Bloomin' Brands, Inc. Announces Fiscal 2014 First Quarter Adjusted Diluted Earnings Per Share Of $0.46 And GAAP Diluted Earnings Per Share Of $0.42; Reaffirms Full-Year 2014 Guidance Including Adjusted Diluted Earnings Per Share Of At Least $1.21
The following summarizes the Company's results for the thirteen weeks ended March 30, 2014:
- Total revenues increased 6.0% to $1.2 billion. This increase was primarily due to the consolidation of restaurant sales generated by the formerly unconsolidated joint venture restaurants in Brazil and additional revenues from opening new restaurants. The increase in Total revenues was partially offset by declines in average unit volumes in the Company's South Korean restaurants, the loss of one operating day due to the the Company's change to a 52-53 week fiscal year, the closing of 25 restaurants since March 31, 2013, and the removal of royalty income related to the consolidation of the Company's Brazilian operation.
- Comparable sales for Company-owned core domestic concepts were flat as a result of increases in general menu prices offset by a 1.6% decline in customer traffic. Traffic was negatively impacted by approximately 1.7% due to the combined impact of unfavorable weather and a shift in the timing of holidays in 2014. In addition, comparable sales were negatively impacted by a change in mix in the Company's product sales. Results by concept were as follows:
|THIRTEEN WEEKS ENDED MARCH 30, 2014||OWNED|
|Domestic comparable restaurant sales (stores open 18 months or more)|
|Carrabba's Italian Grill||(1.8)%|
|Fleming's Prime Steakhouse and Wine Bar||1.7%|
- Adjusted restaurant-level operating margin as a percentage of Restaurant sales was 18.0% for the thirteen weeks ended March 30, 2014 versus 18.4% for the comparable period in 2013. This decrease was primarily attributable to commodity inflation, costs associated with lunch expansion, lower average unit volumes in the Company's South Korean restaurants, higher advertising expenses, and costs associated with the new menu rollout at Carrabba's Italian Grill. The decrease was partially offset by productivity savings, menu pricing and the operating margin benefit from the consolidation of the formerly unconsolidated joint venture restaurants in Brazil.
- Adjusted operating income as a percentage of Total revenues was 8.4% for the thirteen weeks ended March 30, 2014 versus 8.9% for the comparable period in 2013. This decrease was driven primarily by lower Adjusted restaurant-level operating margins and higher Depreciation and amortization. This was partially offset by lower expense associated with the timing of the Company's annual managing partner conference.
- The Company opened 15 new system-wide locations: six Bonefish Grill restaurants, two Carrabba's Italian Grill restaurants, one Outback Steakhouse, one Fleming's Prime Steakhouse and Wine Bar and five Company-owned international Outback Steakhouse restaurants, three in Brazil and one each in South Korea and China.
The Company's fiscal first quarter adjusted results reflect the following items:
- As previously announced, in the fourth quarter of 2013 the Company completed an assessment of its restaurant base in advance of capital and development planning for the 2014 fiscal year. As a result of this assessment, the Company decided to close 22 underperforming restaurants primarily within the Outback Steakhouse concept. In connection with this initiative, the Company incurred an aggregate $4.9 million for non-cancelable operating lease liabilities and restaurant closing costs in the thirteen weeks ended March 30, 2014.
- In connection with the Company's acquisition of a controlling interest in its Brazilian joint venture, an adjustment of approximately $1.5 million for pre-tax, non-cash amortization of intangibles was recorded in the thirteen weeks ended March 30, 2014. This amount represents the Company's portion of the amortization of reacquired franchise rights and favorable and unfavorable leases.
- On March 10, 2014, certain stockholders of the Company completed a secondary public offering of 20.7 million shares of the Company's common stock at a public offering price of $24.50 per share. All of the shares were offered by certain stockholders of the Company, and the Company did not receive any proceeds from the offering. After the completion of this transaction, the Company no longer qualifies as a "controlled company" within the meaning of the corporate governance rules of Nasdaq. The Company incurred approximately $1.1 million of transaction-related expenses in the thirteen weeks ended March 30, 2014, primarily related to this transaction.
As previously reported, the Company's Board of Directors approved a change in the Company's fiscal year end from a calendar year ending on December 31 to a 52-53 week fiscal year ending on the last Sunday in December, effective beginning with fiscal year 2014. The fiscal year change was made on a prospective basis and the Company did not adjust operating results for prior periods. For the thirteen weeks ended March 30, 2014, the fiscal year end change had the following impact as compared to prior year primarily because of one fewer operating day in the current period:
- Total revenues were approximately $7.5 million lower;
- Adjusted net income and U.S. GAAP Net income were approximately $1.5 million lower; and
- Adjusted diluted earnings per share and U.S. GAAP Diluted earnings per share were approximately $0.01 lower.
- During the thirteen weeks ended March 30, 2014, the Company's wholly-owned subsidiary, OSI Restaurant Partners, LLC, ("OSI") made $10.0 million of voluntary prepayments on its outstanding senior secured Term Loan B. The balance of the Term Loan B as of March 30, 2014 was $925.0 million.
- In April 2014, the Company initiated a process to refinance its outstanding senior secured credit facilities. At the time of this release, the terms of the agreement are not final. Upon completion of the refinancing, we expect total outstanding indebtedness under the new credit facilities to be consistent with the total amount outstanding under our current credit facilities. If the refinancing is completed, the Company anticipates lower interest expense in 2014.
Fiscal 2014 Financial OutlookThe Company is reaffirming its full-year guidance for blended core domestic comparable restaurant sales growth of between 1.0% to 2.0% and Adjusted diluted earnings per share to be at least $1.21 as previously communicated in its February 25, 2014 earnings release.
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