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 52 weeks ended December 29, 2013
compared to the 13 and 53 weeks ended December 30, 2012.
Financial Highlights
- Annual revenues exceeded $1.0 billion;
fiscal year 2013 comparable sales grew 4.0%
- Fourth quarter revenues were $241.9
million, an increase of 0.5% (12 weeks compared to 13 weeks);
comparable sales increased 3.7%
- Restaurant-level operating profit
margin increased to 21.7% from 20.6% (See Schedule II)
- GAAP earnings per diluted share were
$0.48 in the fourth quarter (12 weeks), compared to $0.45 a year
ago (13 weeks)
- Adjusted earnings per diluted share
were $0.62 in the fourth quarter (12 weeks) versus $0.59 (13 weeks)
(See Schedule I)
Net income for the 12 weeks ended December 29, 2013 was $7.0
million compared to $6.5 million for the 13 weeks ended December
30, 2012. For the 52 weeks ended December 29, 2013, net income was
$32.2 million compared to $28.3 million for the 53 weeks ended
December 30, 2012.
For the 12 weeks in the 2013 fiscal fourth quarter, GAAP
earnings per diluted share were $0.48 compared to $0.45 for the 13
weeks in the 2012 fourth quarter. Adjusted earnings per diluted
share were $0.62 for the 12 weeks ended December 29, 2013 compared
to $0.59 per diluted share for the 13 weeks ended December 30,
2012. The Company recorded an impairment charge and a non-recurring
special bonus totaling $3.1 million in the fourth quarter of fiscal
year 2013 while the 2012 fourth quarter was impacted by a $2.9
million debt refinancing charge.
GAAP earnings per diluted share for fiscal year 2013 were $2.22
compared to $1.93 in fiscal year 2012. On an adjusted basis, fiscal
2013 diluted earnings per share were $2.37 compared to $2.06 in the
prior year. See Schedule I for a reconciliation of adjusted net
income and earnings per share.
The 53rd week in fiscal year 2012 contributed an estimated $3.1
million to net income, or approximately $0.21 per diluted
share.
“In 2013 we engaged our guests through new service and
presentation, innovative new menu items, and targeted marketing
efforts,” said Steve Carley, Red Robin Gourmet Burgers, Inc. chief
executive officer. “Overall, we have made considerable progress in
transforming our brand and improving our guest experience but
remain mindful that there is still much to be done. 2014 will be a
year of continued focus and execution across our engagement,
efficiency, and expansion initiatives.”
Operating Results
Total Company revenues, which include Company-owned restaurant
revenues and franchise royalties, increased 0.5% to $241.9 million
for the 12 weeks ended December 29, 2013 from $240.7 million for
the 13 weeks ended December 30, 2012. For the 52 weeks ended
December 29, 2013, total Company revenues were $1.0 billion, an
increase of $40.1 million, or 4.1%, over total revenues of $977.1
million for the 53 weeks ended December 30, 2012.
System-wide restaurant revenues for the 12 weeks ended December
29, 2013 totaled $325.3 million, compared to $326.8 million for the
13 weeks ended December 30, 2013 at constant currency rates.
System-wide restaurant revenues for the 52 weeks ended December 29,
2013 increased 3.2% to $1.4 billion, compared to $1.3 billion for
the 53 weeks ended December 30, 2012.
Comparable restaurant revenues increased 3.7% in the fourth
quarter of fiscal year 2013 compared to the prior fiscal year on a
12-week comparable basis. In the fourth quarter, guest counts
decreased 1.4% while average guest check increased 5.1%. Comparable
restaurants included those Company-owned restaurants that have
achieved five full quarters of operations during the period
presented, and such restaurants are only included in our comparable
metrics if they are comparable for the entirety of both periods
presented. The Company’s comparable restaurant revenue growth is
calculated by comparing the same calendar weeks which, for fiscal
year 2012, vary from the Company’s fiscal reporting by one week.
Comparable restaurant revenues for fiscal year 2013 increased 4.0%
for Company-owned restaurants compared to a year ago.
Restaurant-level operating profit margins were 21.7% in the
fourth quarter of fiscal year 2013 compared to 20.6% in the fourth
quarter of fiscal year 2012, an improvement of 110 basis points.
The increased margins resulted primarily from the leverage of
higher sales on fixed 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.
Restaurant revenue performance
Casual Dining Restaurants(1) Q4 2013 Q4 2012
Average weekly sales per unit: Company-owned – Total
$ 56,012 $ 54,441 Company-owned – Comparable $ 56,016 $ 54,033
Franchised units $ 53,743 $ 52,232 Total operating weeks(2):
Company-owned units 4,227 4,330 Franchised units 1,632 1,726
(1) Excludes Red Robin’s Burger Works fast casual
restaurants.
