Brinker revenues decrease 22.7 percent

Brinker International, Inc. (NYSE:EAT) announced fourth quarter fiscal 2009 earnings per diluted share of $0.52 compared to $0.42 for the fourth quarter of fiscal 2008, before special items and excluding Romano's Macaroni Grill (reconciliation included in Table 3). On a GAAP basis, earnings per diluted share increased to $0.41 from a loss per diluted share of $0.02 for the fourth quarter in the prior year. For the full-year fiscal 2009, earnings per diluted share increased to $1.44 from $1.41 in the prior year, before special items and excluding Macaroni Grill (reconciliation included in Table 4). On a GAAP basis, earnings per diluted share increased to $0.77 from $0.49 in the prior year.

In the second quarter of fiscal 2009, the company completed the sale of Macaroni Grill while retaining a minority ownership interest. The information presented below includes Macaroni Grill unless otherwise noted.

Quarterly Revenues

Brinker reported revenues for the 13-week period of $829.4 million, a decrease of 22.7 percent compared with $1,073.6 million reported for the same period of fiscal 2008. The company experienced a 9.0 percent decrease in comparable restaurant sales (see Table 1) in the fourth quarter of fiscal 2009 due to decreases across all brands. Revenues were also negatively impacted by a net decline in capacity of 18.2 percent due to 55 restaurant closures (five of which were Macaroni Grills) and the sale of 198 restaurants since the fourth quarter of fiscal 2008 (189 of which were Macaroni Grills).

  Q4 09 and Q4 08, company and three reported brands; percentage





                              Q4 09         Q4 08        Q4 09     Q4 09

                             Comparable   Comparable    Pricing     Mix-

                              Sales         Sales        Impact    Shift





  Brinker International(1)    (9.0)         2.3          2.4       (2.0)



    Chili's                   (9.4)         3.4          2.5       (1.4)

    On The Border             (5.8)        (2.3)         2.9       (4.2)

    Maggiano's                (9.2)        (0.5)         1.0       (3.8)







   (1)Brinker International comparable restaurant sales exclude the impact

     of Macaroni Grill.

  FY 09 and FY 08, company and three reported brands; percentage





                             FY 09         FY 08        FY 09      FY 09

                            Comparable    Comparable    Pricing     Mix-

                              Sales        Sales        Impact      Shift



  Brinker International(1)

                              (5.6)         0.3          3.0       (1.0)

    Chili's                   (5.6)         0.8          3.2       (0.8)

    On The Border             (4.4)        (3.3)         3.4       (1.4)

    Maggiano's                (7.3)         0.4          1.5       (2.2)





  (1) Brinker International comparable restaurant sales exclude the impact

      of Macaroni Grill.

Quarterly Operating Performance

Cost of sales, as a percent of revenues, decreased from 28.6 percent in the prior year to 27.1 percent in the fourth quarter of fiscal 2009. Continued focus on operational efficiency, efforts to reduce waste and favorable menu price changes resulted in improvements in cost of sales. These improvements more than offset the impact of unfavorable commodity prices primarily related to chicken, beef, produce and dairy products.

Restaurant expenses, as a percent of revenues, decreased to 54.6 percent from 55.8 percent in the prior year primarily due to lower labor costs, pre-opening and property tax expenses as well as a decrease in worker's compensation and general liability insurance expenses due to favorable claims experience.

Depreciation and amortization decreased $1.1 million compared to the prior year due to fully depreciated assets and restaurant closures, partially offset by investments in Chili's reimage program and additional depreciation on new restaurants.

General and administrative expense decreased $7.5 million for the quarter primarily due to reduced salary expense from lower headcount, income related to transitional services provided to Macaroni Grill and a decrease in professional fees.

Other gains and charges includes $26.8 million of charges in the fourth quarter of fiscal 2009 consisting primarily of $15.4 million of long-lived asset and goodwill impairment charges related to the decision to close eight restaurants and $14.3 million of long-lived asset impairment charges related to 16 underperforming restaurants.

Interest expense decreased $3.8 million due to lower interest rates, lower average borrowings and a gain of $1.3 million associated with the repurchase and retirement of a portion of our 5.75 percent notes in the fourth quarter.

Other, net increased $6.8 million for the quarter primarily due to insurance proceeds of $5.5 million.

The effective income tax rate changed from a benefit of 74.1 percent in the fourth quarter of fiscal 2008 to a provision of 15.1 percent in the current quarter. This change is primarily due to the significant impairment charge related to Macaroni Grill recorded in the prior year resulting in a loss and related tax benefit for the quarter. The impact of impairment charges on the tax rate was not as significant in the current quarter.

Logos, product and company names mentioned are the property of their respective owners.

Reader Comments:

Be the first to leave a comment for this article

Tweet