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Item 1. Financial Statements

2024-10-30 compared with 2024-04-30 · 115 added, 186 removed, 352 unchanged (46% of the section changed)

3 unchanged sentences

(In millions, except per share amounts)

Thirteen Week Periods Ended Thirty-Nine Week Periods Ended

2024 March 29,

2023 March 27,

2024 March 29,

Thirteen Week Periods Ended

September 25,

2024 September 27,

Company sales $ 1,127.3 $ 1,002.0

13 unchanged sentences

Income before income taxes 42.3 7.2

Provision (benefit) for income taxes 5.2 ( 0.1 ) 8.9 ( 2.4 )

Provision for income taxes 3.8 —

Net income $ 38.5 $ 7.2

10 unchanged sentences

(In millions, except per share amounts)

September 25,

2024 June 26,

5 unchanged sentences

Prepaid expenses 27.9 20.6

Income taxes receivable 0.4 —

Total current assets 183.6 234.1

14 unchanged sentences

Total assets $ 2,533.1 $ 2,593.1

LIABILITIES AND SHAREHOLDERS’ DEFICIT

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities

10 unchanged sentences

Commitments and contingencies (Note 7)

Shareholders’ deficit

Shareholders’ equity

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)

60.3 million shares issued and 44.4 million shares outstanding at September 25, 2024, and 60.3 million shares issued and 45.0 million shares outstanding at June 26, 2024)

Additional paid-in capital 697.9 707.8

1 unchanged sentence

Accumulated deficit ( 158.1 ) ( 196.6 )

Treasury stock, at cost ( 15.8 million shares at March 27, 2024, and 15.7 million shares at June 28, 2023)

Treasury stock, at cost ( 15.9 million shares at September 25, 2024, and 15.3 million shares at June 26, 2024)

( 526.9 ) ( 471.5 )

Total shareholders’ deficit ( 46.7 ) ( 144.3 )

Total liabilities and shareholders’ deficit $ 2,495.7 $ 2,487.0

Total shareholders’ equity 12.7 39.4

Total liabilities and shareholders’ equity $ 2,533.1 $ 2,593.1

See accompanying Notes to Consolidated Financial Statements (Unaudited)

2 unchanged sentences

(In millions)

Thirty-Nine Week Periods Ended

2024 March 29,

Thirteen Week Periods Ended

September 25,

2024 September 27,

Cash flows from operating activities

24 unchanged sentences

Proceeds from note receivable — 1.3

Proceeds from sale of assets 0.9 —

Insurance recoveries 0.7 —

Net cash used in investing activities ( 56.5 ) ( 45.6 )

6 unchanged sentences

Proceeds from issuance of treasury stock 3.4 —

Payments of dividends ( 0.2 ) ( 0.4 )

Net cash used in financing activities ( 54.7 ) ( 14.2 )

8 unchanged sentences

BRINKER INTERNATIONAL, INC.

Consolidated Statements of Shareholders’ Deficit (Unaudited)

Consolidated Statements of Shareholders’ Equity (Deficit) (Unaudited)

(In millions)

Thirty-Nine Week Period Ended March 27, 2024

Thirteen Week Period Ended September 25, 2024

Common Stock Additional

4 unchanged sentences

Net income — — 38.5 — — 38.5

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 — — — — 0.1 0.1

2 unchanged sentences

Issuances of treasury stock — ( 12.2 ) — 14.9 — 2.7

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 )

See accompanying Notes to Consolidated Financial Statements (Unaudited)

Thirty-Nine Week Period Ended March 29, 2023

Balances at September 25, 2024 $ 6.0 $ 697.9 $ ( 158.1 ) $ ( 526.9 ) $ ( 6.2 ) $ 12.7

Thirteen Week Period Ended September 27, 2023

Common Stock Additional

3 unchanged sentences

Balances at June 28, 2023 $ 6.0 $ 690.0 $ ( 351.9 ) $ ( 482.4 ) $ ( 6.0 ) $ ( 144.3 )

Net loss — — ( 30.2 ) — — ( 30.2 )

Net income — — 7.2 — — 7.2

Other comprehensive loss — — — — ( 0.2 ) ( 0.2 )

