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) February 18, 2020
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:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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 February 18, 2020, the Company issued a press release reporting its financial results for the thirteen weeks ended December 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: |
February 18, 2020 |
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 Q4 Diluted EPS and Adjusted Diluted EPS of
$0.32
Q4 Comparable Restaurant
Sales Growth of 2.7% at Outback Steakhouse and 1.9% Combined U.S.
Provides 2020 Financial Outlook including GAAP EPS of $1.63 to $1.68 and Adjusted EPS of $1.85 to $1.90
2020 Guidance Includes Adjusted EPS Growth of 20% to 23%
Updates Progress on Strategic Alternatives Review and Doubles Annual Dividend from $0.40 to $0.80
TAMPA, Fla., February 18, 2020 - Bloomin’ Brands, Inc. (Nasdaq: BLMN) today reported results for the fourth quarter
2019 (“Q4
2019”) and fiscal year ended December 29, 2019 (“Fiscal
Year 2019”) compared to the fourth quarter 2018 (“Q4
2018”) and fiscal year ended December 30, 2018 (“Fiscal
Year 2018”).
Highlights for
Q4 2019 include the following:
• |
Comparable restaurant sales increased
2.7% at U.S. Outback Steakhouse, representing its 12th consecutive quarter of positive comparable restaurant sales
|
• |
Comparable restaurant sales increased
4.9% for Outback Steakhouse in
Brazil |
• |
Opened seven new restaurants, including five international
locations |
Highlights for Fiscal Year 2019 include the
following:
• |
Comparable restaurant sales increased
2.0% at U.S. Outback
Steakhouse |
• |
Combined U.S. comparable restaurant sales of
1.2% with positive comps at all U.S.
concepts |
• |
Comparable restaurant sales increased
5.8% for Outback Steakhouse in
Brazil |
• |
GAAP and Adjusted operating income margin expansion of 140 basis points and 60 basis points,
respectively, on a comparable basis
|
CEO
Comments
“Q4 was
a strong finish to a very good year for Bloomin’ Brands,” said David Deno, Chief Executive Officer. “In 2019, we capitalized on previous investments and achieved our profit commitments. This includes 60 basis points of operating
margin expansion while driving healthy sales growth. We will continue to leverage our current sales momentum while pursuing opportunities to become a more efficient restaurant company. We expect this to lead to a large increase in total shareholder
return in 2020 and
beyond.”
Diluted EPS and Adjusted Diluted EPS
Our Q4 2019 and Fiscal Year 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 three cent reduction in earnings per share on the quarter and a ten cent reduction on the fiscal year. The following table includes both
a reported and a comparable basis that adjusts for this lease accounting
change.
1
The following table reconciles Diluted earnings per share to Adjusted diluted earnings per share for the periods indicated.
Q4 |
FISCAL YEAR |
||||||||||||||||||||||
2019 |
2018 |
CHANGE |
2019 |
2018 |
CHANGE | ||||||||||||||||||
Diluted earnings per share |
$ |
0.32 |
$ |
0.12 |
$ |
0.20 |
$ |
1.45 |
$ |
1.14 |
$ |
0.31 |
|||||||||||
Adjustments
|
— |
0.18 |
(0.18 |
) |
0.09 |
0.36 |
(0.27 |
)
| |||||||||||||||
Adjusted diluted earnings per share |
$
|
0.32 |
$
|
0.30 |
$
|
0.02 |
$
|
1.54 |
$ |
1.50
|
$
|
0.04 |
|||||||||||
Remove new lease
accounting standard impact (1) |
— |
(0.03 |
) |
0.03 |
— |
(0.10 |
) |
0.10 |
|||||||||||||||
Adjusted diluted earnings per share on a comparable basis (1) |
$
|
0.32 |
$
|
0.27 |
$
|
0.05 |
$
|
1.54 |
$
|
1.40 |
$
|
0.14 |
|||||||||||
______________
See Non-GAAP Measures later in this
release.
