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 26,
2017
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 26, 2017, the Company issued a press release reporting its financial results
for the thirteen weeks ended June 25, 2017. 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 |
Press Release of Bloomin’ Brands, Inc.
dated July 26,
2017 | ||
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 26, 2017 |
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
2017 Q2 Diluted EPS of $0.35 and
Adjusted Diluted EPS of
$0.28;
Reaffirms Full Year 2017 Adjusted Diluted EPS and U.S. Comparable Sales; and
Repurchases $233 Million of Common
Stock Year-to-Date
TAMPA, Fla., July 26, 2017 - Bloomin’ Brands, Inc. (Nasdaq: BLMN) today reported results for the second quarter 2017 (“Q2 2017”) compared to the second quarter 2016 (“Q2
2016”).
Highlights for Q2 2017 include the
following:
• |
Comparable restaurant sales were up
0.3% at Outback Steakhouse; |
• |
Combined U.S. comparable restaurant sales were down 0.3%; |
• |
Comparable restaurant sales were up
13% for Outback Steakhouse in Brazil; and |
• |
Opened five new restaurants all of which were in international markets. |
Subsequent to the fiscal first quarter earnings call, we repurchased
$155 million of common stock, bringing the total year-to-date share repurchases to $233 million through July 25, 2017.
Diluted EPS and Adjusted
Diluted
EPS
The following table reconciles Diluted earnings (loss) per share to Adjusted diluted earnings per share for the periods as indicated below.
Q2 |
|||||||||||
2017 |
2016 |
CHANGE | |||||||||
Diluted earnings (loss) per share |
$ |
0.35 |
$ |
(0.08 |
) |
$ |
0.43 |
||||
Adjustments
|
(0.07 |
) |
0.37 |
(0.44 |
) | ||||||
Adjusted diluted earnings per share |
$ |
0.28
|
$ |
0.29
|
$ |
(0.01
|
) | ||||
___________________
See
Non-GAAP Measures later in this
release.
CEO
Comments
“We were pleased with our second quarter performance, and remain on track to achieve our sales and EPS goals for the year,” said Liz Smith, CEO. “We maintained positive comp sales at
Outback with strengthening traffic trends as our investments are gaining traction. In addition, comp sales were up 13% at Outback Brazil as this business continues to perform at a very high level.”
1
Second Quarter Financial
Results
(dollars in
millions) |
Q2 2017 |
Q2 2016 |
% Change | |||||||
Total
revenues |
$ |
1,033.0 |
$ |
1,078.6 |
(4.2 |
)% | ||||
U.S. GAAP restaurant-level
operating margin |
15.2 |
% |
15.5 |
% |
(0.3 |
)% | ||||
Adjusted restaurant-level operating margin
(1) |
15.2 |
% |
15.5 |
% |
(0.3 |
)% | ||||
U.S. GAAP operating income margin |
4.1 |
% |
1.2 |
% |
2.9 |
% | ||||
Adjusted operating income
margin (1) |
4.5 |
% |
5.1 |
% |
(0.6 |
)% | ||||
___________________
(1) |
See Non-GAAP Measures later in this
release. |
• |
The decrease in Total revenues was primarily due to refranchising internationally and domestically and
the net impact of restaurant closings and new restaurant openings, partially offset by the effect of foreign currency translation and increases in franchise revenues.
|
• |
The decrease in U.S. GAAP and adjusted restaurant-level operating margin was primarily due to: (i)
higher labor costs, (ii) operating expense inflation, (iii) service and product investments at Outback Steakhouse and (iv) higher net rent expense due to the sale-leaseback of certain properties. These decreases were partially offset by: (i)
increases in average check, (ii) the impact of certain cost savings initiatives, (iii) lower advertising expense and (iv) lower insurance costs.
|
• |
The increase in U.S. GAAP operating income margin was primarily due to: (i) lapping $39.6 million of
asset impairment charges in connection with the 2016 sale of our South Korean business and (ii) increases in franchise revenues. This increase was partially offset by: (i) a decrease in restaurant-level operating margin and (ii) the timing of our
annual partner’s conference which occurred in Q2 of 2017 and Q1 of 2016. |
• |
Adjusted operating income margin excludes charges associated with the 2016 sale of our South Korean
business and certain other adjustments. See table five later in this release for more
information. |
Second Quarter Comparable Restaurant
Sales
THIRTEEN
WEEKS ENDED JUNE 25, 2017 |
COMPANY-OWNED | ||
Comparable restaurant
sales (stores open 18 months or more): |
|||
U.S.
