Outback Owner Bloomin' Brands Cooks Up Bigger Margins, Stronger Sales And A Higher Forecast

Bloomin’ Brands Inc. (NASDAQ:BLMN) stock surged Wednesday after the restaurant operator reported second-quarter results that exceeded Wall Street expectations and raised its full-year earnings outlook.

The company owns and operates four restaurant chains: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar.

Adjusted diluted earnings were 39 cents per share, beating the 29-cent analyst estimate. Revenue rose 1.3% to $1.016 billion from $1.002 billion and topped the $1.001 billion estimate.

GAAP diluted EPS from continuing operations increased to 37 cents from 29 cents a year earlier, while adjusted EPS rose from 32 cents.

Margins Improve

GAAP operating margin expanded to 3.8% from 3.0%, while adjusted operating margin increased to 4.0% from 3.5%.

Restaurant-level operating margin rose to 12.4% from 12.0%, helped by higher average check, productivity initiatives and lower pre-opening and health insurance costs.

Higher commodity, labor and operating costs, mainly from inflation, and increased advertising spending partly offset the gains.

Adjusted EBITDA increased to $82.2 million from $77 million, with margin improving to 8.1% from 7.7%.

Comparable Sales Rise

Combined U.S. comparable restaurant sales increased 2.3%, as a 4.2% rise in average check offset a 1.9% traffic decline.

Bonefish Grill led with an 8.1% comparable-sales gain and 4.5% traffic growth. Comparable sales rose 1.7% at Carrabba’s Italian Grill, 1.6% at Fleming’s Prime Steakhouse & Wine Bar and 1.4% at Outback Steakhouse.

Outback guest metric scores improved for a fourth consecutive quarter.

U.S. segment revenue increased to $998.6 million from $985.8 million, while adjusted segment operating margin rose to 7.1% from 6.9%.

The company ended the quarter with 1,448 systemwide restaurants after five openings and nine closures.

Turnaround and Balance Sheet

Bloomin’ Brands reduced planned turnaround investment to about $36 million from roughly $50 million, citing a better investment mix.

Productivity savings remained on track at about $30 million, leaving net investment of about $6 million.

Cash totaled $66.6 million. Debt declined to $702.8 million from $787.4 million at year-end and $917.1 million a year earlier. Net debt-to-adjusted EBITDA improved to 2.0x from 2.7x.

Guidance Raised

Full-year GAAP EPS guidance was raised to 85 cents to 95 cents from 70 cents to 85 cents, versus the 85-cent estimate.

Adjusted EPS guidance increased to 90 cents to $1 from 75 cents to 90 cents, versus the 87-cent estimate.

For the third quarter, Bloomin’ Brands expects an adjusted loss of 27 cents to 22 cents per share, versus a 19-cent loss estimate, and a GAAP loss of 28 cents to 23 cents, versus an 18-cent loss estimate.

The company expects full-year U.S. comparable sales growth of 1% to 2%, commodity inflation of 4.5% to 5.5% and labor wage inflation of 3% to 3.5%. It also cited tariffs and broader economic conditions among forward-looking risks.

BLMN Price Action: Bloomin’ Brands shares were trading up 32.51% at $11.82 at the time of publication on Wednesday, according to Benzinga Pro data.

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