Brinker International, Inc.

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, and 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 as we discuss our financial and operating performance for the second quarter, as well as our outlook on the remainder of fiscal 26. Q2 Chili's same-store sales were plus 8.6%, outpacing the casual dining industry by 680 basis points. This strong result was rolling at plus 31% from last year for a two-year cumulative comp of 43%. This was our 19th consecutive quarter of same-store sales growth with a three-year cumulative comp of 50% and a four-year comp of 62%. The Chili's turnaround is real, it is sustaining, and we have no intentions of taking our foot off the gas, which means we will continue to be focused on improving our food, service, and atmosphere as well as continue making Chili's more fun, easier, and more rewarding for our team members. Q2 results were driven by our world-class marketing and brand building that brought guests in and continued improvements in food, service, and atmosphere that brought guests back. Now I'll give some updates on the Chili's business. We talked last quarter about the need to bring back our skill at Queso based on guest feedback. That reintroduction has been successful. We are now selling 20% more Southwestern queso and the original skillet queso versus the prior two queso lineup. In addition, our relaunched nachos featuring our signature chicken, bacon, and house-made ranch is now 170% bigger business than the previous nachos with guests loving our new nachos. We have also completed our bacon upgrade to thicker bacon strips and our bacon cheeseburger upgrade, which now features triple the bacon than the prior burger. That bacon burger upgrade is doing 43% more sales than the prior bacon burger. What's important to take away from these examples is as we upgrade the menu offerings while attracting a new generation of guests, we continue to build bigger, sustainable sales layers in the business. Over the past three years, we have had success with these menu renovations. Crispers, margaritas, burgers, ribs, frozen margs, and now queso and nachos with more segments still ahead of us to upgrade. Next on our list is our super premium chicken sandwich lineup, which will launch chain wide in April with a substantial advertising campaign. Chicken sandwiches is a very large market with over 80% of people buying them at least once last year, and is by far the biggest segment of all restaurant chicken servings. It has the potential to drive customer traffic, both with new and existing guests. We believe our new chicken sandwich lineup is superior, distinctly on brand, and highly differentiated than what is in the market today. Bold signature flavors unique to Chili's, terrific value with abundance, and a traffic-driving opening price point within a three-tier lineup. We'll also be advertising in a big way, leveraging that sharp price point to drive awareness in traffic. The sandwich lineup has done exceptionally well from a mixed standpoint in merchandising-only tests in 200 restaurants, and we expect even bigger numbers when we launch nationally in April with advertising and earned media attention. From an operations perspective, we've also made great progress in Q2. We've successfully eliminated a net total of six menu items, which will continue to make it easier for our teams to serve hot, delicious food more consistently. One of the keys to our success has been staying disciplined on food innovation, which means avoiding launching food limited time offerings. This allows us to focus our efforts to improve our core offerings, simplify operations, and keep field leader attention on ops fundamentals like hospitality and great food. Avoiding limited time offer distractions to maintain efforts on the core business has continued to drive guest scores. Daily metric we measure, guests with a problem or GWAP, improved to 2.1% versus 2.9% for Q2 last year. For perspective, when we started the turnaround journey over three years ago, we were at about 5%, and it's been consistently getting better every quarter as we keep hitting on different fundamentals in the business. We are also now seeing real movement in syndicated external guest perception metrics, which allow us to track not just progress against ourselves, but even more importantly, how we are improving versus our competitive set. When we started this turnaround, third-party syndicated data placed us at the bottom or near the bottom of our competitive set in all seven of the key metrics that correlate to future sales growth. In the last quarterly snapshot of these metrics, Chili's is now in the top three of all those metrics, quality, value, service, atmosphere, taste, cleanliness, and overall experience. Yes, there's still room for meaningful gains, but our guest experience progress through our operational improvements is very encouraging. The other important takeaway from this data is where we have repositioned ourselves on value, which allows us a long runway for growth. In the past three years, we have captured value leadership in casual dining