Dividends — — 0.0 — — 0.0

Stock-based compensation — 5.7 — — — 5.7

1 unchanged sentence

Issuances of treasury stock — ( 11.7 ) — 11.7 — 0.0

Retirement of stock ( 1.0 ) — ( 306.1 ) 307.1 — —

Balances at September 27, 2023 $ 6.0 $ 683.8 $ ( 344.7 ) $ ( 495.2 ) $ ( 6.2 ) $ ( 156.3 )

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 )

See accompanying Notes to Consolidated Financial Statements (Unaudited)

8 unchanged sentences

Accrued Liabilities 11

Contingencies 13

Commitments and Contingencies 13

Income Taxes 14

Shareholders’ Deficit 15

Shareholders’ Equity 14

Net Income Per Share 14

5 unchanged sentences

and its subsidiaries and any predecessor companies of Brinker International, Inc.

Our Consolidated Financial Statements (Unaudited) as of March 27, 2024 and June 28, 2023, and for the thirteen and thirty-nine week periods ended March 27, 2024 and March 29, 2023, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

The Company is principally engaged in the ownership, operation, development and franchising of the Chili’s ® Grill & Bar (“Chili’s”) and Maggiano’s Little Italy ® (“Maggiano’s”) restaurant brands.

As of March 27, 2024, we owned, operated or franchised 1,618 restaurants, consisting of 1,176 Company-owned restaurants and 442 franchised restaurants, located in the United States, 27 other countries and two United States territories.

Our Consolidated Financial Statements (Unaudited) as of September 25, 2024 and June 26, 2024, and for the thirteen week periods ended September 25, 2024 and September 27, 2023, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

We own, develop, operate, and franchise the Chili’s ® Grill & Bar (“Chili’s”) and Maggiano’s Little Italy ® (“Maggiano’s”) restaurant brands.

As of September 25, 2024 we owned, operated or franchised 1,625 restaurants, consisting of 1,170 Company-owned restaurants and 455 franchised restaurants, located in the United States, 28 other countries and two United States territories.

Use of Estimates

8 unchanged sentences

Foreign Currency Translation

The foreign currency translation adjustment included in the Consolidated Statements of Comprehensive Income (Unaudited) represents the unrealized impact of translating the financial statements of our Canadian restaurants from Canadian dollars to United States dollars.

This amount is not included in Net income and would only be realized upon disposition of our Canadian restaurants.

The related Accumulated other comprehensive loss is presented in the Consolidated Balance Sheets (Unaudited).

Effect of New Accounting Standards

We reviewed accounting pronouncements that became effective for our fiscal 2024 and determined that either they were not applicable, or they did not have a material impact on the Consolidated Financial Statements (Unaudited).

In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

The Foreign currency translation adjustments represent the unrealized impact of translating the financial statements of our Canadian restaurants from their respective functional currency (Canadian dollars) to United States dollars and are reported as a component of comprehensive income and recorded in Accumulated other comprehensive loss on our Consolidated Balance Sheets (Unaudited).

Recently Issued Accounting Standards or Disclosure Rules

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

The amendments are effective for fiscal years beginning after December 15, 2023, which would require us to adopt the provisions in our fiscal 2025 10-K.

Early adoption is permitted.

The amendments are effective for fiscal years beginning after December 15, 2023, which require us to adopt the provisions in our fiscal 2025 Form 10-K.

The amendments should be applied retrospectively to all prior periods presented in the financial statements.

Management does not expect this ASU to have a material impact on our disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires disaggregated information about a company’s effective tax rate reconciliation and requires disclosure of income taxes paid by jurisdiction.

The amendments are effective for fiscal years beginning after December 15, 2024, which would require us to adopt the provisions in our fiscal 2026 Form 10-K.

Early adoption is permitted.

The amendments should be applied prospectively;

however, retrospective application is permitted.

Management is currently evaluating this ASU to determine its impact on our disclosures.

We also reviewed other recently issued accounting pronouncements to be adopted in future periods and determined that they are not expected to have a material impact on the Consolidated Financial Statements (Unaudited).

In March 2024, the SEC adopted the final rule under SEC Release No.

33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors.

This rule will require registrants to disclose certain

Footnote Index

climate-related information in registration statements and annual reports.

In April 2024, the SEC voluntarily stayed the final rule as a result of pending legal challenges.

