Brinker International, Inc.

Good day, ladies and gentlemen, and welcome to the Brinker International's third quarter F21 earnings call. At this time, all participants have been placed on 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, VP of Finance and Investor Relations. Micah, 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, and Joe Taylor, our Chief Financial Officer. Results for the 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, it is my job to remind everyone of our safe harbor regarding the 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 Securities 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 fact-checking, 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. With the rollout of vaccines in full swing and restrictions lifting across the country, Our guests pent up demand for a dine-in experience is being released as well. People are finally starting to feel safer to venture out and spend some of the money they've been saving over the past year. We're excited about the positive momentum in our economy and the resurgence in our dining rooms. When we last talked at the end of January, we were already seeing progress in the business, even as we were navigating a COVID spike that drove another wave of capacity restrictions in our dining rooms. Just as we started to see numbers of cases come back down, we were hit with the winter storm of the century that impacted our restaurants across Texas and the Southeast at levels we haven't experienced before. But despite the challenges at the start of the third quarter, we ended strong, delivering an adjusted EPS of 78 cents, with chili sales returning to positive territory from an absolute perspective. And we've seen those sales trends continue into April. When we look at our more normalized performance of fiscal 19, chili sales are up 10%, and nearly three-quarters of our restaurants are generating meaningful, positive results, even though we're still social distancing and wearing masks in all of our restaurants, and we're still operating under capacity restraints across the country. We believed all along that consumers' increased demand for convenience would continue post-pandemic, and it's playing out that way. As our dining room traffic increases, our off-premise business continues to hold strong. We expect that when things normalize, we'll see stronger dining rooms and a takeout and delivery business stronger than it was pre-pandemic. As you think about Maggiano's in the context of this recovery, upscale casual is playing itself out a little differently. We're pleased with the significant improvements in the Maggiano's business, especially in their dining rooms. Now it's just a matter of how quickly banquets come back. We know there's significant pent-up demand, and we're well positioned to meet it. We're already seeing signs of social occasions returning, and we feel good about building our corporate business back in time for the important holiday season. Staying focused on our strategy throughout the extraordinary events of the past year has served us well, as we consistently outperformed the industry. We have good line of sight to hit the targets we were expecting post-pandemic at both Chili's and Maggiano's. Navigating the past year taught us we can run this business even more efficiently than in the past, and we're committed to keeping our cost structure in line. We think our category leadership driven by the multi-year investments in our infrastructure and digital capabilities will help us continue to outpace the industry. We still have a lot of heart for our restructured marketing approach, and we'll continue to leverage our digital expertise to connect with consumers and drive traffic. The subject of labor is clearly top of mind across our industry. Today's labor market is one of the toughest ones we've experienced, but we have the tools to navigate through it successfully. While our performance throughout the pandemic enabled us to keep higher levels of staffing in our restaurants, we are hiring more team members than usual to support our increased volumes. We're also benefiting from our decision to keep our managers on board throughout the pandemic as they provide the operational leadership to staff our teams and take care of our guests. We're fortunate to be able to leverage our scale, the digital expertise we built, and our PeopleWorks team to recruit talent in creative ways that keep our cost structure intact and our guests coming back. We know the best way to maintain profit margins in this business is through volume. So we leaned into virtual brands as a way to leverage our assets and tap unused capacity. It's Just Wings continues to perform well. and we're on track to hit that $150 million target we set at the beginning of the year. Almost all of our domestic franchise partners jumped on the opportunity, and globally, several of our partners have already picked it up. Wings is now in nine countries and 160 locations outside the U.S., making it a formidable brand in just its first year. It's a real testament to our methodical and disciplined virtual brand strategy, how we've executed it, and the leverage it brings to our P&L and to our franchise partners' business. We have the system up and running, and we're executing it well, especially during high volumes. Now we're focused on building the brand and leveraging the growth opportunities ahead. We believe takeout holds a lot of potential for us, and now that we've invested in the technology and infrastructure to support it, we're working to increase awareness levels outside the delivery channel. We've learned a lot this year with the launch of It's Just Wings that we'll leverage when we're ready for our next virtual brand. We're pleased with the current results from the expanded test of Maggiano's Classics, and we're working through the timing to ensure we're able to support our operators and deliver a great guest experience. So this has been an exceptional year of learning for us, not just with virtual brands, but in many ways. We've learned the restaurant industry in general and specifically our team is full of unbelievably resilient, amazing human beings. I'm so impressed by how this team has risen to every challenge that's come our way. We're stronger for it, and we're prepared for the growth opportunities ahead as vaccinations spread across the country and dining rooms fill up. As we look forward, our ability to navigate through any short-term cost headwinds is solid. Our scale affords us advantages in terms of full contracting, keeping our employment base intact, and delivering one of the strongest value propositions in the industry. Longer term, we see a lot of organic growth potential for Brinker. Obviously, we'll continue to execute our multi-year virtual brand strategy and protect our improved business model. And with higher volumes, we'll capture new development opportunities and keep the brand fresh through our remodel program. I'm proud of our progress and our results, the strength of our brand, and our line of sight to future earnings performance. And with that, I'll turn the call over to Joe.