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) October 29,
2018
BLOOMIN’ BRANDS, INC.
(Exact name of registrant as
specified in its
charter)
Delaware |
001-35625 |
20-8023465 |
(State or other jurisdiction of
incorporation) |
(Commission File Number) |
(IRS
Employer Identification No.) |
2202 North West Shore Boulevard, Suite 500, Tampa,
Florida 33607
(Address of principal executive offices) (Zip
Code)
Registrant’s
telephone number, including area code (813)
282-1225
N/A
(Former name or former address, if changed
since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following
provisions:
o |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425) |
o |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12) |
o |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
o |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act
of 1934 (§240.12b-2 of this chapter).
Emerging growth company
o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
o
Item 2.02 |
Results of Operations and Financial Condition
|
On October 29, 2018, the Company issued a press release reporting its financial
results for the thirteen weeks ended September 30, 2018. A copy of the release is attached as Exhibit
99.1.
The information contained in Item 2.02 of this report, and the exhibit attached hereto, is being furnished and shall not be deemed “filed” for any purpose, and shall not be deemed incorporated
by reference in any document whether or not filed under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, regardless of any general incorporation language in any such document.
Item 9.01 |
Financial Statements and
Exhibits |
(d)
Exhibits.
Exhibit Number |
Description | ||
99.1 |
|||
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
BLOOMIN’ BRANDS,
INC. | |||
(Registrant) | |||
Date: |
October 29, 2018 |
By: |
/s/ David J.
Deno |
David J. Deno | |||
Executive Vice President and Chief Financial and Administrative
Officer (Principal Financial and Accounting Officer) | |||
3
|
NEWS |
Exhibit
99.1 | ||
Mark Graff |
||||
Vice President, IR &
Finance |
||||
(813) 830-5311 |
||||
Bloomin’ Brands Announces
2018 Q3 Diluted EPS of $0.04 and
Adjusted Diluted EPS of
$0.10
Q3 Comparable Restaurant Sales Growth of 4.6% at Outback and 2.9% Combined
U.S.
Q3 Traffic Growth at Outback of 0.9%, 5th Consecutive Quarter of Traffic
Growth
Increases 2018 Guidance For Combined U.S. Comparable Restaurant Sales to 2.0% -
2.5%
Increases Full Year 2018 Guidance For Adjusted Diluted EPS to $1.41 -
$1.47
TAMPA, Fla., October 29, 2018 -
Bloomin’ Brands, Inc. (Nasdaq: BLMN) today reported results for the third quarter 2018 (“Q3 2018”)
compared to the third quarter 2017 (“Q3 2017”).
Highlights for Q3 2018 include the
following:
• |
Comparable restaurant sales were up
4.6% at U.S. Outback Steakhouse with traffic up 0.9%(1) |
• |
Combined U.S. comparable restaurant sales were up 2.9%(1) |
• |
Comparable restaurant sales were down
3.3% in Brazil but finished with positive comparable restaurant sales in the final month of the
quarter |
• |
Opened five new restaurants, including four in international
markets |
____________________________
(1) |
For Q3 2018, comparable restaurant sales and traffic compare the thirteen weeks from July 2, 2018
through September 30, 2018 to the thirteen weeks from July 3, 2017 through October 1,
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 |
|||||||||||
2018 |
2017 |
CHANGE | |||||||||
Diluted earnings per share |
$ |
0.04 |
$ |
0.06 |
$ |
(0.02 |
)
| ||||
Adjustments
|
0.06 |
0.08 |
(0.02 |
)
| |||||||
Adjusted diluted earnings per share |
$
|
0.10 |
$
|
0.14 |
$
|
(0.04 |
) | ||||
___________________
See
Non-GAAP Measures later in this release.
CEO
Comments
“Our momentum continued in the third quarter, and it is clear that our investments in
the customer experience are working,” said Liz Smith, CEO. “At Outback, sales and traffic continued to meaningfully out-pace the industry, and we have increased our U.S. sales guidance for the year to reflect this strong performance. We
have also increased our adjusted EPS guidance for the year, and now expect adjusted earnings growth of between 18% and 23% in 2018. We are on track for a very good year at Bloomin’ Brands.”
1
Third
Quarter Financial
Results
(dollars in
millions) |
Q3 2018 |
Q3 2017 |
CHANGE | |||||||
Total
revenues |
$ |
965.0 |
$ |
955.6 |
1.0 |
% | ||||
GAAP restaurant-level
operating margin |
12.5 |
% |
13.0 |
% |
(0.5 |
)% | ||||
Adjusted restaurant-level operating margin
(1) |
12.4 |
% |
13.0 |
% |
(0.6 |
)% | ||||
GAAP operating income margin |
1.3 |
% |
0.5 |
% |
0.8 |
% | ||||
Adjusted operating income
margin (1) |
2.0 |
% |
2.6 |
% |
(0.6 |
)% | ||||
___________________
(1) |
See Non-GAAP Measures later in this
release. |
• |
The increase in total revenues was primarily due to higher U.S. comparable restaurant sales and the
net impact of restaurant openings and closures, partially offset by foreign currency translation. |
• |
The increase in GAAP operating income margin was primarily due to lower impairment and restaurant
closing expenses, productivity initiatives and increases in average check. This increase was partially offset by commodity inflation, labor inflation, higher incentive compensation expense and lower comparable sales in Brazil. The impairment and
restaurant closing expenses are excluded from our adjusted operating income margin. |
• |
There is a $7.0 million change in year-over-year incentive compensation expense driving an unfavorable
70 basis point change in Q3 2018 operating income margin. This was primarily driven by a reduction in incentive compensation expense in Q3
2017. |
• |
The effective income tax rate in Q3 2018 includes benefits from discrete tax items in the quarter and
exercises of certain legacy stock options. These items benefited Q3 2018 diluted earnings per share by approximately $0.02. |
Third Quarter Comparable Restaurant Sales(1)
THIRTEEN
WEEKS ENDED SEPTEMBER 30, 2018 |
COMPANY-OWNED | ||
Comparable restaurant
sales (stores open 18 months or more): |
|||
U.S.
