SEC Form 10-Q filed by Brinker International Inc.

4/30/24 4:49:31 PM ET

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 27, 2024

Commission File Number 1-10275

BRINKER INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

75-1914582

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

3000 Olympus Blvd

Dallas

75019

(Address of principal executive offices)

(Zip Code)

(972)

980-9917

(Registrant’s telephone number, including area code)

Title of each class

Trading Symbol(s)

Name of exchange on which registered

Common Stock, $0.10 par value

EAT

NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of April 25, 2024: 44,490,516 shares.

BRINKER INTERNATIONAL, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS


			Page
PART I. FINANCIAL INFORMATION			3
Item 1. Financial Statements			3
Consolidated Statements of Comprehensive Income (Unaudited) - Thirteen and Thirty-Nine Week Periods Ended March 27, 2024 and March 29, 2023			3
Consolidated Balance Sheets - March 27, 202 4 (Unaudited) and June 28, 2023			4
Consolidated Statements of Cash Flows (Unaudited) - Thirty-Nine Week Periods Ended March 27, 2024 and March 29, 2023			5
Consolidated Statements of Shareholders’ Deficit (Unaudited) - Thirty-Nine Week Periods Ended March 27, 2024 and March 29, 2023			6
Notes to Consolidated Financial Statements (Unaudited)			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			20
Item 3. Quantitative and Qualitative Disclosures About Market Risk			34
Item 4. Controls and Procedures			35
PART II. OTHER INFORMATION			36
Item 1. Legal Proceedings			36
Item 1A. Risk Factors			36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			36
Item 5. Other Information			36
Item 6. Exhibits			37
SIGNATURES			37


	Thirteen Week Periods Ended				Thirty-Nine Week Periods Ended
	March 27, 2024		March 29, 2023		March 27, 2024		March 29, 2023
Revenues
Company sales	$	1,108.9	$	1,072.9	$	3,174.6	$	3,028.4
Franchise revenues	11.4		10.3		32.3		29.3
Total revenues	1,120.3		1,083.2		3,206.9		3,057.7
Operating costs and expenses
Food and beverage costs	277.8		287.5		809.7		866.4
Restaurant labor	370.6		361.2		1,074.8		1,026.4
Restaurant expenses	303.4		280.9		888.9		818.1
Depreciation and amortization	42.6		42.5		125.8		126.2
General and administrative	46.1		40.6		131.7		115.7
Other (gains) and charges	9.9		6.3		19.5		19.8
Total operating costs and expenses	1,050.4		1,019.0		3,050.4		2,972.6
Operating income	69.9		64.2		156.5		85.1
Interest expenses	16.2		14.2		49.9		40.4
Other income, net	(0.2)		(0.6)		(0.3)		(1.3)
Income before income taxes	53.9		50.6		106.9		46.0
Provision (benefit) for income taxes	5.2		(0.1)		8.9		(2.4)
Net income	$	48.7	$	50.7	$	98.0	$	48.4

Basic net income per share	$	1.10	$	1.15	$	2.21	$	1.10

Diluted net income per share	$	1.08	$	1.12	$	2.17	$	1.08

Basic weighted average shares outstanding	44.3		44.1		44.4		44.0

Diluted weighted average shares outstanding	45.2		45.1		45.2		44.8

Other comprehensive income (loss)
Foreign currency translation adjustment	$	(0.2)	$	0.1	$	(0.2)	$	(0.8)

