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Bloomin’ Brands(BLMN) - 2020 Q2 - Quarterly Report
2020-07-31 20:08
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 28, 2020 or ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission File Number: 001-35625 BLOOMIN' BRANDS, INC. (Exact name of registrant as specified in its charter) Delaware 20-8023465 (State or oth ...
Bloomin’ Brands(BLMN) - 2020 Q2 - Earnings Call Transcript
2020-07-24 18:57
Financial Data and Key Metrics Changes - Total revenues decreased by 43% to $578 million, with combined U.S. comparable sales down 39.4% [30] - GAAP diluted loss per share for the quarter was $1.05 compared to $0.32 of diluted earnings per share in 2019, while adjusted diluted loss per share was $0.74 versus $0.36 last year [30] - Positive cash flow was generated in June, indicating stabilization of the business [13] Business Line Data and Key Metrics Changes - At Outback, comparable restaurant sales were down 10.7% for the week ending July 19, 2020, in locations that reopened with limited dining capacity [11] - In Brazil, comparable restaurant sales at Outback locations with in-restaurant dining were down 44% [19] - The off-premises sales mix remained significant, with 55% in-restaurant and 45% off-premises sales reported recently [70] Market Data and Key Metrics Changes - As of July 19, 2020, almost all U.S. company-operated restaurants had reopened with limited capacity [9] - In Florida and Texas, sales trends remained stable despite rising COVID-19 cases, while California experienced more significant impacts due to restrictions [27][28] Company Strategy and Development Direction - The company aims to emerge stronger post-pandemic by upgrading food, menu, and service across all brands, focusing on delivery and carry-out opportunities, and enhancing digital marketing efforts [20][21][22] - Liquidity position improved to $502 million, providing financial flexibility for future opportunities [36][23] Management's Comments on Operating Environment and Future Outlook - Management emphasized the importance of safety measures and maintaining a clean environment to attract customers back to restaurants [10][50] - The company is optimistic about retaining off-premises sales growth and improving profitability as dining rooms reopen [26][30] Other Important Information - The company permanently closed 30 restaurants during the quarter, including 25 company-owned and 5 franchise locations [35] - The adjusted tax rate for the quarter was 31.2%, influenced by negative pre-tax income and additional tax credits [34] Q&A Session Summary Question: Restaurant margin resilience despite comp sales decline - Management noted that efficiencies gained during the pandemic, particularly from menu simplification, helped maintain a low-single-digit positive margin [40][41] Question: Trends in dine-in versus off-premise sales - Management indicated that dine-in sales remained stable, with minimal migration to off-premise sales [86] Question: Off-premise sales mix breakdown - The off-premise sales mix was reported as 55% to-go, 13% in-house delivery, and 30% third-party delivery [94] Question: Sales recovery prospects in Brazil - Management expressed confidence in Brazil's recovery, noting that the team has not required additional cash infusions and is seeing a gradual increase in sales [101][100]
Bloomin’ Brands(BLMN) - 2020 Q1 - Quarterly Report
2020-05-21 20:08
PART I — FINANCIAL INFORMATION This section presents the company's unaudited financial statements, notes, and management's discussion and analysis [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited consolidated financial statements detail Bloomin' Brands' financial position, operations, cash flows, and COVID-19 impact [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Balance sheets show increased cash and total liabilities as of March 29, 2020, driven by revolving credit facility borrowings | Metric | March 29, 2020 (in thousands) | December 29, 2019 (in thousands) | | :-------------------------------- | :------------------------------ | :------------------------------- | | Cash and cash equivalents | $403,395 | $67,145 | | Total current assets | $572,446 | $340,468 | | Total assets | $3,766,601 | $3,592,683 | | Total current liabilities | $838,030 | $962,021 | | Long-term debt, net | $1,389,273 | $1,022,293 | | Total liabilities | $3,666,458 | $3,415,202 | | Total stockholders' equity | $100,143 | $177,481 | [Consolidated Statements of Operations and Comprehensive (Loss) Income](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20(Loss)%20Income) The company reported a net loss for Q1 2020, a significant decline from prior year net income, due to decreased revenues and increased expenses | Metric | Thirteen Weeks Ended March 29, 2020 (in thousands) | Thirteen Weeks Ended March 31, 2019 (in thousands) | | :-------------------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Total revenues | $1,008,337 | $1,128,131 | | Total costs and expenses | $1,049,905 | $1,045,637 | | (Loss) income from operations | $(41,568) | $82,494 | | Net (loss) income attributable to Bloomin' Brands | $(34,611) | $64,300 | | Basic (loss) earnings per share | $(0.44) | $0.70 | | Diluted (loss) earnings per share | $(0.44) | $0.69 | - Provision for impaired assets and restaurant closings increased significantly to **$41.3 million** in Q1 2020 from **$3.6 million** in Q1 2019[14](index=14&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Stockholders' equity decreased significantly from December 2019 to March 2020 due to net loss, other comprehensive losses, and cash dividends | Metric | December 29, 2019 (in thousands) | March 29, 2020 (in thousands) | | :--------------------------------- | :------------------------------- | :---------------------------- | | Total stockholders' equity | $177,481 | $100,143 | | Net (loss) income | N/A | $(34,414) | | Other comprehensive loss, net of tax | N/A | $(19,901) | | Cash dividends declared | N/A | $(17,480) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased, while financing cash flow substantially increased from credit facility borrowings, leading to a large cash increase | Metric | Thirteen Weeks Ended March 29, 2020 (in thousands) | Thirteen Weeks Ended March 31, 2019 (in thousands) | | :--------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Net cash provided by operating activities | $28,291 | $83,883 | | Net cash used in investing activities | $(34,798) | $(42,020) | | Net cash provided by (used in) financing activities | $342,333 | $(31,379) | | Net increase in cash, cash equivalents and restricted cash | $336,250 | $10,943 | | Cash, cash equivalents and restricted cash as of the end of the period | $403,395 | $82,766 | - Proceeds from borrowings on revolving credit facilities, net, were **$505.0 million** in Q1 2020, significantly higher than **$148.2 million** in Q1 2019[22](index=22&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed notes explain the company's business, COVID-19 impact, accounting policies, and performance across various financial areas [1. Description of the Business and Basis of Presentation](index=9&type=section&id=1.%20Description%20of%20the%20Business%20and%20Basis%20of%20Presentation) Bloomin' Brands operates casual and fine dining restaurants, with Q1 2020 financials significantly impacted by the COVID-19 pandemic - Bloomin' Brands owns and operates four restaurant concepts: **Outback Steakhouse**, **Carrabba's Italian Grill**, **Bonefish Grill**, and **Fleming's Prime Steakhouse & Wine Bar**[25](index=25&type=chunk) - The **COVID-19 pandemic** significantly impacted the company's business in Q1 2020, leading to temporary dining room closures and a shift to take-out and delivery services[27](index=27&type=chunk) - The company adopted ASU No. 2016-13 (credit losses) and ASU No. 2018-15 (cloud computing arrangements) on December 30, 2019, with the former resulting in a **$4.3 million** cumulative-effect debit adjustment to Accumulated deficit[29](index=29&type=chunk)[30](index=30&type=chunk) [2. COVID-19 Impact](index=10&type=section&id=2.%20COVID-19%20Impact) The COVID-19 pandemic resulted in $65.1 million in charges for Q1 2020, including asset impairments, employee relief pay, and inventory obsolescence | CHARGES | CONSOLIDATED INCOME STATEMENT CLASSIFICATION | MARCH 29, 2020 (in thousands) | | :---------------------------------- | :------------------------------------------- | :---------------------------- | | Inventory obsolescence and spoilage | Cost of sales | $6,182 | | Compensation for idle employees | Labor and other related | $16,186 | | Lease guarantee contingent liabilities | General and administrative | $4,188 | | Allowance for expected credit losses | General and administrative | $3,334 | | Right-of-use asset impairment | Provision for impaired assets and restaurant closings | $20,484 | | Fixed asset impairment | Provision for impaired assets and restaurant closings | $11,728 | | Goodwill and other impairment | Provision for impaired assets and restaurant closings | $2,388 | | Total | | $65,063 | [3. Revenue Recognition](index=11&type=section&id=3.%20Revenue%20Recognition) Total revenues decreased by 10.6% year-over-year, primarily due to declining restaurant sales and franchise revenues, heavily impacted by COVID-19 | Revenue Category | Thirteen Weeks Ended March 29, 2020 (in thousands) | Thirteen Weeks Ended March 31, 2019 (in thousands) | | :----------------------- | :----------------------------------------------- | :----------------------------------------------- | | Restaurant sales | $996,237 | $1,111,642 | | Franchise and other revenues | $12,100 | $16,489 | | Total revenues | $1,008,337 | $1,128,131 | | Segment/Concept | Restaurant Sales (March 29, 2020) | Franchise Revenue (March 29, 2020) | Restaurant Sales (March 31, 2019) | Franchise Revenue (March 31, 2019) | | :------------------------------------ | :-------------------------------- | :--------------------------------- | :-------------------------------- | :--------------------------------- | | U.S. total | $884,889 | $7,138 | $1,000,813 | $10,982 | | International total | $111,348 | $2,411 | $110,829 | $2,780 | | Outback Steakhouse U.S. | $530,685 | $6,541 | $586,771 | $10,601 | | Outback Steakhouse Brazil | $91,590 | — | $89,565 | — | - Deferred gift card revenue decreased from **$358.8 million** at December 29, 2019, to **$277.5 million** at March 29, 2020[42](index=42&type=chunk) [4. Impairments, Exit Costs and Disposals](index=13&type=section&id=4.