Delaware | 001-35625 | 20-8023465 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
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)) |
Exhibit Number | Description | ||
99.1 | Press Release of Bloomin’ Brands, Inc. dated May 9, 2014 |
BLOOMIN’ BRANDS, INC. | |||
(Registrant) | |||
Date: | May 9, 2014 | By: | /s/ David J. Deno |
David J. Deno | |||
Executive Vice President and Chief Financial and Administrative Officer |
NEWS | Exhibit 99.1 | |||
Chris Meyer | ||||
Vice President, Investor Relations & Treasurer | ||||
(813) 830-5311 |
• | Total revenues increased 6.0% to $1.2 billion and include the impact of one less operating day due to the change in the Company’s fiscal year end from a calendar year ending on December 31 to a 52-53 week fiscal year |
• | Comparable sales for Company-owned core domestic concepts were flat while traffic decreased 1.6% driven by an estimated (1.7%) of aggregate impact from unfavorable weather and a shift in the timing of holidays |
• | Adjusted operating income margin* was 8.4% versus 8.9% in the first quarter of 2013 and U.S. GAAP operating income margin was 7.8% versus 8.9% in the first quarter of 2013 |
• | Effective income tax rate of 24.8% versus 14.1% in the first quarter of 2013 |
• | Adjusted EBITDA* was $143.1 million versus $140.9 million in the first quarter of 2013 |
• | Adjusted net income* was $58.5 million versus $63.2 million in the first quarter of 2013 and U.S. GAAP Net income attributable to Bloomin’ Brands was $53.7 million versus $63.2 million in the first quarter of 2013 |
• | Adjusted diluted earnings per share* were $0.46 per share, a decrease of $0.04 from the first quarter of 2013, and GAAP Diluted earnings per share were $0.42 per share, a decrease of $0.08 from the first quarter of 2013 |
THIRTEEN WEEKS ENDED MARCH 30, 2014 | THREE MONTHS ENDED MARCH 31, 2013 | CHANGE | |||||||||
Adjusted diluted earnings per share* | $ | 0.46 | $ | 0.50 | $ | (0.04 | ) | ||||
Adjustments* | (0.04 | ) | — | (0.04 | ) | ||||||
Diluted earnings per share | $ | 0.42 | $ | 0.50 | $ | (0.08 | ) |
* | Denoted items are non-GAAP measurements, which include adjustments to the financial results as determined under U.S. GAAP. See Reconciliations of Non-GAAP Measures to U.S. GAAP Results included later in this release. |
• | Total revenues increased 6.0% to $1.2 billion. This increase was primarily due to the consolidation of restaurant sales generated by the formerly unconsolidated joint venture restaurants in Brazil and additional revenues from opening new restaurants. The increase in Total revenues was partially offset by declines in average unit volumes in the Company’s South Korean restaurants, the loss of one operating day due to the the Company’s change to a 52-53 week fiscal year, the closing of 25 restaurants since March 31, 2013, and the removal of royalty income related to the consolidation of the Company’s Brazilian operation. |
• | Comparable sales for Company-owned core domestic concepts were flat as a result of increases in general menu prices offset by a 1.6% decline in customer traffic. Traffic was negatively impacted by approximately 1.7% due to the combined impact of unfavorable weather and a shift in the timing of holidays in 2014. In addition, comparable sales were negatively impacted by a change in mix in the Company’s product sales. Results by concept were as follows: |
THIRTEEN WEEKS ENDED MARCH 30, 2014 | COMPANY- OWNED | |
Domestic comparable restaurant sales (stores open 18 months or more) | ||
Outback Steakhouse | 0.8% | |
Carrabba’s Italian Grill | (1.8)% | |
Bonefish Grill | (1.5)% | |
Fleming’s Prime Steakhouse and Wine Bar | 1.7% |
• | Adjusted restaurant-level operating margin as a percentage of Restaurant sales was 18.0% for the thirteen weeks ended March 30, 2014 versus 18.4% for the comparable period in 2013. This decrease was primarily attributable to commodity inflation, costs associated with lunch expansion, lower average unit volumes in the Company’s South Korean restaurants, higher advertising expenses, and costs associated with the new menu rollout at Carrabba’s Italian Grill. The decrease was partially offset by productivity savings, menu pricing and the operating margin benefit from the consolidation of the formerly unconsolidated joint venture restaurants in Brazil. |
• | Adjusted operating income as a percentage of Total revenues was 8.4% for the thirteen weeks ended March 30, 2014 versus 8.9% for the comparable period in 2013. This decrease was driven primarily by lower Adjusted restaurant-level operating margins and higher Depreciation and amortization. This was partially offset by lower expense associated with the timing of the Company’s annual managing partner conference. |
