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

Bloomin’ Brands, Inc. (Nasdaq: BLMN) reported results for the third quarter 2021 compared to the third quarter 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

  • 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%

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.

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

109,410

87,394

TABLE TWO

BLOOMIN’ BRANDS, INC.

SEGMENT RESULTS

(UNAUDITED)

(dollars in thousands)

 

THIRTEEN WEEKS ENDED

THIRTY-NINE WEEKS ENDED

U.S. Segment

 

SEPTEMBER 26, 2021

SEPTEMBER 27, 2020

SEPTEMBER 26, 2021

SEPTEMBER 27, 2020

Revenues

 

Restaurant sales

 

$

898,790

$

719,406

$

2,789,142

$

2,141,062

Franchise and other revenues

 

13,943

2,332

31,567

12,253

Total revenues

 

$

912,733

$

721,738

$

2,820,709

$

2,153,315

Restaurant-level operating margin

 

10.0

%

11.4

%

17.1

%

9.4

%

Income (loss) from operations

 

$

47,294

$

29,574

$

334,326

$

(21,968

)

Operating income (loss) margin

 

5.2

%

4.1

%

11.9

%

(1.0

)%

International Segment

 

Revenues

 

Restaurant sales

 

$

97,928

$

47,081

$

242,254

$

197,923

Franchise and other revenues (1)

 

(198

)

2,441

12,339

6,818

Total revenues

 

$

97,730

$

49,522

$

254,593

$

204,741

Restaurant-level operating margin

 

12.8

%

(1.5

)%

10.7

%

5.7

%

Income (loss) from operations

 

$

1,412

$

(7,926

)

$

7,419

$

(18,209

)

Operating income (loss) margin

 

1.4

%

(16.0

)%

2.9

%

(8.9

)%

Reconciliation of Segment Income (Loss) from Operations to Consolidated Income (Loss) from Operations

 

Segment income (loss) from operations

 

U.S.

 

$

47,294

$

29,574

$

334,326

$

(21,968

)

International

 

1,412

(7,926

)

7,419

(18,209

)

Total segment income (loss) from operations

 

48,706

21,648

341,745

(40,177

)

Unallocated corporate operating expense (2)

 

(33,869

)

(35,903

)

(111,273

)

(127,558

)

Total income (loss) from operations

 

$

14,837

$

(14,255

)

$

230,472

$

(167,735

)

____________________

(1) The thirteen and thirty-nine weeks ended September 26, 2021 includes an adjustment of $(3.2) million to reduce our initial recorded estimate and net $3.1 million benefit from the recognition of recoverable Program of Social Integration (“PIS”) and Contribution for the Financing of Social Security (“COFINS”) taxes, including accrued interest, respectively, within other revenues in connection with favorable court rulings in Brazil regarding the calculation methodology and taxable base.

(2) The thirteen and thirty-nine weeks ended September 27, 2020 include $4.2 million and $28.8 million, respectively, of charges that were not allocated to our segments related to our transformational initiatives.

TABLE THREE

BLOOMIN’ BRANDS, INC.

SUPPLEMENTAL BALANCE SHEET INFORMATION

(UNAUDITED)

(dollars in thousands)

 

SEPTEMBER 26, 2021

DECEMBER 27, 2020

Cash and cash equivalents

 

$

76,337

$

109,980

Net working capital (deficit) (1)

 

$

(656,556

)

$

(626,250

)

Total assets

 

$

3,218,602

$

3,362,107

Total debt, net

 

$

839,151

$

1,036,480

Total stockholders’ equity

 

$

166,336

$

10,957

_________________

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

TABLE FOUR

BLOOMIN’ BRANDS, INC.

RESTAURANT-LEVEL OPERATING MARGIN RECONCILIATIONS

(UNAUDITED)

Consolidated

 

THIRTEEN WEEKS ENDED

THIRTY-NINE WEEKS ENDED

(dollars in thousands)

 

SEPTEMBER 26, 2021

SEPTEMBER 27, 2020

SEPTEMBER 26, 2021

SEPTEMBER 27, 2020

Income (loss) from operations

 

$

14,837

$

(14,255

)

$

230,472

$

(167,735

)

Operating income (loss) margin

 

1.5

%

(1.8

)%

7.5

%

(7.1

)%

Less:

 

Franchise and other revenues

 

13,745

4,773

43,906

19,071

Plus:

 

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

Restaurant-level operating income

 

$

102,384

$

81,778

$

500,710

$

214,618

Restaurant-level operating margin

 

10.3

%

10.7

%

16.5

%

9.2

%

 

U.S.

