What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-02-28 compared with 2023-02-22 · 240 added, 323 removed, 411 unchanged (58% of the section changed)

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

As of December 25, 2022, we owned and operated 1,186 full-service restaurants and off-premises only kitchens and franchised 321 full-service restaurants and off-premises only kitchens across 47 states, Guam and 13 countries.

As of December 31, 2023, we owned and operated 1,189 restaurants and franchised 291 restaurants 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 2022 include the following:

Financial Overview - Our financial overview for 2023 includes the following:

combined and Outback Steakhouse comparable restaurant sales of 1.4% and 1.1%, respectively;

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Business Strategies - In 2024, our key business strategies include:

• Enhance the 360-Degree Customer Experience to Drive Sustainable Healthy Sales Growth.

• Enhance the Customer Experience to Drive Sustainable Healthy Sales Growth.

We plan to continue to make investments to enhance our core guest experience, upgrade kitchen equipment and technology, increase off-premises dining occasions, remodel and relocate restaurants, invest in digital marketing and data personalization and utilize the Dine Rewards loyalty program and multimedia marketing campaigns to drive sales.

• Drive Long-Term Shareholder Value.

We plan to drive long-term shareholder value by reinvesting operational cash flow into our business, improving our credit profile and returning excess cash to shareholders through share repurchases and dividends.

• Enrich Engagement Among Stakeholders.

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We will continue to pursue U.S.

fill-in opportunities in key states such as Florida and Texas with Outback Steakhouse, and California and Florida with Fleming’s Prime Steakhouse & Wine Bar.

We will also focus on geographic regions in South America, with strategic expansion in Brazil, and pursue global franchise opportunities.

fill-in opportunities for Outback Steakhouse, Fleming’s Prime Steakhouse & Wine Bar and Carrabba’s Italian Grill across key southern states such as North Carolina, Florida and Texas as well as California.

We will also focus on strategic expansion in Brazil and pursue global franchise opportunities.

We intend to fund our business strategies, drive revenue growth and margin improvement, in part by reinvesting savings generated by cost savings and productivity initiatives across our businesses.

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Should the macroeconomic and other conditions persist, we will continue to face increased pressure with respect to our pricing, traffic levels and commodity costs.

We believe that in this environment, we need to maintain our focus on value and innovation as well as refreshing our restaurant base to continue to drive sales.

We believe that in this environment, we need to maintain our focus on value and innovation as well as refreshing our restaurant base through remodels and new restaurant development to continue to drive sales.

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

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• 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.

• Restaurant-level operating margin, Income (loss) from operations, Net income (loss) and Diluted earnings (loss) per share —financial measures utilized to evaluate our operating performance.

• Restaurant-level operating margin, Income from operations, Net income and Diluted earnings per share —financial measures utilized to evaluate our operating performance.

Restaurant-level operating margin is a non-GAAP financial measure widely regarded in the industry as a useful metric to evaluate restaurant-level operating efficiency and performance of ongoing restaurant-level operations, and we use it for these purposes, overall and particularly within our two segments.

Our restaurant-level operating margin is expressed as the percentage of our Restaurant sales that Food and beverage costs, Labor and other related 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 (Loss).

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:

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

The following categories of revenue and operating expenses are not included in restaurant-level operating income and the corresponding 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;

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

Restaurant-level operating margin excludes various expenses, as discussed above, that are essential to support the operations of our restaurants and may materially impact our Consolidated Statements of Operations and Comprehensive Income (Loss).

As a result, restaurant-level operating margin is not indicative of our consolidated results of operations and is presented exclusively as a supplement to, and not a substitute for, Net income (loss) or Income (loss) from operations.

In addition, our presentation of

As a result, restaurant-level operating margin is not indicative of our consolidated results of operations and is presented exclusively as a supplement to, and not a substitute

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

restaurant-level operating margin may not be comparable to similarly titled measures used by other companies in our industry;

for, Net income or Income from operations.

In addition, our presentation of restaurant-level operating margin may not be comparable to similarly titled measures used by other companies in our industry.

• Adjusted restaurant-level operating margin, Adjusted income from operations, Adjusted net income and Adjusted diluted earnings per share —non-GAAP financial measures utilized to evaluate our operating performance, which definitions, usefulness and reconciliations are described in more detail in the “ Non-GAAP Financial Measures ” section below.

Selected Operating Data - The table below presents the number of our full-service restaurants in operation as of the periods indicated:

Selected Operating Data - The table below presents the number of our restaurants in operation as of the periods indicated:

Number of restaurants (at end of the period):

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Company-owned 4 7

Franchised 1 —

total (1) 1,150 1,163

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____________________

(1) Excludes five and 36 off-premises only kitchens as of December 31, 2023 and December 25, 2022, respectively.

One location was Company-owned in the U.S and all others were franchised in South Korea as of December 31, 2023 and December 25, 2022.

(2) The restaurant counts for Brazil, including Abbraccio and Aussie Grill restaurants within International Company-owned Other, are reported as of November 30, 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 December 25, 2022 and December 26, 2021, respectively.

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

(3) International Company-owned Other included two and four Aussie Grill locations as of December 31, 2023 and December 25, 2022, respectively.

International Franchised Other included four Aussie Grill locations as of December 31, 2023 and December 25, 2022.

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

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):

DECEMBER 25, 2022 DECEMBER 26, 2021

Company-owned 1 3

International

Company-owned — 1

Franchised - South Korea 35 40

System-wide total 36 44

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(1) Excludes virtual concepts that operate out of existing restaurants and sports venue locations.

Results of Operations

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:

Restaurant sales 98.6 % 98.5 %

Franchise and other revenues 1.4 1.5

Total revenues 100.0 100.0

Costs and expenses

Food and beverage costs (1) 31.8 30.3

Labor and other related (1) 28.2 28.4

Other restaurant operating (1) 24.5 24.8

Depreciation and amortization 3.8 4.0

General and administrative 5.3 6.0

Provision for impaired assets and restaurant closings 0.1 0.3

Total costs and expenses 92.5 92.5

Income from operations 7.5 7.5

Loss on extinguishment and modification of debt (2.5) (0.1)

Loss on fair value adjustment of derivatives, net (0.4) —

Other (expense) income, net (*) *

Interest expense, net (1.2) (1.4)

Income before provision for income taxes 3.4 6.0

Provision for income taxes 0.9 0.6

Net income 2.5 5.4

net income attributable to noncontrolling interests 0.2 0.2

Net income attributable to Bloomin ’ Brands

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(1) As a percentage of Restaurant sales.