Comprehensive income	$	48.5	$	50.8	$	97.8	$	47.6


	Unaudited
	March 27, 2024		June 28, 2023
ASSETS
Current assets
Cash and cash equivalents	$	15.5	$	15.1
Accounts receivable, net	47.6		60.9
Inventories	32.5		34.5
Restaurant supplies	54.7		55.6
Prepaid expenses	20.2		17.2
Income taxes receivable	0.4		—
Total current assets	170.9		183.3
Property and equipment, at cost
Land	42.4		42.4
Buildings and leasehold improvements	1,678.2		1,635.7
Furniture and equipment	800.6		765.8
Construction-in-progress	32.7		30.1
	2,553.9		2,474.0
Less accumulated depreciation and amortization	(1,704.5)		(1,665.7)
Net property and equipment	849.4		808.3
Other assets
Operating lease assets	1,096.7		1,134.9
Goodwill	194.8		195.0
Deferred income taxes, net	106.2		93.4
Intangibles, net	21.1		23.9
Other	56.6		48.2
Total other assets	1,475.4		1,495.4
Total assets	$	2,495.7	$	2,487.0
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities
Accounts payable	$	150.5	$	125.7
Gift card liability	66.0		73.0
Accrued payroll	111.6		106.1
Operating lease liabilities	113.6		112.4
Other accrued liabilities	131.3		116.3
Income taxes payable	6.1		2.4
Total current liabilities	579.1		535.9
Long-term debt and finance leases, less current installments	818.5		912.2
Long-term operating lease liabilities, less current portion	1,083.9		1,125.8
Other liabilities	60.9		57.4
Commitments and contingencies (Note 7)
Shareholders’ deficit
Common stock (250.0 million authorized shares; $0.10 par value; 60.3 million shares issued; and 44.5 million shares outstanding at March 27, 2024 and 44.6 million shares outstanding at June 28, 2023)	6.0		6.0
Additional paid-in capital	693.4		690.0
Accumulated other comprehensive loss	(6.2)		(6.0)
Accumulated deficit	(253.9)		(351.9)
Treasury stock, at cost (15.8 million shares at March 27, 2024, and 15.7 million shares at June 28, 2023)	(486.0)		(482.4)
Total shareholders’ deficit	(46.7)		(144.3)
Total liabilities and shareholders’ deficit	$	2,495.7	$	2,487.0


	Thirty-Nine Week Period Ended March 27, 2024
	Common Stock		Additional Paid-In Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Loss		Total
Balances at June 28, 2023	$	6.0	$	690.0	$	(351.9)	$	(482.4)	$	(6.0)	$	(144.3)
Net income	—		—		7.2		—		—		7.2
Other comprehensive loss	—		—		—		—		(0.2)		(0.2)
Stock-based compensation	—		5.7		—		—		—		5.7
Purchases of treasury stock	—		(0.2)		—		(24.5)		—		(24.7)
Issuances of treasury stock	—		(11.7)		—		11.7		—		0.0
Balances at September 27, 2023	$	6.0	$	683.8	$	(344.7)	$	(495.2)	$	(6.2)	$	(156.3)
Net income	—		—		42.1		—		—		42.1
Other comprehensive income	—		—		—		—		0.2		0.2

Stock-based compensation	—		4.4		—		—		—		4.4
Purchases of treasury stock	—		(0.1)		—		(0.3)		—		(0.4)
Issuances of treasury stock	—		(1.1)		—		1.6		—		0.5

Balances at December 27, 2023	$	6.0	$	687.0	$	(302.6)	$	(493.9)	$	(6.0)	$	(109.5)
Net income	—		—		48.7		—		—		48.7
Other comprehensive loss	—		—		—		—		(0.2)		(0.2)

Stock-based compensation	—		6.4		—		—		—		6.4
Purchases of treasury stock	—		(0.2)		—		(0.3)		—		(0.5)
Issuances of treasury stock	—		0.2		—		8.2		—		8.4
Balances at March 27, 2024	$	6.0	$	693.4	$	(253.9)	$	(486.0)	$	(6.2)	$	(46.7)


	Thirty-Nine Week Period Ended March 29, 2023
	Common Stock		Additional Paid-In Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Loss		Total
Balances at June 29, 2022	$	7.0	$	690.9	$	(148.4)	$	(812.3)	$	(5.3)	$	(268.1)