 

THIRTEEN WEEKS ENDED

THIRTY-NINE WEEKS ENDED

(dollars in thousands)

 

SEPTEMBER 26, 2021

SEPTEMBER 27, 2020

SEPTEMBER 26, 2021

SEPTEMBER 27, 2020

Income (loss) from operations

 

$

47,294

$

29,574

$

334,326

$

(21,968

)

Operating income (loss) margin

 

5.2

%

4.1

%

11.9

%

(1.0

)%

Less:

 

Franchise and other revenues

 

13,943

2,332

31,567

12,253

Plus:

 

Depreciation and amortization

 

33,421

35,057

100,645

110,005

General and administrative

 

21,998

19,732

66,043

68,955

Provision for impaired assets and restaurant closings

 

1,539

(86

)

8,678

56,389

Restaurant-level operating income

 

$

90,309

$

81,945

$

478,125

$

201,128

Restaurant-level operating margin

 

10.0

%

11.4

%

17.1

%

9.4

%

 

International

 

THIRTEEN WEEKS ENDED

THIRTY-NINE WEEKS ENDED

(dollars in thousands)

 

SEPTEMBER 26, 2021

SEPTEMBER 27, 2020

SEPTEMBER 26, 2021

SEPTEMBER 27, 2020

Income (loss) from operations

 

$

1,412

$

(7,926

)

$

7,419

$

(18,209

)

Operating income (loss) margin

 

1.4

%

(16.0

)%

2.9

%

(8.9

)%

Less:

 

Franchise and other revenues

 

(198

)

2,441

12,339

6,818

Plus:

 

Depreciation and amortization

 

5,843

5,672

17,128

18,314

General and administrative

 

5,060

4,011

13,781

14,413

Provision for impaired assets and restaurant closings

 

28

27

3,640

Restaurant-level operating income (loss)

 

$

12,541

$

(684

)

$

26,016

$

11,340

Restaurant-level operating margin

 

12.8

%

(1.5

)%

10.7

%

5.7

%

TABLE FIVE

BLOOMIN’ BRANDS, INC.

RESTAURANT-LEVEL OPERATING MARGIN NON-GAAP RECONCILIATIONS

(UNAUDITED)

 

THIRTEEN WEEKS ENDED

(UNFAVORABLE)

FAVORABLE

CHANGE IN

ADJUSTED

QUARTER TO

DATE

 

SEPTEMBER 26, 2021

SEPTEMBER 27, 2020

Consolidated:

 

REPORTED

ADJUSTED (1)

REPORTED

ADJUSTED

Restaurant sales

 

100.0

%

100.0

%

100.0

%

100.0

%

 

Food and beverage costs

 

30.5

%

30.5

%

30.1

%

30.1

%

(0.4

)%

Labor and other related

 

29.1

%

29.1

%

32.2

%

32.2

%

3.1

%

Other restaurant operating

 

30.1

%

23.6

%

27.0

%

27.0

%

3.4

%

 

Restaurant-level operating margin (2)

 

10.3

%

16.8

%

10.7

%

10.7

%

6.1

%

 

Segments – Restaurant-level operating margin:

 

U.S. (2)

 

10.0

%

16.9

%

11.4

%

11.4

%

5.5

%

International (2)

 

12.8

%

15.6

%

(1.5

)%

(1.5

)%

17.1

%

 
 

THIRTY-NINE WEEKS ENDED

FAVORABLE

(UNFAVORABLE)

CHANGE IN

ADJUSTED

YEAR TO DATE

 

SEPTEMBER 26, 2021

SEPTEMBER 27, 2020

Consolidated:

 

REPORTED

ADJUSTED (1)

REPORTED

ADJUSTED (1)

Restaurant sales

 

100.0

%

100.0

%

100.0

%

100.0

%

 

Food and beverage costs

 

30.0

%

30.0

%

31.3

%

30.9

%

0.9

%

Labor and other related

 

