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 and year ended December 31,
2017.
Financial Highlights for the 13 Weeks Ended December 31, 2017
Compared to the 12 Weeks Ended December 25, 2016
- Total revenues were $342.4 million, an
increase of 17.5%;
- Net income was $8.8 million compared to
net loss of $8.8 million;
- Comparable restaurant revenue increased
2.7% (using constant currency rates);
- Comparable restaurant guest counts
increased 1.9%;
- Off-premise increased to 8.3% of total
food and beverage sales compared to 5.7%;
- Adjusted EBITDA was $35.8 million
compared to $29.2 million (see Schedule III);
- GAAP earnings per diluted share were
$0.68 compared to GAAP loss per diluted share of $0.68; and
- Adjusted earnings per diluted share
were $0.78 compared to $0.35 (see Schedule I).
Financial Highlights for the 53 Weeks Ended December 31, 2017
Compared to the 52 Weeks Ended December 25, 2016
- Total revenues were $1.4 billion, an
increase of 6.5%;
- Net income was $30.0 million compared
to $11.7 million;
- Comparable restaurant revenue increased
0.6% (using constant currency rates);
- Comparable restaurant guest counts
increased 0.4%;
- Adjusted EBITDA was $139.4 million
compared to $138.3 million (see Schedule III);
- GAAP earnings per diluted share were
$2.31 compared to $0.87; and
- Adjusted earnings per diluted share
were $2.49 compared to $2.78 (see Schedule I).
“We outperformed the casual dining industry on Guest traffic for
the sixth consecutive quarter and ended 2017 with positive same
store sales, while making considerable progress on the critical
changes that will make Red Robin successful in 2018 and beyond,”
said Denny Marie Post, Red Robin Gourmet Burgers, Inc. chief
executive officer. “While positive trends in Guest counts,
restaurant revenues, controllable labor, value perception and
off-premise demand are all encouraging, we know we also need to
continue to evolve our service model, make smart investments in
technology and maximize growth of new channels. We will continue to
innovate and move urgently in the areas of the business that matter
most to our Guests, benefit our Team Members and drive growth.”
Operating Results
Total revenues, which primarily include Company-owned restaurant
revenue and franchise royalties, increased 17.5% to $342.4 million
in the fourth quarter of 2017 from $291.5 million in the fourth
quarter of 2016. Restaurant revenue increased $50.2 million, with
the thirteenth week in the fourth quarter of 2017 contributing
$29.8 million in restaurant revenue. The remaining increase was due
to a $14.2 million increase in revenue from new restaurant
openings and a $8.2 million, or 2.7%, increase in comparable
restaurant revenue, partially offset by $1.5 million from closed
restaurants and a $0.5 million unfavorable foreign currency
impact.
System-wide restaurant revenue (which includes franchised units)
for the fourth quarter of 2017 totaled $404.1 million, compared to
$347.1 million for the fourth quarter of 2016.
Comparable restaurant revenue(1) increased 2.7% in the fourth
quarter of 2017 compared to the same period a year ago, driven by
a 1.9% increase in guest counts and a 0.8% increase in
average guest check. The increase in average guest check comprised
a 2.6% increase in pricing, partially offset by a 1.8% decrease in
menu mix. The Company’s comparable revenue growth is calculated by
comparing the same calendar weeks which, for 2016, include the
first week of 2017.
Restaurant-level operating profit margin (a non-GAAP financial
measure) increased to 20.5% in the fourth quarter of 2017 from
19.8% in the same period a year ago. The 70 basis point margin
increase in the fourth quarter of 2017 resulted from a 100 basis
point decrease in labor costs, a 50 basis point decrease in other
restaurant operating expenses, and a 20 basis point decrease in
occupancy costs, offset by a 90 basis point increase 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, in each case under GAAP.
