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 quarter ended April 17, 2016.
First Quarter 2016 Financial Highlights Compared to First
Quarter 2015
- Total revenues were $402.1 million, an
increase of 1.8%
- Comparable restaurant revenue decreased
2.6% (using constant currency rates)
- Restaurant-level operating profit, as a
percent of restaurant revenue, was 22.5% compared to 23.0% (see
Schedule II)
- Adjusted EBITDA was $51.0 million, an
increase of 8.5% from $47.0 million (see Schedule III)
- GAAP earnings per diluted share was
$1.03 compared to $1.16. Adjusted earnings per diluted share
was $1.27, an increase of 15.5% from $1.10 (See
Schedule I)
- Net income was $14.2 million compared
to $16.6 million. Adjusted net income was $17.6 million, an
increase of 12.5% from $15.6 million (see Schedule I)
- Acquired 13 franchised restaurants in
Texas
Adjusted net income for the sixteen weeks
ended April 17, 2016 increased 12.5% to $17.6 million
from $15.6 million for the same period a year ago. Excluding the
impact of $0.20 per diluted share related to litigation
contingencies, and a charge of $0.04 per diluted share for
restaurant impairment, adjusted earnings per diluted share for the
sixteen weeks ended April 17, 2016 was $1.27, an
increase of 15.5% from $1.10 for the same period a year
ago. See Schedule I for a reconciliation of adjusted net income and
adjusted earnings per share (each, a non-GAAP financial measure) to
net income and earnings per share, respectively.
“We achieved higher revenues and adjusted earnings per share in
the first quarter of 2016 compared to a year ago, and we were
encouraged by the sequential improvement in our performance versus
the fourth quarter of 2015,” said Steve Carley, Red Robin Gourmet
Burgers, Inc. chief executive officer. “Nevertheless, we were
disappointed, particularly with our guest counts. We have a solid
strategy for long-term success, including a number of operations
and marketing initiatives. We believe these efforts will generate
superior results in a highly competitive casual dining
environment.”
Operating Results
Total Company revenues, which primarily include Company-owned
restaurant revenue and franchise royalties, increased 1.8% to
$402.1 million in the first quarter of 2016 from $394.9 million in
the first quarter of 2015. Restaurant revenues increased $19.6
million due to new restaurant openings and acquired
restaurants, partially offset by an $11.0 million, or 2.9%,
decrease in comparable restaurant revenue, which included a $1.2
million, or 0.3%, unfavorable foreign exchange impact, and $0.4
million from closed restaurants. Franchise and other revenue
decreased $1.0 million, primarily driven by a decrease in gift card
breakage revenue from the same period a year ago.
System-wide restaurant revenue (including franchised units) for
the first quarter of 2016 totaled $493.0 million, compared to
$488.1 million for the first quarter in 2015.
Using constant currency rates, comparable revenue decreased 2.6%
in the first quarter of 2016 compared to the same period a year
ago, driven by a 4.1% decrease in guest counts, which was partially
offset by a 1.5% increase in average guest check. Comparable
restaurants are those Company-owned restaurants that have operated
five full quarters during the period presented, and such
restaurants are only included in the comparable metrics if they are
comparable for the entirety of both periods presented.
Restaurant-level operating profit margin (a non-GAAP financial
measure) was 22.5% in the first quarter of 2016 compared to 23.0%
in the same period a year ago. First quarter 2015 included an 80
basis point benefit from lower health care and workers’
compensation costs. Excluding this benefit a year ago, the 30 basis
point margin increase in the first quarter of 2016 resulted from a
70 basis point increase in labor costs, a 50 basis point increase
in other restaurant operating expenses, and a 40 basis point
increase in occupancy costs, offset by a 190 basis point decrease
in cost of sales. 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
(1)
Q1 2016 Q1
2015 Average weekly sales per unit: Company-owned – Total (2) $
56,950 $ 59,032 Company-owned – Comparable (2) $ 57,412 $ 58,930
Franchised units – Comparable $ 63,670 $ 63,641 Total operating
weeks: Company-owned units 6,931 6,526 Franchised units 1,532 1,584
_________________________________
(1) Excludes Red Robin Burger Works® fast casual
restaurants, which had 157 and 134 total operating weeks in the
first quarter of 2016 and 2015. (2) Calculated using constant
currency rates. Using historical currency rates, the average weekly
sales per unit in the first quarter of 2015 for Company-owned –
Total and Company-owned – Comparable was $59,207 and $59,113.