The disclosure requirements will apply to our fiscal year beginning June 26, 2025 (fiscal 2026 Form 10-K), pending resolution of the stay.

Management is currently evaluating the final rule to determine its impact on our disclosures.

REVENUE RECOGNITION

1 unchanged sentence

Our deferred franchise and development fees consist of the unrecognized fees received from franchisees.

Recognition of these fees in subsequent periods is based on satisfaction of the contractual performance obligations of our active contracts with franchisees.

Recognition of these fees in subsequent periods is based on satisfaction of the contractual performance obligations of the active contracts with franchisees.

We also expect to earn subsequent period royalties and advertising fees related to our franchise contracts;

1 unchanged sentence

Deferred franchise and development fees are classified within Other accrued liabilities for the current portion expected to be recognized within the next 12 months, and Other liabilities for the long-term portion in the Consolidated Balance Sheets (Unaudited).

The following table reflects the changes in deferred franchise and development fees between June 28, 2023 and March 27, 2024:

The following table reflects the changes in deferred franchise and development fees between June 26, 2024 and September 25, 2024:

Deferred Franchise and Development Fees

2 unchanged sentences

Amount recognized to Franchise revenues ( 0.5 )

Balance as of March 27, 2024 $ 9.8

The following table illustrates franchise and development fees expected to be recognized in the future related to performance obligations that were unsatisfied or partially unsatisfied as of March 27, 2024:

Balance as of September 25, 2024 $ 9.7

Fiscal Year Franchise and Development Fees Revenue Recognition

3 unchanged sentences

Deferred Gift Card Revenues

Deferred revenues related to our gift cards include the full value of unredeemed gift card balances less recognized breakage and the unamortized portion of third party fees.

The following table reflects the changes in the Gift card liability between June 28, 2023 and March 27, 2024:

Total deferred revenues related to our gift cards include the full value of unredeemed gift card balances less recognized breakage and the unamortized portion of third party fees.

The following table reflects the changes in the Gift card liability between June 26, 2024 and September 25, 2024:

Gift Card Liability

3 unchanged sentences

Gift card breakage recognized to Company sales ( 2.8 )

Balance as of March 27, 2024

Balance as of September 25, 2024

FAIR VALUE MEASUREMENTS

10 unchanged sentences

The 5.000 % notes and 8.250 % notes carrying amounts, which are net of unamortized debt issuance costs and discounts, and fair values are as follows:

March 27, 2024 June 28, 2023

September 25, 2024 June 26, 2024

Carrying Amount Fair Value Carrying Amount Fair Value

9 unchanged sentences

Footnote Index

thirteen and thirty-nine week periods ended March 27, 2024 and March 29, 2023, no indicators of impairment were identified.

During the thirteen week periods ended September 25, 2024 and September 27, 2023, no indicators of impairment were identified.

Intangibles, net in the Consolidated Balance Sheets (Unaudited) includes both indefinite-lived intangible assets such as transferable liquor licenses and definite-lived intangible assets such as reacquired franchise rights.

Accumulated amortization associated with definite-lived intangible assets at March 27, 2024 and June 28, 2023, was $ 16.2 million and $ 15.3 million, respectively.

Accumulated amortization associated with definite-lived intangible assets at September 25, 2024 and June 26, 2024, was $ 17.2 million and $ 16.6 million, respectively.

ACCRUED LIABILITIES

Other accrued liabilities consist of the following:

September 25,

2024 June 26,

2 unchanged sentences

Sales tax 19.9 18.4

Current installments of finance lease obligations 15.5 10.2

Interest 15.4 18.1

Current installments of finance lease obligations 14.6 14.1

Utilities and services 9.7 10.0

4 unchanged sentences

The components of lease expenses included in the Consolidated Statements of Comprehensive Income (Unaudited) were as follows:

Thirteen Week Periods Ended Thirty-Nine Week Periods Ended

2024 March 29,

2023 March 27,

2024 March 29,

Thirteen Week Periods Ended

September 25,

2024 September 27,

Operating lease cost $ 45.6 $ 45.6

6 unchanged sentences

Supplemental cash flow information related to leases:

Thirty-Nine Week Periods Ended

2024 March 29,

Thirteen Week Periods Ended

September 25,

2024 September 27,

Operating lease assets obtained in exchange for operating lease liabilities

$ 53.1 $ 59.1

Finance leases assets obtained in exchange for finance lease liabilities

Finance lease assets are recorded in Property and equipment, at cost, and the net balance as of March 27, 2024 and June 28, 2023 was $ 73.5 million and $ 51.3 million, respectively.

