Form 8-K
false00015464170.01USDBloomin' Brands, Inc.NASDAQ 0001546417 2019-07-31 2019-07-31 iso4217:USD xbrli:shares


 
 
 
 
 


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 31, 2019

blmnlogov3.jpg

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, FL 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:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock
 $0.01 par value

 
BLMN
 
The Nasdaq Stock Market LLC
(Nasdaq Global Select Market)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
 
 
 
 




Item 2.02
Results of Operations and Financial Condition

On July 31, 2019, the Company issued a press release reporting its financial results for the thirteen weeks ended June 30, 2019. A copy of the release is attached as Exhibit 99.1.

The information contained in Item 2.02 of this report, and the exhibit attached hereto, is being furnished and shall not be deemed “filed” for any purpose, and shall not be deemed incorporated by reference in any document whether or not filed under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, regardless of any general incorporation language in any such document.

Item 9.01
Financial Statements and Exhibits

(d) Exhibits.

 
Exhibit
Number
 
 
Description
 
 
 
 
 
99.1
 


2



SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



 
 
 
BLOOMIN’ BRANDS, INC.
 
 
 
(Registrant)
 
 
 
 
Date:
July 31, 2019
By:
/s/ Christopher Meyer
 
 
 
Christopher Meyer
 
 
 
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)


3
EX-99.1



blmnlogov3.jpg
 
NEWS
 
Exhibit 99.1
 
 
 
 
 
Mark Graff
 
 
 
Vice President, IR & Finance
 
 
 
(813) 830-5311
 
 
 

Bloomin’ Brands Announces 2019 Q2 Diluted EPS of $0.32 and Adjusted Diluted EPS of $0.36
Q2 Comparable Restaurant Sales Growth of 1.3% at Outback Steakhouse
Q2 GAAP Operating Margin Expansion of 110 bps and 80 bps on a Comparable Adjusted Basis
Reaffirms Full-Year 2019 Guidance, Including Adjusted Diluted EPS, U.S. Comparable Sales, and Margins


TAMPA, Fla., July 31, 2019 - Bloomin’ Brands, Inc. (Nasdaq: BLMN) today reported results for the second quarter 2019 (“Q2 2019”) compared to the second quarter 2018 (“Q2 2018”).

Highlights for Q2 2019 include the following:

Comparable restaurant sales increased 1.3% at U.S. Outback Steakhouse
Combined U.S. comparable restaurant sales increased 0.6%
Comparable restaurant sales increased 3.5% for Outback Steakhouse in Brazil

Diluted EPS and Adjusted Diluted EPS
Our Q2 2019 results include the impact of the new lease accounting standard adopted in Q1 2019. Among its impacts, we no longer recognize the benefit of deferred gains on sale-leaseback transactions, resulting in an increase to Other restaurant operating expense which represents a two cent reduction in earnings per share. The following table includes both a reported and a comparable basis that adjusts for this lease accounting change.

The following table reconciles Diluted earnings per share to Adjusted diluted earnings per share for the periods as indicated below.
 
Q2
 
 
 
2019
 
2018
 
CHANGE
Diluted earnings per share
$
0.32

 
$
0.28

 
$
0.04

Adjustments
0.04

 
0.10

 
(0.06
)
Adjusted diluted earnings per share
$
0.36

 
$
0.38

 
$
(0.02
)
Remove new lease accounting standard impact (1)

 
(0.02
)
 
0.02

Adjusted diluted earnings per share on a comparable basis (1)(2)
$
0.36

 
$
0.36

 
$

 
 
 
 
 
 

______________
See Non-GAAP Measures later in this release.

(1)
In Q2 2018 both GAAP and adjusted diluted earnings per share include the benefit of deferred gains on sale-leaseback transactions of approximately $0.02. For comparability, we have presented adjusted diluted earnings per share excluding this benefit that we no longer recognize in 2019 as a result of the adoption of the new lease accounting standard.
(2)
The effective income tax rate in Q2 2019 and Q2 2018 includes $1.0 million and $6.2 million, respectively, of tax benefit driven primarily by exercises of certain legacy stock options. These exercises benefited Q2 2019 and Q2 2018 diluted earnings per share by approximately $0.01 and $0.07, respectively.