________________________________________ (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
Q4 2017(13 Weeks)
Q4 2016(12 Weeks)
Average weekly sales per unit(1): Company-owned – Total(2) $ 54,235
$ 51,863 Company-owned – Comparable(2) $ 54,598 $ 51,787 Franchised
units – Comparable $ 59,059 $ 57,313 Total operating weeks:
Company-owned units 6,235 5,560 Franchised units 1,118 1,032
________________________________________ (1) Calculated
using constant currency rates. Using historical currency rates, the
average weekly sales per unit in the fourth quarter of 2016 for
Company-owned – Total and Company-owned – Comparable was $51,785
and $51,706. 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.
(2) Average weekly sales per unit for the fourth quarter of
2017 includes the benefit of the thirteenth week. The average
weekly sales per unit in the thirteenth week of the fourth quarter
of 2017 for Company-owned – Total and Company-owned – Comparable
was $61,991 and $63,691.
Other Results
Depreciation and amortization costs were $22.1 million in the
fourth quarter of 2017, which was flat with the fourth quarter of
2016.
General and administrative costs were $21.9 million, or 6.4% of
total revenues, in the fourth quarter of 2017, compared to $19.0
million, or 6.5% of total revenues in the same period a year ago.
The increase was primarily due to an increase in incentive
compensation, partially offset by a decrease in professional
services costs.
Selling expenses, which now include the expenses associated with
both national and local restaurant marketing activities, were $15.2
million, or 4.5% of total revenues, in the fourth quarter of 2017,
compared to $11.4 million, or 3.9%, of total revenues during the
same period in the prior year.
Pre-opening and acquisition costs were $0.8 million in the
fourth quarter of 2017, compared to $1.0 million in the same period
a year ago.
The Company’s fiscal year 2017 effective tax rate benefit was
3.5%, compared to a tax benefit of 144.9% in 2016. The change in
our 2017 effective tax rate compared to 2016 is primarily
attributable to the increase in earnings before income tax,
partially offset by an increase in the FICA tip tax credit. In
addition, on December 22, 2017, the U.S. government enacted
comprehensive tax legislation commonly referred to as the Tax Cuts
and Job Act (the “Tax Act”). The Company recorded a decrease
related to the Company’s deferred tax liabilities due to the Tax
Act which provided a one-time tax benefit of $2.8 million.
Excluding the $2.8 million one-time tax benefit and the $5.1
million asset impairment, net of tax, the Company’s effective tax
rate for the fiscal year 2017 was 10.0%. Excluding the $2.8 million
one-time tax benefit and the $4.2 million asset impairment, net of
tax, the Company’s effective tax rate for the fourth quarter of
2017 was 7.2%.
Net income for the fourth quarter ended December 31, 2017
was $8.8 million compared to net loss of $8.8 million for the same
period a year ago. Earnings per diluted share for the fourth
quarter of 2017 were $0.68 compared to diluted loss per share of
$0.68 in fourth quarter 2016. For the fiscal year ended
December 31, 2017, net income was $30.0 million compared to
$11.7 million for the fiscal year ended December 25, 2016. The
fifty-third week in 2017 contributed approximately $4.1 million to
net income. Earnings per diluted share for fiscal year 2017 were
$2.31 compared to $0.87 a year ago. The fifty-third week in 2017
contributed approximately $0.39 to earnings per diluted share.
Excluding charges of $0.32 per diluted share for restaurant
impairment, offset by a benefit of $0.22 per diluted share for
deferred tax liability remeasurement due to the Tax Act, adjusted
earnings per diluted share for the fourth quarter ended
December 31, 2017 were $0.78. Excluding charges of $0.96 per
diluted share for restaurant impairment and closure and $0.06 per
diluted share for reorganization costs, adjusted earnings per
diluted share for the fourth quarter ended December 25, 2016
were $0.35. 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 fourth quarter of 2017, the Company opened two Red
Robin restaurants, bringing the total restaurant openings for the
year to 18.
