Core Insights - Brinker International, Inc. (EAT) reported strong third-quarter fiscal 2025 results, with earnings and revenues exceeding expectations, driven by solid fundamentals and increased traffic [1][3][12] - Despite robust performance, the company's shares fell by 14.8% due to economic uncertainty and potential impacts from tariffs on imported goods [2] Financial Performance - Adjusted earnings per share (EPS) for the quarter were $2.66, surpassing the Zacks Consensus Estimate of $2.48, compared to $1.24 in the prior-year quarter [3] - Total revenues reached $1,425.1 million, exceeding the consensus mark of $1,379 million, marking a 27.2% year-over-year increase [3] Segment Performance Chili's - Chili's segment revenues increased by 30.5% year over year to $1.30 billion, supported by favorable comparable restaurant sales and higher traffic [4] - Company-owned traffic for Chili's rose by 20.9% year over year, with comparable sales increasing by 31.6% [5][6] Maggiano's - Maggiano's sales grew by 0.2% year over year to $121 million, driven by increased menu pricing, although traffic fell by 8.2% [7][8] - Comparable sales in Maggiano's rose by 0.4% year over year, below expectations [7] Operating Results - Total operating costs and expenses were $1.27 billion, up from $1.05 billion in the prior year, with an adjusted restaurant operating margin of 18.9%, an increase from 14.2% [10] - Adjusted EBITDA for the quarter was $220.6 million, up from $122.4 million in the prior-year quarter [10] Balance Sheet - As of March 26, 2025, cash and cash equivalents were $17.5 million, up from $15.5 million a year earlier, while long-term debt decreased to $518.3 million from $786.3 million [11] Guidance - For fiscal 2025, management raised revenue expectations to $5.33-$5.35 billion from $5.15-$5.25 billion, and EPS guidance was increased to $8.5-$8.75 from $7.5-$8 [12]

Q3 F25 April 29, 2025 SAFE HARBOR STATEMENT $898 $917 $988 $1,073 $1,019 $1,197 $1,292 Q1 Q2 Q3 Q4 Chili's Company Sales F24 F25 $104 $147 $121 $124 $108 $149 $121 Q1 Q2 Q3 Q4 Maggiano's Company Sales F24 F25 During these presentations, and in response to your questions, certain items may be discussed which are not based entirely on historical facts. Any such items should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Any forw ...