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

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Restaurant Sales

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

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

(dollars in millions) 2023

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Effect of foreign currency translation 34.3

Brazil value added tax exemptions (1) 22.5

Restaurant closures (31.5)

For fiscal year 2022 $ 4,352.7

For fiscal year 2023 (comparable 52-week presentation) (2) 4,524.7

53rd week restaurant sales (3) 82.7

For fiscal year 2023 (as reported) $ 4,607.4

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(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) Fiscal years 2023 and 2022, include $30.2 million and $7.7 million, respectively, of value added tax exemptions resulting from the Brazil tax legislation.

Beginning in the fourth quarter of 2023, we are once again subject to the value added taxes for which we were previously exempt.

See Note 20 - Income Taxes of the Notes to Consolidated Financial Statements for details regarding value added tax exemptions in connection with Brazil tax legislation.

(2) Includes $101.9 million of restaurant sales generated by restaurants closed, primarily in February 2024, in connection with the 2023 Closure Initiative, as defined below.

See Note 4 - Impairments and Exit Costs of the Notes to Consolidated Financial Statements for additional details regarding the 2023 Closure Initiative.

(3) Includes restaurant sales from December 25, 2023 through December 31, 2023, which represents the 53rd week of fiscal year 2023.

The increase in Restaurant sales in 2023 as compared to 2022 was primarily due to:

(i) higher comparable restaurant sales, (ii) the opening of 64 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.

(i) restaurant sales during the 53rd week of 2023, (ii) higher comparable restaurant sales, (iii) the opening of 66 new restaurants not included in our comparable restaurant sales base, (iv) the effect of foreign currency translation of the Brazilian Real relative to the U.S.

dollar and (v) value added tax exemptions in Brazil.

The increase in Restaurant sales was partially offset by the closure of 35 restaurants since December 26, 2021.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Average Restaurant Unit Volumes and Operating Weeks

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(1) Translated at average exchange rates of 5.02 and 5.19 for 2023 and 2022, respectively.

Excludes the benefit of the Brazil tax legislation discussed in Note 21 - Income Taxes of the Notes to Consolidated Financial Statements.

Excludes the benefit of the Brazil value added tax exemptions discussed in Note 20 - 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:

2023 (1) 2022

Year over year percentage change:

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(1) For 2023, comparable restaurant sales, traffic and average check per person compare the 53 weeks from December 26, 2022 through December 31, 2023 to the 53 weeks from December 27, 2021 through January 1, 2023.

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

(3) Excludes the effect of fluctuations in foreign currency rates and the benefit of the Brazil value added tax exemptions discussed in Note 20 - Income Taxes of the Notes to Consolidated Financial Statements.

Includes trading day impact from calendar period reporting.

Excludes the effect of fluctuations in foreign currency rates and the benefit of the Brazil tax legislation discussed in Note 21 - Income Taxes of the Notes to Consolidated Financial Statements.

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

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Franchise and other revenues

(dollars in millions) 2022 2021

Franchise revenues (1) $ 49.7 $ 45.5

Other revenues (2) 14.1 15.8

COSTS AND EXPENSES

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

Restaurant sales 98.6 % 98.6 %

Franchise and other revenues 1.4 1.4

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(1) Represents franchise royalties, advertising fees and initial franchise fees.

(2) Includes a $3.1 million benefit in 2021 from the recognition of recoverable Program of Social Integration (“PIS”) and Contribution for the Financing of Social Security (“COFINS”) taxes in connection with favorable court rulings in Brazil regarding the calculation methodology and taxable base.

Total revenues 100.0 100.0

Costs and expenses

Food and beverage costs

(dollars in millions) 2022 2021 CHANGE

Food and beverage costs $ 1,383.6 $ 1,229.7

% of Restaurant sales 31.8 % 30.3 % 1.5 %

Food and beverage costs increased as a percentage of Restaurant sales in 2022 as compared to 2021 primarily due to 3.5% from commodity inflation, partially offset by a decrease as a percentage of Restaurant sales of 2.0% from increases in average check per person, primarily driven by increases in menu pricing.

In 2023, we anticipate mid single digits commodity inflation, with approximately 60% of our estimated annual food purchases currently covered by fixed contracts and the remainder subject to floating market prices.

Labor and other related expenses

(dollars in millions) 2022 2021 CHANGE

Food and beverage (1) 30.6 31.8

Labor and other related (1) 28.8 28.2

% of Restaurant sales 28.2 % 28.4 % (0.2) %

Labor and other related expenses include all direct and indirect labor costs incurred in operations, including distribution expense to Restaurant Managing Partners and other field incentive compensation expenses.

Labor and other related expenses decreased as a percentage of Restaurant sales in 2022 as compared to 2021 primarily due to:

(i) 1.9% from leveraging increased restaurant sales due to increases in average check per person and lapping the impact of COVID-19, primarily in Brazil and (ii) 0.4% from lower insurance costs.

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

In 2023, we anticipate mid single digits labor cost inflation.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Other restaurant operating expenses

(dollars in millions) 2022 2021 CHANGE

Other restaurant operating (1) 24.4 24.5

% of Restaurant sales 24.5 % 24.8 % (0.3) %

In August 2021, we entered into the Royalty Termination Agreement with the Carrabba’s Founders for $61.9 million in cash.

See Note 22 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for additional details.

Other restaurant operating expenses include certain unit-level operating costs such as operating supplies, rent, repairs and maintenance, advertising expenses, utilities, pre-opening costs and other occupancy costs.

A substantial portion of these expenses is fixed or indirectly variable.

Other restaurant operating expenses decreased as a percentage of Restaurant sales in 2022 as compared to 2021 primarily due to 1.5% from lapping the Carrabba’s Italian Grill royalty termination and 1.3% 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 increases as a percentage of Restaurant sales of:

(i) 1.5% from higher operating expenses including utilities, primarily due to inflation, (ii) 0.7% from higher advertising expense and (iii) 0.4% from an increase in reserves for certain collective action wage and hour lawsuits.

Depreciation and amortization 4.1 3.8

(dollars in millions) 2022 2021 CHANGE

Depreciation and amortization $ 169.6 $ 163.4 $ 6.2

Depreciation and amortization increased in 2022 as compared to 2021 primarily due to additional depreciation expense related to technology projects, upgraded kitchen equipment and restaurant openings and relocations.

General and administrative 5.6 5.3

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 period indicated:

(dollars in millions) 2022

For fiscal year 2021 $ 245.6

Incentive compensation (13.0)

Employee stock-based compensation (7.9)

Severance (4.7)

Compensation, benefits and payroll tax 7.6

Travel and entertainment 5.1

For fiscal year 2022 $ 234.8

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Provision for impaired assets and restaurant closings 0.7 0.1

(dollars in millions) 2022 2021 CHANGE

Provision for impaired assets and restaurant closings $ 6.0 $ 13.7 $ (7.7)

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

Income from operations

(dollars in millions) 2022 2021 CHANGE

Total costs and expenses 93.0 92.5

Income from operations 7.0 7.5

% of Total revenues 7.5 % 7.5 % — %

The increase in Income from operations generated during 2022 as compared to 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 insurance costs.

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.

In September 2022, our Brazilian subsidiary received a preliminary injunction authorizing it to benefit from the exemptions enacted by Law 14,148/2021 which provides for emergency and temporary actions that grant certain industries a 100% exemption from PIS and COFINS and income taxes for a five-year period.

Income from operations for 2022 was not materially impacted by this legislation.

During 2023, we expect a benefit to Income from operations of approximately $17 million in connection the PIS and COFINS tax exemptions under this legislation.

See Note 21 - Income Taxes of the Notes to Consolidated Financial Statements for further information.

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

In connection with the repurchase of $125.0 million of the outstanding 2025 Notes (the “2025 Notes Partial Repurchase”), which is described in further detail within Note 14 - Convertible Senior Notes of the Notes to Consolidated Financial Statements, 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 2022.

Interest expense, net

(dollars in millions) 2022 2021 CHANGE

Loss on extinguishment and modification of debt — (2.5)

Loss on fair value adjustment of derivatives, net — (0.4)

Interest expense, net (1.2) (1.2)

The decrease in Interest expense, net during 2022 as compared to 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 in interest expense from:

(i) the issuance of the 2029 Notes in April 2021, (ii) higher balances on our revolving credit facility and (iii) higher interest rates on the unhedged portion of our variable rate debt.

Income before provision for income taxes 5.8 3.4

Provision for income taxes 0.4 0.9

Net income 5.4 2.5

net income attributable to noncontrolling interests 0.1 0.2

Net income attributable to Bloomin’ Brands

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(1) As a percentage of Restaurant sales.

Fiscal year 2023 as compared to fiscal year 2022

Food and beverage cost decreased as a percentage of Restaurant sales due to 2.0% from increases in average check per person, primarily driven by an increase in menu pricing, and 0.6% from certain cost saving and productivity initiatives, partially offset by an increase of 1.3% from commodity inflation.

Quantitative and Qualitative Disclosures about Market Risk for discussion of our commodity inflation expectations for 2024.

Labor and other related expense increased as a percentage of Restaurant sales primarily due to 1.6% from higher hourly and field management labor costs, primarily due to wage rate inflation, partially offset by decreases of 0.9% from an increase in average check per person and 0.2% from certain cost saving and productivity initiatives.

Other restaurant operating expense decreased as a percentage of Restaurant sales primarily due to:

(i) 0.7% from an increase in average check per person, (ii) 0.3% from certain cost saving and productivity initiatives and (iii) 0.2% from the favorable settlement of certain collective action wage and hour lawsuits.

These decreases were partially offset by increases of 0.9% from higher operating expenses, including utilities, primarily due to inflation, and 0.4% from higher advertising expense.

Depreciation and amortization expense increased primarily due to technology projects and restaurant development.

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Provision for income taxes

(dollars in millions) 2022 2021 CHANGE

Income before provision for income taxes $ 151.9 $ 249.3 $ (97.4)

Provision for income taxes $ 42.7 $ 26.4 $ 16.3

Effective income tax rate 28.1 % 10.6 % 17.5 %

The net increase in the effective income tax rate in 2022 as compared to 2021 was primarily due to the non-deductible losses associated with the 2025 Notes Partial Repurchase recorded during 2022.

General and administrative expense increased primarily due to:

(i) legal and professional fees, (ii) compensation and related expenses, (iii) travel expenses and (iv) incentive compensation, partially offset by a decrease in employee stock-based compensation.

Provision for impaired assets and restaurant closings increased primarily due to asset impairment and closure charges during the fourteen weeks ended December 31, 2023 of $33.3 million and $0.9 million within the U.S.

and international segments, respectively, in connection with the closure of three U.S.

and two international Aussie Grill restaurants and the decision to close 36 predominantly older, underperforming U.S.

restaurants (the “2023 Closure Initiative”).

See Note 4 - Impairments and Exit Costs for additional details regarding the 2023 Closure Initiative.

We expect to incur an additional $8 million to $11 million of severance and closure costs in connection with the 2023 Closure Initiative during the thirteen weeks ended March 31, 2024.

Income from operations during 2023 includes a net operating margin increase of approximately 0.2% attributable to Brazil value added tax exemptions (PIS and COFINS) provided by Brazil tax legislation.

See Note 20 - Income Taxes of the Notes to Consolidated Financial Statements for further discussio n regarding Brazil tax legislation.

Loss on extinguishment and modification of debt and Loss on fair value adjustment of derivatives, net during 2022 were in connection with the repurchase of $125.0 million of the outstanding convertible senior notes due in 2025 (the “2025 Notes”) (the “2025 Notes Partial Repurchase”), which is described in further detail within Note 13 - Convertible Senior Notes of the Notes to Consolidated Financial Statements.

Interest expense, net was flat primarily due to:

(i) the lapping of terminated interest rate swap amortization during 2022, (ii) the 2025 Notes Partial Repurchase in May 2022 and (iii) the repayment of Term Loan A in April 2022.

These decreases were offset by an increase in interest expense from higher balances and interest rates on our revolving credit facility.

Provision for income taxes includes a decrease in the effective income tax rate primarily due to the non-deductible losses associated with the 2025 Notes Partial Repurchase recorded during 2022 and the 2023 benefits of Brazil tax legislation, which includes a temporary reduction in the Brazilian income tax rate from 34% to 0%.

We have a blended federal and state statutory rate of approximately 26%.

The effective income tax rate in 2022 was higher than the blended federal and state statutory rate primarily due to the non-deductible losses associated with the 2025 Notes Partial Repurchase recorded during 2022, partially offset by the benefit of FICA tax credits on certain employees’ tips.

The effective income tax rate in 2021 was lower than the blended federal and state statutory rate primarily due to the benefit of FICA tax credits on certain employees’ tips.

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 effective income tax rate in 2023 was lower than the blended federal and state statutory rate primarily due to the benefit of FICA tax credits on certain tipped wages and benefits of Brazil tax legislation, which includes a temporary reduction in the Brazilian income tax rate from 34% to 0%.

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 pre-tax income.

Provision for income taxes for 2022 was not materially impacted by the Brazilian tax legislation discussed above.

During 2023, we expect to generate an income tax benefit of approximately $6 million in connection with the tax exemptions under this legislation.

See Note 21 - Income Taxes of the Notes to Consolidated Financial Statements for further information.

Restaurant sales and is not impacted by costs incurred that may reduce Income before provision for income taxes.

See Note 20 - Income Taxes of the Notes to Consolidated Financial Statements for further discussion regarding Brazil tax legislation.