Other Results
Depreciation and amortization costs increased to $24.0 million
in the first quarter of 2016 from $23.0 million in the first
quarter of 2015. The increased depreciation was primarily related
to restaurants remodeled under the Brand Transformation Initiative
and new restaurants opened since the first quarter 2015, partially
offset by a change in estimated useful lives of certain assets.
General and administrative costs were $35.9 million, or 8.9% of
total revenues, in the first quarter of 2016, compared to $35.0
million, or 8.9% of total revenues in the same period a year ago.
Excluding $3.9 million of litigation contingencies, general and
administrative costs decreased 8.6% to $32.0 million from the same
period a year ago, primarily due to a decrease in incentive
compensation.
Selling expenses decreased to $11.4 million, or 2.8% of total
revenues, in the first quarter of 2016, compared to $13.1 million,
or 3.3%, of total revenues during the same period in the prior
year. The decrease was primarily due to lower spending on
television media in the first quarter.
Pre-opening costs were $1.7 million in the first quarter of
2016, compared to $1.0 million in the same period a year ago. The
increase was primarily due to timing of restaurant openings. In the
first quarter of 2016, the Company recorded $0.7 million of
acquisition costs related to the acquired franchised
restaurants.
During the first quarter of 2016, the Company recognized a $0.8
million charge for asset impairment costs related to the relocation
of one restaurant.
The Company had an effective tax rate of 23.3% in the first
quarter of fiscal year 2016, compared to a 27.3% effective tax rate
in the same period a year ago.
Restaurant Development and Acquisitions
As of the end of the first quarter of 2016, there were 443
Company-owned Red Robin® restaurants, 11 Red Robin Burger Works®
and 86 franchised Red Robin restaurants, for a total of 540
restaurants. During the first quarter, the Company opened two Red
Robin restaurants and one Red Robin Burger Works. The Company also
relocated one Red Robin Burger Works.
As previously announced, on March 21, 2016, the Company
completed the acquisition of 13 franchised restaurants in the U.S.
for approximately $40.0 million, including $18.8 million for four
properties and other leasehold improvements and equipment based on
the preliminary purchase price allocation. The 13 franchised
restaurants generate approximately $35.0 million in restaurant
revenue on an annualized basis.
Under the Brand Transformation Initiative, the Company completed
32 restaurant remodels during the first quarter 2016. The Company
has over 350 restaurants conforming to its new brand standards,
including new restaurant openings, and will substantially complete
the remodeling of Company-owned restaurants by the end of 2016.
Balance Sheet and Liquidity
As of April 17, 2016, the Company had cash and cash equivalents
of $25.2 million and total debt of $262.2 million, including $7.8
million of capital lease liabilities. The Company funded the
acquisition, restaurant remodels, construction of new restaurants
and other capital expenditures with cash flow from operations and
incremental borrowings of $51.5 million on its credit facility
during the first quarter 2016. As of April 17, 2016, the Company
had outstanding borrowings under its credit facility of $253.5
million, in addition to amounts issued under letters of credit
of $8.3 million, which reduced the amount available under its
credit facility but were not recorded as debt. The Company's
current credit facility provides a total borrowing capacity of
$325 million.
Outlook for 2016
Red Robin’s 2016 fiscal year consists of 52 weeks, which will
end on December 25, 2016 (“2016”).