Restaurant Operations - As of March 26, 2025, the company owned, operated, or franchised a total of 1,626 restaurants, including 1,163 company-owned and 463 franchised locations[70]. - The company opened 27 new franchise restaurants during the thirty-nine week period ended March 26, 2025, and plans to pursue international expansion through development agreements[76]. - The company acquired land and buildings valued at $11.1 million associated with four company-owned restaurants during the third quarter of fiscal 2025[78]. Financial Performance - Total revenues for the thirteen-week period ended March 26, 2025, increased to $1,425.1 million, up from $1,120.3 million for the same period in 2024, representing a growth of approximately 27.1%[80]. - Total revenues for the Chili's segment increased by 30.5% to $1,304.1 million, driven by favorable comparable restaurant sales and higher traffic[94]. - Chili's total revenues increased by 25.0% to $3,543.3 million for the thirty-nine week period ended March 26, 2025, compared to $2,834.9 million for the same period in 2024[97]. - Maggiano's total revenues increased by 1.9% to $379.0 million for the thirty-nine week period ended March 26, 2025, compared to $372.0 million in 2024[104]. Comparable Sales and Traffic - Comparable restaurant sales for company-owned restaurants increased by 28.2% in the thirteen-week period ended March 26, 2025, driven by a 17.7% increase in traffic[81]. - Franchise revenues rose due to higher royalties, with Chili's franchisees generating sales of approximately $237.4 million in the thirteen-week period ended March 26, 2025, compared to $216.2 million in the same period of 2024[80]. Cost Management - Food and beverage costs for the thirteen-week period ended March 26, 2025, were $353.1 million, representing 25.0% of company sales, a favorable variance of 0.1% compared to the previous year[82]. - Restaurant labor costs increased to $452.2 million, accounting for 32.0% of company sales, with a 1.4% favorable variance driven by sales leverage[82]. - Chili's food and beverage costs were $324.5 million, 25.1% of company sales, with a favorable variance of 0.1% attributed to menu pricing[95]. - Chili's food and beverage costs were favorable by 0.2%, with menu pricing contributing 1.4%, offset by unfavorable commodity costs primarily driven by poultry and produce[100]. - Restaurant labor costs for Chili's were favorable by 1.8%, attributed to sales leverage and lower other labor expenses, despite higher hourly labor costs[100]. - Maggiano's food and beverage costs were favorable by 0.5%, driven by menu pricing, despite unfavorable commodity costs primarily from dairy and poultry[105]. Expenses - General and administrative expenses rose by $12.2 million to $58.3 million, primarily due to corporate technology initiatives and stock-based compensation[85]. - General and administrative expenses for Chili's rose by $5.7 million to $36.7 million for the thirty-nine week period ended March 26, 2025, compared to $31.0 million in 2024[101]. - Depreciation and amortization for the thirty-nine-week period ended March 26, 2025, increased by $22.9 million to $148.7 million, primarily due to additions for new and existing restaurant assets[88]. - Chili's depreciation and amortization increased by $22.9 million, totaling $131.2 million for the thirty-nine week period ended March 26, 2025, up from $108.3 million in the prior year[99]. Cash Flow and Financing - Chili's net cash provided by operating activities increased by $212.6 million to $493.0 million for the thirty-nine week period ended March 26, 2025, compared to $280.4 million in 2024[106]. - Net cash used in investing activities increased by $47.4 million to $(185.4) million for the thirty-nine week period ended March 26, 2025, primarily due to increased spending on equipment and capital maintenance[107]. - Net cash used in financing activities increased by $212.7 million, from $(142.0) million in fiscal 2024 to $(354.7) million in fiscal 2025, primarily due to increased net repayments of long-term debt and share repurchase activity[108]. - The company refinanced $350.0 million of 5.000% notes through its existing revolving credit facility and drew net borrowings of $90.0 million during the thirty-nine week period ended March 26, 2025[109]. - As of March 26, 2025, the company had $810.0 million available under its $900.0 million revolving credit facility, which matures on August 18, 2026, with an interest rate of 5.93%[110]. - The company repurchased 1.2 million shares for $86.3 million during the thirty-nine week period ended March 26, 2025, with approximately $107.0 million remaining under the current share repurchase program[114]. - The company expects its current cash and cash equivalents, along with cash generated from operations and availability under the revolving credit facility, to meet capital expenditure and working capital needs for at least the next twelve months[115]. Tax and Interest - The effective income tax rate for the thirteen-week period ended March 26, 2025, was 17.2%, up from 9.6% in the previous year, primarily due to higher income before income taxes[91]. - Interest expenses decreased by $3.0 million to $13.2 million for the thirteen-week period, mainly due to lower average outstanding debt balances[85]. - A hypothetical 100 basis point increase in the current interest rate on the outstanding balance of the revolving credit facility would result in an additional $0.9 million of annual interest expense[118]. Risks - The company faces commodity price risk due to fluctuations in market prices for food and other commodities, which could negatively affect short-term financial results if costs cannot be passed on to customers[119].

Financial Data and Key Metrics Changes - For Q3 2025, Brinker reported total revenues of $1.425 billion with consolidated comp sales growth of 28.2% [19] - Adjusted diluted EPS for the quarter was $2.66, up from $1.24 in the previous year [20] - Restaurant operating margins improved to 18.9%, a 470 basis points increase year over year [21] Business Line Data and Key Metrics Changes - Chili's reported same restaurant sales growth of 31.6%, driven by a 20.9% increase in traffic, a 6.3% positive mix, and a 4.4% price increase [20] - Maggiano's reported comp sales growth of 0.4%, driven by a 7.3% price increase and a 1.3% positive mix, but offset by an 8.2% decline in traffic [21] Market Data and Key Metrics Changes - Chili's sales performance significantly outpaced the industry despite no new food or value news, indicating strong operational performance [6] - The company noted that consumer sentiment remains cautious, impacting overall restaurant traffic across the industry [18] Company Strategy and Development Direction - The company is focused on improving the fundamentals of food, service, and atmosphere to sustain growth and market share [31] - Chili's is launching new menu items and marketing campaigns to enhance brand value and customer experience, including the Big QP burger [10][11] - Maggiano's is following a similar turnaround strategy as Chili's, focusing on menu simplification and eliminating unprofitable discounting [15][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining positive same-store sales growth despite upcoming tougher comparisons [30] - The company is optimistic about its ability to maintain or grow restaurant-level margins through strategic investments and improved productivity [48] Other Important Information - Capital expenditures for the quarter were approximately $80 million, driven by investments in kitchen equipment and maintenance [25] - The company repaid $125 million in funded debt, leaving a remaining balance of $90 million on its revolver [25] Q&A Session Summary Question: Concerns about sustainability of same-store sales growth - Management acknowledged the challenges of maintaining growth but emphasized their focus on improving fundamentals to drive continued success [31] Question: Notable contributors to recent momentum - Management noted that traffic remains strong year over year, with no significant slowdown observed [38] Question: Clarification on traffic trends - Management confirmed that traffic trends in April were similar to Q3, indicating sustained momentum [42] Question: Impact of tariffs on cost of sales - Management indicated that over 80% of their supply chain is sourced domestically, minimizing tariff impacts [56] Question: Future menu upgrades - Management highlighted upcoming upgrades to the rib platform and nachos, aiming to enhance customer experience and drive sales [62] Question: Capacity improvements and constraints - Management is learning from high-performing restaurants to improve capacity and traffic handling across the system [120]

