Executives: Mark Graff - Bloomin' Brands, Inc. Elizabeth A. Smith - Bloomin' Brands, Inc. David Deno - Bloomin' Brands, Inc. Analysts: Michael W.

Gallo - C.L. King & Associates, Inc. Sharon Zackfia - William Blair & Co. LLC Jeffrey Bernstein - Barclays Capital, Inc. John Glass - Morgan Stanley & Co.

LLC Howard W. Penney - Hedgeye Risk Management LLC (Research) Jeff D. Farmer - Wells Fargo Securities LLC John William Ivankoe - JPMorgan Securities LLC Karen Holthouse - Goldman Sachs & Co. Andrew Marc Barish - Jefferies LLC Matthew DiFrisco - Guggenheim Securities LLC Andrew Strelzik - BMO Capital Markets (United States)

Operator: Greetings and welcome to the Bloomin' Brands Fiscal Fourth Quarter 2016 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, Mark Graff, Vice President of Investor Relations. Thank you, Mr. Graff. You may begin.

Mark Graff - Bloomin' Brands, Inc.: Thank you, and good morning, everyone. With me on today's call are Liz Smith, our CEO; and Dave Deno, Executive Vice President and Chief Financial and Administrative Officer. By now, you should have access to our fiscal fourth quarter 2016 earnings release. It can also be found on our website at bloominbrands.com in the Investors section. Throughout this conference call, we will be presenting results on an adjusted basis.

These non-GAAP financial measures are not calculated in accordance with U.S. GAAP and may be calculated differently than similar non-GAAP information used by other companies. Quantitative reconciliations of non-GAAP financial measures to their 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 growth strategies and financial guidance. 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 recap of our financial performance for the fiscal fourth quarter 2016, an overview of company highlights, a discussion regarding progress on key strategic objectives and an update on 2017 guidance. Once we've completed these remarks, we'll open up the call up for questions. With that, I'd now like to turn the call over to Liz Smith. Elizabeth A.

Smith - Bloomin' Brands, Inc.: Thanks, Mark, and welcome to everyone listening today. As noted in this morning's earnings release, our adjusted fourth quarter diluted earnings per share was $0.31, up 3% from last year. For the total year, we achieved adjusted EPS of $1.29, which was an increase of 2%. Our fourth quarter and 2016 results were below expectations in a weak industry environment that remains highly competitive. Improving sales trends remain the number one priority, and we're aggressively spending on initiatives to drive healthy, sustainable traffic over the medium and long term.

During the quarter, we made substantial progress on our strategy to reallocate spending away from discounting towards investments in the 360-degree customer experience. The benefits of this strategy is showing up in strength in brand health metrics. The measures we are focused on include, but are not limited to, pace of the dining experience, improved steak accuracy, higher social media scores and lower incidences of experience a problem in our restaurant. We see these measures as leading indicators of underlying business momentum. As you know, it is our policy not to comment on current trends.

However, we have had a meaningful improvement in Outback sales trends so far this year, which we believe warrant an update. Year-to-date, Outback comps are positive and are outperforming the industry. We know from past experience that there was a lot of volatility that can emerge throughout the year. However, in 2017, we remain committed to showing the patience necessary to invest in our experience to deliver what casual dining guests expect when dining out. Consumer behavior is evolving at a rapid pace.

First, consumers are increasingly motivated by a differentiated dining experience. They're seeking a restaurant where they connect with family and friends and often will share their experience via social media. Accordingly, our current and ongoing investments are prioritized to elevate the total customer experience. This encompasses food quality and portion enhancements, service upgrades, and improved ambience. In addition, we are exploring innovative ideas that unite signature food and service that is unique to Outback.

Second, as part of the growing demand for convenience, consumers want CDR food quality but not always in the restaurant. According to NPD CREST, off-premise visits grew 4% during a very challenging fourth quarter, driven by the proliferation of third-party delivery and expanding prepared food options. This represents a sizeable and incremental sales layer, and we are currently testing the use of a third-party, as well as building our own delivery network. Early consumer feedback has been very positive, and we are building organizational capability to capture this opportunity. We will have at least 115 restaurants offering delivery by the end of Q1.

In our view, off-premise represents the first structural tailwind in the industry in quite some time. We intend to capture our fair share of these incremental occasions when dining at home is preferred. In 2017, we expect the benefits of our investment to build momentum throughout the year. However, the industry environment has remained challenged with negative traffic for over 10 years. In response, the competitive intensity has been robust.

These dynamics, combined with our resolve to do what is right for the long term, will create ebbs and flows in our traffic. Our 2017 sales guidance contemplates this volatility. Now, turning to our brands. Consistent with the industry, Outback sales trend softened in the fourth quarter, particularly in December. In addition to the industry trend, we estimate our pivot away from straight discounting towards more brand-enhancing investments drove approximately 230 basis points of additional traffic decline in Q4.

As we start the year, it appears the industry is strengthening and we see that our investment are elevating the customer experience, strengthening execution, and slowly attracting higher-quality traffic. It is early, but Outback comp sales are positive year-to-date. This journey began in earnest in late Q2 of last year when we implemented the first layer of our investments. This included the launch of the new Center Cut Sirloin, increases in portion sizes, as well as investing dollars into the labor model during peak hours to improve the guest experience. This has led to a steady improvement in steak satisfaction metrics and higher social media scores.

In November, we addressed complexity in our restaurants with a simplified menu to improve execution. As a result, we also improved the overall pace of the dining experience. In addition to our long-term investments, we will continue to provide our customers with brand-appropriate value offers that surprise and delight. Differentiated, brand relevant, traffic-driving promotions allow us to pull back on straight price promotion. A good example of this would be the Loaded Bloomin' Onion which brings innovation to our signature product.

At the same time, we've reduced discounting such as lower values on our FSIs, reduced discounts in key partnerships, all of which has led to a meaningful decrease in discount impressions and offers. We will not revert to off-brand discounting to smooth out traffic volatility. We have established our own customer panel to ensure we receive early and real-time feedback on our investments. Our research suggests that the traffic benefits begin to manifest in 26 to 39 weeks after the investments are implemented. We expect this healthy traffic to build over time due to the frequency of our core customer.

