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 3, 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 November 3, 2017, the Company issued a press release reporting its financial
results for the thirteen weeks ended September 24, 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 |
|||
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 3, 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 Q3 Diluted EPS of $0.05 and
Adjusted Diluted EPS of
$0.12
Posts Comparable
Restaurant Sales of 0.6% at Outback With Positive Traffic
Updates Fiscal 2017 Financial
Outlook
TAMPA, Fla., November 3, 2017 - Bloomin’ Brands, Inc. (Nasdaq: BLMN) today reported results for the third quarter 2017 (“Q3 2017”) compared to the third quarter 2016 (“Q3
2016”).
Highlights for Q3 2017 include the
following:
• |
Comparable restaurant sales were up
0.6% at U.S. Outback Steakhouse with traffic up 0.1%; |
• |
Combined U.S. comparable restaurant sales were down (1.0)%; |
• |
Combined negative impact of Hurricanes Harvey and Irma was estimated to be 1.0% to comp sales and
$0.04 to Diluted EPS; |
• |
Comparable restaurant sales were up
4.8% for Outback Steakhouse in Brazil; and |
• |
Opened eight new restaurants including six in international
markets. |
Subsequent to the fiscal second quarter earnings call, we repurchased $40 million of common stock, bringing the total year-to-date share repurchases to $273 million through November 3, 2017.
Diluted EPS and Adjusted Diluted
EPS
The following table reconciles Diluted earnings per share to Adjusted diluted earnings per share for the periods as indicated below.
Q3 |
|||||||||||
2017 |
2016 |
CHANGE | |||||||||
Diluted earnings per share |
$ |
0.05 |
$ |
0.18 |
$ |
(0.13 |
) | ||||
Adjustments
|
0.07 |
0.01 |
0.06 |
||||||||
Adjusted diluted earnings per share |
$ |
0.12
|
$ |
0.19
|
$ |
(0.07
|
) | ||||
___________________
See
Non-GAAP Measures later in this
release.
CEO
Comments
“We were pleased with how we performed in a challenging third quarter,” said Liz Smith, CEO. “In particular, Outback’s positive response to investments in the customer experience
returned us to traffic growth in Q3. We have seen further strengthening across the portfolio in October; however, we maintain a cautious outlook on the industry as we enter the holiday season, and this is reflected in our updated
guidance.”
1
Third Quarter Financial
Results
(dollars in
millions) |
Q3 2017 |
Q3 2016 |
CHANGE | |||||||
Total
revenues |
$ |
948.9 |
$ |
1,005.4 |
(5.6 |
)% | ||||
U.S. GAAP restaurant-level
operating margin |
13.3 |
% |
14.4 |
% |
(1.1 |
)% | ||||
Adjusted restaurant-level operating margin
(1) |
13.3 |
% |
14.3 |
% |
(1.0 |
)% | ||||
U.S. GAAP operating income margin |
0.3 |
% |
3.2 |
% |
(2.9 |
)% | ||||
Adjusted operating income
margin (1) |
2.4 |
% |
3.6 |
% |
(1.2 |
)% | ||||
Costs associated with hurricanes Harvey and Irma had a 40 basis point negative impact on GAAP and adjusted restaurant margin and operating margin in Q3
2017.
___________________
(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 an increase in franchise and other revenues. |
• |
The decrease in U.S. GAAP and adjusted restaurant-level operating margin was primarily due to: (i)
higher labor costs, (ii) unfavorable seafood and dairy costs, (iii) operating expense inflation and (iv) higher net rent expense due to the sale-leaseback of certain properties. These decreases were partially offset by: (i) the impact of certain
cost savings initiatives, (ii) lower advertising expense, (iii) increases in average check and (iv) lower beef costs. |
• |
The decrease in U.S. GAAP operating income margin was primarily due to a decrease in restaurant-level
operating margin and impairment charges. This decrease was partially offset by increases primarily in franchise and other revenues. |
• |
Adjusted operating income margin excludes certain impairment charges and restaurant closing costs. See
table five later in this release for more
information. |
Third Quarter Comparable Restaurant
Sales
THIRTEEN
WEEKS ENDED SEPTEMBER 24, 2017 |
COMPANY-OWNED | ||
Comparable restaurant
sales (stores open 18 months or more): |
|||
U.S.
|
|||
Outback
Steakhouse |
0.6 |
% | |
Carrabba’s Italian Grill |
(2.8 |
)% | |
Bonefish
Grill |
(4.3 |
)% | |
Fleming’s Prime Steakhouse & Wine
Bar |
(1.0 |
)% | |
Combined
U.S. |
(1.0 |
)% | |
International |
|||
Outback Steakhouse - Brazil |
4.8 |
% | |
Lost operating days from Hurricanes Harvey and Irma are included in our calculation of comparable restaurant sales. These lost operating days had an estimated 1.0% negative impact on third quarter
combined U.S. comp sales results.
