Bloomin' Brands Announces 2022 Q2 Financial Results

Q2

2022

2021

CHANGE

Diluted (loss) earnings per share

$

(0.72

)

$

0.75

$

(1.47

)

Adjustments (1)

1.40

0.06

1.34

Adjusted diluted earnings per share (1)

$

0.68

$

0.81

$

(0.13

)

___________________
(1) Adjustments for Q2 2022 primarily relate to the repurchase of $125 million of our outstanding convertible notes (the “2025 Notes”), as well as the settlements of the related convertible senior note hedges and warrants (the “2025 Notes Partial Repurchase”). See Non-GAAP Measures later in this release.

(dollars in millions, unaudited)

Q2 2022

Q2 2021

CHANGE

Total revenues

$

1,125.2

$

1,077.4

4.4

%

Restaurant-level operating margin

15.5

%

20.3

%

(4.8

) %

GAAP Operating income margin

7.8

%

11.6

%

(3.8

) %

Adjusted operating income margin (1)

7.8

%

11.0

%

(3.2

) %

___________________
(1) See Non-GAAP Measures later in this release.

THIRTEEN WEEKS ENDED

JUNE 26, 2022

Comparable restaurant sales (stores open 18 months or more):

COMPARABLE TO 2021

COMPARABLE TO 2019

U.S.

Outback Steakhouse

(1.1) %

10.1 %

Carrabba’s Italian Grill

(1.0) %

15.6 %

Bonefish Grill

(1.1) %

3.3 %

Fleming’s Prime Steakhouse & Wine Bar

6.0 %

31.8 %

Combined U.S.

(0.4) %

11.7 %

International

Outback Steakhouse - Brazil (1)

95.7 %

27.6 %

_________________
(1) Excludes the effect of fluctuations in foreign currency rates. Includes trading day impact from calendar period reporting.

THIRTEEN WEEKS ENDED

Average restaurant unit volumes (weekly):

JUNE 26, 2022

JUNE 30, 2019 (1)

U.S.

Outback Steakhouse

$

77,941

$

69,497

Carrabba’s Italian Grill

$

66,016

$

56,285

Bonefish Grill

$

64,113

$

60,018

Fleming’s Prime Steakhouse & Wine Bar

$

112,900

$

81,754

International

Outback Steakhouse - Brazil (2)

$

61,210

$

66,829

_________________
(1) Presented for comparability to pre-COVID-19 average restaurant unit volumes.
(2) Translated at average exchange rates of 4.89 and 3.91 for the thirteen weeks ended June 26, 2022 and June 30, 2019, respectively. Brazil average restaurant unit volumes for the thirteen weeks ended June 26, 2022 are up 14% on a constant currency basis versus the comparable period in 2019.

Financial Results:

Prior Outlook

Current Outlook

Total revenues

$4.35B to $4.40B

$4.40B to $4.45B

GAAP diluted earnings per share (1)

$2.23 to $2.32

$1.11 to $1.22

GAAP effective income tax rate (2)

16.5% to 17.5%

28% to 29%

Other Selected Financial Data:

Commodity inflation

11% to 13%

13% to 14%

Capital expenditures

$225M to $240M

$200M to $210M

Weighted average adjusted diluted shares (3)

Approx. 95 million

Approx. 93 million

_________________
(1) For GAAP purposes assumes weighted average diluted shares of approximately 99 million. The total change in GAAP earnings per share is due to the impact of losses related to the 2025 Notes Partial Repurchase.
(2) Increase in the GAAP effective income tax rate primarily related to the 2025 Notes Partial Repurchase in Q2 2022.
(3) Reflects the impact of the partial repurchase of the 2025 Notes.

Financial Results:

Q3 2022 Outlook

Total revenues

$1.05B to $1.07B

GAAP diluted earnings per share (1)

$0.30 to $0.35

Adjusted diluted earnings per share (2)

$0.31 to $0.36

_________________
(1) For GAAP purposes assumes weighted average diluted shares of approximately 96 million.
(2) Assumes weighted average adjusted diluted shares of approximately 93 million, which includes the benefit of the convertible note hedge entered into in May 2020.

