What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-02 compared with 2022-11-01 · 184 added, 326 removed, 352 unchanged (59% of the section changed)

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Cautionary Statement

This Quarterly Report on Form 10-Q (the “Report”) includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

This Quarterly Report on Form 10-Q (the “Report”) includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended.

These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “feels,” “seeks,” “forecasts,” “projects,” “intends,” “plans,” “may,” “will,” “should,” “could” or “would” or, in each case, their negative or other variations or comparable terminology, although not all forward-looking statements are accompanied by such terms.

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(i) Consumer reactions to public health and food safety issues;

(ii) The severity, extent and duration of the COVID-19 pandemic, its impacts on our business and results of operations, financial condition and liquidity, including any adverse impact on our stock price and on the other factors listed below, and the responses of domestic and foreign federal, state and local governments to the pandemic;

(iii) Minimum wage increases, additional mandated employee benefits and fluctuations in the cost and availability of employees;

(iv) Fluctuations in the price and availability of commodities, including supplier freight charges and restaurant distribution expenses, and other impacts of inflation;

(ii) Minimum wage increases, additional mandated employee benefits and fluctuations in the cost and availability of employees;

(iii) Our ability to recruit and retain high-quality leadership, restaurant-level management and team members;

(iv) Economic conditions and their effects on consumer confidence and discretionary spending, consumer traffic, the cost and availability of credit and interest rates;

(v) Our ability to compete in the highly competitive restaurant industry with many well-established competitors and new market entrants;

(vi) Our ability to protect our information technology systems from interruption or security breach, including cyber security threats, and to protect consumer data and personal employee information;

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

(vi) Economic conditions and their effects on consumer confidence and discretionary spending, consumer traffic, the cost and availability of credit and interest rates;

(vii) Our ability to recruit and retain high-quality leadership, restaurant-level management and team members;

(viii) Our ability to preserve and grow the reputation and value of our brands, particularly in light of changes in consumer engagement with social media platforms and limited control with respect to the operations of our franchisees;

(ix) Our ability to protect our information technology systems from interruption or security breach, including cyber security threats, and to protect consumer data and personal employee information;

(x) Dependence on a limited number of suppliers and distributors to meet our beef, chicken and other major product supply needs;

(xi) The effects of international economic, political and social conditions and legal systems on our foreign operations and on foreign currency exchange rates;

(xii) Our ability to comply with governmental laws and regulations, the costs of compliance with such laws and regulations and the effects of changes to applicable laws and regulations, including tax laws and unanticipated liabilities, and the impact of any litigation;

(xiii) Our ability to effectively respond to changes in patterns of consumer traffic, consumer tastes and dietary habits, including by maintaining relationships with third party delivery apps and services;

(xiv) Our ability to implement our remodeling, relocation and expansion plans due to uncertainty in locating and acquiring attractive sites on acceptable terms, obtaining required permits and approvals, recruiting and training necessary personnel, obtaining adequate financing and estimating the performance of newly opened, remodeled or relocated restaurants;

(vii) Fluctuations in the price and availability of commodities, including supplier freight charges and restaurant distribution expenses, and other impacts of inflation and our dependence on a limited number of suppliers and distributors to meet our beef, chicken and other major product supply needs;

(viii) The severity, extent and duration of a health pandemic, its impacts on our business and results of operations, financial condition and liquidity, including any adverse impact on our stock price and on the other factors listed in this Report, and the responses of domestic and foreign federal, state and local governments to the pandemic;

(ix) Our ability to preserve and grow the reputation and value of our brands, particularly in light of changes in consumer engagement with social media platforms and limited control with respect to the operations of our franchisees;

(x) The effects of international economic, political and social conditions and legal systems on our foreign operations and on foreign currency exchange rates;

(xi) Our ability to comply with new environmental, social and governance (“ESG”) requirements or our failure to achieve any goals, targets or objectives with respect to ESG matters;

(xii) Our ability to effectively respond to changes in patterns of consumer traffic, consumer tastes and dietary habits, including by maintaining relationships with third party delivery apps and services;

(xiii) Our ability to comply with governmental laws and regulations, the costs of compliance with such laws and regulations and the effects of changes to applicable laws and regulations, including tax laws and unanticipated liabilities, and the impact of any litigation;

(xiv) Our ability to implement our remodeling, relocation and expansion plans, due to uncertainty in locating and acquiring attractive sites on acceptable terms, obtaining required permits and approvals, recruiting and training necessary personnel, obtaining adequate financing and estimating the performance of newly opened, remodeled or relocated restaurants, and our cost savings plans to enable reinvestment in our business, due to uncertainty with respect to macroeconomic conditions and the efficiency that may be added by the actions we take;

(xv) Seasonal and periodic fluctuations in our results and the effects of significant adverse weather conditions and other disasters or unforeseen events;

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Any forward-looking statement that we make in this Report speaks only as of the date of such statement, and we undertake no obligation to update any forward-looking statement or to publicly announce the results of any revision to any of those statements to reflect future events or developments.

Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless specifically expressed as such, and should only be viewed as historical data.

Comparisons of results for current and any prior

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

periods are not intended to express any future trends or indications of future performance, unless specifically expressed as such, and should only be viewed as historical data.

We are one of the largest casual dining restaurant companies in the world with a portfolio of leading, differentiated restaurant concepts.

As of September 25, 2022, we owned and operated 1,176 full-service restaurants and off-premises only kitchens and franchised 332 full-service restaurants and off-premises only kitchens across 47 states, Guam and 15 countries.

As of March 26, 2023, we owned and operated 1,184 full-service restaurants and off-premises only kitchens and franchised 313 full-service restaurants and off-premises only kitchens across 47 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.

Financial Highlights - Our financial highlights for the thirteen weeks ended September 25, 2022 include the following:

Financial Highlights - Our financial highlights for the thirteen weeks ended March 26, 2023 include the following:

combined and Outback Steakhouse comparable restaurant sales of 5.1% and 4.9%, respectively;

• Increase in Total revenues of 4.5%, as compared to the third quarter of 2021;

• Operating income and restaurant-level operating margins of 4.9% and 13.1%, respectively, as compared to 1.5% and 10.3%, respectively, for the third quarter of 2021;

• Operating income of $51.3 million, as compared to $14.8 million in the third quarter of 2021;

• Diluted earnings per share of $0.34 as compared to $0.03 for the third quarter of 2021.

• Increase in Total revenues of 9.1%, as compared to the first quarter of 2022;

• Operating income and restaurant-level operating margins of 9.7% and 17.9%, respectively, as compared to 9.4% and 17.1%, respectively, for the first quarter of 2022;

• Operating income of $120.6 million, as compared to $107.3 million in the first quarter of 2022;

• Diluted earnings per share of $0.93 as compared to $0.73 for the first quarter of 2022.

Key Financial Performance Indicators - Key measures that we use in evaluating our restaurants and assessing our business include the following:

• Average restaurant unit volumes — average sales (excluding gift card breakage) per restaurant to measure changes in customer traffic, pricing and development of the brand;

• Comparable restaurant sales — year-over-year comparison of the change in sales volumes (excluding gift card breakage) for Company-owned restaurants that are open 18 months or more in order to remove the impact of new restaurant openings in comparing the operations of existing restaurants;

• Average restaurant unit volumes —average sales (excluding gift card breakage and the benefit of value added tax exemptions in Brazil) per restaurant to measure changes in customer traffic, pricing and development of the brand;

• Comparable restaurant sales —year-over-year comparison of the change in sales volumes (excluding gift card breakage and the benefit of value added tax exemptions in Brazil) for Company-owned restaurants that are open 18 months or more in order to remove the impact of new restaurant openings in comparing the operations of existing restaurants;

• System-wide sales —total restaurant sales volume for all Company-owned and franchise restaurants, regardless of ownership, to interpret the overall health of our brands;

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Our restaurant-level operating margin is expressed as the percentage of our Restaurant sales that Food and beverage costs, Labor and other related expenses and Other restaurant operating expenses (including advertising expenses) represent, in each case as such items are reflected in our Consolidated Statements of Operations and Comprehensive Income.