(1) |
In Q4 2018 and Fiscal Year 2018, both GAAP and adjusted diluted earnings per share include the benefit
of deferred gains on sale-leaseback transactions. 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. |
Fourth Quarter Financial
Results
As described above, our Q4 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) |
Q4
2019 |
Q4
2018 |
CHANGE |
Q4
2018 |
CHANGE | ||||||||||||
Total
revenues |
$ |
1,022.2 |
$ |
1,013.1 |
0.9 |
% |
$ |
1,013.1 |
0.9 |
% | |||||||
GAAP restaurant-level
operating margin |
14.4 |
% |
14.7 |
% |
(0.3 |
)% |
14.4 |
% |
— |
% | |||||||
Adjusted restaurant-level operating margin
(2) |
13.9 |
% |
14.7 |
% |
(0.8 |
)% |
14.4 |
% |
(0.5 |
)% | |||||||
GAAP operating income margin |
4.2 |
% |
2.1 |
% |
2.1 |
% |
1.8 |
% |
2.4 |
% | |||||||
Adjusted operating income
margin (2) |
4.2 |
% |
4.3 |
% |
(0.1 |
)% |
4.0 |
% |
0.2 |
% | |||||||
___________________
(1) |
To improve comparability in this table, we removed the benefit of deferred gains on sale-leaseback
transactions from our Q4 2018 results. |
(2) |
See Non-GAAP Measures later in this
release. |
• |
The increase in total revenues was primarily due to higher comparable restaurant sales and the net
impact of restaurant openings and closures, partially offset by domestic refranchising and foreign currency translation. |
• |
GAAP restaurant-level operating margin was flat on a comparable basis primarily due to the impact of
certain cost savings initiatives, higher comparable restaurant sales, and the benefit of certain value-added tax credits in Brazil. These increases were offset by labor, commodity, and operating expense inflation and delivery rollout costs.
|
• |
The primary difference between GAAP and Adjusted restaurant-level operating margin is that adjusted
restaurant-level operating margin excludes the benefit of certain value-added tax credits in Brazil. |
• |
The increase in GAAP operating income margin was due to impairment and restaurant closing costs that
were recorded in 2018 which were excluded from our adjusted operating income
margin. |
• |
The increase in Adjusted operating income margin is due to lower general and administrative
expense. |
2
Fourth Quarter Comparable Restaurant
Sales
THIRTEEN
WEEKS ENDED DECEMBER 29, 2019 |
COMPANY-OWNED | ||
Comparable restaurant
sales (stores open 18 months or more): |
|||
U.S.
|
|||
Outback
Steakhouse |
2.7 |
% | |
Carrabba’s Italian Grill |
1.4 |
% | |
Bonefish
Grill |
0.5 |
% | |
Fleming’s Prime Steakhouse & Wine
Bar |
0.9 |
% | |
Combined
U.S. |
1.9 |
% | |
International |
|||
Outback Steakhouse - Brazil |
4.9 |
% | |
Strategic Alternatives Review Update
In November 2019, the Company 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. Since then, management has been actively working with the Board of Directors and its financial and legal advisors to review all aspects of the business and available opportunities.
Concurrently, the Company has built a plan that supports a growth-focused, operations centric
organization. The pillars of this plan are as follows:
• |
Aligned leadership, resources, and structure to prioritize growth, efficiency, and
scale |
• |
Simplified corporate support functions to enable a more agile and operations-focused
organization |
• |
Rebalanced capital allocation policy, including a doubling of the dividend, while maintaining
flexibility to pay down debt, repurchase shares and reinvest back in the
business |
The impact of these collective decisions is as follows:
• |
Anticipated cost savings representing $40 million over the next two years. We expect approximately $20
million of these savings to be realized in each of 2020 and 2021. The impact of these savings on 2020 results is expected to be $0.17 per share and is outlined in the Fiscal 2020 Financial Outlook section of this release.
|
• |
Anticipated 70 to 80 basis points of adjusted operating margin expansion with modest check average
increases of approximately 1% in 2020. |
• |
On Tuesday, February 11, 2020, the Board of Directors declared a quarterly cash dividend of $0.20 per share to be paid on March 13, 2020 to all stockholders of record as of close of business on February 28, 2020. This
dividend doubles the 2019 quarterly dividend of
$0.10. |
“Over the past few months, we conducted a thorough review of all aspects of the business and the various strategic opportunities available to our Company,” said David Deno, Chief
Executive Officer. “We remain committed to evaluating all credible offers that have the potential to drive value. As part of the review, we are implementing transformational initiatives to enhance Company performance. We believe these actions,
combined with our continued sales momentum, position us for growth and better allow us to capture the opportunities in 2020 and beyond.”
More detail on these initiatives and an update on the strategic alternatives review will be discussed during this morning’s scheduled earnings conference call. Please see the Conference Call section
of this release for more information on how to access this call.
