Item 1. Financial Statements
ITEM 1. FINANCIAL STATEMENTS
BRINKER INTERNATIONAL, INC.
Consolidated Statements of Comprehensive Income (Unaudited)
(In millions, except per share amounts)
Thirteen Week Periods Ended Thirty-Nine Week Periods Ended
March 26,
2025 March 27,
2024 March 26,
2025 March 27,
2024
Revenues
Company sales $ 1,413.0 $ 1,108.9 $ 3,886.4 $ 3,174.6
Franchise revenues 12.1 11.4 35.9 32.3
Total revenues 1,425.1 1,120.3 3,922.3 3,206.9
Operating costs and expenses
Food and beverage costs 353.1 277.8 981.3 809.7
Restaurant labor 452.2 370.6 1,250.6 1,074.8
Restaurant expenses 340.9 303.4 979.2 888.9
Depreciation and amortization 54.7 42.6 148.7 125.8
General and administrative 58.3 46.1 163.2 131.7
Other (gains) and charges 9.0 9.9 30.0 19.5
Total operating costs and expenses 1,268.2 1,050.4 3,553.0 3,050.4
Operating income 156.9 69.9 369.3 156.5
Interest expenses 13.2 16.2 42.2 49.9
Other income, net ( 0.1 ) ( 0.2 ) ( 0.7 ) ( 0.3 )
Income before income taxes 143.8 53.9 327.8 106.9
Provision for income taxes 24.7 5.2 51.7 8.9
Net income $ 119.1 $ 48.7 $ 276.1 $ 98.0
Basic net income per share $ 2.68 $ 1.10 $ 6.19 $ 2.21
Diluted net income per share $ 2.56 $ 1.08 $ 5.96 $ 2.17
Basic weighted average shares outstanding 44.4 44.3 44.6 44.4
Diluted weighted average shares outstanding 46.4 45.2 46.4 45.2
Other comprehensive income (loss)
Foreign currency translation adjustment $ 0.1 $ ( 0.2 ) $ ( 0.3 ) $ ( 0.2 )
Comprehensive income $ 119.2 $ 48.5 $ 275.8 $ 97.8
See accompanying Notes to Consolidated Financial Statements (Unaudited)
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BRINKER INTERNATIONAL, INC.
Consolidated Balance Sheets
(In millions, except per share amounts)
Unaudited
March 26,
2025 June 26,
2024
ASSETS
Current assets
Cash and cash equivalents $ 17.5 $ 64.6
Accounts receivable, net 57.5 60.6
Inventories 35.1 34.5
Restaurant supplies 55.2 53.8
Prepaid expenses 21.2 20.6
Income taxes receivable 2.6 —
Total current assets 189.1 234.1
Property and equipment, at cost
Land 44.8 41.6
Buildings and leasehold improvements 1,723.1 1,670.2
Furniture and equipment 826.3 830.6
Construction-in-progress 116.6 41.0
2,710.8 2,583.4
Less accumulated depreciation and amortization ( 1,771.6 ) ( 1,703.7 )
Net property and equipment 939.2 879.7
Other assets
Operating lease assets 1,075.7 1,095.2
Goodwill 194.5 194.8
Deferred income taxes, net 101.3 113.9
Intangibles, net 18.1 19.9
Other 54.0 55.5
Total other assets 1,443.6 1,479.3
Total assets $ 2,571.9 $ 2,593.1
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable $ 185.6 $ 160.6
Gift card liability 59.5 64.8
Accrued payroll 148.2 130.8
Operating lease liabilities 117.9 114.1
Other accrued liabilities 150.5 144.7
Income taxes payable, net 5.9 7.3
Total current liabilities 667.6 622.3
Long-term debt and finance leases, less current installments 518.3 786.3
Long-term operating lease liabilities, less current portion 1,058.7 1,084.5
Other liabilities 68.3 60.6
Commitments and contingencies (Note 7)
Shareholders’ equity
Common stock ( 250.0 million authorized shares; $ 0.10 par value; 60.3 million shares issued and 44.4 million shares outstanding at March 26, 2025 and 60.3 million shares issued and 45.0 million shares outstanding at June 26, 2024)
6.0 6.0
Additional paid-in capital 711.6 707.8
Accumulated other comprehensive loss ( 6.6 ) ( 6.3 )
Retained earnings (Accumulated deficit) 79.5 ( 196.6 )
Treasury stock, at cost ( 15.9 million shares at March 26, 2025, and 15.3 million shares at June 26, 2024)
( 531.5 ) ( 471.5 )
Total shareholders’ equity 259.0 39.4
Total liabilities and shareholders’ equity $ 2,571.9 $ 2,593.1
See accompanying Notes to Consolidated Financial Statements (Unaudited)
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BRINKER INTERNATIONAL, INC.
