Red Robin Gourmet Burgers, Inc., (NASDAQ: RRGB), a casual dining
restaurant chain serving an innovative selection of high-quality
gourmet burgers in a family-friendly atmosphere, today reported
financial results for the 13 and 53 weeks ended December 30,
2012.
Financial Highlights for the 13 Weeks Ended December 30,
2012, Compared to the 12 Weeks Ended December 25, 2011:
- Earnings per diluted share were $0.45,
compared to fiscal fourth quarter 2011 earnings per diluted share
of $0.20, on a GAAP basis. Adjusted earnings per diluted share were
$0.59, compared to $0.28 in the fiscal fourth quarter a year ago.
(See Schedule I.)
- Total revenues increased 16.8% to
$240.7 million; Company-owned comparable restaurant revenues
increased 1.4% on a 13-week comparable basis.
- Restaurant-level operating profit
margin increased to 20.6% from 19.9%. (See Schedule II.)
- The Company opened three new Red Robin®
restaurants.
Net income for the 13 weeks ended December 30, 2012, was $6.5
million compared to $2.9 million in the 12 weeks ended December 25,
2011. Fiscal fourth quarter 2012 net income excluding charges
related to the Company’s debt refinancing was $8.4 million. See
Schedule I below for a reconciliation of adjustments to net income
in the fiscal fourth quarters of 2012 and 2011.
For the 53 weeks ended December 30, 2012, GAAP net income was
$28.3 million, or $1.93 per diluted share, compared to $20.6
million, or $1.34 per diluted share, for the 52 weeks ended
December 25, 2011. Excluding charges related to the Company’s debt
refinancing, adjusted net income for the full fiscal year 2012 was
$30.2 million, or $2.06 per diluted share, compared to $24.3
million, or $1.58 per diluted share, in the full fiscal year 2011.
(See schedule I.) The fifty-third week in fiscal 2012 contributed
an estimated $3.1 million to net income, or approximately $0.21 per
diluted share.
“We were very pleased with Red Robin’s business performance
during the fourth quarter, which reflected a solid finish to a
successful, foundational year for our Company,” said Steve Carley,
Red Robin Gourmet Burgers, Inc. chief executive officer. “We once
again significantly outpaced the industry in guest count growth and
continued expansion of our operating margins. The outstanding work
of our teams across the enterprise is clearly contributing to
improved results and a stronger, more differentiated Red Robin
brand. Looking ahead to 2013, our goal is to build on what we have
already accomplished to continue elevating the guest experience and
extending our burger authority, while we capitalize on our
significant growth potential for new unit development.”
Operating Results
Total Company revenues, which include Company-owned restaurant
revenues and franchise royalties, increased 16.8% to $240.7 million
in the fiscal fourth quarter of 2012 versus $206.0 million in the
fiscal fourth quarter of 2011. For fiscal 2012, total revenues
increased 6.8% to $977.1 million.
System-wide restaurant revenues in the fiscal fourth quarter of
2012 totaled $327.5 million, compared to $285.1 million in the same
period last year at constant currency rates. For fiscal 2012,
system-wide restaurant revenues increased 5.7% to $1.3 billion.
Comparable restaurant revenues increased 1.4% for Company-owned
restaurants in the fiscal fourth quarter of 2012 compared to the
prior year on a 13-week comparable basis. In the fourth quarter,
guest counts increased 0.3% on a comparable basis while average
guest check increased 1.1%. For the full fiscal year 2012,
comparable restaurant revenues increased 1.1% compared to the prior
year resulting from a 1.7% increase in average guest check,
partially offset by a 0.6 % decrease in guest counts.
Restaurant revenue performance
Q4 2012 Q4 2011 Average weekly revenues
Company-owned units* $54,441
$51,844 Franchised units $52,642 $50,215 Total
operating weeks Company-owned units
4,395 3,909 Franchised units 1,726
1,644
*Excludes Red Robin’s Burger Works®
Restaurant-level operating profit margins at Company-owned
restaurants were 20.6% in the fiscal fourth quarter of 2012
compared to 19.9% in the fiscal fourth quarter of 2011, an
improvement of 70 basis points. The higher margins resulted
primarily from lower cost of goods sold, improved sales mix, and
the impact of the more-profitable additional week in fiscal 2012,
partially offset by higher labor costs. Schedule II of this
earnings release defines restaurant-level operating profit,
discusses why it is a useful metric for investors and reconciles
this metric to income from operations and net income.
