Bloomin' Brands Announces 2023 Q1 Financial Results

Q1

2023

2022

CHANGE

Diluted earnings per share

$

0.93

$

0.73

$

0.20

Adjustments (1)

0.05

0.07

(0.02

)

Adjusted diluted earnings per share (1)

$

0.98

$

0.80

$

0.18

___________________

(1) Adjustments for the periods presented reflect consideration of our convertible note hedge, which offsets the dilutive impact of the shares underlying the 2025 Notes. There were no adjustments to Net income during the periods presented. See Non-GAAP Measures later in this release.

(dollars in millions, unaudited)

Q1 2023

Q1 2022

CHANGE

Total revenues

$

1,244.7

$

1,140.5

9.1

%

Operating income margin

9.7

%

9.4

%

0.3

%

Restaurant-level operating margin (1)

17.9

%

17.1

%

0.8

%

___________________

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

• The increase in Total revenues was primarily due to: (i) higher comparable restaurant sales, (ii) the net impact of restaurant openings and closures, (iii) the benefit of Brazil value added tax exemptions and (iv) the effect of foreign currency translation.
• Operating income margin improved from Q1 2022 due to: (i) increases in comparable restaurant sales, primarily driven by an increase in menu pricing and lapping the impact of COVID-19 in Brazil and Hong Kong, (ii) the impact of certain cost saving initiatives and (iii) the benefit of Brazil value added tax exemptions. These increases were partially offset by commodity, labor and operating expense inflation.

THIRTEEN WEEKS ENDED MARCH 26, 2023

COMPANY-OWNED

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

U.S.

Outback Steakhouse

4.9

%

Carrabba’s Italian Grill

6.7

%

Bonefish Grill

5.2

%

Fleming’s Prime Steakhouse & Wine Bar

3.6

%

Combined U.S.

5.1

%

International

Outback Steakhouse - Brazil (1)

14.3

%

_________________

(1) Excludes the effect of fluctuations in foreign currency rates and the benefit of Brazil value added tax exemptions. Includes trading day impact from calendar period reporting.

Financial Results:

Q2 2023 Outlook

U.S. comparable restaurant sales

0.5% to 1.5%

GAAP diluted earnings per share (1)

$0.59 to $0.64

Adjusted diluted earnings per share (2)

$0.62 to $0.67

_________________

(1) For GAAP purposes assumes weighted average diluted shares of approximately 98 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

(in thousands, except per share data)

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

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

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

TABLE TWO

BLOOMIN’ BRANDS, INC.

SEGMENT RESULTS

(UNAUDITED)

(dollars in thousands)

THIRTEEN WEEKS ENDED

U.S. Segment

MARCH 26, 2023

MARCH 27, 2022

Revenues

Restaurant sales

$

1,080,569

$

1,023,635

Franchise and other revenues

12,427

12,772

Total revenues

$

1,092,996

$

1,036,407

International Segment

Revenues

Restaurant sales (1)

$

147,665

$

99,940

Franchise and other revenues

4,085

4,188

Total revenues

$

151,750

$

104,128

Reconciliation of Segment Income from Operations to Consolidated Income from Operations

Segment income from operations

U.S.

$

133,243

$

132,226

International

24,508

8,884

Total segment income from operations

157,751

141,110

Unallocated corporate operating expense

(37,118

)

(33,854

)

Total income from operations

$

120,633

$

107,256

________________

(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.

TABLE THREE

BLOOMIN’ BRANDS, INC.

SUPPLEMENTAL BALANCE SHEET INFORMATION

MARCH 26, 2023

DECEMBER 25, 2022

(dollars in thousands)

(UNAUDITED)

Cash and cash equivalents

$

94,441

$

84,735

Net working capital (deficit) (1)

$

(672,587

)

$

(632,290

)

Total assets

$

3,231,793

$

3,320,425

Total debt, net

$

767,969

$

833,292

Total stockholders’ equity

$

322,841

$

273,909

_________________

(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 INCOME AND MARGIN NON-GAAP RECONCILIATIONS

(UNAUDITED)

Consolidated

THIRTEEN WEEKS ENDED

(dollars in thousands)

MARCH 26, 2023

MARCH 27, 2022

Income from operations

$

120,633

$

107,256

Operating income margin

9.7

%

9.4

%

Less:

Franchise and other revenues

16,512

16,960

Plus:

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

Restaurant-level operating income (1)

$

219,551

$

192,584

Restaurant-level operating margin

17.9

%

17.1

%

_________________

(1) The following categories of 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:

(a) 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.

(b) 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.

(c) General and administrative expense, which includes primarily non-restaurant-level costs associated with support of the restaurants and other activities at our corporate offices.

(d) Asset impairment charges and restaurant closing costs, which are not reflective of ongoing restaurant performance in a period.

U.S.

THIRTEEN WEEKS ENDED

(dollars in thousands)

MARCH 26, 2023

MARCH 27, 2022

Income from operations

$

133,243

$

132,226

Operating income margin

12.2

%

12.8

%

Less:

Franchise and other revenues

12,427

12,772

Plus:

Depreciation and amortization

38,163

34,758

General and administrative

25,505

23,445

Provision for impaired assets and restaurant closings

3,324

58

Restaurant-level operating income

$

187,808

$

177,715

Restaurant-level operating margin

17.4

%

17.4

%

International

THIRTEEN WEEKS ENDED

(dollars in thousands)

MARCH 26, 2023

MARCH 27, 2022

Income from operations

$

24,508

$

8,884

Operating income margin

16.2

%

8.5

%

Less:

Franchise and other revenues

4,085

4,188

Plus:

Depreciation and amortization

5,919

5,536

General and administrative

7,673

4,928

Provision for impaired assets and restaurant closings

—

1,775

Restaurant-level operating income

$

34,015

$

16,935

Restaurant-level operating margin

23.0

%

16.9

%

TABLE FIVE

BLOOMIN’ BRANDS, INC.

CONSOLIDATED RESTAURANT-LEVEL OPERATING MARGIN NON-GAAP RECONCILIATIONS

(UNAUDITED)

THIRTEEN WEEKS ENDED

FAVORABLE CHANGE
YEAR TO DATE

MARCH 26, 2023

MARCH 27, 2022

Restaurant sales

100.0

%

100.0

%

Food and beverage

31.3

%

32.0

%

0.7

%

Labor and other related

27.8

%

27.8

%

—

%

Other restaurant operating

23.0

%

23.1

%

0.1

%

Restaurant-level operating margin

17.9

%

17.1

%

0.8

%

TABLE SIX

BLOOMIN’ BRANDS, INC.

ADJUSTED DILUTED EARNINGS PER SHARE NON-GAAP RECONCILIATIONS

(UNAUDITED)

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

Diluted earnings per share

$

0.93

$

0.73

Adjusted diluted earnings per share (1)

$

0.98

$

0.80

Diluted weighted average common shares outstanding

98,011

103,454

Adjusted diluted weighted average common shares outstanding (1)

93,180

94,722

_________________

(1) Adjusted diluted weighted average common shares outstanding was calculated excluding the dilutive effect of 4,831 and 8,732 shares for the thirteen weeks ended March 26, 2023 and March 27, 2022, 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.

TABLE SEVEN

BLOOMIN’ BRANDS, INC.

COMPARATIVE RESTAURANT AND OFF-PREMISES ONLY KITCHEN INFORMATION

(UNAUDITED)

Number of restaurants:

DECEMBER 25, 2022

OPENINGS

CLOSURES

MARCH 26, 2023

U.S.

Outback Steakhouse

Company-owned

566

1

(3

)

564

Franchised

127

—

—

127

Total

693

1

(3

)

691

Carrabba’s Italian Grill

Company-owned

199

—

—

199

Franchised

19

—

—

19

Total

218

—

—

218

Bonefish Grill

Company-owned

173

—

(1

)

172

Franchised

7

—

(2

)

5

Total

180

—

(3

)

177

Fleming’s Prime Steakhouse & Wine Bar

Company-owned

65

—

—

65

Aussie Grill

Company-owned

7

—

—

7

U.S. total

1,163

1

(6

)

1,158

International

Company-owned

Outback Steakhouse - Brazil (1)

139

1

—

140

Other (1)(2)

36

—

—

36

Franchised

Outback Steakhouse - South Korea

86

5

(1

)

90

Other (2)

47

1

(1

)

47

International total

308

7

(2

)

313

System-wide total

1,471

8

(8

)

1,471

System-wide total - Company-owned

1,185

2

(4

)

1,183

System-wide total - Franchised

286

6

(4

)

288

____________________

(1) The restaurant counts for Brazil, including Abbraccio and Aussie Grill restaurants within International Company-owned Other, are reported as of November 30, 2022 and February 28, 2023, respectively, to correspond with the balance sheet dates of this subsidiary.

(2) International Company-owned Other and International Franchised Other each included four Aussie Grill locations as of March 26, 2023.

Number of kitchens (1):

DECEMBER 25, 2022

OPENINGS

CLOSURES

MARCH 26, 2023

U.S.

Company-owned

1

—

—

1

International

Franchised - South Korea

35

—

(10

)

25

System-wide total

36

—

(10

)

26

____________________

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

TABLE EIGHT

BLOOMIN’ BRANDS, INC.

COMPARABLE RESTAURANT SALES INFORMATION

(UNAUDITED)

THIRTEEN WEEKS ENDED

MARCH 26, 2023

MARCH 27, 2022

Year over year percentage change:

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

U.S. (1)

Outback Steakhouse

4.9

%

9.2

%

Carrabba’s Italian Grill

6.7

%

11.5

%

Bonefish Grill

5.2

%

21.3

%

Fleming’s Prime Steakhouse & Wine Bar

3.6

%

45.7

%

Combined U.S.

5.1

%

14.0

%

International

Outback Steakhouse - Brazil (2)

14.3

%

35.9

%

Traffic:

U.S.

Outback Steakhouse

(1.5

)%

(1.0

)%

Carrabba’s Italian Grill

1.7

%

3.0

%

Bonefish Grill

(0.5

)%

7.8

%

Fleming’s Prime Steakhouse & Wine Bar

0.2

%

28.8

%

Combined U.S.

(0.7

)%

1.5

%

International

Outback Steakhouse - Brazil

2.2

%

28.7

%

Average check per person (3):

U.S.

Outback Steakhouse

6.4

%

10.2

%

Carrabba’s Italian Grill

5.0

%

8.5

%

Bonefish Grill

5.7

%

13.5

%

Fleming’s Prime Steakhouse & Wine Bar

3.4

%

16.9

%

Combined U.S.

5.8

%

12.5

%

International

Outback Steakhouse - Brazil

11.6

%

7.6

%

____________________

(1) Relocated restaurants closed more than 60 days are excluded from comparable restaurant sales until at least 18 months after reopening.

(2) Includes trading day impact from calendar period reporting. Excludes the effect of fluctuations in foreign currency rates and the benefit of the Brazil tax legislation.

(3) Includes the impact of menu pricing changes, product mix and discounts.