We consider each of our restaurant concepts and international markets as operating segments, which reflects how we manage our business, review operating performance and allocate resources.

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and international.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

segment includes all restaurants operating in the U.S.

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Excluded from Income from operations for U.S.

and international are certain legal and corporate costs not directly related to the performance of the segments, most stock-based compensation expenses, certain insurance expenses and certain bonus expenses.

Refer to Note 23 - Segment Reporting of the Notes to Consolidated Financial Statements for reconciliations of segment income (loss) from operations to the consolidated operating results.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

and international are certain legal and corporate costs not directly related to the performance of the segments, most stock-based compensation expenses, a portion of insurance expenses and certain bonus expenses.

Refer to Note 22 - Segment Reporting of the Notes to Consolidated Financial Statements for reconciliations of segment income from operations to the consolidated operating results.

Summary financial data - Following is a summary of financial data by segment for the periods indicated:

INTERNATIONAL

FISCAL YEAR FISCAL YEAR

(dollars in thousands) 2023 2022 2023 2022

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Restaurant-level operating margin 15.4 % 15.4 % 20.5 % 18.5 %

Restaurant sales

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

segment Restaurant sales for the period indicated:

(dollars in millions) 2022 (1)

For fiscal year 2021 $ 3,714.9

Comparable restaurant sales 150.0

Restaurant openings 29.1

Restaurant closures (31.0)

For fiscal year 2022 $ 3,863.0

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

INTERNATIONAL

FISCAL YEAR FISCAL YEAR

(dollars in millions) 2023 (dollars in millions) 2023

For fiscal year 2022 $ 3,863.0 For fiscal year 2022 $ 489.7

Comparable restaurant sales 63.1 Restaurant openings (1) 37.7

Restaurant openings (1) 27.2 Effect of foreign currency translation 34.3

Restaurant closures (2) (31.0) Brazil value added tax exemptions (3) 22.5

For fiscal year 2023 (comparable 52-week presentation) (4) 3,922.3 Comparable restaurant sales 18.7

53rd week restaurant sales (5) 82.7 Restaurant closures (2) (0.5)

For fiscal year 2023 (as reported) $ 4,005.0 For fiscal year 2023 $ 602.4

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(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 in 2022 as compared to 2021 was primarily due to higher comparable restaurant sales and the opening of 21 new restaurants not included in our comparable restaurant sales base.

These increases were partially offset by the closure of 24 restaurants since December 27, 2020.

Income from operations

The decrease in U.S.

Income from operations generated during 2022 as compared to 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 higher comparable sales, primarily due to increases in average check per person, and lapping the Carrabba’s Italian Grill royalty termination.

(1) Includes restaurant sales from 19 and 47 new U.S.

and international restaurants, respectively, not included in our comparable restaurant sales base.

(2) Includes the restaurant sales impact from the closure of 32 and three U.S.

and international restaurants, respectively, since December 26, 2021.

(3) Fiscal years 2023 and 2022 include $30.2 million and $7.7 million, respectively, of value added tax exemptions resulting from the Brazil tax legislation.

Beginning in the fourth quarter of 2023, we are once again subject to the value added taxes for which we were previously exempt under the Brazil tax legislation.

See Note 20 - Income Taxes of the Notes to Consolidated Financial Statements for details regarding value added tax exemptions in connection with the Brazil tax legislation.

(4) Includes $99.2 million of restaurant sales generated by restaurants closed, primarily in February 2024, in connection with the 2023 Closure Initiative.

See Note 4 - Impairments and Exit Costs of the Notes to Consolidated Financial Statements for additional details regarding the 2023 Closure Initiative.

(5) Includes restaurant sales from December 25, 2023 through December 31, 2023, which represents the 53rd week of fiscal year 2023.

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

International Segment

(dollars in thousands) 2022 2021

Restaurant sales $ 489,679 $ 346,245

Franchise and other revenues 14,959 16,159

Total revenues $ 504,638 $ 362,404

Income from operations

Operating income margin 11.4 % 4.6 %

Restaurant-level operating income $ 90,663 $ 43,927

Restaurant-level operating margin 18.5 % 12.7 %

Restaurant sales

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

(dollars in millions) 2022

For fiscal year 2021 $ 346.2

Comparable restaurant sales (1) 95.3

Restaurant openings (1) 36.6

Effect of foreign currency translation 11.6

For fiscal year 2022 $ 489.7

____________________

(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 in 2022 as compared to 2021 was primarily due to:

(i) higher comparable restaurant sales in Brazil, (ii) the opening of 43 new restaurants not included in our comparable restaurant sales base and (iii) the effect of foreign currency translation of the Brazil Real relative to the U.S.

Income from operations

The increase in international Income from operations generated during 2022 as compared to 2021 was primarily due to the recovery of in-restaurant dining in Brazil and increases in average check per person.

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

- The decrease in U.S.

Income from operations generated during 2023 as compared to 2022 was primarily due to:

(i) higher labor costs, primarily due to wage rate inflation, (ii) commodity inflation, (iii) higher operating expenses, including utilities, primarily due to inflation, (iv) higher impairment charges and restaurant closure costs and (v) higher depreciation and advertising expense.

These decreases were partially offset by an increase in average check per person and certain cost saving and productivity initiatives.

International - The increase in international Income from operations generated during 2023 as compared to 2022 was primarily due to value added tax exemptions in Brazil and an increase in restaurant sales, primarily driven by an increase in average check per person and the recovery of in-restaurant dining.

These increases were partially offset by decreases primarily due to higher operating and labor costs, primarily due to inflation, and higher advertising exp ense.

Non-GAAP Financial Measures

In addition to the results provided in accordance with U.S.

In addition to the results provided in accordance with generally accepted accounting principles (“U.S.

GAAP”), we provide certain non-GAAP measures, which present operating results on an adjusted basis.

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GAAP and include the following:

(i) Restaurant-level and adjusted restaurant-level operating income and the corresponding margins, (ii) Adjusted income from operations and the corresponding margins, (iii) Adjusted net income, (iv) Adjusted diluted earnings per share and (v) system-wide sales.

(i) Restaurant-level operating income, adjusted restaurant-level operating income and their corresponding margins, (ii) Adjusted income from operations and the corresponding margin, (iii) Adjusted net income, (iv) Adjusted diluted earnings per share and (v) system-wide sales.

We believe that our use of non-GAAP financial measures permits investors to assess the operating performance of our business relative to our performance based on U.S.

GAAP results and relative to other companies within the restaurant industry by isolating the effects of certain items that may vary from period to period without correlation

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

to core operating performance or that vary widely among similar companies.

GAAP results and relative to other companies within the restaurant industry by isolating the effects of certain items that may vary from period to period without correlation to core operating performance or that vary widely among similar companies.