%20Impairments,%20Exit%20Costs%20and%20Disposals) Impairment losses and restaurant closure expenses surged to $41.3 million in Q1 2020, largely due to COVID-19 and transformational initiatives | Category | Thirteen Weeks Ended March 29, 2020 (in thousands) | Thirteen Weeks Ended March 31, 2019 (in thousands) | | :------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | | Total impairment losses | $40,424 | $3,482 | | Total restaurant closure expenses | $894 | $104 | | Provision for impaired assets and restaurant closings | $41,318 | $3,586 | - Asset impairment and closure charges related to **COVID-19** totaled **$31.3 million** in the U.S. segment and **$3.3 million** in the international segment[46](index=46&type=chunk) - Asset impairment charges related to transformational initiatives amounted to **$6.3 million**[46](index=46&type=chunk) [5. (Loss) Earnings Per Share](index=14&type=section&id=5.%20(Loss)%20Earnings%20Per%20Share) The company reported a basic and diluted loss per share of $(0.44) for Q1 2020, a significant decrease from prior year earnings | Metric | Thirteen Weeks Ended March 29, 2020 | Thirteen Weeks Ended March 31, 2019 | | :------------------------------------------ | :---------------------------------- | :---------------------------------- | | Net (loss) income attributable to common stockholders | $(38,107) | $64,300 | | Basic (loss) earnings per share | $(0.44) | $0.70 | | Diluted (loss) earnings per share | $(0.44) | $0.69 | | Basic weighted average common shares outstanding | 87,129 | 91,415 | | Diluted weighted average common shares outstanding | 87,129 | 92,661 | - The redemption of preferred stock in excess of carrying value resulted in a **$3.5 million** reduction to net income attributable to common stockholders in Q1 2020[51](index=51&type=chunk) [6. Stock-based Compensation Plans](index=14&type=section&id=6.%20Stock-based%20Compensation%20Plans) Stock-based compensation expense decreased to $3.2 million in Q1 2020, with grants of stock options, restricted stock units, and performance shares | Compensation Type | Thirteen Weeks Ended March 29, 2020 (in thousands) | Thirteen Weeks Ended March 31, 2019 (in thousands) | | :------------------------ | :----------------------------------------------- | :----------------------------------------------- | | Stock options | $832 | $1,159 | | Restricted stock units | $1,683 | $1,749 | | Performance-based share units | $699 | $1,003 | | Total | $3,214 | $3,911 | - The weighted-average grant date fair value per option decreased from **$5.76** in Q1 2019 to **$3.12** in Q1 2020[56](index=56&type=chunk) | Award Type | Unrecognized Compensation Expense (in thousands) | Remaining Weighted-Average Vesting Period (in years) | | :---------------------------- | :--------------------------------------------- | :--------------------------------------------------- | | Stock options | $6,127 | 1.8 | | Restricted stock units | $16,967 | 2.2 | | Performance-based share units | $14,016 | 2.3 | [7. Other Current Assets, Net](index=16&type=section&id=7.%20Other%20Current%20Assets,%20Net) Other current assets, net, decreased significantly to $101.0 million, primarily due to a large reduction in accounts receivable from gift cards | Asset Category | March 29, 2020 (in thousands) | December 29, 2019 (in thousands) | | :------------------------------ | :---------------------------- | :------------------------------- | | Prepaid expenses | $27,716 | $20,218 | | Accounts receivable - gift cards, net | $9,851 | $104,591 | | Accounts receivable - vendors, net | $10,407 | $13,465 | | Deferred gift card sales commissions | $13,049 | $18,554 | | Total other current assets, net | $100,964 | $186,462 | - The decrease in **accounts receivable - gift cards, net**, was a major contributor to the overall decline in other current assets[58](index=58&type=chunk) [8. Goodwill and Intangible Assets, Net](index=17&type=section&id=8.%20Goodwill%20and%20Intangible%20Assets,%20Net) Goodwill decreased to $282.6 million due to a $2.0 million impairment charge for the Hong Kong reporting unit, triggered by COVID-19 | Category | December 29, 2019 (in thousands) | March 29, 2020 (in thousands) | | :-------------------- | :------------------------------- | :---------------------------- | | U.S. Goodwill | $170,657 | $170,657 | | International Goodwill | $117,782 | $111,971 | | Consolidated Goodwill | $288,439 | $282,628 | - A **$2.0 million** goodwill impairment was recorded for the Hong Kong reporting unit within the international segment due to the **COVID-19** outbreak[61](index=61&type=chunk) [9. Other Assets, Net](index=17&type=section&id=9.%20Other%20Assets,%20Net) Other assets, net, decreased to $101.7 million, mainly due to a reduction in company-owned life insurance assets | Asset Category | March 29, 2020 (in thousands) | December 29, 2019 (in thousands) | | :------------------------------ | :---------------------------- | :------------------------------- | | Company-owned life insurance | $46,534 | $60,126 | | Deferred financing fees | $4,476 | $4,893 | | Liquor licenses | $24,224 | $24,289 | | Other assets | $26,500 | $27,802 | | Total other assets, net | $101,734 | $117,110 | [10. Long-term Debt, Net](index=18&type=section&id=10.%20Long-term%20Debt,%20Net) Total debt, net, increased to $1.4 billion, primarily from revolving credit facility borrowings, with an Amended Credit Agreement providing covenant relief | Debt Category | March 29, 2020 (in thousands) | December 29, 2019 (in thousands) | | :-------------------------------- | :---------------------------- | :------------------------------- | | Term loan A | $443,750 | $450,000 | | Revolving credit facility | $975,000 | $599,000 | | Total Senior Secured Credit Facility | $1,418,750 | $1,049,000 | | Total debt, net | $1,418,640 | $1,048,704 | | Long-term debt, net | $1,389,273 | $1,022,293 | - The **Amended Credit Agreement** waives the **Total Net Leverage Ratio (TNLR)** requirement for the remainder of fiscal year 2020 and sets new maximum TNLR thresholds for subsequent periods[66](index=66&type=chunk) - New restrictions include a minimum monthly liquidity threshold of **$125.0 million** and a cap of **$100.0 million** on aggregate capital expenditures through March 28, 2021[67](index=67&type=chunk)[68](index=68&type=chunk) [11. Other Long-term Liabilities, Net](index=19&type=section&id=11.%20Other%20Long-term%20Liabilities,%20Net) Other long-term liabilities, net, increased to $148.6 million, mainly due to additional interest rate swap and contingent lease liabilities | Liability Category | March 29, 2020 (in thousands) | December 29, 2019 (in thousands) | | :-------------------------------------------------- | :---------------------------- | :------------------------------- | | Accrued insurance liability | $33,490 | $33,818 | | Chef and Restaurant Managing Partner deferred compensation obligations and deposits | $41,824 | $47,831 | | Other long-term liabilities | $73,318 | $56,411 | | Total other long-term liabilities, net | $148,632 | $138,060 | - The increase in other long-term liabilities was primarily driven by **$9.9 million** in additional interest rate swap liabilities and **$8.7 million** in additional contingent lease liabilities[74](index=74&type=chunk) [12. Stockholders' Equity](index=19&type=section&id=12.%20Stockholders'%20Equity) No share repurchases occurred in Q1 2020, a cash dividend was paid, and Accumulated Other Comprehensive Loss increased due to foreign currency and derivatives - No share repurchases were made during the thirteen weeks ended March 29, 2020, and repurchases are restricted until after **September 26, 2021**, under the **Amended Credit Agreement**[75](index=75&type=chunk) - A quarterly cash dividend of **$0.20 per share**, totaling **$17.5 million**, was declared and paid in Q1 2020[76](index=76&type=chunk) | AOCL Component | March 29, 2020 (in thousands) | December 29, 2019 (in thousands) | | :--------------------------------------- | :---------------------------- | :------------------------------- | | Foreign currency translation adjustment | $(159,328) | $(152,031) | | Unrealized loss on derivatives, net of tax | $(29,685) | $(17,745) | | Accumulated other comprehensive loss | $(189,013) | $(169,776) | [13. Derivative Instruments and Hedging Activities](index=20&type=section&id=13.%20Derivative%20Instruments%20and%20Hedging%20Activities) The company uses interest rate swaps to hedge variable rate debt, which were in a net liability position and subsequently re-designated in May 2020 - The company has variable-to-fixed interest rate swap agreements with an aggregate notional amount of **$550.0 million**, maturing on **November 30, 2022**, paying a weighted-average fixed rate of **3.04%**[81](index=81&type=chunk) | Derivative Type | March 29, 2020 (in thousands) | December 29, 2019 (in thousands) | | :--------------------------------------- | :---------------------------- | :------------------------------- | | Interest rate swaps - current liability | $13,335 | $7,174 | | Interest rate swaps - non-current liability | $26,758 | $16,835 | | Total fair value of derivative instruments - liabilities | $40,093 | $24,009 | - The company de-designated and re-designated its interest rate swap hedge relationships in **May 2020** to align with the **Amended Credit Agreement**, with no impact on consolidated financial statements from the hedge activity[83](index=83&type=chunk)[85](index=85&type=chunk) [14. Leases](index=21&type=section&id=14.%20Leases) Operating lease right-of-use assets and total lease liabilities remained substantial, with significant cash paid for operating lease liabilities | Lease Metric | March 29, 2020 (in thousands) | December 29, 2019 (in thousands) | | :-------------------------------- | :---------------------------- | :------------------------------- | | Operating lease right-of-use assets | $1,249,750 | $1,266,548 | | Total lease assets, net | $1,251,826 | $1,268,584 | | Current operating lease liabilities | $185,278 | $171,866 | | Non-current operating lease liabilities | $1,281,372 | $1,279,051 | | Total lease liabilities | $1,468,978 | $1,453,225 | | Lease Expense Category | Thirteen Weeks Ended March 29, 2020 (in thousands) | Thirteen Weeks Ended March 31, 2019 (in thousands) | | :----------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Operating leases | $45,882 | $45,233 | | Variable lease cost | $1,120 | $819 | | Sublease revenue | $(1,677) | $(1,314) | | Lease costs, net | $45,713 | $45,135 | - Cash paid for amounts included in the measurement of operating lease liabilities was **$48.5 million** for the thirteen weeks ended March 29, 2020[93](index=93&type=chunk) [15. Fair Value Measurements](index=22&type=section&id=15.