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) November 6, 2019
BLOOMIN’ BRANDS, INC.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
(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:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | |||
$0.01 par value |
The Nasdaq Stock Market LLC (Nasdaq Global Select Market) | ||||
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 ☐
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. ☐
Item 2.02 |
Results of Operations and Financial Condition |
On November 6, 2019, the Company issued a press release reporting its financial results for the thirteen weeks ended September 29, 2019. 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: |
November 6, 2019 |
By: |
/s/ Christopher Meyer |
Christopher Meyer | |||
Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) | |||
3
|
NEWS |
Exhibit
99.1 | ||
Mark Graff |
||||
Group Vice President, IR &
Finance |
||||
(813) 830-5311 |
||||
Bloomin’ Brands Announces
2019 Q3 Diluted EPS of $0.11 and
Adjusted Diluted EPS of
$0.10
Q3 GAAP Operating Margin Expansion of 100 bps and 60 bps on a Comparable Adjusted Basis
Reaffirms Full-Year 2019 Guidance for Adjusted Diluted EPS and Adjusted Operating Margin
Company Exploring Strategic Alternatives to Maximize Shareholder Value
TAMPA, Fla., November 6, 2019 -
Bloomin’ Brands, Inc. (Nasdaq: BLMN) today reported results for the third quarter 2019 (“Q3 2019”)
compared to the third quarter 2018 (“Q3
2018”).
Highlights for Q3 2019 include the
following:
• |
Comparable restaurant sales increased
0.2% at U.S. Outback Steakhouse, representing its 11th consecutive quarter of positive comparable restaurant sales
|
• |
Comparable restaurant sales increased
11.2% for Outback Steakhouse in Brazil |
• |
Opened eight new restaurants, including five international franchise
locations |
Diluted EPS and Adjusted Diluted EPS
Our Q3 2019 results include the impact of the new lease accounting standard adopted in Q1 2019. Among its impacts, we no longer recognize the benefit of deferred gains on sale-leaseback transactions,
resulting in an increase to Other restaurant operating expense which represents a two cent reduction in earnings per share on the quarter. The following table includes both a reported and a comparable basis that adjusts for this lease accounting
change.
The following table reconciles Diluted earnings per share to Adjusted diluted earnings
per share for the periods as indicated below.
Q3 |
|||||||||||
2019 |
2018 |
CHANGE | |||||||||
Diluted earnings per share |
$ |
0.11 |
$ |
0.04 |
$ |
0.07 |
|||||
Adjustments
|
(0.01 |
) |
0.06 |
(0.07 |
)
| ||||||
Adjusted diluted earnings per share |
$
|
0.10 |
$
|
0.10 |
$
|
— |
|||||
Remove new lease
accounting standard impact (1) |
— |
(0.02 |
) |
0.02 |
|||||||
Adjusted diluted earnings per share on a comparable basis (1) |
$
|
0.10 |
$
|
0.08 |
$
|
0.02 |
|||||
______________
See Non-GAAP Measures later in this
release.
(1) |
In Q3 2018 both GAAP and adjusted diluted earnings per share include the benefit of deferred gains on
sale-leaseback transactions of approximately $0.02. For comparability, we have presented adjusted diluted earnings per share excluding this benefit that we no longer recognize in 2019 as a result of the adoption of the new lease accounting
standard. |
1
CEO
Comments
“Q3 earnings per share increased 25% on a comparable adjusted basis as we focus on building healthy traffic
and improving profitability,” said David Deno, CEO. “U.S. comp sales were flat with traffic significantly outperforming the industry. We have intentionally moderated our average check increases to further strengthen our value relative to
competition across the portfolio. This pricing discipline combined with sales momentum from investments in the customer experience and off-premises is building, with October trends significantly out-pacing the industry. This strategy combined with
disciplined cost management, drove operating margins higher by 60 basis points on comparable adjusted basis versus last year. We remain well positioned to finish the year strong and achieve our earnings
commitments.”
