SEC Filing | Bloomin’ Brands, Inc.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	June 30, 2019
	or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ______ to ______

Commission File Number: 001-35625

https://cdn.kscope.io/6fc97e88b7e17963376eb334559814e2-blmnlogov3.jpg

BLOOMIN’ BRANDS, INC.

(Exact name of registrant as specified in its charter)



Delaware		20-8023465
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

2202 North West Shore Boulevard, Suite 500, Tampa, Florida 33607

(Address of principal executive offices) (Zip Code)

(813) 282-1225

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐

Smaller reporting company ☐ 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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 30, 2019, 86,832,208 shares of common stock of the registrant were outstanding.

Table of Contents

BLOOMIN’ BRANDS, INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

For the Quarterly Period Ended June 30, 2019

(Unaudited)

TABLE OF CONTENTS



	PART I — FINANCIAL INFORMATION	Page No.

Item 1.	Financial Statements (Unaudited)	3

	Consolidated Financial Statements:

	Consolidated Balance Sheets — June 30, 2019 and December 30, 2018	3

	Consolidated Statements of Operations and Comprehensive Income (Loss) — For the Thirteen and Twenty-Six Weeks Ended June 30, 2019 and July 1, 2018	4

	Consolidated Statements of Changes in Stockholders’ Equity — For the Thirteen and Twenty-Six Weeks Ended June 30, 2019 and July 1, 2018	5

	Condensed Consolidated Statements of Cash Flows — For the Twenty-Six Weeks Ended June 30, 2019 and July 1, 2018	7

	Notes to Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47

Item 4.	Controls and Procedures	47

	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	48

Item 1A.	Risk Factors	48

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48

Item 5.	Other Information	48

Item 6.	Exhibits	49

	Signature	50

Table of Contents

BLOOMIN’ BRANDS, INC.

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA, UNAUDITED)



	JUNE 30, 2019			DECEMBER 30, 2018
ASSETS
Current assets
Cash and cash equivalents	$	64,653		$	71,823
Restricted cash and cash equivalents	2,187			—
Inventories	69,238			72,812
Other current assets, net	97,821			190,848
Total current assets	233,899			335,483
Property, fixtures and equipment, net	1,058,938			1,115,929
Operating lease right-of-use assets	1,275,303			—
Goodwill	294,292			295,427
Intangible assets, net	476,470			503,972
Deferred income tax assets, net	56,499			92,990
Other assets, net	116,325			120,973
Total assets	$	3,511,726		$	2,464,774
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	151,495		$	174,488
Accrued and other current liabilities	371,079			246,653
Unearned revenue	237,304			342,708
Current portion of long-term debt	26,706			27,190
Total current liabilities	786,584			791,039
Non-current operating lease liabilities	1,284,574			—
Deferred rent	—			167,027
Deferred income tax liabilities	13,668			14,790
Long-term debt, net	1,122,189			1,067,585
Long-term portion of deferred gain on sale-leaseback transactions, net	—			177,983
Other long-term liabilities, net	146,118			191,533
Total liabilities	3,353,133			2,409,957
Commitments and contingencies (Note 16)
Stockholders’ equity
Bloomin’ Brands stockholders’ equity
Preferred stock, $0.01 par value, 25,000,000 shares authorized; no shares issued and outstanding as of June 30, 2019 and December 30, 2018	—			—
Common stock, $0.01 par value, 475,000,000 shares authorized; 86,826,650 and 91,271,825 shares issued and outstanding as of June 30, 2019 and December 30, 2018, respectively	868			913
Additional paid-in capital	1,099,598			1,107,582
Accumulated deficit	(792,341		)	(920,010		)
Accumulated other comprehensive loss	(157,346		)	(142,755		)
Total Bloomin’ Brands stockholders’ equity	150,779			45,730
Noncontrolling interests	7,814			9,087
Total stockholders’ equity	158,593			54,817
Total liabilities and stockholders’ equity	$	3,511,726		$	2,464,774

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

BLOOMIN’ BRANDS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)



