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Brinker (EAT) Q2 Earnings Beat Estimates, Revenues Miss

·4 min read

Brinker International, Inc. EAT reported second-quarter fiscal 2022 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same. However, both the metrics improved year over year. The company gained from the robust performance of Chili's and Maggiano's.

Earnings & Revenue Discussion

The company’s adjusted earnings per share was 71 cents, surpassing the Zacks Consensus Estimate of 50 cents. Brinker had reported an adjusted earnings of 35 cents in the year-ago quarter.

Quarterly revenues of $925.8 million missed the consensus mark of $928 million. The top line improved 21.7% on a year-over-year basis.

Chili's

Chili’s revenues in the fiscal second quarter jumped 16.1% year over year to $808.2 million, primarily due to an increase in dining room sales, marginally offset by a decline in off-premise sales.

Chili's company restaurant expenses (as a percentage of company sales) in the fiscal second quarter increased to 89.3% year over year from 88.7%. The increase was primarily due to a rise in restaurant labor costs, which includes wage rates, training and overtime. An increase in utilities expenses and commodity costs pushed the costs higher. Chili's company-owned traffic in the quarter increased 8.8% year over year, against a decline of 4.8% in the prior-year quarter.

The segment’s company-owned comps increased 12.1% in the fiscal second quarter, compared with the same period in 2021.

Comps at Chili's franchised restaurants increased 17% against a decline of 9% in the year-ago quarter. At international franchised Chili’s restaurants, the same surged 27.7% versus the year-ago quarter’s decrease of 16.2%. Meanwhile, at the U.S. franchised units, comps climbed 4.8% against the year-ago quarter’s slump of 4.7%.

At Chili's, domestic comps (including company-owned and franchised) rose 11.5% year over year against the prior-year quarter’s fall of 6.1%.

Brinker International, Inc. Price and EPS Surprise

Brinker International, Inc. Price and EPS Surprise
Brinker International, Inc. Price and EPS Surprise

Brinker International, Inc. price-eps-surprise | Brinker International, Inc. Quote

Maggiano's

Maggiano's sales soared 82.9% year over year to $117.6 million, primarily due to an increase in dining and banquet room sales. Comps increased 78.1% year over year. Traffic in the quarter rose 53.3% year over year.

Maggiano's company restaurant expenses (as a percentage of company sales) in the fiscal second quarter was 86.4%, compared with 94.5% in the prior-year quarter. The decrease was primarily due to sales leverage. The decline was negated by increased restaurant labor costs including training, wage rates, overtime and manager bonuses, higher repairs and maintenance expenses.

Operating Results

Total operating costs and expenses contracted to $886 million from $738.6 million in the year-ago quarter. Restaurant operating margin — as a percentage of company sales — was 10.7% compared with 11.3% in the prior-year quarter.

Balance Sheet

As of Dec 29, 2021, cash and cash equivalents amounted to $15.6 million compared with $64.1 million as of Dec 23, 2020.

Long-term debt was $1,047.3 million as of Dec 29, 2021, compared with $917.9 million on Jun 30, 2021. Total shareholders’ deficit in the reported quarter came in at ($327.4) million compared with ($303.3) million as of Jun 30, 2021.

The company currently has a Zacks Rank #4 (Sell).

Key Picks

Some better-ranked stocks in the Zacks Retail-Wholesale sector include MarineMax, Inc. HZO, Arcos Dorados Holdings Inc. ARCO and Tapestry, Inc. TPR. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

MarineMax sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 55.8%, on average. Shares of the company have increased 12.3% in the past year.

The Zacks Consensus Estimate for MarineMax’s 2022 sales and EPS suggests growth of 11.8% and 16.2%, respectively, from the year-ago period’s levels.

Arcos Dorados flaunts a Zacks Rank #1. ARCO has a long-term earnings growth of 42.9%. Shares of the company have increased 30% in the past year.

The Zacks Consensus Estimate for Arcos Dorados’ 2022 sales and EPS suggests growth of 10.4% and 255.6%, respectively, from the year-ago period’s levels.

Tapestry carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 29%, on average. Shares of the company have increased 9.4% in the past year.

The Zacks Consensus Estimate for Tapestry’s 2022 sales and EPS suggests growth of 15% and 18.5%, respectively, from the year-ago period’s levels.


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