3
Fiscal 2020 Financial
Outlook
The
following table presents our expectations for selected fiscal 2020 financial reporting and operating results:
Financial
Results: |
2020 Guidance |
GAAP diluted earnings per
share (1) |
$1.63 to
$1.68 |
Adjusted diluted earnings
per share (1) |
$1.85 to
$1.90 |
GAAP operating income margin (1) |
4.9% to
5.0% |
Adjusted operating income margin (1) |
5.5% to
5.6% |
GAAP effective income tax rate (1) |
9% to
10% |
Adjusted effective income tax rate (1) |
11% to
12% |
Other Selected Financial
Data: |
|
Combined U.S. comparable
restaurant sales |
1.0% to
1.5% |
Commodity
inflation |
Approx.
2% |
Capital
expenditures |
$175M -
$190M |
Number of new system-wide
restaurants |
Approx.
25 |
___________________
(1) |
The primary difference between our GAAP outlook and our adjusted outlook for diluted earnings per share,
operating income margin and effective income tax rate is driven by anticipated adjustments in costs related to our restructuring and relocation initiatives. |
Earnings Per
Share: |
2019 |
2020 Guidance |
Change | ||
Adjusted diluted earnings
per share before costs savings |
$1.54 |
$1.68 to $1.73 |
$0.14 to $0.19 | ||
Plus: Cost
savings |
- |
0.17 |
0.17 | ||
Adjusted diluted earnings
per share |
$1.54 |
$1.85 to
$1.90 |
$0.31 to
$0.36 | ||
Adjusted diluted earnings
per share growth |
20% to
23% | ||||
Conference Call
The Company
will host a conference call today, February 18th at 8:30 AM
EST. 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 until Tuesday, March 3, 2020. The conference ID for the live call and replay is 13698429. 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
4
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.
Forward-Looking Statements
Certain statements contained herein, including statements under the headings “CEO Comments,” “Strategic Alternatives Review
Update” and “Fiscal 2020 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: 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 including our ability to achieve the cost savings described in this release; 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 |
FISCAL
YEAR ENDED | ||||||||||||||
(in thousands, except per share
data) |
DECEMBER 29, 2019 |
DECEMBER 30, 2018 |
DECEMBER 29, 2019 |
DECEMBER 30, 2018 | |||||||||||
Revenues |
|||||||||||||||
Restaurant sales |
$ |
1,005,869 |
$ |
996,984 |
$ |
4,075,014 |
$ |
4,060,871 |
|||||||
Franchise and other
revenues |
16,315
|
16,129
|
64,375
|
65,542
|
|||||||||||
Total revenues |
1,022,184 |
1,013,113 |
4,139,389 |
4,126,413 |
|||||||||||
Costs and
expenses |
|||||||||||||||
Cost of sales |
312,659 |
313,173 |
1,277,824 |
1,295,588 |
|||||||||||
Labor and other
related |
298,509 |
295,291 |
1,207,289 |
1,197,297 |
|||||||||||
Other restaurant operating |
249,930 |
241,631 |
982,051 |
967,099 |
|||||||||||
Depreciation and
amortization |
49,615 |
50,120 |
196,811 |
201,593 |
|||||||||||
General and administrative |
66,125 |
70,204 |
275,239 |
282,720 |
|||||||||||
Provision for impaired
assets and restaurant closings |
2,168
|
21,273
|
9,085
|
36,863
|
|||||||||||
Total costs and expenses |
979,006 |
991,692 |
3,948,299 |
3,981,160 |
|||||||||||
Income from
operations |
43,178 |
21,421 |
191,090 |
145,253 |
|||||||||||
Other income (expense), net |
2 |
(5 |
) |
(143 |
) |
(11 |
) | ||||||||
Interest expense,
net |
(12,372
|
)
|
(11,708
|
)
|
(49,257
|
)
|
(44,937
|
)
| |||||||
Income before Provision (benefit) for income
taxes |
30,808 |
9,708 |
141,690 |
100,305 |
|||||||||||
Provision (benefit) for
income taxes |
1,522
|
(2,717
|
)
|
7,573
|
(9,233
|
)
| |||||||||
Net income |
29,286 |
12,425 |
134,117 |