Third Quarter Financial
Results
As described above, our Q3 2019 results include the impact from adopting the new lease accounting standard, which
reduces operating margins by 30 basis points. The following table includes both a reported and a comparable basis that adjusts for the lease accounting
change:
AS
REPORTED |
COMPARABLE
BASIS (1) | ||||||||||||||||
(dollars in
millions) |
Q3
2019 |
Q3
2018 |
CHANGE |
Q3
2018 |
CHANGE | ||||||||||||
Total
revenues |
$ |
967.1 |
$ |
965.0 |
0.2 |
% |
$ |
965.0 |
0.2 |
% | |||||||
GAAP restaurant-level
operating margin |
12.9 |
% |
12.5 |
% |
0.4 |
% |
12.2 |
% |
0.7 |
% | |||||||
Adjusted restaurant-level operating margin
(2) |
12.5 |
% |
12.4 |
% |
0.1 |
% |
12.1 |
% |
0.4 |
% | |||||||
GAAP operating income margin |
2.3 |
% |
1.3 |
% |
1.0 |
% |
1.0 |
% |
1.3 |
% | |||||||
Adjusted operating income
margin (2) |
2.3 |
% |
2.0 |
% |
0.3 |
% |
1.7 |
% |
0.6 |
% | |||||||
___________________
(1) |
To improve comparability in this table, we removed the benefit of deferred gains on sale-leaseback
transactions from our Q3 2018 results. |
(2) |
See Non-GAAP Measures later in this
release. |
• |
The increase in total revenues was primarily due to higher comparable restaurant sales in Brazil and
the net impact of restaurant openings and closures, partially offset by the impact of domestic refranchising. |
• |
The increase in reported GAAP operating income margin was primarily due to higher comparable
restaurant sales in Brazil, the impact of certain cost savings initiatives, and gains on the sale of certain U.S. surplus properties. This increase was partially offset by commodity, operating and labor inflation, delivery rollout costs, and the
impact from adopting the new lease accounting standard as described above.
|
• |
The primary difference between GAAP and Adjusted restaurant-level operating margin is that Q3 adjusted
restaurant-level operating margin excludes the benefit related to gains on the sale of certain U.S. surplus properties. |
Third
Quarter Comparable Restaurant
Sales
THIRTEEN
WEEKS ENDED SEPTEMBER 29, 2019 |
COMPANY-OWNED | ||
Comparable restaurant
sales (stores open 18 months or more): |
|||
U.S.
|
|||
Outback
Steakhouse |
0.2 |
% | |
Carrabba’s Italian Grill |
0.1 |
% | |
Bonefish
Grill |
(2.2 |
)% | |
Fleming’s Prime Steakhouse & Wine
Bar |
0.4 |
% | |
Combined
U.S. |
(0.2 |
)% | |
International |
|||
Outback Steakhouse - Brazil |
11.2 |
% | |
2
Dividend Declaration
On October 24, 2019, our Board of Directors declared a quarterly cash dividend of
$0.10 per share to be paid on November 27, 2019 to all stockholders of record as of the close of business on November 18,
2019.
Fiscal 2019
Financial Outlook
We are updating our 2019 financial outlook for U.S. comparable restaurant sales,
commodity inflation, capital expenditures, and our tax rates. Although U.S. comparable restaurant sales across the portfolio have improved in October, we remain cautious on industry sales trends given industry declines in the third quarter. All
other aspects of our previously provided full year financial outlook remain unchanged. See the table below for more
details.
Financial
Results: |
Prior Outlook |
Current Outlook | |
Adjusted diluted earnings
per share (1) |
$1.53 to
$1.61 |
$1.53 to
$1.61 | |
GAAP diluted earnings per
share (1) |
$1.44 to
$1.52 |
$1.44 to
$1.52 | |
GAAP effective income tax rate (1) |
6% to
7% |
5% to
6% | |
Adjusted effective income tax rate (1) |
7% to
8% |
6% to
7% | |
Adjusted operating income margin (1) |
4.8% to
5.0% |
4.8% to
5.0% | |
Other Selected Financial
Data: |
|||
Combined U.S. comparable
restaurant sales |
2.0% to
2.5% |
Approx.
1.5% | |
Commodity
inflation |
Approx.
2% |
Approx.
1.5% | |
Capital
expenditures |
$175M to
$200M |
Approx. $175M
| |
Number of new system-wide
restaurants |
Approx.
20 |
Approx.
20 | |
___________________
(1) |
The primary difference between our GAAP outlook and our adjusted outlook for diluted earnings per share,
effective income tax rate and operating income margin is driven by adjustments through Q3 2019 as reflected in Table 5 of this release, as well as anticipated adjustments in connection with our relocation and restaurant closure
initiatives. |
Company Exploring Strategic Alternatives
The Company also announced that it is exploring and evaluating strategic alternatives that have the potential to maximize value for our shareholders, including but not limited to, a possible sale of the
Company. The Board of Directors has retained BofA Securities, Inc. as its financial
advisor.
“Over the past few years Bloomin’ Brands has made significant progress towards its long term objectives to elevate the customer experience, capitalize on the emerging off-premises segment,
expand the rapidly growing international business, and improve operating margins. These efforts have created significant market share gains and enhanced profitability,” said David Deno, Chief Executive Officer of Bloomin’ Brands.
“However, despite this continued progress, we believe the current stock price does not reflect the value of the Company. That is why the time is right to explore strategic alternatives that have the potential to maximize value for our
shareholders. Our Board of Directors is committed to fully evaluating appropriate strategic alternatives while simultaneously supporting the Company’s ongoing progress against our business
plan.”
