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 and 40 weeks ended October 6,
2013.
Fiscal Third Quarter 2013 Financial Highlights:
- Earnings per diluted share were $0.32,
compared to fiscal third quarter 2012 earnings per diluted share of
$0.24.
- Total revenues increased 8.1% to $230.7
million; Company-owned comparable restaurant revenues increased
5.7% compared to the same period a year ago.
- Restaurant-level operating profit
margin increased to 20.4% from 19.7% (See Schedule I).
Net income for the 12 weeks ended October 6, 2013, was $4.7
million compared to $3.5 million in the quarter ended September 30,
2012.
Year to date through the Company’s fiscal third quarter 2013,
net income was $25.3 million compared to $21.8 million for the
comparable period in 2012. Earnings per diluted share through the
first three quarters were $1.75, an increase of 18.2% compared to
2012 earnings per diluted share of $1.48.
“Red Robin’s strong third quarter performance reflected
continued progress enhancing the guest experience,” said Steve
Carley, Red Robin Gourmet Burgers, Inc. chief executive officer.
“The changes we made this summer in our menu and presentation, as
well as our new marketing approach, helped us return to positive
guest traffic. Looking ahead, we know consumers continue to feel
challenged finding great value and a great casual dining
experience. As we fight the day-to-day battle for guest traffic and
share, we remain focused on long-term initiatives that will
continue to build the brand for the future, but may take some time
to bear fruit.”
Operating Results
Total Company revenues, which include Company-owned restaurant
revenues and franchise royalties, increased 8.1% to $230.7 million
in the third quarter of 2013 from $213.3 million in the fiscal
third quarter of 2012. In the fiscal third quarter a year ago,
Company revenues and operating results were increased by
approximately $1.0 million due to changes to Red Robin Royalty™
incentives, which reduced deferred revenue.
System-wide restaurant revenues in the third quarter of 2013
totaled $315.2 million, compared to $291.0 million in the same
period last year at constant currency rates.
Comparable restaurant revenues increased 5.7% for Company-owned
restaurants in the third quarter of 2013 compared to the prior
year. In the third quarter, guest counts increased 1.1% on a
comparable basis while average guest check increased 4.6%. 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 third
quarter of 2013, comparable restaurant net revenues increased 4.2%
compared to a year ago and were driven by an increase in average
guest check resulting from both price and product mix.
Restaurant-level operating profit margins at Company-owned
restaurants were 20.4% in the third quarter of 2013 compared to
19.7% in the third quarter of 2012, an improvement of 70 basis
points. The higher margins resulted primarily from sales leverage
on the higher average check which more than offset higher food and
beverage 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.
Restaurant revenue performance
Casual Dining Restaurants* Q3
2013 Q3 2012 Average weekly sales per unit:
Company-owned - Total
$ 55,029 $ 52,779 Company-owned - Comparable
$ 54,998 $ 52,026 Franchised units
$ 54,584 $ 51,214 Total operating
weeks: Company-owned
units 4,108 3,959 Franchised units
1,618 1,586
*Excludes Red Robin’s Burger Works fast casual locations (60 and
45 operating weeks in the third quarter of 2013 and 2012,
respectively).
Other Results
Depreciation and amortization costs had a slight increase from
$13.3 million in the third quarter of 2012 to $13.4 million in the
third quarter of 2013.
General and administrative costs were $20.6 million, an increase
of $1.7 million from the third quarter of 2012 due mainly to an
increase in salaries and benefits related to investments in talent
to support value-enhancing initiatives. Selling expenses were $6.8
million in the third quarter of 2013, an increase from $5.5 million
a year ago, primarily due to increased television advertising.
The Company had an effective tax rate of 24.6% in the third
quarter of 2013, compared to a 25.5% rate in the same period a year
ago.
Restaurant Openings
As of the end of the third quarter of 2013, there were 345
Company-owned Red Robin® restaurants, five Red Robin’s Burger
Works® and 135 franchised Red Robin® restaurants – a total of 485
locations. In the third quarter of 2013, the Company opened six new
Red Robin® restaurants and franchisees opened two new Red Robin®
restaurants.