|
|||
Outback
Steakhouse |
4.6 |
% | |
Carrabba’s Italian Grill |
(0.6 |
)% | |
Bonefish
Grill |
1.8 |
% | |
Fleming’s Prime Steakhouse & Wine
Bar |
0.5 |
% | |
Combined
U.S. |
2.9 |
% | |
International |
|||
Outback Steakhouse - Brazil |
(3.3 |
)% | |
___________________
(1) |
For Q3 2018, comparable restaurant sales compare the thirteen weeks from July 2, 2018 through September
30, 2018 to the thirteen weeks from July 3, 2017 through October 1,
2017. |
2
Dividend Declaration and Share Repurchases
On October 24, 2018, our Board of Directors declared a quarterly cash dividend of
$0.09 per share to be paid on November 21, 2018 to all stockholders of record as of the close of business on November 14,
2018.
On February 16, 2018, our Board of Directors approved a $150.0 million share repurchase program. As of October 29, 2018, we had $51.0 million remaining under this authorization. This authorization will
expire on August 16, 2019.
Fiscal 2018
Financial Outlook
We are updating our 2018 financial outlook for adjusted diluted earnings per share, U.S. comparable
restaurant sales and our tax rate. All other aspects of our full-year financial outlook as previously communicated in our July 30, 2018 earnings release remain intact. Our tax rate is now expected to be lower due to the tax benefit from the exercise
of certain legacy stock options. See the table below for more
detail.
Financial
Results: |
Outlook on Jul. 30 |
Current Outlook | |
Adjusted diluted earnings
per share (1) |
$1.38 to
$1.45 |
$1.41 to
$1.47 | |
GAAP effective income tax rate (1) |
2.5% to
3.5% |
Approx. (4.0)%
| |
Adjusted effective income tax rate (1) |
4.5% to
5.5% |
Approx.
1.0% | |
Other Selected Financial
Data: |
|||
Combined U.S. comparable restaurant sales
(2) |
1.5% to
2.5% |
2.0% to
2.5% | |
___________________
(1) |
The primary difference between our U.S. GAAP outlook and our adjusted outlook for both diluted earnings
per share and effective income tax rate is driven by adjustments through Q3 2018 as reflected in Table 5 of this release, as well as anticipated adjustments in connection with our relocation and restaurant closure
initiatives. |
(2) |
Combined U.S. comparable restaurant sales outlook is based on a comparable calendar basis. For 2018,
this will compare the 52 weeks from January 1, 2018 through December 30, 2018 to the 52 weeks from January 2, 2017 through December 31,
2017. |
3
Conference Call
The Company
will host a conference call today, October 29th at 9:00 AM EDT. 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 Monday, November 5, 2018. The conference ID for the live call and replay is 13683855. The call will also be
webcast live from the Company’s website at http://www.bloominbrands.com under the
Investors section. A replay of this webcast will be available on the Company’s website after the
call.
Impact of the Adoption of New Revenue Recognition Standard
Effective January 1, 2018, we adopted Accounting Standards Update No. 2014-09 “Revenue Recognition (Topic 606), Revenue from Contracts with Customers”. Refer to Exhibit 99.2 to our April 26,
2018 Form 8-K for additional information regarding our adoption of this standard and the impact to our historical financial results.
Non-GAAP
Measures
In addition to the results provided in accordance with GAAP, this press release and related tables include
certain non-GAAP measures, which present operating results on an adjusted basis. These are supplemental measures of performance that are not required by or presented in accordance with GAAP and include the following: (i) Adjusted restaurant-level
operating margin, (ii) Adjusted income from operations and the corresponding margin, (iii) Adjusted net income, (iv) Adjusted diluted earnings per share, (v) Adjusted segment restaurant-level operating margin and (vi) Adjusted segment income from
operations and the corresponding
margin.
We believe that our use of non-GAAP financial measures permits investors to assess the operating performance of our business relative to our performance based on GAAP results and relative to other
companies within the restaurant industry by isolating the effects of certain items that may vary from period to period without correlation to core operating performance or that vary widely among similar companies. However, our inclusion of these
adjusted measures should not be construed as an indication that our future results will be unaffected by unusual or infrequent items or that the items for which we have made adjustments are unusual or infrequent or will not recur. We believe that
the disclosure of these non-GAAP measures is useful to investors as they form part of the basis for how our management team and Board of Directors evaluate our operating performance, allocate resources and administer employee incentive
plans.
