BLMN Bloomin Brands Inc

TAMPA, Fla., Nov. 4, 2014 /PRNewswire/ -- Bloomin' Brands, Inc. (Nasdaq: BLMN) today reported financial results for the thirteen weeks ended September 28, 2014.

Key highlights for the thirteen weeks ended September 28, 2014 include the following:

• Total revenues increased 10.1% to $1.1 billion
• Comparable sales for Company-owned core domestic concepts increased 3.3% while traffic increased 0.6%
• The Company announced its intention to close 34 Outback Steakhouse restaurants in South Korea as part of a restructuring initiative to right-size the business and position it for future growth
• Total system-wide development was 16 new restaurants including four Outback Steakhouse restaurants in Brazil
• Adjusted restaurant-level operating margin* was 13.8% versus 13.0% in the third quarter of 2013 and U.S. GAAP restaurant-level operating margin was 13.8% versus 12.5% in the third quarter of 2013
• Adjusted operating income margin* was 3.2% versus 3.7% in the third quarter of 2013 and U.S. GAAP operating (loss) income margin was (0.1)% versus 3.0% in the third quarter of 2013
• Adjusted net income* was $12.6 million versus $13.2 million in the third quarter of 2013 and U.S. GAAP Net (loss) income attributable to Bloomin' Brands was $(11.4) million versus $11.3 million in the third quarter of 2013

The following table reconciles Adjusted diluted earnings per share to Diluted (loss) earnings per share for the periods as indicated below:

"We were pleased with our third quarter results.  Comp sales at our core domestic concepts grew 3.3%, which was a 290 basis point outperformance versus Knapp," said Elizabeth Smith, CEO.  "Importantly, these results include an improved dinner sales trend driven by successful marketing and innovation."

Smith continued, "In addition, we have taken significant restructuring measures to right-size our business in Korea and optimize our infrastructure for growth.  Third quarter results coupled with our recent actions give us confidence that our growth strategies are working, and more importantly, we are well positioned for sustained long-term success."

Financial Results

The following summarizes the Company's results for the thirteen weeks ended September 28, 2014:

• The increase in Total revenues was primarily due to the consolidation of restaurant sales generated by the formerly unconsolidated joint venture restaurants in Brazil, additional revenues from opening new restaurants and an increase in domestic comparable restaurant sales at our existing restaurants. The increase in restaurant sales was partially offset by the closing of 34 restaurants since June 30, 2013 and a decline in comparable sales in the Company's South Korea restaurants.

Comparable sales for Company-owned core domestic concepts were up 3.3% due to increases in general menu prices and a strengthening of the dinner sales trend relative to the second quarter.  Customer traffic increased by 0.6% and was driven primarily by lunch expansion and promotions.   Results by concept were as follows:

• The improvement in Adjusted restaurant-level operating margin was primarily due to productivity savings, the operating margin benefit from the consolidation of Brazil and higher domestic average unit volumes.  The increase was partially offset by lower average unit volumes in the Company's South Korea restaurants, higher insurance expenses, commodity inflation and lunch expansion rollout costs.

The improvement in U.S. GAAP restaurant-level operating margin was due to increased Adjusted restaurant-level operating margin and the lapping of a 2013 reserve for a payroll tax audit.

• The decrease in Adjusted operating income margin was driven primarily by higher General and administrative expenses and Depreciation and amortization.  This decrease was partially offset by higher restaurant margins.  In addition, due to the consolidation of Brazil we no longer record the Company's share of earnings from the Brazilian restaurants as "Income from operations of unconsolidated affiliates".

The decrease in U.S. GAAP operating (loss) income margin was driven primarily by impairments as outlined in the "Other Events" section of this release as well as the decrease in Adjusted operating income margin.

