ThZeal - The Zeal

blmn-20220925

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended September 25, 2022
or
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from ______ to ______

Commission File Number: 001-35625

BLOOMIN’ BRANDS, INC.

(Exact name of registrant as specified in its charter)


Delaware						20-8023465
(State or other jurisdiction of incorporation or organization)						(IRS Employer Identification No.)

2202 North West Shore Boulevard, Suite 500, Tampa, FL 33607

(Address of principal executive offices) (Zip Code)

(813) 282-1225

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

$0.01 par value

BLMN

The Nasdaq Stock Market LLC

(Nasdaq Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐

Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 27, 2022, 87,793,644 shares of common stock of the registrant were outstanding.

Table of Contents

BLOOMIN’ BRANDS, INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

For the Quarterly Period Ended September 25, 2022

(Unaudited)

TABLE OF CONTENTS


	PART I — FINANCIAL INFORMATION	Page No.

Item 1.	Financial Statements (Unaudited)	3

	Consolidated Financial Statements:

	Consolidated Balance Sheets — September 25, 2022 and December 26, 2021	3

	Consolidated Statements of Operations and Comprehensive Income — For the Thirteen and Thirty-Nine Weeks Ended September 25, 2022 and September 26, 2021	4

	Consolidated Statements of Changes in Stockholders’ Equity — For the Thirteen and Thirty-Nine Weeks Ended September 25, 2022 and September 26, 2021	5

	Condensed Consolidated Statements of Cash Flows — For the Thirty-Nine Weeks Ended September 25, 2022 and September 26, 2021	7

	Notes to Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	50

Item 4.	Controls and Procedures	50

	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	51

Item 1A.	Risk Factors	51

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51



Item 6.	Exhibits	52

	Signature	53

Table of Contents

BLOOMIN’ BRANDS, INC.

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA, UNAUDITED)


	SEPTEMBER 25, 2022		DECEMBER 26, 2021
ASSETS
Current assets
Cash and cash equivalents	$	90,678	$	87,585
Restricted cash and cash equivalents	143		1,472
Inventories	83,250		79,112

Other current assets, net	101,639		184,623
Total current assets	275,710		352,792


Property, fixtures and equipment, net	875,567		842,012
Operating lease right-of-use assets	1,115,004		1,130,873
Goodwill	273,100		268,444
Intangible assets, net	449,975		453,412
Deferred income tax assets, net	158,883		168,068
Other assets, net	70,962		78,670
Total assets	$	3,219,201	$	3,294,271


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	187,825	$	167,978
Accrued and other current liabilities	430,185		406,894
Unearned revenue	291,831		398,795

Current portion of long-term debt	1,481		10,958
Total current liabilities	911,322		984,625

Non-current operating lease liabilities	1,160,657		1,179,447


Long-term debt, net	820,225		782,107
Other long-term liabilities, net	86,852		125,242
Total liabilities	2,979,056		3,071,421
Commitments and contingencies (Note 15)


Stockholders’ equity
Bloomin’ Brands stockholders’ equity
Preferred stock, $0.01 par value, 25,000,000 shares authorized; no shares issued and outstanding as of September 25, 2022 and December 26, 2021	—		—
Common stock, $0.01 par value, 475,000,000 shares authorized; 88,449,929 and 89,252,823 shares issued and outstanding as of September 25, 2022 and December 26, 2021, respectively	884		893
Additional paid-in capital	1,159,722		1,119,728
Accumulated deficit	(735,268)		(698,171)
Accumulated other comprehensive loss	(186,840)		(205,989)
Total Bloomin’ Brands stockholders’ equity	238,498		216,461
Noncontrolling interests	1,647		6,389
Total stockholders’ equity	240,145		222,850
Total liabilities and stockholders’ equity	$	3,219,201	$	3,294,271

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

BLOOMIN’ BRANDS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)


	THIRTEEN WEEKS ENDED				THIRTY-NINE WEEKS ENDED
	SEPTEMBER 25, 2022		SEPTEMBER 26, 2021		SEPTEMBER 25, 2022		SEPTEMBER 26, 2021
Revenues
Restaurant sales	$	1,040,375	$	996,718	$	3,272,868	$	3,031,396
Franchise and other revenues	15,388		13,745		48,592		43,906
Total revenues	1,055,763		1,010,463		3,321,460		3,075,302
Costs and expenses
Food and beverage costs	332,939		304,300		1,056,768		908,272
Labor and other related	303,244		290,246		924,514		859,883
Other restaurant operating	267,944		299,788		790,583		762,531
Depreciation and amortization	42,171		40,827		125,203		122,592
General and administrative	56,089		58,880		174,009		182,590
Provision for impaired assets and restaurant closings	2,067		1,585		4,099		8,962
Total costs and expenses	1,004,454		995,626		3,075,176		2,844,830
Income from operations	51,309		14,837		246,284		230,472
Loss on extinguishment and modification of debt	—		—		(107,630)		(2,073)
Loss on fair value adjustment of derivatives, net	—		—		(17,685)		—
Other income, net	—		5		—		26
Interest expense, net	(12,696)		(14,245)		(38,877)		(43,863)
Income before provision (benefit) for income taxes	38,613		597		82,092		184,562
Provision (benefit) for income taxes	5,563		(4,454)		33,028		24,827
Net income	33,050		5,051		49,064		159,735
Less: net income attributable to noncontrolling interests	1,064		1,602		5,202		4,879
Net income attributable to Bloomin’ Brands	$	31,986	$	3,449	$	43,862	$	154,856



Net income	$	33,050	$	5,051	$	49,064	$	159,735
Other comprehensive income:
Foreign currency translation adjustment	(13,041)		1,673		10,182		5,113

Unrealized (loss) gain on derivatives, net of tax	—		(153)		573		(323)
Reclassification of adjustments for loss on derivatives included in Net income, net of tax	—		1,519		954		6,036
Impact of terminated interest rate swaps included in Net income, net of tax	2,255		1,479		7,440		2,950
Comprehensive income	22,264		9,569		68,213		173,511
Less: comprehensive income attributable to noncontrolling interests	1,064		1,602		5,202		4,879
Comprehensive income attributable to Bloomin’ Brands	$	21,200	$	7,967	$	63,011	$	168,632

Earnings per share:
Basic	$	0.36	$	0.04	$	0.49	$	1.74
Diluted	$	0.34	$	0.03	$	0.44	$	1.42
Weighted average common shares outstanding:
Basic	89,192		89,229		89,149		88,890
Diluted	94,736		107,783		99,609		109,410

The accompanying notes are an integral part of these consolidated financial statements.

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BLOOMIN’ BRANDS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)


	BLOOMIN’ BRANDS, INC.
	COMMON STOCK			ADDITIONAL PAID-IN CAPITAL		ACCUM- ULATED DEFICIT		ACCUMULATED OTHER COMPREHENSIVE LOSS		NON-CONTROLLING INTERESTS		TOTAL
	SHARES	AMOUNT
Balance, June 26, 2022	90,151	$	902	$	1,169,697	$	(733,723)	$	(176,054)	$	1,919	$	262,741

Net income	—	—		—		31,986		—		1,064		33,050
Other comprehensive loss, net of tax	—	—		—		—		(10,786)		—		(10,786)
Cash dividends declared, $0.14 per common share	—	—		(12,475)		—		—		—		(12,475)
Repurchase and retirement of common stock	(1,746)	(18)		—		(33,531)		—		—		(33,549)
Stock-based compensation	—	—		2,013		—		—		—		2,013

Common stock issued under stock plans (1)	45	—		487		—		—		—		487

Distributions to noncontrolling interests	—	—		—		—		—		(1,477)		(1,477)
Contributions from noncontrolling interests	—	—		—		—		—		141		141








Balance, September 25, 2022	88,450	$	884	$	1,159,722	$	(735,268)	$	(186,840)	$	1,647	$	240,145

Balance, December 26, 2021	89,253	$	893	$	1,119,728	$	(698,171)	$	(205,989)	$	6,389	$	222,850

Net income	—	—		—		43,862		—		5,202		49,064
Other comprehensive income, net of tax	—	—		—		—		19,149		—		19,149
Cash dividends declared, $0.42 per common share	—	—		(37,452)		—		—		—		(37,452)
Repurchase and retirement of common stock	(4,058)	(41)		—		(80,959)		—		—		(81,000)
Stock-based compensation	—	—		11,815		—		—		—		11,815

Common stock issued under stock plans (1)	942	9		2,485		—		—		—		2,494
Purchase of noncontrolling interests, net of tax of $254	—	—		(735)		—		—		(3,915)		(4,650)
Distributions to noncontrolling interests	—	—		—		—		—		(6,631)		(6,631)
Contributions from noncontrolling interests	—	—		—		—		—		602		602




Retirement of convertible senior note hedges	—	—		112,956		—		—		—		112,956
Retirement of warrants	—	—		(97,617)		—		—		—		(97,617)
Issuance of common stock from repurchase of convertible senior notes	2,313	23		48,542		—		—		—		48,565
Balance, September 25, 2022	88,450	$	884	$	1,159,722	$	(735,268)	$	(186,840)	$	1,647	$	240,145

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BLOOMIN’ BRANDS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)


	BLOOMIN’ BRANDS, INC.
	COMMON STOCK			ADDITIONAL PAID-IN CAPITAL		ACCUM- ULATED DEFICIT		ACCUMULATED OTHER COMPREHENSIVE LOSS		NON-CONTROLLING INTERESTS		TOTAL
	SHARES	AMOUNT
Balance, June 27, 2021	89,211	$	892	$	1,109,904	$	(762,319)	$	(202,188)	$	6,618	$	152,907
Net income	—	—		—		3,449		—		1,602		5,051
Other comprehensive income, net of tax	—	—		—		—		4,518		—		4,518


Stock-based compensation	—	—		5,593		—		—		—		5,593

Common stock issued under stock plans (1)	37	—		(42)		—		—		—		(42)

Purchase of noncontrolling interests	—	—		9		—		—		(12)		(3)

Distributions to noncontrolling interests	—	—		—		—		—		(2,062)		(2,062)
Contributions from noncontrolling interests	—	—		—		—		—		374		374




Balance, September 26, 2021	89,248	$	892	$	1,115,464	$	(758,870)	$	(197,670)	$	6,520	$	166,336

Balance, December 27, 2020	87,856	$	879	$	1,132,808	$	(918,096)	$	(211,446)	$	6,812	$	10,957
Cumulative-effect from a change in accounting principle, net of tax	—	—		(47,323)		4,370		—		—		(42,953)
Net income	—	—		—		154,856		—		4,879		159,735
Other comprehensive income, net of tax	—	—		—		—		13,776		—		13,776


Stock-based compensation	—			20,100		—		—		—		20,100


Common stock issued under stock plans (1)	1,392	13		9,870		—		—		—		9,883

Purchase of noncontrolling interests	—	—		9		—		—		(12)		(3)

Distributions to noncontrolling interests	—	—		—		—		—		(6,203)		(6,203)
Contributions from noncontrolling interests	—	—		—		—		—		1,044		1,044



Balance, September 26, 2021	89,248	$	892	$	1,115,464	$	(758,870)	$	(197,670)	$	6,520	$	166,336

________________

(1)Net of forfeitures and shares withheld for employee taxes.

The accompanying notes are an integral part of these consolidated financial statements.

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BLOOMIN’ BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS, UNAUDITED)


	THIRTY-NINE WEEKS ENDED
	SEPTEMBER 25, 2022		SEPTEMBER 26, 2021

Cash flows provided by operating activities:
Net income	$	49,064	$	159,735
Adjustments to reconcile Net income to cash provided by operating activities:
Depreciation and amortization	125,203		122,592
Amortization of debt discounts and issuance costs	2,779		3,441
Amortization of deferred gift card sales commissions	18,213		19,277
Provision for impaired assets and restaurant closings	4,099		8,962

Non-cash interest expense from terminated interest rate swaps	10,014		3,973
Non-cash operating lease costs	62,539		57,791


Stock-based and other non-cash compensation expense	11,815		20,100
Deferred income tax expense	6,604		3,842


Loss on extinguishment and modification of debt	107,630		2,073



Loss on fair value adjustment of derivatives, net	17,685		—
Other, net	5,381		(946)
Change in assets and liabilities	(128,447)		(96,594)






Net cash provided by operating activities	292,579		304,246
Cash flows used in investing activities:
Proceeds from disposal of property, fixtures and equipment	207		7,052
Proceeds received on life insurance policies	14,598		9,270


Capital expenditures	(137,260)		(85,339)
Other investments, net	1,000		(68)
Net cash used in investing activities	$	(121,455)	$	(69,085)

	(CONTINUED...)