TABLE ONE

BLOOMIN’ BRANDS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

THIRTEEN WEEKS ENDED

TWENTY-SIX WEEKS ENDED

(in thousands, except per share data)

JUNE 26, 2022

JUNE 27, 2021

JUNE 26, 2022

JUNE 27, 2021

Revenues

Restaurant sales

$

1,108,918

$

1,055,227

$

2,232,493

$

2,034,678

Franchise and other revenues

16,244

22,139

33,204

30,161

Total revenues

1,125,162

1,077,366

2,265,697

2,064,839

Costs and expenses

Food and beverage costs

364,459

312,102

723,829

603,972

Labor and other related

308,759

294,999

621,270

569,637

Other restaurant operating

263,529

233,450

522,639

462,743

Depreciation and amortization

41,257

40,539

83,032

81,765

General and administrative

59,246

66,462

117,920

123,710

Provision for impaired assets and restaurant closings

193

5,177

2,032

7,377

Total costs and expenses

1,037,443

952,729

2,070,722

1,849,204

Income from operations

87,719

124,637

194,975

215,635

Loss on extinguishment and modification of debt

(107,630

)

(2,073

)

(107,630

)

(2,073

)

Loss on fair value adjustment of derivatives, net

(17,685

)

—

(17,685

)

—

Other income, net

—

—

—

21

Interest expense, net

(12,548

)

(14,990

)

(26,181

)

(29,618

)

(Loss) income before provision for income taxes

(50,144

)

107,574

43,479

183,965

Provision for income taxes

11,536

22,688

27,465

29,281

Net (loss) income

(61,680

)

84,886

16,014

154,684

Less: net income attributable to noncontrolling interests

1,955

2,341

4,138

3,277

Net (loss) income attributable to Bloomin’ Brands

(63,635

)

82,545

11,876

151,407

Convertible senior notes if-converted method interest adjustment, net of tax

—

—

—

691

Diluted net (loss) income attributable to Bloomin’ Brands

$

(63,635

)

$

82,545

$

11,876

$

152,098

(Loss) earnings per share:

Basic

$

(0.72

)

$

0.93

$

0.13

$

1.71

Diluted

$

(0.72

)

$

0.75

$

0.12

$

1.38

Weighted average common shares outstanding:

Basic

88,898

89,075

89,127

88,721

Diluted

88,898

109,805

102,045

110,223

TABLE TWO

BLOOMIN’ BRANDS, INC.

SEGMENT RESULTS

(UNAUDITED)

(dollars in thousands)

THIRTEEN WEEKS ENDED

TWENTY-SIX WEEKS ENDED

U.S. Segment

JUNE 26, 2022

JUNE 27, 2021

JUNE 26, 2022

JUNE 27, 2021

Revenues

Restaurant sales

$

985,927

$

990,293

$

2,009,562

$

1,890,352

Franchise and other revenues

12,700

12,765

25,472

17,624

Total revenues

$

998,627

$

1,003,058

$

2,035,034

$

1,907,976

Restaurant-level operating margin

15.1

%

21.7

%

16.3

%

20.5

%

Income from operations

$

104,620

$

165,297

$

236,846

$

287,032

Operating income margin

10.5

%

16.5

%

11.6

%

15.0

%

International Segment

Revenues

Restaurant sales

$

122,991

$

64,934

$

222,931

$

144,326

Franchise and other revenues (1)

3,544

9,374

7,732

12,537

Total revenues

$

126,535

$

74,308

$

230,663

$

156,863

Restaurant-level operating margin

17.8

%

3.2

%

17.4

%

9.3

%

Income from operations

$

14,126

$

2,470

$

23,010

$

6,007

Operating income margin

11.2

%

3.3

%

10.0

%

3.8

%

Reconciliation of Segment Income from Operations to Consolidated Income from Operations

Segment income from operations

U.S.

$

104,620

$

165,297

$

236,846

$

287,032

International

14,126

2,470

23,010

6,007

Total segment income from operations

118,746

167,767

259,856

293,039

Unallocated corporate operating expense

(31,027

)

(43,130

)

(64,881

)

(77,404

)

Total income from operations

$

87,719

$

124,637

$

194,975

$

215,635

____________________
(1) During the thirteen and twenty-six weeks ended June 27, 2021, we recognized $6.3 million of other revenues in connection with favorable court rulings in Brazil regarding the calculation methodology and taxable base of Program of Social Integration (“PIS”) and Contribution for the Financing of Social Security (“COFINS”) taxes.