109,538 |
|||||||||||
Less: net income
attributable to noncontrolling interests |
1,282
|
1,518
|
3,544
|
2,440
|
|||||||||||
Net income attributable to Bloomin’
Brands |
$ |
28,004 |
$ |
10,907 |
$ |
130,573 |
$ |
107,098 |
|||||||
Earnings per share: |
|||||||||||||||
Basic |
$
|
0.32 |
$
|
0.12 |
$
|
1.47 |
$
|
1.16 |
|||||||
Diluted |
$ |
0.32 |
$ |
0.12 |
$ |
1.45 |
$ |
1.14 |
|||||||
Weighted average common shares
outstanding: |
|||||||||||||||
Basic |
86,903
|
91,579
|
88,839
|
92,042
|
|||||||||||
Diluted |
88,188 |
92,833 |
89,777 |
94,075 |
|||||||||||
6
TABLE
TWO | |||||||||||||||
BLOOMIN’ BRANDS,
INC. | |||||||||||||||
SEGMENT
RESULTS | |||||||||||||||
(UNAUDITED) | |||||||||||||||
(dollars in
thousands) |
THIRTEEN WEEKS ENDED |
FISCAL YEAR ENDED | |||||||||||||
U.S. Segment |
DECEMBER 29, 2019 |
DECEMBER 30, 2018 |
DECEMBER 29, 2019 |
DECEMBER 30, 2018 | |||||||||||
Revenues |
|||||||||||||||
Restaurant sales |
$ |
897,486 |
$ |
892,080 |
$ |
3,634,668 |
$ |
3,634,198 |
|||||||
Franchise and other
revenues |
13,262
|
12,604
|
53,250
|
53,041
|
|||||||||||
Total revenues |
$ |
910,748 |
$ |
904,684 |
$ |
3,687,918 |
$ |
3,687,239 |
|||||||
Restaurant-level
operating margin |
13.4 |
% |
13.9 |
% |
14.2 |
% |
14.2 |
% | |||||||
Income from operations |
$ |
69,499 |
$ |
58,314 |
$ |
311,666 |
$ |
288,959 |
|||||||
Operating income
margin |
7.6 |
% |
6.4 |
% |
8.5 |
% |
7.8 |
% | |||||||
International
Segment |
|||||||||||||||
Revenues |
|||||||||||||||
Restaurant sales |
$ |
108,383 |
$ |
104,904 |
$ |
440,346 |
$ |
426,673 |
|||||||
Franchise and other
revenues |
3,053
|
3,525
|
11,125
|
12,501
|
|||||||||||
Total revenues |
$ |
111,436 |
$ |
108,429 |
$ |
451,471 |
$ |
439,174 |
|||||||
Restaurant-level
operating margin |
21.9 |
% |
20.3 |
% |
20.3 |
% |
18.8 |
% | |||||||
Income from operations |
$ |
13,249 |
$ |
7,949 |
$ |
44,428 |
$ |
22,001 |
|||||||
Operating income
margin |
11.9 |
% |
7.3 |
% |
9.8 |
% |
5.0 |
% | |||||||
Reconciliation of Segment Income
from Operations to Consolidated Income from Operations |
|||||||||||||||
Segment income from
operations |
|||||||||||||||
U.S. |
$ |
69,499 |
$ |
58,314 |
$ |
311,666 |
$ |
288,959 |
|||||||
International
|
13,249
|
7,949
|
44,428
|
22,001
|
|||||||||||
Total segment income from
operations |
82,748 |
66,263 |
356,094 |
310,960 |
|||||||||||
Unallocated corporate
operating expense |
(39,570
|
)
|
(44,842
|
)
|
(165,004
|
)
|
(165,707
|
)
| |||||||
Total income from operations |
$ |
43,178 |
$ |
21,421 |
$ |
191,090 |
$ |
145,253 |
|||||||
TABLE
THREE | |||||||
BLOOMIN’
BRANDS, INC. | |||||||
SUPPLEMENTAL BALANCE
SHEET INFORMATION | |||||||
(UNAUDITED) | |||||||
(in thousands) |
DECEMBER 29, 2019 |
DECEMBER 30, 2018 | |||||
Cash and cash
equivalents |
$ |
67,145 |
$ |
71,823 |
|||
Net working capital (deficit) (1) |
$ |
(621,553 |
) |
$ |
(455,556 |
) | |
Total assets
(2) |
$ |
3,592,683 |
$ |
2,464,774 |
|||
Total debt, net |
$ |
1,048,704 |
$ |
1,094,775 |
|||
Total stockholders’
equity (3) |
$ |
177,481 |
$ |
54,817 |
|||
Common stock outstanding (3) |
86,946 |
91,272 |
|||||
_________________
(1) |
During 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 fiscal
year ended December 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 2019, we repurchased 5.5 million shares of our outstanding common stock and issued 0.7 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 |
(UNFAVORABLE) FAVORABLE CHANGE IN ADJUSTED QUARTER TO
DATE | |||||||||||||||||||
DECEMBER 29, 2019 |
DECEMBER 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 |
31.1 |
% |
31.4 |
% |
31.4 |
% |
31.4 |
% |
31.4 |
% |
— |
% |
— |
% | ||||||
