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Rating Action: Moody's upgrades Brinker's CFR to Ba3; outlook remains positiveGlobal Credit Research - 01 Mar 2022New York, March 01, 2022 -- Moody's Investors Service, ("Moody's") today upgraded Brinker International, Inc.'s ("Brinker") corporate family rating (CFR) to Ba3 from B1 and probability of default rating (PDR) to Ba3-PD from B1-PD. In addition, Moody's upgraded Brinker's guaranteed senior unsecured notes to B1 from B2 and its senior unsecured non-guaranteed notes to B2 from B3. Brinker's speculative grade liquidity rating remains SGL-2. The outlook remains positive."The upgrade and positive outlook reflects Brinker's continued improvement in operating performance that has resulted in a significant strengthening of credit metrics despite ongoing inflationary headwinds," stated Bill Fahy, Moody's Senior Credit Officer. Over the LTM period ending December 29, 2021, Brinker's leverage improved to about 4.0 times from about 5.8 times in the same prior year period. "Even though operating performance is expected to moderate as inflationary pressures persist we believe steady consumer demand, selective price increases, costs saving initiatives and a continued focus on debt reduction over and above required amortization will drive stronger credit metrics while maintaining good liquidity," Fahy added.Upgrades:..Issuer: Brinker International, Inc..... Corporate Family Rating, Upgraded to Ba3 from B1.... Probability of Default Rating, Upgraded to Ba3-PD from B1-PD....Gtd Global Notes, Upgraded to B1 (LGD4) from B2 (LGD4)....Senior Global Notes, Upgraded to B2 (LGD5) from B3 (LGD6)Outlook Actions:..Issuer: Brinker International, Inc.....Outlook, Remains PositiveRATINGS RATIONALEBrinker's Ba3 CFR benefits from its high level of brand awareness, meaningful scale, improved cost structure, good product pipeline and technology initiatives that are expected to drive incremental traffic and mitigate inflationary pressures over the longer term. The ratings are constrained by the earnings concentration with Chili's, which requires this core brand to generate profitable same restaurant sales trends on a consistent basis. In addition, the uncertainty with regards to the ability and willingness of consumers to maintain or increase their spend on food away from home remains a concern as ongoing inflationary pressures negatively impact purchasing power as price increases are likely throughout the industry.The positive outlook reflects Moody's view that earnings and credit metrics will gradually improve despite inflationary pressures as consumer demand remains steady and management focuses on debt reduction over and above required amortization. The outlook also anticipates that Brinker follows a prudent financial policy towards dividends and share repurchases and maintains at least good liquidity.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSAn upgrade would require a continued strengthening of operating performance that resulted in improved credit metrics with debt to EBITDA sustained below 4.0 times and EBIT coverage of interest sustained above 2.75 times. A higher rating would also require maintaining at least good liquidity and a moderate financial policy.Ratings could be downgraded should there be a sustained deterioration in credit metrics with debt to EBITDA exceeding 4.75 times or EBIT coverage of interest below 2.0 times. A sustained deterioration in liquidity for any reason could also result in a downgrade.Brinker's board of directors is a good mix of industry veterans, as well as directors with large company experience and relatively varied periods of board tenure. Brinker's board has 10 members, 9 of which are independent and separate Chairman and CEO roles. Brinker is a publicly traded company.Restaurants by their nature and relationship with regards to sourcing food and packaging, as well as having an extensive labor force and constant consumer interaction are deeply entwined with sustainability, social and environmental concerns. To this end, Brinker requires its suppliers to adhere to its supplier code of conduct, which sets forth its expectations on business integrity, food safety and food ingredients, animal welfare and sustainability. While these may not directly impact the credit, these factors could impact consumers view of the brand overall.Brinker International, Inc. ("Brinker") owns, operates and franchises the casual dining concepts Chili's Grill & Bar (Chili's) and Maggiano's Little Italy. As of December 29, 2021, Brinker had about 1,182 company-owned restaurants and approximately 471 franchised restaurants. For the LTM period ending December 29, 2021 revenues were approximately $3.64 billion.The principal methodology used in these ratings was Restaurants published in August 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1276314. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. William V. Fahy VP - Senior Credit Officer Corporate Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. 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