Consolidated Statements of Cash Flows (Unaudited)
(In millions)
Thirty-Nine Week Periods Ended
March 26,
2025 March 27,
2024
Cash flows from operating activities
Net income $ 276.1 $ 98.0
Adjustments to reconcile Net income to Net cash provided by operating activities:
Depreciation and amortization 148.7 125.8
Stock-based compensation 23.1 16.5
Deferred income taxes, net 12.6 ( 12.9 )
Non-cash other (gains) and charges 11.6 10.1
Net loss on disposal of assets 8.6 3.2
Other 1.9 2.1
Changes in assets and liabilities:
Accounts receivable, net 2.2 11.6
Inventories ( 1.1 ) 1.5
Restaurant supplies ( 2.0 ) ( 0.4 )
Prepaid expenses 0.1 ( 9.0 )
Income taxes ( 4.4 ) 2.5
Operating lease assets, net of liabilities ( 2.0 ) ( 2.9 )
Other assets ( 0.3 ) ( 0.4 )
Accounts payable 8.8 26.7
Gift card liability ( 5.2 ) ( 7.0 )
Accrued payroll 17.7 5.4
Other accrued liabilities ( 8.6 ) 7.8
Other liabilities 5.2 1.8
Net cash provided by operating activities 493.0 280.4
Cash flows from investing activities
Payments for property and equipment ( 185.4 ) ( 140.9 )
Proceeds from note receivable — 1.3
Proceeds from sale of assets — 0.9
Insurance recoveries — 0.7
Net cash used in investing activities ( 185.4 ) ( 138.0 )
Cash flows from financing activities
Borrowings on revolving credit facility 670.0 304.0
Payments on revolving credit facility ( 580.0 ) ( 414.0 )
Payments on long-term debt ( 366.3 ) ( 14.4 )
Purchases of treasury stock ( 86.3 ) ( 25.6 )
Proceeds from issuance of treasury stock 8.0 8.9
Payments for debt issuance costs ( 0.1 ) ( 0.7 )
Payments of dividends — ( 0.2 )
Net cash used in financing activities ( 354.7 ) ( 142.0 )
Net change in cash and cash equivalents ( 47.1 ) 0.4
Cash and cash equivalents at beginning of period 64.6 15.1
Cash and cash equivalents at end of period $ 17.5 $ 15.5
Supplemental disclosure of cash flow information:
Income taxes paid, net $ 43.4 $ 19.2
Interest paid, net of amounts capitalized 51.7 38.7
Accrued capital expenditures 30.4 10.5
See accompanying Notes to Consolidated Financial Statements (Unaudited)
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BRINKER INTERNATIONAL, INC.
Consolidated Statements of Shareholders’ Equity (Deficit) (Unaudited)
(In millions)
Thirty-Nine Week Period Ended March 26, 2025
Common Stock Additional
Paid-In
Capital Retained Earnings (Accumulated Deficit) Treasury
Stock Accumulated
Other
Comprehensive
Loss Total
Balances at June 26, 2024 $ 6.0 $ 707.8 $ ( 196.6 ) $ ( 471.5 ) $ ( 6.3 ) $ 39.4
Net income — — 38.5 — — 38.5
Other comprehensive income — — — — 0.1 0.1
Stock-based compensation — 7.1 — — — 7.1
Purchases of treasury stock — ( 4.8 ) — ( 70.3 ) — ( 75.1 )
Issuances of treasury stock — ( 12.2 ) — 14.9 — 2.7
Balances at September 25, 2024 $ 6.0 $ 697.9 $ ( 158.1 ) $ ( 526.9 ) $ ( 6.2 ) $ 12.7
Net income — — 118.5 — — 118.5
Other comprehensive loss — — — — ( 0.5 ) ( 0.5 )
Stock-based compensation — 7.2 — — — 7.2
Purchases of treasury stock — ( 0.3 ) — ( 10.1 ) — ( 10.4 )
Issuances of treasury stock — ( 0.3 ) — 4.3 — 4.0
Balances at December 25, 2024 $ 6.0 $ 704.5 $ ( 39.6 ) $ ( 532.7 ) $ ( 6.7 ) $ 131.5
Net income — — 119.1 — — 119.1
Other comprehensive income — — — — 0.1 0.1
Stock-based compensation — 8.8 — — — 8.8
Purchases of treasury stock — ( 0.8 ) — ( 0.3 ) — ( 1.1 )
Issuances of treasury stock — ( 0.9 ) — 1.5 — 0.6
Balances at March 26, 2025 $ 6.0 $ 711.6 $ 79.5 $ ( 531.5 ) $ ( 6.6 ) $ 259.0
See accompanying Notes to Consolidated Financial Statements (Unaudited)
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Thirty-Nine Week Period Ended March 27, 2024
Common Stock Additional
Paid-In
Capital Accumulated Deficit Treasury
Stock Accumulated
Other
Comprehensive
Loss Total
Balances at June 28, 2023 $ 6.0 $ 690.0 $ ( 351.9 ) $ ( 482.4 ) $ ( 6.0 ) $ ( 144.3 )
Net income — — 7.2 — — 7.2
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 — —
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 — — — — 0.2 0.2
Stock-based compensation — 4.4 — — — 4.4
Purchases of treasury stock — ( 0.1 ) — ( 0.3 ) — ( 0.4 )
