Red Robin Gourmet Burgers, Inc., (NASDAQ: RRGB), a casual dining
restaurant chain focused on serving an innovative selection of
high-quality gourmet burgers in a family-friendly atmosphere, today
reported financial results for the 12 weeks ended October 3,
2010.
Financial and Operational Results
Results for the 12 weeks ended October 3, 2010, compared to the
12 weeks ended October 4, 2009, include the following:
- Restaurant revenue increased 4.2% to
$191.6 million.
- Company-owned comparable restaurant
sales increased 0.9% and guest counts increased 2.6%.
- Restaurant-level operating profit
decreased 2.6% to $33.5 million.
- Selling, general and administrative
expenses included a $3.4 million investment in the Company’s fall
TV media campaign and $2.3 million in pre-tax executive transition
expenses.
- The Company recorded a GAAP net loss of
$4.2 million, or loss of $0.27 per diluted share, including the
effects of a non-cash restaurant impairment charge, and the
executive transition expense.
- Non-GAAP adjusted net income was $1.8
million, or earnings of $0.11 per diluted share, excluding the
effects of a non-cash impairment charge, and the executive
transition expense. (See Schedule II at the end of this release for
a reconciliation of these non-GAAP calculations to GAAP.)
- Three new company-owned Red Robin®
restaurants opened during the fiscal third quarter 2010.
As of the end of the fiscal third quarter of 2010, there were
312 company-owned and 134 franchised Red Robin® restaurants.
Fiscal Third Quarter 2010 Results
Comparable restaurant sales increased 0.9% for company-owned
restaurants in the fiscal third quarter of 2010 compared to the
fiscal third quarter of 2009, driven by a 2.6% increase in guest
counts, partially offset by a 1.7% decrease in the average guest
check. Average weekly comparable sales from the 297 company-owned
comparable restaurants were $52,019 in the fiscal third quarter of
2010, compared to $51,964 for the 269 company-owned comparable
restaurants in the fiscal third quarter of 2009. Average weekly
sales for the 15 non-comparable company-owned restaurants were
$58,240 in the fiscal third quarter of 2010, compared to $49,385
for the 35 non-comparable restaurants in the fiscal third quarter a
year ago. For all company-owned restaurants, average weekly sales
were $52,296 from 3,730 operating weeks in the fiscal third quarter
of 2010 compared to $51,667 from 3,648 operating weeks, in the
fiscal third quarter of 2009.
Total Company revenues, which include company-owned restaurant
sales and franchise royalties and fees, increased 4.2% to $194.8
million in the fiscal third quarter of 2010, versus $187.0 million
last year. Franchise royalties and fees decreased 1.1% to $3.0
million in the fiscal third quarter of 2010 compared to the same
period a year ago.
For the fiscal third quarter of 2010, the Company’s U.S.
franchise restaurant sales of $67.9 million were higher compared to
$64.6 million in the prior year period. Comparable sales in the
fiscal third quarter of 2010 for franchise restaurants in the U.S.
increased 3.5% and for franchise restaurants in Canada decreased
0.6% from the fiscal third quarter of 2009. Average weekly
comparable sales for the U.S. franchised restaurants were $49,215
from the 110 comparable restaurants in the fiscal third quarter of
2010, compared to $47,981 for the 101 comparable restaurants in the
fiscal third quarter of 2009. Average weekly sales in the fiscal
third quarter of 2010 for the Company’s 17 comparable franchise
restaurants in Canada were C$53,675 versus C$52,908 in the same
period last year. Canadian results are in Canadian dollars.
Restaurant-level operating profit margins at company-owned
restaurants were 17.5% in the fiscal third quarter of 2010 compared
to 18.7% in the fiscal third quarter of 2009. As a percentage of
restaurant revenue, fiscal third quarter 2010 restaurant-level
operating profit margins were negatively impacted by a 1.0%
increase in food and beverage costs and a 0.7% increase in labor
costs, partially offset by a 0.5% decrease in occupancy costs.