Net loss	—		—		(30.2)		—		—		(30.2)
Other comprehensive loss	—		—		—		—		(1.0)		(1.0)
Dividends	—		—		0.0		—		—		0.0
Stock-based compensation	—		4.7		—		—		—		4.7
Purchases of treasury stock	—		0.2		—		(2.2)		—		(2.0)
Issuances of treasury stock	—		(7.8)		—		7.8		—		0.0
Retirement of stock	(1.0)		—		(306.1)		307.1		—		—
Balances at September 28, 2022	$	6.0	$	688.0	$	(484.7)	$	(499.6)	$	(6.3)	$	(296.6)
Net income	—		—		27.9		—		—		27.9
Other comprehensive income	—		—		—		—		0.1		0.1

Stock-based compensation	—		1.2		—		—		—		1.2
Purchases of treasury stock	—		0.0		—		(0.1)		—		(0.1)
Issuances of treasury stock	—		(0.5)		—		0.5		—		0.0

Balances at December 28, 2022	$	6.0	$	688.7	$	(456.8)	$	(499.2)	$	(6.2)	$	(267.5)
Net income	—		—		50.7		—		—		50.7
Other comprehensive income	—		—		—		—		0.1		0.1

Stock-based compensation	—		4.4		—		—		—		4.4
Purchases of treasury stock	—		0.0		—		(0.1)		—		(0.1)
Issuances of treasury stock	—		(0.8)		—		2.9		—		2.1
Balances at March 29, 2023	$	6.0	$	692.3	$	(406.1)	$	(496.4)	$	(6.1)	$	(210.3)


	Deferred Franchise and Development Fees

Balance as of June 28, 2023	$	11.1
Additions	0.4

Amount recognized to Franchise revenues	(1.7)

Balance as of March 27, 2024	$	9.8


Fiscal Year	Franchise and Development Fees Revenue Recognition
Remainder of 2024	$	0.2
2025	0.8
2026	0.7
2027	0.7
2028	0.6
Thereafter	6.8
	$	9.8


Level 1			Quoted prices in active markets for identical assets or liabilities
Level 2			Observable inputs other than quoted prices in active markets for identical assets or liabilities
Level 3			Unobservable inputs that cannot be corroborated by observable market data


	March 27, 2024				June 28, 2023
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
5.000% notes	$	349.6	$	347.9	$	349.0	$	343.5
8.250% notes	345.0		368.9		344.3		348.3


	March 27, 2024		June 28, 2023
Insurance	$	27.2	$	29.3
Property tax	21.0		24.5
Sales tax	19.7		17.3
Current installments of finance lease obligations	15.5		10.2
Interest	15.5		6.4
Utilities and services	9.8		10.4



Other	22.6		18.2
	$	131.3	$	116.3


	March 27, 2024		June 28, 2023
Revolving credit facility	$	51.3	$	161.3
5.000% notes(1)	350.0		350.0
8.250% notes	350.0		350.0
Finance lease obligations	88.1		67.8
Total long-term debt	839.4		929.1
Less: unamortized debt issuance costs and discounts	(5.4)		(6.7)
Total long-term debt, less unamortized debt issuance costs and discounts	834.0		922.4
Less: current installments of long-term debt and finance leases(2)	(15.5)		(10.2)
Total long-term debt, less current portion	$	818.5	$	912.2


	Percentage Change in the Thirteen Week Period Ended March 27, 2024 versus March 29, 2023
	Comparable Restaurant Sales(1)		Price Impact		Mix-Shift Impact(2)		Traffic Impact		Restaurant Capacity(3)
Company-owned	3.3	%	6.4	%	(0.7)	%	(2.4)	%	(0.5)	%
Chili’s	3.5	%	6.1	%	(0.8)	%	(1.8)	%	(0.5)	%
Maggiano’s	1.7	%	8.2	%	1.0	%	(7.5)	%	(1.2)	%
Franchise(4)	1.2	%
U.S.	4.9	%
International	(0.8)	%
Chili’s domestic(5)	3.6	%