%20Fair%20Value%20Measurements) The company measures financial instruments and impaired assets at fair value, primarily using Level 3 unobservable inputs for nonrecurring measurements | Financial Instrument | March 29, 2020 (in thousands) | December 29, 2019 (in thousands) | | :--------------------------------------- | :---------------------------- | :------------------------------- | | Total asset recurring fair value measurements | $9,370 | $13,789 | | Total liability recurring fair value measurements | $40,093 | $24,009 | | Asset Category (Nonrecurring) | March 29, 2020 Carrying Value (in thousands) | March 29, 2020 Total Impairment (in thousands) | | :------------------------------------ | :------------------------------------------- | :--------------------------------------------- | | Assets held for sale | $1,182 | $75 | | Operating lease right-of-use assets | $55,644 | $19,563 | | Property, fixtures and equipment | $21,693 | $18,398 | | Goodwill and other assets | $1,044 | $2,388 | | Total | $79,563 | $40,424 | - The majority of inputs used to value long-lived assets held and used are unobservable (**Level 3**), including weighted-average cost of capital (**10.4%**) and long-term growth rate (**1.5% to 2.0%**)[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk) [16. Allowance for Expected Credit Losses](index=25&type=section&id=16.%20Allowance%20for%20Expected%20Credit%20Losses) Allowance for trade receivable expected credit losses increased to $4.6 million, driven by ASU adoption and a provision for franchise receivables due to COVID-19 | Metric | Thirteen Weeks Ended March 29, 2020 (in thousands) | | :------------------------------------------ | :----------------------------------------------- | | Allowance for credit losses, beginning of period | $199 | | Adjustment for adoption of ASU No. 2016-13 | $1,018 | | Provision for expected credit losses | $3,334 | | Allowance for credit losses, end of period | $4,551 | - The company fully reserved substantially all outstanding franchise receivables in **March 2020** due to the economic impact of the **COVID-19 pandemic**[110](index=110&type=chunk) [17. Income Taxes](index=26&type=section&id=17.%20Income%20Taxes) The effective income tax rate increased significantly to 36.4% in Q1 2020, primarily due to the CARES Act's NOL carryback benefit | Metric | Thirteen Weeks Ended March 29, 2020 | Thirteen Weeks Ended March 31, 2019 | | :-------------------------------------------------- | :---------------------------------- | :---------------------------------- | | (Loss) income before (benefit) provision for income taxes | $(54,069) | $71,145 | | (Benefit) provision for income taxes | $(19,655) | $5,496 | | Effective income tax rate | 36.4% | 7.7% | - The increase in the effective tax rate was primarily driven by the benefit of the five-year carryback of the forecasted **2020 NOL** under the **CARES Act**[115](index=115&type=chunk) - The company expects to increase its general business credit carryforwards by approximately **$50 million to $80 million** in 2020 due to the **NOL carryback** and **CARES Act** provisions[116](index=116&type=chunk) [18. Commitments and Contingencies](index=26&type=section&id=18.%20Commitments%20and%20Contingencies) The company faces legal proceedings and is contingently liable for $31.3 million in assigned real estate leases, with additional COVID-19 related liabilities - Liabilities for legal matters were **$3.3 million** as of March 29, 2020[118](index=118&type=chunk) - The company is contingently liable for approximately **$31.3 million** in undiscounted payments for assigned real estate leases[120](index=120&type=chunk) - An additional **$4.2 million** contingent lease liability was recorded in **March 2020** due to the **COVID-19 pandemic**, bringing the total recorded contingent lease liability to **$9.7 million**[124](index=124&type=chunk) [19. Segment Reporting](index=27&type=section&id=19.%20Segment%20Reporting) Total revenues decreased by 10.6%, with the U.S. segment experiencing a significant decline in income from operations due to COVID-19 and inflation - The company's reportable segments are **U.S.** (**Outback Steakhouse**, **Carrabba's Italian Grill**, **Bonefish Grill**, **Fleming's Prime Steakhouse & Wine Bar**) and **International** (**Outback Steakhouse**, **Abbraccio in Brazil**, **Hong Kong/China**)[125](index=125&type=chunk) | Segment | Thirteen Weeks Ended March 29, 2020 (in thousands) | Thirteen Weeks Ended March 31, 2019 (in thousands) | | :-------------- | :----------------------------------------------- | :----------------------------------------------- | | U.S. Total revenues | $894,497 | $1,014,507 | | International Total revenues | $113,840 | $113,624 | | Total revenues | $1,008,337 | $1,128,131 | | Segment | Thirteen Weeks Ended March 29, 2020 (in thousands) | Thirteen Weeks Ended March 31, 2019 (in thousands) | | :-------------- | :----------------------------------------------- | :----------------------------------------------- | | U.S. Segment income from operations | $11,379 | $113,035 | | International Segment income from operations | $6,787 | $13,720 | | Total segment income from operations | $18,166 | $126,755 | [20. Subsequent Events](index=28&type=section&id=20.%20Subsequent%20Events) Post-quarter, the company completed a $230.0 million convertible senior notes offering and entered into hedge and warrant transactions to manage dilution - On **May 8, 2020**, the company completed a **$200.0 million** private offering of **5.00% convertible senior notes due 2025**, with an additional **$30.0 million** issued on **May 12, 2020**, totaling **$230.0 million**[131](index=131&type=chunk) - Net proceeds from the convertible notes offering were approximately **$221.4 million**, intended for general corporate purposes[137](index=137&type=chunk) - The company entered into **Convertible Note Hedge Transactions** and **Warrant Transactions** to reduce potential equity dilution and offset cash payments upon conversion of the notes, with a net cost of approximately **$19.6 million**[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2020 financial performance, condition, and liquidity, highlighting COVID-19's adverse impact, key indicators, and strategic adjustments [Cautionary Statement](index=30&type=section&id=Cautionary%20Statement) The cautionary statement emphasizes risks and uncertainties in forward-looking statements, particularly concerning COVID-19's material adverse effects on the business - Forward-looking statements involve **risks and uncertainties** related to events and circumstances that may or may not occur in the future[148](index=148&type=chunk) - The **COVID-19 pandemic** is a significant factor that could cause actual results to differ materially from forward-looking statements, impacting business, financial condition, and liquidity[148](index=148&type=chunk) - The company's **Q1 2020 Form 10-Q** filing was delayed due to complexities in forecasting and accounting for goodwill and other assets, and management's focus on the **Amended Credit Agreement** and **2025 Notes offering**, all stemming from the **COVID-19 pandemic**[152](index=152&type=chunk)[154](index=154&type=chunk) [Overview](index=33&type=section&id=Overview) Bloomin' Brands is a global casual dining company operating 1,172 owned and 300 franchised restaurants across four distinct concepts - Bloomin' Brands operates **1,172 owned** and **300 franchised restaurants** globally as of **March 29, 2020**[157](index=157&type=chunk) - The company's portfolio includes **Outback Steakhouse**, **Carrabba's Italian Grill**, **Bonefish Grill**, and **Fleming's Prime Steakhouse & Wine Bar**[157](index=157&type=chunk) [Executive Summary](index=33&type=section&id=Executive%20Summary) Q1 2020 saw a 10.6% revenue decrease and a shift to operating loss, driven by lower sales, COVID-19 costs, restructuring, and inflation - Total revenues decreased by **10.6%** in Q1 2020 compared to Q1 2019[158](index=158&type=chunk) - The company reported a loss from operations of **$41.6 million** in Q1 2020, down from an income of **$82.5 million** in Q1 2019[159](index=159&type=chunk) - Key drivers for the decline include lower comparable restaurant sales, **COVID-19 related costs** (**asset impairment**, **relief pay**, **inventory obsolescence**), restructuring initiatives, and commodity/labor inflation[159](index=159&type=chunk) [Recent Developments - COVID-19](index=33&type=section&id=Recent%20Developments%20-%20COVID-19) The company limited U.S. services to carry-out/delivery in March 2020, leading to reduced traffic, expense management, and withdrawal of financial guidance - U.S. restaurant dining rooms were temporarily limited to carry-out and delivery only, effective **March 20, 2020**, due to the **COVID-19 pandemic**[160](index=160&type=chunk) - The company has reopened a significant portion of dining rooms but anticipates continued adverse impacts on results due to uncertain customer traffic and potential governmental restrictions on capacity[161](index=161&type=chunk) - Financial guidance for **2020** has been withdrawn, and the company is actively managing expenses and securing liquidity[161](index=161&type=chunk)[162](index=162&type=chunk) [Strategic Alternatives Review Update](index=33&type=section&id=Strategic%20Alternatives%20Review%20Update) The strategic alternatives review, including a potential Brazil business sale, has been suspended to prioritize the COVID-19 pandemic response - The strategic review process, initiated in **November 2019**, has been suspended to prioritize the **COVID-19 pandemic** response[163](index=163&type=chunk) - Discussions regarding a sale of the **Brazil business** have also been suspended[163](index=163&type=chunk) [Key Performance Indicators](index=34&type=section&id=Key%20Performance%20Indicators) Performance is evaluated using average restaurant unit volumes, comparable sales, system-wide sales, restaurant-level operating margin, and adjusted non-GAAP measures - Key performance indicators include **average restaurant unit volumes**, **comparable restaurant sales**, **system-wide sales**, **restaurant-level operating margin**, **Income from operations**, **Net income**, **Diluted earnings per share**, and **customer satisfaction scores**[165](index=165&type=chunk) - **Restaurant-level operating margin** is a non-GAAP measure used to evaluate restaurant-level operating efficiency, excluding franchise and other revenues, depreciation and amortization, general and administrative expenses, and asset impairment/closing costs[166](index=166&type=chunk) - Adjusted non-GAAP financial measures (e.g., **Adjusted restaurant-level operating margin**, **Adjusted income from operations**) are used to