Balance Sheet and Liquidity
On October 6, 2013, the Company had cash and cash equivalents of
$18.0 million and total debt of $90.9 million, including $9.4
million of capital lease liabilities.
Year to date through the third quarter of 2013, cash generated
from operations totaled $82.2 million compared to $72.3 million for
the same period in 2012, and capital investments amounted to $50.4
million compared to $42.9 million through the third quarter of
2012.
During the third quarter, the Company repurchased 36,888 shares
for a total of $2.5 million under its share repurchase
authorization.
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
close to 4.0% 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 $75 million. In 2013, the Company plans to open 21
new company-owned Red Robin® restaurants and one Red Robin’s Burger
Works® restaurant. The Company also plans to complete the remodel
of 20 Red Robin® restaurants as part of its brand transformation
initiative.
Restaurant-level operating profit margins in 2013 are expected
to be approximately 21.7%.
General and administrative costs are expected to exceed $92
million, while selling expenses are expected to be approximately
2.9% of sales. Depreciation is projected to be below $59
million.
The income tax rate in 2013 is expected to be approximately
24.0%.
The sensitivity of the Company’s earnings per diluted share to a
1% change in guest counts for fiscal 2013 is estimated to be $0.28
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 $0.07, and a change of $145,000
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
third quarter 2013 results today at 10:00 a.m. ET. The conference
call number is (888) 637-7738, or for international callers (913)
981-4904. 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 Monday, November
11, 2013. The replay can be accessed by dialing (877) 870-5176, or
(858) 384-5517 for international callers. The conference ID is
9717363. The webcast replay will also be available on the Company’s
website until midnight on Sunday, December 29, 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 491 Red Robin locations across the
United States and Canada, including 351 company-owned Red Robin
restaurants and five Red Robin’s Burger Works locations, and 135
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 restaurant sales growth, new restaurant openings,
long-term initiatives, brand transformation initiative, future
economic performance, anticipated costs, expenses and other
financial measures and capital expenditures and investments,
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 Forty Weeks Ended
October 6, September 30, October
6, September 30, 2013 2012
2013 2012 Revenues: Restaurant revenue $
226,844 $ 209,754 $ 762,647 $ 724,328 Franchise royalties, fees and
other revenue 3,829 3,563 12,674 12,125
Total revenues 230,673 213,317 775,321
736,453 Costs and expenses:
Restaurant operating costs (exclusive of
depreciation and amortization shown separately below):
Cost of sales 57,253 52,066 190,259 182,945 Labor 76,624 71,729
255,154 243,410 Other operating 29,463 28,374 95,016 94,656
Occupancy 17,132 16,309 56,484 53,213 Depreciation and amortization
13,436 13,284 44,589 42,468 General and administrative 20,647
18,986 71,480 63,388 Selling 6,834 5,483 21,995 20,532 Pre-opening
costs 2,482 1,250 4,607 2,835 Total
costs and expenses 223,871 207,481 739,584
703,447 Income from operations 6,802 5,836 35,737
33,006 Other expense: Interest expense, net and other
624 1,093 2,387 4,193 Income before
income taxes 6,178 4,743 33,350 28,813 Provision for income taxes
1,517 1,210 8,070 6,974 Net income $