The following table details restaurant unit data for
Company-owned and franchised locations for the periods
indicated:
ThirteenWeeks Ended
Twelve Weeks Ended
Fifty-threeWeeks Ended
Fifty-twoWeeks Ended
December 31, 2017
December 25, 2016
December 31, 2017
December 25, 2016
Company-owned: Beginning of period 479 462 465 439 Opened during
the period 2 5 18 26 Acquired from franchisees — — — 13 Closed
during the period (1 ) (2 ) (3 ) (13 ) End of period 480 465
480 465 Franchised: Beginning of period 86 86
86 99 Opened during the period — — 1 — Sold or closed during the
period — — (1 ) (13 ) End of period 86 86
86 86 Total number of restaurants 566
551 566 551
Balance Sheet and Liquidity
As of December 31, 2017, the Company had cash and cash
equivalents of $17.7 million and total debt of $266.4 million,
excluding $10.9 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 $10.4 million on its credit facility during the fourth quarter
of 2017. As of December 31, 2017, the Company had outstanding
borrowings under its credit facility of $265.5 million, in
addition to amounts issued under letters of credit of $7.6
million, which reduce the amount available under its credit
facility but are not recorded as debt.
The Company’s lease adjusted leverage ratio was 4.04x as of
December 31, 2017. The lease adjusted leverage ratio is
defined in Section 1.1 of the Company’s credit facility, which is
filed as Exhibit 10.32 in the Annual Report on Form 10-K filed on
February 21, 2017.
Outlook for 2018
- The Company expects comparable
restaurant sales growth of 50 to 150 basis points, and operating
weeks to decline 1%, as a result of having only 52 weeks in 2018
compared to 53 weeks in 2017, offset by the impact of new unit
growth in 2017 and 2018. As a result, 2018 total revenue is
projected between a decline of 50 basis points and an increase of
50 basis points.
- Cost of sales, as a percentage of
restaurant revenue, is projected to be higher by 50 to 100 basis
points versus 2017 due to the onset of a moderately inflationary
commodity environment.
- Restaurant labor costs, as a percentage
of restaurant revenue, are projected between an increase of 25
basis points and a decrease of 25 basis points, driven by minimum
wage increases in more highly penetrated markets and restaurant
manager bonuses planned at target levels, offset by the effect of
improvements in labor productivity.
- Other operating expenses are expected
to be flat to down 50 basis points, due primarily to lower repair
and maintenance costs.
- Depreciation and amortization is
projected to be approximately $95 million.
- General and administrative expense is
projected to be $85 to $90 million.
- Selling expense, which includes the
consolidation of all national and local marketing activities, is
expected to be up slightly as a percentage of restaurant
revenue.
- Pre-opening costs are estimated to be
approximately $3 million due to the reduced number of new
restaurant openings.
- The Company’s income tax rate is
expected between 0% and 5%.
- Earnings per diluted share is projected
to range from $2.40 to $2.80. The Company expects Q1 earnings per
diluted share between $0.60 and $0.80.
- Overall capital expenditures are
projected between $65 million and $75 million. The Company plans to
add approximately three to five net Red Robin locations in
2018.
The sensitivity of the Company’s earnings per diluted share to a
1% change in guest counts for fiscal year 2018 is estimated to be
approximately $0.45 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 $135,000 in pre-tax income or
expense is equivalent to approximately $0.01 per diluted share.
Guidance Policy
The Company provides only annual guidance as it relates to
selected information related to the Company's financial and
operating performance, and such measures may differ from year to
year.
Investor Conference Call and Webcast
Red Robin will host an investor conference call to discuss its
fourth quarter 2017 results today at 5:00 p.m. ET. The conference
call number is (800) 239-9838, or for international callers (323)
794-2551. 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 Thursday, March 1, 2018. The
replay can be accessed by dialing (844) 512-2921, or (412) 317-6671
for international callers. The conference ID is 5896805.
