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 20, 2014 compared to
the 16 weeks ended April 21, 2013.
First Quarter Financial Highlights
- First quarter revenues were $340.5
million, an increase of 11.1%
- Comparable restaurant revenue increased
5.4%
- Restaurant-level operating profit, as a
percent of restaurant revenue, increased to 22.4% from 21.5% (See
Schedule I)
- Earnings per diluted share increased
24.2% to $0.82 compared to $0.66 for the same period a year
ago
- Net income increased 26.0% to $11.9
million compared to $9.5 million for the same period a year
ago
“We are pleased with Red Robin’s first quarter performance,
which included strong comparable restaurant revenue growth and
productivity gains that resulted in solid EPS growth,” said Steve
Carley, Red Robin Gourmet Burgers, Inc. chief executive officer.
“The success of our new FinestTM line of Black Angus burgers as
well as increased media contributed to our higher sales. Looking
ahead, we will continue to focus on our expansion, efficiency and
engagement initiatives which should help to offset headwinds and
position us well for the future.”
Operating Results
Total Company revenues, which include Company-owned restaurant
revenue and franchise royalties, increased 11.1% to $340.5 million
in the first quarter of 2014 from $306.3 million in the first
quarter of 2013.
System-wide restaurant revenue (including franchised units) for
the first quarter of 2014 totaled $457.3 million, compared to
$415.6 million for the first quarter in 2013 at constant currency
rates.
Comparable restaurant revenue increased 5.4% in the first
quarter of 2014 compared to the prior year. In the first quarter,
guest counts increased 0.5%, supported by increased media this
year, while average guest check increased 4.9%. Comparable
restaurants are 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.
Restaurant-level operating profit margins (a non-GAAP financial
measure) were 22.4% in the first quarter of 2014 compared to 21.5%
in the first quarter of fiscal year 2013, an improvement of 90
basis points. The increased margins resulted primarily from the
leverage of a higher average check on fixed costs and effective
labor management. 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 (1) Q1 2014
Q1 2013 Average weekly sales per unit:
Company-owned – Total $ 58,382
$ 55,978 Company-owned – Comparable $ 58,941
$ 55,906 Franchised units (2) $ 57,568
$ 53,694 Total operating weeks:
Company-owned units 5,718 5,364 Franchised
units 2,124 2,128
(1) Excludes Red Robin's Burger Works® fast casual
restaurants
(2) Constant currency rates
Other Results
Depreciation and amortization costs increased $1.1 million to
$18.9 million in the first quarter of 2014 compared to $17.8
million in the first quarter of 2013. The increased depreciation
was primarily related to new restaurants opened and acquired since
the first quarter 2013 and restaurants remodeled under our brand
transformation initiative.
General and administrative costs were $32.1 million, an increase
of $3.1 million from the first quarter of fiscal year 2013, due
mainly to an increase in salaries and benefits related to
investments in talent to support the Company’s business
initiatives.
Selling expenses were $10.3 million, or 3.1% of revenue, in the
first quarter of fiscal year 2014, an increase from $8.6 million,
or 2.8% of revenue, a year ago due to increased spending on
media.
Pre-opening and acquisition costs were $2.1 million in the first
quarter of fiscal year 2014 which included approximately $0.6
million of costs related to franchise acquisitions.
The Company had an effective tax rate of 27.0% in the first
quarter of fiscal year 2014, compared to a 23.9% rate in the same
period a year ago.
Restaurant Development and Acquisitions
As of the end of the first quarter of 2014, there were 362
Company-owned Red Robin® restaurants, five Red Robin's Burger
Works® and 129 franchised Red Robin restaurants – a total of 496
restaurants. In the first quarter of fiscal year 2014, the Company
opened four new Red Robin restaurants, and closed one full-service
and one Red Robin's Burger Works restaurant.
As previously announced, the Company acquired four franchised
restaurants in New York State in March for approximately $8.0
million. In addition, Red Robin has an agreement to acquire an
additional 32 franchised restaurants in the U.S. and Canada for
approximately $40 million, which is expected to close in late
summer.
Balance Sheet and Liquidity
As of April 20, 2014, the Company had cash and cash equivalents
of $14.6 million and total debt of $87.5 million, including $9.1
million of capital lease liabilities.
During the first quarter of 2014, the Company repurchased
approximately 108,000 shares for a total of $7.5 million under its
share repurchase authorization.
Outlook for 2014
The Company's outlook does not include the impact of the
anticipated acquisition of 32 restaurants which is expected to
close in late summer.
Red Robin’s 2014 fiscal year consists of 52 weeks and will end
on December 28, 2014.
In fiscal year 2014, the Company expects comparable restaurant
revenue 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, excluding acquisitions. In
addition to the new restaurant openings, the Company also plans to
remodel at least 50 Red Robin restaurants as part of its brand
transformation initiative.
Restaurant-level operating profit margins in fiscal year 2014
are expected to be approximately 21.4%.
General and administrative costs are expected to be
approximately $93 million, while selling expenses are expected to
be approximately 3.2% of sales. Depreciation is projected to be
approximately $62 million.
The income tax rate in fiscal year 2014 is expected to be
approximately 27.5%.
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
first quarter 2014 results today at 10:00 a.m. ET. The conference
call number is (888) 569-5033, or for international callers (719)
325-2456. 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 27,
2014. The replay can be accessed by dialing (877) 870-5176, or
(858) 384-5517 for international callers. The conference ID is
2282970.