1



CEO Comments
“Q2 was a good quarter for Bloomin’ Brands,” said David Deno, CEO. “We were particularly pleased with the healthy sales growth, reduction in discounting, and corresponding strong operating profit and margin expansion. Our positive momentum continued as we took additional market share and at Outback, sales exceeded the industry for the 10th consecutive quarter. In addition, we continue to capitalize on our growth opportunities and expect to achieve our comparable adjusted EPS growth range of 10% to 15% for the year.”

Second Quarter Financial Results
As described above, our Q2 2019 results include the impact from adopting the new lease accounting standard which reduces operating margins by 30 basis points. The following table includes both a reported and a comparable basis that adjusts for the lease accounting change:
 
AS REPORTED
 
COMPARABLE BASIS (1)
(dollars in millions)
Q2 2019
 
Q2 2018
 
CHANGE
 
Q2 2018
 
CHANGE
Total revenues
$
1,021.9

 
$
1,031.8

 
(1.0
)%
 
$
1,031.8

 
(1.0
)%
 
 
 
 
 
 
 
 
 
 
GAAP restaurant-level operating margin
15.0
%
 
15.0
%
 
 %
 
14.7
%
 
0.3
 %
Adjusted restaurant-level operating margin (2)
15.0
%
 
14.9
%
 
0.1
 %
 
14.6
%
 
0.4
 %
 
 
 
 
 
 
 
 
 
 
GAAP operating income margin
4.3
%
 
3.2
%
 
1.1
 %
 
2.9
%
 
1.4
 %
Adjusted operating income margin (2)
4.6
%
 
4.1
%
 
0.5
 %
 
3.8
%
 
0.8
  %
___________________
(1)
To improve comparability in this table, we removed the benefit of deferred gains on sale-leaseback transactions from our Q2 2018 results.
(2)
See Non-GAAP Measures later in this release.

The decrease in total revenues was primarily due to foreign currency translation and domestic refranchising, partially offset by higher comparable restaurant sales and the net impact of restaurant openings and closures.

The increase in reported GAAP and Adjusted operating income margin was primarily due to higher comparable restaurant sales and the impact of certain cost savings initiatives. These increases were partially offset by labor and commodity inflation, and the impact from adopting the new lease accounting standard as described above.

Second Quarter Comparable Restaurant Sales
THIRTEEN WEEKS ENDED JUNE 30, 2019
 
COMPANY-OWNED
Comparable restaurant sales (stores open 18 months or more):
 
 
U.S.
 
 
Outback Steakhouse
 
1.3
 %
Carrabba’s Italian Grill
 
(1.6
)%
Bonefish Grill
 
0.1
 %
Fleming’s Prime Steakhouse & Wine Bar
 
1.6
 %
Combined U.S.
 
0.6
 %
 
 
 
International
 
 
Outback Steakhouse - Brazil
 
3.5
  %
Dividend Declaration and Share Repurchases
On July 23, 2019, our Board of Directors declared a quarterly cash dividend of $0.10 per share to be paid on August 21, 2019 to all stockholders of record as of the close of business on August 12, 2019.

On February 12, 2019, our Board of Directors approved a $150.0 million share repurchase program. As of July 31, 2019, we repurchased 5.5 million shares for a total of $107.0 million and had $43.0 million remaining under this authorization. This authorization will expire on August 12, 2020.

2



Fiscal 2019 Financial Outlook
We are reaffirming all aspects of our full-year financial guidance as previously communicated in our February 14, 2019 earnings release.

Conference Call
The Company will host a conference call today, July 31st 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 Wednesday, August 14, 2019. The conference ID for the live call and replay is 13692414. The call will also be webcast live from the Company’s website at http://www.bloominbrands.com under the Investors section. A replay of this webcast will be available on the Company’s website after the call.

Non-GAAP Measures
In addition to the results provided in accordance with GAAP, this press release and related tables include certain non-GAAP measures, which present operating results on an adjusted basis. These are supplemental measures of performance that are not required by or presented in accordance with GAAP and include the following: (i) Adjusted restaurant-level operating margin, (ii) Adjusted income from operations and the corresponding margin, (iii) Adjusted net income, (iv) Adjusted diluted earnings per share, (v) Adjusted segment restaurant-level operating margin and (vi) Adjusted segment income from operations and the corresponding margin. For purposes of improving comparability, we have also presented Adjusted diluted earnings per share and Adjusted operating income margin excluding the impact of the new lease accounting standard in the table above.

