Quantitative and Qualitative Disclosures about Market Risk
−Removed: We are exposed to market risk from changes in commodity prices, labor inflation and foreign currency exchange rates.
−Removed: During 2021, we substantially reduced our variable rate debt borrowings and terminated a significant portion of our interest rate swap agreements, which significantly reduced our market risk exposure related to interest rate risk.
+Added: We are exposed to market risk from changes in commodity prices, labor inflation, interest rates and foreign currency exchange rates.
Commodity Pricing Risk
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The related agreements may contain contractual features that limit the price paid by establishing certain price floors and caps.
−Removed: As of December 26, 2021, approximately 70% of our estimated 2022 annual food purchases were covered by fixed contracts, most of which are scheduled to expire during 2022.
+Added: As of December 25, 2022, approximately 60% of our estimated 2023 annual food purchases are covered by fixed contracts, most of which are scheduled to expire during 2023.
During 2021, commodity markets began experiencing elevated levels of inflation across all proteins given strong consumer demand and product shortages due to supply chain disruptions.
In addition, higher input costs across labor, fuel, freight and packaging contributed to increases as well.
−Removed: We anticipate commodity inflation to be approximately 11.0% to 13.0% for 2022.
+Added: During 2022, we experienced 14.6% commodity inflation and anticipate mid single digits commodity inflation for 2023.
Extreme changes in commodity prices or long-term changes could affect our financial results adversely.
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Substantial increases in costs and expenses could impact our operating results to the extent such increases cannot be passed through to our guests.
−Removed: We anticipate high-single digit labor cost inflation during 2022.
+Added: During 2022, we experienced 7.8% labor cost inflation and anticipate mid single digits labor cost inflation during 2023.
+Added: Interest Rate Risk
+Added: We are exposed to market risk from fluctuations in interest rates, which could affect our consolidated balance sheet, earnings and cash flows.
+Added: We manage our exposure to market risk through regular operating and financing activities and by using a combination of fixed-rate and variable-rate debt.
+Added: The amount of variable-rate debt fluctuates during the year based on our working capital requirements.
+Added: As of December 25, 2022, our interest rate risk was primarily from variable interest rate changes on our revolving credit facility, which had an outstanding balance of $430.0 million.
+Added: BLOOMIN’ BRANDS, INC.
+Added: We periodically evaluate financial instruments to hedge our exposure to variable interest rates.
+Added: As of December 26, 2021, we had interest rate swaps with an aggregate notional amount of $125.0 million.
+Added: These swaps matured in November 2022 and as of December 25, 2022, we had no financial instruments to hedge our interest rate exposure.
+Added: See Note 17 - Derivative Instruments and Hedging Activities of the Notes to Consolidated Financial Statements for further information.
+Added: We utilize valuation models to estimate the effects of changing interest rates.
+Added: As of December 25, 2022, a potential change from a hypothetical 150 basis point increase/decrease in short-term interest rates would increase or decrease our annual interest expense by $6.5 million.
Foreign Currency Exchange Rate Risk
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Currently, we do not use financial instruments to hedge foreign currency exchange rate changes.
−Removed: BLOOMIN’ BRANDS, INC.
For 2022, 11.4% of our revenue was generated in foreign currencies.
A 10% change in average foreign currency rates against the U.S.
−Removed: dollar would have increased or decreased our Total revenues for our foreign entities by $38.9 million.
−Removed: The 10% change would not have had a material effect on Net income.
−Removed: Interest Rate Risk
−Removed: We are exposed to market risk from fluctuations in interest rates, which could affect our consolidated balance sheet, earnings and cash flows.
−Removed: As of December 26, 2021, our interest rate risk was primarily from variable interest rate changes on our Senior Secured Credit Facility.
−Removed: We manage our exposure to market risk through regular operating and financing activities and when deemed appropriate, through the use of derivative financial instruments.
−Removed: We use derivative financial instruments as risk management tools and not for speculative purposes.
−Removed: To manage the risk of fluctuations in variable interest rate debt, we have interest rate swaps.
−Removed: As of December 26, 2021, we had interest rate swaps with an aggregate notional amount of $125.0 million that mature on November 30, 2022 .
−Removed: See Note 17 - Derivative Instruments and Hedging Activities of the Notes to Consolidated Financial Statements for further information.
−Removed: We utilize valuation models to estimate the effects of changing interest rates.
−Removed: As of December 26, 2021, a potential change from a hypothetical 100 basis point increase/decrease in short-term interest rates would not materially impact the fair value of our interest rate swaps or our annual interest expense.
+Added: dollar would have increased or decreased our Total revenues and Net income for our foreign entities by $54.4 million and $3.6 million, respectively.
This market risk discussion contains forward-looking statements.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.