Bloomin Brands Inc

(UNAUDITED)

1. Description of the Business and Basis of Presentation

Description of the Business -Bloomin’ Brands (“Bloomin’ Brands” or the “Company”) owns and operates casual, upscale casual and fine dining restaurants. OSI Restaurant Partners, LLC (“OSI”) is the Company’s primary operating entity. The Company’s restaurant portfolio includes Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar. Additional Outback Steakhouse, Carrabba’s Italian Grill and Bonefish Grill restaurants are operated under franchise agreements.

Basis of Presentation -The accompanying interim unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles in the United States (“U.S. GAAP”) for complete financial statements. In the opinion of the Company, all adjustments necessary for fair statement of results for the periods presented have been included and are of a normal, recurring nature. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Unless otherwise noted, disclosures within these Notes to Consolidated Financial Statements relate solely to the Company’s continuing operations. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 29, 2024.

Recently Issued Financial Accounting Standards Not Yet Adopted - In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” (“ASU No. 2023-09”) which expands existing income tax disclosures, including disaggregation of the Company’s effective income tax rate reconciliation table and income taxes paid disclosures. ASU No. 2023-09 is effective for the Company beginning with the 2025 Form 10-K, with early adoption permitted, and may be applied either prospectively for reporting periods after the effective date or retrospectively to prior periods presented. The Company is currently evaluating the impact ASU No. 2023-09 will have on its disclosures.

In November 2024, the FASB issued ASU No. 2024-03, “Income Statement - Reporting Comprehensive Income (Subtopic 220-40): Disaggregation of Income Statement Expenses,” (“ASU No. 2024-03”) which requires detailed disclosures in the notes to financial statements of expense categories within relevant income statement captions including purchases of inventory, employee compensation, depreciation and intangible asset amortization. ASU No. 2024-03 is effective for the Company beginning with the 2027 Form 10-K, with early adoption permitted, and may be applied either prospectively for reporting periods after the effective date or retrospectively to prior periods presented. The Company is currently evaluating the impact ASU No. 2024-03 will have on its disclosures.

Recent accounting guidance not discussed herein is not applicable, did not have or is not expected to have a material impact to the Company.

Reclassifications - The Company reclassified certain immaterial amounts in prior period financial statements to conform to the current period’s presentation. These reclassifications had no effect on previously reported net income.

2. Discontinued Operations

On December 30, 2024 (the “Closing Date”), an indirect wholly owned subsidiary of the Company (the “Seller”) completed the sale of 67% of the ownership interest in its business in Brazil (the “Disposal Group”) to a fund managed by an affiliate of Vinci Partners Investments Ltd. (the “Buyer”) (the “Brazil Sale Transaction”). Following the closing, the Brazil restaurants began operating as unconsolidated franchisees.

The aggregate consideration paid to the Seller consists of 67% of the enterprise valuation of the Disposal Group in the amount of R$2.06 billion Brazilian Reais, which equals R$1.4 billion Brazilian Reais (approximately $225.3 million in U.S. Dollars based on the exchange rate on the Closing Date), subject to customary adjustments, and withholding for Brazilian taxes (the “Purchase Price”). On December 30, 2024 the Company received cash proceeds, net of withheld income taxes, of $103.9 million, in U.S. dollars based on the exchange rate on the Closing Date, representing 52% of the Purchase Price. The proceeds were applied to the Company’s revolving credit facility during the thirteen weeks ended March 30, 2025. The second installment payment, representing 48% of the Purchase Price, is due on the first anniversary of the Closing Date (based on the exchange rate on the date of payment) and will generate interest income based on the interbank deposit rate in Brazil until paid. During the thirteen weeks ended March 30, 2025 the Company recorded a pretax gain on the sale of the Disposal Group of $2.9 million within Net (loss) income from discontinued operations, net of tax in its Consolidated Statements of Operations and Comprehensive Income (Loss).

