Bloomin' Brands, Inc 10-Q for FY2020 Q1

Bloomin' Brands, Inc. (BLMN)

10-Q 2020-05-21 For: 2020-03-29

Added on April 11, 2026

About this 10-Q

Bloomin' Brands, Inc filed this 10-Q on May 21, 2020, covering the quarter ended March 29, 2020 (FY2020 Q1).

Headline figures

Quarter ended March 29, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.01B; down 10.6% from $1.13B a year earlier
Net loss: $34.61M; compared with net income of $64.3M a year earlier
Diluted EPS: -$0.44; compared with $0.69 a year earlier

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(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	March 29, 2020
	or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ______ to ______



Delaware		20-8023465
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)



Title of each class		Trading Symbol(s)	Name of each exchange on which registered
Common Stock	$0.01 par value	BLMN	The Nasdaq Stock Market LLC (Nasdaq Global Select Market)



	PART I — FINANCIAL INFORMATION	Page No.

Item 1.	Financial Statements (Unaudited)	3

	Consolidated Financial Statements:

	Consolidated Balance Sheets — March 29, 2020 and December 29, 2019	3

	Consolidated Statements of Operations and Comprehensive (Loss) Income — For the Thirteen Weeks Ended March 29, 2020 and March 31, 2019	4

	Consolidated Statements of Changes in Stockholders’ Equity — For the Thirteen Weeks Ended March 29, 2020 and March 31, 2019	5

	Condensed Consolidated Statements of Cash Flows — For the Thirteen Weeks Ended March 29, 2020 and March 31, 2019	6

	Notes to Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49

Item 4.	Controls and Procedures	49

	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	50

Item 1A.	Risk Factors	50

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52

Item 5.	Other Information	52

Item 6.	Exhibits	53

	Signature	54



	MARCH 29, 2020			DECEMBER 29, 2019
ASSETS
Current assets
Cash and cash equivalents	$	403,395		$	67,145
Inventories	68,087			86,861
Other current assets, net	100,964			186,462
Total current assets	572,446			340,468
Property, fixtures and equipment, net	996,091			1,036,077
Operating lease right-of-use assets	1,249,750			1,266,548
Goodwill	282,628			288,439
Intangible assets, net	468,082			470,615
Deferred income tax assets, net	95,870			73,426
Other assets, net	101,734			117,110
Total assets	$	3,766,601		$	3,592,683
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	141,221		$	174,877
Accrued and other current liabilities	378,357			391,451
Unearned revenue	289,085			369,282
Current portion of long-term debt	29,367			26,411
Total current liabilities	838,030			962,021
Non-current operating lease liabilities	1,281,372			1,279,051
Deferred income tax liabilities	9,151			13,777
Long-term debt, net	1,389,273			1,022,293
Other long-term liabilities, net	148,632			138,060
Total liabilities	3,666,458			3,415,202
Commitments and contingencies (Note 18)
Stockholders’ equity
Bloomin’ Brands stockholders’ equity
Preferred stock, $0.01 par value, 25,000,000 shares authorized; no shares issued and outstanding as of March 29, 2020 and December 29, 2019	—			—
Common stock, $0.01 par value, 475,000,000 shares authorized; 87,416,867 and 86,945,869 shares issued and outstanding as of March 29, 2020 and December 29, 2019, respectively	874			869
Additional paid-in capital	1,074,081			1,094,338
Accumulated deficit	(793,992		)	(755,089		)
Accumulated other comprehensive loss	(189,013		)	(169,776		)
Total Bloomin’ Brands stockholders’ equity	91,950			170,342
Noncontrolling interests	8,193			7,139
Total stockholders’ equity	100,143			177,481
Total liabilities and stockholders’ equity	$	3,766,601		$	3,592,683

The accompanying notes are an integral part of these consolidated financial statements.



	THIRTEEN WEEKS ENDED
	MARCH 29, 2020			MARCH 31, 2019
Revenues
Restaurant sales	$	996,237		$	1,111,642
Franchise and other revenues	12,100			16,489
Total revenues	1,008,337			1,128,131
Costs and expenses
Cost of sales	319,693			352,111
Labor and other related	309,269			319,015
Other restaurant operating	246,555			250,854
Depreciation and amortization	48,268			49,482
General and administrative	84,802			70,589
Provision for impaired assets and restaurant closings	41,318			3,586
Total costs and expenses	1,049,905			1,045,637
(Loss) income from operations	(41,568		)	82,494
Other expense, net	(793		)	(168		)
Interest expense, net	(11,708		)	(11,181		)
(Loss) income before (benefit) provision for income taxes	(54,069		)	71,145
(Benefit) provision for income taxes	(19,655		)	5,496
Net (loss) income	(34,414		)	65,649
Less: net income attributable to noncontrolling interests	197			1,349
Net (loss) income attributable to Bloomin’ Brands	(34,611		)	64,300
Redemption of preferred stock in excess of carrying value	(3,496		)	—
Net (loss) income attributable to common stockholders	$	(38,107	)	$	64,300