(2) The fourth quarter of fiscal year 2013 had 12 weeks as
compared to 13 weeks in the fourth quarter of fiscal year 2012.
Other Results
Depreciation and amortization costs increased slightly from
$13.0 million in the fourth quarter of 2012 to $13.6 million in the
fourth quarter of fiscal year 2013.
General and administrative costs were $22.8 million, an increase
of $2.3 million from the fourth quarter of fiscal year 2012 due
mainly to an increase in salaries and benefits related to
investments in talent to support the Company’s business initiatives
as well as a $1.6 million non-recurring special bonus awarded by
the board.
Selling expenses were $8.0 million, or 3.3% of revenue, in the
fourth quarter of fiscal year 2013, an increase from $6.4 million,
or 2.7% of revenue, a year ago, primarily due to costs associated
with a 15.7% increase in gift card sales.
During fiscal year 2013, the Company determined that four
Company-owned restaurants were impaired. The Company recognized a
non-cash pre-tax impairment charge of $1.5 million resulting from
the projected future results of these restaurants.
The Company had an effective tax rate of 11.9% in the fourth
quarter of fiscal year 2013, compared to a 19.3% rate in the same
period a year ago. The effective tax rate for fiscal year 2013 was
21.8%, compared to 23.1% for fiscal year 2012.
Restaurant Development
As of the end of the fourth quarter of fiscal year 2013, there
were 355 Company-owned Red Robin® restaurants, six Red Robin’s
Burger Works® and 134 franchised Red Robin restaurants – a total of
495 restaurants. In the fourth quarter of fiscal year 2013, the
Company opened ten new Red Robin restaurants and relocated one as
well as opened one Red Robin’s Burger Works. During the full year
2013, the Company opened 21 new Red Robin restaurants and relocated
two as well as opened one Red Robin’s Burger Works. Franchisees
opened two and closed one Red Robin restaurant during 2013.
Under our brand transformation initiative, the Company remodeled
19 Red Robin restaurants to our new brand standards during
2013.
Balance Sheet and Liquidity
On December 29, 2013, the Company had cash and cash equivalents
of $17.1 million and total debt of $88.7 million, including $9.3
million of capital lease liabilities.
Cash generated from operations in fiscal year 2013 totaled
$113.5 million compared to $94.4 million in fiscal year 2012, and
fiscal year 2013 capital investments amounted to $78.9 million
compared to $60.0 million in the prior year.
During the fourth quarter, the Company repurchased 31,928 shares
for a total of $2.5 million under its share repurchase
authorization. In fiscal year 2013, the Company repurchased a total
of 68,816 shares for a total of $5.0 million.
Outlook for 2014
Red Robin’s 2014 fiscal year consists of 52 weeks ending on
December 28, 2014.
In fiscal year 2014, the Company expects comparable restaurant
sales growth in the low single digits. Additionally, the Company
plans to open 20 new Red Robin restaurants and five Red Robin’s
Burger Works resulting in total operating week growth of between 6
and 7%.
Capital investments in fiscal year 2014 are expected to total
between $85 million and $90 million. In addition to the new
restaurants, the Company also plans to remodel 50 Red Robin
restaurants as part of its brand transformation initiative.
Restaurant-level operating profit margins in fiscal year 2014
are expected to exceed 21.0% with increases in both commodity and
labor costs.
General and administrative costs are expected to be
approximately $93 million, while selling expenses are expected to
be approximately 3.1% of sales. Depreciation is projected to be
between $59 million and $60 million.
The income tax rate in fiscal year 2014 is expected to be
approximately 26.5%.
The sensitivity of the Company’s earnings per diluted share to a
1% change in guest counts for fiscal year 2014 is estimated to be
$0.30 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
approximately $200,000 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
fourth quarter and fiscal year 2013 results today at 10:00 a.m. ET.
The conference call number is (888) 224-1058, or for international
callers (913) 312-0400. 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 Friday, February
21, 2014. The replay can be accessed by dialing (877) 870-5176, or
(858) 384-5517 for international callers. The conference ID is
8276333. The webcast replay will also be available on the Company’s
website until midnight on April 29, 2014.
