UNITED
STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Date
of Report (Date of earliest event reported) July 30,
2018
BLOOMIN’ BRANDS, INC.
(Exact name of registrant as
specified in its
charter)
Delaware |
001-35625 |
20-8023465 |
(State or other jurisdiction of
incorporation) |
(Commission File Number) |
(IRS
Employer Identification No.) |
2202 North West Shore Boulevard, Suite 500, Tampa,
Florida 33607
(Address of principal executive offices) (Zip
Code)
Registrant’s
telephone number, including area code (813)
282-1225
N/A
(Former name or former address, if changed
since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following
provisions:
o |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425) |
o |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12) |
o |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
o |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act
of 1934 (§240.12b-2 of this chapter).
Emerging growth company
o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
o
Item 2.02 |
Results of Operations and Financial Condition
|
On July 30, 2018, the Company issued a press release reporting its financial results
for the thirteen weeks ended July 1, 2018. A copy of the release is attached as Exhibit
99.1.
The information contained in Item 2.02 of this report, and the exhibit attached hereto, is being furnished and shall not be deemed “filed” for any purpose, and shall not be deemed incorporated
by reference in any document whether or not filed under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, regardless of any general incorporation language in any such document.
Item 9.01 |
Financial Statements and
Exhibits |
(d)
Exhibits.
Exhibit Number |
Description | ||
99.1 |
|||
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
BLOOMIN’ BRANDS,
INC. | |||
(Registrant) | |||
Date: |
July 30, 2018 |
By: |
/s/ David J.
Deno |
David J. Deno | |||
Executive Vice President and Chief Financial and Administrative
Officer (Principal Financial and Accounting Officer) | |||
3
|
NEWS |
Exhibit
99.1 | ||
Mark Graff |
||||
Vice President, IR &
Finance |
||||
(813) 830-5311 |
||||
Bloomin’ Brands Announces
2018 Q2 Diluted EPS of $0.28 and
Adjusted Diluted EPS of
$0.38
Q2 Comparable Restaurant Sales Growth of 4.0% at Outback and 2.4% Combined
U.S.
Reaffirms Full Year 2018 Guidance For Adjusted Diluted
EPS
Increases 2018 Guidance For Combined U.S. Comparable Restaurant
Sales
TAMPA, Fla., July 30, 2018 - Bloomin’ Brands, Inc. (Nasdaq: BLMN) today reported results for the second quarter
2018 (“Q2
2018”) compared to the second quarter 2017 (“Q2
2017”).
Highlights for Q2 2018 include the
following:
• |
Comparable restaurant sales were up
4.0% at U.S. Outback Steakhouse with traffic up 0.6%(1); |
• |
Combined U.S. comparable restaurant sales were up 2.4%(1); |
• |
Comparable restaurant sales were down
6.1% for Outback Steakhouse in Brazil; and |
• |
Opened eight new restaurants, including seven in international
markets. |
____________________________
(1) |
For Q2 2018, comparable restaurant sales and traffic compare the thirteen weeks from April 2, 2018
through July 1, 2018 to the thirteen weeks from April 3, 2017 through July 2,
2017. |
Diluted EPS and Adjusted Diluted
EPS
The following table reconciles Diluted earnings per share to Adjusted diluted earnings per share for the periods as indicated below.
Q2 |
|||||||||||
2018 |
2017 |
CHANGE | |||||||||
Diluted earnings per share |
$ |
0.28 |
$ |
0.34 |
$ |
(0.06 |
)
| ||||
Adjustments
|
0.10 |
(0.07 |
) |
0.17 |
|||||||
Adjusted diluted earnings per share |
$
|
0.38 |
$
|
0.27 |
$
|
0.11 |
|||||
___________________
See
Non-GAAP Measures later in this release.
CEO
Comments
“Our strong momentum continued in the second quarter, and we remain on track for a very
good year at Bloomin’ Brands,” said Liz Smith, CEO. “At Outback, sales and traffic continued to out-pace the industry, and it is clear that our investments are working. Our strong domestic performance enables us to deliver our
financial objectives for the year despite a challenging environment in Brazil.”
1
Second Quarter Financial
Results
(dollars in
millions) |
Q2 2018 |
Q2 2017 |
CHANGE | |||||||
Total
revenues |
$ |
1,031.8 |
$ |
1,036.5 |
(0.4 |
)% | ||||
GAAP restaurant-level
operating margin |
15.0 |
% |
14.9 |
% |
0.1 |
% | ||||
Adjusted restaurant-level operating margin
(1) |
14.9 |
% |
14.8 |
% |
0.1 |
% | ||||
GAAP operating income margin |
3.2 |
% |
4.0 |
% |
(0.8 |
)% | ||||
Adjusted operating income
margin (1) |
4.1 |
% |
4.4 |
% |
(0.3 |
)% | ||||
___________________
(1) |
See Non-GAAP Measures later in this
release. |
• |
The decrease in total revenues was primarily due to domestic refranchising and foreign currency
translation, partially offset by the net impact of restaurant openings and closures and higher U.S. comparable restaurant sales. |
• |
The decrease in GAAP operating income margin was primarily due to impairment expenses associated with
international restructuring as well as labor inflation, commodity inflation and lower sales in Brazil. These decreases were partially offset by increases in average check, productivity initiatives and lower advertising expense.