These non-GAAP financial measures are not intended to replace GAAP financial measures, and they are not necessarily standardized or comparable to similarly titled measures used by other companies. We
maintain internal guidelines with respect to the types of adjustments we include in our non-GAAP measures. These guidelines endeavor to differentiate between types of gains and expenses that are reflective of our core operations in a period, and
those that may vary from period to period without correlation to our core performance in that period. However, implementation of these guidelines necessarily involves the application of judgment, and the treatment of any items not directly addressed
by, or changes to, our guidelines will be considered by our disclosure committee. You should refer to the reconciliations of non-GAAP measures in tables four, five, and six included later in this release for descriptions of the actual adjustments
made in the current period and the corresponding prior
period.
In this release, we have also included forward-looking non-GAAP information under the caption “Fiscal
2018 Financial Outlook”. This relates to our current expectations for fiscal year 2018 adjusted diluted EPS, combined U.S. comparable restaurant sales and adjusted effective income tax
rate. We have also provided information with respect to our expectations for the corresponding GAAP
measures.
The differences between our disclosed GAAP and non-GAAP expectations are described to the extent practicable under “Fiscal 2018 Financial Outlook”. However, in addition to the general cautionary language regarding all
forward-looking statements included elsewhere in this release, we note that, because the items we adjust for in our non-GAAP measures may vary from period to period without correlation to our core performance, they are by nature more difficult 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 20 countries, some of which are franchise locations. For more information, please visit www.bloominbrands.com.
Forward-Looking
Statements
Certain statements contained herein, including statements under the headings “CEO
Comments” and “Fiscal 2018 Financial Outlook” are not based on historical
fact and are “forward-looking statements” within the meaning of applicable securities laws. Generally, these statements can be identified by the use of words such as “guidance,” “believes,”
“estimates,” “anticipates,” “expects,” “on track,” “feels,” “forecasts,” “seeks,” “projects,” “intends,” “plans,”
“may,” “will,” “should,” “could,” “would” and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying
words. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the Company’s
forward-looking statements. These risks and uncertainties include, but are not limited to: consumer reaction to public health and food safety issues; competition; increases in labor costs; government actions and policies; increases in unemployment
rates and taxes; local, regional, national and international economic conditions; consumer confidence and spending patterns; price and availability of commodities; application of the new revenue recognition rules or other accounting standards; the
effects of changes in tax laws; challenges associated with our expansion, remodeling and relocation plans; interruption or breach of our systems or loss of consumer or employee information; political, social and legal conditions in international
markets and their effects on foreign operations and foreign currency exchange rates; our ability to preserve the value of and grow our brands; the seasonality of the Company’s business; weather, acts of God and other disasters; changes in
patterns of consumer traffic, consumer tastes and dietary habits; the effectiveness of our strategic actions; the cost and availability of credit; interest rate changes; compliance with debt covenants and the Company’s ability to make debt
payments and planned investments; and our ability to continue to pay dividends and repurchase shares of our common stock. Further information on potential factors that could affect the financial results of the Company and its forward-looking
statements is included in its most recent Form 10-K and subsequent filings with the Securities and Exchange Commission. The Company assumes no obligation to update any forward-looking statement, except as may be required by law. These
forward-looking statements speak only as of the date of this release. All forward-looking statements are qualified in their entirety by this cautionary statement.
Note: Numerical figures included in this release have been subject to rounding adjustments.
5
TABLE
ONE | |||||||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||||||
CONSOLIDATED
STATEMENTS OF OPERATIONS | |||||||||||||||
(UNAUDITED) | |||||||||||||||
THIRTEEN
WEEKS ENDED |
THIRTY-NINE
WEEKS ENDED | ||||||||||||||
(in thousands, except per share
data) |
SEPTEMBER 30, 2018 |
SEPTEMBER 24, 2017 |
SEPTEMBER 30, 2018 |
SEPTEMBER 24, 2017 | |||||||||||
Revenues |
|||||||||||||||
Restaurant sales |
$ |
949,400 |
$ |
940,012 |
$ |
3,063,887 |
$ |
3,105,027 |
|||||||
Franchise and other
revenues |
15,621
|
15,575
|
49,413
|
41,729
|
|||||||||||
Total revenues |
965,021 |