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 496 Red Robin restaurants across the
United States and Canada, including 356 company-owned Red Robin
restaurants and six Red Robin’s Burger Works restaurants, 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
strategic initiatives, restaurant sales, new restaurant openings
and operating weeks, capital investments including our brand
transformation initiative, future economic performance, anticipated
costs, expenses and other financial measures, certain statements
under the heading “Outlook for 2014” 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,” “will” 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 and
restaurant remodeling; 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)
Twelve
Weeks Ended
December 29,
2013
Thirteen
Weeks Ended
December 30,
2012
Fifty-two
Weeks Ended
December 29,
2013
Fifty-three
Weeks Ended
December 30,
2012
Revenues: Restaurant revenue $ 237,551 $ 236,666 $ 1,000,198
$ 960,994 Franchise royalties, fees and other revenue 4,375
4,013 17,049 16,138 Total revenues
241,926 240,679 1,017,247 977,132 Costs
and expenses:
Restaurant operating costs (exclusive of
depreciation
and amortization shown separately
below):
Cost of sales 59,978 59,696 250,237 242,641 Labor 79,959 79,690
335,113 323,100 Other operating 28,463 30,815 123,479 125,471
Occupancy 17,595 17,758 74,079 70,971 Depreciation and amortization
13,611 13,000 58,200 55,468 General and administrative 22,796
20,462 94,276 83,716 Selling 8,007 6,416 30,002 27,082 Pre-opening
costs 1,923 639 6,530 3,474 Asset impairment charge 1,517
- 1,517 - Total costs and expenses
233,849 228,476 973,433 931,923 Income
from operations 8,077 12,203 43,814 45,209 Other expense:
Interest expense, net and other 178 4,159
2,565 8,352 Income before income taxes 7,899 8,044
41,249 36,857 Provision for income taxes 940 1,552
9,010 8,526 Net income $ 6,959 $ 6,492 $ 32,239 $
28,331 Earnings per share: Basic $ 0.49 $ 0.46 $ 2.27 $ 1.97
Diluted $ 0.48 $ 0.45 $ 2.22 $ 1.93 Weighted average shares
outstanding: Basic 14,346 14,085 14,225
14,411 Diluted 14,607 14,326 14,510
14,669
RED ROBIN GOURMET BURGERS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
December 29, 2013 December
30, 2012 Assets: Current Assets: Cash and cash
equivalents $ 17,108 $ 22,440 Accounts receivable, net 22,568
16,386 Inventories 21,992 18,371 Prepaid expenses and other current
assets 15,766 13,439 Income tax receivable 260 858 Deferred tax
asset and other 2,952 3,010
Total current assets
80,646 74,504 Property and
equipment, net 444,727 413,258 Goodwill 62,525 62,525 Intangible
assets, net 36,800 37,203 Other assets, net 9,947
9,642
Total assets
$ 634,645 $ 597,132
Liabilities and
Stockholders’ Equity: Current Liabilities: Trade accounts
payable $ 19,117 $ 14,241 Construction related payables 14,682
4,694 Accrued payroll and payroll related liabilities 45,919 31,476
Unearned revenue 35,740 28,187 Accrued liabilities 23,628 22,901
Current portion of capital lease obligations 826
784
Total current liabilities
139,912 102,283 Deferred rent
51,985 44,801 Long-term debt 79,375 125,000 Long-term portion of
capital lease obligations 8,513 9,211 Other non-current liabilities
7,457 8,918
Total liabilities
287,242 290,213 Stockholders’
Equity:
Common stock, $0.001 par value: 30,000
shares authorized; 17,851 and 17,499 shares issued; 14,350 and
13,999 shares outstanding
18 17
Preferred stock, $0.001 par value: 3,000
shares authorized; no shares issued and outstanding
- - Treasury stock, 3,501 and 3,500 shares, at cost (110,486 )
(107,589 ) Paid-in capital 197,145 185,974 Accumulated other
comprehensive (loss) gain, net of tax (25 ) 5 Retained earnings
260,751 228,512 Total stockholders’
equity 347,403 306,919 Total
liabilities and stockholders’ equity $ 634,645 $ 597,132
Schedule I
Reconciliation of Non-GAAP Results to GAAP
Results
(In thousands, except percentage
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 12 and 52 weeks ended December 29, 2013 and the 13 and
53 weeks ended December 30, 2012, net income and basic and diluted
earnings per share, excluding the effects of asset impairment
charges in the fourth quarter of fiscal year 2013 and the
refinancing of the Company’s debt in the fourth quarter of fiscal
year 2012. 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. Income tax expense
related to the asset impairment charges and the loss on debt
refinancing was calculated based on the change in the total tax
provision calculation after adjusting for the identified items. The
non- GAAP measurements are intended to supplement the presentation
of the Company’s financial results in accordance with GAAP.