Table of Contents

BLOOMIN’ BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS, UNAUDITED)


	THIRTY-NINE WEEKS ENDED
	SEPTEMBER 25, 2022		SEPTEMBER 26, 2021

Cash flows used in financing activities:
Proceeds from issuance of long-term debt	$	—	$	200,000

Repayments of long-term debt and finance lease obligations	(196,076)		(428,364)
Proceeds from borrowings on revolving credit facilities	929,500		378,000
Repayments of borrowings on revolving credit facilities	(589,500)		(701,000)

Financing fees	(1,205)		(5,868)
Proceeds from issuance of senior notes	—		300,000




Issuance costs related to senior notes	—		(5,546)
Repurchase of convertible senior notes	(196,919)		—
Proceeds from retirement of convertible senior note hedges	131,869		—
Payments for retirement of warrants	(114,825)		—
Proceeds from share-based compensation, net	2,494		9,883
Distributions to noncontrolling interests	(6,631)		(6,203)
Contributions from noncontrolling interests	602		1,044
Purchase of noncontrolling interests	(4,904)		(3)
Payments for partner equity plan	(7,813)		(7,135)
Repurchase of common stock	(79,900)		—



Cash dividends paid on common stock	(37,452)		—

Net cash used in financing activities	(170,760)		(265,192)
Effect of exchange rate changes on cash and cash equivalents	1,400		207

Net increase (decrease) in cash, cash equivalents and restricted cash	1,764		(29,824)
Cash, cash equivalents and restricted cash as of the beginning of the period	89,057		110,408
Cash, cash equivalents and restricted cash as of the end of the period	$	90,821	$	80,584
Supplemental disclosures of cash flow information:
Cash paid for interest	$	23,050	$	28,787
Cash paid for income taxes, net of refunds	$	25,354	$	23,449
Supplemental disclosures of non-cash investing and financing activities:

Leased assets obtained in exchange for new operating lease liabilities	$	44,556	$	38,154
Leased assets obtained in exchange for new finance lease liabilities	$	2,417	$	1,229
Increase in liabilities from the acquisition of property, fixtures and equipment	$	14,961	$	3,006

The accompanying notes are an integral part of these consolidated financial statements.

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Description of the Business and Basis of Presentation

Description of the Business - Bloomin’ Brands (“Bloomin’ Brands” or the “Company”) owns and operates casual, upscale casual and fine dining restaurants. The Company’s restaurant portfolio has four concepts: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar. Additional Outback Steakhouse, Carrabba’s Italian Grill and Bonefish Grill restaurants in which the Company has no direct investment are operated under franchise agreements.

Basis of Presentation - The accompanying interim unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles in the United States (“U.S. GAAP”) for complete financial statements. In the opinion of the Company, all adjustments necessary for fair financial statement presentation for the periods presented have been included and are of a normal, recurring nature. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 26, 2021.

Recently Issued Financial Accounting Standards Not Yet Adopted - In November 2021, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance” (“ASU No. 2021-10”), which requires financial statement footnote disclosure regarding government assistance accounted for by applying a grant or contribution accounting model by analogy. ASU No. 2021-10 is effective for the Company for the fiscal year ending December 25, 2022. Upon adoption of ASU No. 2021-10 during the fourth quarter of 2022, the Company anticipates government assistance financial statement footnote disclosures within the 2022 Form 10-K, primarily in connection with employee retention credits provided under the Coronavirus, Aid, Relief and Economic Security (“CARES”) Act.

Recent accounting guidance not discussed herein is not applicable, did not have, or is not expected to have a material impact to the Company.

Reclassifications - The Company reclassified certain items in the accompanying consolidated financial statements for prior periods to be comparable with the classification for the current period, including, but not limited to, presentation of certain items within the condensed consolidated statements of cash flows and certain notes to the consolidated financial statements. These reclassifications had no effect on previously reported net income.

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

2. Revenue Recognition

The following table includes the categories of revenue included in the Company’s Consolidated Statements of Operations and Comprehensive Income for the periods indicated:


	THIRTEEN WEEKS ENDED				THIRTY-NINE WEEKS ENDED
(dollars in thousands)	SEPTEMBER 25, 2022		SEPTEMBER 26, 2021		SEPTEMBER 25, 2022		SEPTEMBER 26, 2021
Revenues
Restaurant sales	$	1,040,375	$	996,718	$	3,272,868	$	3,031,396
Franchise and other revenues
Franchise revenues	11,826		12,908		37,828		31,918
Other revenues (1)	3,562		837		10,764		11,988
Total Franchise and other revenues	15,388		13,745		48,592		43,906
Total revenues	$	1,055,763	$	1,010,463	$	3,321,460	$	3,075,302

________________

(1)The thirteen and thirty-nine weeks ended September 26, 2021 include an adjustment of $(3.2) million to reduce the Company’s initial recorded estimate and net $3.1 million benefit, respectively, within other revenues in connection with favorable court rulings in Brazil regarding the calculation methodology and taxable base of Program of Social Integration (“PIS”) and Contribution for the Financing of Social Security (“COFINS”) taxes. The net amount recognized as a result of the favorable court rulings primarily represents refundable PIS and COFINS taxes for prior years, including accrued interest.

The following tables include the disaggregation of Restaurant sales and franchise revenues, by restaurant concept and major international market for the periods indicated:


	THIRTEEN WEEKS ENDED
	SEPTEMBER 25, 2022				SEPTEMBER 26, 2021
(dollars in thousands)	RESTAURANT SALES		FRANCHISE REVENUES		RESTAURANT SALES		FRANCHISE REVENUES
U.S.
Outback Steakhouse	$	536,793	$	7,447	$	523,142	$	9,335
Carrabba’s Italian Grill	159,728		738		159,147		482
Bonefish Grill	130,669		163		134,603		169
Fleming’s Prime Steakhouse & Wine Bar	80,748		—		79,687		—
Other	2,741		17		2,211		3
U.S. total	910,679		8,365		898,790		9,989
International
Outback Steakhouse Brazil	105,932		—		74,020		—
Other (1)	23,764		3,461		23,908		2,919
International total	129,696		3,461		97,928		2,919
Total	$	1,040,375	$	11,826	$	996,718	$	12,908

________________

(1)Includes Restaurant sales for Company-owned Outback Steakhouse restaurants outside of Brazil and Abbraccio restaurants in Brazil. Franchise revenues primarily includes revenues from franchised Outback Steakhouse restaurants.

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued


















	THIRTY-NINE WEEKS ENDED
	SEPTEMBER 25, 2022				SEPTEMBER 26, 2021
(dollars in thousands)	RESTAURANT SALES		FRANCHISE REVENUES		RESTAURANT SALES		FRANCHISE REVENUES
U.S.
Outback Steakhouse	$	1,705,749	$	24,062	$	1,649,433	$	20,709
Carrabba’s Italian Grill	505,546		2,196		488,241		1,764
Bonefish Grill	427,557		513		410,613		473
Fleming’s Prime Steakhouse & Wine Bar	272,343		—		234,099		—
Other	9,046		30		6,756		3
U.S. total	2,920,241		26,801		2,789,142		22,949
International
Outback Steakhouse Brazil	291,880		—		178,178		—
Other (1)	60,747		11,027		64,076		8,969
International total	352,627		11,027		242,254		8,969
Total	$	3,272,868	$	37,828	$	3,031,396	$	31,918

________________

The following table includes a detail of assets and liabilities from contracts with customers included on the Company’s Consolidated Balance Sheets as of the periods indicated:


(dollars in thousands)	SEPTEMBER 25, 2022		DECEMBER 26, 2021
Other current assets, net
Deferred gift card sales commissions	$	10,798	$	17,793

Unearned revenue
Deferred gift card revenue	$	283,559	$	387,945
Deferred loyalty revenue	5,226		9,386
Deferred franchise fees - current	457		443
Other	2,589		1,021
Total unearned revenue	$	291,831	$	398,795

Other long-term liabilities, net
Deferred franchise fees - non-current	$	4,244	$	4,280

The following table is a rollforward of deferred gift card sales commissions for the periods indicated:


	THIRTEEN WEEKS ENDED				THIRTY-NINE WEEKS ENDED
(dollars in thousands)	SEPTEMBER 25, 2022		SEPTEMBER 26, 2021		SEPTEMBER 25, 2022		SEPTEMBER 26, 2021
Balance, beginning of the period	$	12,338	$	12,548	$	17,793	$	19,300
Deferred gift card sales commissions amortization	(4,755)		(4,841)		(18,213)		(19,277)
Deferred gift card sales commissions capitalization	3,836		3,698		13,441		12,494
Other	(621)		(573)		(2,223)		(1,685)
Balance, end of the period	$	10,798	$	10,832	$	10,798	$	10,832

Table of Contents

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

The following table is a rollforward of unearned gift card revenue for the periods indicated:


	THIRTEEN WEEKS ENDED				THIRTY-NINE WEEKS ENDED
(dollars in thousands)	SEPTEMBER 25, 2022		SEPTEMBER 26, 2021		SEPTEMBER 25, 2022		SEPTEMBER 26, 2021
Balance, beginning of the period	$	303,544	$	293,955	$	387,945	$	373,048
Gift card sales	46,692		45,036		162,146		153,126
Gift card redemptions	(63,041)		(61,189)		(252,091)		(237,988)
Gift card breakage	(3,636)		(3,598)		(14,441)		(13,982)
Balance, end of the period	$	283,559	$	274,204	$	283,559	$	274,204

3. Impairments and Exit Costs

The components of Provision for impaired assets and restaurant closings are as follows for the period indicated:


	THIRTY-NINE WEEKS ENDED
(dollars in thousands)	SEPTEMBER 26, 2021
Impairment losses
U.S.	$	8,289
International	180
Corporate	257
Total impairment losses	8,726
Restaurant closure charges (benefits)
U.S.	389
International	(153)
Total restaurant closure charges	236
Provision for impaired assets and restaurant closings	$	8,962

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

Annual Goodwill and Intangible Asset Impairment Assessment - The Company performs its annual assessment for impairment of goodwill and other indefinite-lived intangible assets during its second fiscal quarter. The Company’s 2022 and 2021 assessments were qualitative. In connection with these assessments, the Company did not record any impairment charges.

Accrued Facility Closure and Other Costs Rollforward - The following table is a rollforward of the Company’s closed facility lease liabilities and other accrued costs associated with the closure and restructuring initiatives for the period indicated:


	THIRTY-NINE WEEKS ENDED
(dollars in thousands)	SEPTEMBER 25, 2022
Balance, beginning of the period	$	8,485

Cash payments	(2,813)
Accretion	434
Adjustments	(272)
Balance, end of the period (1)	$	5,834

________________

(1)As of September 25, 2022, the Company had exit-related accruals related to certain closure and restructuring initiatives of $1.5 million recorded in Accrued and other current liabilities and $4.3 million recorded in Non-current operating lease liabilities on its Consolidated Balance Sheet.

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

4. Earnings Per Share

In February 2021, the Company provided the trustee of its convertible senior notes due in 2025 (the “2025 Notes”) notice of the Company’s irrevocable election to settle the principal portion of the 2025 Notes in cash and any excess in shares. As a result, subsequent to the election, only the amounts in excess of the principal amount are considered in diluted earnings per share. The amount of the 2025 Notes settled in shares of common stock will have a dilutive impact on diluted earnings per share when the average market price of the Company’s common stock for a given period exceeds the conversion price, which was initially $11.89 per share of common stock.

In connection with the offering of the 2025 Notes, the Company entered into warrant transactions (the “Warrant Transactions”), which have a dilutive effect on the Company’s common stock to the extent the price of its common stock exceeds the strike price of the Warrant Transactions, which was initially $16.64.

The following table presents the computation of basic and diluted earnings per share for the periods indicated:


	THIRTEEN WEEKS ENDED				THIRTY-NINE WEEKS ENDED
(in thousands, except per share data)	SEPTEMBER 25, 2022		SEPTEMBER 26, 2021		SEPTEMBER 25, 2022		SEPTEMBER 26, 2021
Net income attributable to Bloomin’ Brands	$	31,986	$	3,449	$	43,862	$	154,856


Convertible senior notes if-converted method interest adjustment, net of tax (1)	—		—		—		460
Diluted net income attributable to Bloomin’ Brands	$	31,986	$	3,449	$	43,862	$	155,316

Basic weighted average common shares outstanding	89,192		89,229		89,149		88,890

Effect of dilutive securities:
Stock options	173		864		261		913
Nonvested restricted stock units	117		286		167		380
Nonvested performance-based share units	—		—		96		31
Convertible senior notes (1)(2)	3,690		10,476		6,732		12,300
Warrants (2)	1,564		6,928		3,204		6,896
Diluted weighted average common shares outstanding	94,736		107,783		99,609		109,410

Basic earnings per share	$	0.36	$	0.04	$	0.49	$	1.74
Diluted earnings per share	$	0.34	$	0.03	$	0.44	$	1.42

________________

(1)Adjustment for interest related to the 2025 Notes weighted for the portion of the period prior to the Company’s election under the 2025 Notes indenture to settle the principal portion of the 2025 Notes in cash. Effective with the Company’s election, there will be no further numerator adjustments for interest or denominator adjustments for shares required to settle the principal portion.

