Red Robin Gourmet Burgers, Inc., (NASDAQ:RRGB), a full-service
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 16, 2017.
First Quarter 2017 Financial Highlights Compared to First
Quarter 2016
- Total revenues were $418.6 million, an
increase of 4.1%;
- Net income was $11.6 million compared
to $14.2 million;
- Comparable restaurant revenue decreased
1.2% (using constant currency rates);
- Adjusted EBITDA was $45.8 million
compared to $48.9 million (see Schedule III);
- GAAP earnings per diluted share were
$0.89 compared to $1.03; and
- Adjusted earnings per diluted share
were $0.89 compared to $1.27 (see Schedule I).
“The steps we’ve taken so far are strengthening our business,
enabling us to gain market share, and separating Red Robin from our
casual dining competitors,” said Denny Marie Post, Red Robin
Gourmet Burgers, Inc. chief executive officer. “During the first
quarter, our everyday value Tavern Double burger menu continued to
drive traffic, our teams delivered on improved speed of service,
and our recent investments in the growing off-premise use began to
gain traction. The early success of these and other initiatives
gives us confidence that we are laying the groundwork for improved
performance for the balance of the year and beyond.”
Operating Results
Total revenues, which primarily include Company-owned restaurant
revenue and franchise royalties, increased 4.1% to $418.6 million
in the first quarter of 2017 from $402.1 million in the first
quarter of 2016. Restaurant revenue increased $24.8
million primarily due to new restaurant openings and acquired
restaurants, partially offset by decreases of $4.6 million, or
1.2%, in comparable restaurant revenue and $3.8 million from closed
restaurants. Franchise and other revenue decreased $0.3 million,
primarily driven by the loss of royalties from 13 franchised
restaurants acquired during the first quarter of 2016.
System-wide restaurant revenue (which includes franchised units)
for the first quarter of 2017 totaled $498.8 million, compared to
$493.0 million for the first quarter of 2016.
Comparable restaurant revenue(1) decreased 1.2% in the first
quarter of 2017 compared to the same period a year ago, driven by a
1.7% decrease in guest counts, partially offset by a 0.5% increase
in average guest check. The increase in average guest check
comprised a 1.6% increase in pricing and a 1.1% decrease in menu
mix.
Restaurant-level operating profit margin (a non-GAAP financial
measure) was 20.7% in the first quarter of 2017 compared to 22.5%
in the same period a year ago. The 180 basis point margin decrease
in the first quarter of 2017 resulted from a 170 basis point
increase in labor costs and a 70 basis point increase in other
restaurant operating expenses, partially offset by a 40 basis point
decrease in cost of sales and a 20 basis point decrease in
occupancy 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.
_________________________________________________________
(1) 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 Revenue Performance
Q1 2017 Q1 2016 Average weekly sales per
unit(1): Company-owned – Total $ 55,408 $ 56,019 Company-owned –
Comparable $ 56,342 $ 57,024 Franchised units – Comparable $ 61,619
$ 63,692 Total operating weeks: Company-owned units 7,462 7,088
Franchised units 1,381 1,532
_________________________________________________________
(1) Calculated using constant currency rates. Using historical
currency rates, the average weekly sales per unit in the first
quarter of 2016 for Company-owned – Total and Company-owned –
Comparable was $55,978 and $56,980. The Company calculates non-GAAP
constant currency average weekly sales per unit by translating
prior year local currency average weekly sales per unit to U.S.
dollars based on current quarter average exchange rates. The
Company considers non-GAAP constant currency average weekly sales
per unit to be a useful metric to investors and management as they
facilitate a more useful comparison of current performance to
historical performance.
Other Results
Depreciation and amortization costs increased to $28.0 million
in the first quarter of 2017 from $24.0 million in the first
quarter of 2016. The increased depreciation was primarily related
to new restaurants opened and acquired since the first quarter of
2016 and restaurants remodeled under the Brand Transformation
Initiative.
General and administrative costs were $30.9 million, or 7.4% of
total revenues, in the first quarter of 2017, compared to $32.0
million, or 8.0% of total revenues in the same period a year ago.
The decrease of $1.1 million resulted primarily from timing and
will reverse in future quarters.
Selling expenses were $12.4 million, or 3.0% of total revenues,
in the first quarter of 2017, compared to $11.4 million, or 2.8%,
of total revenues during the same period in the prior year.
