8-K: Bloomin' Brands Reports Q4 2024 Results, Provides 2025 Outlook

Bloomin' Brands announces Q4 2024 financial results with a diluted EPS of $(0.93) and adjusted diluted EPS of $0.38, while also providing a full-year 2025 financial outlook.

Summary

• Bloomin' Brands reported a Q4 2024 diluted EPS of $(0.93) and an adjusted diluted EPS of $0.38.
• The company's total revenues from continuing operations were $972.0 million, a 9.3% decrease compared to Q4 2023.
• GAAP operating income margin from continuing operations decreased to 1.7% from 4.6% in Q4 2023.
• U.S. comparable restaurant sales decreased by 1.1% overall, with Outback Steakhouse down 1.8%, Carrabba's Italian Grill down 0.9%, Bonefish Grill down 1.5%, and Fleming's Prime Steakhouse & Wine Bar up 3.0%.
• The company completed the sale of 67% of its Brazil operations on December 30, 2024, retaining a 33% interest.
• Bloomin' Brands declared a quarterly cash dividend of $0.15 per share, payable on March 26, 2025.
• The company repurchased 10.1 million shares for $265.7 million during 2024 and has $96.8 million remaining under its share repurchase program.
• For 2025, the company expects U.S. comparable restaurant sales to range from -2.0% to flat, with diluted EPS between $1.08 and $1.28 and adjusted diluted EPS between $1.20 and $1.40.
• Capital expenditures for 2025 are projected to be between $190 million and $210 million, with plans to open 18 to 20 new company-owned restaurants and approximately 30 new franchised restaurants.

Sentiment

Score: 4

Explanation: The sentiment is slightly negative due to the reported loss in Q4, declining revenues, and decreased operating margins. However, the company's forward-looking guidance and strategic initiatives provide some optimism.

Positives

• Fleming's Prime Steakhouse & Wine Bar showed positive comparable restaurant sales growth of 3.0% in Q4 2024.
• The company declared a quarterly cash dividend of $0.15 per share.
• Bloomin' Brands repurchased 10.1 million shares during 2024, indicating confidence in the company's value.
• The company plans to open 18 to 20 new company-owned restaurants and approximately 30 new franchised restaurants in 2025.

Negatives

• Q4 2024 diluted EPS was a loss of $(0.93).
• Total revenues from continuing operations decreased by 9.3% compared to Q4 2023.
• GAAP operating income margin from continuing operations decreased significantly from 4.6% to 1.7%.
• U.S. comparable restaurant sales decreased by 1.1% overall, with Outback Steakhouse, Carrabba's Italian Grill, and Bonefish Grill all experiencing negative growth.

Risks

• The company faces risks related to consumer reaction to public health and food safety issues.
• Increases in labor costs and fluctuations in employee availability could impact profitability.
• Commodity price increases and inflation may affect operating costs.
• Political, social, and legal conditions in international markets could impact foreign operations.
• The company's ability to make debt payments and comply with debt covenants is a potential risk.
• Changes in consumer traffic patterns, tastes, and dietary habits could affect sales.

Future Outlook

Bloomin' Brands expects U.S. comparable restaurant sales to range from -2.0% to flat in 2025. Diluted EPS is projected to be between $1.08 and $1.28, and adjusted diluted EPS is expected to be between $1.20 and $1.40. The company plans to open 18 to 20 new company-owned restaurants and approximately 30 new franchised restaurants.

Management Comments

• CEO Mike Spanos stated that the company has iconic brands with a strong right to succeed.
• He also acknowledged that current results are not what the company expects and are not representative of its potential.
• Spanos mentioned that changes are being made to address near-term execution and drive sustainable sales and profit growth.

Industry Context

The casual dining industry is facing challenges related to inflation, labor costs, and changing consumer preferences. Bloomin' Brands' results reflect these industry-wide pressures, as evidenced by the decrease in comparable restaurant sales and operating margins. The company's focus on cost-saving initiatives and new restaurant openings aligns with strategies employed by other players in the sector to navigate these challenges.

Comparison to Industry Standards

• Comparing Bloomin' Brands to competitors like Darden Restaurants (DRI) or Texas Roadhouse (TXRH) reveals varying performance in comparable sales and operating margins.
• Darden, with brands like Olive Garden and LongHorn Steakhouse, has shown more resilience in comparable sales growth in recent quarters.
• Texas Roadhouse has maintained strong restaurant-level operating margins due to its focus on value and operational efficiency.
• Bloomin' Brands' sale of its Brazil operations is a strategic move that differs from the international strategies of some competitors, who continue to invest in overseas markets.

Stakeholder Impact

• Shareholders will be impacted by the decreased earnings and stock performance.
• Employees may be affected by the workforce reduction announced on February 20, 2025.
• Customers may experience changes in menu offerings and pricing due to inflation and cost-saving measures.
• Suppliers may be affected by changes in procurement strategies and cost management efforts.

Next Steps

• The company will host a conference call on February 26, 2025, to discuss the financial results.
• Management will focus on implementing changes to improve near-term execution and drive sustainable growth.
• The company will continue to execute its plans for new restaurant openings and cost-saving initiatives.

Key Dates