	THIRTEEN WEEKS ENDED						TWENTY-SIX WEEKS ENDED
	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

Net income	$	29,809		$	26,723		$	95,458		$	92,860
Other comprehensive income (loss):
Foreign currency translation adjustment	(8,476		)	(30,044		)	(2,721		)	(28,695		)
Unrealized (loss) gain on derivatives, net of tax	(7,239		)	296			(11,620		)	1,184
Reclassification of adjustment for loss (gain) on derivatives included in Net income, net of tax	130			71			(234		)	379
Comprehensive income (loss)	14,224			(2,954		)	80,883			65,728
Less: comprehensive income attributable to noncontrolling interests	896			360			2,153			1,081
Comprehensive income (loss) attributable to Bloomin’ Brands	$	13,328		$	(3,314	)	$	78,730		$	64,647

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

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

BLOOMIN’ BRANDS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)



	BLOOMIN’ BRANDS, INC.
	COMMON STOCK					ADDITIONAL PAID-IN CAPITAL			ACCUM- ULATED DEFICIT			ACCUMULATED OTHER COMPREHENSIVE LOSS			NON-CONTROLLING INTERESTS			TOTAL
	SHARES		AMOUNT			ADDITIONAL PAID-IN CAPITAL			ACCUM- ULATED DEFICIT			ACCUMULATED OTHER COMPREHENSIVE LOSS			NON-CONTROLLING INTERESTS			TOTAL
Balance, March 31, 2019	91,647		$	916		$	1,099,346		$	(714,425	)	$	(141,653	)	$	8,179		$	252,363
Net income	—		—			—			29,021			—			788			29,809
Other comprehensive (loss) income, net of tax	—		—			—			—			(15,727		)	142			(15,585		)
Cash dividends declared, $0.10 per common share	—		—			(9,227		)	—			—			—			(9,227		)
Repurchase and retirement of common stock	(5,469	)	(55		)	—			(106,937		)	—			—			(106,992		)
Stock-based compensation	—		—			5,137			—			—			—			5,137
Common stock issued under stock plans (1)	649		7			4,499			—			—			—			4,506
Purchase of noncontrolling interests	—		—			(157		)	—			34			82			(41		)
Distributions to noncontrolling interests	—		—			—			—			—			(1,578		)	(1,578		)
Contributions from noncontrolling interests	—		—			—			—			—			201			201
Balance, June 30, 2019	86,827		$	868		$	1,099,598		$	(792,341	)	$	(157,346	)	$	7,814		$	158,593

Balance, December 30, 2018	91,272		$	913		$	1,107,582		$	(920,010	)	$	(142,755	)	$	9,087		$	54,817
Cumulative-effect from a change in accounting principle, net of tax	—		—			—			141,285			—			—			141,285
Net income	—		—			—			93,321			—			2,137			95,458
Other comprehensive (loss) income, net of tax	—		—			—			—			(14,625		)	50			(14,575		)
Cash dividends declared, $0.20 per common share	—		—			(18,367		)	—			—			—			(18,367		)
Repurchase and retirement of common stock	(5,469	)	(55		)	—			(106,937		)	—			—			(106,992		)
Stock-based compensation	—		—			9,130			—			—			—			9,130
Common stock issued under stock plans (1)	1,024		10			1,410			—			—			—			1,420
Purchase of noncontrolling interests	—		—			(157		)	—			34			82			(41		)
Distributions to noncontrolling interests	—		—			—			—			—			(4,007		)	(4,007		)
Contributions from noncontrolling interests	—		—			—			—			—			465			465
Balance, June 30, 2019	86,827		$	868		$	1,099,598		$	(792,341	)	$	(157,346	)	$	7,814		$	158,593

															(CONTINUED...)

Table of Contents

BLOOMIN’ BRANDS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)



	BLOOMIN’ BRANDS, INC.
	COMMON STOCK					ADDITIONAL PAID-IN CAPITAL			ACCUM- ULATED DEFICIT			ACCUMULATED OTHER COMPREHENSIVE LOSS			NON-CONTROLLING INTERESTS			TOTAL
	SHARES		AMOUNT			ADDITIONAL PAID-IN CAPITAL			ACCUM- ULATED DEFICIT			ACCUMULATED OTHER COMPREHENSIVE LOSS			NON-CONTROLLING INTERESTS			TOTAL
Balance, April 1, 2018	91,416		$	914		$	1,092,147		$	(898,768	)	$	(96,636	)	$	10,778		$	108,435
Net income	—		—			—			26,721			—			245			26,966
Other comprehensive (loss) income, net of tax	—		—			—			—			(30,036		)	359			(29,677		)
Cash dividends declared, $0.09 per common share	—		—			(8,363		)	—			—			—			(8,363		)
Repurchase and retirement of common stock	(1,288	)	(13		)	—			(29,991		)	—			—			(30,004		)
Stock-based compensation	—		—			6,057			—			—			—			6,057
Common stock issued under stock plans (1)	2,309		23			19,417			—			—			—			19,440
Change in the redemption value of redeemable interests	—		—			(243		)	—			—			—			(243		)
Distributions to noncontrolling interests	—		—			—			—			—			(2,303		)	(2,303		)
Contributions from noncontrolling interests	—		—			—			—			—			1,162			1,162
Balance, July 1, 2018	92,437		$	924		$	1,109,015		$	(902,038	)	$	(126,672	)	$	10,241		$	91,470

Balance, December 31, 2017	91,913		$	919		$	1,081,813		$	(913,191	)	$	(99,199	)	$	10,889		$	81,231
Net income	—		—			—			92,119			—			1,063			93,182
Other comprehensive (loss) income, net of tax	—		—			—			—			(27,473		)	341			(27,132		)
Cash dividends declared, $0.18 per common share	—		—			(16,734		)	—			—			—			(16,734		)
Repurchase and retirement of common stock	(3,404	)	(34		)	—			(80,966		)	—			—			(81,000		)
Stock-based compensation	—					11,178			—			—			—			11,178
Common stock issued under stock plans (1)	3,928		39			33,080			—			—			—			33,119
Change in the redemption value of redeemable interests	—		—			(322		)	—			—			—			(322		)
Distributions to noncontrolling interests	—		—			—			—			—			(3,372		)	(3,372		)
Contributions from noncontrolling interests	—		—			—			—			—			1,320			1,320
Balance, July 1, 2018	92,437		$	924		$	1,109,015		$	(902,038	)	$	(126,672	)	$	10,241		$	91,470

________________


(1)	Net of forfeitures and shares withheld for employee taxes.

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

BLOOMIN’ BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS, UNAUDITED)



	TWENTY-SIX WEEKS ENDED
	JUNE 30, 2019			JULY 1, 2018
Cash flows provided by operating activities:
Net income	$	95,458		$	92,860
Adjustments to reconcile Net income to cash provided by operating activities:
Depreciation and amortization	99,270			100,902
Amortization of deferred discounts and issuance costs	1,255			1,288
Amortization of deferred gift card sales commissions	14,089			15,219
Provision for impaired assets and restaurant closings	5,526			11,628
Non-cash operating lease costs	36,096			—
Stock-based and other non-cash compensation expense	12,854			13,263
Deferred income tax benefit	(945		)	(264		)
Loss on sale of a business or subsidiary	214			—
Recognition of deferred gain on sale-leaseback transactions	—			(6,142		)
Other, net	(4,299		)	1,257
Change in assets and liabilities	(127,075		)	(129,928		)
Net cash provided by operating activities	132,443			100,083
Cash flows used in investing activities:
Proceeds from disposal of property, fixtures and equipment	1,717			6,164
Proceeds from sale-leaseback transactions, net	3,052			4,695
Capital expenditures	(80,773		)	(92,528		)
Other investments, net	2,150			(275		)
Net cash used in investing activities	$	(73,854	)	$	(81,944	)

	(CONTINUED...)