isolate the effects of certain items not correlated to core operating performance[167](index=167&type=chunk)[168](index=168&type=chunk) [Selected Operating Data](index=35&type=section&id=Selected%20Operating%20Data) As of March 29, 2020, the company operated 1,213 U.S. and 259 international restaurants, totaling 1,472 system-wide, with minor changes | Segment | March 29, 2020 | March 31, 2019 | | :------------------------------------ | :------------- | :------------- | | U.S. total | 1,213 | 1,226 | | International total | 259 | 255 | | System-wide total | 1,472 | 1,481 | | U.S. Company-owned Outback Steakhouse | 575 | 579 | | International Company-owned Outback Steakhouse - Brazil | 103 | 95 | [Results of Operations](index=36&type=section&id=Results%20of%20Operations) Overall profitability declined significantly due to 10.6% lower revenues, increased costs as a percentage of sales, and substantial impairment charges from COVID-19 | Metric | Thirteen Weeks Ended March 29, 2020 | Thirteen Weeks Ended March 31, 2019 | | :------------------------------------------ | :---------------------------------- | :---------------------------------- | | Total revenues | 100.0% | 100.0% | | Cost of sales (% of Restaurant sales) | 32.1% | 31.7% | | Labor and other related (% of Restaurant sales) | 31.0% | 28.7% | | Other restaurant operating (% of Restaurant sales) | 24.7% | 22.6% | | (Loss) income from operations (% of Total revenues) | (4.1)% | 7.3% | [RESTAURANT SALES](index=36&type=section&id=RESTAURANT%20SALES) Restaurant sales decreased by $115.4 million in Q1 2020, primarily due to lower comparable sales, refranchising, and negative foreign currency translation | Change Factor | Impact (in millions) | | :------------------------------------------ | :------------------- | | Comparable restaurant sales | $(99.3) | | Divestiture of restaurants through refranchising transactions | $(11.2) | | Effect of foreign currency translation | $(10.4) | | Restaurant closures | $(6.6) | | Restaurant openings | $12.1 | | Total change from March 31, 2019 to March 29, 2020 | $(115.4) | - The decrease in **Restaurant sales** was primarily driven by lower U.S. comparable restaurant sales and the impact of **COVID-19**[175](index=175&type=chunk) [Comparable Restaurant Sales, Traffic and Average Check Per Person Increases (Decreases)](index=37&type=section&id=Comparable%20Restaurant%20Sales,%20Traffic%20and%20Average%20Check%20Per%20Person%20Increases%20(Decreases)) U.S. comparable restaurant sales declined by 10.4% in Q1 2020 across all concepts due to COVID-19, while Brazil saw a 6.8% increase | Metric | Thirteen Weeks Ended March 29, 2020 | Thirteen Weeks Ended March 31, 2019 | | :------------------------------------------ | :---------------------------------- | :---------------------------------- | | Combined U.S. Comparable restaurant sales | (10.4)% | 2.4% | | Outback Steakhouse - Brazil Comparable restaurant sales | 6.8% | 3.7% | | Combined U.S. Traffic | (10.4)% | (0.9)% | | Combined U.S. Average check per person | —% | 3.3% | - U.S. **Outback Steakhouse** comparable sales decreased by **9.5%**, **Carrabba's Italian Grill** by **8.7%**, **Bonefish Grill** by **13.9%**, and **Fleming's** by **13.2%**[176](index=176&type=chunk) - **Outback Steakhouse Brazil** results for **Q1 2020** (through **February 29, 2020**) did not include any material impact from the **COVID-19 pandemic**[176](index=176&type=chunk) [Average Restaurant Unit Volumes and Operating Weeks](index=38&type=section&id=Average%20Restaurant%20Unit%20Volumes%20and%20Operating%20Weeks) Average weekly restaurant unit volumes decreased across all U.S. concepts and Outback Steakhouse Brazil in Q1 2020, reflecting reduced sales | Concept | Thirteen Weeks Ended March 29, 2020 (weekly) | Thirteen Weeks Ended March 31, 2019 (weekly) | | :------------------------------------ | :------------------------------------------- | :------------------------------------------- | | U.S. Outback Steakhouse | $70,071 | $77,198 | | U.S. Carrabba's Italian Grill | $55,383 | $59,940 | | U.S. Bonefish Grill | $54,685 | $63,654 | | U.S. Fleming's Prime Steakhouse & Wine Bar | $80,649 | $91,238 | | International Outback Steakhouse - Brazil | $70,300 | $74,878 | [Franchise and other revenues](index=38&type=section&id=Franchise%20and%20other%20revenues) Franchise and other revenues decreased to $12.1 million in Q1 2020 from $16.5 million in Q1 2019, primarily due to a decline in franchise revenues | Revenue Type | Thirteen Weeks Ended March 29, 2020 (in millions) | Thirteen Weeks Ended March 31, 2019 (in millions) | | :--------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Franchise revenues | $9.5 | $13.8 | | Other revenues | $2.6 | $2.7 | | Franchise and other revenues | $12.1 | $16.5 | [COSTS AND EXPENSES](index=38&type=section&id=COSTS%20AND%20EXPENSES) Costs and expenses increased significantly as a percentage of Restaurant sales across all categories in Q1 2020, primarily due to COVID-19 impacts, inflation, and substantial asset impairment charges [Cost of sales](index=38&type=section&id=Cost%20of%20sales) Cost of sales increased by 0.4% as a percentage of Restaurant sales in Q1 2020, primarily due to 0.6% from inventory obsolescence and spoilage related to COVID-19 and 0.3% from commodity cost inflation | Metric | Thirteen Weeks Ended March 29, 2020 | Thirteen Weeks Ended March 31, 2019 | Change | | :-------------------- | :---------------------------------- | :---------------------------------- | :----- | | Cost of sales (in millions) | $319.7 | $352.1 | $(32.4) | | % of Restaurant sales | 32.1% | 31.7% | 0.4% | - **Inventory obsolescence and spoilage costs** associated with **COVID-19** contributed **0.6%** to the increase in cost of sales as a percentage of Restaurant sales[179](index=179&type=chunk) [Labor and other related expenses](index=39&type=section&id=Labor%20and%20other%20related%20expenses) Labor and other related expenses increased by 2.3% as a percentage of Restaurant sales in Q1 2020, mainly due to 1.6% from relief pay for idle employees impacted by COVID-19 dining room closures, 0.5% from decreased restaurant sales, and 0.3% from wage rate increases | Metric | Thirteen Weeks Ended March 29, 2020 | Thirteen Weeks Ended March 31, 2019 | Change | | :-------------------- | :---------------------------------- | :---------------------------------- | :----- | | Labor and other related (in millions) | $309.3 | $319.0 | $(9.7) | | % of Restaurant sales | 31.0% | 28.7% | 2.3% | - **Relief pay** for hourly employees due to **COVID-19** dining room closures accounted for **1.6%** of the increase in labor costs as a percentage of sales[181](index=181&type=chunk) [Other restaurant operating expenses](index=39&type=section&id=Other%20restaurant%20operating%20expenses) Other restaurant operating expenses increased by 2.1% as a percentage of Restaurant sales in Q1 2020, primarily due to the shift to an off-premise operational model (1.1% from additional operating expenses, 0.9% from decreased sales), increased gift card fees, and operating expense inflation | Metric | Thirteen Weeks Ended March 29, 2020 | Thirteen Weeks Ended March 31, 2019 | Change | | :-------------------- | :---------------------------------- | :---------------------------------- | :----- | | Other restaurant operating (in millions) | $246.6 | $250.9 | $(4.3) | | % of Restaurant sales | 24.7% | 22.6% | 2.1% | - The shift to an **off-premise only operational model** in **March 2020** contributed **1.1%** from additional operating expenses and **0.9%** from decreased restaurant sales to the increase in other restaurant operating expenses as a percentage of sales[182](index=182&type=chunk) [General and administrative](index=39&type=section&id=General%20and%20administrative) General and administrative expenses increased to $84.8 million in Q1 2020 from $70.6 million in Q1 2019, driven by higher expected credit losses and contingent lease liabilities ($7.5 million), transformational costs ($5.4 million), and severance ($4.8 million) | Change Factor | Impact (in millions) | | :------------------------------------------ | :------------------- | | Expected credit losses and contingent lease liabilities | $7.5 | | Transformational costs | $5.4 | | Severance | $4.8 | | Total General and administrative (March 29, 2020) | $84.8 | | Total General and administrative (March 31, 2019) | $70.6 | [Provision for impaired assets and restaurant closings](index=39&type=section&id=Provision%20for%20impaired%20assets%20and%20restaurant%20closings) Provision for impaired assets and restaurant closings surged to $41.3 million in Q1 2020, a $37.7 million increase from Q1 2019, primarily due to COVID-19 related asset impairment and transformational initiatives | Metric | Thirteen Weeks Ended March 29, 2020 (in millions) | Thirteen Weeks Ended March 31, 2019 (in millions) | Change (in millions) | | :-------------------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :------------------- | | Provision for impaired assets and restaurant closings | $41.3 | $3.6 | $37.7 | - **COVID-19** related asset impairment and closure charges totaled **$31.3 million** in the U.S. segment and **$3.3 million** in the international segment[184](index=184&type=chunk) - Asset impairment charges related to transformational initiatives amounted to **$6.3 million**[184](index=184&type=chunk) [(Loss) income from operations](index=40&type=section&id=(Loss)%20income%20from%20operations) The company reported an operating loss of $(41.6) million in Q1 2020, a significant decline due to lower sales, COVID-19 costs, and inflation | Metric | Thirteen Weeks Ended March 29, 2020 (in millions) | Thirteen Weeks Ended March 31, 2019 (in millions) | Change (in millions) | | :------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :------------------- | | (Loss) income from operations | $(41.6) | $82.5 | $(124.1) | | % of Total revenues | (4.1)% | 7.3% | (11.4)% | - The shift to an operating loss was driven by lower comparable restaurant sales, **COVID-19 related costs** (**asset impairment**, **relief pay**, **inventory obsolescence**), restructuring initiatives, and commodity/labor inflation[186](index=186&type=chunk) [Interest expense, net](index=40&type=section&id=Interest%20expense,%20net) Net interest expense increased slightly to $11.7 million in Q1 2020 from $11.2 million in Q1 2019, primarily due to higher interest expense from derivative instruments, partially offset by lower interest rates | Metric | Thirteen Weeks Ended March 29, 2020 (in millions) | Thirteen Weeks Ended March 31, 2019 (in millions) | Change (in millions) | | :-------------------- | :---------------------------------------------- | :---------------------------------------------- | :------------------- | | Interest expense, net | $11.7 | $11.2 | $0.5 | - The increase was primarily due to higher interest expense from derivative instruments, partially offset by lower interest rates[187](index=187&type=chunk) [(Benefit) provision for income taxes](index=40&type=section&id=(Benefit)%20provision%20for%20income%20taxes) The effective income tax rate increased significantly to 36.4% in Q1 2020, primarily due to the CARES Act's five-year NOL carryback benefit | Metric | Thirteen Weeks Ended March 29, 2020 | Thirteen Weeks Ended March 31, 2019 | Change | | :-------------------------- | :---------------------------------- | :---------------------------------- | :----- | | Effective income tax rate | 36.4% | 7.7% | 28.7% | - The increase in the effective tax rate was primarily due to the benefit of the five-year carryback of the forecasted **2020 NOL** under the **CARES Act**[188](index=188&type=chunk) [SEGMENT PERFORMANCE](index=41&type=section&id=SEGMENT%20PERFORMANCE) The U.S. segment experienced a substantial decline in total revenues and income from operations, primarily due to lower comparable restaurant sales and COVID-19 related costs. The International segment saw a slight increase in total revenues but a decrease in income from operations due to COVID-19 impacts in Hong Kong and other charges, despite higher comparable sales in Brazil [U.S. Segment](index=41&type=section&id=U.S.