Other Results
General and administrative costs were $20.5 million, an increase
of $1.4 million in the fourth quarter 2012 due mainly to the costs
associated with the additional operating week. Selling expenses
were $6.4 million in the fourth quarter 2012, an increase of $1.9
million, due primarily to higher marketing fund contributions
related to increased sales and gift card expenses.
The Company had an effective tax rate of 23.1% in fiscal 2012,
compared to 6.8% in the prior year.
Restaurant Openings
As of the end of the fiscal fourth quarter of 2012, there were
339 Company-owned Red Robin® restaurants, including five Red
Robin’s Burger Works®, and 133 franchised Red Robin locations. In
the fiscal fourth quarter of 2012, the Company opened three new Red
Robin restaurants, including the Company’s first mid-size
prototypes. One franchised location in Texas that closed during the
fiscal third quarter of 2012 was reopened in the fiscal fourth
quarter of 2012 by a different franchisee.
Debt Refinancing
As previously announced, the Company closed on a new $225
million credit agreement in December. The new credit facility, a
five-year $225 million revolving line of credit, replaces a
facility comprised of a $150 million term loan and $100 million
revolving line of credit that was scheduled to mature in May 2016.
In conjunction with the closing of the credit agreement, the
Company recorded a non-cash, pre-tax charge of approximately $2.9
million, comprised of a write-off of unamortized fees from the
prior credit agreement and a charge related to the re-designation
of an interest rate swap in the fourth fiscal quarter 2012.
Balance Sheet and Liquidity
On December 30, 2012, the Company had cash and cash equivalents
of $22.4 million and total debt of $135.0 million, including $10.0
million of capital lease liabilities.
During the fiscal fourth quarter of 2012, the Company
repurchased approximately 281,000 shares of stock for $8.6 million.
In fiscal year 2012, the Company repurchased a total of
approximately 803,000 shares for $24.3 million.
During the fiscal year 2012, cash generated from operations
totaled $94.4 million compared to $95.7 million in fiscal 2011, and
capital investments amounted to $63.2 million, including $3.2
million for the acquisition of a franchised restaurant, compared to
$44.1 million in fiscal 2011.
Outlook for 2013
Red Robin’s 2013 fiscal year consists of 52 weeks ending on
December 29, 2013.
In fiscal 2013, the Company expects comparable restaurant sales
growth of 2.5% to 3.0% compared to fiscal 2012 based on a
combination of increases in prices, items sold per guest and
increased guest visits. Additionally, the Company plans to open 20
new company-owned restaurants, including up to five new Red Robin’s
Burger Works® restaurants.
Restaurant-level operating profit margins in fiscal 2013 are
expected to be flat to down 10 basis points as a percentage of
restaurant sales compared to 20.7% in fiscal 2012 due mainly to
higher commodity prices.
General and Administrative costs are expected to range between
$83 million and $84 million, while Selling expenses are expected to
remain consistent with 2012 at 2.8% of sales. Depreciation is
expected to be around $58 million, an increase of approximately $3
million from fiscal 2012 due to depreciation of newly implemented
technology systems, as well as an increased number of units in the
Company’s restaurant base.
The income tax rate in fiscal 2013 is expected to range from 23%
to 24%.
During fiscal 2013, the Company expects between $50 million and
$55 million in capital expenditures, which will be used to open new
restaurants, as well as fund restaurant and technology
infrastructure improvements and remodeling investments.
The sensitivity of the Company’s earnings per diluted share to a
1% change in guest counts for fiscal 2013 is estimated to be $0.23
on an annualized basis. Additionally, a 10 basis point change in
restaurant-level operating margin is expected to impact earnings
per diluted share by approximately $0.05, and a change of $187,000
in pre-tax income or expense is equivalent to approximately $0.01
per diluted share.