(2)During the thirty-nine weeks ended September 25, 2022, the Company repurchased $125.0 million of the 2025 Notes and retired the corresponding portion of the related warrants. See Note 8 - Convertible Senior Notes for additional details.

Share-based compensation-related weighted average securities outstanding not included in the computation of earnings per share because their effect was antidilutive were as follows for the periods indicated:


	THIRTEEN WEEKS ENDED		THIRTY-NINE WEEKS ENDED
(shares in thousands)	SEPTEMBER 25, 2022	SEPTEMBER 26, 2021	SEPTEMBER 25, 2022	SEPTEMBER 26, 2021
Stock options	2,297	—	2,012	455
Nonvested restricted stock units	150	77	249	53
Nonvested performance-based share units	771	376	574	424

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

5. Stock-based Compensation Plans

The Company recognized stock-based compensation expense as follows for the periods indicated:


	THIRTEEN WEEKS ENDED				THIRTY-NINE WEEKS ENDED
(dollars in thousands)	SEPTEMBER 25, 2022		SEPTEMBER 26, 2021		SEPTEMBER 25, 2022		SEPTEMBER 26, 2021
Performance-based share units (1)	$	67	$	3,026	$	5,526	$	11,813
Restricted stock units	1,872		2,043		5,709		6,373
Stock options	38		495		470		1,829

	$	1,977	$	5,564	$	11,705	$	20,015

________________

(1)The thirteen and thirty-nine weeks ended September 25, 2022 include a cumulative life-to-date adjustment to decrease expense for PSUs granted in fiscal year 2020 based on revised Company projections of performance criteria set forth in the award agreements. The thirty-nine weeks ended September 26, 2021 includes a cumulative life-to-date adjustment to increase expense for PSUs granted in fiscal years 2019, 2020 and 2021 based on revised Company projections of performance criteria set forth in the award agreements.

In February 2022, the Company granted 0.5 million performance-based share units (“PSUs”) subject to final payout modification by a Relative Total Shareholder Return (“Relative TSR”) modifier. This Relative TSR modifier can adjust the final payout outcome by 75%, 100% or 125% of the achieved performance metric, with the overall payout capped at 200% of the annual target grant. These PSUs have a three-year cliff vesting period and their fair value was estimated using the Monte Carlo simulation model.

Assumptions used in the Monte Carlo simulation model and the grant date fair value of PSUs granted were as follows for the periods indicated:


	THIRTY-NINE WEEKS ENDED
	SEPTEMBER 25, 2022			SEPTEMBER 26, 2021
Assumptions:
Risk-free interest rate (1)	1.64		%	0.20		%
Dividend yield (2)	2.31		%	—		%

Volatility (3)	49.11		%	48.45		%

Grant date fair value per unit (4)	$	26.10		$	29.73

________________

(1)Risk-free interest rate is the U.S. Treasury yield curve in effect as of the grant date for the performance period of the unit.

(2)Dividend yield is the level of dividends expected to be paid on the Company’s common stock over the expected term.

(3)Based on the historical volatility of the Company’s stock over the last seven years.

(4)Represents a premium above the per share value of the Company’s common stock for the Relative TSR modifier as of the grant date of 7.9% and 14.3% for grants during the thirty-nine weeks ended September 25, 2022 and September 26, 2021, respectively.

The following represents unrecognized stock-based compensation expense and the remaining weighted average vesting period as of September 25, 2022:


	UNRECOGNIZED COMPENSATION EXPENSE (dollars in thousands)		REMAINING WEIGHTED AVERAGE VESTING PERIOD (in years)
Performance-based share units	$	14,620	1.4
Restricted stock units	$	9,673	1.8

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

6. Other Current Assets, Net

Other current assets, net, consisted of the following as of the periods indicated:


(dollars in thousands)	SEPTEMBER 25, 2022		DECEMBER 26, 2021
Prepaid expenses	$	31,468	$	21,194
Accounts receivable - gift cards, net	8,584		91,248
Accounts receivable - vendors, net	18,348		11,793
Accounts receivable - franchisees, net	2,124		1,701
Accounts receivable - other, net	17,322		18,353
Deferred gift card sales commissions	10,798		17,793

Company-owned life insurance policies	7,420		17,244
Other current assets, net	5,575		5,297
	$	101,639	$	184,623

7. Long-term Debt, Net

Following is a summary of outstanding Long-term debt, net as of the periods indicated:


	SEPTEMBER 25, 2022				DECEMBER 26, 2021
(dollars in thousands)	OUTSTANDING BALANCE		INTEREST RATE		OUTSTANDING BALANCE		INTEREST RATE
Senior Secured Credit Facility:
Term loan A (1)	$	—			$	195,000	1.60	%
Revolving credit facility (2)	420,000		4.26	%	80,000		3.75	%
Total Senior Secured Credit Facility	420,000				275,000




2025 Notes (3)	105,000		5.00	%	230,000		5.00	%
2029 Notes	300,000		5.13	%	300,000		5.13	%
Finance lease liabilities	3,816				2,376

Less: unamortized debt discount and issuance costs (4)	(6,836)				(14,157)
Less: finance lease interest	(274)				(154)
Total debt, net	821,706				793,065
Less: current portion of long-term debt	(1,481)				(10,958)
Long-term debt, net	$	820,225			$	782,107

________________

(1)Interest rate represents the weighted average interest rate as of December 26, 2021.

(2)Interest rate represents the weighted average interest rate as of September 25, 2022 and the base rate option elected in anticipation of impending repayment as of December 26, 2021.

(3)During the thirty-nine weeks ended September 25, 2022, the Company repurchased $125.0 million of the 2025 Notes. See Note 8 - Convertible Senior Notes for additional details.

(4)In connection with the Amended Credit Agreement and the partial repurchase of the 2025 Notes, $5.7 million of debt issuance costs were written off during the thirty-nine weeks ended September 25, 2022. See Note 8 - Convertible Senior Notes for additional details.

Credit Agreement Amendment - On April 16, 2021, the Company and its wholly-owned subsidiary, OSI Restaurant Partners, LLC (“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”), maturing on April 16, 2026.

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

On April 26, 2022, the Company 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 the Company’s existing revolving credit facility from $800.0 million to $1.0 billion and a transition from London Inter-Bank Offered Rate (“LIBOR”) to 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. The total indebtedness of the Company remained unchanged as a result of the Amended Credit Agreement.

Under the Amended Credit Agreement, the Company may elect an interest rate at each reset period based on the Base Rate or Adjusted Term SOFR, plus an applicable spread. The Base Rate option is the highest of: (i) the prime rate of Wells Fargo Bank, National Association, (ii) the federal funds effective rate plus 0.5 of 1.0% or (iii) the Adjusted Term SOFR with a one-month interest period plus 1.0% (the “Base Rate”). The Adjusted Term SOFR option is the 30, 90 or 180-day SOFR, plus a term SOFR adjustment of 0.10%, subject to a 0% floor (the “Adjusted Term SOFR”). The interest rate spreads are as follows:


	BASE RATE ELECTION	ADJUSTED TERM SOFR ELECTION
Revolving credit facility	50 to 150 basis points over the Base Rate	150 to 250 basis points over the Adjusted Term SOFR

The transition to SOFR did not materially impact the interest rate applied to the Company’s borrowings. No other material changes were made to the terms of the Company’s Credit Agreement as a result of the Amended Credit Agreement.

As of September 25, 2022 and December 26, 2021, the Company was in compliance with its debt covenants.

Following is a summary of principal payments of the Company’s total consolidated debt outstanding as of the period indicated:


(dollars in thousands)	SEPTEMBER 25, 2022
Year 1	$	1,250
Year 2	1,202
Year 3	105,662
Year 4	420,350
Year 5	220
Thereafter	300,132
Total payments	828,816
Less: unamortized debt discount and issuance costs	(6,836)
Less: finance lease interest	(274)
Total principal payments	$	821,706

8. Convertible Senior Notes

2025 Notes - On May 25, 2022, the Company entered into exchange agreements (the “Exchange Agreements”) with certain holders (the “Noteholders”) of the 2025 Notes. The Noteholders agreed to exchange $125.0 million in aggregate principal amount of the Company’s outstanding 2025 Notes for $196.9 million in cash, plus accrued interest, and approximately 2.3 million shares of the Company’s common stock (the “2025 Notes Partial Repurchase”). Under the Exchange Agreements, the total amount of cash paid and number of shares of common stock issued by the Company were based upon the volume-weighted average price per share of the Company’s common stock during a ten-trading day averaging period ending on June 14, 2022. Upon entering into the Exchange Agreements, the conversion feature related to the 2025 Notes repurchased, as well as the settlements of the related

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

convertible senior note hedges and warrants, were subject to derivative accounting. In connection with the 2025 Notes Partial Repurchase, the Company 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, and recorded a $48.5 million increase to Additional paid-in capital during the thirty-nine weeks ended September 25, 2022.

The initial conversion rate applicable to the 2025 Notes was 84.122 shares of common stock per $1,000 principal amount of 2025 Notes, or a total of approximately 19.348 million shares for the total $230.0 million principal amount. This initial conversion rate was equivalent to an initial conversion price of approximately $11.89 per share. In connection with dividends paid during the thirty-nine weeks ended September 25, 2022, the conversion rate for the remaining 2025 Notes decreased to approximately $11.66 per share, which represents 85.743 shares of common stock per $1,000 principal amount of the 2025 Notes, or a total of approximately 9.003 million shares.

The following table includes the outstanding principal amount and carrying value of the 2025 Notes as of the periods indicated:


(dollars in thousands)	SEPTEMBER 25, 2022		DECEMBER 26, 2021
Long-term debt, net
Principal	$	105,000	$	230,000
Less: debt issuance costs (1)	(2,132)		(5,898)
Net carrying amount	$	102,868	$	224,102

________________

(1)Debt issuance costs are amortized to Interest expense, net using the effective interest method over the 2025 Notes’ expected life. During the thirty-nine weeks ended September 25, 2022, the Company wrote off $2.8 million of debt issuance costs as a result of the 2025 Notes Partial Repurchase.

Following is a summary of interest expense for the 2025 Notes, by component for the periods indicated:


	THIRTEEN WEEKS ENDED				THIRTY-NINE WEEKS ENDED
(dollars in thousands)	SEPTEMBER 25, 2022		SEPTEMBER 26, 2021		SEPTEMBER 25, 2022		SEPTEMBER 26, 2021
Coupon interest	$	1,313	$	2,875	$	6,785	$	8,625
Debt issuance cost amortization	190		392		963		1,159
Total interest expense (1)	$	1,503	$	3,267	$	7,748	$	9,784

________________

(1)The effective rate of the 2025 Notes over their expected life is 5.85%.

Based on the daily closing prices of the Company’s stock during the quarter ended September 25, 2022, the remaining holders of the 2025 Notes are eligible to convert their 2025 Notes during the fourth quarter of 2022.

Convertible Note Hedge and Warrant Transactions - In connection with the 2025 Notes Partial Repurchase, the Company 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. Upon settlement, the Company received $131.9 million for the Note Hedge Early Termination Agreements and paid $114.8 million for the Warrant Early Termination Agreements during the thirty-nine weeks ended September 25, 2022. In connection with the Note Hedge Early Termination Agreements and the Warrant Early Termination Agreements the Company recorded a $113.0 million increase and a $97.6 million decrease, respectively, to Additional paid-in capital during the thirty-nine weeks ended September 25, 2022.

The remaining Warrant Transactions have a dilutive effect on the Company’s common stock to the extent that the price of its common stock exceeds the strike price of the Warrant Transactions. The strike price was initially $16.64 per share and is subject to certain adjustments under the terms of the Warrant Transactions. In connection with

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

dividends paid during the thirty-nine weeks ended September 25, 2022, the strike price for the remaining Warrant Transactions decreased to $16.33.

9. Other Long-term Liabilities, Net

Other long-term liabilities, net, consisted of the following as of the periods indicated:


(dollars in thousands)	SEPTEMBER 25, 2022		DECEMBER 26, 2021
Accrued insurance liability	$	30,419	$	31,517

Deferred payroll tax liabilities (1)	—		27,302
Deferred compensation obligations	28,351		37,514
Other long-term liabilities	28,082		28,909
	$	86,852	$	125,242

_______________

(1)During the thirty-nine weeks ended September 25, 2022, the Company reclassified $27.3 million of payroll taxes deferred under the CARES Act to current.