%20Segment) The U.S. segment's total revenues decreased to $894.5 million in Q1 2020 from $1,014.5 million in Q1 2019, leading to a significant drop in income from operations to $11.4 million from $113.0 million, primarily due to lower comparable restaurant sales, COVID-19 related costs, and labor/commodity inflation | Metric | Thirteen Weeks Ended March 29, 2020 (in thousands) | Thirteen Weeks Ended March 31, 2019 (in thousands) | | :-------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Restaurant sales | $884,889 | $1,000,813 | | Total revenues | $894,497 | $1,014,507 | | Restaurant-level operating margin | 11.5% | 16.7% | | Income from operations | $11,379 | $113,035 | [Restaurant sales](index=42&type=section&id=Restaurant%20sales) U.S. Restaurant sales decreased by $115.9 million to $884.9 million in Q1 2020, primarily due to a $102.7 million decline from lower comparable restaurant sales, refranchising, and restaurant closures, partially offset by new openings | Change Factor | Impact (in millions) | | :------------------------------------------ | :------------------- | | Comparable restaurant sales | $(102.7) | | Divestiture of restaurants through refranchising transactions | $(11.2) | | Restaurant closures | $(5.7) |\ | Restaurant openings | $3.7 | | Total U.S. Restaurant sales (March 29, 2020) | $884.9 | [Income from operations](index=42&type=section&id=Income%20from%20operations) U.S. income from operations decreased significantly due to lower comparable restaurant sales, COVID-19 related costs (asset impairment, relief pay, inventory obsolescence, incremental operating costs), and labor/commodity inflation - The decrease in U.S. income from operations was primarily due to lower comparable restaurant sales, **COVID-19 related costs** (**asset impairment charges**, **relief pay**, **inventory obsolescence**, **incremental operating costs**), and labor and commodity inflation[197](index=197&type=chunk) [International Segment](index=42&type=section&id=International%20Segment) The International segment's total revenues slightly increased to $113.8 million in Q1 2020, but income from operations decreased to $6.8 million from $13.7 million, primarily due to COVID-19 related costs and lower comparable sales in Hong Kong, despite higher comparable sales and lower advertising in Brazil | Metric | Thirteen Weeks Ended March 29, 2020 (in thousands) | Thirteen Weeks Ended March 31, 2019 (in thousands) | | :-------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Restaurant sales | $111,348 | $110,829 | | Total revenues | $113,840 | $113,624 | | Restaurant-level operating margin | 18.5% | 22.3% | | Income from operations | $6,787 | $13,720 | [Restaurant sales](index=43&type=section&id=Restaurant%20sales) International Restaurant sales slightly increased to $111.3 million in Q1 2020, driven by $8.4 million from new restaurant openings and $3.4 million from higher comparable restaurant sales, partially offset by a $10.4 million negative effect of foreign currency translation | Change Factor | Impact (in millions) | | :------------------------------------------ | :------------------- | | Restaurant openings | $8.4 | | Comparable restaurant sales | $3.4 | | Effect of foreign currency translation | $(10.4) | | Restaurant closures | $(0.9) | | Total International Restaurant sales (March 29, 2020) | $111.3 | [Income from operations](index=43&type=section&id=Income%20from%20operations) International income from operations decreased due to COVID-19 related costs, lower comparable restaurant sales in Hong Kong, changes in product mix in Brazil, and commodity inflation - The decrease in international income from operations was primarily due to **COVID-19 related costs**, lower comparable restaurant sales in **Hong Kong**, changes in product mix in **Brazil**, and commodity inflation[203](index=203&type=chunk) - These decreases were partially offset by higher comparable restaurant sales and lower advertising expense in **Brazil**[203](index=203&type=chunk) [Non-GAAP Financial Measures](index=43&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP measures like System-Wide Sales and Adjusted operating margins provide a clearer view of core performance by excluding variable or non-recurring items [System-Wide Sales](index=43&type=section&id=System-Wide%20Sales) System-wide sales, a non-GAAP measure, includes sales from both company-owned and franchised restaurants. Total franchise sales decreased to $206 million in Q1 2020 from $229 million in Q1 2019, with declines in both U.S. and International segments - **System-wide sales** include sales from all company-owned and franchised restaurants, used by management to evaluate brand health and development[204](index=204&type=chunk) | Segment | Thirteen Weeks Ended March 29, 2020 (in millions) | Thirteen Weeks Ended March 31, 2019 (in millions) | | :--------------------------- | :---------------------------------------------- | :---------------------------------------------- | | U.S. Total franchise sales | $130 | $145 | | International Total franchise sales | $76 | $84 | | Total franchise sales | $206 | $229 | [Adjusted restaurant-level operating margin](index=44&type=section&id=Adjusted%20restaurant-level%20operating%20margin) Adjusted restaurant-level operating margin for the U.S. segment was 12.5% in Q1 2020, down from 17.1% in Q1 2019. This adjustment primarily accounts for restaurant and asset impairments, closing costs, and COVID-19 related costs | Metric | Thirteen Weeks Ended March 29, 2020 (Adjusted) | Thirteen Weeks Ended March 31, 2019 (Adjusted) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | | Restaurant-level operating margin | 12.5% | 17.1% | - Adjustments include unfavorable impacts from restaurant and asset impairments and closing costs (**$2.8 million**) and **COVID-19** related costs (**$(6.2) million**) in Q1 2020[209](index=209&type=chunk) [Adjusted income from operations, Adjusted net income and Adjusted diluted earnings per share](index=45&type=section&id=Adjusted%20income%20from%20operations,%20Adjusted%20net%20income%20and%20Adjusted%20diluted%20earnings%20per%20share) Adjusted income from operations was $27.5 million in Q1 2020, down from $88.5 million in Q1 2019, with adjusted diluted EPS of $0.14 compared to $0.75. Adjustments primarily include $48.9 million in COVID-19 related costs and $22.2 million in severance and transformational costs | Metric | Thirteen Weeks Ended March 29, 2020 | Thirteen Weeks Ended March 31, 2019 | | :------------------------------------------ | :---------------------------------- | :---------------------------------- | | (Loss) income from operations | $(41,568) | $82,494 | | COVID-19 related costs adjustments | $48,876 | — | | Severance and other transformational costs adjustments | $22,232 | $2,855 | | Adjusted income from operations | $27,513 | $88,512 | | Adjusted net income | $12,475 | $69,499 | | Adjusted diluted earnings per share | $0.14 | $0.75 | - **COVID-19 related costs**, including **asset impairments**, **inventory obsolescence**, and **credit losses**, were a major adjustment in Q1 2020[212](index=212&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) The company aggressively preserved liquidity by suspending dividends/repurchases, reducing capital expenditures, and drawing on credit facilities in response to COVID-19 [LIQUIDITY](index=46&type=section&id=LIQUIDITY) In response to COVID-19, the company suspended dividends and repurchases, reduced expenditures, negotiated rent, and drew down its revolving credit facility - The company suspended **quarterly cash dividends** and **stock repurchases**[215](index=215&type=chunk) - Marketing and capital expenditures were significantly reduced, and rent abatements/deferrals were pursued[215](index=215&type=chunk) - Substantially all remaining availability under the **revolving credit facility** was drawn down on **March 16, 2020**, to increase cash position[216](index=216&type=chunk) [Cash and Cash Equivalents](index=46&type=section&id=Cash%20and%20Cash%20Equivalents) Cash and cash equivalents totaled $403.4 million as of March 29, 2020, with $32.2 million held by foreign affiliates, generally unrestricted - Cash and cash equivalents were **$403.4 million** as of March 29, 2020[218](index=218&type=chunk) - **$32.2 million** of cash was held by foreign affiliates, with no known restrictions on repatriation[218](index=218&type=chunk) [Closure Initiatives](index=46&type=section&id=Closure%20Initiatives) Future undiscounted cash expenditures for lease liabilities related to closure initiatives are estimated between $11.9 million and $14.5 million through January 2029 - Future undiscounted cash expenditures for lease liabilities related to closure initiatives are estimated between **$11.9 million** and **$14.5 million**[220](index=220&type=chunk) [Capital Expenditures](index=46&type=section&id=Capital%20Expenditures) Estimated capital expenditures for 2020 are $100.0 million to $110.0 million, with a $100.0 million limit imposed by the Amended Credit Agreement - Estimated capital expenditures for **2020** are **$100.0 million to $110.0 million**[221](index=221&type=chunk) - The **Amended Credit Agreement** limits aggregate capital expenditures to **$100.0 million** for the four fiscal quarters through **March 28, 2021**[223](index=223&type=chunk) [Credit Facilities](index=47&type=section&id=Credit%20Facilities) Outstanding borrowings under the Senior Secured Credit Facility totaled $1.4 billion as of March 29, 2020, with $4.8 million in available unused borrowing capacity under the revolving credit facility | Credit Facility | Balance as of March 29, 2020 (in thousands) | Balance as of December 29, 2019 (in thousands) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------- | | Term Loan A | $443,750 | $450,000 | | Revolving Credit Facility | $975,000 | $599,000 | | Total Credit Facilities | $1,418,750 | $1,049,000 | - As of **March 29, 2020**, the company had **$4.8 million** in available unused borrowing capacity under its **revolving credit f