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 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, restaurant sales growth,
operating weeks, new unit growth, cost of sales including
commodities, restaurant labor costs and productivity, expenses
including operating expenses, depreciation and amortization,
general and administrative, and selling expense, pre-opening costs,
tax rate, earnings per share and the sensitivity of earnings per
share and other projected financial measures, capital expenditures,
statements under the heading “Outlook for 2018”, 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 strategic initiatives; the ability
to fulfill planned, and realize the anticipated benefits of
completed, expansion and restaurant remodeling; the effectiveness
of the Company's 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; the ability to
increase labor productivity through alternative labor models;
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)
ThirteenWeeks Ended
Twelve WeeksEnded
Fifty-threeWeeks Ended
Fifty-twoWeeks Ended
December 31, 2017
December 25, 2016
December 31, 2017
December 25, 2016
Revenues: Restaurant revenue $ 338,158 $ 287,924 $ 1,365,060 $
1,280,669 Franchise royalties, fees and other revenue 4,195
3,535 15,869 15,772 Total revenues 342,353
291,459 1,380,929 1,296,441
Costs and expenses:
Restaurant operating costs (exclusive of
depreciationand amortization shown separately below):
Cost of sales 80,203 65,646 320,355 298,249 Labor 115,286 101,107
475,432 439,232 Other operating 44,734 39,319 178,309 167,727
Occupancy 28,626 24,884 112,753 107,408 Depreciation and
amortization 22,070 22,117 92,545 86,695 General and administrative
21,874 19,015 93,277 91,296 Selling 15,243 11,381 56,742 46,591
Pre-opening and acquisition costs 835 1,033 5,570 8,025 Other
charges 5,330 21,742 6,914 39,648 Total
costs and expenses 334,201 306,244 1,341,897
1,284,871 Income (loss) from operations 8,152 (14,785
) 39,032 11,570 Other expense: Interest expense, net and
other 2,543 2,046 10,012 6,782
Income (loss) before income taxes 5,609 (16,831 ) 29,020 4,788
Benefit from income taxes (3,198 ) (8,079 ) (999 ) (6,937 ) Net
income (loss) $ 8,807 $ (8,752 ) $ 30,019 $ 11,725
Earnings (loss) per share: Basic $ 0.68 $ (0.68 ) $
2.33 $ 0.88 Diluted $ 0.68 $ (0.68 ) $ 2.31
$ 0.87 Weighted average shares outstanding: Basic
12,934 12,869 12,899 13,332 Diluted 13,036 12,869 12,998 13,462
RED ROBIN GOURMET BURGERS,
INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In
thousands, except per share amounts)
(Unaudited)December 31,
2017
December 25, 2016 Assets: Current Assets: Cash
and cash equivalents $ 17,714 $ 11,732 Accounts receivable, net
26,499 24,166 Inventories 29,553 29,899 Prepaid expenses and other
current assets 31,038 27,049 Total current assets
104,804 92,846 Property and equipment, net
638,151 656,439 Goodwill 96,979 95,935 Intangible assets, net
38,273 42,270 Other assets, net 32,408 31,055 Total
assets $ 910,615 $ 918,545
Liabilities and
Stockholders’ Equity: Current Liabilities: Accounts payable $
35,347 $ 26,602 Accrued payroll and payroll related liabilities
32,777 34,703 Unearned revenue 55,915 50,199 Accrued liabilities
and other 36,300 29,505 Total current liabilities
160,339 141,009 Deferred rent 74,980 72,431
Long-term debt 266,375 336,375 Long-term portion of capital lease
obligations 10,197 10,805 Other non-current liabilities 11,289
9,872 Total liabilities 523,180 570,492
Stockholders’ Equity:
Common stock; $0.001 par value: 45,000
shares authorized; 17,851 and 17,851shares issued; 12,954 and
12,828 shares outstanding
18 18
Preferred stock, $0.001 par value: 3,000
shares authorized; no shares issuedand outstanding
— — Treasury stock 4,897 and 5,023 shares, at cost (202,485 )
(207,720 ) Paid-in capital 210,708 208,022 Accumulated other loss,
net of tax (3,566 ) (5,008 ) Retained earnings 382,760
352,741 Total stockholders’ equity 387,435 348,053
Total liabilities and stockholders’ equity $ 910,615
$ 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 13 and 53 weeks ended December 31, 2017 and the 12 and
52 weeks ended December 25, 2016, net income (loss) and basic and
diluted earnings (loss) per share, excluding the effects of
restaurant impairment and closure costs, deferred tax liability
remeasurement due to the Tax Act, litigation contingencies,
reorganization costs, and the related income tax effects. The
Company believes the presentation of net income (loss) and earnings
(loss) 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 effect of reconciling items
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.