10. Stockholders’ Equity

Share Repurchases - On February 8, 2022, the Company’s Board of Directors (the “Board”) approved a share repurchase program (the “2022 Share Repurchase Program”) under which the Company was authorized to repurchase up to $125.0 million of its outstanding common stock. The 2022 Share Repurchase Program will expire on August 9, 2023. As of September 25, 2022, $44.0 million remained available for repurchase under the 2022 Share Repurchase Program. Following is a summary of the shares repurchased under the 2022 Share Repurchase Program during fiscal year 2022:


(in thousands, except per share data)	NUMBER OF SHARES	AVERAGE REPURCHASE PRICE PER SHARE		AMOUNT
First fiscal quarter	551	$	21.26	$	11,702
Second fiscal quarter	1,761	$	20.30	35,749
Third fiscal quarter	1,746	$	19.21	33,549
Total common stock repurchases (1)	4,058	$	19.96	$	81,000

________________

(1)Subsequent to September 25, 2022, the Company repurchased 682 thousand shares of its common stock for $13.8 million under a Rule 10b5-1 plan through October 28, 2022.

Dividends - The Company declared and paid dividends per share during fiscal year 2022 as follows:




(dollars in thousands, except per share data)	DIVIDENDS PER SHARE		AMOUNT
First fiscal quarter	$	0.14	$	12,559
Second fiscal quarter	0.14		12,418
Third fiscal quarter	0.14		12,475

Total cash dividends declared and paid	$	0.42	$	37,452

In October 2022, the Board declared a quarterly cash dividend of $0.14 per share, payable on November 23, 2022 to shareholders of record at the close of business on November 9, 2022.

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

Accumulated Other Comprehensive Loss (“AOCL”) - Following are the components of AOCL as of the periods indicated:


(dollars in thousands)	SEPTEMBER 25, 2022		DECEMBER 26, 2021
Foreign currency translation adjustment	$	(185,298)	$	(195,480)
Unrealized loss on derivatives, net of tax	(1,542)		(10,509)
Accumulated other comprehensive loss	$	(186,840)	$	(205,989)

Following are the components of Other comprehensive (loss) income attributable to Bloomin’ Brands for the periods indicated:


	THIRTEEN WEEKS ENDED				THIRTY-NINE WEEKS ENDED
(dollars in thousands)	SEPTEMBER 25, 2022		SEPTEMBER 26, 2021		SEPTEMBER 25, 2022		SEPTEMBER 26, 2021
Foreign currency translation adjustment	$	(13,041)	$	1,673	$	10,182	$	5,113

Unrealized (loss) gain on derivatives, net of tax	—		(153)		573		(323)
Reclassification of adjustments for loss on derivatives included in Net income, net of tax (1)	—		1,519		954		6,036
Impact of terminated interest rate swaps included in Net income, net of tax (1)	2,255		1,479		7,440		2,950
Total gain on derivatives, net of tax	2,255		2,845		8,967		8,663

Other comprehensive (loss) income attributable to Bloomin’ Brands	$	(10,786)	$	4,518	$	19,149	$	13,776

________________

(1)See Note 11 - Derivative Instruments and Hedging Activities for the tax impact of reclassifications and the terminated swaps.

11. Derivative Instruments and Hedging Activities

Cash Flow Hedges of Interest Rate Risk - In October 2018, the Company entered into variable-to-fixed interest rate swap agreements with 12 counterparties to hedge a portion of the cash flows of the Company’s variable rate debt. The swap agreements had an aggregate notional amount of $550.0 million and mature on November 30, 2022. Under the terms of the swap agreements, the Company paid a weighted average fixed rate of 3.04% on the notional amount and received payments from the counterparty based on one-month LIBOR. During 2021, the Company terminated its variable-to-fixed interest rate swap agreements with certain counterparties and as a result, as of December 26, 2021 had interest rate swap agreements remaining with two counterparties for an aggregate notional amount of $125.0 million.

In connection with the Amended Credit Agreement, on April 26, 2022 the Company terminated its remaining variable-to-fixed interest rate swap agreements. Following these terminations, the unrealized loss related to the terminated swap agreements included in Accumulated other comprehensive loss is amortized to Interest expense, net during 2022.

The Company’s swap agreements were designated and qualified as cash flow hedges, recognized on its Consolidated Balance Sheet at fair value as of December 26, 2021 and classified based on the instruments’ maturity dates. As of September 25, 2022, the Company estimated $2.2 million of interest expense from the terminated swap agreements will be reclassified to Interest expense, net through the November 2022 maturity date of the swaps.

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

The following table presents the fair value and classification of the Company’s swap agreements as of the period indicated:

(dollars in thousands)

DECEMBER 26, 2021

CONSOLIDATED BALANCE SHEET CLASSIFICATION

Interest rate swaps - liability (1)

3,056

Accrued and other current liabilities

Accrued interest

276

Accrued and other current liabilities

____________________

(1)See Note 13 - Fair Value Measurements for fair value discussion of the interest rate swaps.

The following table summarizes the effects of the swap agreements on Net income for the periods indicated:


	THIRTEEN WEEKS ENDED				THIRTY-NINE WEEKS ENDED
(dollars in thousands)	SEPTEMBER 25, 2022		SEPTEMBER 26, 2021		SEPTEMBER 25, 2022		SEPTEMBER 26, 2021
Interest rate swap agreements:
Interest rate swap expense recognized in Interest expense, net	$	—	$	(2,045)	$	(1,284)	$	(8,127)
Income tax benefit recognized in Provision (benefit) for income taxes	—		526		330		2,091
Net effects of interest rate swap agreements	$	—	$	(1,519)	$	(954)	$	(6,036)
Terminated interest rate swap agreements:
Terminated interest rate swap expense recognized in Interest expense, net	$	(3,034)	$	(1,992)	$	(10,014)	$	(3,973)
Income tax benefit recognized in Provision (benefit) for income taxes	779		513		2,574		1,023
Net effects of terminated interest rate swap agreements	$	(2,255)	$	(1,479)	$	(7,440)	$	(2,950)
Total net effects on Net income	$	(2,255)	$	(2,998)	$	(8,394)	$	(8,986)

12. Leases

The following table includes a detail of lease assets and liabilities included on the Company’s Consolidated Balance Sheets as of the periods indicated:


(dollars in thousands)	CONSOLIDATED BALANCE SHEET CLASSIFICATION	SEPTEMBER 25, 2022		DECEMBER 26, 2021
Operating lease right-of-use assets	Operating lease right-of-use assets	$	1,115,004	$	1,130,873
Finance lease right-of-use assets (1)	Property, fixtures and equipment, net	3,404		2,074
Total lease assets, net		$	1,118,408	$	1,132,947

Current operating lease liabilities (2)	Accrued and other current liabilities	$	181,427	$	177,028
Current finance lease liabilities	Current portion of long-term debt	1,481		958
Non-current operating lease liabilities (2)	Non-current operating lease liabilities	1,160,392		1,178,998
Non-current finance lease liabilities	Long-term debt, net	2,061		1,264
Total lease liabilities		$	1,345,361	$	1,358,248

________________

(1)Net of accumulated amortization of $3.4 million and $3.3 million as of September 25, 2022 and December 26, 2021, respectively.

(2)Excludes current accrued contingent percentage rent of $3.3 million and $3.5 million, as of September 25, 2022 and December 26, 2021, respectively, and immaterial current and non-current COVID-19-related deferred rent accruals.

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

Following is a summary of expenses and income related to leases recognized in the Company’s Consolidated Statements of Operations and Comprehensive Income for the periods indicated:


	CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME CLASSIFICATION	THIRTEEN WEEKS ENDED				THIRTY-NINE WEEKS ENDED
(dollars in thousands)		SEPTEMBER 25, 2022		SEPTEMBER 26, 2021		SEPTEMBER 25, 2022		SEPTEMBER 26, 2021
Operating leases (1)	Other restaurant operating	$	45,817	$	44,807	$	136,757	$	133,362
Variable lease cost (2)	Other restaurant operating	1,519		1,574		5,021		3,082
Finance leases:
Amortization of leased assets	Depreciation and amortization	355		280		1,048		800
Interest on lease liabilities	Interest expense, net	44		34		120		101
Sublease revenue	Franchise and other revenues	(2,455)		(3,276)		(7,449)		(6,936)
Lease costs, net		$	45,280	$	43,419	$	135,497	$	130,409

________________

(1)Excludes rent expense for office facilities and Company-owned closed or subleased properties of $3.1 million and $3.2 million for the thirteen weeks ended September 25, 2022 and September 26, 2021, respectively, and $9.1 million and $9.9 million for the thirty-nine weeks ended September 25, 2022 and September 26, 2021, respectively, which is included in General and administrative expense.

(2)Includes COVID-19-related rent abatements for the thirteen and thirty-nine weeks ended September 26, 2021.

The following table is a summary of cash flow impacts to the Company’s Consolidated Financial Statements related to its leases for the periods indicated:


	THIRTY-NINE WEEKS ENDED
(dollars in thousands)	SEPTEMBER 25, 2022		SEPTEMBER 26, 2021

Cash flows from operating activities:
Cash paid for amounts included in the measurement of operating lease liabilities	$	145,797	$	155,661

13. Fair Value Measurements

Fair value is the price that would be received for an asset or paid to transfer a liability, or the exit price, in an orderly transaction between market participants on the measurement date. Fair value is categorized into one of the following three levels based on the lowest level of significant input:


Level 1						Unadjusted quoted market prices in active markets for identical assets or liabilities
Level 2						Observable inputs available at measurement date other than quoted prices included in Level 1
Level 3						Unobservable inputs that cannot be corroborated by observable market data

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

Fair Value Measurements on a Recurring Basis - The following table summarizes the Company’s financial assets and liabilities measured at fair value by hierarchy level on a recurring basis as of the periods indicated:


	SEPTEMBER 25, 2022				DECEMBER 26, 2021
(dollars in thousands)	TOTAL		LEVEL 1			TOTAL		LEVEL 1		LEVEL 2
Assets:
Cash equivalents:
Fixed income funds	$	6,277	$	6,277		$	6,714	$	6,714	$	—
Money market funds	10,254		10,254			9,039		9,039		—
Restricted cash equivalents:

Money market funds	143		143			1,472		1,472		—




Total asset recurring fair value measurements	$	16,674	$	16,674		$	17,225	$	17,225	$	—

Liabilities:
Accrued and other current liabilities:
Derivative instruments - interest rate swaps	$	—	$	—		$	3,056	$	—	$	3,056

Fair value of each class of financial instrument is determined based on the following:


FINANCIAL INSTRUMENT						METHODS AND ASSUMPTIONS
Fixed income funds and Money market funds						Carrying value approximates fair value because maturities are less than three months.
Derivative instruments						The Company’s derivative instruments include interest rate swaps. Fair value measurements are based on the contractual terms of the derivatives and use observable market-based inputs. The interest rate swaps are valued using a discounted cash flow analysis on the expected cash flows of each derivative using observable inputs including interest rate curves and credit spreads. The Company also considers its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. As of December 26, 2021, the Company has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives.

Fair Value Measurements on a Nonrecurring Basis - Assets and liabilities that are measured at fair value on a nonrecurring basis relate primarily to property, fixtures and equipment, operating lease right-of-use assets, goodwill and other intangible assets, which are remeasured when carrying value exceeds fair value. Carrying value after impairment approximates fair value. The following table summarizes the Company’s assets measured at fair value by hierarchy level on a nonrecurring basis for the period indicated:












	THIRTY-NINE WEEKS ENDED
	SEPTEMBER 26, 2021
(dollars in thousands)		REMAINING CARRYING VALUE (1)		TOTAL IMPAIRMENT

Operating lease right-of-use assets		$	7,651	$	1,466
Property, fixtures and equipment		8,928		7,260

		$	16,579	$	8,726

________________

(1)All asset carrying values measured using discounted cash flow models (Level 3).

Interim Disclosures about Fair Value of Financial Instruments - The Company’s non-derivative financial instruments consist of cash equivalents, accounts receivable, accounts payable and current and long-term debt. The fair values of cash equivalents, accounts receivable and accounts payable approximate their carrying amounts reported on its Consolidated Balance Sheets due to their short duration.

