Bloomin' Brands, Inc. · NASDAQ:BLMN
Bloomin' Brands — Investor Day (March 2019)
57 slides from Bloomin' Brands's investor day presentation, Mar 11, 2019
Slide 1: Bloomin' Brands
BLOOMIN’ BRANDS2° ONES ‘ “ine Fleming’
Slide 2: 2019 Investor Day March 11, 2019
2019 Investor Day March 11, 2019
Slide 3: 2019 Investor Day March 11, 2019
2019 Investor Day March 11, 2019
Slide 4: Forward Looking Statements
Forward Looking Statements Certain statements contained herein are not based on historical fact and are "forward-looking statements" within the meaning of applicable securities laws. Generally, these statements can be identified by the use of words such as "guidance," "believes," "estimates," "antic
Slide 5: Introductions and Strategy Review
Liz Smith Chairman and CEO Introductions and Strategy Review
Slide 6: Agenda for Today
Agenda for Today Strategic review Financial outlook Brand updates Portfolio growth initiatives Management Q&A Culinary presentation 9:00a to 9:30a 9:30a to 10:15a 10:15a to 11:00a 11:00a to 11:30a 11:30a to Noon Noon to end
Slide 7: Key Messages for Today
Key Messages for Today Great brands in casual dining are alive and well Lines blurring between CDR and other dining options presents growth opportunities BLMN strategy is to “win within” and “extend beyond” Made portfolio investments to drive growth Step-change in our platform for customer scale Inf
Slide 8: CDR is ~$80B of ~$1.6T Total Food Expenditures
CDR is $~80B of $~1.6T Total Food Expenditures National Restaurant Association, USDA All food expenditures $1,620B Dining out of home $870B $86B CDR
Slide 9: The Ongoing Supply/Demand Imbalance in CDR Challenges Sales Comps
Source: Knapp Track The Ongoing Supply/Demand Imbalance in CDR Challenges Sales Comps Over the last ten years… -2.0% to -2.5% +1.0% to 1.5% CDR Traffic CAGR% CDR Supply CAGR%
Slide 10: Changing Customer Preferences Impact Traditional CDR Experience
On-demand convenience (where and when) Digital interaction and engagement Food is an immersive, social experience 28% of consumers stay at home more vs. two years ago Among 18-34, 30% replacing carryout with delivery 2B+ digital restaurant orders in 2018 11 hours of screen time per day 34 days per y
Slide 11: New Dining Formats have Emerged to Meet New Needs
New Dining Formats have Emerged to Meet New Needs Food Halls Food Trucks “Eatertainment” Retail Cafes
Slide 12: Brands are Using New Ways to Connect and Interact with Customers
Brands are Using New Ways to Connect and Interact with Customers Consider Purchase Wait Retain Eat Buy Anywhere Targeted Marketing Loyalty Instant Feedback Call Ahead Seating Order Tracking Instagram
Slide 13: What Has Not Changed: In-Restaurant Execution Remains Critical
What Has Not Changed: In-Restaurant Execution Remains Critical Menu Innovation Value Service Ambiance Marketing and Advertising Customer Win Within
Slide 14: Winning in Traditional CDR Requires a Differentiated Experience
Ambiance Service Value Beverage Food Bottom comp sales quartile brands Top comp sales quartile brands Net social media sentiment (+ minus -) Points of Differentiation Cost of Entry Winning in Traditional CDR Requires a Differentiated Experience Source: Black Box Intelligence and White Box Social Int
Slide 15: Growing Opportunity to Bring Food to Our Guests' Tables at Home
* (real $) Indexed to 1997 Growing Opportunity to Bring Food to Our Guests’ Tables at Home *Source: The NPD Group/National Eating Trends® and CREST®, years ending February 2018 Extend Beyond
Slide 16: In-Home Dining has Evolved Away from Homemade to Home Consumed
In-Home Dining has Evolved Away from Homemade to Home Consumed Dry Packaged Only Groceries Including Fresh and Frozen Meal Kit Delivery w/Fresh Ingredients Groceries, Prepared Meals Restaurant Delivery Convenient More Convenient Source: The NPD Group
Slide 17: Delivery is the New Normal for Young Consumers
Delivery occasions (35+) (18-34) 29% of Millennials >1 meal per week delivery 46% of Boomer+ <1 meal per month delivery % customers Source: The NPD Group/Delivery Custom Survey, June 2016 Delivery is the New Normal for Young Consumers
Slide 18: New Paradigm Creates Opportunity for BBI
New Paradigm Creates Opportunity for BBI Dining out of home $870B $86B CDR Sales* $750B Dining in home Dining out of home Competitive sets Must win within the core… …and extend beyond our traditional reach *Source: The NPD Group/CREST® YE Dec ‘18
Slide 19: Our Priorities are Clear
Our Priorities are Clear Fortify the Core 360˚ In-Restaurant Experience Enhanced Quality and Service Reach Our Customers Off-Premises Loyalty Digital
Slide 20: We Have Invested to Fortify the Core