|
|||
Outback
Steakhouse |
0.3 |
% | |
Carrabba’s Italian Grill |
0.4 |
% | |
Bonefish
Grill |
(2.6 |
)% | |
Fleming’s Prime Steakhouse & Wine
Bar |
(1.3 |
)% | |
Combined
U.S. |
(0.3 |
)% | |
International |
|||
Outback Steakhouse - Brazil |
12.6 |
% | |
2
Dividend Declaration and Share Repurchases
In July 2017, our Board of Directors declared a quarterly cash dividend of $0.08 per
share to be paid on August 23, 2017 to all stockholders of record as of the close of business on August 9,
2017.
On April 21, 2017, our Board of Directors approved a new $250 million share repurchase program. As of July 25, 2017, we repurchased 7.4 million shares of common stock for a total of $155 million and there is $95 million remaining under this authorization, which expires on October 21,
2018.
Fiscal 2017 Financial
Outlook
We are reaffirming all aspects of our full-year financial guidance as previously communicated in our February 17, 2017
earnings release except for the following:
Outlook on Feb. 17 |
Current Outlook | |||
U.S. GAAP effective income tax rate
(1) |
25% -
26% |
21% -
22% | ||
Adjusted effective income tax rate (1) |
25% -
26% |
24% -
25% | ||
Number of new system-wide
restaurants (2) |
40 -
50 |
Approximately
30 | ||
___________________
(1) |
Decrease primarily related to certain favorable discrete tax items recorded in
2017. |
(2) |
Decrease primarily related to a reduction in International franchise restaurant
expectations. |
3
Conference Call
The Company will
host a conference call today, July 26th 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 Wednesday, August 2, 2017. The conference ID for the live call and replay is 13665492. 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 U.S. 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 U.S. 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 U.S. 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 U.S. 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.
As previously announced, based on a review of our non-GAAP presentations, we determined that, commencing with our results for the first fiscal quarter of 2017, when presenting non-GAAP measures, we will no
longer adjust for expenses incurred in connection with our remodel program or intangible amortization recorded as a result of the acquisition of our Brazil operations. We recast historical comparable periods to conform to the revised presentation.
4
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 2017 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; 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) |
JUNE 25, 2017 |
JUNE 26, 2016 |
JUNE 25, 2017 |
JUNE 26, 2016 | |||||||||||
Revenues |
|||||||||||||||
Restaurant sales |
$ |
1,019,957 |
$ |
1,072,519 |
$ |
2,155,445 |
$ |
2,230,571 |
|||||||
Franchise and other
revenues |
13,025
|
6,069
|
21,360
|
12,205
|
|||||||||||
Total revenues |
1,032,982 |
1,078,588 |
2,176,805 |
2,242,776 |
|||||||||||
Costs and
expenses |
|||||||||||||||
Cost of sales |
323,130 |
346,811 |
687,878 |
722,099 |
|||||||||||
Labor and other
