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Bloomin’ Brands Announces 2018 Q4 Diluted EPS of $0.12 and Adjusted Diluted EPS of $0.30

By: Bloomin' Brands, Inc. |  0 Shares     75 Reads

• Full Year 2018 Diluted EPS of $1.14 and Adjusted Diluted EPS of $1.50
• Q4 Comparable Restaurant Sales Growth of 2.9% at Outback Steakhouse and 1.6% Combined U.S.
• Full Year Comparable Restaurant Sales Growth of 4.0% at Outback Steakhouse and 2.5% Combined U.S.

TAMPA, Fla. - (BUSINESS WIRE) - February 14, 2019 - Bloomin’ Brands, Inc. (Nasdaq: BLMN) today reported results for the fourth quarter 2018 (“Q4 2018”) and fiscal year ended December 30, 2018 (“Fiscal Year 2018”) compared to the fourth quarter 2017 (“Q4 2017”) and fiscal year ended December 31, 2017 (“Fiscal Year 2017”). In 2017, the fourth quarter and fiscal year included an additional operating week (“53rd week”) compared to Fiscal Year 2018.

Highlights for Q4 2018 include the following:

• Comparable restaurant sales increased 2.9% at U.S. Outback Steakhouse(1)
• Combined U.S. comparable restaurant sales increased 1.6%(1) and include an estimated negative (0.4%) impact from holiday shift
• Comparable restaurant sales increased 2.4% for Outback Steakhouse in Brazil
• Highlights for Fiscal Year 2018 include the following:
• Comparable restaurant sales increased 4.0% at U.S. Outback Steakhouse with traffic up 0.9%(1)
• Combined U.S. comparable restaurant sales increased 2.5% with positive comps at all U.S. concepts (1)
• Opened 30 new restaurants, including 24 in international markets
• Repurchased 5.1 million shares of common stock for a total of $114 million
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(1) For Q4 2018, comparable restaurant sales compare the 13 weeks from October 1, 2018 through December 30, 2018 to the 13 weeks from October 2, 2017 through December 31, 2017. For Fiscal Year 2018, comparable sales and traffic compare the 52 weeks from January 1, 2018 through December 30, 2018 to the 52 weeks from January 2, 2017 through December 31, 2017.

Diluted EPS and Adjusted Diluted EPS

The following table reconciles Diluted earnings per share to Adjusted diluted earnings per share for the periods as indicated below.

CEO Comments

“The fourth quarter was an excellent finish to a strong 2018 for Bloomin’ Brands,” said Liz Smith, CEO. “The Company met or exceeded the top end of our guidance for sales and profit driven by our strategic investments in the portfolio. Outback finished the year up 4.0% in comp sales with Q4 marking our eighth consecutive quarter of strong sales performance versus the industry. In 2019, we expect to drive healthy, profitable traffic growth and increase margins behind our sustainable growth model.”

Fourth Quarter Financial Results

Our Q4 2017 results included an additional operating week (14 Weeks) compared to Q4 2018 (13 Weeks). This additional week added $80.4M of total revenues, $0.12 of EPS and provided a 190 basis point and 170 basis point benefit to Q4 2017 GAAP and adjusted operating income margins, respectively. The following table includes both a reported and a comparable 13 weeks view of our Q4 2018 results:

• The decrease in reported total revenues was primarily due to revenues from the 53rd week in Q4 2017 and foreign currency translation partially offset by higher U.S. comparable restaurant sales.
• The increase in reported GAAP operating income margin was primarily due to: (i) lower general and administrative expense from reduced compensation and severance, (ii) increases in U.S. comparable restaurant sales and (iii) the impact of certain cost savings initiatives. These increases were partially offset by: (i) commodity and labor inflation, (ii) the impact of the 53rd week in 2017 and (iii) net year-over-year impact of closure and restructuring initiatives.

Fourth Quarter Comparable Restaurant Sales⁽¹⁾

Q4 2018 comparable restaurant sales exclude New Year’s Eve from our 2018 results, and include New Year’s Eve in our 2017 results. This shift had an estimated negative 40 basis point impact on Q4 2018 comparable restaurant sales.

Dividend Declaration and Share Repurchases

On February 12, 2019, our Board of Directors declared a quarterly cash dividend of $0.10 per share to be paid on March 8, 2019 to all stockholders of record as of the close of business on February 25, 2019.

On February 16, 2018, our Board of Directors approved a $150.0 million share repurchase program. As of February 12, 2019, we had $36.0 million remaining under this authorization. On February 12, 2019, our Board of Directors canceled this remaining authorization and approved a new $150.0 million authorization. This authorization will expire on August 12, 2020.

Impact of the Adoption of New Lease Accounting Standard

Beginning with Q1 2019, our financial statements will include the adoption of the new lease accounting standard. Among its impacts, we will no longer recognize the benefit of deferred gains on sale-leaseback transactions, resulting in an increase to Other restaurant operating expense of approximately $12.3 million in fiscal year 2019. The additional rent expense from these sale-leaseback transactions will remain on our financial statements.

We expect this change to have the following impact to our fiscal 2019 financial reporting and operating results:

• a 10 cent reduction in earnings per share for the fiscal year
• a 30 basis point reduction in operating income margin for the fiscal year

Fiscal 2019 Financial Outlook

The following table presents our expectations for selected fiscal 2019 financial reporting and operating results. Please note the following as it relates to these expectations:

• Fiscal Year 2019 adjusted diluted earnings per share growth is expected to be approximately 10% to 15%, excluding the $0.10 impact of the deferred gains on sale-leaseback transactions as described above
• We expect adjusted operating margin expansion of 50 to 70 basis points after adjusting for the negative 30 basis point impact of the deferred gains on sale-leaseback transactions as described above

The following table is a reconciliation of our 2019 adjusted diluted earnings per share and adjusted operating income margin outlook. To improve comparability, in this table we have removed the benefit of deferred gains on sale-leaseback transactions from our 2018 results since we will no longer recognize those benefits in 2019 as a result of the adoption of the new lease accounting standard.

Conference Call

The Company will host a conference call today, February 14th at 9:00 AM EST. The conference call can be accessed live over the telephone by dialing (877) 407-9039 or (201) 689-8470 for international participants. A replay will be available beginning two hours after the call and can be accessed by dialing (844) 512-2921 or (412) 317-6671 for international callers. The replay will be available until Thursday, February 21, 2019. The conference ID for the live call and replay is 13686753. 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.

Impact of the Adoption of New Revenue Recognition Standard

Effective January 1, 2018, we adopted Accounting Standards Update No. 2014-09 “Revenue Recognition (Topic 606), Revenue from Contracts with Customers” (“ASU No. 2014-09”). Refer to Exhibit 99.2 to our April 26, 2018 Form 8-K for additional information regarding our adoption of this standard and the impact to our historical financial results.

Non-GAAP Measures

In addition to the results provided in accordance with GAAP, this press release and related tables include certain non-GAAP measures, which present operating results on an adjusted basis. These are supplemental measures of performance that are not required by or presented in accordance with GAAP and include the following: (i) Adjusted restaurant-level operating margin, (ii) Adjusted income from operations and the corresponding margin, (iii) Adjusted net income, (iv) Adjusted diluted earnings per share, (v) Adjusted segment restaurant-level operating margin and (vi) Adjusted segment income from operations and the corresponding margin. For purposes of improving comparability for our 2019 guidance, we have also presented Adjusted diluted earnings per share and Adjusted operating income margin excluding the impact of the new lease accounting standard in the table above.

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

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

In this release, we have also included forward-looking non-GAAP information under the caption “Fiscal 2019 Financial Outlook”. This relates to our current expectations for fiscal year 2019 adjusted diluted EPS, combined U.S. comparable restaurant sales, adjusted operating margin expansion and adjusted effective income tax rate. We have also provided information with respect to our expectations for the corresponding GAAP measures.

The differences between our disclosed GAAP and non-GAAP expectations are described to the extent practicable under “Fiscal 2019 Financial Outlook”. However, in addition to the general cautionary language regarding all forward-looking statements included elsewhere in this release, we note that, because the items we adjust for in our non-GAAP measures may vary from period to period without correlation to our core performance, they are by nature more difficult to predict and estimate, so additional adjustments may occur in the remainder of the fiscal year and they may significantly impact our GAAP results.

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 approximately 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 “CEO Comments”, “Impact of the Adoption of New Lease Accounting Standard” and “Fiscal 2019 Financial Outlook” are not based on historical fact and are “forward-looking statements” within the meaning of applicable securities laws. Generally, these statements can be identified by the use of words such as “guidance,” “believes,” “estimates,” “anticipates,” “expects,” “on track,” “feels,” “forecasts,” “seeks,” “projects,” “intends,” “plans,” “may,” “will,” “should,” “could,” “would” and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the Company’s forward-looking statements. These risks and uncertainties include, but are not limited to: consumer reaction to public health and food safety issues; 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 effectiveness of our strategic actions; the cost and availability of credit; interest rate changes; compliance with debt covenants and the Company’s ability to make debt payments and planned investments; and our ability to continue to pay dividends and repurchase shares of our common stock. 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.

Restaurant-level Operating Margin Adjustments - Following is a summary restaurant-level operating margin adjustments recorded in Other restaurant operating for the following activities, as described in table five of this release:

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

Contact:

Mark Graff
Vice President, IR & Finance
(813) 830-5311

SOURCE Bloomin’ Brands, Inc.

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