Brinker Q4: EPS Beat, Marginal Sales Miss, Favorable Mix & Menu Pricing, And More

Brinker International, Inc. EAT reported Q4 revenues of $1.076 billion, marginally missing the consensus of $1.080 billion. Revenues gained 5.3% Y/Y.

Adjusted EPS of $1.39 beats the $1.32 estimate.

In the quarter under review, the company gained from favorable food and beverage costs as a percentage of company sales, reasonable income taxes, menu pricing, and a favorable menu item mix.

Comparable sales increased by 6.6%, with an increase in comparable restaurant sales of 6.3% for Chili's and 9.1% for Maggiano's.

Operating margin expanded by 110 basis points to 5.5%. Adjusted EBITDA jumped 14.3% to $114.5 million.

Restaurant operating margin for the quarter was 13.4% versus 12.5% last year.

EAT exited the quarter with cash and equivalents worth $15.1 million. Additionally, long-term debt decreased $87.0 million in fiscal 2023.

During the fourth quarter of fiscal 2023, the company amended its revolving credit facility to increase the capacity by $100 million to $900 million and successfully issued $350 million 8.250% senior notes due 2030 in a private offering.

"We are proud of our team's progress on improving operational performance and bringing our new strategy to life. Simplification, a focus on the Core Business, and key strategic investments in labor, repairs and maintenance, and advertising have driven a better guest & team member experience, stronger sales and improving margins," said Kevin Hochman, Chief Executive Officer and President of Brinker.

"And that progress gives us confidence we have laid a strong foundation for continued sustainable & profitable growth in the long term."

FY24 Outlook

EAT projects sales of $4.27 billion-$4.35 billion versus the $4.30 billion estimate. 

The company sees adjusted EPS of $3.15-$3.55 versus the $3.31 estimate.

Capital expenditures are expected to be in the range of $175 million - $195 million.

Price Action: EAT shares are trading lower by 3.77% to $35 on the last check Wednesday.