|
• |
The primary difference between GAAP and adjusted operating income margin is Q2 2018 adjusted operating
income margin excludes impairment charges related to international
restructuring. |
• |
The effective income tax rate in Q2 2018 includes $6.2 million of tax benefit driven primary by
exercises of certain legacy stock options. These exercises benefited Q2 2018 diluted earnings per share by approximately $0.07. |
Second Quarter Comparable Restaurant Sales(1)
THIRTEEN
WEEKS ENDED JULY 1, 2018 |
COMPANY-OWNED | ||
Comparable restaurant
sales (stores open 18 months or more): |
|||
U.S.
|
|||
Outback
Steakhouse |
4.0 |
% | |
Carrabba’s Italian Grill |
(0.6 |
)% | |
Bonefish
Grill |
1.5 |
% | |
Fleming’s Prime Steakhouse & Wine
Bar |
0.3 |
% | |
Combined
U.S. |
2.4 |
% | |
International |
|||
Outback Steakhouse - Brazil |
(6.1 |
)% | |
___________________
(1) |
For Q2 2018, comparable restaurant sales compare the thirteen weeks from April 2, 2018 through July 1,
2018 to the thirteen weeks from April 3, 2017 through July 2,
2017. |
Dividend
Declaration and Share Repurchases
On July 25, 2018, our Board of Directors declared a quarterly cash dividend of $0.09 per share to be paid on August 22, 2018 to all stockholders of record as of the close of business on August 9,
2018.
On February 16, 2018, our Board of Directors approved a $150.0 million share repurchase program. As of July 30, 2018, we had $69.0 million remaining under this authorization. This authorization will
expire on August 16, 2019.
2
Fiscal 2018 Financial Outlook
We
are updating our 2018 financial outlook for GAAP diluted earnings per share, U.S. comparable restaurant sales and our tax rate. All other aspects of our full-year financial outlook as previously communicated in our April 26, 2018 earnings release
remain intact. Our tax rate is now expected to be lower due to the tax benefit from the exercise of certain legacy stock options in Q2 2018. See the table below for more
detail.
We are reaffirming our full-year adjusted diluted earnings per share guidance of $1.38 to $1.45. The benefit of stronger than expected U.S. comparable restaurant sales and our lower than expected tax rate
are expected to be offset by political headwinds and foreign currency translation losses impacting our business in
Brazil.
Financial
Results: |
Outlook on Apr. 26 |
Current Outlook | |
GAAP diluted earnings per
share (1) |
$1.28 to $1.35 |
$1.24 to $1.31 | |
GAAP effective income tax rate (1) |
6.5% to
7.5% |
2.5% to
3.5% | |
Adjusted effective income tax rate (1) |
8.5% to
9.5% |
4.5% to
5.5% | |
Other Selected Financial
Data: |
|||
Combined U.S. comparable restaurant sales
(2) |
1% to
2% |
1.5% to
2.5% | |
___________________
(1) |
The primary difference between our U.S. GAAP outlook and our adjusted outlook for both diluted earnings
per share and effective income tax rate is driven by adjustments through Q2 2018 as reflected in Table 5 of this release, as well as anticipated adjustments in connection with our relocation and restaurant closure
initiatives. |
(2) |
Combined U.S. comparable restaurant sales outlook is based on a comparable calendar basis. For 2018,
this will compare the 52 weeks from January 1, 2018 through December 30, 2018 to the 52 weeks from January 2, 2017 through December 31,
2017. |
3
Conference Call
The Company
will host a conference call today, July 30th at 9:00 AM ET. The conference call can be accessed live over the telephone by dialing (877) 407-9039 or (201) 689-8470 for international participants. A replay will be available beginning two hours after
the call and can be accessed by dialing (844) 512-2921 or (412) 317-6671 for international callers. The replay will be available through Monday, August 6, 2018. The conference ID for the live call and replay is 13681471. The call will also be
webcast live from the Company’s website at http://www.bloominbrands.com under the
Investors section. A replay of this webcast will be available on the Company’s website after the
call.
Impact of the Adoption of New Revenue Recognition Standard
Effective January 1, 2018, the Company adopted Accounting Standards Update No. 2014-09 “Revenue Recognition (Topic 606), Revenue from Contracts with Customers”. Refer to Exhibit 99.2 to our
April 26, 2018 Form 8-K for additional information regarding the Company’s adoption of this standard and the impact to our historical financial results.
Non-GAAP
Measures
In addition to the results provided in accordance with GAAP, this press release and related tables include certain non-GAAP measures, which present operating results on an adjusted basis. These are
supplemental measures of performance that are not required by or presented in accordance with GAAP and include the following: (i) Adjusted restaurant-level operating margin, (ii) Adjusted income from operations and the corresponding margin, (iii)
Adjusted net income, (iv) Adjusted diluted earnings per share, (v) Adjusted segment restaurant-level operating margin and (vi) Adjusted segment income from operations and the corresponding
margin.
We believe that our use of non-GAAP financial measures permits investors to assess the operating performance of our business relative to our performance based on GAAP results and relative to other
companies within the restaurant industry by isolating the effects of certain items that may vary from period to period without correlation to core operating performance or that vary widely among similar companies. However, our inclusion of these
adjusted measures should not be construed as an indication that our future results will be unaffected by unusual or infrequent items or that the items for which we have made adjustments are unusual or infrequent or will not recur. We believe that
the disclosure of these non-GAAP measures is useful to investors as they form part of the basis for how our management team and Board of Directors evaluate our operating performance, allocate resources and administer employee incentive
plans.