This is a strong brand with great consumer appeal and quality investments which will return it to sustainable, long-term growth. Turning to Bonefish, we made progress over the year with the efforts to simplify execution to enhance the experience in the restaurant. This translated into improved guest satisfaction scores that remain at all-time highs. Bonefish continues to outperform the industry in sales and will build upon its superior fresh fish experience this year. At Carrabba's, we have redoubled our efforts to ensure it is the restaurant of choice for special occasions and adult dining.

This is illustrated through the celebration of the service, experience and heritage of Italian cooking. In addition, we are growing our off-premise business with our Family Bundle meals, and believe delivery holds great potential for Carrabba's. The Dine Rewards loyalty program continues to perform well and now has 2.6 million members. This is attracting a healthier consumer that is stickier and cumulative versus the episodic nature of a discount-driven consumer. When it reaches maturity, we expect Dine Rewards to drive a 1% to 2% lift in sales consistent with results in the six test markets.

Turning to International, Brazil finished the year strong and posted comps of 6.1% with traffic growth of 0.4% in the quarter. There are now more than 83 Outback restaurants, and we have doubled our footprint over the past four years. In addition to Outback, Abbraccio continues to perform very well with seven restaurants, and sales have been similar to new Outbacks. This gives us conviction in the potential for Abbraccio. Our brand strength, combined with the underpenetration of casual dining Brazil, gives us confidence to continue investing capital in Brazil for high levels of return.

In China, we're seeing meaningful sales gains and reached profitability at the restaurant level during last year. This validates our consumer appeal and puts us in a position to accelerate expansion. There are six Outback restaurants in China, and we expect to increase the footprint this year outside of Shanghai. And finally, we made great progress in monetizing our owned real estate. Since the beginning of 2016, a total of 159 properties were sold for gross proceeds of $560 million.

As a result of these proceeds and our strong free cash flow, more than $340 million has been returned to shareholders through share repurchases and dividends in 2016. In summary, 2016 was a challenging year for the industry, and we took the necessary steps to reposition the portfolio for growth. We recognize there's more work to do in 2017, and have a defined strategy to achieve our objectives. The first priority will be to grow sales in the U.S. behind significant investments in enhancing food quality, service, and ambience in our restaurants.

We have growing confidence that our heightened focus on elevating the customer experience will drive healthier, sustained growth in 2017 and beyond. Our second priority is investing behind the emerging off-premise opportunity. We are aggressively pursuing two approaches and have tests underway in multiple markets. Third, we will continue to invest capital in our rapidly growing International business. This includes accelerating our leading market position in Brazil, while investing ahead in the emerging opportunities in China.

In addition, we will capture the growing franchise opportunities in Latin America and Asia with our portfolio of brands. And our last priority is to maximize total shareholder return. We expect to complete the sale of real estate assets this year. This, coupled with our strong free cash flow, enables us to improve our capital structure and return cash to shareholders in the form of share repurchases and dividends. We are excited about the prospects ahead, and look forward to updating you as the year progresses.

And with that, I'll turn the call over to Dave Deno to provide more detail on Q4 and 2017 guidance. Dave?
David Deno - Bloomin' Brands, Inc.: Well, thank you, Liz, and good morning, everyone. I'll kick off with discussion around our sales and profit performance for the quarter. As a reminder, when I speak to results, I will be referring to adjusted numbers that exclude certain costs and benefits. Please see the earnings release for reconciliations between non-GAAP metrics and their most directly comparable U.S.

GAAP measures. We also provided a discussion of the nature of each adjustment. With that in mind, our fourth quarter financial results versus the prior year are as follows. GAAP diluted earnings per share for the quarter was negative $0.04 versus $0.14 in 2015. Adjusted diluted earnings per share was $0.31 versus $0.30 last year.

The primary difference between the GAAP and adjusted numbers in the fourth quarter was due to $47 million of impairment expenses resulting from our decision to close 43 underperforming restaurants. I'll discuss these closures more in a moment. Total revenues decreased 4.3% to $1 billion. This decrease was driven primarily by the sale of our Outback business in South Korea and lower comp sales. These are partially offset by a positive benefit from foreign currency translation and the net benefit of restaurant openings and closures.

Combined U.S. comp sales finished Q4 down 3.5%. Q4 comp sales were largely impacted by two key factors. First, like many in our industry, we experienced a softer-than-anticipated sales leading up to the Christmas holiday. Results were also negatively impacted by holiday shift related to the timing of Christmas.

Second, we estimate our pivot away from straight discounting towards more brand-enhancing investments drove approximately 230 basis points of traffic decline in Outback in the short term in Q4. Adjusted restaurant level margin was 15.1% this year versus 16.5% a year ago. The decline was driven primarily by wage inflation, the impact of service and product enhancements at Outback, higher rent from our sale-leaseback initiative, and commodity inflation and lower traffic. These items were partially offset by the benefit of increases in average check and productivity savings. It's also important to note that embedded in Q4 restaurant level margin is approximately $5 million of investments to enhance the guest experience, including the launch of the new Center Cut Sirloin and service model enhancements to optimize labor during peak hours.

These are part of our $15 million investments we made into our business in 2016, as discussed on prior earnings calls. As a reminder, we are not raising prices to cover the cost of these investments. As it relates to G&A, after removing all adjustments from Q4 2016 and Q4 2015, general and administrative costs were $59.3 million (15:38) and $67.8 million, respectively. The reduction in G&A is primarily related to the lower incentive and deferred compensation expense, as 2016 results fell short of our objectives. Turning to reporting segments, International adjusted restaurant margin was up 150 basis points to 21.5% in Q4 versus last year.

The strong International restaurant margin is a very positive part of our portfolio and really sets us apart from other casual dining restaurants. As we continue to capture the potential of our international business and grow key equity markets internationally, consolidated margins will benefit from the success of overseas investments. On the development front, we opened 16 system-wide locations in the fourth quarter, consisting of four Outback locations, one each at Bonefish and Fleming's and 10 international locations. As we have discussed on prior calls, we continue to monetize our owned real estate. In 2016, we sold a total of 159 properties for $560 million.