ThirteenWeeks Ended
Twelve WeeksEnded
Fifty-threeWeeks Ended
Fifty-twoWeeks Ended
December 31, 2017
December 25, 2016
December 31, 2017
December 25, 2016
Net income (loss) as reported $ 8,807 $ (8,752 ) $ 30,019 $ 11,725
Restaurant impairment and closure 5,330 20,420 6,914 34,426
Litigation contingencies — — — 3,900 Reorganization costs — 1,322 —
1,322 Income tax effect of reconciling items (1,175 ) (8,470 )
(1,793 ) (13,972 ) Deferred tax liability remeasurement due to Tax
Act (2,808 ) — (2,808 ) — Adjusted net income $
10,154 $ 4,520 $ 32,332 $ 37,401
Basic net income (loss) per share: Net income (loss) as reported $
0.68 $ (0.68 ) $ 2.33 $ 0.88 Restaurant impairment and closure 0.41
1.59 0.54 2.58 Litigation contingencies — — — 0.29 Reorganization
costs — 0.10 — 0.10 Income tax effect of reconciling items (0.09 )
(0.66 ) (0.14 ) (1.05 ) Deferred tax liability remeasurement due to
Tax Act (0.22 ) — (0.22 ) — Adjusted earnings per
share - basic $ 0.78 $ 0.35 $ 2.51 $ 2.80
Diluted net income (loss) per share(1): Net income
(loss) as reported $ 0.68 $ (0.68 ) $ 2.31 $ 0.87 Restaurant
impairment and closure 0.41 1.58 0.53 2.56 Litigation contingencies
— — — 0.29 Reorganization costs — 0.10 — 0.10 Income tax effect of
reconciling items (0.09 ) (0.65 ) (0.13 ) (1.04 ) Deferred tax
liability remeasurement due to Tax Act (0.22 ) — (0.22 ) —
Adjusted earnings per share - diluted $ 0.78 $ 0.35
$ 2.49 $ 2.78 Weighted average shares
outstanding Basic 12,934 12,869 12,899 13,332 Diluted 13,036 12,983
12,998 13,462
(1) For the fourth quarter of 2016, the impact of dilutive
shares is included in the calculations as the adjustments for the
quarter resulted in adjusted net income. The calculation for
Restaurant impairment and closure includes $0.01 related to the
effect of the diluted shares on net loss per share as reported. For
diluted shares reported on the condensed consolidated statement of
operations, the impact of dilutive shares is excluded due to the
reported net loss for the quarter.
Schedule II
Reconciliation of Non-GAAP Restaurant-Level
Operating Profit to Income (Loss)from Operations and Net
Income (Loss)(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 (loss)
from operations or net income (loss) 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 13 and 53 weeks ended December 31, 2017 and the
12 and 52 weeks ended December 25, 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.