These non-GAAP financial measures are not intended to replace GAAP financial measures, and they are not necessarily standardized or comparable to similarly titled measures used by other companies. We
maintain internal guidelines with respect to the types of adjustments we include in our non-GAAP measures. These guidelines endeavor to differentiate between types of gains and expenses that are reflective of our core operations in a period, and
those that may vary from period to period without correlation to our core performance in that period. However, implementation of these guidelines necessarily involves the application of judgment, and the treatment of any items not directly addressed
by, or changes to, our guidelines will be considered by our disclosure committee. You should refer to the reconciliations of non-GAAP measures in tables four, five, and six included later in this release for descriptions of the actual adjustments
made in the current period and the corresponding prior
period.
In this release, we have also included forward-looking non-GAAP information under the caption “Fiscal
2018 Financial Outlook”. This relates to our current expectations for fiscal year 2018 adjusted diluted EPS, combined U.S. comparable restaurant sales and adjusted effective income tax
rate. We have also provided information with respect to our expectations for the corresponding GAAP
measures.
The differences between our disclosed GAAP and non-GAAP expectations are described to the extent practicable under “Fiscal 2018 Financial Outlook”. However, in addition to the general cautionary language regarding all
forward-looking statements included elsewhere in this release, we note that, because the items we adjust for in our non-GAAP measures may vary from period to period without correlation to our core performance, they are by nature more difficult
4
to predict and estimate, so additional adjustments may occur in the remainder of the fiscal year and they may significantly impact our GAAP results.
About Bloomin’ Brands, Inc.
Bloomin’ Brands, Inc. is one of the largest casual dining restaurant companies in the world with a portfolio of leading, differentiated restaurant concepts. The Company has four founder-inspired
brands: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar. The Company operates approximately 1,500 restaurants in
48 states, Puerto Rico, Guam and 19 countries, some of which are franchise locations. For more information, please visit www.bloominbrands.com.
Forward-Looking
Statements
Certain statements contained herein, including statements under the headings “CEO
Comments” and “Fiscal 2018 Financial Outlook” are not based on historical
fact and are “forward-looking statements” within the meaning of applicable securities laws. Generally, these statements can be identified by the use of words such as “guidance,” “believes,”
“estimates,” “anticipates,” “expects,” “on track,” “feels,” “forecasts,” “seeks,” “projects,” “intends,” “plans,”
“may,” “will,” “should,” “could,” “would” and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying
words. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the Company’s
forward-looking statements. These risks and uncertainties include, but are not limited to: consumer reaction to public health and food safety issues; competition; increases in labor costs; government actions and policies; increases in unemployment
rates and taxes; local, regional, national and international economic conditions; consumer confidence and spending patterns; price and availability of commodities; application of the new revenue recognition rules or other accounting standards; the
effects of changes in tax laws; challenges associated with our expansion, remodeling and relocation plans; interruption or breach of our systems or loss of consumer or employee information; political, social and legal conditions in international
markets and their effects on foreign operations and foreign currency exchange rates; our ability to preserve the value of and grow our brands; the seasonality of the Company’s business; weather, acts of God and other disasters; changes in
patterns of consumer traffic, consumer tastes and dietary habits; the effectiveness of our strategic actions; the cost and availability of credit; interest rate changes; compliance with debt covenants and the Company’s ability to make debt
payments and planned investments; and our ability to continue to pay dividends and repurchase shares of our common stock. Further information on potential factors that could affect the financial results of the Company and its forward-looking
statements is included in its most recent Form 10-K and subsequent filings with the Securities and Exchange Commission. The Company assumes no obligation to update any forward-looking statement, except as may be required by law. These
forward-looking statements speak only as of the date of this release. All forward-looking statements are qualified in their entirety by this cautionary statement.
Note: Numerical figures included in this release have been subject to rounding adjustments.