Bloomin’ Brands(BLMN) - 2020 Q1 - Earnings Call Transcript
2020-05-08 19:46
Financial Performance - Total revenues decreased by 10.6% to $1 billion compared to the previous year [17] - GAAP diluted loss per share for the quarter was $0.44, down from earnings per share of $0.69 in 2019 [17] - Adjusted diluted earnings per share was $0.14 versus $0.75 last year, and adjusted restaurant level operating margin was 12.5% compared to 17.1% last year [17][19] - Weekly cash burn rate has been reduced to $6 million to $8 million due to immediate actions taken to minimize spending [20] Business Lines and Market Performance - Average off-premises sales have tripled since the beginning of March, allowing the company to keep most locations open [8] - Comparable sales at 23 Outback Steakhouse locations that reopened for dine-in were down 17% from the prior year [9] - As of May 3, 2020, 355 dining rooms were open across all brands with limited seating capacity [9] Company Strategy and Industry Competition - The company is focused on enhancing total shareholder return and has seen positive sales and traffic across all concepts prior to the pandemic [15] - The strategy includes maintaining off-premises gains while reopening dining rooms safely [10][15] - The company has ceased exploration of strategic alternatives to focus on responding to the COVID-19 pandemic [25] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in retaining off-premises market share gains and emphasized the importance of safety protocols during the reopening of dining rooms [7][10] - The company is optimistic about emerging stronger post-crisis, leveraging the lessons learned during the pandemic [30] - Management noted that it is too early to provide guidance for the remainder of the year due to ongoing uncertainties [44] Other Important Information - The company raised $200 million through convertible notes to strengthen liquidity and navigate economic uncertainty [14][24] - Brazil's operations faced challenges similar to the U.S., but the leadership team has successfully built a carryout business [26][27] - The company has not laid off or furloughed any employees during the crisis, maintaining a trained workforce ready for reopening [11][12] Q&A Session Summary Question: What is the confidence level in sustaining the recovery trend after reopening dining rooms? - Management highlighted the importance of safety protocols and a fully trained staff, which has contributed to sustained gains in states where dining rooms have reopened [32][33] Question: What led to the decision to issue convertible notes? - The convertible bond was chosen as it offered the lowest cost of capital, providing flexibility to capitalize on future opportunities [35][36] Question: What does optimizing the asset base mean? - Management clarified that optimizing the asset base involves strengthening the off-premise business and enhancing dining operations rather than closing more locations [40] Question: How is the company managing cash burn and rent payments? - The company is paying full rent as part of its cash burn rate but is in constructive discussions with landlords regarding deferrals and abatements [105] Question: What is the status of franchisee health? - Franchisee health varies, but the company has maintained strong relationships and only a handful of closures have occurred [80] Question: What are the learnings from the early reopening states? - Key learnings include prioritizing safety, managing table turns, and preserving off-premises business [84]
Bloomin’ Brands(BLMN) - 2019 Q4 - Annual Report
2020-02-26 21:08
PART I [Business Overview](index=5&type=section&id=Item%201.%20Business) Bloomin' Brands operates a global casual dining portfolio, emphasizing innovation, digital engagement, and strategic value - **Bloomin' Brands, Inc. is one of the largest global casual dining restaurant companies**, with a portfolio of four founder-inspired concepts[23](index=23&type=chunk) Restaurant Count (as of December 29, 2019) | Category | Owned & Operated | Franchised | Total | |:---|:---|:---|:---| | U.S. | 1,045 | 173 | 1,218 | | International | 128 | 127 | 255 | | **System-wide** | **1,173** | **300** | **1,473** | - The company completed the rollout of in-house delivery to substantially all Outback Steakhouse and most Carrabba's Italian Grill Company-owned restaurants in 2019, and expanded Outback Steakhouse's delivery platform through an exclusive third-party partnership with DoorDash[36](index=36&type=chunk) - A multi-year relocation plan is underway for U.S. Outback Steakhouse, aiming to move legacy restaurants to prime locations to drive additional traffic, with **11 restaurants relocated in 2019** and **nine planned for 2020**[43](index=43&type=chunk) - The company is exploring strategic alternatives to maximize shareholder value, including a possible sale, and has implemented a plan for growth, efficiency, and scale through leadership consolidation, streamlined corporate functions, and rebalanced capital allocation[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk) [General and History](index=6&type=section&id=General%20and%20History) Bloomin' Brands is a leading global casual dining restaurant company with a diverse portfolio of concepts - **Bloomin' Brands, Inc. is one of the largest global casual dining restaurant companies**, with a portfolio of leading, differentiated restaurant concepts[23](index=23&type=chunk) - As of December 29, 2019, the company owned and operated **1,173 restaurants** and franchised **300 restaurants** across 48 states, Puerto Rico, Guam, and 21 countries[24](index=24&type=chunk) [Our Segments](index=6&type=section&id=Our%20Segments) The company's operations are segmented into U.S. and International, encompassing owned and franchised restaurants - The company aggregates its operating segments into two reportable segments: U.S. and International[25](index=25&type=chunk) Reportable Segments and Concepts (as of December 29, 2019) | Reportable Segment | Concept | Geographic Location | |:---|:---|:---| | U.S. | Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill, Fleming's Prime Steakhouse & Wine Bar | United States of America | | International | Outback Steakhouse, Carrabba's Italian Grill (Abbraccio) | Brazil, Hong Kong/China | - As of December 29, 2019, the U.S. segment included **1,045 owned and operated restaurants** and **173 franchised restaurants** across 48 states[26](index=26&type=chunk) - As of December 29, 2019, the International segment included **128 owned and operated restaurants** and **127 franchised restaurants** across 21 countries, Puerto Rico, and Guam[34](index=34&type=chunk) [Restaurant Overview](index=7&type=section&id=Restaurant%20Overview) This section details selected sales data, delivery initiatives, and system-wide restaurant rollforward for 2019 Selected Sales Data for Company-owned Restaurants (2019) | Concept | Food & Non-alcoholic Beverage | Alcoholic Beverage | Average Check Per Person ($USD) | |:---|:---|:---|:---| | Outback Steakhouse | 91% | 9% | $23 | | Carrabba's Italian Grill | 86% | 14% | $22 | | Bonefish Grill | 78% | 22% | $27 | | Fleming's Prime Steakhouse & Wine Bar | 74% | 26% | $83 | | Outback Steakhouse Brazil | 85% | 15% | $15 (R$ 59) | - In 2019, the company completed the rollout of in-house delivery to substantially all Outback Steakhouse and most Carrabba's Italian Grill Company-owned restaurants, and expanded Outback Steakhouse's delivery platform through an exclusive third-party partnership with DoorDash[36](index=36&type=chunk) System-wide Restaurant Rollforward (2019) | Concept | Dec 30, 2018 | Openings | Closures | Other | Dec 29, 2019 | |:---|:---|:---|:---|:---|:---|\ | **U.S. Total** | **1,232** | **6** | **(20)** | **—** | **1,218** | | Outback Steakhouse (Company-owned) | 579 | 3 | (3) | — | 579 | | Outback Steakhouse (Franchised) | 154 | — | (9) | — | 145 | | Carrabba's Italian Grill (Company-owned) | 224 | — | (2) | (18) | 204 | | Carrabba's Italian Grill (Franchised) | 3 | — | — | 18 | 21 | | Bonefish Grill (Company-owned) | 190 | 1 | (1) | — | 190 | | Fleming's Prime Steakhouse & Wine Bar (Company-owned) | 70 | — | (2) | — | 68 | | **International Total** | **256** | **21** | **(22)** | **—** | **255** | | Outback Steakhouse - Brazil (Company-owned) | 92 | 7 | — | — | 99 | | Outback Steakhouse - South Korea (Franchised) | 76 | 5 | (9) | — | 72 | | **System-wide Total** | **1,488** | **27** | **(42)** | **—** | **1,473** | [Restaurant Design and Development](index=8&type=section&id=Restaurant%20Design%20and%20Development) The company focuses on constructing freestanding restaurants, ongoing remodels, and strategic relocations and international expansion - The company primarily constructs freestanding buildings on leased properties, with an ongoing remodel program across all concepts to maintain ambiance[40](index=40&type=chunk) - A multi-year relocation plan for U.S. Outback Steakhouse aims to move legacy restaurants to prime locations within the same trade area, with **11 relocations in 2019** and **nine planned for 2020**[43](index=43&type=chunk) - International expansion focuses on established equity and franchise markets in South America and Asia, particularly Brazil[45](index=45&type=chunk) [Research & Development / Innovation](index=9&type=section&id=Research%20%26%20Development%20%2F%20Innovation) The R&D team drives menu innovation and simplification through consumer research and local market tailoring - The R&D team performs thorough reviews and consumer research before adding items to the global core menu, with local teams tailoring menus for international markets[47](index=47&type=chunk) - Menu innovation and simplification are high priorities, including increased portion sizes at Outback Steakhouse and Carrabba's Italian Grill, and locally-sourced 