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

Debt is carried at amortized cost; however, the Company estimates the fair value of debt for disclosure purposes. The following table includes the carrying value and fair value of the Company’s debt by hierarchy level as of the periods indicated:


	SEPTEMBER 25, 2022				DECEMBER 26, 2021
	CARRYING VALUE		FAIR VALUE LEVEL 2		CARRYING VALUE	FAIR VALUE LEVEL 2
(dollars in thousands)
Senior Secured Credit Facility:
Term loan A	$	—	$	—		$	195,000	$	190,125
Revolving credit facility	$	420,000	$	409,500		$	80,000	$	76,926



2025 Notes	$	105,000	$	178,869		$	230,000	$	447,615
2029 Notes	$	300,000	$	252,471		$	300,000	$	304,395

14. Income Taxes


	THIRTEEN WEEKS ENDED					THIRTY-NINE WEEKS ENDED
(dollars in thousands)	SEPTEMBER 25, 2022			SEPTEMBER 26, 2021		SEPTEMBER 25, 2022			SEPTEMBER 26, 2021
Income before provision (benefit) for income taxes	$	38,613		$	597	$	82,092		$	184,562
Provision (benefit) for income taxes	$	5,563		$	(4,454)	$	33,028		$	24,827
Effective income tax rate	14.4		%	(NM)		40.2		%	13.5		%

________________

NM Not meaningful.

The provision for income taxes for the thirteen weeks ended September 25, 2022 increased primarily due to higher pre-tax book income across the Company’s U.S. and international subsidiaries. The benefit for income taxes for the thirteen weeks ended September 26, 2021 includes the impact of changes to the estimate of the forecasted full-year effective tax rate relative to prior quarters in 2021.

The effective income tax rate for the thirty-nine weeks ended September 25, 2022 increased by 26.7 percentage points as compared to the thirty-nine weeks ended September 26, 2021. The increase was primarily due to the non-deductible losses associated with the 2025 Notes Partial Repurchase recorded during the thirty-nine weeks ended September 25, 2022.

On September 16, 2022, the Company’s Brazilian subsidiary was granted a preliminary injunction granting it eligibility to benefit from a recent law in Brazil that established several emergency actions by the government to offset the economic effects of the COVID-19 pandemic for the tourism and events sector. The new law introduced a 100% exemption from Brazilian corporate income tax (IRPJ and CSLL) and federal value-added taxes (PIS and COFINS) for a period of 5 years. The injunction was issued as part of an ongoing lawsuit initiated by the Company’s Brazilian subsidiary due to the uncertainty regarding the restaurant industry’s eligibility for this exemption. The Company has not recognized a financial impact for the thirteen-week period ended September 25, 2022 as the Company continues to evaluate the exemption, the uncertainty and impacts of the injunction, and the best courses of action moving forward.

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.

The effective income tax rate for the thirteen weeks ended September 25, 2022 was lower than the Company’s blended federal and state statutory rate of approximately 26% primarily due to the benefit of FICA tax credits on certain tipped wages.

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

The effective income tax rate for the thirty-nine weeks ended September 25, 2022 was higher than the statutory rate primarily due to the non-deductible losses associated with the 2025 Notes Partial Repurchase recorded during the thirty-nine weeks ended September 25, 2022.

The effective income tax rates for the thirteen and thirty-nine weeks ended September 26, 2021 were lower than the statutory rate primarily due to the benefit of FICA tax credits on certain tipped wages.

On December 28, 2021, the U.S. Treasury and the Internal Revenue Service released final regulations that, among other things, provide guidance on several aspects of the foreign tax credit rules. As part of the guidance issued, these regulations change longstanding foreign tax credit regulations that now make foreign taxes paid to certain countries no longer creditable in the United States. The Company expects that a portion of post-2022 foreign taxes paid will not be creditable in the United States. Furthermore, the impact of these regulations will result in the utilization of existing prior year foreign tax credit carryforwards for which the Company had previously recorded a valuation allowance. The valuation allowance related to the credits expected to be utilized has been released during the thirty-nine weeks ended September 25, 2022.

15. Commitments and Contingencies

Litigation and Other Matters - The Company is subject to legal proceedings, claims and liabilities, such as liquor liability, slip and fall cases, wage-and-hour and other employment-related litigation, which arise in the ordinary course of business. A reserve is recorded when it is both: (i) probable that a loss has occurred and (ii) the amount of loss can be reasonably estimated. There may be instances in which an exposure to loss exceeds the recorded reserve. The Company evaluates, on a quarterly basis, developments in legal proceedings that could cause an increase or decrease in the amount of the reserve that has been previously recorded, or a revision to the disclosed estimated range of possible losses, as applicable.

The Company’s legal proceedings range from cases brought by a single plaintiff to threatened class actions with many putative class members. While some matters pending against the Company specify the damages claimed by the plaintiff or class, many seek unspecified amounts or are at very early stages of the legal process. Even when the amount of damages claimed against the Company are stated, the claimed amount may be exaggerated, unsupported or unrelated to possible outcomes, and as such, are not meaningful indicators of the Company’s potential liability or financial exposure. As a result, some matters have not yet progressed sufficiently through discovery or development of important factual information and legal issues to enable the Company to estimate an amount of loss or a range of possible loss.

The Company recorded reserves of $8.6 million and $7.1 million for certain of its outstanding legal proceedings as of September 25, 2022 and December 26, 2021, respectively, within Accrued and other current liabilities and Other long-term liabilities on its Consolidated Balance Sheets. While the Company believes that additional losses beyond these accruals are reasonably possible, it cannot estimate a possible loss contingency or range of reasonably possible loss contingencies beyond these accruals.

The Company intends to defend itself in legal matters. Some of these matters may be covered, at least in part, by insurance if they exceed specified retention or deductible amounts. However, it is possible that claims may be denied by the Company’s insurance carriers, the Company may be required by its insurance carriers to contribute to the payment of claims, or the Company’s insurance coverage may not continue to be available on acceptable terms or in sufficient amounts. The Company records receivables from third party insurers when recovery has been determined to be probable. The Company believes that the ultimate determination of liability in connection with legal claims pending against the Company, if any, in excess of amounts already provided for such matters in the consolidated financial statements, will not have a material adverse effect on its business, annual results of operations, liquidity or financial position. However, it is possible that the Company’s business, results of operations,

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

liquidity, or financial condition could be materially affected in a particular future reporting period by the unfavorable resolution of one or more matters or contingencies during such period.

Lease Guarantees - The Company assigned its interest, and is contingently liable, under certain real estate leases. These leases have varying terms, the latest of which expires in 2032. As of September 25, 2022, the undiscounted payments that the Company could be required to make in the event of non-payment by the primary lessees was approximately $22.4 million. The present value of these potential payments discounted at the Company’s incremental borrowing rate as of September 25, 2022 was approximately $15.7 million. In the event of default, the indemnity clauses in the Company’s purchase and sale agreements generally govern its ability to pursue and recover damages incurred. As of September 25, 2022 and December 26, 2021, the Company’s recorded contingent lease liability was $7.5 million and $8.7 million, respectively.

Royalty Termination - In August 2021, wholly-owned subsidiaries of the Company entered into the Purchase and Sale of Royalty Payment Stream and Termination of Royalty Agreement (the “Royalty Termination Agreement”) with the Carrabba’s Italian Grill founders (the “Carrabba’s Founders”), pursuant to which the Company’s obligation to pay future royalties on U.S. Carrabba’s Italian Grill restaurant sales and lump sum royalty fees on Carrabba’s Italian Grill (and Abbraccio) restaurants opened outside the U.S. was terminated. Upon execution of the Royalty Termination Agreement, the Company made a cash payment of $61.9 million to the Carrabba’s Founders, which was recorded in Other restaurant operating expense in its Consolidated Statements of Operations and Comprehensive Income during the thirteen weeks ended September 26, 2021.

16. Segment Reporting

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.

Segment accounting policies are the same as those described in Note 2 - Summary of Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 26, 2021. Revenues for all 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, certain insurance expenses and certain bonus expenses.

The following table is a summary of Total revenues by segment for the periods indicated:


	THIRTEEN WEEKS ENDED				THIRTY-NINE WEEKS ENDED
(dollars in thousands)	SEPTEMBER 25, 2022		SEPTEMBER 26, 2021		SEPTEMBER 25, 2022		SEPTEMBER 26, 2021
Total revenues
U.S.	$	922,521	$	912,733	$	2,957,555	$	2,820,709
International	133,242		97,730		363,905		254,593
Total revenues	$	1,055,763	$	1,010,463	$	3,321,460	$	3,075,302

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

The following table is a reconciliation of segment income from operations to Income before provision (benefit) for income taxes for the periods indicated:


	THIRTEEN WEEKS ENDED				THIRTY-NINE WEEKS ENDED
(dollars in thousands)	SEPTEMBER 25, 2022		SEPTEMBER 26, 2021		SEPTEMBER 25, 2022		SEPTEMBER 26, 2021
Segment income from operations
U.S.	$	68,501	$	47,294	$	305,347	$	334,326
International	15,849		1,412		38,859		7,419
Total segment income from operations	84,350		48,706		344,206		341,745
Unallocated corporate operating expense	(33,041)		(33,869)		(97,922)		(111,273)
Total income from operations	51,309		14,837		246,284		230,472
Loss on extinguishment and modification of debt	—		—		(107,630)		(2,073)
Loss on fair value adjustment of derivatives, net	—		—		(17,685)		—
Other income, net	—		5		—		26
Interest expense, net	(12,696)		(14,245)		(38,877)		(43,863)
Income before provision (benefit) for income taxes	$	38,613	$	597	$	82,092	$	184,562

The following table is a summary of Depreciation and amortization expense by segment for the periods indicated:


	THIRTEEN WEEKS ENDED				THIRTY-NINE WEEKS ENDED
(dollars in thousands)	SEPTEMBER 25, 2022		SEPTEMBER 26, 2021		SEPTEMBER 25, 2022		SEPTEMBER 26, 2021
Depreciation and amortization
U.S.	$	34,432	$	33,422	$	102,735	$	100,645
International	5,882		5,842		17,438		17,128
Corporate	1,857		1,563		5,030		4,819
Total depreciation and amortization	$	42,171	$	40,827	$	125,203	$	122,592

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “feels,” “seeks,” “forecasts,” “projects,” “intends,” “plans,” “may,” “will,” “should,” “could” or “would” or, in each case, their negative or other variations or comparable terminology, although not all forward-looking statements are accompanied by such terms. 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)The severity, extent and duration of the COVID-19 pandemic, its impacts on our business and results of operations, financial condition and liquidity, including any adverse impact on our stock price and on the other factors listed below, and the responses of domestic and foreign federal, state and local governments to the pandemic;

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

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

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

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

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

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

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

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

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

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

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

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

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

(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 26, 2021.

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.

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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 September 25, 2022, we owned and operated 1,176 full-service restaurants and off-premises only kitchens and franchised 332 full-service restaurants and off-premises only kitchens across 47 states, Guam and 15 countries. We have four founder-inspired concepts: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar.

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

•U.S. combined and Outback Steakhouse comparable restaurant sales of 1.4% and 2.3%, respectively;

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

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

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

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

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

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

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

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

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

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

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

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

(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. 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 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.

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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 full-service restaurants in operation as of the periods indicated:


Number of restaurants (at end of the period):	SEPTEMBER 25, 2022	SEPTEMBER 26, 2021
U.S.
Outback Steakhouse
Company-owned	564	564
Franchised	128	130
Total	692	694
Carrabba’s Italian Grill
Company-owned	199	199
Franchised	19	20
Total	218	219
Bonefish Grill
Company-owned	173	178
Franchised	7	7
Total	180	185
Fleming’s Prime Steakhouse & Wine Bar
Company-owned	64	64
Aussie Grill
Company-owned (1)	5	4
U.S. total	1,159	1,166
International
Company-owned
Outback Steakhouse - Brazil (2)	137	113

Other (1)(2)(3)	33	33
Franchised
Outback Steakhouse - South Korea (1)	83	77
Other (3)	50	54
International total	303	277
System-wide total	1,462	1,443
System-wide total - Company-owned	1,175	1,155
System-wide total - Franchised	287	288

____________________

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

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

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

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


Number of kitchens (at end of the period) (1):	SEPTEMBER 25, 2022	SEPTEMBER 26, 2021
U.S.
Company-owned	1	3


International
Company-owned	—	1
Franchised - South Korea	45	37


System-wide total	46	41

____________________

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

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

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:


	THIRTEEN WEEKS ENDED				THIRTY-NINE WEEKS ENDED
	SEPTEMBER 25, 2022		SEPTEMBER 26, 2021		SEPTEMBER 25, 2022		SEPTEMBER 26, 2021
Revenues
Restaurant sales	98.5	%	98.6	%	98.5	%	98.6	%
Franchise and other revenues	1.5		1.4		1.5		1.4
Total revenues	100.0		100.0		100.0		100.0
Costs and expenses
Food and beverage costs (1)	32.0		30.5		32.3		30.0
Labor and other related (1)	29.1		29.1		28.2		28.4
Other restaurant operating (1)	25.8		30.1		24.2		25.2
Depreciation and amortization	4.0		4.0		3.8		4.0
General and administrative	5.3		5.8		5.2		5.9



Provision for impaired assets and restaurant closings	0.2		0.2		0.1		0.3

Total costs and expenses	95.1		98.5		92.6		92.5
Income from operations	4.9		1.5		7.4		7.5
Loss on extinguishment and modification of debt	—		—		(3.1)		(0.1)
Loss on fair value adjustment of derivatives, net	—		—		(0.5)		—
Other income, net	—		*		—		*
Interest expense, net	(1.2)		(1.4)		(1.3)		(1.4)
Income before provision (benefit) for income taxes	3.7		0.1		2.5		6.0
Provision (benefit) for income taxes	0.6		(0.4)		1.0		0.8
Net income	3.1		0.5		1.5		5.2
Less: net income attributable to noncontrolling interests	0.1		0.2		0.2		0.2
Net income attributable to Bloomin’ Brands	3.0	%	0.3	%	1.3	%	5.0	%

________________

(1)As a percentage of Restaurant sales.