Core Viewpoint - Brinker International, the parent company of Chili's, reported strong growth in the third quarter, but the stock price fell significantly due to high investor expectations and concerns about a potential recession from trade wars [1][2]. Financial Performance - Comparable sales at Chili's increased by 31%, with traffic growth of 21%, attributed to effective marketing strategies [3]. - Revenue rose by 27.2% to $1.43 billion, surpassing the consensus estimate of $1.39 billion [4]. - Operating income more than doubled to $156.9 million, and adjusted earnings per share increased from $1.24 to $2.66, exceeding estimates of $2.57 [4]. Guidance and Market Reaction - The company raised its full-year revenue guidance to $5.33 billion-$5.35 billion, up from $5.15 billion-$5.25 billion, and above the consensus of $5.25 billion [4]. - Adjusted EPS guidance was lifted to $8.50-$8.75, an increase from the previous range of $7.50-$8.00, leading to a forward P/E of around 16 [5]. - Despite the positive adjustments, investor skepticism remains regarding the company's ability to sustain its growth momentum [5]. Demand Outlook - Chili's appears to have tapped into a new level of demand, which is expected to persist in the future [6].

Financial Data and Key Metrics Changes - For Q3 2025, Brinker International reported total revenues of $1.425 billion with consolidated comp sales growth of 28.2% [21] - Adjusted diluted EPS for the quarter was $2.66, up from $1.24 in the previous year [22] - Restaurant operating margins improved to 18.9%, a 470 basis points increase year-over-year [24] Business Line Data and Key Metrics Changes - Chili's reported same restaurant sales growth of 31.6%, driven by a 20.9% increase in traffic, a 6.3% positive mix, and a 4.4% price increase [22] - Maggiano's reported comp sales growth of 0.4%, driven by a 7.3% price increase, a 1.3% positive mix, but offset by an 8.2% decline in traffic [23] Market Data and Key Metrics Changes - Chili's sales performance significantly outpaced the industry despite no new food or value news, indicating strong operational performance [7] - The company noted that guests are pulling back on restaurant visits, favoring brands that deliver superior experiences [20] Company Strategy and Development Direction - The company is focused on improving the fundamentals of food, service, and atmosphere to sustain growth [32] - Chili's is launching new menu items and marketing campaigns to enhance brand value and customer experience, including the Big QP burger [12][13] - Maggiano's is following a similar turnaround strategy as Chili's, focusing on menu simplification and eliminating unprofitable discounting [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining positive same-store sales growth despite upcoming tougher comparisons [29] - The company is committed to investing in labor and operational improvements to enhance guest experiences and drive traffic [74][76] - Management acknowledged the competitive environment but believes that their value proposition and guest experience will help maintain market share [110] Other Important Information - Capital expenditures for the quarter were approximately $80 million, driven by investments in kitchen equipment and maintenance [26] - The company repaid approximately $125 million in funded debt, reducing overall leverage [26] Q&A Session Summary Question: Concerns about sustainability of same-store sales growth - Management acknowledged the challenges of tougher comparisons but emphasized their focus on improving fundamentals to sustain growth [32] Question: Notable contributors to recent momentum - Management noted that traffic remains strong year-over-year, with no significant slowdown observed [40] Question: Clarification on Chili's maintained momentum in April - Management confirmed that trends in April were similar to Q3, with strong traffic and sales results [43] Question: Expectations for restaurant level margins moving into FY 2026 - Management expects to maintain or grow restaurant margins through strategic investments and improved productivity [49] Question: Estimated tariff impact on cost of sales - Management indicated that over 80% of their supply chain is sourced domestically, minimizing tariff impacts [56] Question: Upgrading the menu platform - Management is excited about upcoming upgrades to the rib and nacho offerings, aiming to enhance customer appeal [64][66] Question: Investments in labor and operator feedback - Management is focused on strategic investments in labor to improve guest experiences and manage increased traffic [74] Question: Breakdown of traffic increase sources - Management stated that traffic growth is coming from both new guests and increased frequency from existing customers [82] Question: Pricing expectations for Chili's - Management expects pricing to moderate to 2% to 3% in the fourth quarter, with a longer-term range of 3% to 5% [88] Question: Advertising spend expectations - Management anticipates advertising spend to increase to approximately 3% of sales in the fourth quarter [97]