The Company plans to proceed in a timely manner, but has not set a definitive timetable for completion of this process. There can be no assurance that this review will result in a transaction or other
strategic alternative of any kind. The Company does not intend to make any further public comment regarding the review unless it determines that disclosure is appropriate or
necessary.
3
Conference
Call
The Company will host a conference call today, November 6th at 9:00 AM EST. The conference call can be accessed live over the telephone by dialing (855) 327-6838 or (604) 235-2082
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 until Wednesday, November 20, 2019.
The conference ID for the live call and replay is 10007953. 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.
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. For purposes of improving comparability, we have also presented Adjusted diluted earnings per share and Adjusted
operating income margin excluding the impact of the new lease accounting standard in the table
above.
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.
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 more
than 1,450 restaurants in 48 states, Puerto Rico, Guam and
21 countries, some of which are franchise locations. For more information, please
visit
www.bloominbrands.com.
4
Forward-Looking Statements
Certain statements contained herein, including statements under the headings “CEO Comments,” “Fiscal 2019 Financial Outlook” and “Company Exploring Strategic Alternatives” 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: the outcome of our review of strategic alternatives, including the impact on our ongoing business, our stock price and our ability to successfully implement
any alternatives that we pursue; 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; the effects of changes in tax laws; challenges associated with our remodeling, relocation and expansion 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 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 |
THIRTY-NINE
WEEKS ENDED | ||||||||||||||
(in thousands, except per share
data) |
SEPTEMBER 29, 2019 |
SEPTEMBER 30, 2018 |
SEPTEMBER 29, 2019 |
SEPTEMBER 30, 2018 | |||||||||||
Revenues |
|||||||||||||||
Restaurant sales |
$ |
951,816 |
$ |
949,400 |
$ |
3,069,145 |
$ |
3,063,887 |
|||||||
Franchise and other
revenues |
15,328
|
15,621
|
48,060
|
49,413
|
|||||||||||
Total revenues |
967,144 |
965,021 |
3,117,205 |
3,113,300 |
|||||||||||
Costs and
expenses |
|||||||||||||||
Cost of sales |
300,375 |
307,493 |
965,165 |
982,415 |
|||||||||||
Labor and other
related |
288,552 |
289,023 |
908,780 |
902,006 |
|||||||||||
Other restaurant operating |
240,372 |
233,744 |
732,121 |
725,468 |
|||||||||||
Depreciation and
amortization |
47,926 |
50,571 |
147,196 |
151,473 |
|||||||||||
General and administrative |
66,570 |
67,691 |
209,114 |
212,516 |
|||||||||||
Provision for impaired
assets and restaurant closings |
1,391
|
3,962
|
6,917
|
15,590
|
|||||||||||
Total costs and expenses |
945,186 |
952,484 |
2,969,293 |
2,989,468 |
|||||||||||
Income from
operations |
21,958 |
12,537 |
147,912 |
123,832 |
|||||||||||
Other income (expense), net |
11 |
(1 |
) |
(145 |
) |
(6 |
) | ||||||||
Interest expense,
net |
(13,256
|
)
|
(11,600
|
)
|
(36,885
|
)
|
(33,229
|
)
| |||||||
Income before (benefit) provision for income
taxes |
8,713 |
936 |
110,882 |
90,597 |
|||||||||||
(Benefit) provision for
income taxes |
(660
|
)
|
(3,317
|
)
|
6,051
|
(6,516
|
)
| ||||||||
Net income |
9,373 |
4,253 |
104,831 |
97,113 |
|||||||||||
Less: net income
attributable to noncontrolling interests |
125
|
181
|
2,262
|
922
|
|||||||||||
Net income attributable to Bloomin’
Brands |
$ |
9,248 |
$ |
4,072 |
$ |
102,569 |
$ |
96,191 |
|||||||
Earnings per share: |
|||||||||||||||
Basic |
$
|
0.11 |
$
|
0.04 |
$
|
1.15 |