Labor and other related |
29.7 |
% |
29.7 |
% |
29.6 |
% |
29.6 |
% |
29.6 |
% |
(0.1 |
)% |
(0.1 |
)% | ||||||
Other restaurant
operating |
24.8 |
% |
25.0 |
% |
24.2 |
% |
24.3 |
% |
24.6 |
% |
(0.7 |
)% |
(0.4 |
)% | ||||||
Restaurant-level operating
margin (3) |
14.4 |
% |
13.9 |
% |
14.7 |
% |
14.7 |
% |
14.4 |
% |
(0.8 |
)% |
(0.5 |
)% | ||||||
Segments - Restaurant-level operating margin (3): |
||||||||||||||||||||
U.S. |
13.4 |
% |
13.4 |
% |
13.9 |
% |
13.9 |
% |
(0.5 |
)% |
||||||||||
International |
21.9 |
% |
17.7 |
% |
20.3 |
% |
20.3 |
% |
(2.6 |
)% |
||||||||||
FISCAL YEAR ENDED |
(UNFAVORABLE) FAVORABLE CHANGE IN ADJUSTED YEAR TO DATE | |||||||||||||||||||
DECEMBER 29, 2019 |
DECEMBER 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 |
% |
31.9 |
% |
31.9 |
% |
31.9 |
% |
0.5 |
% |
0.5 |
% | ||||||
Labor and other related |
29.6 |
% |
29.6 |
% |
29.5 |
% |
29.5 |
% |
29.5 |
% |
(0.1 |
)% |
(0.1 |
)% | ||||||
Other restaurant
operating |
24.1 |
% |
24.2 |
% |
23.8 |
% |
23.9 |
% |
24.2 |
% |
(0.3 |
)% |
— |
% | ||||||
Restaurant-level operating
margin (3) |
14.9 |
% |
14.7 |
% |
14.8 |
% |
14.7 |
% |
14.4 |
% |
— |
% |
0.3 |
% | ||||||
Segments - Restaurant-level operating margin (3): |
||||||||||||||||||||
U.S. |
14.2 |
% |
14.1 |
% |
14.2 |
% |
14.2 |
% |
(0.1 |
)% |
||||||||||
International |
20.3 |
% |
19.3 |
% |
18.8 |
% |
18.7 |
% |
0.6 |
% |
||||||||||
_________________
(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 fiscal year ended
December 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 $12.3 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 (unless otherwise noted
below) for the following activities, as described in table five of this
release:
THIRTEEN
WEEKS ENDED |
FISCAL
YEAR ENDED | ||||||||||||||
(dollars in
millions) |
DECEMBER 29, 2019 |
DECEMBER 30, 2018 |
DECEMBER 29, 2019 |
DECEMBER 30, 2018 | |||||||||||
Restaurant and asset
impairments and closing costs (1) |
$ |
0.3 |
$ |
0.2 |
$ |
4.3 |
$ |
3.4 |
|||||||
Restaurant relocations and related
costs |
(0.2 |
) |
0.1 |
(0.6 |
) |
0.7 |
|||||||||
Legal and other matters
(2) |
4.6
|
—
|
4.6
|
—
|
|||||||||||
$
|
4.7 |
$ |
0.3 |
$ |
8.3 |
$ |
4.1 |
||||||||
_________________
(1) |
Includes $0.6 million of adjustments for the fiscal year ended December 30, 2018, recorded in the international
segment. All other adjustments were recorded within the U.S. segment. |
(2) |
Includes adjustments of $2.7 million and $1.9 million recorded in Cost of sales and Other restaurant
operating expense, respectively, within the international
segment. |
9
TABLE
FIVE | |||||||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||||||
INCOME FROM
OPERATIONS, NET INCOME AND DILUTED EARNINGS PER SHARE NON-GAAP RECONCILIATIONS | |||||||||||||||
(UNAUDITED) | |||||||||||||||
THIRTEEN WEEKS ENDED |
FISCAL
YEAR ENDED | ||||||||||||||
(in thousands, except per share
data) |
DECEMBER 29, 2019 |
DECEMBER 30, 2018 |
DECEMBER 29, 2019 |
DECEMBER 30, 2018 | |||||||||||
Income from
operations |
$ |
43,178 |
$ |
21,421 |
$ |
191,090 |
$ |
145,253 |
|||||||
Operating income
margin |
4.2 |
% |
2.1 |
% |
4.6 |
% |
3.5 |
% | |||||||
Adjustments: |
|||||||||||||||
Restaurant and asset impairments and closing costs
(1) |
2,452 |
17,521 |
3,550 |
29,542 |
|||||||||||
Restaurant relocations
and related costs (2) |
747 |
4,009 |
3,208 |
8,647 |
|||||||||||
Severance (3) |
— |
— |
5,511 |
3,493 |
|||||||||||
Legal and other matters
(4) |
(3,811 |
) |
310 |
(2,996 |
) |
1,068 |
|||||||||
Total income from operations
adjustments |
$
|
(612 |
)
|
$
|
21,840 |
$
|
9,273 |
$
|
42,750 |
||||||
Adjusted income from
operations |
$
|
42,566 |
$
|
43,261 |
$
|
200,363 |
$
|
188,003 |
|||||||
Adjusted operating income
margin |
4.2 |
% |
4.3 |
% |
4.8 |
% |
4.6 |
% | |||||||
Net income attributable to Bloomin’
Brands |
$ |
28,004 |
$ |
10,907 |
$ |
130,573 |
$ |
107,098 |
|||||||
Adjustments: |
|||||||||||||||
Income from operations
adjustments |
(612 |
) |
21,840 |
9,273 |
42,750 |
||||||||||
Total adjustments, before
income taxes |
(612 |
) |
21,840 |
9,273 |
42,750 |
||||||||||
Adjustment to provision for income taxes
(5) |
440 |
(5,182 |
) |
(1,263 |
) |
(8,944 |
) | ||||||||
Net
adjustments |
(172
|
)
|
16,658
|
8,010
|
33,806
|
||||||||||
Adjusted net income |
$ |
27,832 |
$ |
27,565 |
$ |
138,583 |
$ |
140,904 |
|||||||
Diluted earnings per share |
$ |
0.32 |
$ |
0.12 |
$ |
1.45 |
$ |
1.14 |
|||||||
Adjusted diluted earnings per
share |
$ |
0.32 |
$ |
0.30 |
$ |
1.54 |
$ |
1.50 |
|||||||
Remove new lease
accounting standard impact (6) |
—
|
(0.03
|
)
|
—
|
(0.10
|
)
| |||||||||
Adjusted diluted earnings per share on a comparable
basis (6) |
$ |
0.32 |
$ |
0.27 |
$ |
1.54 |
$ |
1.40 |
|||||||
Diluted weighted average common shares
outstanding |
88,188 |
92,833 |
89,777 |
94,075 |
|||||||||||
_________________
(1) |
Represents asset impairment charges and related costs primarily related to: (i) approved closure and
restructuring initiatives, (ii) the restructuring of certain international markets, (iii) the restructuring of our Express concept in Q4 2018 and (iv) reclassification of assets to held for sale in connection with refranchising certain restaurants
in Q4 2018. Also includes gains on the sale of certain surplus properties of $3.8 million in Fiscal Year 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) |
Amount includes the recognition of certain value-added tax credits in Brazil of $4.6 million in Q4 2019
related to prior years, offset by fees and expenses related to certain legal matters. |
(5) |
Represents income tax effect of the adjustments for the periods presented. |
(6) |
During the thirteen weeks and fiscal year ended December 30, 2018 both GAAP and adjusted diluted
earnings per share include the benefit of deferred gains on sale-leaseback transactions of approximately $0.03 and $0.10, 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 |
FISCAL
YEAR ENDED | ||||||||||||||
(dollars in thousands) |
DECEMBER 29, 2019 |
DECEMBER 30, 2018 |
DECEMBER 29, 2019 |
DECEMBER 30, 2018 | |||||||||||
Cost of
sales |
$ |
(2,683 |
) |
$ |
— |
$ |
(2,683 |
) |
$ |
— |
|||||
Other restaurant operating |
(1,982 |
) |
(314 |
) |
(5,624 |
) |
(4,097 |
) | |||||||
Depreciation and
amortization |
593 |
901 |
2,376 |
5,423 |
|||||||||||
General and administrative |
1,561 |
825 |
8,667 |
6,683 |
|||||||||||
Provision for impaired
assets and restaurant closings |
1,899 |
20,428 |
6,537 |
34,741 |
|||||||||||
Provision (benefit) for income
taxes |
440 |
(5,182 |
) |
(1,263 |
) |
(8,944 |
) | ||||||||
Net
adjustments |
$
|
(172 |
)
|
$
|
16,658 |
$
|
8,010 |
$
|
33,806 |
||||||
TABLE
SIX | |||||||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||||||
SEGMENT INCOME FROM
OPERATIONS NON-GAAP RECONCILIATION | |||||||||||||||
(UNAUDITED) | |||||||||||||||
(dollars in
thousands) |
THIRTEEN WEEKS ENDED |
FISCAL
YEAR ENDED | |||||||||||||
U.S. Segment |
DECEMBER 29, 2019 |
DECEMBER 30, 2018 |
DECEMBER 29, 2019 |
DECEMBER 30, 2018 | |||||||||||
Income from
operations |
$ |
69,499 |
$ |
58,314 |
$ |
311,666 |
$ |
288,959 |
|||||||
Operating income
margin |
7.6 |
% |
6.4 |
% |
8.5 |
% |
7.8 |
% | |||||||
Adjustments: |
|||||||||||||||
Restaurant and asset impairments and closing costs
(1) |
1,484 |
12,240 |
401 |
14,283 |
|||||||||||
