Brinker International (EAT) Tops Q2 EPS by 15c, Miss on Revenues; Offers FY18 EPS Above Consensus

Brinker International (NYSE: EAT) reported Q2 EPS of $0.87, $0.15 better than the analyst estimate of $0.72. Revenue for the quarter came in at $766.4 million versus the consensus estimate of $774.35 million.

Fiscal 2018 Outlook Update

The Tax Act will have a material impact on the Company\'s effective tax rate for fiscal 2018. The Company estimates adjusted earnings per diluted share, excluding special items and the revaluation of the Company\'s deferred tax accounts, for fiscal 2018 will be in the range of $3.42 to $3.52 including the effective rate impact of the Tax Act. Previously, the Company expected the effective income tax rate excluding the impact of special items to be approximately 27 to 29 percent for fiscal 2018. The Company\'s effective tax rate excluding the impact of special items and the revaluation of the deferred tax accounts is now expected to be approximately 20 to 22 percent. The Company believes providing estimated fiscal 2018 earnings per diluted share guidance provides investors the appropriate insight into the Company\'s ongoing operating performance.

GUIDANCE:

Brinker International sees FY2018 EPS of $3.42-$3.52, versus the consensus of $3.33.

Highlights include the following:

• On a GAAP basis, earnings per diluted share were $0.54 for the second quarter of fiscal 2018 representing a 21.7 percent decrease from $0.69 in the second quarter of fiscal 2017
• Earnings per diluted share, excluding special items, were $0.87 for the second quarter of fiscal 2018 representing a 22.5 percent increase from $0.71 in the second quarter of fiscal 2017 (see non-GAAP reconciliation below)
• The Tax Cuts and Jobs Act of 2017 (the "Tax Act") negatively impacted GAAP net income by $3.9 million or $0.08 per diluted share, consisting of $8.7 million or $0.18 per diluted share for the revaluation of the Company\'s net deferred tax assets, partially offset by the impact from the decrease in the statutory tax rate of $4.8 million or $0.10 per diluted share for the second quarter of 2017
• Brinker International\'s total revenues were $766.4 million in the second quarter of fiscal 2018 decreasing 0.6 percent compared to the second quarter of fiscal 2017, and company sales were $742.7 million in the second quarter of fiscal 2018 decreasing 0.8 percent compared to the second quarter of fiscal 2017
• Chili\'s company-owned comparable restaurant sales decreased 1.5 percent in the second quarter of fiscal 2018 compared to the second quarter of fiscal 2017. Chili\'s U.S. franchise comparable restaurant sales decreased 1.7 percent in the second quarter of fiscal 2018 compared to the second quarter of fiscal 2017
• Chili\'s international franchise comparable restaurant sales increased 0.1 percent in the second quarter of fiscal 2018 compared to the second quarter of fiscal 2017
• Maggiano\'s comparable restaurant sales increased 1.8 percent in the second quarter of fiscal 2018 compared to the second quarter of fiscal 2017
• Operating income, as a percent of total revenues, was 7.1 percent for the second quarter of fiscal 2018 compared to 8.0 percent for the second quarter of fiscal 2017 representing a decrease of approximately 90 basis points
• Restaurant operating margin, as a percent of company sales, was 14.9 percent for the second quarter of fiscal 2018 compared to 15.1 percent for the second quarter of fiscal 2017 representing a decrease of approximately 20 basis points (see non-GAAPreconciliation below)
• For the first six months of fiscal 2018, cash flows provided by operating activities were $119.7 million and capital expenditures totaled $48.6 million. Free cash flow was $71.1 million (see non-GAAP reconciliation below)
• The Company is updating its fiscal 2018 outlook and now estimates earnings per diluted share, excluding special items and the revaluation of the Company's deferred tax accounts, to be in the range of $3.42 to $3.52 for fiscal 2018

For earnings history and earnings-related data on Brinker International (EAT) click here.

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