955,587 |
3,113,300 |
3,146,756 |
|||||||||||
Costs and
expenses |
|||||||||||||||
Cost of sales |
307,493 |
296,632 |
982,415 |
984,510 |
|||||||||||
Labor and other
related |
289,023 |
285,325 |
902,006 |
907,580 |
|||||||||||
Other restaurant operating |
233,744 |
235,944 |
725,468 |
735,480 |
|||||||||||
Depreciation and
amortization |
50,571 |
47,826 |
151,473 |
142,479 |
|||||||||||
General and administrative |
67,691 |
66,063 |
212,516 |
215,059 |
|||||||||||
Provision for impaired
assets and restaurant closings |
3,962
|
18,578
|
15,590
|
38,253
|
|||||||||||
Total costs and expenses |
952,484 |
950,368 |
2,989,468 |
3,023,361 |
|||||||||||
Income from
operations |
12,537 |
5,219 |
123,832 |
123,395 |
|||||||||||
Loss on extinguishment and modification of debt |
— |
— |
— |
(260 |
) | ||||||||||
Other (expense) income,
net |
(1 |
) |
7,531 |
(6 |
) |
14,761 |
|||||||||
Interest expense, net |
(11,600 |
) |
(10,705 |
) |
(33,229 |
) |
(29,389 |
) | |||||||
Income before (benefit)
provision for income taxes |
936 |
2,045 |
90,597 |
108,507 |
|||||||||||
(Benefit) provision for income
taxes |
(3,317 |
) |
(3,248 |
) |
(6,516 |
) |
17,744 |
||||||||
Net
income |
4,253 |
5,293 |
97,113 |
90,763 |
|||||||||||
Less: net income (loss) attributable to
noncontrolling interests |
181 |
(290 |
) |
922 |
1,422 |
||||||||||
Net income attributable to
Bloomin’ Brands |
$
|
4,072 |
$
|
5,583 |
$
|
96,191 |
$
|
89,341 |
|||||||
Earnings per
share: |
|||||||||||||||
Basic |
$ |
0.04 |
$ |
0.06 |
$ |
1.04 |
$ |
0.91 |
|||||||
Diluted |
$
|
0.04 |
$
|
0.06 |
$
|
1.02 |
$
|
0.88 |
|||||||
Weighted average common
shares outstanding: |
|||||||||||||||
Basic |
92,202 |
92,485 |
92,197 |
98,137 |
|||||||||||
Diluted |
93,324
|
95,655
|
94,489
|
101,497
|
|||||||||||
Cash dividends declared
per common share |
$
|
0.09 |
$
|
0.08 |
$
|
0.27 |
$
|
0.24 |
|||||||
6
TABLE
TWO | |||||||||||||||
BLOOMIN’ BRANDS,
INC. | |||||||||||||||
SEGMENT
RESULTS | |||||||||||||||
(UNAUDITED) | |||||||||||||||
(dollars in
thousands) |
THIRTEEN
WEEKS ENDED |
THIRTY-NINE
WEEKS ENDED | |||||||||||||
U.S. Segment |
SEPTEMBER 30, 2018 |
SEPTEMBER 24, 2017 |
SEPTEMBER 30, 2018 |
SEPTEMBER 24, 2017 | |||||||||||
Revenues |
|||||||||||||||
Restaurant sales |
$ |
848,837 |
$ |
826,076 |
$ |
2,742,118 |
$ |
2,769,895 |
|||||||
Franchise and other
revenues |
12,656
|
12,733
|
40,437
|
33,383
|
|||||||||||
Total revenues |
$ |
861,493 |
$ |
838,809 |
$ |
2,782,555 |
$ |
2,803,278 |
|||||||
Restaurant-level
operating margin |
11.9 |
% |
11.8 |
% |
14.4 |
% |
14.6 |
% | |||||||
Income from operations |
$ |
44,598 |
$ |
30,224 |
$ |
230,645 |
$ |
213,248 |
|||||||
Operating income
margin |
5.2 |
% |
3.6 |
% |
8.3 |
% |
7.6 |
% | |||||||
International
Segment |
|||||||||||||||
Revenues |
|||||||||||||||
Restaurant sales |
$ |
100,563 |
$ |
113,936 |
$ |
321,769 |
$ |
335,132 |
|||||||
Franchise and other
revenues |
2,965
|
2,842
|
8,976
|
8,346
|
|||||||||||
Total revenues |
$ |
103,528 |
$ |
116,778 |
$ |
330,745 |
$ |
343,478 |
|||||||
Restaurant-level
operating margin |
17.9 |
% |
20.7 |
% |
18.4 |
% |
20.7 |
% | |||||||
Income from operations |
$ |
7,776 |
$ |
8,394 |
$ |
14,052 |
$ |
26,757 |
|||||||
Operating income
margin |
7.5 |
% |
7.2 |
% |
4.2 |
% |
7.8 |
% | |||||||
Reconciliation of Segment Income
from Operations to Consolidated Income from Operations |
|||||||||||||||
Segment income from
operations |
|||||||||||||||
U.S. |
$ |
44,598 |
$ |
30,224 |
$ |
230,645 |
$ |
213,248 |
|||||||
International
|
7,776
|
8,394
|
14,052
|
26,757
|
|||||||||||
Total segment income from
operations |
52,374 |
38,618 |
244,697 |
240,005 |
|||||||||||
Unallocated corporate
operating expense |
(39,837
|
)
|
(33,399
|
)
|
(120,865
|
)
|
(116,610
|
)
| |||||||
Total income from operations |
$ |
12,537 |
$ |
5,219 |
$ |
123,832 |
$ |
123,395 |
|||||||
TABLE
THREE | |||||||
BLOOMIN’
BRANDS, INC. | |||||||
SUPPLEMENTAL BALANCE
SHEET INFORMATION | |||||||
(UNAUDITED) | |||||||
(in thousands) |
SEPTEMBER 30, 2018 |
DECEMBER 31, 2017 | |||||
Cash and cash equivalents
(1) |
$ |
78,615 |
$ |
128,263 |
|||
Net working capital (deficit) (2) |
$ |
(392,195 |
) |
$ |
(453,183 |
) | |
Total
assets |
$ |
2,350,794 |
$ |
2,561,894 |
|||
Total debt, net |
$ |
1,150,791 |
$ |
1,118,104 |
|||
Total stockholders’
equity (3) |
$ |
60,142 |
$ |
81,231 |
|||
Common stock outstanding (3) |
91,854 |
91,913 |
|||||
_________________
(1) |
Excludes restricted cash. |
(2) |
The Company has, and in the future may continue to have, negative working capital balances (as is common
for many restaurant companies). The Company operates successfully with negative working capital because cash collected on Restaurant sales is typically received before payment is due on its current liabilities, and its inventory turnover rates
require relatively low investment in inventories. Additionally, ongoing cash flows from restaurant operations and gift card sales are used to service debt obligations and to make capital expenditures. |
(3) |
During the thirty-nine weeks ended September 30,
2018, we repurchased 4.4 million shares of our outstanding common stock and
issued 3.9 million shares of our common stock through the exercise of stock options.