5
TABLE
ONE | |||||||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||||||
CONSOLIDATED
STATEMENTS OF OPERATIONS | |||||||||||||||
(UNAUDITED) | |||||||||||||||
THIRTEEN
WEEKS ENDED |
TWENTY-SIX
WEEKS ENDED | ||||||||||||||
(in thousands, except per share
data) |
JULY 1, 2018 |
JUNE 25, 2017 |
JULY 1, 2018 |
JUNE 25, 2017 | |||||||||||
Revenues |
|||||||||||||||
Restaurant sales |
$ |
1,015,484 |
$ |
1,021,184 |
$ |
2,114,487 |
$ |
2,165,015 |
|||||||
Franchise and other
revenues |
16,330
|
15,274
|
33,792
|
26,154
|
|||||||||||
Total revenues |
1,031,814 |
1,036,458 |
2,148,279 |
2,191,169 |
|||||||||||
Costs and
expenses |
|||||||||||||||
Cost of sales |
322,790 |
323,130 |
674,922 |
687,878 |
|||||||||||
Labor and other
related |
301,921 |
297,857 |
612,983 |
622,255 |
|||||||||||
Other restaurant operating |
238,379 |
248,412 |
491,724 |
499,536 |
|||||||||||
Depreciation and
amortization |
50,782 |
48,063 |
100,902 |
94,653 |
|||||||||||
General and administrative |
76,129 |
77,056 |
144,825 |
148,997 |
|||||||||||
Provision for impaired
assets and restaurant closings |
8,889
|
598
|
11,628
|
19,674
|
|||||||||||
Total costs and expenses |
998,890 |
995,116 |
2,036,984 |
2,072,993 |
|||||||||||
Income from
operations |
32,924 |
41,342 |
111,295 |
118,176 |
|||||||||||
Loss on extinguishment and modification of debt |
— |
(260 |
) |
— |
(260 |
) | |||||||||
Other (expense) income,
net |
(6 |
) |
7,281 |
(5 |
) |
7,230 |
|||||||||
Interest expense, net |
(11,319 |
) |
(9,543 |
) |
(21,629 |
) |
(18,684 |
) | |||||||
Income before (benefit)
provision for income taxes |
21,599 |
38,820 |
89,661 |
106,462 |
|||||||||||
(Benefit) provision for income
taxes |
(5,124 |
) |
2,988 |
(3,199 |
) |
20,992 |
|||||||||
Net
income |
26,723 |
35,832 |
92,860 |
85,470 |
|||||||||||
Less: net income attributable to noncontrolling
interests |
2 |
699 |
741 |
1,712 |
|||||||||||
Net income attributable to
Bloomin’ Brands |
$
|
26,721 |
$
|
35,133 |
$
|
92,119 |
$
|
83,758 |
|||||||
Earnings per
share: |
|||||||||||||||
Basic |
$ |
0.29 |
$ |
0.36 |
$ |
1.00 |
$ |
0.83 |
|||||||
Diluted |
$
|
0.28 |
$
|
0.34 |
$
|
0.97 |
$
|
0.80 |
|||||||
Weighted average common
shares outstanding: |
|||||||||||||||
Basic |
92,120 |
98,852 |
92,194 |
100,963 |
|||||||||||
Diluted |
94,361
|
102,421
|
95,072
|
104,417
|
|||||||||||
Cash dividends declared
per common share |
$
|
0.09 |
$
|
0.08 |
$
|
0.18 |
$
|
0.16 |
|||||||
6
TABLE
TWO | |||||||||||||||
BLOOMIN’ BRANDS,
INC. | |||||||||||||||
SEGMENT
RESULTS | |||||||||||||||
(UNAUDITED) | |||||||||||||||
(dollars in
thousands) |
THIRTEEN
WEEKS ENDED |
TWENTY-SIX
WEEKS ENDED | |||||||||||||
U.S. Segment |
JULY 1, 2018 |
JUNE 25, 2017 |
JULY 1, 2018 |
JUNE 25, 2017 | |||||||||||
Revenues |
|||||||||||||||
Restaurant sales |
$ |
908,937 |
$ |
908,264 |
$ |
1,893,281 |
$ |
1,943,819 |
|||||||
Franchise and other
revenues |
13,418
|
12,532
|
27,781
|
20,650
|
|||||||||||
Total revenues |
$ |
922,355 |
$ |
920,796 |
$ |
1,921,062 |
$ |
1,964,469 |
|||||||
Restaurant-level
operating margin |
14.5 |
% |
13.8 |
% |
15.4 |
% |
15.8 |
% | |||||||
Income from operations |
$ |
76,913 |
$ |
74,207 |
$ |
186,047 |
$ |
183,024 |
|||||||
Operating income
margin |
8.3 |
% |
8.1 |
% |
9.7 |
% |
9.3 |
% | |||||||
International
Segment |
|||||||||||||||
Revenues |
|||||||||||||||
Restaurant sales |
$ |
106,547 |
$ |
112,920 |
$ |
221,206 |
$ |
221,196 |
|||||||
Franchise and other
revenues |
2,912
|
2,742
|
6,011
|
5,504
|
|||||||||||
Total revenues |
$ |
109,459 |
$ |
115,662 |
$ |
227,217 |
$ |
226,700 |
|||||||
Restaurant-level
operating margin |
17.7 |
% |
21.1 |
% |
18.6 |
% |
20.7 |
% | |||||||
(Loss) income from operations |
$ |
(2,049 |
) |
$ |
9,728 |
$ |
6,276 |
$ |
18,363 |
||||||
Operating (loss) income
margin |
(1.9 |
)% |
8.4 |
% |
2.8 |
% |
8.1 |
% | |||||||
Reconciliation of Segment (Loss)
Income from Operations to Consolidated Income from Operations |
|||||||||||||||
Segment income (loss) from
operations |
|||||||||||||||
U.S. |
$ |
76,913 |
$ |
74,207 |
$ |
186,047 |
$ |
183,024 |
|||||||
International
|
(2,049
|
)
|
9,728
|
6,276
|
18,363
|
||||||||||
Total segment income from
operations |
74,864 |
83,935 |
192,323 |
201,387 |
|||||||||||
Unallocated corporate
operating expense |
(41,940
|
)
|
(42,593
|
)
|
(81,028
|
)
|
(83,211
|
)
| |||||||
Total income from operations |
$ |
32,924 |
$ |
41,342 |
$ |
111,295 |
$ |
118,176 |
|||||||
TABLE
THREE | |||||||
BLOOMIN’
BRANDS, INC. | |||||||
SUPPLEMENTAL BALANCE
SHEET INFORMATION | |||||||
(UNAUDITED) | |||||||
(in thousands) |
JULY 1, 2018 |
DECEMBER 31, 2017 | |||||
Cash and cash equivalents
(1) |
$ |
81,694 |
$ |
128,263 |
|||
Net working capital (deficit) (2) |
$ |
(383,106 |
) |
$ |
(453,183 |
) | |
Total
assets |
$ |
2,389,866 |
$ |
2,561,894 |
|||
Total debt, net |
$ |
1,139,729 |
$ |
1,118,104 |
|||
Total stockholders’
equity (3) |
$ |
91,470 |
$ |
81,231 |
|||
Common stock outstanding (3) |
92,437 |
91,913 |
|||||
_________________
(1) |
Excludes restricted cash. |
(2) |
The Company has, and in the future may continue to have, negative working capital balances (as is common
for many restaurant companies). The Company operates successfully with negative working capital because cash collected on Restaurant sales is typically received before payment is due on its current liabilities, and its inventory turnover rates
require relatively low investment in inventories. Additionally, ongoing cash flows from restaurant operations and gift card sales are used to service debt obligations and to make capital expenditures. |
(3) |
During the twenty-six weeks ended July 1,
2018, we issued 3.6 million shares of our common stock through the exercise
of stock options and repurchased 3.4 million shares of our outstanding common stock.
