Brinker International, Inc.

Thank you, Holly, and good morning, everyone, and thank you for joining us on today's call.

Here with me today are Kevin Hochman, President and Chief Executive Officer and President of Chili's, and Micah Ware, Chief Financial Officer. Results for our fourth quarter were released earlier this morning and are available on our website at brinker.com. As usual, Kevin and Micah will first make prepared comments related to our strategic initiatives and operating performance. Then we will open the call for your questions. Before beginning our comments, I would like 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 risks and uncertainties which could cause actual results to differ materially from those anticipated. Such risks 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 Kevin.

Thank you, Kim, and good morning, everyone. Thank you for joining us today to discuss our financial and operating performance in the quarter, as well as to share guidance for fiscal 26. Q4 Chili's same-store sales were plus 24%, outperforming a stronger casual dining industry by 1,890 basis points. This result was lapping a plus 15% in Q4 last year for a two-year comp of plus 39%. Q4 25% marks the completion of a three years into our turnaround plan, and the sustained results continue to be very encouraging. Chili's has now beat the industry the past seven quarters on traffic, as well as completed our 17th consecutive quarter of positive same-store sales growth. Our three-year fiscal 25 comp sales growth number is plus 40%, and that growth has lifted AUVs to $4.5 million. Through simplification and growth, we've also been able to expand Chili's restaurant operating margins significantly, from 11.9% in fiscal 22 to 17.6% in fiscal 25. With $4.5 million AUVs, everything generally gets easier for the restaurants. Labor budgets, repairs and maintenance, staffing, cleaning, and keeping food coming out hot and delicious. When you have these fundamentals in place and labor and facilities are properly funded, it's a lot easier to continue improving the guest and team member experience over the next three years. With a significantly streamlined menu, more labor deployed, a restaurant in a state in better condition with better equipment, and a brand new culture that people are excited about, Chili's is well positioned to continue growing market share in the industry for years to come. These strong quarterly results were achieved by our continued focus on the fundamentals of casual dining, food, service, and atmosphere. At the end of Q4, we relaunched our ribs platform. Customers are raving about the look, the size, and the taste of the ribs. It's a very noticeable upgrade. With a full rack of ribs that are so big and look so delicious, they are a wow when guests see them come to the table. After we get a quarter of execution reps for our restaurant teams on the new ribs, our plan is to turn on digital marketing in Q2. It's clear we have a winning product with our new ribs, and our intent now is to use them to drive traffic. We also rolled out our new frozen marg program, which features a new premium Patron frozen base with the new Taylor marg machines. The new tailors deliver a superior frozen marg texture, as well as have a larger production capacity, which is important because we are selling nearly twice the number of frozen margs, even at the significantly higher $10 price point. Customers love the new Patron Frozen, the Flamingo Freeze featuring Tito's Vodka, and the Arctic Drip featuring Malibu Coconut Rum and Blue Curacao. We believe we now have the best tasting frozen margs in the restaurant industry. The marketing team successfully launched a new frozen program, at a press event in New York City featuring the world's first-ever frozen Chili's restaurant, and the reviews and sales of the new frozen program are significantly exceeding expectations. And lastly on food, I'd like to share the results of the Big QP launch, which continues our Chili's industry-leading value story at 1099. The marketing team came up with a brilliant launch event they called Fast Food Financing, where guests tired of paying high prices for fast food could apply for loans to pay for their next fast food purchase and try the new Big QP. This event not only created incredible buzz all throughout the country, it reinforced Chili's as a restaurant value leader. And through sharp menu merchandising, we've been able to keep three-for-me mix flat at under 18% and reduce 1099 mix to 7.7% even with the Big QP's success. We also delivered more operational improvements in Q4. Turbo Chefs have now been successfully installed in all restaurants, resulting in the retirement of the CTX and Impinger units. We continue to hear from the restaurant teams that turbo chefs put out way less heat in the kitchen, cook more evenly, and quickly are more reliable and easier to clean than the old equipment. They also enable the noticeable delicious bark on our new ribs, and we believe the sales growth in ribs alone will deliver the return on investment we need for the new equipment. Q4 also saw continued simplification of pantry ingredients and menu items. We eliminated a net of 10 pantry SKUs and eight food and drink menu items, which will allow our bartenders and cooks to focus on making fewer things better and help with less things to order and to inventory. We have now started the year four of our turnaround, and there are some that have questioned the sustainability of our results, which is a fair question given the history of casual dining and of Chili's. Our strategy that we shared two and a half years ago at our investment day was simple. Address the key fundamentals to winning casual dining for the long term, food, service, and atmosphere. And while there's still lots of opportunity ahead of us, We are a much different Chili's today than we were three years ago. Here are some facts that provide some color on how much different Chili's is today. Our average restaurant volume has grown from 3.1 million at the end of fiscal 22 to 4.5 million in fiscal 25. And Chili's restaurant operating margin has improved from 11.9% in fiscal 22 to 17.6% today. We've eliminated over 25% of our menu, and we do fewer things a whole lot better. We focused on improving our five to tribe core segments, burgers, crispers, fajitas, margaritas, and the triple dipper. As a result of the simplification of menu upgrades, food grade scores have never been