Ahead Of Brinker International's Q2 Results

(RTTNews) - Brinker International Inc. (EAT), one of the world's leading casual dining restaurant companies, continues to focus on revenue-driving initiatives, effective cost and margin management and utilization of its substantial free cash flow.

Meanwhile, the company expects second-quarter comp sales to be below first quarter levels. The company is slated to release its second-quarter results before the bell on January 20, 2016. Analysts estimate earnings of $0.75 per share on revenue of $798.89 million for the quarter.

Catalysts

- Superior Free Cash Flow Generation

- Long-Term Growth Opportunities

- Balanced Shareholder Value Growth

- Consistent High Level Of Capital Return

- Reliable Long-Term EPS Growth

For FY16...

The company reaffirmed its forecast for 2016 earnings, excluding special items, to increase 15% - 18% in the range of $3.55 - $3.65 per share, with lower sales offset by commodity and other cost management actions. Eighteen Wall Street analysts are looking for earnings of $3.57 per share.

In fiscal 2015, the company's earnings per share was $3.09, higher than the $2.71 reported in fiscal 2014, $2.34 in 2013, and $1.96 in 2012.

Brinker reduced guidance for revenues and company-owned comp sales. Total revenues are now expected to increase about 10% - 12% including the 53rd week, versus prior guidance range of 12% - 14%.

Comparable restaurant sales to be down 0.5% to down 1.5%, compared to the prior range of up 1.5% - 2%. Company-owned new restaurant development is unchanged and is expected to add year-over-year capacity growth of about 1%, excluding the addition of the recently acquired Chili's restaurants.

In The Previous Quarter...

Net income advanced to $33.21 million from $32.74 million in the prior year. Earnings per share increased 10.2% to $0.54 from $0.49.

First-quarter earnings per share, excluding special items, were $0.56 while it totaled $0.50 for the first quarter of fiscal 2015. On average, 17 analysts polled by Thomson Reuters expected earnings of $0.55 per share. Analysts' estimates typically exclude certain special items.

Total revenues increased to $762.6 million from last year's $711.02 million. Analysts expected revenues of $774.82 million.

Brinker International company sales increased 7.8% to $740.5 million. Chili's company-owned comparable restaurant sales decreased 1.6%, while Maggiano's comparable restaurant sales decreased 1.7%.

CHILI'S first quarter company sales increased 8.8% to $653.1 million from $600.1 million in the prior year, largely due to an increase in restaurant capacity resulting from the acquisition of 103 Chili's restaurants on June 25, 2015.

MAGGIANO'S company sales improved 0.7% to $87.4 million from $86.8 million in the prior year, primarily due to increases in restaurant capacity.

Meanwhile, Franchise and other revenues declined 8.6% to $22.1 million from $24.2 million last year, driven primarily by a decrease in royalty revenues resulting from the acquisition of 103 Chili's restaurants.

"Brinker again delivered solid earnings growth for the quarter, demonstrating the strength of our business model and our ability to deliver bottom line results in a highly competitive market," said Wyman Roberts, Chief Executive Officer and President. "But our top line performance fell short of our expectations, and we are moving aggressively to respond to competitive activity and return to positive sales and traffic."

June 25, 2015, Brinker said it acquired Pepper Dining Holding Corp., a franchisee of 103 Chili's Grill & Bar restaurants primarily located in the Northeast and Southeast. The purchase price of $106.5 million was funded with availability under Brinker's existing credit facility. The acquisition is expected to be EPS accretive in fiscal year 2016 and strengthen long-term free cash flow generation.

During the first quarter, the company repurchased 900,000 shares for $51 million and ended the quarter with $66 million of cash on its balance sheet.

In the last four years, the company has returned $1.4 billion of capital to the shareholders. Since the end of the first quarter, Brinker purchased an additional 328,000 shares for $17 million, leaving an outstanding authorization of about $550 million. This includes the additional authorization of $250 million approved by the board in August.

The company also raised its quarterly dividend of $0.32 per share, representing a 14% increase over prior year.