However, our inclusion of these adjusted measures should not be construed as an indication that our future results will be unaffected by unusual or infrequent items or that the items for which we have made adjustments are unusual or infrequent or will not recur.

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These guidelines endeavor to differentiate between types of gains and expenses that are reflective of our core operations in a period, and those that may vary from period to period without correlation to our core performance in that period.

However, implementation of these guidelines necessarily involves the application of judgment, and the treatment of any items not directly addressed by, or changes to, our guidelines will be considered by our disclosure committee.

However, implementation of these guidelines involves the application of judgment, and the treatment of any items not directly addressed by, or changes to, our guidelines will be considered by our disclosure committee.

Refer to the reconciliations of non-GAAP measures for descriptions of the actual adjustments made in the current period and the corresponding prior period.

Consolidated restaurant-level operating income and adjusted restaurant-level operating income and corresponding margins non-GAAP reconciliations - Restaurant-level operating margin is calculated as Restaurant sales after deduction of the main restaurant-level operating costs, which includes Food and beverage costs, Labor and other related expenses and Other restaurant operating expenses.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Consolidated Restaurant-level Operating Income and Adjusted Restaurant-level Operating Income and Corresponding Margins Non-GAAP Reconciliations - Restaurant-level operating margin is calculated as Restaurant sales after deduction of the main restaurant-level operating costs, which includes Food and beverage cost, Labor and other related expense and Other restaurant operating expense.

Adjusted restaurant-level operating margin is Restaurant-level operating margin adjusted for certain items.

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Restaurant-level operating margin 16.2 % 15.6 %

Royalty termination expense (1) — 61,880

Legal and other matters (1) (3,650) 5,900

Asset impairments and closing costs (2) (2,450) —

Partner compensation (3) 1,894 —

Total restaurant-level operating income adjustments (4,206) 5,900

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_________________

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

See Note 22 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for additional details regarding the Royalty Termination Agreement.

(2) For 2022, includes an increase in reserves for certain collective action wage and hour lawsuits during the fourth quarter.

See Note 22 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for additional details relating to the lawsuits.

For 2021, includes 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, as a result of an unfavorable Brazilian Supreme Court ruling.

(1) Reflects changes in legal reserves in connection with certain collective action wage and hour lawsuits.

(2) Lease remeasurement gains in connection with the 2023 Closure Initiative.

See Note 4 - Impairments and Exit Costs of the Notes to Consolidated Financial Statements for additional details regarding the 2023 Closure Initiative.

(3) Costs incurred in connection with the transition to a new partner compensation program.

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

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

Segment Restaurant-level and Adjusted Restaurant-level Operating Income and Corresponding Margins Non-GAAP Reconciliations - The following tables reconcile segment Income from operations and the corresponding margin to segment restaurant-level operating income and adjusted restaurant-level operating income and the corresponding margins for the periods indicated:

(dollars in thousands) 2023 2022

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Restaurant-level operating margin 15.4 % 15.4 %

Royalty termination expense (1) — 61,880

Asset impairments and closing costs (1) (2,450) —

Partner compensation (2) 1,894 —

Total restaurant-level operating income adjustments (556) —

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_________________

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

(1) Lease remeasurement gains in connection with the 2023 Closure Initiative.

(2) Costs incurred in connection with the transition to a new partner compensation program.

International FISCAL YEAR

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Restaurant-level operating margin 20.5 % 18.5 %

Legal and other matters (1) — 2,761

Total restaurant-level operating income adjustments — —

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Adjusted restaurant-level operating margin 20.5 % 18.5 %

_________________

(1) Includes 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, as a result of an unfavorable Brazilian Supreme Court ruling.

BLOOMIN’ BRANDS, INC.

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Restaurant sales 100.0 % 100.0 % 100.0 % 100.0 %

Food and beverage costs 31.8 % 31.8 % 30.3 % 30.3 %

Food and beverage 30.6 % 30.6 % 31.8 % 31.8 %

Labor and other related 28.8 % 28.7 % 28.2 % 28.2 %

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_________________

(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.

(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 restaurant-level operating margin adjustments.

For 2023, restaurant-level operating margin adjustments of $1.9 million and ($6.1) million were recorded within Labor and other related expense and Other restaurant operating expense, respectively.

For 2022, all restaurant-level operating margin adjustments were recorded within Other restaurant operating expense.

Adjusted Income from Operations Non-GAAP Reconciliations - The following table reconciles Income from operations and the corresponding margin to adjusted income from operations and the corresponding margin for the periods indicated:

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Operating income margin 7.0 % 7.5 %

Total restaurant-level operating margin adjustments (1) 5,900 64,641

Severance and other transformational costs (2) — 2,764

Legal and other matters (3) — (3,133)

Total restaurant-level operating income adjustments (1) (4,206) 5,900

Asset impairments and closing costs (2)

Other (3) 7,546 —

Total income from operations adjustments 31,576 5,900

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_________________

(2) Severance, professional fees and other costs incurred as a result of transformational and restructuring activities.

(3) Includes the recognition of recoverable PIS and COFINS taxes, including accrued interest within other revenues as a result of favorable court rulings in Brazil.

(2) Includes asset impairment, closure costs and severance in connection with the 2023 Closure Initiative.

Also includes a lease termination gain, net of related asset impairment charges, of $6.7 million related to the closure of one restaurant.

(3) Primarily includes professional fees, severance and other costs not correlated to our core operating performance during the period.

BLOOMIN’ BRANDS, INC.

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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 common stockholders to adjusted net income and adjusted diluted earnings per share for the periods indicated:

(in thousands, except share and per share data) 2022 2021

Diluted net income attributable to common stockholders $ 101,907 $ 215,900

Convertible senior notes if-converted method interest adjustment, net of tax (1) — 345

Adjusted Net Income and Adjusted Diluted Earnings Per Share Non-GAAP Reconciliations - The following table reconciles Net income attributable to Bloomin’ Brands to adjusted net income and adjusted diluted earnings per share for the periods indicated:

(in thousands, except per share data) 2023 2022

Net income attributable to Bloomin’ Brands $ 247,386 $ 101,907

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_________________

(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.

(1) See the Adjusted Income from Operations Non-GAAP Reconciliations table above for details regarding Income from operations adjustments.

(3) For 2022, includes losses in connection with the 2025 Notes Partial Repurchase and Amended Credit Agreement.

See Note 14 - Convertible Senior Notes and Note 13 - Long-term Debt, Net , respectively, of the Notes to Consolidated Financial Statements for additional details.

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

(2) Includes losses primarily in connection with the 2025 Notes Partial Repurchase, including settlements of the related convertible senior note hedges and warrants.

See Note 13 - Convertible Senior Notes of the Notes to Consolidated Financial Statements for additional details.

