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Bloomin’ Brands Announces 2021 Q3 Financial Results and Strong Operating Margin Expansion

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Q3 Diluted EPS of $0.03 and Adjusted Diluted EPS of $0.57

Q3 Comparable Restaurant Sales Growth of 18.3% at Outback Steakhouse and 25.5% Combined U.S.

Fourth Quarter-to-Date U.S. Comp Sales Trends Ahead of Industry

TAMPA, Fla., November 02, 2021--(BUSINESS WIRE)--Bloomin’ Brands, Inc. (Nasdaq: BLMN) today reported results for the third quarter 2021 ("Q3 2021") compared to the third quarter 2020 ("Q3 2020").

CEO Comments

"Q3 represented another quarter of strong results with significant sales, margin and earnings growth," said David Deno, Chief Executive Officer. "This performance is a result of the great work by our employees in the restaurants and the restaurant support center. Recently, we have seen inflationary pressures in our business and have levers available to combat these headwinds and achieve our margin targets. We remain confident in our strategy and are well positioned to deliver our long-term goals of growing healthy sales, optimizing margins, and increasing cash flow."

Diluted EPS and Adjusted Diluted EPS

The following table reconciles Diluted earnings (loss) per share attributable to common stockholders to Adjusted diluted earnings (loss) per share for the periods indicated:

Q3

2021

2020

CHANGE

Q3 2019 (1)

Diluted earnings (loss) per share attributable to common stockholders

$

0.03

$

(0.20

)

$

0.23

$

0.11

Adjustments (2)

0.54

0.08

0.46

(0.01

)

Adjusted diluted earnings (loss) per share (2)

$

0.57

$

(0.12

)

$

0.69

$

0.10

___________________

(1) Presented for improved comparability.

(2) Includes a $61.9 million payment made to the founders of our Carrabba’s Italian Grill concept in the third quarter of 2021 in connection with an agreement to terminate future royalty payments. See Non-GAAP Measures later in this release.

Third Quarter Financial Results

(dollars in millions)

Q3 2021

Q3 2020

CHANGE

Q3 2019 (1)

Total revenues

$

1,010.5

$

771.3

31.0

%

$

967.1

Restaurant-level operating margin

10.3

%

10.7

%

(0.4

)%

12.9

%

Adjusted restaurant-level operating margin (2)

16.8

%

10.7

%

6.1

%

12.5

%

GAAP operating income (loss) margin

1.5

%

(1.8

)%

3.3

%

2.3

%

Adjusted operating income (loss) margin (2)

8.2

%

(1.3

)%

9.5

%

2.3

%

___________________

(1) Presented for improved comparability.

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

  • The increase in Total revenues was primarily due to: (i) higher comparable restaurant sales from in-restaurant dining and strong retention of off-premises sales, (ii) the net impact of restaurant openings and closures and (iii) higher franchise revenues.

  • GAAP restaurant-level operating margin decreased primarily due to: (i) the Carrabba’s Italian Grill royalty termination, (ii) higher labor costs and commodity inflation and (iii) higher utilities, rent and operating expense. These decreases were partially offset by higher comparable restaurant sales and lower advertising expense.

  • GAAP operating income margin increased primarily due to higher comparable restaurant sales from in-restaurant dining and strong retention of off-premises sales, and higher franchise revenues.

  • Adjusted restaurant-level operating margin and adjusted operating income margin exclude the impact of the Carrabba’s Italian Grill royalty termination and are up significantly on a two-year basis to 2019.

Third Quarter Comparable Restaurant Sales

Third quarter U.S. comparable restaurant sales results were positive on a two-year basis given strong retention of off-premises sales. In August 2021, sales began decelerating due to traditional seasonality and concerns over the Delta variant. In addition, there was significant promotional activity during 2019 at Outback Steakhouse that we chose not to replicate in 2021 given the evolving consumer environment, including offers tied to the launch of our third party delivery channel. Despite these headwinds in Q3, U.S. comparable restaurant sales increased 9.5% when compared to Q3 2019.

The following table includes Company-owned comparable restaurant sales for the third quarter ended September 26, 2021 relative to 2019 and 2020:

THIRTEEN WEEKS ENDED

SEPTEMBER 26, 2021

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

COMPARABLE TO 2019 (1)

COMPARABLE TO 2020

U.S.

Outback Steakhouse

6.0

%

18.3

%

Carrabba’s Italian Grill

17.1

%

28.8

%

Bonefish Grill

5.7

%

36.6

%

Fleming’s Prime Steakhouse & Wine Bar

28.0

%

59.6

%

Combined U.S.