Pre-opening and acquisition costs were $1.9 million in the first
quarter of 2017, compared to $2.4 million in the same period a year
ago. The decrease was primarily due to $0.7 million in acquisition
costs incurred in the first quarter 2016, partially offset by an
increase due to timing of restaurant openings.
The Company’s effective tax rate for first quarter 2017 was
20.1%, compared to 23.3% for first quarter 2016. The change in the
effective tax rate was primarily due to a decrease in income in the
first quarter of 2017 compared to the same period a year ago.
Net income for the first quarter ended April 16, 2017 was
$11.6 million compared to $14.2 million for the same period a year
ago. Earnings per diluted share for the first quarter 2016 was
$0.89 compared to $1.03 in first quarter 2016.
Excluding charges of $0.20 per diluted share for litigation
contingencies and $0.04 per diluted share for asset impairment,
adjusted earnings per diluted share for the first quarter
ended April 17, 2016 were $1.27. 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.
Restaurant Development
During the first quarter of 2017, the Company opened six Red
Robin restaurants, including one restaurant that was temporarily
closed during 2016, and relocated one Red Robin restaurant. Our
franchisees opened one restaurant during the first quarter of
2017.
The following table details restaurant unit data for our
Company-owned and franchised locations for the periods
indicated:
Sixteen Weeks Ended April 16,
2017 April 17, 2016 Company-owned:
Beginning of period 465 439 Opened during the period 6 3 Acquired
from franchisees — 13 Closed during the period (2 ) (1 ) End of
period 469 454 Franchised: Beginning of period 86 99
Opened during the period 1 — Sold or closed during the period —
(13 ) End of period 87 86 Total number of
restaurants 556 540
Balance Sheet and Liquidity
As of April 16, 2017, the Company had cash and cash equivalents
of $22.2 million and total debt of $300.9 million, excluding $11.3
million of capital lease liabilities. The Company funded
construction of new restaurants and other capital expenditures with
cash flow from operations and made net repayments of $35.5 million
on its credit facility during the first quarter of 2017. As of
April 16, 2017, the Company had outstanding borrowings under its
credit facility of $300.0 million, in addition to amounts
issued under letters of credit of $7.4 million, which reduce
the amount available under its credit facility but are not recorded
as debt.
The Company’s lease adjusted leverage ratio decreased to 4.23x
as of April 16, 2017. The lease adjusted leverage ratio is defined
in Section 1.1 of our credit facility, which is filed as Exhibit
10.32 of our Annual Report on Form 10-K filed on February 21, 2017.
On April 13, 2017, the Company entered into a first amendment to
its credit facility to increase the lease adjusted leverage ratio
to 5.25x (see Exhibit 10.1 of our Quarterly Report on Form 10-Q to
be filed on May 17, 2017).
Outlook for 2017
- Earnings per diluted share is projected
to range from $2.80 to $3.10 with approximately 45% expected in the
first half of 2017 and 55% in the second half of 2017.
- Interest expense for 2017 is expected
to be approximately $10 million.
The sensitivity of the Company’s earnings per diluted share to a
1% change in guest counts for fiscal year 2017 is estimated to be
approximately $0.40 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
$0.10, and a change of approximately $160,000 in pre-tax income or
expense is equivalent to approximately $0.01 per diluted share.
Guidance Policy
The Company intends to provide only annual guidance as it
relates to revenues, comparable restaurant revenue growth,
operating weeks associated with locations opened, cost of sales and
restaurant labor costs as a percentage of restaurant revenue, other
operating expenses (other than interest expense), depreciation and
amortization, general and administrative expense, selling expense,
pre-opening expense, income tax rate, EBITDA, earnings per diluted
share, overall capital expenditures and restaurant openings and
closings. The Company intends to only provide updates if there is a
material change versus the previously communicated guidance.
Investor Conference Call and Webcast
Red Robin will host an investor conference call to discuss its
first quarter 2017 results today at 5:00 p.m. ET. The conference
call number is (888) 724-9493, or for international callers (913)
312-0654. 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” section of the
Company’s website at 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 “Company” section,
then the “Investor Relations” link, then the “Presentations” link.
A replay of the live conference call will be available from two
hours after the call until midnight on Tuesday, May 23, 2017. The
replay can be accessed by dialing (844) 512-2921, or (412) 317-6671
for international callers. The conference ID is 3117834.
Additional Disclosure
Law enforcement officials have made the Company aware that cyber
criminals are actively targeting restaurant companies, including
Red Robin. The Company is investigating whether Red Robin Guests
have been impacted. The Company's practice, which has been
published in the Privacy Policy on Red Robin's website, is to share
information about security incidents impacting Red Robin Guests
only when the Company has complete and accurate information.
