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 19, 2015.
First Quarter Financial Highlights
- First quarter revenues were $394.9
million, an increase of 16.0% over the same period a year ago
- Comparable restaurant revenue increased
3.1% over the same period a year ago
- Restaurant-level operating profit, as a
percent of restaurant revenue, increased to 23.0% from 22.4% in the
same period a year ago (See Schedule II) benefiting approximately
80 basis points from lower health care and workers compensation
costs
- Earnings per diluted share increased
41.5% to $1.16 compared to $0.82 for the same period a year
ago
- Adjusted earnings per diluted share
were $1.10, an increase of 34.1% compared to $0.82 for the same
period a year ago (See Schedule I)
Net income increased 38.7% to $16.6 million compared to $11.9
million for the same period a year ago. Adjusted net income of
$15.6 million excludes an after-tax adjustment for a change in
accounting estimate for gift card breakage of $0.9 million or $0.06
per diluted share. See Schedule I for a reconciliation of adjusted
net income and earnings per share.
“Our solid first quarter results are a testament to the
excellent performance of our restaurant team members combined with
Red Robin's food and beverage innovation,” said Steve Carley, Red
Robin Gourmet Burgers, Inc. chief executive officer. “Our
initiatives are enabling us to continue taking market share
including our Brand Transformation remodels which are generating
even stronger guest satisfaction scores.”
Operating Results
Total Company revenues, which include Company-owned restaurant
revenue and franchise royalties, increased 16.0% to $394.9 million
in the first quarter of 2015 from $340.5 million in the first
quarter of 2014. New restaurant openings, including acquisitions
and net of closures, contributed $43.5 million of additional
revenue, comparable restaurant revenue increased $10.0 million, and
other revenue increased $0.9 million. Other revenue included a
one-time adjustment of $1.4 million related to a change in estimate
of the redemption pattern over which gift card breakage revenue is
recorded. This was partially offset by a $0.9 million decrease in
franchise royalties related to 36 franchised restaurants that the
Company acquired in 2014.
System-wide restaurant revenue (including franchised units) for
the first quarter of 2015 totaled $488.1 million, compared to
$455.7 million for the first quarter in 2014 at constant currency
rates.
Comparable restaurant revenue increased 3.1% in the first
quarter of 2015 compared to the prior year. In the first quarter,
guest counts increased 1.1%, while average guest check increased
2.0%. 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 23.0% in the first quarter of 2015 compared to 22.4%
in the first quarter of fiscal year 2014, an improvement of 60
basis points. The improved margin resulted primarily from a 110
basis point decrease in labor costs driven by lower health
insurance and workers' compensation claims partially offset by
higher rent related to newly opened and acquired restaurants.
Schedule II of this earnings release defines restaurant-level
operating profit, discusses why it is a useful metric for
investors, and reconciles this metric to income from operations and
net income.
Restaurant revenue performance
Casual Dining Restaurants (1) Q1 2015 Q1
2014 Average weekly sales per unit: Company-owned – Total $
59,207 $ 58,382 Company-owned – Comparable $ 60,289 $ 58,492
Franchised units (2) $ 62,875 $ 57,568 Total operating weeks:
Company-owned units 6,526 5,718 Franchised units 1,584 2,124
_________________________________________________________
(1)
Excludes Red Robin Burger Works® fast
casual restaurants, which had 134 and 92 operating weeks in the
first quarter of 2015 and 2014
(2)
Calculated at current currency exchange
rates
Other Results
Depreciation and amortization costs increased to $23.0 million
in the first quarter of 2015 from $18.9 million in the first
quarter of 2014. The increased depreciation was primarily related
to new restaurants opened and acquired since the first quarter 2014
and restaurants remodeled under the Brand Transformation
Initiative.
General and administrative costs were $35.0 million, or 8.9% of
total revenues, compared to $32.1 million, or 9.4% of revenues a
year ago. The increase of $2.9 million resulted primarily from
increased compensation expense, hiring costs, and travel costs.
Selling expenses were $13.1 million, or 3.3% of revenue, in the
first quarter of fiscal year 2015, compared to $10.3 million, or
3.0% of revenue, a year ago due to increased spending on media and
costs associated with higher gift card sales.
Pre-opening costs were $1.0 million in the first quarter of
fiscal year 2015, compared to $2.1 million a year ago. The decrease
is due to fewer restaurant openings in 2015 in addition to $0.6
million in acquisition costs included in the first quarter of
2014.