We believe that our use of non-GAAP financial measures permits investors to assess the operating performance of our business relative to our performance based on GAAP results and relative to other companies within the restaurant industry by isolating the effects of certain items that may vary from period to period without correlation to core operating performance or that vary widely among similar companies. However, our inclusion of these adjusted measures should not be construed as an indication that our future results will be unaffected by unusual or infrequent items or that the items for which we have made adjustments are unusual or infrequent or will not recur. We believe that the disclosure of these non-GAAP measures is useful to investors as they form part of the basis for how our management team and Board of Directors evaluate our operating performance, allocate resources and administer employee incentive plans.

These non-GAAP financial measures are not intended to replace GAAP financial measures, and they are not necessarily standardized or comparable to similarly titled measures used by other companies. We maintain internal guidelines with respect to the types of adjustments we include in our non-GAAP measures. These guidelines endeavor to differentiate between types of gains and expenses that are reflective of our core operations in a period, and those that may vary from period to period without correlation to our core performance in that period. However, implementation of these guidelines necessarily involves the application of judgment, and the treatment of any items not directly addressed by, or changes to, our guidelines will be considered by our disclosure committee. You should refer to the reconciliations of non-GAAP measures in tables four, five, and six included later in this release for descriptions of the actual adjustments made in the current period and the corresponding prior period.

About Bloomin’ Brands, Inc.
Bloomin’ Brands, Inc. is one of the largest casual dining restaurant companies in the world with a portfolio of leading, differentiated restaurant concepts. The Company has four founder-inspired brands: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar. The Company operates more than 1,450 restaurants in 48 states, Puerto Rico, Guam and 20 countries, some of which are franchise locations. For more information, please visit  www.bloominbrands.com.


3



Forward-Looking Statements
Certain statements contained herein, including statements under the headings “CEO Comments” and “Fiscal 2019 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; the effects of changes in tax laws; challenges associated with our remodeling, relocation and expansion plans; interruption or breach of our systems or loss of consumer or employee information; political, social and legal conditions in international markets and their effects on foreign operations and foreign currency exchange rates; our ability to preserve the value of and grow our brands; the seasonality of the Company’s business; weather, acts of God and other disasters; changes in patterns of consumer traffic, consumer tastes and dietary habits; the 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.

4


TABLE ONE
BLOOMIN’ BRANDS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 
THIRTEEN WEEKS ENDED
 
TWENTY-SIX WEEKS ENDED
(in thousands, except per share data)
JUNE 30, 2019
 
JULY 1, 2018
 
JUNE 30, 2019
 
JULY 1, 2018
Revenues
 
 
 
 
 
 
 
Restaurant sales
$
1,005,687

 
$
1,015,484

 
$
2,117,329

 
$
2,114,487

Franchise and other revenues
16,243

 
16,330

 
32,732

 
33,792

Total revenues
1,021,930

 
1,031,814

 
2,150,061

 
2,148,279

Costs and expenses
 

 
 

 
 

 
 
Cost of sales
312,679

 
322,790

 
664,790

 
674,922

Labor and other related
301,213

 
301,921

 
620,228

 
612,983

Other restaurant operating
240,895

 
238,379

 
491,749

 
491,724

Depreciation and amortization
49,788

 
50,782

 
99,270

 
100,902

General and administrative
71,955

 
76,129

 
142,544

 
144,825

Provision for impaired assets and restaurant closings
1,940

 
8,889

 
5,526

 
11,628

Total costs and expenses
978,470

 
998,890

 
2,024,107

 
2,036,984

Income from operations
43,460

 
32,924

 
125,954

 
111,295

Other income (expense), net
12

 
(6
)
 
(156
)
 
(5
)
Interest expense, net
(12,448
)
 
(11,319
)
 
(23,629
)
 
(21,629
)
Income before provision (benefit) for income taxes
31,024

 
21,599

 
102,169

 
89,661

Provision (benefit) for income taxes
1,215

 
(5,124
)
 