This is a great outcome for our company and reflects both an attractive real estate environment, as well as the high level demand for these properties. We now have less than 60 properties remaining to be sold, and we expect to complete this process by mid-2017. We expect over $700 million in proceeds once the program is completed. We had utilized the proceeds from these transactions for two primary purposes. First, we had paid off $342 million of our $370 million bridge loan, and as of today, only $28 million remains outstanding.

We expect this loan to be fully paid off in early 2017. Finally, we have taken the remaining sale-leaseback proceeds and used them to repurchase stock. Between these sale-leaseback proceeds and our excess cash flow generated from our core business, we've been able to make significant progress on our capital structure. In 2016, we repurchased $310 million worth of stock, bringing total repurchases since the inception of the program to nearly $500 million. As of today, $110 million remains on the existing $300 million authorization, which expires in January 2018.

Given current valuation levels, we will continue to opportunistically repurchase shares. Also of note, in February, the Board of Directors declared a cash dividend of $0.08 a share payable on March 10. This represents $0.01 increase in our dividend versus last quarter. As noted in this morning's earnings release, we have done a thorough review of our existing assets and intend to close 43 underperforming locations. In connection with these closures, we incurred approximately $47 million of pre-tax impairment in the fourth quarter.

This charge has been excluded from our adjusted results. In 2017, we will incur another $16 million to $19 million of restaurant closing costs primarily in the first quarter. These costs will also be excluded from our adjusted results. Before we turn to 2017 guidance, I just wanted to update you on the change in policy as it relates to our non-GAAP results. We decided to stop making adjustments for two items starting in the first quarter of 2017.

First, we will no longer be adding back expenses related to our exterior remodel initiative. In 2016, we added back approximately $2.4 million related to this initiative and we would expect the impact to be similar in 2017. Second, we will no longer be adding back intangible amortization recorded as a result of the 2013 acquisition of our Brazil operations. In 2016, we added back approximately $3.9 million related to this initiative and we would expect the impact to be similar in 2017. Our 2017 non-GAAP guidance will reflect both of these items as expenses.

We are making these changes after reviewing our non-GAAP presentation in light of recent SEC guidance. Please note that we did not apply this change in methodology to the discussion of 2016 results to ensure that our performance was measured consistently with our previously issued 2016 guidance. If you'd like to review the impact of these changes on the historical periods between 2014 through 2016, you can refer to the 8-K filed this morning. In addition, we will be comparing our 2017 results against these recasted (19:35) 2016 numbers as we report each quarter. I would now like to take you through 2017 guidance.

We expect GAAP EPS to be between $1.34 and $1.41. We expect adjusted EPS to be between $1.40 and $1.47. Before I move to other elements of the guidance, I want to discuss several items that will have a material impact on 2017 adjusted EPS. First, our EPS guidance includes the impact of the 53rd week that will take place at the end of 2017. We expect the benefit of the extra week to partially fund the ongoing investment in Outback.

Next, the success we've had with our sale-leaseback initiative is expected to benefit EPS significantly in 2017, but will have an incremental 50-basis-point unfavorable impact on restaurant margins due to higher net rent expense. The incremental impact to operating margins is 20 basis points unfavorable. The higher rent is partially offset by lower depreciation as these assets have come off of our books. As it relates to revenue, we expect U.S. comp sales to be flat to slightly down.

This guidance reflects the combination of industry trends and the reduction of discount offers across the portfolio. We have seen sales trend improvement so far in Q1, but given the continued volatility in the casual dining industry, we believe it is prudent to be cautious on our approach to 2017 sales. If necessary, we will continue to update guidance as the year progresses. On the cost of sales line, we expect commodity costs to be flat to down 1%. These costs will be favorable in 2017, but we do expect mid to high-single digit food inflation in Brazil.

In addition, seafood is expected to be unfavorable and represents about 17% of our domestic commodity purchases. Labor will continue to be a headwind in 2017. We expect 3.5% to 4% inflation before the impact of Department of Labor regulations we discussed on the last call. As it relates to those regulations, we previously expected to incur an incremental $9 million of expense related to regulations enacted by the Department of Labor that raises the salary threshold for employees exempted from overtime. The implementation of these regulations has been blocked by a Federal court.

However, we did proceed with previously announced salary increases for our managers, but we now expect to incur an incremental $3 million of expense instead of the $9 million originally forecast. On the productivity front, we expect to deliver $50 million of productivity savings in 2017. On the cost of sales line, we are making major progress moving away from the restaurants through (21:59) the actual versus theoretical food cost initiative. We expect cost of sales represents the majority of our overall productivity savings in 2017. In addition, we continue to focus on savings outside of the restaurant to help achieve productivity goals.

This includes opportunities to optimize cost from the supply chain network. On the G&A line, we'll need to reload approximately $18 million in incentive compensation due to our 2016 performance against objectives. Other than this item, we remain committed to zero overhead growth in G&A. As I mentioned, we will continue to make incremental investments to drive U.S. sales growth.

These 2017 investments are about $25 million higher than 2016. A majority of these dollars will go towards upgrading food offerings through product enhancement, as well as service initiatives. The benefit of the 53rd week will help us offset some of these cost of these investments. Our estimate of GAAP and adjusted tax rate is between 25% and 26%. Turning to the other elements of our guidance, we plan to open between 40 and 50 new restaurants with the majority being international.

And finally, CapEx will be between $260 million and $280 million. The composition will focus on upgrading domestic assets and expanding international markets. In summary, we believe a more cautious approach to 2017 sales is appropriate in this volatile operating environment. As I indicated, however, we have seen comp sales improvement from our Q4 trend. We remain confident that we are making the right and necessary investments, both domestically and internationally to support long-term growth.

We remain disciplined stewards of capital and our improving capital structure provides us increased flexibility to return cash to shareholders. And with that, we will now open up the call for questions.

Operator: Thank you. We will now be conducting a question-and-answer session. Our first question comes from the line of Michael Gallo with C.L.

King. Please proceed with your questions. Michael W. Gallo - C.L. King & Associates, Inc.: Hi.

Good morning. David Deno - Bloomin' Brands, Inc.: Good morning. Elizabeth A. Smith - Bloomin' Brands, Inc.: Good morning. Michael W.

