Bloomin' Brands, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Management’s discussion and analysis of financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the related notes. Unless the context otherwise indicates, as used in this report, the term the “Company,” “we,” “us,” “our” and other similar terms mean Bloomin’ Brands, Inc. and its subsidiaries. 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 (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 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. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Report and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Although we base these forward-looking statements on assumptions that we believe are reasonable when made, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and industry developments may differ materially from statements made in or suggested by the forward-looking statements contained in this Report. In addition, even if our results of operations, financial condition and liquidity, and industry developments are consistent with the forward-looking statements contained in this Report, those results or developments may not be indicative of results or developments in subsequent periods. Important factors that could cause actual results to differ materially from statements made or suggested by forward-looking statements include, but are not limited to, the following: (i) Consumer reactions to public health and food safety issues; (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 and geopolitical 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 cybersecurity threats, and to protect consumer data and personal employee information; 24 Table of Contents BLOOMIN’ BRANDS, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued (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, pork, chicken and other major product supply needs; (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) The effects of international economic, political and social conditions and legal systems on our foreign operations and on foreign currency exchange rates; (x) The impact of the strategic review process for our Brazil operations or any resulting action or inaction; (xi) Our ability to comply with new corporate citizenship and sustainability reporting requirements and investor expectations or our failure to achieve any goals, targets or objectives that we establish with respect to corporate citizenship and sustainability matters; (xii) Our ability to effectively respond to changes in patterns of consumer traffic, including by maintaining relationships with third-party delivery apps and services, consumer tastes and dietary habits; (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; (xvi) The effects of our leverage and restrictive covenants in our various credit facilities on our ability to raise additional capital to fund our operations, to make capital expenditures to invest in new or renovate restaurants and to react to changes in the economy or our industry; (xvii) Any impairment in the carrying value of our goodwill or other intangible or long-lived assets and its effect on our financial condition and results of operations; and (xviii) Such other factors as discussed in Part I, Item IA. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2023. Given these risks and uncertainties, we caution you not to place undue reliance on these forward-looking statements. 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. 25 Table of Contents BLOOMIN’ BRANDS, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Overview We are one of the largest casual dining restaurant companies in the world with a portfolio of leading, differentiated restaurant concepts. As of June 30, 2024, we owned and operated 1,173 restaurants and franchised 292 restaurants across 46 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 Overview - Our financial overview for the thirteen weeks ended June 30, 2024 includes the following: • U.S. combined and Outback Steakhouse comparable restaurant sales of (0.1)%; • Decrease in Total revenues of (2.9)% as compared to the second quarter of 2023; • Operating income and restaurant-level operating margins of 4.1% and 14.3%, respectively, as compared to 7.8% and 16.4%, respectively, for the second quarter of 2023; • Operating income of $46.1 million as compared to $89.4 million in the second quarter of 2023; and • Diluted earnings per share of $0.32 as compared to $0.70 for the second quarter of 2023. Reviewing Strategic Alternatives for Brazil Operations - In May 2024, we announced that we are exploring and evaluating strategic alternatives for our Brazil operations that have the potential to maximize value for our shareholders, including but not limited to, a possible sale of the operations. The Board has retained BofA Securities, Inc. as its financial advisor. We plan to proceed in a timely manner, but have not set a definitive timetable for completion of this process. There can be no assurance that this review will result in a transaction or other strategic alternative of any kind. We do not intend to make any further public comment regarding the review unless we determine that disclosure is appropriate or necessary. 