higher. On service, we now invest over $160 million more in labor than we did in fiscal 22. And that going investment is built into the 17.6 restaurant operating margin. Guests with a problem or GWAP, our dining room key measure, we track daily on a guest experience, is a mere 2.3% and has never been lower since we started tracking it. Less things to do with more people to do those things makes it a whole lot easier to deliver better food and service. On repairs and maintenance, we've invested over $100 million incrementally in the past three years, allowing us to catch up on deferred maintenance accumulated during COVID, which had significantly impacted the guest and team member experience. Our estate has never been in better condition than it is today And we are now funded ongoing to keep it that way. Our marketing budgets are also much bigger now, which allows us to drive traffic to our better operating restaurants. In fiscal 22, we invested $32 million in marketing. In fiscal 25, we invested $137 million. We built a world-class marketing team led by George Felix, Jesse Johnson, Steve Kelly, Mary Ellen Scott to invest those incremental dollars. And that team is now widely considered the best in restaurant marketing. They were awarded AdAge's 2025 Brand of the Year, which spans all industries and not just restaurants. Lastly, because of our much-improved performance, we've been able to strengthen our balance sheet. We paid down over $570 million of our outstanding debt in the past three years and are now at a very strong 1.7 lease-adjusted leverage ratio. This will give us increased flexibility in the future and the financial strength to weather any macro headwinds or bumps in the road that would be more difficult if we continued to have all that leverage. The reason why we are sharing this detail is to substantiate that Chili's is a completely different concept today than it was three years ago. Those who believe our success was driven solely from a cheese pull in social media are just not close enough to our story. Yes, internet virality and TV advertising will bring new guests in, but that success is fleeting and short-lived unless the experience they have in the restaurant matches what they saw in advertising. The investments we have made in the food, operations, and facilities have allowed our guest experience to match the quality of our world-class marketing. As we say at Chili's, marketing brings them in, but operation keeps them coming back. This is why we continue to grow and sustain those gains. Now I'd like to spend a few minutes on what's coming in Fiscal 26. Our Chili's Fiscal 26 plans are strong and will allow us to continue the momentum and comp the comp, which includes rolling two big quarters of plus 30% same-store sales growth in Q2 and Q3, the fiscal 25, and a whopping plus 43% same-store sales growth in November. Our 12 vice presidents of operations once again selected an obsession metric to be laser-focused on this fiscal. With their confidence in the plans and their confidence in the restaurant team's ability to deliver them, I'm excited to share they have again chosen traffic as their obsession metric in fiscal 26. In the food pillar, we'll have a full year of the ribs upgrade that started in July and Queso and nacho upgrades at the beginning of Q2, which we believe will position us to have the best tasting queso in the industry, served hot every order. And in the back half of the year, we have a major relaunch of our chicken sandwich platform. Chicken sandwiches are a very large and growing segment. We have an exceptional product at an exceptional value, which positions us well to grow share in the chicken category. And from the beverage side, we'll have a full year of our new frozen mark platform and a full lineup of exciting $6 marks of the month. We expect this plan will extend our number one position in margaritas, driven by our barbell pricing strategy and growth in the large frozen marg segment. We are also investing in base ingredients to continue elevating food grade scores. Throughout the fiscal, we will be making investments in more premium mayo, ranch, bacon bits, and 50% thicker bacon, which are key building blocks in the Chili's menu and are featured in many of our recipes. At a time when others may be pulling back on quality to offset inflationary headwinds, We view this as an opportunity to accelerate our food quality versus competition. From the operations front, we have several initiatives coming in fiscal 26. We will have four quarters of simplification rollouts, which will continue to make it easier for our teams to execute with excellence. Fiscal 26 will see the start of our north of six initiatives, where we take the best in class processes from high $6 million AUV restaurants and roll them into the balance of the system to increase throughput. And lastly, we will launch a new hospitality initiative that includes new labor scheduling process tools to help our general managers build stronger teams, and an initiative to help build a culture of manager ownership and accountability. In the atmosphere pillar, we are now finished with catching up on repairs and maintenance, and with our improved cash position, we are now switching over to playing offense, which means remodeling and building new restaurants. We're on track to do our first four remodels in the new modern Greenville re-image package by the end of this calendar year, where we'll learn what's working, what's not, and land on the right package to roll to the system. The modern Greenville project objective is to remodel 10% of the fleet annually, which means restaurants are refreshed every 10 years and we maintain an atmosphere that guests are excited to dine in. We expect to ramp up re-image pace in calendar 26 and are planning to get to a run rate of the 10% by the beginning of calendar 27. The work I've seen so far is exciting and when we showed the modern Greenville remodel renderings to the managers last week, At our annual conference, there were a lot of oohs and aahs with iPhones out snapping away. Our world-class marketing team set a vision for an exciting new design that is uniquely Chili's, and our construction team is doing a brilliant job of how to cost-effectively bring this to life. To up our re-imaging and our new restaurant development capability, we've invested in the new officer role to lead the group. I'm pleased to share Richard Ingram, started a few months ago as