|
7
TABLE
FOUR | ||||||||||||||
BLOOMIN’
BRANDS, INC. | ||||||||||||||
RESTAURANT-LEVEL
OPERATING MARGIN NON-GAAP RECONCILIATION | ||||||||||||||
(UNAUDITED) | ||||||||||||||
THIRTEEN WEEKS ENDED |
THIRTEEN
WEEKS ENDED |
(UNFAVORABLE)
FAVORABLE CHANGE IN ADJUSTED | ||||||||||||
SEPTEMBER 30,
2018 |
SEPTEMBER 24,
2017 |
|||||||||||||
Consolidated:
|
GAAP |
ADJUSTED (1) |
GAAP |
ADJUSTED (1) |
QUARTER TO DATE | |||||||||
Restaurant
sales |
100.0
|
% |
100.0
|
% |
100.0
|
% |
100.0
|
% |
||||||
Cost of
sales |
32.4 |
% |
32.4 |
% |
31.6 |
% |
31.6 |
% |
(0.8 |
)% | ||||
Labor and other related |
30.4 |
% |
30.4 |
% |
30.4 |
% |
30.4 |
% |
— |
% | ||||
Other restaurant
operating |
24.6 |
% |
24.8 |
% |
25.1 |
% |
25.1 |
% |
0.3 |
% | ||||
Restaurant-level operating
margin (2) |
12.5 |
% |
12.4 |
% |
13.0 |
% |
13.0 |
% |
(0.6 |
)% | ||||
Segments - Restaurant-level operating margin (2): |
||||||||||||||
U.S. |
11.9 |
% |
11.8 |
% |
11.8 |
% |
11.8 |
% |
— |
% | ||||
International |
17.9 |
% |
17.9 |
% |
20.7 |
% |
20.7 |
% |
(2.8 |
)% | ||||
THIRTY-NINE
WEEKS ENDED |
THIRTY-NINE
WEEKS ENDED |
(UNFAVORABLE) FAVORABLE CHANGE IN ADJUSTED | ||||||||||||
SEPTEMBER 30,
2018 |
SEPTEMBER 24,
2017 |
|||||||||||||
Consolidated:
|
GAAP |
ADJUSTED (1) |
GAAP |
ADJUSTED (1) |
YEAR TO DATE | |||||||||
Restaurant
sales |
100.0
|
% |
100.0
|
% |
100.0
|
% |
100.0
|
% |
||||||
Cost of
sales |
32.1 |
% |
32.1 |
% |
31.7 |
% |
31.7 |
% |
(0.4 |
)% | ||||
Labor and other related |
29.4 |
% |
29.4 |
% |
29.2 |
% |
29.2 |
% |
(0.2 |
)% | ||||
Other restaurant
operating |
23.7 |
% |
23.8 |
% |
23.7 |
% |
23.9 |
% |
0.1 |
% | ||||
Restaurant-level operating
margin (2) |
14.8 |
% |
14.7 |
% |
15.4 |
% |
15.2 |
% |
(0.5 |
)% | ||||
Segments - Restaurant-level operating margin (2): |
||||||||||||||
U.S. |
14.4 |
% |
14.2 |
% |
14.6 |
% |
14.4 |
% |
(0.2 |
)% | ||||
International |
18.4 |
% |
18.2 |
% |
20.7 |
% |
20.7 |
% |
(2.5 |
)% | ||||
_________________
(1) |
Includes adjustments recorded in Other restaurant operating for the following activities, as described
in Table 5 of this release: |
THIRTEEN WEEKS ENDED |
THIRTY-NINE WEEKS ENDED | ||||||||||||||
(dollars
in millions) |
SEPTEMBER 30, 2018 |
SEPTEMBER 24, 2017 |
SEPTEMBER 30, 2018 |
SEPTEMBER 24, 2017 | |||||||||||
Restaurant and asset impairments and closing costs |
$ |
1.0 |
$ |
— |
$ |
3.2 |
$ |
4.8 |
|||||||
Restaurant
relocations and related costs |
0.2 |
0.2 |
0.6 |
0.7 |
|||||||||||
$
|
1.2 |
$
|
0.2 |
$
|
3.8 |
$
|
5.5 |
||||||||
Restaurant and asset impairments and closing
costs includes $0.6 million of adjustments for the thirty-nine weeks ended September 30, 2018 recorded the International segment. All other adjustments were recorded within the U.S.
segment.