6,711

 
(3,199
)
Net income
29,809

 
26,723

 
95,458

 
92,860

Less: net income attributable to noncontrolling interests
788

 
2

 
2,137

 
741

Net income attributable to Bloomin’ Brands
$
29,021

 
$
26,721

 
$
93,321

 
$
92,119

 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.32

 
$
0.29

 
$
1.03

 
$
1.00

Diluted
$
0.32

 
$
0.28

 
$
1.02

 
$
0.97

 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
90,194

 
92,120

 
90,805

 
92,194

Diluted
90,953

 
94,361

 
91,807

 
95,072



5


TABLE TWO
BLOOMIN’ BRANDS, INC.
SEGMENT RESULTS
(UNAUDITED)
(dollars in thousands)
THIRTEEN WEEKS ENDED
 
TWENTY-SIX WEEKS ENDED
U.S. Segment
JUNE 30, 2019
 
JULY 1, 2018
 
JUNE 30, 2019
 
JULY 1, 2018
Revenues
 
 
 
 
 
 
 
Restaurant sales
$
900,616

 
$
908,937

 
$
1,901,429

 
$
1,893,281

Franchise and other revenues
13,603

 
13,418

 
27,297

 
27,781

Total revenues
$
914,219

 
$
922,355

 
$
1,928,726

 
$
1,921,062

Restaurant-level operating margin
14.5
%
 
14.5
 %
 
15.6
%
 
15.4
%
Income from operations
$
78,814

 
$
76,913

 
$
191,849

 
$
186,047

Operating income margin
8.6
%
 
8.3
 %
 
9.9
%
 
9.7
%
International Segment
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
Restaurant sales
$
105,071

 
$
106,547

 
$
215,900

 
$
221,206

Franchise and other revenues
2,640

 
2,912

 
5,435

 
6,011

Total revenues
$
107,711

 
$
109,459

 
$
221,335

 
$
227,217

Restaurant-level operating margin
18.4
%
 
17.7
 %
 
20.4
%
 
18.6
%
Income (loss) from operations
$
6,909

 
$
(2,049
)
 
$
20,629

 
$
6,276

Operating income (loss) margin
6.4
%
 
(1.9
)%
 
9.3
%
 
2.8
%
Reconciliation of Segment Income (Loss) from Operations to Consolidated Income from Operations
 
 
 
 
 
 
 
Segment income (loss) from operations
 
 
 
 
 
 
 
U.S.
$
78,814

 
$
76,913

 
$
191,849

 
$
186,047

International
6,909

 
(2,049
)
 
20,629

 
6,276

Total segment income from operations
85,723

 
74,864

 
212,478

 
192,323

Unallocated corporate operating expense
(42,263
)
 
(41,940
)
 
(86,524
)
 
(81,028
)
Total income from operations
$
43,460

 
$
32,924

 
$
125,954

 
$
111,295


TABLE THREE
BLOOMIN’ BRANDS, INC.
SUPPLEMENTAL BALANCE SHEET INFORMATION
(UNAUDITED)
(in thousands)
JUNE 30, 2019
 
DECEMBER 30, 2018
Cash and cash equivalents (excluding restricted cash)
$
64,653

 
$
71,823

Net working capital (deficit) (1)
$
(552,685
)
 
$
(455,556
)
Total assets (2)
$
3,511,726

 
$
2,464,774

Total debt, net
$
1,148,895

 
$
1,094,775

Total stockholders’ equity (3)
$
158,593

 
$
54,817

Common stock outstanding (3)
86,827

 
91,272

_________________
(1)
During the twenty-six weeks ended June 30, 2019 net working capital (deficit) was negatively impacted by the recognition of approximately $170 million of current lease liabilities as a result of the adoption of the new lease accounting standard. We have, and in the future may continue to have, negative working capital balances (as is common for many restaurant companies). We operate successfully with negative working capital because cash collected on Restaurant sales is typically received before payment is due on our current liabilities, and our inventory turnover rates require relatively low investment in inventories. Additionally, ongoing cash flows from restaurant operations and gift card sales are used to service debt obligations and to make capital expenditures.
(2)
The change in total assets during the twenty-six weeks ended June 30, 2019 includes the addition of $1.3 billion of lease right-of-use assets as a result of the adoption of the new lease accounting standard.
(3)
During the twenty-six weeks ended June 30, 2019, we repurchased 5.5 million shares of our outstanding common stock and issued 0.6 million shares of our common stock through the exercise of stock options.

