Brinker International Lifts 2010 Outlook

Brinker International, Inc. (EAT), one of the leading casual dining restaurant companies, recently lifted its fiscal 2010 outlook based on improvement expected in comparable-store sales.

The operator of Chili's Grill & Bar and Maggiano's Little Italy restaurants now expects fiscal 2010 earnings before special items in the range of $1.40 to $1.44 per share, up from the previous guidance range of $1.15 to $1.30. Brinker now expects comparable-store sales for fiscal 2010 to fall between 1% and 2%, an improvement over the 2% to 4% decline forecasted earlier.

For third-quarter 2010, management expects earnings between 41 cents and 44 cents per share, and comparable-store sales to decline between 3.5% and 4.5%. By restaurant concepts, comps are expected to fall between 4.5% to 5.5% at Chili's Grill & Bar and 2.5% to 3.5% at On The Border. However, comps are expected to rise in the range of 1.5% to 2.5% at Maggiano's.

The current Zacks Consensus Estimate for third-quarter and fiscal 2010 are 40 cents and $1.40 per share, respectively.

In a separate story, Brinker declared that it has agreed to sell its On The Border Mexican Grill & Cantina brand to OTB Acquisition, an affiliate of San Francisco based private equity firm Golden Gate Capital. The transaction will close by fiscal-end 2010. But, the terms of the transactions were not disclosed.

Excluding special items and net income from On The Border, management has projected third-quarter 2010 earnings between 36 cents and 39 cents, and fiscal 2010 earnings between $1.20 and $1.24 per share.

On The Border Mexican Grill is a casual dining Mexican restaurant operating 160 outlets. There are also 1,499 restaurants operating under Chili's Grill & Bar and 45 restaurants operating under Maggiano's Little Italy.

Apart from raising its outlook, Brinker said that it will boost its quarterly dividend by 27% to 14 cents from 11 cents a share at present effective fourth-quarter 2010. The higher dividend will be paid on Jul 1, 2010 to shareholders of record as of Jun 17, 2010.

Brinker’s board also authorized an additional $250 million share repurchase program bringing the total authorization to $310 million. Management hinted that it will use the proceeds arising from the divestiture of On The Border brand and the free cash flow generated over time to buy back shares.