The Company had an effective tax rate of 27.3% in the first
quarter of fiscal year 2015, compared to a 27.0% rate in the same
period a year ago.
Restaurant Development
As of the end of the first quarter of 2015, there were 408
Company-owned Red Robin® restaurants, 10 Red Robin Burger Works®
and 99 franchised Red Robin restaurants for a total of 517
restaurants. In the first quarter of fiscal year 2015, the Company
opened one Red Robin restaurant and three Red Robin Burger Works,
and closed one Red Robin restaurant.
Under the Brand Transformation Initiative, the Company completed
18 remodels during the first quarter resulting in a total of 122
Red Robin restaurants remodeled to the new brand standards through
the first quarter 2015.
Balance Sheet and Liquidity
As of April 19, 2015, the Company had cash and cash equivalents
of $21.4 million and total debt of $144.2 million, including $8.3
million of capital lease liabilities. The Company decreased debt by
$3.7 million during the first quarter.
Outlook for 2015
Red Robin’s 2015 fiscal year consists of 52 weeks and will end
on December 27, 2015.
In fiscal year 2015, the Company expects total revenue growth of
12.0% to 12.5% including comparable restaurant revenue growth of
2.5% to 3.0%. Additionally, the Company plans to open 20 new Red
Robin restaurants and five Red Robin Burger Works resulting in
operating week growth, inclusive of 2014 acquisitions, of
approximately 9.5%.
Capital investments in fiscal year 2015 are expected be
approximately $170 million. In addition to the new restaurant
openings, the Company plans to relocate three locations and to
remodel approximately 150 Red Robin restaurants as part of its
Brand Transformation Initiative.
Restaurant-level operating profit margin in fiscal year 2015 is
expected to approach 22.0%.
General and administrative costs are expected to be between $100
million and $101 million, while selling expenses are expected to be
approximately 3.3% of sales. Pre-opening expense is expected to be
approximately $7.5 million. Depreciation and amortization is
projected to be between $78 million and $79 million.
Interest expense is expected to be approximately $4.0 million
while the income tax rate in fiscal year 2015 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 2015 is estimated to be
$0.30 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 $0.07, and a change of
approximately $145,000 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 2015 results today at 10:00 a.m. ET. The conference
call number is (877) 718-5098, or for international callers (719)
325-4796. 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 26,
2015. The replay can be accessed by dialing (877) 870-5176, or
(858) 384-5517 for international callers. The conference ID is
5686250.
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, earning the restaurant
the 2014 VIBE Vista Award for Best Beer Program in a Multi-Unit
Chain Restaurant. There are more than 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, revenues and profit margins, new restaurant
openings (including Red Robin Burger Works) and operating weeks,
capital investments including our Brand Transformation Initiative
and restaurant remodeling, restaurant relocations, future economic
performance, market share, anticipated costs, expenses, tax rate,
sensitivity of earnings per share and other projected financial
measures, statements under the heading “Outlook for 2015” 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
and initiatives to achieve restaurant sales growth; the ability to
fulfill planned expansion and restaurant remodeling; the cost and
availability of key food products, labor and energy; the ability to
achieve anticipated revenue and cost savings from our anticipated
new technology systems and other initiatives; availability of
capital or credit facility borrowings; the adequacy of cash flows
or available debt resources to fund operations and growth
opportunities; federal, state and local regulation of our business;
and other risk factors described from time to time in the Company’s
Form 10-K, Form 10-Q and Form 8-K reports (including all amendments
to those reports) filed with the U.S. Securities and Exchange
Commission.
