* Q1 EPS of 20 cents excluding items matches expectations
* Still sees 2009 earnings down 15 percent to 25 percent
* Cuts 2009 capital spending forecast by $40 million
* Will use Macaroni Grill stake sale proceeds to pay debt
* Shares fall more than 5 percent
(Adds executive comments, byline; updates share price; changes
dateline, previous NEW YORK)
By Lisa Baertlein
LOS ANGELES, Oct 21 Brinker International Inc
(EAT.N), owner of Chili's Grill & Bar, posted a lower quarterly
profit on Tuesday because of higher costs and a sharp decline
in business in September.
The company's shares fell more than 5 percent.
Brinker, whose other chains include On The Border Mexican
Grill & Cantina and Maggiano's Little Italy, said its business
had been on track until September, when U.S. customer traffic
deteriorated due to two hurricanes and a U.S. financial crisis
that caused many consumers to rein in discretionary spending.
The company and other restaurant operators in the mid-tier
casual dining segment are among the hardest hit by the U.S.
economic downturn, which has prompted consumers to cut back on
meals away from home and contributed to the worst restaurant
industry downturn since the early 1990s.
Brinker's net income for the fiscal first quarter ended
Sept. 24 fell to $23.8 million, or 23 cents per share, from
$37.6 million, or 34 cents per share, a year ago.
Earnings before special items and excluding Romano's
Macaroni Grill were 20 cents a share, matching analysts'
expectations according to Reuters Estimates.
CHILI'S SALES FALL
The company, based in Dallas, said earlier in October that
it expected lower earnings in the quarter because of higher
commodity costs and a greater-than-expected decline in
comparable restaurant sales.
Revenue fell 6.7 percent to $984.4 million after the sale
of 76 restaurants to franchisees and 49 restaurant closures.
Sales at restaurants open at least 18 months fell 4 percent,
the company said. Same-store sales at its flagship Chili's
brand were down 3 percent.
Restaurant expense as a percentage of revenue increased to
58.8 percent from 57.1 percent because of costs such as labor
Brinker said it is still on track to close the $131.5
million sale of a majority stake in Macaroni Grill to private
equity firm Golden Gate Capital by the end of this quarter.
Asked whether Golden Gate had sought to renegotiate the
deal's price given weak market conditions, Brinker executives
said the subject had not come up and that the chain was
performing as expected.
Chief Financial Officer Chuck Sonsteby said that Brinker
would use Macaroni Grill sale proceeds to pay down debt and
that it has a moratorium on share buybacks.
He also reassured investors that Brinker was "well within
compliance of all debt covenants" at the end of the first
The company cut its 2009 forecast for capital spending by
$40 million to a range of $135 million to $145 million, a move
Sonsteby said should "substantially" increase free cash flow.
Brinker stood by its recently lowered forecast for 2009
earnings excluding items to show a decline of 15 percent to 25
percent compared with fiscal 2008.
Shares in Brinker, which owns, operates or franchises more
than 1,900 restaurants, fell 54 cents to $9.68 on Tuesday, down
from nearly $20 at the beginning of the year.
(Additional reporting by Aarthi Sivaraman in New York; editing
by Dave Zimmerman and Susan Kelly)