Bloomin' Brands, Inc.

Greetings, and welcome to the Blumenbrand's Fiscal First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following a question and answer session, a question and answer session will follow management's prepared remarks. It is now my pleasure to introduce your host, Tammy Dean, Senior Director of Corporate Finance and Investor Relations. Thank you, Ms. Dean. You may begin.

Thank you, and good morning, everyone. With me on today's call are David Dino, our Chief Executive Officer, and Chris Meyer, Executive Vice President and Chief Financial Officer. By now, you should have access to our fiscal first quarter 2023 earnings release. It can also be found on our website at blumenbrands.com in the investor section. Throughout this conference call, we will be presenting results on an adjusted basis. and explanation of our use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our earnings release and on our website as previously described. Before we begin formal remarks, I'd like to remind everyone that part of our discussion today will include forward-looking statements, including a discussion of recent trends. These statements are subject to numerous risks and uncertainties that could cause actual results to differ in a material way from our forward-looking statements. Some of these risks are mentioned in our earnings release. Others are discussed in our SEC filings, which are available at sec.gov. During today's call, we will provide a brief recap of our financial performance for the fiscal first quarter 2023, an overview of company highlights, and current thoughts on 2023 guidance. Once we've completed these remarks, we'll open the call up for questions. With that, I'd now like to turn the call over to David Deno.

Well, thank you, Tammy, and welcome to everyone listening today. As noted in this morning's earnings release, adjusted Q1 2023 diluted earnings per share was $0.98, which compares to $0.80 in Q1 2022, up 23%. Key One 2023 marks the best quarterly diluted earnings per share in the company's history. Combined U.S. comparable sales are up 5.1%, with each brand having positive same-store sales. The first quarter results further validate the strategic and operational framework we outlined for the year and set us up to deliver our commitments. I will be giving an update on our plans in a minute. Before doing that, I would like to thank our teams in the restaurants and Restaurant Support Center for their unwavering commitment to serving our guests. Your dedication to great hospitality and service and experience is what makes our company so successful. As we look to build upon the momentum of the first quarter, we continue to remain focused on executing our plan to grow the business. As a reminder, our priorities include driving same-store sales growth, maintaining off-premises momentum, sustaining the progress in operating margins, becoming a more digitally savvy company, and increasing new restaurant openings. Let me now turn to our first priority, which is to grow sales and traffic in our restaurants. Growing sustainable traffic, especially at Outback, is our biggest priority. To achieve this goal, we are executing a number of initiatives. To start, let me provide a brief update on our use of technology to improve execution and consistency in the restaurants. The handheld technology roll-up for our servers was completed at the end of Q4. The Outback team is now focused on optimizing the experience in the dining room to deliver a differentiated guest experience. The tablets allow our servers to cover more tables while providing an even better experience to our guests. Tablets are not replacing personal interaction. They are enhancing it as servers now spend more time with guests. In addition, we continue to roll out new cooking technology, including advanced grills and ovens. The rollout is on track to be completed in the third quarter. This cooking technology is improving product quality and meal pacing. Like handhelds, the kitchen investments are also improving the customer experience and productivity. The second part of building sales and traffic is more targeted marketing designed to leverage our heritage, build brand equity, and drive frequency. Outback brought back the No Rules, Just Write platform at the beginning of Q1, but this is more than just marketing. It's an attitude. It's how we re-energize our restaurants with new food offerings, exceptional service, and most importantly, it ties back to our past. No Rules, Just Write is aimed at highlighting our great menu and the everyday value that we offer to our guests. In Q1, we leaned into our Aussie roots with both food and beverage innovation. The third element to our sales building strategy is an introduction of new layers in all of our brands. For example, during the first quarter, Fleming's launched Social Hour. It captures our wonderful food and drink offerings during the early evening. We also continue to grow our event catering business within Fleming's and look forward to the innovation that's coming from this business. Another sales layer is wine dinners at Carrabba's. Wine dinners showcase the innovation and product quality Krobs is known for while providing a great value for the guest and a good return for the company. We will continue to provide updates on sales layers at all of our brands throughout the year. The final sales driving strategy is additional spending on remodels this year. We paused our remodel efforts during the pandemic and have since developed a variety of scopes that can be deployed based on varying needs of our restaurants. We are on track to remodel over 100 locations this year. This is the beginning of a multi-year effort to touch a large percentage of our business. Keeping our assets looking their best is a key element of growing traffic. All the initiatives I've just described are designed to build sustainable traffic now and over the long term. Turning to our second priority, continuing the momentum in the off-premises business. The total off-premises business was 23% of U.S. sales in Q1, and our third-party delivery business continues to perform well. Importantly, off-premises profit margins are comparable to margins of the in-restaurant business. In addition, catering is becoming an important and growing opportunity for our brands. The Carabas team remains an industry leader in this space. Both Outback and Bonefish are also seeing momentum in catering. As a result of all of the above, we expect off-premises to remain a large part of our business. Our third priority is to sustain the major projects we have made in operating margins over the last four years in a highly inflationary environment. Margin improvements start with growing healthy traffic across the in-restaurant and off-premises channels. We also reduced the reliance on discounting and promotional LTOs and pivoted advertising spend towards more targeted, higher-return digital channels. Additionally, we remain disciplined in managing the middle of the P&L and are aggressively pursuing efficiencies in food, labor, and overhead. As Chris will discuss, despite persistent inflation, we've been able to achieve our margins well above 2019. We remain committed to achieving 8% operating margins over the long term. The fourth priority is to capitalize on our progress to become a more digitally savvy company. In Q1, approximately 79% of total U.S. off-premises sales were through digital channels. The new online ordering system and mobile app have exceeded our expectations. The new app has 3 million users. You can expect to see further activity as we improve the functionality and features of our app and digital offerings. And the final priority is to build more new restaurants, especially at Outback, Fleming's, and in Brazil. Each of these brands have strong sales and profit margins and offer great returns. Outback has the opportunity to significantly expand its restaurant base. We will continue to invest and grow Fleming's. And we also have the ability to more than double our footprint in Brazil. In summary, we are off to a terrific start. We are focusing on achieving our 2023 goals while building a great business that will continue to thrive. And with that, I will now turn the call over to Chris.