9.5

%

25.5

%

International

Outback Steakhouse - Brazil (2)

(5.1

)%

109.8

%

_________________

(1) Represents comparable restaurant sales increases (decreases) relative to 2019 for improved comparability due to the impact of COVID-19 on fiscal year 2020 restaurant sales.

(2) Outback Steakhouse Brazil results are reported on a one-month lag and are presented on a calendar basis. Represents results through August 31, 2021. Excludes the effect of fluctuations in foreign currency rates. Includes trading day impact from calendar period reporting.

Recent Sales Results - U.S.

The following tables include quarter-to-date U.S. Company-owned comparable restaurant sales for the four-week period ended October 24, 2021 and weekly U.S. comparable average unit volumes for the periods indicated. During this period the Company chose not to replicate 2019 marketing activities and promotions at Outback Steakhouse given the evolving consumer environment. This had a significant impact on 2021 comparable restaurant sales as compared to 2019.

FOUR WEEKS ENDED

OCTOBER 24, 2021

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

COMPARABLE TO 2019 (1)

COMPARABLE TO 2020 (2)

U.S.

Outback Steakhouse

0.3

%

11.0

%

Carrabba’s Italian Grill

13.1

%

17.3

%

Bonefish Grill

1.7

%

22.8

%

Fleming’s Prime Steakhouse & Wine Bar

30.2

%

39.5

%

Combined U.S.

5.0

%

16.1

%

FOUR WEEKS ENDED

Comparable restaurant average unit volumes (weekly):

OCTOBER 24, 2021 (3)

OCTOBER 27, 2019 (3)

U.S.

Outback Steakhouse

$

70,275

$

70,065

Carrabba’s Italian Grill

$

61,246

$

54,159

Bonefish Grill

$

57,069

$

56,191

Fleming’s Prime Steakhouse & Wine Bar

$

103,994

$

79,859

Combined U.S.

$

68,248

$

65,036

_________________

(1) For the four-week period September 27, 2021 through October 24, 2021 as compared to September 30, 2019 through October 27, 2019.

(2) For the four-week period September 27, 2021 through October 24, 2021 as compared to September 28, 2020 through October 25, 2020.

(3) For the four-week periods September 27, 2021 through October 24, 2021 and September 30, 2019 through October 27, 2019, respectively.

Recent Sales Results - Brazil

Brazil’s fourth quarter-to-date comparable restaurant sales have continued to strengthen due to an increase in in-restaurant dining capacity for a majority of the country as COVID-19 case counts decline and vaccination rates increase. In São Paulo, which represents our largest market with 46% of stores, in-restaurant dining capacity increased to 80% on August 1, 2021, providing optimism about the continued recovery. The following tables include Brazil fourth quarter-to-date Company-owned comparable restaurant sales for the eight-week period ended October 24, 2021 and weekly comparable average unit volumes for the periods indicated:

EIGHT WEEKS ENDED

OCTOBER 24, 2021

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

COMPARABLE TO 2019 (1)

COMPARABLE TO 2020 (2)

International

Outback Steakhouse - Brazil (3)

7.0

%

28.6

%

EIGHT WEEKS ENDED

Comparable restaurant average unit volumes (weekly):

OCTOBER 24, 2021 (4)

OCTOBER 27, 2019 (4)

International

Outback Steakhouse - Brazil (5)

$

61,198

$

58,088

________________

(1) For the eight-week period August 30, 2021 through October 24, 2021 as compared to September 2, 2019 through October 27, 2019.

(2) For the eight-week period August 30, 2021 through October 24, 2021 as compared to August 31, 2020 through October 25, 2020.

(3) Excludes the effect of fluctuations in foreign currency rates.

(4) For the eight-week periods August 30, 2021 through October 24, 2021 and September 2, 2019 through October 27, 2019, respectively.

(5) Translated at an average exchange rate of 5.36.

Q4 2021 Financial Outlook

The table below presents our expectations for selected fiscal Q4 2021 operating results. Our outlook assumes no significant business interruptions related to COVID-19 and contemplates the following:

  • Continuing U.S. sales trends and includes a level of traditional Q4 seasonality;

  • Achieving ongoing operating efficiencies from simplification efforts, waste reduction and lower advertising;

  • Impact from Florida minimum wage increases due to legislative changes that went into effect in September, higher wage pressures and retention efforts, as well as increased commodity inflation; and

  • Q4 Adjusted diluted earnings per share guidance of at least $0.50 represents growth of 56% versus Q4 2019.