(2) |
The following categories of our revenue and operating expenses are not included in restaurant-level
operating margin because we do not consider them reflective of operating performance at the restaurant-level within a period: |
(i) |
Franchise and other revenues, which are earned primarily from franchise royalties and other non-food and
beverage revenue streams, such as rental and sublease income. |
(ii) |
Depreciation and amortization which, although substantially all of which is related to restaurant-level
assets, represent historical sunk costs rather than cash outlays for the restaurants. |
(iii) |
General and administrative expense which includes primarily non-restaurant-level costs associated with
support of the restaurants and other activities at our corporate offices. |
(iv) |
Asset impairment charges and restaurant closing costs which are not reflective of ongoing restaurant
performance in a
period. |
8
TABLE
FIVE | |||||||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||||||
INCOME FROM
OPERATIONS, NET INCOME AND DILUTED EARNINGS PER SHARE NON-GAAP RECONCILIATIONS | |||||||||||||||
(UNAUDITED) | |||||||||||||||
THIRTEEN
WEEKS ENDED |
THIRTY-NINE
WEEKS ENDED | ||||||||||||||
(in thousands, except per share
data) |
SEPTEMBER 30, 2018 |
SEPTEMBER 24, 2017 |
SEPTEMBER 30, 2018 |
SEPTEMBER 24, 2017 | |||||||||||
Income from
operations |
$ |
12,537 |
$ |
5,219 |
$ |
123,832 |
$ |
123,395 |
|||||||
Operating income
margin |
1.3 |
% |
0.5 |
% |
4.0 |
% |
3.9 |
% | |||||||
Adjustments: |
|||||||||||||||
Restaurant and asset impairments and closing costs
(1) |
2,840 |
15,292 |
12,021 |
31,491 |
|||||||||||
Severance
(2) |
2,528 |
1,015 |
3,493 |
1,015 |
|||||||||||
Restaurant relocations and related costs
(3) |
1,560 |
3,743 |
4,638 |
8,101 |
|||||||||||
Legal and contingent
matters |
— |
— |
758 |
— |
|||||||||||
Transaction-related expenses (4) |
— |
— |
— |
1,447 |
|||||||||||
Total income from
operations adjustments |
6,928 |
20,050 |
20,910 |
42,054 |
|||||||||||
Adjusted income from operations |
$ |
19,465 |
$ |
25,269 |
$ |
144,742 |
$ |
165,449 |
|||||||
Adjusted operating
income margin |
2.0
|
% |
2.6
|
% |
4.6
|
% |
5.3 |
% | |||||||
Net income attributable to
Bloomin’ Brands |
$ |
4,072 |
$ |
5,583 |
$ |
96,191 |
$ |
89,341 |
|||||||
Adjustments: |
|||||||||||||||
Income from operations
adjustments |
6,928 |
20,050 |
20,910 |
42,054 |
|||||||||||
Gain on disposal of business and other costs (5) |
— |
(7,570 |
) |
— |
(14,854 |
) | |||||||||
Loss on extinguishment and modification
of debt |
— |
— |
— |
260 |
|||||||||||
Total adjustments, before income
taxes |
6,928 |
12,480 |
20,910 |
27,460 |
|||||||||||
Adjustment to provision for income taxes
(6) |
(1,643
|
)
|
(5,074
|
)
|
(3,762
|
)
|
(14,018
|
)
| |||||||
Net adjustments |
5,285 |
7,406 |
17,148 |
13,442 |
|||||||||||
Adjusted net
income |
$
|
9,357 |
$
|
12,989 |
$
|
113,339 |
$
|
102,783 |
|||||||
Diluted earnings per
share |
$
|
0.04 |
$
|
0.06 |
$
|
1.02 |
$
|
0.88 |
|||||||
Adjusted diluted earnings per
share |
$
|
0.10 |
$
|
0.14 |
$
|
1.20 |
$
|
1.01 |
|||||||
Diluted weighted average common shares
outstanding |
93,324 |
95,655 |
94,489 |
101,497 |
|||||||||||
_________________
(1) |
Represents asset impairment charges and related costs primarily associated with: (i) approved closure and restructuring
initiatives, (ii) the restructuring of certain international markets in 2018 and (iii) the remeasurement of certain surplus properties. |
(2) |
Relates to severance expense incurred primarily as a result of restructuring of certain
functions. |
(3) |
Represents asset impairment charges and accelerated depreciation incurred in connection with our relocation
program. |
(4) |
Relates primarily to professional fees related to certain income tax items in which the associated tax benefit is adjusted
in Adjustments to provision for income taxes, as described in footnote 6 below. |
(5) |