and the broader restaurant industry. And while we earn that leadership value position, We were also able to improve restaurant operating margins from 11% to 18%, while baking in hundreds of millions of dollars of guest experience investments into the going four-wall economics. The brand repositioning and operational improvements have delivered big results. Chili's was the number one traffic brand in casual dining for the entire 2025 year. And what's even more encouraging is Black Box data is telling us our per-person check average is still more than $3 less than our direct casual dining competitors, and more than $4 less than casual dining as a whole. Simply put, Chili's has been repositioned to win for the long term, and that's exactly what this team is going to do. On the Maggiano's business, we are making progress on the turnaround pillars of food, service, and atmosphere I talked about last quarter. Based on guest feedback, we've brought back Gigi's Butter Cake, eggplant parmesan, baked ziti, and classic meat sauce. On the value front, we've also increased pasta portions by 20%, and have up portions on select other dishes that had opportunities, including our meatball dishes, salads, stuffed shells, and crispy mozzarella. As a result of bigger portions, value scores have improved in the past few months. We did see some sequential improvement in the business during the quarter, and sales beat our internal expectations for the first time in a while. Still lots of work ahead of us on service atmosphere and team culture, but these are encouraging green shoots and small wins. Magianas is now only 8% of our company sales and 3% of our profit contribution, but it can be a source of growth in the future given the white space opportunities. This is why improving for all economics of the brand and getting momentum back into the business is important. Q2 marked another exceptionally strong quarter for Chili's with continued progress in food service and atmosphere, guest experience improvements, world-class marketing, a reposition relevant and distinctive Chili's brand, and our value leadership sets us up for continued market share gains and a long run of profitable growth. We rolled big results from Q2 last year with more big results this year, and that's proof that the strategy is working and that it's sustainable. Lastly, I want to recognize our restaurant teams and our home office teams for quickly responding to winter storm Fern. I know many of us on this call view the storm through a lens of what it will do to sales or earnings, but on the ground, it's a whole lot more than that. Our restaurant teams have done an excellent job overcoming the challenges of the storm to reopen safely and quickly. Our field facilities teams are working tirelessly on restaurant repairs that are needed, and our Restaurant Support Center has been incredibly responsive getting restaurants what they need. Hats off to our VPOs, our directors of operations, our managers, our team members, and our Restaurant Support Center for all that you do to overcome challenges like these. Now I'll hand the call over to Micah to walk you through fiscal 26 second quarter numbers. Go ahead, Micah.

Thank you, Kevin, and good morning. Brinker successfully comped the comp, delivering another quarter of positive same-store sales growth led by 8.6% growth at Chili's, lapping a 31.4% increase from the prior year. With fiscal 26 more than halfway complete, we expect to achieve our fifth consecutive year of same-store sales growth and second consecutive year of traffic gains demonstrating our continued momentum and sustained growth. We have grown our customer base by leaning into our everyday industry-leading value, core menu improvements, and marketing initiatives to position us well in a competitive and challenging environment. And by focusing on the fundamentals of food, service, and atmosphere, we continue to improve operations, bring guests back, and deliver consistent positive growth. For the second quarter, Brinker reported total revenues of $1.45 billion, an increase of 7% over the prior year, with consolidated comp sales of positive 7.5%. Our adjusted diluted EPS for the quarter was $2.87, up from $2.80 last year. Chili's popline sales growth was driven by price of 4.4%, positive traffic of 2.7%, and positive mix of 1.5%. These results were bolstered by the continued success of our Margarita of the Month program, which performed well during all months of the quarter. Notably, we exceeded our expectations in November with what guests in the media coined the Wicked Margaritas, which sold approximately 1.5 million more drinks than a typical Margarita of the Month. Another call out for the quarter Christmas Day traded out of the second quarter into the third quarter, resulting in a favorable comp sales impact of 1.2%. Turning to Maggiano's, the brand reported comp sales for the quarter of negative 2.4%. As Kevin mentioned, we saw some encouraging progress as the team executes on its Back to Maggiano strategy, which is designed to improve our value proposition, optimize our service model, and ensure our atmosphere