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 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. • Restaurant-level operating margin, Income from operations, Net income (loss) and Diluted earnings (loss) 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 expense and Other restaurant operating expense (including advertising expenses) represent, in each case as such items are reflected in our Consolidated Statements of 26 Table of Contents BLOOMIN’ BRANDS, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Operations and Comprehensive Income (Loss). The following categories of revenue and operating expenses are not included in restaurant-level operating income and 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; (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; and (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 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. We believe that our use of these 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 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. We believe that the disclosure of these non-GAAP measures is useful to investors as they form part of the basis for how our management team and Board evaluate our operating performance, allocate resources and administer employee incentive plans. 27 Table of Contents BLOOMIN’ BRANDS, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued 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): JUNE 30, 2024 JUNE 25, 2023 U.S. Outback Steakhouse Company-owned 549 562 Franchised 125 127 Total 674 689 Carrabba’s Italian Grill Company-owned 192 199 Franchised 18 19 Total 210 218 Bonefish Grill Company-owned 162 170 Franchised 4 5 Total 166 175 Fleming’s Prime Steakhouse & Wine Bar Company-owned 63 64 Aussie Grill Company-owned 4 7 Franchised 2 — Total 6 7 U.S. total (1) 1,119 1,153 International Company-owned Outback Steakhouse - Brazil (2) 165 148 Other (2)(3) 38 36 Franchised Outback Steakhouse - South Korea (1) 93 92 Other (3) 50 46 International total 346 322 System-wide total 1,465 1,475 System-wide total - Company-owned 1,173 1,186 System-wide total - Franchised 292 289 ____________________ (1) Excludes three and ten off-premises only kitchens as of June 30, 2024 and June 25, 2023, respectively. One location was Company-owned in the U.S. and all others were franchised in South Korea as of June 30, 2024 and June 25, 2023. (2) The restaurant counts for Brazil, including Abbraccio and Aussie Grill restaurants within International Company-owned Other, are reported as of May 31, 2024 and 2023, respectively, to correspond with the balance sheet dates of this subsidiary. (3) International Company-owned Other included two and four Aussie Grill locations as of June 30, 2024 and June 25, 2023, respectively. International Franchised Other included six and three Aussie Grill locations as of June 30, 2024 and June 25, 2023, respectively. 28 Table of Contents BLOOMIN’ BRANDS, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Results of Operations REVENUES Restaurant Sales - Following is a summary of the change in Restaurant sales for the periods indicated: (dollars in millions) THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED For the periods ended June 25, 2023 $ 1,137.3 $ 2,365.6 Change from: Restaurant closures (33.7) (58.8) Comparable restaurant sales (1) (14.2) (49.7) Brazil value added tax exemptions (2) (9.6) (19.2) Restaurant openings 23.6 37.8 Effect of foreign currency translation 0.2 7.4 For the periods ended June 30, 2024 $ 1,103.6 $ 2,283.1 ________________ (1) Comparable restaurant sales for the twenty-six weeks ended June 30, 2024 includes an estimated $16.5 million negative impact from a one-week shift in the fiscal calendar. (2) During 2023, we were eligible for certain value added tax exemptions under the Brazil tax legislation until August 2023. Beginning on May 23, 2024, we are eligible for certain value added tax exemptions under the new Brazil tax legislation. See Note 15 - Income Taxes of the Notes to Consolidated Financial Statements for details regarding value added tax exemptions in connection with Brazil tax legislation. The decrease in Restaurant sales during the thirteen weeks ended June 30, 2024 was primarily due to: (i) the closure of 53 restaurants since March 26, 2023, (ii) lower comparable restaurant sales and (iii) the benefit from value added tax exemptions in Brazil during 2023. The decrease in Restaurant sales was partially offset by the opening of 55 new restaurants not included in our comparable restaurant sales base. The decrease in Restaurant sales during the twenty-six weeks ended June 30, 2024 was primarily due to: (i) the closure of 57 restaurants since December 25, 2022, (ii) lower comparable restaurant sales including the impact of the one-week shift in the fiscal calendar and (iii) the benefit from value added tax exemptions in Brazil during 2023. The decrease in Restaurant sales was partially offset by the opening of 65 new restaurants not included in our comparable restaurant sales base and the effect of foreign currency translation of the Brazilian Real relative to the U.S. dollar. 29 Table of Contents BLOOMIN’ BRANDS, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Average Restaurant Unit Volumes and Operating Weeks - Following is a summary of the average restaurant unit volumes and operating weeks for the periods indicated: THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED JUNE 30, 2024 JUNE 25, 2023 JUNE 30, 2024 JUNE 25, 2023 Average restaurant unit volumes (weekly): U.S. Outback Steakhouse $ 78,698 $ 78,321 $ 80,870 $ 81,421 Carrabba’s Italian Grill $ 69,942 $ 68,290 $ 71,259 $ 70,489 Bonefish Grill $ 63,760 $ 64,671 $ 65,232 $ 67,427 Fleming’s Prime Steakhouse & Wine Bar $ 107,399 $ 109,882 $ 111,512 $ 115,754 International Outback Steakhouse - Brazil (1) $ 55,282 $ 58,306 $ 58,344 $ 60,670 Operating weeks: U.S. Outback Steakhouse 7,108 7,321 14,314 14,679 Carrabba’s Italian Grill 2,496 2,587 5,038 5,174 Bonefish Grill 2,106 2,218 4,274 4,466 Fleming’s Prime Steakhouse & Wine Bar 823 845 1,655 1,690 International Outback Steakhouse - Brazil 2,141 1,891 4,168 3,679 ____________________ (1) Translated at average exchange rates of 5.08 and 5.06 for the thirteen weeks ended June 30, 2024 and June 25, 2023, respectively, and 5.00 and 5.14 for the twenty-six weeks ended June 30, 2024 and June 25, 2023, respectively. Excludes the benefit of the Brazil value added tax exemptions discussed in Note 15 - Income Taxes of the Notes to Consolidated Financial Statements. 