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Brinker International Reports Year-Over-Year Increase In First Quarter Eps

The following excerpt is from the company's SEC filing.

DALLAS (Oct. 20, 2015) – Brinker International, Inc. (NYSE: EAT) today announced results for the fiscal first quarter ended Sept. 23, 2015.

Highlights include the following:

Earnings per diluted share, excluding special items, increased 12.0 percent to $0.56 compared to $0.50 for the first quarter of fiscal 2015

On a GAAP basis, earnings per diluted share increased 10.2 percent to $0.54 compared to $0.49 for the first quarter of fiscal 2015

Brinker International company sales increased 7.8 percent to $740.5 million

Chili’s company-owned comparable restaurant sales decreased 1.6 percent

Maggiano’s comparable restaurant sales decreased 1.7 percent

Chili's franchise comparable restaurant sales increased 2.2 percent which includes an 0.8 percent increase for U.S. franchise restaurants and a 4.8 percent increase for international franchise restaurants

Restaurant operating margin,

as a percent of company sales, improved approximately 10 basis points to 14.6 percent compared to 14.5 percent for the first quarter of fiscal 2015

For the first three months of fiscal 2016, cash flows provided by operating activities were $45.5 million and capital expenditures totaled $23.7 million. Free cash flow

was approximately $21.8 million

The company repurchased approximately 0.9 million shares of its common stock for $51.1 million in the first quarter

The company declared a dividend of 32 cents per share to be paid in the second quarter, representing a 14.3% increase over the prior year

The company acquired 103 Chili's restaurants from a franchisee in the first quarter of fiscal 2016

The company reaffirms earnings per diluted share, excluding special items, to be in the range of $3.55 to $3.65 for fiscal 2016

“Brinker again delivered solid earnings growth for the quarter, demonstrating the strength of our business model and our ability to deliver bottom line results in a highly competitive market,” said Wyman Roberts, Chief Executive Officer and President. “But our top line performance fell short of our expectations, and we are moving aggressively to respond to competitive activity and return to positive sales and traffic.”

Restaurant operating margin is defined as Company sales less Cost of sales, Restaurant Labor and Restaurant expenses. Restaurant operating margin is widely regarded in the restaurant industry as a useful metric by which to evaluate restaurant-level operating efficiency and performance. Restaurant operating margin is not a measurement determined in accordance with GAAP and should not be considered in isolation, or as an alternative, to operating income or other similarly titled measures of other companies.

Free cash flow is defined as cash flows provided by operating activities less capital expenditures.

Table 1: Q1 comparable restaurant sales

Company-owned, reported brands and franchise; percentage

Chili’s Company-Owned

Comparable Restaurant Sales

Pricing Impact

Mix-Shift

Traffic

Maggiano’s

Chili's Franchise

U.S. Comparable Restaurant Sales

International Comparable Restaurant Sales

Chili's Domestic

System-wide

Chili's company-owned comparable restaurant sales includes 103 Chili's restaurants acquired from a franchisee in the first quarter of fiscal 2016.

Revenues generated by franchisees are not included in revenues on the consolidated statements of comprehensive income; however, we generate royalty revenue and advertising fees based on franchisee revenues, where applicable. We believe including franchise comparable restaurant sales provides investors information regarding brand performance that is relevant to current operations and may impact future restaurant development.

Chili's Domestic comparable restaurant sales percentages are derived from sales generated by company-owned and franchise operated Chili's restaurants in the United States.

System-wide comparable restaurant sales are derived from sales generated by company-owned Chili’s and Maggiano’s restaurants in addition to the sales generated at franchise operated restaurants.

Quarterly Operating Performance

CHILI’S first quarter company sales increased 8.8 percent to $653.1 million from $600.1 million in the prior year primarily due

to an increase in restaurant capacity resulting from the acquisition of 103 Chili's restaurants on June 25, 2015. As compared to the prior year, Chili's restaurant operating margin

declined slightly primarily due to the impact of the recently acquired restaurants. Cost of sales, as a percent of company sales, was positively impacted by favorable menu pricing and commodity pricing related to avocados, cheese and seafood, partially offset by unfavorable menu item mix and commodity pricing primarily related to chicken and beef. Restaurant expenses, as a percent of company sales, increased slightly due to higher repairs and maintenance and rent expenses, partially offset by decreased advertising. Restaurant labor, as a percent of company sales, increased slightly compared to the prior year due to higher wage rates.

MAGGIANO’S first quarter company sales increased 0.7 percent to $87.4 million from $86.8 million in the prior year primarily due to increases in restaurant capacity. As compared to the prior year, Maggiano's restaurant operating margin

improved. Cost of sales, as a percent of company sales, was...


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