Bloomin Brands Inc
For the period ended Sep 29, 2024. Filed Nov 8, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 29, 2024 · Filed Nov 8, 2024
BLMN$9.75-6.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0001546417-24-000125
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-29; filed 2024-11-08.
0001546417-24-000160
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 159 previous paragraphs and 162 current paragraphs.
94 unchanged; 49 reworded; 19 added; 14 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 19 previous and 19 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
(x)Our ability to complete the Brazil franchise partnership transaction and the impact of such transaction on our future results;
Current report
•Diluted earnings per share of $0.08 as compared to $0.45 for the third quarter of 2023.
Current report
Agreement to Sell Majority Ownership of our Brazil Operations -On November 8, 2024, we announced an agreement to sell 67% of our Brazil operations at a total enterprise valuation of R$2.06 billion Brazilian Reais, which equals R$1.4 billion Brazilian Reais (approximately $243 million in U.S. Dollars based on current exchange rates) to Buyer. We will retain an indirect 33% interest in our Brazil operations.
Current report
The sale transaction is expected to close on or before December 31, 2024. Following the closing of the sale, our subsidiary will enter into amended and restated franchise agreements with the buyer and our Brazil restaurants will be operated as unconsolidated franchisees. See Note 15 -Subsequent Events of the Notes to Consolidated Financial Statements for additional details regarding the sale agreement.
Current report
(1)The thirteen and thirty-nine weeks ended September 29, 2024 include the restaurant sales impact from the closure of 58 and 67 restaurants since June 25, 2023 and December 25, 2022, respectively.
Current report
(3)The thirteen and thirty-nine weeks ended September 29, 2024 include restaurant sales from 56 and 75 new restaurants, respectively, not included in our comparable restaurant sales base.
Current report
Less than 1/10th of one percent of Total revenues.
Current report
General and administrative expense increased as a percentage of Total revenues primarily due to increases in professional fees and executive transition costs.
Current report
Interest expense, netincreased primarily due to higher balances and interest rates on the unhedged portion of our revolving credit facility partially offset by a decrease in interest expense from the 2025 Notes Partial Repurchase.
Current report
Thirty-nine weeks ended September 29, 2024 as compared to thirty-nine weeks ended September 24, 2023
Current report
General and administrative expense increased as a percentage of Total revenues primarily due to increases in professional fees and executive transition costs.
Current report
Interest expense, netincreased primarily due to higher balances and interest rates on the unhedged portion of our revolving credit facility partially offset by a decrease in interest expense from the 2025 Notes Partial Repurchase and interest income in connection with the Brazil judicial deposit.
Current report
International -The decrease in international Income from operations generated during the thirteen weeks ended September 29, 2024 as compared to the thirteen weeks ended September 24, 2023 was primarily due to: (i) lower restaurant sales, as discussed above, (ii) higher closure costs and severance and (iii) higher operating, labor and commodity costs, primarily due to inflation. These decreases were partially offset by: (i) favorable product mix, (ii) an increase in average check per person and (iii) lower advertising expense.
Current report
(1)Costs incurred in connection with the transition to a new partner compensation program.
Current report
(1)Costs incurred in connection with the transition to a new partner compensation program.
Current report
(3)Compensation costs and professional fees related to our CEO transition and severance related to other executive level changes.
Current report
(5)Costs incurred in connection with the strategic review and agreement to sell the majority ownership of our Brazil operations and pending franchise partnership transaction.
Current report
(6)Primarily includes professional fees, severance and other costs not correlated to our core operating performance during the period.
Current report
Third Amended and Restated Credit Agreement -On September 19, 2024, we and OSI, as co-borrowers, entered into the Third Amended and Restated Credit Agreement which provides for senior secured financing of up to $1.2 billion consisting of the Senior Secured Credit Facility. The Senior Secured Credit Facility matures on September 19, 2029 and replaced our Former Credit Facility financing of up to $1.0 billion. Our total indebtedness and the interest rate applied to our borrowings remained unchanged as a result of the Third Amended and Restated Credit Agreement. See Note 6 -Supplemental Balance Sheet Information - Long-term debt, netof the Notes to Consolidated Financial Statements for additional details regarding the Third Amended and Restated Credit Agreement.
Removed paragraphs (14)
Previous report
(x)The impact of the strategic review process for our Brazil operations or any resulting action or inaction;
Previous report
•Diluted earnings per share of $0.32 as compared to $0.70 for the second quarter of 2023.
