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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 March 26, 2023 |
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
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, FL 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 April 27, 2023, 87,293,770 shares of common stock of the registrant were outstanding.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
For the Quarterly Period Ended March 26, 2023
(Unaudited)
TABLE OF CONTENTS
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Item 1. | | |
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Item 2. | | |
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Item 3. | | |
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Item 4. | | |
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Item 1. | | |
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Item 1A. | | |
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Item 2. | | |
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Item 6. | | |
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PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
| | | | | | | | | | | |
| MARCH 26, 2023 | | DECEMBER 25, 2022 |
| (UNAUDITED) | | |
ASSETS | | | |
Current assets | | | |
Cash and cash equivalents | $ | 94,441 | | | $ | 84,735 | |
| | | |
Inventories | 67,898 | | | 78,124 | |
| | | |
Other current assets, net | 85,507 | | | 183,718 | |
Total current assets | 247,846 | | | 346,577 | |
| | | |
| | | |
Property, fixtures and equipment, net | 936,225 | | | 914,142 | |
Operating lease right-of-use assets | 1,091,943 | | | 1,103,083 | |
Goodwill | 272,510 | | | 273,032 | |
Intangible assets, net | 446,696 | | | 448,326 | |
Deferred income tax assets, net | 151,436 | | | 153,118 | |
Other assets, net | 85,137 | | | 82,147 | |
Total assets | $ | 3,231,793 | | | $ | 3,320,425 | |
| |
| | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
Current liabilities | | | |
Accounts payable | $ | 196,093 | | | $ | 183,715 | |
Accrued and other current liabilities | 399,465 | | | 399,301 | |
Unearned revenue | 322,608 | | | 394,215 | |
| | | |
Current portion of long-term debt | 2,267 | | | 1,636 | |
Total current liabilities | 920,433 | | | 978,867 | |
| | | |
Non-current operating lease liabilities | 1,136,694 | | | 1,148,607 | |
| | | |
| | | |
Long-term debt, net | 765,702 | | | 831,656 | |
Other long-term liabilities, net | 86,123 | | | 87,386 | |
Total liabilities | 2,908,952 | | | 3,046,516 | |
Commitments and contingencies (Note 12) | | | |
| | | |
| | | |
Stockholders’ equity | | | |
Bloomin’ Brands stockholders’ equity | | | |
Preferred stock, $0.01 par value, 25,000,000 shares authorized; no shares issued and outstanding as of March 26, 2023 and December 25, 2022 | — | | | — | |
Common stock, $0.01 par value, 475,000,000 shares authorized; 87,465,214 and 87,696,200 shares issued and outstanding as of March 26, 2023 and December 25, 2022, respectively | 875 | | | 877 | |
Additional paid-in capital | 1,141,017 | | | 1,161,912 | |
Accumulated deficit | (635,451) | | | (706,109) | |
Accumulated other comprehensive loss | (186,445) | | | (185,311) | |
Total Bloomin’ Brands stockholders’ equity | 319,996 | | | 271,369 | |
Noncontrolling interests | 2,845 | | | 2,540 | |
Total stockholders’ equity | 322,841 | | | 273,909 | |
Total liabilities and stockholders’ equity | $ | 3,231,793 | | | $ | 3,320,425 | |
|
The accompanying notes are an integral part of these unaudited consolidated financial statements. |
BLOOMIN’ BRANDS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)
| | | | | | | | | | | | | | | |
| | | THIRTEEN WEEKS ENDED |
| | | | | MARCH 26, 2023 | | MARCH 27, 2022 |
Revenues | | | | | | | |
Restaurant sales | | | | | $ | 1,228,234 | | | $ | 1,123,575 | |
Franchise and other revenues | | | | | 16,512 | | | 16,960 | |
Total revenues | | | | | 1,244,746 | | | 1,140,535 | |
Costs and expenses | | | | | | | |
Food and beverage | | | | | 384,214 | | | 359,370 | |
Labor and other related | | | | | 341,542 | | | 312,511 | |
Other restaurant operating | | | | | 282,927 | | | 259,110 | |
Depreciation and amortization | | | | | 46,302 | | | 41,775 | |
General and administrative | | | | | 65,804 | | | 58,674 | |
Provision for impaired assets and restaurant closings | | | | | 3,324 | | | 1,839 | |
Total costs and expenses | | | | | 1,124,113 | | | 1,033,279 | |
Income from operations | | | | | 120,633 | | | 107,256 | |
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Interest expense, net | | | | | (12,444) | | | (13,633) | |
Income before provision for income taxes | | | | | 108,189 | | | 93,623 | |
