Brinker International, Inc.

Good morning, ladies and gentlemen, and welcome to the Brinker International Q1F22 earnings call. At this time, all participants have been placed on a listen-only mode, and the floor will be opened for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Micah Ware, Vice President of Financial and Investor Relations.

Sir, the floor is yours. Thank you, Kate, 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. As many of you know, we pre-released limited results for the first quarter ahead of our Investor Day, hosted here in Dallas on October 20th. We released full results for the quarter earlier this morning, which are available on our website at Brinker.com. Since we have recently shared details regarding the first quarter, Wyman and Joe will make prepared comments related to our operating performance, and then we will open the call and jump straight to your questions. Before beginning our comments, it is my job to 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 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 factors more completely described in this morning's press release and the company's filing 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.

Okay. Thanks, Micah. It's good to be back with you all again. It was great seeing some of you in Dallas and many of you virtually during our investor day a couple of weeks ago. Thank you for making time to get an in-depth look into our business. What you should have taken away from that was this. We're very optimistic about where the business is going. We're managing for long-term success, and we're confident in the strength of our brands and the levers we have yet to pull to continue to grow the business. From a top-line perspective, we're sitting in good spots. Sales numbers are solid and traffic numbers are extremely good. Our near-term challenge is not creating demand, but rather it's working through the latest pandemic-driven staffing and supply chain issues that are impacting our cost structure. As you know, these are the same challenges impacting the industry as well as much of the economy. But after 40 years in this business, I'll take managing costs of researching for sales and traffic any day. Those are good problems to solve because they're largely within our control. Our operators are working extremely hard every day to train our new team members, deliver great guest experiences, and tighten up the middle of the P&L. We've taken some additional price during the quarter to help offset our structural labor and cost of sales increases. As I mentioned during Investor Day, we're not going to price to buy a quarter. But as we closely monitor the issues, we've layered in incremental pricing to offset what we believe are the structural labor and cost of sales increases. And Joe will give you more detail on that. Moving forward, if we discover that what we thought was transitory turns out to be more structural, we'll deal with that from a pricing perspective with a disciplined approach that protects our traffic performance and keeps our brand strong. We know we have pricing power if we need it, particularly in the delivery and virtual brand channels. And we're committed to maintaining our margins and our business model. And that's what we want to do here. We're also working hard to remove transitory costs from the system with full recognition that the headwinds are notable and persistent, especially around labor. And while it takes some time, we're confident with the progress we're making, and we will significantly reduce these costs by the back half of the year. The spike in turnover we experienced during the quarter created short-term pressure on the business as we trained our new team members to run our systems. The good news is we are quickly building staff and have as many team members now as we did pre-COVID, though there are markets that are still not fully staffed, which is limiting their capacity. This is particularly true in the Midwest, where it's taking longer to reach these optimum levels. The impact of these staffing challenges cost us 3% to 4% in first quarter in sales, which we view as upside as we get those restaurants staffed and trained over the coming months. Our top talent is engaged in these markets to solve these issues as quickly as possible. Meanwhile, the base business is strong, especially where dining rooms are fully open. When we look at the totality of the business, Chili's is running positive sales and traffic and maintaining a sizable traffic gap to the industry, most recently at 9% on a two-year look as measured by NAPTRAC. And we've got sales leverage around virtual brands and delivery that we're holding in reserve until our operations teams are stabilized and fully trained. And while the last quarter was more challenging than we expected, we're making great progress. And my expectation is we will end the year strong. And as we shared with you during Investor Day, we've got exciting initiatives and innovation we're working on, and we're confident in our future growth opportunities. Now I'll turn the call over to Joe to share more insight into the quarter and guidance for the year. Joe?