Core Insights - Brinker International reported quarterly earnings of $2.66 per share, exceeding the Zacks Consensus Estimate of $2.48 per share, and significantly up from $1.24 per share a year ago [1] - The company achieved revenues of $1.43 billion for the quarter, surpassing the Zacks Consensus Estimate by 3.35% and up from $1.12 billion year-over-year [3] Earnings Performance - The earnings surprise for the quarter was 7.26%, and the company has surpassed consensus EPS estimates three out of the last four quarters [2] - In the previous quarter, Brinker International reported earnings of $2.80 per share against an expectation of $1.80, resulting in a surprise of 55.56% [2] Stock Performance - Brinker International shares have increased approximately 21.5% since the beginning of the year, contrasting with a -6% decline in the S&P 500 [4] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [7] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $2.12 on revenues of $1.35 billion, and for the current fiscal year, it is $8.38 on revenues of $5.24 billion [8] - The estimate revisions trend for Brinker International is mixed, which may change following the recent earnings report [7] Industry Context - The Retail - Restaurants industry is currently ranked in the bottom 19% of over 250 Zacks industries, suggesting potential challenges for stocks within this sector [9] - Another company in the same industry, FAT Brands Inc., is expected to report a quarterly loss of $2.40 per share, indicating a year-over-year change of -1.3% [10]

Financial Performance - Company sales for Q3 fiscal 2025 were $1,413.0 million, a 27.4% increase from $1,108.9 million in Q3 fiscal 2024[2] - Operating income for Q3 fiscal 2025 was $156.9 million, compared to $69.9 million in Q3 fiscal 2024, representing a 125.1% increase[3] - Net income for Q3 fiscal 2025 was $119.1 million, up from $48.7 million in Q3 fiscal 2024, a 144.5% increase[3] - Adjusted EBITDA (non-GAAP) for Q3 fiscal 2025 was $220.6 million, compared to $122.4 million in Q3 fiscal 2024, an increase of 80.0%[3] - Total revenues reached $1,425.1 million for the thirteen weeks ended March 26, 2025, compared to $1,120.3 million in the prior year, reflecting a 27.1% increase[21] - Basic net income per share rose to $2.68 for the thirteen weeks ended March 26, 2025, compared to $1.10 for the same period in 2024, representing a 143.6% increase[21] - Year-to-date net income reached $276.1 million in Q3 25, compared to $98.0 million in Q3 24, representing a 182.7% increase[37] Restaurant Performance - Comparable restaurant sales increased by 28.2%, with Chili's up 31.6% and Maggiano's up 0.4%[4] - Comparable restaurant sales for company-owned restaurants increased by 28.2% for Q3 2025 compared to Q3 2024, driven by a 17.7% increase in traffic[29] - Q3 25 GAAP operating income for Chili's was $197.7 million, up from $97.2 million in Q3 24, representing a 103.1% increase[33] - Non-GAAP restaurant operating margin for Brinker was $266.8 million in Q3 25, compared to $157.1 million in Q3 24, reflecting a 69.8% increase[33] - Restaurant operating margin as a percentage of company sales for Q3 25 was 19.4%, up from 14.1% in Q3 24[33] Guidance and Projections - Full year fiscal 2025 revenue guidance is projected to be between $5.33 billion and $5.35 billion[9] - Net income per diluted share, excluding special items, is expected to be in the range of $8.50 to $8.75 for fiscal 2025[9] - Capital expenditures for fiscal 2025 are anticipated to be between $265.0 million and $275.0 million[9] - The company plans to open 35-38 new restaurants in fiscal year 2025, with 29 openings projected for the third quarter[28] Costs and Expenses - Total operating costs and expenses for the thirteen weeks ended March 26, 2025, were $1,268.2 million, up from $1,050.4 million in the prior year, marking a 20.8% increase[21] - Interest expenses decreased to $13.2 million in Q3 25 from $16.2 million in Q3 24, showing an 18.5% reduction[37] - Depreciation and amortization for Q3 25 was $54.7 million, up from $42.6 million in Q3 24, indicating a 28.5% increase[37] Cash Flow and Assets - Cash flows from operating activities for the thirty-nine weeks ended March 26, 2025, were $493.0 million, compared to $280.4 million for the same period in 2024, indicating a 75.8% increase[26] - The company reported total assets of $2,571.9 million as of March 26, 2025, slightly down from $2,593.1 million as of June 26, 2024[24] - Long-term debt and finance leases decreased to $518.3 million as of March 26, 2025, from $786.3 million as of June 26, 2024, reflecting a reduction of 34.1%[24] Operating Efficiency - The company emphasizes that restaurant operating margin is a useful metric for evaluating restaurant-level operating efficiency, despite being a non-GAAP measure[34]