Table of Contents

BLOOMIN’ BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS, UNAUDITED)



	TWENTY-SIX WEEKS ENDED
	JUNE 30, 2019			JULY 1, 2018
Cash flows used in financing activities:
Repayments of long-term debt	$	(14,031	)	$	(12,876	)
Proceeds from borrowings on revolving credit facilities, net	408,000			266,829
Repayments of borrowings on revolving credit facilities	(321,200		)	(234,500		)
Proceeds from the exercise of share-based compensation, net	1,420			33,119
Distributions to noncontrolling interests	(4,007		)	(3,372		)
Contributions from noncontrolling interests	465			1,320
Purchase of limited partnership and noncontrolling interests	(41		)	(1,443		)
Repayments of partner deposits and accrued partner obligations	(8,662		)	(9,646		)
Repurchase of common stock	(106,992		)	(81,000		)
Cash dividends paid on common stock	(18,367		)	(16,734		)
Net cash used in financing activities	(63,415		)	(58,303		)
Effect of exchange rate changes on cash and cash equivalents	(157		)	(3,164		)
Net decrease in cash, cash equivalents and restricted cash	(4,983		)	(43,328		)
Cash, cash equivalents and restricted cash as of the beginning of the period	71,823			129,543
Cash, cash equivalents and restricted cash as of the end of the period	$	66,840		$	86,215
Supplemental disclosures of cash flow information:
Cash paid for interest	$	25,263		$	20,488
Cash paid for income taxes, net of refunds	11,309			6,675
Supplemental disclosures of non-cash investing and financing activities:
Leased assets obtained in exchange for new operating lease liabilities	$	33,679		$	—
Leased assets obtained in exchange for new finance lease liabilities	194			—
(Decrease) increase in liabilities from the acquisition of property, fixtures and equipment or capital leases	(5,494		)	1,430

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Description of the Business and Basis of Presentation

Description of the Business - Bloomin’ Brands (“Bloomin’ Brands” or the “Company”) owns and operates casual, upscale casual and fine dining restaurants. The Company’s restaurant portfolio has four concepts: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar. Additional Outback Steakhouse, Carrabba’s Italian Grill and Bonefish Grill restaurants in which the Company has no direct investment are operated under franchise agreements.

Basis of Presentation - The accompanying interim unaudited consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles in the United States (“U.S. GAAP”) for complete financial statements. In the opinion of the Company, all adjustments necessary for fair financial statement presentation for the periods presented have been included and are of a normal, recurring nature. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 30, 2018.

Recently Adopted Financial Accounting Standards - On December 31, 2018, the Company adopted Accounting Standards Update (“ASU”) No. 2016-02: Leases (Topic 842) (“ASU No. 2016-02”), ASU No. 2018-01: Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842 (“ASU No. 2018-01”), and ASU No. 2018-11: Leases (Topic 842): Targeted Improvements (“ASU No. 2018-11”). ASU No. 2016-02 requires the lease rights and obligations arising from lease contracts, including existing and new arrangements, to be recognized as assets and liabilities on the balance sheet. ASU No. 2018-01 allows an entity to elect an optional transition practical expedient to not evaluate land easements that exist or expired before the Company’s adoption of ASU No. 2016-02. ASU No. 2018-11 allows for an additional transition method, which permits use of the effective date of adoption as the date of initial application of ASU No. 2016-02 without restating comparative period financial statements and provides entities with a practical expedient that allows entities to elect not to separate lease and non-lease components when certain conditions are met.

The Company adopted ASU No. 2016-02 using December 31, 2018 as the date of initial application. Consequently, financial information and the disclosures required under the new standard were not provided for dates and periods before December 31, 2018. The Company also elected a transition package including practical expedients that permitted it not to reassess the classification and initial direct costs of expired or existing contracts and leases, to not separate lease and non-lease components of restaurant facility leases executed subsequent to adoption, and to not evaluate land easements that exist or expired before the adoption. In preparation for adoption, the Company implemented a new lease accounting system.

Adoption resulted in the following, as of December 31, 2018:


(i)	recording of right-of-use assets of $1.3 billion and lease liabilities of $1.5 billion;


(ii)	a credit to the beginning balance of Accumulated Deficit of $