(3) Includes the tax effects of non-GAAP adjustments determined based on the nature of the underlying non-GAAP adjustments and their relevant jurisdictional tax rates for all periods presented.

For 2023, also includes a $2.9 million adjustment related to a Brazil federal income tax exemption on certain state value added tax benefits.

For 2022, the primary difference between GAAP and adjusted effective income tax rates relates to certain non-deductible losses and other tax costs associated with the 2025 Notes Partial Repurchase.

Also includes a $4.2 million adjustment during 2021 for the reduction of certain unrecognized tax benefits related to tax positions taken during a prior period.

(4) Adjusted diluted weighted average common shares outstanding was calculated excluding the dilutive effect of 5,067 and 6,089 shares for 2023 and 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.

For 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.

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.

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For a summary of sales of Company-owned restaurants, refer to Note 3 - 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.

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.

(dollars in millions) 2023 2022

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____________________

(1) Includes franchise sales for off-premises only kitchens in South Korea.

(2) Franchise sales are not included in Total revenues in the Consolidated Statements of Operations and Comprehensive Income (Loss).

(1) Includes franchise sales for off-premises only kitch ens in South Korea.

Liquidity and Capital Resources

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The international jurisdictions in which we have significant cash do not have any known restrictions that would prohibit repatriation.

As of December 25, 2022, we had aggregate undistributed foreign earnings of approximately $23.2 million.

These earnings may be repatriated to the U.S.

As of December 31, 2023, we had aggregate undistributed foreign earnings of approximately $42.6 million that may be repatriated to the U.S.

without additional material U.S.

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

See Note 21 - Income Taxes of the Notes to Consolidated Financial Statements for further information regarding our indefinite reinvestment assertion.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Borrowing Capacity and Debt Service

Credit Facilities - Following is a summary of our outstanding credit facilities as of the dates indicated and principal payments and debt issuance during the periods indicated:

SENIOR SECURED CREDIT FACILITY FORMER CREDIT FACILITY TOTAL CREDIT FACILITIES

TERM LOAN A REVOLVING FACILITY TERM LOAN A REVOLVING FACILITY 2025 NOTES 2029 NOTES

SENIOR SECURED CREDIT FACILITY TOTAL CREDIT FACILITIES

TERM LOAN A REVOLVING FACILITY 2025 NOTES 2029 NOTES

(dollars in thousands)

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____________________

(1) Subsequent to December 25, 2022, we repaid $80.0 million on our revolving credit facility.

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

(1) Interest rate for revolving credit facility represents the weighted average interest rate as of December 31, 2023.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

As of December 31, 2023, we had $599.2 million in available unused borrowing capacity under our revolving credit facility, net of letters of credit of $19.8 million.

Credit Agreement - On April 16, 2021, we and OSI, as co-borrowers, entered into the Second Amended and Restated Credit Agreement (the “Credit Agreement”), which provides for senior secured financing of up to $1.0 billion consisting of a $200.0 million Term loan A and an $800.0 million revolving credit facility (the “Senior Secured Credit Facility”).

The Senior Secured Credit Facility matures on April 16, 2026 and replaced our prior senior secured financing of up to $1.5 billion (the “Former Credit Facility”).

On April 26, 2022, we and OSI entered into the First Amendment to the Second Amended and Restated Credit Agreement and Incremental Amendment (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 the one-month London Inter-Bank Offered Rate (“LIBOR”) rate to the Secured Overnight Financing Rate (“SOFR”) as the benchmark rate for purposes of calculating interest under the Senior Secured Credit Facility.

Credit Agreement - On April 26, 2022, we and OSI entered into the First Amendment to the Second Amended and Restated Credit Agreement and Incremental Amendment (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 the one-month London Inter-Bank Offered Rate (“LIBOR”) rate to the Secured Overnight Financing Rate (“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.

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

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

2025 Notes Partial Repurchase - On May 25, 2022, we and certain holders (the “Noteholders”) entered into 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.

2025 Notes Partial Repurchase - On May 25, 2022, we and certain holders (the “Noteholders”) entered into exchange agreements in which the Noteholders agreed to exchange $125.0 million in aggregate principal amount of the 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 partial unwind agreements with certain financial institutions relating to a portion of the convertible note hedge transactions (the “Note Hedge Early Termination Agreements”) and a portion of the Warrant Transactions (the “Warrant Early Termination Agreements”) that were previously entered into by the Company in connection with the issuance of the 2025 Notes.

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See Note 13 - 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.

2029 Notes - On April 16, 2021, we issued $300.0 million aggregate principal amount of senior unsecured notes due 2029.

The 2029 Notes mature on April 15, 2029, unless earlier redeemed or purchased by us.

The 2029 Notes bear cash interest at an annual rate of 5.125% payable semi-annually in arrears on April 15 and October 15 of each year.

The net proceeds from the 2029 Notes were approximately $294.5 million, after deducting the initial purchaser’s discount and our offering expenses.

The net proceeds were used to repay a portion of our outstanding Term loan A and revolving credit facility in conjunction with the refinancing of our Former Credit Facility.

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.

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 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, development of new restaurants, relocating or remodeling older restaurants, investments in technology, dividend payments and share repurchases.

However, our ability to continue to meet these requirements and obligations will depend on, among other things, our ability to achieve anticipated levels of revenue and cash flow and our ability to manage costs and working capital successfully.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Brazil Judicial Deposit - During the first half of 2024, we anticipate making a judicial deposit of approximately $45.0 million to $50.0 million in connection with our appeal of an unfavorable court ruling related to our ongoing litigation regarding our eligibility for tax exemptions under the Brazil tax legislation.

The judicial deposit includes the disputed amounts through December 31, 2023 and will be recorded in Other assets, net, on our Consolidated Balance Sheet.

We believe that we will more likely than not prevail in this appeal and accordingly, have not recorded any expense or liability for the disputed amounts.

See Note 20 - Income Taxes of the Notes to Consolidated Financial Statements for further information regarding the Brazil tax legislation and related litigation.

Dividends and Share Repurchases - During 2023 and 2022, we declared and paid quarterly cash dividends of $0.24 and $0.14 per share, respectively.

In February 2024, our Board declared a quarterly cash dividend of $0.24 per share, payable on March 20, 2024.

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.

Following is a summary of our share repurchase programs active during the periods presented as of December 31, 2023 (dollars in thousands):

SHARE REPURCHASE PROGRAM BOARD APPROVAL DATE AUTHORIZED REPURCHASED CANCELLED OR EXPIRED REMAINING

2022 February 8, 2022 $ 125,000 $ 125,000 $ — $ —

2023 (1) February 7, 2023 $ 125,000 54,999 $ — $ 70,001

Total share repurchase programs $ 179,999

________________

(1) Subsequent to December 31, 2023, we repurchased $12.5 million of our common stock authorized under the 2023 Share Repurchase Program under a Rule 10b5-1 plan.