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

REVENUES

Restaurant sales

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


(dollars in millions)	THIRTEEN WEEKS ENDED		THIRTY-NINE WEEKS ENDED
For the periods ended September 26, 2021	$	996.7	$	3,031.4
Change from:
Comparable restaurant sales (1)	34.9		212.6
Restaurant openings (1)	18.0		46.0
Restaurant closures (1)	(8.2)		(24.7)
Effect of foreign currency translation	(1.0)		7.6

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

____________________

(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.

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

The increase in Restaurant sales during the thirteen weeks ended September 25, 2022 was primarily due to higher comparable restaurant sales and the opening of 42 new restaurants not included in our comparable restaurant sales base. The increase in Restaurant sales was partially offset by the closure of 22 restaurants since June 27, 2021.

The increase in Restaurant sales during the thirty-nine weeks ended September 25, 2022 was primarily due to: (i) higher comparable restaurant sales, (ii) the opening of 54 new restaurants not included in our comparable restaurant sales base and (iii) the effect of foreign currency translation of the Brazilian Real relative to the U.S. dollar. The increase in Restaurant sales was partially offset by the closure of 25 restaurants since December 27, 2020.

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				THIRTY-NINE WEEKS ENDED
	SEPTEMBER 25, 2022		SEPTEMBER 26, 2021			SEPTEMBER 25, 2022		SEPTEMBER 26, 2021
Average restaurant unit volumes (weekly):
U.S.
Outback Steakhouse	$	72,834	$	70,849		$	77,106	$	74,163
Carrabba’s Italian Grill	$	62,010	$	61,518		$	65,309	$	62,910
Bonefish Grill	$	57,998	$	57,844		$	62,811	$	58,626
Fleming’s Prime Steakhouse & Wine Bar	$	97,053	$	95,777		$	109,112	$	94,064
International
Outback Steakhouse - Brazil (1)	$	60,711	$	49,841		$	58,722	$	40,848

Operating weeks:
U.S.
Outback Steakhouse	7,331		7,344			21,968		22,089
Carrabba’s Italian Grill	2,576		2,587			7,741		7,761
Bonefish Grill	2,253		2,327			6,807		7,004
Fleming’s Prime Steakhouse & Wine Bar	832		832			2,496		2,489
International
Outback Steakhouse - Brazil	1,745		1,485			4,971		4,362

____________________

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

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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 Increases (Decreases)

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


	THIRTEEN WEEKS ENDED				THIRTY-NINE WEEKS ENDED
	SEPTEMBER 25, 2022		SEPTEMBER 26, 2021		SEPTEMBER 25, 2022		SEPTEMBER 26, 2021

Year over year percentage change:
Comparable restaurant sales (stores open 18 months or more):
U.S. (1)
Outback Steakhouse	2.3	%	18.3	%	3.4	%	25.3	%
Carrabba’s Italian Grill	0.7	%	28.8	%	3.6	%	35.1	%
Bonefish Grill	(0.9)	%	36.6	%	5.9	%	41.2	%
Fleming’s Prime Steakhouse & Wine Bar	1.3	%	59.6	%	15.7	%	56.9	%
Combined U.S.	1.4	%	25.5	%	4.8	%	31.4	%
International
Outback Steakhouse - Brazil (2)	30.1	%	109.8	%	48.7	%	29.4	%


Traffic:
U.S.
Outback Steakhouse	(6.8)	%	14.8	%	(5.5)	%	19.6	%
Carrabba’s Italian Grill	(8.4)	%	27.1	%	(4.4)	%	27.0	%
Bonefish Grill	(8.3)	%	25.6	%	(3.3)	%	23.4	%
Fleming’s Prime Steakhouse & Wine Bar	(4.8)	%	48.4	%	5.8	%	38.1	%
Combined U.S.	(7.2)	%	19.3	%	(4.7)	%	21.9	%
International
Outback Steakhouse - Brazil	16.7	%	62.5	%	32.1	%	25.2	%


Average check per person (3):
U.S.
Outback Steakhouse	9.1	%	3.5	%	8.9	%	5.7	%
Carrabba’s Italian Grill	9.1	%	1.7	%	8.0	%	8.1	%
Bonefish Grill	7.4	%	11.0	%	9.2	%	17.8	%
Fleming’s Prime Steakhouse & Wine Bar	6.1	%	11.2	%	9.9	%	18.8	%
Combined U.S.	8.6	%	6.2	%	9.5	%	9.5	%
International
Outback Steakhouse - Brazil	13.1	%	45.5	%	16.5	%	5.5	%

____________________

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

(2)Excludes the effect of fluctuations in foreign currency rates. Includes trading day impact from calendar period reporting.

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

The thirteen weeks ended December 25, 2022 will include the impact of Hurricane Ian which is estimated to be 0.3% to U.S. comparable sales and approximately $0.03 to diluted earnings per share, inclusive of storm-related costs.

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Franchise and other revenues


	THIRTEEN WEEKS ENDED				THIRTY-NINE WEEKS ENDED
(dollars in millions)	SEPTEMBER 25, 2022		SEPTEMBER 26, 2021		SEPTEMBER 25, 2022		SEPTEMBER 26, 2021
Franchise revenues	$	11.8	$	12.9	$	37.8	$	31.9
Other revenues (1)	3.6		0.8		10.8		12.0
Franchise and other revenues	$	15.4	$	13.7	$	48.6	$	43.9

____________________

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

COSTS AND EXPENSES

Food and beverage costs


	THIRTEEN WEEKS ENDED								THIRTY-NINE WEEKS ENDED
(dollars in millions)	SEPTEMBER 25, 2022			SEPTEMBER 26, 2021			CHANGE		SEPTEMBER 25, 2022			SEPTEMBER 26, 2021			CHANGE
Food and beverage costs	$	332.9		$	304.3				$	1,056.8		$	908.3
% of Restaurant sales	32.0		%	30.5		%	1.5	%	32.3		%	30.0		%	2.3	%

Food and beverage costs increased as a percentage of Restaurant sales during the thirteen weeks ended September 25, 2022 as compared to the thirteen weeks ended September 26, 2021 primarily due to 3.5% from commodity inflation and 0.5% from product mix. These increases were partially offset by decreases as a percentage of Restaurant sales of 2.2% from increases in average check per person, primarily driven by an increase in menu pricing, and 0.3% from the impact of certain cost saving initiatives.

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

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

Labor and other related expenses


	THIRTEEN WEEKS ENDED								THIRTY-NINE WEEKS ENDED
(dollars in millions)	SEPTEMBER 25, 2022			SEPTEMBER 26, 2021			CHANGE		SEPTEMBER 25, 2022			SEPTEMBER 26, 2021			CHANGE
Labor and other related	$	303.2		$	290.2				$	924.5		$	859.9
% of Restaurant sales	29.1		%	29.1		%	—	%	28.2		%	28.4		%	(0.2)	%

Labor and other related expenses were flat as a percentage of Restaurant sales during the thirteen weeks ended September 25, 2022 as compared to the thirteen weeks ended September 26, 2021 primarily due to decreases of 1.7% from leveraging increased restaurant sales due to increases in average check per person and lapping the impact of COVID-19, primarily in Brazil. These decreases were partially offset by an increase as a percentage of Restaurant sales of 1.8% from higher labor costs primarily due to wage rate inflation.

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

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

leveraging increased restaurant sales due to increases in average check per person and lapping the impact of COVID-19, primarily in Brazil. These decreases were offset by an increase as a percentage of Restaurant sales of 2.0% from higher labor cost primarily due to wage rate inflation.

Other restaurant operating expenses


	THIRTEEN WEEKS ENDED								THIRTY-NINE WEEKS ENDED
(dollars in millions)	SEPTEMBER 25, 2022			SEPTEMBER 26, 2021			CHANGE		SEPTEMBER 25, 2022			SEPTEMBER 26, 2021			CHANGE
Other restaurant operating	$	267.9		$	299.8				$	790.6		$	762.5
% of Restaurant sales	25.8		%	30.1		%	(4.3)	%	24.2		%	25.2		%	(1.0)	%

During the thirteen weeks ended September 26, 2021, we entered into the Royalty Termination Agreement with the Carrabba’s Founders for $61.9 million in cash. See Note 15 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for additional details.

Other restaurant operating expenses decreased as a percentage of Restaurant sales during the thirteen weeks ended September 25, 2022 as compared to the thirteen weeks ended September 26, 2021 primarily due to 6.2% from lapping the Carrabba’s Italian Grill royalty termination and 0.9% from leveraging increased restaurant sales due to lapping the impact of COVID-19, primarily in Brazil, and increases in average check per person. These decreases were partially offset by increases as a percentage of Restaurant sales of 1.5% from higher operating expenses including utilities, primarily due to inflation, and 1.1% from higher advertising expense.

Other restaurant operating expenses decreased as a percentage of Restaurant sales during the thirty-nine weeks ended September 25, 2022 as compared to the thirty-nine weeks ended September 26, 2021 primarily due to 2.0% from lapping the Carrabba’s Italian Grill royalty termination, and 1.5% from leveraging increased restaurant sales due to increases in average check per person and lapping the impact of COVID-19, primarily in Brazil. These decreases were partially offset by increases as a percentage of Restaurant sales of 1.5% from higher operating expenses including utilities, primarily due to inflation, and 0.8% from higher advertising expense.

General and administrative

General and administrative expense includes salaries and benefits, management incentive programs, related payroll tax and benefits, other employee-related costs and professional services. Following is a summary of the change in General and administrative expense for the periods indicated:


(dollars in millions)	THIRTEEN WEEKS ENDED		THIRTY-NINE WEEKS ENDED
For the periods ended September 26, 2021	$	58.9	$	182.6
Change from:

Employee stock-based compensation	(3.6)		(8.3)
Incentive compensation	(2.8)		(10.4)




Compensation, benefits and payroll tax	2.3		6.0
Travel and entertainment	1.1		4.1

Other	0.2		—
For the periods ended September 25, 2022	$	56.1	$	174.0

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Provision for impaired assets and restaurant closings


	THIRTEEN WEEKS ENDED						THIRTY-NINE WEEKS ENDED
(dollars in millions)	SEPTEMBER 25, 2022		SEPTEMBER 26, 2021		CHANGE		SEPTEMBER 25, 2022		SEPTEMBER 26, 2021		CHANGE
Provision for impaired assets and restaurant closings	$	2.1	$	1.6	$	0.5	$	4.1	$	9.0	$	(4.9)

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

Income from operations


	THIRTEEN WEEKS ENDED									THIRTY-NINE WEEKS ENDED
(dollars in millions)	SEPTEMBER 25, 2022			SEPTEMBER 26, 2021			CHANGE			SEPTEMBER 25, 2022			SEPTEMBER 26, 2021			CHANGE
Income from operations	$	51.3		$	14.8		$	36.5		$	246.3		$	230.5		$	15.8
% of Total revenues	4.9		%	1.5		%	3.4		%	7.4		%	7.5		%	(0.1)		%

The increase in Income from operations generated during the thirteen weeks ended September 25, 2022 as compared to the thirteen weeks ended September 26, 2021 was primarily due to: (i) lapping the Carrabba’s Italian Grill royalty termination, (ii) increases in average check per person, (iii) lapping the impact of COVID-19, primarily in Brazil, and (iv) lower share-based and incentive compensation. These increases were partially offset by: (i) commodity inflation, (ii) higher labor cost primarily due to wage rate inflation, (iii) higher operating expenses including utilities, primarily due to inflation, and (iv) an increase in advertising costs.