30 Table of Contents BLOOMIN’ BRANDS, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Comparable Restaurant Sales, Traffic and Average Check Per Person (Decreases) Increases - Following is a summary of comparable restaurant sales, traffic and average check per person (decreases) increases for the periods indicated: THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED JUNE 30, 2024 (1) JUNE 25, 2023 JUNE 30, 2024 (1) JUNE 25, 2023 Year over year percentage change: Comparable restaurant sales (restaurants open 18 months or more): U.S. (2) Outback Steakhouse (0.1) % 0.6 % (0.7) % 2.8 % Carrabba’s Italian Grill 2.0 % 3.5 % 1.2 % 5.1 % Bonefish Grill (2.0) % 0.5 % (3.5) % 3.4 % Fleming’s Prime Steakhouse & Wine Bar (1.1) % (2.5) % (1.5) % 0.4 % Combined U.S. (0.1) % 0.8 % (0.9) % 3.1 % International Outback Steakhouse - Brazil (3)(4) (1.1) % 4.1 % (1.0) % 9.1 % Traffic: U.S. Outback Steakhouse (4.1) % (5.4) % (4.1) % (3.5) % Carrabba’s Italian Grill (1.8) % (0.8) % (2.3) % 0.5 % Bonefish Grill (4.8) % (4.4) % (6.0) % (2.0) % Fleming’s Prime Steakhouse & Wine Bar (8.2) % (2.3) % (6.5) % (1.1) % Combined U.S. (3.8) % (4.2) % (4.1) % (2.4) % International Outback Steakhouse - Brazil (3) (2.7) % (4.0) % (3.3) % (0.9) % Average check per person (5): U.S. Outback Steakhouse 4.0 % 6.0 % 3.4 % 6.3 % Carrabba’s Italian Grill 3.8 % 4.3 % 3.5 % 4.6 % Bonefish Grill 2.8 % 4.9 % 2.5 % 5.4 % Fleming’s Prime Steakhouse & Wine Bar 7.1 % (0.2) % 5.0 % 1.5 % Combined U.S. 3.7 % 5.0 % 3.2 % 5.5 % International Outback Steakhouse - Brazil (3) 1.0 % 8.5 % 1.8 % 10.0 % ____________________ (1) For Q2 2024, comparable restaurant sales, traffic and average check per person compare the thirteen weeks from April 1, 2024 through June 30, 2024 to the thirteen weeks from April 3, 2023 through July 2, 2023, and for the twenty-six weeks from January 1, 2024 through June 30, 2024 to the twenty-six weeks from January 2, 2023 through July 2, 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 15 - Income Taxes of the Notes to Consolidated Financial Statements. (4) Includes trading day impact from calendar period reporting. (5) Includes the impact of menu pricing changes, product mix and discounts. 31 Table of Contents BLOOMIN’ BRANDS, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued 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: THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED JUNE 30, 2024 JUNE 25, 2023 JUNE 30, 2024 JUNE 25, 2023 Revenues Restaurant sales 98.6 % 98.7 % 98.7 % 98.7 % Franchise and other revenues 1.4 1.3 1.3 1.3 Total revenues 100.0 100.0 100.0 100.0 Costs and expenses Food and beverage (1) 30.5 30.9 30.4 31.1 Labor and other related (1) 29.8 28.7 29.4 28.2 Other restaurant operating (1) 25.4 24.0 25.0 23.5 Depreciation and amortization 4.4 4.1 4.3 3.9 General and administrative 5.5 5.5 5.5 5.4 Provision for impaired assets and restaurant closings 1.5 0.2 1.2 0.2 Total costs and expenses 95.9 92.2 94.7 91.2 Income from operations 4.1 7.8 5.3 8.8 Loss on extinguishment of debt — — (5.9) — Interest expense, net (1.3) (1.2) (1.2) (1.1) Income (loss) before provision for income taxes 2.8 6.6 (1.8) 7.7 Provision for income taxes 0.2 0.5 0.5 0.9 Net income (loss) 2.6 6.1 (2.3) 6.8 Less: net income attributable to noncontrolling interests 0.1 0.2 0.1 0.1 Net income (loss) attributable to Bloomin’ Brands 2.5 % 5.9 % (2.4) % 6.7 % ____________________ (1) As a percentage of Restaurant sales. Thirteen weeks ended June 30, 2024 as compared to thirteen weeks ended June 25, 2023 Food and beverage cost decreased as a percentage of Restaurant sales primarily due to 1.4% from increases in average check per person driven by an increase in menu pricing and 0.6% from cost-saving and productivity initiatives. These decreases were partially offset by increases as a percentage of Restaurant sales of 0.9% from unfavorable product mix and 0.4% from commodity inflation. Labor and other related expense increased as a percentage of Restaurant sales primarily due to 1.8% from higher hourly and field management labor costs, primarily due to wage rate inflation, partially offset by a decrease of 0.8% from an increase in average check per person. Other restaurant operating expense increased as a percentage of Restaurant sales primarily due to 1.6% from higher restaurant-level operating and supply expenses, primarily due to inflation, and 0.4% from higher advertising expense. These increases were partially offset by decreases as a percentage of Restaurant sales of 0.6% from an increase in average check per person and 0.2% from certain cost-saving and productivity initiatives. Depreciation and amortization expense increased primarily due to restaurant development and technology projects. Provision for impaired assets and restaurant closings increased primarily due to impairment and closure charges in connection with the Q2 2024 decision to close nine restaurants in Hong Kong and closure charges in connection with the Q4 2023 decision to close 36 older, predominately underperforming restaurants within the U.S. segment . 