Issuances of treasury stock — ( 1.1 ) — 1.6 — 0.5
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)
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BRINKER INTERNATIONAL, INC.
Notes to Consolidated Financial Statements (Unaudited)
Footnote Index
Note # Description Page
Note 1
Basis of Presentation 9
Note 2
Revenue Recognition 10
Note 3
Fair Value Measurements 11
Note 4
Accrued Liabilities 12
Note 5
Leases 12
Note 6
Debt 13
Note 7
Commitments and Contingencies 13
Note 8
Income Taxes 14
Note 9
Shareholders’ Equity 15
Note 10
Net Income Per Share 15
Note 11
Other Gains and Charges 16
Note 12
Segment Information 17
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1. BASIS OF PRESENTATION
References to “Brinker,” the “Company,” “we,” “us,” and “our” in this Form 10-Q refer to Brinker International, Inc. and its subsidiaries and any predecessor companies of Brinker International, Inc. Our Consolidated Financial Statements (Unaudited) as of March 26, 2025 and June 26, 2024, and for the thirteen and thirty-nine week periods ended March 26, 2025 and March 27, 2024, 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 March 26, 2025, we owned, operated or franchised 1,626 restaurants, consisting of 1,163 Company-owned restaurants and 463 franchised restaurants, located in the United States, 28 other countries and two United States territories.
Use of Estimates
The preparation of the Consolidated Financial Statements (Unaudited) is in conformity with generally accepted accounting principles in the United States (“GAAP”) and requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements (Unaudited), and the reported amounts of revenues and costs and expenses in the reporting periods. Actual results could differ from those estimates.
The information furnished herein reflects all adjustments (consisting only of normal recurring accruals and adjustments) which are, in our opinion, necessary to fairly state the interim operating results, financial position and cash flows for the respective periods. However, these operating results are not necessarily indicative of the results expected for the full fiscal year. Certain information and footnote disclosures, normally included in annual financial statements prepared in accordance with GAAP, have been omitted pursuant to SEC rules and regulations. The Notes to Consolidated Financial Statements (Unaudited) should be read in conjunction with the Notes to Consolidated Financial Statements contained in our June 26, 2024 Form 10-K. We believe the disclosures are sufficient for interim financial reporting purposes. All amounts in the Notes to Consolidated Financial Statements (Unaudited) are presented in millions unless otherwise specified.
Foreign Currency Translation
The Foreign currency translation adjustment represents 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
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 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 require us to adopt the provisions in our fiscal 2026 Form 10-K. The amendments should be applied prospectively; however, retrospective application is permitted. Management does not expect this ASU to have a material impact on our disclosures.
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In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires, for each relevant expense caption on the income statement, detailed disclosure amounts for purchases of inventory, employee compensation, depreciation, and intangible asset amortization. In addition, this ASU requires companies to include amounts already required by GAAP in the same disclosure, provide a qualitative description of remaining amounts not separately disaggregated, and disclose the amount of total selling expenses along with the companies’ definition of selling expenses. The amendment is effective for fiscal years beginning after December 15, 2026, which would require us to adopt the provisions in our fiscal 2028 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.
