Bloomin' Brands, Inc.

Greetings and welcome to the Blumen Brands Inc. Second Quarter 2025 Earnings Conference Call. At this time, 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 Mike Spanos, our Chief Executive Officer, and Michael Healy, Chief Financial Officer and Executive Vice President. By now, you should have access to our fiscal second quarter 2025 earnings release and our investor presentation slides, both of which can 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, an explanation of our use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our earnings release and investor presentation 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'll provide a brief recap of our financial performance for the second quarter 2025, an overview of company highlights and current thoughts on fiscal 2025 guidance. Once we've completed these remarks, we'll open the call up for questions. With that, I would now like to turn the call over to Mike Spanis.

Thanks, Tara, and good morning, everyone. Before I get into our business update, I would like to discuss the changes to our senior leadership team that were announced earlier this week. As I've previously stated, my initial focus has been on our operational priorities, listening and learning from our restaurant operators to best support them in simplifying the agenda and driving consistency of execution to deliver a great guest experience with a priority on outback. This has been important to foster a culture that is grounded in our founders' principles and beliefs, executing with an operational mindset and a passion for guest hospitality. I've also discussed our urgent and deliberate work on the Bloomen Brands strategy, centered on turning around outback. As we complete our enterprise-wide strategy, we have implemented an organizational structure that builds capability, is effective and efficient, and consists of a set of leaders that are deep in restaurant and operational experience, enhancing our transformation and strategic muscles as we lead the future business. Turnaround outback is our highest priority. As a result, Michael Healy will move into a newly created role, executive vice president, strategy and transformation. He will lead the strategic initiatives central to our turnaround efforts. His extensive experience with over 16 years across the organization and supply chain, brand leadership, and both outback CFO as well as the company CFO, make him the ideal candidate for this role. He will also lead the revenue management work. I'm excited to see this transformation capability, which will allow us to in-source external consulting support, driving cost efficiencies. I'd like to welcome Eric Kristal, who has joined the company as executive vice president and chief financial officer-elect. Eric is a seasoned finance leader with nearly two decades of experience in the food and beverage sector, including senior roles at Campbell's Snacks and PepsiCo. Most recently, he served as senior vice president and chief financial officer of Campbell's Snack Division, where he led the finance teams through a period of growth, transformation, and operational efficiency. His leadership helped grow sales and profitability through strategic pricing, marketing investments, and international expansion. Prior to Campbell's, Eric served as senior vice president and chief financial officer of the Americas at Dentsu. He has deep experience across financial planning and analysis, operating finance, strategy and transformation, and franchise and company-owned operations with large operating P&Ls. Eric will spend the next month getting hands-on restaurant training immersed in our restaurant and brand cultures. Michael will remain the company's executive vice president and chief financial officer until September 8th, and will collaborate closely with Eric to ensure a smooth and effective transition of responsibilities. They will work closely together on our go-forward strategy and financial processes. Jessica Mottori will join our team officially next week as senior vice president and chief human resources officer. She will oversee human resources, compensation and benefits, recruiting, employee development, and performance management. Jessica joins us from Advanced Auto Parts where she was senior vice president, global total rewards and employee experience, and prior to that was at Pepsi Beverages North America. Jessica has worked in complex businesses in both company-owned and franchise operations her entire career. She brings broad HR experience, a people-first mentality, and financial acumen to support the employee value proposition. Ali Chari will join our team as senior vice president, guest insights and analytics. He will lead the company's strategic and marketing brand positioning, guest insights and analytics, and our digital capabilities. He brings over 20 years of experience in consumer insights, strategy, and marketplace analytics across restaurants and consumer-facing brands. He most recently served as senior vice president of strategy and insights at Darden restaurants. He will lead the brand positioning of our four founder-inspired brands and will work in partnership with each brand's marketing team. Rafael Sanchez, senior vice president and chief information officer, joined our team at the end of June. Rafael has over 25 years of IT leadership across the restaurant, retail, hospitality, and entertainment industries. He recently served as senior vice president of information technology at Davidson Hospitality Group. Prior to Davidson Hospitality Group, he was a chief information officer of Six Flags Entertainment and Feld Entertainment. His extensive background will be instrumental in integrating our technology to enhance the guest experience while also helping our team members to work more effectively. Randy Scruggs has been promoted to senior vice president