Provision for income taxes | | | | | 14,761 | | | 15,929 | |
Net income | | | | | 93,428 | | | 77,694 | |
Less: net income attributable to noncontrolling interests | | | | | 2,117 | | | 2,183 | |
Net income attributable to Bloomin’ Brands | | | | | $ | 91,311 | | | $ | 75,511 | |
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Net income | | | | | $ | 93,428 | | | $ | 77,694 | |
Other comprehensive income: | | | | | | | |
Foreign currency translation adjustment | | | | | (1,134) | | | 11,283 | |
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Unrealized gain on derivatives, net of tax | | | | | — | | | 573 | |
Reclassification of adjustments for loss on derivatives included in Net income, net of tax | | | | | — | | | 681 | |
Impact of terminated interest rate swaps included in Net income, net of tax | | | | | — | | | 3,021 | |
Comprehensive income | | | | | 92,294 | | | 93,252 | |
Less: comprehensive income attributable to noncontrolling interests | | | | | 2,117 | | | 2,183 | |
Comprehensive income attributable to Bloomin’ Brands | | | | | $ | 90,177 | | | $ | 91,069 | |
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Earnings per share: | | | | | | | |
Basic | | | | | $ | 1.02 | | | $ | 0.85 | |
Diluted | | | | | $ | 0.93 | | | $ | 0.73 | |
Weighted average common shares outstanding: | | | | | | | |
Basic | | | | | 89,116 | | | 89,355 | |
Diluted | | | | | 98,011 | | | 103,454 | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
BLOOMIN’ BRANDS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)
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| BLOOMIN’ BRANDS, INC. | | | | |
| COMMON STOCK | | ADDITIONAL PAID-IN CAPITAL | | ACCUM- ULATED DEFICIT | | ACCUMULATED OTHER COMPREHENSIVE LOSS | | NON-CONTROLLING INTERESTS | | TOTAL |
| SHARES | | AMOUNT | | | | | |
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Balance, December 25, 2022 | 87,696 | | | $ | 877 | | | $ | 1,161,912 | | | $ | (706,109) | | | $ | (185,311) | | | $ | 2,540 | | | $ | 273,909 | |
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Net income | — | | | — | | | — | | | 91,311 | | | — | | | 2,117 | | | 93,428 | |
Other comprehensive loss | — | | | — | | | — | | | — | | | (1,134) | | | — | | | (1,134) | |
Cash dividends declared, $0.24 per common share | — | | | — | | | (21,014) | | | — | | | — | | | — | | | (21,014) | |
Repurchase and retirement of common stock, including excise tax | (863) | | | (9) | | | — | | | (20,653) | | | — | | | — | | | (20,662) | |
Stock-based compensation | — | | | — | | | 2,904 | | | — | | | — | | | — | | | 2,904 | |
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Common stock issued under stock plans (1) | 632 | | | 7 | | | (2,785) | | | — | | | — | | | — | | | (2,778) | |
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Distributions to noncontrolling interests | — | | | — | | | — | | | — | | | — | | | (2,555) | | | (2,555) | |
Contributions from noncontrolling interests | — | | | — | | | — | | | — | | | — | | | 743 | | | 743 | |
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Balance, March 26, 2023 | 87,465 | | | $ | 875 | | | $ | 1,141,017 | | | $ | (635,451) | | | $ | (186,445) | | | $ | 2,845 | | | $ | 322,841 | |
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| BLOOMIN’ BRANDS, INC. | | | | |
| COMMON STOCK | | ADDITIONAL PAID-IN CAPITAL | | ACCUM- ULATED DEFICIT | | ACCUMULATED OTHER COMPREHENSIVE LOSS | | NON-CONTROLLING INTERESTS | | TOTAL |
| SHARES | | AMOUNT | | | | | |
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Balance, December 26, 2021 | 89,253 | | | $ | 893 | | | $ | 1,119,728 | | | $ | (698,171) | | | $ | (205,989) | | | $ | 6,389 | | | $ | 222,850 | |
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Net income | — | | | — | | | — | | | 75,511 | | | — | | | 2,183 | | | 77,694 | |
Other comprehensive income, net of tax | — | | | — | | | — | | | — | | | 15,558 | | | — | | | 15,558 | |
Cash dividends declared, $0.14 per common share | — | | | — | | | (12,559) | | | — | | | — | | | — | | | (12,559) | |
Repurchase and retirement of common stock | (551) | | | (6) | | | — | | | (11,696) | | | — | | | — | | | (11,702) | |
Stock-based compensation | — | | | — | | | 4,843 | | | — | | | — | | | — | | | 4,843 | |
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Common stock issued under stock plans (1) | 483 | | | 5 | | | 880 | | | — | | | — | | | — | | | 885 | |
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Purchase of noncontrolling interests, net of tax of $888 | — | | | — | | | 2,566 | | | — | | | — | | | (4,454) | | | (1,888) | |