Investor Conference Call and Webcast
Red Robin will host an investor conference call to discuss its
fiscal fourth quarter 2012 results today at 10:00 a.m. ET. The
conference call number is (888) 329-8862, or for international
callers (719) 457-2628. The 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, the Company will post supplemental financial information that
will be discussed during the call and live webcast.
To access the supplemental financial information and webcast,
please visit www.redrobin.com and select the “Investors” link from
the menu. A replay of the live conference call will be available
from two hours after the call until midnight on Tuesday, February
26, 2013. The replay can be accessed by dialing (877) 870-5176, or
(858) 384-5517 for international callers. The conference ID is
4081874. The webcast replay will also be available on the Company’s
website until midnight on Sunday, April 21, 2013.
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., is the
gourmet burger expert, famous for serving more than two dozen
craveable, high-quality burgers with Bottomless Steak Fries® in a
fun environment welcoming to guests of all ages. In addition to its
many burger offerings, Red Robin serves a wide variety of salads,
soups, appetizers, entrees, desserts and signature Mad Mixology®
Beverages. There currently are 473 Red Robin locations across the
United States and Canada, including 335 company-owned Red Robin®
restaurants and five Red Robin’s Burger Works® locations, and 133
Red Robin® restaurants operating under franchise agreements.
Forward-Looking Statements:
Forward-looking statements in this press release regarding our
expected earnings per share, restaurant sales, new restaurant
growth, future economic performance, capital expenditures, certain
statements under the heading “Outlook for 2013” and all other
statements that are not historical facts, are made under the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995. These statements are based on assumptions believed by the
Company to be reasonable and speak only as of the date on which
such statements are made. Without limiting the generality of the
foregoing, words such as “continue,” “will,” “expect,” “believe,”
“anticipate,” “intend,” or “estimate,” or the negative or other
variations thereof or comparable terminology are intended to
identify forward-looking statements. We undertake no obligation to
update such statements to reflect events or circumstances arising
after such date, and we caution investors not to place undue
reliance on any such forward-looking statements. Forward-looking
statements involve risks and uncertainties that could cause actual
results to differ materially from those described in the statements
based on a number of factors, including but not limited to the
following: the effectiveness of the Company’s marketing strategies,
loyalty program and guest count initiatives to achieve restaurant
sales growth; the ability to fulfill planned expansion; the cost
and availability of key food products, labor and energy; the
ability to achieve anticipated revenue and cost savings from our
anticipated new technology systems and other initiatives;
availability of capital or credit facility borrowings; the adequacy
of cash flows or available debt resources to fund operations and
growth opportunities; federal, state and local regulation of our
business; and other risk factors described from time to time in the
Company’s Form 10-K, Form 10-Q and Form 8-K reports (including all
amendments to those reports) filed with the U.S. Securities and
Exchange Commission.
RED ROBIN GOURMET BURGERS,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except per share
data)(Unaudited)
ThirteenWeeks Ended TwelveWeeks
Ended Fifty-threeWeeks Ended
Fifty-twoWeeks Ended
December 30,2012
December 25,2011
December 30,2012
December 25,2011
Revenues: Restaurant revenue $ 236,666 $
202,504
$ 960,994 $
898,842
Franchise royalties and fees and other revenue 4,013
3,477 16,138 16,008 Total
revenues 240,679 205,981 977,132