TABLE THREE

BLOOMIN’ BRANDS, INC.

SUPPLEMENTAL BALANCE SHEET INFORMATION

JUNE 26, 2022

DECEMBER 26, 2021

(dollars in thousands)

(UNAUDITED)

Cash and cash equivalents

$

95,346

$

87,585

Net working capital (deficit) (1)

$

(616,924

)

$

(631,833

)

Total assets

$

3,229,995

$

3,294,271

Total debt, net

$

801,733

$

793,065

Total stockholders’ equity

$

262,741

$

222,850

_________________
(1) We have, and in the future may continue to have, negative working capital balances (as is common for many restaurant companies). We operate successfully with negative working capital because cash collected on restaurant sales is typically received before payment is due on our current liabilities, and our inventory turnover rates require relatively low investment in inventories. Additionally, ongoing cash flows from restaurant operations and gift card sales are typically used to service debt obligations and to make capital expenditures.

TABLE FOUR

BLOOMIN’ BRANDS, INC.

RESTAURANT-LEVEL OPERATING MARGIN RECONCILIATIONS

(UNAUDITED)

Consolidated

THIRTEEN WEEKS ENDED

TWENTY-SIX WEEKS ENDED

(dollars in thousands)

JUNE 26, 2022

JUNE 27, 2021

JUNE 26, 2022

JUNE 27, 2021

Income from operations

$

87,719

$

124,637

$

194,975

$

215,635

Operating income margin

7.8

%

11.6

%

8.6

%

10.4

%

Less:

Franchise and other revenues

16,244

22,139

33,204

30,161

Plus:

Depreciation and amortization

41,257

40,539

83,032

81,765

General and administrative

59,246

66,462

117,920

123,710

Provision for impaired assets and restaurant closings

193

5,177

2,032

7,377

Restaurant-level operating income

$

172,171

$

214,676

$

364,755

$

398,326

Restaurant-level operating margin

15.5

%

20.3

%

16.3

%

19.6

%

U.S.

THIRTEEN WEEKS ENDED

TWENTY-SIX WEEKS ENDED

(dollars in thousands)

JUNE 26, 2022

JUNE 27, 2021

JUNE 26, 2022

JUNE 27, 2021

Income from operations

$

104,620

$

165,297

$

236,846

$

287,032

Operating income margin

10.5

%

16.5

%

11.6

%

15.0

%

Less:

Franchise and other revenues

12,700

12,765

25,472

17,624

Plus:

Depreciation and amortization

33,545

33,579

68,303

67,224

General and administrative

23,648

22,953

47,093

44,045

Provision for impaired assets and restaurant closings

191

5,676

249

7,139

Restaurant-level operating income

$

149,304

$

214,740

$

327,019

$

387,816

Restaurant-level operating margin

15.1

%

21.7

%

16.3

%

20.5

%

International

THIRTEEN WEEKS ENDED

TWENTY-SIX WEEKS ENDED

(dollars in thousands)

JUNE 26, 2022

JUNE 27, 2021

JUNE 26, 2022

JUNE 27, 2021

Income from operations

$

14,126

$

2,470

$

23,010

$

6,007

Operating income margin

11.2

%

3.3

%

10.0

%

3.8

%

Less:

Franchise and other revenues

3,544

9,374

7,732

12,537

Plus:

Depreciation and amortization

6,020

5,565

11,556

11,285

General and administrative

5,331

4,116

10,259

8,721

Provision for impaired assets and restaurant closings

—

(708

)

1,775

(1

)

Restaurant-level operating income

$

21,933

$

2,069

$

38,868

$

13,475

Restaurant-level operating margin

17.8

%

3.2

%

17.4

%

9.3

%

_________________

The following categories of our revenue and operating expenses are not included in restaurant-level operating margin because we do not consider them reflective of operating performance at the
restaurant-level within a period:

(1) Franchise and other revenues, which are earned primarily from franchise royalties and other non-food and beverage revenue streams, such as rental and sublease income.
(2) Depreciation and amortization which, although substantially all of which is related to restaurant-level assets, represent historical sunk costs rather than cash outlays for the restaurants.
(3) General and administrative expense which includes primarily non-restaurant-level costs associated with support of the restaurants and other activities at our corporate offices.
(4) Asset impairment charges and restaurant closing costs which are not reflective of ongoing restaurant performance in a period.