Schedule I of this earnings release defines restaurant-level
operating profit and reconciles this metric to income from
operations and net income for all periods presented. The Company’s
restaurant-level operating profit metric is designed to afford
management and investors with a basis for considering and comparing
restaurant performance. It is not calculated in conformity with
generally accepted accounting principles (“GAAP”). It is intended
to supplement, rather than replace GAAP results. Restaurant-level
operating profit is useful to management and to the Company’s
investors because it is widely regarded in the restaurant industry
as a meaningful metric by which to evaluate restaurant-level
operating efficiency and performance.
Selling, general and administrative expenses were $22.6 million
in the fiscal third quarter of 2010 and $16.1 million in the fiscal
third quarter of 2009, which were 11.6% and 8.6% of total revenue,
respectively. Included in the fiscal third quarter of 2010 was a
$3.4 million investment in the Company’s television media campaign,
compared to $0.4 million in the fiscal third quarter of 2009. Also
included in fiscal third quarter 2010 SG&A expense was
approximately $2.3 million in executive transition costs, as well
as higher performance-based bonus expense due to a reversal of $1.7
million in performance- based bonus expense in the fiscal third
quarter of 2009.
During the fiscal third quarter 2010, the Company determined
that four restaurants were impaired based on a review of each
restaurant’s past, present and projected operating performance. The
carrying value of each restaurant’s assets was compared to the fair
value of those assets, resulting in a $6.1 million non-cash asset
impairment charge.
Interest expense was $1.1 million in the fiscal third quarter of
2010, compared to $1.3 million in the fiscal third quarter of
2009.
The Company reported a $4.2 million net loss for the fiscal
third quarter of 2010, or a loss of $0.27 per diluted share,
compared to net income of $5.7 million, or $0.37 per diluted share,
in the fiscal third quarter of 2009. Included in fiscal third
quarter 2010 results were restaurant impairment charges and
executive transition costs. Excluding the impairment and executive
transition expense, and the related tax benefit, the Company’s
fiscal third quarter 2010 earnings would have been $0.11 per
diluted share. Schedule II of this earnings release reconciles the
impact on the net income and diluted earnings per share as reported
on a GAAP basis in the fiscal third quarter of 2010 and 2009 to
adjusted amounts excluding certain charges in the fiscal third
quarter of 2010.
For the fiscal third quarter of 2010, the Company realized an
effective tax benefit of 41.3% compared to an effective tax rate of
16.3% in the fiscal third quarter of 2009. The tax benefit is
primarily due to the reduction in the Company’s taxable net income
due to the executive transition costs and the restaurant asset
impairment charge, as well as more favorable general business and
tax credits, primarily the FICA Tip Tax Credit, which more than
offset the current year income tax. The Company anticipates that
the effective tax rate for the full fiscal year 2010 will be a
benefit of approximately 46%.
Balance Sheet and Liquidity
On October 3, 2010, the Company held $11.2 million in cash and
cash equivalents and had a total outstanding debt balance of $160.8
million, including $104.0 million of borrowings under its $150
million term loan, $45.2 million of borrowings under its $150
million revolving credit facility and $11.6 million outstanding for
capital leases. The Company has also issued $6.2 million of
outstanding letters of credit under its revolving credit facility.
In the fiscal third quarter of 2010, the Company paid down $6.4
million in debt.
The Company is subject to a number of customary covenants under
its credit agreement, including limitations on new credit
facilities, acquisitions, dividend payments, and requirements to
maintain certain financial ratios. As of October 3, 2010, the
Company was in compliance with all of its debt covenants, and the
Company expects to remain in full compliance for the remainder of
the 2010 fiscal year.
Outlook
The Company’s fiscal fourth quarter of 2010 is a 12-week
quarter. One new company-owned restaurant and one new franchised
restaurant opened early in the fiscal fourth quarter. Four new
company-owned restaurants and one new franchised restaurants are
currently under construction. During the remainder of the fiscal
fourth quarter, the Company expects to open the last three of its
11 new company-owned restaurants planned for 2010. The last of four
new franchised restaurants planned for 2010 is expected to open
late in the fiscal fourth quarter.
Due to the Company’s long-term view of investment in the brand
and the business, the competitive environment and the significant
impact that small changes in revenue or costs currently have on its
earnings per share, the Company is suspending its full year
guidance with respect to specific revenue, comparable restaurant
sales and earnings per share estimates. The Company expects same
store sales trends to decrease as the fiscal fourth quarter of 2010
progresses, due to the absence of TV media support during the
remainder of the quarter and more difficult year-over-year
comparisons. The Company also anticipates continued commodity and
labor cost pressures during the fiscal fourth quarter of 2010.
