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Brinker's (EAT) Q2 Earnings Beat Estimates, Revenues Lag
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Brinker International, Inc. (EAT - Free Report) posted mixed results in second-quarter fiscal 2018, with earnings surpassing the Zacks Consensus Estimate and revenues lagging the same.
Adjusted earnings of 87 cents beat the consensus estimate of 71 cents by 22.5%. The bottom line increased 22.5% from the year-ago quarter, primarily driven by favorable tax reform impact and Maggiano’s strong holiday season sales.
Quarterly revenues, however, declined 0.6% year over year to $766.4 million. Revenues also missed the consensus estimate of $771.4 million by 0.6%. Company sales totaled $742.7 million, down 0.8 % from the year-ago quarter.
Brinker International, Inc. Price, Consensus and EPS Surprise
Shares moved up nearly 1% in after-hours trading session following the earnings release. However, over the past six months, the company’s shares have rallied 2.9%, underperforming the industry’s 10.8%.
Apart from the favorable impact of tax benefits on earnings, management is optimistic about the sales-building initiatives. The company is focused on menu innovation and providing improved digital services that are expected to drive traffic and comps, both at Chili’s and Maggiano’s.
Let’s take a closer look at the Q2 numbers:
Brand Performances
Brinker primarily engages in the 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
Chili’s reported company sales of $623.6 million in the quarter, down 1.3% from the prior-year quarter owing to declining comps.
The brand’s company-owned comps fell 1.5% due to a 4.4% decline in traffic, partially offset by a 2.3% and 0.6% improvement in pricing and mix, respectively. However, comps compared favorably with the prior-quarter decline of 3.4% and 3.3% drop in the year-ago quarter.
Comps at Chili's franchised restaurants went down 1% compared with a 3.5% decline in the year-ago quarter and 4.1% drop in the last quarter.
In International franchised Chili’s restaurants, comps inched up 0.1% comparing favorably with the year-ago quarter’s decline of 4.2% and the prior-quarter’s fall of 7.9%. Meanwhile, the same fell in the domestic franchised units by 1.7%, same as that in the last quarter. However, the decline was narrower than the 3% fall in the year-ago quarter.
At Chili's, domestic comps (including company-owned and franchised) declined 1.6%, narrower than the prior-quarter’s drop of 3% and the year-earlier quarter’s decline of 3.2%.
Maggiano's
Maggiano's company sales rose 2.1% year over year to $119.1 million, primarily owing to an increase in comps.
Comps grew 1.8% in the quarter on a 1.1% increase in both pricing and mix, partially offset by a 0.4% decline in traffic. Markedly, comps compared favorably with the prior-quarter’s decline of 2.6% and the year-ago quarter’s fall of 0.8%.
Operating Results
Total operating costs and expenses increased 0.3% to nearly $712 million from $709.5 million in the year-ago quarter. While cost of sales margin expanded 10 basis points (bps), restaurant labor margin increased 40 bps year over year.
Restaurant operating margin, as a percentage of company sales, declined 20 bps. Net income in the quarter fell 26.9% to $25.4 million from the year-ago quarter.
Balance Sheet
As of Dec 27, 2017, cash and cash equivalents were $14.7 million as compared with nearly $9 million on Sep 27, 2017.
Long-term debt was $1.36 billion as of Dec 27, 2017, compared with $1.35 billion as of Sep 27, 2017.
Capital expenditures as of Dec 27, 2017, were $48.6 million while the same was $22.5 million as of Sep 27, 2017.
Free cash flow was $71.1 million as of Dec 27, 2017, up from $27.7 million as of Sep 27, 2017.
Total shareholders’ deficit in the quarter was $552.9 million, compared with $539 million in the last reported quarter.
2018 Guidance
Brinker expects adjusted earnings in the range of $3.42 to $3.52, including the effective rate impact of the Tax Act.
McDonald's (MCD - Free Report) posted fourth-quarter 2017 adjusted earnings per share of $1.71, surpassing the consensus mark of $1.59 by 7.5%. Revenues of $5.34 billion beat the consensus mark of $5.26 billion by 1.5%.
Darden Restaurants (DRI - Free Report) reported second-quarter fiscal 2018 earnings of 73 cents per share, outpacing the consensus estimate by 4.3%. Revenues surpassed the Zacks Consensus Estimate by a slight margin.
Sonic announced first-quarter fiscal 2018 earnings of 30 cents, surpassing the consensus estimate of 25 cents by 20%. Total revenues of $105 million missed the Zacks Consensus Estimate of $106 million by 1%.
