Key Highlights

● Bloomin' Brands reports fiscal third-quarter results before the open on Friday, November 6.

● A webcast call is set for 8 a.m. Eastern time.

● Management guided to a seasonal adjusted loss of 22 to 27 cents a share.

● In August the company raised its full-year Earnings guidance.

Bloomin' Brands (NASDAQ:BLMN), the operator of Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill and Fleming's Prime Steakhouse and Wine Bar, will release results for its fiscal third quarter early on Friday, the sixth of November, and walk through them on a webcast call at eight in the morning Eastern time. The quarter ended in the final days of September.

The company enters the event in a different position from a year ago. Last November it unveiled a turnaround plan, closed a group of underperforming restaurants and suspended its Dividend so that cash could go to its core brands and to paying down debt. Since then results have improved, and in August management raised its full-year earnings guidance while still telling the market to expect a seasonal loss in the third quarter.

That makes Friday's report less about whether the quarter was positive and more about whether sales, margins and the Balance Sheet moved in the direction management described. For readers who follow Smallcap Stocks, a restaurant operator with a heavy Debt load and a single dominant Brand is a clear example of how a turnaround is measured. The sections below set out the facts already on the record.

When will Bloomin' Brands report, and what quarter is it?

The company said in mid-October that it would issue its fiscal third-quarter results at about half past six on Friday morning, the sixth of November, and host a conference call at eight o'clock Eastern time. The quarter covered the 13 weeks that ended on the 20-seventh of September.

The call is available as a live webcast on the company website, and a replay is posted afterward. The finance contact named in the notice is the senior vice president responsible for market communications, planning and international operations.

Because the release comes before the open, the first price move will occur in regular trading. The stock has a history of large moves on results days, discussed further below.

What happened at the previous report in August?

On the fifth of August the company reported total Revenue of about $1.016 billion for the second quarter, a rise of just over 1%. Diluted Earnings per Share from continuing operations were $0.37 against $0.29 a year earlier, and adjusted earnings were $0.39 against $0.32.

Operating Margin was nearly 4% on an accounting basis and 4% on an adjusted basis, both higher than a year before. Restaurant-level operating margin, the measure of how much each restaurant keeps after its own costs, rose to about 12.5% from 12%.

The chief executive, Mike Spanos, said he was pleased with the results and with continued progress on what the company calls the Outback Turnaround. He added that the company remained focused on consistency of execution across food, service, experience and affordability.

How did each brand perform on comparable sales?

Comparable restaurant sales in the United States rose by about 2.33% in the second quarter. Outback Steakhouse, the largest brand, grew by about 1.5%, Carrabba's by about 1.7%, and Fleming's by about 1.6%.

Bonefish Grill stood out with growth of more than 8%, a strong figure for a casual dining chain. The result indicates that the smaller brands are not simply dragging on the group while attention goes to Outback.

Comparable sales measure restaurants open for at least a full year, so they exclude the effect of openings and closures. They are the key gauge in the industry because they capture traffic and average check without the distortion of changes in the store base.

In the second quarter every brand posted a positive comparable figure. Readers will want to see whether all four brands stayed positive in the third quarter, and whether the spread between the strongest and weakest narrowed or widened.

What does the Outback Turnaround involve?

The plan, announced last November, centers on the Outback brand. It includes refreshing existing restaurants to meet brand standards, improving food and service consistency, and keeping value in the menu so that diners see the price as fair. Free Cash Flow is directed to the base Business and to debt reduction.

The second-quarter release noted accelerated Depreciation tied to equipment upgrades under the turnaround, which the company excluded from its adjusted results. That item shows that physical updating of restaurants is under way and that some older equipment is being retired earlier than planned.

The approach contrasts with a growth push through new restaurants. Management has chosen to improve what exists, so the key evidence is in sales per restaurant and margin per restaurant rather than in the unit count.

The four brands have different roles. Outback is the Volume driver and the one most exposed to value perceptions. Carrabba's and Bonefish Grill occupy the casual Italian and seafood slots, and Fleming's sits at the upscale end, where check sizes and occasion dining carry more weight than everyday traffic.

What closures and Lease decisions were made?

When the plan was unveiled, the company closed 21 American restaurants, with the closures completed in October, and decided not to renew leases at 22 more, most of which expire over the following four years. It recorded asset impairments and closure charges of about $33 million in that quarter and expected a further $5 million to $7 million of severance and closure costs in the next.

Trimming weaker locations raises the average quality of the base, though it reduces revenue. The second-quarter release showed system-wide restaurants totaling 1,448 at the end of June, of which 959 were company-owned and 489 were franchised, after five openings in the quarter.

The balance between company-owned and franchised restaurants matters because franchised units bring Royalty revenue with less capital. The third-quarter report will show whether the count moved and whether any further charges related to closures were booked.

Closure charges also explain gaps between accounting and adjusted results. The company excludes such items from its adjusted figures, so the reconciliation table in the release is the place to see how large they were. A smaller charge than the $5 million to $7 million flagged for the following quarter last year would indicate that the program is largely behind it.

What guidance did management give for the third quarter and the year?