TABLE FIVE

BLOOMIN’ BRANDS, INC.

RESTAURANT-LEVEL OPERATING MARGIN RECONCILIATIONS

(UNAUDITED)

THIRTEEN WEEKS ENDED

(UNFAVORABLE)
FAVORABLE CHANGE
QUARTER TO DATE

Consolidated:

JUNE 26, 2022

JUNE 27, 2021

Restaurant sales

100.0 %

100.0 %

Food and beverage costs

32.9 %

29.6 %

(3.3) %

Labor and other related

27.8 %

28.0 %

0.2 %

Other restaurant operating

23.8 %

22.1 %

(1.7) %

Restaurant-level operating margin

15.5 %

20.3 %

(4.8) %

Segments - Restaurant-level operating margin:

U.S.

15.1 %

21.7 %

(6.6) %

International

17.8 %

3.2 %

14.6 %

TWENTY-SIX WEEKS ENDED

(UNFAVORABLE)
FAVORABLE CHANGE
YEAR TO DATE

Consolidated:

JUNE 26, 2022

JUNE 27, 2021

Restaurant sales

100.0 %

100.0 %

Food and beverage costs

32.4 %

29.7 %

(2.7) %

Labor and other related

27.8 %

28.0 %

0.2 %

Other restaurant operating

23.4 %

22.7 %

(0.7) %

Restaurant-level operating margin

16.3 %

19.6 %

(3.3) %

Segments - Restaurant-level operating margin:

U.S.

16.3 %

20.5 %

(4.2) %

International

17.4 %

9.3 %

8.1 %

TABLE SIX

BLOOMIN’ BRANDS, INC.

INCOME FROM OPERATIONS, NET (LOSS) INCOME AND DILUTED (LOSS) EARNINGS PER SHARE NON-GAAP RECONCILIATIONS

(UNAUDITED)

THIRTEEN WEEKS ENDED

TWENTY-SIX WEEKS ENDED

(in thousands, except per share data)

JUNE 26, 2022

JUNE 27, 2021

JUNE 26, 2022

JUNE 27, 2021

Income from operations

$

87,719

$

124,637

$

194,975

$

215,635

Operating income margin

7.8

%

11.6

%

8.6

%

10.4

%

Adjustments:

Legal and other matters (1)

—

(6,337

)

—

(6,337

)

Total income from operations adjustments

—

(6,337

)

—

(6,337

)

Adjusted income from operations

$

87,719

$

118,300

$

194,975

$

209,298

Adjusted operating income margin

7.8

%

11.0

%

8.6

%

10.2

%

Diluted net (loss) income attributable to Bloomin’ Brands

$

(63,635

)

$

82,545

$

11,876

$

152,098

Convertible senior notes if-converted method interest adjustment, net of tax (2)

—

—

—

691

Net (loss) income attributable to Bloomin’ Brands

(63,635

)

82,545

11,876

151,407

Adjustments:

Income from operations adjustments

—

(6,337

)

—

(6,337

)

Loss on extinguishment and modification of debt (3)

107,630

2,073

107,630

2,073

Loss on fair value adjustment of derivatives, net (4)

17,685

—

17,685

—

Total adjustments, before income taxes

125,315

(4,264

)

125,315

(4,264

)

Adjustment to provision for income taxes (5)

1,322

1,243

1,322

1,243

Net adjustments

126,637

(3,021

)

126,637

(3,021

)

Adjusted net income

$

63,002

$

79,524

$

138,513

$

148,386

Diluted (loss) earnings per share (6)

$

(0.72

)

$

0.75

$

0.12

$

1.38

Adjusted diluted earnings per share (7)

$

0.68

$

0.81

$

1.48

$

1.53

Diluted weighted average common shares outstanding (6)

88,898

109,805

102,045

110,223

Adjusted diluted weighted average common shares outstanding (7)