The increase in Income from operations generated during the thirty-nine weeks ended September 25, 2022 as compared to the thirty-nine weeks ended September 26, 2021 was primarily due to: (i) increases in average check per person, (ii) lapping the Carrabba’s Italian Grill royalty termination, (iii) lapping the impact of COVID-19, primarily in Brazil, and (iv) lower share-based and incentive compensation. 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.

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

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

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

Interest expense, net


	THIRTEEN WEEKS ENDED						THIRTY-NINE WEEKS ENDED
(dollars in millions)	SEPTEMBER 25, 2022		SEPTEMBER 26, 2021		CHANGE		SEPTEMBER 25, 2022		SEPTEMBER 26, 2021		CHANGE
Interest expense, net	$	12.7	$	14.2	$	(1.5)	$	38.9	$	43.9	$	(5.0)

The decrease in Interest expense, net for the thirteen weeks ended September 25, 2022 as compared to the thirteen weeks ended September 26, 2021 was primarily due to: (i) the 2025 Notes Partial Repurchase in May 2022, (ii) repayment of the Term loan A in April 2022 and (iii) the impact of our April 2021 interest rate swap terminations. These decreases were partially offset by increases in interest expense from higher balances and interest rates on revolver debt.

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

The decrease in Interest expense, net for the thirty-nine weeks ended September 25, 2022 as compared to the thirty-nine weeks ended September 26, 2021 was primarily due to the repayment of Term loan A in April 2022 and the 2025 Notes Partial Repurchase in May 2022. These decreases were partially offset by increases from the issuance of the 2029 Notes in April 2021.

Provision (benefit) for income taxes


	THIRTEEN WEEKS ENDED							THIRTY-NINE WEEKS ENDED
(dollars in millions)	SEPTEMBER 25, 2022			SEPTEMBER 26, 2021		CHANGE		SEPTEMBER 25, 2022			SEPTEMBER 26, 2021			CHANGE
Income before provision (benefit) for income taxes	$	38.6		$	0.6	$	38.0	$	82.1		$	184.6		$	(102.5)
Provision (benefit) for income taxes	$	5.6		$	(4.5)	$	10.1	$	33.0		$	24.8		$	8.2
Effective income tax rate	14.4		%	(NM)		NM		40.2		%	13.5		%	26.7		%

________________

NM Not meaningful.

The provision for income taxes for the thirteen weeks ended September 25, 2022 increased primarily due to higher pre-tax book income across our U.S. and international subsidiaries. The benefit for income taxes for the thirteen weeks ended September 26, 2021 includes the impact of changes to the estimate of the forecasted full-year effective tax rate relative to prior quarters in 2021.

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, certain insurance expenses and certain bonus expenses.

Refer to Note 16 - 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

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

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.

U.S. Segment


	THIRTEEN WEEKS ENDED						THIRTY-NINE WEEKS ENDED
(dollars in thousands)	SEPTEMBER 25, 2022			SEPTEMBER 26, 2021			SEPTEMBER 25, 2022			SEPTEMBER 26, 2021
Revenues
Restaurant sales	$	910,679		$	898,790		$	2,920,241		$	2,789,142
Franchise and other revenues	11,842			13,943			37,314			31,567
Total revenues	$	922,521		$	912,733		$	2,957,555		$	2,820,709








Restaurant-level operating margin	12.7		%	10.0		%	15.2		%	17.1		%
Income from operations	$	68,501		$	47,294		$	305,347		$	334,326
Operating income margin	7.4		%	5.2		%	10.3		%	11.9		%

Restaurant sales

Following is a summary of the change in U.S. segment Restaurant sales for the periods indicated:


(dollars in millions)	THIRTEEN WEEKS ENDED (1)		THIRTY-NINE WEEKS ENDED (1)
For the periods ended September 26, 2021	$	898.8	$	2,789.1
Change from:
Comparable restaurant sales	12.8		135.1
Restaurant openings	7.3		20.7
Restaurant closures	(8.2)		(24.7)

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

____________________

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

The increase in U.S. Restaurant sales during the thirteen weeks ended September 25, 2022 was primarily due to higher comparable restaurant sales and the opening of 13 new restaurants not included in our comparable restaurant sales base. The increase was partially offset by the closure of 21 restaurants since June 27, 2021.

The increase in U.S. Restaurant sales during the thirty-nine weeks ended September 25, 2022 was primarily due to higher comparable restaurant sales and the opening of 16 new restaurants not included in our comparable restaurant sales base. The increase in U.S. Restaurant sales was partially offset by the closure of 24 restaurants since December 27, 2020.

Income from operations

The increase in U.S. Income from operations generated during the thirteen weeks ended September 25, 2022 as compared to the thirteen weeks ended September 26, 2021 was primarily due to lapping the Carrabba’s Italian Grill royalty termination and increases in average check per person. These increases were partially offset by: (i) commodity inflation, (ii) higher labor cost primarily due to wage rate inflation, (iii) higher operating expenses including utilities and (iv) higher advertising expense.

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

The decrease in U.S. Income from operations generated during the thirty-nine weeks ended September 25, 2022 as compared to the thirty-nine weeks ended September 26, 2021 was primarily due to: (i) commodity inflation, (ii) higher labor cost primarily due to wage rate inflation, (iii) higher operating expenses including utilities and (iv) higher advertising expense. These decreases were partially offset by increases in average check per person and lapping the Carrabba’s Italian Grill royalty termination.

International Segment


	THIRTEEN WEEKS ENDED						THIRTY-NINE WEEKS ENDED
(dollars in thousands)	SEPTEMBER 25, 2022			SEPTEMBER 26, 2021			SEPTEMBER 25, 2022			SEPTEMBER 26, 2021
Revenues
Restaurant sales	$	129,696		$	97,928		$	352,627		$	242,254
Franchise and other revenues	3,546			(198)			11,278			12,339
Total revenues	$	133,242		$	97,730		$	363,905		$	254,593








Restaurant-level operating margin	18.5		%	12.8		%	17.8		%	10.7		%
Income from operations	$	15,849		$	1,412		$	38,859		$	7,419
Operating income margin	11.9		%	1.4		%	10.7		%	2.9		%

Restaurant sales

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


(dollars in millions)	THIRTEEN WEEKS ENDED		THIRTY-NINE WEEKS ENDED
For the periods ended September 26, 2021	$	97.9	$	242.3
Change from:
Comparable restaurant sales (1)	22.1		77.5
Restaurant openings (1)	10.7		25.3
Effect of foreign currency translation	(1.0)		7.6
For the periods ended September 25, 2022	$	129.7	$	352.7

____________________

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

The increase in international Restaurant sales during the thirty-nine weeks ended September 25, 2022 was primarily due to: (i) higher comparable restaurant sales in Brazil, (ii) the opening of 38 new restaurants not included in our comparable restaurant sales base and (iii) the effect of foreign currency translation of the Brazilian Real relative to the U.S. dollar.

Income from operations

The increase in international Income from operations generated during the thirteen weeks ended September 25, 2022 as compared to the thirteen weeks ended September 26, 2021 was primarily due to: (i) the recovery of in-restaurant dining in Brazil and (ii) increases in average check per person. These increases were partially offset by decreases primarily due to: (i) product mix, (ii) labor inflation and (iii) commodity inflation.

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

The increase in international Income from operations generated during the thirty-nine weeks ended September 25, 2022 as compared to the thirty-nine weeks ended September 26, 2021 was primarily due to: (i) the recovery of in-restaurant dining in Brazil and (ii) increases in average check per person. These increases were partially offset by decreases primarily due to commodity and labor inflation.

Non-GAAP Financial Measures

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


Consolidated	THIRTEEN WEEKS ENDED						THIRTY-NINE WEEKS ENDED
(dollars in thousands)	SEPTEMBER 25, 2022			SEPTEMBER 26, 2021			SEPTEMBER 25, 2022			SEPTEMBER 26, 2021
Income from operations	$	51,309		$	14,837		$	246,284		$	230,472
Operating income margin	4.9		%	1.5		%	7.4		%	7.5		%
Less:
Franchise and other revenues	15,388			13,745			48,592			43,906
Plus:
Depreciation and amortization	42,171			40,827			125,203			122,592
General and administrative	56,089			58,880			174,009			182,590
Provision for impaired assets and restaurant closings	2,067			1,585			4,099			8,962
Restaurant-level operating income	$	136,248		$	102,384		$	501,003		$	500,710
Restaurant-level operating margin	13.1		%	10.3		%	15.3		%	16.5		%
Adjustments:
Royalty termination expense (1)	—			61,880			—			61,880
Legal and other matters (2)	—			2,761			—			2,761
Total restaurant-level operating income adjustments	—			64,641			—			64,641
Adjusted restaurant-level operating income	$	136,248		$	167,025		$	501,003		$	565,351
Adjusted restaurant-level operating margin	13.1		%	16.8		%	15.3		%	18.6		%

_________________

(1)Payment to the Carrabba’s Founders in connection with the Royalty Termination Agreement. See Note 15 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for additional details regarding the Royalty Termination Agreement.

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

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

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


U.S.	THIRTEEN WEEKS ENDED						THIRTY-NINE WEEKS ENDED
(dollars in thousands)	SEPTEMBER 25, 2022			SEPTEMBER 26, 2021			SEPTEMBER 25, 2022			SEPTEMBER 26, 2021
Income from operations	$	68,501		$	47,294		$	305,347		$	334,326
Operating income margin	7.4		%	5.2		%	10.3		%	11.9		%
Less:
Franchise and other revenues	11,842			13,943			37,314			31,567
Plus:
Depreciation and amortization	34,432			33,421			102,735			100,645
General and administrative	22,339			21,998			69,432			66,043
Provision for impaired assets and restaurant closings	2,068			1,539			2,317			8,678
Restaurant-level operating income	$	115,498		$	90,309		$	442,517		$	478,125
Restaurant-level operating margin	12.7		%	10.0		%	15.2		%	17.1		%
Adjustments:
Royalty termination expense (1)	—			61,880			—			61,880
Total restaurant-level operating income adjustments	—			61,880			—			61,880
Adjusted restaurant-level operating income	$	115,498		$	152,189		$	442,517		$	540,005
Adjusted restaurant-level operating margin	12.7		%	16.9		%	15.2		%	19.4		%

________________

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


International	THIRTEEN WEEKS ENDED						THIRTY-NINE WEEKS ENDED
(dollars in thousands)	SEPTEMBER 25, 2022			SEPTEMBER 26, 2021			SEPTEMBER 25, 2022			SEPTEMBER 26, 2021
Income from operations	$	15,849		$	1,412		$	38,859		$	7,419
Operating income margin	11.9		%	1.4		%	10.7		%	2.9		%
Less:
Franchise and other revenues	3,546			(198)			11,278			12,339
Plus:
Depreciation and amortization	5,882			5,843			17,438			17,128
General and administrative	5,828			5,060			16,087			13,781
Provision for impaired assets and restaurant closings	—			28			1,775			27
Restaurant-level operating income	$	24,013		$	12,541		$	62,881		$	26,016
Restaurant-level operating margin	18.5		%	12.8		%	17.8		%	10.7		%
Adjustments:
Legal and other matters (1)	—			2,761			—			2,761
Total restaurant-level operating income adjustments	—			2,761			—			2,761
Adjusted restaurant-level operating income	$	24,013		$	15,302		$	62,881		$	28,777
Adjusted restaurant-level operating margin	18.5		%	15.6		%	17.8		%	11.9		%

________________

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

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

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


	THIRTEEN WEEKS ENDED
	SEPTEMBER 25, 2022				SEPTEMBER 26, 2021
	REPORTED		ADJUSTED		REPORTED		ADJUSTED (1)
Restaurant sales	100.0	%	100.0	%	100.0	%	100.0	%

Food and beverage costs	32.0	%	32.0	%	30.5	%	30.5	%
Labor and other related	29.1	%	29.1	%	29.1	%	29.1	%
Other restaurant operating	25.8	%	25.8	%	30.1	%	23.6	%

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

	THIRTY-NINE WEEKS ENDED
	SEPTEMBER 25, 2022				SEPTEMBER 26, 2021
	REPORTED		ADJUSTED		REPORTED		ADJUSTED (1)
Restaurant sales	100.0	%	100.0	%	100.0	%	100.0	%

Food and beverage costs	32.3	%	32.3	%	30.0	%	30.0	%
Labor and other related	28.2	%	28.2	%	28.4	%	28.4	%
Other restaurant operating	24.2	%	24.2	%	25.2	%	23.0	%

Restaurant-level operating margin	15.3	%	15.3	%	16.5	%	18.6	%

_________________

(1)See the Consolidated restaurant-level operating income and adjusted restaurant-level operating income and corresponding margins non-GAAP reconciliations table above for details regarding the restaurant-level operating margin adjustments. All restaurant-level operating margin adjustments for the periods presented were recorded within Other restaurant operating expense.