Gallo - C.L. King & Associates, Inc.: My question, Liz, is just on the reduced discounting. I mean, you reduced it all through 2016 at the same time that food and home became increasingly deflationary and while you made some investments to improve food quality, it doesn't seem like it drove the incremental traffic. So, I was wondering as we start to look to 2017, do we think about perhaps some of those discounts went too far? And then, two, how do you better drive traffic or drive awareness that you've improved some of these products to perhaps get more guest in the restaurants? Thanks. Elizabeth A.

Smith - Bloomin' Brands, Inc.: Sure. So, Michael, it is all about the timing and let's remember that this category has a purchase frequency of two to three times a year, and the discounting traffic comes out right away. We really started in earnest with the investments as we talked last year with the introduction of Center Cut Sirloin in May. And so, once we had those investments, we were pulling back more in earnest starting in mid-year on discounting in Outback. And again, when you pull back to that degree, it comes out right away.

It's more episodic, but when the investments in Dine Rewards, food quality upgrades and ambience started in the midpoint of the year, and we do like what we're seeing behind them. They are gaining awareness. They are gaining traction on customer service metrics, and we believe they are starting to show encouraging signs on the traffic levers. I think it's really clear for 2016 that driving traffic in the casual dining is not going to come through discounted food. That is not what is keeping customers out of the stores.

In fact, all the consumer metrics that are out there are fairly good and favorable in terms of macros. What customers are looking for when they go out is an experience. It's the superior product, superior service, signature elements and signature service that makes them want to get out of their house and go into your restaurant because they can only have that 360-degree experience in your restaurant. It is very clear that cheap food is not going to revitalize this category, and we have seen that. So, we are very confident in our decision to pivot away.

Now, this isn't a – we didn't – when we talk about going too far, I've been really clear. Promotional is going to be a really important part of the 360-degree experience, but we were over-investing in it. We've reallocated our spending. We like what we're seeing. It's against more brand enhancing, cumulative, long-term growth.

We're still going to have the surprise and delights, don't worry about that, but we don't need to be as discount-focused as we've been. And now, we need to see and are beginning to see that traffic come back. Michael W. Gallo - C.L. King & Associates, Inc.: Thank you.

Operator: Thank you. Our next questions come from the line of Sharon Zackfia with William Blair. Please go ahead with your questions. Sharon Zackfia - William Blair & Co. LLC: Hi.

Good morning. I have two questions, first on G&A. Obviously, it's been coming down for a few years because of that incentive accrual dynamics. So, perhaps if you can tell us kind of where you think G&A goes in 2017 or kind of what the normalized growth rate would be there? And then secondarily, Liz, for delivery, it does seem like it's a pretty exciting initiative. Any thoughts on how quickly you can roll that out system-wide? And of the 115 location, I wasn't sure which concepts you were targeting for that and kind of what your expectation would be of the ramp and delivery over time?
David Deno - Bloomin' Brands, Inc.: Sure.

Hi, Sharon. Fine. On overhead, we are committed to zero overhead growth as a company. The one thing that does change from time to time is the incentive comp, and we have – we mentioned we reloaded the incentive comp accrual for 2017 to the tune of $18 million, and that's in our numbers. But everything else around overhead is flat.

Elizabeth A. Smith - Bloomin' Brands, Inc.: Yeah. In terms of delivery, Sharon, we think that this is a huge opportunity. I mean, we see it as at least a $10 billion to $15 billion CD (28:41) opportunity within the next – call it, 2019, 2020. And we've been at this for a couple of years.

We announced today that we'll be in 115 stores, and it's focused on Outback and Carrabba's, right? We really – the key part with delivery is, you've got to really nail it and do it right. That means high food quality, high speed, really spending the time to make sure our customer service metrics and feedback are exactly where they want to be. You kind of got one shot to establish yourself as a really credible delivery alternative. We're really pleased we've employed the go-slow to go-fast. We'll be up to 115.

In answer to how many we will do, we will go as fast as possible while being able to maintain the customer service levels that we insist on. And you could imagine, when you put delivery in a store, it's not just about, okay, now we'll take delivery. You've got to reorient the store. You've got to train. You've got to make sure you know the impact on the kitchen.

All of these things take a lot of time and energy to really do it right. And we have a dedicated team that we've had in place for two years focusing on that. So, I would like to roll this out as quickly as we can, but we're going to get it right. Everything about the stores that it is in suggests what the market structure says, which is, this is a very separate eating occasion that you're tapping into, right? It's a whole separate market structure. So, the cannibalization that you might expect from the dine-in isn't the case.

People seem to first make a decision, do I want to go out tonight or stay in? We've now moved our set of brands in the consideration set for staying in and dining, which is huge. So we're very excited, but we will do it right.

Operator: Thank you. Our next questions come from the line of Jerry (sic) [Jeff] (30:34) Bernstein with Barclays. Please go ahead with your questions.

Jeffrey Bernstein - Barclays Capital, Inc.: Great. Thank you very much. Two questions. One, just, Dave, maybe if you can help us with the – maybe a little bit of an EPS bridge. I mean, I think you're guiding to – well, this 9% (30:47) to 14% earnings growth, but actually, if you adjust the 2016 numbers for that change from an SEC perspective, you're talking about 12% to 18% adjusted EPS growth.

I mean, in 2016, you grew earnings at 2%. So, if your comps are flattish, if your units after closures are flattish, cost pressures we know are pretty large, I'm just wondering what you see are the biggest buckets. Whether there's incremental cost saves, or maybe the closures you made were such a big drag or, I mean, share repo might be outsized (31:16)? I'm just wondering, what gives you the confidence to reaccelerate to double-digit earnings growth when it doesn't seem like the industry is getting a whole lot better, and 2016 was a good example of that? And then I had one follow-up. David Deno - Bloomin' Brands, Inc.: Sure. Thanks, Jeff.

Well, first of all, Liz talked about a number of levers in our company that will help us provide (31:33) the EPS growth. Number one, we do do a terrific job managing our cost structure. So, since the beginning of our company, we have looked at opportunities in overhead, and we've looked at opportunities in the P&L. And we talked about the productivity piece on managing waste and also working our supply chain. So, our cost balance and measurement is extremely important as we go through that, so as we attack the cost opportunities.