Through October 31, 2010, the first four weeks of the Company’s
12-week fiscal fourth quarter of 2010, company-owned comparable
restaurant sales increased 4.3% and guest counts increased 4.2%
from the prior year period, compared to a year-over-year
company-owned comparable restaurant sales decrease of 11.6% and
guest count decrease of 9.6% in the first four weeks of the fiscal
fourth quarter of 2009. The first four weeks of the fiscal fourth
quarter of 2010 included two weeks of national cable TV and some
local network TV advertising, compared to two weeks of TV
advertising limited to 10 local markets during the first four weeks
of the fiscal fourth quarter of 2009.
The Company has spent $13.4 million for television advertising
to support LTO promotions during fiscal year 2010, compared to $2.5
million that the Company spent on television advertising during the
full fiscal year 2009. The Company’s total marketing expense in
fiscal year 2010 is expected to be about $29.0 million compared to
$17.2 million spent in fiscal year 2009 and is included in selling,
general and administrative expense.
For the last quarter of fiscal year 2010, the Company’s run rate
SG&A expense is expected to be approximately $17.0 million.
Adding to that will be the Company’s portion of TV marketing
expense, which is $2.1 million in the fiscal fourth quarter of
2010.
Based on the Company’s development plans and other
infrastructure and maintenance costs, the Company expects total
fiscal year 2010 capital expenditures to be approximately $34
million, which the Company expects to continue funding entirely out
of operating cash flow. The Company also intends to make scheduled
payments of $18.7 million required by the term loan portion of its
existing credit facility from free cash flow after capital
expenditures in fiscal year 2010 and expects to use its remaining
free cash flow to make payments on the Company’s revolving credit
facility and maintain flexibility to opportunistically repurchase
shares of the Company’s common stock.
Investor Conference Call and
Webcast
Red Robin will host an investor conference call to discuss its
third quarter 2010 results today at 5:00 p.m. ET. The conference
call number is (877) 407-0784. To access the webcast, please visit
www.redrobin.com and select the “Investors” link from the menu. The
quarterly financial information that the Company intends to discuss
during the conference call is included in this press release and
will be available on the "Investors" link of the Company's website
at www.redrobin.com prior to the conference call.
About Red Robin Gourmet Burgers, Inc.
(NASDAQ: RRGB)
Red Robin Gourmet Burgers, Inc. (www.redrobin.com), a casual
dining restaurant chain founded in 1969 that operates through its
wholly-owned subsidiary, Red Robin International, Inc., serves up
wholesome, fun, feel-good experiences in a family-friendly
environment. Red Robin® restaurants are famous for serving more
than two dozen insanely delicious, high-quality gourmet burgers in
a variety of recipes with Bottomless Steak Fries®, as well as
salads, soups, appetizers, entrees, desserts, and signature Mad
Mixology® Beverages. There are more than 440 Red Robin® restaurants
located across the United States and Canada, including
company-owned locations and those operating under franchise
agreements.