We Have Invested to Fortify the Core… 360˚ In-Restaurant Experience Enhanced Quality and Service $20M invested in service training and labor $400M invested in remodels across brands $30M invested in: Food quality Portions Reduced complexity
Slide 21: And Built an Infrastructure to Reach Our Customers
…And Built an Infrastructure to Reach Our Customers 500+ units live 300 remodels in next three years to support off-premises Built personalization capabilities Integrated into all brands Built digital ordering platform Highly rated digital app Off-Premises Loyalty Digital
Slide 22: The Investments are Paying Off
The Investments are Paying Off SSS Growth % Combined US Reinvestment in Core
Slide 23: BLMN Portfolio Construct for Sustainable Growth
BLMN Portfolio Construct for Sustainable Growth 360° Customer Experience Off-Premises CRM / Loyalty Digital Tightly edited portfolio Platform for customer scale Brand differentiation
Slide 24: Financial Outlook
David Deno CFAO Financial Outlook
Slide 25: Agenda
Agenda 2018 Recap Long-Term Growth Framework Capital Allocation Philosophy 2019 Guidance
Slide 26: 2018 Recap
2018 Recap
Slide 27: Key Takeaways from 2018
Key Takeaways from 2018 Focus on healthy sustainable traffic Qualified incremental sales layers across loyalty, digital, and off-premises Robust margin expansion opportunity with large investments behind us Positioned to further leverage portfolio to drive efficiencies Generate significant free cash
Slide 28: Achieved 2018 Commitments
Achieved 2018 Commitments Guidance / Commitment Actual Assessment 1.0% to 2.0% Positive comps at all U.S. concepts Comp Sales 2.5% Quality sales and prudent cost management Adj. Operating Margins Full Year Expansion 52-week comparable calendar +10 bps ü Adjusted EPS $1.38 to $1.45 Delivered 25% comp
Slide 29: Returned ~$1B to Shareholders Over the Last Years
Returned ~$1B to Shareholders Over the Last 4 Years Dividends & Share Repurchases ($ in millions) Share Repurchases Dividends Cash used to repurchase shares only done after making all the investments needed to grow the business Monetized real estate at attractive valuations
Slide 30: Long-Term Growth Framework
Long-Term Growth Framework
Slide 31: Long-Term Growth Framework (Annual)
Long-Term Growth Framework (Annual) U.S Comparable Restaurant Sales Total Shareholder Return Adjusted Operating Margin Expansion Capital Expenditures Commodity Inflation Number of New System-wide Restaurants Approx. 1.5% to 2% 10% to 15% ~50 bps / year Approx. $200M 2%+ 20 to 40
Slide 32: Financial Goals Updated to Reflect Current Environment
Financial Goals Updated to Reflect Current Environment Off-premises represents significant and incremental sales opportunity More conservative pricing outlook to deliver value Large upfront investments complete What’s Changed? Productivity pipeline and efficiency savings Significant margin improveme
Slide 33: Long-Term Operating Margin Opportunity
Long-Term Operating Margin Opportunity ~250 bps operating margin opportunity vs peers Continue to narrow gap through: Sales momentum from healthy traffic and incremental sales layers Monetization of investments Disciplined cost management Long-term target of 7% Quality ingredients will not be sacrif
Slide 34: Multiple Levers Available to Drive Annual Margin Gains
Multiple Levers Available to Drive Annual Margin Gains AUV leverage Productivity Marketing Shift G&A International Operating leverage from high quality traffic ~$50M / year in cost savings From mass marketing to mass personalization High margin international business Flat to down G&A dollar spend ta
Slide 35: AUV Leverage: Focused on Growing Volume in the Box
Percent of Business Average Ticket Flow Through LT Potential Size of Prize Focused on Growing Volume in the Box Average Outback In-Restaurant Off-Premises 88% $54 $$$ ++ 12% $27 / $42 $$ +++ To Go Delivery $3.6M AUV AUV Leverage
Slide 36: Off-Premises has Huge Long Term Potential
Off-Premises has Huge Long Term Potential Committed to Omni Channel Approach 25%+ Off-Premises Mix Opportunity 700 Units Future State Complete Rollout in 2019 Delivery Unit Potential ~80%+ of locations direct Delivery Unit Potential ~80% of locations direct Incremental Sales and Profit AUV Leverage
Slide 37: Productivity Opportunity Remains Robust
Productivity Opportunity Remains Robust Supplier Efficiency Labor Management Food / Liquor Waste Process Simplification Facilities Management Fraud / Discount Reduction Continued Focus on Optimizing: Annual Productivity Savings ($M) Productivity
Slide 38: Winning Formula: Pricing + Productivity Offsets Inflation
Winning Formula: Pricing + Productivity Offsets Inflation Inflationary pressures expected to continue Productivity allows for prudent pricing Pricing below inflation protects traffic Invest in customer experience while growing margins > I $ + P (PRICING) (PRODUCTIVITY) Productivity (INFLATION)