2. REVENUE RECOGNITION
Deferred Franchise and Development Fees
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 the active contracts with franchisees. We also expect to earn subsequent period royalties and advertising fees related to our franchise contracts; however, due to the variability and uncertainty of these future revenues based upon a sales-based measure, these future revenues are not yet estimable as the performance obligations remain unsatisfied. 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 26, 2024 and March 26, 2025:
Deferred Franchise and Development Fees
Balance as of June 26, 2024 $ 9.7
Additions 1.1
Amount recognized to Franchise revenues ( 1.1 )
Balance as of March 26, 2025 $ 9.7
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 26, 2025:
Fiscal Year Franchise and Development Fees Revenue Recognition
Remainder of 2025 $ 0.2
2026 0.8
2027 0.8
2028 0.7
2029 0.6
Thereafter 6.6
$ 9.7
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Deferred Gift Card Revenues
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 March 26, 2025:
Gift Card Liability
Balance as of June 26, 2024 $ 64.8
Gift card sales 94.9
Gift card redemptions recognized to Company sales ( 91.4 )
Gift card breakage recognized to Company sales ( 8.6 )
Other ( 0.2 )
Balance as of March 26, 2025
$ 59.5
3. FAIR VALUE MEASUREMENTS
Fair value is the price that would be received to sell an asset or paid to transfer a liability, in an orderly transaction between market participants at the measurement date under market conditions. Fair value measurements are categorized in three levels based on the types of significant inputs used, as follows:
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than quoted prices in active markets for identical assets or liabilities
Level 3 Unobservable inputs that cannot be corroborated by observable market data
Financial Instruments
Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and long-term debt. The fair values of cash and cash equivalents, accounts receivable and accounts payable approximate their carrying amounts because of the short maturity of these items.
The carrying amount of debt outstanding related to our revolving credit facility approximates fair value as the interest rate on this instrument approximates current market rates (Level 2). The fair values of our notes are based on quoted market prices and are considered Level 2 fair value measurements.
The carrying amounts of the notes, which are net of unamortized debt issuance costs and discounts, and fair values are as follows:
March 26, 2025 June 26, 2024
Carrying Amount Fair Value Carrying Amount Fair Value
8.250 % notes $ 345.8 $ 371.1 $ 345.2 $ 367.8
5.000 % notes (1)
— — 349.8 349.6
(1) On October 1, 2024, the 5.000% notes matured and were repaid in full using borrowings under our revolving credit facility.
Non-Financial Assets
The fair values of transferable liquor licenses are based on prices in the open market for licenses in the same or similar jurisdictions and are categorized as Level 2. The fair values of other non-financial assets are determined based on appraisals, sales prices of comparable assets or estimates of discounted cash flow and are categorized as Level 3.
We review the carrying amounts of non-financial assets, primarily long-lived property and equipment, finance lease assets, operating lease assets, reacquired franchise rights, goodwill and transferable liquor licenses annually or when events or circumstances indicate that the fair value may not substantially exceed the carrying amount. We record an
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impairment charge for the excess of the carrying amount over the fair value. Any impairment charges are included in Other (gains) and charges in the Consolidated Statements of Comprehensive Income (Unaudited). During the thirteen and thirty-nine week periods ended March 26, 2025 and March 27, 2024, 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 26, 2025 and June 26, 2024, was $ 18.3 million and $ 16.6 million, respectively.
4. ACCRUED LIABILITIES
Other accrued liabilities consist of the following:
March 26,
2025 June 26,
2024
Insurance $ 34.3 $ 31.4
Sales tax 26.8 18.4
Current installments of finance lease obligations 24.0 14.1
Property tax 20.5 24.6
Utilities and services 10.6 10.0
Interest 6.8 18.1
Other 27.5 28.1
$ 150.5 $ 144.7
5. LEASES
We typically lease our restaurant facilities through ground leases (where we lease land only, but construct the building and improvements) or retail leases (where we lease the land/retail space and building). In addition to our restaurant facilities, we also lease our corporate headquarters location and certain equipment.