Forward-Looking Statements:
Certain information and statements contained in this press
release, including those under the heading “Outlook,” are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking
statements include statements regarding our expectations, beliefs,
intentions, plans, objectives, goals, strategies, future events or
performance and underlying assumptions and other statements which
are other than statements of historical facts including, without
limitation, statements regarding future compliance with debt
covenants, the number of new restaurants planned to be opened,
anticipated restaurant sales, marketing, SG&A and other
expenses, anticipated capital expenditures and intentions as to
debt repayment. These statements may be identified, without
limitation, by the use of forward-looking terminology such as
“believe,” “continue,” “expects,” “anticipates,” “will” or
comparable terms or the negative thereof. All forward-looking
statements included in this press release are based on information
available to the Company on the date hereof. Such statements speak
only as of the date hereof and we undertake no obligation to update
any such statement to reflect events or circumstances arising after
the date hereof. These statements are based on assumptions believed
by us to be reasonable, and involve known and unknown risks and
uncertainties that could cause actual results to differ materially
from those described in the statements. These risks and
uncertainties include, but are not limited to, the
following: our ability to open and operate additional
restaurants in both new and existing markets profitably, the
anticipated number of new restaurants and the timing of such
openings; estimated costs of opening and operating new restaurants,
including general and administrative, marketing and, franchise
development costs; expected future revenues and earnings,
comparable and non-comparable restaurant sales, results of
operations, and future restaurant growth (both company-owned and
franchised); anticipated restaurant operating costs, including
commodity and food prices, labor and energy costs and selling,
general and administrative expenses and the success of our
advertising and marketing activities and tactics, including the
effect on revenue and guest counts; anticipated advertising costs
and plans to include television advertising to support 2010 LTO
promotions; our ability to attract new guests and retain loyal
guests; future capital expenditures and the anticipated amounts of
such capital expenditures; our expectation that we will have
adequate cash from operations and credit facility borrowings to
reduce our debt and to meet all future debt service, capital
expenditure, including restaurant development, and working capital
requirements in fiscal year 2010; anticipated compliance with debt
covenants; the sufficiency of the supply of commodities and labor
pool to carry on our business; anticipated restaurant closings and
related impairment charges; anticipated interest and tax expense;
expectations regarding competition and our competitive advantages;
and other risk factors described from time to time in the Company’s
10-Q and 10-K filings with the SEC.
RED ROBIN GOURMET
BURGERS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
amounts)
(Unaudited)
October 3,
December 27,
2010
2009
Assets: Current Assets: Cash and cash equivalents $ 11,240 $
20,268 Accounts receivable, net 5,903 4,703 Inventories 14,901
14,526 Prepaid expenses and other current assets 9,895 6,203 Income
tax receivable 2,887 4,713 Deferred tax asset 1,968 4,127
Restricted current assets—marketing funds 6,489
665 Total current assets $ 53,283 $ 55,205
Property and equipment, net 418,021 431,536 Goodwill
61,769 61,769 Intangible assets, net 44,609 47,426 Other assets,
net 4,023 4,159 Total assets $ 581,705
$ 600,095
Liabilities and Stockholders’
Equity: Current Liabilities: Trade accounts payable $ 14,379 $
10,891 Construction related payables 4,447 3,181 Accrued payroll
and payroll related liabilities 28,513 26,912 Unearned revenue
5,752 15,437 Accrued liabilities 22,138 18,818 Accrued
liabilities—marketing funds 6,489 665 Current portion of term loan
notes payable 18,739 18,739 Current portion of long-term debt and
capital lease obligations 868 779 Total
current liabilities $ 101,325 $ 95,422
Deferred rent 33,410 30,996 Long-term portion of term loan notes
payable 85,214 103,954 Other long-term debt and capital lease
obligations 55,949 67,862 Other non-current liabilities
8,152 13,239 Total liabilities $ 284,050
$ 311,473 Stockholders’ Equity: Common stock;
$0.001 par value: 30,000,000 shares authorized; 17,079,573 and