Slide 39: Optimizing Efficiencies Across Marketing
Optimizing Efficiencies Across Marketing Shift from mass marketing to mass personalization Media spend efficiencies through higher digital ROI $53M Marketing Shift
Slide 40: Capturing Efficiencies in G&A
Capturing Efficiencies in G&A Optimized G&A structure Disciplined cost management Reallocating dollars towards higher growth initiatives Target flat to down G&A dollar spend G&A $14M Adjusted GAAP figures
Slide 41: International Continues as a Growth Priority
International Continues as a Growth Priority Brazil to anchor LATAM Build new Outbacks Abbraccio opportunity Test smaller footprint Grow LATAM franchise base Continue to grow around the world Grow franchise base Develop smaller formats Strong partners in South Korea Continue to invest in high growth
Slide 42: Brazil Remains a Key Part of International Growth Story
Brazil Remains a Key Part of International Growth Story Units doubled since acquisition …now at 92 Revenues of $537M USD (2014 - Constant Currency) …15% CAGR Profits of $52M USD (2014 - Constant Currency) …10% CAGR Note: CAGR calculated based on 2014 constant currency comparative. Above data was tra
Slide 43: Momentum in Brazil with Abbraccio
Abbraccio is the Brazilian Carrabba’s 12 locations currently with potential for 50+ Capitalizing on underpenetrated market for Italian Abbraccio Average Unit Volumes similar to new Outback locations Momentum in Brazil with Abbraccio
Slide 44: Early Efforts With Delivery Showing Success
Emerging Growth Layer with Delivery 12 restaurants started offering delivery Large incremental sales opportunity Utilizing third party delivery with attractive economics Online consumer feedback 4.8 out of 5 Early Efforts With Delivery Showing Success
Slide 45: Confident We Can Achieve Margin Targets
Confident We Can Achieve Margin Targets AUV leverage 2018 Adjusted Operating Margin Marketing Shift 4.6% 7.0%
Slide 46: Capital Allocation Philosophy
Capital Allocation Philosophy
Slide 47: Capital Allocation Philosophy
Capital Allocation Philosophy Strong Free Cash Flow Remodels 1st Priority to Ensure Restaurants Receive Capital to be Successful Relocations New Store Development Share Repurchases Return Cash to Shareholders & Deleverage Balance Sheet Dividends Debt Paydown & Refinancing
Slide 48: New Store Development Opportunities
New Store Development Opportunities Newest Outback Opening in Tampa, FL Fleming’s in Miami, FL International 50 new Outbacks, 50 new Abbraccios in Brazil Grow Franchise Base Test Smaller Box Footprint Domestic 50 new Outback locations in U.S. 15-20 new Fleming’s locations Bonefish new restaurant pot
Slide 49: Relocation Opportunities Generating Significant Lifts
Completed over 50 relocations since 2012 30%+ sales lift Potential for an additional 50+ Outback Steakhouse relocations Outback AUVs ($M) 30%+ sales lift Relocation Opportunities Generating Significant Lifts
Slide 50: Strong FCF Provides Capital Allocation Flexibility
Excess cash flow after business reinvestment dedicated towards debt paydown and returning cash to shareholders Targeting towards investment grade Strong FCF Provides Capital Allocation Flexibility Generate annual free cash flow of ~$100M Comfortable with long-term debt level approaching 3x (Adjusted
Slide 51: Go Forward Growth Model Framework
Go Forward Growth Model Framework Off-Premises, Digital, Loyalty Sales Levers 1.5% to 2% Comp Sales Growth International Expansion Ongoing Productivity Efforts Margin Levers Healthy Traffic Disciplined Cost Structure +10% to +15% Long-term TSR Target
Slide 52: 2019 Guidance
2019 Guidance
Slide 53: 2019 Guidance
2019 Guidance U.S Comparable Restaurant Sales Adjusted Earnings Per Share Growth1 Adjusted Operating Margins Expansion1 Capital Expenditures Commodity Inflation Number of New System-wide Restaurants 2.0% - 2.5% 10% to 15% 50 - 70 bps $175M - $200M Approx. 2% Approx. 20 1 Excluding the impact of the
Slide 54: Appendix
Appendix
Slide 55: Adjusted Operating Income Margin Reconciliation
Adjusted Operating Income Margin Reconciliation FISCAL YEAR ($ in thousands) 2018 2017 Income from Operations $ 145,253 $ 138,686 Operating Income Margin 3.5% 3.3% Adjustments: Restaurant and asset impairments and closing costs 29,542 42,767 Restaurant relocations and related costs 8,647 12,539 Lega
Slide 56: Adjusted Net Income Reconciliation
Adjusted Net Income Reconciliation FISCAL YEAR ($ in thousands) 2018 2017 Net income attributable to Bloomin' Brands $ 107,098 $ 101,293 Adjustments: Income from operations adjustments 42,750 68,312 Loss on defeasance, extinguishment and modification of debt - 1,069 Gain on disposal of business and
Slide 57: Bloomin' Brands
BLOOMIN’ BRANDS2° ONES ‘ “ine Fleming’