Previous report
Reviewing Strategic Alternatives for Brazil Operations -In May 2024, we announced that we are exploring and evaluating strategic alternatives for our Brazil operations that have the potential to maximize value for our shareholders, including but not limited to, a possible sale of the operations. The Board has retained BofA Securities, Inc. as its financial advisor.
Previous report
We plan to proceed in a timely manner, but have not set a definitive timetable for completion of this process. There can be no assurance that this review will result in a transaction or other strategic alternative of any kind. We do not intend to make any further public comment regarding the review unless we determine that disclosure is appropriate or necessary.
Previous report
(1)Excludes three and ten off-premises only kitchens as of June 30, 2024 and June 25, 2023, respectively. One location was Company-owned in the U.S. and all others were franchised in South Korea as of June 30, 2024 and June 25, 2023.
Previous report
(3)International Company-owned Other included two and four Aussie Grill locations as of June 30, 2024 and June 25, 2023, respectively. International Franchised Other included six and three Aussie Grill locations as of June 30, 2024 and June 25, 2023, respectively.
Previous report
The decrease in Restaurant sales during the thirteen weeks ended June 30, 2024 was primarily due to: (i) the closure of 53 restaurants since March 26, 2023, (ii) lower comparable restaurant sales and (iii) the benefit from value added tax exemptions in Brazil during 2023. The decrease in Restaurant sales was partially offset by the opening of 55 new restaurants not included in our comparable restaurant sales base.
Previous report
The decrease in Restaurant sales during the twenty-six weeks ended June 30, 2024 was primarily due to: (i) the closure of 57 restaurants since December 25, 2022, (ii) lower comparable restaurant sales including the impact of the one-week shift in the fiscal calendar and (iii) the benefit from value added tax exemptions in Brazil during 2023. The decrease in Restaurant sales was partially offset by the opening of 65 new restaurants not included in our comparable restaurant sales base and the effect of foreign currency translation of the Brazilian Real relative to the U.S. dollar.
Previous report
Income from operations during the thirteen weeks ended June 30, 2024 includes a net operating margin decrease of approximately 0.4% attributable to the lapping of the 2023 Brazil value added tax exemptions (PIS and COFINS). Beginning on May 23, 2024, we are eligible for certain value added tax exemptions under the new Brazil tax legislation. See Note 15 -Income Taxes of the Notes to Consolidated Financial Statements for further discussion regarding Brazil tax legislation.
Previous report
Twenty-six weeks ended June 30, 2024 as compared to twenty-six weeks ended June 25, 2023
Previous report
Income from operations during the twenty-six weeks ended June 30, 2024 includes a net operating margin decrease of approximately 0.3% attributable to the lapping of the 2023 Brazil value added tax exemptions (PIS and COFINS). Beginning on May 23, 2024, we are eligible for certain value added taxes exemptions under the new Brazil tax legislation. See Note 15 -Income Taxes of the Notes to Consolidated Financial Statements for further discussion regarding Brazil tax legislation.
Previous report
International -International Loss from operations generated during the thirteen weeks ended June 30, 2024 as compared to international Income from operations generated during the thirteen weeks ended June 25, 2023 was primarily due to: (i) higher impairment and closure costs, (ii) higher labor and operating costs, primarily due to inflation and (iii) lapping value added tax exemptions in Brazil during 2023. These decreases were partially offset by an increase in average check per person.
Previous report
(1)Includes franchise sales for off-premises only kitchens in South Korea.
Previous report
(3)Subsequent to June 30, 2024, we repurchased $15.6 million of our common stock authorized under the 2024 Share Repurchase Program through August 2, 2024 under a Rule 10b5-1 plan.
Reworded paragraphs (49)
Previous wording
We are one of the largest casual dining restaurant companies in the world with a portfolio of leading, differentiated restaurant concepts. As of June 30, 2024, we owned and operated 1,173 restaurants and franchised 292 restaurants across 46 states, Guam and 13 countries. We have four founder-inspired concepts: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar.
Current wording
We are one of the largest casual dining restaurant companies in the world with a portfolio of leading, differentiated restaurant concepts. As of September 29, 2024, we owned and operated 1,173 restaurants and franchised 290 restaurants across 46 states, Guam and 13 countries. We have four founder-inspired concepts: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar.