Number two, international. What a under-talked-about story? I mean, look at the Brazil numbers, look at the expansion of the business. We're now profitable at the restaurant level in China. Liz talked about Abbraccio. I think investors need to pay attention to that.

That's another big part of our story. And third, we have talked for a long time about the power of our cash flow. So, between the great job the team did on the sale-leaseback, really a phenomenal job. We've got little bit more left to do this year. So, the cash flow coming out of the business, plus the sale-leaseback, allows us to pay down debt and repurchase shares.

So, all those three things come together while – while we're investing in the business for growth. And Liz talked about the investments we're making in food and service. So, when you combine the investments in food and service with a great management of the cost structure, with international opportunity, which is underappreciated, and then finally, the capital structure we have and the cash flow, that's how we get to our EPS guidance. Jeffrey Bernstein - Barclays Capital, Inc.: Understood. And then, just my follow-up.

You guys mentioned a couple of times, maybe glimmers of enthusiasm or hope around the quarter-to-date 2017 comps, which I think you said year-to-date were positive and outpacing the industry. That's clearly a good thing, but I'm just wondering, I mean, it looks like, based on Knapp-Track numbers, that the industry had also turned positive. And I think your compares versus Knapp-Track are easier, at least through the first half of 2017. So, I just want to kind of take your temperature in terms of your confidence that this is Outback changing your trajectory versus just the industry bouncing back off of what sounds like it was a pretty horrible December, just trying to figure out the comfort you have that this is kind of an Outback changing trajectory. Elizabeth A.

Smith - Bloomin' Brands, Inc.: Yes. So, you're right. We all lived through 2016, which was just kind of the momentum shift and then the December. I've always said that your – what you do yourself impacts your trends most. And what gives us confidence that this is an Outback-specific performance.

The first is, year-ago base means less than quarter-to-quarter momentum, and you certainly last year saw that. And so, what gives us confidence, in addition to the industry strengthening, are the very specific seeds that we've planted that are now coming to fruition on Outback, so, staying the course on exterior remodels. We had 75 in Q4. Okay? Now, we're finally getting those block. Those are delivering at 4% to 5%.

They all roll into this year. The investments that we made, that we said we're seeing this showing up in the customer service metrics, we – that – you take that (34:40) 26 to 39 weeks, we believe that you're beginning to see some of that positive roll in, but it's going to happen over the rest of the year. You have Dine Rewards which was launched in July and is now up to 2.6 million. That's going to roll through. One of the challenging things, which I get, is that a lot of our investments have been really kind of, what I'd call, structural, in the brand that sustains, (35:02) and so they don't pop immediately.

But they're starting now to come up and flourish to some degree, and we will update the guidance as we roll through the year. So, we do feel that – probably because we have a more granular line of sight, that we are benefiting from the 360-degree investments we're making in Outback, and that's going to continue to roll through the year. This is a volatile category. We're going to remain prudent, and we will update you guys as we go along. Jeffrey Bernstein - Barclays Capital, Inc.: Great.

Thank you for the color.

Operator: Our next questions come from the line of John Glass with Morgan Stanley. Please proceed with your questions. John Glass - Morgan Stanley & Co. LLC: Thanks.

Good morning. David Deno - Bloomin' Brands, Inc.: Good morning. John Glass - Morgan Stanley & Co. LLC: Just coming back to the guidance bridge, Dave. One is, are the stores that are closing, are those cash flow negative or positive? How much of the benefit of earnings growth comes from that? And maybe if you could provide the share count you're using to get to the $1.40 to $1.47 that would be helpful.

David Deno - Bloomin' Brands, Inc.: Sure. The restaurants that we're closing, John, are relatively – it's a relatively small impact in our EPS. There's two reasons why we did what we did. There are some that were losing money at the restaurant level and cash. But also Liz talked about the investments we're making in the brand.

So, when you look at it, you got to say to yourself, okay, we've got to update the restaurants; we've got to put the money behind the food and service. So, we thought that given where they were going, we didn't feel that they warranted that kind of investment. So, two things, profitability or cash flow at the restaurant level. Very small part of the guidance change, John, very small. And then secondly, the – secondly would be the – just the investment behind those restaurants.

John Glass - Morgan Stanley & Co. LLC: And the share count you're using for that? And then I have just one other follow up. David Deno - Bloomin' Brands, Inc.: Yeah. I don't think we – for reasons of how we want to buy shares in the marketplace, John, I really don't want to get into that kind of detail. Obviously, if you look at the numbers historically, we've made a lot of progress.

But it is – it is – if you look at our historical numbers, you'll see a sense of where we've been. But I really – given that we could be in the marketplace from time to time, I really don't want to get into that kind of detail. John Glass - Morgan Stanley & Co. LLC: And then, Liz, you talked about the impact – the negative impact of the reduction of discounting on comps. You also made some menu item reductions this quarter.

How much do you think that impacted your sales in the fourth quarter?
Elizabeth A. Smith - Bloomin' Brands, Inc.: The menu item reductions came in November. So, it's unlikely that it had the same impact that the overall declining momentum in the category had, John. But you're right. We significantly reduced the menu.

We took 20 items off, which is about, I don't know, so it's (37:41) 20% reduction in items. And that was in November. So, we feel like that's going to ride its way through and what it is resulting in much better is reduced complexity which is translating into the number one reason come in – people come in which is kind of a world-class safe (38:04) experience, right? So, we've gotten rid of, if you will, some of the ancillary items which will have a short-term potential knock on sales, but it's such the right thing to do to deliver the core experience that we haven't looked back (38:17). John Glass - Morgan Stanley & Co. LLC: Okay.

Thank you. David Deno - Bloomin' Brands, Inc.: Thank you.

Operator: Our next questions come from the line of Howard Penney with Hedgeye Risk Management. Please proceed with your questions. Howard W.

Penney - Hedgeye Risk Management LLC (Research): Hi. Thanks very much. I was wondering if you could walk us through the rationale and maybe your thought process for testing and owning your own delivery network. Thanks very much. David Deno - Bloomin' Brands, Inc.: Yeah.