'Neighborhood Catch' dishes at Bonefish Grill[49](index=49&type=chunk) [Information Systems](index=9&type=section&id=Information%20Systems) Technology is leveraged for digital marketing, customer engagement, business analytics, and supply chain efficiency - Technology is leveraged for digital marketing, customer engagement, business analytics, restaurant operations, and productivity initiatives[50](index=50&type=chunk) - Investments include brand websites, digital marketing, online ordering, mobile apps, and a customer loyalty program (Dine Rewards) to increase traffic[51](index=51&type=chunk) - A global supply chain management system has been implemented for better inventory forecasting and replenishment, with investments in risk management and cybersecurity[51](index=51&type=chunk) [Advertising and Marketing](index=10&type=section&id=Advertising%20and%20Marketing) Advertising utilizes diverse media channels with a focus on data-driven personalization and loyalty programs - Advertising uses diverse media channels including national/spot television, radio, social media, search engines, and other digital tactics[54](index=54&type=chunk) - Increased focus on data segmentation, personalization, customer relationship management, and digital advertising for efficiency and relevance[54](index=54&type=chunk) - The multi-branded loyalty program, Dine Rewards, aims to drive incremental traffic and provide data for customer segmentation[55](index=55&type=chunk) [Restaurant Operations](index=10&type=section&id=Restaurant%20Operations) Restaurant operations involve varied management structures, performance-based incentives, and international partner participation - Restaurant management staff varies by concept and size, with most employees being hourly and part-time[56](index=56&type=chunk) - Area Operating Partners and Restaurant Managing Partners receive performance-based bonuses, with U.S. partners potentially participating in deferred compensation plans[57](index=57&type=chunk)[58](index=58&type=chunk) - International Restaurant Managing Partners may purchase participation interests in restaurant cash distributions[59](index=59&type=chunk) [Sourcing and Supply](index=11&type=section&id=Sourcing%20and%20Supply) A global procurement strategy leverages diverse suppliers for efficiency, with beef as a primary purchased protein - A global approach to procurement and supply chain management leverages global, regional, and local suppliers for efficiency and economies of scale[63](index=63&type=chunk)[64](index=64&type=chunk) - Beef constitutes the majority of purchased proteins, primarily sourced from **four U.S. suppliers (over 80% of market)** and **two Brazil suppliers (approx. 45% of market)**[66](index=66&type=chunk) - The R&D facility in Tampa, Florida, serves as a global test kitchen and vendor product qualification site, with a quality assurance team managing supplier evaluations and third-party inspections[67](index=67&type=chunk) [Restaurant Ownership Structures](index=11&type=section&id=Restaurant%20Ownership%20Structures) Revenue is generated from company-owned and franchised restaurants, with varying royalty fee structures - Revenues are generated from Company-owned restaurants and royalties/franchise sales from franchised restaurants[69](index=69&type=chunk) - Company-owned restaurants are wholly-owned or majority-owned, with results included in consolidated operating results[70](index=70&type=chunk) - Carrabba's Italian Grill restaurants in the U.S. pay royalties of **0.5% to 1.5% of sales** to the founders, while international Carrabba's pay a one-time lump sum fee[71](index=71&type=chunk) Unaffiliated Franchise Royalty Fee Percentages | Franchisee Type | Monthly Royalty Fee Percentage | |:---|:---|\ | U.S. franchisees | 3.50% - 5.75% | | International franchisees | 2.75% - 6.00% | [Competition](index=12&type=section&id=Competition) The restaurant industry is highly competitive, facing challenges from diverse operators and expanding food service options - The restaurant industry is highly competitive, with numerous operators competing on price, service, location, and food quality, including well-established competitors and new market entrants[75](index=75&type=chunk) - Competition also comes from the supermarket industry (prepared meals), quick service/fast casual restaurants, and expanding home delivery services[75](index=75&type=chunk) [Government Regulation](index=12&type=section&id=Government%20Regulation) The company is subject to extensive federal, state, local, and international regulations, particularly for alcoholic beverage sales - The company is subject to various federal, state, local, and international laws and regulations, including those for alcoholic beverage control, health and safety, and employment[76](index=76&type=chunk)[78](index=78&type=chunk)[80](index=80&type=chunk) - Alcoholic beverage sales represent **14% of U.S. restaurant sales** and require specific state and local licenses[77](index=77&type=chunk) [Information About Our Executive Officers](index=13&type=section&id=Information%20About%20Our%20Executive%20Officers) This section provides a list of the company's executive officers as of February 14, 2020 Executive Officers (as of February 14, 2020) | Name | Age | Position | |:---|:---|:---|\ | David J. Deno | 62 | Chief Executive Officer | | Christopher Meyer | 48 | Executive Vice President, Chief Financial Officer | | Kelly Lefferts | 53 | Executive Vice President, Chief Legal Officer and Secretary | | Gregg Scarlett | 58 | Executive Vice President, Chief Operating Officer, Casual Dining Restaurants | | Michael Stutts | 40 | Executive Vice President, Chief Customer Officer | [Employees](index=13&type=section&id=Employees) As of December 29, 2019, the company employed approximately 94,000 persons, with some international employees covered by labor agreements - As of December 29, 2019, the company employed approximately **94,000 persons**, including **800 corporate personnel**[87](index=87&type=chunk) - None of the U.S. employees are covered by a collective bargaining agreement, but various jurisdictional industry-wide labor agreements apply to certain employees in Brazil[87](index=87&type=chunk) [Trademarks](index=14&type=section&id=Trademarks) The company protects its key service marks and trademarks globally, licensing their use with quality control - Key service marks and trademarks include Outback®, Outback Steakhouse®, Carrabba's Italian Grill®, Bonefish Grill®, Fleming's Prime Steakhouse & Wine Bar®, and Bloomin' Onion®[89](index=89&type=chunk) - The company pursues global registration of its marks, vigorously opposing infringement and licensing their use to franchisees and third parties with quality control standards[89](index=89&type=chunk)[90](index=90&type=chunk) [Seasonality](index=14&type=section&id=Seasonality) The business experiences seasonal fluctuations in customer traffic, with variations between U.S. and international markets - The business is subject to seasonal fluctuations, with U.S. customer traffic generally **highest in the first quarter** and **lowest in the third quarter**[91](index=91&type=chunk) - International customer traffic patterns vary by market; for example, Brazil historically experiences minimal seasonal fluctuations[91](index=91&type=chunk) [Risk Factors](index=14&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from strategic review uncertainty, competitive pressures, operational challenges, regulatory compliance, and financial leverage - Uncertainty regarding the outcome of the strategic alternatives review could adversely impact business operations, stock price, and personnel retention[95](index=95&type=chunk)[98](index=98&type=chunk) - Organizational restructuring, while aiming for cost savings, involves significant implementation challenges and potential unforeseen adverse effects on sales or operations[99](index=99&type=chunk)[100](index=100&type=chunk) - Food safety issues, whether internal or industry-wide, could negatively impact traffic, sales, and brand reputation, exacerbated by social media[101](index=101&type=chunk)[102](index=102&type=chunk) - The highly competitive restaurant industry, coupled with expanding consumer options, poses a risk to traffic, sales, and margins if the company cannot compete effectively[103](index=103&type=chunk)[104](index=104&type=chunk) - Increases in minimum wage, mandated benefits, and other labor regulations could materially increase operating costs[106](index=106&type=chunk)[107](index=107&type=chunk) - Challenging economic conditions, consumer confidence, and discretionary spending directly impact the restaurant industry, potentially leading to declining sales, increased costs, and reduced growth initiatives[109](index=109&type=chunk) - Cybersecurity breaches of confidential consumer/employee information or failures in technological systems could result in negative publicity, brand damage, business interruption, and legal liabilities[110](index=110&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) - Increased commodity, energy, and other costs could decrease profit margins or necessitate menu price increases, potentially affecting sales[116](index=116&type=chunk)[117](index=117&type=chunk) - Failure to comply with extensive government regulations could adversely affect business operations and incur significant costs[118](index=118&type=chunk)[120](index=120&type=chunk) - Changes in consumer preferences and perceptions may lessen demand for current product offerings, harming business and operating results[121](index=121&type=chunk)[122](index=122&type=chunk) - Reliance on third-party delivery services carries risks related to platform failures, poor driver performance, and potential cannibalization of more profitable in-restaurant sales[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) - Risks associated with remodeling, relocation, and expansion plans include difficulty in site acquisition, funding constraints, personnel challenges, and uncertain performance of new/relocated restaurants[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk)[132](index=132&type=chunk) - International operations face additional risks such as economic/political instability, differing cultures, diverse regulations, currency fluctuations, and the ability to source high-quality ingredients[133](index=133&type=chunk)[136](index=136&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk) - Loss of key management personnel or failure to recruit/retain high-quality restaurant staff could hurt business and inhibit growth[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) - The success of the business depends on preserving