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
March 26,
2025 March 27,
2024 March 26,
2025 March 27,
2024
Operating lease cost $ 45.8 $ 45.7 $ 137.2 $ 136.9
Variable lease cost 18.0 16.3 51.6 47.4
Finance lease amortization 6.8 3.0 19.3 8.8
Finance lease interest 1.6 1.0 4.7 2.8
Short-term lease cost 0.2 0.1 0.5 0.2
Sublease income ( 0.3 ) ( 0.3 ) ( 1.1 ) ( 1.1 )
Total lease costs, net $ 72.1 $ 65.8 $ 212.2 $ 195.0
Supplemental cash flow information related to leases:
Thirty-Nine Week Periods Ended
March 26,
2025 March 27,
2024
Operating lease assets obtained in exchange for operating lease liabilities
$ 65.3 $ 53.1
Finance lease assets obtained in exchange for finance lease liabilities
17.2 30.7
Finance lease assets are recorded in Property and equipment, at cost, and the net balance as of March 26, 2025 and June 26, 2024 was $ 91.5 million and $ 93.4 million, respectively.
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6. DEBT
Long-term debt consists of the following:
March 26,
2025 June 26,
2024
Revolving credit facility $ 90.0 $ —
8.250 % notes 350.0 350.0
5.000 % notes (1)
— 350.0
Finance lease obligations 106.5 105.4
Total long-term debt 546.5 805.4
Less: unamortized debt issuance costs and discounts ( 4.2 ) ( 5.0 )
Total long-term debt, less unamortized debt issuance costs and discounts 542.3 800.4
Less: current installments of long-term debt and finance leases (2)
( 24.0 ) ( 14.1 )
Total long-term debt, less current portion $ 518.3 $ 786.3
(1) On October 1, 2024, the 5.000% notes matured and were repaid in full using borrowings under 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). Refer to Note 4 - Accrued Liabilities for further details.
Revolving Credit Facility
In the thirty-nine week period ended March 26, 2025, net borrowings of $ 90.0 million were drawn on our revolving credit facility. As of March 26, 2025, $ 810.0 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 March 26, 2025, our interest rate was 5.93 % consisting of SOFR of 4.33 % plus the applicable margin and spread adjustment of 1.60 %.
Financial Covenants
The indenture for our 8.250% notes contains 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 26, 2025, 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 8.250% notes .
7. 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 March 26, 2025 and June 26, 2024, we have outstanding lease guarantees or are secondarily liable for an estimated $ 13.0 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. In the event of default under a lease by an owner of a divested brand,
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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. 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 and management is closely monitoring any exposure. In the thirty-nine week period ended March 26, 2025 we recorded a $ 1.5 million charge in Other (gains) and charges in the Consolidated Statements of Comprehensive Income (Unaudited) for lease contingencies.
Letters of Credit
We provide letters of credit to various insurers to collateralize obligations for outstanding claims. As of March 26, 2025, we had $ 5.8 million in undrawn standby letters of credit outstanding. All standby letters of credit are renewable within the next 7 months.
Cyber Security Litigation
In fiscal 2018, we discovered malware at certain Chili’s restaurants that may have resulted in unauthorized access or acquisition of customer payment card data. We settled all claims from payment card companies related to this incident and do not expect material claims from payment card companies in the future. In connection with this event, the Company was also named as a defendant in a putative class action lawsuit in the United States District Court for the Middle District of Florida (the “Litigation”) relating to this incident. 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.
On April 17, 2025, the district court heard oral argument on the issue of class certification. Upon conclusion of the hearing, the court indicated it would take the matter under advisement. The parties await the court’s ruling. We believe we have defenses and intend to continue defending the Litigation. As such, as of March 26, 2025, 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.
Legal Proceedings
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 (Unaudited).
We are engaged in various legal proceedings and have certain unresolved claims pending. Liabilities have been established based on our best estimates of our potential liability in certain of these matters. Based upon consultation with legal counsel, management is of the opinion that there are no matters pending or threatened which are expected to have a material adverse effect, individually or in the aggregate, on the consolidated financial condition or results of operations.
8. INCOME TAXES
Thirty-Nine Week Periods Ended
March 26,
2025 March 27,
2024
Effective income tax rate 15.8 % 8.3 %
The federal statutory tax rate was 21.0 % for the thirty-nine week periods ended March 26, 2025 and March 27, 2024.
The change in the effective income tax rate in the thirty-nine week period ended March 26, 2025 to the thirty-nine week period ended March 27, 2024 is primarily due to higher Income before income taxes and the resulting deleverage of the FICA tip tax credit.