The Company expects total revenues to grow around 8.0% in 2016,
comprised of flat to slightly negative comparable revenue growth,
with the remainder due to increased operating weeks associated with
locations opened in 2015 and 2016 and acquired restaurants. The
Company plans to open approximately 25 new Red Robins and three
Burger Works in 2016.
Earnings before interest taxes and depreciation (EBITDA) is
expected to range between $150 million and $155 million in 2016.
EBITDA is a non-GAAP number and defined in Schedule III.
Depreciation and amortization is projected to be between $82
million and $84 million in 2016 while interest expense is expected
to be approximately $6 million. The 2016 annual tax rate is
projected to be approximately 23.0%.
The Company expects capital investments of around $190 million,
which includes the 13 restaurants acquired in the first quarter. In
addition to new restaurant openings, the Company expects to remodel
around 70 locations as part of its Brand Transformation
Initiative.
The sensitivity of the Company’s earnings per diluted share to a
1% change in guest counts for fiscal year 2016 is estimated to be
$0.34 on an annualized basis. Additionally, a 10 basis point change
in restaurant-level operating profit margin is expected to impact
earnings per diluted share by approximately $0.09, and a change of
approximately $143,000 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 2016 results today at 10:00 a.m. ET. The conference
call number is (888) 668-1637, or for international callers (913)
312-1384. The financial information that the Company intends to
discuss during the conference call is included in this press
release and will be available in the “Company” tab on the Company’s
website, www.redrobin.com, by selecting the “Investor Relations”
link, then the “News Releases” link. 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 24,
2016. The replay can be accessed by dialing (877) 870-5176, or
(858) 384-5517 for international callers. The conference ID is
6044426.
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., and under the trade
name Red Robin Gourmet Burgers and Brews, 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. Whether a family dining with kids, adults grabbing a
drink at the bar, or teens enjoying a meal, Red Robin offers an
unparalleled experience for its guests. In addition to its
many burger offerings, Red Robin serves a wide variety of salads,
soups, appetizers, entrees, desserts and signature
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, earning the
restaurant a VIBE Vista Award for Best Beer Program in a
Multi-Unit Chain Restaurant. There are more than 540 Red Robin
restaurants across the United States and Canada, including Red
Robin Burger Works® locations and those operating under
franchise agreements. Red Robin… YUMMM®! Connect with Red Robin on
Facebook, Instagram, and Twitter.
Forward-Looking Statements
Forward-looking statements in this press release regarding our
strategic initiatives, future performance, revenues, EBITDA,
capital investments, anticipated number and timing of new
restaurant openings (including Red Robin Burger Works) and
operating weeks, the anticipated number and timing of restaurant
remodels under the Brand Transformation Initiative, anticipated
costs, expenses including depreciation, amortization, and interest
expense, tax rate, sensitivity of earnings per share and other
projected financial measures, statements under the heading “Outlook
for 2016” 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 our business
improvement initiatives; the ability to fulfill planned expansion
and restaurant remodeling; the effectiveness of our marketing
strategies and initiatives to achieve restaurant sales growth; ;