17,079,267 shares issued; 15,587,293 and 15,586,948 shares
outstanding 17 17 Preferred stock, $0.001 par value: 3,000,000
shares authorized; no shares issued and outstanding - - Treasury
stock, 1,492,280 shares, at cost (50,125 ) (50,125 ) Paid-in
capital 170,710 167,637 Accumulated other comprehensive loss, net
of tax (324 ) (1,212 ) Retained earnings 177,377
172,305 Total stockholders’ equity 297,655
288,622 Total liabilities and stockholders’
equity $ 581,705 $ 600,095
RED ROBIN GOURMET
BURGERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per share
data)
(Unaudited)
Twelve Weeks Ended Forty Weeks Ended
October 3, October 4, October 3, October
4, 2010 2009 2010 2009
Revenues: Restaurant revenue $ 191,612 $ 183,878 $ 657,094 $
648,436 Franchise royalties and fees 3,001 3,035 10,292 10,265
Other revenue 230 34 4,310
147 Total revenues 194,843 186,947
671,696 658,848 Costs and expenses:
Restaurant operating costs (exclusive of depreciation
and amortization shown separately
below):
Cost of sales 46,723 42,961 160,432 156,472 Labor (includes $211,
$126, $631, and $1,249 of stock- based compensation, respectively)
68,231 64,113 233,080 224,063 Operating 29,080 27,963 96,695 94,968
Occupancy 14,074 14,434 48,361 47,836 Depreciation and amortization
13,341 13,112 43,777 43,815 Selling, general, and administrative
(includes $1,349, $600, $3,100, and $4,942 of stock-based
compensation, respectively) 22,612 16,096 73,455 63,088 Pre-opening
costs 740 125 1,992 3,263 Asset impairment charge 6,116
- 6,116 - Total costs and
expenses 200,917 178,804 663,908
633,505 Income (loss) from operations (6,074 ) 8,143
7,788 25,343 Other expense (income): Interest expense, net
1,099 1,321 4,241 4,994 Other 7 10 (13
) 29 Total other expenses 1,106 1,331
4,228 5,023 Income (loss) before income
taxes (7,180 ) 6,812 3,560 20,320 Income tax (benefit) expense
(2,967 ) 1,110 (1,512 ) 4,352 Net
income (loss) $ (4,213 ) $ 5,702 $ 5,072 $ 15,968 Earnings
(loss) per share: Basic $ (0.27 ) $ 0.37 $ 0.33 $ 1.04
Diluted $ (0.27 ) $ 0.37 $ 0.32 $ 1.03 Weighted average
shares outstanding: Basic 15,519 15,408
15,494 15,379 Diluted 15,519
15,535 15,668 15,488
Schedule I
Reconciliation of Non-GAAP Restaurant-Level
Operating Profit to Incomefrom Operations and Net
Income(In thousands, except percentage data)
The Company believes that restaurant-level operating profit is
an important measure for management and investors because it is
widely regarded in the restaurant industry as a useful metric by
which to evaluate restaurant-level operating efficiency and
performance. The Company defines restaurant-level operating profit
to be restaurant revenues minus restaurant-level operating costs,
excluding restaurant closures and impairment costs. The measure
includes restaurant level occupancy costs, which include fixed
rents, percentage rents, common area maintenance charges, real
estate and personal property taxes, general liability insurance and
other property costs, but excludes depreciation related to
restaurant buildings and leasehold improvements. The measure
excludes depreciation and amortization expense, substantially all
of which is related to restaurant level assets, because such
expenses represent historical sunk costs which do not reflect a
current cash outlay for the restaurants. The measure also excludes
selling, general and administrative costs, and therefore excludes
occupancy costs associated with selling, general and administrative
functions, pre-opening costs, reacquired franchise costs, legal
settlements and costs associated with the tender offer of stock
options attributed to non-restaurant employees. The Company
excludes restaurant closure costs as they do not represent a
component of the efficiency of continuing operations. Restaurant
impairment costs are excluded, because, similar to depreciation and
amortization, they represent a non-cash charge for the Company’s
investment in its restaurants and not a component of the efficiency
of restaurant operations. Restaurant-level operating profit is not
a measurement determined in accordance with generally accepted
accounting principles (“GAAP”) and should not be considered in
isolation, or as an alternative, to income from operations or net
income as indicators of financial performance. Restaurant-level
operating profit as presented may not be comparable to other
similarly titled measures of other companies. The table below sets
forth certain unaudited information for the 12 and 40 weeks ended
October 3, 2010, and October 4, 2009, expressed as a percentage of
total revenues, except for the components of restaurant operating
costs, which are expressed as a percentage of restaurant
revenues.