The following categories of our revenue and operating expenses are not included in restaurant-level operating margin because we do not consider them reflective of operating performance at the restaurant-level within a period:

(i) Franchise and other revenues which are earned primarily from franchise royalties and other non-food and beverage revenue streams, such as rental and sublease income;

(ii) Depreciation and amortization which, although substantially all of which is related to restaurant-level assets, represent historical sunk costs rather than cash outlays for the restaurants;

(iii) General and administrative expense which includes primarily non-restaurant-level costs associated with support of the restaurants and other activities at our corporate offices;

The following categories of revenue and operating expenses are

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

not included in restaurant-level operating margin because we do not consider them reflective of operating performance at the restaurant-level within a period:

(i) Franchise and other revenues which are earned primarily from franchise royalties and other non-food and beverage revenue streams, such as rental and sublease income;

(ii) Depreciation and amortization which, although substantially all of which is related to restaurant-level assets, represent historical sunk costs rather than cash outlays for the restaurants;

(iii) General and administrative expense which includes primarily non-restaurant-level costs associated with support of the restaurants and other activities at our corporate offices;

(iv) Asset impairment charges and restaurant closing costs which are not reflective of ongoing restaurant performance in a period.

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Number of restaurants (at end of the period):

SEPTEMBER 25, 2022 SEPTEMBER 26, 2021

MARCH 26, 2023 MARCH 27, 2022

Outback Steakhouse

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____________________

(1) Previously presented restaurant counts as of September 26, 2021 have been adjusted to exclude off-premises only locations included in the table below.

(2) The restaurant counts for Brazil, including Abbraccio restaurants within International Company-owned Other, are reported as of August 31, 2022 and 2021, respectively, to correspond with the balance sheet dates of this subsidiary.

(3) International Company-owned Other included two Aussie Grill locations as of September 25, 2022 and September 26, 2021.

International Franchised Other included three Aussie Grill locations as of September 25, 2022 and September 26, 2021.

(1) The restaurant counts for Brazil, including Abbraccio and Aussie Grill restaurants within International Company-owned Other, are reported as of February 28, 2023 and 2022, respectively, to correspond with the balance sheet dates of this subsidiary.

(2) International Company-owned Other included four and two Aussie Grill locations as of March 26, 2023 and March 27, 2022, respectively.

International Franchised Other included four and three Aussie Grill locations as of March 26, 2023 and March 27, 2022, respectively.

The table below presents the number of our off-premises only kitchens in operation as of the periods indicated:

Number of kitchens (at end of the period) (1):

SEPTEMBER 25, 2022 SEPTEMBER 26, 2021

MARCH 26, 2023 MARCH 27, 2022

Company-owned 1 2

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The following table sets forth the percentages of certain items in our Consolidated Statements of Operations in relation to Total revenues or Restaurant sales for the periods indicated:

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 SEPTEMBER 25, 2022 SEPTEMBER 26, 2021

THIRTEEN WEEKS ENDED

MARCH 26, 2023 MARCH 27, 2022

Restaurant sales 98.7 % 98.5 %

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Costs and expenses

Food and beverage costs (1) 32.0 30.5 32.3 30.0

Food and beverage (1) 31.3 32.0

Labor and other related (1) 27.8 27.8

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Income from operations 9.7 9.4

Loss on extinguishment and modification of debt — — (3.1) (0.1)

Loss on fair value adjustment of derivatives, net — — (0.5) —

Other income, net — * — *

Interest expense, net (1.0) (1.2)

Income before provision (benefit) for income taxes 3.7 0.1 2.5 6.0

Provision (benefit) for income taxes 0.6 (0.4) 1.0 0.8

Income before provision for income taxes 8.7 8.2

Provision for income taxes 1.2 1.4

Net income 7.5 6.8

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________________

(1) As a percentage of Restaurant sales.

* Less than 1/10 th of one percent of Total revenues.

Restaurant Sales

Following is a summary of the change in Restaurant sales for the periods indicated:

(dollars in millions) THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

For the periods ended September 26, 2021 $ 996.7 $ 3,031.4

Following is a summary of the change in Restaurant sales for the period indicated:

(dollars in millions) THIRTEEN WEEKS ENDED

For the period ended March 27, 2022 $ 1,123.6

Comparable restaurant sales 73.3

Restaurant openings 21.0

Restaurant closures (1) (8.2) (24.7)

Brazil value added tax exemptions (1) 9.6

Effect of foreign currency translation 5.5

For the periods ended September 25, 2022 $ 1,040.4 $ 3,272.9

Restaurant closures (4.8)

For the period ended March 26, 2023 $ 1,228.2

________________

(1) Summation of quarterly changes for restaurant openings, closures and comparable restaurant sales will not total to annual amounts as the restaurants that meet the definition of each will differ each period based on when the restaurant opened or closed.

(1) See Note 11 - Income Taxes of the Notes to Consolidated Financial Statements for details regarding value added tax exemptions in connection with recent Brazil tax legislation.

The increase in Restaurant sales during the thirteen weeks ended March 26, 2023, was primarily due to:

(i) higher comparable restaurant sales, (ii) the opening of 47 new restaurants not included in our comparable restaurant sales

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

The increase in Restaurant sales during the thirteen weeks ended September 25, 2022 was primarily due to higher comparable restaurant sales and the opening of 42 new restaurants not included in our comparable restaurant sales base.

The increase in Restaurant sales was partially offset by the closure of 22 restaurants since June 27, 2021.

The increase in Restaurant sales during the thirty-nine weeks ended September 25, 2022 was primarily due to:

(i) higher comparable restaurant sales, (ii) the opening of 54 new restaurants not included in our comparable restaurant sales base and (iii) the effect of foreign currency translation of the Brazilian Real relative to the U.S.

base, (iii) value added tax exemptions in Brazil as a result of recent tax legislation and (iv) the effect of foreign currency translation of the Brazilian Real relative to the U.S.

The increase in Restaurant sales was partially offset by the closure of 19 restaurants since December 26, 2021.

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Following is a summary of the average restaurant unit volumes and operating weeks for the periods indicated:

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 SEPTEMBER 25, 2022 SEPTEMBER 26, 2021

THIRTEEN WEEKS ENDED

MARCH 26, 2023 MARCH 27, 2022

Average restaurant unit volumes (weekly):

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____________________

(1) Translated at average exchange rates of 5.18 and 5.15 for the thirteen weeks ended September 25, 2022 and September 26, 2021, respectively, and 5.16 and 5.27 for the thirty-nine weeks ended September 25, 2022 and September 26, 2021, respectively.

(1) Translated at average exchange rates of 5.21 and 5.47 for the thirteen weeks ended March 26, 2023 and March 27, 2022, respectively.

Excludes the benefit of the Brazil value added tax exemptions discussed in Note 11 - Income Taxes of the Notes to Consolidated Financial Statements.

BLOOMIN’ BRANDS, INC.

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Following is a summary of comparable restaurant sales, traffic and average check per person increases (decreases) for the periods indicated:

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 SEPTEMBER 25, 2022 SEPTEMBER 26, 2021

THIRTEEN WEEKS ENDED

MARCH 26, 2023 MARCH 27, 2022

Year over year percentage change:

Comparable restaurant sales (stores open 18 months or more):

Comparable restaurant sales (restaurants open 18 months or more):

Outback Steakhouse 4.9 % 9.2 %

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Combined U.S.

1.4 % 25.5 % 4.8 % 31.4 %

International

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Combined U.S.

8.6 % 6.2 % 9.5 % 9.5 %

International

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(1) Relocated restaurants closed more than 60 days are excluded from comparable restaurant sales until at least 18 months after reopening.

(2) Excludes the effect of fluctuations in foreign currency rates.

(2) Includes trading day impact from calendar period reporting.

Excludes the effect of fluctuations in foreign currency rates and the benefit of the Brazil value added tax exemptions discussed in Note 11 - Income Taxes of the Notes to Consolidated Financial Statements.

(3) Includes the impact of menu pricing changes, product mix and discounts.

The thirteen weeks ended December 25, 2022 will include the impact of Hurricane Ian which is estimated to be 0.3% to U.S.

comparable sales and approximately $0.03 to diluted earnings per share, inclusive of storm-related costs.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Franchise and other revenues

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 SEPTEMBER 25, 2022 SEPTEMBER 26, 2021

THIRTEEN WEEKS ENDED

(dollars in millions) MARCH 26, 2023 MARCH 27, 2022

Franchise revenues $ 13.5 $ 13.4

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Franchise and other revenues $ 16.5 $ 17.0

____________________

(1) The thirteen and thirty-nine weeks ended September 26, 2021 include an adjustment of $(3.2) million to reduce our initial recorded estimate and net $3.1 million benefit, respectively, from the recognition of recoverable PIS and COFINS taxes within other revenues recognized in connection with favorable court rulings in Brazil regarding the calculation methodology and taxable base for prior years.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

COSTS AND EXPENSES

Food and beverage costs

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 CHANGE SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 CHANGE

Food and beverage costs $ 332.9 $ 304.3 $ 1,056.8 $ 908.3

THIRTEEN WEEKS ENDED

(dollars in millions) MARCH 26, 2023 MARCH 27, 2022 CHANGE

Food and beverage $ 384.2 $ 359.4

% of Restaurant sales 31.3 % 32.0 % (0.7) %

Food and beverage costs increased as a percentage of Restaurant sales during the thirteen weeks ended September 25, 2022 as compared to the thirteen weeks ended September 26, 2021 primarily due to 3.5% from commodity inflation and 0.5% from product mix.

These increases were partially offset by decreases as a percentage of Restaurant sales of 2.2% from increases in average check per person, primarily driven by an increase in menu pricing, and 0.3% from the impact of certain cost saving initiatives.

Food and beverage costs increased as a percentage of Restaurant sales during the thirty-nine weeks ended September 25, 2022 as compared to the thirty-nine weeks ended September 26, 2021 primarily due to 4.0% from commodity inflation, partially offset by a decrease as a percentage of Restaurant sales of 1.8% from increases in average check per person, primarily driven by an increase in menu pricing.

In aggregate, menu pricing increases during 2022 have trailed the current level of commodity inflation.

Food and beverage costs decreased as a percentage of Restaurant sales during the thirteen weeks ended March 26, 2023 as compared to the thirteen weeks ended March 27, 2022 primarily due to 2.1% from increases in average check per person, primarily driven by an increase in menu pricing, and 0.4% from the impact of certain cost saving initiatives.

These decreases were partially offset by an increase as a percentage of Restaurant sales of 1.9% from commodity inflation.

Labor and other related expenses

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 CHANGE SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 CHANGE

THIRTEEN WEEKS ENDED

(dollars in millions) MARCH 26, 2023 MARCH 27, 2022 CHANGE

Labor and other related $ 341.5 $ 312.5

% of Restaurant sales 27.8 % 27.8 % — %

Labor and other related expenses were flat as a percentage of Restaurant sales during the thirteen weeks ended September 25, 2022 as compared to the thirteen weeks ended September 26, 2021 primarily due to decreases of 1.7% from leveraging increased restaurant sales due to increases in average check per person and lapping the impact of COVID-19, primarily in Brazil.

These decreases were partially offset by an increase as a percentage of Restaurant sales of 1.8% from higher labor costs primarily due to wage rate inflation.

Labor and other related expenses decreased as a percentage of Restaurant sales during the thirty-nine weeks ended September 25, 2022 as compared to the thirty-nine weeks ended September 26, 2021 primarily due to 2.0% from

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

leveraging increased restaurant sales due to increases in average check per person and lapping the impact of COVID-19, primarily in Brazil.

These decreases were offset by an increase as a percentage of Restaurant sales of 2.0% from higher labor cost primarily due to wage rate inflation.

Labor and other related expenses were flat as a percentage of Restaurant sales during the thirteen weeks ended March 26, 2023 as compared to the thirteen weeks ended March 27, 2022 primarily due to an increase of 1.6% from higher labor costs, primarily due to wage rate inflation.

This increase was partially offset by a decrease as a percentage of Restaurant sales of 1.5% from leveraging increased restaurant sales due to increases in average check per person, primarily driven by an increase in menu pricing, and lapping the impact of COVID-19 in Brazil and Hong Kong.

Other restaurant operating expenses

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 CHANGE SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 CHANGE

THIRTEEN WEEKS ENDED

(dollars in millions) MARCH 26, 2023 MARCH 27, 2022 CHANGE

Other restaurant operating $ 282.9 $ 259.1

% of Restaurant sales 23.0 % 23.1 % (0.1) %

During the thirteen weeks ended September 26, 2021, we entered into the Royalty Termination Agreement with the Carrabba’s Founders for $61.9 million in cash.

See Note 15 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for additional details.

Other restaurant operating expenses decreased as a percentage of Restaurant sales during the thirteen weeks ended September 25, 2022 as compared to the thirteen weeks ended September 26, 2021 primarily due to 6.2% from lapping the Carrabba’s Italian Grill royalty termination and 0.9% from leveraging increased restaurant sales due to lapping the impact of COVID-19, primarily in Brazil, and increases in average check per person.

These decreases were partially offset by increases as a percentage of Restaurant sales of 1.5% from higher operating expenses including utilities, primarily due to inflation, and 1.1% from higher advertising expense.

Other restaurant operating expenses decreased as a percentage of Restaurant sales during the thirty-nine weeks ended September 25, 2022 as compared to the thirty-nine weeks ended September 26, 2021 primarily due to 2.0% from lapping the Carrabba’s Italian Grill royalty termination, and 1.5% from leveraging increased restaurant sales due to increases in average check per person and lapping the impact of COVID-19, primarily in Brazil.

Other restaurant operating expenses were flat as a percentage of Restaurant sales during the thirteen weeks ended March 26, 2023 as compared to the thirteen weeks ended March 27, 2022 primarily due to 1.6% from leveraging increased restaurant sales due to increases in average check per person, primarily driven by an increase in menu pricing, and lapping the impact of COVID-19 in Brazil and Hong Kong.

This decrease was offset by an increase as a percentage of Restaurant sales of 1.6% from higher operating expenses including utilities, primarily due to inflation.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Depreciation and amortization

THIRTEEN WEEKS ENDED

(dollars in millions) MARCH 26, 2023 MARCH 27, 2022 CHANGE

Depreciation and amortization $ 46.3 $ 41.8 $ 4.5

Depreciation and amortization increased during the thirteen weeks ended March 26, 2023 as compared to the thirteen weeks ended March 27, 2022 primarily due to additional depreciation expense related to:

(i) technology projects, (ii) upgraded kitchen equipment and (iii) restaurant remodels, openings and relocations.

General and administrative

General and administrative expense includes salaries and benefits, management incentive programs, related payroll tax and benefits, other employee-related costs and professional services.

Following is a summary of the change in General and administrative expense for the periods indicated:

(dollars in millions) THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

For the periods ended September 26, 2021 $ 58.9 $ 182.6

Employee stock-based compensation (3.6) (8.3)

Incentive compensation (2.8) (10.4)

Following is a summary of the change in General and administrative expense for the period indicated:

(dollars in millions) THIRTEEN WEEKS ENDED

For the period ended March 27, 2022 $ 58.7

Legal and professional fees 3.0

Compensation, benefits and payroll tax 2.6

Travel and entertainment 1.2

For the periods ended September 25, 2022 $ 56.1 $ 174.0

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Provision for impaired assets and restaurant closings

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 CHANGE SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 CHANGE

Provision for impaired assets and restaurant closings $ 2.1 $ 1.6 $ 0.5 $ 4.1 $ 9.0 $ (4.9)

Impairment and closure charges during the periods presented resulted primarily from locations identified for closure.

For the period ended March 26, 2023 $ 65.8

Income from operations

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 CHANGE SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 CHANGE

THIRTEEN WEEKS ENDED

(dollars in millions) MARCH 26, 2023 MARCH 27, 2022 CHANGE

Income from operations $ 120.6 $ 107.3 $ 13.3

% of Total revenues 9.7 % 9.4 % 0.3 %

The increase in Income from operations generated during the thirteen weeks ended September 25, 2022 as compared to the thirteen weeks ended September 26, 2021 was primarily due to:

(i) lapping the Carrabba’s Italian Grill royalty termination, (ii) increases in average check per person, (iii) lapping the impact of COVID-19, primarily in Brazil, and (iv) lower share-based and incentive compensation.

These increases were partially offset by:

(i) commodity inflation, (ii) higher labor cost primarily due to wage rate inflation, (iii) higher operating expenses including utilities, primarily due to inflation, and (iv) an increase in advertising costs.

The increase in Income from operations generated during the thirty-nine weeks ended September 25, 2022 as compared to the thirty-nine weeks ended September 26, 2021 was primarily due to:

(i) increases in average check per person, (ii) lapping the Carrabba’s Italian Grill royalty termination, (iii) lapping the impact of COVID-19, primarily in Brazil, and (iv) lower share-based and incentive compensation.

The increase in Income from operations generated during the thirteen weeks ended March 26, 2023 as compared to the thirteen weeks ended March 27, 2022 was primarily due to:

(i) increases in comparable restaurant sales, primarily driven by an increase in menu pricing and lapping the impact of COVID-19 in Brazil and Hong Kong, (ii) the impact of certain cost saving initiatives and (iii) value added tax exemptions in Brazil as a result of recent tax legislation.

These increases were partially offset by:

Loss on extinguishment and modification of debt and Loss on fair value adjustment of derivatives, net

In connection with the 2025 Notes Partial Repurchase, we recognized a loss on extinguishment of debt of $104.7 million and a loss on fair value adjustment of derivatives, net, of $17.7 million during the thirty-nine weeks ended September 25, 2022.

See Note 8 - Convertible Senior Notes of the Notes to Consolidated Financial Statements for additional details.

Interest expense, net

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 CHANGE SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 CHANGE

Interest expense, net $ 12.7 $ 14.2 $ (1.5) $ 38.9 $ 43.9 $ (5.0)

The decrease in Interest expense, net for the thirteen weeks ended September 25, 2022 as compared to the thirteen weeks ended September 26, 2021 was primarily due to:

(i) the 2025 Notes Partial Repurchase in May 2022, (ii) repayment of the Term loan A in April 2022 and (iii) the impact of our April 2021 interest rate swap terminations.

These decreases were partially offset by increases in interest expense from higher balances and interest rates on revolver debt.

(i) commodity inflation, (ii) higher labor costs, primarily due to wage rate inflation, and (iii) higher operating expenses including utilities, primarily due to inflation.

During the thirteen weeks ended March 26, 2023, the increase in operating income margin included approximately 0.3% attributable to exemptions from Brazil federal value added taxes (PIS and COFINS) on Restaurant sales provided by recent Brazil tax legislation, partially offset by corresponding limitations on allowable value added tax credits typically recognized as reductions of cost and expense lines throughout our Consolidated Statements of Operations and Comprehensive Income.

See Note 11 - Income Taxes of the Notes to Consolidated Financial Statements for further discussion regarding Brazil tax legislation.

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

The decrease in Interest expense, net for the thirty-nine weeks ended September 25, 2022 as compared to the thirty-nine weeks ended September 26, 2021 was primarily due to the repayment of Term loan A in April 2022 and the 2025 Notes Partial Repurchase in May 2022.

These decreases were partially offset by increases from the issuance of the 2029 Notes in April 2021.

Provision (benefit) for income taxes

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 CHANGE SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 CHANGE

Income before provision (benefit) for income taxes $ 38.6 $ 0.6 $ 38.0 $ 82.1 $ 184.6 $ (102.5)

Provision (benefit) for income taxes $ 5.6 $ (4.5) $ 10.1 $ 33.0 $ 24.8 $ 8.2

Effective income tax rate 14.4 % (NM) NM 40.2 % 13.5 % 26.7 %

________________

NM Not meaningful.

The provision for income taxes for the thirteen weeks ended September 25, 2022 increased primarily due to higher pre-tax book income across our U.S.

and international subsidiaries.

The benefit for income taxes for the thirteen weeks ended September 26, 2021 includes the impact of changes to the estimate of the forecasted full-year effective tax rate relative to prior quarters in 2021.

The effective income tax rate for the thirty-nine weeks ended September 25, 2022 increased by 26.7 percentage points as compared to the thirty-nine weeks ended September 26, 2021.

The increase was primarily due to the non-deductible losses associated with the 2025 Notes Partial Repurchase recorded during the thirty-nine weeks ended September 25, 2022.

Provision for income taxes

THIRTEEN WEEKS ENDED

(dollars in millions) MARCH 26, 2023 MARCH 27, 2022 CHANGE

Income before provision for income taxes $ 108.2 $ 93.6 $ 14.6

Provision for income taxes $ 14.8 $ 15.9 $ (1.1)

Effective income tax rate 13.6 % 17.0 % (3.4) %

The effective income tax rate for the thirteen weeks ended March 26, 2023 decreased by 3.4 percentage points as compared to the thirteen weeks ended March 27, 2022.

The decrease was primarily due to the benefits of Brazil tax legislation that include a temporary reduction in the Brazilian income tax rate from 34% to 0% applicable to the thirteen weeks ended March 26, 2023.

See Note 11 - Income Taxes of the Notes to Consolidated Financial Statements for further discussion regarding Brazil tax legislation.

SEGMENT PERFORMANCE

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Refer to Note 13 - Segment Reporting of the Notes to Consolidated Financial Statements for reconciliations of segment income from operations to the consolidated operating results.

Restaurant-level operating margin is widely regarded in the industry as a useful non-GAAP measure to evaluate restaurant-level operating efficiency and performance of ongoing restaurant-level operations, and we use it for these

See the Overview-Key Financial Performance Indicators and Non-GAAP Financial Measures sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional details regarding the calculation of restaurant-level operating margin.

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

purposes, overall and particularly within our two segments.

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in thousands) SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 SEPTEMBER 25, 2022 SEPTEMBER 26, 2021

THIRTEEN WEEKS ENDED

(dollars in thousands) MARCH 26, 2023 MARCH 27, 2022

Restaurant sales $ 1,080,569 $ 1,023,635

1 unchanged sentence

Total revenues $ 1,092,996 $ 1,036,407

Restaurant-level operating margin 12.7 % 10.0 % 15.2 % 17.1 %

Income from operations $ 133,243 $ 132,226

Operating income margin 12.2 % 12.8 %

Restaurant-level operating income $ 187,808 $ 177,715

Restaurant-level operating margin 17.4 % 17.4 %

Restaurant sales

Following is a summary of the change in U.S.

segment Restaurant sales for the periods indicated:

(dollars in millions) THIRTEEN WEEKS ENDED (1) THIRTY-NINE WEEKS ENDED (1)

For the periods ended September 26, 2021 $ 898.8 $ 2,789.1

segment Restaurant sales for the period indicated:

(dollars in millions) THIRTEEN WEEKS ENDED

For the period ended March 27, 2022 $ 1,023.7

Comparable restaurant sales 50.4

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Restaurant closures (4.8)

For the periods ended September 25, 2022 $ 910.7 $ 2,920.2

____________________

(1) Summation of quarterly changes will not total to annual amounts as the restaurants that meet the definition of each change category will differ each period based on when the restaurant opened or closed.

The increase in U.S.

Restaurant sales during the thirteen weeks ended September 25, 2022 was primarily due to higher comparable restaurant sales and the opening of 13 new restaurants not included in our comparable restaurant sales base.

The increase was partially offset by the closure of 21 restaurants since June 27, 2021.

The increase in U.S.

Restaurant sales during the thirty-nine weeks ended September 25, 2022 was primarily due to higher comparable restaurant sales and the opening of 16 new restaurants not included in our comparable restaurant sales base.

For the period ended March 26, 2023 $ 1,080.6

The increase in U.S.

Restaurant sales was partially offset by the closure of 24 restaurants since December 27, 2020.

Restaurant sales during the thirteen weeks ended March 26, 2023 was primarily due to higher comparable restaurant sales and the opening of 17 new restaurants not included in our comparable restaurant sales base.

The increase in Restaurant sales was partially offset by the closure of 18 restaurants since December 26, 2021.

Income from operations

The increase in U.S.

Income from operations generated during the thirteen weeks ended September 25, 2022 as compared to the thirteen weeks ended September 26, 2021 was primarily due to lapping the Carrabba’s Italian Grill royalty termination and increases in average check per person.

These increases were partially offset by:

(i) commodity inflation, (ii) higher labor cost primarily due to wage rate inflation, (iii) higher operating expenses including utilities and (iv) higher advertising expense.

Income from operations generated during the thirteen weeks ended March 26, 2023 as compared to the thirteen weeks ended March 27, 2022 was primarily due to increases in comparable restaurant sales, primarily driven by an increase in menu pricing, and the impact of certain cost saving initiatives.

These increases were partially offset by decreases primarily due to:

(i) commodity inflation, (ii) higher labor costs, primarily due to wage rate inflation, (iii) higher operating expenses including utilities, primarily due to inflation and (iv) an increase in asset impairment charges.

The decrease in U.S.

operating income margin during the thirteen weeks ended March 26, 2023 as compared to the thirteen weeks ended March 27, 2022 was primarily due to an increase in asset impairment charges.

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

The decrease in U.S.

Income from operations generated during the thirty-nine weeks ended September 25, 2022 as compared to the thirty-nine weeks ended September 26, 2021 was primarily due to:

(i) commodity inflation, (ii) higher labor cost primarily due to wage rate inflation, (iii) higher operating expenses including utilities and (iv) higher advertising expense.

These decreases were partially offset by increases in average check per person and lapping the Carrabba’s Italian Grill royalty termination.

International Segment

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in thousands) SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 SEPTEMBER 25, 2022 SEPTEMBER 26, 2021

THIRTEEN WEEKS ENDED

(dollars in thousands) MARCH 26, 2023 MARCH 27, 2022

Restaurant sales $ 147,665 $ 99,940

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Total revenues $ 151,750 $ 104,128

Restaurant-level operating margin 18.5 % 12.8 % 17.8 % 10.7 %

Income from operations $ 24,508 $ 8,884

Operating income margin 16.2 % 8.5 %

Restaurant-level operating income $ 34,015 $ 16,935

Restaurant-level operating margin 23.0 % 16.9 %

Restaurant sales

Following is a summary of the change in international segment Restaurant sales for the periods indicated:

(dollars in millions) THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

For the periods ended September 26, 2021 $ 97.9 $ 242.3

Following is a summary of the change in international segment Restaurant sales for the period indicated:

(dollars in millions) THIRTEEN WEEKS ENDED

For the period ended March 27, 2022 $ 99.9

Comparable restaurant sales 22.9

Restaurant openings 9.7

Brazil value added tax exemptions (1) 9.6

Effect of foreign currency translation 5.5

For the periods ended September 25, 2022 $ 129.7 $ 352.7

For the period ended March 26, 2023 $ 147.6

________________

(1) Summation of quarterly changes for restaurant openings and comparable restaurant sales will not total to annual amounts as the restaurants that meet the definition of each will differ each period based on when the restaurant opened.

The increase in international Restaurant sales during the thirteen weeks ended September 25, 2022 was primarily due to higher comparable restaurant sales in Brazil and the opening of 29 new restaurants not included in our comparable restaurant sales base.

The increase in international Restaurant sales during the thirty-nine weeks ended September 25, 2022 was primarily due to:

(i) higher comparable restaurant sales in Brazil, (ii) the opening of 38 new restaurants not included in our comparable restaurant sales base and (iii) the effect of foreign currency translation of the Brazilian Real relative to the U.S.

(1) See Note 11 - Income Taxes of the Notes to Consolidated Financial Statements for details regarding value added tax exemptions in connection with recent Brazil tax legislation.

The increase in international Restaurant sales during the thirteen weeks ended March 26, 2023 was primarily due to:

(i) higher comparable restaurant sales in Brazil and Hong Kong, (ii) the opening of 30 new restaurants not included in our comparable restaurant sales base, (iii) value added tax exemptions in Brazil as a result of recent tax legislation and (iv) the effect of foreign currency translation of the Brazilian Real relative to the U.S.

Income from operations

The increase in international Income from operations generated during the thirteen weeks ended September 25, 2022 as compared to the thirteen weeks ended September 26, 2021 was primarily due to:

(i) the recovery of in-restaurant dining in Brazil and (ii) increases in average check per person.

The increase in international Income from operations generated during the thirteen weeks ended March 26, 2023 as compared to the thirteen weeks ended March 27, 2022 was primarily due to:

(i) the recovery of in-restaurant dining, (ii) value added tax exemptions in Brazil as a result of recent tax legislation and (iii) increases in comparable restaurant sales, primarily driven by an increase in menu pricing.

These increases were partially offset by decreases primarily due to:

(i) product mix, (ii) labor inflation and (iii) commodity inflation.

(i) higher labor costs, primarily due to wage rate inflation, (ii) commodity inflation and (iii) higher advertising expense.

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

The increase in international Income from operations generated during the thirty-nine weeks ended September 25, 2022 as compared to the thirty-nine weeks ended September 26, 2021 was primarily due to:

(i) the recovery of in-restaurant dining in Brazil and (ii) increases in average check per person.

These increases were partially offset by decreases primarily due to commodity and labor inflation.

Non-GAAP Financial Measures

Consolidated restaurant-level operating income and adjusted restaurant-level operating income and corresponding margins non-GAAP reconciliations - The following table reconciles consolidated Income from operations and the corresponding margins to restaurant-level operating income and adjusted restaurant-level operating income and the corresponding margins for the periods indicated:

Consolidated THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in thousands) SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 SEPTEMBER 25, 2022 SEPTEMBER 26, 2021

Consolidated restaurant-level operating income and corresponding margin non-GAAP reconciliations - The following table reconciles consolidated Income from operations and the corresponding margin to restaurant-level operating income and the corresponding margin for the periods indicated:

Consolidated THIRTEEN WEEKS ENDED

(dollars in thousands) MARCH 26, 2023 MARCH 27, 2022

Income from operations $ 120,633 $ 107,256

6 unchanged sentences

Restaurant-level operating margin 17.9 % 17.1 %

Royalty termination expense (1) — 61,880 — 61,880

Legal and other matters (2) — 2,761 — 2,761

Total restaurant-level operating income adjustments — 64,641 — 64,641

Adjusted restaurant-level operating income $ 136,248 $ 167,025 $ 501,003 $ 565,351

Adjusted restaurant-level operating margin 13.1 % 16.8 % 15.3 % 18.6 %

_________________

(1) Payment to the Carrabba’s Founders in connection with the Royalty Termination Agreement.

See Note 15 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for additional details regarding the Royalty Termination Agreement.

(2) The thirteen and thirty-nine weeks ended September 26, 2021 include an accrual for Imposto sobre Serviços (“ISS”), a Brazilian municipal service tax, in connection with royalties from our Brazilian subsidiary over the past five years, including related penalties and interest, recorded within Other restaurant operating expense as a result of an unfavorable Brazilian Supreme Court ruling.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Segment adjusted restaurant-level operating margin non-GAAP reconciliations - The following tables reconcile segment Income from operations and the corresponding margins to segment restaurant-level operating income and adjusted restaurant-level operating income and the corresponding margins for the periods indicated:

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in thousands) SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 SEPTEMBER 25, 2022 SEPTEMBER 26, 2021

Segment restaurant-level and operating margin non-GAAP reconciliations - The following tables reconcile segment Income from operations and the corresponding margin to segment restaurant-level operating income and the corresponding margin for the periods indicated:

THIRTEEN WEEKS ENDED

(dollars in thousands) MARCH 26, 2023 MARCH 27, 2022

Income from operations $ 133,243 $ 132,226

6 unchanged sentences

Restaurant-level operating margin 17.4 % 17.4 %

Royalty termination expense (1) — 61,880 — 61,880

Total restaurant-level operating income adjustments — 61,880 — 61,880

Adjusted restaurant-level operating income $ 115,498 $ 152,189 $ 442,517 $ 540,005

Adjusted restaurant-level operating margin 12.7 % 16.9 % 15.2 % 19.4 %

________________

(1) Payment to the Carrabba’s Founders in connection with the Royalty Termination Agreement.

International THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in thousands) SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 SEPTEMBER 25, 2022 SEPTEMBER 26, 2021

International THIRTEEN WEEKS ENDED

(dollars in thousands) MARCH 26, 2023 MARCH 27, 2022

Income from operations $ 24,508 $ 8,884

6 unchanged sentences

Restaurant-level operating margin 23.0 % 16.9 %

Legal and other matters (1) — 2,761 — 2,761

Total restaurant-level operating income adjustments — 2,761 — 2,761

Adjusted restaurant-level operating income $ 24,013 $ 15,302 $ 62,881 $ 28,777

Adjusted restaurant-level operating margin 18.5 % 15.6 % 17.8 % 11.9 %

________________

(1) The thirteen and thirty-nine weeks ended September 26, 2021 include an accrual for ISS, a Brazilian municipal service tax, in connection with royalties from our Brazilian subsidiary over the past five years, including related penalties and interest, recorded within Other restaurant operating expense as a result of an unfavorable Brazilian Supreme Court ruling.

BLOOMIN’ BRANDS, INC.

1 unchanged sentence

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Adjusted restaurant-level operating margin non-GAAP reconciliations (continued) - The following tables present the percentages of certain operating cost financial statement line items in relation to Restaurant sales for the periods indicated:

Restaurant-level operating margin non-GAAP reconciliations (continued) - The following table presents the percentages of certain operating cost financial statement line items in relation to Restaurant sales for the periods indicated:

THIRTEEN WEEKS ENDED

SEPTEMBER 25, 2022 SEPTEMBER 26, 2021

REPORTED ADJUSTED REPORTED ADJUSTED (1)

Restaurant sales 100.0 % 100.0 % 100.0 % 100.0 %

Food and beverage costs 32.0 % 32.0 % 30.5 % 30.5 %

Labor and other related 29.1 % 29.1 % 29.1 % 29.1 %

Other restaurant operating 25.8 % 25.8 % 30.1 % 23.6 %

Restaurant-level operating margin 13.1 % 13.1 % 10.3 % 16.8 %

THIRTY-NINE WEEKS ENDED

SEPTEMBER 25, 2022 SEPTEMBER 26, 2021

REPORTED ADJUSTED REPORTED ADJUSTED (1)

MARCH 26, 2023 MARCH 27, 2022

Restaurant sales 100.0 % 100.0 %

Food and beverage costs 32.3 % 32.3 % 30.0 % 30.0 %

Food and beverage 31.3 % 32.0 %

Labor and other related 27.8 % 27.8 %

1 unchanged sentence

Restaurant-level operating margin 17.9 % 17.1 %

_________________

(1) See the Consolidated restaurant-level operating income and adjusted restaurant-level operating income and corresponding margins non-GAAP reconciliations table above for details regarding the restaurant-level operating margin adjustments.

All restaurant-level operating margin adjustments for the periods presented were recorded within Other restaurant operating expense.

Adjusted income from operations non-GAAP reconciliations - The following table reconciles Income from operations and the corresponding margins to adjusted income from operations and the corresponding margins for the periods indicated:

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in thousands) SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 SEPTEMBER 25, 2022 SEPTEMBER 26, 2021

Income from operations $ 51,309 $ 14,837 $ 246,284 $ 230,472

Operating income margin 4.9 % 1.5 % 7.4 % 7.5 %

Total restaurant-level operating margin adjustments (1) — 64,641 — 64,641

Legal and other matters (2) — 3,204 — (3,133)

Total income from operations adjustments — 67,845 — 61,508

Adjusted income from operations $ 51,309 $ 82,682 $ 246,284 $ 291,980

Adjusted operating income margin 4.9 % 8.2 % 7.4 % 9.5 %

_________________

(2) The thirteen and thirty-nine weeks ended September 26, 2021 include an adjustment to reduce our initial recorded estimate and net benefit, respectively, from the recognition of recoverable PIS and COFINS taxes, including accrued interest within other revenues as a result of favorable court rulings in Brazil.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Adjusted net income and Adjusted diluted earnings per share non-GAAP reconciliations - The following table reconciles Diluted net income attributable to Bloomin’ Brands to adjusted net income and adjusted diluted earnings per share for the periods indicated:

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(in thousands, except per share data) SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 SEPTEMBER 25, 2022 SEPTEMBER 26, 2021

Diluted net income attributable to Bloomin’ Brands $ 31,986 $ 3,449 $ 43,862 $ 155,316

Convertible senior notes if-converted method interest adjustment, net of tax (1) — — — 460

Adjusted diluted earnings per share non-GAAP reconciliations - The following table reconciles Net income attributable to Bloomin’ Brands to adjusted diluted earnings per share for the periods indicated:

THIRTEEN WEEKS ENDED

(in thousands, except share and per share data) MARCH 26, 2023 MARCH 27, 2022

Net income attributable to Bloomin’ Brands

$ 91,311 $ 75,511

Income from operations adjustments (2) — 67,845 — 61,508

Loss on extinguishment and modification of debt (3) — — 107,630 2,073

Loss on fair value adjustment of derivatives, net (3) — — 17,685 —

Total adjustments, before income taxes — 67,845 125,315 63,581

Adjustment to provision for income taxes (4) — (15,878) 1,322 (14,635)

Net adjustments — 51,967 126,637 48,946

Adjusted net income $ 31,986 $ 55,416 $ 170,499 $ 203,802

Diluted earnings per share $ 0.93 $ 0.73

3 unchanged sentences

_________________

(1) Adjustment for interest expense related to the 2025 Notes weighted for the portion of the period prior to our election under the 2025 Notes indenture to settle the principal portion of the 2025 Notes in cash.

(2) See the Adjusted income from operations non-GAAP reconciliations table above for details regarding Income from operations adjustments.

(3) The thirty-nine weeks ended September 25, 2022 include losses in connection with the 2025 Notes Partial Repurchase and Amended Credit Agreement.

See Note 8 - Convertible Senior Notes and Note 7 - Long-term Debt, Net , respectively, of the Notes to Consolidated Financial Statements for additional details.

(4) The tax effect of non-GAAP adjustments were determined based on the nature of the underlying non-GAAP adjustments and their relevant jurisdictional tax rates.

For the thirty-nine weeks ended September 25, 2022, the primary difference between the GAAP and adjusted effective income tax rates relate to certain non-deductible losses and other tax costs associated with the 2025 Notes Partial Repurchase.

(5) Adjusted diluted weighted average common shares outstanding was calculated excluding the dilutive effect of 3,690 and 10,476 shares for the thirteen weeks ended September 25, 2022 and September 26, 2021, respectively, and 6,732 and 10,453 shares for the thirty-nine weeks ended September 25, 2022 and September 26, 2021, respectively, to be issued upon conversion of the 2025 Notes to satisfy the amount in excess of the principal since our convertible note hedge offsets the dilutive impact of the shares underlying the 2025 Notes.

For the thirty-nine weeks ended September 26, 2021, adjusted diluted weighted average common shares outstanding was also calculated assuming our February 2021 election to settle the principal portion of the 2025 Notes in cash was in effect for the entire period.

(1) Adjusted diluted weighted average common shares outstanding was calculated excluding the dilutive effect of 4,831 and 8,732 shares for the thirteen weeks ended March 26, 2023 and March 27, 2022, respectively, to be issued upon conversion of the 2025 Notes to satisfy the amount in excess of the principal since our convertible note hedge offsets the dilutive impact of the shares underlying the 2025 Notes.

System-Wide Sales - System-wide sales is a non-GAAP financial measure that includes sales of all restaurants operating under our brand names, whether we own them or not.

2 unchanged sentences

For a summary of sales of Company-owned restaurants, refer to Note 2 - Revenue Recognition of the Notes to Consolidated Financial Statements.

The following table provides a summary of sales of franchised restaurants for the periods indicated, which are not included in our consolidated financial results.

Franchise sales within this table do not represent our sales and are

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

The following table provides a summary of sales of franchised restaurants for the periods indicated, which are not included in our consolidated financial results.

Franchise sales within this table do not represent our sales and are presented only as an indicator of changes in the restaurant system, which management believes is important information regarding the health of our restaurant concepts and in determining our royalties and/or service fees.

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 25, 2022 SEPTEMBER 26, 2021 SEPTEMBER 25, 2022 SEPTEMBER 26, 2021

presented only as an indicator of changes in the restaurant system, which management believes is important information regarding the health of our restaurant concepts and in determining our royalties and/or service fees.

THIRTEEN WEEKS ENDED

(dollars in millions) MARCH 26, 2023 MARCH 27, 2022

Outback Steakhouse $ 136 $ 129

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Cash and Cash Equivalents

As of September 25, 2022, we had $90.7 million in cash and cash equivalents, of which $34.5 million was held by foreign affiliates.

As of March 26, 2023, we had $94.4 million in cash and cash equivalents, of which $27.1 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.

As of September 25, 2022, we had aggregate accumulated foreign earnings of approximately $28.6 million.

As of March 26, 2023, we had aggregate undistributed foreign earnings of approximately $25.8 million.

This amount consisted primarily of historical earnings from 2017 and prior that were previously taxed in the U.S.

3 unchanged sentences

These amounts are not considered indefinitely reinvested in our foreign subsidiaries.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Borrowing Capacity and Debt Service

1 unchanged sentence

SENIOR SECURED CREDIT FACILITY TOTAL CREDIT FACILITIES

(dollars in thousands) TERM LOAN A REVOLVING FACILITY 2025 NOTES 2029 NOTES

(dollars in thousands) REVOLVING CREDIT FACILITY 2025 NOTES 2029 NOTES

Balance as of December 25, 2022 $ 430,000 $ 105,000 $ 300,000 $ 835,000

1 unchanged sentence

2023 payments (260,000) — — (260,000)

Balance as of September 25, 2022 $ — $ 420,000 $ 105,000 $ 300,000 $ 825,000

Interest rates, as of September 25, 2022 (1) 4.26 % 5.00 % 5.13 %

Balance as of March 26, 2023 $ 360,000 $ 105,000 $ 300,000 $ 765,000

Interest rates, as of March 26, 2023 (1) 6.28 % 5.00 % 5.13 %

Principal maturity date April 2026 May 2025 April 2029

____________________

(1) Interest rate for revolving credit facility represents the weighted average interest rate as of September 25, 2022.

As of September 25, 2022, we had $560.0 million in available unused borrowing capacity under our revolving credit facility, net of letters of credit of $20.0 million.

Credit Agreement Amendment - On April 26, 2022, we and OSI entered into the Amended Credit Agreement, which included an increase of our existing revolving credit facility from $800.0 million to $1.0 billion and a transition from LIBOR to SOFR as the benchmark rate for purposes of calculating interest under the Senior Secured Credit Facility.

At closing, an incremental $192.5 million was drawn on the revolving credit facility to fully repay the outstanding balance of Term loan A.

Our total indebtedness remained unchanged as a result of the Amended Credit Agreement.

The transition to SOFR did not materially impact the interest rate applied to our borrowings.

See Note 7 - Long-term Debt, Net of the Notes to Consolidated Financial Statements for additional details regarding the Amended Credit Agreement.

Our Amended Credit Agreement 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 13 - Long-term Debt, Net in our Annual Report on Form 10-K for the year ended December 26, 2021 for further information.

As of September 25, 2022 and December 26, 2021, we were in compliance with our debt covenants.

We believe that we will remain in compliance with our debt covenants during the next 12 months.

2025 Notes Partial Repurchase - On May 25, 2022, we and the Noteholders entered into the Exchange Agreements in which the Noteholders agreed to exchange $125.0 million in aggregate principal amount of our outstanding 2025 Notes for $196.9 million in cash, plus accrued interest, and approximately 2.3 million shares of our common stock.

In connection with the 2025 Notes Partial Repurchase, we entered into the Note Hedge Early Termination Agreements and the Warrant Early Termination Agreements.

Upon settlement, we received $131.9 million for the Note Hedge Early Termination Agreements and paid $114.8 million for the Warrant Early Termination Agreements during the thirty-nine weeks ended September 25, 2022.

See Note 8 - Convertible Senior Notes of the Notes to Consolidated Financial Statements for additional details regarding the 2025 Notes Partial Repurchase and related Note Hedge Early Termination Agreements and Warrant Early Termination Agreements.

(1) Interest rate for revolving credit facility represents the weighted average interest rate as of March 26, 2023.

BLOOMIN’ BRANDS, INC.

1 unchanged sentence

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Cash flows generated from operating activities and availability under our revolving credit facility are our principal sources of liquidity, which we use for operating expenses, debt payments, share repurchases and dividend payments, development of new restaurants, remodeling or relocating older restaurants and investment in technology.

As of March 26, 2023, we had $620.2 million in available unused borrowing capacity under our revolving credit facility, net of letters of credit of $19.8 million.

Our credit agreement, as amended, contains various financial and non-financial covenants.

See Note 13 - Long-term Debt, Net in our Annual Report on Form 10-K for the year ended December 25, 2022 for further information.

As of March 26, 2023 and December 25, 2022, we were in compliance with our debt covenants.

We believe that we will remain in compliance with our debt covenants during the next 12 months and beyond.

Cash flows generated from operating activities and availability under our revolving credit facility are our principal sources of liquidity, which we use for operating expenses, debt payments, share repurchases, dividend payments, development of new restaurants, remodeling or relocating older restaurants and investment in technology.

We believe that our expected liquidity sources are adequate to fund debt service requirements, lease obligations, capital expenditures and working capital obligations during the 12 months following this filing.

2 unchanged sentences

The amount of actual capital expenditures may be affected by general economic, financial, competitive, legislative and regulatory factors, among other things, including raw material constraints.

Dividends and Share Repurchases - In October 2022, our Board declared a quarterly cash dividend of $0.14 per share, payable on November 23, 2022.

Dividends and Share Repurchases - In April 2023, our Board declared a quarterly cash dividend of $0.24 per share, payable on May 24, 2023.

Future dividend payments are dependent on our earnings, financial condition, capital expenditure requirements, surplus and other factors that our Board considers relevant, as well as continued compliance with the financial covenants in our debt agreements.

During the thirteen weeks ended March 26, 2023, we fully utilized the remaining share repurchase authorization under the 2022 Share Repurchase Program.

On February 7, 2023, our Board approved the 2023 Share Repurchase Program under which we are authorized to repurchase up to $125.0 million of our outstanding common stock.

The 2023 Share Repurchase Program will expire on August 7, 2024.

As of September 25, 2022, we had $44.0 million remaining available for repurchase under the 2022 Share Repurchase Program.

Following is a summary of dividends and share repurchases from fiscal year 2015 through September 25, 2022:

As of March 26, 2023, we had $119.4 million remaining available for repurchase under the 2023 Share Repurchase Program.

Following is a summary of dividends and share repurchases from fiscal year 2015 through March 26, 2023:

(dollars in thousands) DIVIDENDS PAID SHARE REPURCHASES TOTAL

Fiscal year 2015 $ 29,332 $ 169,999 $ 199,331

Fiscal year 2016 31,379 309,887 341,266

Fiscal year 2017 30,988 272,736 303,724

Fiscal year 2018 33,312 113,967 147,279

Fiscal year 2019 35,734 106,992 142,726

Fiscal year 2020 17,480 — 17,480

Fiscal year 2021 — — —

Fiscal years 2015 - 2022 $ 227,961 $ 1,083,580 $ 1,311,541

First fiscal quarter 2023 21,014 20,645 41,659

Second fiscal quarter 2022 12,418 35,749 48,167

Third fiscal quarter 2022 12,475 33,549 46,024

Total (1) $ 248,975 $ 1,104,225 $ 1,353,200

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(1) Subsequent to September 25, 2022, we repurchased $13.8 million of our common stock under a Rule 10b5-1 plan through October 28, 2022.

Deferred Compensation Programs - The deferred compensation obligation due to managing and chef partners was $5.2 million and $15.5 million as of September 25, 2022 and December 26, 2021, respectively.

We invest in various corporate-owned life insurance policies, which are held within an irrevocable grantor or rabbi trust account for settlement of our obligations under the deferred compensation plans.

The obligation for managing and chef partners’ deferred compensation was fully funded as of September 25, 2022.

(1) Subsequent to March 26, 2023, we repurchased $7.2 million of our common stock under a Rule 10b5-1 plan.

BLOOMIN’ BRANDS, INC.

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Cash Flows - The following table presents a summary of our cash flows provided by (used in) operating, investing and financing activities for the periods indicated:

THIRTY-NINE WEEKS ENDED

(dollars in thousands) SEPTEMBER 25, 2022 SEPTEMBER 26, 2021

THIRTEEN WEEKS ENDED

(dollars in thousands) MARCH 26, 2023 MARCH 27, 2022

Net cash provided by operating activities $ 189,668 $ 147,135

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Effect of exchange rate changes on cash and cash equivalents (30) 1,965

Net increase (decrease) in cash, cash equivalents and restricted cash $ 1,764 $ (29,824)

Operating activities - The decrease in net cash provided by operating activities during the thirty-nine weeks ended September 25, 2022 as compared to the thirty-nine weeks ended September 26, 2021 was primarily due to the timing of operational payments and receipts and increased employee compensation payments, partially offset by lapping cash paid in connection with the Carrabba’s Italian Grill royalty termination during 2021.

Investing activities - The increase in net cash used in investing activities during the thirty-nine weeks ended September 25, 2022 as compared to the thirty-nine weeks ended September 26, 2021 was primarily due to higher capital expenditures.

Financing activities - The decrease in net cash used in financing activities during the thirty-nine weeks ended September 25, 2022 as compared the thirty-nine weeks ended September 26, 2021 was primarily due to net draws on the revolving credit facility during 2022, generally used to settle debt obligations in excess of the principal balance due in connection with the 2025 Notes Partial Repurchase, partially offset by the repurchase of common stock and payment of cash dividends on our common stock.

Net increase in cash, cash equivalents and restricted cash $ 9,706 $ 8,839

Operating activities - The increase in net cash provided by operating activities during the thirteen weeks ended March 26, 2023 as compared to the thirteen weeks ended March 27, 2022 was primarily due to higher operational receipts net of payments and decreased employee compensation payments.

Investing activities - The increase in net cash used in investing activities during the thirteen weeks ended March 26, 2023 as compared to the thirteen weeks ended March 27, 2022 was primarily due to higher capital expenditures.

Financing activities - The increase in net cash used in financing activities during the thirteen weeks ended March 26, 2023 as compared the thirteen weeks ended March 27, 2022 was primarily due to increases in the repurchase of common stock and payment of cash dividends on our common stock.

Financial Condition - Following is a summary of our current assets, current liabilities and working capital (deficit) as of the periods indicated:

(dollars in thousands) SEPTEMBER 25, 2022 DECEMBER 26, 2021

(dollars in thousands) MARCH 26, 2023 DECEMBER 25, 2022

Current assets $ 247,846 $ 346,577

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Working capital (deficit) includes:

(i) Unearned revenue primarily from unredeemed gift cards of $291.8 million and $398.8 million as of September 25, 2022 and December 26, 2021, respectively, and (ii) current operating lease liabilities of $181.4 million and $177.0 million as of September 25, 2022 and December 26, 2021, respectively, with the corresponding operating right-of-use assets recorded as non-current on our Consolidated Balance Sheets.

(i) Unearned revenue primarily from unredeemed gift cards of $322.6 million and $394.2 million as of March 26, 2023 and December 25, 2022, respectively, and (ii) current operating lease liabilities of $182.8 million and $183.5 million as of March 26, 2023 and December 25, 2022, respectively, with the corresponding operating right-of-use assets recorded as non-current on our Consolidated Balance Sheets.

We have, and in the future may continue to have, negative working capital balances (as is common for many restaurant companies).

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Recently Issued Financial Accounting Standards

For a description of recently issued Financial Accounting Standards that we adopted during the thirty-nine weeks ended September 25, 2022 and, that are applicable to us and likely to have material effect on our consolidated

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

financial statements, but have not yet been adopted, see Note 1 - Description of the Business and Basis of Presentation of the Notes to Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

For a description of recently issued Financial Accounting Standards that we adopted during the thirteen weeks ended March 26, 2023 and, that are applicable to us and likely to have material effect on our consolidated financial statements, but have not yet been adopted, see Note 1 - Description of the Business and Basis of Presentation of the Notes to Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

BLOOMIN’ BRANDS, INC.

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.

What changed 10-Q

Item 2. Management’s Discussion and Analysis