Finance lease assets are recorded in Property and equipment, at cost, and the net balance as of September 25, 2024 and June 26, 2024 was $ 91.7 million and $ 93.4 million, respectively.

Footnote Index

Pre-Commencement Leases

In the third quarter of fiscal 2024, we executed one finance lease for Chili’s table-top devices with an initial term of 4 years after a rollout period, commencing as devices are installed.

The undiscounted fixed payments over the initial term of the lease for the remaining devices not installed as of March 27, 2024 is $ 22.1 million.

Additionally, we have executed six leases for new Chili’s locations with undiscounted fixed payments over the initial term of $ 16.1 million.

These leases are expected to commence during the next 12 months and are expected to have an economic lease term of 20 years.

These leases will commence when the landlords make the property available to us for new restaurant construction.

Long-term debt consists of the following:

September 25,

2024 June 26,

9 unchanged sentences

Total long-term debt, less current portion $ 806.9 $ 786.3

(1) Obligations under our 5.000% notes, which will mature in October 2024, have been classified as long-term, reflecting our intent and ability to refinance these notes through our existing revolving credit facility.

(1) Obligations under our 5.000% notes have been classified as long-term, reflecting our intent and ability to refinance these notes through our existing revolving credit facility.

Subsequent to the end of the first quarter, on October 1, 2024, our $350.0 million 5.000% notes matured and the payoff was funded with borrowings from our revolving credit facility.

(2) Current installments of long-term debt consist of finance leases and are recorded within Other accrued liabilities in the Consolidated Balance Sheets (Unaudited).

1 unchanged sentence

Revolving Credit Facility

In the thirty-nine week period ended March 27, 2024, net repayments of $ 110.0 million were made on our revolving credit facility.

As of March 27, 2024, $ 848.7 million of credit was available under the revolving credit facility.

The $ 900.0 million revolving credit facility matures on August 18, 2026 and bears interest of SOFR plus an applicable margin of 1.50 % to 2.25 % and an undrawn commitment fee of 0.25 % to 0.35 %, both based on a function of our debt-to-cash-flow ratio.

As of March 27, 2024, our interest rate was 7.20 % consisting of SOFR of 5.32 % plus the applicable margin and spread adjustment of 1.88 %.

In the thirteen week period ended September 25, 2024, net borrowings of $ 25.0 million were drawn on our revolving credit facility.

As of September 25, 2024, $ 875.0 million of credit was available under the revolving credit facility.

The $ 900.0 million revolving credit facility matures on August 18, 2026 and bears interest at a rate of SOFR plus an applicable margin of 1.60 % to 2.35 % and an undrawn commitment fee of 0.25 % to 0.35 %, both based on a function of our debt-to-cash-flow ratio.

As of September 25, 2024, our interest rate was 6.46 % consisting of SOFR of 4.86 % plus the applicable margin and spread adjustment of 1.60 %.

Financial Covenants

The indentures for our 5.000% notes and the 8.250% notes contain certain covenants, including, but not limited to, limitations and restrictions on the ability of the Company and its Restricted Subsidiaries (as defined in the indentures) to (i) create liens on Principal Property (as defined in the indenture) and (ii) merge, consolidate or amalgamate with or into any other person or sell, transfer, assign, lease, convey or otherwise dispose of all or substantially all of their property.

These covenants are subject to a number of important conditions, qualifications, exceptions, and limitations.

Our debt agreements contain various financial covenants that, among other things, require the maintenance of certain leverage ratios.

As of March 27, 2024, we were in compliance with our covenants pursuant to the $900.0 million revolving credit facility and under the terms of the indentures governing our 5.000% and 8.250% notes .

CONTINGENCIES

Lease Commitments

We have, in certain cases, divested brands or sold restaurants to franchisees and have not been released from lease guarantees for the related restaurants.

As of March 27, 2024 and June 28, 2023, we have outstanding lease guarantees or are secondarily liable for an estimated $ 13.2 million and $ 16.9 million, respectively.