Analyst and Investor Day
The Company will host its Analyst and Investor Day on May 23,
2017, in Denver, Colo. The presentation is scheduled to begin at
7:30 a.m. MT and will conclude at approximately 12:00 p.m. MT. A
listen-only webcast of the event will be broadcast simultaneously
and can be accessed via the “Company” section of the Company’s
website at www.redrobin.com by selecting the “Investor Relations”
link. The presentation and supplemental slides will also be
available on the website. A replay of the event will be available
on the Company’s website.
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 560 Red Robin restaurants
across the United States and Canada, including locations
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 the
Company’s future performance, revenues and timing thereof, tax
rate, sensitivity of earnings per share and other projected
financial measures, statements under the heading “Outlook for
2017”, 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. Except as
required by law, the Company undertakes no obligation to update
such statements to reflect events or circumstances arising after
such date, and cautions 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 business improvement initiatives;
the ability to fulfill planned, and see the anticipated benefits of
completed, 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; the ability to achieve anticipated revenue and
cost savings from anticipated new technology systems and tools in
the restaurants and other initiatives; the ability to develop,
test, implement and increase online ordering, to-go services,
catering and other off-premise sales; 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 the Company’s 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 16, 2017
April 17, 2016 Revenues: Restaurant revenue $ 413,451
$ 396,770 Franchise royalties, fees and other revenue 5,106
5,356 Total revenues 418,557 402,126 Costs and
expenses:
Restaurant operating costs (exclusive of
depreciation and amortization shown separately below):
Cost of sales 94,607 92,325 Labor 145,519 132,984 Other operating
54,680 49,708 Occupancy 33,119 32,498 Depreciation and amortization
28,044 23,951 General and administrative 30,913 31,980 Selling
12,362 11,408 Pre-opening costs and acquisition costs 1,855 2,372
Other charges(1) — 4,725 Total costs and expenses 401,099
381,951 Income from operations 17,458 20,175
Other expense: Interest expense, net and other 2,984 1,638
Income before income taxes 14,474 18,537 Provision for
income taxes 2,907 4,312 Net income $ 11,567 $ 14,225
Earnings per share: Basic $ 0.90 $ 1.04 Diluted $ 0.89
$ 1.03 Weighted average shares outstanding: Basic 12,853
13,635 Diluted 12,953 13,783
(1) Certain amounts presented in prior periods have been
reclassified to conform with the current period presentation. For
the first quarter of 2016, the Company reclassified litigation
contingencies of $3.9 million from Selling, general, and
administrative expenses and impairment charges of $0.8 million from
Asset impairment to Other charges on the condensed consolidated
statement of operations. Management believes separating these
special items on the condensed consolidated statement of operations
provides more clarity of the Company’s ongoing operating
performance and a more relevant comparison to prior period
results.
RED ROBIN GOURMET BURGERS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except per share
amounts)
(Unaudited)
April 16, 2017
December 25, 2016 Assets: Current Assets: Cash and
cash equivalents $ 22,239 $ 11,732 Accounts receivable, net 14,239
24,166 Inventories 29,736 29,899 Prepaid expenses and other current
assets 16,586 27,049
Total current assets
82,800 92,846 Property and equipment, net
656,418 656,439 Goodwill 95,935 95,935 Intangible assets, net
41,708 42,270 Other assets, net 31,301 31,055 Total
assets $ 908,162 $ 918,545
Liabilities and
Stockholders’ Equity: Current Liabilities: Trade accounts
payable $ 19,257 $ 13,740 Construction related payables 15,923
12,862 Accrued payroll and payroll related liabilities 38,156
34,703 Unearned revenue 37,612 50,199 Accrued liabilities and other
39,741 29,505 Total current liabilities 150,689
141,009 Deferred rent 73,191 72,431 Long-term
debt 300,875 336,375 Long-term portion of capital lease obligations
10,633 10,805 Other non-current liabilities 11,150 9,872
Total liabilities 546,538 570,492
Stockholders’ Equity: Common stock; $0.001 par value: 45,000 shares