28.4

%

28.4

%

32.6

%

32.6

%

4.2

%

Other restaurant operating

 

25.2

%

23.0

%

27.0

%

27.0

%

4.0

%

 

Restaurant-level operating margin (2)

 

16.5

%

18.6

%

9.2

%

9.5

%

9.1

%

 

Segments – Restaurant-level operating margin:

 

U.S. (2)

 

17.1

%

19.4

%

9.4

%

9.6

%

9.8

%

International (2)

 

10.7

%

11.9

%

5.7

%

6.7

%

5.2

%

_________________

(1) The table set forth below titled “Restaurant-level Operating Margin Adjustments” provides additional information regarding the adjustments for each period presented.

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

(a) Franchise and other revenues, which are earned primarily from franchise royalties and other non-food and beverage revenue streams, such as rental and sublease income.

(b) Depreciation and amortization which, although substantially all of which is related to restaurant-level assets, represent historical sunk costs rather than cash outlays for the restaurants.

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

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

Restaurant-level Operating Margin Adjustments – Following is a summary of (favorable) unfavorable adjusted restaurant-level operating margin adjustments recorded in Other restaurant operating expense (unless otherwise noted below) for the following activities, as described in table six of this release for the periods indicated:

 

THIRTEEN WEEKS ENDED

 

THIRTY-NINE WEEKS ENDED

(dollars in millions)

 

SEPTEMBER 26, 2021

SEPTEMBER 26, 2021

SEPTEMBER 27, 2020

Royalty termination expense

 

$

(61.9

)

$

(61.9

)

$

Legal and other matters (i)

 

(2.7

)

(2.7

)

COVID-19 related costs (ii)

 

(9.9

)

Asset impairments and closing costs

 

2.7

 

$

(64.6

)

$

(64.6

)

$

(7.2

)

_________________

(i) Adjustment recorded within the international segment.

(ii) Includes $7.3 million of adjustments recorded in Food and beverage costs, including $2.0 million of adjustments recorded in the international segment. All other adjustments were recorded within the U.S. segment.

TABLE SIX

BLOOMIN’ BRANDS, INC.

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

(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

Income (loss) from operations

 

$

14,837

$

(14,255

)

$

230,472

$

(167,735

)

Operating income (loss) margin

 

1.5

%

(1.8

)%

7.5

%

(7.1

)%

Adjustments:

 

Royalty termination expense (1)

 

61,880

61,880

Legal and other matters (2)

 

5,965

(372

)

178

COVID-19-related costs (3)

 

79,218

Severance and other transformational costs (4)

 

4,200

28,847

Asset impairments and closure costs (5)

 

(2,205

)

Total income (loss) from operations adjustments

 

67,845

4,200

61,508

106,038

Adjusted income (loss) from operations

 

$

82,682

$

(10,055

)

$

291,980

$

(61,697

)

Adjusted operating income (loss) margin

 

8.2

%

(1.3

)%

9.5

%

(2.6

)%

 

Diluted net income (loss) attributable to common stockholders

 

$

3,449

$

(17,637

)

$

155,316

$

(148,000

)

Convertible senior notes if-converted method interest adjustment, net of tax (6)

 

460

Net income (loss) attributable to common stockholders

 

3,449

(17,637

)

154,856

(148,000

)

Adjustments:

 

Income (loss) from operations adjustments

 

67,845

4,200

61,508

106,038

Loss on extinguishment and modification of debt

 

2,073

Amortization of debt discount (7)

 

2,407

3,786

Total adjustments, before income taxes

 

67,845

6,607

63,581

109,824

Adjustment to provision for income taxes (8)

 

(15,878

)

440

(14,635

)

(28,029

)

Redemption of preferred stock in excess of carrying value (9)

 

3,496

Net adjustments

 

51,967

7,047

48,946

85,291

Adjusted net income (loss)

 

$

55,416

$

(10,590

)

$

203,802

$

(62,709

)

 

Diluted earnings (loss) per share attributable to common stockholders (10)

 

$

0.03

$

(0.20

)

$

1.42

$

(1.69

)

Adjusted diluted earnings (loss) per share (11)

 

$

0.57

$

(0.12

)

$

2.10

$

(0.72

)

 

Diluted weighted average common shares outstanding (10)

 

107,783

87,558

109,410

87,394

Adjusted diluted weighted average common shares outstanding (11)

 

97,307

87,558

97,110

87,394

_________________

(1) Payment made to the founders of our Carrabba’s Italian Grill concept in connection with an agreement to terminate future royalty payments.