These amounts

As of September 25, 2024, we were in compliance with our covenants pursuant to the $900.0 million revolving credit facility and under the terms of the indentures governing our 5.000% and 8.250% notes .

Footnote Index

represent the maximum known potential liability of rent payments under the leases, but outstanding rent payments can exist outside of our knowledge as a result of the landlord and tenant relationship being between two third parties.

COMMITMENTS AND CONTINGENCIES

Lease Commitments and Guarantees

We have, in certain cases, divested brands or sold restaurants to franchisees and have not been released from lease guarantees for the related restaurants.

As of September 25, 2024 and June 26, 2024, we have outstanding lease guarantees or are secondarily liable for an estimated $ 14.3 million and $ 15.7 million, respectively.

These amounts represent the maximum known potential liability of rent payments under the leases, but outstanding rent payments can exist outside of our knowledge as a result of the landlord and tenant relationship being between two third parties.

These leases have been assigned to the buyers and expire at the end of the respective lease terms, which range from fiscal 2025 through fiscal 2035.

We have received notices of default and have been named a party in lawsuits pertaining to some of these leases in circumstances where the current lessee did not pay its rent obligations.

In the event of default under a lease by an owner of a divested brand, the indemnity and default clauses in our agreements with such third parties and applicable laws govern our ability to pursue and recover amounts we may pay on behalf of such parties.

In the thirty-nine week period ended March 27, 2024 we recorded a $ 0.8 million charge in Other (gains) and charges in the Consolidated Statements of Comprehensive Income.

We have received notices of default and have been named a party in lawsuits pertaining to some of these leases in circumstances where the current lessee did not pay its rent obligations.

During the first quarter of fiscal 2024, we recorded a $ 0.5 million charge in Other (gains) and charges in the Consolidated Statements of Comprehensive Income (Unaudited).

We will continue to closely monitor our exposure.

Letters of Credit

We provide letters of credit to various insurers to collateralize obligations for outstanding claims.

As of March 27, 2024, we had $ 5.8 million in undrawn standby letters of credit outstanding.

As of September 25, 2024, we had $ 5.8 million in undrawn standby letters of credit outstanding.

All standby letters of credit are renewable within the next 13 months.

4 unchanged sentences

In the Litigation, plaintiffs assert various claims at the Company’s Chili’s restaurants involving customer payment card information and seek monetary damages in excess of $ 5.0 million, injunctive and declaratory relief, and attorney’s fees and costs.

The parties have completed their briefing on our petition for writ of certiorari in the United States Supreme Court seeking review of the Eleventh Circuit’s decision to uphold the plaintiff’s damages calculation methodology.

We await the Court’s decision whether to take up the matter.

Concurrently in the trial court, the court declined to stay the matter and ordered the parties to submit supplemental briefs on the issue of predominance as it relates to class certification in light of the Eleventh Circuit’s ruling on the issue.

The parties completed their briefing on March 22, 2024, and now await the court’s ruling.

On April 29, 2024, the US Supreme Court denied our petition for certiorari concerning review of the Eleventh Circuit’s decision to uphold plaintiff’s damages calculation.

Accordingly, the parties continue to await the trial court’s ruling on the issue of predominance as it relates to class certification in light of the Eleventh Circuit’s ruling on this issue.

We believe we have defenses and intend to continue defending the Litigation.

As such, as of March 27, 2024, we have concluded that a loss, or range of loss, from this matter is not determinable, therefore, we have not recorded a liability related to the Litigation.

As such, as of September 25, 2024, we have concluded that a loss, or range of loss, from this matter is not determinable, therefore, we have not recorded a liability related to the Litigation.

We will continue to evaluate this matter based on new information as it becomes available.

1 unchanged sentence

Evaluating contingencies related to litigation is a process involving judgment on the potential outcome of future events, and the ultimate resolution of litigated claims may differ from our current analysis.

Accordingly, we review the adequacy of accruals and disclosures pertaining to litigated matters each quarter in consultation with legal counsel and we assess the probability and range of possible losses associated with contingencies for potential accrual in the Consolidated Financial Statements.

We are engaged in various legal proceedings and have certain unresolved claims pending.

2 unchanged sentences

Footnote Index

Thirty-Nine Week Periods Ended

2024 March 29,

Thirteen Week Periods Ended

September 25,

2024 September 27,

Effective income tax rate 9.0 % — %

The federal statutory tax rate was 21.0 % for the thirty-nine week periods ended March 27, 2024 and March 29, 2023.