Sure. Howard, as you might know, I've spent a lot of years at Pizza Hut, and we have other people in the company that have delivery experience. Really two things. One, if you own your own – if you test your own, you get a sense of – you control the experience from soup to nuts, right? You control experience from the call-in or order all the way to the delivery to the home. So, that's number one.

Number two, you have to take a look at the economics, right? And because I think there's some economic benefit if you own your own versus using a third party. And then number three, I think we get a sense of how important off-premise – we talk delivery, Howard, it's not just deliveries, delivery and takeout. So, we get a sense of how important off-premise is in the restaurant. So, all those things come together. Now, with a third party, which we're also testing, you get more visibility on the sites.

You get – you don't have to have the drivers deliver the product, et cetera. The consumer may be going that way more, right? So, that's the benefits there, but the economics aren't as attractive. So, I think looking at both of those would be extremely important. And we may in a marketplace have both opportunities available to consumer, our own delivery system and then also a third party. Elizabeth A.

Smith - Bloomin' Brands, Inc.: Yeah. So, just a couple of things I would add to that, Howard, is, is that we're going to be nimble and agile. And so at the end of the day, the customer's going to decide, right? So, even if it's better, as Dave said, which it is, economics, if they say, "hey, I want to do third party", then they are the ultimate decision-maker. But I think what you're going to see is that it's going to evolve not too dissimilar to what's currently happening in like maybe lodging and hospitality – hotels where you see – you have some third-party aggregators, but you also have a growing opportunity and developing scenario where people are booking direct, if you will. We want to give our customers the options either way and the benefits either way.

And there are certainly some very strong benefits to kind of, "go direct", whether it's in the form of advantaged 360-degree experience, whether it's potentially in the form of a cost (40:49) advantage vis-à-vis (40:51) consumer. And also what it allows us to do is that then the relationship is with us, right? The relationship is with us and we can give them surprise and delights and additional opportunity, and it shows up in a Bloomin' Brands bag with something specifically from us and that's the relationship. But I do want to assure you that the consumer's driving the boat on this one. I will tell you that where we've tested both, and we've tested it, we've seen a lot to be encouraged about in taking the approach that we're taking on kind of hybrid. Howard W.

Penney - Hedgeye Risk Management LLC (Research): Thank you for that. And just – if I can just add to that, there's others who have mentioned potentially maybe testing delivery-only stores, is that something you're looking at as well? Thanks. David Deno - Bloomin' Brands, Inc.: Little too early to talk about that, Howard, but we are examining all aspects of the off-premise opportunity. Howard W. Penney - Hedgeye Risk Management LLC (Research): Thank you.

Elizabeth A. Smith - Bloomin' Brands, Inc.: Thanks.

Operator: Thank you. Our next questions come from the line of Jeff Farmer with Wells Fargo. Please proceed with your questions.

Jeff D. Farmer - Wells Fargo

Securities LLC: Thank you. A couple of follow ups. I'm curious what the common themes of the closed or underperforming restaurants were? And potentially, could we see additional restaurant closures?
David Deno - Bloomin' Brands, Inc.: Yeah. No, we went through the details of the restaurants in our assets very carefully.

I think the – what I mentioned earlier, Jeff, was just, are they – one, are they losing profitability at the restaurant level; and then number two is, do they deserve the investment that we needed to have to grow the business. And there's no reflection in our people or what the service they're providing, it's just the current marketplace of the restaurants and where they spend (42:31). Jeff D. Farmer - Wells Fargo

Securities LLC: All right. And then...

Elizabeth A. Smith - Bloomin' Brands, Inc.: Yeah. And the only thing I would add to that is that we basically did a whitespace on where exactly should the footprint be, strategically going forward, given what we're seeing in all the investments that were pumped about and striked (42:46) about, you talk about delivery. And so, based on that, we made these decisions. Some of them were cash flow and (42:55) positive, but we didn't see them as part of the longer term.

So, when you talk about, will there be more to come, no. I think we did the heavy-lifting on, what I'd call, the strategic footprint. And now, are there going to be a few that are every year which course the business (43:10), yeah, but I don't think we feel like we need a whole strategic relook. Jeff D. Farmer - Wells Fargo

Securities LLC: Okay.

And then just assuming that those closed restaurants were posting same store sales declines, what type of same store sales tailwind, if any, could you see in 2017 from shuttering those boxes?
Elizabeth A. Smith - Bloomin' Brands, Inc.: That – yeah, I wouldn't think about it as any influence, it's de minimis. It's 43 stores spread across all three brands. And again, I'm going to go back to the thought that some of this was strategic, right? Some of the – this wasn't just – while we got these 43 stores, if we couldn't (43:43) cut these off, we'd be much better off. It's just as we look forward, and we're excited about the growing occasions in growth, and we looked at it from a national footprint standpoint, we just decided, you know what, we're not going to want to invest the way we're excited about investing in these stores.

So, 43 out of the domestic footprint of like a 1,000 is not going to show up in any type of number. Jeff D. Farmer - Wells Fargo

Securities LLC: Thank you.

Operator: Our next questions come from the line of John Ivankoe with JPMorgan. Please go ahead with your questions.

John William Ivankoe - JPMorgan

Securities LLC: Hi. Great. Just some cash flow questions, if I may. Firstly, in terms of run rate D&A, so excluding any charges that might be in there for store closures, the accelerated write-off, what do you think the 2017 number will be if it's fair to ask?
David Deno - Bloomin' Brands, Inc.: Yeah. Sure, John.

It'll be higher. I don't have that exact number right in front of me, but it will be modestly higher because of some of the investments that we're making behind the business for our next year remodels and things, and also some of our IT investments. John William Ivankoe - JPMorgan

Securities LLC: I mean, you did make the comment that the sale-leaseback actually lowers your D&A by 30 basis points. Is it fair to assume that it will just be as a percentage of revenue 30 basis points lower, 2017 versus 2016?
David Deno - Bloomin' Brands, Inc.: Correct. 30 basis points on the P&L.

John William Ivankoe - JPMorgan

Securities LLC: Okay. Yes. And then, yeah, secondly, could you remind us, out of the 650 Outbacks company-operated that you have in the U.S., how many would you say that are at the modern image, if you want to use those words? How many will you reimage in 2017 and how many are going to be left to do after 2017?
Elizabeth A. Smith - Bloomin' Brands, Inc.: So, I think of the fleet, probably about 50% right now of the exteriors have been touched. The big chunk of that was in Q4.