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Distributions to noncontrolling interests | — | | | — | | | — | | | — | | | — | | | (2,641) | | | (2,641) | |
Contributions from noncontrolling interests | — | | | — | | | — | | | — | | | — | | | 217 | | | 217 | |
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Balance, March 27, 2022 | 89,185 | | | $ | 892 | | | $ | 1,115,458 | | | $ | (634,356) | | | $ | (190,431) | | | $ | 1,694 | | | $ | 293,257 | |
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________________
(1)Net of forfeitures and shares withheld for employee taxes.
The accompanying notes are an integral part of these unaudited consolidated financial statements.
BLOOMIN’ BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS, UNAUDITED)
| | | | | | | | | | | |
| THIRTEEN WEEKS ENDED |
| MARCH 26, 2023 | | MARCH 27, 2022 |
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Cash flows provided by operating activities: | | | |
Net income | $ | 93,428 | | | $ | 77,694 | |
Adjustments to reconcile Net income to cash provided by operating activities: | | | |
Depreciation and amortization | 46,302 | | | 41,775 | |
Amortization of debt discounts and issuance costs | 763 | | | 1,065 | |
Amortization of deferred gift card sales commissions | 7,797 | | | 8,017 | |
Provision for impaired assets and restaurant closings | 3,324 | | | 1,839 | |
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Non-cash interest expense from terminated interest rate swaps | — | | | 4,067 | |
Non-cash operating lease costs | 21,182 | | | 20,477 | |
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Stock-based and other non-cash compensation expense | 2,904 | | | 4,843 | |
Deferred income tax expense | 1,682 | | | 3,209 | |
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Other, net | (1,823) | | | 2,229 | |
Change in assets and liabilities | 14,109 | | | (18,080) | |
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Net cash provided by operating activities | 189,668 | | | 147,135 | |
Cash flows used in investing activities: | | | |
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Capital expenditures | (64,415) | | | (40,180) | |
Other investments, net | 1,470 | | | 1,030 | |
Net cash used in investing activities | (62,945) | | | (39,150) | |
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Cash flows used in financing activities: | | | |
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Repayments of long-term debt and finance lease obligations | (385) | | | (2,863) | |
Proceeds from borrowings on revolving credit facilities | 190,000 | | | 90,000 | |
Repayments of borrowings on revolving credit facilities | (260,000) | | | (160,000) | |
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(Payments of taxes) proceeds from share-based compensation, net | (2,778) | | | 885 | |
Distributions to noncontrolling interests | (2,555) | | | (2,641) | |
Contributions from noncontrolling interests | 743 | | | 217 | |
Purchase of noncontrolling interests | (100) | | | (1,000) | |
Payments for partner equity plan | — | | | (2,748) | |
Repurchase of common stock | (20,898) | | | (10,402) | |
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Cash dividends paid on common stock | (21,014) | | | (12,559) | |
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Net cash used in financing activities | (116,987) | | | (101,111) | |
Effect of exchange rate changes on cash and cash equivalents | (30) | | | 1,965 | |
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Net increase in cash, cash equivalents and restricted cash | 9,706 | | | 8,839 | |
Cash, cash equivalents and restricted cash as of the beginning of the period | 84,735 | | | 89,057 | |
Cash, cash equivalents and restricted cash as of the end of the period | $ | 94,441 | | | $ | 97,896 | |
Supplemental disclosures of cash flow information: | | | |
Cash paid for interest | $ | 6,528 | | | $ | 2,444 | |
Cash paid for income taxes, net of refunds | $ | 2,458 | | | $ | 2,257 | |
Supplemental disclosures of non-cash investing and financing activities: | | | |
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Leased assets obtained in exchange for new operating lease liabilities | $ | 11,394 | | | $ | 11,515 | |
Leased assets obtained in exchange for new finance lease liabilities | $ | 4,711 | | | $ | 1,313 | |
Increase (decrease) in liabilities from the acquisition of property, fixtures and equipment | $ | 1,159 | | | $ | (6,178) | |
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The accompanying notes are an integral part of these unaudited consolidated financial statements.