System-wide(6)	3.0	%


	Percentage Change in the Thirty-Nine Week Period Ended March 27, 2024 versus March 29, 2023
	Comparable Restaurant Sales(1)		Price Impact		Mix-Shift Impact(2)		Traffic Impact		Restaurant Capacity(3)
Company-owned	4.7	%	7.4	%	0.4	%	(3.1)	%	(0.4)	%
Chili’s	4.8	%	7.1	%	0.5	%	(2.8)	%	(0.3)	%
Maggiano’s	3.9	%	9.4	%	0.2	%	(5.7)	%	(2.4)	%
Franchise(4)	1.8	%
U.S.	5.7	%
International	(0.3)	%
Chili’s domestic(5)	4.8	%

System-wide(6)	4.2	%


	Thirteen Week Period Ended March 27, 2024
	Chili's		Maggiano's		Corporate		Consolidated
Company sales	$	988.4	$	120.5	$	—	$	1,108.9
Franchise revenues	11.2		0.2		—		11.4
Total revenues	999.6		120.7		—		1,120.3

Food and beverage costs	249.3		28.5		—		277.8
Restaurant labor	331.3		39.3		—		370.6
Restaurant expenses	268.7		34.6		0.1		303.4
Depreciation and amortization	36.6		3.4		2.6		42.6
General and administrative	10.8		2.4		32.9		46.1
Other (gains) and charges	5.7		0.2		4.0		9.9
Total operating costs and expenses	902.4		108.4		39.6		1,050.4
Operating income (loss)	97.2		12.3		(39.6)		69.9
Interest expenses	0.8		0.1		15.3		16.2
Other income, net	—		—		(0.2)		(0.2)
Income (loss) before income taxes	$	96.4	$	12.2	$	(54.7)	$	53.9


	Thirteen Week Period Ended March 29, 2023
	Chili's		Maggiano's		Corporate		Consolidated
Company sales	$	953.2	$	119.7	$	—	$	1,072.9
Franchise revenues	10.2		0.1		—		10.3
Total revenues	963.4		119.8		—		1,083.2

Food and beverage costs	257.9		29.6		—		287.5
Restaurant labor	322.0		39.2		—		361.2
Restaurant expenses	247.5		33.1		0.3		280.9
Depreciation and amortization	36.7		3.3		2.5		42.5
General and administrative	8.8		2.0		29.8		40.6
Other (gains) and charges	2.2		0.4		3.7		6.3
Total operating costs and expenses	875.1		107.6		36.3		1,019.0
Operating income (loss)	88.3		12.2		(36.3)		64.2
Interest expenses	1.0		—		13.2		14.2
Other income, net	—		—		(0.6)		(0.6)
Income (loss) before income taxes	$	87.3	$	12.2	$	(48.9)	$	50.6


	Openings During the		Openings During the		Full Year Projected Openings
	Thirteen Week Periods Ended		Thirty-Nine Week Periods Ended			Total Open Restaurants at
	March 27, 2024	March 29, 2023	March 27, 2024	March 29, 2023	Fiscal 2024	March 27, 2024	March 29, 2023
Company-owned restaurants
Chili’s domestic	2	3	7	7	9	1,122	1,129
Chili’s international	—	—	—	—	—	4	5
Maggiano’s domestic	—	—	—	—	—	50	50
Total Company-owned	2	3	7	7	9	1,176	1,184
Franchise restaurants
Chili’s domestic	—	1	—	2	0-1	99	102
Chili’s international	2	6	16	14	19-24	341	366
Maggiano’s domestic	—	—	—	—	—	2	2
Total franchise	2	7	16	16	19-25	442	470
Total restaurants
Chili’s domestic	2	4	7	9	9-10	1,221	1,231
Chili’s international	2	6	16	14	19-24	345	371
Maggiano’s domestic	—	—	—	—	—	52	52
Total	4	10	23	23	28-34	1,618	1,654