related |
297,857 |
309,155 |
622,255 |
631,960 |
|||||||||||
Other restaurant operating |
244,124 |
250,443 |
492,064 |
504,014 |
|||||||||||
Depreciation and
amortization |
48,063 |
49,004 |
94,653 |
96,655 |
|||||||||||
General and administrative |
77,056 |
68,566 |
148,997 |
143,591 |
|||||||||||
Provision for impaired
assets and restaurant closings |
598
|
41,276
|
19,674
|
44,440
|
|||||||||||
Total costs and expenses |
990,828 |
1,065,255 |
2,065,521 |
2,142,759 |
|||||||||||
Income from
operations |
42,154 |
13,333 |
111,284 |
100,017 |
|||||||||||
Loss on defeasance, extinguishment and modification of
debt |
(260 |
) |
— |
(260 |
) |
(26,580 |
) | ||||||||
Other income (expense),
net |
7,281 |
(1 |
) |
7,230 |
(20 |
) | |||||||||
Interest expense, net |
(9,543 |
) |
(10,302 |
) |
(18,684 |
) |
(23,177 |
) | |||||||
Income before provision
for income taxes |
39,632 |
3,030 |
99,570 |
50,240 |
|||||||||||
Provision for income taxes |
3,303 |
11,095 |
18,318 |
22,422 |
|||||||||||
Net income
(loss) |
36,329 |
(8,065 |
) |
81,252 |
27,818 |
||||||||||
Less: net income attributable to noncontrolling
interests |
699 |
1,112 |
1,712 |
2,520 |
|||||||||||
Net income (loss)
attributable to Bloomin’ Brands |
$
|
35,630 |
$
|
(9,177 |
)
|
$
|
79,540 |
$
|
25,298 |
||||||
Earnings (loss) per
share: |
|||||||||||||||
Basic |
$ |
0.36 |
$ |
(0.08 |
) |
$ |
0.79 |
$ |
0.22 |
||||||
Diluted |
$
|
0.35 |
$
|
(0.08 |
)
|
$
|
0.76 |
$
|
0.21 |
||||||
Basic weighted average
common shares outstanding |
98,852
|
113,330
|
100,963
|
115,630
|
|||||||||||
Effect of diluted securities: |
|||||||||||||||
Stock
options |
3,128 |
— |
3,030 |
2,719 |
|||||||||||
Nonvested restricted stock and restricted stock
units |
433 |
— |
394 |
208 |
|||||||||||
Nonvested
performance-based share units |
8
|
—
|
30
|
3
|
|||||||||||
Diluted weighted average common shares
outstanding |
102,421 |
113,330 |
104,417 |
118,560 |
|||||||||||
Cash dividends declared per common
share |
$ |
0.08 |
$ |
0.07 |
$ |
0.16 |
$ |
0.14 |
|||||||
6
TABLE
TWO | |||||||||||||||
BLOOMIN’ BRANDS,
INC. | |||||||||||||||
SEGMENT
RESULTS | |||||||||||||||
(UNAUDITED) | |||||||||||||||
(dollars in
thousands) |
THIRTEEN WEEKS ENDED |
TWENTY-SIX WEEKS ENDED | |||||||||||||
U.S. Segment |
JUNE 25, 2017 |
JUNE 26, 2016 |
JUNE 25, 2017 |
JUNE 26, 2016 | |||||||||||
Revenues |
|||||||||||||||
Restaurant sales |
$ |
907,037 |
$ |
953,992 |
$ |
1,934,249 |
$ |
1,992,741 |
|||||||
Franchise and other
revenues |
10,332
|
4,989
|
15,738
|
10,019
|
|||||||||||
Total revenues |
$ |
917,369 |
$ |
958,981 |
$ |
1,949,987 |
$ |
2,002,760 |
|||||||
Restaurant-level
operating margin |
14.1 |
% |
15.5 |
% |
15.8 |
% |
16.5 |
% | |||||||
Income from operations |
$ |
75,068 |
$ |
89,010 |
$ |
176,014 |
$ |
206,849 |
|||||||
Operating income
margin |
8.2 |
% |
9.3 |
% |
9.0 |
% |
10.3 |
% | |||||||
International
Segment |
|||||||||||||||
Revenues |
|||||||||||||||
Restaurant sales |
$ |
112,920 |
$ |
118,527 |
$ |
221,196 |
$ |
237,830 |
|||||||
Franchise and other
revenues |
2,693
|
1,080
|
5,622
|
2,186
|
|||||||||||
Total revenues |
$ |
115,613 |
$ |
119,607 |
$ |
226,818 |
$ |
240,016 |
|||||||
Restaurant-level
operating margin |
21.1 |
% |
16.2 |
% |
20.7 |
% |
17.8 |
% | |||||||
Income (loss) from operations |
$ |
9,679 |
$ |
(34,573 |
) |
$ |
18,481 |
$ |
(23,224 |
) | |||||
Operating income (loss)
margin |
8.4 |
% |
(28.9 |
)% |
8.1 |
% |
(9.7 |
)% | |||||||
Reconciliation of Segment Income
(Loss) from Operations to Consolidated Income from Operations |
|||||||||||||||
Segment income (loss) from
operations |
|||||||||||||||
U.S. |
$ |
75,068 |
$ |
89,010 |
$ |
176,014 |
$ |
206,849 |
|||||||
International
|
9,679
|
(34,573
|
)
|
18,481
|
(23,224
|
)
| |||||||||
Total segment income from
operations |
84,747 |
54,437 |
194,495 |
183,625 |
|||||||||||
Unallocated corporate
operating expense |
(42,593
|
)
|
(41,104
|
)
|
(83,211
|
)
|
(83,608
|
)
| |||||||
Total income from operations |
$ |
42,154 |
$ |
13,333 |
$ |
111,284 |
$ |
100,017 |
|||||||
TABLE
THREE | |||||||
BLOOMIN’
BRANDS, INC. | |||||||
SUPPLEMENTAL BALANCE
SHEET INFORMATION | |||||||
(UNAUDITED) | |||||||
(in thousands) |
JUNE 25, 2017 |
DECEMBER 25, 2016 | |||||
Cash and cash equivalents
(1) |
$ |
103,474 |
$ |
127,176 |
|||
Net working capital (deficit) (2) |
$ |
(471,077 |
) |
$ |
(432,889 |
) | |
Total
assets |
$ |
2,480,921 |
$ |
2,642,279 |
|||
Total debt, net |
$ |
1,126,538 |
$ |
1,089,485 |
|||
Total stockholders’
equity |
$ |
101,228 |
$ |
195,353 |
|||
Common stock outstanding (3) |
95,008 |
103,922 |
|||||
_________________
(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 June 25, 2017, we repurchased 9.9 million shares of our
outstanding common
stock. |
7
TABLE
FOUR | ||||||||||||||
BLOOMIN’
BRANDS, INC. | ||||||||||||||
RESTAURANT-LEVEL
OPERATING MARGIN NON-GAAP RECONCILIATION | ||||||||||||||
(UNAUDITED) | ||||||||||||||
THIRTEEN
WEEKS ENDED |
(UNFAVORABLE)
FAVORABLE CHANGE IN ADJUSTED | |||||||||||||
JUNE 25,
2017 |
JUNE 26,
2016 |
|||||||||||||
Consolidated:
|
U.S. GAAP |
ADJUSTED |
U.S. GAAP |
ADJUSTED (1) |
QUARTER TO DATE | |||||||||
Restaurant
sales |
100.0
|
% |
100.0
|
% |
100.0
|
% |
100.0
|
% |
||||||
Cost of
sales |
31.7 |
% |
31.7 |
% |
32.3 |
% |
32.3 |
% |
0.6 |
% | ||||
Labor and other related |
29.2 |
% |
29.2 |
% |
28.8 |
% |
28.8 |
% |
(0.4 |
)% | ||||
Other restaurant
operating |
23.9 |
% |
23.9 |
% |
23.4 |
% |
23.3 |
% |
(0.6 |
)% | ||||
Restaurant-level operating
margin |
15.2 |
% |
15.2 |
% |
15.5 |
% |
15.5 |
% |
(0.3 |
)% | ||||
Segments: |
||||||||||||||
Restaurant-level operating margin -
U.S. |
14.1 |
% |
14.1 |
% |
15.5 |
% |
15.5 |
% |
(1.4 |
)% | ||||
Restaurant-level operating
margin - International |
21.1 |
% |
21.1 |
% |
16.2 |
% |
16.2 |
% |
4.9 |
% | ||||
TWENTY-SIX WEEKS ENDED |
(UNFAVORABLE) FAVORABLE CHANGE IN ADJUSTED | |||||||||||||
JUNE 25,
2017 |
JUNE 26,
2016 |
|||||||||||||
Consolidated:
|
U.S. GAAP |
ADJUSTED (2) |
U.S. GAAP |
ADJUSTED (1)(3) |
YEAR TO DATE | |||||||||
Restaurant
sales |
100.0
|
% |
100.0
|
% |
100.0
|
% |