6



TABLE FOUR
BLOOMIN’ BRANDS, INC.
RESTAURANT-LEVEL OPERATING MARGIN NON-GAAP RECONCILIATION
(UNAUDITED)
 
THIRTEEN WEEKS ENDED
 
THIRTEEN WEEKS ENDED
 
(UNFAVORABLE) FAVORABLE CHANGE IN ADJUSTED
QUARTER TO DATE
 
JUNE 30, 2019
 
JULY 1, 2018
 
 
AS REPORTED
 
AS REPORTED
 
COMPARABLE ADJUSTED BASIS (2)
 
Consolidated:
GAAP
 
ADJUSTED
 
GAAP
 
ADJUSTED (1)
 
 
AS REPORTED
 
COMPARABLE BASIS (2)
Restaurant sales
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of sales
31.1
%
 
31.1
%
 
31.8
%
 
31.8
%
 
31.8
%
 
0.7
 %
 
0.7
 %
Labor and other related
30.0
%
 
30.0
%
 
29.7
%
 
29.7
%
 
29.7
%
 
(0.3
)%
 
(0.3
)%
Other restaurant operating
24.0
%
 
23.9
%
 
23.5
%
 
23.6
%
 
23.9
%
 
(0.3
)%
 
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restaurant-level operating margin (3)
15.0
%
 
15.0
%
 
15.0
%
 
14.9
%
 
14.6
%
 
0.1
 %
 
0.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segments - Restaurant-level operating margin (3):
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S.
14.5
%
 
14.5
%
 
14.5
%
 
14.4
%
 
 
 
0.1
 %
 
 
International
18.4
%
 
18.4
%
 
17.7
%
 
17.1
%
 
 
 
1.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TWENTY-SIX WEEKS ENDED
 
TWENTY-SIX WEEKS ENDED
 
(UNFAVORABLE) FAVORABLE CHANGE IN ADJUSTED
YEAR TO DATE
 
JUNE 30, 2019
 
JULY 1, 2018
 
 
AS REPORTED
 
AS REPORTED
 
COMPARABLE ADJUSTED BASIS (2)
 
Consolidated:
GAAP
 
ADJUSTED
 
GAAP
 
ADJUSTED (1)
 
 
AS REPORTED
 
COMPARABLE BASIS (2)
Restaurant sales
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of sales
31.4
%
 
31.4
%
 
31.9
%
 
31.9
%
 
31.9
%
 
0.5
 %
 
0.5
 %
Labor and other related
29.3
%
 
29.3
%
 
29.0
%
 
29.0
%
 
29.0
%
 
(0.3
)%
 
(0.3
)%
Other restaurant operating
23.2
%
 
23.2
%
 
23.3
%
 
23.4
%
 
23.7
%
 
0.2
 %
 
0.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restaurant-level operating margin (3)
16.1
%
 
16.1
%
 
15.8
%
 
15.7
%
 
15.4
%
 
0.4
 %
 
0.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segments - Restaurant-level operating margin (3):
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S.
15.6
%
 
15.6
%
 
15.4
%
 
15.3
%
 
 
 
0.3
 %
 
 
International
20.4
%
 
20.4
%
 
18.6
%
 
18.3
%
 
 
 
2.1
 %
 
 
_________________
(1)
The table set forth below titled “Restaurant-level Operating Margin Adjustments” provides additional information regarding the adjustments for each period presented.
(2)
During the thirteen and twenty-six weeks ended July 1, 2018 both GAAP and adjusted restaurant-level operating margin included the benefit of deferred gains on sale-leaseback transactions of $3.0 million and $6.1 million, respectively. For comparability, we presented adjusted restaurant-level operating margin excluding this benefit that we no longer recognize in 2019 as a result of the adoption of the new lease accounting standard.
(3)
The following categories of our revenue and operating expenses are not included in restaurant-level operating margin because we do not consider them reflective of operating performance at the restaurant-level within a period:
(i)
Franchise and other revenues, which are earned primarily from franchise royalties and other non-food and beverage revenue streams, such as rental and sublease income.
(ii)
Depreciation and amortization which, although substantially all of which is related to restaurant-level assets, represent historical sunk costs rather than cash outlays for the restaurants.
(iii)
General and administrative expense which includes primarily non-restaurant-level costs associated with support of the restaurants and other activities at our corporate offices.
(iv)
Asset impairment charges and restaurant closing costs which are not reflective of ongoing restaurant performance in a period.

7



Restaurant-level Operating Margin Adjustments - Following is a summary of unfavorable restaurant-level operating margin adjustments recorded in Other restaurant operating for the following activities, as described in table five of this release:
 
THIRTEEN WEEKS ENDED
 
TWENTY-SIX WEEKS ENDED
(dollars in millions)
JULY 1, 2018
 
JULY 1, 2018
Restaurant and asset impairments and closing costs (1)
$
1.4

 
$
2.2

Restaurant relocations and related costs
0.2

 
0.4

 
$
1.6

 
$
2.6

_________________
(1)
Includes $0.6 million of adjustments for the thirteen and twenty-six weeks ended July 1, 2018, recorded in the International segment. All other adjustments were recorded within the U.S. segment.


8


TABLE FIVE
BLOOMIN’ BRANDS, INC.
INCOME FROM OPERATIONS, NET INCOME AND DILUTED EARNINGS PER SHARE NON-GAAP RECONCILIATIONS
(UNAUDITED)
 
THIRTEEN WEEKS ENDED
 
TWENTY-SIX WEEKS ENDED
(in thousands, except per share data)
JUNE 30, 2019
 
JULY 1, 2018
 
JUNE 30, 2019
 
JULY 1, 2018
Income from operations
$
43,460

 
$
32,924

 
$
125,954

 
$
111,295

Operating income margin
4.3
%
 
3.2
%
 
5.9
%
 
5.2
%
Adjustments:
 
 
 
 
 
 
 
Restaurant and asset impairments and closing costs (1)
2,039

 
7,886

 
4,170

 
9,181

Restaurant relocations and related costs (2)
952

 
1,353

 
1,984

 
3,078

Severance (3)
748

 

 
3,603

 
965

Legal and contingent matters

 
288

 

 
758

Total income from operations adjustments
$
3,739

 
$
9,527

 
$
9,757

 
$
13,982

Adjusted income from operations
$
47,199

 
$
42,451

 
$
135,711

 
$
125,277

Adjusted operating income margin
4.6
%
 
4.1
%
 
6.3
%
 
5.8
%
 
 
 
 
 
 
 
 
Net income attributable to Bloomin’ Brands
$
29,021

 
$
26,721

 
$
93,321

 
$
92,119

Adjustments:
 
 
 
 
 
 
 
Income from operations adjustments
3,739

 
9,527

 
9,757

 
13,982

Total adjustments, before income taxes
3,739

 
9,527

 
9,757

 
13,982

Adjustment to provision for income taxes (4)
(413
)
 
(438
)
 
(1,232
)
 
(2,119
)
Net adjustments
3,326

 
9,089

 
8,525

 
11,863

Adjusted net income
$
32,347

 
$
35,810

 
$
101,846

 
$
103,982

 
 
 
 
 
 
 
 
Diluted earnings per share
$
0.32

 
$
0.28

 
$
1.02

 
$
0.97

 
 
 
 
 
 
 
 
Adjusted diluted earnings per share
$
0.36

 
$
0.38

 
$
1.11

 
$
1.09

Remove new lease accounting standard impact (5)

 
(0.02
)
 

 
(0.05
)
Adjusted diluted earnings per share on a comparable basis (5)
$
0.36

 
$
0.36

 
$
1.11

 
$
1.04

 
 
 
 
 
 
 
 
Diluted weighted average common shares outstanding
90,953

 
94,361

 
91,807

 
95,072

_________________
(1)
Represents asset impairment charges and related costs primarily associated with approved closure and restructuring initiatives, and the restructuring of certain international markets.
(2)
Represents asset impairment charges and accelerated depreciation incurred in connection with our relocation program.
(3)
Relates to severance expense incurred as a result of restructuring activities.
(4)
Represents income tax effect of the adjustments for the periods presented.
(5)
During the thirteen and twenty-six weeks ended July 1, 2018 both GAAP and adjusted diluted earnings per share were positively impacted by the benefit of deferred gains on sale-leaseback transactions by approximately $0.02 and $0.05, respectively. For comparability, we have presented adjusted diluted earnings per share excluding this benefit that we no longer recognize in 2019 as a result of the adoption of the new lease accounting standard.