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9. SHAREHOLDERS’ EQUITY
Share Repurchases
Our Board of Directors approved a $ 300.0 million share repurchase program during fiscal 2022. Our share repurchase program is used to return capital to shareholders and to minimize the dilution to our shares outstanding that results from equity compensation grants. 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. Repurchased shares are reflected as an increase in Treasury stock within Shareholder’s equity in the Consolidated Balance Sheets (Unaudited).
In the thirty-nine week period ended March 26, 2025, we repurchased 1.2 million shares of our common stock for $ 86.3 million, including 1.0 million shares purchased for $ 76.0 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 26, 2025, approximately $ 107.0 million of share repurchase authorization remains under the current share repurchase program.
Stock-based Compensation
In November 2024, our stockholders approved the Brinker International, Inc. 2024 Stock Option and Incentive Plan (the “2024 Plan”) for employees and authorized approximately 3.5 million shares for issuance under the 2024 Plan. The 2024 Plan replaced our stockholder-approved 1998 Stock Option and Incentive Plan (as amended, the “1998 Plan”) for employees, and no further awards will be granted under the 1998 Plan. Our 1999 Stock Option and Incentive Plan for Non-Employee Directors and Consultants (the “1999 Plan”) remains in effect.
In November 2024, the Board of Directors approved the 2025 Executive Performance Share Retention Plan and the granting of performance-based restricted share awards to Kevin Hochman, our CEO and President of the Company and President of Chili’s Grill & Bar, and certain other executives of the Company at a total grant date fair value of $ 25.0 million. Shares earned range from 0% to 200% of the target number of performance shares granted based on the Company’s total shareholder return (“TSR”) over a five -year period from September 26, 2024 through September 25, 2029, relative to the TSR of a peer group of companies as defined. There is a cap on the dollar value of performance shares that may be earned based on a multiple of the target number of performance shares and the Company’s stock price on the grant date. Additionally, vesting is generally contingent upon continuous service during the performance period. Compensation expense for these performance shares is recorded to General and administrative expenses on a straight-line basis over the vesting period based on the fair value of the shares as determined by Monte Carlo simulation on the date of grant.
The following table presents restricted share awards granted under the Company’s various equity compensation plans and the related weighted average fair value per share amounts.
Thirty-Nine Week Periods Ended
March 26,
2025 March 27,
2024
Restricted share awards
Restricted share awards granted 0.6 0.6
Weighted average fair value per share $ 86.47 $ 33.60
10. NET INCOME PER SHARE
Basic net income per share is computed by dividing Net income by the Basic weighted average shares outstanding for the reporting period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the calculation of Diluted net income per share, the Basic weighted average shares outstanding is increased by the dilutive effect of
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stock options and restricted share awards. Stock options and restricted share awards with an anti-dilutive effect are not included in the Diluted net income per share calculation. Basic weighted average shares outstanding are reconciled to Diluted weighted average shares outstanding as follows:
Thirteen Week Periods Ended Thirty-Nine Week Periods Ended
March 26,
2025 March 27,
2024 March 26,
2025 March 27,
2024
Basic weighted average shares outstanding 44.4 44.3 44.6 44.4
Dilutive stock options 0.1 0.1 0.1 0.1
Dilutive restricted shares 1.9 0.8 1.7 0.7
Total dilutive impact 2.0 0.9 1.8 0.8
Diluted weighted average shares outstanding 46.4 45.2 46.4 45.2
Awards excluded due to anti-dilutive effect — 0.1 — 0.6
11. OTHER GAINS AND CHARGES
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
March 26,
2025 March 27,
2024 March 26,
2025 March 27,
2024
Litigation & claims, net $ 2.5 $ 2.0 $ 11.1 $ 5.2
Enterprise system implementation costs 2.4 3.3 12.0 7.4
Severance and other benefit charges 2.0 0.4 2.3 0.5
Lease contingencies 1.5 0.3 1.5 0.8
Restaurant closure asset write-offs and charges 0.8 4.0 2.3 4.8
Loss from natural disasters, net (of insurance recoveries) — — 0.7 ( 0.4 )
Lease modification gain, net ( 0.2 ) ( 0.1 ) ( 1.2 ) ( 0.2 )
Other — — 1.3 1.4
$ 9.0 $ 9.9 $ 30.0 $ 19.5
• Litigation & claims, net primarily relates to legal contingencies and claims on alcohol service cases.