Net (loss) income	$	(34,414	)	$	65,649
Other comprehensive (loss) income:
Foreign currency translation adjustment	(7,961		)	5,755
Unrealized loss on derivatives, net of tax	(13,336		)	(4,381		)
Reclassification of adjustment for loss (gain) on derivatives included in Net (loss) income, net of tax	1,396			(364		)
Comprehensive (loss) income	(54,315		)	66,659
Less: comprehensive (loss) income attributable to noncontrolling interests	(467		)	1,257
Comprehensive (loss) income attributable to Bloomin’ Brands	$	(53,848	)	$	65,402

(Loss) earnings per share attributable to common stockholders:
Basic	$	(0.44	)	$	0.70
Diluted	$	(0.44	)	$	0.69
Weighted average common shares outstanding:
Basic	87,129			91,415
Diluted	87,129			92,661



	BLOOMIN’ BRANDS, INC.
	COMMON STOCK			ADDITIONAL PAID-IN CAPITAL			ACCUM- ULATED DEFICIT			ACCUMULATED OTHER COMPREHENSIVE LOSS			NON-CONTROLLING INTERESTS			TOTAL
	SHARES	AMOUNT		ADDITIONAL PAID-IN CAPITAL			ACCUM- ULATED DEFICIT			ACCUMULATED OTHER COMPREHENSIVE LOSS			NON-CONTROLLING INTERESTS			TOTAL
Balance, December 29, 2019	86,946	$	869	$	1,094,338		$	(755,089	)	$	(169,776	)	$	7,139		$	177,481
Cumulative-effect from a change in accounting principle, net of tax	—	—		—			(4,292		)	—			—			(4,292		)
Net (loss) income	—	—		—			(34,611		)	—			197			(34,414		)
Other comprehensive loss, net of tax	—	—		—			—			(19,754		)	(147		)	(19,901		)
Cash dividends declared, $0.20 per common share	—	—		(17,480		)	—			—			—			(17,480		)
Stock-based compensation	—	—		3,289			—			—			—			3,289
Consideration for preferred stock in excess of carrying value, net of tax	—	—		(3,496		)	—			517			1,261			(1,718		)
Common stock issued under stock plans (1)	471	5		(2,513		)	—			—			—			(2,508		)
Purchase of noncontrolling interests	—	—		(57		)	—			—			—			(57		)
Distributions to noncontrolling interests	—	—		—			—			—			(310		)	(310		)
Contributions from noncontrolling interests	—	—		—			—			—			53			53
Balance, March 29, 2020	87,417	$	874	$	1,074,081		$	(793,992	)	$	(189,013	)	$	8,193		$	100,143


(1)	Net of forfeitures and shares withheld for employee taxes.



CHARGES	CONSOLIDATED INCOME STATEMENT CLASSIFICATION	THIRTEEN WEEKS ENDED
CHARGES	CONSOLIDATED INCOME STATEMENT CLASSIFICATION	MARCH 29, 2020
Inventory obsolescence and spoilage (1)	Cost of sales	$	6,182
Compensation for idle employees (2)	Labor and other related	16,186
Lease guarantee contingent liabilities (3)	General and administrative	4,188
Allowance for expected credit losses (4)	General and administrative	3,334
Other charges	General and administrative	573
Right-of-use asset impairment (5)	Provision for impaired assets and restaurant closings	20,484
Fixed asset impairment (5)	Provision for impaired assets and restaurant closings	11,728
Goodwill and other impairment (6)	Provision for impaired assets and restaurant closings	2,388
		$	65,063


(1)	Includes the write-off of value added tax credits related to the purchase of inventory by the Company’s Brazil subsidiary.


(2)	Represents relief pay for hourly employees impacted by the closure of dining rooms.


(3)	Represents additional contingent liabilities recorded for lease guarantees related to certain former restaurant locations now operated by franchisees or other third parties.


(4)	Includes additional reserves based on the Company’s increase in expected credit losses, primarily related to franchise receivables.


(5)	Includes impairments resulting from the remeasurement of assets utilizing projected future cash flows revised for current economic conditions and the closure of certain restaurants.


(6)	Includes impairment of goodwill for the Company’s Hong Kong subsidiary. See Note 8 - Goodwill and Intangible Assets, Net for details regarding impairment of goodwill.



	THIRTEEN WEEKS ENDED
	MARCH 29, 2020				MARCH 31, 2019
(dollars in thousands)	RESTAURANT SALES		FRANCHISE REVENUE		RESTAURANT SALES		FRANCHISE REVENUE
U.S.
Outback Steakhouse	$	530,685	$	6,541	$	586,771	$	10,601
Carrabba’s Italian Grill	146,875		461		173,475		171
Bonefish Grill	135,072		136		156,434		210
Fleming’s Prime Steakhouse & Wine Bar	70,960		—		83,026		—
Other	1,297		—		1,107		—
U.S. total	$	884,889	$	7,138	$	1,000,813	$	10,982
International
Outback Steakhouse Brazil (1)	$	91,590	$	—	$	89,565	$	—
Other (1)(2)	19,758		2,411		21,264		2,780
International total	$	111,348	$	2,411	$	110,829	$	2,780
Total	$	996,237	$	9,549	$	1,111,642	$	13,762


(1)	Brazil Restaurant sales are reported on a one-month lag and are presented on a calendar basis. Restaurant sales for Brazil during the first fiscal quarter of 2020 (through February 29, 2020) do not include any material impact from the COVID-19 pandemic.



