Bloomin' Brands, Inc.

Good morning and welcome to the Bloomin' Brands Inc. Third Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Tara Kurian, Vice President, Corporate Finance and Investor Relations. Please go ahead.

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 third quarter 2023 earnings release. It can also be found on our website at www.bloominbrands.com in the Investors section. Throughout this conference call, we will be presenting results on an adjusted basis. An explanation of our use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our earnings release 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 www.sec.gov. During today's call, we'll provide a brief recap of our financial performance for the fiscal third quarter 2023, an overview of company highlights, and current thoughts on Q4 and fiscal 2023 guidance. Once we've completed these remarks, we'll open the call up for questions. With that, I would like So now let's turn the call over to David Dino.

Well, thank you, Tara, and welcome to everyone listening today. As noted in this morning's earnings release, adjusted Q3 2023 diluted earnings per share was 44 cents. This compares to 35 cents in Q3 2022, reflecting a growth of 26% year over year. Combined U.S. comp sales were down 50 basis points, and traffic was 60 basis points behind the industry. Following Labor Day, sales trends in the casual dining industry softened. From August to September, there was nearly a 300 basis point decline in comparable sales trends. Our brands experienced a similar change in trend. Despite these top line headwinds, we had 90 basis points of restaurant margin expansion versus last year, driven by our productivity initiatives. As a result, our Q3 profitability remained strong. Moving forward, although the industry landscape has changed from earlier this year, we expect U.S. comp sales to improve sequentially in Q4 from Q3. We have already seen an improvement in October, and this is incorporated within our Q4 guidance. In the long term, we are committed to the strategic priorities that are making us a stronger, leaner, operation-centered company. These priorities include, first, driving in-restaurant same-store sales growth, and this is our top priority. Second, increasing new restaurant openings while refreshing our existing assets. Third, maintaining our off-premises momentum. Fourth, becoming a more digitally driven company. And finally, investing in technology to drive growth while preserving margins. Since 2019, we have made great progress on improving our operating model through simplification efforts and by leveraging investments to improve efficiency. The efforts have resulted in strong margin gains that have sustained despite record inflation. These achievements also provide a strong foundation for the exciting growth ahead, and we have confidence that these priorities will enable us to drive sustainable long-term sales and profit growth. In addition, our investments in the customer experience in both restaurant technology and operational simplification allow us to provide differentiated guest experience that strengthens our value proposition. Many of these investments have been made across the entire portfolio, but the primary focus has been at Outback. With a strong operating foundation and healthy margins, improving in-restaurant sales and traffic is our top priority. As the economic and consumer landscape continues to evolve, we are making sure we continue to evolve with it. This includes doing the work to ensure we exceed the needs of our existing and future customers. This ongoing effort is always being done through the lens of the consumer and customer analytics. A few quarters ago, we discussed our No Rules, Just Right campaign that built on Outback's brand equity and heritage. But this is more than just marketing. It's an attitude. It's how we re-energize our restaurants and bring back the irreverence that Outback is known for. We'll be spending more on marketing and advertising in Q4 as well as 2024. Although we do not intend to return to pre-pandemic levels, we do believe a higher level of advertising spend is warranted moving forward. Utilizing a blend of television and high-return digital tactics, we believe our increased marketing presence can help build traffic. We will leverage a combination of new product innovation, highlighting our already accessible price points. For example, our current LTO at Outback, the Staken Mates $16.99 combo offering, provides a great value to the guest and an attractive return. We recognize in the short term that driving traffic growth may be challenged as the consumer is more careful with their discretionary spending. We will be thoughtful about our approach to discounting in this environment. Another catalyst for growth are the investments we are making to enhance our operations at Outback. At the end of the third quarter, we completed the rollout of our server handheld technology and the advanced grills and ovens. These investments are improving our consistency, overall meal pacing, and guest satisfaction, while also providing a cost-saving opportunity for the company. Now our focus is leveraging this technology to further improve the guest experience. This will lead to increased intent to return metrics, which drive additional guest frequency and traffic growth. We are confident in the strategy at Outback and are making the necessary decisions to set up the brand for the long term. We'll remain disciplined in our response in this environment and look forward to updating you on our progress in the future. As it relates to the broader strategic priorities for the company, let me first talk about development. We are upgrading our assets to remodeling, relocating, and opening new restaurants, especially Outback. On our remodeling efforts, we are at the beginning of a multi-year effort and remain on track for 100 remodels this year. In terms of relocations, at Outback, we continue to see outside sales lift with average volumes exceeding $4.7 million per year. The success of our relocation program reinforces the broad consumer appeal of Outback, and there are still another 50 relocation opportunities remaining. The new restaurant pipeline continues to build at Outback and across the portfolio, and we are seeing good returns on new units. Our development efforts provide the runway for future growth and are a critical part of our strategy. Complementing this strategy is our leading off-premises channel. This business has more than doubled since 2019 and currently represents 25% of our US sales. As pioneers in to-go, we continue to have robust demand and are maintaining strength in third-party delivery. This is a highly incremental occasion and this differentiated offer that is profitable. In addition, the success of our catering business, particularly at Carrabba's, provides a runway for future growth. Before I turn it over to Chris, I want to comment on a couple of specific businesses that are doing very well. First, Carrabba's had another excellent quarter with comp sales of 3%. The off-premises and catering channels are proving to be very robust. Off-premises is 34% of Carrabba's sales, which includes a strong contribution from our growing catering business. Carabas has the perfect menu to meet the demands of this important and growing channel. We launched Carabas Bistro earlier this year, which is a lunch-focused catering option featuring a wide variety of sandwiches that represent Carabas' Italian heritage. This continues to outperform our expectations. Off-premises will continue to remain a large part of the company in the future. Additionally, Carabas continues to offer innovative product offerings, such as the wine dinners and seasonal specials, which highlight the great value and experience that this brand is known for. The strong sales at Carabas Combined with productivity initiatives and cost management, our financial returns continue to get stronger. Carabas has earned the right to grow, and we've started to build out a pipeline for future restaurant openings. Next are international operations, but driven by our market-leading business in Brazil. Brazil had another outstanding quarter with significant growth in sales and profits. The Brazil team offers amazing food and exceptional service, and we continue to rapidly expand the business throughout the country. We look forward to capitalizing on our leading position and double our restaurant footprint in the coming years. Importantly, the sales growth initiatives I described are supported by a solid foundation with healthy margins, robust cash flow, and a strong balance sheet. This strength gives us the ability to invest in new unit development, technology enhancements, and asset improvements while meeting our commitments. We remain dedicated to delivering great food and experience for our guests while building a strong business that will continue to thrive for many years to come. Finally, our results would not be possible without our great teams in the restaurants and in our restaurant support center. Thank you for delivering on outstanding hospitality and service to our guests. And with that, I'll now turn the call over to Chris who will provide more detail on Q3 and our thoughts on Q4.