92,863

98,574

93,792

97,011

_________________
(1) The thirteen and twenty-six weeks ended June 27, 2021 include the recognition of recoverable PIS and COFINS taxes, including accrued interest, within other revenues as a result of favorable court rulings in Brazil during the second quarter of 2021.
(2) Adjustment for interest expense related to the 2025 Notes weighted for the portion of the period prior to our election under the 2025 Notes indenture to settle the principal portion of the 2025 Notes in cash.
(3) The thirteen and twenty-six weeks ended June 26, 2022 include losses in connection with the $125.0 million 2025 Notes Partial Repurchase, the modification of our revolving credit facility and the extinguishment of our term loan A.
(4) Fair value adjustments to the conversion feature of the 2025 Notes repurchased, as well as the settlements of the related convertible senior note hedges and warrants in connection with the 2025 Notes Partial Repurchase.
(5) Income tax effect of the adjustments for the periods presented. For the thirteen and twenty-six weeks ended June 26, 2022, the primary difference between the GAAP and adjusted effective income tax rates relate to certain non-deductible losses and other tax costs associated with the 2025 Notes Partial Repurchase.
(6) Due to the GAAP net loss, the effect of dilutive securities was excluded from the calculation of GAAP diluted loss per share for the thirteen weeks ended June 26, 2022.
(7) Adjusted diluted weighted average common shares outstanding was calculated excluding the dilutive effect of 7,774 and 11,231 shares for the thirteen weeks ended June 26, 2022 and June 27, 2021, respectively, and 8,253 and 10,442 shares for the twenty-six weeks ended June 26, 2022 and June 27, 2021, respectively, to be issued upon conversion of the 2025 Notes to satisfy the amount in excess of the principal since our convertible note hedge offsets the dilutive impact of the shares underlying the 2025 Notes. For the twenty-six weeks ended June 27, 2021, adjusted diluted weighted average common shares outstanding was also calculated assuming our February 2021 election to settle the principal portion of the 2025 Notes in cash was in effect for the entire period. For adjusted diluted earnings per share, the calculation includes 3,965 dilutive shares for the thirteen weeks ended June 26, 2022, primarily related to outstanding warrants.

THIRTEEN WEEKS ENDED

TWENTY-SIX WEEKS ENDED

(dollars in thousands)

JUNE 26, 2022

JUNE 27, 2021

JUNE 26, 2022

JUNE 27, 2021

Franchise and other revenues

$

—

$

(6,337

)

$

—

$

(6,337

)

Loss on extinguishment and modification of debt

107,630

2,073

107,630

2,073

Loss on fair value adjustment of derivatives, net

17,685

—

17,685

—

Provision for income taxes

1,322

1,243

1,322

1,243

Net adjustments

$

126,637

$

(3,021

)

$

126,637

$

(3,021

)

TABLE SEVEN

BLOOMIN’ BRANDS, INC.

SEGMENT INCOME FROM OPERATIONS NON-GAAP RECONCILIATIONS

(UNAUDITED)

(dollars in thousands)

THIRTEEN WEEKS ENDED

TWENTY-SIX WEEKS ENDED

International Segment

JUNE 26, 2022

JUNE 27, 2021

JUNE 26, 2022

JUNE 27, 2021

Income from operations

$

14,126

$

2,470

$

23,010

$

6,007

Operating income margin

11.2

%

3.3

%

10.0

%

3.8

%

Adjustments:

Legal and other matters (1)

—

(6,337

)

—

(6,337

)

Adjusted income (loss) from operations

$

14,126

$

(3,867

)

$

23,010

$

(330

)

Adjusted operating income (loss) margin

11.2

%

(5.7

) %

10.0

%

(0.2

) %

_________________
(1) Recognition of recoverable PIS and COFINS taxes, including accrued interest, within other revenues as a result of favorable court rulings in Brazil during the second quarter of 2021.

TABLE EIGHT

BLOOMIN’ BRANDS, INC.

COMPARATIVE RESTAURANT AND OFF-PREMISES ONLY KITCHEN INFORMATION

(UNAUDITED)

Number of restaurants:

MARCH 27, 2022

OPENINGS

CLOSURES

JUNE 26, 2022

U.S.