	Thirteen Week Periods Ended								Favorable (Unfavorable) Variance
	March 27, 2024				March 29, 2023
	Dollars		% of Company Sales		Dollars		% of Company Sales		Dollars		% of Company Sales
Food and beverage costs	$	277.8	25.1	%	$	287.5	26.8	%	$	9.7	1.7	%
Restaurant labor	370.6		33.4	%	361.2		33.6	%	(9.4)		0.2	%
Restaurant expenses	303.4		27.4	%	280.9		26.2	%	(22.5)		(1.2)	%
Depreciation and amortization	42.6				42.5				(0.1)
General and administrative	46.1				40.6				(5.5)
Other (gains) and charges	9.9				6.3				(3.6)
Interest expenses	16.2				14.2				(2.0)
Other income, net	(0.2)				(0.6)				(0.4)


	Thirteen Week Periods Ended				Favorable (Unfavorable) Variance		Variance as percentage
	March 27, 2024		March 29, 2023
Company sales	$	988.4	$	953.2	$	35.2	3.7	%
Franchise revenues	11.2		10.2		1.0		9.8	%
Total revenues	$	999.6	$	963.4	$	36.2	3.8	%


	General and Administrative
Thirteen Week Period Ended March 29, 2023	$	8.8
Change from:
Performance-based compensation	0.9
Defined contribution plan employer expenses and other benefits	0.3
Stock-based compensation	0.4

Other	0.4
Thirteen Week Period Ended March 27, 2024	$	10.8


	Depreciation and Amortization
Thirty-Nine Week Period Ended March 29, 2023	$	108.7
Change from:
Additions for existing and new restaurant assets	17.4

Finance leases	(6.0)
Retirements and fully depreciated restaurant assets	(11.7)

Other	(0.1)
Thirty-Nine Week Period Ended March 27, 2024	$	108.3


	Thirteen Week Periods Ended				Favorable (Unfavorable) Variance		Variance as a percentage
	March 27, 2024		March 29, 2023
Company sales	$	120.5	$	119.7	$	0.8	0.7	%
Franchise revenues	0.2		0.1		0.1		100.0	%
Total revenues	$	120.7	$	119.8	$	0.9	0.8	%


	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Approximate Dollar Value that May Yet be Purchased Under the Program
December 28, 2023 through January 31, 2024	—	$	—	—	$	183.0
February 1, 2024 through February 28, 2024	0.000	44.63		—	183.0
February 29, 2024 through March 27, 2024	0.010	46.21		—	183.0
Total	0.010	$	46.16	—


Exhibit						Description
3.1						Certificate of Incorporation of Registrant, as amended(1)
3.2						Bylaws of Registrant(2)
31(a)						Certification by Kevin D. Hochman, President and Chief Executive Officer of the Registrant and President of Chili’s Grill & Bar, pursuant to 17 CFR 240.13a – 14(a) or 17 CFR 240.15d – 14(a)*
31(b)						Certification by Joseph G. Taylor, Executive Vice President and Chief Financial Officer of the Registrant, pursuant to 17 CFR 240.13a – 14(a) or 17 CFR 240.15d – 14(a)*
32(a)						Certification by Kevin D. Hochman, President and Chief Executive Officer of the Registrant and President of Chili’s Grill & Bar, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
32(b)						Certification by Joseph G. Taylor, Executive Vice President and Chief Financial Officer of the Registrant, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH						XBRL Schema Document
101.CAL						XBRL Calculation Linkbase Document
101.DEF						XBRL Definition Linkbase Document
101.LAB						XBRL Label Linkbase Document
101.PRE						XBRL Presentation Linkbase
104						The cover page from the Registrant's Quarterly Report on Form 10-Q for the thirteen week period ended March 27, 2024 is formatted in Inline XBRL.

SEC Form 10-Q filed by Brinker International Inc.

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