	THIRTEEN WEEKS ENDED
(dollars in thousands)	MARCH 29, 2020			MARCH 31, 2019
Balance, beginning of period	$	18,554		$	16,431
Deferred gift card sales commissions amortization	(9,090		)	(8,407		)
Deferred gift card sales commissions capitalization	4,324			3,833
Other	(739		)	(662		)
Balance, end of period	$	13,049		$	11,195



	THIRTEEN WEEKS ENDED
(dollars in thousands)	MARCH 29, 2020			MARCH 31, 2019
Balance, beginning of period	$	358,757		$	333,794
Gift card sales	58,439			55,472
Gift card redemptions	(133,181		)	(141,459		)
Gift card breakage	(6,497		)	(6,884		)
Balance, end of period	$	277,518		$	240,923


(2)	Includes Restaurant sales for the Company’s Abbraccio concept in Brazil.


(1)	Includes goodwill impairment charges of $2.0 million during the thirteen weeks ended March 29, 2020. See Note 8 - Goodwill and Intangible Assets, Net for details regarding impairment of goodwill.


(1)	As of March 29, 2020, the Company had exit-related accruals related to certain closure initiatives of $3.2 million recorded in Accrued and other current liabilities and $11.1 million recorded in Non-current operating lease liabilities on its Consolidated Balance Sheet.



	THIRTEEN WEEKS ENDED
(in thousands, except per share data)	MARCH 29, 2020			MARCH 31, 2019
Net (loss) income attributable to Bloomin’ Brands	$	(34,611	)	$	64,300
Redemption of preferred stock in excess of carrying value (1)	(3,496		)	—
Net (loss) income attributable to common stockholders	$	(38,107	)	$	64,300

Basic weighted average common shares outstanding	87,129			91,415

Effect of diluted securities:
Stock options	—			792
Nonvested restricted stock units	—			358
Nonvested performance-based share units	—			96
Diluted weighted average common shares outstanding	87,129			92,661

Basic (loss) earnings per share attributable to common stockholders	$	(0.44	)	$	0.70
Diluted (loss) earnings per share attributable to common stockholders	$	(0.44	)	$	0.69



	THIRTEEN WEEKS ENDED
(shares in thousands)	MARCH 29, 2020	MARCH 31, 2019
Stock options	4,665	3,384
Nonvested restricted stock units	651	222
Nonvested performance-based share units	533	260


(1)	Risk-free interest rate is the U.S. Treasury yield curve in effect as of the grant date for periods within the expected term of the option.


(2)	Dividend yield is the level of dividends expected to be paid on the Company’s common stock over the expected term of the option.


(3)	Expected term represents the period of time that the options are expected to be outstanding. The Company estimates the expected term based on historical exercise experience for its stock options.


(4)	Based on the historical volatility of the Company’s stock.



	UNRECOGNIZED COMPENSATION EXPENSE (dollars in thousands)		REMAINING WEIGHTED-AVERAGE VESTING PERIOD (in years)
Stock options	$	6,127	1.8
Restricted stock units	$	16,967	2.2
Performance-based share units	$	14,016	2.3


(1)	Includes $10.0 million of Company-owned life insurance policies as of March 29, 2020 transferred to current assets during the thirteen weeks ended March 29, 2020 for planned payment of deferred compensation obligations.


(1)	During the thirteen weeks ended March 29, 2020, the Company reclassified $10.0 million of Company-owned life insurance policies to current assets for planned payment of deferred compensation obligations.


(2)	Net of accumulated amortization of $7.2 million and $6.8 million as of March 29, 2020 and December 29, 2019, respectively.


(1)	Interest rate represents the weighted-average interest rate for the respective periods.



QUARTERLY PERIOD ENDED	MAXIMUM RATIO
March 28, 2021 (1)	5.50	to	1.00
June 27, 2021 (2)	5.00	to	1.00
September 26, 2021 and thereafter (3)	4.50	to	1.00


(1)	Seasonally annualized Consolidated EBITDA calculated as Consolidated EBITDA for the fiscal quarter ending March 28, 2021 divided by 34.1%.


(1)	The increase in Other long-term liabilities during the thirteen weeks ended March 29, 2020, preliminary relates to $9.9 million of additional interest rate swap liabilities and $8.7 million of additional contingent lease liabilities. See Note 13 - Derivative Instruments and Hedging Activities and Note 18 - Commitments and Contingencies, respectively, for details regarding these increases.



(in thousands, except per share data)	DIVIDENDS PER SHARE		AMOUNT
First fiscal quarter	$	0.20	$	17,480


(1)	Unrealized loss on derivatives is net of tax of $(4.6) million and $(1.5) million for the thirteen weeks ended March 29, 2020 and March 31, 2019, respectively.


(2)	Reclassifications of adjustments for loss (gain) on derivatives are net of tax. See Note 13 - Derivative Instruments and Hedging Activities for the tax impact of reclassifications.