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 August 5, 2014 |
BLOOMIN’ BRANDS, INC. | |||
(Registrant) | |||
Date: | August 5, 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 9.0% to $1.1 billion |
• | Comparable sales for Company-owned core domestic concepts increased 0.6% while traffic was flat |
• | The Company plans to expand Carrabba’s Italian Grill in Brazil with first opening in the first half of 2015 |
• | Total system-wide development was six new restaurants including three Brazilian Outback Steakhouse locations |
• | Restaurant-level operating margin was 16.1% versus 16.0% for the second quarter of 2013 |
• | Adjusted operating income margin* was 5.8% versus 6.7% in the second quarter of 2013 and U.S. GAAP operating income margin was 5.6% versus 6.7% in the second quarter of 2013 |
• | Adjusted net income* was $34.2 million versus $31.8 million in the second quarter of 2013 and U.S. GAAP Net income attributable to Bloomin’ Brands was $26.4 million versus $74.9 million in the second quarter of 2013 |
THIRTEEN WEEKS ENDED JUNE 29, 2014 | THREE MONTHS ENDED JUNE 30, 2013 | CHANGE | |||||||||
Adjusted diluted earnings per share* | $ | 0.27 | $ | 0.25 | $ | 0.02 | |||||
Adjustments* | (0.06 | ) | 0.33 | (0.39 | ) | ||||||
Diluted earnings per share | $ | 0.21 | $ | 0.58 | $ | (0.37 | ) | ||||
* | Denoted items are non-GAAP measurements, which include adjustments to the financial results as determined under U.S. GAAP. Adjustments primarily relate to the: (i) loss on extinguishment and modification of debt for the May 2014 refinancing and the April 2013 repricing of our Senior Secured Credit Facility and (ii) the release of the U.S. valuation allowance in the three months ended June 30, 2013. See Reconciliations of Non-GAAP Measures to U.S. GAAP Results included later in this release for more details. |
• | Total revenues increased 9.0% to $1.1 billion. This increase was primarily due to the consolidation of restaurant sales generated by the formerly unconsolidated joint venture restaurants in Brazil, additional revenues from opening new restaurants and an increase in domestic comparable restaurant sales at our existing restaurants. The increase in restaurant sales was partially offset by the closing of 29 restaurants since March 31, 2013 and a decline in comparable sales in the Company’s South Korean restaurants. |
• | Comparable sales for Company-owned core domestic concepts grew 0.6%. Traffic for Company-owned core domestic concepts was flat as traffic increases from lunch expansion were offset by traffic declines in the dinner business. Results by concept were as follows: |
THIRTEEN WEEKS ENDED JUNE 29, 2014 | COMPANY- OWNED | ||
Domestic comparable restaurant sales (stores open 18 months or more) | |||
Outback Steakhouse | 0.9 | % | |
Carrabba’s Italian Grill | (1.2 | )% | |
Bonefish Grill | 0.3 | % | |
Fleming’s Prime Steakhouse and Wine Bar | 3.6 | % |
• | Restaurant-level operating margin was 16.1% for the thirteen weeks ended June 29, 2014 versus 16.0% for the second quarter of 2013. This increase was primarily due to productivity savings, menu pricing and the operating margin benefit from the consolidation of the formerly unconsolidated joint venture restaurants in Brazil. The increase was partially offset by commodity inflation, costs associated with lunch expansion and new promotions, lower average unit volumes in the Company’s South Korean restaurants and increases in certain other operating expenses. |
• | Adjusted operating income margin was 5.8% and operating income margin was 5.6% for the thirteen weeks ended June 29, 2014, respectively, versus 6.7% for the second quarter of 2013, respectively. This decrease was driven primarily by the timing of the Company’s annual managing partner conference, higher Depreciation and amortization and higher costs associated with growth investments. This decrease was partially offset by lower incentive compensation and higher restaurant margins. In addition, due to the consolidation of Brazil we no longer record the Company’s share of their earnings as “Income from operations of unconsolidated affiliates”. |
• | The Company opened six new system-wide locations: one Bonefish Grill restaurant, one Outback Steakhouse, and four Company-owned international Outback Steakhouse restaurants, three in Brazil and one in South Korea. There were also four closures: three international Outback Steakhouse restaurants in South Korea and one domestic Outback Steakhouse location. |
Outlook on Feb. 25 | Current Outlook | |||
Financial Results (in millions, except per share data or as otherwise indicated): | ||||
(At least) | (Between) | |||
Total revenues | $4,400 | $4,400 - $4,450 | ||
Adjusted EBITDA | $493 | $459 - $470 | ||
Adjusted net income (1) | $156 | $135 - $141 | ||
GAAP Net income attributable to Bloomin’ Brands | $148 | $120 - $126 | ||
Adjusted diluted earnings per share (1) | $1.21 | $1.05 - $1.10 | ||
GAAP Diluted earnings per share | $1.15 | $0.93 - $0.98 | ||
Other Selected Financial Data (in millions, or as otherwise indicated): | ||||
Comparable sales for Company-owned core domestic concepts | 1.0% - 2.0% | 0.0% - 1.0% | ||
Commodity inflation | 2.0% - 4.0% | 2.5% - 3.5% | ||
General and administrative expenses* | $295 - $305 | $280 - $290 | ||
Effective income tax rate* | 27.0% - 29.0% | 27.0% - 29.0% | ||
Number of new system-wide restaurants | 55 - 60 | 55 - 60 | ||
Capital expenditures | $250 - $280 | $250 - $270 |
(1) | The 2014 Adjusted net income and Adjusted diluted earnings per share guidance includes: (i) adjustments incurred through June 29, 2014 and (ii) $3.0 million of pre-tax amortization for the second half of the year for intangibles acquired in connection with the Brazil acquisition. See Non-GAAP financial measures for further information. |
• | the timing of marketing expenditures; and |
• | costs associated with the Bonefish Grill menu rollout in early July. |
THIRTEEN WEEKS ENDED JUNE 29, 2014 | THREE MONTHS ENDED JUNE 30, 2013 | TWENTY-SIX WEEKS ENDED JUNE 29, 2014 | SIX MONTHS ENDED JUNE 30, 2013 | ||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||
Revenues | |||||||||||||||
Restaurant sales | $ | 1,104,437 | $ | 1,007,991 | $ | 2,254,962 | $ | 2,090,347 | |||||||
Other revenues | 6,475 | 10,865 | 13,809 | 20,759 | |||||||||||
Total revenues | 1,110,912 | 1,018,856 | 2,268,771 | 2,111,106 | |||||||||||
Costs and expenses | |||||||||||||||
Cost of sales | 358,856 | 325,453 | 732,470 | 675,442 | |||||||||||
Labor and other related | 302,472 | 284,028 | 613,890 | 583,895 | |||||||||||
Other restaurant operating | 265,279 | 237,440 | 521,797 | 471,249 | |||||||||||
Depreciation and amortization | 48,627 | 40,889 | 94,792 | 81,085 | |||||||||||
General and administrative | 72,262 | 65,094 | 146,316 | 137,585 | |||||||||||
Provision for impaired assets and restaurant closings | 1,025 | 689 | 7,089 | 2,585 | |||||||||||
Income from operations of unconsolidated affiliates | — | (2,623 | ) | — | (5,481 | ) | |||||||||
Total costs and expenses | 1,048,521 | 950,970 | 2,116,354 | 1,946,360 | |||||||||||
Income from operations | 62,391 | 67,886 | 152,417 | 164,746 | |||||||||||
Loss on extinguishment and modification of debt | (11,092 | ) | (14,586 | ) | (11,092 | ) | (14,586 | ) | |||||||
Other income (expense), net | 317 | (133 | ) | 153 | (350 | ) | |||||||||
Interest expense, net | (15,109 | ) | (18,015 | ) | (31,707 | ) | (38,895 | ) | |||||||
Income before provision (benefit) for income taxes | 36,507 | 35,152 | 109,771 | 110,915 | |||||||||||
Provision (benefit) for income taxes | 8,785 | (41,312 | ) | 26,949 | (30,605 | ) | |||||||||
Net income | 27,722 | 76,464 | 82,822 | 141,520 | |||||||||||
Less: net income attributable to noncontrolling interests | 1,331 | 1,596 | 2,698 | 3,429 | |||||||||||
Net income attributable to Bloomin’ Brands | $ | 26,391 | $ | 74,868 | $ | 80,124 | $ | 138,091 | |||||||
Net income | $ | 27,722 | $ | 76,464 | $ | 82,822 | $ | 141,520 | |||||||
Other comprehensive income: | |||||||||||||||
Foreign currency translation adjustment | 19,088 | (8,144 | ) | 13,723 | (12,676 | ) | |||||||||
Comprehensive income | 46,810 | 68,320 | 96,545 | 128,844 | |||||||||||
Less: comprehensive income attributable to noncontrolling interests | 1,331 | 1,596 | 2,698 | 3,429 | |||||||||||
Comprehensive income attributable to Bloomin’ Brands | $ | 45,479 | $ | 66,724 | $ | 93,847 | $ | 125,415 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.21 | $ | 0.61 | $ | 0.64 | $ | 1.13 | |||||||
Diluted | $ | 0.21 | $ | 0.58 | $ | 0.63 | $ | 1.08 | |||||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | 125,229 | 122,858 | 124,889 | 122,052 | |||||||||||
Diluted | 128,378 | 128,338 | 128,115 | 127,599 |
JUNE 29, 2014 | DECEMBER 31, 2013 | ||||||
(unaudited) | |||||||
Cash and cash equivalents (1) | $ | 155,843 | $ | 209,871 | |||
Net working capital (deficit) (2) | (232,264 | ) | (260,471 | ) | |||
Total assets | 3,234,079 | 3,274,174 | |||||
Total debt, net (3) | 1,404,489 | 1,419,143 | |||||
Total stockholders’ equity | 579,473 | 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. |
(3) | The Company completed a refinancing of its Senior Secured Credit Facility in May 2014. The total indebtedness of the Company remained unchanged as a result of the refinancing. |
THIRTEEN WEEKS ENDED JUNE 29, 2014 | THREE MONTHS ENDED JUNE 30, 2013 | TWENTY-SIX WEEKS ENDED JUNE 29, 2014 | SIX MONTHS ENDED JUNE 30, 2013 | (UNFAVORABLE) FAVORABLE CHANGE IN ADJUSTED 2014 VS. 2013 | ||||||||||||||||
U.S. GAAP AND ADJUSTED (1) | U.S. GAAP AND ADJUSTED (1) | U.S. GAAP | ADJUSTED (2) | U.S. GAAP AND ADJUSTED (1) | QUARTER TO DATE | YEAR TO DATE | ||||||||||||||
Restaurant sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
Cost of sales | 32.5 | % | 32.3 | % | 32.5 | % | 32.5 | % | 32.3 | % | (0.2 | )% | (0.2 | )% | ||||||
Labor and other related | 27.4 | % | 28.2 | % | 27.2 | % | 27.2 | % | 27.9 | % | 0.8 | % | 0.7 | % | ||||||
Other restaurant operating | 24.0 | % | 23.6 | % | 23.1 | % | 23.2 | % | 22.5 | % | (0.4 | )% | (0.7 | )% | ||||||
Restaurant-level operating margin | 16.1 | % | 16.0 | % | 17.2 | % | 17.1 | % | 17.2 | % | 0.1 | % | (0.1 | )% |
(1) | No adjustments impacted Restaurant-level operating margins during the thirteen weeks ended June 29, 2014 and three and six months ended June 30, 2013. |
(2) | 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 twenty-six weeks ended June 29, 2014. |
THIRTEEN WEEKS ENDED JUNE 29, 2014 | THREE MONTHS ENDED JUNE 30, 2013 | TWENTY-SIX WEEKS ENDED JUNE 29, 2014 | SIX MONTHS ENDED JUNE 30, 2013 | ||||||||||||
Income from operations | $ | 62,391 | $ | 67,886 | $ | 152,417 | $ | 164,746 | |||||||
Operating income margin | 5.6 | % | 6.7 | % | 6.7 | % | 7.8 | % | |||||||
Adjustments: | |||||||||||||||
Transaction-related expenses (1) | — | 704 | 1,118 | 704 | |||||||||||
Restaurant closing costs (2) | — | — | 4,929 | — | |||||||||||
Purchased intangibles amortization (3) | 1,532 | — | 2,990 | — | |||||||||||
Adjusted income from operations | $ | 63,923 | $ | 68,590 | $ | 161,454 | $ | 165,450 | |||||||
Adjusted operating income margin | 5.8 | % | 6.7 | % | 7.1 | % | 7.8 | % | |||||||
Net income attributable to Bloomin’ Brands | $ | 26,391 | $ | 74,868 | $ | 80,124 | $ | 138,091 | |||||||
Adjustments: | |||||||||||||||
Transaction-related expenses (1) | — | 704 | 1,118 | 704 | |||||||||||
Restaurant closing costs (2) | — | — | 4,929 | — | |||||||||||
Purchased intangibles amortization (3) | 1,532 | — | 2,990 | — | |||||||||||
Loss on extinguishment and modification of debt (4) | 11,092 | 14,586 | 11,092 | 14,586 | |||||||||||
Total adjustments, before income taxes | 12,624 | 15,290 | 20,129 | 15,290 | |||||||||||
Adjustment to provision (benefit) for income taxes (5) | (4,847 | ) | (58,370 | ) | (7,542 | ) | (58,370 | ) | |||||||
Net adjustments | 7,777 | (43,080 | ) | 12,587 | (43,080 | ) | |||||||||
Adjusted net income | $ | 34,168 | $ | 31,788 | $ | 92,711 | $ | 95,011 | |||||||
Diluted earnings per share | $ | 0.21 | $ | 0.58 | $ | 0.63 | $ | 1.08 | |||||||
Adjusted diluted earnings per share | $ | 0.27 | $ | 0.25 | $ | 0.72 | $ | 0.74 | |||||||
Diluted weighted average common shares outstanding | 128,378 | 128,338 | 128,115 | 127,599 |