RED ROBIN GOURMET BURGERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per share
data)
(Unaudited)
Sixteen Weeks Ended April 19, 2015
April 20, 2014 Revenues: Restaurant revenue $ 388,509
$ 334,995 Franchise royalties, fees, and other revenue 6,392
5,489 Total revenues 394,901 340,484 Costs and
expenses:
Restaurant operating costs (exclusive of
depreciation and amortization shown separately below):
Cost of sales 97,950 84,220 Labor 124,356 110,921 Other operating
46,584 40,597 Occupancy 30,147 24,282 Depreciation and amortization
23,003 18,886 General and administrative 34,995 32,100 Selling
13,066 10,323 Pre-opening costs and acquisition costs 955
2,113 Total costs and expenses 371,056 323,442 Income
from operations 23,845 17,042 Other expense: Interest
expense, net and other 1,060 674 Income before income
taxes 22,785 16,368 Provision for income taxes 6,220 4,424
Net income $ 16,565 $ 11,944 Earnings per share: Basic $
1.18 $ 0.83 Diluted $ 1.16 $ 0.82 Weighted average
shares outstanding: Basic 14,077 14,352 Diluted 14,275 14,592
RED ROBIN GOURMET BURGERS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except per share
amounts)
(Unaudited)
April 19, 2015
December 28, 2014 Assets: Current Assets: Cash and
cash equivalents $ 21,447 $ 22,408 Accounts receivable, net 12,612
23,740 Inventories 25,924 25,947 Prepaid expenses and other current
assets 19,914 23,160 Deferred tax asset and other 4,478
4,677 Total current assets 84,375 99,932
Property and equipment, net 506,619 496,262 Goodwill 83,194
84,115 Intangible assets, net 41,748 42,479 Other assets, net
19,388 13,101 Total assets $ 735,324 $ 735,889
Liabilities and Stockholders’ Equity: Current
Liabilities: Trade accounts payable $ 25,180 $ 28,522 Construction
related payables 16,815 15,652 Accrued payroll and payroll related
liabilities 42,068 47,362 Unearned revenue 32,643 45,049 Accrued
liabilities and other 25,903 27,084 Total current
liabilities 142,609 163,669 Deferred rent
59,254 57,341 Long-term debt 135,875 139,375 Long-term portion of
capital lease obligations 7,804 7,938 Other non-current liabilities
9,462 7,795 Total liabilities 355,004 376,118
Stockholders’ Equity: Common stock; $0.001 par value:
30,000 shares authorized; 17,851 and 17,851 shares issued; 14,130
and 14,043 shares outstanding 18 18 Preferred stock, $0.001 par
value: 3,000 shares authorized; no shares issued and outstanding —
— Treasury stock 3,721 and 3,808 shares, at cost (129,222 )
(132,252 ) Paid-in capital 202,676 200,617 Accumulated other
comprehensive loss, net of tax (3,029 ) (1,924 ) Retained earnings
309,877 293,312 Total stockholders’ equity 380,320
359,771 Total liabilities and stockholders’ equity $
735,324 $ 735,889
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 19, 2015 and the 16 weeks ended
April 20, 2014, net income and basic and diluted earnings per
share, excluding the effects of 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 19, 2015
April 20, 2014 Net income as reported $ 16,565
$ 11,944 Change in estimate for gift card breakage (1,369 ) —
Income tax benefit 439 — Adjusted net income $ 15,635
$ 11,944 Basic net income per share: Net income as reported
$ 1.18 $ 0.83 Change in estimate for gift card breakage (0.10 ) —
Income tax benefit 0.03 $ — Adjusted earnings per share -
basic $ 1.11 $ 0.83 Diluted net income per share: Net
income as reported $ 1.16 $ 0.82 Change in estimate for gift card
breakage (0.09 ) $ — Income tax benefit 0.03 — Adjusted
earnings per share - diluted $ 1.10 $ 0.82 Weighted
average shares outstanding Basic 14,077 14,352 Diluted 14,275
14,592
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 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
19, 2015 and the 16 weeks ended April 20, 2014, 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 19, 2015
April 20, 2014 Restaurant revenue $ 388,509
98.4 % $ 334,995 98.4 %
Restaurant operating costs (exclusive of depreciation and
amortization shown separately below): Cost of sales 97,950 25.2 %
84,220 25.1 % Labor 124,356 32.0 % 110,921 33.1 % Other operating
46,584 12.0 % 40,597 12.1 % Occupancy 30,147
7.8 % 24,282 7.3 % Restaurant-level operating
profit 89,472 23.0 % 74,975
22.4 % Add – Franchise royalties, fees, and other
revenues 6,392 1.6 % 5,489 1.6 % Deduct – other operating:
Depreciation and amortization 23,003 5.8 % 18,886 5.6 % General and
administrative 34,995 8.9 % 32,100 9.4 % Selling 13,066 3.3 %
10,323 3.0 % Pre-opening and acquisition costs 955
0.2 % 2,113 0.6 % Total other operating
72,019 18.2 % 63,422 18.6
% Income from operations 23,845 6.0 % 17,042 5.0 %
Interest expense, net and other 1,060 0.3 % 674 0.2 % Income tax
expense 6,220
1.5
% 4,424 1.3 % Total other 7,280
1.8 % 5,098 1.5 % Net income $
16,565 4.2 % $ 11,944 3.5
%
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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150519006188/en/
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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