Brinker International, Inc.

Good morning, ladies and gentlemen, and welcome to the Brinker International Q4 2020 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Micah Ware. Ma'am, the floor is yours.

Thank you, Paul, and good morning, everyone. With me on today's call are Wyman Roberts, Chief Executive Officer and President of and Joe Taylor, Chief Financial Officer. Results for the fourth quarter were released earlier this morning and are available on our website at brinker.com. Wyman and Joe will first make prepared comments related to our operating performance and strategic initiatives. Then we will open the call for your questions. Before beginning our comments, I must remind everyone of our safe harbor regarding forward-looking statements. During our call, management may discuss certain items which are not based entirely on historical facts. Any such items should be considered forward-looking statements within the meaning of the Private Security Litigation Reform Act of 1995. All such statements are subject to risk and uncertainties which could cause actual results to differ from those anticipated. Such risk and uncertainties include factors more completely described in this morning's press release and the company's filings with the SEC. And, of course, on the call, we may refer to certain non-GAAP financial measures that management uses in its review of the business and believes will provide insight into the company's ongoing operations. And with that said, I will turn the call over to Wyman.

Thanks, Micah. And thanks, everyone, for joining us this morning. Joe and I will share highlights of our fourth quarter performance and what we're seeing quarter to date. And by now you've heard most others in our space, and despite the volatility we're all facing, it's good to see the category and the industry moving in the right direction. You'll hear some of the same themes from us, like progressive improvements throughout the quarter as dining rooms reopened, growth in off-premise, and digital expansion. The biggest difference you'll hear is in our level of performance. By staying true to our strategy and making aggressive moves to grow the business, our team has navigated this pandemic very well. Chili's generated significant top-line progress throughout the quarter, and with our operators' disciplined margin management, we delivered positive cash flow for the quarter, which we used to pay down debt. Our debt load is now below our pre-pandemic level. We continued this momentum into July, ending the month with Chili's down just 10.9%. And in the 84% of our company-owned restaurants with open dining rooms, we're down just 3.8%. And 36% of our company-owned Chili's restaurants ran positive comp sales for the month. It wasn't our quick reaction to the crisis that enabled us to deliver these results. It was our choice to stay true to the strategy we've been working for more than two years. We had already made significant progress in the areas required to thrive in this environment, off-premise, digital, value, and scale. We didn't have to scramble when the pandemic hit. We walked into it with seven solid quarters of performance. All we had to do was stay focused and push the accelerator a little harder. As a result, we set the bar in casual dining, landing the top spot in sales and traffic for three straight months, according to NAPTRAC. and we're poised for continued future success. You've heard how many restaurant companies are leaning into digital to manage through this crisis. And while Chili's is no exception, we were leading the way in the digital space long before the pandemic. Over the past decade, we've made significant investments to build our digital infrastructure, foster connections with guests, and enabling us to quickly respond to their evolving dining needs. Increasing convenience is a big component of how we leverage our digital capability. We can lean into our 8 million member loyalty database, gain check-level purchasing insight from our tabletop devices, and continue to improve our five-star app with features like one-tap reorder of our guests' most frequent ordered items. And last year, we integrated DoorDash into our POS system and our e-commerce experience, making it possible to shift our marketing focus from national TV spots to our digital platform. where we continuously test and learn to increase e-commerce conversions. And as a result, our digital sales of off-premise meals have grown from low teens to more than 50% in the fourth quarter, with only a slight dip as dining rooms reopen. We've also driven frequency, increased frequency through our takeout and delivery channels at a fraction of the marketing expense. That's the beauty of a digital strategy that makes dining easier and more convenient for guests. Because we can meet them where they are, Guests used us more. Finally, here's something you haven't heard from anyone else in our space. During the last week of fiscal 2020, we accomplished something no other restaurant company has ever done. In a single day, we launched It's Just Wings, our first virtual brand, in 1,050 Chili's and Maggiano's across the country. Sales continue to build every week, and we clearly see the potential to exceed $150 million in the brand's first year, which would secure It's Just Wings a spot in the top 200 restaurant brands. Over the years, casual dining has been dinged for being overbuilt. We believe this is our opportunity to prove that maybe it isn't overbuilt, it's just underutilized. It's Just Wings leverages existing buildings, equipment, and labor. Even after aggressive pricing and marketing, buying quality ingredients and packaging, and paying our last mile logistics partner, we're generating strong flow through. The brand's guests are highly incremental to Brinker Concepts and their feedback is extremely positive. Satisfaction ratings are among the top restaurant brands on DoorDash and rear intent is high. And we're just getting started. We created this business in six months and launched it overnight with minimal investment in a consumer channel where demand is growing by more than 100% annually. Taking into account our scale, the capacity of our kitchens, our exclusive partnership with DoorDash, we believe our ability to win in this space is unmatched. So we're testing additional virtual concepts and learning how to drive visibility among the millions of DoorDash guests looking for food delivery options and how to continually improve our operations to meet consumer demand for speed, food quality, and value. We are pleased to have not one, but two brands that rank among the most popular on the DoorDash platform, and we're excited about the potential that lies ahead. Obviously, things aren't back to normal for any of us yet, but we see a bright future for all the Brinker brands. We promised you last quarter that no matter what came our way, we would do two things. Put the safety of our guests and team members first, and continue to perform and take share. I couldn't be more proud of how our operators and our support teams have delivered on both of those promises and how we're creatively and boldly building our future together. No matter what lies ahead, with the talent on our team, the power of our brands, and the scale at our disposal, we start from a position of strength. And with that, I'll turn the call over to Joe.