4,661 $ 3,533 $ 25,280 $ 21,839 Earnings per share: Basic $ 0.33 $
0.25 $ 1.78 $ 1.50 Diluted $ 0.32 $ 0.24 $ 1.75 $ 1.48 Weighted
average shares outstanding: Basic 14,328 14,300
14,189 14,517 Diluted 14,600 14,539
14,472 14,778
RED ROBIN GOURMET BURGERS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
amounts)
(Unaudited)
October 6, 2013 December 30, 2012
Assets: Current Assets: Cash and cash equivalents $ 17,964 $
22,440 Accounts receivable, net 14,388 16,386 Inventories 21,276
18,371 Prepaid expenses and other current assets 10,952 13,439
Deferred tax asset and other 3,608 3,868
Total current assets 68,188 74,504
Property and equipment, net 437,508 413,258 Goodwill
62,525 62,525 Intangible assets, net 36,108 37,203 Other assets,
net 9,733 9,642 Total assets $ 614,062
$ 597,132
Liabilities and Stockholders’
Equity: Current Liabilities: Trade accounts payable $ 17,279 $
14,241 Construction related payables 20,388 4,694 Accrued payroll
and payroll related liabilities 40,260 31,476 Unearned revenue, net
20,032 28,187 Accrued liabilities and other 24,925
23,685 Total current liabilities 122,884
102,283 Deferred rent 50,953 44,801
Long-term portion of credit facility 81,500 125,000 Long-term
portion of capital lease obligations 8,630 9,211 Other non-current
liabilities 9,217 8,918 Total
liabilities 273,184 290,213
Stockholders’ Equity:
Common stock, $0.001 par value: 30,000
shares authorized; 17,843 and 17,499 shares issued; 14,345 and
13,999 shares outstanding
18 17
Preferred stock, $0.001 par value: 3,000
shares authorized; no shares issued and outstanding
- - Treasury stock, 3,498 and 3,500 shares, at cost (108,899 )
(107,589 ) Paid-in capital 195,979 185,974 Accumulated other
comprehensive (loss) gain, net of tax (12 ) 5 Retained earnings
253,792 228,512 Total stockholders’
equity 340,878 306,919 Total
liabilities and stockholders’ equity $ 614,062 $ 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 forty weeks ended October
6, 2013 and September 30, 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 Forty
Weeks Ended October 6, September 30,
October 6, September 30, 2013
2012 2013 2012 Restaurant revenues $ 226,844
98.3 % $ 209,754 98.3 % $ 762,647
98.4 % $ 724,328 98.4 %
Restaurant operating costs (exclusive of depreciation and
amortization shown separately below): Cost of sales 57,253 25.2
52,066 24.8 190,259 24.9 182,945 25.3 Labor 76,624 33.8 71,729 34.2
255,154 33.5 243,410 33.6 Other operating 29,463 13.0 28,374 13.5
95,016 12.5 94,656 13.1 Occupancy 17,132 7.6 16,309
7.8 56,484 7.4 53,213 7.3 Restaurant-level operating
profit 46,372 20.4 41,276 19.7 165,734 21.7
150,104 20.7 Add – Franchise royalties, fees and
other revenue 3,829 1.7 3,563 1.7 12,674 1.6 12,125 1.6 Deduct –
other operating: Depreciation and amortization 13,436 5.8 13,284
6.2 44,589 5.8 42,468 5.8 General and administrative 20,647 9.0
18,986 8.9 71,480 9.2 63,388 8.6 Selling 6,834 3.0 5,483 2.6 21,995
2.8 20,532 2.8 Pre-opening costs 2,482 1.1 1,250 0.6
4,607 0.6 2,835 0.4 Total other operating
43,399 18.8 39,003 18.3 142,671 18.4 129,223
17.5 Income from operations 6,802 2.9 5,836 2.7 35,737 4.6
33,006 4.5 Interest expense, net and other 624 0.3 1,093 0.5
2,387 0.3 4,193 0.6 Income tax expense 1,517 0.7
1,210 0.6 8,070 1.0 6,974 0.9 Total other
2,141 0.9 2,303 1.1 10,457 1.3 11,167 1.5
Net income $ 4,661 2.0 % $ 3,533 1.7 % $ 25,280 3.3 % $
21,839 3.0 %
_____________________
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.
Red Robin Gourmet Burgers, Inc.Media Relations:Kevin
Caulfield, 303-846-5470Senior Director of
CommunicationsorInvestor Relations:Stuart Brown,
303-846-6000Chief Financial Officer
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