For the third quarter the company guided to comparable sales growth of 1 to 2% in the United States and to a diluted loss per share of between 23 and $0.28. On an adjusted basis, it expected a loss of between 22 and $0.27. The assumed share count was about $86 million.

For the full year it raised its earnings ranges in August. Diluted earnings per share are now expected between 85 and $0.95, up from 70 to $0.85, and adjusted earnings between $0.90 and $1, up from 75 to $0.90.

Comparable sales guidance for the year was narrowed to between 1 and 2% from between one-half and 2.5%. The narrower range signals greater confidence in the direction, because management gave itself less room for error, and the new report will show whether the third quarter landed inside the quarterly range.

The assumed share count of about 86 million matters for the per-share arithmetic. A loss of $0.25 a share on that base is a total loss of roughly $21 million, so even small changes in sales or margin during the quarter can move the per-share figure noticeably.

Why is the third quarter a loss quarter?

The fiscal third quarter is traditionally the weakest of the year for this kind of restaurant company, because the quarter lacks the holiday traffic of the final period of the year. Fixed costs such as rent, labor and depreciation still apply.

A year earlier the company reported revenue of about $929 million and an adjusted loss of $0.03 a share, which was better than the expected loss of $0.13 at the time. That comparison gives a sense of the seasonal pattern, though the new guidance for a larger loss reflects different circumstances.

The practical test is not whether the number is negative but how it compares with the range of 22 to $0.27. A smaller loss would show that costs or sales did better than management expected, while a larger one would raise questions.

How much has debt come down?

At the end of June total debt stood at about $703 million, down from about $787 million at the end of last year, a reduction of roughly $85 million in six months. Cash and equivalents were about $67 million compared with about $60 million.

Stockholders' Equity rose to about $435 million from about $337 million, reflecting the earnings the company has recorded. The report also showed a working Capital Deficit of about $614 million, which is normal for restaurants because they collect cash from diners before paying suppliers.

Debt reduction is one of the pillars of the plan, so the figure at the end of September is among the most important in the release. A continued decline would show that free cash flow is being directed as stated.

The cash line is worth reading together with the debt line. Cash of about $67 million is small relative to annual revenue, which is typical for a restaurant company, so the company relies on steady Operating Cash Flow and its Credit arrangements for liquidity. The filing lists the facilities and their maturities for those who want the detail.

What happened to the dividend for Bloomin' Brands?

The company suspended its dividend when it announced the turnaround. Spanos said at the time that the decision supported the strategy, and the cash that would have gone to payouts is now directed to refreshing restaurants and repaying debt.

The suspension was a significant shift for a stock that had been known for a regular payout. It signals a priority on rebuilding the base and the balance sheet ahead of distributions.

Nothing in the August release mentioned a restoration of the payout, and none is announced for Friday. Readers should treat any statement on this subject on the call as new information, since the timing depends on the debt and earnings trajectory.

The decision also changed how the company is compared with peers. Without a payout, the stock is no longer part of payout-oriented screens, and the focus shifts to growth in sales, margin recovery and debt repayment, which are the same items the call is likely to emphasize.

How has the stock reacted to previous reports?

A data page tracking the stock's reactions to news showed large moves on earnings days. The report in November last year, headlined by the turnaround strategy, was followed by a decline of more than 18% by the close, and the August report a year earlier by a decline of more than 26%.

The May report this year went the other way, with a rise of about 15% by the close. The pattern shows how sensitive the shares are to the tone of guidance and comparable sales, and it warns against assuming that a particular direction is typical.

Smaller companies with leveraged balance sheets often show such swings because modest changes in earnings can alter how the market views their debt capacity.

Those moves took place on a base of roughly 290 labeled news events over three years, according to the same page, and the median move on ordinary news was small. Earnings days are therefore the exception, which is why the Friday release and call are the main scheduled event for the stock this quarter.

What else should readers check in the release?

Beyond headline numbers, readers can look for traffic versus average check in the Outback comparable sales, the share of sales from off-premises dining, and the commentary on food and labor costs. These are the lines that explain whether margin gains are structural or temporary.

The release will also contain a table for the international business, where currency movements and local conditions affect reported results.

Finally, the guidance for the final quarter and the full year will be restated or revised. The company has raised its earnings range in the last report, so another move would continue a pattern, whereas an unchanged or lowered range would be a change of direction.

Where does the company sit in the market for Bloomin' Brands?

Bloomin' Brands is a smaller listed company within the Russell 2000 universe and competes with larger casual dining groups, steakhouse chains and fast-casual operators. Its brands are well known, but its scale is far below the largest restaurant companies.

The business depends on consumer discretionary spending, which makes it sensitive to the state of household budgets and to the cost of beef, labor and energy. Those factors help explain why management talks about affordability in every statement.

The Friday report will Supply the next set of facts for those following the company.

Size is relevant to how the market reads the results. With revenue of roughly $1 billion in a single quarter, the company is large for a small-cap index but modest beside the giants of casual dining. A move of a point in comparable sales therefore translates into a meaningful number of dollars, yet not into the kind of figure that moves a large index.