is clean and well-maintained. At the Brinker level, restaurant operating margin was 18.8% compared to 19.1% in the prior year, a 30 basis points decrease year over year, mainly due to Maggiano sales due leverage and the additional investments needed to help improve that business. However, at Chili's, we saw a 40 basis point increase in restaurant operating margin year over year, mainly due to sales leverage partially offset by incremental investments in labor and advertising, and higher health and workers' compensation insurance costs due to increased restaurant headcount. Food and beverage for the quarter were unfavorable by 20 basis points year-over-year due to unfavorable menu mix with 0.8% commodity inflation offset by price. Labor for the quarter was favorable 30 basis points year-over-year. Top line sales growth offset additional investments in labor, higher health insurance costs, and wage rate inflation of approximately 3.3%. Advertising expenses for the quarter were 2.9% of sales and increased 40 basis points year-over-year due to additional weeks on TV. G&A for the quarter came in at 4.1% of total revenues, 20 basis points higher than prior year due to increased restaurant center support resources partially offset by sales leverage. Depreciation and amortization for the quarter came in at 3.8% of total revenues and increased 30 basis points year-over-year due to an increase in our asset base from equipment purchases partially offset by sales leverage. Second quarter adjusted EBITDA was approximately $223.5 million, a 3.6% increase from prior year. The adjusted tax rate for the quarter increased to 18.8%, mainly driven by higher profits, which increased at a greater rate than the offset generated by the FICA tax tip credit. Capital expenditures for the quarter were approximately $63.7 million driven by capital maintenance spend. As discussed, in 2026, we started our re-image program for Chili's. We just completed our first four re-images and will use the learnings to inform our long-term re-image and new unit growth strategy. We expect to complete another eight to 10 re-images during the balance of this fiscal year before ramping up to 60 to 80 re-images in fiscal 2027. We expect to fully roll out both our reimage and new unit growth programs during fiscal 2028. At Maggiano's, our main focus areas will be guest facing repairs and maintenance and a smaller scope reimage program. Our strong free cash flow provides sufficient liquidity to maintain our discipline capital allocation strategy, allowing us to invest in our restaurants and return excess cash to shareholders. In the second quarter, we also repurchased an additional 100 million of common stock under our share purchase program to support our ongoing commitment to returning capital to shareholders. In terms of our expectations for the balance of the year, as noted in this morning's press release, we're raising our fiscal 2026 guidance, which includes annual revenues in the range of $5.76 billion to $5.83 billion. adjusted diluted EPS in the range of $10.45 to $10.85, capital expenditures in the range of $250 million to $260 million, and weighted average shares in the range of $44.7 million to $45.2 million. This guidance also includes the negative impact from closures caused by winter storm Fern through Tuesday, January 27th, which includes includes approximately 20 million in reduced revenues and a decrease of 15 cents in adjusted diluted EPS. Prior to the storm, Chili's comps, including the negative holiday flip, were running solidly in the mid single digit range, giving us a good glimpse into the health of the base business. Once we get through the negative impacts of the weather, we expect Chili's same store sales to return to the mid single digit range. Additional assumptions underlying our guidance largely remain unchanged. We still anticipate wage inflation in the low single digits and our tax rate to be approximately 19%. Our commodity inflation is now anticipated to be in the low single digits for the fiscal year due to the removal of Brazil-based ground beef tariffs this past quarter and better than expected poultry and dairy commodity prices. However, due to rising beef prices, We still expect mid-single-digit inflation for the back half of the year. We remain confident our plans will enable us to lap the upcoming quarters and continue to significantly outperform the industry on sales and traffic at Chili's. In summary, our second quarter results reflect the continued strength of our strategy. Chili's industry-leading everyday value continues to deliver for the guest, not only on overall price, but also on overall experience. As we look ahead, we remain focused on delivering sustainable long-term growth. Our continued momentum and plans for the remainder of this fiscal year give me confidence in our ability to deliver on expectations, and our strong financial position will allow us to continue to invest in the business and return cash to shareholders, unlocking future growth potential. With our comments now complete, I will turn the call back over to Holly to moderate questions. Holly?