We did 75 in Q4. We did over 125 in the back half of last year. And so, John, some of that is also showing up in the momentum this year and we're excited (45:46) we're going to do another 160 to 170 this year so that by the end of the year, you'll be looking at 75% of the fleet touched. As you know, some of our SR (45:57) markets are franchise markets out west. And so, they are going to be remodeled, but they're on a different timetable.

So, you absolutely see the accelerated pace and the impact that we're seeing because we are still seeing that 4-plus percent traffic lift when we get to those remodels. So, we're pretty excited about completing that this year. David Deno - Bloomin' Brands, Inc.: The other thing, John, that we have is – we talked about it for a while, but it's beginning in earnest in 2017. We have 15 Outback relocations, which obviously help us with the image, but also a better trade area (46:26). So, that – we've already talked about 100 opportunities there and that's now – that pipeline that's built now is coming into play.

John William Ivankoe - JPMorgan

Securities LLC: And so, Liz, you said finishing this year, in 2017, does the Outback exterior remodel program end in 2017 or will you do a similar number, 160, 170 in 2018 as well?
David Deno - Bloomin' Brands, Inc.: Yeah. No, they will be smaller, John, because we'll be largely done. You'll get new restaurants, relocations, the remodels we've previously done, plus the stuff we have been doing, will be largely done. So, that will be a big part of our story in 2017. We'll have some in 2018 that we have left, but not as many as 2017.

John William Ivankoe - JPMorgan

Securities LLC: Yeah. Not to pick on you, but just to ease your math, it would suggest that you'd have 200 left to be done at the end of 2017. David Deno - Bloomin' Brands, Inc.: Well, that's – you're not including some of the stuff we did prior to the start of the program, John. So, that's number one. We've had some new restaurants as well.

So, you've got to take a look at that. And then also, there will be some that we might do a lighter touch to and stuff like that. So – but you've got to look at what we did prior to the start of the program, the new relocations, what we've done with the program, and some lighter touched up at the end. John William Ivankoe - JPMorgan

Securities LLC: And I'm going to ask this question for the – for the – I think the third time that people have asked. We're getting a lot of questions about a lot of comp volatility that we've seen, just across the industry in the last six weeks.

I think it was one week in particular where in January, that was hugely positive and other weeks were negative. I mean, can you just give us a little peek behind the curtain, just in terms of how the week-to-week volatility is at Outback and, if it does, to make – sense to call out anything in particular, whether it's calendar shifts or it's weather? Any kind of unusual strength in any market that may be influencing the results, or do you want us to put in a positive comp for the entire quarter?
Elizabeth A. Smith - Bloomin' Brands, Inc.: Okay. Well, you know we're not going to direct you on what comps to put in for the quarter. What I will say about Outback is that, consistent with what we think is impacting the business, we've been pleased with how our brand has performed on a week-to-week basis and also relative to the industry, right? So, that's a – if seven weeks is a long term – can ever be long term – that's a long-term comment, versus we had a killer week and we're really jacked that we can put it in the year-to-date number.

So, whenever – if seven weeks is – it's been good progress for those seven weeks. John William Ivankoe - JPMorgan

Securities LLC: Thanks for that.

Operator: Thank you. Our next question comes from the line of Karen Holthouse with Goldman Sachs. Please proceed with your questions.

Karen Holthouse - Goldman Sachs & Co.: Hi. Thanks for taking the question. So usually, you give an idea of what to expect in terms of operating margin expansion and/or sort of overall restaurant margin expansion year-over-year in guidance. Can you give us any sort of thoughts on what to expect there?
David Deno - Bloomin' Brands, Inc.: Yeah. This year, we decided to step away from it because of the timing of the investments and what we believe on the – let's say, what the (49:18) comp sales look like.

But clearly, our goal is to improve operating margin, to improve restaurant margin. Now, we will have some headwind in operating margin and restaurant margin from the sale-leaseback program, 50 basis points in restaurant margin, 20 basis points in operating margin. But we still see we have an opportunity to get closer to our competitors. And we want to make positive progress on that, but given the change in the sale-leaseback and also some of the comp sales and our investments, we decided to step back from this year, but clearly our goal is to have it be positive and grow year-on-year. Karen Holthouse - Goldman Sachs & Co.: So, guidance includes growth in operating margins year-over-year?
David Deno - Bloomin' Brands, Inc.: We didn't guide to it.

So, I'll leave our long-term goal to grow operating margins each year over the long term and capture our opportunity versus our competitors, but we didn't offer any specific guidance on operating margins. Karen Holthouse - Goldman Sachs & Co.: Okay. And then, on the units that you plan on closing, are those – sort of what percentage of those would you consider in markets that you have other units versus stand-alone markets? Just trying to think through potential benefits from sales transfer after those units are closed. David Deno - Bloomin' Brands, Inc.: Yeah. They were broad – like Liz mentioned, they were broadly paced across the country.

I don't think there's one particular thing you can say that, that was unique. So, there will be some sales transfer – not a lot. Again, these are only 43 restaurants on a system of over 1,000. So, that won't have a huge impact in our comps, but there was no specific like remote market versus larger markets, et cetera. Karen Holthouse - Goldman Sachs & Co.: All right.

Thank you.

Operator: Our next questions come from the line of Andy Barish with Jefferies. Please proceed with your questions. Andrew Marc Barish -

Jefferies LLC: Yeah. I just wanted to get a clarification on the investment, is the $25 million incremental in 2017 to the $15 million? And is that purely Outback related, or does that start to touch Carrabba's potentially, or other brands?
David Deno - Bloomin' Brands, Inc.: The majority of it to the Outback is (51:23) $25 million is incremental.

And as Liz mentioned, it's on our food initiatives, on upping portion sizes or food – different type of (51:36) food quality, improving that, and then also on the service side. And it's important that it's in addition to – it's not replacing stuff, it's in addition to things we have already done in the past. So, the $25 million is incremental, Andy. And we talked about the 53rd week helping us out in that, but that's in the guidance. Andrew Marc Barish -

Jefferies LLC: And just one other follow-up, why did you see commodity inflation in the fourth quarter in the underlying basket, what went the wrong way there?
David Deno - Bloomin' Brands, Inc.: It would be seafood and Brazil.