I n February 2024, our Board canceled the remaining $57.5 million of authorization under the 2023 Share Repurchase Program and approved a new $350.0 million authorization.

The 2024 Share Repurchase Program includes capacity above our normal share repurchases activity to provide flexibility in retiring our 2025 Notes at or prior to their May 2025 maturity.

The 2024 Share Repurchase Program will expire on August 13, 2025.

The following table presents our dividends and share repurchases for the periods indicated:

(dollars in thousands) DIVIDENDS PAID SHARE REPURCHASES (1)

Fiscal year 2023 $ 83,742 $ 70,000 $ 153,742

Fiscal year 2022 49,736 109,999 159,735

Total $ 133,478 $ 179,999 $ 313,477

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(1) Excludes $0.1 million of excise tax on share repurchases for fiscal year 2023.

Our ability to pay dividends and make share repurchases is dependent on our ability to obtain funds from our subsidiaries, continued compliance with the financial covenants in our debt agreements and the existence of surplus, as well as our earnings, financial condition, capital expenditure requirements and other factors that our Board deems relevant.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Material Cash Requirements - The following table presents current and long-term material cash requirements as of December 31, 2023:

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Excludes $945.4 million related to operating lease renewal options that are reasonably certain of exercise.

(2) Includes Senior Secured Credit Facility, 2029 Notes, 2025 Notes and finance lease obligations.

Amounts are not reduced by unamortized debt issuance costs and finance lease interest totaling $7.7 million.

(2) Includes Senior Secured Credit Facility, 2029 Notes and 2025 Notes.

Amounts are not reduced by unamortized debt issuance costs totaling $5.1 million.

(3) Projected future interest payments on long-term debt are based on interest rates in effect as of December 31, 2023.

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and the approximate timing of the transaction.

We have purchase obligations with various vendors that consist primarily of inventory, kitchen equipment, technology, advertising and restaurant-level service contracts.

(5) Includes other long-term liabilities, primarily consisting of deferred compensation obligations, deposits and other accrued obligations.

Unrecognized tax benefits are excluded from this table since it is not possible to estimate when these future payments will occur.

Dividends and Share Repurchases - During 2022, we declared and paid quarterly cash dividends of $0.14 per share.

We did not pay dividends during 2021 as a result of certain restrictions that were included within the Credit Agreement.

On February 7, 2023, our Board declared a quarterly cash dividend of $0.24 per share, payable on March 15, 2023.

Following is a summary of our share repurchase program as of December 25, 2022 (dollars in thousands):

SHARE REPURCHASE PROGRAM BOARD APPROVAL DATE AUTHORIZED REPURCHASED CANCELLED OR EXPIRED REMAINING

2022 (1) February 8, 2022 $ 125,000 $ 109,999 $ — $ 15,001

________________

(1) Subsequent to December 25, 2022, we repurchased the remaining $15.0 million of our common stock authorized under the 2022 Share Repurchase Program under a Rule 10b5-1 plan.

On February 7, 2023, our Board approved a new $125.0 million authorization (the “2023 Share Repurchase Program”).

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

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

The following table presents our dividends and share repurchases for the periods indicated:

(dollars in thousands) DIVIDENDS PAID SHARE REPURCHASES TOTAL

Fiscal year 2022 $ 49,736 $ 109,999 $ 159,735

Fiscal year 2021 — — —

Fiscal year 2020 17,480 — 17,480

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

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

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

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

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

Total $ 227,961 $ 1,083,580 $ 1,311,541

We have purchase obligations with various vendors that consist primarily of inventory, fixtures and equipment and technology.

(5) Includes other long-term liabilities, primarily consisting of deferred compensation obligations, deposits, undiscounted finance leases and other accrued obligations.

Unrecognized tax benefits are excluded from this table since it is not possible to estimate when these future payments may occur.

Summary of Cash Flows and Financial Condition

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Effect of exchange rate changes on cash and cash equivalents 1,448 1,395

Net decrease in cash, cash equivalents and restricted cash $ (4,322) $ (21,351)

Operating activities - The decrease in net cash provided by operating activities during 2022 as compared to 2021 was primarily due to increases and timing of operational payments net of receipts, partially offset by lapping cash paid in connection with the Carrabba’s Italian Grill royalty termination during 2021.

Investing and financing activities - The increase in net cash used in investing activities and the decrease in net cash used in financing activities during 2022 as compared to 2021 was primarily due to repurposing a portion of excess cash flow away from debt paydown and utilizing the cash flow to increase capital expenditures.

Net increase (decrease) in cash, cash equivalents and restricted cash $ 29,638 $ (4,322)

Operating activities - The increase in net cash provided by operating activities during 2023 as compared to 2022 was primarily due to:

(i) higher operational receipts, net of payments, (ii) decreased employee compensation payments and (iii) lower tax payments.

These increases were partially offset by higher rent and interest payments.

Investing activities - The increase in net cash used in investing activities during 2023 as compared to 2022 was primarily due to higher capital expenditures and a decrease in cash withdrawn from Company-owned life insurance policies .

Financing activities - The decrease in net cash used in financing activities during 2023 as compared to 2022 was primarily due to:

(i) a decrease in repurchases of common stock, (ii) higher net proceeds from share-based compensation and (iii) partner equity plan payments during 2022.

These decreases were partially offset by higher payments of cash dividends on our common stock and increased repayments on our debt.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

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

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Working capital (deficit) includes:

(i) Unearned revenue primarily from unredeemed gift cards of $394.2 million and $398.8 million as of December 25, 2022 and December 26, 2021, respectively, and (ii) current operating lease liabilities of $183.5 million and $177.0 million as of December 25, 2022 and December 26, 2021, respectively, with

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

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 $381.9 million and $394.2 million as of December 31, 2023 and December 25, 2022, respectively, and (ii) current operating lease liabilities of $175.4 million and $183.5 million as of December 31, 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).

We operate successfully with negative working capital because cash collected on restaurant sales is typically received before payment is due on our current liabilities, and our inventory turnover rates require relatively low investment in inventories.

Additionally, ongoing cash flows from restaurant operations and gift card sales are typically used to service debt obligations and to make capital expenditures.

Additionally, ongoing cash flows from restaurant operations and gift card sales are typically used to service debt obli gations and to make capital expenditures.

Critical Accounting Policies and Estimates

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Historically, the change in useful lives of our assets as a result of planned closures or the decision not to renew leases has been a key factor in the impairment we have recognized.

Goodwill and Indefinite-Lived Intangible Assets - Goodwill and indefinite-lived intangible assets are tested for impairment annually in the second fiscal quarter, or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

We may elect to perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired.