100.0
|
% |
||||||
Cost of
sales |
31.9 |
% |
31.9 |
% |
32.4 |
% |
32.4 |
% |
0.5 |
% | ||||
Labor and other related |
28.9 |
% |
28.9 |
% |
28.3 |
% |
28.3 |
% |
(0.6 |
)% | ||||
Other restaurant
operating |
22.8 |
% |
23.1 |
% |
22.6 |
% |
22.7 |
% |
(0.4 |
)% | ||||
Restaurant-level operating
margin |
16.4 |
% |
16.1 |
% |
16.7 |
% |
16.6 |
% |
(0.5 |
)% | ||||
Segments: |
||||||||||||||
Restaurant-level operating margin -
U.S. |
15.8 |
% |
15.5 |
% |
16.5 |
% |
16.4 |
% |
(0.9 |
)% | ||||
Restaurant-level operating
margin - International |
20.7 |
% |
20.7 |
% |
17.8 |
% |
17.8 |
% |
2.9 |
% | ||||
_________________
(1) |
Includes adjustments for loss of $0.3 million on the sale of certain properties, recorded in Other
restaurant operating in the U.S segment. |
(2) |
Includes adjustments for the write-off of $5.3 million of deferred rent liabilities associated with the
2017 Closure Initiative and our relocation program, recorded in Other restaurant operating in the U.S segment. |
(3) |
Includes adjustments for the write-off of $1.9 million of deferred rent liabilities primarily associated
with the Bonefish Restructuring, recorded in Other restaurant operating in the U.S segment. |
8
TABLE
FIVE | |||||||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||||||
INCOME FROM
OPERATIONS, NET INCOME (LOSS) AND DILUTED EARNINGS PER SHARE NON-GAAP RECONCILIATIONS | |||||||||||||||
(UNAUDITED) | |||||||||||||||
THIRTEEN WEEKS ENDED |
TWENTY-SIX WEEKS ENDED | ||||||||||||||
(in thousands, except per share
data) |
JUNE 25, 2017 |
JUNE 26, 2016 |
JUNE 25, 2017 |
JUNE 26, 2016 | |||||||||||
Income from
operations |
$ |
42,154 |
$ |
13,333 |
$ |
111,284 |
$ |
100,017 |
|||||||
Operating income
margin |
4.1 |
% |
1.2 |
% |
5.1 |
% |
4.5 |
% | |||||||
Adjustments: |
|||||||||||||||
Restaurant relocations and related costs
(1) |
2,251 |
550 |
4,358 |
906 |
|||||||||||
Transaction-related
expenses (2) |
1,240 |
(106 |
) |
1,447 |
466 |
||||||||||
Restaurant impairments and closing costs
(3) |
702 |
335 |
16,199 |
2,120 |
|||||||||||
Asset impairments and
related costs (4) |
— |
39,677 |
— |
40,023 |
|||||||||||
Severance (5) |
— |
737 |
— |
1,872 |
|||||||||||
Total income from
operations adjustments |
4,193 |
41,193 |
22,004 |
45,387 |
|||||||||||
Adjusted income from operations |
$ |
46,347 |
$ |
54,526 |
$ |
133,288 |
$ |
145,404 |
|||||||
Adjusted operating
income margin |
4.5
|
% |
5.1
|
% |
6.1 |
% |
6.5 |
% | |||||||
Net income (loss)
attributable to Bloomin’ Brands |
$ |
35,630 |
$ |
(9,177 |
) |
$ |
79,540 |
$ |
25,298 |
||||||
Adjustments: |
|||||||||||||||
Income from operations
adjustments |
4,193 |
41,193 |
22,004 |
45,387 |
|||||||||||
Gain on disposal of business (6) |
(7,284 |
) |
— |
(7,284 |
) |
— |
|||||||||
Loss on defeasance, extinguishment and
modification of debt (7) |
260 |
— |
260 |
26,580 |
|||||||||||
Total adjustments, before income
taxes |
(2,831 |
) |
41,193 |
14,980 |
71,967 |
||||||||||
Adjustment to provision for income taxes
(8) |
(4,525
|
)
|
2,032
|
(8,944
|
)
|
(7,044
|
)