Restaurant relocations
and related costs (2) |
748 |
4,010 |
3,209 |
8,648 |
|||||||||||
Severance (3) |
— |
— |
759 |
1,576 |
|||||||||||
Adjusted income from
operations |
$ |
71,731
|
$ |
74,564
|
$ |
316,035
|
$ |
313,466
|
|||||||
Adjusted operating income
margin |
7.9 |
% |
8.2 |
% |
8.6 |
% |
8.5 |
% | |||||||
International
Segment |
|||||||||||||||
Income from
operations |
$ |
13,249 |
$ |
7,949 |
$ |
44,428 |
$ |
22,001 |
|||||||
Operating income
margin |
11.9 |
% |
7.3 |
% |
9.8 |
% |
5.0 |
% | |||||||
Adjustments: |
|||||||||||||||
Legal and other matters (4) |
(4,583 |
) |
— |
(4,583 |
) |
— |
|||||||||
Restaurant and asset
impairments and closing costs (5) |
242 |
5,281 |
2,422 |
15,259 |
|||||||||||
Severance (3) |
— |
— |
— |
571 |
|||||||||||
Adjusted income from
operations |
$ |
8,908
|
$ |
13,230
|
$ |
42,267
|
$ |
37,831
|
|||||||
Adjusted operating income
margin |
8.0 |
% |
12.2 |
% |
9.4 |
% |
8.6 |
% | |||||||
_________________
(1) |
Represents asset impairment charges and related costs primarily related to: (i) approved closure and
restructuring initiatives, (ii) the restructuring of our Express concept in Q4 2018 and (iii) the reclassification of assets to held for sale in connection with refranchising certain restaurants in Q4 2018. Amount also includes gains on the sale of
certain surplus properties of $3.8 million in Fiscal Year 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) |
Amount includes the recognition of certain value-added tax credits in Brazil of $4.6 million in Q4 2019,
related to prior years. |
(5) |
Represents asset impairment charges and related costs primarily associated with the restructuring of
certain international
markets. |
11
TABLE
SEVEN | |||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||
COMPARATIVE
RESTAURANT INFORMATION | |||||||||||
(UNAUDITED) | |||||||||||
Number of restaurants (at end of
the period): |
SEPTEMBER 29, 2019 |
OPENINGS |
CLOSURES |
DECEMBER 29, 2019 | |||||||
U.S. |
|||||||||||
Outback Steakhouse |
|||||||||||
Company-owned
|
579 |
1 |
(1 |
) |
579 |
||||||
Franchised |
147 |
— |
(2 |
) |
145 |
||||||
Total |
726
|
1
|
(3
|
)
|
724
|
||||||
Carrabba’s Italian Grill |
|||||||||||
Company-owned
|
204 |
— |
— |
204 |
|||||||
Franchised |
21 |
— |
— |
21 |
|||||||
Total |
225
|
—
|
—
|
225
|
|||||||
Bonefish Grill |
|||||||||||
Company-owned
|
190 |
— |
— |
190 |
|||||||
Franchised |
7 |
— |
— |
7 |
|||||||
Total |
197
|
—
|
—
|
197
|
|||||||
Fleming’s Prime Steakhouse & Wine
Bar |
|||||||||||
Company-owned
|
69
|
—
|
(1
|
)
|
68
|
||||||
Other |
|||||||||||
Company-owned
|
3
|
1
|
—
|
4
|
|||||||
U.S. Total |
1,220
|
2
|
(4
|
)
|
1,218
|
||||||
International |
|||||||||||
Company-owned |
|||||||||||
Outback
Steakhouse—Brazil (1) |
99 |
— |
— |
99 |
|||||||
Other |
28 |
1 |
— |
29 |
|||||||
Franchised |
|||||||||||
Outback Steakhouse - South Korea |
70 |
3 |
(1 |
) |
72 |
||||||
Other |
54 |
1 |
— |
55 |
|||||||
International Total |
251
|
5
|
(1
|
)
|
255
|
||||||
System-wide
total |
1,471
|
7
|
(5
|
)
|
1,473
|
||||||
____________________
(1) |
The restaurant counts for Brazil are reported as of August 31, 2019 and November 30, 2019 to correspond
with the balance sheet dates of this
subsidiary. |
12
TABLE
EIGHT | |||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||
COMPARABLE
RESTAURANT SALES INFORMATION | |||||||||||
(UNAUDITED) | |||||||||||
THIRTEEN
WEEKS ENDED |
FISCAL
YEAR ENDED | ||||||||||
DECEMBER 29, 2019 |
DECEMBER 30, 2018 (1) |
DECEMBER 29, 2019 |
DECEMBER 30, 2018 (1) | ||||||||
Year over year percentage
change: |
|||||||||||
Comparable restaurant sales (stores open 18 months or
more): |
|||||||||||
U.S.