Core Insights - Brinker International reported strong financial results for the third quarter of fiscal 2025, with a significant increase in sales and operating income, indicating a successful turnaround strategy for its Chili's brand [2][3][10] Financial Performance - Company sales reached $1,413.0 million in Q3 2025, up from $1,108.9 million in Q3 2024, marking a $304.1 million increase [3][18] - Total revenues for the quarter were $1,425.1 million, compared to $1,120.3 million in the previous year, reflecting a $304.8 million increase [3][18] - Operating income rose to $156.9 million, up from $69.9 million, resulting in an operating income margin of 11.0%, compared to 6.2% in the prior year [3][18] - Net income for the quarter was $119.1 million, compared to $48.7 million in Q3 2024, with diluted net income per share increasing to $2.56 from $1.08 [3][18][28] Comparable Restaurant Sales - Comparable restaurant sales increased by 28.2% overall, with Chili's seeing a 31.6% increase and Maggiano's a modest 0.4% increase [4][24] - The growth in Chili's sales was primarily driven by a 21% increase in traffic and effective advertising strategies [2][4] Segment Performance - Chili's company sales were $1,292.2 million in Q3 2025, up from $988.4 million in Q3 2024, while Maggiano's sales were relatively stable at $120.8 million [8][10] - Chili's operating income margin improved to 15.2% from 9.7%, while Maggiano's decreased slightly to 8.8% from 10.2% [8][10] Guidance and Future Outlook - The company updated its full-year fiscal 2025 guidance, projecting total revenues between $5.33 billion and $5.35 billion, with net income per diluted share expected to be in the range of $8.50 to $8.75 [5][7] - Capital expenditures are anticipated to be between $265.0 million and $275.0 million for the fiscal year [7] Operational Improvements - The company has made operational improvements that contributed to higher sales and repeat visits, alongside a focus on great food and service [2][10] - General and administrative expenses increased due to higher incentive compensation and technology initiatives [2][3]

Core Concept - Chili's Grill & Bar introduces the Radical 'Rita, a new margarita inspired by 90's nostalgia, available for $6 at participating locations throughout May [1][4][5] Product Details - The Radical 'Rita is crafted with Lunazul® Blanco Tequila, Monin® Dragonfruit, Blue Curaçao, House-Made Sour, and garnished with a lime wedge and 90's-inspired swizzle sticks [5][7] - The drink changes color from pink and blue to vibrant purple when mixed with the swizzle stick [3][5] Marketing Campaign - Tiffani Thiessen, a notable figure from the 90's, features in a promotional video demonstrating the drink's color-changing feature [6][9] - The campaign aims to evoke 90's nostalgia and will be showcased on platforms like Peacock and streaming apps [9][10] Sales Strategy - The Radical 'Rita is part of Chili's Margarita of the Month program, which has been running since 2018, offering a rotating selection of margaritas at a low price [7][9] - In 2024, Chili's sold over 25 million margaritas, indicating strong demand for their affordable margarita offerings [7] Company Background - Chili's is a leader in the casual dining industry and is known for its diverse menu, including burgers, fajitas, and margaritas [11] - The company operates nearly 1,600 restaurants across 29 countries and has raised over $110 million for St. Jude Children's Research Hospital through guest donations [11]