Brinker shares (EAT) fall after Q4 earnings fall short of estimates

Brinker International, Inc. EAT reported mixed results for its fourth quarter of fiscal 2024. Earnings came in below the Zacks Consensus Estimate, but revenues beat the same.

However, sales and profits increased compared to the previous year. Following the mixed results, the stock lost 12% in premarket trading on August 14.

Discussion about earnings and revenue

In the quarter, Brinker reported adjusted earnings per share (EPS) of $1.61, below the Zacks Consensus Estimate of $1.65. In the year-ago quarter, the company reported adjusted earnings per share of $1.39.

In the fourth quarter, total revenue of $1,208.2 million exceeded the consensus mark of $1,158 million. Revenue increased 12.3% year-over-year. EAT benefited from the solid performance of Chili’s.

Brinker International, Inc. Price, Consensus and EPS Surprise

Brinker International, Inc. Price Consensus EPS Surprise Chart | Brinker International, Inc. Price

Chili’s

In the fiscal fourth quarter, Chili’s segment revenue increased 13.7% year over year to $1,084.4 million. The uptick was driven by higher menu prices and increased customer traffic. Our model projected segment revenue of $1,019.6 million.

Chili’s restaurant expenses (as a percentage of company revenue) were 84.9% in the fiscal fourth quarter, compared to 87.1% in the year-ago quarter. The decrease was due to sales leverage, slightly overshadowed by increases in hourly wages, repairs and maintenance, advertising and executive compensation, and bonus expenses.

Chili’s company-owned traffic increased 5.9% year-on-year in the quarter, compared to a decrease of 7.7% in the same quarter last year.

The segment’s own comparative figures increased by 14.8% in the fourth quarter compared to the same quarter last year.

At Chili’s, domestic operations (including company-owned and franchised operations) are up 4.4% year-over-year, compared to a 6.9% decline in the same period last year.

Restaurant Maggiano’s

Maggiano’s revenues increased 2% year over year to $123.8 million in the fiscal fourth quarter. The increase was driven by favorable comparable restaurant sales due to higher menu prices and favorable menu mix. Comparables in this segment increased 2.5% year over year. Our guidance was 0.6%.

Traffic in the quarter in question fell by 8.9% compared to the previous year. In the same quarter last year, the figure had fallen by 0.2%.
Maggiano’s company restaurant costs (as a percentage of company revenue) were 84% in the fourth quarter of fiscal year compared to 82.7% in the prior year. The decrease was due to menu prices, partially offset by higher repair and maintenance costs.

Operating result

Total operating costs and expenses were $1.13 billion for the quarter, compared to $1.01 billion in the year-ago quarter. Adjusted restaurant operating margin as a percentage of company revenue was 15.2 percent, compared to 13.4 percent in the year-ago quarter.

Adjusted EBITDA was $141.8 million in the fourth quarter compared to $114.5 million in the prior year quarter.

Balance sheet

As of June 26, 2024, cash and cash equivalents were $64.6 million, compared to $15.1 million as of June 28, 2023. As of June 26, 2024, long-term debt was $786.3 million, compared to $912.2 million as of June 28, 2023.

Outlook for the 2025 financial year

For fiscal 2025, management expects total revenue in the range of $4.55 billion to $4.62 billion. Capital expenditures are expected in the range of $195 million to $215 million. EAT forecasts earnings per share for fiscal 2025 in the range of $3.8 to $4, below the previous estimate of $4.35 to $4.75.

Zacks Rank

Brinker currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Current publications in retail and wholesale

The Wendy’s Company WEN reported dismal results for its second quarter of fiscal 2024, with earnings and revenue coming in below the Zacks Consensus Estimate. Year-over-year, revenue increased while earnings declined. Solid comparable restaurant sales and strong breakfast sales in the U.S., as well as momentum in digital sales, contributed to the company’s performance.

The company remains focused on industry-leading quality, innovation and value. WEN aims to maintain its customer-centric approach while advancing its restaurant economic model year-round and beyond.

Shake Shack Inc. SHAK delivered solid results for the second quarter of fiscal 2024, with earnings in line with the Zacks Consensus Estimate and revenues beating it. Earnings and revenue increased year over year. During the quarter, the company benefited from product innovations, strategic menu pricing, technology implementations and promotions.

Looking ahead, SHAK is committed to increasing efficiencies across all geographies and formats through the use of drive-ins and third-party delivery. The Company plans to reduce construction costs by 10% in 2024 and continue to reduce costs in 2025 to enable exploration of new real estate options while maintaining consistent returns. The Company intends to achieve strong unit-level economics and increase ROI to drive long-term value creation for its shareholders.

The Cheesecake Factory Incorporated CAKE reported second-quarter fiscal 2024 results. Earnings beat the Zacks Consensus Estimate, but revenues fell short. Earnings and revenues increased from the year-ago quarter.

During the quarter, CAKE benefited from strong demand and new restaurant sales. Improvements in food efficiency, labor productivity, overtime and payroll management also increased profitability at the restaurant level. The company is committed to strengthening its operational services to drive long-term growth.

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