(2) |
|||||||||||
Outback Steakhouse |
2.7 |
% |
2.9 |
% |
2.0 |
% |
4.0 |
% | |||
Carrabba’s Italian
Grill |
1.4 |
% |
0.8 |
% |
0.1 |
% |
0.2 |
% | |||
Bonefish Grill |
0.5 |
% |
(1.1 |
)% |
0.1 |
% |
0.5 |
% | |||
Fleming’s Prime
Steakhouse & Wine Bar |
0.9 |
% |
(0.4 |
)% |
0.7 |
% |
0.8 |
% | |||
Combined U.S. |
1.9 |
% |
1.6 |
% |
1.2 |
% |
2.5 |
% | |||
International
|
|||||||||||
Outback Steakhouse - Brazil (3) |
4.9 |
% |
2.4 |
% |
5.8 |
% |
(1.5 |
)% | |||
Traffic: |
|||||||||||
U.S. |
|||||||||||
Outback Steakhouse |
0.6 |
% |
(0.8 |
)% |
(0.7 |
)% |
0.9 |
% | |||
Carrabba’s Italian
Grill |
3.1 |
% |
(1.8 |
)% |
0.2 |
% |
(4.1 |
)% | |||
Bonefish Grill |
(0.2 |
)% |
(3.9 |
)% |
(1.7 |
)% |
(2.6 |
)% | |||
Fleming’s Prime
Steakhouse & Wine Bar |
(0.3 |
)% |
(3.4 |
)% |
0.1 |
% |
(4.3 |
)% | |||
Combined U.S. |
0.9 |
% |
(1.5 |
)% |
(0.6 |
)% |
(0.8 |
)% | |||
International
|
|||||||||||
Outback Steakhouse - Brazil |
8.2 |
% |
(2.5 |
)% |
3.9 |
% |
(4.4 |
)% | |||
Average check per person (4): |
|||||||||||
U.S. |
|||||||||||
Outback Steakhouse |
2.1 |
% |
3.7 |
% |
2.7 |
% |
3.1 |
% | |||
Carrabba’s Italian
Grill |
(1.7 |
)% |
2.6 |
% |
(0.1 |
)% |
4.3 |
% | |||
Bonefish Grill |
0.7 |
% |
2.8 |
% |
1.8 |
% |
3.1 |
% | |||
Fleming’s Prime
Steakhouse & Wine Bar |
1.2 |
% |
3.0 |
% |
0.6 |
% |
5.1 |
% | |||
Combined U.S. |
1.0 |
% |
3.1 |
% |
1.8 |
% |
3.3 |
% | |||
International
|
|||||||||||
Outback Steakhouse - Brazil |
(3.3 |
)% |
4.2 |
% |
1.8 |
% |
2.8 |
% | |||
____________________
(1) |
For Q4 2018, U.S. comparable restaurant sales and traffic compare the 13 weeks from October 1, 2018
through December 30, 2018 to the 13 weeks from October 2, 2017 through December 31, 2017. For Fiscal Year 2018, U.S. comparable restaurant sales and traffic compare the 52 weeks from January 1, 2018 through December 30, 2018 to the 52 weeks from
January 2, 2017 through December 31, 2017. |
(2) |
Relocated restaurants closed more than 60 days are excluded from comparable restaurant sales until at
least 18 months after reopening. |
(3) |
Excludes the effect of fluctuations in foreign currency rates. 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.
13