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 condensed 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 25, 2022.
Recently Issued Financial Accounting Standards Not Yet Adopted - Recent accounting guidance not discussed herein is not applicable, did not have or is not expected to have a material impact to the Company.
Reclassifications - The Company reclassified certain items in the accompanying consolidated financial statements for prior periods to be comparable with the classification for the current period, including, but not limited to, presentation of certain notes to the consolidated financial statements. These reclassifications had no effect on previously reported net income.
2. Revenue Recognition
The following table includes the categories of revenue included in the Company’s Consolidated Statements of Operations and Comprehensive Income for the periods indicated:
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| | | THIRTEEN WEEKS ENDED | | | | | | |
(dollars in thousands) | | | | | MARCH 26, 2023 | | MARCH 27, 2022 | | | | | | |
Revenues | | | | | | | | | | | | | |
Restaurant sales | | | | | $ | 1,228,234 | | | $ | 1,123,575 | | | | | | | |
Franchise and other revenues | | | | | | | | | | | | | |
Franchise revenues | | | | | 13,523 | | | 13,406 | | | | | | | |
Other revenues | | | | | 2,989 | | | 3,554 | | | | | | | |
Total Franchise and other revenues | | | | | 16,512 | | | 16,960 | | | | | | | |
Total revenues | | | | | $ | 1,244,746 | | | $ | 1,140,535 | | | | | | | |
BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) - Continued
The following table includes the disaggregation of Restaurant sales and franchise revenues, by restaurant concept and major international market, for the periods indicated:
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| THIRTEEN WEEKS ENDED |
| MARCH 26, 2023 | | MARCH 27, 2022 |
(dollars in thousands) | RESTAURANT SALES | | FRANCHISE REVENUES | | RESTAURANT SALES | | FRANCHISE REVENUES |
U.S. | | | | | | | |
Outback Steakhouse | $ | 628,183 | | | $ | 8,544 | | | $ | 595,393 | | | $ | 8,459 | |
Carrabba’s Italian Grill | 188,042 | | | 795 | | | 175,628 | | | 661 | |
Bonefish Grill | 157,689 | | | 171 | | | 151,416 | | | 177 | |
Fleming’s Prime Steakhouse & Wine Bar | 102,773 | | | — | | | 97,662 | | | — | |
Other | 3,882 | | | 15 | | | 3,536 | | | 5 | |
U.S. total | 1,080,569 | | | 9,525 | | | 1,023,635 | | | 9,302 | |
International | | | | | | | |
Outback Steakhouse - Brazil (1) | 122,016 | | | — | | | 85,301 | | | — | |
Other (1)(2) | 25,649 | | | 3,998 | | | 14,639 | | | 4,104 | |
International total | 147,665 | | | 3,998 | | | 99,940 | | | 4,104 | |
Total | $ | 1,228,234 | | | $ | 13,523 | | | $ | 1,123,575 | | | $ | 13,406 | |
________________
(1)Restaurant sales in Brazil increased $9.6 million during the thirteen weeks ended March 26, 2023 in connection with value added tax exemptions resulting from recent tax legislation. See Note 11 - Income Taxes for details regarding the Brazil tax legislation.