$
|
1.04 |
|||||||
Diluted |
$ |
0.11 |
$ |
0.04 |
$ |
1.14 |
$ |
1.02 |
|||||||
Weighted average common shares
outstanding: |
|||||||||||||||
Basic |
86,843
|
92,202
|
89,484
|
92,197
|
|||||||||||
Diluted |
87,305 |
93,324 |
90,306 |
94,489 |
|||||||||||
6
TABLE
TWO | |||||||||||||||
BLOOMIN’ BRANDS,
INC. | |||||||||||||||
SEGMENT
RESULTS | |||||||||||||||
(UNAUDITED) | |||||||||||||||
(dollars in
thousands) |
THIRTEEN WEEKS ENDED |
THIRTY-NINE WEEKS ENDED | |||||||||||||
U.S. Segment |
SEPTEMBER 29, 2019 |
SEPTEMBER 30, 2018 |
SEPTEMBER 29, 2019 |
SEPTEMBER 30, 2018 | |||||||||||
Revenues |
|||||||||||||||
Restaurant sales |
$ |
835,753 |
$ |
848,837 |
$ |
2,737,182 |
$ |
2,742,118 |
|||||||
Franchise and other
revenues |
12,691
|
12,656
|
39,988
|
40,437
|
|||||||||||
Total revenues |
$ |
848,444 |
$ |
861,493 |
$ |
2,777,170 |
$ |
2,782,555 |
|||||||
Restaurant-level
operating margin |
12.0 |
% |
11.9 |
% |
14.5 |
% |
14.4 |
% | |||||||
Income from operations |
$ |
50,318 |
$ |
44,598 |
$ |
242,167 |
$ |
230,645 |
|||||||
Operating income
margin |
5.9 |
% |
5.2 |
% |
8.7 |
% |
8.3 |
% | |||||||
International
Segment |
|||||||||||||||
Revenues |
|||||||||||||||
Restaurant sales |
$ |
116,063 |
$ |
100,563 |
$ |
331,963 |
$ |
321,769 |
|||||||
Franchise and other
revenues |
2,637
|
2,965
|
8,072
|
8,976
|
|||||||||||
Total revenues |
$ |
118,700 |
$ |
103,528 |
$ |
340,035 |
$ |
330,745 |
|||||||
Restaurant-level
operating margin |
18.7 |
% |
17.9 |
% |
19.8 |
% |
18.4 |
% | |||||||
Income from operations |
$ |
10,550 |
$ |
7,776 |
$ |
31,179 |
$ |
14,052 |
|||||||
Operating income
margin |
8.9 |
% |
7.5 |
% |
9.2 |
% |
4.2 |
% | |||||||
Reconciliation of Segment Income
from Operations to Consolidated Income from Operations |
|||||||||||||||
Segment income from
operations |
|||||||||||||||
U.S. |
$ |
50,318 |
$ |
44,598 |
$ |
242,167 |
$ |
230,645 |
|||||||
International
|
10,550
|
7,776
|
31,179
|
14,052
|
|||||||||||
Total segment income from
operations |
60,868 |
52,374 |
273,346 |
244,697 |
|||||||||||
Unallocated corporate
operating expense |
(38,910
|
)
|
(39,837
|
)
|
(125,434
|
)
|
(120,865
|
)
| |||||||
Total income from operations |
$ |
21,958 |
$ |
12,537 |
$ |
147,912 |
$ |
123,832 |
|||||||
TABLE
THREE | |||||||
BLOOMIN’
BRANDS, INC. | |||||||
SUPPLEMENTAL BALANCE
SHEET INFORMATION | |||||||
(UNAUDITED) | |||||||
(in thousands) |
SEPTEMBER 29, 2019 |
DECEMBER 30, 2018 | |||||
Cash and cash
equivalents |
$ |
51,408 |
$ |
71,823 |
|||
Net working capital (deficit) (1) |
$ |
(579,222 |
) |
$ |
(455,556 |
) | |
Total assets
(2) |
$ |
3,468,947 |
$ |
2,464,774 |
|||
Total debt, net |
$ |
1,119,939 |
$ |
1,094,775 |
|||
Total stockholders’
equity (3) |
$ |
151,574 |
$ |
54,817 |
|||
Common stock outstanding (3) |
86,856 |
91,272 |
|||||
_________________
(1) |
During the thirty-nine weeks ended September 29,
2019, net working capital (deficit) was negatively impacted by the recognition of approximately $170 million of current lease liabilities as a result of the adoption of the new lease accounting
standard. We have, and in the future may continue to have, negative working capital balances (as is common for many restaurant companies). We operate successfully with negative working capital because cash collected on Restaurant sales is typically
received before payment is due on our current liabilities, and our 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. |
(2) |
The change in total assets during the
thirty-nine weeks ended September 29, 2019 includes the addition of $1.3
billion of lease right-of-use assets as a result of the adoption of the new lease accounting standard. |
(3) |
During the thirty-nine weeks ended September 29,
2019, we repurchased 5.5 million shares of our outstanding common stock and
issued 0.6 million shares of our common stock through the exercise of stock options.
