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 12 weeks ended July 14, 2013.
Fiscal Second Quarter 2013 Financial Highlights:
- Earnings per diluted share were $0.77,
compared to fiscal second quarter 2012 earnings per diluted share
of $0.52.
- Total revenues increased 6.5% to $238.3
million; Company-owned comparable restaurant revenues increased
4.3% compared to the same period a year ago.
- Restaurant-level operating profit
margin increased to 23.3% from 21.1% (See Schedule I).
Net income for the 12 weeks ended July 14, 2013, was $11.1
million compared to $7.7 million in the 12 weeks ended July 8,
2012.
Year to date through the Company’s fiscal second quarter 2013,
net income was $20.6 million compared to $18.3 million for the
comparable period in 2012. Earnings per diluted share were $1.43,
an increase of 16.3% compared to 2012 earnings per diluted share of
$1.23.
“During the second quarter, we continued enhancing our menu to
offer Red Robin guests greater variety and value while remaining
true to our gourmet burger authority, contributing to revenue
growth and continued market share gains in a tough casual dining
environment,” said Steve Carley, Red Robin Gourmet Burgers, Inc.
chief executive officer. “Our most recent performance marks 12
consecutive quarters of same store sales growth and continued
expansion of our operating margins. Looking ahead, we remain
focused on making even more progress on our strategic road map
initiatives, including our brand transformation and other
initiatives that are growing our base of loyal Red Robin fans and
driving sustainable growth and profitability for our brand.”
Operating Results
Total Company revenues, which include Company-owned restaurant
revenues and franchise royalties, increased 6.5% to $238.3 million
in the second quarter of 2013 from $223.7 million in the fiscal
second quarter of 2012.
System-wide restaurant revenues in the second quarter of 2013
totaled $324.1 million, compared to $306.8 million in the same
period last year at constant currency rates.
Comparable restaurant revenues increased 4.3% for Company-owned
restaurants in the second quarter of 2013 compared to the prior
year. In the second quarter, guest counts decreased 0.7% on a
comparable basis while average guest check increased 5.0%. 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. Year to date through the fiscal second
quarter of 2013, comparable restaurant net revenues increased 3.1%
compared to a year ago and were driven by a 3.7% increase in
average guest check, partially offset by a 0.6% decrease in guest
counts.
Restaurant-level operating profit margins at Company-owned
restaurants were 23.3% in the second quarter of 2013 compared to
21.1% in the second quarter of 2012, an improvement of 220 basis
points. The higher margins resulted primarily from lower food and
beverage costs, as well as lower insurance and other operating
costs as a percentage of sales. 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.
Restaurant revenue performance
Q2 2013 Q2 2012 Average weekly sales per unit:
Company-owned* - Total $ 57,699
$ 55,774 Company-owned* - Comparable $ 57,769
$ 55,388 Franchised units $ 56,142 $ 54,492 Total
operating weeks: Company-owned units
4,111 3,962 Franchised units
1,596 1,594
*Includes Company-owned casual dining restaurants only
Other Results
Depreciation and amortization costs were $13.3 million, an
increase of $0.8 million from the second 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 $21.9 million, an increase
of $3.0 million from the second quarter of 2012 due mainly to
investments in talent to support value-enhancing initiatives and
higher incentive-based compensation. Selling expenses were $6.5
million in the second quarter of 2013, a decrease from $6.7 million
a year ago.
Net interest expense was $0.7 million, a decrease from $1.3
million during 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 24.3% in the second
quarter of 2013, compared to a 23.7% rate in the same period a year
ago.
Restaurant Openings
As of the end of the second quarter of 2013, there were 339
Company-owned Red Robin® restaurants, five Red Robin’s Burger
Works® and 133 franchised Red Robin restaurants – a total of 477
locations. In the second quarter of 2013, the Company opened two
new Red Robin restaurants.
Balance Sheet and Liquidity
On July 14, 2013, the Company had cash and cash equivalents of
$16.5 million and total debt of $82.1 million, including $9.6
million of capital lease liabilities.
Year to date through the second quarter of 2013, cash generated
from operations totaled $71.0 million compared to $50.1 million for
the same period in 2012, and capital investments amounted to $31.7
million compared to $27.8 million through the second quarter of
2012.
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 approximately 3.0% compared to 2012 based on a combination of
increased prices and guests enjoying more items per visit.
The Company is expecting 2013 capital investments of
approximately $70 million. The Company plans to open 20 new
company-owned Red Robin restaurants and potentially several Red
Robin’s Burger Works restaurants. The Company also 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 approximately 21.3%.
General and administrative costs are expected to be between $89
million and $90 million, while selling expenses are expected to be
approximately 2.8% of sales. Depreciation is projected to be
between $59 million and $60 million.