Outback Steakhouse

Company-owned

562

2

(1)

563

Franchised

130

—

—

130

Total

692

2

(1)

693

Carrabba’s Italian Grill

Company-owned

199

—

(1)

198

Franchised

20

—

(1)

19

Total

219

—

(2)

217

Bonefish Grill

Company-owned

175

—

(1)

174

Franchised

7

—

—

7

Total

182

—

(1)

181

Fleming’s Prime Steakhouse & Wine Bar

Company-owned

64

—

—

64

Aussie Grill

Company-owned

7

—

(2)

5

U.S. total

1,164

2

(6)

1,160

International

Company-owned

Outback Steakhouse - Brazil (1)

123

6

—

129

Other (1)(2)

33

—

—

33

Franchised

Outback Steakhouse - South Korea

78

1

(2)

77

Other (2)

52

—

(2)

50

International total

286

7

(4)

289

System-wide total

1,450

9

(10)

1,449

System-wide total - Company-owned

1,163

8

(5)

1,166

System-wide total - Franchised

287

1

(5)

283

____________________
(1) The restaurant counts for Brazil, including Abbraccio restaurants within International Company-owned Other, are reported as of February 28, 2022 and May 31, 2022, respectively, to correspond with the balance sheet dates of this subsidiary.
(2) International Company-owned Other and International Franchised Other included two and three Aussie Grill locations, respectively, as of June 26, 2022.

MARCH 27, 2022

OPENINGS

CLOSURES

JUNE 26, 2022

U.S.

Company-owned

2

—

—

2

International

Company-owned

1

—

—

1

Franchised - South Korea

46

3

—

49

System-wide total

49

3

—

52

____________________
(1) Excludes virtual concepts that operate out of existing restaurants and sports venue locations.

TABLE NINE

BLOOMIN’ BRANDS, INC.

COMPARABLE RESTAURANT SALES INFORMATION

(UNAUDITED)

THIRTEEN WEEKS ENDED

TWENTY-SIX WEEKS ENDED

JUNE 26, 2022

JUNE 26, 2022

COMPARABLE TO

COMPARABLE TO

2021

2019 (1)

2021

2019 (1)

Year over year percentage change:

Comparable restaurant sales (stores open 18 months or more):

U.S. (2)

Outback Steakhouse

(1.1) %

10.1 %

3.9 %

6.3 %

Carrabba’s Italian Grill

(1.0) %

15.6 %

5.0 %

13.1 %

Bonefish Grill

(1.1) %

3.3 %

9.2 %

2.5 %

Fleming’s Prime Steakhouse & Wine Bar

6.0 %

31.8 %

23.1 %

27.6 %

Combined U.S.

(0.4) %

11.7 %

6.4 %

8.6 %

International

Outback Steakhouse - Brazil (3)

95.7 %

27.6 %

61.1 %

20.8 %

Traffic:

U.S.

Outback Steakhouse

(8.7) %

(4.5) %

(5.0) %

(7.4) %

Carrabba’s Italian Grill

(7.5) %

4.6 %

(2.5) %

3.2 %

Bonefish Grill

(8.6) %

(4.9) %

(1.0) %

(5.6) %

Fleming’s Prime Steakhouse & Wine Bar

(2.9) %

8.8 %

11.1 %

7.3 %

Combined U.S.

(8.3) %

(2.5) %

(3.5) %

(4.8) %

International

Outback Steakhouse - Brazil

57.8 %

28.8 %

42.0 %

23.9 %

Average check per person (4):

U.S.

Outback Steakhouse

7.6 %

14.6 %

8.9 %

13.7 %

Carrabba’s Italian Grill

6.5 %

11.0 %

7.5 %

9.9 %

Bonefish Grill

7.5 %

8.2 %

10.2 %

8.1 %

Fleming’s Prime Steakhouse & Wine Bar

8.9 %

23.0 %

12.0 %

20.3 %

Combined U.S.

7.9 %

14.2 %

9.9 %

13.4 %

International

Outback Steakhouse - Brazil

37.3 %

— %

19.2 %

(2.8) %

____________________
(1) Comparable restaurant sales, traffic and average check per person increases (decreases) relative to 2019 for improved comparability to pre-COVID-19 restaurant sales.
(2) Relocated restaurants closed more than 60 days are excluded from comparable restaurant sales until at least 18 months after reopening.
(3) Excludes the effect of fluctuations in foreign currency rates. Includes trading day impact from calendar period reporting.
(4) Average check per person includes the impact of menu pricing changes, product mix and discounts.