2
Dividend
Declaration and Share Repurchases
In October 2017, our Board of Directors declared a quarterly cash dividend of $0.08 per share to be paid on November 22, 2017 to all stockholders of record as of the close of business on November 13,
2017.
On April 21, 2017, our Board of Directors approved a new $250 million share repurchase program. As of November 3, 2017, we repurchased 9.6 million shares of common stock for a total of $195 million and there is $55 million remaining under this authorization, which expires on October 21,
2018.
Fiscal 2017 Financial
Outlook
We have updated several of the metrics in our financial outlook for fiscal 2017 primarily due to the negative impact of
Hurricanes Harvey and Irma as well as higher commodity expenses than planned. In addition, although comp sales across the portfolio have improved in October, we remain cautious on future industry sales trends given the severity of industry declines
in the third quarter and uncertainty surrounding consumer behavior during the upcoming holiday
season.
The following table presents our updated expectations for selected fiscal 2017 financial reporting and operating results as compared to the financial outlook provided in our July 26, 2017 earnings release.
These updated expectations supersede the previously provided financial outlook. Expectations for combined U.S. comparable restaurant sales, capital expenditures, and number of new system-side restaurants are unchanged from the July 26, 2017
outlook.
Financial
Results: |
Outlook on Jul. 26 |
Current Outlook | ||
U.S. GAAP diluted earnings
per share (1) |
$1.34 to $1.41 |
$1.09 to $1.14 | ||
Adjusted diluted earnings
per share (1) |
$1.40 to
$1.47 |
$1.31 to
$1.36 | ||
U.S. GAAP effective income
tax rate |
21% to
22% |
15% to
16% | ||
Adjusted effective income
tax rate |
24% to
25% |
23% to
24% | ||
Other Selected Financial
Data: |
||||
Commodity inflation /
(deflation) |
Flat to
(1%) |
Flat to
(0.5%) | ||
___________________
(1) |
The difference between our U.S. GAAP and Adjusted diluted earnings per share outlook is due to
adjustments to year-to-date results (as described in Table 5 later in this release), as well as the estimated impact of certain income adjustments on fiscal fourth quarter
results. |
3
Conference Call
The Company will
host a conference call today, November 3rd 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 Friday, November 10th, 2017. The conference ID for the live call and replay is 13672251. 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.
In this release, we have also included forward-looking non-GAAP information under the caption “Fiscal
2017 Financial Outlook”. This relates to our current expectations for fiscal 2017 adjusted diluted EPS and adjusted effective income tax rate. We have also provided information with
respect to our expectations for the corresponding GAAP
measures.
The differences between our disclosed GAAP and non-GAAP expectations are described to the extent practicable under “Fiscal 2017 Financial Outlook”. However, in addition to the general cautionary language regarding all
forward-looking statements included elsewhere in this release, we note that, because the items we adjust for in our non-GAAP measures may vary from period to period without correlation to our core performance, they are by nature more difficult to
predict and estimate, so additional adjustments may occur in the remainder of the fiscal year and they may significantly impact our GAAP results.