the cost and availability of key food products, labor, and energy;
our ability to achieve anticipated revenue and cost savings from
our anticipated new technology systems and tools in the restaurants
and other initiatives; availability of capital or credit facility
borrowings; our ability to increase our to-go and other offerings;
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 17,
2016 April 19, 2015 Revenues: Restaurant revenue
$ 396,770 $ 388,509 Franchise royalties, fees and other revenue
5,356 6,392 Total revenues 402,126 394,901
Costs and expenses: Restaurant operating costs (exclusive of
depreciationand amortization shown separately below): Cost of sales
92,325 97,950 Labor 132,984 124,356 Other operating 49,708 46,584
Occupancy 32,498 30,147 Depreciation and amortization 23,951 23,003
General and administrative 35,880 34,995 Selling 11,408 13,066
Pre-opening costs and acquisition costs 2,372 955 Asset impairment
825 — Total costs and expenses 381,951 371,056
Income from operations 20,175 23,845 Other expense: Interest
expense, net and other 1,638 1,060 Income before
income taxes 18,537 22,785 Provision for income taxes 4,312
6,220 Net income $ 14,225 $ 16,565 Earnings per share: Basic
$ 1.04 $ 1.18 Diluted $ 1.03 $ 1.16 Weighted average
shares outstanding: Basic 13,635 14,077 Diluted 13,783 14,275
RED ROBIN GOURMET BURGERS,
INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In
thousands, except per share amounts)
(Unaudited)April 17,
2016
December 27,2015
Assets: Current Assets: Cash and cash equivalents $ 25,167 $
22,705 Accounts receivable, net 15,110 27,760 Inventories 28,679
28,223 Prepaid expenses and other current assets 14,636
18,052 Total current assets 83,592 96,740
Property and equipment, net 657,536 603,686 Goodwill 97,282
81,957 Intangible assets, net 44,799 39,573 Other assets, net
24,660 18,023 Total assets $ 907,869 $ 839,979
Liabilities and Stockholders’ Equity: Current
Liabilities: Trade accounts payable $ 21,279 $ 23,392 Construction
related payables 36,460 28,692 Accrued payroll and payroll related
liabilities 37,987 47,587 Unearned revenue 34,636 48,392 Accrued
liabilities and other 38,515 29,610 Total current
liabilities 168,877 177,673 Deferred rent
68,399 66,470 Long-term debt 254,375 202,875 Long-term portion of
capital lease obligations 7,257 7,441 Other non-current liabilities
16,628 11,209 Total liabilities 515,536
465,668 Stockholders’ Equity:
Common stock; $0.001 par value: 45,000
shares authorized; 17,851 and 17,851shares issued; 13,652 and
13,628 shares outstanding
18 18
Preferred stock, $0.001 par value: 3,000
shares authorized; no shares issued andoutstanding
— — Treasury stock 4,199 and 4,223 shares, at cost (166,371 )
(167,339 ) Paid-in capital 207,344 205,995 Accumulated other loss,
net of tax (3,899 ) (5,379 ) Retained earnings 355,241
341,016 Total stockholders’ equity 392,333 374,311
Total liabilities and stockholders’ equity $ 907,869
$ 839,979
Schedule I
Reconciliation of Non-GAAP Results to GAAP
Results(In thousands, except per share 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 16 weeks ended April 17, 2016 and the 16 weeks ended
April 19, 2015, net income and basic and diluted earnings per
share, excluding the effects of litigation contingencies,
restaurant closure expense, and a change in accounting estimate for
gift card breakage. The Company believes that the presentation of
net income and earnings per share exclusive of the identified item
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 change in accounting estimate was calculated based
on the change in the total tax provision calculation after
adjusting for the identified item. The non-GAAP measurements are
intended to supplement the presentation of the Company’s financial
results in accordance with GAAP.