| ||||||||
Net adjustments |
(7,356 |
) |
43,225 |
6,036 |
64,923 |
||||||||||
Adjusted net
income |
$
|
28,274 |
$
|
34,048 |
$
|
85,576 |
$
|
90,221 |
|||||||
Diluted earnings (loss)
per share |
$
|
0.35 |
$
|
(0.08 |
)
|
$
|
0.76 |
$
|
0.21 |
||||||
Adjusted diluted earnings per
share |
$
|
0.28 |
$
|
0.29 |
$ |
0.82 |
$
|
0.76 |
|||||||
Basic weighted average common shares
outstanding |
98,852 |
113,330 |
100,963 |
115,630 |
|||||||||||
Diluted weighted average common shares
outstanding (9) |
102,421
|
116,343
|
104,417
|
118,560
|
|||||||||||
_________________
(1) |
Represents asset impairment charges and accelerated depreciation incurred in connection with our relocation
program. |
(2) |
Relates primarily to the following: (i) 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 8 to this table and (ii) costs incurred in connection with our sale-leaseback
initiative. |
(3) |
Represents expenses incurred for approved closure and restructuring
initiatives. |
(4) |
Represents asset impairment charges and related costs associated with the decision to sell Outback Steakhouse South Korea in
2016. |
(5) |
Relates to severance expense incurred primarily as a result of the relocation of our Fleming’s operations center to
the corporate home office in 2016. |
(6) |
Primarily relates to the sale of 54 U.S. Company-owned restaurants to existing franchisees. |
(7) |
Relates to modification of our Credit Agreement in 2017 and the defeasance of the 2012 CMBS loan in
2016. |
(8) |
Represents income tax effect of the adjustments for the thirteen and twenty-six weeks ended June 25, 2017 and June 26, 2016.
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) |
Due to the GAAP net loss in the thirteen weeks ended June 26, 2016, the effect of dilutive securities was excluded from the
calculation of GAAP diluted loss per share for that period. For adjusted diluted earnings per share, the calculation includes dilutive shares of 3,013 for the thirteen weeks ended June 26,
2016. |
9
Following is a summary of the financial statement line item classification of
the net income (loss) adjustments:
THIRTEEN
WEEKS ENDED |
TWENTY-SIX
WEEKS ENDED | ||||||||||||||
(dollars in
thousands) |
JUNE 25, 2017 |
JUNE 26, 2016 |
JUNE 25, 2017 |
JUNE 26, 2016 | |||||||||||
Other restaurant
operating |
$ |
(148 |
) |
$ |
151 |
$ |
(5,287 |
) |
$ |
(1,862 |
) | ||||
Depreciation and amortization |
1,739 |
811 |
3,332 |
1,255 |
|||||||||||
General and
administrative |
2,005 |
259 |
4,394 |
2,911 |
|||||||||||
Provision for impaired assets and restaurant
closings |
597 |
39,972 |
19,565 |
43,083 |
|||||||||||
Loss on defeasance, extinguishment and
modification of debt |
260 |
— |
260 |
26,580 |
|||||||||||
Other income (expense), net |
(7,284 |
) |
— |
(7,284 |
) |
— |
|||||||||
Provision for income
taxes |
(4,525
|
)
|
2,032
|
(8,944
|
)
|
(7,044
|
)
| ||||||||
Net adjustments |
$ |
(7,356 |
) |
$ |
43,225 |
$ |
6,036 |
$ |
64,923 |
||||||
TABLE
SIX | |||||||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||||||
SEGMENT INCOME
(LOSS) FROM OPERATIONS NON-GAAP RECONCILIATION | |||||||||||||||
(UNAUDITED) | |||||||||||||||
U.S. Segment |
THIRTEEN
WEEKS ENDED |
TWENTY-SIX
WEEKS ENDED | |||||||||||||
(dollars in
thousands) |
JUNE 25, 2017 |
JUNE 26, 2016 |
JUNE 25, 2017 |
JUNE 26, 2016 | |||||||||||
Income from operations |
$ |
75,068 |
$ |
89,010 |
$ |
176,014 |
$ |
206,849 |
|||||||
Operating income
margin |
8.2 |
% |
9.3 |
% |
9.0 |
% |
10.3 |
% | |||||||
Adjustments: |
|||||||||||||||
Restaurant relocations and related costs
(1) |
2,251 |
550 |
4,358 |
906 |
|||||||||||
Restaurant impairments
and closing costs (2) |
702 |
— |
16,199 |
2,224 |
|||||||||||
Transaction-related expenses (3) |
140 |
(189 |
) |
347 |
145 |
||||||||||
Severance
(4) |
— |
737 |
— |
1,276 |
|||||||||||
Adjusted income from operations |
$
|
78,161 |
$
|
90,108 |
$
|
196,918 |
$
|
211,400 |
|||||||
Adjusted operating
income margin |
8.5 |
% |
9.4 |
% |
10.1 |
% |
10.6
|
% | |||||||
International
Segment |
|||||||||||||||
(dollars in
thousands) |
|||||||||||||||
Income (loss) from
operations |
$ |
9,679 |
$ |
(34,573 |
) |
$ |
18,481 |
$ |
(23,224 |
) | |||||
Operating income
margin |
8.4 |
% |
(28.9 |
)% |
8.1 |
% |
(9.7 |
)% | |||||||
Adjustments: |
|||||||||||||||
Asset impairments and related costs
(5) |
— |
39,677 |
— |
40,023 |
|||||||||||
Restaurant impairments
and closing costs (2) |
— |
335 |
— |
(103 |
) | ||||||||||
Adjusted income from operations |
$
|
9,679 |
$
|
5,439 |
$
|
18,481 |
$
|
16,696 |
|||||||
Adjusted operating
income margin |
8.4
|
% |
4.5 |
% |
8.1
|
% |
7.0 |
% | |||||||
_________________
(1) |
Represents asset impairment charges and accelerated depreciation incurred in connection with our
relocation program. |
(2) |
Represents expenses incurred for approved closure and restructuring
initiatives. |
(3) |
Represents costs incurred in connection with our sale-leaseback
initiative. |
(4) |
Relates to severance expense incurred primarily as a result of the relocation of our Fleming’s
operations center to the corporate home office in 2016. |
(5) |
Represents asset impairment charges and related costs associated with the decision to sell Outback
Steakhouse South Korea in
2016. |
10
TABLE
SEVEN | ||||||||||||||
BLOOMIN’
BRANDS, INC. | ||||||||||||||
COMPARATIVE
RESTAURANT INFORMATION | ||||||||||||||
(UNAUDITED) | ||||||||||||||
Number of restaurants (at end of
the period): |
MARCH 26, 2017 |
OPENINGS |
CLOSURES |
OTHER |
JUNE 25, 2017 | |||||||||
U.S. |
||||||||||||||
Outback Steakhouse |
||||||||||||||
Company-owned
(1) |
637 |
— |
— |
(53 |
) |
584 |
||||||||
Franchised (1) |
105 |
— |
— |
53 |
158 |
|||||||||
Total |
742
|
—
|
—
|
—
|
742
|
|||||||||
Carrabba’s Italian Grill |
||||||||||||||
Company-owned
(1) |
228 |
— |
— |
(1 |
) |
227 |
||||||||
Franchised (1) |
2 |
— |
— |
1 |
3 |
|||||||||
Total |
230
|
—
|
—
|
—
|
230
|
|||||||||
Bonefish Grill |
||||||||||||||
Company-owned
|
196 |
— |
— |
— |
196 |
|||||||||
Franchised |
7 |
— |
— |
— |
7 |
|||||||||
Total |
203
|
—
|
—
|
— |
203
|
|||||||||
Fleming’s Prime Steakhouse & Wine