(2)Includes Restaurant sales for Company-owned Outback Steakhouse restaurants outside of Brazil and Abbraccio restaurants in Brazil. Franchise revenues primarily include revenues from franchised Outback Steakhouse restaurants.
The following table includes a detail of assets and liabilities from contracts with customers included on the Company’s Consolidated Balance Sheets as of the periods indicated:
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(dollars in thousands) | MARCH 26, 2023 | | DECEMBER 25, 2022 | | | | |
Other current assets, net | | | | | | | | | |
Deferred gift card sales commissions | $ | 13,403 | | | $ | 17,755 | | | | | | | |
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Unearned revenue | | | | | | | | | |
Deferred gift card revenue | $ | 314,096 | | | $ | 386,495 | | | | | | | |
Deferred loyalty revenue | 6,024 | | | 5,628 | | | | | | | |
Deferred franchise fees - current | 471 | | | 460 | | | | | | | |
Other | 2,017 | | | 1,632 | | | | | | | |
Total Unearned revenue | $ | 322,608 | | | $ | 394,215 | | | | | | | |
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Other long-term liabilities, net | | | | | | | | | |
Deferred franchise fees - non-current | $ | 4,193 | | | $ | 4,126 | | | | | | | |
The following table is a rollforward of deferred gift card sales commissions for the periods indicated:
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| | | THIRTEEN WEEKS ENDED |
(dollars in thousands) | | | | | MARCH 26, 2023 | | MARCH 27, 2022 |
Balance, beginning of the period | | | | | $ | 17,755 | | | $ | 17,793 | |
Deferred gift card sales commissions amortization | | | | | (7,797) | | | (8,017) | |
Deferred gift card sales commissions capitalization | | | | | 4,403 | | | 4,169 | |
Other | | | | | (958) | | | (912) | |
Balance, end of the period | | | | | $ | 13,403 | | | $ | 13,033 | |
BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) - Continued
The following table is a rollforward of unearned gift card revenue for the periods indicated:
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| | | THIRTEEN WEEKS ENDED |
(dollars in thousands) | | | | | MARCH 26, 2023 | | MARCH 27, 2022 |
Balance, beginning of the period | | | | | $ | 386,495 | | | $ | 387,945 | |
Gift card sales | | | | | 53,005 | | | 50,280 | |
Gift card redemptions | | | | | (118,283) | | | (116,622) | |
Gift card breakage | | | | | (7,121) | | | (6,629) | |
Balance, end of the period | | | | | $ | 314,096 | | | $ | 314,974 | |
3. Earnings Per Share
The following table presents the computation of basic and diluted earnings per share for the periods indicated:
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| | | THIRTEEN WEEKS ENDED |
(in thousands, except per share data) | | | | | MARCH 26, 2023 | | MARCH 27, 2022 |
Net income attributable to Bloomin’ Brands | | | | | $ | 91,311 | | | $ | 75,511 | |
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Basic weighted average common shares outstanding | | | | | 89,116 | | | 89,355 | |
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Effect of dilutive securities: | | | | | | | |
Stock options | | | | | 401 | | | 370 | |
Nonvested restricted stock units | | | | | 269 | | | 279 | |
Nonvested performance-based share units | | | | | 286 | | | 276 | |
Convertible senior notes | | | | | 4,831 | | | 8,732 | |
Warrants | | | | | 3,108 | | | 4,442 | |
Diluted weighted average common shares outstanding | | | | | 98,011 | | | 103,454 | |
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Basic earnings per share | | | | | $ | 1.02 | | | $ | 0.85 | |
Diluted earnings per share | | | | | $ | 0.93 | | | $ | 0.73 | |
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Share-based compensation-related weighted average securities outstanding not included in the computation of earnings per share because their effect was antidilutive were as follows for the periods indicated:
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| | | THIRTEEN WEEKS ENDED | | |
(shares in thousands) | | | | | MARCH 26, 2023 | | MARCH 27, 2022 |
Stock options | | | | | 725 | | | 1,417 | | | |
Nonvested restricted stock units | | | | | 120 | | | 217 | | | |
Nonvested performance-based share units | | | | | 344 | | | 365 | | | |
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4. Stock-based Compensation Plans
The Company recognized stock-based compensation expense as follows for the periods indicated:
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| | | THIRTEEN WEEKS ENDED |
(dollars in thousands) | | | | | MARCH 26, 2023 | | MARCH 27, 2022 |
Performance-based share units | | | | | $ | 923 | | | $ | 2,619 | |
Restricted stock units | | | | | 1,963 | | | 1,810 | |
Stock options | | | | | — | | | 377 | |
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| | | | | $ | 2,886 | | | $ | 4,806 | |
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) - Continued
In February 2023, the Company granted performance-based share units (“PSUs”) subject to final payout modification by a Relative Total Shareholder Return (“Relative TSR”) modifier. This Relative TSR modifier can adjust the final payout outcome by 75%, 100% or 125% of the achieved performance metric, with the overall payout capped at 200% of the annual target grant. These PSUs have a three-year cliff vesting period and their fair value was estimated using the Monte Carlo simulation model.