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 |
THIRTY-NINE
WEEKS ENDED | ||||||||||||||
(in thousands, except per share
data) |
SEPTEMBER 24, 2017 |
SEPTEMBER 25, 2016 |
SEPTEMBER 24, 2017 |
SEPTEMBER 25, 2016 | |||||||||||
Revenues |
|||||||||||||||
Restaurant sales |
$ |
937,852 |
$ |
998,806 |
$ |
3,093,297 |
$ |
3,229,377 |
|||||||
Franchise and other
revenues |
11,047
|
6,581
|
32,407
|
18,786
|
|||||||||||
Total revenues |
948,899 |
1,005,387 |
3,125,704 |
3,248,163 |
|||||||||||
Costs and
expenses |
|||||||||||||||
Cost of sales |
296,632 |
322,080 |
984,510 |
1,044,179 |
|||||||||||
Labor and other
related |
285,325 |
290,032 |
907,580 |
921,992 |
|||||||||||
Other restaurant operating |
231,293 |
243,175 |
723,357 |
747,189 |
|||||||||||
Depreciation and
amortization |
47,826 |
48,551 |
142,479 |
145,206 |
|||||||||||
General and administrative |
66,063 |
65,072 |
215,059 |
208,663 |
|||||||||||
Provision for impaired
assets and restaurant closings |
18,578
|
4,743
|
38,253
|
49,183
|
|||||||||||
Total costs and expenses |
945,717 |
973,653 |
3,011,238 |
3,116,412 |
|||||||||||
Income from
operations |
3,182 |
31,734 |
114,466 |
131,751 |
|||||||||||
Loss on defeasance, extinguishment and modification of
debt |
— |
(418 |
) |
(260 |
) |
(26,998 |
) | ||||||||
Other income,
net |
7,531 |
2,079 |
14,761 |
2,059 |
|||||||||||
Interest expense, net |
(10,705 |
) |
(10,217 |
) |
(29,389 |
) |
(33,394 |
) | |||||||
Income before (benefit)
provision for income taxes |
8 |
23,178 |
99,578 |
73,418 |
|||||||||||
(Benefit) provision for income
taxes |
(4,038 |
) |
1,950 |
14,280 |
24,372 |
||||||||||
Net
income |
4,046 |
21,228 |
85,298 |
49,046 |
|||||||||||
Less: net (loss) income attributable to
noncontrolling interests |
(290 |
) |
495 |
1,422 |
3,015 |
||||||||||
Net income attributable to
Bloomin’ Brands |
$
|
4,336 |
$
|
20,733 |
$
|
83,876 |
$
|
46,031 |
|||||||
Earnings per
share: |
|||||||||||||||
Basic |
$ |
0.05 |
$ |
0.19 |
$ |
0.85 |
$ |
0.41 |
|||||||
Diluted |
$
|
0.05 |
$
|
0.18 |
$
|
0.83 |
$
|
0.40 |
|||||||
Weighted average common
shares outstanding: |
|||||||||||||||
Basic |
92,485 |
109,399 |
98,137 |
113,553 |
|||||||||||
Diluted |
95,655
|
112,430
|
101,497
|
116,516
|
|||||||||||
Cash dividends declared
per common share |
$
|
0.08 |
$
|
0.07 |
$
|
0.24 |
$
|
0.21 |
|||||||
6
TABLE
TWO | |||||||||||||||
BLOOMIN’ BRANDS,
INC. | |||||||||||||||
SEGMENT
RESULTS | |||||||||||||||
(UNAUDITED) | |||||||||||||||
(dollars in
thousands) |
THIRTEEN WEEKS ENDED |
THIRTY-NINE WEEKS ENDED | |||||||||||||
U.S. Segment |
SEPTEMBER 24, 2017 |
SEPTEMBER 25, 2016 |
SEPTEMBER 24, 2017 |
SEPTEMBER 25, 2016 | |||||||||||
Revenues |
|||||||||||||||
Restaurant sales |
$ |
823,916 |
$ |
889,350 |
$ |
2,758,165 |
$ |
2,882,091 |
|||||||
Franchise and other
revenues |
8,157
|
4,556
|
23,895
|
14,575
|
|||||||||||
Total revenues |
$ |
832,073 |
$ |
893,906 |
$ |
2,782,060 |
$ |
2,896,666 |
|||||||
Restaurant-level
operating margin |
12.2 |
% |
14.1 |
% |
14.7 |
% |
15.7 |
% | |||||||
Income from operations |
$ |
28,139 |
$ |
61,905 |
$ |
204,153 |
$ |
268,754 |
|||||||
Operating income
margin |
3.4 |
% |
6.9 |
% |
7.3 |
% |
9.3 |
% | |||||||
International
Segment |
|||||||||||||||
Revenues |
|||||||||||||||
Restaurant sales |
$ |
113,936 |
$ |
109,456 |
$ |