32 Table of Contents BLOOMIN’ BRANDS, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Income from operations during the thirteen weeks ended June 30, 2024 includes a net operating margin decrease of approximatel y 0.4% attributable to the lapping of the 2023 Brazil value added tax exemptions (PIS and COFINS). Beginning on May 23, 2024, we are eligible for certain value added tax exemptions under the new Brazil tax legislation. See Note 15 - Income Taxes of the Notes to Consolidated Financial Statements for further discussion regarding Brazil tax legislation. Provision for income taxes for the thirteen weeks ended June 30, 2024 includes the impact of lower forecasted annual pre-tax book income for the thirteen weeks ended June 30, 2024 relative to the prior quarter in 2024. Twenty-six weeks ended June 30, 2024 as compared to twenty-six weeks ended June 25, 2023 Food and beverage cost decreased as a percentage of Restaurant sales primarily due to 1.3% from increases in average check per person driven by an increase in menu pricing and 0.6% from cost-saving and productivity initiatives. These decreases were partially offset by increases as a percentage of Restaurant sales of: (i) 0.6% from unfavorable product mix, (ii) 0.2% from commodity inflation and (iii) 0.2% from the lapping of the 2023 Brazil value added tax exemptions. Labor and other related expense increased as a percentage of Restaurant sales primarily due to 1.7% from higher hourly and field management labor costs, primarily due to wage rate inflation, partially offset by a decrease of 0.5% from an increase in average check per person. Other restaurant operating expense increased as a percentage of Restaurant sales primarily due to 1.2% from higher restaurant-level operating and supply expenses, primarily due to inflation, and 0.5% from higher advertising expense. These increases were partially offset by decreases as a percentage of Restaurant sales of 0.3% from an increase in average check per person and 0.2% from certain cost-saving and productivity initiatives. Depreciation and amortization expense increased primarily due to restaurant development and technology projects. Provision for impaired assets and restaurant closings increased primarily due to impairment and closure charges in connection with the Q2 2024 decision to close nine restaurants in Hong Kong and the Q4 2023 decision to close 36 older, predominately underperforming restaurants within the U.S. segment. Income from operations during the twenty-six weeks ended June 30, 2024 includes a net operating margin decrease of approximately 0.3% attributable to the lapping of the 2023 Brazil value added tax exemptions (PIS and COFINS). Beginning on May 23, 2024, we are eligible for certain value added taxes exemptions under the new Brazil tax legislation. See Note 15 - Income Taxes of the Notes to Consolidated Financial Statements for further discussion regarding Brazil tax legislation. Loss on extinguishment of debt during the twenty-six weeks ended June 30, 2024 was in connection with the 2025 Notes Partial Repurchase, which is described in further detail within Note 10 - Convertible Senior Notes of the Notes to Consolidated Financial Statements. Provision for income taxes for the twenty-six weeks ended June 30, 2024 includes the impact of nondeductible losses associated with the 2025 Notes Partial Repurchase which, relative to a pre-tax book loss during the period, resulted in a negative effective income tax rate. 33 Table of Contents BLOOMIN’ BRANDS, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued SEGMENT PERFORMANCE The following is a summary of reporting segments: REPORTABLE SEGMENT (1) CONCEPT GEOGRAPHIC LOCATION U.S. Outback Steakhouse United States of America Carrabba’s Italian Grill Bonefish Grill Fleming’s Prime Steakhouse & Wine Bar International Outback Steakhouse Brazil, Hong Kong/China Carrabba’s Italian Grill (Abbraccio) Brazil _________________ (1) Includes franchise locations. Revenues for both segments include only transactions with customers and exclude intersegment revenues. 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, a portion of insurance expenses and certain bonus expenses. Refer to Note 17 - 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 purposes, overall and particularly within our two segments. 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. 34 Table of Contents BLOOMIN’ BRANDS, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Summary financial data - Following is a summary of financial data by segment for the periods indicated: U.S. INTERNATIONAL THIRTEEN WEEKS ENDED THIRTEEN WEEKS ENDED (dollars in thousands) JUNE 30, 2024 JUNE 25, 2023 JUNE 30, 2024 JUNE 25, 2023 Revenues Restaurant sales $ 962,088 $ 993,438 $ 141,477 $ 143,892 Franchise and other revenues 12,085 11,791 3,216 3,573 Total revenues $ 974,173 $ 1,005,229 $ 144,693 $ 147,465 Income (loss) from operations $ 79,677 $ 103,008 $ (874) $ 20,486 Operating income (loss) margin 8.2 % 10.2 % (0.6) % 13.9 % Restaurant-level operating income $ 136,455 $ 154,856 $ 22,044 $ 29,673 Restaurant-level operating margin 14.2 % 15.6 % 15.6 % 20.6 % TWENTY-SIX WEEKS ENDED TWENTY-SIX WEEKS ENDED (dollars in thousands) JUNE 30, 2024 JUNE 25, 2023 JUNE 30, 2024 JUNE 25, 2023 Revenues Restaurant sales $ 1,992,984 $ 2,074,007 $ 290,068 $ 291,557 Franchise and other revenues 24,293 24,218 6,848 7,658 Total revenues $ 2,017,277 $ 2,098,225 $ 296,916 $ 299,215 Income from operations $ 177,161 $ 236,251 $ 14,888 $ 44,994 Operating income margin 8.8 % 11.3 % 5.0 % 15.0 % Restaurant-level operating income $ 298,431 $ 342,664 $ 49,201 $ 63,688 Restaurant-level operating margin 15.0 % 16.5 % 17.0 % 21.8 % Restaurant sales - Following is a summary of the change in segment Restaurant sales for the periods indicated: U.S. INTERNATIONAL THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (dollars in millions) (dollars in millions) For the periods ended June 25, 2023 $ 993.4 $ 2,074.0 For the periods ended June 25, 2023 $ 143.9 $ 291.6 Change from: Change from: Restaurant closures (1) (33.0) (57.5) Brazil value added tax exemptions (2) (9.6) (19.2) Comparable restaurant sales (3) (11.1) (43.8) Comparable restaurant