supply chain. He has over 20 years of experience in the food industry, recently serving as our VP of supply chain. He and his team have collaboratively driven productivity with our partners while improving quality and specification standards. His expertise in sourcing and logistics and his passion for supporting our restaurant teams has been instrumental in the quality we provide our guests. Tara Kurian has been promoted to senior vice president IR, FP&A, and international. Tara will take on expanded responsibilities within our international business. She will also partner with Michael on the strategy and transformation team as the primary financial lead. She recently served as our VP of corporate finance investor relations. Her deep financial expertise, banking, and business acumen position her well to succeed in this role. Susan Klein has been promoted to group vice president strategy and transformation and will support Michael Healy in his new role. Susan's 30 years of operational experience, starting as a hostess and managing partner at Outback will be critical in grounding our project management work from an Outbacker perspective and guest lens. Turning to our brands, John Betten will join the company at the beginning of September as senior vice president, president of Bonefish Grill. John is a strategic and operational leader with over 30 years of experience within the restaurant industry where he began his career as a sous chef. He most recently served as chief executive officer of Miller's Ale House and prior to that was CEO of the Palm Restaurant Group. His strategic leadership, operational experience, and guest-centric approach are well suited as we develop our future strategic plans for Bonefish Grill. I wanna thank Mark Rath for his years of dedicated service to our organization. His leadership helped shape our company's success and laid the foundation for the future of our brands. Mark will work with John to ensure a smooth transition over the next couple of months. The remainder of our executive and brand leadership teams remains the same. Our brand leaders have spent their careers as operators, growing sales and profits, serving guests with a passion, and making an impact on people. I am excited that we have the right team in place to foster a culture grounded in accountability, hospitality, inclusion, and fun. We are in the early stages of turning around Outback. This team believes in our potential and is committed to the hard work to grow sales and profits in each restaurant. Before I move on to the business update, I wanted to thank our people. The more time I spend with our people and our guests in the restaurants, as well as with our restaurant support center team members, I increasingly see the passion our people have about serving our guests, taking care of each other, and making it happen every day. I'm proud to have the privilege of leading this organization. I will now discuss our second quarter results and progress on our operational priorities. Our second quarter results highlight the progress we're making on our operating priorities. We saw sequential improvements in US traffic, which was down 2% in Q2, 190 basis points better than Q1. Our Q2 sales comp of negative 10 basis points reflected an improvement from Q1 of negative 50 basis points. We had solid Mother's Day and Father's Day holidays across our brands. Traffic performance at Outback strengthened throughout the quarter, driven by the Aussie three-course offering. We also saw continued positive comp sales growth at Carrabba's, driven by strong off-premises, including catering and experiential line dinners. Fleming's maintained sales momentum with strong holiday and in-restaurant traffic, driven by events and catering platforms. While we are making progress, we're still losing share in the industry as defined by Black Box. We know our in-restaurant dining is our biggest opportunity. We know that it will take time to reverse our market share trends given the state of our business, and we remain focused on improving our execution every day. We have made progress on our operational priorities. I'll first discuss simplify the agenda and driving consistency of execution before we discuss the Outback turnaround. Menu reductions across brands are now fully implemented. We expect further reductions to the Outback menu to be implemented as we learn more in tests. We streamlined menus both on and off-premise, removed items with low sales mix, low satisfaction scores, or items that did not travel well. We removed seasonal LTOs from Outback, which has allowed the team to focus on everyday execution. We introduced Aussie three-course as the everyday value offer, which is easy for the restaurants to execute and is a great value for the guests. Aussie three-course was a large contributor to the traffic improvement we sought out back in Q2. The mix continues to be in line with our expectations, and the value within the offer creates a mixed headwind for us. In the first half of Q3, we are lapping Aussie three-course from last year, and then we expect a favorable lap for the second half of the quarter. We have favorable laps for the entire fourth quarter to finish the year strong. As I mentioned on the last call, we are continuing to monitor the effectiveness of all value programs and will iterate as needed. Our leadership teams, including brand presidents, JVPs, and MVPs, are spending more time in the restaurants during peak hours and conducting multi-day visits to gather feedback from employees and guests. The goal is to identify and remove obstacles to deliver more consistent execution. We are leading with an operational mindset. Ziosk, or as our Outbackers call the device TableMates, have been completely rolled out at Outback for a little over three months now. Over 85% of guests are electing to use TableMates to complete payments in the