335,132 |
$ |
347,286 |
|||||||
Franchise and other
revenues |
2,890
|
2,025
|
8,512
|
4,211
|
|||||||||||
Total revenues |
$ |
116,826 |
$ |
111,481 |
$ |
343,644 |
$ |
351,497 |
|||||||
Restaurant-level
operating margin |
20.7 |
% |
18.2 |
% |
20.7 |
% |
17.9 |
% | |||||||
Income (loss) from operations |
$ |
8,442 |
$ |
8,277 |
$ |
26,923 |
$ |
(14,947 |
) | ||||||
Operating income (loss)
margin |
7.2 |
% |
7.4 |
% |
7.8 |
% |
(4.3 |
)% | |||||||
Reconciliation of Segment Income
(Loss) from Operations to Consolidated Income from Operations |
|||||||||||||||
Segment income (loss) from
operations |
|||||||||||||||
U.S. |
$ |
28,139 |
$ |
61,905 |
$ |
204,153 |
$ |
268,754 |
|||||||
International
|
8,442
|
8,277
|
26,923
|
(14,947
|
)
| ||||||||||
Total segment income from
operations |
36,581 |
70,182 |
231,076 |
253,807 |
|||||||||||
Unallocated corporate
operating expense |
(33,399
|
)
|
(38,448
|
)
|
(116,610
|
)
|
(122,056
|
)
| |||||||
Total income from operations |
$ |
3,182 |
$ |
31,734 |
$ |
114,466 |
$ |
131,751 |
|||||||
TABLE
THREE | |||||||
BLOOMIN’
BRANDS, INC. | |||||||
SUPPLEMENTAL BALANCE
SHEET INFORMATION | |||||||
(UNAUDITED) | |||||||
(in thousands) |
SEPTEMBER 24, 2017 |
DECEMBER 25, 2016 | |||||
Cash and cash equivalents
(1) |
$ |
98,697 |
$ |
127,176 |
|||
Net working capital (deficit) (2) |
$ |
(458,052 |
) |
$ |
(432,889 |
) | |
Total
assets |
$ |
2,472,954 |
$ |
2,642,279 |
|||
Total debt, net |
$ |
1,200,692 |
$ |
1,089,485 |
|||
Total stockholders’
equity (3) |
$ |
36,634 |
$ |
195,353 |
|||
Common stock outstanding (3) |
91,164 |
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 thirty-nine
weeks ended September 24, 2017, we repurchased 13.8 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 | |||||||||||||
SEPTEMBER 24,
2017 |
SEPTEMBER 25,
2016 |
|||||||||||||
Consolidated:
|
U.S. GAAP |
ADJUSTED (1) |
U.S. GAAP |
ADJUSTED (1) |
QUARTER TO DATE | |||||||||
Restaurant
sales |
100.0
|
% |
100.0
|
% |
100.0
|
% |
100.0
|
% |
||||||
Cost of
sales |
31.6 |
% |
31.6 |
% |
32.2 |
% |
32.2 |
% |
0.6 |
% | ||||
Labor and other related |
30.4 |
% |
30.4 |
% |
29.0 |
% |
29.0 |
% |
(1.4 |
)% | ||||
Other restaurant
operating |
24.7 |
% |
24.7 |
% |
24.3 |
% |
24.4 |
% |
(0.3 |
)% | ||||
Restaurant-level operating
margin (2) |
13.3 |
% |
13.3 |
% |
14.4 |
% |
14.3 |
% |
(1.0 |
)% | ||||
Segments: |
||||||||||||||
Restaurant-level operating margin - U.S.
(2) |
12.2 |
% |
12.1 |
% |
14.1 |
% |
14.1 |
% |
(2.0 |
)% | ||||
Restaurant-level operating
margin - International (2) |
20.7 |
% |
20.7 |
% |
18.2 |
% |
18.2 |
% |
2.5 |
% | ||||
THIRTY-NINE WEEKS ENDED |
(UNFAVORABLE) FAVORABLE CHANGE IN ADJUSTED | |||||||||||||
SEPTEMBER 24,
2017 |
SEPTEMBER 25,
2016 |
|||||||||||||
Consolidated:
|
U.S. GAAP |
ADJUSTED (3) |
U.S. GAAP |
ADJUSTED (4) |
YEAR TO DATE | |||||||||
Restaurant
sales |
100.0
|
% |
100.0
|
% |
100.0
|
% |
100.0
|
% |
||||||
Cost of
sales |
31.8 |
% |
31.8 |
% |
32.3 |
% |
32.3 |
% |
0.5 |
% | ||||
Labor and other related |
29.3 |
% |
29.3 |
% |
28.6 |
% |
28.6 |
% |
(0.7 |
)% | ||||
Other restaurant
operating |
23.4 |
% |
23.6 |
% |
23.1 |
% |
23.2 |
% |
(0.4 |
)% | ||||
Restaurant-level operating
margin (2) |
15.4 |
% |
15.3 |
% |
16.0 |
% |
15.9 |
% |
(0.6 |
)% | ||||
Segments: |
||||||||||||||
Restaurant-level operating margin - U.S.