sales (3.1) (5.9) Restaurant openings (4) 12.8 20.3 Restaurant closures (1) (0.7) (1.3) For the periods ended June 30, 2024 $ 962.1 $ 1,993.0 Restaurant openings (4) 10.8 17.5 Effect of foreign currency translation 0.2 7.4 For the periods ended June 30, 2024 $ 141.5 $ 290.1 ____________________ (1) The thirteen weeks ended June 30, 2024 includes the restaurant sales impact from the closure of 51 U.S. and two international restaurants since March 26, 2023. The twenty-six weeks ended June 30, 2024 includes the restaurant sales impact from the closure of 55 U.S. and two international restaurants since December 25, 2022. (2) During 2023, we were eligible for certain value added tax exemptions under the Brazil tax legislation until August 2023. Beginning on May 23, 2024, we are eligible for certain value added tax exemptions under the new Brazil tax legislation. See Note 15 - Income Taxes of the Notes to Consolidated Financial Statements for details regarding value added tax exemptions in connection with Brazil tax legislation. (3) U.S. comparable restaurant sales for the twenty-six weeks ended June 30, 2024 includes an estimated $16.5 million negative impact from a one-week shift in the fiscal calendar. (4) The thirteen weeks ended June 30, 2024 includes restaurant sales from 20 U.S. and 35 international new restaurants not included in our comparable restaurant sales base. The twenty-six weeks ended June 30, 2024 includes restaurant sales from 22 U.S. and 43 international new restaurants not included in our comparable restaurant sales base. 35 Table of Contents BLOOMIN’ BRANDS, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Income from operations U.S. - The decrease in U.S. Income from operations generated during the thirteen weeks ended June 30, 2024 as compared to the thirteen weeks ended June 25, 2023 was primarily due to: (i) lower restaurant sales, as discussed above, (ii) higher labor and operating costs, primarily due to inflation, (iii) unfavorable product mix and (iv) higher advertising expense. These decreases were partially offset by increases from an increase in average check per person and the impact of certain cost-saving and productivity initiatives. The decrease in U.S. Income from operations generated during the twenty-six weeks ended June 30, 2024 as compared to the twenty-six weeks ended June 25, 2023 was primarily due to: (i) lower restaurant sales, as discussed above, (ii) higher labor and operating costs, primarily due to inflation, (iii) unfavorable product mix, (iv) higher advertising expense and (v) higher impairment and closure costs. These decreases were partially offset by increases from an increase in average check per person and the impact of certain cost-saving and productivity initiatives. International - International Loss from operations generated during the thirteen weeks ended June 30, 2024 as compared to international Income from operations generated during the thirteen weeks ended June 25, 2023 was primarily due to: (i) higher impairment and closure costs, (ii) higher labor and operating costs, primarily due to inflation and (iii) lapping value added tax exemptions in Brazil during 2023. These decreases were partially offset by an increase in average check per person. The decrease in international Income from operations generated during the twenty-six weeks ended June 30, 2024 as compared to the twenty-six weeks ended June 25, 2023 was primarily due to: (i) higher impairment and closure costs, (ii) higher labor and operating costs, primarily due to inflation and (iii) lapping value added tax exemptions in Brazil during 2023. These decreases were partially offset by an increase in average check per person. 36 Table of Contents BLOOMIN’ BRANDS, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued 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 margin to restaurant-level operating income and adjusted restaurant-level operating income and the corresponding margins for the periods indicated: Consolidated THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (dollars in thousands) JUNE 30, 2024 JUNE 25, 2023 JUNE 30, 2024 JUNE 25, 2023 Income from operations $ 46,131 $ 89,446 $ 123,224 $ 210,079 Operating income margin 4.1 % 7.8 % 5.3 % 8.8 % Less: Franchise and other revenues 15,301 15,364 31,141 31,876 Plus: Depreciation and amortization 49,525 47,565 98,807 93,867 General and administrative 61,152 63,358 127,928 129,162 Provision for impaired assets and restaurant closings 16,261 1,827 27,134 5,151 Restaurant-level operating income $ 157,768 $ 186,832 $ 345,952 $ 406,383 Restaurant-level operating margin 14.3 % 16.4 % 15.2 % 17.2 % Adjustments: Asset impairments and closure-related charges — — 434 — Total restaurant-level operating income adjustments — — 434 — Adjusted restaurant-level operating income $ 157,768 $ 186,832 $ 346,386 $ 406,383 Adjusted restaurant-level operating margin 14.3 % 16.4 % 15.2 % 17.2 % Segment Restaurant-level and Adjusted Restaurant-level Operating Income and Corresponding Margins Non-GAAP Reconciliations - The following tables reconcile segment Income (loss) 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: U.S. THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (dollars in thousands) JUNE 30, 2024 JUNE 25, 2023 JUNE 30, 2024 JUNE 25, 2023 Income from operations $ 79,677 $ 103,008 $ 177,161 $ 236,251 Operating income margin 8.2 % 10.2 % 8.8 % 11.3 % Less: Franchise and other revenues 12,085 11,791 24,293 24,218 Plus: Depreciation and amortization 40,616 39,376 80,584 77,539 General and administrative 26,112 22,436 51,908 47,941 Provision for impaired assets and restaurant closings 2,135 1,827 13,071 5,151 Restaurant-level operating income $ 136,455 $ 154,856 $ 298,431 $ 342,664 Restaurant-level