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Brinker (EAT) Q4 Earnings Surpass Estimates, Revenues Lag
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Brinker International, Inc. (EAT - Free Report) reported fourth-quarter fiscal 2023 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line increased on a year-over-year basis. The upside was primarily driven by improved menu pricing and a favorable menu item mix.
Following the announcement, shares of the company fell 5.5% during trading hours on Aug 16. Negative investor sentiments were witnessed as the company stated concerns about a sticky wage inflation environment.
Earnings & Revenue Discussion
In the quarter under review, Brinker reported adjusted earnings per share (EPS) of $1.39, surpassing the Zacks Consensus Estimate of $1.30. The company reported an adjusted EPS of $1.15 in the prior-year quarter.
Brinker International, Inc. Price, Consensus and EPS Surprise
In the fiscal fourth quarter, total revenues of $1,075.5 million missed the Zacks Consensus Estimate of $1,079 million. However, the top line increased 5.3% on a year-over-year basis. The company gained from the solid performance of Chili's and Maggiano's.
Chili's
Chili’s revenues in the fiscal fourth quarter increased 5.5% year over year to $954.1 million. The upside was primarily driven by increased menu pricing and a favorable menu item mix. However, this was partially offset by lower traffic.
Chili's restaurant expenses (as a percentage of company sales) in the fiscal fourth quarter came in at 87.1% year over year compared with 88% reported in the prior-year quarter. The downside was primarily due to sales leverage, menu pricing, favorable commodity mix, lower delivery and off-premise supplies. A rise in commodity costs, advertising expenses and hourly wage rates partially offset this.
Chili's company-owned traffic in the quarter declined 7.7% year over year compared with a fall of 5.7% reported in the prior-year quarter.
The segment’s company-owned comps increased 6.3% in the fiscal fourth quarter from the year-ago quarter’s levels.
At Chili’s, domestic comps (including company-owned and franchised) rose 6% year over year compared with 0.1% rise in the prior-year quarter’s levels.
Maggiano’s
Maggiano’s sales rose 3.5% year over year to $121.2 million. the upside was driven by a rise in menu pricing. However, this was partially offset by unfavorable menu item mix and lower traffic. Comps in the segment increased 9.1% year over year. Our estimate for the metric was 11.3%. Traffic in the quarter fell 0.2% year over year against a 17.9% rise reported in the prior-year quarter.
Maggiano's company restaurant expenses (as a percentage of company sales) in the fiscal fourth quarter were 82.7% compared with 84% reported in the prior-year quarter. The downside was primarily due to sales leverage and lower advertising. However, this was partially offset by higher hourly wage rates.
Operating Results
Total operating costs and expenses in the fiscal fourth quarter were $1,016.2 million compared with $976.8 million reported in the year-ago quarter. The restaurant operating margin, as a percentage of company sales, was 13.4% compared with 12.5% reported in the prior-year quarter.
Balance Sheet
As of Jun 28, 2023, cash and cash equivalents amounted to $15.1 million compared with $13.8 million as of Mar 29, 2023.
Long-term debt as of Jun 28, 2023, was $912.2 million compared with $930.7 million as of Mar 29, 2023. The total shareholders’ deficit in the reported quarter was ($144.3) million compared with ($210.3) million reported in the previous quarter.
2023 Highlights
Total revenues in fiscal 2023 amounted to $4,133.2 million compared with $3,804.1 million in fiscal 2022.
Adjusted EBITDA in fiscal 2023 came in at $345.6 million compared with $355.1 million in fiscal 2022.
In fiscal 2023, diluted EPS came in at $2.83 per share compared with $3.09 reported in the previous year.
Fiscal 2024 Outlook
For fiscal 2024, the company anticipates total revenues in the range of $4.27-$4.35 billion. Capital expenditures are expected in the range of $175-$195 million. The company expects fiscal 2023 diluted EPS in the range of $3.15-$3.55.
Zacks Rank & Key Picks
Brinker currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Retail-Wholesale sector are:
BJ's Restaurants, Inc. (BJRI - Free Report) sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 121.2%, on average. Shares of BJRI have increased 15.1% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BJRI’s 2023 sales and EPS indicates 5.6% and 423.5% growth, respectively, from the year-ago period’s levels.
Arcos Dorados Holdings Inc. (ARCO - Free Report) currently carries a Zacks Rank #2 (Buy). ARCO has a long-term earnings growth rate of 9.5%. The stock has gained 44.4% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2023 sales and EPS indicates 19% and 11.6% growth, respectively, from the year-ago period’s levels.
Chuy's Holdings, Inc. (CHUY - Free Report) carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 26.6% on average. Shares of CHUY have increased by 61% in the past year.
The Zacks Consensus Estimate for CHUY’s 2023 sales and EPS indicate an increase of 9.5% and 32.9%, respectively, from the year-ago period’s levels.