authorized; 17,851 and 17,851 shares issued; 12,872 and 12,828
shares outstanding 18 18 Preferred stock, $0.001 par value: 3,000
shares authorized; no shares issued and outstanding — — Treasury
stock 4,979 and 5,023 shares, at cost (205,881 ) (207,720 ) Paid-in
capital 207,975 208,022 Accumulated other loss, net of tax (4,796 )
(5,008 ) Retained earnings 364,308 352,741 Total
stockholders’ equity 361,624 348,053 Total
liabilities and stockholders’ equity $ 908,162 $ 918,545
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 16, 2017 and April 17, 2016, net
income and basic and diluted earnings per share, excluding the
effects of litigation contingencies, asset impairment, and the
related income tax effects. The Company believes 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 16, 2017
April 17, 2016 Net income as reported $ 11,567
$ 14,225 Litigation contingencies — 3,900 Asset impairment — 825
Income tax expense — (1,356 ) Adjusted net income $ 11,567
$ 17,594 Basic net income per share: Net
income as reported $ 0.90 $ 1.04 Litigation contingencies — 0.29
Asset impairment — 0.06 Income tax expense — (0.10 )
Adjusted earnings per share - basic $ 0.90 $ 1.29
Diluted net income per share: Net income as reported $ 0.89
$ 1.03 Litigation contingencies — 0.28 Asset impairment — 0.06
Income tax expense — (0.10 ) Adjusted earnings per share -
diluted $ 0.89 $ 1.27 Weighted average shares
outstanding Basic 12,853 13,635 Diluted 12,953 13,783
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 16, 2017 and April 17,
2016, 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 16, 2017
April 17, 2016 Restaurant revenue $ 413,451
98.8 % $ 396,770 98.7 % Restaurant
operating costs (1): Cost of sales 94,607 22.9 % 92,325 23.3 %
Labor 145,519 35.2 % 132,984 33.5 % Other operating 54,680 13.2 %
49,708 12.5 % Occupancy 33,119 8.0 % 32,498
8.2 % Restaurant-level operating profit 85,526
20.7 % 89,255 22.5 % Add – Franchise
royalties, fees and other revenue 5,106 1.2 % 5,356 1.3 % Deduct –
other operating: Depreciation and amortization 28,044 6.7 % 23,951
6.0 % General and administrative expenses 30,913 7.4 % 31,980 8.0 %
Selling 12,362 3.0 % 11,408 2.8 % Pre-opening & acquisition
costs 1,855 0.4 % 2,372 0.6 % Other charges — — %
4,725 1.2 % Total other operating 73,174
17.5 % 74,436 18.5 % Income from
operations 17,458 4.2 % 20,175 5.0 % Interest expense, net
and other 2,984 0.7 % 1,638 0.4 % Income tax expense 2,907
0.7 % 4,312 1.1 % Total other 5,891
1.4 % 5,950 1.5 % Net income $ 11,567
2.8 % $ 14,225 3.5 %
(1) Excluding depreciation and
amortization, which is shown separately.
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, and depreciation and
amortization. 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, asset disposals, and asset impairment and
restaurant closure 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. We
have not provided a reconciliation of our adjusted EBITDA outlook
to the most comparable GAAP measure of net income. Providing net
income guidance is potentially misleading and not practical given
the difficulty of projecting event driven transactional and other
non-core operating items that are included in net income, including
asset impairments and income tax valuation adjustments. The
reconciliations of adjusted EBITDA to net income for the historical
periods presented below are indicative of the reconciliations that
will be prepared upon completion of the periods covered by the
non-GAAP guidance.
Sixteen Weeks Ended April 16, 2017
April 17, 2016 Net income as reported $ 11,567
$ 14,225 Interest expense, net 3,249 1,655 Provision for income
taxes 2,907 4,312 Depreciation and amortization 28,044
23,951 EBITDA(1) 45,767 44,143 Litigation
contingencies — 3,900 Asset impairment — 825 Adjusted EBITDA
$ 45,767 $ 48,868
(1) EBITDA for the first quarter of 2016 was previously reported
as $46.2 million. To conform with current period presentation and
to provide an EBITDA measure comparable to other companies in our
industry, $2.1 million of stock-based compensation is included in
prior period EBITDA.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170516006592/en/
Media Relations:Coyne PRBrian Farley,
973-588-2000orInvestor Relations:ICRRaphael Gross/Dara
Dierks, 203-682-8200
Red Robin Gourmet Burgers (NASDAQ:RRGB)
Historical Stock Chart
From Jun 2024 to Jul 2024
Red Robin Gourmet Burgers (NASDAQ:RRGB)
Historical Stock Chart
From Jul 2023 to Jul 2024