914,850 Costs and expenses:
Restaurant operating costs (exclusive of
depreciation and amortization shown separately below):
Cost of sales 59,696 51,464 242,641 227,063 Labor 79,690 67,915
323,100 303,503 Other operating 30,815 27,270 125,471 124,238
Occupancy 17,758 15,570 70,971 65,785 Depreciation and amortization
13,000 12,521 55,468 55,272 General and administrative 20,462
19,058 83,716 79,087 Selling 6,416 4,558 27,082 24,037 Pre-opening
costs 639 728 3,474 3,527 Asset impairment charge -
2,418 - 4,337 Total costs
and expenses 228,476 201,502
931,923 886,849 Income from operations
12,203 4,479 45,209 28,001 Other expense: Interest expense
1,249 1,487 5,662 5,885 Loss on debt refinanacing 2,919 - 2,919 -
Other (income)/expense (9 ) 2 (229 )
28 Total other expenses 4,159 1,489 8,352 5,913
Income before income taxes 8,044 2,990 36,857 22,088 Income
tax expense 1,552 85 8,526
1,511 Net income $ 6,492 $ 2,905
$ 28,331 $ 20,577 Earnings per share: Basic $ 0.46
$ 0.20 $ 1.97 $ 1.36 Diluted $ 0.45
$ 0.20 $ 1.93 $ 1.34 Weighted average
shares outstanding: Basic 14,085 14,620
14,411 15,122 Diluted 14,326
14,823 14,669 15,357
RED ROBIN GOURMET BURGERS,
INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In
thousands, except share amounts)(Unaudited)
December 30,2012
December 25,2011
Assets: Current Assets: Cash and cash equivalents $ 22,440 $
35,036 Accounts receivable, net 16,386 14,785 Inventories 18,371
18,040 Prepaid expenses and other current assets 13,439 9,970
Income tax receivable 858 1,387 Deferred tax asset 3,010
1,429 Total current assets 74,504
80,647 Property and equipment, net 413,258
402,360 Goodwill 62,525 61,769 Intangible assets, net 37,203 38,969
Other assets, net 9,642 9,231 Total
assets $ 597,132 $ 592,976
Liabilities and
Stockholders’ Equity: Current Liabilities: Trade accounts
payable $ 14,241 $ 14,798 Construction related payables 4,694 3,328
Accrued payroll and payroll related liabilities 31,476 35,044
Unearned revenue, net 28,187 24,139 Accrued liabilities 22,901
19,045 Current portion of credit facility - 9,375 Current portion
of long-term debt and capital lease obligations 784
757 Total current liabilities 102,283
106,486 Deferred rent 44,801 40,025 Long-term portion
of credit facility 125,000 136,875 Other long-term debt and capital
lease obligations 9,211 9,924 Other non-current liabilities
8,918 4,968 Total liabilities 290,213
298,278 Stockholders’ Equity:
Common stock; $0.001 par value: 30,000,000
shares authorized; 17,499,147 and 17,276,404 shares issued;
13,999,278 and 14,579,257 shares outstanding
17 17
Preferred stock, $0.001 par value:
3,000,000 shares authorized; no shares issued and outstanding
- - Treasury stock 3,499,869 and 2,697,147 shares, at cost (107,589
) (83,285 ) Paid-in capital 185,974 178,111 Accumulated other
comprehensive gain (loss), net of tax 5 (326 ) Retained earnings
228,512 200,181 Total stockholders’
equity 306,919 294,698 Total
liabilities and stockholders’ equity $ 597,132 $ 592,976
Schedule I
Reconciliation of Non-GAAP Results to
GAAP Results(In thousands, except per share data)
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 thirteen and fifty-three weeks ended
December 30, 2012 and the twelve and fifty-two weeks ended December
25, 2011, net income and basic and diluted earnings per share,
excluding the effects of the refinancing of the Company’s debt in
the fourth quarter of 2012; and severance expense, executive
transition costs, and initial gift card breakage revenue recorded
in first and second fiscal quarters of 2011. The Company believes
that the presentation of net income and earnings per share
exclusive of the identified items 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 2012 and 2011 non-GAAP results were
calculated using an assumed 23.5% and 11.5% normalized tax rate,
respectively on income and expense items before taxes, excluding
the identified items. The non- GAAP measurements are intended to
supplement the presentation of the Company’s financial results in
accordance with GAAP.
ThirteenWeeks Ended TwelveWeeks
Ended Fifty-threeWeeks Ended
Fifty-twoWeeks Ended
December 30,2012
December 25,2011
December 30,2012
December 25,2011
Net income as reported $ 6,492 $ 2,905 $ 28,331 $ 20,577
Loss on debt refinancing 2,919 - 2,919 - Executive transition and
severance expense - - - 2,228 Asset impairment and restaurant
closure costs - 2,418 - 4,337 Initial cumulative gift card breakage
income - - - (438 ) Income tax expense (1,020 )
(1,208 ) (1,020 ) (2,391 ) Adjusted net income
$ 8,391 $ 4,115 $ 30,230 $ 24,313
Basic net income per share: Net income as reported $ 0.46 $
0.20 $ 1.97 $ 1.36 Loss on debt refinancing 0.21 - 0.20 - Executive
transition and severance expense - - - 0.15 Asset impairment and
restaurant closure costs - 0.17 - 0.29 Initial cumulative gift card
breakage income - - - (0.03 ) Income tax expense (0.07 )
(0.10 ) (0.07 ) (0.16 ) Adjusted
earnings per share - basic $ 0.60 $ 0.27 $ 2.10
$ 1.61 Diluted net income per share:
Net income as reported $ 0.45 $ 0.20 $ 1.93 $ 1.34 Loss on debt
refinancing 0.20 - 0.20 - Executive transition and severance
expense - - - 0.15 Asset impairment and restaurant closure costs -
0.16 - 0.28 Initial cumulative gift card breakage income - - -
(0.03 ) Income tax expense (0.06 ) (0.08 )
(0.07 ) (0.16 ) Adjusted earnings per share - diluted
$ 0.59 $ 0.28 $ 2.06 $ 1.58
Weighted average shares outstanding: Basic 14,085 14,620 14,411
15,122 Diluted 14,326 14,823 14,669 15,357
Schedule II
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 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, and pre-opening costs. 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 thirteen and
fifty-three weeks ended December 30, 2012 and the twelve and
fifty-two weeks ended December 25, 2011, expressed as a percentage
of total revenues, except for the components of restaurant
operating costs, which are expressed as a percentage of restaurant
revenues.
ThirteenWeeks Ended
TwelveWeeks Ended Fifty-threeWeeks
Ended Fifty-twoWeeks Ended
December 30, 2012
December 25, 2011
December 30, 2012
December 25, 2011
Restaurant revenues $
236,666
98.3 % $
202,504
98.3 % $
960,994
98.3 % $
898,842
98.3 % Restaurant operating costs (exclusive of depreciation
and amortization shown separately below): Cost of sales 59,696 25.2
51,464 25.4 242,641 25.2 227,063 25.3 Labor 79,690 33.7 67,915 33.5
323,100 33.6 303,503 33.8 Other operating 30,815 13.0 27,270 13.5
125,471 13.1 124,238 13.8 Occupancy 17,758 7.5
15,570 7.7 70,971 7.4
65,785 7.3 Restaurant-level operating profit
48,707 20.6 40,285 19.9
198,811 20.7 178,253 19.8
Add – Franchise royalties and fees and other revenues 4,013
1.7 3,477 1.7 16,138 1.7 16,008 1.7 Deduct – other operating:
Depreciation and amortization 13,000 5.4 12,521 6.1 55,468 5.7
55,272 6.0 General and administrative 20,462 8.5 19,058 9.3 83,716
8.5 79,087 8.5 Selling 6,416 2.7 4,558 2.2 27,082 2.8 24,037 2.6
Pre-opening costs 639 0.3 728 0.4 3,474 0.4 3,527 0.4 Asset
impairment charge - 0.0 2,418
1.2 - 0.0 4,337 0.5
Total other operating 40,517 16.9
39,283 19.2 169,740 17.4
166,260 18.0 Income from operations
12,203 5.1 4,479 2.2 45,209 4.6 28,001 3.1 Interest expense,
net and other 4,159 1.7 1,489 0.7 8,352 0.9 5,913 0.6 Income tax
expense 1,552 0.6 85 0.0
8,526 0.9 1,511 0.2 Total
other 5,711 2.3 1,574 0.7 16,878 1.8 7,424 0.8 Net income $
6,492 2.7 % $ 2,905 1.4 % $ 28,331 2.9 % $
20,577 2.2 %
Certain percentage amounts in the table above do not total due
to rounding as well as the fact that restaurant operating costs are
expressed as a percentage of restaurant revenues and not total
revenues.
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