• | The Company opened 15 new system-wide locations: six Bonefish Grill restaurants, two Carrabba’s Italian Grill restaurants, one Outback Steakhouse, one Fleming’s Prime Steakhouse and Wine Bar and five Company-owned international Outback Steakhouse restaurants, three in Brazil and one each in South Korea and China. |
• | The Company’s fiscal first quarter adjusted results reflect the following items: |
◦ | As previously announced, in the fourth quarter of 2013 the Company completed an assessment of its restaurant base in advance of capital and development planning for the 2014 fiscal year. As a result of this assessment, the Company decided to close 22 underperforming restaurants primarily within the Outback Steakhouse concept. In connection with this initiative, the Company incurred an aggregate $4.9 million for non-cancelable operating lease liabilities and restaurant closing costs in the thirteen weeks ended March 30, 2014. |
◦ | In connection with the Company’s acquisition of a controlling interest in its Brazilian joint venture, an adjustment of approximately $1.5 million for pre-tax, non-cash amortization of intangibles was recorded in the thirteen weeks ended March 30, 2014. This amount represents the Company’s portion of the amortization of reacquired franchise rights and favorable and unfavorable leases. |
◦ | On March 10, 2014, certain stockholders of the Company completed a secondary public offering of 20.7 million shares of the Company’s common stock at a public offering price of $24.50 per share. All of the shares were offered by certain stockholders of the Company, and the Company did not receive any proceeds from the offering. After the completion of this transaction, the Company no longer qualifies as a “controlled company” within the meaning of the corporate governance rules of Nasdaq. The Company incurred approximately $1.1 million of transaction-related expenses in the thirteen weeks ended March 30, 2014, primarily related to this transaction. |
• | As previously reported, the Company’s Board of Directors approved a change in the Company’s fiscal year end from a calendar year ending on December 31 to a 52-53 week fiscal year ending on the last Sunday in December, effective beginning with fiscal year 2014. The fiscal year change was made on a prospective basis and the Company did not adjust operating results for prior periods. For the thirteen weeks ended March 30, 2014, the fiscal year end change had the following impact as compared to prior year primarily because of one fewer operating day in the current period: |
◦ | Total revenues were approximately $7.5 million lower; |
◦ | Adjusted net income and U.S. GAAP Net income were approximately $1.5 million lower; and |
◦ | Adjusted diluted earnings per share and U.S. GAAP Diluted earnings per share were approximately $0.01 lower. |
• | During the thirteen weeks ended March 30, 2014, the Company’s wholly-owned subsidiary, OSI Restaurant Partners, LLC, (“OSI”) made $10.0 million of voluntary prepayments on its outstanding senior secured Term Loan B. The balance of the Term Loan B as of March 30, 2014 was $925.0 million. |
• | In April 2014, the Company initiated a process to refinance its outstanding senior secured credit facilities. At the time of this release, the terms of the agreement are not final. Upon completion of the refinancing, we expect total outstanding indebtedness under the new credit facilities to be consistent with the total amount outstanding under our current credit facilities. If the refinancing is completed, the Company anticipates lower interest expense in 2014. |
THIRTEEN WEEKS ENDED MARCH 30, 2014 | THREE MONTHS ENDED MARCH 31, 2013 | ||||||
(unaudited) | (unaudited) | ||||||
Revenues | |||||||
Restaurant sales | $ | 1,150,525 | $ | 1,082,356 | |||
Other revenues | 7,334 | 9,894 | |||||
Total revenues | 1,157,859 | 1,092,250 | |||||
Costs and expenses | |||||||
Cost of sales | 373,614 | 349,989 | |||||
Labor and other related | 311,418 | 299,867 | |||||
Other restaurant operating | 256,518 | 233,809 | |||||
Depreciation and amortization | 46,165 | 40,196 | |||||
General and administrative | 74,054 | 72,491 | |||||
Provision for impaired assets and restaurant closings | 6,064 | 1,896 | |||||
Income from operations of unconsolidated affiliates | — | (2,858 | ) | ||||
Total costs and expenses | 1,067,833 | 995,390 | |||||
Income from operations | 90,026 | 96,860 | |||||
Other expense, net | (164 | ) | (217 | ) | |||
Interest expense, net | (16,598 | ) | (20,880 | ) | |||
Income before provision for income taxes | 73,264 | 75,763 | |||||
Provision for income taxes | 18,164 | 10,707 | |||||
Net income | 55,100 | 65,056 | |||||
Less: net income attributable to noncontrolling interests | 1,367 | 1,833 | |||||
Net income attributable to Bloomin’ Brands | $ | 53,733 | $ | 63,223 | |||
Net income | $ | 55,100 | $ | 65,056 | |||
Other comprehensive income: | |||||||
Foreign currency translation adjustment | (5,365 | ) | (4,532 | ) | |||
Comprehensive income | 49,735 | 60,524 | |||||
Less: comprehensive income attributable to noncontrolling interests | 1,367 | 1,833 | |||||
Comprehensive income attributable to Bloomin’ Brands | $ | 48,368 | $ | 58,691 | |||
Earnings per share: | |||||||
Basic | $ | 0.43 | $ | 0.52 | |||
Diluted | $ | 0.42 | $ | 0.50 | |||
Weighted average common shares outstanding: | |||||||
Basic | 124,542 | 121,238 | |||||
Diluted | 127,851 | 126,507 |
MARCH 30, 2014 | DECEMBER 31, 2013 | ||||||
(unaudited) | |||||||
Cash and cash equivalents (1) | $ | 172,604 | $ | 209,871 | |||
Net working capital (deficit) (2) | (226,345 | ) | (260,471 | ) | |||
Total assets | 3,208,790 | 3,274,174 | |||||
Total debt, net | 1,405,133 | 1,419,143 | |||||
Total stockholders’ equity | 530,176 | 482,709 |
(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. |
• | Restaurant-level operating margins are calculated as Restaurant sales after deduction of the main restaurant-level operating costs (comprising Cost of sales, Labor and other related and Other restaurant operating). Adjusted restaurant-level operating margins are calculated by eliminating from Restaurant-level operating margins the impact of items that are not considered indicative of ongoing operations consistent with the other non-GAAP measures discussed below. The Company provides this non-GAAP measure because it believes it is useful for investors to assess core restaurant operations without the effect of certain adjustments. For the periods presented, Adjusted restaurant-level operating margin includes the adjustment for the deferred rent write-off associated with the fourth quarter of 2013 decision to close 22 underperforming locations. The write-off of the deferred rent liability was recorded in Other restaurant operating during the thirteen weeks ended March 30, 2014. No adjustments impacted Restaurant-level operating margins during the three months ended March 31, 2013. |
• | Adjusted income from operations, Adjusted net income and Adjusted diluted earnings per share are calculated by eliminating from Income from operations, Net income attributable to Bloomin’ Brands and Diluted earnings per share the impact of items that are not considered indicative of ongoing operations. The Company provides these non-GAAP measures because it believes they are useful for investors to assess the operating performance of the business without the effect of certain adjustments. For the periods presented, the non-GAAP adjustments include transaction-related expenses primarily attributable to costs associated with the secondary offering of the Company’s common stock in March 2014; certain restaurant closing charges; purchased intangibles amortization; and an adjustment to the Provision for income taxes based on the statutory rate applicable to jurisdictions in which the above non-GAAP adjustments relate. |
• | Earnings before interest, taxes and depreciation and amortization (“EBITDA”) and Adjusted EBITDA (calculated by adjusting EBITDA to exclude certain stock-based compensation expenses, non-cash expenses and other significant unusual items that the Company does not consider representative of its underlying business performance) are supplemental measures of operating performance. The Company believes that EBITDA and Adjusted EBITDA are useful measures for investors as they permit a comparative assessment of its operating performance relative to its performance based on its U.S. GAAP results, while isolating the effects of some items that vary from period to period and to facilitate company-to-company comparisons within the restaurant industry by eliminating some of these foregoing variations. |
THIRTEEN WEEKS ENDED MARCH 30, 2014 | THREE MONTHS ENDED MARCH 31, 2013 | (UNFAVORABLE) FAVORABLE CHANGE IN ADJUSTED 2014 VS. ADJUSTED 2013 | ||||||||||
U.S. GAAP | ADJUSTED (1) | U.S. GAAP AND ADJUSTED (2) | ||||||||||
Restaurant sales | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
Cost of sales | 32.5 | % | 32.5 | % | 32.3 | % | (0.2 | )% | ||||
Labor and other related | 27.1 | % | 27.1 | % | 27.7 | % | 0.6 | % | ||||
Other restaurant operating | 22.3 | % | 22.5 | % | 21.6 | % | (0.9 | )% | ||||
Restaurant-level operating margin | 18.2 | % | 18.0 | % | 18.4 | % | (0.4 | )% |
(1) | Adjusted restaurant-level operating margins include the adjustment for the deferred rent liability write-off associated with the fourth quarter of 2013 decision to close 22 underperforming locations. The write-off of the deferred rent liability was recorded in Other restaurant operating during the thirteen weeks ended March 30, 2014. |
(2) | No adjustments impacted Restaurant-level operating margins during the three months ended March 31, 2013. |
THIRTEEN WEEKS ENDED MARCH 30, 2014 | THREE MONTHS ENDED MARCH 31, 2013 | ||||||
Income from operations | $ | 90,026 | $ | 96,860 | |||
Operating income margin | 7.8 | % | 8.9 | % | |||
Adjustments: | |||||||
Transaction-related expenses (1) | 1,118 | — | |||||
Other losses (2) | 4,929 | — | |||||
Purchased intangibles amortization (3) | 1,458 | — | |||||
Adjusted income from operations | $ | 97,531 | $ | 96,860 | |||
Adjusted operating income margin | 8.4 | % | 8.9 | % | |||
Net income attributable to Bloomin’ Brands | $ | 53,733 | $ | 63,223 | |||
Adjustments: | |||||||
Transaction-related expenses (1) | 1,118 | — | |||||
Other losses (2) | 4,929 | — | |||||
Purchased intangibles amortization (3) | 1,458 | — | |||||
Total adjustments, before income taxes | 7,505 | — | |||||
Adjustment to provision for income taxes (4) | (2,695 | ) | — | ||||
Net adjustments | 4,810 | — | |||||
Adjusted net income | $ | 58,543 | $ | 63,223 | |||
Diluted earnings per share | $ | 0.42 | $ | 0.50 | |||
Adjusted diluted earnings per share | $ | 0.46 | $ | 0.50 | |||
Diluted weighted average common shares outstanding | 127,851 | 126,507 |
(1) | Transaction-related expenses primarily relate to costs incurred with the secondary offering of the Company’s common stock completed in March 2014. |
(2) | During the thirteen weeks ended March 30, 2014, the Company incurred additional expenses for non-cancelable operating lease liabilities and restaurant closing costs associated with the fourth quarter of 2013 decision to close 22 underperforming locations. |
(3) | Represents the Company’s proportional share of non-cash amortization of intangibles recorded as a result of the acquisition of a controlling ownership interest in the Company’s Brazilian operations and includes amortization for reacquired franchise rights and favorable and unfavorable leases. |
(4) | Income tax effect of adjustments for the thirteen weeks ended March 30, 2014 was calculated based on the statutory rate applicable to jurisdictions in which the above non-GAAP adjustments relate. |
THIRTEEN WEEKS ENDED MARCH 30, 2014 | THREE MONTHS ENDED MARCH 31, 2013 | ||||||
Net income attributable to Bloomin’ Brands | $ | 53,733 | $ | 63,223 | |||
Provision for income taxes | 18,164 | 10,707 | |||||
Interest expense, net | 16,598 | 20,880 | |||||
Depreciation and amortization | 46,165 | 40,196 | |||||
EBITDA | 134,660 | 135,006 | |||||
Impairments and disposals (1) | 399 | 876 | |||||
Transaction-related expenses (2) | 1,118 | — | |||||
Stock-based compensation expense | 3,575 | 4,429 | |||||
Other losses (3) | 3,335 | 582 | |||||
Adjusted EBITDA | $ | 143,087 | $ | 140,893 |
(1) | Represents the elimination of non-cash impairment charges for fixed assets and intangible assets and net gains or losses on the disposal of fixed assets. |
(2) | Transaction-related expenses primarily relate to costs incurred with the secondary offering of the Company’s common stock completed in March 2014. |
(3) | Represents expenses incurred as a result of (losses) gains on the Company’s partner deferred compensation participant investment accounts net of the loss (gain) on the corporate-owned life insurance policies that are held for settlement of the Company’s obligations under these programs, foreign currency loss (gain), the loss (gain) on the cash surrender value of executive life insurance and additional expenses for non-cancelable operating lease liabilities and restaurant closing costs of approximately $4.9 million associated with the fourth quarter of 2013 decision to close 22 underperforming locations. |
MARCH 30, | MARCH 31, | ||||
2014 | 2013 | ||||
Number of restaurants (at end of the period): | |||||
Outback Steakhouse | |||||
Company-owned—domestic | 650 | 663 | |||
Company-owned—international (1) (2) | 171 | 117 | |||
Franchised—domestic | 104 | 106 | |||
Franchised and joint venture—international (1) | 51 | 89 | |||
Total | 976 | 975 | |||
Carrabba’s Italian Grill | |||||
Company-owned | 240 | 234 | |||
Franchised | 1 | 1 | |||
Total | 241 | 235 | |||
Bonefish Grill | |||||
Company-owned | 192 | 174 | |||
Franchised | 5 | 7 | |||
Total | 197 | 181 | |||
Fleming’s Prime Steakhouse and Wine Bar | |||||
Company-owned | 66 | 65 | |||
Roy’s | |||||
Company-owned | 20 | 22 | |||
System-wide total | 1,500 | 1,478 |
(1) | Effective November 1, 2013, the Company acquired a controlling interest in its Brazilian operations resulting in the consolidation and reporting of 47 restaurants (as of the acquisition date) as Company-owned locations that are reported as unconsolidated joint venture locations in the historical period presented. |
(2) | The restaurant count for Brazil is reported as of February 28, 2014 to correspond with the balance sheet date of this subsidiary and, therefore, excludes one restaurant that opened in March 2014. Restaurant counts for the Company’s Brazilian operations were reported as of March 31st in the historical period presented. |