operating margin 14.2 % 15.6 % 15.0 % 16.5 % Adjustments: Asset impairments and closure-related charges — — 434 — Total restaurant-level operating income adjustments — — 434 — Adjusted restaurant-level operating income $ 136,455 $ 154,856 $ 298,865 $ 342,664 Adjusted restaurant-level operating margin 14.2 % 15.6 % 15.0 % 16.5 % 37 Table of Contents BLOOMIN’ BRANDS, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued International THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (dollars in thousands) JUNE 30, 2024 JUNE 25, 2023 JUNE 30, 2024 JUNE 25, 2023 (Loss) income from operations $ (874) $ 20,486 $ 14,888 $ 44,994 Operating (loss) income margin (0.6) % 13.9 % 5.0 % 15.0 % Less: Franchise and other revenues 3,216 3,573 6,848 7,658 Plus: Depreciation and amortization 6,695 6,125 13,956 12,044 General and administrative 5,313 6,635 13,142 14,308 Provision for impaired assets and restaurant closings 14,126 — 14,063 — Restaurant-level operating income $ 22,044 $ 29,673 $ 49,201 $ 63,688 Restaurant-level operating margin 15.6 % 20.6 % 17.0 % 21.8 % 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: THIRTEEN WEEKS ENDED JUNE 30, 2024 JUNE 25, 2023 REPORTED AND ADJUSTED REPORTED AND ADJUSTED Restaurant sales 100.0 % 100.0 % Food and beverage 30.5 % 30.9 % Labor and other related 29.8 % 28.7 % Other restaurant operating 25.4 % 24.0 % Restaurant-level operating margin 14.3 % 16.4 % TWENTY-SIX WEEKS ENDED JUNE 30, 2024 JUNE 25, 2023 REPORTED AND ADJUSTED (1) REPORTED AND ADJUSTED Restaurant sales 100.0 % 100.0 % Food and beverage 30.4 % 31.1 % Labor and other related 29.4 % 28.2 % Other restaurant operating 25.0 % 23.5 % Restaurant-level operating margin 15.2 % 17.2 % _________________ (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. All restaurant-level operating margin adjustments for the periods presented were recorded within Labor and other related expense. 38 Table of Contents BLOOMIN’ BRANDS, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued 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: THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (dollars in thousands) JUNE 30, 2024 JUNE 25, 2023 JUNE 30, 2024 JUNE 25, 2023 Income from operations $ 46,131 $ 89,446 $ 123,224 $ 210,079 Operating income margin 4.1 % 7.8 % 5.3 % 8.8 % Adjustments: Total restaurant-level operating income adjustments (1) — — 434 — Asset impairments and closure-related charges (2) 16,225 — 28,746 — Strategic initiative fees (3) 1,000 — 1,000 — Total income from operations adjustments 17,225 — 30,180 — Adjusted income from operations $ 63,356 $ 89,446 $ 153,404 $ 210,079 Adjusted operating income margin 5.7 % 7.8 % 6.6 % 8.8 % _________________ (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 income adjustments. (2) Includes asset impairment, closure costs and severance primarily in connection with the Q2 2024 decision to close nine restaurants in Hong Kong and the Q4 2023 decision to close 36 older, predominately underperforming U.S. restaurants. (3) Represents fees incurred in connection with a project-based strategic initiative. The costs incurred represent third-party consulting fees related to a strategic initiative to develop revenue growth management capabilities for Outback Steakhouse and are included in General and administrative expense. We expect to incur additional fees for this project for the remainder of 2024. Given the expected magnitude and scope of this initiative and that it is not expected to recur in the foreseeable future after 2024, we consider these incremental expenses to be distinct from other consulting fees that we incur in the ordinary course of business and not reflective of the ongoing costs to operate our business or operating performance in the period. Adjusted Net Income and Adjusted Diluted Earnings Per Share Non-GAAP Reconciliations - The following table reconciles Net income (loss) attributable to Bloomin’ Brands to adjusted net income and adjusted diluted earnings per share for the periods indicated: THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (in thousands, except per share data) JUNE 30, 2024 JUNE 25, 2023 JUNE 30, 2024 JUNE 25, 2023 Net income (loss) attributable to Bloomin’ Brands $ 28,403 $ 68,277 $ (55,469) $ 159,588 Adjustments: Income from operations adjustments (1) 17,225 — 30,180 — Loss on extinguishment of debt (2) — — 135,797 — Total adjustments, before income taxes 17,225 — 165,977 — Adjustment to provision for income taxes (3) (602) — (1,968) — Net adjustments 16,623 — 164,009 — Adjusted net income $ 45,026 $ 68,277 $ 108,540 $ 159,588 Diluted earnings (loss) per share $ 0.32 $ 0.70 $ (0.64) $ 1.63 Adjusted diluted earnings per share (4)(5) $ 0.51 $ 0.70 $ 1.18 $ 1.63 Diluted weighted average common shares outstanding (5) 88,632 97,401 86,856 97,706 Adjusted diluted weighted average common shares outstanding (4)(5) 88,632 97,401 92,004 97,706 _________________ (1) See the Adjusted Income from Operations Non-GAAP Reconciliations table above for details regarding Income from operations adjustments. (2) Includes losses in connection with the 2025 Notes Partial Repurchase. See Note 10 - Convertible Senior Notes of the Notes to Consolidated Financial Statements for additional details. 