Following is a summary of the financial statement line item classification of the net income adjustments:
 
THIRTEEN WEEKS ENDED
 
TWENTY-SIX WEEKS ENDED
(dollars in thousands)
JUNE 30, 2019
 
JULY 1, 2018
 
JUNE 30, 2019
 
JULY 1, 2018
Other restaurant operating
$
65

 
$
(1,560
)
 
$
43

 
$
(2,518
)
Depreciation and amortization
607

 
1,523

 
1,172

 
3,111

General and administrative
1,075

 
1,533

 
4,330

 
3,090

Provision for impaired assets and restaurant closings
1,992

 
8,031

 
4,212

 
10,299

Provision (benefit) for income taxes
(413
)
 
(438
)
 
(1,232
)
 
(2,119
)
Net adjustments
$
3,326

 
$
9,089

 
$
8,525

 
$
11,863


9


TABLE SIX
BLOOMIN’ BRANDS, INC.
SEGMENT INCOME FROM OPERATIONS NON-GAAP RECONCILIATION
(UNAUDITED)
U.S. Segment
THIRTEEN WEEKS ENDED
 
TWENTY-SIX WEEKS ENDED
(dollars in thousands)
JUNE 30, 2019
 
JULY 1, 2018
 
JUNE 30, 2019
 
JULY 1, 2018
Income from operations
$
78,814

 
$
76,913

 
$
191,849

 
$
186,047

Operating income margin
8.6
%
 
8.3
 %
 
9.9
%
 
9.7
%
Adjustments:
 
 
 
 
 
 
 
Restaurant relocations and related costs (1)
952

 
1,353

 
1,984

 
3,078

Restaurant and asset impairments and closing costs (2)
246

 
(181
)
 
2,081

 
(797
)
Severance (3)

 

 
700

 
888

Adjusted income from operations
$
80,012

 
$
78,085

 
$
196,614

 
$
189,216

Adjusted operating income margin
8.8
%
 
8.5
 %
 
10.2
%
 
9.8
%
 
 
 
 
 
 
 
 
International Segment
 
 
 
 
 
 
 
(dollars in thousands)
 
 
 
 
 
 
 
Income (loss) from operations
$
6,909

 
$
(2,049
)
 
$
20,629

 
$
6,276

Operating income (loss) margin
6.4
%
 
(1.9
)%
 
9.3
%
 
2.8
%
Adjustments:
 
 
 
 
 
 
 
Restaurant and asset impairments and closing costs (2)
1,793

 
8,067

 
2,089

 
9,978

Adjusted income from operations
$
8,702

 
$
6,018

 
$
22,718

 
$
16,254

Adjusted operating income margin
8.1
%
 
5.5
 %
 
10.3
%
 
7.2
%
_________________
(1)
Represents asset impairment charges and accelerated depreciation incurred in connection with our relocation program.
(2)
Represents asset impairment charges and related costs primarily associated with approved closure and restructuring initiatives, and the restructuring of certain international markets.
(3)
Relates to severance expense incurred as a result of restructuring activities.

10


TABLE SEVEN
BLOOMIN’ BRANDS, INC.
COMPARATIVE RESTAURANT INFORMATION
(UNAUDITED)
Number of restaurants (at end of the period):
MARCH 31, 2019
 
OPENINGS
 
CLOSURES
 
JUNE 30, 2019
U.S.
 