|
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 QUARTER TO
DATE | ||||||||||||||||||
SEPTEMBER 29,
2019 |
SEPTEMBER 30,
2018 |
|||||||||||||||||||
AS
REPORTED |
AS
REPORTED |
COMPARABLE
ADJUSTED BASIS (2) |
||||||||||||||||||
Consolidated:
|
GAAP |
ADJUSTED (1) |
GAAP |
ADJUSTED (1) |
AS REPORTED |
COMPARABLE BASIS (2) | ||||||||||||||
Restaurant
sales |
100.0
|
% |
100.0
|
% |
100.0
|
% |
100.0
|
% |
100.0
|
% |
||||||||||
Cost of
sales |
31.6 |
% |
31.6 |
% |
32.4 |
% |
32.4 |
% |
32.4 |
% |
0.8 |
% |
0.8 |
% | ||||||
Labor and other related |
30.3 |
% |
30.3 |
% |
30.4 |
% |
30.4 |
% |
30.4 |
% |
0.1 |
% |
0.1 |
% | ||||||
Other restaurant
operating |
25.3 |
% |
25.6 |
% |
24.6 |
% |
24.8 |
% |
25.1 |
% |
(0.8 |
)% |
(0.5 |
)% | ||||||
Restaurant-level operating
margin (3) |
12.9 |
% |
12.5 |
% |
12.5 |
% |
12.4 |
% |
12.1 |
% |
0.1 |
% |
0.4 |
% | ||||||
Segments - Restaurant-level operating margin (3): |
||||||||||||||||||||
U.S. |
12.0 |
% |
11.5 |
% |
11.9 |
% |
11.8 |
% |
(0.3 |
)% |
||||||||||
International |
18.7 |
% |
18.7 |
% |
17.9 |
% |
17.9 |
% |
0.8 |
% |
||||||||||
THIRTY-NINE
WEEKS ENDED |
THIRTY-NINE
WEEKS ENDED |
(UNFAVORABLE) FAVORABLE CHANGE IN ADJUSTED YEAR TO DATE | ||||||||||||||||||
SEPTEMBER 29,
2019 |
SEPTEMBER 30,
2018 |
|||||||||||||||||||
AS
REPORTED |
AS REPORTED |
COMPARABLE ADJUSTED BASIS (2) |
||||||||||||||||||
Consolidated:
|
GAAP |
ADJUSTED (1) |
GAAP |
ADJUSTED (1) |
AS REPORTED |
COMPARABLE BASIS (2) | ||||||||||||||
Restaurant
sales |
100.0
|
% |
100.0
|
% |
100.0
|
% |
100.0
|
% |
100.0
|
% |
||||||||||
Cost of
sales |
31.4 |
% |
31.4 |
% |
32.1 |
% |
32.1 |
% |
32.1 |
% |
0.7 |
% |
0.7 |
% | ||||||
Labor and other related |
29.6 |
% |
29.6 |
% |
29.4 |
% |
29.4 |
% |
29.4 |
% |
(0.2 |
)% |
(0.2 |
)% | ||||||
Other restaurant
operating |
23.9 |
% |
24.0 |
% |
23.7 |
% |
23.8 |
% |
24.1 |
% |
(0.2 |
)% |
0.1 |
% | ||||||
Restaurant-level operating
margin (3) |
15.1 |
% |
15.0 |
% |
14.8 |
% |
14.7 |
% |
14.4 |
% |
0.3 |
% |
0.6 |
% | ||||||
Segments - Restaurant-level operating margin (3): |
||||||||||||||||||||
U.S. |
14.5 |
% |
14.4 |
% |
14.4 |
% |
14.2 |
% |
0.2 |
% |
||||||||||
International |
19.8 |
% |
19.8 |
% |
18.4 |
% |
18.2 |
% |
1.6 |
% |
||||||||||
_________________
(1) |
The table set forth below titled
“Restaurant-level Operating Margin Adjustments” provides additional information regarding the adjustments for each period
presented. |
(2) |
During the thirteen and thirty-nine weeks ended
September 30, 2018 both GAAP and adjusted restaurant-level operating margin included the benefit of deferred gains on sale-leaseback transactions of $3.1 million and $9.2 million,
respectively. For comparability, we presented adjusted restaurant-level operating margin excluding this benefit that we no longer recognize in 2019 as a result of the adoption of the new lease accounting standard. |
(3) |
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
Restaurant-level Operating
Margin Adjustments - Following is a summary of unfavorable (favorable) restaurant-level operating margin adjustments recorded in Other restaurant operating expense for the following
activities, as described in table five of this release:
THIRTEEN
WEEKS ENDED |
THIRTY-NINE
WEEKS ENDED | ||||||||||||||
(dollars in
millions) |
SEPTEMBER 29, 2019 |
SEPTEMBER 30, 2018 |
SEPTEMBER 29, 2019 |
SEPTEMBER 30, 2018 | |||||||||||
Restaurant and asset
impairments and closing costs (1) |
$ |
3.8 |
$ |
1.0 |
$ |
4.0 |
$ |
3.2 |
|||||||
Restaurant relocations and related
costs |
(0.1 |
) |
0.2 |
(0.4 |
) |
0.6 |
|||||||||
$
|
3.7 |
$
|
1.2 |
$
|
3.6 |
$
|
3.8 |
||||||||
_________________
(1) |
Includes $0.6 million of adjustments for the thirty-nine weeks ended September 30, 2018, recorded in the
International segment. All other adjustments were recorded within the U.S. segment.