The following table presents a summary of the Company’s PSU activity:
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(in thousands, except per unit data) | PERFORMANCE-BASED SHARE UNITS | | WEIGHTED AVERAGE GRANT DATE FAIR VALUE PER UNIT | | AGGREGATE INTRINSIC VALUE (1) |
Outstanding as of December 25, 2022 | 874 | | | $ | 24.83 | | | $ | 18,323 | |
Granted | 301 | | | $ | 29.01 | | | |
Performance adjustment (2) | 154 | | | $ | 19.84 | | | |
Vested | (470) | | | $ | 19.84 | | | |
Forfeited | (32) | | | $ | 26.39 | | | |
Outstanding as of March 26, 2023 | 827 | | | $ | 26.92 | | | $ | 20,630 | |
Expected to vest as of March 26, 2023 | 1,067 | | | | | $ | 26,611 | |
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(1)Based on the $20.96 and $24.94 share price of the Company’s common stock on December 23, 2022 and March 24, 2023, the last trading day of the year ended December 25, 2022 and the thirteen weeks ended March 26, 2023, respectively.
(2)Represents adjustment to 148% payout for PSUs granted during 2020.
Assumptions used in the Monte Carlo simulation model and the grant date fair value of PSUs granted were as follows for the periods indicated:
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| THIRTEEN WEEKS ENDED | |
| MARCH 26, 2023 | | MARCH 27, 2022 | | | | |
Assumptions: | | | | | | | |
Risk-free interest rate (1) | 4.26 | % | | 1.64 | % | | | | |
Dividend yield (2) | 3.47 | % | | 2.31 | % | | | | |
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Volatility (3) | 51.02 | % | | 49.11 | % | | | | |
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Grant date fair value per unit (4) | $ | 29.01 | | | $ | 26.10 | | | | | |
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(1)Risk-free interest rate is the U.S. Treasury yield curve in effect as of the grant date for the performance period of the unit.
(2)Dividend yield is the level of dividends expected to be paid on the Company’s common stock over the expected term.
(3)Based on the historical volatility of the Company’s stock over the last seven years.
(4)Represents a premium above the per share value of the Company’s common stock for the Relative TSR modifier as of the grant date of 2.7% and 7.9% as of March 26, 2023 and March 27, 2022, respectively.
