Research Update: Brinker International Outlook Revised To Stable From Negative On Improved Margins, Reduced Leverage; Ratings Affirmed

Dallas-based Brinker International Inc. has improved its S&P Global Ratings-adjusted EBITDA margins over the past four quarters, to 13.9% for the 12-months ended December 2023 from 12.2% for the same period in 2022, through increased pricing despite its declining traffic (though stronger than for the overall industry). Over the same timeframe, the company improved its S&P Global Ratings-adjusted debt to EBITDA to 3.6x from 4.8x aided by a more than $100 million reduction in its reported debt. We anticipate Brinker's accelerating sales momentum and improving margins will continue to support its efforts to reduce its leverage. We now forecast the company will improve its S&P Global Ratings-adjusted leverage to the mid- to high-3x range while expanding its EBITDA interest coverage

...- Dallas-based Brinker International Inc. has improved its S&P Global Ratings-adjusted EBITDA margins over the past four quarters, to 13.9% for the 12-months ended December 2023 from 12.2% for the same period in 2022, through increased pricing despite its declining traffic (though stronger than for the overall industry). Over the same timeframe, the company improved its S&P Global Ratings-adjusted debt to EBITDA to 3.6x from 4.8x aided by a more than $100 million reduction in its reported debt. - We anticipate Brinker's accelerating sales momentum and improving margins will continue to support its efforts to reduce its leverage. We now forecast the company will improve its S&P Global Ratings-adjusted leverage to the mid- to high-3x range while expanding its EBITDA interest coverage to the mid-4x level in fiscal year 2024. - We revised our outlook on Brinker to stable from negative and affirmed all of our ratings, including our '##-' issuer credit rating. - The stable outlook reflects our...

Research Update