(2) |
14.7 |
% |
14.5 |
% |
15.7 |
% |
15.7 |
% |
(1.2 |
)% | ||||
Restaurant-level operating
margin - International (2) |
20.7 |
% |
20.7 |
% |
17.9 |
% |
17.9 |
% |
2.8 |
% | ||||
_________________
(1) |
Includes adjustments for the write-off of $0.2 million of deferred rent liabilities associated with our relocation program,
recorded in Other restaurant operating. |
(2) |
The following categories of our revenue and operating expenses are not included in restaurant-level
operating margin because we do not consider them reflective of operating performance at the restaurant-level within a period: |
(i) |
Franchise and other revenues, which are earned primarily from franchise royalties and other non-food and
beverage revenue streams, such as rental and sublease income. |
(ii) |
Depreciation and amortization which, although substantially all of which is related to restaurant-level
assets, represent historical sunk costs rather than cash outlays for the restaurants. |
(iii) |
General and administrative expense which includes primarily non-restaurant-level costs associated with
support of the restaurants and other activities at our corporate offices. |
(iv) |
Asset impairment charges and restaurant closing costs which are not reflective of ongoing restaurant
performance in a period. |
(3) |
Includes adjustments for the write-off of $5.5 million of deferred rent liabilities associated with the 2017 Closure
Initiative and our relocation program, recorded in Other restaurant operating. |
(4) |
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. |
8
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 24, 2017 |
SEPTEMBER 25, 2016 |
SEPTEMBER 24, 2017 |
SEPTEMBER 25, 2016 | |||||||||||
Income from
operations |
$ |
3,182 |
$ |
31,734 |
$ |
114,466 |
$ |
131,751 |
|||||||
Operating income
margin |
0.3 |
% |
3.2 |
% |
3.7 |
% |
4.1 |
% | |||||||
Adjustments: |
|||||||||||||||
Asset impairments and related costs
(1) |
10,566 |
3,208 |
10,566 |
43,231 |
|||||||||||
Restaurant impairments
and closing costs (2) |
4,726 |
(685 |
) |
20,925 |
1,435 |
||||||||||
Restaurant relocations and related costs
(3) |
3,743 |
1,141 |
8,101 |
2,047 |
|||||||||||
Severance
(4) |
1,015 |
— |
1,015 |
1,872 |
|||||||||||
Transaction-related expenses (5) |
— |
1,047 |
1,447 |
1,513 |
|||||||||||
Total income from
operations adjustments |
20,050 |
4,711 |
42,054 |
50,098 |
|||||||||||
Adjusted income from operations |
$ |
23,232 |
$ |
36,445 |
$ |
156,520 |
$ |
181,849 |
|||||||
Adjusted operating
income margin |
2.4
|
% |
3.6
|
% |
5.0 |
% |
5.6 |
% | |||||||
Net income attributable to
Bloomin’ Brands |
$ |
4,336 |
$ |
20,733 |
$ |
83,876 |
$ |
46,031 |
|||||||
Adjustments: |
|||||||||||||||
Income from operations
adjustments |
20,050 |
4,711 |
42,054 |
50,098 |
|||||||||||
Gain on disposal of business and other costs (6) |
(7,570 |
) |
(2,084 |
) |
(14,854 |
) |
(2,084 |
) | |||||||
Loss on defeasance, extinguishment and
modification of debt (7) |
— |
418 |
260 |
26,998 |
|||||||||||
Total adjustments, before income
taxes |
12,480 |
3,045 |
27,460 |
75,012 |
|||||||||||
Adjustment to provision for income taxes
(8) |
(5,074
|
)
|
(2,338
|
)
|
(14,018
