Bloomin' Brands, Inc. 8-K Summary
Business Context and Reporting Period
This Form 8-K, dated February 15, 2017, reports on Bloomin' Brands, Inc.'s financial results for the thirteen weeks and fiscal year ended December 25, 2016. The filing also announces a strategic decision to close 43 underperforming restaurants and a change in the methodology for calculating non-GAAP financial measures.
Key Financial Metrics and Material Changes
- Asset Impairments and Closing Costs: The company recognized pre-tax asset impairments and closing costs of $46.5 million during the thirteen weeks and fiscal year ended December 25, 2016. This amount includes three restaurants that closed in the fourth quarter.
- Future Closure Costs: The company expects to incur additional charges of approximately $19.5 million to $23.5 million over the next three years related to the 2017 Closure Initiative.
- Future Cash Expenditures: Total future undiscounted cash expenditures are estimated between $31.5 million and $37.0 million, primarily related to lease liabilities, with final terms ending in January 2029.
- Non-GAAP Methodology Change: Commencing with the first fiscal quarter of 2017, the company will no longer adjust non-GAAP measures (Adjusted income from operations, Adjusted net income, and Adjusted diluted EPS) for expenses related to its remodel program or intangible amortization from the 2013 Brazil acquisition.
Guidance, Outlook, and Risks
The Fiscal 2017 Financial Outlook provided in the associated earnings release is estimated based on the revised non-GAAP methodology. The company has provided a recast of non-GAAP measures for fiscal years 2016, 2015, and 2014 to assist investors in understanding the impact of this change. The filing notes that the amounts and timing of all estimates regarding the restaurant closures are subject to assumptions and actual results may differ.
Investor Verification Checklist
- Verify the specific impact of the $46.5 million impairment charge on the Q4 and full-year 2016 GAAP net income.
- Review the attached Exhibit 99.2 to compare historical non-GAAP results under the old versus new methodology.
- Confirm the timeline for the closure of the 43 restaurants and the specific lease obligations driving the $31.5 million to $37.0 million future cash outflow.
- Assess how the exclusion of remodel program expenses and Brazil amortization will affect future Adjusted EPS comparisons.