The change in the effective income tax rate in the thirty-nine week period ended March 27, 2024 to the thirty-nine week period ended March 29, 2023 is primarily due to higher Income before income taxes and the resulting deleverage of the FICA tip tax credit.

SHAREHOLDERS’ DEFICIT

Retirement of Common Stock

During the first quarter of fiscal 2023, the Board of Directors approved the retirement of 10.0 million shares of Treasury stock for a weighted average price per share of $ 30.71 .

As of March 27, 2024, 15.8 million shares remain in treasury.

The federal statutory tax rate was 21.0 % for the thirteen week periods ended September 25, 2024 and September 27, 2023.

The change in the effective income tax rate in the thirteen week period ended September 25, 2024 to the thirteen week period ended September 27, 2023 is primarily due to higher Income before income taxes and the resulting deleverage of the FICA tip tax credit.

SHAREHOLDERS’ EQUITY

Share Repurchases

2 unchanged sentences

We evaluate potential share repurchases under our plan based on several factors, including our cash position, share price, operational liquidity, proceeds from divestitures, borrowings and planned investment and financing needs.

In the thirty-nine week period ended March 27, 2024, we repurchased 0.8 million shares of our common stock for $ 25.6 million, including 0.7 million shares purchased for $ 21.0 million as part of our share repurchase program and 0.1 million shares purchased from team members to satisfy tax withholding obligations on the vesting of restricted shares.

Repurchased shares are reflected as an increase in Treasury stock within Shareholders’ equity in the Consolidated Balance Sheets (Unaudited).

In the thirteen week period ended September 25, 2024, we repurchased 1.1 million shares of our common stock for $ 74.8 million, including 0.9 million shares purchased for $ 66.0 million as part of our share repurchase program and 0.2 million shares purchased from team members to satisfy tax withholding obligations on the vesting of restricted shares.

These withheld shares of common stock are not considered common stock repurchases under our authorized common stock repurchase plan.

As of March 27, 2024, approximately $ 183.0 million of share repurchase authorization remains under the current share repurchase program.

As of September 25, 2024, approximately $ 117.0 million of share repurchase authorization remains under the current share repurchase program.

Stock-based Compensation

The following table presents the restricted share awards granted and related weighted average fair value per share amounts.

Thirty-Nine Week Periods Ended

2024 March 29,

Thirteen Week Periods Ended

September 25,

2024 September 27,

Restricted share awards

9 unchanged sentences

Basic weighted average shares outstanding are reconciled to Diluted weighted average shares outstanding as follows:

Thirteen Week Periods Ended Thirty-Nine Week Periods Ended

2024 March 29,

2023 March 27,

2024 March 29,

Thirteen Week Periods Ended

September 25,

2024 September 27,

Basic weighted average shares outstanding 44.9 44.6

Dilutive stock options

0.1 0.1 0.1 0.0

Dilutive restricted shares

0.8 0.9 0.7 0.8

Total dilutive impact 1.0 0.8

3 unchanged sentences

Other (gains) and charges in the Consolidated Statements of Comprehensive Income (Unaudited) consist of the following:

Thirteen Week Periods Ended Thirty-Nine Week Periods Ended

2024 March 29,

2023 March 27,

2024 March 29,

Restaurant closure asset write-offs and charges $ 4.0 $ 1.8 $ 4.8 $ 6.6

Thirteen Week Periods Ended

September 25,

2024 September 27,

Enterprise system implementation costs $ 4.4 $ 2.0

Litigation & claims, net 2.5 2.2

Severance 0.4 1.0 0.5 3.9

Restaurant closure asset write-offs and charges 0.7 0.6

Lease contingencies — 0.5

Remodel-related asset write-offs 0.1 0.1 0.4 1.1

Other 1.3 1.0

$ 9.9 $ 6.3 $ 19.5 $ 19.8

• Restaurant closure asset write-offs and charges includes costs associated with the closure of certain Chili’s restaurants in the current year and both Chili’s and Maggiano’s restaurants in the prior year.

• Enterprise system implementation costs primarily consist of software subscription fees, certain consulting fees, and contract labor associated with the ongoing enterprise system implementation that are not capitalized.