In considering the qualitative approach, we evaluate factors including, but not limited to, macroeconomic conditions, market and industry conditions, commodity cost fluctuations, competitive environment, share price performance, results of prior impairment tests, operational stability and the overall financial performance of the reporting units.

If the qualitative assessment is not performed or if we determine that it is not more likely than not that the fair value of the reporting unit exceeds the carrying value, the fair value of the reporting unit is calculated.

Fair value of a reporting unit is the price a willing buyer would pay for the reporting unit and is estimated by utilizing a weighted average of the income approach, using a discounted cash flow model, and, when appropriate, the market approach including the guideline public company method and guideline transaction method.

The key estimates and

Based on a review of operating results for each of our restaurants, given the current operating environment, the amount of net book value associated with lower performing restaurants that would be deemed at risk for impairment is not material to our consolidated financial statements.

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

assumptions used in these models are future cash flow estimates, which are heavily influenced by revenue growth rates, operating margins and capital expenditures.

Goodwill and Indefinite-Lived Intangible Assets - Goodwill and indefinite-lived intangible assets are not subject to amortization and are tested for impairment annually in the second fiscal quarter, or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

We may elect to perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired.

Any adverse change in these factors could have a significant impact on the recoverability of assets and could have a material impact on our consolidated financial statements.

If the qualitative assessment is not performed or if we determine that it is not more likely than not that the fair value of the reporting unit exceeds the carrying value, a quantitative approach, using the fair value of the reporting unit, is calculated.

The key estimates and assumptions used in this assessment are future cash flow estimates, which are heavily influenced by revenue growth rates, operating margins and capital expenditures.

These estimates are subjective, and our ability to achieve the forecasted cash flows used in our fair value calculations is affected by factors such as the success of strategic initiatives, changes in economic conditions and discount rates, changes in our operating performance and changes in our business strategies.

The fair value of the trade names is determined through a relief from royalty method.

We estimate the fair value of trade names using the relief-from-royalty method, which requires assumptions related to projected sales for each reporting unit, assumed market royalty rates applicable to the trade names, and discount rates.

The carrying value of the reporting unit or trade name is compared to its estimated fair value, with any excess of carrying value over fair value deemed to be an impairment.

The carrying value of goodwill as of December 25, 2022 was $273.0 million.

We performed our annual impairment test in the second quarter of 2022 by utilizing the qualitative approach and determined that there were no events or circumstances to indicate that it was more likely than not that the fair value of any of our reporting units was less than their carrying values.

The carrying value of goodwill and trade names as of December 31, 2023 was $276.3 million and $414.7 million, respectively.

We performed our annual impairment test in the second quarter of 2023 by utilizing the quantitative approach and determined that the excess of fair value over carrying value of our reporting units was substantial.

Sales declines at our restaurants, unplanned increases in commodity or labor costs, deterioration in overall economic conditions and challenges in the restaurant industry may result in future impairment charges.

It is possible that changes in circumstances or changes in our judgments, assumptions and estimates could result in an impairment charge of a portion or all of our goodwill or other intangible assets.

Leases - We use judgment to determine the reasonably certain lease term, which in turn, impacts the applicable incremental borrowing rate (“IBR”) used to calculate the initial lease liability for each portfolio of leases.

It is possible that changes in circumstances or changes in our judgments, assumptions and estimates could result in impairment of a portion or all of our goodwill or other intangible assets.

Leases - We use judgment at lease inception to determine the reasonably certain lease term, which in turn, impacts the applicable incremental borrowing rate (“IBR”) used to calculate the initial lease liability for each portfolio of leases.

Other assumptions used in determining our incremental borrowing rate include our implied credit rating and an estimate of secured borrowing rates based on comparable market data.

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Such an economic penalty would typically result from having to abandon a building or equipment with remaining economic value upon vacating a property.

We use our estimated IBR, which is derived from information available at the lease commencement date, in determining the present value of lease payments.

We give consideration to market data as well as publicly available data for instruments with similar characteristics when calculating our IBR.

At the inception of each lease, we evaluate the property and the lease to determine whether the lease is an operating lease or a financing lease.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

At the inception of each lease, we evaluate the property and the lease to determine whether the lease is an operating lease or a finance lease.

This lease accounting evaluation may require significant judgment in determining the fair value and useful life of the leased property and the appropriate reasonably certain lease term.

These judgments may produce materially different amounts of rent expense in a given reporting period than would be reported if different assumed lease terms were used.

Determination of the reasonably certain lease term impacts the period in which buildings are depreciated.

These judgments may produce materially different amounts of rent and depreciation expense in a given reporting period than would be reported if different assumed lease terms were used.

Insurance Reserves - We carry insurance programs with specific retention levels or high per-claim deductibles for a significant portion of expected losses under our workers’ compensation, general or liquor liability, health, property and management liability insurance programs.

For some programs, we maintain stop-loss coverage to limit the exposure relating to certain risks.

We record a liability for all unresolved and incurred but not reported claims at the anticipated cost that falls below our specified retention levels or per-claim deductible amounts.

We record a liability for all unresolved and incurred but not reported claims at the anticipated cost below our specified retention levels or per-claim deductible amounts.

Our liability for insurance claims was $45.9 million and $49.1 million as of December 31, 2023 and December 25, 2022, respectively.

In establishing our reserves, we consider certain actuarial assumptions and judgments regarding economic conditions, and the frequency and severity of claims.

The establishment of the reserves utilizing such estimates and assumptions is in part based on the

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

premise that historical claims experience is indicative of current or future expected activity, which could differ significantly.

The establishment of the reserves utilizing such estimates and assumptions is in part based on the premise that historical claims experience is indicative of current or future expected activity, which could differ significantly.

Reserves recorded for workers’ compensation and general or liquor liability claims are discounted using the average of the one-year and five-year risk-free rate of monetary assets that have comparable maturities.

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A valuation allowance is established against the deferred tax assets when it is more likely than not that some portion or all of the deferred taxes may not be realized.

Changes in assumptions regarding our level and composition of earnings, tax laws or the deferred tax valuation allowance and the results of tax audits, may materially impact the effective income tax rate.

Changes in assumptions regarding our level and composition of earnings, tax laws or the deferred tax valuation allowance and the results of tax audits and litigation, may materially impact the effective income tax rate.

While we consider all of our tax positions to be fully supportable, our income tax returns, like those of most companies, are periodically audited by U.S.

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As of December 31, 2023, we had $16.7 million of unrecognized tax benefits, including accrued interest and penalties, that if recognized, would impact our effective income tax rate.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Recently Issued Financial Accounting Standards

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What changed 10-K

Item 7. Management’s Discussion and Analysis