|
)
|
(9,382
|
)
| |||||||
Net adjustments |
7,406 |
707 |
13,442 |
65,630 |
|||||||||||
Adjusted net
income |
$
|
11,742 |
$
|
21,440 |
$
|
97,318 |
$
|
111,661 |
|||||||
Diluted earnings per
share |
$
|
0.05 |
$
|
0.18 |
$
|
0.83 |
$
|
0.40 |
|||||||
Adjusted diluted earnings per
share |
$
|
0.12 |
$
|
0.19 |
$ |
0.96 |
$
|
0.96 |
|||||||
Diluted weighted average common shares
outstanding |
95,655 |
112,430 |
101,497 |
116,516 |
|||||||||||
_________________
(1) |
Represents asset impairment charges and related costs primarily associated with: (i) the remeasurement
of certain surplus properties currently leased to the owners of our former restaurant concepts in 2017, (ii) our Puerto Rico subsidiary in 2016 and (iii) the decision to sell Outback Steakhouse South Korea in 2016. |
(2) |
Represents expenses incurred for approved closure and restructuring
initiatives. |
(3) |
Represents asset impairment charges and accelerated depreciation incurred in connection with our relocation
program. |
(4) |
Relates to severance expense incurred primarily as a result of: (i) restructuring of certain functions in 2017 and (ii) the
relocation of our Fleming’s operations center to the corporate home office in 2016. |
(5) |
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 in 2017, as described in footnote 8 to this table, and (ii) costs incurred in connection with our sale-leaseback initiative in 2017 and 2016. |
(6) |
Primarily relates to: (i) the sale of 54 U.S. Company-owned restaurants to existing franchisees in the second quarter of
2017, (ii) a gain of the sale of one Carrabba's Italian Grill restaurant during the third quarter of 2017, (iii) expenses related to certain surplus properties during the third quarter of 2017 and (iv) the sale of Outback Steakhouse South Korea
during the third quarter of 2016. |
(7) |
Relates to modification of our Credit Agreement in 2017 and amendments of the PRP Mortgage loan and the defeasance of the
2012 CMBS loan in 2016. |
(8) |
Represents income tax effect of the adjustments for the thirteen and thirty-nine weeks ended September 24, 2017 and
September 25, 2016. Adjustments include the impact of excluding $4.6 million of discrete income tax items for the thirty-nine weeks ended September 24,
2017. |
9
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 24, 2017 |
SEPTEMBER 25, 2016 |
SEPTEMBER 24, 2017 |
SEPTEMBER 25, 2016 | |||||||||||
Other restaurant
operating |
$ |
(194 |
) |
$ |
(220 |
) |
$ |
(5,481 |
) |
$ |
(2,084 |
) | |||
Depreciation and amortization |
1,777 |
1,121 |
5,109 |
2,377 |
|||||||||||
General and
administrative |
1,015 |
1,047 |
5,409 |
3,958 |
|||||||||||
Provision for impaired assets and restaurant
closings |
17,452 |
2,764 |
37,017 |
45,847 |
|||||||||||
Loss on defeasance, extinguishment and
modification of debt |
— |
418 |
260 |
26,998 |
|||||||||||
Other income, net |
(7,570 |
) |
(2,085 |
) |
(14,854 |
) |
(2,084 |
) | |||||||
Provision for income
taxes |
(5,074
|
)
|
(2,338
|
)
|
(14,018
|
)
|
(9,382
|
)
| |||||||
Net adjustments |
$ |
7,406 |
$ |
707 |
$ |
13,442 |
$ |
65,630 |
|||||||
TABLE
SIX | |||||||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||||||