Twelve Weeks Ended
Forty Weeks Ended October 3, 2010 October 4,
2009 October 3, 2010 October 4, 2009 Restaurant
revenues $ 191,612 98.3 % $ 183,878 98.4 % $ 657,094 97.8 % $
648,436 98.4 % Restaurant operating costs (exclusive of
depreciation and amortization shown separately below): Cost of
sales 46,723 24.4 42,961 23.4 160,432 24.4 156,472 24.1 Labor
68,231 35.6 64,113 34.9 233,080 35.5 223,177 34.4 Operating 29,080
15.2 27,963 15.2 96,695 14.7 94,968 14.6 Occupancy 14,074 7.3
14,434 7.8 48,361 7.4 47,836 7.4 Tender offer stock-based
compensation expense - - - - - -
886 0.2 Restaurant-level operating profit
33,504 17.5 34,407 18.7 118,526 18.0
125,097 19.3 Add – other revenues 3,231 1.7
3,069 14,602 2.1 10,412 1.6 Deduct – other operating: Depreciation
and amortization 13,341 6.8 13,112 7.0 43,777 6.5 43,815 6.7
Selling, general, and administrative 22,618 11.6 16,096 8.6 73,366
10.9 63,088 9.6 Pre-opening costs 740 0.4 125 0.1 1,992 0.3 3,263
0.5 Tender offer stock-based compensation expense - - - - - - 3,116
0.5 Asset impairment charge 6,116 3.1 - - 6,116 0.9 - - Restaurant
closure costs (6 ) 0.0 - - 89 0.0
598 0.1 Total other operating 42,809
22.0 29,333 15.7 125,340 18.7
113,880 17.4 Income (loss) from operations (6,074 ) (3.1 )
8,143 4.4 7,788 1.2 21,629 3.8 Total other expenses, net
1,106 0.6 1,331 0.7 4,228 0.6 5,023 0.8 Income tax expense
(benefit) (2,967 ) (1.5 ) 1,110 0.6 -1,512
(0.2 ) 4,352 0.7 Total other (1,861 ) (1.0 ) 2,441 1.3 2,716
0.4 9,375 1.5 Net income (loss) $ (4,213 ) (2.2 ) % $ 5,702
3.1 % $ 5,072 0.8 % $ 12,254 2.3 %
______________________
Certain percentage amounts in the table above do not sum due to
rounding as well as the fact that restaurant operating costs are
expressed as a percentage of restaurant revenues, as opposed to
total revenues.
Schedule II
Reconciliation of Non-GAAP Results to GAAP
Results
In addition to the results provided in accordance with Generally
Accepted Accounting Principles (“GAAP”) throughout this press
release, the Company has provided non-GAAP measurements which
present the 12 and 40 weeks ended October 3, 2010, net income and
diluted net income per share, excluding the effects of the
executive transition costs and impairment of four restaurants. The
Company believes that the presentation of net income (loss) and
earnings per share exclusive of the identified charges gives the
reader additional insight into the ongoing operational results of
the Company. This supplemental information will assist with
comparisons of past and future financial results against the
present financial results presented herein. The non-GAAP results
were calculated using an assumed 8% effective tax rate on income
before taxes excluding the identified charges. The non-GAAP
measurements are intended to supplement the presentation of the
Company’s financial results in accordance with GAAP.
Twelve
Weeks Ended Forty Weeks Ended October 3, 2010
October 4, 2009 October 3, 2010
October 4, 2009 Net income (loss) as
reported $ (4,213 ) $ 5,702 $ 5,072 $ 15,968 Asset impairment 6,116
- 6,116 - Executive transition costs 2,329 - 2,512 - Income tax
expense (2,475 ) - (2,475 ) -
Net income excluding impairment charges and and executive
transition costs $ 1,757 $ 5,702 $ 11,225 $ 15,968
Basic net income (loss) per share: Net income (loss) $ (0.27 ) $
0.37 $ 0.33 $ 1.04 Asset impairment 0.39 - 0.39 - Executive
transition costs 0.15 - 0.16 - Income tax expense (0.16 )
- (0.16 ) - Basic net income excluding
impairment charges and executive transition costs $ 0.11 $ 0.37 $
0.72 $ 1.04 Diluted net income (loss) per
share: Net income (loss) $ (0.27 ) 0.37 0.32 1.03 Asset impairment
0.39 - 0.39 - Executive transition costs 0.15 - 0.16 - Income tax
expense (0.16 ) - (0.16 ) -
Diluted net income excluding impairment charges and executive
transition costs $ 0.11 $ 0.37 $ 0.72 $ 1.03 Weighted
average shares outstanding: Basic 15,519 15,408 15,494 15,379
Diluted 15,704 15,535 15,668 15,488
Red Robin Gourmet Burgers (NASDAQ:RRGB)
Historical Stock Chart
From Jun 2024 to Jul 2024
Red Robin Gourmet Burgers (NASDAQ:RRGB)
Historical Stock Chart
From Jul 2023 to Jul 2024