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Brinker's (EAT) Q2 Earnings Beat Estimates, Revenues Lag
Brinker International, Inc. (EAT - Free Report) posted mixed results in second-quarter fiscal 2018, with earnings surpassing the Zacks Consensus Estimate and revenues lagging the same.
Adjusted earnings of 87 cents beat the consensus estimate of 71 cents by 22.5%. The bottom line increased 22.5% from the year-ago quarter, primarily driven by favorable tax reform impact and Maggiano’s strong holiday season sales.
Quarterly revenues, however, declined 0.6% year over year to $766.4 million. Revenues also missed the consensus estimate of $771.4 million by 0.6%. Company sales totaled $742.7 million, down 0.8 % from the year-ago quarter.
Brinker International, Inc. Price, Consensus and EPS Surprise
Brinker International, Inc. Price, Consensus and EPS Surprise | Brinker International, Inc. Quote
Shares moved up nearly 1% in after-hours trading session following the earnings release. However, over the past six months, the company’s shares have rallied 2.9%, underperforming the industry’s 10.8%.
Apart from the favorable impact of tax benefits on earnings, management is optimistic about the sales-building initiatives. The company is focused on menu innovation and providing improved digital services that are expected to drive traffic and comps, both at Chili’s and Maggiano’s.
Let’s take a closer look at the Q2 numbers:
Brand Performances
Brinker primarily engages in the 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
Chili’s reported company sales of $623.6 million in the quarter, down 1.3% from the prior-year quarter owing to declining comps.
The brand’s company-owned comps fell 1.5% due to a 4.4% decline in traffic, partially offset by a 2.3% and 0.6% improvement in pricing and mix, respectively. However, comps compared favorably with the prior-quarter decline of 3.4% and 3.3% drop in the year-ago quarter.
Comps at Chili's franchised restaurants went down 1% compared with a 3.5% decline in the year-ago quarter and 4.1% drop in the last quarter.
In International franchised Chili’s restaurants, comps inched up 0.1% comparing favorably with the year-ago quarter’s decline of 4.2% and the prior-quarter’s fall of 7.9%. Meanwhile, the same fell in the domestic franchised units by 1.7%, same as that in the last quarter. However, the decline was narrower than the 3% fall in the year-ago quarter.
At Chili's, domestic comps (including company-owned and franchised) declined 1.6%, narrower than the prior-quarter’s drop of 3% and the year-earlier quarter’s decline of 3.2%.
Maggiano's
Maggiano's company sales rose 2.1% year over year to $119.1 million, primarily owing to an increase in comps.
Comps grew 1.8% in the quarter on a 1.1% increase in both pricing and mix, partially offset by a 0.4% decline in traffic. Markedly, comps compared favorably with the prior-quarter’s decline of 2.6% and the year-ago quarter’s fall of 0.8%.
Operating Results
Total operating costs and expenses increased 0.3% to nearly $712 million from $709.5 million in the year-ago quarter. While cost of sales margin expanded 10 basis points (bps), restaurant labor margin increased 40 bps year over year.
Restaurant operating margin, as a percentage of company sales, declined 20 bps. Net income in the quarter fell 26.9% to $25.4 million from the year-ago quarter.
Balance Sheet
As of Dec 27, 2017, cash and cash equivalents were $14.7 million as compared with nearly $9 million on Sep 27, 2017.
Long-term debt was $1.36 billion as of Dec 27, 2017, compared with $1.35 billion as of Sep 27, 2017.
Capital expenditures as of Dec 27, 2017, were $48.6 million while the same was $22.5 million as of Sep 27, 2017.
Free cash flow was $71.1 million as of Dec 27, 2017, up from $27.7 million as of Sep 27, 2017.
Total shareholders’ deficit in the quarter was $552.9 million, compared with $539 million in the last reported quarter.
2018 Guidance
Brinker expects adjusted earnings in the range of $3.42 to $3.52, including the effective rate impact of the Tax Act.
Zacks Rank & Peer Releases
Brinker carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
McDonald's (MCD - Free Report) posted fourth-quarter 2017 adjusted earnings per share of $1.71, surpassing the consensus mark of $1.59 by 7.5%. Revenues of $5.34 billion beat the consensus mark of $5.26 billion by 1.5%.
Darden Restaurants (DRI - Free Report) reported second-quarter fiscal 2018 earnings of 73 cents per share, outpacing the consensus estimate by 4.3%. Revenues surpassed the Zacks Consensus Estimate by a slight margin.
Sonic announced first-quarter fiscal 2018 earnings of 30 cents, surpassing the consensus estimate of 25 cents by 20%. Total revenues of $105 million missed the Zacks Consensus Estimate of $106 million by 1%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>