Selected Financial Data:

Q4 2021 Outlook

Total revenues

At least $1.02B

EBITDA (1)

At least $115M

GAAP diluted earnings per share (2)

At least $0.45

Adjusted diluted earnings per share (3)

At least $0.50

_________________

(1) See EBITDA outlook reconciliation later in this release.

(2) Assumes weighted average diluted shares of approximately 109 million, which includes the dilutive impact of shares issuable in excess of the convertible note principal and excludes the benefit of the convertible notes hedge.

(3) Assumes weighted average adjusted diluted shares of approximately 98 million, which excludes common shares to be issued upon conversion of the 2025 Notes for the amount in excess of the principal since our convertible note hedge offsets the dilutive impact of the shares underlying the 2025 Notes.

Fiscal 2021 Financial Outlook

We are updating our 2021 financial outlook for the following items:

  • Increased commodity inflation reflecting increases in protein costs, primarily chicken and seafood, as we acquired additional supply outside of our contracted terms due to higher sales volumes and strategic contract pricing to secure next year's supply; and

  • Higher labor inflation from increased wage pressures, training costs, and retention efforts.

All other aspects of our previously provided financial outlook remain unchanged. See the table below for more details.

Selected Financial Data:

Prior Outlook

Current Outlook

Commodity inflation

Approx. 1.0%

Approx. 1.5%

Labor inflation

3.0% - 3.5%

Approx. 4.5%

We will discuss current inflationary trends and preliminary thoughts on 2022 on our third quarter conference call.

Conference Call

The Company will host a conference call today, November 2, 2021 at 8:15 AM EDT. The conference call will be webcast live from the Company’s website at http://www.bloominbrands.com under the Investors section. A replay of this webcast will be available on the Company’s website after the call.

Non-GAAP Measures

In addition to the results provided in accordance with GAAP, this press release and related tables include certain non-GAAP measures, which present operating results on an adjusted basis. These are supplemental measures of performance that are not required by or presented in accordance with GAAP and include the following: (i) Adjusted restaurant-level operating margin, (ii) Adjusted income (loss) from operations and the corresponding margin, (iii) Adjusted net income (loss), (iv) Adjusted diluted earnings (loss) per share, (v) Adjusted segment restaurant-level operating margin, (vi) Adjusted segment income (loss) from operations and the corresponding margin and (vii) Earnings before interest, taxes, depreciation and amortization ("EBITDA").

We believe that our use of non-GAAP financial measures permits investors to assess the operating performance of our business relative to our performance based on GAAP results and relative to other companies within the restaurant industry by isolating the effects of certain items that may vary from period to period without correlation to core operating performance or that vary widely among similar companies. However, our inclusion of these adjusted measures should not be construed as an indication that our future results will be unaffected by unusual or infrequent items or that the items for which we have made adjustments are unusual or infrequent or will not recur. We believe that the disclosure of these non-GAAP measures is useful to investors as they form part of the basis for how our management team and Board of Directors evaluate our operating performance, allocate resources and administer employee incentive plans.

These non-GAAP financial measures are not intended to replace GAAP financial measures, and they are not necessarily standardized or comparable to similarly titled measures used by other companies. We maintain internal guidelines with respect to the types of adjustments we include in our non-GAAP measures. These guidelines endeavor to differentiate between types of gains and expenses that are reflective of our core operations in a period, and those that may vary from period to period without correlation to our core performance in that period. However, implementation of these guidelines necessarily involves the application of judgment, and the treatment of any items not directly addressed by, or changes to, our guidelines will be considered by our disclosure committee. You should refer to the reconciliations of non-GAAP measures in tables five, six, seven and ten included later in this release for descriptions of the actual adjustments made in the current period and the corresponding prior period.

About Bloomin’ Brands, Inc.

Bloomin’ Brands, Inc. is one of the largest casual dining restaurant companies in the world with a portfolio of leading, differentiated restaurant concepts. The Company has four founder-inspired brands: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar. The Company operates more than 1,450 restaurants in 47 states, Guam and 19 countries, some of which are franchise locations. For more information, please visit www.bloominbrands.com.

