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 October 4, 2015.
Third Quarter 2015 Financial Highlights
- Total revenues were $283.4 million, an
increase of 6.0%
- Comparable restaurant revenue increased
3.5%
- Restaurant-level operating profit, as a
percent of restaurant revenue, increased to 21.6% from 19.5% (see
Schedule II)
- EBITDA increased 22.1% to $31.2 million
from $25.6 million (see Schedule III)
- Net income increased 14.9% to $8.3
million from $7.2 million
- Earnings per diluted share increased
16.0% to $0.58 compared to $0.50
Year to date net income was $36.0 million, an increase of 25.8%.
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 21.0% to $35.1
million. Year to date earnings per diluted share was $2.52,
compared to $1.97 a year ago, an increase of 27.9%. Year to date
earnings per diluted share on an adjusted basis was $2.46 compared
to $2.00 a year ago, an increase of 23.0%. 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.
“Our guests continue to react favorably to our restaurant
upgrades and our menu innovation, both of which are critical in
this increasingly competitive environment,” said Steve Carley, Red
Robin Gourmet Burgers, Inc. chief executive officer. “Our third
quarter sales increase is the direct result of guests enjoying more
of what we have to offer.”
Operating Results
Total Company revenues, which primarily include Company-owned
restaurant revenue and franchise royalties, increased 6.0% to
$283.4 million in the third quarter of 2015 from $267.4 million in
the third quarter of 2014. Comparable restaurant revenue increased
$8.2 million, new restaurant openings, including acquisitions and
net of closures, contributed $7.4 million of additional revenue,
and franchise and other revenue increased $0.4 million. The $7.4
million additional revenue from newly opened and acquired
restaurants included a $2.1 million unfavorable foreign exchange
impact.
System-wide restaurant revenue (including franchised units) for
the third quarter of 2015 totaled $350.6 million, compared to
$330.9 million for the third quarter in 2014.
Comparable restaurant revenue increased 3.5% in the third
quarter of 2015 compared to the same period a year ago, driven by a
3.6% increase in average guest check and offset by 0.1% decrease in
guest count. 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 21.6% in the third quarter of 2015 compared to 19.5%
in the same period a year ago, an improvement of 210 basis points.
The improved margin resulted from a 150 basis point decrease in
cost of sales and a 70 basis point decrease in labor costs,
partially offset by higher 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.
Restaurant Revenue Performance (1)
Q3 2015 Q3 2014 Average
weekly sales per unit: Company-owned – Total $ 55,780 $ 54,684
Company-owned – Comparable $ 56,462 $ 54,580 Franchised units –
Comparable $ 59,664 $ 57,179 Total operating weeks: Company-owned
units 4,978 4,803 Franchised units 1,195 1,176
(1)
Excludes Red Robin Burger Works® fast
casual restaurants, which had 120 and 84 operating weeks in the
third quarter of 2015 and 2014
Other Results
Depreciation and amortization costs increased to $18.6 million
in the third quarter of 2015 from $15.2 million in the third
quarter of 2014. The increased depreciation was primarily related
to restaurants remodeled under the Brand Transformation Initiative
and new restaurants opened since the third quarter 2014.
General and administrative costs were $23.7 million, or 8.4% of
total revenues, in the third quarter of 2015, compared to $20.1
million, or 7.5% of revenues in the same period a year ago. The
increase of $3.6 million resulted primarily from increased
incentive compensation, and higher manager hiring and training
costs.
Selling expenses were flat at $7.9 million, or 2.8% of total
revenues, in the third quarter of 2015, compared to $7.7 million,
or 2.9% of total revenues in the prior year.
Pre-opening costs, including acquisition-related costs, were
$2.2 million in the third quarter of 2015, compared to $2.6 million
in the same period a year ago. A $0.5 million decrease in
acquisition costs was partially offset by an increase in restaurant
pre-opening costs due to the timing of restaurant openings in
2015.
The Company had an effective tax rate of 21.9% in the third
quarter of 2015, compared to a 12.5% rate in the same period a year
ago. The year to date effective tax rate was 26.5%, compared to a
23.9% rate in same period of 2014.
Restaurant Development
As of the end of the third quarter of 2015, there were 418
Company-owned Red Robin® restaurants, 10 Red Robin Burger Works®
and 99 franchised Red Robin restaurants for a total of 527
restaurants. During the third quarter, the Company opened five Red
Robin restaurants, relocated three Red Robin restaurants, and
acquired one franchised restaurant.
Under the Brand Transformation Initiative, the Company completed
53 remodels during the third quarter towards its goal of 150
remodels this year. The Company anticipates having over 300
restaurants conforming to the new brand standards by year end,
including new restaurant openings.
Balance Sheet and Liquidity
As of October 4, 2015, the Company had cash and cash equivalents
of $21.8 million and total debt of $172.9 million, including $8.1
million of capital lease liabilities. The Company increased debt by
$25.0 million since the beginning of fiscal year 2015.
During the third quarter, the Company purchased 136,568 shares
of the Company's common stock for $10.6 million. As
of October 4, 2015, there was approximately $39.4 million
remaining under the current board authorization for stock
repurchases.
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 2.5% and total revenue growth near 11.0%.
The Company plans to open 20 new Red Robin restaurants and three
Red Robin Burger Works in fiscal year 2015 resulting in operating
week growth, inclusive of 2014 acquisitions, approaching 8.5%.
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 (a non-GAAP financial
measure) in fiscal year 2015 is expected to be approximately
22.3%.
General and administrative costs are expected to be between $102
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 26.5%.
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
third quarter 2015 results today at 10:00 a.m. ET. The conference
call number is (888) 812-8515, or for international callers (913)
312-6675. 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, November
10, 2015. The replay can be accessed by dialing (877) 870-5176, or
(858) 384-5517 for international callers. The conference ID is
205397.
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 Forty Weeks Ended
October 4, 2015 October 5, 2014
October 4, 2015 October 5, 2014
Revenues: Restaurant revenue $ 279,496 $ 263,883 $ 956,709 $
850,696 Franchise royalties, fees and other revenue 3,916
3,493 14,583 13,297 Total revenues 283,412
267,376 971,292 863,993 Costs and expenses:
Restaurant operating costs (exclusive of depreciation and
amortization shown separately below): Cost of sales 68,197 68,241
237,812 216,150 Labor 92,097 88,918 309,966 282,410 Other operating
36,144 34,124 118,084 105,744 Occupancy 22,804 21,222 76,161 64,122
Depreciation and amortization 18,618 15,209 58,881 48,216 General
and administrative 23,709 20,106 81,748 72,645 Selling 7,899 7,725
32,047 27,928 Pre-opening costs and acquisition costs 2,239
2,605 4,563 7,045 Total costs and expenses 271,707
258,150 919,262 824,260 Income from
operations 11,705 9,226 52,030 39,733 Other expense:
Interest expense, net and other 1,098 986 3,062
2,134 Income before income taxes 10,607 8,240 48,968
37,599 Provision for income taxes 2,325 1,032 12,955
8,977 Net income $ 8,282 $ 7,208 $ 36,013
$ 28,622 Earnings per share: Basic $ 0.59 $ 0.51
$ 2.55 $ 2.00 Diluted $ 0.58 $ 0.50 $
2.52 $ 1.97 Weighted average shares outstanding: Basic
14,138 14,216 14,115 14,299 Diluted 14,309 14,397 14,297 14,517
RED ROBIN GOURMET BURGERS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except per share
amounts)
(Unaudited)
October 4, 2015
December 28, 2014 Assets: Current Assets: Cash and
cash equivalents $ 21,823 $ 22,408 Accounts receivable, net 12,875
23,740 Inventories 26,643 25,947 Prepaid expenses and other current
assets 19,360 23,160 Deferred tax asset and other 4,184
4,677 Total current assets 84,885 99,932
Property and equipment, net 580,631 496,262 Goodwill 82,646
84,115 Intangible assets, net 40,275 42,479 Other assets, net
13,892 13,101 Total assets $ 802,329 $ 735,889
Liabilities and Stockholders’ Equity: Current
Liabilities: Trade accounts payable $ 22,244 $ 28,522 Construction
related payables 33,248 15,652 Accrued payroll and payroll related
liabilities 46,494 47,362 Unearned revenue 30,221 45,049 Accrued
liabilities and other 31,512 27,084 Total current
liabilities 163,719 163,669 Deferred rent
63,635 57,341 Long-term debt 164,875 139,375 Long-term portion of
capital lease obligations 7,534 7,938 Other non-current liabilities
9,647 7,795 Total liabilities 409,410 376,118
Stockholders’ Equity: Common stock; $0.001 par value:
45,000 shares authorized; 17,851 and 17,851 shares issued; 14,047
and 14,043 shares outstanding 18 18 Preferred stock, $0.001 par
value: 3,000 shares authorized; no shares issued and outstanding —
— Treasury stock 3,804 and 3,808 shares, at cost (137,211 )
(132,252 ) Paid-in capital 205,255 200,617 Accumulated other loss,
net of tax (4,468 ) (1,924 ) Retained earnings 329,325
293,312 Total stockholders’ equity 392,919 359,771
Total liabilities and stockholders’ equity $ 802,329
$ 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 40 weeks ended October 4, 2015 and the 12 and 40
weeks ended October 5, 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 Forty
Weeks Ended October 4, 2015 October 5,
2014 October 4, 2015 October 5,
2014 Net income as reported $ 8,282 $ 7,208 $ 36,013 $ 28,622
Change in estimate for gift card breakage — — (1,369 ) — Executive
transition costs — — — 544 Income tax benefit (expense) — —
439 (183 ) Adjusted net income $ 8,282 $ 7,208
$ 35,083 $ 28,983 Basic net income per
share: Net income as reported $ 0.59 $ 0.51 $ 2.55 $ 2.00 Change in
estimate for gift card breakage — — (0.10 ) — Executive transition
costs — — — 0.04 Income tax benefit (expense) — —
0.03 (0.01 ) Adjusted earnings per share - basic $ 0.59
$ 0.51 $ 2.48 $ 2.03 Diluted net
income per share: Net income as reported $ 0.58 $ 0.50 $ 2.52 $
1.97 Change in estimate for gift card breakage — — (0.09 ) —
Executive transition costs — — — 0.04 Income tax benefit (expense)
— — 0.03 (0.01 ) Adjusted earnings per share -
diluted $ 0.58 $ 0.50 $ 2.46 $ 2.00
Weighted average shares outstanding Basic 14,138 14,216
14,115 14,299 Diluted 14,308 14,397 14,297 14,517
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 40 weeks ended
October 4, 2015 and the 12 and 40 weeks ended October 5, 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 Forty
Weeks Ended October 4, 2015 October 5,
2014 October 4, 2015 October 5,
2014 Restaurant revenues $ 279,496 98.6 %
$ 263,883 98.7 % $ 956,709
98.5 % $ 850,696 98.5 % Restaurant
operating costs (exclusive of depreciation and amortization shown
separately below): Cost of sales 68,197 24.4 % 68,241 25.9 %
237,812 24.9 % 216,150 25.4 % Labor 92,097 33.0 % 88,918 33.7 %
309,966 32.4 % 282,410 33.2 % Other operating 36,144 12.9 % 34,124
12.9 % 118,084 12.3 % 105,744 12.4 % Occupancy 22,804
8.1 % 21,222 8.0 % 76,161 8.0 % 64,122
7.6 % Restaurant-level operating profit 60,254
21.6 % 51,378 19.5 % 214,686
22.4 % 182,270 21.4 % Add – Franchise
royalties, fees and other revenue 3,916 1.4 % 3,493 1.3 % 14,583
1.5 % 13,297 1.5 % Deduct – other operating: Depreciation and
amortization 18,618 6.6 % 15,209 5.7 % 58,881 6.1 % 48,216 5.6 %
General and administrative expenses 23,709 8.4 % 20,106 7.5 %
81,748 8.4 % 72,645 8.4 % Selling 7,899 2.8 % 7,725 2.9 % 32,047
3.3 % 27,928 3.2 % Pre-opening & acquisition costs 2,239
0.8 % 2,605 1.0 % 4,563 0.5 %
7,045 0.8 % Total other operating 52,465
18.6 % 45,645 17.1 % 177,239
18.3 % 155,834 18.0 % Income from operations
11,705 4.1 % 9,226 3.5 % 52,030 5.4 % 39,733 4.6 % Interest
expense, net and other 1,098 0.4 % 986 0.4 % 3,062 0.4 % 2,134 0.2
% Income tax expense 2,325 0.8 % 1,032
0.4 % 12,955 1.3 % 8,977 1.1 % Total
other 3,423 1.2 % 2,018 0.8 % 16,017
1.7 % 11,111 1.3 % Net income $
8,282 2.9 % $ 7,208 2.7 % 36,013
3.7 % 28,622 3.3 %
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 Forty
Weeks Ended October 4, 2015 October 5,
2014 October 4, 2015 October 5,
2014 Net income as reported $ 8,282 $ 7,208 $ 36,013 $ 28,622
Interest expense, net 777 927 2,670 2,233 Provision for income
taxes 2,325 1,032 12,955 8,977 Depreciation and amortization 18,618
15,209 58,881 48,216 Non-cash stock based compensation 1,194
1,178 4,043 3,211 EBITDA 31,196 25,554
114,562 91,259 Change in estimate for gift card
breakage — — (1,369 ) — Executive transition — — —
544 Adjusted EBITDA $ 31,196 $ 25,554 $
113,193 $ 91,803
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151103005429/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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