• Enterprise system implementation costs primarily consists of software subscription fees and certain other costs prior to implementation and support of our new cloud-based Enterprise Resource Planning (“ERP”) system after implementation.
• Severance and other benefit charges relates to changes in our management team and organizational structure.
• Lease contingencies includes expenses related to certain lease guarantees and sublease receivables 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.
• Restaurant closure asset write-offs and charges includes costs associated with the closure of certain Chili’s restaurants.
• Loss from natural disasters, net (of insurance recoveries) in the current year consists of costs incurred related to Hurricane Helene and Hurricane Milton.
• Lease modification gain, net relates to the reduction of lease liabilities of certain closed Chili’s restaurants.
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12. SEGMENT INFORMATION
Our operating segments are Chili’s and Maggiano’s. 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 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, 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, Maggiano’s banquet service charge income, gift card breakage, delivery service fee income, 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.
We do not rely on any major customers as a source of sales , and the customers and long-lived assets of our operating segments are predominantly located in the United States. There were no material transactions amongst our operating segments.
Our chief operating decision maker uses Operating income as the measure for assessing performance of our segments. 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, supplies, delivery fees, utilities, payment processing fees, and workers’ compensation and general liability insurance.
The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP:
Thirteen Week Period Ended March 26, 2025
Chili's Maggiano's Corporate Consolidated
Company sales $ 1,292.2 $ 120.8 $ — $ 1,413.0
Franchise revenues 11.9 0.2 — 12.1
Total revenues 1,304.1 121.0 — 1,425.1
Food and beverage costs 324.5 28.6 — 353.1
Restaurant labor 413.1 39.1 — 452.2
Restaurant expenses 304.5 35.8 0.6 340.9
Depreciation and amortization 48.9 3.5 2.3 54.7
General and administrative 12.7 2.5 43.1 58.3
Other (gains) and charges 2.7 0.8 5.5 9.0
Total operating costs and expenses 1,106.4 110.3 51.5 1,268.2
Operating income (loss) 197.7 10.7 ( 51.5 ) 156.9
Interest expenses 1.3 0.1 11.8 13.2
Other income, net — — ( 0.1 ) ( 0.1 )
Income (loss) before income taxes $ 196.4 $ 10.6 $ ( 63.2 ) $ 143.8
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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
Thirty-Nine Week Period Ended March 26, 2025
Chili’s Maggiano's Corporate Consolidated
Company sales $ 3,508.0 $ 378.4 $ — $ 3,886.4
Franchise revenues 35.3 0.6 — 35.9
Total revenues 3,543.3 379.0 — 3,922.3
Food and beverage costs 893.7 87.6 — 981.3
Restaurant labor 1,133.1 117.5 — 1,250.6
Restaurant expenses 870.1 107.8 1.3 979.2
Depreciation and amortization 131.2 10.3 7.2 148.7
General and administrative 36.7 7.9 118.6 163.2
Other (gains) and charges 11.8 1.2 17.0 30.0
Total operating costs and expenses 3,076.6 332.3 144.1 3,553.0
Operating income (loss) 466.7 46.7 ( 144.1 ) 369.3
Interest expenses 4.2 0.2 37.8 42.2
Other income, net ( 0.1 ) — ( 0.6 ) ( 0.7 )
Income (loss) before income taxes $ 462.6 $ 46.5 $ ( 181.3 ) $ 327.8
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Thirty-Nine Week Period Ended March 27, 2024
Chili’s
Maggiano's Corporate Consolidated
Company sales
$ 2,803.1 $ 371.5 $ — $ 3,174.6
Franchise revenues
31.8 0.5 — 32.3
Total revenues 2,834.9 372.0 — 3,206.9
Food and beverage costs 721.6 88.1 — 809.7
Restaurant labor 955.3 119.5 — 1,074.8
Restaurant expenses 785.5 103.0 0.4 888.9
Depreciation and amortization 108.3 9.8 7.7 125.8
General and administrative 31.0 6.9 93.8 131.7
Other (gains) and charges 10.3 0.6 8.6 19.5
Total operating costs and expenses 2,612.0 327.9 110.5 3,050.4
Operating income (loss) 222.9 44.1 ( 110.5 ) 156.5
Interest expenses 2.5 0.2 47.2 49.9
Other income, net ( 0.1 ) — ( 0.2 ) ( 0.3 )
Income (loss) before income taxes $ 220.5 $ 43.9 $ ( 157.5 ) $ 106.9
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.