SEGMENT INCOME
(LOSS) FROM OPERATIONS NON-GAAP RECONCILIATION | |||||||||||||||
(UNAUDITED) | |||||||||||||||
U.S. Segment |
THIRTEEN
WEEKS ENDED |
THIRTY-NINE
WEEKS ENDED | |||||||||||||
(dollars in
thousands) |
SEPTEMBER 24, 2017 |
SEPTEMBER 25, 2016 |
SEPTEMBER 24, 2017 |
SEPTEMBER 25, 2016 | |||||||||||
Income from operations |
$ |
28,139 |
$ |
61,905 |
$ |
204,153 |
$ |
268,754 |
|||||||
Operating income
margin |
3.4 |
% |
6.9 |
% |
7.3 |
% |
9.3 |
% | |||||||
Adjustments: |
|||||||||||||||
Asset impairments and related costs
(1) |
10,566 |
3,208 |
10,566 |
3,208 |
|||||||||||
Restaurant impairments
and closing costs (2) |
3,071 |
(685 |
) |
19,270 |
1,539 |
||||||||||
Restaurant relocations and related costs
(3) |
3,743 |
1,142 |
8,101 |
2,047 |
|||||||||||
Severance
(4) |
— |
— |
— |
1,276 |
|||||||||||
Transaction-related expenses (5) |
— |
530 |
347 |
675 |
|||||||||||
Adjusted income from
operations |
$ |
45,519
|
$ |
66,100
|
$ |
242,437
|
$ |
277,499
|
|||||||
Adjusted operating income
margin |
5.5 |
% |
7.4 |
% |
8.7 |
% |
9.6 |
% | |||||||
International
Segment |
|||||||||||||||
(dollars in
thousands) |
|||||||||||||||
Income (loss) from
operations |
$ |
8,442 |
$ |
8,277 |
$ |
26,923 |
$ |
(14,947 |
) | ||||||
Operating income (loss)
margin |
7.2 |
% |
7.4 |
% |
7.8 |
% |
(4.3 |
)% | |||||||
Adjustments: |
|||||||||||||||
Restaurant impairments and closing costs
(2) |
1,655 |
— |
1,655 |
(103 |
) | ||||||||||
Severance |
290 |
— |
290 |
— |
|||||||||||
Asset impairments and related costs
(6) |
— |
— |
— |
40,023 |
|||||||||||
Transaction-related
expenses (6) |
—
|
161
|
—
|
161
|
|||||||||||
Adjusted income from operations |
$
|
10,387 |
$
|
8,438 |
$
|
28,868 |
$
|
25,134 |
|||||||
Adjusted operating
income margin |
8.9
|
% |
7.6 |
% |
8.4
|
% |
7.2 |
% | |||||||
_________________
(1) |
Represents asset impairment charges and related costs primarily associated with: (i) the remeasurement
of certain surplus properties in 2017 and (ii) our Puerto Rico subsidiary in 2016. |
(2) |
Represents expenses incurred for approved closure and restructuring
initiatives. |
(3) |
Represents asset impairment charges and accelerated depreciation incurred in connection with our relocation
program. |
(4) |
Relates to severance expense primarily resulting from the relocation of our Fleming’s operations
center to the corporate home office. |
(5) |
Represents costs incurred in connection with our sale-leaseback
initiative. |
(6) |
Represents asset impairment charges and related costs primarily associated with the decision to sell
Outback Steakhouse South
Korea. |
10
TABLE
SEVEN | |||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||
COMPARATIVE
RESTAURANT INFORMATION | |||||||||||
(UNAUDITED) | |||||||||||
Number of restaurants (at end of
the period): |
JUNE 25, 2017 |
OPENINGS |
CLOSURES |
SEPTEMBER 24, 2017 | |||||||
U.S. |
|||||||||||
Outback Steakhouse |
|||||||||||
Company-owned
|
584 |
— |
— |
584 |
|||||||
Franchised |
158 |
— |
(2 |
) |
156 |
||||||
Total |
742
|
—
|
(2
|
)
|
740
|
||||||
Carrabba’s Italian Grill |
|||||||||||
Company-owned
|
227 |
— |
(1 |
) |
226 |
||||||
Franchised |
3 |
— |
— |
3 |
|||||||