Primarily relates to: (i) the sale of 54 U.S. Company-owned restaurants to existing franchisees, (ii) a gain on the sale of
one Carrabba's Italian Grill restaurant and (iii) expenses related to certain surplus properties. |
(6) |
Represents income tax effect of the adjustments for the periods presented. Adjustments include the impact of excluding $4.6 million of discrete
income tax items for the 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 30, 2018 |
SEPTEMBER 24, 2017 |
SEPTEMBER 30, 2018 |
SEPTEMBER 24, 2017 | |||||||||||
Other restaurant
operating |
$ |
(1,265 |
) |
$ |
(194 |
) |
$ |
(3,783 |
) |
$ |
(5,481 |
) | |||
Depreciation and amortization |
1,411 |
1,777 |
4,522 |
5,109 |
|||||||||||
General and
administrative |
2,768 |
1,015 |
5,858 |
5,409 |
|||||||||||
Provision for impaired assets and restaurant
closings |
4,014 |
17,452 |
14,313 |
37,017 |
|||||||||||
Loss on extinguishment and modification of
debt |
— |
— |
— |
260 |
|||||||||||
Other (expense) income, net |
— |
(7,570 |
) |
— |
(14,854 |
) | |||||||||
(Benefit) provision for income
taxes |
(1,643
|
)
|
(5,074
|
)
|
(3,762
|
)
|
(14,018
|
)
| |||||||
Net adjustments |
$ |
5,285 |
$ |
7,406 |
$ |
17,148 |
$ |
13,442 |
|||||||
TABLE
SIX | |||||||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||||||
SEGMENT INCOME FROM
OPERATIONS NON-GAAP RECONCILIATION | |||||||||||||||
(UNAUDITED) | |||||||||||||||
U.S. Segment |
THIRTEEN WEEKS ENDED |
THIRTY-NINE
WEEKS ENDED | |||||||||||||
(dollars in
thousands) |
SEPTEMBER 30, 2018 |
SEPTEMBER 24, 2017 |
SEPTEMBER 30, 2018 |
SEPTEMBER 24, 2017 | |||||||||||
Income from operations |
$ |
44,598 |
$ |
30,224 |
$ |
230,645 |
$ |
213,248 |
|||||||
Operating income
margin |
5.2 |
% |
3.6 |
% |
8.3 |
% |
7.6 |
% | |||||||
Adjustments: |
|||||||||||||||
Restaurant and asset impairments and closing costs
(1) |
2,840 |
13,637 |
2,043 |
29,836 |
|||||||||||
Restaurant relocations
and related costs (2) |
1,560 |
3,743 |
4,638 |
8,101 |
|||||||||||
Severance (3) |
688 |
— |
1,576 |
— |
|||||||||||
Transaction-related
expenses |
— |
— |
— |
347 |
|||||||||||
Adjusted income from operations |
$
|
49,686 |
$
|
47,604 |
$
|
238,902 |
$
|
251,532 |
|||||||
Adjusted operating
income margin |
5.8 |
% |
5.7 |
% |
8.6 |
% |
9.0 |
% | |||||||
International
Segment |
|||||||||||||||
(dollars in
thousands) |
|||||||||||||||
Income from
operations |
$ |
7,776 |
$ |
8,394 |
$ |
14,052 |
$ |
26,757 |
|||||||
Operating income
margin |
7.5 |
% |
7.2 |
% |
4.2 |
% |
7.8 |
% | |||||||
Adjustments: |
|||||||||||||||
Severance (3) |
571 |
290 |
571 |
290 |
|||||||||||
Restaurant and asset
impairments and closing costs (4) |
— |
1,655 |
9,978 |
1,655 |
|||||||||||
Adjusted income from operations |
$
|
8,347 |
$
|
10,339 |
$
|
24,601 |
$
|
28,702 |
|||||||
Adjusted operating
income margin |
8.1 |
% |
8.9 |
% |
7.4 |
% |
8.4 |
% | |||||||
_________________
(1) |
Represents asset impairment charges and related costs primarily associated with approved closure and
restructuring initiatives and the remeasurement of certain surplus properties. |
(2) |
Represents asset impairment charges and accelerated depreciation incurred in connection with our relocation
program. |
(3) |
Relates to severance expense incurred primarily as a result of restructuring of certain
functions. |
(4) |
Represents asset impairment charges and related costs primarily associated with the restructuring of
certain international markets in 2018 and approved closure and restructuring initiatives. |
10
TABLE
SEVEN | |||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||
COMPARATIVE
RESTAURANT INFORMATION | |||||||||||
(UNAUDITED) | |||||||||||
Number of restaurants (at end of
the period): |
JULY 1, 2018 |
OPENINGS |
CLOSURES |
SEPTEMBER 30, 2018 | |||||||
U.S. |
|||||||||||
Outback Steakhouse |
|||||||||||
Company-owned
|
583 |
— |
(3 |
) |
580 |
||||||
Franchised |
154 |
1 |
(2 |
) |
153 |
||||||
Total |
737
|
1
|
(5
|
)
|
733
|
||||||
Carrabba’s Italian Grill |