Andrew Marc Barish -

Jefferies LLC: Okay.

Operator: Thank you. Our next question comes from the line of Matthew DiFrisco with Guggenheim Securities. Please go ahead with your questions. Matthew DiFrisco - Guggenheim

Securities LLC: Thank you.

Can you give us an update on just what percent of sales is right now off-premise or takeout at Outback, if it's even meaningful? And then also, curious of why you chose just Outback with this test? Some might say that Carrabba's price point and their menu might be a little bit more advantageous. And then also, the leader in that category has already gone down that path, as far as off-premise sales. So, I was curious if that Italian concept also could follow through. Elizabeth A. Smith - Bloomin' Brands, Inc.: Sure, Matt.

Let me just clarify that the test is on both Outback and Carrabba's. So, you're absolutely right, Carrabba's certainly does lend itself, and so the markets that we're in today is Outback and Carrabba's test. We are excited about the prospect for Outback and Carrabba's. Last year, off-premise as a percent of sales for Outback was around 10%, and it was around 11% for Carrabba's. And I will tell you that when we started to focus on this in the back half of the year, you saw some nice growth trends.

We anticipate that to continue in earnest this year, although we're not going to break that out again. We just know that it's – we know what it does in the test markets, we know the incrementality of it, and we're just looking forward to rolling it out. But we don't want to get in a situation where then we have to report on the percentage of comp, but we will give you guys a sense of how total off-premise is growing. Matthew DiFrisco - Guggenheim

Securities LLC: And then, if you could just give us an update – I didn't hear much about Bonefish today on the call – with respect to maybe the menu redesign and also any sort of reimaging going on there as far as trying to improve the direction of that brand?
Elizabeth A. Smith - Bloomin' Brands, Inc.: Sure.

So, with Bonefish, our goal was to restore it to its prominence as a lifestyle brand, as a brand that you go into for a total experience, and we are really happy with that. We're really happy with all the customer satisfaction scores, which are at an all-time high, the social media scores. We outperformed the industry last year. We were down a little, 0.5% (54:33) for the year. So, not growing, but certainly well outperforming the industry.

And that was during a time that we were reducing discounting. So, honestly, we have resisted doing anything really on Bonefish that isn't consistent with that lifestyle. We like how it's building. We like how it's coming back, and we think it's going to continue to do that in 2017. So, we'll continue with the fresh-fish, customer-centric strategy.

The loyalty program has also been popular in there, and we look forward to reporting more to you guys as we progress. Matthew DiFrisco - Guggenheim

Securities LLC: And then just the last question, just to clarify, did you guys say positive traffic year-to-date or positive comp year-to-date for the Outback brand?
Elizabeth A. Smith - Bloomin' Brands, Inc.: Yeah. What we said was that there is a meaningful trend change that – and you can imply that that's both sales and traffic. However, the actual language that we used was that Outback sales comp was positive.

Matthew DiFrisco - Guggenheim

Securities LLC: Okay. Thank you. Elizabeth A. Smith - Bloomin' Brands, Inc.: But the notion of kind of giving intra-quarter guidance is really based on the fact that there – we felt like there was quite a meaningful change in both metrics that would allow us to talk with more granular about how the brands are performing. Matthew DiFrisco - Guggenheim

Securities LLC: Right.

I'm just curious if there's the benefit of – though (55:56) the less discounting is also now lifting the check more so than a full recovery in the traffic side. Elizabeth A. Smith - Bloomin' Brands, Inc.: I think you should feel good that that we are seeing a meaningful trend change in both the comp sales and the traffic coming out of Q4. Matthew DiFrisco - Guggenheim

Securities LLC: Excellent. Thank you so much.

Operator: Thank you. Our last questions will come from the line of Andrew Strelzik with BMO Capital. Please go ahead with your questions. Andrew Strelzik - BMO Capital Markets (United States): Hey. Good morning.

Thanks for taking the question. Despite the EPS growth that you're guiding to, it seems like this is a pretty significant investment year, and you talked about a number of the margin headwinds and reinvestment headwinds. Now, you're talking about delivery as well. When do you think we should really start to see that gap close, meaning the operating margins that you guys have and your peer group? And also, you've been investing ahead of growth for a while now. When did the – on an absolute dollar basis, when does that start to crest or flatten out or (56:57) should we continue to see that increase over the next couple of years?
David Deno - Bloomin' Brands, Inc.: Yeah.

We – we will – we see in our planning a long-term build towards operating margin expansion towards our competitors levels, and we remain bullish on that. And Liz mentioned on the investment side, it takes a few quarters for these things to pay off. We are very pleased with what we're seeing so far, but these things do build over time. And not a direct – it's not like a direct episode or a (57:23) discounting, for instance. So, these opportunities do build.

We're seeing it. And between the things we mentioned today, between delivering off-premise, between the investments we're making in the restaurants, and don't forget about our international opportunity and all the work we've done there. These things are building upon each other and giving us – making us still real positive, but we're talking about (57:46) 2017 and beyond. Andrew Strelzik - BMO Capital Markets (United States): And if I can just sneak one more in here, two different things. Is it fair to assume that you're still seeing headwinds on the comps? Are you talking about quarter-to-date from the discounting and are you also willing to give us a sense for – on your beef position, how much you lagged for (58:05) 2017?
David Deno - Bloomin' Brands, Inc.: On the beef (58:06) side, we really don't want to get into that, but we feel very good about where we stand on that.

The team continues to do a really terrific job. And I think Liz talked earlier about in the comp side what we're willing to do, and I think that statement stands. So, we're just talking about the meaningful trend change in Q4. Andrew Strelzik - BMO Capital Markets (United States): That's great. Thank you very much.

Operator: Thank you. We've reached the end of our question-and-answer session, I'd like to turn the floor back to Ms. Smith for closing comments. Elizabeth A. Smith - Bloomin' Brands, Inc.: Thank you, guys, for joining us today, and we look forward to updating you on the progress on a number of these initiatives as the year unfolds.

Thanks again.

Operator: This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.