(2) The thirteen and thirty-nine weeks ended September 26, 2021 includes: (i) an adjustment of $(3.2) million to reduce our initial recorded estimate and net $3.1 million benefit from the recognition of recoverable PIS and COFINS taxes, including accrued interest, respectively, within other revenues as a result of favorable court rulings and (ii) an accrual of $2.7 million for ISS, a Brazilian municipal service tax, in connection with royalties from our Brazilian subsidiary over the past five years, including related penalties and interest, recorded within Other restaurant operating expense as a result of an unfavorable Brazilian Supreme Court ruling.

(3) Costs incurred in connection with the COVID-19 pandemic, primarily consisting of fixed asset and right-of-use asset impairments, restructuring charges, inventory obsolescence and spoilage, contingent lease liabilities and current expected credit losses.

(4) Severance, professional fees and other costs incurred as a result of transformational and restructuring activities.

(5) Primarily includes a lease termination gain of $2.8 million.

(6) Adjustment for interest expense related to our convertible senior notes (the “2025 Notes”) weighted for the portion of the period prior to our election under the 2025 Notes indenture to settle the principal portion of our 2025 Notes in cash. The calculation of adjusted diluted earnings per share excludes the 2025 Notes interest adjustment.

(7) Amortization of debt discount related to the issuance of the 2025 Notes.

(8) Income tax effect of the adjustments for the periods presented.

(9) Consideration paid in excess of the carrying value for the redemption of preferred stock of our Abbraccio concept.

(10) Due to the GAAP net loss, the effect of dilutive securities was excluded from the calculation of GAAP diluted loss per share for the thirteen and thirty-nine weeks ended September 27, 2020.

(11) For the thirty-nine weeks ended September 26, 2021, adjusted diluted weighted average common shares outstanding was calculated assuming our February 2021 election to settle the principal portion of the 2025 Notes in cash was in effect for the entire period. For the thirteen and thirty-nine weeks ended September 26, 2021, adjusted diluted weighted average common shares outstanding was calculated excluding the dilutive effect of 10,476 and 10,453 shares, respectively, to be issued upon conversion of the 2025 Notes to satisfy the amount in excess of the principal since our convertible note hedge offsets the dilutive impact of the shares underlying the 2025 Notes.

Following is a summary of the financial statement line item classification of the net income (loss) adjustments:

 

THIRTEEN WEEKS ENDED

THIRTY-NINE WEEKS ENDED

(dollars in thousands)

 

SEPTEMBER 26, 2021

SEPTEMBER 27, 2020

SEPTEMBER 26, 2021

SEPTEMBER 27, 2020

Franchise and other revenues

 

$

3,204

$

$

(3,133

)

$

Food and beverage costs

 

7,345

Other restaurant operating

 

64,641

64,641

(176

)

Depreciation and amortization

 

407

General and administrative

 

4,200

32,056

Provision for impaired assets and restaurant closings

 

66,406

Loss on extinguishment and modification of debt

 

2,073

Interest expense, net

 

2,407

3,786

(Benefit) provision for income taxes

 

(15,878

)

440

(14,635

)

(28,029

)

Redemption of preferred stock in excess of carrying value

 

3,496

Net adjustments

 

$

51,967

$

7,047

$

48,946

$

85,291

TABLE SEVEN

BLOOMIN’ BRANDS, INC.

SEGMENT INCOME (LOSS) FROM OPERATIONS NON-GAAP RECONCILIATIONS

(UNAUDITED)

(dollars in thousands)

 

THIRTEEN WEEKS ENDED

THIRTY-NINE WEEKS ENDED

U.S. Segment

 

SEPTEMBER 26, 2021

SEPTEMBER 27, 2020

SEPTEMBER 26, 2021

SEPTEMBER 27, 2020

Income (loss) from operations

 

$

47,294

$

29,574

$

334,326

$

(21,968)

Operating income (loss) margin

 

5.2

%

4.1

%

11.9

%

(1.0)

%

Adjustments:

 

Royalty agreement termination (1)

 