The income tax rate in 2013 is expected to be approximately
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
second quarter 2013 results today at 10:00 a.m. ET. The conference
call number is (888) 670-2246, or for international callers (913)
312-1507. 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 Thursday, August
22, 2013. The replay can be accessed by dialing (877) 870-5176, or
(858) 384-5517 for international callers. The conference ID is
6901079. The webcast replay will also be available on the Company’s
website until midnight on Sunday, October 6, 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 480 Red Robin locations across the
United States and Canada, including 341 company-owned Red Robin
restaurants and five Red Robin’s Burger Works locations, and 134
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)
Twelve Weeks Ended
Twenty-eight Weeks Ended July 14, 2013 July 8,
2012 July 14, 2013 July 8, 2012 Revenues:
Restaurant revenue $ 234,490 $ 219,932 $ 535,803 $ 514,574
Franchise royalties, fees and other revenue 3,809
3,745 8,845 8,562 Total revenues 238,299
223,677 544,648 523,136 Costs and
expenses:
Restaurant operating costs (exclusive of
depreciation and amortization shown separately below):
Cost of sales 58,024 55,804 133,006 130,879 Labor 76,648 73,075
178,530 171,681 Other operating 28,463 28,877 65,553 66,282
Occupancy 16,779 15,790 39,352 36,904 Depreciation and amortization
13,319 12,532 31,153 29,184 General and administrative 21,868
18,881 50,835 44,381 Selling 6,518 6,693 15,159 15,070 Pre-opening
costs 1,291 602 2,125 1,585 Total costs
and expenses 222,910 212,254 515,713
495,966 Income from operations 15,389 11,423 28,935 27,170
Other expense: Interest expense, net and other 674
1,267 1,763 3,100 Income before income
taxes 14,715 10,156 27,172 24,070 Provision for income taxes
3,576 2,408 6,553 5,764 Net income $ 11,139 $
7,748 $ 20,619 $ 18,306 Earnings per share: Basic $ 0.78 $ 0.53 $
1.46 $ 1.25 Diluted $ 0.77 $ 0.52 $ 1.43 $ 1.23 Weighted average
shares outstanding: Basic 14,209 14,607 14,134
14,609 Diluted 14,475 14,859 14,415
14,879
RED ROBIN GOURMET BURGERS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
amounts)
(Unaudited)
July 14, 2013 December 30, 2012
Assets: Current Assets: Cash and cash equivalents $
16,545 $ 22,440 Accounts receivable, net 13,011 16,386 Inventories
19,885 18,371 Prepaid expenses and other current assets 9,651
13,439 Deferred tax asset and other 3,222
3,868 Total current assets 62,314
74,504 Property and equipment, net 418,582 413,258
Goodwill 62,525 62,525 Intangible assets, net 36,066 37,203 Other
assets, net 9,699 9,642 Total assets $
589,186 $ 597,132
Liabilities and
Stockholders’ Equity: Current Liabilities: Trade accounts
payable $ 18,447 $ 14,241 Construction related payables 6,894 4,694
Accrued payroll and payroll related liabilities 37,419 31,476
Unearned revenue, net 20,529 28,187 Accrued liabilities and other
28,986 23,685 Total current liabilities
112,275 102,283 Deferred rent
49,456 44,801 Long-term portion of credit facility 72,500 125,000
Long-term portion of capital lease obligations 8,830 9,211 Other
non-current liabilities 9,243 8,918
Total liabilities 252,304 290,213
Stockholders’ Equity:
Common stock, $0.001 par value: 30,000
shares authorized; 17,781 and 17,499 shares issued; 14,281 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 shares, at cost (107,589 ) (107,589 )
Paid-in capital 195,267 185,974 Accumulated other comprehensive
gain, net of tax 55 5 Retained earnings 249,131
228,512 Total stockholders’ equity 336,882
306,919 Total liabilities and stockholders’
equity $ 589,186 $ 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 twelve and twenty-eight weeks ended
July 14, 2013 and July 8, 2012, expressed as a percentage of total
revenues, except for the components of restaurant level operating
profit, which are expressed as a percentage of restaurant
revenues.
Twelve Weeks Ended Twenty-eight Weeks Ended
July 14, 2013
July 8, 2012
July 14, 2013
July 8, 2012
Restaurant revenues $ 234,490 98.4 % $ 219,932 98.3 % $ 535,803
98.4 % $ 514,574 98.4 %
Restaurant operating costs (exclusive of
depreciation and amortization shown separately below):
Cost of sales 58,024 24.7 55,804 25.4 133,006 24.8 130,879 25.4
Labor 76,648 32.7 73,075 33.2 178,530 33.3 171,681 33.4 Other
operating 28,463 12.1 28,877 13.1 65,553 12.2 66,282 12.9 Occupancy
16,779 7.2 15,790 7.2 39,352 7.3 36,904
7.2 Restaurant-level operating profit 54,576 23.3
46,386 21.1 119,362 22.3 108,828 21.1 Add –
Franchise royalties, fees and other revenue 3,809 1.6 3,745 1.7
8,845 1.6 8,562 1.6 Deduct – other operating: Depreciation and
amortization 13,319 5.6 12,532 5.6 31,153 5.7 29,184 5.6 General
and administrative 21,868 9.2 18,881 8.4 50,835 9.3 44,381 8.5
Selling 6,518 2.7 6,693 3.0 15,159 2.8 15,070 2.9 Pre-opening costs
1,291 0.5 602 0.3 2,125 0.4 1,585 0.3
Total other operating 42,996 18.0 38,708 17.3
99,272 18.2 90,220 17.3 Income from operations 15,389
6.5 11,423 5.1 28,935 5.3 27,170 5.2 Interest expense, net
and other 674 0.3 1,267 0.6 1,763 0.3 3,100 0.6 Income tax expense
3,576 1.5 2,408 1.1 6,553 1.2 5,764 1.1
Total other 4,250 1.7 3,675 1.7 8,316 1.4
8,864 1.7 Net income $ 11,139 4.7 % $ 7,748 3.5 % $
20,619 3.8 % $ 18,306 3.5 %
Certain percentage amounts in the table above do not total due
to rounding as well as the fact that components of restaurant level
operating profit are expressed as a percentage of restaurant
revenues and not total revenues.
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