39 Table of Contents BLOOMIN’ BRANDS, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued (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. The difference between GAAP and adjusted effective income tax rates during the thirteen weeks ended June 30, 2024 primarily relates to asset impairment and closure costs in Hong Kong with no corresponding tax benefit as a result of a full valuation allowance against deferred tax assets in that jurisdiction. The difference between GAAP and adjusted effective income tax rates for the twenty-six weeks ended June 30, 2024 primarily relates to nondeductible losses and other tax costs associated with the 2025 Notes Partial Repurchase. (4) Adjusted diluted weighted average common shares outstanding for the thirteen weeks ended June 30, 2024 and June 25, 2023 and the twenty-six weeks ended June 30, 2024 and June 25, 2023 were calculated including the effect of 1.0 million, 5.0 million, 2.7 million and 4.9 million dilutive securities, respectively, for outstanding 2025 Notes and the effect of 0.6 million, 3.3 million, 1.9 million and 3.2 million dilutive securities, respectively, for the Warrant Transactions, as defined below. In connection with the offering of the 2025 Notes, we entered into convertible note hedge transactions (the “Convertible Note Hedge Transactions”) and concurrently entered into warrant transactions relating to the same number of shares of our common stock (the “Warrant Transactions”). If our stock price is in excess of the conversion price of the 2025 Notes ($10.94 and $11.37 as of June 30, 2024 and June 25, 2023, respectively), the Convertible Note Hedge Transactions deliver shares to offset dilution from the 2025 Notes, which, in combination with the warrant transactions, effectively offset dilution from the 2025 Notes up to the strike price of the Warrant Transactions ($15.32 and $15.92 as of June 30, 2024 and June 25, 2023, respectively). Adjusted diluted earnings per share and adjusted diluted weighted average common shares outstanding for the thirteen and twenty-six weeks ended June 25, 2023 have been recast to remove the 5.0 million and 4.9 million share benefit, respectively, of the Convertible Note Hedge Transactions which was previously included as a non-GAAP share adjustment. (5) Due to a GAAP net loss, antidilutive securities are excluded from diluted weighted average common shares outstanding for the twenty-six weeks ended June 30, 2024. However, considering the adjusted net income position, adjusted diluted weighted average common shares outstanding incorporates securities that would have been dilutive for GAAP. 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. Management uses this information to make decisions about future plans for the development of additional restaurants and new concepts, as well as evaluation of current operations. System-wide sales comprise sales of Company-owned and franchised restaurants. 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 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 TWENTY-SIX WEEKS ENDED (dollars in millions) JUNE 30, 2024 JUNE 25, 2023 JUNE 30, 2024 JUNE 25, 2023 U.S. Outback Steakhouse $ 128 $ 131 $ 261 $ 267 Carrabba’s Italian Grill 11 12 23 25 Bonefish Grill 2 2 5 5 Aussie Grill 1 — 1 — U.S. total 142 145 290 297 International Outback Steakhouse - South Korea 70 76 152 170 Other (1) 24 25 48 52 International total 94 101 200 222 Total franchise sales $ 236 $ 246 $ 490 $ 519 _________________ (1) Includes franchise sales fo r off-premises only kitchens in South Korea. 40 Table of Contents BLOOMIN’ BRANDS, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Liquidity and Capital Resources Cash and Cash Equivalents As of June 30, 2024, we had $117.9 million in cash and cash equivalents, of which $59.2 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 June 30, 2024, we had aggregate undistributed foreign earnings of approximately $33.1 million that may be repatriated to the U.S. without additional material U.S. federal income tax. These amounts are not considered indefinitely reinvested in our foreign subsidiaries. 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 period indicated: SENIOR SECURED CREDIT FACILITY TOTAL CREDIT FACILITIES (dollars in thousands) REVOLVING CREDIT FACILITY 2025 NOTES 2029 NOTES Balance as of December 31, 2023 $ 381,000 $ 104,786 $ 300,000 $ 785,786 2024 new debt 860,000 — — 860,000 2024 payments (556,000) — — (556,000) 2024 repurchases and conversions — (84,062) — (84,062) Balance as of June 30, 2024 $ 685,000 $ 20,724 $ 300,000 $ 1,005,724 Interest rates, as of June 30, 2024 (1) 6.96 % 5.00 % 5.13 % Principal maturity date April 2026 May 2025 April 2029 ____________________ (1) The revolving credit facility interest rate represents the weighted average interest rate as of June 30, 2024. As of June 30, 2024, we had $297.2 million in available unused borrowing capacity under our revolving credit facility, net of letters of credit of $17.8 million. Our credit agreement, as amended, 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 12 - Long-term Debt, Net in our Annual Report on Form 10-K for the year ended December 31, 2023 for further information. As of June 30, 2024 and December 31, 2023, 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. 2025 Notes Partial Repurchase - On February 29, 2024, we and the Noteholders entered into the Exchange Agreements in which the Noteholders agreed to exchange $83.6 million in aggregate principal amount of our outstanding 2025 Notes for approximately 7.5 million shares of our common stock and $3.3 million in cash, including accrued interest. Convertible Note Hedge and Warrant Transactions - In connection with the 2025 Notes Partial Repurchase, we entered into the Early Termination Agreements with the Derivative Counterparties. Upon settlement, we received approximately $118.2 million in cash and 0.3 million shares of our common stock from the Derivative 41 Table of Contents BLOOMIN’ BRANDS, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Counterparties and paid $102.2 million in cash to the Derivative Counterparties during the twenty-six weeks ended June 30, 2024. See Note 10 - Convertible Senior Notes of the Notes to Consolidated Financial Statements for additional details regarding the 2025 Notes Partial Repurchase and related Early Termination Agreements. Use of Cash 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, remodeling or relocating older restaurants, investments in technology, dividend payments and share repurchases. 