Sixteen Weeks Ended April 17, 2016
April 19, 2015 Net income as reported $ 14,225 $
16,565 Litigation contingencies 3,900 — Asset impairment 825 —
Change in estimate for gift card breakage — (1,369 ) Income tax
benefit (expense) (1,356 ) 439 Adjusted net income $ 17,594
$ 15,635 Basic net income per share: Net
income as reported $ 1.04 $ 1.18 Litigation contingencies 0.29 —
Asset impairment 0.06 — Change in estimate for gift card breakage —
(0.10 ) Income tax benefit (expense) (0.10 ) 0.03 Adjusted
earnings per share - basic $ 1.29 $ 1.11
Diluted net income per share: Net income as reported $ 1.03 $ 1.16
Litigation contingencies 0.28 — Asset impairment 0.06 — Change in
estimate for gift card breakage — (0.09 ) Income tax benefit
(expense) (0.10 ) 0.03 Adjusted earnings per share - diluted
$ 1.27 $ 1.10 Weighted average shares
outstanding Basic 13,635 14,077 Diluted 13,783 14,275
Schedule II
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 impairment and closure 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 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 in our industry. The
table below sets forth certain unaudited information for the 16
weeks ended April 17, 2016 and the 16 weeks ended April 19, 2015,
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 17, 2016
April 19, 2015 Restaurant revenues $ 396,770
98.7 % $ 388,509 98.4 %
Restaurant operating costs (exclusive of
depreciation and amortizationshown separately below):
Cost of sales 92,325 23.3 % 97,950 25.2 % Labor 132,984 33.5 %
124,356 32.0 % Other operating 49,708 12.5 % 46,584 12.0 %
Occupancy 32,498 8.2 % 30,147 7.8 %
Restaurant-level operating profit 89,255 22.5 %
89,472 23.0 % Add – Franchise royalties, fees
and other revenue 5,356 1.3 % 6,392 1.6 % Deduct – other operating:
Depreciation and amortization 23,951 6.0 % 23,003 5.8 % General and
administrative expenses 35,880 8.9 % 34,995 8.9 % Selling 11,408
2.8 % 13,066 3.3 % Pre-opening & acquisition costs 2,372 0.6 %
955 0.2 % Asset impairment 825 0.2 % —
— % Total other operating 74,436 18.5 % 72,019
18.2 % Income from operations 20,175 5.0 % 23,845 6.0
% Interest expense, net and other 1,638 0.4 % 1,060 0.3 %
Income tax expense 4,312 1.1 % 6,220
1.5 % Total other 5,950 1.5 % 7,280 1.8
% Net income $ 14,225 3.5 % $ 16,565
4.2 %
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.
Schedule III
Reconciliation of Net Income to EBITDA and
Adjusted EBITDA(In thousands, unaudited)
The Company defines EBITDA as net income before interest
expense, provision for income taxes, depreciation and amortization,
and non-cash stock based compensation. EBITDA and adjusted EBITDA
are presented because the Company believes that investors'
understanding of our performance is enhanced by including these
non-GAAP financial measures as a reasonable basis for evaluating
our ongoing results of operations without the effect of non-cash
charges such as depreciation and amortization expenses and asset
disposals, stock-based compensation, closure costs and asset
impairment charges. EBITDA and adjusted EBITDA are supplemental
measures of operating performance that do not represent and should
not be considered as alternatives to net income or cash flow from
operations, as determined by GAAP, and our calculation thereof may
not be comparable to that reported by other companies in our
industry or otherwise. Adjusted EBITDA further adjusts EBITDA to
reflect the additions and eliminations shown in the table below.
The use of adjusted EBITDA as a performance measure permits a
comparative assessment of our operating performance relative to our
performance based on our GAAP results, while isolating the effects
of some items that vary from period to period without any
correlation to core operating performance. Adjusted EBITDA as
presented may not be comparable to other similarly-titled measures
of other companies, and our presentation of adjusted EBITDA should
not be construed as an inference that our future results will be
unaffected by excluded or unusual items.
Sixteen Weeks Ended April 17, 2016
April 19, 2015 Net income as reported $ 14,225 $
16,565 Interest expense, net 1,655 1,088 Provision for income taxes
4,312 6,220 Depreciation and amortization 23,951 23,003 Non-cash
stock based compensation 2,090 1,446 EBITDA 46,233 48,322
Litigation contingencies 3,900 — Asset impairment 825 — Change in
estimate for gift card breakage — (1,369) Adjusted EBITDA $ 50,958
$ 46,953
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160517005596/en/
For media relations:Coyne PRJennifer DeNick,
973-588-2000orFor investor relations:Red Robin Gourmet
Burgers, Inc.Stuart Brown, 303-846-6000Chief Financial Officer
Red Robin Gourmet Burgers (NASDAQ:RRGB)
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