The following represents unrecognized stock-based compensation expense and the remaining weighted average vesting period as of March 26, 2023:
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| UNRECOGNIZED COMPENSATION EXPENSE (dollars in thousands) | | REMAINING WEIGHTED AVERAGE VESTING PERIOD (in years) |
Performance-based share units | $ | 16,617 | | | 2.0 |
Restricted stock units | $ | 11,864 | | | 2.2 |
BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) - Continued
5. Other Current Assets, Net
Other current assets, net, consisted of the following as of the periods indicated:
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(dollars in thousands) | MARCH 26, 2023 | | DECEMBER 25, 2022 | | |
Prepaid expenses | $ | 27,856 | | | $ | 29,343 | | | |
Accounts receivable - gift cards, net | 8,515 | | | 85,606 | | | |
Accounts receivable - vendors, net | 10,209 | | | 25,385 | | | |
Accounts receivable - franchisees, net | 3,755 | | | 2,550 | | | |
Accounts receivable - other, net | 17,488 | | | 18,408 | | | |
Deferred gift card sales commissions | 13,403 | | | 17,755 | | | |
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Other current assets, net | 4,281 | | | 4,671 | | | |
| $ | 85,507 | | | $ | 183,718 | | | |
6. Long-term Debt, Net
Following is a summary of outstanding Long-term debt, net, as of the periods indicated:
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| MARCH 26, 2023 | | DECEMBER 25, 2022 |
(dollars in thousands) | OUTSTANDING BALANCE | | INTEREST RATE | | OUTSTANDING BALANCE | | INTEREST RATE |
Senior secured credit facility - revolving credit facility (1) | $ | 360,000 | | | 6.28 | % | | $ | 430,000 | | | 5.79 | % |
2025 Notes | 105,000 | | | 5.00 | % | | 105,000 | | | 5.00 | % |
2029 Notes | 300,000 | | | 5.13 | % | | 300,000 | | | 5.13 | % |
Finance lease liabilities | 9,114 | | | | | 4,785 | | | |
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Less: unamortized debt discount and issuance costs | (6,145) | | | | | (6,493) | | | |
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Total debt, net | 767,969 | | | | | 833,292 | | | |
Less: current portion of long-term debt | (2,267) | | | | | (1,636) | | | |
Long-term debt, net | $ | 765,702 | | | | | $ | 831,656 | | | |
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(1)Interest rate represents the weighted average interest rate as of the respective periods.
Debt Covenants - As of March 26, 2023 and December 25, 2022, the Company was in compliance with its debt covenants.
7. Convertible Senior Notes
2025 Notes - In connection with dividends paid during the thirteen weeks ended March 26, 2023, the conversion rate for the Company’s remaining convertible senior notes due 2025 (“2025 Notes”) decreased to approximately $11.49 per share, which represents 87.059 shares of common stock per $1,000 principal amount of the 2025 Notes, or a total of approximately 9.141 million shares.
BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) - Continued
The following table includes the outstanding principal amount and carrying value of the 2025 Notes as of the periods indicated:
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(dollars in thousands) | MARCH 26, 2023 | | DECEMBER 25, 2022 |
Long-term debt, net | | | |
Principal | $ | 105,000 | | | $ | 105,000 | |
Less: debt issuance costs (1) | (1,744) | | | (1,939) | |
Net carrying amount | $ | 103,256 | | | $ | 103,061 | |
________________
(1)Debt issuance costs are amortized to Interest expense, net using the effective interest method over the 2025 Notes’ expected life.
Following is a summary of interest expense for the 2025 Notes by component for the periods indicated:
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| | | THIRTEEN WEEKS ENDED |
(dollars in thousands) | | | | | MARCH 26, 2023 | | MARCH 27, 2022 |
Coupon interest | | | | | $ | 1,313 | | | $ | 2,875 | |
Debt issuance cost amortization | | | | | 195 | | | 404 | |
Total interest expense (1) | | | | | $ | 1,508 | | | $ | 3,279 | |
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(1)The effective rate of the 2025 Notes over their expected life is 5.85%.
Based on the daily closing prices of the Company’s stock during the quarter ended March 26, 2023, the remaining holders of the 2025 Notes are eligible to convert their 2025 Notes during the second quarter of 2023.
8. Stockholders’ Equity
Share Repurchases - On February 8, 2022, the Company’s Board of Directors (the “Board”) approved a share repurchase program (the “2022 Share Repurchase Program”) under which the Company was authorized to repurchase up to $125.0 million of its outstanding common stock. During the thirteen weeks ended March 26, 2023, the Company fully utilized the remaining share repurchase authorization under the 2022 Share Repurchase Program. On February 7, 2023, the Company’s Board approved a new $125.0 million authorization (the “2023 Share Repurchase Program”) expiring on August 7, 2024. As of March 26, 2023, $119.4 million remained available for repurchase under the 2023 Share Repurchase Program.