Forward-Looking Statements

Certain statements contained herein, including statements under the headings "CEO Comments", "Q4 2021 Financial Outlook" and "Fiscal 2021 Financial Outlook" are not based on historical fact and are "forward-looking statements" within the meaning of applicable securities laws. Generally, these statements can be identified by the use of words such as "guidance," "believes," "estimates," "anticipates," "expects," "on track," "feels," "forecasts," "seeks," "projects," "intends," "plans," "may," "will," "should," "could," "would" and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the Company’s forward-looking statements. These risks and uncertainties include, but are not limited to: consumer reaction to public health and food safety issues; the effects of the COVID-19 pandemic and uncertainties about its depth and duration, as well as the impacts to economic conditions and consumer behavior, including, among others: the inability of workers, including delivery drivers, to work due to illness, quarantine, or government mandates, temporary restaurant closures and capacity restrictions due to reduced workforces or government mandates, the unemployment rate, the extent, availability and effectiveness of any COVID-19 stimulus packages or loan programs, the ability of our franchisees to operate their restaurants during the pandemic and pay royalties, and trends in consumer behavior and spending during and after the end of the pandemic; competition; increases in labor costs and fluctuations in the availability of employees; price and availability of commodities; government actions and policies; increases in unemployment rates and taxes; local, regional, national and international economic conditions; consumer confidence and spending patterns; the effects of changes in tax laws; challenges associated with our remodeling, relocation and expansion plans; interruption or breach of our systems or loss of consumer or employee information; political, social and legal conditions in international markets and their effects on foreign operations and foreign currency exchange rates; our ability to preserve the value of and grow our brands; the seasonality of the Company’s business; weather, acts of God and other disasters; changes in patterns of consumer traffic, consumer tastes and dietary habits; the cost and availability of credit; interest rate changes; and compliance with debt covenants and the Company’s ability to make debt payments and planned investments. Further information on potential factors that could affect the financial results of the Company and its forward-looking statements is included in its most recent Form 10-K and subsequent filings with the Securities and Exchange Commission. The Company assumes no obligation to update any forward-looking statement, except as may be required by law. These forward-looking statements speak only as of the date of this release. All forward-looking statements are qualified in their entirety by this cautionary statement.

Note: Numerical figures included in this release have been subject to rounding adjustments.

TABLE ONE

BLOOMIN’ BRANDS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

THIRTEEN WEEKS ENDED

THIRTY-NINE WEEKS ENDED

(in thousands, except per share data)

SEPTEMBER 26, 2021

SEPTEMBER 27, 2020

SEPTEMBER 26, 2021

SEPTEMBER 27, 2020

Revenues

Restaurant sales

$

996,718

$

766,487

$

3,031,396

$

2,338,985

Franchise and other revenues

13,745

4,773

43,906

19,071

Total revenues

1,010,463

771,260

3,075,302

2,358,056

Costs and expenses

Food and beverage costs

304,300

230,547

908,272

730,998

Labor and other related

290,246

246,861

859,883

761,667

Other restaurant operating

299,788

207,301

762,531

631,702

Depreciation and amortization

40,827

43,417

122,592

137,469

General and administrative

58,880

57,443

182,590

197,732

Provision for impaired assets and restaurant closings

1,585

(54

)

8,962

66,223

Total costs and expenses

995,626

785,515

2,844,830

2,525,791

Income (loss) from operations

14,837

(14,255

)

230,472

(167,735

)

Loss on extinguishment and modification of debt

(2,073

)

(237

)

Other income (expense), net

5

1

26

(211

)

Interest expense, net

(14,245

)

(18,300

)

(43,863

)

(46,647

)

Income (loss) before (benefit) provision for income taxes

597

(32,554

)

184,562

(214,830

)

(Benefit) provision for income taxes

(4,454

)

(14,776

)

24,827

(70,210

)

Net income (loss)

5,051

(17,778

)

159,735

(144,620

)

Less: net income (loss) attributable to noncontrolling interests

1,602

(141

)

4,879

(116

)

Net income (loss) attributable to Bloomin’ Brands

3,449

(17,637

)

154,856

(144,504

)

Redemption of preferred stock in excess of carrying value

(3,496

)

Net income (loss) attributable to common stockholders

3,449

(17,637

)

154,856

(148,000

)

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

460

Diluted net income (loss) attributable to common stockholders

$

3,449

$

(17,637

)

$

155,316

$

(148,000

)

Earnings (loss) per share attributable to common stockholders:

Basic

$

0.04

$

(0.20

)

$

1.74

$

(1.69

)

Diluted

$

0.03

$

(0.20

)

$

1.42

$

(1.69

)

Weighted average common shares outstanding:

Basic

...

89,229

87,558

88,890

87,394

Diluted

107,783

87,558

...