Reports Strengthening Sales Trends
Announces 2020 Q1 Financial Results
Bloomin’ Brands, Inc. (Nasdaq:BLMN) today announced a business
update related to COVID-19 as well as first quarter 2020 financial
results.
Statement from David Deno, Chief
Executive Officer
Our priorities remain unchanged as we continue to navigate these
challenging times. We are focused on taking care of our people and
serving food in a safe environment that protects both our Team
Members and customers.
We have leveraged our strong off-premises business since the
pandemic required the closure of our dining rooms. As a result, we
have tripled our average off-premises sales per restaurant since
the beginning of March. This is a testament to the strong affinity
for our brands, and our decision to invest significantly over a
number of years into building a robust delivery network to
complement our take-out business. These outstanding off-premises
results have allowed us to keep substantially all of our locations
open during this time.
We have also recently begun the process of reopening our dining
rooms as state and local governments allow. For perspective, we had
23 Outback Steakhouse restaurants open for dine-in service at
limited capacity during the full week ended May 3, 2020, and
comparable sales at these locations were down 17% from the prior
year, with limited declines in off-premises business. We are
encouraged by these results, and as of the end of day today, we
expect to have 336 total Bloomin’ Brands restaurant dining rooms
opened with limited seating capacity across multiple states.
As these dining rooms reopen, we are adhering to the strongest
of safety measures, including additional sanitation and
disinfecting practices, enhanced hand-washing protocols, use of
gloves and facial protection for our employees, and we are
providing contactless payment options for our customers. In
addition, each dining room seating configuration has been modified
to adhere to social distancing and reduced capacity standards, and
we are leveraging our table management notification system to allow
guests to wait in their cars for their table.
We are tightly managing our cash usage. We have stopped
non-essential spending, significantly reduced marketing expenses
and deferred nearly all of our capital expenditures. These efforts
have allowed us to minimize our ongoing cash burn. Also, our
decision not to terminate or furlough any of our employees will
allow us to reopen dining rooms quickly with no re-hiring or
training expenses.
As it relates to our first quarter results, we were on track to
deliver a strong quarter prior to the impact of the pandemic. The
strategies to enhance Total Shareholder Return that we outlined on
our Q4 earning’s call were working. Through February all of our
concepts were positive in sales and traffic. We achieved meaningful
expansion of our adjusted operating margins during those eight
weeks, and we had begun to see the benefits of our expected $40
million of cost savings that we outlined in February. Once we have
successfully navigated the ongoing crisis, we believe that we will
be well positioned to build on our early 2020 success and emerge a
stronger company.
Cash Utilization and Liquidity
Update
As of May 4, 2020, we had approximately $270 million of cash on
hand in our domestic bank accounts (including cash in transit from
weekend sales). On April 21, 2020, we made a $12.5 million one-time
cash distribution to our Brazil business for general operational
purposes.
At recent sales levels, we expect our ongoing weekly cash burn
rate to be approximately $6 million to $8 million, while our
business is operating primarily off-premises. This is down from our
previous burn rate of $8 million to $10 million due primarily to
higher sales volumes. We would expect our burn rate to improve as
more dining rooms reopen and capacity expands.
Recent Sales Results
The following table includes estimated comparable restaurant
sales by concept for our U.S. company-owned restaurants for the
periods indicated:
WEEK ENDED
Comparable restaurant sales (stores
open 18 months or more):
MARCH 22, 2020
MARCH 29, 2020
APRIL 5, 2020
APRIL 12, 2020(1)
APRIL 19, 2020
APRIL 26, 2020
MAY 3, 2020
Outback Steakhouse
(63.7
)%
(63.5
)%
(60.6
)%
(52.2
)%
(40.3
)%
(41.0
)%
(38.4
)%
Carrabba’s Italian Grill
(67.5
)%
(68.7
)%
(64.7
)%
(53.0
)%
(54.0
)%
(50.3
)%
(47.2
)%
Bonefish Grill
(83.4
)%
(82.7
)%
(79.2
)%
(68.2
)%
(74.3
)%
(72.6
)%
(70.7
)%
Fleming’s Prime Steakhouse & Wine
Bar
(82.3
)%
(85.6
)%
(82.7
)%
(63.9
)%
(77.9
)%
(73.7
)%
(74.1
)%
Combined U.S.
(69.1
)%
(69.5
)%
(66.1
)%
(55.9
)%
(51.9
)%
(50.3
)%
(48.0
)%
_________________
(1)
The week ended April 12, 2020 includes the benefit of the Easter
holiday.
The following table includes estimated average off-premises
weekly sales per comparable restaurant for our U.S. company-owned
restaurants for the periods indicated:
WEEK ENDED
Average off-premises weekly sales per
restaurant (stores open 18 months or more):
MARCH 22, 2020
MARCH 29, 2020
APRIL 5, 2020
APRIL 12, 2020(1)
APRIL 19, 2020
APRIL 26, 2020
MAY 3, 2020
Outback Steakhouse
$21,781
$27,013
$28,211
$33,161
$41,246
$39,828
$39,648
Carrabba’s Italian Grill
$15,151
$18,821
$19,457
$25,377
$26,825
$26,822
$26,523
Bonefish Grill
$6,348
$11,313
$12,463
$18,696
$16,442
$15,483
$15,643
Fleming’s Prime Steakhouse & Wine
Bar
$9,261
$12,664
$13,781
$28,077
$21,403
$20,086
$20,848
_________________
(1)
The week ended April 12, 2020 includes the benefit of the Easter
holiday.
Credit Agreement
Amendment
On May 4, 2020, we entered into an amendment to our Credit
Agreement. The Amendment waives compliance with the total net
leverage ratio covenant for the remainder of fiscal 2020 and
permits higher leverage ratios in the first two fiscal quarters of
2021 before reverting to the current requirement thereafter. For
additional details on the Amendment, please refer to Item 1.01 of
the Current Report on Form 8-K that we are filing today with the
SEC.
First Quarter Preliminary Diluted EPS
and Adjusted Diluted EPS
The following table reconciles Preliminary Diluted earnings per
share attributable to common stockholders to Preliminary Adjusted
diluted earnings per share for the first quarter 2020 (“Q1 2020”)
compared to the first quarter 2019 (“Q1 2019”).
Q1
2020
2019
CHANGE
Diluted earnings per share attributable to
common stockholders
$
(0.44
)
$
0.69
$
(1.13
)
Adjustments
0.58
0.06
0.52
Adjusted diluted earnings per share
$
0.14
$
0.75
$
(0.61
)
_________________
See Preliminary Data and Non-GAAP Measures
later in this release.
For additional context, our first quarter adjusted diluted
earnings per share results included $16 million of relief pay
provided to hourly employees impacted by the closure of our dining
rooms.
First Quarter Preliminary Comparable
Restaurant Sales
Comparable Restaurant Sales information in the following table
remains unchanged from the information provided in our April 16,
2020 Press Release.
EIGHT WEEKS ENDED
FIVE WEEKS ENDED
THIRTEEN WEEKS ENDED
Comparable restaurant sales (stores
open 18 months or more):
FEBRUARY 23, 2020
MARCH 29, 2020
MARCH 29, 2020
U.S.
Outback Steakhouse
2.2
%
(28.1
)%
(9.5
)%
Carrabba’s Italian Grill
4.5
%
(29.9
)%
(8.7
)%
Bonefish Grill
2.0
%
(38.6
)%
(13.9
)%
Fleming’s Prime Steakhouse & Wine
Bar
2.4
%
(40.0
)%
(13.2
)%
Combined U.S.
2.6
%
(31.0
)%
(10.4
)%
International
Outback Steakhouse - Brazil (1)
NM
NM
6.8
%
_________________
NM
Not meaningful.
(1)
Brazil comparable restaurant sales are on a one-month lag and
are presented on a calendar basis. Represents results through
February 29, 2020. Brazil’s First Quarter comparable restaurant
sales do not include any material impact from the COVID-19
pandemic. Most of our Brazil restaurants are currently open for
off-premises only.
Strategic Alternatives Review
Update
In November 2019, we announced that we were exploring and
evaluating strategic alternatives that have the potential to
maximize value for our stockholders. In February 2020, in
connection with our year-end earnings release and conference call,
we provided an update on that process and discussed certain actions
that we planned to take. While we have implemented the 2020 cost
savings measures described at the time and remain committed to our
plan to support a growth-focused, operations centric organization
over the long term, we have suspended further activity with respect
to the strategic review process as we prioritize our response to
the COVID-19 pandemic. This includes a suspension of discussions
with interested parties with respect to our Brazil business.
Conference Call
The Company will host a conference call Friday, May 8, 2020 at
8:30 AM EST to review recent developments and Q1 2020 results. The
conference call will be webcast live from the Company’s website at
http://www.bloominbrands.com under the Investors section. A replay
of this webcast will be available on the Company’s website after
the call.
Preliminary Data
The unaudited data presented in this release is preliminary,
based upon certain management estimates and subject to the
completion of our procedures for the preparation and review of our
quarterly financial statements. We have not completed our final
closing procedures related to our analysis of goodwill, intangible
assets and certain other long-lived assets for impairment and the
related income tax provision adjustments that may result from
completion of such procedures. In addition, estimated weekly sales
and cash burn data has been provided to help investors understand
and assess the near-term impacts of the COVID-19 pandemic, but is
subject to variability and may not be indicative of our results or
trends for any full reporting period.
Non-GAAP Measures
In addition to the results provided in accordance with GAAP,
this press release and related tables include certain non-GAAP
measures, which present operating results on an adjusted basis.
These are supplemental measures of performance that are not
required by or presented in accordance with GAAP and include the
following: (i) Adjusted income from operations and the
corresponding margin, (ii) Adjusted net income and (iii) Adjusted
diluted earnings per share.
We believe that our use of non-GAAP financial measures permits
investors to assess the operating performance of our business
relative to our performance based on GAAP results and relative to
other companies within the restaurant industry by isolating the
effects of certain items that may vary from period to period
without correlation to core operating performance or that vary
widely among similar companies. However, our inclusion of these
adjusted measures should not be construed as an indication that our
future results will be unaffected by unusual or infrequent items or
that the items for which we have made adjustments are unusual or
infrequent or will not recur. We believe that the disclosure of
these non-GAAP measures is useful to investors as they form part of
the basis for how our management team and Board of Directors
evaluate our operating performance, allocate resources and
administer employee incentive plans.
These non-GAAP financial measures are not intended to replace
GAAP financial measures, and they are not necessarily standardized
or comparable to similarly titled measures used by other companies.
We maintain internal guidelines with respect to the types of
adjustments we include in our non-GAAP measures. These guidelines
endeavor to differentiate between types of gains and expenses that
are reflective of our core operations in a period, and those that
may vary from period to period without correlation to our core
performance in that period. However, implementation of these
guidelines necessarily involves the application of judgment, and
the treatment of any items not directly addressed by, or changes
to, our guidelines will be considered by our disclosure committee.
You should refer to the reconciliations of non-GAAP measures in the
table included later in this release for descriptions of the actual
adjustments made in the current period and the corresponding prior
period.
About Bloomin’ Brands,
Inc.
Bloomin’ Brands, Inc. is one of the largest casual dining
restaurant companies in the world with a portfolio of leading,
differentiated restaurant concepts. The Company has four
founder-inspired brands: Outback Steakhouse, Carrabba’s Italian
Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine
Bar. The Company operates more than 1,450 restaurants in 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 “Statement from David Deno, Chief Executive Officer,”
“Cash Utilization and Liquidity Update” and “Strategic Alternatives
Review Update” are not based on historical fact and are
“forward-looking statements” within the meaning of applicable
securities laws. Generally, these statements can be identified by
the use of words such as “guidance,” “believes,” “estimates,”
“anticipates,” “expects,” “on track,” “feels,” “forecasts,”
“seeks,” “projects,” “intends,” “plans,” “may,” “will,” “should,”
“could,” “would” and similar expressions intended to identify
forward-looking statements, although not all forward-looking
statements contain these identifying words. These forward-looking
statements include all matters that are not historical facts. By
their nature, forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially
from the Company’s forward-looking statements. These risks and
uncertainties include, but are not limited to: the effects of the
COVID-19 pandemic and uncertainties about its depth and duration,
as well as the impacts to economic conditions and consumer
behavior, including, among others: the inability of workers,
including delivery drivers, to work due to illness, quarantine, or
government mandates, temporary restaurant closures due to reduced
workforces or government mandates, the unemployment rate, the
extent, availability and effectiveness of any COVID-19 stimulus
packages or loan programs, the ability of our franchisees to
operate their restaurants during the pandemic and pay royalties,
and trends in consumer behavior and spending during and after the
end of the pandemic; the outcome of our review of strategic
alternatives, including the impact on our ongoing business, our
stock price and our ability to successfully implement any
alternatives that we pursue including our ability to achieve the
cost savings described in this release; consumer reaction to public
health and food safety issues; competition; increases in labor
costs; government actions and policies; increases in unemployment
rates and taxes; local, regional, national and international
economic conditions; consumer confidence and spending patterns;
price and availability of commodities; the effects of changes in
tax laws; challenges associated with our remodeling, relocation and
expansion plans; interruption or breach of our systems or loss of
consumer or employee information; political, social and legal
conditions in international markets and their effects on foreign
operations and foreign currency exchange rates; our ability to
preserve the value of and grow our brands; the seasonality of the
Company’s business; weather, acts of God and other disasters;
changes in patterns of consumer traffic, consumer tastes and
dietary habits; the cost and availability of credit; interest rate
changes; and compliance with debt covenants and the Company’s
ability to make debt payments and planned investments. Further
information on potential factors that could affect the financial
results of the Company and its forward-looking statements is
included in its most recent Form 10-K and subsequent filings with
the Securities and Exchange Commission. The Company assumes no
obligation to update any forward-looking statement, except as may
be required by law. These forward-looking statements speak only as
of the date of this release. All forward-looking statements are
qualified in their entirety by this cautionary statement.
Note: Numerical figures included in this release have been
subject to rounding adjustments.
BLOOMIN’ BRANDS, INC.
INCOME FROM OPERATIONS, NET
INCOME AND DILUTED EARNINGS PER SHARE NON-GAAP
RECONCILIATIONS
(UNAUDITED)
THIRTEEN WEEKS ENDED
MARCH 29, 2020
MARCH 31, 2019
(in thousands, except per share
data)
(PRELIMINARY)
(Loss) income from operations
$
(41,568
)
$
82,494
Operating (loss) income margin
(4.1
)%
7.3
%
Adjustments:
COVID-19 related costs (1)
48,876
—
Severance and other transformational costs
(2)
22,232
2,855
Restaurant relocations and related costs
(3)
592
1,032
Legal and other matters
178
—
Restaurant and asset impairments and
closing costs (4)
(2,797
)
2,131
Total income from operations
adjustments
$
69,081
$
6,018
Adjusted income from operations
$
27,513
$
88,512
Adjusted operating income margin
2.7
%
7.8
%
Net (loss) income attributable to common
stockholders
$
(38,107
)
$
64,300
Adjustments:
Income from operations adjustments
69,081
6,018
Total adjustments, before income taxes
69,081
6,018
Adjustment to provision for income taxes
(5)
(21,995
)
(819
)
Redemption of preferred stock in excess of
carrying value (6)
3,496
—
Net adjustments
50,582
5,199
Adjusted net income
$
12,475
$
69,499
Diluted (loss) earnings per share
attributable to common stockholders
$
(0.44
)
$
0.69
Adjusted diluted earnings per share
$
0.14
$
0.75
Basic weighted average common shares
outstanding
87,129
91,415
Diluted weighted average common shares
outstanding (7)
87,963
92,661
_________________ Note: The unaudited data presented in this table
is preliminary, based upon certain management estimates and subject
to the completion of our procedures for the preparation and review
of our quarterly financial statements. We have not completed our
final closing procedures related to our analysis of goodwill,
intangible assets and certain other long-lived assets for
impairment and the related income tax provision adjustments that
may result from completion of such procedures.
(1) Represents costs incurred in
connection with the economic impact of the COVID-19 pandemic,
primarily consisting of fixed asset and right-of-use asset
impairments, inventory obsolescence and spoilage, contingent lease
liabilities and current expected credit losses.
(2) Relates to severance and
other costs incurred as a result of transformational and
restructuring activities.
(3) Represents asset impairment
charges and accelerated depreciation incurred in connection with
our relocation program.
(4) Includes a lease buyout gain
of $2.8 million in 2020 and asset impairment charges and related
costs primarily related to approved closure and restructuring
initiatives in 2019.
(5) Represents income tax effect
of the adjustments for the periods presented.
(6) Represents consideration paid
in excess of the carrying value for the redemption of preferred
stock of our Abbraccio subsidiary.
(7) Due to the GAAP net loss, the
effect of dilutive securities was excluded from the calculation of
GAAP diluted (loss) earnings per share for the thirteen weeks ended
March 29, 2020. For adjusted diluted earnings per share, the
calculation includes 834 dilutive shares for the thirteen weeks
ended March 29, 2020.
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Mark Graff Group Vice President, IR & Finance (813)
830-5311
Bloomin Brands (NASDAQ:BLMN)
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