|||||||||||
Company-owned
|
224 |
— |
— |
224 |
|||||||
Franchised |
3 |
— |
— |
3 |
|||||||
Total |
227
|
—
|
—
|
227
|
|||||||
Bonefish Grill |
|||||||||||
Company-owned
|
192 |
— |
(1 |
) |
191 |
||||||
Franchised |
7 |
— |
— |
7 |
|||||||
Total |
199
|
—
|
(1
|
)
|
198
|
||||||
Fleming’s Prime Steakhouse & Wine
Bar |
|||||||||||
Company-owned
|
70
|
—
|
—
|
70
|
|||||||
Other |
|||||||||||
Company-owned
|
5
|
—
|
—
|
5
|
|||||||
U.S. Total |
1,238
|
1
|
(6
|
)
|
1,233
|
||||||
International |
|||||||||||
Company-owned |
|||||||||||
Outback
Steakhouse—Brazil (1) |
92 |
— |
— |
92 |
|||||||
Other |
31 |
2 |
(1 |
) |
32 |
||||||
Franchised |
|||||||||||
Outback Steakhouse - South Korea |
74 |
1 |
— |
75 |
|||||||
Other |
55 |
1 |
— |
56 |
|||||||
International Total |
252
|
4
|
(1
|
)
|
255
|
||||||
System-wide
total |
1,490
|
5
|
(7
|
)
|
1,488
|
||||||
____________________
(1) |
The restaurant counts for Brazil are reported as of May 31, 2018 and August 31, 2018 to correspond with
the balance sheet dates of this
subsidiary. |
11
TABLE
EIGHT | |||||||||||
BLOOMIN’
BRANDS, INC. | |||||||||||
COMPARABLE
RESTAURANT SALES INFORMATION | |||||||||||
(UNAUDITED) | |||||||||||
THIRTEEN WEEKS ENDED |
THIRTY-NINE WEEKS ENDED | ||||||||||
SEPTEMBER 30, 2018 (1) |
SEPTEMBER 24, 2017 |
SEPTEMBER 30, 2018 (1) |
SEPTEMBER 24, 2017 | ||||||||
Year over year percentage
change: |
|||||||||||
Comparable restaurant sales (stores open 18 months or
more) (2): |
|||||||||||
U.S. |
|||||||||||
Outback Steakhouse |
4.6 |
% |
0.6 |
% |
4.3 |
% |
0.8 |
% | |||
Carrabba’s Italian
Grill |
(0.6 |
)% |
(2.8 |
)% |
— |
% |
(2.1 |
)% | |||
Bonefish Grill |
1.8 |
% |
(4.3 |
)% |
1.1 |
% |
(2.4 |
)% | |||
Fleming’s Prime
Steakhouse & Wine Bar |
0.5 |
% |
(1.0 |
)% |
1.4 |
% |
(1.8 |
)% | |||
Combined U.S. (3) |
2.9 |
% |
(1.0 |
)% |
2.8 |
% |
(0.5 |
)% | |||
International
|
|||||||||||
Outback Steakhouse - Brazil (4) |
(3.3 |
)% |
4.8 |
% |
(2.8 |
)% |
6.9 |
% | |||
Traffic: |
|||||||||||
U.S. |
|||||||||||
Outback Steakhouse |
0.9 |
% |
0.1 |
% |
1.3 |
% |
(1.1 |
)% | |||
Carrabba’s Italian
Grill |
(2.9 |
)% |
(4.2 |
)% |
(4.8 |
)% |
(4.5 |
)% | |||
Bonefish Grill |
(2.7 |
)% |
(5.7 |
)% |
(2.1 |
)% |
(3.5 |
)% | |||
Fleming’s Prime Steakhouse &
Wine Bar |
(4.2 |
)% |
(6.5 |
)% |
(4.7 |
)% |
(6.6 |
)% | |||
Combined U.S. |
(0.5 |
)% |
(1.9 |
)% |
(0.6 |
)% |
(2.3 |
)% | |||
International
|
|||||||||||
Outback Steakhouse - Brazil |
(5.5 |
)% |
(1.5 |
)% |
(5.0 |
)% |
(0.1 |
)% | |||
Average check per person increases
(5): |
|||||||||||
U.S. |
|||||||||||
Outback Steakhouse |
3.7 |
% |
0.5 |
% |
3.0 |
% |
1.9 |
% | |||
Carrabba’s Italian
Grill |
2.3 |
% |
1.4 |
% |
4.8 |
% |
2.4 |
% | |||
Bonefish Grill |
4.5 |
% |
1.4 |
% |
3.2 |
% |
1.1 |
% | |||
Fleming’s Prime
Steakhouse & Wine Bar |
4.7 |
% |
5.5 |
% |
6.1 |
% |
4.8 |
% | |||
Combined U.S. |
3.4 |
% |
0.9 |
% |
3.4 |
% |
1.8 |
% | |||
International
|
|||||||||||
Outback Steakhouse - Brazil |
2.1 |
% |
6.2 |
% |
2.3 |
% |
6.8 |
% | |||
____________________
(1) |
For Q3 2018, comparable restaurant sales and traffic compare the thirteen weeks from July 2, 2018
through September 30, 2018 to the thirteen weeks from July 3, 2017 through October 1, 2017, and for the thirty-nine weeks from January 1, 2018 through September 30, 2018 to the thirty-nine weeks from January 2, 2017 through October 1,
2017. |
(2) |
Comparable restaurant sales exclude the effect of fluctuations in foreign currency rates. Relocated
international restaurants closed more than 30 days and relocated U.S. restaurants closed more than 60 days are excluded from comparable restaurant sales until at least 18 months after reopening. |
(3) |
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. |
(4) |
Includes trading day impact from calendar period reporting. |
(5) |
Average check per person includes the impact of menu pricing changes, product mix and
discounts. |
SOURCE:
Bloomin’ Brands, Inc.
12