Bar |
||||||||||||||
Company-owned
|
67
|
—
|
—
|
—
|
67
|
|||||||||
International |
||||||||||||||
Company-owned |
||||||||||||||
Outback Steakhouse—Brazil
(2) |
83 |
2 |
— |
— |
85 |
|||||||||
Other |
31 |
3 |
(1 |
) |
— |
33 |
||||||||
Franchised |
||||||||||||||
Outback Steakhouse - South
Korea |
75 |
— |
(1 |
) |
— |
74 |
||||||||
Other |
55 |
— |
(1 |
) |
— |
54 |
||||||||
Total |
244 |
5 |
(3 |
) |
— |
246 |
||||||||
System-wide total |
1,486 |
5 |
(3 |
) |
—
|
1,488 |
||||||||
____________________
(1) |
In April 2017, we sold 54 restaurants which are now operated as franchises under agreements with the
buyers. |
(2) |
The restaurant counts for Brazil are reported as of February 28, 2017 and May 31, 2017 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 | ||||||||||
JUNE 25, 2017 |
JUNE 26, 2016 |
JUNE 25, 2017 |
JUNE 26, 2016 | ||||||||
Year over year percentage
change: |
|||||||||||
Comparable restaurant sales (stores open 18 months
or more) (1): |
|||||||||||
U.S. |
|||||||||||
Outback Steakhouse |
0.3 |
% |
(2.5 |
)% |
0.9 |
% |
(1.9 |
)% | |||
Carrabba’s Italian
Grill |
0.4 |
% |
(4.8 |
)% |
(1.8 |
)% |
(3.3 |
)% | |||
Bonefish Grill |
(2.6 |
)% |
0.9 |
% |
(1.6 |
)% |
(1.0 |
)% | |||
Fleming’s Prime
Steakhouse & Wine Bar |
(1.3 |
)% |
(0.8 |
)% |
(2.1 |
)% |
0.3 |
% | |||
Combined U.S. |
(0.3 |
)% |
(2.3 |
)% |
(0.3 |
)% |
(1.9 |
)% | |||
International
|
|||||||||||
Outback Steakhouse - Brazil (2) |
12.6 |
% |
3.9 |
% |
8.2 |
% |
6.4 |
% | |||
Traffic: |
|||||||||||
U.S. |
|||||||||||
Outback Steakhouse |
(0.8 |
)% |
(5.9 |
)% |
(1.5 |
)% |
(4.4 |
)% | |||
Carrabba’s Italian
Grill |
(2.0 |
)% |
(4.8 |
)% |
(4.7 |
)% |
(1.6 |
)% | |||
Bonefish Grill |
(3.1 |
)% |
(2.8 |
)% |
(2.6 |
)% |
(4.0 |
)% | |||
Fleming’s Prime Steakhouse &
Wine Bar |
(5.5 |
)% |
(3.7 |
)% |
(6.5 |
)% |
(1.2 |
)% | |||
Combined U.S. |
(1.5 |
)% |
(5.2 |
)% |
(2.5 |
)% |
(3.7 |
)% | |||
International
|
|||||||||||
Outback Steakhouse - Brazil |
3.2 |
% |
(1.5 |
)% |
0.7 |
% |
(0.4 |
)% | |||
Average check per person increases (decreases)
(3): |
|||||||||||
U.S. |
|||||||||||
Outback Steakhouse |
1.1 |
% |
3.4 |
% |
2.4 |
% |
2.5 |
% | |||
Carrabba’s Italian
Grill |
2.4 |
% |
— |
% |
2.9 |
% |
(1.7 |
)% | |||
Bonefish Grill |
0.5 |
% |
3.7 |
% |
1.0 |
% |
3.0 |
% | |||
Fleming’s Prime
Steakhouse & Wine Bar |
4.2 |
% |
2.9 |
% |
4.4 |
% |
1.5 |
% | |||
Combined U.S. |
1.2 |
% |
2.9 |
% |
2.2 |
% |
1.8 |
% | |||
International
|
|||||||||||
Outback Steakhouse - Brazil |
8.2 |
% |
6.3 |
% |
7.3 |
% |
6.7 |
% | |||
____________________
(1) |
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. |
(2) |
Includes trading day impact from calendar period reporting of 1.2% and (0.9)% for the
thirteen weeks ended June 25, 2017 and June 26, 2016, respectively and 0.2% and 0.1% for the twenty-six weeks ended June 25, 2017 and June 26, 2016, respectively. |
(3) |
Average check per person increases (decreases) include the impact of menu pricing changes, product mix
and discounts. |
SOURCE: Bloomin’ Brands,
Inc.
12