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Brinker's (EAT) Earnings & Revenues Surpass Estimates in Q3

Zacks Equity Research

Brinker International, Inc. EAT reported third-quarter fiscal 2019 results, wherein both the top and bottom line surpassed the Zacks Consensus Estimate.

Adjusted earnings of $1.26 surpassed the consensus mark of $1.20 by 5% and improved 16.7% from the year-ago quarter. Quarterly revenues totaled $839.3 million, which surpassed the consensus mark of $833 million and improved 3.3% on a year-over-year basis. The company’s traffic-building strategies and efforts to capture increased market share have aided top-line growth.

Brand Performances                     

Brinker primarily engages in ownership, operation, development and franchising of various restaurant brands under the names Chili’s Grill & Bar (Chili’s) and Maggiano’s Little Italy (Maggiano’s).

Chili's

Revenues at Chili’s totaled $709.8 million in the reported quarter, up 3% from the prior-year quarter. The upside was driven by comps growth.

The brand’s company-owned comps rose 2.9% on account of 3% improvement in traffic, partially offset by a decline of 1.7% in mix. However, the metric remained same as that recorded in the second quarter and compared favorably with a decline of 0.4% in the year-ago quarter.

Comps at Chili's franchised restaurants decreased 0.2% compared with a decline of 2.2% registered in the year-ago quarter and a drop of 0.8% in the second quarter. At international franchised Chili’s restaurants, the same fell 3.9% compared with the second-quarter’s decrease of 6.5% and year-ago quarter’s decline of 0.2%. Meanwhile, at the domestic franchised units, comps increased by 2% against the year-ago quarter’s decline of 3.3%. However, the figure gained 3.4% in the second quarter.

At Chili's, domestic comps (including company-owned and franchised) grew 2.7% compared with the last quarter’s increase of 3.3%. However, the figure declined 1.1% in the prior-year quarter.

Maggiano's

Maggiano's sales increased 0.2% year over year to $101.8 million primarily due to rise in comparable restaurant sales.

Comps grew 0.4% on a year-over-year flat traffic. Comps had also increased 0.5% in the prior-year quarter.

Brinker International, Inc. Price, Consensus and EPS Surprise

Brinker International, Inc. Price, Consensus and EPS Surprise | Brinker International, Inc. Quote

Operating Results

Total operating costs and expenses jumped roughly 4% to nearly $769.1 million compared with $739.8 million in the year-ago quarter. While the cost of sales margin expanded 30 bps, restaurant labor margin contracted 10 bps year over year.

Restaurant operating margin, as a percentage of company sales, was 14.3% compared with 16.1% in the prior-year quarter.

Balance Sheet

As of Mar 27, 2019, cash and cash equivalents amounted to $12.2 million compared with nearly $13.4 million at the end of Mar 27, 2018.

Long-term debt was $1.2 billion as of Mar 27, 2019 compared with $1.5 billion as of Mar 27, 2018. Total shareholders’ deficit in the reported quarter was $814.2 million compared with $718.3 million as of May 27, 2018.

Management approved a quarterly dividend of 38 cents per share of the company’s common stock in the fiscal third quarter, which is payable Jun 27 to its shareholders of record as on Jun 7.

Zacks Rank & Peer Releases

Brinker currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Darden DRI reported third-quarter fiscal 2019 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. Adjusted earnings of $1.80 per share beat the Zacks Consensus Estimate of $1.75. Moreover, the bottom line increased 5.3% year over year on the back of higher revenues.

Chipotle CMG reported better-than-expected results in the first quarter of 2019. Adjusted earnings of $3.40 per share surpassed the Zacks Consensus Estimate of $3.01 by 13%. The bottom line also grew 59.6% from the year-ago quarter, backed by increased revenues and lower food costs.

Domino’s DPZ reported mixed first-quarter 2019 financial numbers, wherein earnings outpaced the Zacks Consensus Estimate but revenues missed the same. Adjusted earnings of $2.20 per share surpassed the Zacks Consensus Estimate of $2.07 and increased 10% on a year-over-year basis. The bottom-line improvement was driven by higher net income and lower diluted share count as a result of share repurchases.

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