and growing brand value, which can be adversely affected by ineffective marketing, negative publicity, or failure to innovate[143](index=143&type=chunk)[144](index=144&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk) - An impairment in the carrying value of goodwill or other intangible/long-lived assets could adversely affect financial condition and results of operations[151](index=151&type=chunk) - Limited control over franchisees means their failure to operate according to standards could harm brand image and reputation, and financial difficulties could impact royalty revenues and incur support expenses[153](index=153&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk) - Reliance on a limited number of suppliers for major products and a single custom distribution company creates risk of supply shortages and higher costs if these partners fail to fulfill obligations[156](index=156&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk) - Failure to achieve projected cost savings from efficiency initiatives could adversely affect results of operations and limit funding for growth[159](index=159&type=chunk)[160](index=160&type=chunk) - Various initiatives (acquisitions, dispositions, new ventures) carry risks of being unsuccessful, incurring significant expenses, or diverting resources, potentially harming financial results[162](index=162&type=chunk) - Business is subject to seasonal and periodic fluctuations, with U.S. customer traffic highest in Q1 and lowest in Q3, and quarterly results affected by new restaurant openings/closures and associated costs[163](index=163&type=chunk) - Adverse weather conditions, natural disasters, and unforeseen events could negatively impact operations and consumer traffic[164](index=164&type=chunk) - Inability to enforce trademarks or other proprietary rights could adversely affect competitive position and brand value[165](index=165&type=chunk)[166](index=166&type=chunk) - Litigation could divert resources, incur substantial settlement payments or damage awards, and materially impact financial performance[167](index=167&type=chunk)[169](index=169&type=chunk) - Insurance policies may not provide adequate coverage, and fluctuating insurance requirements/costs could negatively impact profitability[170](index=170&type=chunk) - Failure to maintain effective internal control over financial reporting and disclosure controls could adversely affect business and financial results, leading to loss of investor confidence[171](index=171&type=chunk)[172](index=172&type=chunk) - Future changes to accounting rules, standards, or interpretations, and subjective judgments in complex accounting matters, could significantly affect reported financial results[173](index=173&type=chunk) - Substantial leverage (**$1.0 billion total indebtedness** as of Dec 29, 2019) increases vulnerability to economic conditions, restricts capital raising, and exposes the company to interest rate risk[175](index=175&type=chunk)[176](index=176&type=chunk)[177](index=177&type=chunk)[179](index=179&type=chunk) - Debt agreements contain restrictive covenants that limit operational flexibility and could lead to acceleration of debt if breached[183](index=183&type=chunk)[184](index=184&type=chunk) - Inability to generate sufficient cash flow to service debt and operating lease obligations could force actions like reducing capital expenditures or selling assets, potentially leading to default[185](index=185&type=chunk)[186](index=186&type=chunk) - The stock price is subject to volatility due to fluctuations in operating results, analyst estimates, market conditions, and other external factors[187](index=187&type=chunk) - Inability to continue paying dividends or repurchasing stock, especially under the new capital allocation policy, could lead to a decline in common stock value[189](index=189&type=chunk)[190](index=190&type=chunk)[191](index=191&type=chunk) - Provisions in the certificate of incorporation, bylaws, Senior Secured Credit Facility, and Delaware law may discourage, delay, or prevent a change of control or management changes, potentially depressing stock price[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk) - Limited ability to raise future capital could hinder funding of capital requirements, and issuance of new securities could dilute existing stockholders' interests[196](index=196&type=chunk)[197](index=197&type=chunk) [Unresolved Staff Comments](index=27&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments to report - Not applicable[199](index=199&type=chunk) [Properties](index=27&type=section&id=Item%202.%20Properties) The company operates 1,473 system-wide restaurants, primarily on leased properties, and leases corporate offices - As of December 29, 2019, the company had **1,473 system-wide restaurants** across 48 states, Puerto Rico, Guam, and 21 countries[200](index=200&type=chunk) Restaurant Count by Ownership and Geographic Location (as of December 29, 2019) | Category | Company-Owned | Franchised | |:---|:---|:---|\ | United States | 1,045 | 173 | | International | 128 | 127 | | **Total** | **1,173** | **300** | Company-owned Restaurant Sites by Type (as of December 29, 2019) | Site Type | U.S. | International | Total | Percentage of Total | |:---|:---|:---|:---|:---|\ | Company-owned sites | 27 | — | 27 | 2% | | Leased sites: | | | | | | Land, ground and building
Bloomin’ Brands(BLMN) - 2019 Q4 - Earnings Call Transcript
2020-02-18 19:49
Financial Performance - Adjusted Q4 2019 diluted earnings per share was $0.32, a 19% increase compared to the previous year [8][22] - Total revenues increased by 0.9% to $1 billion in Q4, driven by higher comp sales and the net impact of restaurant openings and closures [23] - US comp sales rose by 1.9%, with traffic up by 0.9% and average check increasing by 1% [24][25] - Adjusted operating margin expanded by 60 basis points for the year, with Q4 marking the fifth consecutive quarter of margin growth [10][34] Business Line Performance - Outback's comp sales increased by 2.7%, marking its 12th consecutive quarter of growth [27] - Carrabba's comp sales rose by 1.4%, with off-premise sales accounting for 21% of total sales in Q4, up 32% year-over-year [30] - Bonefish Grill's comp sales improved by 0.5%, while Fleming's comp sales increased by 0.9% [31] - Brazil's comp sales grew by 4.9%, with traffic up by 8.2%, driven by successful promotions [32] Market Performance - Combined US comp sales were up 1.9%, outperforming the industry by 380 basis points [8][24] - Traffic growth in Q4 was the best since Q4 2017, indicating strong market performance [24] Company Strategy and Industry Competition - The company plans to focus on sustainable top-line growth through various initiatives, including enhancing food quality and service, and investing in off-premise sales [13][18] - A strategic pivot towards a more tempered pricing approach aims to enhance value relative to competitors [16] - The company is exploring strategic alternatives, including a potential sale, with significant interest in its Brazilian operations [36][37] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in maintaining top-line momentum into 2020, supported by strategic investments in digital and off-premise channels [9][19] - The company anticipates a challenging Q4 2020 due to potential impacts from the election, but remains optimistic about overall performance [62] Other Important Information - The company plans to double its annual dividend from $0.40 to $0.80 per share, reflecting a commitment to returning cash to shareholders [43] - Capital spending is expected to be between $175 million and $190 million, focusing on new locations primarily in Brazil [57] Q&A Session Question: Can you provide insights on comps and how they relate to the industry? - Management indicated a strong start to 2020, with traffic trends improving and a goal to outperform the industry [70][73] Question: What is the Board's stance on cash usage and the Brazil business? - The Board decided to double the dividend while also considering share repurchases and debt paydowns, with ongoing discussions about the Brazil business [76][77] Question: Can you elaborate on the interaction between DoorDash and internal delivery? - Management reported positive incrementality from both DoorDash and internal delivery, contributing to strong sales growth [81] Question: What is the status of the strategic review process? - The strategic review is ongoing, with no compelling offers yet, but management is focused on creating a stronger company regardless of the review's outcome [86][87] Question: Can you clarify the expected restaurant margins and cost savings? - Management did not provide specific guidance on restaurant margins but indicated that cost savings would come from infrastructure improvements and operational efficiencies [90][91]
Bloomin’ Brands(BLMN) - 2019 Q3 - Quarterly Report
2019-11-07 21:07
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 29, 2019 or ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission File Number: 001-35625 BLOOMIN' BRANDS, INC. (Exact name of registrant as specified in its charter) Delaware 20-8023465 (State o ...
Bloomin’ Brands(BLMN) - 2019 Q3 - Earnings Call Transcript
2019-11-06 20:48
Bloomin' Brands, Inc. (NASDAQ:BLMN) Q3 2019 Results Earnings Conference Call November 6, 2019 9:00 AM ET Company Participants Mark Graff - Vice President of Investor Relations & Corporate Finance Dave Deno - Chief Executive Officer Chris Meyer - Executive Vice President, Chief Financial Officer Conference Call Participants Jeffrey Bernstein - Barclays Brett Levy - MKM Partners John Glass - Morgan Stanley John Ivankoe - JPMorgan Jeff Farmer - Gordon Haskett Brian Vaccaro - Raymond James Matt DiFrisco - Gugge ...
Bloomin’ Brands(BLMN) - 2019 Q2 - Quarterly Report
2019-08-02 20:08
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 or ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission File Number: 001-35625 BLOOMIN' BRANDS, INC. (Exact name of registrant as specified in its charter) Delaware 20-8023465 (State or oth ...
Bloomin’ Brands(BLMN) - 2019 Q2 - Earnings Call Transcript
2019-07-31 20:01
Bloomin' Brands, Inc. (NASDAQ:BLMN) Q2 2019 Earnings Conference Call July 31, 2019 9:00 AM ET Company Participants Mark Graff - Vice President, Investor Relations Dave Deno - Chief Executive Officer Chris Meyer - Executive Vice President & Chief Financial Officer Conference Call Participants Jeffrey Bernstein - Barclays Jeff Farmer - Gordon Haskett John Ivankoe - JPMorgan John Glass - Morgan Stanley Matthew DiFrisco - Guggenheim Securities Alex Slagle - Jefferies Brian Vaccaro - Raymond James Sharon Zackfia ...