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Brinker International Provides Fiscal 2013 Outlook And Long-Term Vision

Stocks in this article: EAT

Brinker will generate up to 1 percent annual margin improvement, driven by sales leverage on restaurant labor and restaurant expenses, continued emphasis on labor productivity improvements and flat cost of sales.

The Company expects to continue to generate strong cash flow and maintain a consistent strategy regarding the prudent allocation of capital. This will add to Brinker's commitment to return cash to shareholders through a competitively favorable dividend, and at least $1 billion of share repurchase over the next five years.

The combination of focusing on these outlined strategies will result in Brinker delivering annual EPS growth of 10 to 15 percent and doubling EPS to at least $4.00 per share by fiscal 2017.

Fiscal 2013 Outlook

The Company anticipates earnings per diluted share, before special items, to be at the lower end of the guidance range of $2.30 to $2.45, for fiscal 2013 EPS. Comparable restaurant sales are now projected to be approximately 1 percent for fiscal 2013 reflecting a softer sales environment in the third quarter as guests adjust to lower discretionary income resulting from higher payroll taxes, gas prices, and the delay in the disbursement of federal tax refund checks.

Cost of sales as a percentage of Company sales is estimated to be 50 basis points better year over year, driven by better than expected commodity inflation and lower actual versus theoretical food costs. Restaurant labor is projected to improve 50 basis points compared to fiscal 2012 due to better productivity related to rollout of new kitchen equipment. The Company continues to expect operating margins to improve 100 basis points compared to fiscal 2012. Brinker's diluted weighted average share count is expected to be between 73 and 75 million shares for fiscal 2013.

As of February 25, quarter to date comp sales at Chili's is running at negative 2.2 percent, sales at Maggiano's are essentially flat, and sales in the Global system are up 4.1 percent.

Forward Calendar

  • Third quarter earnings release, prior to market open on April 23, 2013
  • Third quarter conference call, via a live webcast on April 23, 2013
  • SEC Form 10-Q for third quarter fiscal 2013 filing on or before May 6, 2013

Guidance Policy

Brinker provides annual guidance as it relates to comparable restaurant sales, earnings per diluted share, and other key line items in the income statement and will only provide updates if there is a material change versus the original guidance. Consistent with prior practice, management will not discuss intra-period sales or other key operating results not yet reported as the limited data may not accurately reflect the final results of the period or quarter referenced.

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