Previous wording
•U.S. combined and Outback Steakhouse comparable restaurant sales of (0.1)%;
Current wording
•U.S. combined and Outback Steakhouse comparable restaurant sales of (1.5)% and (1.3)%, respectively;
Previous wording
•Decrease in Total revenues of (2.9)% as compared to the second quarter of 2023;
Current wording
•Decrease in Total revenues of (3.8)% as compared to the third quarter of 2023;
Previous wording
•Operating income and restaurant-level operating margins of 4.1% and 14.3%, respectively, as compared to 7.8% and 16.4%, respectively, for the second quarter of 2023;
Current wording
•Operating income and restaurant-level operating margins of 1.7% and 12.5%, respectively, as compared to 5.4% and 13.8%, respectively, for the third quarter of 2023;
Previous wording
•Operating income of $46.1 million as compared to $89.4 million in the second quarter of 2023; and
Current wording
•Operating income of $17.2 million as compared to $58.2 million in the third quarter of 2023; and
Previous wording
Restaurant-level operating margin is a non-GAAP financial measure widely regarded in the industry as a useful metric to evaluate restaurant-level operating efficiency and performance of ongoing restaurant-level operations, and we use it for these purposes, overall and particularly within our two segments. Our restaurant-level operating margin is expressed as the percentage of our Restaurant sales that Food and beverage costs, Labor and other related expense and Other restaurant operating expense (including advertising expenses) represent, in each case as such items are reflected in our Consolidated Statements of
Current wording
Restaurant-level operating margin is a non-GAAP financial measure widely regarded in the industry as a useful metric to evaluate restaurant-level operating efficiency and performance of ongoing restaurant-level operations, and we use it for these purposes, overall and particularly within our two segments. Our restaurant-level operating margin is expressed as the percentage of our Restaurant sales that Food and beverage costs, Labor and other related expense and Other restaurant operating expense (including advertising expenses) represent, in each case as such items are reflected in our Consolidated Statements of Operations and Comprehensive (Loss) Income. The following categories of revenue and operating expenses are not included in restaurant-level operating income and corresponding margin because we do not consider them reflective of operating performance at the restaurant-level within a period:
Previous wording
Restaurant-level operating margin excludes various expenses, as discussed above, that are essential to support the operations of our restaurants and may materially impact our Consolidated Statements of Operations and Comprehensive Income (Loss). As a result, restaurant-level operating margin is not indicative of our consolidated results of operations and is presented exclusively as a supplement to, and not a substitute for, Net income (loss) or Income from operations. In addition, our presentation of restaurant-level operating margin may not be comparable to similarly titled measures used by other companies in our industry.
Current wording
Restaurant-level operating margin excludes various expenses, as discussed above, that are essential to support the operations of our restaurants and may materially impact our Consolidated Statements of Operations and Comprehensive (Loss) Income. As a result, restaurant-level operating margin is not indicative of our consolidated results of operations and is presented exclusively as a supplement to, and not a substitute for, Net income (loss) or Income from operations. In addition, our presentation of restaurant-level operating margin may not be comparable to similarly titled measures used by other companies in our industry.
Previous wording
(2)The restaurant counts for Brazil, including Abbraccio and Aussie Grill restaurants within International Company-owned Other, are reported as of May 31, 2024 and 2023, respectively, to correspond with the balance sheet dates of this subsidiary.
Current wording
(1)The restaurant counts for Brazil, including Abbraccio and Aussie Grill restaurants within International Company-owned Other, are reported as of August 31, 2024 and 2023, respectively, to correspond with the balance sheet dates of this subsidiary.
Previous wording
(1)Comparable restaurant sales for the twenty-six weeks ended June 30, 2024 includes an estimated$16.5 million negative impact from a one-week shift in the fiscal calendar.
Current wording
(2)Comparable restaurant sales for the thirty-nine weeks ended September 29, 2024 includes an estimated $16.5 million negative impact from a one-week shift in the fiscal calendar.
Previous wording
(2)During 2023, we were eligible for certain value added tax exemptions under the Brazil tax legislation until August 2023. Beginning on May 23, 2024, we are eligible for certain value added tax exemptions under the new Brazil tax legislation. See Note 15 -Income Taxes of the Notes to Consolidated Financial Statements for details regarding value added tax exemptions in connection with Brazil tax legislation.
Current wording
(4)During 2023, we were eligible for certain value added tax exemptions under the Brazil tax legislation until August 2023. Beginning on May 23, 2024, we are eligible for certain value added tax exemptions under the new Brazil tax legislation. See Note 12 -Income Taxes of the Notes to Consolidated Financial Statements for details regarding value added tax exemptions in connection with Brazil tax legislation.
Previous wording
(1)Translated at average exchange rates of 5.08 and 5.06 for the thirteen weeks ended June 30, 2024 and June 25, 2023, respectively, and 5.00 and 5.14 for the twenty-six weeks ended June 30, 2024 and June 25, 2023, respectively. Excludes the benefit of the Brazil value added tax exemptions discussed in Note 15 -Income Taxes of the Notes to Consolidated Financial Statements.
Current wording
(1)Translated at average exchange rates of 5.50 and 4.85 for the thirteen weeks ended September 29, 2024 and September 24, 2023, respectively, and 5.17 and 5.03 for the thirty-nine weeks ended September 29, 2024 and September 24, 2023, respectively. Excludes the benefit of the Brazil value added tax exemptions discussed in Note 12 -Income Taxes of the Notes to Consolidated Financial Statements.
Previous wording
(1)For Q2 2024, comparable restaurant sales, traffic and average check per person compare the thirteen weeks from April 1, 2024 through June 30, 2024 to the thirteen weeks from April 3, 2023 through July 2, 2023, and for the twenty-six weeks from January 1, 2024 through June 30, 2024 to the twenty-six weeks from January 2, 2023 through July 2, 2023.
Current wording
(1)For Q3 2024, U.S. comparable restaurant sales, traffic and average check per person compare the thirteen weeks from July 1, 2024 through September 29, 2024 to the thirteen weeks from July 3, 2023 through October 1, 2023, and for the thirty-nine weeks from January 1, 2024 through September 29, 2024 to the thirty-nine weeks from January 2, 2023 through October 1, 2023.
Previous wording
Food and beverage cost decreased as a percentage of Restaurant sales primarily due to 1.3% from increases in average check per person driven by an increase in menu pricing and 0.6% from cost-saving and productivity initiatives. These decreases were partially offset by increases as a percentage of Restaurant sales of: (i) 0.6% from unfavorable product mix, (ii) 0.2% from commodity inflation and (iii) 0.2% from the lapping of the 2023 Brazil value added tax exemptions.
Current wording
Food and beverage cost decreased as a percentage of Restaurant sales primarily due to 1.1% from increases in average check per person driven by an increase in menu pricing and 0.2% from cost-saving and productivity initiatives. These decreases were partially offset by an increase as a percentage of Restaurant sales of 0.6% from commodity inflation.
Previous wording
Labor and other related expense increased as a percentage of Restaurant sales primarily due to 1.7% from higher hourly and field management labor costs, primarily due to wage rate inflation, partially offset by a decrease of 0.5% from an increase in average check per person.
Current wording
Labor and other related expense increased as a percentage of Restaurant sales primarily due to 1.7% from higher hourly and field management labor costs, primarily due to wage rate inflation, partially offset by a decrease of 0.6% from an increase in average check per person.
Previous wording
Other restaurant operating expense increased as a percentage of Restaurant sales primarily due to 1.6% from higher restaurant-level operating and supply expenses, primarily due to inflation, and 0.4% from higher advertising expense. These increases were partially offset by decreases as a percentage of Restaurant sales of 0.6% from an increase in average check per person and 0.2% from certain cost-saving and productivity initiatives.
Current wording
Other restaurant operating expense increased as a percentage of Restaurant sales primarily due to 0.7% from higher restaurant-level operating and supply expenses, primarily due to inflation, and 0.2% from higher pre-opening expense. These increases were partially offset by decreases as a percentage of Restaurant sales of 0.2% from an increase in average check per person and 0.2% from certain cost-saving and productivity initiatives.
Previous wording
Provision for impaired assets and restaurant closings increased primarily due to impairment and closure charges in connection with the Q2 2024 decision to close nine restaurants in Hong Kong and closure charges in connection with the Q4 2023 decision to close 36 older, predominately underperforming restaurants within the U.S. segment.
Current wording
Provision for impaired assets and restaurant closings increased primarily due to impairment and closure charges in connection with the Q2 2024 decision to close nine restaurants in Hong Kong and a net gain in Q3 2023 of $6.7 million in connection with the lease termination and closure of one U.S. restaurant.
Previous wording
Provision for income taxes for the thirteen weeks ended June 30, 2024 includes the impact of lower forecasted annual pre-tax book income for the thirteen weeks ended June 30, 2024 relative to the prior quarter in 2024.
Current wording
Benefit for income taxes for the thirteen weeks ended September 29, 2024 includes: (i) the impact of changes to the estimate of forecasted annual pre-tax book income relative to the prior quarter in 2024, (ii) the benefit of FICA tax credits on certain tipped wages and (iii) the temporary reduction in the Brazilian income tax rate from 34% to 0% under the new Brazil tax legislation.
Previous wording
Food and beverage cost decreased as a percentage of Restaurant sales primarily due to 1.4% from increases in average check per person driven by an increase in menu pricing and 0.6% from cost-saving and productivity initiatives. These decreases were partially offset by increases as a percentage of Restaurant sales of 0.9% from unfavorable product mix and 0.4% from commodity inflation.
Current wording
Food and beverage cost decreased as a percentage of Restaurant sales primarily due to 1.3% from increases in average check per person driven by an increase in menu pricing and 0.4% from cost-saving and productivity initiatives. These decreases were partially offset by increases as a percentage of Restaurant sales of 0.4% from unfavorable product mix and 0.4% from commodity inflation.
Previous wording
Labor and other related expense increased as a percentage of Restaurant sales primarily due to 1.8% from higher hourly and field management labor costs, primarily due to wage rate inflation, partially offset by a decrease of 0.8% from an increase in average check per person.
Current wording
Labor and other related expense increased as a percentage of Restaurant sales primarily due to 1.8% from higher hourly and field management labor costs, primarily due to wage rate inflation, partially offset by a decrease of 0.6% from an increase in average check per person.
Previous wording
Other restaurant operating expense increased as a percentage of Restaurant sales primarily due to 1.2% from higher restaurant-level operating and supply expenses, primarily due to inflation, and 0.5% from higher advertising expense. These increases were partially offset by decreases as a percentage of Restaurant sales of 0.3% from an increase in average check per person and 0.2% from certain cost-saving and productivity initiatives.
Current wording
Other restaurant operating expense increased as a percentage of Restaurant sales primarily due to: (i) 1.0% from higher restaurant-level operating and supply expenses, primarily due to inflation, (ii) 0.4% from higher advertising expense and (iii) 0.2% from higher pre-opening expense. These increases were partially offset by decreases as a percentage of Restaurant sales of 0.3% from an increase in average check per person and 0.2% from certain cost-saving and productivity initiatives.
Previous wording
Loss on extinguishment of debt during the twenty-six weeks ended June 30, 2024 was in connection with the 2025 Notes Partial Repurchase, which is described in further detail within Note 10 -Convertible Senior Notes of the Notes to Consolidated Financial Statements.
Current wording
Loss on extinguishment of debt during the thirty-nine weeks ended September 29, 2024 was in connection with the 2025 Notes Partial Repurchase, which is described in further detail within Note 7 -Convertible Senior Notes of the Notes to Consolidated Financial Statements.
Previous wording
Provision for income taxes for the twenty-six weeks ended June 30, 2024 includes the impact of nondeductible losses associated with the 2025 Notes Partial Repurchase which, relative to a pre-tax book loss during the period, resulted in a negative effective income tax rate.
Current wording
Provision for income taxes for the thirty-nine weeks ended September 29, 2024 includes the impact of nondeductible losses associated with the 2025 Notes Partial Repurchase which, relative to a pre-tax book loss during the period, resulted in a negative effective income tax rate.
Previous wording
(1)The thirteen weeks ended June 30, 2024 includes the restaurant sales impact from the closure of 51 U.S. and two international restaurants since March 26, 2023. The twenty-six weeks ended June 30, 2024 includes the restaurant sales impact from the closure of 55 U.S. and two international restaurants since December 25, 2022.
Current wording
(1)The thirteen weeks ended September 29, 2024 includes the restaurant sales impact from the closure of 47 U.S. and 11 international restaurants since June 25, 2023. The thirty-nine weeks ended September 29, 2024 includes the restaurant sales impact from the closure of 56 U.S. and 11 international restaurants since December 25, 2022.
Previous wording
(3)U.S. comparable restaurant sales for the twenty-six weeks ended June 30, 2024 includes an estimated$16.5 million negative impact from a one-week shift in the fiscal calendar.
Current wording
(2)U.S. comparable restaurant sales for the thirty-nine weeks ended September 29, 2024 includes an estimated $16.5 million negative impact from a one-week shift in the fiscal calendar.
Previous wording
(4)The thirteen weeks ended June 30, 2024 includes restaurant sales from 20 U.S. and 35 international new restaurants not included in our comparable restaurant sales base. The twenty-six weeks ended June 30, 2024 includes restaurant sales from 22 U.S. and 43 international new restaurants not included in our comparable restaurant sales base.
Current wording
(3)The thirteen weeks ended September 29, 2024 includes restaurant sales from 18 U.S. and 38 international new restaurants not included in our comparable restaurant sales base. The thirty-nine weeks ended September 29, 2024 includes restaurant sales from 24 U.S. and 51 international new restaurants not included in our comparable restaurant sales base.
Previous wording
(2)During 2023, we were eligible for certain value added tax exemptions under the Brazil tax legislation until August 2023. Beginning on May 23, 2024, we are eligible for certain value added tax exemptions under the new Brazil tax legislation. See Note 15 -Income Taxes of the Notes to Consolidated Financial Statements for details regarding value added tax exemptions in connection with Brazil tax legislation.
Current wording
(4)During 2023, we were eligible for certain value added tax exemptions under the Brazil tax legislation until August 2023. Beginning on May 23, 2024, we are eligible for certain value added tax exemptions under the new Brazil tax legislation. See Note 12 -Income Taxes of the Notes to Consolidated Financial Statements for details regarding value added tax exemptions in connection with Brazil tax legislation.
Previous wording
U.S. -The decrease in U.S. Income from operations generated during the thirteen weeks ended June 30, 2024 as compared to the thirteen weeks ended June 25, 2023 was primarily due to: (i) lower restaurant sales, as discussed above, (ii) higher labor and operating costs, primarily due to inflation, (iii) unfavorable product mix and (iv) higher advertising expense. These decreases were partially offset by increases from an increase in average check per person and the impact of certain cost-saving and productivity initiatives.
Current wording
U.S. -The decrease in U.S. Income from operations generated during the thirteen weeks ended September 29, 2024 as compared to the thirteen weeks ended September 24, 2023 was primarily due to: (i) lower restaurant sales, as discussed above, (ii) higher labor, operating and commodity costs, primarily due to inflation, (iii) a lease termination gain in Q3 2023, (iv) higher advertising expense and professional fees and (v) unfavorable product mix. These decreases were partially offset by increases from an increase in average check per person and the impact of certain cost-saving and productivity initiatives.
Previous wording
The decrease in U.S. Income from operations generated during the twenty-six weeks ended June 30, 2024 as compared to the twenty-six weeks ended June 25, 2023 was primarily due to: (i) lower restaurant sales, as discussed above, (ii) higher labor and operating costs, primarily due to inflation, (iii) unfavorable product mix, (iv) higher advertising expense and (v) higher impairment and closure costs. These decreases were partially offset by increases from an increase in average check per person and the impact of certain cost-saving and productivity initiatives.
Current wording
The decrease in U.S. Income from operations generated during the thirty-nine weeks ended September 29, 2024 as compared to the thirty-nine weeks ended September 24, 2023 was primarily due to: (i) lower restaurant sales, as discussed above, (ii) higher labor, operating and commodity costs, primarily due to inflation, (iii) higher impairment, closure costs and severance, including a lease termination gain in Q3 2023, (iv) unfavorable product mix and (v) higher advertising expense. These decreases were partially offset by increases from an increase in average check per person and the impact of certain cost-saving and productivity initiatives.
Previous wording
The decrease in international Income from operations generated during the twenty-six weeks ended June 30, 2024 as compared to the twenty-six weeks ended June 25, 2023 was primarily due to: (i) higher impairment and closure costs, (ii) higher labor and operating costs, primarily due to inflation and (iii) lapping value added tax exemptions in Brazil during 2023. These decreases were partially offset by an increase in average check per person.
Current wording
The decrease in international Income from operations generated during the thirty-nine weeks ended September 29, 2024 as compared to the thirty-nine weeks ended September 24, 2023 was primarily due to: (i) higher impairment and closure costs, (ii) lower restaurant sales, as discussed above, (iii) higher operating, labor and commodity costs, primarily due to inflation and (iv) a lower benefit from value added tax exemptions in Brazil. These decreases were partially offset by: (i) an increase in average check per person, (ii) favorable product mix and (iii) lower advertising expense.
Previous wording
Segment Restaurant-level and Adjusted Restaurant-level Operating Income and Corresponding Margins Non-GAAP Reconciliations - The following tables reconcile segment Income (loss) from operations and the corresponding margin to segment restaurant-level operating income and adjusted restaurant-level operating income and the corresponding margins for the periods indicated:
Current wording
Segment Restaurant-level and Adjusted Restaurant-level Operating Income and Corresponding Margins Non-GAAP Reconciliations - The following tables reconcile segment Income from operations and the corresponding margin to segment restaurant-level operating income and adjusted restaurant-level operating income and the corresponding margins for the periods indicated:
Previous wording
(2)Includes asset impairment, closure costs and severance primarily in connection with the Q2 2024 decision to close nine restaurants in Hong Kong and the Q4 2023 decision to close 36 older, predominately underperforming U.S. restaurants.
Current wording
(2)The thirteen and thirty-nine weeks ended September 29, 2024 include asset impairment, closure costs and severance primarily in connection with the Q2 2024 decision to close nine restaurants in Hong Kong. The thirty-nine weeks ended September 29, 2024 also includes asset impairment, closure costs and severance in connection with the Q4 2023 decision to close 36 older, predominately underperforming U.S. restaurants. The thirteen and thirty-nine weeks ended September 24, 2023 include a lease termination gain and related restaurant closure costs.
Previous wording
(3)Represents fees incurred in connection with a project-based strategic initiative. The costs incurred represent third-party consulting fees related to a strategic initiative to develop revenue growth management capabilities for Outback Steakhouse and are included in General and administrative expense. We expect to incur additional fees for this project for the remainder of 2024. Given the expected magnitude and scope of this initiative and that it is not expected to recur in the foreseeable future after 2024, we consider these incremental expenses to be distinct from other consulting fees that we incur in the ordinary course of business and not reflective of the ongoing costs to operate our business or operating performance in the period.
Current wording
(4)Represents fees incurred in connection with a project-based strategic initiative. The costs incurred represent third-party consulting fees related to a strategic initiative to develop revenue growth management capabilities for Outback Steakhouse and are included in General and administrative expense. We expect to incur additional fees for this project for the remainder of 2024. Given the magnitude and scope of this initiative and that it is not expected to recur in the foreseeable future after 2024, we consider these incremental expenses to be distinct from other consulting fees that we incur in the ordinary course of business and not reflective of the ongoing costs to operate our business or operating performance in the period.
Previous wording
(3)Includes the tax effects of non-GAAP adjustments determined based on the nature of the underlying non-GAAP adjustments and their relevant jurisdictional tax rates for all periods presented. The difference between GAAP and adjusted effective income tax rates during the thirteen weeks ended June 30, 2024 primarily relates to asset impairment and closure costs in Hong Kong with no corresponding tax benefit as a result of a full valuation allowance against deferred tax assets in that jurisdiction. The difference between GAAP and adjusted effective income tax rates for the twenty-six weeks ended June 30, 2024 primarily relates to nondeductible losses and other tax costs associated with the 2025 Notes Partial Repurchase.
Current wording
(3)Includes the tax effects of non-GAAP adjustments determined based on the nature of the underlying non-GAAP adjustments and their relevant jurisdictional tax rates for all periods presented. The difference between GAAP and adjusted effective income tax rates during the thirty-nine weeks ended September 29, 2024 primarily relates to nondeductible losses and other tax costs associated with the 2025 Notes Partial Repurchase. The thirteen and thirty-nine weeks ended September 24, 2023 include a $2.9 million adjustment related to a Brazil federal income tax exemption on certain state VAT benefits.
Previous wording
(4)Adjusted diluted weighted average common shares outstanding for the thirteen weeks ended June 30, 2024 and June 25, 2023 and the twenty-six weeks ended June 30, 2024 and June 25, 2023 were calculated including the effect of 1.0 million, 5.0 million, 2.7 million and 4.9 million dilutive securities, respectively, for outstanding 2025 Notes and the effect of 0.6 million, 3.3 million, 1.9 million and 3.2 million dilutive securities, respectively, for the Warrant Transactions, as defined below. In connection with the offering of the 2025 Notes, we entered into convertible note hedge transactions (the “Convertible Note Hedge Transactions”) and concurrently entered into warrant transactions relating to the same number of shares of our common stock (the “Warrant Transactions”). If our stock price is in excess of the conversion price of the 2025 Notes ($10.94 and $11.37 as of June 30, 2024 and June 25, 2023, respectively), the Convertible Note Hedge Transactions deliver shares to offset dilution from the 2025 Notes, which, in combination with the warrant transactions, effectively offset dilution from the 2025 Notes up to the strike price of the Warrant Transactions ($15.32 and $15.92 as of June 30, 2024 and June 25, 2023, respectively). Adjusted diluted earnings per share and adjusted diluted weighted average common shares outstanding for the thirteen and twenty-six weeks ended June 25, 2023 have been recast to remove the 5.0 million and 4.9 million share benefit, respectively, of the Convertible Note Hedge Transactions which was previously included as a non-GAAP share adjustment.