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


	THIRTEEN WEEKS ENDED						THIRTY-NINE WEEKS ENDED
(dollars in thousands)	SEPTEMBER 25, 2022			SEPTEMBER 26, 2021			SEPTEMBER 25, 2022			SEPTEMBER 26, 2021
Income from operations	$	51,309		$	14,837		$	246,284		$	230,472
Operating income margin	4.9		%	1.5		%	7.4		%	7.5		%
Adjustments:
Total restaurant-level operating margin adjustments (1)	—			64,641			—			64,641
Legal and other matters (2)	—			3,204			—			(3,133)

Total income from operations adjustments	—			67,845			—			61,508
Adjusted income from operations	$	51,309		$	82,682		$	246,284		$	291,980
Adjusted operating income margin	4.9		%	8.2		%	7.4		%	9.5		%

_________________

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

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

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


	THIRTEEN WEEKS ENDED				THIRTY-NINE WEEKS ENDED
(in thousands, except per share data)	SEPTEMBER 25, 2022		SEPTEMBER 26, 2021		SEPTEMBER 25, 2022		SEPTEMBER 26, 2021
Diluted net income attributable to Bloomin’ Brands	$	31,986	$	3,449	$	43,862	$	155,316
Convertible senior notes if-converted method interest adjustment, net of tax (1)	—		—		—		460
Net income attributable to Bloomin’ Brands	31,986		3,449		43,862		154,856
Adjustments:
Income from operations adjustments (2)	—		67,845		—		61,508
Loss on extinguishment and modification of debt (3)	—		—		107,630		2,073
Loss on fair value adjustment of derivatives, net (3)	—		—		17,685		—
Total adjustments, before income taxes	—		67,845		125,315		63,581
Adjustment to provision for income taxes (4)	—		(15,878)		1,322		(14,635)
Net adjustments	—		51,967		126,637		48,946
Adjusted net income	$	31,986	$	55,416	$	170,499	$	203,802

Diluted earnings per share	$	0.34	$	0.03	$	0.44	$	1.42
Adjusted diluted earnings per share (5)	$	0.35	$	0.57	$	1.84	$	2.10







Diluted weighted average common shares outstanding	94,736		107,783		99,609		109,410
Adjusted diluted weighted average common shares outstanding (5)	91,046		97,307		92,877		97,110

_________________

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

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

(3)The thirty-nine weeks ended September 25, 2022 include losses in connection with the 2025 Notes Partial Repurchase and Amended Credit Agreement. See Note 8 - Convertible Senior Notes and Note 7 - Long-term Debt, Net, respectively, of the Notes to Consolidated Financial Statements for additional details.

(4)The tax effect of non-GAAP adjustments were determined based on the nature of the underlying non-GAAP adjustments and their relevant jurisdictional tax rates. For the thirty-nine weeks ended September 25, 2022, the primary difference between the GAAP and adjusted effective income tax rates relate to certain non-deductible losses and other tax costs associated with the 2025 Notes Partial Repurchase.

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

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.

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

The following table provides a summary of sales of franchised restaurants for the periods indicated, which are not included in our consolidated financial results. Franchise sales within this table do not represent our sales and are presented only as an indicator of changes in the restaurant system, which management believes is important information regarding the health of our restaurant concepts and in determining our royalties and/or service fees.


	THIRTEEN WEEKS ENDED				THIRTY-NINE WEEKS ENDED
(dollars in millions)	SEPTEMBER 25, 2022		SEPTEMBER 26, 2021		SEPTEMBER 25, 2022		SEPTEMBER 26, 2021
U.S.
Outback Steakhouse	$	119	$	118	$	377	$	329
Carrabba’s Italian Grill	12		10		37		32
Bonefish Grill	3		3		9		8
U.S. total	134		131		423		369
International
Outback Steakhouse - South Korea	77		73		220		219
Other (1)	24		26		86		77
International total	101		99		306		296
Total franchise sales (2)	$	235	$	230	$	729	$	665

_____________________

(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.

Liquidity and Capital Resources

Cash and Cash Equivalents

As of September 25, 2022, we had $90.7 million in cash and cash equivalents, of which $34.5 million was held by foreign affiliates. The international jurisdictions in which we have significant cash do not have any known restrictions that would prohibit repatriation.

As of September 25, 2022, we had aggregate accumulated foreign earnings of approximately $28.6 million. This amount consisted primarily of historical earnings from 2017 and prior that were previously taxed in the U.S. under the 2017 Tax Cuts and Jobs Act and post-2017 foreign earnings, which we may repatriate to the U.S. without additional material U.S. federal income tax. These amounts are not considered indefinitely reinvested in our foreign subsidiaries.

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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 period indicated:


	SENIOR SECURED CREDIT FACILITY								TOTAL CREDIT FACILITIES
(dollars in thousands)	TERM LOAN A		REVOLVING FACILITY			2025 NOTES						2029 NOTES
Balance as of December 26, 2021	$	195,000	$	80,000		$	230,000		$	300,000			$	805,000
2022 new debt	—		929,500			—			—				929,500
2022 payments	(195,000)		(589,500)			(125,000)			—				(909,500)
Balance as of September 25, 2022	$	—	$	420,000		$	105,000		$	300,000			$	825,000

Interest rates, as of September 25, 2022 (1)			4.26		%	5.00		%	5.13		%
Principal maturity date			April 2026			May 2025			April 2029

____________________

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

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

Credit Agreement Amendment - On April 26, 2022, we and OSI entered into the Amended Credit Agreement, which included an increase of our existing revolving credit facility from $800.0 million to $1.0 billion and a transition from LIBOR to SOFR as the benchmark rate for purposes of calculating interest under the Senior Secured Credit Facility. At closing, an incremental $192.5 million was drawn on the revolving credit facility to fully repay the outstanding balance of Term loan A. Our total indebtedness remained unchanged as a result of the Amended Credit Agreement. The transition to SOFR did not materially impact the interest rate applied to our borrowings.

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

Our Amended Credit Agreement contains various financial and non-financial covenants. A violation of these covenants could negatively impact our liquidity by restricting our ability to borrow under the revolving credit facility and cause an acceleration of the amounts due under the credit facilities. See Note 13 - Long-term Debt, Net in our Annual Report on Form 10-K for the year ended December 26, 2021 for further information.

As of September 25, 2022 and December 26, 2021, we were in compliance with our debt covenants. We believe that we will remain in compliance with our debt covenants during the next 12 months.

2025 Notes Partial Repurchase - On May 25, 2022, we and the Noteholders entered into the Exchange Agreements in which the Noteholders agreed to exchange $125.0 million in aggregate principal amount of our outstanding 2025 Notes for $196.9 million in cash, plus accrued interest, and approximately 2.3 million shares of our common stock. In connection with the 2025 Notes Partial Repurchase, we entered into the Note Hedge Early Termination Agreements and the Warrant Early Termination Agreements. Upon settlement, we received $131.9 million for the Note Hedge Early Termination Agreements and paid $114.8 million for the Warrant Early Termination Agreements during the thirty-nine weeks ended September 25, 2022.

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

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

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, 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. 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 $200 million to $210 million in 2022. The amount of actual capital expenditures may be affected by general economic, financial, competitive, legislative and regulatory factors, among other things, including raw material constraints.

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

On February 8, 2022, our Board approved the 2022 Share Repurchase Program under which we are authorized to repurchase up to $125.0 million of our outstanding common stock. The 2022 Share Repurchase Program will expire on August 9, 2023. As of September 25, 2022, we had $44.0 million remaining available for repurchase under the 2022 Share Repurchase Program.

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


(dollars in thousands)	DIVIDENDS PAID		SHARE REPURCHASES		TOTAL
Fiscal year 2015	$	29,332	$	169,999	$	199,331
Fiscal year 2016	31,379		309,887		341,266
Fiscal year 2017	30,988		272,736		303,724
Fiscal year 2018	33,312		113,967		147,279
Fiscal year 2019	35,734		106,992		142,726
Fiscal year 2020	17,480		—		17,480
Fiscal year 2021	—		—		—
First fiscal quarter 2022	12,559		11,702		24,261
Second fiscal quarter 2022	12,418		35,749		48,167
Third fiscal quarter 2022	12,475		33,549		46,024
Total (1)	$	215,677	$	1,054,581	$	1,270,258

________________

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

Deferred Compensation Programs - The deferred compensation obligation due to managing and chef partners was $5.2 million and $15.5 million as of September 25, 2022 and December 26, 2021, respectively. We invest in various corporate-owned life insurance policies, which are held within an irrevocable grantor or rabbi trust account for settlement of our obligations under the deferred compensation plans. The obligation for managing and chef partners’ deferred compensation was fully funded as of September 25, 2022.

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

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:


	THIRTY-NINE WEEKS ENDED
(dollars in thousands)	SEPTEMBER 25, 2022		SEPTEMBER 26, 2021
Net cash provided by operating activities	$	292,579	$	304,246
Net cash used in investing activities	(121,455)		(69,085)
Net cash used in financing activities	(170,760)		(265,192)
Effect of exchange rate changes on cash and cash equivalents	1,400		207

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

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

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

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

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


(dollars in thousands)	SEPTEMBER 25, 2022		DECEMBER 26, 2021
Current assets	$	275,710	$	352,792
Current liabilities	911,322		984,625
Working capital (deficit)	$	(635,612)	$	(631,833)

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

Recently Issued Financial Accounting Standards

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

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

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

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BLOOMIN’ BRANDS, INC.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk from changes in interest rates, changes in foreign currency exchange rates and changes in commodity prices. We believe that there have been no material changes in our market risk since December 26, 2021. See Part II, Item 7A., “Quantitative and Qualitative Disclosures about Market Risk,” in our Annual Report on Form 10-K for the year ended December 26, 2021 for further information regarding market risk.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We have established and maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 25, 2022.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the thirteen weeks ended September 25, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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BLOOMIN’ BRANDS, INC.

PART II: OTHER INFORMATION

Item 1. Legal Proceedings

For a description of our legal proceedings, see Note 15 - Commitments and Contingencies of the Notes to Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

In addition to the other information discussed in this report, please consider the factors described in Part I, Item 1A., “Risk Factors,” in our 2021 Form 10-K which could materially affect our business, financial condition or future results. There have not been any material changes to the risk factors described in our 2021 Form 10-K, but these are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may adversely affect our business, financial condition or operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no sales of equity securities during the thirteen weeks ended September 25, 2022 that were not registered under the Securities Act.

The following table provides information regarding our purchases of common stock during the thirteen weeks ended September 25, 2022:


REPORTING PERIOD	TOTAL NUMBER OF SHARES PURCHASED	AVERAGE PRICE PAID PER SHARE		TOTAL NUMBER OF SHARES PURCHASED AS PART OF PUBLICLY ANNOUNCED PLANS OR PROGRAMS	APPROXIMATE DOLLAR VALUE OF SHARES THAT MAY YET BE PURCHASED UNDER THE PLANS OR PROGRAMS (1)
June 27, 2022 through July 24, 2022	712,969	$	17.32	712,969	$	65,201,059
July 25, 2022 through August 21, 2022	493,395	$	20.68	493,395	$	55,000,002
August 22, 2022 through September 25, 2022	540,337	$	20.36	540,337	$	44,000,185
Total	1,746,701			1,746,701

____________________

(1)On February 8, 2022, our Board of Directors authorized the repurchase of $125.0 million of our outstanding common stock as announced in our press release issued on February 18, 2022 (the “2022 Share Repurchase Program”). The 2022 Share Repurchase Program will expire on August 9, 2023.

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BLOOMIN’ BRANDS, INC.

Item 6. Exhibits

EXHIBIT
NUMBER

DESCRIPTION OF EXHIBITS

FILINGS REFERENCED FOR
INCORPORATION BY REFERENCE

10.1*

Employment Offer Letter Agreement, dated as of August 4, 2022, between Suzann Trevisan and Bloomin’ Brands, Inc.

Filed herewith

31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith

31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1)

Furnished herewith

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1)

Furnished herewith

101.INS

Inline XBRL Instance Document

Filed herewith

101.SCH

Inline XBRL Taxonomy Extension Schema Document

Filed herewith

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Filed herewith

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

Filed herewith

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

Filed herewith

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Filed herewith

104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

Filed herewith

* Management contract or compensatory plan or arrangement required to be filed as an exhibit.

(1) These certifications are not deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. These certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates them by reference.

Table of Contents

BLOOMIN’ BRANDS, INC.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Date:	November 1, 2022	BLOOMIN’ BRANDS, INC.
		(Registrant)

		By: /s/ Philip Pace
		Philip Pace Senior Vice President, Chief Accounting Officer (Principal Accounting Officer)

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