 
 
 
 
 
 
Outback Steakhouse
 
 
 
 
 
 
 
Company-owned
579

 
1

 
(1
)
 
579

Franchised
153

 

 
(5
)
 
148

Total
732

 
1

 
(6
)
 
727

Carrabba’s Italian Grill
 
 
 
 
 
 
 
Company-owned
205

 

 

 
205

Franchised
21

 

 

 
21

Total
226

 

 

 
226

Bonefish Grill
 
 
 
 
 
 
 
Company-owned
189

 
1

 

 
190

Franchised
7

 

 

 
7

Total
196

 
1

 

 
197

Fleming’s Prime Steakhouse & Wine Bar
 
 
 
 
 
 
 
Company-owned
70

 

 
(1
)
 
69

Other
 
 
 
 
 
 
 
Company-owned
2

 
1

 

 
3

U.S. Total
1,226

 
3

 
(7
)
 
1,222

International
 
 
 
 
 
 
 
Company-owned
 
 
 
 
 
 
 
Outback Steakhouse—Brazil (1)
95

 
2

 

 
97

Other
34

 
1

 
(8
)
 
27

Franchised
 
 
 
 
 
 
 
Outback Steakhouse - South Korea
72

 

 
(2
)
 
70

Other
54

 

 
(3
)
 
51

International Total
255

 
3

 
(13
)
 
245

System-wide total
1,481

 
6

 
(20
)
 
1,467

____________________
(1)
The restaurant counts for Brazil are reported as of February 28, 2019 and May 31, 2019 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 30, 2019
 
JULY 1, 2018
 
JUNE 30, 2019
 
JULY 1, 2018
Year over year percentage change:
 
 
 
 
 
 
 
Comparable restaurant sales (stores open 18 months or more) (1):
 

 
 
 
 

 
 
U.S.
 
 
 
 
 
 
 
Outback Steakhouse
1.3
 %
 
4.0
 %
 
2.4
 %
 
4.2
 %
Carrabba’s Italian Grill
(1.6
)%
 
(0.6
)%
 
(0.6
)%
 
0.3
 %
Bonefish Grill
0.1
 %
 
1.5
 %
 
1.0
 %
 
0.7
 %
Fleming’s Prime Steakhouse & Wine Bar
1.6
 %
 
0.3
 %
 
1.1
 %
 
1.6
 %
Combined U.S.
0.6
 %
 
2.4
 %
 
1.6
 %
 
2.7
 %
International
 
 
 
 
 
 
 
Outback Steakhouse - Brazil (2)
3.5
 %
 
(6.1
)%
 
3.6
 %
 
(2.6
)%
 
 
 
 
 
 
 
 
Traffic:
 

 
 
 
 

 
 
U.S.
 
 
 
 
 
 
 
Outback Steakhouse
(1.6
)%
 
0.6
 %
 
(1.0
)%
 
1.5
 %
Carrabba’s Italian Grill
(1.4
)%
 
(5.8
)%
 
(1.4
)%
 
(5.7
)%
Bonefish Grill
(1.5
)%
 
(1.2
)%
 
(1.7
)%
 
(1.9
)%
Fleming’s Prime Steakhouse & Wine Bar
3.6
 %
 
(7.7
)%
 
0.8
 %
 
(4.9
)%
Combined U.S.
(1.4
)%
 
(1.2
)%
 
(1.2
)%
 
(0.6
)%
International
 
 
 
 
 
 
 
Outback Steakhouse - Brazil
1.2
 %
 
(7.7
)%
 
(0.7
)%
 
(4.7
)%
 
 
 
 
 
 
 
 
Average check per person (3):
 
 
 
 
 
 
 
U.S.
 
 
 
 
 
 
 
Outback Steakhouse
2.9
 %
 
3.4
 %
 
3.4
 %
 
2.7
 %
Carrabba’s Italian Grill
(0.2
)%
 
5.2
 %
 
0.8
 %
 
6.0
 %
Bonefish Grill
1.6
 %
 
2.7
 %
 
2.7
 %
 
2.6
 %
Fleming’s Prime Steakhouse & Wine Bar
(2.0
)%
 
8.0
 %
 
0.3
 %
 
6.5
 %
Combined U.S.
2.0
 %
 
3.6
 %
 
2.8
 %
 
3.3
 %
International
 
 
 
 
 
 
 
Outback Steakhouse - Brazil
2.1
 %
 
1.9
 %
 
4.4
 %
 
2.4
  %
____________________
(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.
(3)
Average check per person includes the impact of menu pricing changes, product mix and discounts.
SOURCE: Bloomin’ Brands, Inc.

12