Current wording
(4)Adjusted diluted weighted average common shares outstanding for the thirteen weeks ended September 29, 2024 and September 24, 2023 and the thirty-nine weeks ended September 29, 2024 and September 24, 2023 were calculated including the effect of 0.7 million, 5.4 million, 2.0 million and 5.1 million dilutive securities, respectively, for outstanding 2025 Notes and the effect of 0.3 million, 3.8 million, 1.4 million and 3.4 million dilutive securities, respectively, for the Warrant Transactions, as defined below. In connection with the offering of the 2025 Notes, we entered into convertible note hedge transactions (the “Convertible Note Hedge Transactions”) and concurrently entered into warrant transactions relating to the same number of shares of our common stock (the “Warrant Transactions”). If our stock price is in excess of the conversion price of the 2025 Notes ($10.79 and $11.26 as of September 29, 2024 and September 24, 2023, respectively), the Convertible Note Hedge Transactions deliver shares to offset dilution from the 2025 Notes, which, in combination with the Warrant Transactions, effectively offset dilution from the 2025 Notes up to the strike price of the Warrant Transactions ($15.11 and $15.77 as of September 29, 2024 and September 24, 2023, respectively). Adjusted diluted earnings per share and adjusted diluted weighted average common shares outstanding for the thirteen and thirty-nine weeks ended September 24, 2023 have been recast to remove the 5.4 million and 5.1 million share benefit, respectively, of the Convertible Note Hedge Transactions which was previously included as a non-GAAP share adjustment.
Previous wording
(5)Due to a GAAP net loss, antidilutive securities are excluded from diluted weighted average common shares outstanding for the twenty-six weeks ended June 30, 2024. However, considering the adjusted net income position, adjusted diluted weighted average common shares outstanding incorporates securities that would have been dilutive for GAAP.
Current wording
(5)Due to a GAAP net loss, antidilutive securities are excluded from diluted weighted average common shares outstanding for the thirty-nine weeks ended September 29, 2024. However, considering the adjusted net income position, adjusted diluted weighted average common shares outstanding incorporates securities that would have been dilutive for GAAP.
Previous wording
As of June 30, 2024, we had $117.9 million in cash and cash equivalents, of which $59.2 million was held by foreign affiliates. The international jurisdictions in which we have significant cash do not have any known restrictions that would prohibit repatriation.
Current wording
As of September 29, 2024, we had $83.6 million in cash and cash equivalents, of which $18.9 million was held by foreign affiliates. The international jurisdictions in which we have significant cash do not have any known restrictions that would prohibit repatriation.
Previous wording
As of June 30, 2024, we had aggregate undistributed foreign earnings of approximately $33.1 million that may be repatriated to the U.S. without additional material U.S. federal income tax. These amounts are not considered indefinitely reinvested in our foreign subsidiaries.
Current wording
As of September 29, 2024, we had aggregate undistributed foreign earnings of approximately $35.7 million that may be repatriated to the U.S. without additional material U.S. federal income tax. These amounts are not considered indefinitely reinvested in our foreign subsidiaries.
Previous wording
As of June 30, 2024, we had $297.2 million in available unused borrowing capacity under our revolving credit facility, net of letters of credit of $17.8 million.
Current wording
As of September 29, 2024, we had $407.2 million in available unused borrowing capacity under our revolving credit facility, net of letters of credit of $17.8 million.
Previous wording
Our credit agreement, as amended, contains various financial and non-financial covenants. A violation of these covenants could negatively impact our liquidity by restricting our ability to borrow under the revolving credit facility and cause an acceleration of the amounts due under the credit facilities. See Note 12 -Long-term Debt, Net in our Annual Report on Form 10-K for the year ended December 31, 2023 for further information.
Current wording
Our credit agreement, as amended, contains various financial and non-financial covenants. A violation of these covenants could negatively impact our liquidity by restricting our ability to borrow under the revolving credit facility and cause an acceleration of the amounts due under the credit facilities.
Previous wording
Convertible Note Hedge and Warrant Transactions - In connection with the 2025 Notes Partial Repurchase, we entered into the Early Termination Agreements with the Derivative Counterparties. Upon settlement, we received approximately $118.2 million in cash and 0.3 million shares of our common stock from the Derivative
Current wording
Convertible Note Hedge and Warrant Transactions - In connection with the 2025 Notes Partial Repurchase, we entered into the Early Termination Agreements with the Derivative Counterparties. Upon settlement, we received approximately $118.2 million in cash and 0.3 million shares of our common stock from the Derivative Counterparties and paid $102.2 million in cash to the Derivative Counterparties during the thirty-nine weeks ended September 29, 2024.
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Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Operations and Comprehensive Income (Loss). The following categories of revenue and operating expenses are not included in restaurant-level operating income and corresponding margin because we do not consider them reflective of operating performance at the restaurant-level within a period:
Previous report — wording carried elsewhere
Counterparties and paid $102.2 million in cash to the Derivative Counterparties during the twenty-six weeks ended June 30, 2024.