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 16 weeks ended April 21, 2013.
Fiscal First Quarter 2013 Financial Highlights:
- Earnings per diluted share were $0.66,
compared to fiscal first quarter 2012 earnings per diluted share of
$0.71.
- Total revenues increased 2.3% to $306.3
million; Company-owned comparable restaurant revenues increased
2.2% compared to the same period a year ago.
- Restaurant-level operating profit
margin increased to 21.5% from 21.2% (See Schedule I).
Net income for the 16 weeks ended April 21, 2013, was $9.5
million compared to $10.6 million in the 16 weeks ended April 15,
2012.
“Overall, we were pleased with Red Robin’s business performance
during the first quarter as we achieved our 11th consecutive
quarter of same store sales growth and we continued expansion of
our operating margins,” said Steve Carley, Red Robin Gourmet
Burgers, Inc. chief executive officer. “Seasonality shifts from
changes in our reporting period and media timing had a negative
impact on our guest traffic and earnings in the first quarter this
year. However, we remain encouraged by our strong guest counts
relative to the casual dining category as a whole. We also made
significant progress on our strategic road map initiatives,
including the promising results we achieved with our brand
transformation initiative. Our success to date gives us the
confidence that we are positioning Red Robin for continued growth
and profitability.”
Operating Results
Total Company revenues, which include Company-owned restaurant
revenues and franchise royalties, increased 2.3% to $306.3 million
in the first quarter of 2013 from $299.5 million in the fiscal
first quarter of 2012.
System-wide restaurant revenues in the first quarter of 2013
totaled $416.6 million, compared to $414.2 million in the same
period last year at constant currency rates.
Comparable restaurant revenues increased 2.2% for Company-owned
restaurants in the first quarter of 2013 compared to the prior
year. In the first quarter, guest counts decreased 0.6% on a
comparable basis while average guest check increased 2.8%. The
Company’s comparable revenue growth is calculated by comparing the
same calendar weeks which, for 2012, vary from the Company’s fiscal
reporting by one week.
Restaurant revenue performance
Q1 2013 Q1 2012 Average weekly sales
per unit: Company-owned* - Total
$55,978 $56,303 Company-owned* - Comparable $55,982
$54,794 Franchised units $54,171 $54,702 Total
operating weeks: Company-owned units
5,444 5,244 Franchised units 2,128
2,186
*Includes Company-owned casual dining
restaurants only
Restaurant-level operating profit margins at Company-owned
restaurants were 21.5% in the first quarter of 2013 compared to
21.2% in the first quarter of 2012, an improvement of 30 basis
points. The higher margins resulted primarily from lower food and
beverage costs and other operating costs as a percentage of sales,
partially offset by higher labor expenses and occupancy costs.
Schedule I 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
Depreciation and amortization costs were $17.8 million, an
increase of $1.2 million from the first quarter of 2012 due
primarily to the opening of new restaurants and the placing of new
information technology systems into service.
General and administrative costs were $29.0 million, an increase
of $3.5 million in the first quarter of 2013 due mainly to
investments in talent to support value-enhancing initiatives and
higher incentive-based compensation. Selling expenses were $8.6
million in the first quarter of 2013, an increase of $0.3 million
from a year ago.
Net interest expense was $1.1 million, a decrease of $0.7
million from the same period a year ago as a result of the
Company’s debt refinancing in December 2012 as well as lower
average borrowings.
The Company had an effective tax rate of 23.9% in the first
quarter of 2013, compared to a 24.1% rate in the same period a year
ago.
Restaurant Openings
As of the end of the first quarter of 2013, there were 337
Company-owned Red Robin® restaurants, five Red Robin’s Burger
Works® and 133 franchised Red Robin restaurants – a total of 475
locations. In the first quarter of 2013, the Company opened three
new Red Robin restaurants.
Balance Sheet and Liquidity
On April 21, 2013, the Company had cash and cash equivalents of
$17.4 million and total debt of $100.2 million, including $9.7
million of capital lease liabilities.
During the first quarter of 2013, cash generated from operations
totaled $40.4 million compared to $29.6 million in the first
quarter of 2012, and capital investments amounted to $13.6 million
compared to $10.4 million in the same period a year ago.
Outlook for 2013
Red Robin’s 2013 fiscal year consists of 52 weeks ending on
December 29, 2013, compared to fiscal 2012, which consisted of 53
weeks.
In 2013, the Company expects comparable restaurant sales growth
of 2.5% to 3.0% compared to 2012 based on a combination of
increases in prices, items sold per guest and increased guest
visits.
The Company is increasing its projected capital investments to
approximately $70 million. The Company plans to open 20 new
company-owned Red Robin restaurants in addition to several Red
Robin’s Burger Works restaurants and intends to remodel 20 existing
Red Robin restaurants as part of its brand transformation
initiative.
Restaurant-level operating profit margins in 2013 are expected
to be near 20.9%.
General and administrative costs are expected to be near $87
million, while selling expenses are expected to be approximately
2.8% of sales. Depreciation is projected to be between $59 million
and $60 million, including accelerated depreciation associated with
the remodeling program.
The income tax rate in 2013 is expected to be near 24%.