our Vice President of Restaurant Development. His responsibilities across both Chili's and Maggiano's are to one, lead the re-image program to upgrade our state, and two, restart a new restaurant opening program that will accelerate development. Richard spent over two decades working in development at a large convenience store chain that built a lot of new stores over a long period of time, and we are confident Richard will be able to do the same at Brinker. Lastly, I want to share several of the big technology initiatives we have planned for 26 to improve both the guest and team member restaurant experience. The biggest one is a dramatic simplification of a handheld iPad application our servers use to take hundreds of millions of orders annually. It will feature a more intuitive design created by a third-party UX expert, the removal of over 700 SKUs that are no longer sold but currently show up in the application, and faster paths to create orders. The results will be hundreds of millions of less taps for our servers, less scrolling, and more importantly, more accuracy and faster order taking. We also believe this initiative will help with server turnover. as we've had some issues of new servers leaving after being frustrated by the current tablet system within 30 days of starting. The new app will also continue to work even if the restaurant's internet connection goes down through a seamless offline mode and also feature easier split-check capability, which can be a pain for our servers and slow down table turns in the current system. Another major tech initiative is upgrading the internet and Wi-Fi throughout our state. This was a project that began last year with our Comcast partners and will be completed by calendar year-end. It brings three important improvements to our connection. One, cellular backup if the network goes down to continue service. Two, higher speed internet for restaurants on older technology. And three, better Wi-Fi coverage within the restaurants by installing over 5,000 new access points. Given how much of our operation now depends on the internet connection and the speed of it, this is a very important foundational upgrade. CIO Chris Caldwell has done an exceptional job in his first year refocusing his organization on enterprise technology projects, that will make a real difference removing friction and improving productivity every day for our restaurant teams. Now let's do an update on Maggiano's. Today we announced the leadership change. Dominique Berloni has made the decision to step away from Maggiano's and Brinker. Dom brought Brinker a new lens to hospitality and food that has inspired all of us to see what the Maggiano's brand can be, especially with the recent re-imaged Orlando Maggiano's, our first re-imaged restaurant in the Maggiano's turnaround. I want to offer my sincere thanks to Dom for his friendship, leadership, and service to Brinker over the past two years and wish him the very best in his next. While we are making progress on menu simplification and upgrading recipes, we do have an opportunity to apply more of the Chili's turnaround to Maggiano's. One of the keys at Chili's was leaning into the things that made Chili's great when it was at its best and making those things relevant again. When Maggiano's was at its best and growing the fastest, its core was a menu of delicious Italian-American favorites served in abundant portions in an inviting atmosphere where you'd have a great time with friends and family. This was the recipe for great value. The core essence is why guests frequent Maggiano's and is what we need to focus on to reignite and make Maggiano's a growth concept. To accelerate a Back to Maggiano's turnaround, I will now be overseeing Maggiano's as the interim president. We also have promoted the Chili's VP of Operations from the Florida region, Rich Kitzel, to COO of Maggiano's. Florida has been a top three performing Chili's region for years, and Rich's leadership has been the reason why. Rich is known for being a disciplined operator who builds great teams and is not afraid to challenge the status quo when change is needed. Rich and I, together with the Maggiano's leadership team, are crafting a Back to Maggiano's plan, which will apply the key learnings from the Chili's turnaround to address the biggest opportunities on the brand's food, service, and atmosphere. We will also commit to spending more time listening to the restaurant team's ideas, like we've done on Chili's, to drive the ideation that will accelerate Maggiano's turnaround. I'm looking forward to sharing plans in upcoming calls. I continue to be encouraged by our business momentum, and I'm just so proud of our team. Our Chili's business has been rebuilt for the long-term sustainable growth with a larger consumer base that now includes a new generation being introduced to the brand, a tighter menu, more labor, properly working equipment, upgraded technology, and restaurants in good condition. That stronger foundation plus an exceptionally strong fiscal 26 plan gives me the confidence we'll be able not just to sustain the growth from 25, but add an additional four quarters of growth. It's not just our executive team in Dallas that's confident in the plans. We just completed our annual general manager conference in Las Vegas last week, and they all couldn't have been more excited about the progress we've made together and the fiscal 26 plans. With great plans, the right investments, and field leadership who is fired up, I am very confident about our ability to deliver fiscal 26. Before I hand the call off to Micah, I do want to recognize three restaurant leaders from that conference for their amazing results this year. John Kovaca is our fiscal 25 general manager of the year. He leads a great team out of Bethpage, New York on Long Island. He was selected above 1,000 plus other general managers. Henry Altuve was our above restaurant leader of the year. He's done an exceptional job leading the South Florida market and was chosen out of over 140 directors of operations. And Vice President Dale Bellotta was our five-star VP this year. Now, Dale just beat only 11 other VPOs, but that's still really good because our VPOs are the best in the business. A big congratulations to John, Henry, and Dale. Well done. Now I'm going to hand the call over to Micah, and she's going to walk you through the fiscal 25 fourth quarter numbers and our guidance for fiscal 26. Go ahead, Micah.