Brinker (EAT) Q1 Earnings & Revenues Outshine Estimates
Brinker International, Inc. EAT reported first-quarter fiscal 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and bottom lines increased on a year-over-year basis. The upside was primarily driven by improved menu pricing and a favorable menu item mix.
Following the announcement, shares of the company inched up 0.6% during the trading hours on Nov 1.
Earnings & Revenue Discussion
In the quarter under review, Brinker reported adjusted earnings per share (EPS) of 28 cents, surpassing the Zacks Consensus Estimate of 3 cents. The company reported an adjusted loss of 57 cents per share in the prior-year quarter.
In the fiscal first quarter, total revenues of $1,012.5 million beat the Zacks Consensus Estimate of $1,007 million. The top line improved 5.6% on a year-over-year basis. EAT gained from solid performance of Chili's.
Chili's
Chili’s revenues in the fiscal first quarter gained 6.4% year over year to $908.1 million. The upside was primarily driven by increased menu pricing and a favorable menu item mix. However, this was partially offset by lower traffic. Our model predicted segmental revenues to rise 5.4% year over year.
Chili's restaurant expenses (as a percentage of company sales) in the fiscal first quarter were 89.4% compared with 94.2% in the prior-year quarter. The downside was caused by sales leverage, menu pricing, favorable commodity mix, lower delivery and off-premise supplies. A rise in advertising expenses and hourly wage rates partially offset this.
Chili's company-owned traffic in the quarter declined 5.8% year over year. The metric fell 4.9% in the prior-year quarter.
The segment’s company-owned comps jumped 6.1% in the fiscal first quarter from the year-ago levels.
At Chili’s, domestic comps (including company-owned and franchised) rose 6% year over year compared with 3.4% in the prior year.
Brinker International, Inc. Price, Consensus and EPS Surprise
Brinker International, Inc. price-consensus-eps-surprise-chart | Brinker International, Inc. Quote
Maggiano’s
Maggiano’s sales declined 1.1% year over year to $104.4 million due to restaurant closures. This was partially overshadowed by favorable comparable restaurant sales driven by increased menu pricing.
Comps in the segment rose 2.6% year over year. Our projection was 6.9%.
Traffic in the quarter fell 5.7% year over year. The metric was up 9.3% in the prior-year quarter.
Maggiano's company restaurant expenses (as a percentage of company sales) in the fiscal first quarter were 91.2% compared with 91.5% a year ago. Menu pricing and favorable commodity costs resulted in this downside.
Operating Results
Total operating costs and expenses were $988.3 million compared with $975.3 million in the year-ago quarter. Adjusted operating margin, as a percentage of company sales, was 10.4% compared with 6% in the prior-year quarter.
Balance Sheet
As of Sep 27, 2023, cash and cash equivalents amounted to $14.4 million compared with $19.5 million as of Sep 28, 2022.
As of Sep 27, 2023, long-term debt was $923.9 million compared with $912.2 million as of Jun 28, 2023. Total shareholders’ deficit in the reported quarter was ($156.3) million compared with ($144.3) million in the previous quarter.
Fiscal 2024 Outlook
Management continues to anticipate total revenues in the range of $4.27-$4.35 billion. Capital expenditures are expected in the $175-$195 million band. EAT projects fiscal 2024 EPS in the range of $3.35-$3.65, up from the prior estimate of $3.15-$3.55.
Zacks Rank
Brinker currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Retail-Wholesale Releases
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YUM! Brands’ third-quarter 2023 adjusted EPS reached $1.44, increasing 32% from the prior year. Quarterly revenues of $1,708 million improved 4% year over year. The company benefited from robust same-store sales and unit growth.
McDonald's Corporation MCD reported third-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. Both metrics surpassed the consensus estimate for the fifth straight quarter and increased on a year-over-year basis.
In the quarter under discussion, global comps of McDonald's expanded 8.8% compared with 11.7% in the prior-year quarter.
Yum China Holdings, Inc. YUMC reported third-quarter 2023 results, with earnings and revenues missing the Zacks Consensus Estimate after beating in the preceding two quarters. Consumer demand weakened in late September through October, negatively impacting the company's quarterly results.
Total system sales of Yum China grew 15% year over year. System sales at KFC and Pizza Hut jumped 15% and 13% (excluding foreign currency translation), respectively.
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