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
first quarter 2013 results today at 10:00 a.m. ET. The conference
call number is (877) 741-4249, or for international callers (719)
325-4805. 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, May 28,
2013. The replay can be accessed by dialing (877) 870-5176, or
(858) 384-5517 for international callers. The conference ID is
6811617. The webcast replay will also be available on the Company’s
website until midnight on Sunday, July 14, 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. Red Robin’s award-winning burgers have earned the
title of Best Burger in the full-service category in the Zagat Fast
Food Survey four years in a row. 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 475 Red Robin locations across the
United States and Canada, including 337 company-owned Red Robin
restaurants and five Red Robin’s Burger Works locations, and 133
Red Robin restaurants operating under franchise agreements.
Red Robin… YUMMM®! Connect with Red Robin on Facebook and
Twitter.
Forward-Looking Statements:
Forward-looking statements in this press release regarding our
expected earnings per share, restaurant sales, new restaurant
growth, brand transformation initiative, future economic
performance, costs and 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 “expect,” “believe,” “anticipate,” “intend,” “plan,”
“project,” 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)
Sixteen Weeks Ended
April 21, 2013
April 15, 2012
Revenues: Restaurant revenue $
301,313
$
294,642
Franchise royalties, fees and other revenue 5,036
4,817 Total revenues 306,349
299,459 Costs and expenses:
Restaurant operating costs (exclusive of
depreciation and amortization shown separately below):
Cost of sales 74,982 75,075 Labor 101,882 98,606 Other operating
37,090 37,405 Occupancy 22,573 21,114 Depreciation and amortization
17,834 16,652 General and administrative 28,967 25,500 Selling
8,641 8,377 Pre-opening costs 834 983
Total costs and expenses 292,803 283,712
Income from operations 13,546 15,747 Other
expense: Interest expense, net and other 1,089
1,833 Income before income taxes 12,457 13,914
Provision for income taxes 2,977 3,356
Net income $ 9,480 $ 10,558 Earnings per share: Basic
$ 0.67 $ 0.72 Diluted $ 0.66 $ 0.71
Weighted average shares outstanding: Basic 14,062
14,611 Diluted 14,341 14,894
RED ROBIN GOURMET BURGERS,
INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In
thousands, except share amounts)(Unaudited)
April 21, 2013
December 30, 2012
Assets: Current Assets: Cash and cash equivalents $ 17,375 $
22,440 Accounts receivable, net 9,198 16,386 Inventories 18,325
18,371 Prepaid expenses and other current assets 8,952 13,439
Deferred tax asset and other 3,238 3,868
Total current assets 57,088 74,504
Property and equipment, net 410,573 413,258 Goodwill
62,525 62,525 Intangible assets, net 36,892 37,203 Other assets,
net 9,633 9,642 Total assets $ 576,711
$ 597,132
Liabilities and Stockholders’
Equity: Current Liabilities: Trade accounts payable $ 13,974 $
14,241 Construction-related payables 4,682 4,694 Accrued payroll
and related liabilities 33,371 31,476 Unearned revenue, net 20,552
28,187 Accrued liabilities and other 29,738
23,685 Total current liabilities 102,317
102,283 Deferred rent 46,327 44,801 Long-term
portion of credit facility 90,500 125,000 Long-term portion of
capital lease obligations 8,960 9,211 Other non-current liabilities
8,656 8,918 Total liabilities
256,760 290,213 Stockholders’ Equity:
Common stock, $0.001 par value: 30,000
shares authorized; 17,656 and 17,499 shares issued; 14,156 and
13,999 shares outstanding
18 17
Preferred stock, $0.001 par value: 3,000
shares authorized; no shares issued and outstanding
- - Treasury stock, 3,500 and 3,500 shares, at cost (107,589 )
(107,589 ) Paid-in capital 189,561 185,974 Accumulated other
comprehensive gain (loss), net of tax (31 ) 5 Retained earnings
237,992 228,512 Total stockholders’
equity 319,951 306,919 Total
liabilities and stockholders’ equity $ 576,711 $ 597,132
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
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 sixteen weeks ended April 21, 2013
and April 15, 2012, expressed as a percentage of total revenues,
except for the components of restaurant operating costs, which are
expressed as a percentage of restaurant revenues.
Sixteen Weeks
Ended
April 21, 2013
April 15, 2012
Restaurant revenues
$
301,313
98.4 %
$
294,642
98.4 %
Restaurant operating costs (exclusive
ofdepreciation and amortization shownseparately below):
Cost of sales 74,982
24.9
75,075
25.5
Labor 101,882 33.8 98,606 33.5 Other operating 37,090 12.3 37,405
12.7 Occupancy 22,573 7.5 21,114
7.2 Restaurant-level operating profit
64,786 21.5 62,442 21.2
Add – Franchise royalties, fees and other revenue
5,036 1.6 4,817 1.6 Deduct – other operating: Depreciation and
amortization 17,834 5.8 16,652 5.6 General and administrative
28,967 9.5 25,500 8.5 Selling 8,641 2.8 8,377 2.8 Pre-opening costs
834 0.3 983 0.3
Total other operating 56,276 18.4
51,512 17.2 Income from
operations 13,546 4.4 15,747 5.3 Interest expense, net and
other 1,089 0.4 1,833 0.6 Income tax expense 2,977
1.0 3,356 1.1 Total other
4,066 1.3 5,189
1.7 Net income $ 9,480 3.1 % $ 10,558
3.5 %
______________________
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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