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Brinker (EAT) Q4 Earnings Surpass Estimates, Revenues Lag
Brinker International, Inc. (EAT - Free Report) reported fourth-quarter fiscal 2023 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line increased on a year-over-year basis. The upside was primarily driven by improved menu pricing and a favorable menu item mix.
Following the announcement, shares of the company fell 5.5% during trading hours on Aug 16. Negative investor sentiments were witnessed as the company stated concerns about a sticky wage inflation environment.
Earnings & Revenue Discussion
In the quarter under review, Brinker reported adjusted earnings per share (EPS) of $1.39, surpassing the Zacks Consensus Estimate of $1.30. The company reported an adjusted EPS of $1.15 in the prior-year quarter.
Brinker International, Inc. Price, Consensus and EPS Surprise
Brinker International, Inc. price-consensus-eps-surprise-chart | Brinker International, Inc. Quote
In the fiscal fourth quarter, total revenues of $1,075.5 million missed the Zacks Consensus Estimate of $1,079 million. However, the top line increased 5.3% on a year-over-year basis. The company gained from the solid performance of Chili's and Maggiano's.
Chili's
Chili’s revenues in the fiscal fourth quarter increased 5.5% year over year to $954.1 million. The upside was primarily driven by increased menu pricing and a favorable menu item mix. However, this was partially offset by lower traffic.
Chili's restaurant expenses (as a percentage of company sales) in the fiscal fourth quarter came in at 87.1% year over year compared with 88% reported in the prior-year quarter. The downside was primarily due to sales leverage, menu pricing, favorable commodity mix, lower delivery and off-premise supplies. A rise in commodity costs, advertising expenses and hourly wage rates partially offset this.
Chili's company-owned traffic in the quarter declined 7.7% year over year compared with a fall of 5.7% reported in the prior-year quarter.
The segment’s company-owned comps increased 6.3% in the fiscal fourth quarter from the year-ago quarter’s levels.
At Chili’s, domestic comps (including company-owned and franchised) rose 6% year over year compared with 0.1% rise in the prior-year quarter’s levels.
Maggiano’s
Maggiano’s sales rose 3.5% year over year to $121.2 million. the upside was driven by a rise in menu pricing. However, this was partially offset by unfavorable menu item mix and lower traffic. Comps in the segment increased 9.1% year over year. Our estimate for the metric was 11.3%. Traffic in the quarter fell 0.2% year over year against a 17.9% rise reported in the prior-year quarter.
Maggiano's company restaurant expenses (as a percentage of company sales) in the fiscal fourth quarter were 82.7% compared with 84% reported in the prior-year quarter. The downside was primarily due to sales leverage and lower advertising. However, this was partially offset by higher hourly wage rates.
Operating Results
Total operating costs and expenses in the fiscal fourth quarter were $1,016.2 million compared with $976.8 million reported in the year-ago quarter. The restaurant operating margin, as a percentage of company sales, was 13.4% compared with 12.5% reported in the prior-year quarter.
Balance Sheet
As of Jun 28, 2023, cash and cash equivalents amounted to $15.1 million compared with $13.8 million as of Mar 29, 2023.
Long-term debt as of Jun 28, 2023, was $912.2 million compared with $930.7 million as of Mar 29, 2023. The total shareholders’ deficit in the reported quarter was ($144.3) million compared with ($210.3) million reported in the previous quarter.
2023 Highlights
Total revenues in fiscal 2023 amounted to $4,133.2 million compared with $3,804.1 million in fiscal 2022.
Adjusted EBITDA in fiscal 2023 came in at $345.6 million compared with $355.1 million in fiscal 2022.
In fiscal 2023, diluted EPS came in at $2.83 per share compared with $3.09 reported in the previous year.
Fiscal 2024 Outlook
For fiscal 2024, the company anticipates total revenues in the range of $4.27-$4.35 billion. Capital expenditures are expected in the range of $175-$195 million. The company expects fiscal 2023 diluted EPS in the range of $3.15-$3.55.
Zacks Rank & Key Picks
Brinker currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Retail-Wholesale sector are:
BJ's Restaurants, Inc. (BJRI - Free Report) sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 121.2%, on average. Shares of BJRI have increased 15.1% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BJRI’s 2023 sales and EPS indicates 5.6% and 423.5% growth, respectively, from the year-ago period’s levels.
Arcos Dorados Holdings Inc. (ARCO - Free Report) currently carries a Zacks Rank #2 (Buy). ARCO has a long-term earnings growth rate of 9.5%. The stock has gained 44.4% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2023 sales and EPS indicates 19% and 11.6% growth, respectively, from the year-ago period’s levels.
Chuy's Holdings, Inc. (CHUY - Free Report) carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 26.6% on average. Shares of CHUY have increased by 61% in the past year.
The Zacks Consensus Estimate for CHUY’s 2023 sales and EPS indicate an increase of 9.5% and 32.9%, respectively, from the year-ago period’s levels.