Bloomin’ Brands(BLMN) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted Q2 2024 diluted earnings per share was $0.51, down from$ 0.70 in 2023 [16] - Total revenues in Q2 were $1.1 billion, a decrease of 3% from 2023, primarily due to a decline in comparable restaurant sales and the loss of the Brazil value-added tax exemption benefit [14] - U.S. comparable restaurant sales were negative 10 basis points, with traffic down 380 basis points [14] - Q2 adjusted operating margins were 5.7%, compared to 7.8% last year, impacted by labor costs and the loss of the Brazil tax benefit [18] Business Line Data and Key Metrics Changes - Off-premises sales accounted for approximately 24% of total U.S. sales, with third-party delivery now at 14%, up from 12% in Q2 2023 [15] - The catering business at Carrabbas increased approximately 180% over the last two years, indicating strong growth potential [12] Market Data and Key Metrics Changes - The casual dining industry experienced softer than anticipated performance in Q2, with Bloomin' Brands' comparable sales growth outpacing the industry by 20 basis points [4] - The company is seeing signs of inflation returning to normal, which may create opportunities for growth [4] Company Strategy and Development Direction - The company is focused on three primary areas: delivering great experiences, improving the menu for value, and enhancing digital marketing capabilities [6][10] - Plans include remodeling 60 to 65 restaurants and opening 40 to 45 new restaurants system-wide in 2024, with a strong pipeline in Brazil [11] - The company aims to maintain a strong balance sheet while investing in marketing and operations initiatives [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging near-term environment but expressed confidence in the company's ability to navigate these headwinds and take market share [5] - The updated full-year guidance reflects a softer industry environment, with comparable sales expected to be flat to down 100 basis points [22] - Management remains optimistic about the long-term success of the Outback brand and is committed to enhancing customer experiences [5][24] Other Important Information - The company is undergoing a CEO succession process, with a committee formed to oversee the transition [13] - Total debt net of cash was$ 884 million at the end of Q2, with a commitment to maintain leverage ratios at or below 3 times [19] Q&A Session Summary Question: Thoughts on the current industry environment and value focus - Management noted that the industry is softer than expected and is adjusting to provide more value while ensuring returns for shareholders [26] Question: Outlook on construction costs and beef prices - Construction costs are significantly up, but the company is managing its pipeline to ensure high returns [29] - Beef prices remain inflationary but are more manageable than initially expected [30] Question: Insights on consumer behavior - Consumers are being choosy with their spending, but once they choose to dine, there is no significant trade-down in their selections [31] Question: Marketing strategy for the second half of the year - The company aims to hold its share of voice in marketing and can adjust spending based on the quality of offerings and returns [48] Question: Performance of Fleming's and outlook for fine dining - Fleming's is taking market share in fine dining despite facing challenges, and management remains bullish on its performance [42] Question: Update on Brazil's operating environment - Brazil's economy is softer due to higher interest rates, but the brand remains strong and is opening new restaurants [46]