(1) | Relates primarily to costs incurred with the secondary offering of our common stock in March 2014 and May 2013, respectively. |
(2) | Represents expenses associated with the fourth quarter of 2013 decision to close 22 underperforming locations. |
(3) | Represents non-cash intangible amortization recorded as a result of the acquisition of our Brazilian operations. |
(4) | Relates to the refinancing in May 2014 and the repricing in April 2013 of our Senior Secured Credit Facility. |
(5) | Includes the release of the U.S. valuation allowance for the three and six months ended June 30, 2013. Income tax effect of adjustments for the thirteen and twenty-six weeks ended June 29, 2014 was calculated based on the statutory rate applicable to jurisdictions in which the above non-GAAP adjustments relate. For the three and six months ended June 30, 2013, we utilized a normalized annual effective tax rate of 22%. |
THIRTEEN WEEKS ENDED JUNE 29, 2014 | THREE MONTHS ENDED JUNE 30, 2013 | TWENTY-SIX WEEKS ENDED JUNE 29, 2014 | SIX MONTHS ENDED JUNE 30, 2013 | ||||||||||||
Net income attributable to Bloomin’ Brands | $ | 26,391 | $ | 74,868 | $ | 80,124 | $ | 138,091 | |||||||
Provision (benefit) for income taxes | 8,785 | (41,312 | ) | 26,949 | (30,605 | ) | |||||||||
Interest expense, net | 15,109 | 18,015 | 31,707 | 38,895 | |||||||||||
Depreciation and amortization | 48,627 | 40,889 | 94,792 | 81,085 | |||||||||||
EBITDA | 98,912 | 92,460 | 233,572 | 227,466 | |||||||||||
Impairments and disposals (1) | 979 | 605 | 1,378 | 1,481 | |||||||||||
Transaction-related expenses (2) | — | 704 | 1,118 | 704 | |||||||||||
Stock-based compensation expense | 4,264 | 3,018 | 7,839 | 7,447 | |||||||||||
Other losses (gains) (3) | 326 | (34 | ) | (986 | ) | 548 | |||||||||
Restaurant closing costs (4) | — | — | 4,929 | — | |||||||||||
Loss on extinguishment and modification of debt (5) | 11,092 | 14,586 | 11,092 | 14,586 | |||||||||||
Adjusted EBITDA | $ | 115,573 | $ | 111,339 | $ | 258,942 | $ | 252,232 |
(1) | Represents non-cash impairment charges for fixed assets and intangible assets and net gains or losses on the disposal of fixed assets. |
(2) | Relates primarily to costs incurred with the secondary offering of our common stock in March 2014 and May 2013, respectively. |
(3) | Represents expenses incurred as a result of net (losses) gains on partner deferred compensation participant investment accounts, foreign currency loss (gain) and the loss (gain) on the cash surrender value of executive life insurance. |
(4) | Represents expenses associated with the fourth quarter of 2013 decision to close 22 underperforming locations. |
(5) | Relates to the refinancing in May 2014 and the repricing in April 2013 of our Senior Secured Credit Facility. |
JUNE 29, | JUNE 30, | ||||
2014 | 2013 | ||||
Number of restaurants (at end of the period): | |||||
Outback Steakhouse | |||||
Company-owned—domestic | 650 | 663 | |||
Company-owned—international (1) (2) | 172 | 117 | |||
Franchised—domestic | 104 | 106 | |||
Franchised and joint venture—international (1) | 51 | 93 | |||
Total | 977 | 979 | |||
Carrabba’s Italian Grill | |||||
Company-owned | 240 | 234 | |||
Franchised | 1 | 1 | |||
Total | 241 | 235 | |||
Bonefish Grill | |||||
Company-owned | 193 | 175 | |||
Franchised | 5 | 7 | |||
Total | 198 | 182 | |||
Fleming’s Prime Steakhouse and Wine Bar | |||||
Company-owned | 66 | 65 | |||
Roy’s | |||||
Company-owned | 20 | 22 | |||
System-wide total | 1,502 | 1,483 |
(1) | Effective November 1, 2013, the Company acquired a controlling interest in the Brazilian Joint Venture resulting in the consolidation and reporting of 47 restaurants (as of the acquisition date) as Company-owned locations, which are reported as unconsolidated joint venture locations in the historical period presented. |
(2) | The restaurant count for Brazil is reported as of May 31, 2014 to correspond with the balance sheet date of this subsidiary and, therefore, excludes two restaurants that opened in June 2014. Restaurant counts for the Company’s Brazilian operations were reported as of June 30th in the historical period presented. |