Bloomin' Brands, Inc.

All participants are in a listen-only mode. A brief question and answer session will follow management's prepared remarks. It is now my pleasure to introduce your host, Tara Kurian, Vice President, Corporate Finance and Investor Relations. Thank you. Ms. Kurian, 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 fourth quarter 2023 earnings release. It can also be found on our website at www.bloomandbrands.com in the investor 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 fourth quarter 2023, an overview of company highlights, and current thoughts on fiscal 2024 guidance. Once we've completed these remarks, we'll open the call up for questions. With that, I would like to now 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 Q4 2023 diluted earnings per share was 75 cents. This compares to 68 cents in Q4 2022, reflecting a growth of 10% year-over-year. Combined U.S. comparable sales were down 20 basis points. Our fourth quarter and 2023 results were largely in line with expectations. Importantly, we had a sequential U.S. comp sales and traffic improvement from Q3 into Q4. And within Q4, a softer October was offset by progressively improving comp sales ending with a strong holiday season. Before we discuss 2024, and more specifically our plans at Outback Steakhouse, I would like to recognize two businesses that had outstanding results in 2023, Carabas and Brazil. Carabas continues to take share versus the industry. Carabas posted comp sales growth of 3.9% and positive traffic growth for the year. In 2023, Carabas outperformed the industry in sales by 90 basis points and in traffic growth by 300 basis points. They continue to demonstrate strength, specifically in their off-premises channel and growing catering business. Krab's Bistro, which we launched in 2023, is a lunch-focused catering option featuring our wide-drive sandwiches that reflect Krab's Italian heritage. It is now offered in our restaurant as a compelling lunch offer, either within the restaurant or to-go. Bistro continues to outperform expectations. Brazil had another great year with significant growth in sales and profits. This is especially impressive given the lapping of pent-up demand in 2022. We continue to expand this business throughout the country and open 18 new restaurants in 2023. We look forward to capitalizing on our leading position and doubling our restaurant footprint in the coming years. Our 2023 results would not have been possible without our great teams in the restaurants and in our Restaurant Support Center. Thank you for delivering outstanding hospitality and excellent service to our guests. As we move forward, we remain focused on the strategic priorities that are making us a stronger, leaner, operations-centered company. These priorities include, first, driving in-restaurant same-store sales growth, which remains our top priority, especially at Outback. 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 improve infrastructure and drive growth while preserving margins. Our primary focus remains improving in-restaurant sales and traffic at Outback. We've done a lot of work to better understand our ever-evolving post-COVID customer. We believe we have a better idea of who our customer is, and as a result, we continue to sharpen our brand positioning. The first step of this effort was the launch of Outback's No Rules, Just Right campaign. This was built on our brand equity and heritage, and it brings back the adventure and irreverence as expected from Outback. I especially like the just right part of that phrase as it reinforces the food and service promise to our customers. In addition, we spent more on marketing and advertising in 2023 to improve our share of voice in a highly competitive marketplace. During Q4, we saw a positive response to our additional marketing spend. We plan to increase our 2024 spending by approximately $20 million. This investment will improve our share of voice and build traffic, utilizing a blend of television and high-return digital tactics. The advertising highlights new menu innovation, accessible price points, and great value. We also recognize the consumer may be more careful with their discretionary spending. Our current LTO, a three-course Aussie dinner for $16.99, offers the customer a great value. We will continue to be thoughtful of our approach to overall pricing and discounting. The No Rules, Just Right campaign and the marketing investment are just the start of the work underway at Outback. There will be more to unveil in our strategy at Outback in the coming quarters. Since we are going to spend more on marketing in 2024 at Outback, we must make sure our operations are best in class. We will continue to focus on delivering a differentiated guest experience, specifically improved service and consistently great food. We are solving this through investments in technology such as server handhelds and new ovens and grills, as well as relentlessly focusing on key operational behaviors. As a result of this work, our internal customer measures have meaningfully improved. A couple of key leading indicators that we track are stake accuracy and consistency of experience. Over the last year, stake accuracy is up 400 basis points and consistency of experience is up 700 basis points. This progress is further validated by casual dining industry metrics, which have continued to improve. Friendly service and food quality are now 300 and 360 basis points ahead of our casual dining peers, respectively. We are confident in the strategy at Outback, and it is working. In 12 of the last 14 weeks, Outback has beaten the industry in comp sales growth. Based on recent trends, we expect to see Outback perform above the industry, and this is reflected in our guidance. On to our second priority, new unit development and improving our asset base. We are upgrading our assets through new openings, relocating, and remodeling restaurants. We opened six new domestic units in 2023 and are on track to nearly triple that in 2024. We know that upgrading our assets is a big part of improving our traffic trends, especially at Outback. Our development pipeline for new restaurants and relocations remains very robust. We are opportunistic on relocations and continue to see outside sales lift on these investments. We successfully completed over 100 remodels in 2023 and will continue to work our way through the system in 2024. Our development efforts provide a runway for future growth, offer good returns, and are a key part of our strategy. The last priority I'll discuss today is our leading off-premises channel. The business has more than doubled since 2019 and currently represents 24% of our U.S. sales. We were pioneers in the to-go space, and we continue to see robust demand in this highly incremental location. In addition, the success of our catering business at all of our brands, but particularly Carrabba's, provides a runway for future growth. Next, let me comment on our restaurant closure initiative. We periodically review our asset base, and in our latest review, we made the decision to close 41 underperforming locations. The majority of these restaurants were older assets with leases from the 90s and early 2000s. This decision considered a variety of factors, including sales and traffic, trade areas, and the investment that would have to be made to improve the restaurants. Despite this initiative, our confidence in our portfolio remains high as we plan to open 40 to 45 new restaurants across the system in 2024. These are promising trade areas with great potential. It's critical to add that these closures are not a reflection of the hard work of our team members. As always, we will take care of our people, offering many the opportunity to transfer to another restaurant and severance for those who do not. 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 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. Before I turn the call over to Chris, I just wanted to comment on the 8K we sent out this morning regarding Chris's retirement from Bloomin' Brands. Chris has been a great partner to me the last five years as CFO. He has made many, many contributions to our company, and he will be missed. The company is considering various options for his replacement. Chris is expected to continue in his current role until such a time as Successor is named and otherwise assist in the transition. Chris, thank you for everything you have done for the company and for me. Over to you to discuss our financial performance and 2024 guidance.