|
7
TABLE
FOUR | ||||||||||||||
BLOOMIN’
BRANDS, INC. | ||||||||||||||
RESTAURANT-LEVEL
OPERATING MARGIN NON-GAAP RECONCILIATION | ||||||||||||||
(UNAUDITED) | ||||||||||||||
THIRTEEN WEEKS ENDED |
THIRTEEN
WEEKS ENDED |
(UNFAVORABLE)
FAVORABLE CHANGE IN ADJUSTED | ||||||||||||
JULY 1,
2018 |
JUNE 25,
2017 |
|||||||||||||
Consolidated:
|
GAAP |
ADJUSTED (1) |
GAAP |
ADJUSTED (1) |
QUARTER TO DATE | |||||||||
Restaurant
sales |
100.0
|
% |
100.0
|
% |
100.0
|
% |
100.0
|
% |
||||||
Cost of
sales |
31.8 |
% |
31.8 |
% |
31.6 |
% |
31.6 |
% |
(0.2 |
)% | ||||
Labor and other related |
29.7 |
% |
29.7 |
% |
29.2 |
% |
29.2 |
% |
(0.5 |
)% | ||||
Other restaurant
operating |
23.5 |
% |
23.6 |
% |
24.3 |
% |
24.3 |
% |
0.7 |
% | ||||
Restaurant-level operating
margin (2) |
15.0 |
% |
14.9 |
% |
14.9 |
% |
14.8 |
% |
0.1 |
% | ||||
Segments: |
||||||||||||||
Restaurant-level operating margin - U.S.
(2) |
14.5 |
% |
14.4 |
% |
13.8 |
% |
13.8 |
% |
0.6 |
% | ||||
Restaurant-level operating
margin - International (2) |
17.7 |
% |
17.1 |
% |
21.1 |
% |
21.1 |
% |
(4.0 |
)% | ||||
TWENTY-SIX WEEKS
ENDED |
TWENTY-SIX WEEKS
ENDED |
(UNFAVORABLE) FAVORABLE CHANGE IN ADJUSTED | ||||||||||||
JULY 1,
2018 |
JUNE 25,
2017 |
|||||||||||||
Consolidated:
|
GAAP |
ADJUSTED (1) |
GAAP |
ADJUSTED (1) |
YEAR TO DATE | |||||||||
Restaurant
sales |
100.0
|
% |
100.0
|
% |
100.0
|
% |
100.0
|
% |
||||||
Cost of
sales |
31.9 |
% |
31.9 |
% |
31.8 |
% |
31.8 |
% |
(0.1 |
)% | ||||
Labor and other related |
29.0 |
% |
29.0 |
% |
28.7 |
% |
28.7 |
% |
(0.3 |
)% | ||||
Other restaurant
operating |
23.3 |
% |
23.4 |
% |
23.1 |
% |
23.3 |
% |
(0.1 |
)% | ||||
Restaurant-level operating
margin (2) |
15.8 |
% |
15.7 |
% |
16.4 |
% |
16.2 |
% |
(0.5 |
)% | ||||
Segments: |
||||||||||||||
Restaurant-level operating margin - U.S.
(2) |
15.4 |
% |
15.3 |
% |
15.8 |
% |
15.5 |
% |
(0.2 |
)% | ||||
Restaurant-level operating
margin - International (2) |
18.6 |
% |
18.3 |
% |
20.7 |
% |
20.7 |
% |
(2.4 |
)% | ||||
_________________
(1) |
Includes adjustments recorded in Other restaurant operating for the following activities, as described
in Table 5 of this release: |
THIRTEEN WEEKS ENDED |
TWENTY-SIX WEEKS ENDED | ||||||||||||||
(dollars
in millions) |
JULY 1, 2018 |
JUNE 25, 2017 |
JULY 1, 2018 |
JUNE 25, 2017 | |||||||||||
Restaurant and asset impairments and closing costs |
$ |
1.4 |
$ |
(0.2 |
) |
$ |
2.2 |
$ |
4.8 |
||||||
Restaurant relocations and related costs |
$ |
0.2 |
$ |
0.3 |
0.4 |
$ |
0.5 |
||||||||
Restaurant and asset impairments and closing costs includes $0.6 million of adjustments for the thirteen and twenty-six weeks ended July 1, 2018, recorded the
International segment. All other adjustments were recorded within the U.S. segment.
(2) |
The following categories of our revenue and operating expenses are not included in restaurant-level
operating margin because we do not consider them reflective of operating performance at the restaurant-level within a period: |
(i) |
Franchise and other revenues, which are earned primarily from franchise royalties and other non-food and
beverage revenue streams, such as rental and sublease income. |
(ii) |
Depreciation and amortization which, although substantially all of which is related to restaurant-level
assets, represent historical sunk costs rather than cash outlays for the restaurants. |
(iii) |
General and administrative expense which includes primarily non-restaurant-level costs associated with
support of the restaurants and other activities at our corporate offices. |
(iv) |
Asset impairment charges and restaurant closing costs which are not reflective of ongoing restaurant
performance in a
period. |
8
TABLE
FIVE | |||||||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||||||
INCOME FROM
OPERATIONS, NET INCOME AND DILUTED EARNINGS PER SHARE NON-GAAP RECONCILIATIONS | |||||||||||||||
(UNAUDITED) | |||||||||||||||
THIRTEEN
WEEKS ENDED |
TWENTY-SIX
WEEKS ENDED | ||||||||||||||
(in thousands, except per share
data) |
JULY 1, 2018 |
JUNE 25, 2017 |
JULY 1, 2018 |
JUNE 25, 2017 | |||||||||||
Income from
operations |
$ |
32,924 |
$ |
41,342 |
$ |
111,295 |
$ |
118,176 |
|||||||
Operating income
margin |
3.2 |
% |
4.0 |
% |
5.2 |
% |
5.4 |
% | |||||||
Adjustments: |
|||||||||||||||
Restaurant and asset impairments and closing costs
(1) |
7,886 |
702 |
9,181 |
16,199 |
|||||||||||
Restaurant relocations
and related costs (2) |
1,353 |
2,251 |
3,078 |
4,358 |
|||||||||||
Legal and contingent matters |
288 |
— |
758 |
— |
|||||||||||
Severance
(3) |
— |
— |
965 |
— |
|||||||||||
Transaction-related expenses (4) |
— |
1,240 |
— |
1,447 |
|||||||||||
Total income from
operations adjustments |
9,527 |
4,193 |
13,982 |
22,004 |
|||||||||||
Adjusted income from operations |
$ |
42,451 |
$ |
45,535 |
$ |
125,277 |
$ |
140,180 |
|||||||
Adjusted operating
income margin |
4.1
|
% |
4.4
|
% |
5.8
|
% |
6.4 |
% | |||||||
Net income attributable to
Bloomin’ Brands |
$ |
26,721 |
$ |
35,133 |
$ |
92,119 |
$ |
83,758 |
|||||||
Adjustments: |
|||||||||||||||
Income from operations
adjustments |
9,527 |
4,193 |
13,982 |
22,004 |
|||||||||||
Gain on disposal of business and other costs (5) |
— |
(7,284 |
) |
— |
(7,284 |
) | |||||||||
Loss on extinguishment and modification
of debt |
— |
260 |
— |
260 |
|||||||||||
Total adjustments, before income
taxes |
9,527 |
(2,831 |
) |
13,982 |
14,980 |
||||||||||
Adjustment to (benefit) provision for
income taxes (6) |
(438
|
)
|
(4,525
|
)
|
(2,119
|
)
|
(8,944
|
)
| |||||||
Net adjustments |
9,089 |
(7,356 |
) |
11,863 |
6,036 |
||||||||||
Adjusted net
income |
$
|
35,810 |
$
|
27,777 |
$
|
103,982 |
$
|
89,794 |
|||||||
Diluted earnings per
share |
$
|
0.28 |
$
|
0.34 |
$
|
0.97 |
$
|
0.80 |
|||||||
Adjusted diluted earnings per
share |
$
|
0.38 |
$
|
0.27 |
$
|
1.09 |
$
|
0.86 |
|||||||
Diluted weighted average common shares
outstanding |
94,361 |
102,421 |
95,072 |
104,417 |
|||||||||||
_________________
(1) |
Represents asset impairment charges and related costs primarily associated with approved closure and restructuring
initiatives, and the restructuring of certain international markets. |
(2) |
Represents asset impairment charges and accelerated depreciation incurred in connection with our relocation
program. |
(3) |
Relates to severance expense incurred primarily as a result of restructuring of certain
functions. |
(4) |
Relates primarily to professional fees related to certain income tax items in which the associated tax benefit is adjusted
in Adjustments to provision for income taxes, as described in footnote 6 below. |
(5) |
Primarily relates to the sale of 54 U.S. Company-owned restaurants to existing franchisees in 2017. |
(6) |
Represents income tax effect of the adjustments for the periods presented. Adjustments include the impact of excluding $4.6 million of discrete
income tax items for the thirteen and twenty-six weeks ended June 25,
2017. |
9
Following
is a summary of the financial statement line item classification of the net income adjustments:
THIRTEEN
WEEKS ENDED |
TWENTY-SIX
WEEKS ENDED | ||||||||||||||
(dollars in
thousands) |
JULY 1, 2018 |
JUNE 25, 2017 |
JULY 1, 2018 |
JUNE 25, 2017 | |||||||||||
Other restaurant
operating |
$ |
(1,560 |
) |
$ |
(148 |
) |
$ |
(2,518 |
) |
$ |
(5,287 |
) | |||
Depreciation and amortization |
1,523 |
1,739 |
3,111 |
3,332 |
|||||||||||
General and
administrative |
1,533 |
2,005 |
3,090 |
4,394 |
|||||||||||
Provision for impaired assets and restaurant
closings |
8,031 |
597 |
10,299 |
19,565 |
|||||||||||
Loss on defeasance, extinguishment and
modification of debt |
— |
260 |
— |
260 |
|||||||||||
Other (expense) income, net |
— |
(7,284 |
) |
— |
(7,284 |
) | |||||||||
(Benefit) provision for income
taxes |
(438
|
)
|
(4,525
|
)
|
(2,119
|
)
|
(8,944
|
)
| |||||||
Net adjustments |
$ |
9,089 |
$ |
(7,356 |
) |
$ |
11,863 |
$ |
6,036 |
||||||
TABLE
SIX | |||||||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||||||
SEGMENT INCOME FROM
OPERATIONS NON-GAAP RECONCILIATION | |||||||||||||||
(UNAUDITED) | |||||||||||||||
U.S. Segment |
THIRTEEN WEEKS ENDED |
TWENTY-SIX
WEEKS ENDED | |||||||||||||
(dollars in
thousands) |
JULY 1, 2018 |
JUNE 25, 2017 |
JULY 1, 2018 |
JUNE 25, 2017 | |||||||||||
Income from operations |
$ |
76,913 |
$ |
74,207 |
$ |
186,047 |
$ |
183,024 |
|||||||
Operating income
margin |
8.3 |
% |
8.1 |
% |
9.7 |
% |
9.3 |
% | |||||||
Adjustments: |
|||||||||||||||
Restaurant relocations and related costs
(1) |
1,353 |
2,251 |
3,078 |
4,358 |
|||||||||||
Restaurant and asset
impairments and closing costs (2) |
(181 |
) |
702 |
(797 |
) |
16,199 |
|||||||||
Severance (3) |
— |
— |
888 |
— |
|||||||||||
Transaction-related
expenses |
— |
140 |
— |
347 |
|||||||||||
Adjusted income from operations |
$
|
78,085 |
$
|
77,300 |
$
|
189,216 |
$
|
203,928 |
|||||||
Adjusted operating
income margin |
8.5 |
% |
8.4 |
% |
9.8 |
% |
10.4
|
% |
|||||||
International
Segment |
|||||||||||||||
(dollars in
thousands) |
|||||||||||||||
(Loss) income from
operations |
$ |
(2,049 |
) |
$ |
9,728 |
$ |
6,276 |
$ |
18,363 |
||||||
Operating (loss) income
margin |
(1.9 |
)% |
8.4 |
% |
2.8 |
% |
8.1 |
% | |||||||
Adjustments: |
|||||||||||||||
Restaurant and asset impairments and closing costs
(4) |
8,067 |
— |
9,978 |
— |
|||||||||||
Adjusted income from
operations |
$ |
6,018
|
$ |
9,728
|
$ |
16,254
|
$ |
18,363
|
|||||||
Adjusted operating income
margin |
5.5 |
% |
8.4 |
% |
7.2 |
% |
8.1 |
% | |||||||
_________________
(1) |
Represents asset impairment charges and accelerated depreciation incurred in connection with our relocation
program. |
(2) |
Represents asset impairment charges and related costs primarily associated with approved closure and
restructuring initiatives. |
(3) |
Relates to severance expense incurred primarily as a result of restructuring of certain
functions. |
(4) |
Represents asset impairment charges and related costs primarily associated with the restructuring of
certain international
markets. |
10
TABLE
SEVEN | |||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||
COMPARATIVE
RESTAURANT INFORMATION | |||||||||||
(UNAUDITED) | |||||||||||
Number of restaurants (at end of
the period): |
APRIL 1, 2018 |
OPENINGS |
CLOSURES |
JULY 1, 2018 | |||||||
U.S. |
|||||||||||
Outback Steakhouse |
|||||||||||
Company-owned
|
584 |
— |
(1 |
) |
583 |
||||||
Franchised |
154 |
— |
— |
154 |
|||||||
Total |
738
|
—
|
(1
|
)
|
737
|
||||||
Carrabba’s Italian Grill |
|||||||||||
Company-owned
|
224 |
— |
— |
224 |
|||||||
Franchised |
3 |
— |
— |
3 |
|||||||
Total |
227
|
—
|
—
|
227
|
|||||||
Bonefish Grill |
|||||||||||
Company-owned
|
193 |
— |
(1 |
) |
192 |
||||||
Franchised |
7 |
— |
— |
7 |
|||||||
Total |
200
|
—
|
(1
|
)
|
199
|
||||||
Fleming’s Prime Steakhouse & Wine
Bar |
|||||||||||
Company-owned
|
70
|
—
|
—
|
70
|
|||||||
Express |
|||||||||||
Company-owned
|
4
|
1
|
—
|
5
|
|||||||
U.S. Total |
1,239
|
1
|
(2
|
)
|
1,238
|
||||||
International |
|||||||||||
Company-owned |
|||||||||||
Outback
Steakhouse—Brazil (1) |
89 |
3 |
— |
92 |
|||||||
Other |
36 |
3 |
(8 |
) |
31 |
||||||
Franchised |
|||||||||||
Outback Steakhouse - South Korea |
76 |
— |
(2 |
) |
74 |
||||||
Other |
54 |
1 |
— |
55 |
|||||||
International Total |
255
|
7
|
(10
|
)
|
252
|
||||||
System-wide
total |
1,494
|
8
|
(12
|
)
|
1,490
|
||||||
____________________
(1) |
The restaurant counts for Brazil are reported as of February 28, 2018 and May 31, 2018 to correspond
with the balance sheet dates of this
subsidiary. |
11
TABLE
EIGHT | |||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||
COMPARABLE
RESTAURANT SALES INFORMATION | |||||||||||
(UNAUDITED) | |||||||||||
THIRTEEN WEEKS ENDED |
TWENTY-SIX
WEEKS ENDED | ||||||||||
JULY 1, 2018 (1) |
JUNE 25, 2017 |
JULY 1, 2018 (1) |
JUNE 25, 2017 | ||||||||
Year over year percentage
change: |
|||||||||||
Comparable restaurant sales (stores open 18 months or
more) (2): |
|||||||||||
U.S. |
|||||||||||
Outback Steakhouse |
4.0 |
% |
0.3 |
% |
2.8 |
% |
0.9 |
% | |||
Carrabba’s Italian
Grill |
(0.6 |
)% |
0.4 |
% |
(1.3 |
)% |
(1.8 |
)% | |||
Bonefish Grill |
1.5 |
% |
(2.6 |
)% |
(0.7 |
)% |
(1.6 |
)% | |||
Fleming’s Prime
Steakhouse & Wine Bar |
0.3 |
% |
(1.3 |
)% |
(0.4 |
)% |
(2.1 |
)% | |||
Combined U.S. |
2.4 |
% |
(0.3 |
)% |
1.2 |
% |
(0.3 |
)% | |||
International
|
|||||||||||
Outback Steakhouse - Brazil (3) |
(6.1 |
)% |
12.6 |
% |
(2.6 |
)% |
8.2 |
% | |||
Traffic: |
|||||||||||
U.S. |
|||||||||||
Outback Steakhouse |
0.6 |
% |
(0.8 |
)% |
1.5 |
% |
(1.5 |
)% | |||
Carrabba’s Italian
Grill |
(5.8 |
)% |
(2.0 |
)% |
(5.7 |
)% |
(4.7 |
)% | |||
Bonefish Grill |
(1.2 |
)% |
(3.1 |
)% |
(1.9 |
)% |
(2.6 |
)% | |||
Fleming’s Prime Steakhouse &
Wine Bar |
(7.7 |
)% |
(5.5 |
)% |
(4.9 |
)% |
(6.5 |
)% | |||
Combined U.S. |
(1.2 |
)% |
(1.5 |
)% |
(0.6 |
)% |
(2.5 |
)% | |||
International
|
|||||||||||
Outback Steakhouse - Brazil |
(7.7 |
)% |
3.2 |
% |
(4.7 |
)% |
0.7 |
% | |||
Average check per person increases
(4): |
|||||||||||
U.S. |
|||||||||||
Outback Steakhouse |
3.4 |
% |
1.1 |
% |
1.3 |
% |
2.4 |
% | |||
Carrabba’s Italian
Grill |
5.2 |
% |
2.4 |
% |
4.4 |
% |
2.9 |
% | |||
Bonefish Grill |
2.7 |
% |
0.5 |
% |
1.2 |
% |
1.0 |
% | |||
Fleming’s Prime
Steakhouse & Wine Bar |
8.0 |
% |
4.2 |
% |
4.5 |
% |
4.4 |
% | |||
Combined U.S. |
3.6 |
% |
1.2 |
% |
1.8 |
% |
2.2 |
% | |||
International
|
|||||||||||
Outback Steakhouse - Brazil |
1.9 |
% |
8.2 |
% |
2.4 |
% |
7.3 |
% | |||
____________________
(1) |
For Q2 2018, comparable restaurant sales and traffic compare the thirteen weeks from April 2, 2018
through July 1, 2018 to the thirteen weeks from April 2, 2017 through July 2, 2017, and for the twenty-six weeks from January 1, 2018 through July 1, 2018 to the twenty-six weeks from January 2, 2017 through July 2,
2017. |
(2) |
Comparable restaurant sales exclude the effect of fluctuations in foreign currency rates. Relocated
international restaurants closed more than 30 days and relocated U.S. restaurants closed more than 60 days are excluded from comparable restaurant sales until at least 18 months after reopening. |
(3) |
Includes trading day impact from calendar period reporting. |
(4) |
Average check per person includes the impact of menu pricing changes, product mix and
discounts. |
SOURCE:
Bloomin’ Brands, Inc.
12