Twelve
Weeks Ended
December 29,
2013
Thirteen
Weeks Ended
December 30,
2012
Fifty-two
Weeks Ended
December 29,
2013
Fifty-three
Weeks Ended
December 30,
2012
Net income as reported $ 6,959 $ 6,492 $ 32,239 $ 28,331
Loss on debt refinancing - 2,919 - 2,919 Asset impairment charges
1,517 - 1,517 - Non-recurring bonus 1,626 - 1,626 - Income tax
expense (974 ) (1,020 ) (974 ) (1,020 )
Adjusted net income $ 9,128 $ 8,391 $ 34,408
$ 30,230 Basic net income per share: Net
income as reported $ 0.49 $ 0.46 $ 2.27 $ 1.97 Loss on debt
refinancing - 0.21 - 0.20 Asset impairment charges 0.11 - 0.11 -
Non-recurring special bonus 0.11 - 0.11 - Income tax expense
(0.07 ) (0.07 ) (0.07 ) (0.07 )
Adjusted earnings per share - basic $ 0.64 $ 0.60 $
2.42 $ 2.10 Diluted net income per share: Net
income as reported $ 0.48 $ 0.45 $ 2.22 $ 1.93 Loss on debt
refinancing - 0.20 - 0.20 Asset impairment charges 0.10 - 0.11 -
Non-recurring special bonus 0.11 - 0.11 - Income tax expense
(0.07 ) (0.06 ) (0.07 ) (0.07 )
Adjusted earnings per share - diluted $ 0.62 $ 0.59 $
2.37 $ 2.06 Weighted average shares
outstanding: Basic 14,346 14,085
14,225 14,411 Diluted 14,607
14,326 14,510 14,669
Schedule II
Reconciliation of Non-GAAP Restaurant-Level
Operating Profit to Income
from 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 12 and 52 weeks ended December 29,
2013 and the 13 and 53 weeks ended December 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
December 29,
2013
Thirteen
Weeks Ended
December 30,
2012
Fifty-two
Weeks Ended
December 29,
2013
Fifty-three
Weeks Ended
December 30,
2012
Restaurant revenues $ 237,551 98.2 % $ 236,666
98.3 % $ 1,000,198 98.3 % $ 960,994 98.3 % Restaurant
operating costs (exclusive of depreciation and amortization shown
separately below): Cost of sales 59,978 25.2 % 59,696 25.2 %
250,237 25.0 % 242,641 25.2 % Labor 79,959 33.7 % 79,690 33.7 %
335,113 33.5 % 323,100 33.6 % Other operating 28,463 12.0 % 30,815
13.0 % 123,479 12.3 % 125,471 13.1 % Occupancy 17,595 7.4 %
17,758 7.5 % 74,079 7.4 % 70,971 7.4 %
Restaurant-level operating profit 51,556 21.7 %
48,707 20.6 % 217,290 21.7 % 198,811 20.7 %
Add – Franchise royalties, fees and other revenue 4,375 1.8 % 4,013
1.7 % 17,049 1.7 % 16,138 1.7 % Deduct – other operating:
Depreciation and amortization 13,611 5.6 % 13,000 5.4 % 58,200 5.7
% 55,468 5.7 % General and administrative 22,796 9.4 % 20,462 8.5 %
94,276 9.3 % 83,716 8.6 % Selling 8,007 3.3 % 6,416 2.7 % 30,002
2.9 % 27,082 2.8 % Pre-opening costs 1,923 0.8 % 639 0.3 % 6,530
0.6 % 3,474 0.4 % Asset impairment charge 1,517 0.6 %
- 0.0 % 1,517 0.1 % - 0.0 % Total other operating
47,854 19.8 % 40,517 16.8 % 190,525 18.7 %
169,740 17.4 % Income from operations 8,077 3.3 %
12,203 5.1 % 43,814 4.3 % 45,209 4.6 % Interest expense, net
and other 178 0.1 % 4,159 1.7 % 2,565 0.3 % 8,352 0.9 % Income tax
expense 940 0.4 % 1,552 0.6 % 9,010 0.9 %
8,526 0.9 % Total other 1,118 0.5 % 5,711 2.4
% 11,575 1.1 % 16,878 1.7 % Net income $ 6,959
2.9 % $ 6,492 2.7 % $ 32,239 3.2 % $ 28,331 2.9 %
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.
Media RelationsCoyne PRJennifer DeNick, (973)
588-2000orInvestor RelationsRed Robin Gourmet Burgers,
Inc.Stuart Brown, Chief Financial Officer, (303) 846-6000
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