|
9
TABLE
FIVE | |||||||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||||||
INCOME FROM
OPERATIONS, NET INCOME AND DILUTED EARNINGS PER SHARE NON-GAAP RECONCILIATIONS | |||||||||||||||
(UNAUDITED) | |||||||||||||||
THIRTEEN WEEKS ENDED |
THIRTY-NINE
WEEKS ENDED | ||||||||||||||
(in thousands, except per share
data) |
SEPTEMBER 29, 2019 |
SEPTEMBER 30, 2018 |
SEPTEMBER 29, 2019 |
SEPTEMBER 30, 2018 | |||||||||||
Income from
operations |
$ |
21,958 |
$ |
12,537 |
$ |
147,912 |
$ |
123,832 |
|||||||
Operating income
margin |
2.3 |
% |
1.3 |
% |
4.7 |
% |
4.0 |
% | |||||||
Adjustments: |
|||||||||||||||
Restaurant and asset impairments and closing costs
(1) |
(3,072 |
) |
2,840 |
1,098 |
12,021 |
||||||||||
Severance
(2) |
1,908 |
2,528 |
5,511 |
3,493 |
|||||||||||
Legal and contingent matters |
815 |
— |
815 |
758 |
|||||||||||
Restaurant relocations
and related costs (3) |
477 |
1,560 |
2,461 |
4,638 |
|||||||||||
Total income from operations
adjustments |
$
|
128 |
$
|
6,928 |
$
|
9,885 |
$
|
20,910 |
|||||||
Adjusted income from
operations |
$
|
22,086 |
$
|
19,465 |
$
|
157,797 |
$
|
144,742 |
|||||||
Adjusted operating income
margin |
2.3 |
% |
2.0 |
% |
5.1 |
% |
4.6 |
% | |||||||
Net income attributable to Bloomin’
Brands |
$ |
9,248 |
$ |
4,072 |
$ |
102,569 |
$ |
96,191 |
|||||||
Adjustments: |
|||||||||||||||
Income from operations
adjustments |
128 |
6,928 |
9,885 |
20,910 |
|||||||||||
Total adjustments, before
income taxes |
128 |
6,928 |
9,885 |
20,910 |
|||||||||||
Adjustment to provision for income taxes
(4) |
(471 |
) |
(1,643 |
) |
(1,703 |
) |
(3,762 |
) | |||||||
Net
adjustments |
(343
|
)
|
5,285
|
8,182
|
17,148
|
||||||||||
Adjusted net income |
$ |
8,905 |
$ |
9,357 |
$ |
110,751 |
$ |
113,339 |
|||||||
Diluted earnings per share |
$ |
0.11 |
$ |
0.04 |
$ |
1.14 |
$ |
1.02 |
|||||||
Adjusted diluted earnings per
share |
$ |
0.10 |
$ |
0.10 |
$ |
1.23 |
$ |
1.20 |
|||||||
Remove new lease
accounting standard impact (5) |
—
|
(0.02
|
)
|
—
|
(0.07
|
)
| |||||||||
Adjusted diluted earnings per share on a comparable
basis (5) |
$ |
0.10 |
$ |
0.08 |
$ |
1.23 |
$ |
1.13 |
|||||||
Diluted weighted average common shares
outstanding |
87,305 |
93,324 |
90,306 |
94,489 |
|||||||||||
_________________
(1) |
Represents asset impairment charges and related costs primarily associated with approved closure and
restructuring initiatives, and the restructuring of certain international markets. Amount also includes gains on the sale of certain surplus properties of $3.8 million for the thirteen and thirty-nine weeks ended September 29, 2019. |
(2) |
Relates to severance expense incurred as a result of restructuring activities. |
(3) |
Represents asset impairment charges and accelerated depreciation incurred in connection with our relocation program. |
(4) |
Represents income tax effect of the adjustments for the periods presented. |
(5) |
During the thirteen and thirty-nine weeks ended September 30, 2018 both GAAP and adjusted diluted
earnings per share include the benefit of deferred gains on sale-leaseback transactions of approximately $0.02 and $0.07, respectively. For comparability, we have presented adjusted diluted earnings per share excluding this benefit that we no longer recognize in
2019 as a result of the adoption of the new lease accounting
standard. |
10
Following is a summary of the financial statement line item classification of the net income