restaurants, improving table turns by about five to seven minutes. Additionally, we continue to gather real-time feedback through surveys and leverage AI tools to help managing partners efficiently address any service gaps. The good news is we are seeing traction in our simplification and consistent execution at Outback. We are seeing improvements in customer metrics in key areas like food and intent to return. While we are encouraged by the improvements, we know we need to do more in our everyday operations to deliver a consistent experience. Beyond the everyday execution, we are focused on the Outback turnaround. We know we have three key areas to address in the what you get for what you pay for equation, and that is state quality, service, and value. Addressing these three areas, we believe will drive sustainable traffic growth at Outback. We had 14 restaurants in tests earlier this year, which was largely focused on menu simplification, innovation, and guest experience. We are encouraged by what we have seen in the tests, which provided guest learnings and Outbacker feedback that has allowed us to expand testing to a total of 42 restaurants by the end of September. These restaurants will have integrated test cells with enhanced service models, state quality, menu innovation, and value components. We believe the expansion tests will create a meaningfully improved guest experience and will be the foundation for the Outback turnaround. Starting with the service model, we know we need to improve our service model to deliver a consistent guest experience. Two years ago, we implemented handheld technology for our servers to aid in pace and accuracy, increasing the -to-table station ratios above industry standards. We transitioned to a -to-six ratio with servers supported by server assistance. The increased table ratio has not delivered a consistent guest experience. I have seen this challenge for our teams and guests especially during peak hours. We believe a lower -to-table station ratio of one to four offset by reduction in server assistance support will lead to a more consistent execution and speed of service. We are currently testing this revised service approach in select markets and are encouraged by what we are seeing. On state quality, we completed a thorough menu satisfaction survey earlier this year. With the survey results combined with Ziosk table mates, item level data, we are working with our strategic partners to improve our center of the plate proteins, primarily our stake lineup and spec tolerances to enhance quality and craveability. We have tests in selected markets that include enhanced product specs and updated execution processes. As a steakhouse, we have to lead with great stake quality. On menu innovation and value, we are testing opening price points across categories as well as different offerings, leveraging work we are doing on revenue growth management. Through testing that has enhanced service models, state quality, menu innovation and value components, we believe we will drive greater frequency from our loyal guests as well as visits from lapsed and new guests. Given our average guest frequency of two times per year, it will take some time to see the traffic benefits and we will provide updates as we learn more. We also started our brand positioning work which complements changes in quality, service and value. Outback is a casual and craveable steakhouse at its core with great equities. And we need to be sharper in our positioning and consumer communication to differentiate ourselves within casual dining. This will enhance the effectiveness of our marketing. It is exciting work and the results will amplify the efforts we are doing to improve the guest experience. As I've said in our prior calls, we are focused on getting to the best outcome for the brand, for our outbackers and for our guests and we will continue to test until we have the right approach. Michael will speak in more detail, but expanding the test to more restaurants requires approximately $3 million of investments in 2025, which was not included in our prior guidance. As it relates to our assets, we have a thorough assessment underway that is looking at our network of restaurants, analyzing repair and maintenance costs, developing a refresh and remodel approach and completing a restaurant level analysis based on profitability, site quality and trade area demand. We completed the repair and maintenance survey at the end of the second quarter and we use the findings to help prioritize the remodel scopes. We will do approximately 10 outback remodels this year that have three different levels of spending scopes. These remodels will inform our approach for the next few years as we work through the balance of the system. As we have pulled back on new restaurant openings, we intend to repurpose those capital dollars towards remodels over the next few years. We are working diligently and urgently on our strategic plan. We know we need to make changes for the long-term health of the business. We are encouraged by the expansion of the test cells to 42 restaurants and we believe the test expansion will be the foundation for the outback turnaround. Our intention is to be transparent as we work through our plan and provide elements of our strategy by the end of this year. Before I turn it over to Michael, I want to reiterate that our priorities remain reinvesting back into our restaurants, reducing our debt leverage post the Brazil transaction and returning capital to our shareholders. Our liquidity is ample and our cash flow is healthy. We're committed to getting our leverage back to below a three times lease adjusted net leverage ratio, but we know the solution will require a focus on debt pay down as well as completing the outback turnaround. With that, I would now like to turn the call over to Michael to review our financial performance.