Total |
230
|
—
|
(1
|
)
|
229
|
||||||
Bonefish Grill |
|||||||||||
Company-owned
|
196 |
— |
(1 |
) |
195 |
||||||
Franchised |
7 |
— |
— |
7 |
|||||||
Total |
203
|
—
|
(1
|
)
|
202
|
||||||
Fleming’s Prime Steakhouse & Wine
Bar |
|||||||||||
Company-owned
|
67
|
1
|
—
|
68
|
|||||||
Express |
|||||||||||
Company-owned
|
—
|
1
|
—
|
1
|
|||||||
International |
|||||||||||
Company-owned |
|||||||||||
Outback Steakhouse—Brazil
(1) |
85 |
2 |
— |
87 |
|||||||
Other |
33 |
3 |
— |
36 |
|||||||
Franchised |
|||||||||||
Outback Steakhouse - South
Korea |
74 |
— |
— |
74 |
|||||||
Other |
54 |
1 |
(1 |
) |
54 |
||||||
Total |
246 |
6 |
(1 |
) |
251 |
||||||
System-wide total |
1,488 |
8 |
(5 |
) |
1,491 |
||||||
____________________
(1) |
The restaurant counts for Brazil are reported as of May 31, 2017 and August 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 |
THIRTY-NINE
WEEKS ENDED | ||||||||||
SEPTEMBER 24, 2017 |
SEPTEMBER 25, 2016 |
SEPTEMBER 24, 2017 |
SEPTEMBER 25, 2016 | ||||||||
Year over year percentage
change: |
|||||||||||
Comparable restaurant sales (stores open 18 months or
more) (1): |
|||||||||||
U.S. |
|||||||||||
Outback Steakhouse |
0.6 |
% |
(0.7 |
)% |
0.8 |
% |
(1.6 |
)% | |||
Carrabba’s Italian
Grill |
(2.8 |
)% |
(2.1 |
)% |
(2.1 |
)% |
(2.9 |
)% | |||
Bonefish Grill |
(4.3 |
)% |
1.7 |
% |
(2.4 |
)% |
(0.1 |
)% | |||
Fleming’s Prime
Steakhouse & Wine Bar |
(1.0 |
)% |
(1.9 |
)% |
(1.8 |
)% |
(0.3 |
)% | |||
Combined U.S. (2) |
(1.0 |
)% |
(0.7 |
)% |
(0.5 |
)% |
(1.5 |
)% | |||
International
|
|||||||||||
Outback Steakhouse - Brazil (3) |
4.8 |
% |
7.3 |
% |
6.9 |
% |
6.9 |
% | |||
Traffic: |
|||||||||||
U.S. |
|||||||||||
Outback Steakhouse |
0.1 |
% |
(6.5 |
)% |
(1.1 |
)% |
(5.1 |
)% | |||
Carrabba’s Italian
Grill |
(4.2 |
)% |
(4.5 |
)% |
(4.5 |
)% |
(2.5 |
)% | |||
Bonefish Grill |
(5.7 |
)% |
(2.0 |
)% |
(3.5 |
)% |
(3.3 |
)% | |||
Fleming’s Prime Steakhouse &
Wine Bar |
(6.5 |
)% |
(2.9 |
)% |
(6.6 |
)% |
(1.6 |
)% | |||
Combined U.S. |
(1.9 |
)% |
(5.4 |
)% |
(2.3 |
)% |
(4.2 |
)% | |||
International
|
|||||||||||
Outback Steakhouse - Brazil |
(1.5 |
)% |
1.4 |
% |
(0.1 |
)% |
0.2 |
% | |||
Average check per person increases (decreases)
(4): |
|||||||||||
U.S. |
|||||||||||
Outback Steakhouse |
0.5 |
% |
5.8 |
% |
1.9 |
% |
3.5 |
% | |||
Carrabba’s Italian
Grill |
1.4 |
% |
2.4 |
% |
2.4 |
% |
(0.4 |
)% | |||
Bonefish Grill |
1.4 |
% |
3.7 |
% |
1.1 |
% |
3.2 |
% | |||
Fleming’s Prime
Steakhouse & Wine Bar |
5.5 |
% |
1.0 |
% |
4.8 |
% |
1.3 |
% | |||
Combined U.S. |
0.9 |
% |
4.7 |
% |
1.8 |
% |
2.7 |
% | |||
International
|
|||||||||||
Outback Steakhouse - Brazil |
6.2 |
% |
6.0 |
% |
6.8 |
% |
6.6 |
% | |||
____________________
(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) |
Combined U.S. comparable restaurant sales for the thirteen weeks ended September 24, 2017 includes an
estimated (1.0%) impact related to hurricanes that occurred during the quarter. |
(3) |
Includes trading day impact from calendar period reporting. |
(4) |
Average check per person increases (decreases) include the impact of menu pricing changes, product mix
and discounts. |
SOURCE: Bloomin’ Brands,
Inc.
12