Thirteen WeeksEnded
Twelve WeeksEnded
Fifty-three WeeksEnded
Fifty-two WeeksEnded
December 31, 2017 December 25, 2016 December 31,
2017 December 25, 2016 Restaurant revenue $ 338,158
99.8 % $ 287,924 98.8 % $ 1,365,060 98.9 % $
1,280,669 98.8 % Restaurant operating costs (1): Cost of
sales 80,203 23.7 % 65,646 22.8 % 320,355 23.5 % 298,249 23.3 %
Labor 115,286 34.1 % 101,107 35.1 % 475,432 34.8 % 439,232 34.3 %
Other operating 44,734 13.2 % 39,319 13.7 % 178,309 13.1 % 167,727
13.1 % Occupancy 28,626 8.5 % 24,884
8.7 % 112,753 8.3 % 107,408 8.4 %
Restaurant-level operating profit 69,309 20.5 %
56,968 19.8 % 278,211 20.4 % 268,053
20.9 % Add – Franchise royalties, fees and
other revenue 4,195 1.2 % 3,535 1.2 % 15,869 1.1 % 15,772 1.2 %
Deduct – other operating: Depreciation and amortization 22,070 6.4
% 22,117 7.6 % 92,545 6.7 % 86,695 6.7 % General and administrative
expenses 21,874 6.4 % 19,015 6.5 % 93,277 6.8 % 91,296 7.0 %
Selling 15,243 4.5 % 11,381 3.9 % 56,742 4.1 % 46,591 3.6 %
Pre-opening & acquisition costs 835 0.2 % 1,033 0.4 % 5,570 0.4
% 8,025 0.6 % Other charges 5,330 1.6 % 21,742
7.5 % 6,914 0.5 % 39,648 3.1 %
Total other operating 65,352 19.1 % 75,288
25.9 % 255,048 18.5 % 272,255
21.0 % Income (loss) from operations 8,152 2.4 % (14,785 )
(5.1 )% 39,032 2.8 % 11,570 0.9 % Interest expense, net and
other 2,543 0.7 % 2,046 0.7 % 10,012 0.7 % 6,782 0.5 % Income tax
benefit (3,198 ) (0.9 )% (8,079 ) (2.8 )% (999 )
(0.1 )% (6,937 ) (0.5 )% Total other (655 )
(0.2 )% (6,033 ) (2.1 )% 9,013 0.6 % (155 )
0.0 % Net income (loss) $ 8,807 2.6 % $
(8,752 ) (3.0 )% $ 30,019 2.2 % $ 11,725
0.9 %
(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 (Loss) to
EBITDA and Adjusted EBITDA(In thousands, unaudited)
The Company defines EBITDA as net income (loss) before interest
expense, provision (benefit) for income taxes, and depreciation and
amortization. EBITDA and adjusted EBITDA are presented because the
Company believes 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.
Thirteen WeeksEnded
Twelve WeeksEnded
Fifty-threeWeeks Ended
Fifty-two Weeks Ended
December 31,2017
December 25,2016
December 31, 2017
December 25,2016
Net income (loss) as reported $ 8,807 $ (8,752 ) $ 30,019 $ 11,725
Interest expense, net 2,821 2,161 10,918 7,193 Benefit from income
taxes (3,198 ) (8,079 ) (999 ) (6,937 ) Depreciation and
amortization 22,070 22,117 92,545 86,695
EBITDA(1) 30,500 7,447 132,483 98,676
Restaurant impairment and closure 5,330 20,420 6,914
34,426 Litigation contingencies — — — 3,900 Reorganization costs —
1,322 — 1,322 Adjusted EBITDA $ 35,830
$ 29,189 $ 139,397 $ 138,324
(1) EBITDA for the twelve and fifty-two weeks ended
December 25, 2016 was previously reported as $8.4 million and
$103.2 million. To conform with current period presentation and to
provide an EBITDA measure comparable to other companies in our
industry, $1.0 million and $4.5 million of stock-based compensation
is included in EBITDA for these prior periods.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180222006406/en/
For media relations:Coyne PRBrian Farley,
973-588-2000orFor investor relations:ICRRaphael Gross/Dara
Dierks, 203-682-8200
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