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
Authority™, 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. Red Robin offers a variety of options behind the bar,
including its extensive selection of local and regional beers, and
innovative adult beer shakes and cocktails, recently earning the
restaurant the 2014 VIBE Vista Award for Best Beer Program in a
Multi-Unit Chain Restaurant. There are close to 500 Red Robin
restaurants across the United States and Canada, including those
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, franchise acquisition, including
anticipated closing timeline, future economic performance,
anticipated costs, expenses and other financial measures,
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,” “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 (including
franchised unit acquisitions) 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) (Unaudited) Sixteen Weeks
Ended April 20, 2014 April 21, 2013
Revenues: Restaurant revenue $ 334,995 $ 301,313 Franchise
royalties, fees and other revenue 5,489 5,036 Total revenues
340,484 306,349 Costs and expenses:
Restaurant operating costs (exclusive of
depreciation and amortization shown separately below):
Cost of sales 84,220 74,982 Labor 110,921 101,882 Other operating
40,597 37,090 Occupancy 24,282 22,573 Depreciation and amortization
18,886 17,834 General and administrative 32,100 28,967 Selling
10,323 8,641 Pre-opening costs and acquisition costs 2,113
834 Total costs and expenses 323,442 292,803 Income
from operations 17,042 13,546 Other expense: Interest
expense, net and other 674 1,089 Income before income
taxes 16,368 12,457 Provision for income taxes 4,424 2,977
Net income $ 11,944 $ 9,480 Earnings per share: Basic $ 0.83
$ 0.67 Diluted $ 0.82 $ 0.66 Weighted average shares
outstanding: Basic 14,352 14,062 Diluted 14,592
14,341
RED ROBIN GOURMET BURGERS, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (In thousands)
(Unaudited) April 20, 2014 December 29,
2013 Assets: Current Assets: Cash and cash equivalents $
14,635 $ 17,108 Accounts receivable, net 14,326 22,568 Inventories
21,922 21,992 Prepaid expenses and other current assets 9,191
15,766 Deferred tax asset and other 2,959 3,212 Total
current assets 63,033 80,646 Property and
equipment, net 451,834 444,727 Goodwill 64,608 62,525 Intangible
assets, net 38,862 36,800 Other assets, net 11,165 9,947
Total assets $ 629,502 $ 634,645
Liabilities and Stockholders’ Equity: Current Liabilities:
Trade accounts payable $ 17,376 $ 19,117 Construction related
payables 14,105 14,682 Accrued payroll and payroll related
liabilities 38,701 45,919 Unearned revenue 27,037 35,740 Accrued
liabilities and other 26,999 24,454 Total current
liabilities 124,218 139,912 Deferred rent
54,597 51,985 Long-term debt 78,375 79,375 Long-term portion of
capital lease obligations 8,317 8,513 Other non-current liabilities
9,147 7,457 Total liabilities 274,654 287,242
Stockholders’ Equity: Common stock; $0.001 par value:
30,000 shares authorized; 17,845 and 17,851 shares issued; 14,298
and 14,350 shares outstanding 18 18 Preferred stock, $0.001 par
value: 3,000 shares authorized; no shares issued and outstanding
-
-
Treasury stock 3,547 and 3,501 shares, at cost (116,005 ) (110,486
) Paid-in capital 198,190 197,145 Accumulated other comprehensive
loss, net of tax (50 ) (25 ) Retained earnings 272,695
260,751 Total stockholders’ equity 354,848 347,403
Total liabilities and stockholders’ equity $ 629,502
$ 634,645
Schedule I
Reconciliation of Non-GAAP Restaurant-Level
Operating Profit to Incomefrom Operations and Net
Income(In thousands)
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 revenue 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 16 weeks ended April 20, 2014 and the
16 weeks ended April 21, 2013, expressed as a percentage of total
revenues, except for the components of restaurant-level operating
profit, which are expressed as a percentage of restaurant
revenue.
Sixteen Weeks Ended April 20, 2014
April 21, 2013 Restaurant revenue $ 334,995
98.4 % $ 301,313 98.4 % Restaurant operating
costs (exclusive of depreciation and amortization shown separately
below): Cost of sales 84,220 25.1 % 74,982 24.9 % Labor 110,921
33.1 % 101,882 33.8 % Other operating 40,597 12.1 % 37,090 12.3 %
Occupancy 24,282 7.3 % 22,573 7.5 %
Restaurant-level operating profit 74,975 22.4 %
64,786 21.5 % Add – Franchise royalties, fees
and other revenues 5,489 1.6 % 5,036 1.6 % Deduct – other
operating: Depreciation and amortization 18,886 5.5 % 17,834 5.8 %
General and administrative 32,100 9.4 % 28,967 9.5 % Selling 10,323
3.1 % 8,641 2.8 % Pre-opening and acquisition costs 2,113
0.6 % 834 0.3 % Total other operating 63,422
18.6 % 56,276 18.4 % Income from
operations 17,042 5.0 % 13,546 4.4 % Interest expense, net
and other 674 0.2 % 1,089 0.3 % Income tax expense 4,424
1.3 % 2,977 1.0 % Total other 5,098
1.5 % 4,066 1.3 % Net income $ 11,944
3.5 % $ 9,480 3.1 %
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
revenue and not total revenues.
Media Relations:Coyne PRJennifer DeNick,
973-588-2000orInvestor Relations:Red Robin Gourmet Burgers,
Inc.Stuart Brown, 303-846-6000Chief Financial Officer
Red Robin Gourmet Burgers (NASDAQ:RRGB)
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