• Litigation & claims, net primarily relates to claims on alcohol service cases and legal contingencies.

• Severance relates to changes in our management team and organizational structure.

• Enterprise system implementation costs primarily consist of consulting fees, software subscription fees, and contract labor associated with the enterprise system implementation.

• Litigation & claims, net primarily relates to legal contingencies and claims on alcohol service cases.

• Restaurant closure asset write-offs and charges includes costs associated with the closure of certain Chili’s restaurants.

• Lease contingencies includes expenses related to certain sublease receivables and lease guarantees for divested brands when we have determined it is probable that the current lessee will default on the lease obligation.

Refer to Note 7 - Contingencies for additional information about our secondarily liable lease guarantees.

• Remodel-related asset write-offs relates to assets that are removed or discarded in connection with Maggiano’s and Chili’s remodel projects.

Footnote Index

Refer to Note 7 - Commitments and Contingencies for additional information about our secondarily liable lease guarantees.

SEGMENT INFORMATION

1 unchanged sentence

The Chili’s segment includes the results of our Company-owned Chili’s restaurants, which are principally located in the United States, within the full-service casual dining segment of the industry.

The Chili’s segment also has Company-owned restaurants in Canada, and franchised locations in the United States, 27 other countries and two United States territories.

The Maggiano’s segment includes the results of our Company-owned Maggiano’s restaurants in the United States as well as the results from our domestic franchise business.

The Chili’s segment also includes results of our Canadian Company-owned restaurants and royalties and other fees from our franchised locations in the United States, 28 other countries and two United States territories.

The Maggiano’s segment includes the results of our Company-owned Maggiano’s restaurants in the United States as well as royalties and other fees from our domestic franchise business.

Costs related to our restaurant support teams for the Chili’s and Maggiano’s brands, including operations, finance, franchise, marketing, human resources, and culinary innovation are included in the results of our operating segments.

The Corporate segment includes costs related to the common and shared infrastructure, including accounting, information technology, purchasing, guest relations, and legal and restaurant development.

Company sales for each segment include revenues generated by the operation of Company-owned restaurants including food and beverage sales, net of discounts, gift card breakage, Maggiano’s banquet service charge income, delivery, digital entertainment revenues, merchandise income and are net of gift card discounts from third-party gift card sales.

The Corporate segment includes costs related to the common and shared infrastructure, including accounting, information technology, purchasing, guest relations, legal and restaurant development.

Footnote Index

Company sales for each segment include revenues generated by the operation of Company-owned restaurants including food and beverage sales, net of discounts, Maggiano’s banquet service charge income, gift card breakage, delivery, digital entertainment revenues, merchandise income and are net of gift card discounts from third-party gift card sales.

Franchise revenues for each operating segment include royalties, franchise advertising fees, franchise and development fees and gift card equalization.

3 unchanged sentences

Operating income includes revenues and expenses directly attributable to segment-level results of operations.

Restaurant expenses during the periods presented primarily include restaurant rent, repairs and maintenance, advertising, utilities, supplies, delivery fees, payment processing fees, franchise and property taxes, supervision expenses, to-go supplies, and workers’ compensation and general liability insurance.

Restaurant expenses during the periods presented primarily include restaurant rent, repairs and maintenance, utilities, supplies, advertising, delivery fees, payment processing fees, workers’ compensation and general liability insurance, supervision expenses, and to-go supplies.

The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP:

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

Footnote Index

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

Thirty-Nine Week Period Ended March 27, 2024

Thirteen Week Period Ended September 25, 2024

Chili's Maggiano's Corporate Consolidated

13 unchanged sentences

Income (loss) before income taxes $ 92.7 $ 7.7 $ ( 58.1 ) $ 42.3

Segment assets $ 2,111.4 $ 252.7 $ 131.6 $ 2,495.7

Payments for property and equipment 121.3 12.3 7.3 140.9

Footnote Index

Thirty-Nine Week Period Ended March 29, 2023

Thirteen Week Period Ended September 27, 2023

Chili's Maggiano's Corporate Consolidated

15 unchanged sentences

Income (loss) before income taxes $ 54.8 $ 3.5 $ ( 51.1 ) $ 7.2

Payments for property and equipment $ 119.4 $ 10.7 $ 6.5 $ 136.6

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements