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 12 weeks ended July 12, 2015.
Second Quarter 2015 Financial Highlights Compared to Prior
Year
- Total revenues were $293.0 million, an
increase of 14.4%
- Comparable restaurant revenue increased
2.9%
- Restaurant-level operating profit, as a
percent of restaurant revenue, increased to 22.5% from 22.2% (See
Schedule II)
- EBITDA increased 19.6% to $35.0 million
from $29.3 million (as adjusted, See Schedule III)
- Net income increased 13.6% to $11.2
million from $9.8 million (as adjusted, see Schedule
I)
- Earnings per diluted share increased
14.7% to $0.78 compared to $0.68 (as adjusted, see Schedule I)
Year to date net income was $27.7 million, an increase of 29.5%.
After adjusting for a change in accounting estimate for gift card
breakage in the current year and executive transition costs in the
prior year, year to date net income increased 23.1% to $26.8
million. Year to date earnings per diluted share was $1.94,
compared to $1.47 a year ago, an increase of 32.0%. Year to date
earnings per diluted share on an adjusted basis was $1.88 compared
to $1.50 a year ago, an increase of 25.3%. 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 continue to be pleased with the progress we are making
toward a best in class brand experience. Our guests are choosing to
visit us more frequently and they are trading up to our newest
burgers and beers,” said Steve Carley, Red Robin Gourmet Burgers,
Inc. chief executive officer. “As a result, we have now
outperformed the casual dining industry in reported comparable
sales for the last four years and outpaced them on traffic by over
200 basis points during the second quarter.”
Operating Results
Total Company revenues, which include Company-owned restaurant
revenue and franchise royalties, increased 14.4% to $293.0 million
in the second quarter of 2015 from $256.1 million in the second
quarter of 2014. New restaurant openings, including acquisitions
and net of closures, contributed $29.7 million of additional
revenue, while comparable restaurant revenue increased $7.2
million.
System-wide restaurant revenue (including franchised units) for
the second quarter of 2015 totaled $363.2 million, compared to
$341.5 million for the second quarter in 2014 at constant currency
rates.
Comparable restaurant revenue increased 2.9% in the second
quarter of 2015 compared to the same period a year ago, driven by a
0.5% increase in guest counts and a 2.4% 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 second quarter of 2015 compared to 22.2%
in the same period a year ago, an improvement of 30 basis points.
The improved margin resulted from a 50 basis point decrease in cost
of sales and a 40 basis point decrease in labor costs, partially
offset by higher occupancy costs, including 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) Q2 2015
Q2 2014 Average weekly sales per unit: Company-owned – Total
$ 58,321 $ 57,549 Company-owned – Comparable $ 59,234 $
57,556 Franchised units (2) $ 62,676 $ 57,478 Total operating
weeks: Company-owned units 4,916 4,360 Franchised units 1,188 1,560
_________________________________________________________
(1)
Excludes Red Robin Burger Works® fast
casual restaurants, which had 120 and 64 operating weeks in the
second quarter of 2015 and 2014
(2)
Calculated at current currency exchange
rates
Other Results
Depreciation and amortization costs increased to $17.3 million
in the second quarter of 2015 from $14.1 million in the second
quarter of 2014. The increased depreciation was primarily related
to new restaurants opened and acquired since the second quarter
2014 and restaurants remodeled under the Brand Transformation
Initiative.
General and administrative costs were $23.0 million, or 7.9% of
total revenues, in the second quarter of 2015, compared to $20.4
million, or 8.0% of revenues in the same period a year ago. The
increase of $2.6 million resulted primarily from increased
incentive compensation, incremental Canadian costs and higher
manager hiring and training costs.
Selling expenses were $11.1 million, or 3.8% of total revenues,
in the second quarter of 2015, compared to $9.9 million, or 3.9% of
total revenues, a year ago due to increased spending associated
with higher gift card sales and other marketing initiatives.
Pre-opening costs were $1.4 million in the second quarter of
2015, compared to $2.3 million in the same period a year ago. The
decrease is due to fewer restaurant openings in 2015 in addition to
$0.7 million in acquisition costs included in the second quarter of
2014.
The Company had an effective tax rate of 28.3% in the second
quarter of 2015, compared to a 27.1% rate in the same period a year
ago.
Restaurant Development
As of the end of the second quarter of 2015, there were 412
Company-owned Red Robin® restaurants, 10 Red Robin Burger Works®
and 99 franchised Red Robin restaurants for a total of 521
restaurants. During the second quarter, the Company opened four Red
Robin restaurants, including the reopening of one Red Robin
restaurant that was temporarily closed in 2014 due to public
construction.
Under the Brand Transformation Initiative, the Company completed
31 remodels during the second quarter towards its goal of 150
remodels this year. The Company anticipates having a total of 295
restaurants conforming to the new brand standards by year end,
including new restaurant openings.
Balance Sheet and Liquidity
As of July 12, 2015, the Company had cash and cash equivalents
of $22.6 million and total debt of $145.1 million, including $8.2
million of capital lease liabilities. The Company decreased debt by
$2.8 million since the beginning of fiscal year 2015.
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 comparable revenue
growth of approximately 3.0% and total revenue growth near 12.0%.
The Company plans to open 20 new Red Robin restaurants and three to
five Red Robin Burger Works resulting in operating week growth,
inclusive of 2014 acquisitions, approaching 9.0%.
Capital investments in fiscal year 2015 are expected to be
approximately $170 million. In addition to the new restaurant
openings, the Company plans to relocate three restaurants and
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 22.2%.
General and administrative costs are expected to be between $101
million and $103 million, while selling expenses are expected to be
approximately 3.3% of sales. Pre-opening expense is expected to be
approximately $7.0 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
$0.33 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 $0.08, 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
second quarter 2015 results today at 10:00 a.m. ET. The conference
call number is (888) 609-5701, or for international callers (913)
905-3216. 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, August 18,
2015. The replay can be accessed by dialing (877) 870-5176, or
(858) 384-5517 for international callers. The conference ID is
6807530.
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)
Twelve Weeks Ended Twenty-eight Weeks Ended
July 12, 2015 July 13, 2014 July 12,
2015 July 13, 2014 Revenues:
Restaurant revenue $ 288,704 $ 251,818 $ 677,213 $ 586,813
Franchise royalties, fees, and other revenue 4,275 4,315
10,667 9,804 Total revenues 292,979
256,133 687,880 596,617 Costs and
expenses:
Restaurant operating costs (exclusive of
depreciation and amortization shown separately below):
Cost of sales 71,665 63,689 169,615 147,909 Labor 93,513 82,572
217,869 193,493 Other operating 35,356 31,022 81,940 71,619
Occupancy 23,210 18,618 53,357 42,900 Depreciation and amortization
17,260 14,120 40,263 33,006 General and administrative 23,044
20,442 58,039 52,540 Selling 11,082 9,878 24,148 20,203 Pre-opening
costs and acquisition costs 1,369 2,326 2,324
4,439 Total costs and expenses 276,499 242,667
647,555 566,109 Income from operations 16,480
13,466 40,325 30,508 Other expense: Interest expense, net
and other 904 475 1,964 1,149
Income before income taxes 15,576 12,991 38,361 29,359 Provision
for income taxes 4,410 3,521 10,630 7,945
Net income $ 11,166 $ 9,470 $ 27,731 $
21,414 Earnings per share: Basic $ 0.79 $ 0.66
$ 1.96 $ 1.49 Diluted $ 0.78 $ 0.65 $
1.94 $ 1.47 Weighted average shares outstanding:
Basic
14,142
14,312
14,134
14,335
Diluted 14,311 14,528 14,322 14,565
RED ROBIN GOURMET BURGERS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except per share
amounts)
(Unaudited)
July 12, 2015
December 28, 2014 Assets: Current Assets: Cash and
cash equivalents $ 22,615 $ 22,408 Accounts receivable, net 15,835
23,740 Inventories 26,655 25,947 Prepaid expenses and other current
assets 23,752 23,160 Deferred tax asset and other 4,461
4,677 Total current assets 93,318 99,932
Property and equipment, net 530,018 496,262 Goodwill 83,033
84,115 Intangible assets, net 41,173 42,479 Other assets, net
19,295 13,101 Total assets $ 766,837 $ 735,889
Liabilities and Stockholders’ Equity: Current
Liabilities: Trade accounts payable $ 24,581 $ 28,522 Construction
related payables 24,661 15,652 Accrued payroll and payroll related
liabilities 43,158 47,362 Unearned revenue 31,764 45,049 Accrued
liabilities and other 33,121 27,084 Total current
liabilities 157,285 163,669 Deferred rent
61,122 57,341 Long-term debt 136,875 139,375 Long-term portion of
capital lease obligations 7,672 7,938 Other non-current liabilities
10,082 7,795 Total liabilities 373,036 376,118
Stockholders’ Equity: Common stock, $0.001 par value:
45,000 shares authorized; 17,851 and 17,851 shares issued; 14,176
and 14,043 shares outstanding 18 18 Preferred stock, $0.001 par
value: 3,000 shares authorized; no shares issued and outstanding —
— Treasury stock 3,675 and 3,808 shares, at cost (127,627 )
(132,252 ) Paid-in capital 204,082 200,617 Accumulated other
comprehensive loss, net of tax (3,715 ) (1,924 ) Retained earnings
321,043 293,312 Total stockholders’ equity 393,801
359,771 Total liabilities and stockholders’ equity $
766,837 $ 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 12 and 28 weeks ended July 12, 2015 and the 12 and 28
weeks ended July 13, 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.
Twelve Weeks Ended
Twenty-eight Weeks Ended July 12, 2015
July 13, 2014 July 12, 2015 July 13,
2014 Net income as reported $ 11,166 $ 9,470 $ 27,731 $ 21,414
Change in estimate for gift card breakage — — (1,369 ) — Executive
transition costs — 544 — 544 Income tax benefit (expense) —
(183 ) 439 (183 ) Adjusted net income $ 11,166 $
9,831 $ 26,801 $ 21,775 Basic net
income per share: Net income as reported $ 0.79 $ 0.66 $ 1.96 $
1.49 Change in estimate for gift card breakage — — (0.10 ) —
Executive transition costs — 0.04 — 0.04 Income tax benefit
(expense) — (0.01 ) 0.03 (0.01 ) Adjusted earnings
per share - basic $ 0.79 $ 0.69 $ 1.89 $ 1.52
Diluted net income per share: Net income as reported
$ 0.78 $ 0.65 $ 1.94 $ 1.47 Change in estimate for gift card
breakage — — (0.09 ) — Executive transition costs — 0.04 — 0.04
Income tax benefit (expense) — (0.01 ) 0.03 (0.01 )
Adjusted earnings per share - diluted $ 0.78 $ 0.68 $
1.88 $ 1.50 Weighted average shares
outstanding Basic 14,142 14,312 14,134 14,335 Diluted 14,311 14,528
14,322 14,565
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 12 and 28 weeks ended
July 12, 2015 and the 12 and 28 weeks ended July 13, 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.
Twelve Weeks Ended
Twenty-eight Weeks Ended July 12, 2015
July 13, 2014 July 12, 2015 July 13,
2014 Restaurant revenue $ 288,704 98.5 % $
251,818 98.3 % $ 677,213
98.4 % $ 586,813 98.4 % Restaurant operating
costs (exclusive of depreciation and amortization shown separately
below): Cost of sales 71,665 24.8 % 63,689 25.3 % 169,615 25.0 %
147,909 25.2 % Labor 93,513 32.4 % 82,572 32.8 % 217,869 32.2 %
193,493 33.0 % Other operating 35,356 12.3 % 31,022 12.3 % 81,940
12.1 % 71,619 12.2 % Occupancy 23,210 8.0 %
18,618 7.4 % 53,357 7.9 %
42,900 7.3 % Restaurant-level operating profit
64,960 22.5 % 55,917 22.2
% 154,432 22.8 % 130,892
22.3 % Add – Franchise royalties, fees, and other revenues
4,275 1.5 % 4,315 1.7 % 10,667 1.6 % 9,804 1.6 % Deduct – other
operating: Depreciation and amortization 17,260 5.9 % 14,120 5.5 %
40,263 5.9 % 33,006 5.5 % General and administrative 23,044 7.9 %
20,442 8.0 % 58,039 8.4 % 52,540 8.8 % Selling 11,082 3.8 % 9,878
3.9 % 24,148 3.5 % 20,203 3.4 % Pre-opening and acquisition costs
1,369 0.5 % 2,326 0.9 %
2,324 0.3 % 4,439 0.7 %
Total other operating 52,755 18.0 % 46,766
18.3 % 124,774 18.1 %
110,188 18.4 % Income from operations
16,480 5.6 % 13,466 5.3 % 40,325 5.9 % 30,508 5.1 % Interest
expense, net and other 904 0.3 % 475 0.2 % 1,964 0.3 % 1,149 0.2 %
Income tax expense 4,410 1.5 % 3,521
1.4 % 10,630 1.6 % 7,945
1.3 % Total other 5,314 1.8 %
3,996 1.6 % 12,594 1.9 %
9,094 1.5 % Net income $ 11,166
3.8 % $ 9,470 3.7 % 27,731
4.0 % 21,414 3.6 %
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 restaurant
impairments. 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. 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.
Twelve Weeks Ended
Twenty-eight Weeks Ended July 12, 2015
July 13, 2014 July 12, 2015 July 13,
2014 Net income as reported $ 11,166 $ 9,470 $ 27,731 $ 21,414
Interest expense, net 805 619 1,893 1,308 Provision for income
taxes 4,410 3,521 10,630 7,945 Depreciation and amortization 17,260
14,120 40,263 33,006 Non-cash stock based compensation 1,403 1,021
2,849 2,030 EBITDA 35,044 28,751 83,366
65,703 Change in estimate for gift card breakage —
— (1,369 ) — Executive transition — 544 — 544
Adjusted EBITDA $ 35,044 $ 29,295 $ 81,997 $ 66,247
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150811005375/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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