61,880

61,880

COVID-19-related costs (2)

 

72,784

Asset impairments and closure costs (3)

 

(2,205)

Adjusted income from operations

 

$

109,174

$

29,574

$

396,206

$

48,611

Adjusted operating income margin

 

12.0

%

4.1

%

14.0

%

2.3

%

 

International Segment

 

Income (loss) from operations

 

$

1,412

$

(7,926)

$

7,419

$

(18,209)

Operating income (loss) margin

 

1.4

%

(16.0)

%

2.9

%

(8.9)

%

Adjustments:

 

Legal and other matters (4)

 

5,965

(372)

COVID-19 related costs (2)

 

5,651

Adjusted income (loss) from operations

 

$

7,377

$

(7,926)

$

7,047

$

(12,558)

Adjusted operating income (loss) margin

 

7.3

%

(16.0)

%

2.8

%

(6.1)

%

_________________

(1) Payment made to the founders of our Carrabba’s Italian Grill concept in connection with an agreement to terminate future royalty payments.

(2) Costs incurred in connection with the COVID-19 pandemic, primarily consisting of fixed asset and right-of-use asset impairments, restructuring charges, inventory obsolescence and spoilage, contingent lease liabilities and current expected credit losses.

(3) Primarily includes a lease termination gain of $2.8 million.

(4) The thirteen and thirty-nine weeks ended September 26, 2021 includes: (i) an adjustment of $(3.2) million to reduce our initial recorded estimate and net $3.1 million benefit from the recognition of recoverable PIS and COFINS taxes, including accrued interest, respectively, within other revenues as a result of favorable court rulings and (ii) an accrual of $2.7 million for ISS, a Brazilian municipal service tax, in connection with royalties from our Brazilian subsidiary over the past five years, including related penalties and interest, recorded within Other restaurant operating expense as a result of an unfavorable Brazilian Supreme Court ruling.

TABLE EIGHT

BLOOMIN’ BRANDS, INC.

COMPARATIVE RESTAURANT INFORMATION

(UNAUDITED)

Number of restaurants (at end of the period):

 

JUNE 27, 2021

OPENINGS

CLOSURES

SEPTEMBER 26, 2021

U.S.:

 

Outback Steakhouse

 

Company-owned

 

566

2

(4)

564

Franchised

 

131

(1)

130

Total

 

697

2

(5)

694

Carrabba’s Italian Grill

 

Company-owned

 

199

199

Franchised

 

20

20

Total

 

219

219

Bonefish Grill

 

Company-owned

 

179

(1)

178

Franchised

 

7

7

Total

 

186

(1)

185

Fleming’s Prime Steakhouse & Wine Bar

 

Company-owned

 

64

64

Other

 

Company-owned (1)

 

8

(1)

7

U.S. total

 

1,174

2

(7)

1,169

International:

 

Company-owned

 

Outback Steakhouse – Brazil (2)

 

113

113

Other (1)(3)

 

34

34

Franchised

 

Outback Steakhouse—South Korea (3)

 

108

7

(1)

114

Other (1)

 

55

(1)

54

International total

 

310

7

(2)

315

System-wide total

 

1,484

9

(9)

1,484

____________________

(1) U.S. Company-owned and International Franchised Other include four and three fast-casual Aussie Grill locations as of September 26, 2021. International Company-owned Other includes two Aussie Grill locations as of September 26, 2021.

(2) The restaurant counts for Brazil are reported as of May 31, 2021 and August 31, 2021, respectively, to correspond with the balance sheet dates of this subsidiary.

(3) As of September 26, 2021, we had 37 international dark kitchens that offer delivery only included in Franchised Outback Steakhouse – South Korea. In addition, we had one international dark kitchen location included within Company-owned Other as of September 26, 2021.

TABLE NINE

BLOOMIN’ BRANDS, INC.

COMPARABLE RESTAURANT SALES INFORMATION

(UNAUDITED)

 

THIRTEEN WEEKS ENDED

THIRTY-NINE WEEKS ENDED

 

SEPTEMBER 26, 2021

SEPTEMBER 27,

2020

SEPTEMBER 26, 2021

SEPTEMBER 27,

2020

 

COMPARABLE

TO 2019 (1)

COMPARABLE

TO 2020

COMPARABLE

TO 2019

COMPARABLE

TO 2019 (1)

COMPARABLE

TO 2020

COMPARABLE

TO 2019

Year over year percentage change:

 

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

 

U.S. (2)

 

Outback Steakhouse

 

6.0

%

18.3

%

(10.4

)%

3.5

%

25.3

%

(17.4

)%

Carrabba’s Italian Grill

 

17.1

%

28.8

%

(9.0

)%

10.6

%

35.1

%

(18.1

)%

Bonefish Grill

 

5.7

%

36.6

%

(22.5

)%

(2.7

)%

41.2

%

(31.0

)%

Fleming’s Prime Steakhouse & Wine Bar

 

28.0

%

59.6

%

(20.3

)%

10.8

%

56.9

%

(29.7

)%

Combined U.S.

 

9.5

%

25.5

%

(12.8

)%

4.3

%

31.4

%

(20.7

)%

International

 

Outback Steakhouse – Brazil (3)

 

(5.1

)%

109.8

%

(54.8

)%

(18.9

)%

29.4

%

(36.9

)%

 

Traffic:

 

U.S.

 

Outback Steakhouse

 

(0.8

)%

14.8

%

(13.6

)%

(2.1

)%

19.6

%

(18.1

)%

Carrabba’s Italian Grill

 

12.2

%

27.1

%

(11.7

)%

7.8

%

27.0

%

(15.1

)%

Bonefish Grill

 

5.2

%

25.6

%

(14.7

)%

(1.7

)%

23.4

%

(19.4

)%

Fleming’s Prime Steakhouse & Wine Bar

 

14.4

%

48.4

%

(23.3

)%

1.8

%

38.1

%

(26.6

)%

Combined U.S.

 

2.9

%

19.3

%

(13.6

)%

(0.1

)%

21.9

%

(17.9

)%

International

 

Outback Steakhouse – Brazil

 

1.9

%

62.5

%

(37.6

)%

(8.2

)%

25.2

%

(25.9

)%

 

Average check per person (4):

 

U.S.

 

Outback Steakhouse

 

6.8

%

3.5

%

3.2

%

5.6

%

5.7

%

0.7

%

Carrabba’s Italian Grill

 

4.9

%

1.7

%

2.7

%

2.8

%

8.1

%

(3.0

)%

Bonefish Grill

 

0.5

%

11.0

%

(7.8

)%

(1.0

)%

17.8

%

(11.6

)%

Fleming’s Prime Steakhouse & Wine Bar

 

13.6

%

11.2

%

3.0

%

9.0

%

18.8

%

(3.1

)%

Combined U.S.

 

6.6

%

6.2

%

0.8

%

4.4

%

9.5

%

(2.8

)%

International

 

Outback Steakhouse – Brazil

 

(6.0

)%

45.5

%

(16.2

)%

(10.3

)%

5.5

%

(11.0

)%

____________________

(1) Represents comparable restaurant sales, traffic and average check per person increases (decreases) relative to fiscal year 2019 for improved comparability due to the impact of COVID-19 on fiscal year 2020 restaurant sales.

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

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

(4) Average check per person includes the impact of menu pricing changes, product mix and discounts.

TABLE TEN

BLOOMIN’ BRANDS, INC.

EBITDA RECONCILIATIONS

(UNAUDITED)

 

THIRTEEN WEEKS ENDED

THIRTY-NINE WEEKS ENDED

(dollars in thousands)

 

SEPTEMBER 26, 2021

SEPTEMBER 26, 2021

Net income attributable to common stockholders

 

$

3,449

$

154,856

(Benefit) provision for income taxes

 

(4,454

)

24,827

Interest expense, net

 

14,245

43,863

Depreciation and amortization

 

40,827

122,592

EBITDA

 

$

54,067

$

346,138

TABLE ELEVEN

BLOOMIN’ BRANDS, INC.

FISCAL 2021 FOURTH QUARTER EBITDA OUTLOOK RECONCILIATION

(UNAUDITED)

THIRTEEN WEEKS ENDED

(dollars in millions)

DECEMBER 26, 2021

Net income attributable to common stockholders

At least $49M

Provision for income taxes

At least $11M

Interest expense, net

At least $14M

Depreciation and amortization

At least $41M

EBITDA

At least $115M