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. 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. Capital Expenditures - We estimate that our capital expenditures will total approximately $260 million to $270 million in 2024. 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. Brazil Judicial Deposit - In July 2024, we made a judicial deposit of $42.9 million in connection with our appeal of an unfavorable court ruling regarding our eligibility for tax exemptions under the Brazil tax legislation. The judicial deposit includes the disputed amounts through December 31, 2023 and was 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. Dividends and Share Repurchases - In July 2024, our Board declared a quarterly cash dividend of $0.24 per share, payable on September 4, 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. In February 2024, our Board canceled the remaining $57.5 million under our former share repurchase authorization and approved a new $350.0 million share repurchase 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. On March 1, 2024, we entered into the ASR Agreement, in connection with our previously announced 2024 Share Repurchase Program, with Wells Fargo to repurchase $220.0 million of our common stock. Under the ASR Agreement, we made an aggregate payment of $220.0 million to Wells Fargo and received an aggregate initial delivery of approximately 6.5 million shares of our common stock on March 4, 2024, representing approximately 80% of the total shares that are estimated to be repurchased under the ASR Agreement based on the price per share of common stock on that date. On April 23, 2024, we received 1.4 million additional shares of our common stock from Wells Fargo in connection with the final settlement of the ASR Agreement. See Note 11 - Stockholders’ Equity of the Notes to Consolidated Financial Statements for additional details regarding the ASR Agreement. As of June 30, 2024, $115.0 million remained available for repurchase under the 2024 Share Repurchase Program. 42 Table of Contents BLOOMIN’ BRANDS, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Following is a summary of dividends and share repurchases from fiscal year 2023 through June 30, 2024: (dollars in thousands) DIVIDENDS PAID SHARE REPURCHASES TOTAL Fiscal year 2023 $ 83,742 $ 70,000 $ 153,742 First fiscal quarter 2024 (1) 21,075 188,500 209,575 Second fiscal quarter 2024 (2) 20,762 59,000 79,762 Total (3) $ 125,579 $ 317,500 $ 443,079 ________________ (1) Excludes $0.4 million of fees recorded in Accumulated deficit related to repurchases under the ASR Agreement. (2) Includes $44.0 million of share repurchases in connection with the ASR Agreement that settled during the thirteen weeks ended June 30, 2024. (3) Subsequent to June 30, 2024, we repurchased $15.6 million of our common stock authorized under the 2024 Share Repurchase Program through August 2, 2024 under a Rule 10b5-1 plan. Summary of Cash Flows and Financial Condition 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: TWENTY-SIX WEEKS ENDED (dollars in thousands) JUNE 30, 2024 JUNE 25, 2023 Net cash provided by operating activities $ 116,192 $ 287,293 Net cash used in investing activities (131,218) (140,651) Net cash provided by (used in) financing activities 22,288 (143,214) Effect of exchange rate changes on cash and cash equivalents (3,716) 631 Net increase in cash, cash equivalents and restricted cash $ 3,546 $ 4,059 Operating Activities - The decrease in net cash provided by operating activities during the twenty-six weeks ended June 30, 2024 as compared to the twenty-six weeks ended June 25, 2023 was primarily due to changes in working capital and lower net earnings. Investing Activities - The decrease in net cash used in investing activities during the twenty-six weeks ended June 30, 2024 as compared to the twenty-six weeks ended June 25, 2023 was primarily due to lower capital expenditures. Financing Activities - The net cash provided by financing activities during the twenty-six weeks ended June 30, 2024 was due to net draws on the revolving credit facility exceeding cash used to repurchase common stock and pay dividends on our common stock, and net cash received from the Early Termination Agreements. Net cash used in financing activities during twenty-six weeks ended June 25, 2023 was primarily due to net repayments on our revolving credit facility, cash dividends on our common stock and repurchases of 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) JUNE 30, 2024 DECEMBER 31, 2023 Current assets $ 300,211 $ 343,314 Current liabilities 867,270 1,002,335 Working capital (deficit) $ (567,059) $ (659,021) Working capital (deficit) includes: (i) Unearned revenue primarily from unredeemed gift cards of $309.0 million and $381.9 million as of June 30, 2024 and December 31, 2023, respectively, and (ii) current operating lease liabilities of $169.4 million and $175.4 million as of June 30, 2024 and December 31, 2023, respectively, with the corresponding operating right-of-use assets recorded as non-current on our Consolidated Balance Sheets. We have, 43 Table of Contents BLOOMIN’ BRANDS, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued 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. Recently Issued Financial Accounting Standards For a description of recently issued Financial Accounting Standards that we adopted during the thirteen weeks ended June 30, 2024 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. 44 Table of Contents BLOOMIN’ BRANDS, INC.