adjustments:
THIRTEEN
WEEKS ENDED |
THIRTY-NINE
WEEKS ENDED | ||||||||||||||
(dollars in thousands) |
SEPTEMBER 29, 2019 |
SEPTEMBER 30, 2018 |
SEPTEMBER 29, 2019 |
SEPTEMBER 30, 2018 | |||||||||||
Other restaurant
operating |
$ |
(3,685 |
) |
$ |
(1,265 |
) |
$ |
(3,642 |
) |
$ |
(3,783 |
) | |||
Depreciation and amortization |
611 |
1,411 |
1,783 |
4,522 |
|||||||||||
General and
administrative |
2,776 |
2,768 |
7,106 |
5,858 |
|||||||||||
Provision for impaired assets and restaurant
closings |
426 |
4,014 |
4,638 |
14,313 |
|||||||||||
(Benefit) provision for
income taxes |
(471
|
)
|
(1,643
|
)
|
(1,703
|
)
|
(3,762
|
)
| |||||||
Net adjustments |
$ |
(343 |
) |
$ |
5,285 |
$ |
8,182 |
$ |
17,148 |
||||||
11
TABLE
SIX | |||||||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||||||
SEGMENT INCOME FROM
OPERATIONS NON-GAAP RECONCILIATION | |||||||||||||||
(UNAUDITED) | |||||||||||||||
U.S. Segment |
THIRTEEN WEEKS ENDED |
THIRTY-NINE
WEEKS ENDED | |||||||||||||
(dollars in
thousands) |
SEPTEMBER 29, 2019 |
SEPTEMBER 30, 2018 |
SEPTEMBER 29, 2019 |
SEPTEMBER 30, 2018 | |||||||||||
Income from
operations |
$ |
50,318 |
$ |
44,598 |
$ |
242,167 |
$ |
230,645 |
|||||||
Operating income
margin |
5.9 |
% |
5.2 |
% |
8.7 |
% |
8.3 |
% | |||||||
Adjustments: |
|||||||||||||||
Restaurant and asset impairments and closing costs
(1) |
(3,164 |
) |
2,840 |
(1,083 |
) |
2,043 |
|||||||||
Restaurant relocations
and related costs (2) |
477 |
1,560 |
2,461 |
4,638 |
|||||||||||
Severance (3) |
59 |
688 |
759 |
1,576 |
|||||||||||
Adjusted income from
operations |
$ |
47,690
|
$ |
49,686
|
$ |
244,304
|
$ |
238,902
|
|||||||
Adjusted operating income
margin |
5.6 |
% |
5.8 |
% |
8.8 |
% |
8.6 |
% | |||||||
International
Segment |
|||||||||||||||
(dollars
in thousands) |
|||||||||||||||
Income from operations |
$ |
10,550 |
$ |
7,776 |
$ |
31,179 |
$ |
14,052 |
|||||||
Operating
income margin |
8.9 |
% |
7.5 |
% |
9.2 |
% |
4.2 |
% | |||||||
Adjustments: |
|||||||||||||||
Restaurant and asset
impairments and closing costs (4) |
91 |
— |
2,180 |
9,978 |
|||||||||||
Severance (3) |
— |
571 |
— |
571 |
|||||||||||
Adjusted income from
operations |
$ |
10,641
|
$ |
8,347
|
$ |
33,359
|
$ |
24,601
|
|||||||
Adjusted operating income
margin |
9.0 |
% |
8.1 |
% |
9.8 |
% |
7.4 |
% | |||||||
_________________
(1) |
Represents asset impairment charges and related costs primarily associated with approved closure and
restructuring initiatives, and gains of $3.8 million on the sale of certain surplus properties for the thirteen and thirty-nine weeks ended September 29, 2019. |
(2) |
Represents asset impairment charges and accelerated depreciation incurred in connection with our
relocation program. |
(3) |
Relates to severance expense incurred as a result of restructuring activities. |
(4) |
Represents asset impairment charges and related costs primarily associated with
the restructuring of certain international markets. |
12
TABLE
SEVEN | |||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||
COMPARATIVE
RESTAURANT INFORMATION | |||||||||||
(UNAUDITED) | |||||||||||
Number of restaurants (at end of
the period): |
JUNE 30, 2019 |
OPENINGS |
CLOSURES |
SEPTEMBER 29, 2019 | |||||||
U.S. |
|||||||||||
Outback Steakhouse |
|||||||||||
Company-owned
|
579 |
— |
— |
579 |
|||||||
Franchised |
148 |
— |
(1 |
) |
147 |
||||||
Total |
727
|
—
|
(1
|
)
|
726
|
||||||
Carrabba’s Italian Grill |