System-wide Development

The following summarizes the Company's system-wide development for the thirteen weeks ended September 28, 2014:

Other Events

The Company's fiscal third quarter adjusted results reflect the following items:

• The Company decided to close 36 underperforming international locations, 34 of which are in South Korea. The Company expects to substantially complete these restaurant closings during the fourth quarter of 2014 and the first quarter of 2015. In connection with these closures, the Company incurred pre-tax asset impairments of approximately $11.6 million during the thirteen weeks ended September 28, 2014. In addition, the Company expects to incur pre-tax restaurant closing costs of approximately $19.0 million to $29.0 million, including costs associated with lease obligations and employee terminations. These costs are expected to be incurred primarily in the fourth quarter of 2014 and the first quarter of 2015.
• In September 2014, the Company reclassified the assets and liabilities of Roy's to held for sale as the Company plans to exit the Roy's business. In connection with the decision to sell, the Company recorded pre-tax impairment and other charges of $6.1 million for assets held for sale during the thirteen weeks ended September 28, 2014.
• During the third quarter of 2014, the Company underwent an organizational realignment that optimized certain support functions primarily in our supply chain and development teams. As a result of this realignment, the Company incurred $5.4 million of expense for severance and related items during the thirteen weeks ended September 28, 2014.
• During the third quarter of 2014, the Company decided to sell both of its corporate airplanes. In connection with this decision, the Company recognized pre-tax asset impairment and other charges of $10.8 million for the thirteen weeks ended September 28, 2014.

Fiscal 2014 Financial Outlook

Based on results for the thirteen weeks ended September 28th, 2014, the Company revised its financial outlook for fiscal 2014.  This outlook incorporates the improvement in anticipated full year domestic comp sales expectations.  In addition, the Company expects Adjusted net income and Adjusted Diluted earnings per share to be at or above the mid-point of the guidance range. GAAP net income and GAAP diluted earnings per share guidance includes the impact of known items that have been excluded from all adjusted metrics.

The following table presents the Company's updated expectations for selected fiscal 2014 financial reporting and operating results as compared to the financial outlook provided in the Company's August 5, 2014 earnings release.

Conference Call

The Company will host a conference call today, November 4, 2014 at 9:00 AM ET.  The conference call can be accessed live over the telephone by dialing (888) 539-3624 or (719) 325-2349 for international callers.  A replay will be available beginning two hours after the call and can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international callers; the conference ID is 8093016.  The replay will be available through Tuesday, November 11, 2014.  The call will also be webcast live from the Company's website at http://www.bloominbrands.com under the Investors section.  A replay of this webcast will be available on the Company's website after the call.

About Bloomin' Brands, Inc.

The Company is one of the largest casual dining restaurant companies in the world with a portfolio of leading, differentiated restaurant concepts. The Company has five founder-inspired brands: Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill, Fleming's Prime Steakhouse and Wine Bar and Roy's, with all except Roy's considered core concepts.  The Company operates more than 1,500 restaurants in 48 states, Puerto Rico, Guam and 20 countries, some of which are franchise locations.  For more information, please visit www.bloominbrands.com.

Forward-Looking Statements

Certain statements contained herein, including statements under the headings "Fiscal 2014 Financial Outlook" are not based on historical fact and are "forward-looking statements" within the meaning of applicable securities laws.  Generally, these statements can be identified by the use of words such as "believes," "estimates," "anticipates," "expects," "on track," "feels," "forecasts," "seeks," "projects," "intends," "plans," "may," "will," "should," "could," "would" and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.  These forward-looking statements include all matters that are not historical facts.  By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the Company's forward-looking statements.  These risks and uncertainties include, but are not limited to: local, regional, national and international economic conditions; consumer confidence and spending patterns; price and availability of commodities, such as beef, chicken, shrimp, pork, seafood, dairy, potatoes, onions and energy supplies, which are subject to fluctuation and could increase or decrease more than the Company expects; weather, acts of God and other disasters; the seasonality of the Company's business; inflation or deflation; increases in unemployment rates and taxes; increases in labor and health insurance costs; competition and changes in consumer tastes and the level of acceptance of the Company's restaurant concepts (including consumer acceptance of prices); consumer reaction to public health issues; consumer perception of food safety; demographic trends; the cost of advertising and media; government actions and policies; interest rate changes, compliance with debt covenants and the Company's ability to make debt payments; the availability of credit presently arranged from the Company's revolving credit facilities.  Further information on potential factors that could affect the financial results of the Company and its forward-looking statements is included in its Form 10-K filed with the Securities and Exchange Commission on March 3, 2014.  The Company assumes no obligation to update any forward-looking statement, except as may be required by law.  These forward-looking statements speak only as of the date of this release.  All forward-looking statements are qualified in their entirety by this cautionary statement.

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

Supplemental Balance Sheet Information (in thousands):

Non-GAAP Financial Measures (unaudited)

In addition to the results provided in accordance with U.S. GAAP, we provide non-GAAP measures which present operating results on an adjusted basis.  These are supplemental measures of performance that are not required by or presented in accordance with U.S. GAAP and include the following: (i) Adjusted restaurant-level operating margins, (ii) Adjusted income from operations and the corresponding margins, (iii) Adjusted net income, (iv) Adjusted diluted earnings per share and (v) Earnings Before Interest, Tax, Depreciation and Amortization ("EBITDA") and Adjusted EBITDA.

Although we believe these non-GAAP measures enhance investors' understanding of our business and performance, these non-GAAP financial measures are not intended to replace accompanying U.S. GAAP financial measures.  These metrics are not necessarily comparable to similarly titled measures used by other companies.

The use of other non-GAAP financial measures permits investors to assess the operating performance of our business relative to our performance based on U.S. GAAP results and relative to other companies within the restaurant industry by isolating the effects of certain items that vary from period to period without correlation to core operating performance or that vary widely among similar companies.  However, our inclusion of these adjusted measures should not be construed as an indication that our future results will be unaffected by unusual or infrequent items or that the items for which we have made adjustments are unusual or infrequent.  We believe that the disclosure of these non-GAAP measures is useful to investors as they form the basis for how our management team and Board of Directors evaluate our operating performance, allocate resources and establish employee incentive plans.  EBITDA and Adjusted EBITDA are also frequently used by investors, analysts and credit agencies in evaluating and comparing companies.  In addition, our debt agreements require compliance of certain ratios that are based on financial measures similar to Adjusted EBITDA.

Adjusted restaurant-level operating margin

Restaurant-level operating margin is calculated as Restaurant sales after deduction of the main restaurant-level operating costs, which includes Cost of sales, Labor and other related and Other restaurant operating.  Adjusted restaurant-level operating margin is Restaurant-level operating margin adjusted for certain items, as noted below.

The following tables show the percentages of certain operating cost financial statement line items in relation to Restaurant sales on both a U.S. GAAP basis and an adjusted basis, as indicated, for the thirteen and thirty-nine weeks ended September 28, 2014 and the three and nine months ended September 30, 2013:

Adjusted income from operations, Adjusted net income and Adjusted diluted earnings per share

The following table reconciles Adjusted income from operations and the corresponding margins, Adjusted net income and Adjusted diluted earnings per share to their respective most comparable U.S. GAAP measures for the thirteen and thirty-nine weeks ended September 28, 2014 and the three and nine months ended September 30, 2013 (in thousands, except per share amounts):

EBITDA and Adjusted EBITDA

EBITDA and Adjusted EBITDA (EBITDA adjusted for certain significant items, as noted below) are supplemental measures of operating performance.  The following table reconciles Net (loss) income attributable to Bloomin' Brands to EBITDA and Adjusted EBITDA for the thirteen and thirty-nine weeks ended September 28, 2014 and the three and nine months ended September 30, 2013 (in thousands):

Comparative Store Information

The table below presents the number of the Company's restaurants in operation at the end of the periods indicated:

Chris Meyer
Group Vice President, IR & Finance
(813) 830-5311

SOURCE Bloomin' Brands, Inc.