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Bloomin’ Brands Announces 2016 Q4 Diluted EPS of $(0.04) and

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Bloomin’ Brands Announces 2016 Q4 Diluted EPS of $(0.04) and Adjusted Diluted EPS of $0.31; Provides 2017 Financial Outlook

PR Newswire

TAMPA, Fla., Feb. 17, 2017 - Bloomin’ Brands, Inc. (Nasdaq: BLMN) today reported results for the fourth quarter (“Q4 2016”) and fiscal year ended December 25, 2016 (“Fiscal Year 2016”) compared to the fourth quarter (“Q4 2015”) and fiscal year ended December 27, 2015 (“Fiscal Year 2015”).

Highlights for Q4 2016 include the following:

  • Repurchased 1.8 million shares of common stock for a total of $35 million;
  • Reported combined U.S. comparable restaurant sales down 3.5%;
  • Reported comparable restaurant sales for Outback Steakhouse in Brazil up 6.1%; and
  • Opened 16 new restaurants, including ten in international markets.

Highlights for Fiscal Year 2016 include the following:

  • Repurchased 16.6 million shares of common stock for a total of $310 million;
  • Generated $560 million in gross sale-leaseback proceeds;
  • Reported combined U.S. comparable restaurant sales down 1.9%;
  • Reported comparable restaurant sales for Outback Steakhouse in Brazil up 6.7%; and
  • Opened 42 new restaurants, including 30 in international markets.

Diluted EPS and Adjusted Diluted EPS

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

 

 

 

 

 

 

 

 

 

 

 


Q4

 




FISCAL YEAR

 




2016

 


2015

 


CHANGE

 


2016

 


2015

 


CHANGE

 

Diluted (loss) earnings per share

 

$

 

(0.04)

 



$

 

0.14

 



$

 

(0.18)

 



$

 

0.37

 



$

 

1.01

 



$

 

(0.64)

 


Adjustments

 

0.35

 



0.16

 



0.19

 



0.92

 




0.26

 




0.66

 


Adjusted diluted earnings per share

 

$

 

0.31

 



$

 

0.30

 



$

 

0.01

 



$

 

1.29

 



$

 

1.27

 



$

 

0.02

 














_________________

See Non-GAAP Measures later in this release.

 

 

CEO Comments

“Although 2016 was a challenging year for both Bloomin’ Brands and the industry, we made real progress on our strategy to reallocate spending away from discounting toward investments to strengthen brand health, ” said Liz Smith, CEO. “We are pleased with how our brands are performing so far in 2017, particularly at Outback where we believe our investments are beginning to gain traction.”

 

Fourth Quarter Financial Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollars in millions)

 

Q4 2016

 


Q4 2015

 


% Change

 

Total revenues

 

$

 

1,004.1

 



$

 

1,049.3

 



(4.3)%

 







U.S. GAAP restaurant-level operating margin

 

15.2%

 



16.1%

 



(0.9)%

 

Adjusted restaurant-level operating margin (1)

 

15.1%

 



16.5%

 



(1.4)%

 







U.S. GAAP operating income margin

 

(0.4)%

 



3.0%

 



(3.4)%

 

Adjusted operating income margin (1)

 

5.7%

 



6.0%

 



(0.3)%

 

_________________

(1) See Non-GAAP Measures later in this release..

 

 

  • The decrease in Total revenues was primarily due to the sale of Outback Steakhouse South Korea restaurants in July 2016 and lower comparable restaurant sales, partially offset by the effect of foreign currency translation and the net benefit of new restaurant openings and closings.
  • The decrease in U.S. GAAP restaurant-level operating margin was primarily due to: (i) higher labor costs due to higher wage rates and investments in our service model, (ii) higher rent expense due to the sale-leaseback of certain properties, (iii) commodity inflation and (iv) lower traffic. These decreases were partially offset by increases in average check and productivity savings.
  • Adjusted restaurant-level operating margin excludes the impact from: (i) the write-off of deferred rent in connection with the 2017 Closure Initiative and (ii) expenses associated with certain legal and contingent matters..
  • The decrease in U.S. GAAP operating margin was primarily due to impairment charges related to the 2017 Closure Initiative and lower U.S. GAAP restaurant-level margin. These decreases were partially offset by lower incentive compensation expense.
  • Adjusted operating margin excludes the impact of our 2017 Closure Initiative and certain other adjustments. See table five later in this release for more information.

 

Fourth Quarter Comparable Restaurant Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THIRTEEN WEEKS ENDED DECEMBER 25, 2016

 


COMPANY-OWNED

 

Comparable restaurant sales (stores open 18 months or more) (1) (2):

 



U.S.

 



Outback Steakhouse

 


(4.8)%

 

Carrabba’s Italian Grill

 


(2.3)%

 

Bonefish Grill

 


(1.9)%

 

Fleming’s Prime Steakhouse & Wine Bar

 


0.2%

 

Combined U.S.

 


(3.5)%

 




International

 



Outback Steakhouse - Brazil

 


6.1%

 

_________________

 

 

(1)

 

Comparable restaurant sales exclude the effect of fluctuations in foreign currency rates.

 

(2)

 

Relocated international restaurants closed more than 30 days and relocated U.S. restaurants closed more than 60 days are excluded from comparable restaurant sales until at least 18 months after reopening.

 

 

Sale Leaseback Initiative

In fiscal 2016, we sold 159 restaurant properties for gross proceeds of $560 million. We used a portion of these proceeds to pay down substantially all of our bridge loan, of which $28 million remains outstanding as of February 17, 2017.

Dividend Declaration and Share Repurchases

In February 2017, our Board of Directors declared a quarterly cash dividend of $0.08 per share to be paid on March 10, 2017 to all stockholders of record as of the close of business on February 27, 2017.

We repurchased 1.8 million shares of common stock in Q4 2016 for a total of $35 million. Subsequent to Q4, we have repurchased an additional 1.1 million shares of common stock through February 17, 2017 for $20 million under a rule 10b5-1 plan. As of February 17, 2017 there is $110 million remaining under our existing repurchase authorization, which expires on January 26, 2018.

2017 Closure Initiative

On February 15, 2017, we decided to close 43 underperforming restaurants. In connection with these closures, we recognized pre-tax asset impairments of $46.5 million during Q4 2016, which includes three restaurants that closed in the fourth quarter. We expect to incur charges between $16 million to $19 million in fiscal year 2017 with the majority of these expenses occurring in the first quarter.

Non-GAAP Financial Measures Update

Commencing with our results for the first fiscal quarter of 2017, when presenting non-GAAP measures we will no longer include adjustments for the following:

  • Expenses incurred in connection with our remodel program; and
  • Intangible amortization recorded as a result of the 2013 acquisition of our Brazil operations.

Although our fourth quarter and fiscal year 2016 results announced in today’s earnings release are reported in accordance with our existing methodology, we will be reporting our non-GAAP measures for all periods in fiscal year 2017 in accordance with the revised methodology. Therefore, the adjusted measures included in our Fiscal 2017 Financial Outlook table that follows are estimated based on the revised methodology.

The combined pre-tax impact of these two items to our fiscal year 2016 financial results was $6.2 million. Refer to Exhibit 99.2 to the Form 8-K furnished to the SEC today for a complete recasting of the impacted non-GAAP measures to conform with the revised methodology for fiscal years 2016, 2015 and 2014.

Fiscal 2017 Financial Outlook

The table below presents our current expectations for selected 2017 financial and operating results.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Results:

 


Current Outlook

 

U.S. GAAP diluted earnings per share (1) (2)

 


$1.34 to $1.41

 




Adjusted diluted earnings per share (1) (2)

 


$1.40 to $1.47

 




U.S. GAAP and adjusted effective income tax rate (3)

 


25% to 26%

 




Other Selected Financial Data (dollars in millions, or as otherwise indicated):

 



Combined U.S. comparable restaurant sales

 


Flat to slightly down

 




Commodity inflation / (deflation)

 


Flat to (1%)

 




Capital expenditures

 


$260 - $280

 




Number of new system-wide restaurants

 


40 - 50

 

_________________

 

 

 

 

(1)

 

Includes the addition of a 53rd week at the end of fiscal 2017.

 

(2)

 

The primary difference between our U.S. GAAP diluted earnings per share outlook and our adjusted diluted earnings per share outlook is between $16 million and $19 million of restaurant closing expenses related to the 2017 Closure Initiative.

 

(3)

 

The primary difference between the U.S. GAAP and the Adjusted effective income tax rate relates to the tax impact of our 2017 Closure Initiative.

 

 

Conference Call

The Company will host a conference call today, February 17th at 9:00 AM ET. 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 conference ID is 13653382. The replay will be available through Friday, February 24, 2017. 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.

Non-GAAP Measures

In addition to the results provided in accordance with U.S. 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 U.S. 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.

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 U.S. 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 establish employee incentive plans.

These non-GAAP financial measures are not intended to replace U.S. 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 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 2017 Financial Outlook”. This information relates to our current expectations for fiscal 2017 adjusted diluted EPS 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 and quantified to the extent available without unreasonable efforts under “Fiscal 2017 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 we cannot guarantee that additional adjustments will not occur in the remainder of the fiscal year or that they will not significantly impact our GAAP results.

For reconciliations of the non-GAAP measures used in this release, refer to tables four, five and six included later in this release.

As indicated above and in the Form 8-K we furnished to the SEC today, based on a review of our non-GAAP presentations, we have determined that, commencing with our results for the first fiscal quarter of 2017, when presenting the non-GAAP measures Adjusted income from operations and the corresponding margins, Adjusted net income and Adjusted diluted earnings per share, we will no longer adjust for expenses incurred in connection with our remodel program or intangible amortization recorded as a result of the acquisition of our Brazil operations. Although our fourth quarter and fiscal year 2016 results announced in this release (and reconciled in table five included below) are reported in accordance with our existing methodology, because we will be reporting our non-GAAP measures for all periods in fiscal 2017 in accordance with the revised methodology, the adjusted measures included in our Fiscal 2017 Financial Outlook are estimated based on the revised methodology. In order to assist investors in understanding the impact of this change and for comparability purposes, Exhibit 99.2 to the Form 8-K furnished to the SEC today contains a recasting of the impacted non-GAAP measures to conform to the revised methodology for fiscal years 2016, 2015 and 2014. In future earnings releases that report non-GAAP measures in accordance with the revised methodology, the prior comparable periods presented will be recast to conform to the revised methodology.

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”, “2017 Closure Initiative” and “Fiscal 2017 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: our ability to preserve the value of and grow our brands; local, regional, national and international economic conditions; consumer confidence and spending patterns; the cost and availability of credit; interest rate changes; competition; consumer reaction to public health and food safety issues; government actions and policies; increases in unemployment rates and taxes; increases in labor costs; price and availability of commodities; challenges associated with our expansion, remodeling and relocation plans; interruption or breach of our systems or loss of consumer or employee information; foreign currency exchange rates;  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; 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

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Posted on Feb 17, 2017 - 01:15 PM • Print