|||||||||||
Company-owned
|
205 |
— |
(1 |
) |
204 |
||||||
Franchised |
21 |
— |
— |
21 |
|||||||
Total |
226
|
—
|
(1
|
)
|
225
|
||||||
Bonefish Grill |
|||||||||||
Company-owned
|
190 |
— |
— |
190 |
|||||||
Franchised |
7 |
— |
— |
7 |
|||||||
Total |
197
|
—
|
—
|
197
|
|||||||
Fleming’s Prime Steakhouse & Wine
Bar |
|||||||||||
Company-owned
|
69
|
—
|
—
|
69
|
|||||||
Other |
|||||||||||
Company-owned
|
3
|
—
|
—
|
3
|
|||||||
U.S. Total |
1,222
|
—
|
(2
|
)
|
1,220
|
||||||
International |
|||||||||||
Company-owned |
|||||||||||
Outback
Steakhouse—Brazil (1) |
97 |
2 |
— |
99 |
|||||||
Other |
27 |
1 |
— |
28 |
|||||||
Franchised |
|||||||||||
Outback Steakhouse - South Korea |
70 |
2 |
(2 |
) |
70 |
||||||
Other |
51 |
3 |
— |
54 |
|||||||
International Total |
245
|
8
|
(2
|
)
|
251
|
||||||
System-wide
total |
1,467
|
8
|
(4
|
)
|
1,471
|
||||||
____________________
(1) |
The restaurant counts for Brazil are reported as of May 31, 2019 and August 31, 2019 to correspond with
the balance sheet dates of this
subsidiary. |
13
TABLE
EIGHT | |||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||
COMPARABLE
RESTAURANT SALES INFORMATION | |||||||||||
(UNAUDITED) | |||||||||||
THIRTEEN
WEEKS ENDED |
THIRTY-NINE
WEEKS ENDED | ||||||||||
SEPTEMBER 29, 2019 |
SEPTEMBER 30, 2018 |
SEPTEMBER 29, 2019 |
SEPTEMBER 30, 2018 | ||||||||
Year over year percentage
change: |
|||||||||||
Comparable restaurant sales (stores open 18 months or
more): |
|||||||||||
U.S.
(1) |
|||||||||||
Outback Steakhouse |
0.2 |
% |
4.6 |
% |
1.7 |
% |
4.3 |
% | |||
Carrabba’s Italian
Grill |
0.1 |
% |
(0.6 |
)% |
(0.4 |
)% |
— |
% | |||
Bonefish Grill |
(2.2 |
)% |
1.8 |
% |
— |
% |
1.1 |
% | |||
Fleming’s Prime
Steakhouse & Wine Bar |
0.4 |
% |
0.5 |
% |
0.8 |
% |
1.4 |
% | |||
Combined U.S. |
(0.2 |
)% |
2.9 |
% |
1.0 |
% |
2.8 |
% | |||
International
|
|||||||||||
Outback Steakhouse - Brazil (2) |
11.2 |
% |
(3.3 |
)% |
6.1 |
% |
(2.8 |
)% | |||
Traffic: |
|||||||||||
U.S. |
|||||||||||
Outback Steakhouse |
(1.1 |
)% |
0.9 |
% |
(1.1 |
)% |
1.3 |
% | |||
Carrabba’s Italian
Grill |
0.5 |
% |
(2.9 |
)% |
(0.8 |
)% |
(4.8 |
)% | |||
Bonefish Grill |
(2.9 |
)% |
(2.7 |
)% |
(2.1 |
)% |
(2.1 |
)% | |||
Fleming’s Prime
Steakhouse & Wine Bar |
(0.3 |
)% |
(4.2 |
)% |
0.6 |
% |
(4.7 |
)% | |||
Combined U.S. |
(1.0 |
)% |
(0.5 |
)% |
(1.1 |
)% |
(0.6 |
)% | |||
International
|
|||||||||||
Outback Steakhouse - Brazil |
10.0 |
% |
(5.5 |
)% |
2.8 |
% |
(5.0 |
)% | |||
Average check per person (3): |
|||||||||||
U.S. |
|||||||||||
Outback Steakhouse |
1.3 |
% |
3.7 |
% |
2.8 |
% |
3.0 |
% | |||
Carrabba’s Italian
Grill |
(0.4 |
)% |
2.3 |
% |
0.4 |
% |
4.8 |
% | |||
Bonefish Grill |
0.7 |
% |
4.5 |
% |
2.1 |
% |
3.2 |
% | |||
Fleming’s Prime
Steakhouse & Wine Bar |
0.7 |
% |
4.7 |
% |
0.2 |
% |
6.1 |
% | |||
Combined U.S. |
0.8 |
% |
3.4 |
% |
2.1 |
% |
3.4 |
% | |||
International
|
|||||||||||
Outback Steakhouse - Brazil |
0.8 |
% |
2.1 |
% |
3.3 |
% |
2.3 |
% | |||
____________________
(1) |
Relocated restaurants closed more than 60 days are excluded from comparable restaurant sales until at
least 18 months after reopening. |
(2) |
Excludes the effect of fluctuations in foreign currency rates. Includes trading day impact from calendar
period reporting. |
(3) |
Average check per person includes the impact of menu pricing changes, product mix and
discounts. |
SOURCE: Bloomin’ Brands,
Inc.
14