The sale represents a strategic shift to a primarily franchised model for the Company’s international operations. The assets and liabilities of the Disposal Group were classified as held for sale on the Company’s Consolidated Balance Sheet as of December 29, 2024. For the thirteen weeks ended March 30, 2025 and March 31, 2024, all sales, direct costs and expenses and income taxes attributable to restaurants classified as discontinued operations have been aggregated to a single caption titled (Loss) income from discontinued operations, net of tax in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) for all periods presented.

As of the Closing Date, the fair value of the Company’s retained interest was $59.9 million based on the proportional enterprise valuation of the Disposal Group, adjusted for debt used by the Buyer to fund a portion of the Purchase Price and to be pushed down to the operating entity subsequent to the second installment payment. See Note 3 -Equity Method Investmentfor additional details regarding the Company’s retained interest in its Brazil operations.

(Loss) income from discontinued operations, net of tax, in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) includes the following for the periods indicated:

(1)Includes $1.6 million of foreign currency translation gains on contingent consideration assets and indemnification liabilities, as discussed below.

Contingent Consideration Assets and Indemnification Liabilities - During the thirteen weeks ended March 30, 2025, the Company recognized contingent consideration assets of $29.3 million and indemnification liabilities of $6.9 million within Other assets, net and Other long-term liabilities, net, respectively, on the Company’s Consolidated Balance Sheet in connection with the Brazil Sale Transaction. As of March 30, 2025, the Company’s balance of contingent consideration assets and indemnification liabilities, which are denominated in Brazilian Reais, increased to $31.5 million and $7.5 million, respectively, as a result of fluctuations in foreign exchange rates. All future activity related to contingent consideration assets and indemnification liabilities, including foreign exchange gains and losses, will also be reflected in discontinued operations.

3. Equity Method Investment

Subsequent to the Brazil Sale Transaction, the Company retained a 33% interest in the franchisee of the Company’s restaurants in Brazil, which is accounted for using the equity method of accounting. To ensure timely reporting, the Company records the results of the equity method investment in Brazil on a calendar basis one-month lag.

As of March 30, 2025, the carrying value of the Company’s equity method investment was $61.8 million and is recorded in Equity method investment on its Consolidated Balance Sheet. The Company’s proportionate share of net loss from its equity interest was $1.3 million for the quarter ended March 30, 2025 and is recorded within Loss from equity method investment, net of tax in the Consolidated Statements of Operations and Comprehensive Income (Loss).

4. Revenue Recognition

The following table includes the disaggregation of Restaurant sales and franchise revenues by restaurant concept and segment for the periods indicated:

(1)The thirteen weeks ended March 30, 2025 include intercompany royalties from Brazil prior to the sale androyalties from Brazil after the sale.

(2)Includes Restaurant sales for Company-owned restaurants in Hong Kong and China.

The following table includes a detail of assets and liabilities from contracts with customers included on the Company’s Consolidated Balance Sheets as of the periods indicated:

The following table is a rollforward of deferred gift card sales commissions for the periods indicated:

The following table is a rollforward of unearned gift card revenue for the periods indicated:

5. Impairments and Exit Costs

The components of Provision for impaired assets and restaurant closings are as follows for the period indicated:

(1)Primarily related to the closure of 36 predominantly older, underperforming U.S. restaurants (the “2023 Restaurant Closures”). Activity for the thirteen weeks ended March 30, 2025 is immaterial.

6. Earnings (Loss) Per Share

The following table presents the computation of basic and diluted earnings (loss) per share for the periods indicated:

7. Stock-based Compensation Plans

The following table presents a summary of the Company’s performance-based share units (“PSUs”) and restricted stock units (“RSUs”) activity:

(1)Based on the $12.27 and $7.41 share price of the Company’s common stock on December 27, 2024 and March 28, 2025, the last trading day of the year ended December 29, 2024 and thirteen weeks ended March 30, 2025, respectively.

(2)The weighted average dividend yield was 6.40% and 6.46% for PSUs and RSUs, respectively. For PSU’s, a new performance structure was used for grants beginning in 2025. The new structure contains separate performance goals that are set at the beginning of each of thethree annual performance periods and cliff vest after three years.

(3)Represents adjustment to 0% payout for PSUs granted during 2022.

(4)For PSUs, estimated number of units to be issued upon the vesting of outstanding PSUs based on Company performance projections of performance criteria set forth in the 2023, 2024 and 2025 PSU award agreements.

The following represents unrecognized stock-based compensation expense and the remaining weighted average recognition period as of March 30, 2025:

8. Supplemental Balance Sheet Information

Other current assets, net, consisted of the following as of the periods indicated:

Other assets, net, consisted of the following as of the periods indicated:

(1)Net of accumulated amortization of $1.2 million and $0.6 million as of March 30, 2025 and December 29, 2024, respectively.

Accrued and other current liabilities consisted of the following as of the periods indicated:

Other long-term liabilities, net, consisted of the following as of the periods indicated:

(1)Includes indemnification liabilities in connection with the Brazil Sale Transaction. See Note 2 –Discontinued Operations for additional details.

Long-term debt, net, consisted of the following as of the periods indicated:

(1)Interest rate represents the weighted average interest rate as of the respective periods.

(2)Obligations under the 2025 Notes, which matured on May 1, 2025, have been classified as long-term, reflecting the Company’s intent and ability to refinance these notes through borrowings on its existing revolving credit facility. On May 1, 2025, the 2025 Notes were settled primarily using borrowings from the revolving credit facility.

Debt Covenants -As of March 30, 2025 and December 29, 2024, the Company was in compliance with its debt covenants.

9. Convertible Senior Notes

The following table includes the outstanding principal amount and carrying value of the Company’s remaining 5.00% convertible senior notes due in 2025 (the “2025 Notes”) as of the periods indicated:

Following is a summary of interest expense for the 2025 Notes by component for the periods indicated:

(1)The effective rate of the 2025 Notes over their expected life is 5.85%.

The 2025 Notes matured on May 1, 2025, and were settled in cash for $20.7 million, excluding accrued interest. In connection with the maturity of the 2025 Notes, the related convertible note hedges entered into with certain purchasers of the 2025 Notes and/or their respective affiliates and other financial institutions expired.

The warrants remain proportional to the 2025 Notes that matured May 1, 2025 and have a dilutive effect on the Company’s common stock to the extent that the price of its common stock exceeds the strike price of the warrants. The warrants expire on various dates following the maturity of the 2025 Notes through November 21, 2025, unless the Company terminates the warrants prior to their scheduled expiration. In connection with dividends paid during thirteen weeks ended March 30, 2025, the strike price for the remaining warrants decreased to $14.60.

10. Stockholders’ Equity

Share Repurchases - In February 2024, the Company’s Board of Directors (the “Board”) approved a $350.0 million share repurchase authorization (the “2024 Share Repurchase Program”). As of March 30, 2025, $96.8 million remained available for repurchase.

Dividends -The Company declared and paid dividends per share during fiscal year 2025 as follows:

In April 2025, the Board declared a quarterly cash dividend of $0.15 per share, payable on June 4, 2025 to shareholders of record at the close of business on May 20, 2025.

Accumulated Other Comprehensive Income (Loss)-The following table is a rollforward of the components of Accumulated Other Comprehensive Income (Loss) for the periods indicated:

(1)Represents foreign currency translation adjustments primarily related to the Company’s equity method investment.

11. Derivative Instruments and Hedging Activities

Cash Flow Hedges of Interest Rate Risk -In March 2024 and December 2023, OSI entered into 11 interest rate swap agreements withten counterparties (the “Swap Transactions”) to manage its exposure to fluctuations in variable interest rates that includeone andtwo-year tenors. The remaining Swap Transactions have an aggregate notional amount of $275.0 million with the following terms:

(1)The weighted average fixed interest rate excludes the term SOFR adjustment and interest rate spread described below.

In connection with the remaining Swap Transactions, the Company effectively converted $275.0 million of its outstanding indebtedness from SOFR, plus a term SOFR adjustment of 0.10% and a spread of 150 to 250 basis points, to the weighted average fixed interest rates within the table above, plus a term SOFR adjustment of 0.10% and a spread of 150 to 250 basis points. The Swap Transactions have an embedded floor of minus 0.10%.

The Swap Transactions have been designated and qualify as cash flow hedges, are recognized on the Company’s Consolidated Balance Sheets at fair value and are classified based on the instruments’ maturity dates. The Company estimates $1.1 million of interest expense will be reclassified from Accumulated Other Comprehensive Income (Loss) to Interest expense, net over the next 12 months related to the Swap Transactions.

The following table presents the fair value and classification of the Company’s swap agreements as of the periods indicated:

(1)See Note 13 -Fair Value Measurements for fair value discussion of the interest rate swaps.

By utilizing the interest rate swaps, the Company is exposed to credit-related losses in the event that the counterparty fails to perform under the terms of the derivative contract. To mitigate this risk, the Company enters into derivative contracts with major financial institutions based upon credit ratings and other factors. The Company continually assesses the creditworthiness of its counterparties. As of March 30, 2025, all counterparties to the Swap Transactions performed in accordance with their contractual obligations.

As of March 30, 2025 and December 29, 2024, the fair value of the Company’s Swap Transactions was in a net liability position, including accrued interest but excluding any adjustment for nonperformance risk, of $1.1 million and $0.8 million, respectively. As of March 30, 2025 and December 29, 2024, the Company has not posted any collateral related to the Swap Transactions.

The Swap Transactions contain provisions whereby the Company could be declared in default on its derivative obligations if the repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on indebtedness. If the Company had breached any of these provisions as of March 30, 2025 and December 29, 2024, it could have been required to settle its obligations under the Swap Transactions at their termination value of $1.1 million and $0.8 million, respectively.

Non-Designated Hedges

During the fourth quarter of 2024, the Company entered into foreign currency forward contracts to partially offset the foreign currency exchange gains and losses generated by the Brazilian Reais rate risk associated with the purchase price installment payments from the Brazil Sale Transaction. As of March 30, 2025, the Company had R$697.0 million Brazilian Reais (approximately $120.2 million U.S. Dollars) of outstanding notional amounts related to its foreign currency forward contracts. The liability and asset related to the foreign exchange forward contracts as of March 30, 2025 and December 29, 2024 are not material. As of March 30, 2025 and December 29, 2024, the Company has not posted any collateral related to the foreign currency forward contracts.

The following table summarizes the effects of the Company’s foreign exchange forward contracts on the Consolidated Statements of Operations and Comprehensive Income (Loss) for the period indicated:

(1)The loss on foreign currency forward contracts is materially offset by the gains on foreign currency exchange related to the installment receivable from the Brazil Sale Transaction.

The Company’s interest rate swaps and foreign currency forward contracts are subject to master netting arrangements. As of March 30, 2025, the Company elected not to offset derivative positions in the balance sheet with the same counterparty under the same agreement.

12. Leases

The following table includes a detail of lease assets and liabilities included on the Company’s Consolidated Balance Sheets as of the periods indicated:

(1)Net of accumulated amortization of $4.7 million and $4.0 million as of March 30, 2025 and December 29, 2024, respectively.

Following is a summary of expenses and income related to leases recognized in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) for the periods indicated:

(1)Excludes rent expense for office facilities and Company-owned closed or subleased properties of $3.6 million and $3.4 million for the thirteen weeks ended March 30, 2025 and March 31, 2024, respectively, which is included in General and administrative expense.

The following table is a summary of cash flow impacts to the Company’s Consolidated Financial Statements related to its leases for the periods indicated:

13. Fair Value Measurements

Fair value is the price that would be received for an asset or paid to transfer a liability, or the exit price, in an orderly transaction between market participants on the measurement date. Fair value is categorized into one of the following three levels based on the lowest level of significant input:

Fair Value Measurements on a Recurring Basis -The following table summarizes the Company’s financial assets and liabilities measured at fair value by hierarchy level on a recurring basis as of the periods indicated:

Fair value of each class of financial instruments is determined based on the following:

Interim Disclosures about Fair Value of Financial Instruments -The Company’s non-derivative financial instruments consist of cash equivalents, accounts receivable, accounts payable and long-term debt. The fair values of cash equivalents, accounts receivable and accounts payable approximate their carrying amounts reported on the Company’s Consolidated Balance Sheets due to their short duration.

Debt is carried at amortized cost; however, the Company estimates the fair value of debt for disclosure purposes. The following table includes the carrying value and fair value of the Company’s debt by hierarchy level as of the periods indicated:

14. Income Taxes

The effective income tax rate for the thirteen weeks ended March 30, 2025 increased by 10.5 percentage points as compared to the thirteen weeks ended March 31, 2024. This increase was primarily due to impact of the non-deductible losses associated with the repurchase of $83.6 million of the outstanding 2025 Notes (the “Second 2025 Notes Partial Repurchase”) recorded in the thirteen weeks ended March 31, 2024 which, relative to a pre-tax book loss, resulted in a negative effective income tax rate. The increase was partially offset by the benefit of FICA tax credits on certain employees’ tips in 2025 relative to forecasted pretax book income.

In the U.S., a restaurant company employer may claim a credit against its federal income taxes for FICA taxes paid on certain tipped wages (the “FICA tax credit”). The level of FICA tax credits is primarily driven by U.S. Restaurant sales and is not impacted by costs incurred that may reduce Income (loss) before provision for income taxes.

The effective income tax rate for the thirteen weeks ended March 30, 2025 was lower than the Company’s blended federal and state statutory rate of approximately 26% primarily due to the benefit of FICA tax credits on certain tipped wages.

The effective income tax rate for the thirteen weeks ended March 31, 2024 was lower than the Company’s blended federal and state statutory rate of approximately 26% primarily due to the impact of nondeductible losses associated with the Second 2025 Notes Partial Repurchase, partially offset by the benefit of FICA tax credits on certain tipped wages which, relative to a pre-tax book loss during the quarter, resulted in a negative effective income tax rate.

15. Commitments and Contingencies

Litigation and Other Matters - The Company recorded reserves of $2.2 million and $2.3 million for certain of its outstanding legal proceedings as of March 30, 2025 and December 29, 2024, respectively, within Accrued and other current liabilities on its Consolidated Balance Sheets. While the Company believes that additional losses beyond these accruals are reasonably possible, it cannot estimate a possible loss contingency or range of reasonably possible loss contingencies beyond these accruals.

Lease Guarantees - The Company assigned its interest, and is contingently liable, under certain real estate leases. These leases have varying terms, the latest of which expires in 2032. As of March 30, 2025, the undiscounted payments that the Company could be required to make in the event of non-payment by the primary lessees was $11.6 million. The present value of these potential payments discounted at the Company’s incremental borrowing rate as of March 30, 2025 was $9.4 million. In the event of default, the indemnity clauses in the Company’s purchase and sale agreements generally govern its ability to pursue and recover damages incurred. As of March 30, 2025 and December 29, 2024, the Company’s recorded contingent lease liability was $1.8 million and $1.6 million, respectively.

16. Segment Reporting

The following is a summary of reportable segments:

(1)Includes franchise locations.

Segment accounting policies are the same as those described in Note 2 -Summary of Significant Accounting Policiesin the Company’s Annual Report on Form 10-K for the year ended December 29, 2024. Revenues for all segments include only transactions with customers and exclude intersegment revenues. There were no material transactions among reportable segments. Excluded from Income from operations for U.S. are certain legal and corporate costs not directly related to the performance of the segment, most stock-based compensation expenses, a portion of insurance expenses and certain bonus expenses. The below segment disclosures have been recast to include amounts that relate solely to the Company’s continuing operations. In the tables below, “other” includes amounts related to the Company’s equity method investment in Brazil and its Hong Kong subsidiary.

The following table is a summary of revenues by segment for the periods indicated:

The following table presents segment operating income and significant segment expense information for the periods indicated:

(1)Includes depreciation and amortization, general and administrative and impairment expense.

(2)Includes general and administrative expense.

The following table is a reconciliation of segment income from operations to Income (loss) before provision for income taxes for the periods indicated:

The following table is a summary of depreciation and amortization and capital expenditures by segment for the periods indicated:

The following table sets forth Total assets by segment as of the periods indicated: