Brinker International (EAT) Tops Q3 EPS by 6c, Revenues Miss

Brinker International (NYSE: EAT) reported Q3 EPS of $1.26, $0.06 better than the analyst estimate of $1.20. Revenue for the quarter came in at $811.6 million versus the consensus estimate of $833.16 million.

Highlights include the following:

• Earnings per diluted share, on a GAAP basis, in the third quarter of fiscal 2019 increased 28.4% to $1.31 compared to $1.02 in the third quarter of fiscal 2018
• Earnings per diluted share, excluding special items, in the third quarter of fiscal 2019 increased 16.7% to $1.26 compared to $1.08 in the third quarter of fiscal 2018 (see non-GAAP reconciliation below)
• Brinker International's Company sales in the third quarter of fiscal 2019 increased 2.7% to $811.6 million compared to the third quarter of fiscal 2018. Total revenues in the third quarter of fiscal 2019 increased 3.3% to $839.3 million compared to the third quarter of fiscal 2018
• Chili's company-owned comparable restaurant sales increased 2.9% in the third quarter of fiscal 2019 compared to the third quarter of fiscal 2018. Chili's U.S. franchise comparable restaurant sales increased 2.0% in the third quarter of fiscal 2019 compared to the third quarter of fiscal 2018
• Maggiano's company-owned comparable restaurant sales increased 0.4% in the third quarter of fiscal 2019 compared to the third quarter of fiscal 2018
• Chili's international franchise comparable restaurant sales decreased 3.9% in the third quarter of fiscal 2019 compared to the third quarter of fiscal 2018
• Operating income, as a percent of Total revenues, was 8.4% in the third quarter of fiscal 2019 compared to 8.9% in the third quarter of fiscal 2018 representing a decrease of approximately 50 basis points
• Restaurant operating margin, as a percent of Company sales, was 14.3% in the third quarter of fiscal 2019 which included the impact of the sale leaseback transactions and adopting the new revenue accounting standard ("ASC 606"), compared to 16.1% in the third quarter of fiscal 2018 (see non-GAAP reconciliation below). Excluding the impact of the sale leaseback transactions and ASC 606, Restaurant operating margin would have been flat year-over-year
• Cash flows provided by operating activities in the thirty-nine week period ended March 27, 2019 was $150.6 million and capital expenditures totaled $128.0 million resulting in free cash flow of $22.6 million (see non-GAAP reconciliation below) which was reduced by $75.0 million in cash tax payments related to the gain on the sale leaseback transactions. Proceeds from sale leaseback transactions of $468.8 million are included in Cash flows provided by investing activities
• The Company's Board of Directors approved a quarterly dividend of $0.38 per share on the common stock of the Company. The dividend will be payable June 27, 2019 to shareholders of record as of June 7, 2019

"Brinker posted strong comp sales growth and industry leading traffic again in the third quarter," said Wyman Roberts, CEO and President. "This marked our 5th consecutive quarter of significantly outperforming the category in traffic. Our focus continues to be on elevating our guest experiences and providing true every day value to increase the frequency and loyalty of our guests."

For earnings history and earnings-related data on Brinker International (EAT) click here.

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