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Ruby Tuesday, Inc. Announces Third Quarter Fiscal 2013 Results



  Ruby Tuesday, Inc. Announces Third Quarter Fiscal 2013 Results

Business Wire

MARYVILLE, Tenn. -- April 10, 2013

Ruby Tuesday, Inc. (NYSE: RT) today reported financial results for the fiscal
third quarter ended March 5, 2013.

Highlights for the third quarter of 2013 include:

  * Same-restaurant sales decreased 2.8% at Company-owned Ruby Tuesday
    restaurants and decreased 1.7% at domestic Ruby Tuesday franchise
    restaurants
  * Net income from continuing operations of $4.7 million, or $6.3 million
    excluding special items (see non-GAAP reconciliation below). This compares
    to the prior-year net income from continuing operations of $6.9 million,
    or $13.9 million excluding special items. Since the Marlin & Ray’s,
    Truffles Grill, and Wok Hay concepts met the accounting definition of
    discontinued operations in the quarter, their current and historical
    results are presented separately within our Statements of Operations and
    Comprehensive Income/(Loss).
  * Diluted earnings per share from continuing operations of $0.08, or $0.10
    excluding special items, compared to diluted earnings per share from
    continuing operations of $0.11 for the prior year, or $0.22 excluding
    special items
  * Net loss from discontinued operations of $2.5 million, or a loss of $0.04
    per diluted share, compared to net loss from discontinued operations of
    $2.3 million for the prior year, or a loss of $0.04 per diluted share
  * Repurchased 1.3 million shares of common stock for $10.1 million during
    the third quarter
  * Closed sale leaseback transactions on four restaurants during the quarter
    resulting in $8.8 million of gross proceeds, and closed sale leaseback
    transactions on an additional two restaurants subsequent to the end of the
    quarter, resulting in $5.2 million of gross proceeds

JJ Buettgen, President and CEO, commented, “I am pleased with the progress we
have made in evolving the Ruby Tuesday brand over the past quarter. We believe
the initiatives we are working on will shift consumers’ perceptions of the
brand toward a more mainstream, lively, and approachable position. We have
already introduced a handful of new menu items, and our current advertising
and merchandising materials portray a more fun, casual, and affordable
personality for the brand. As we broaden the brand’s appeal and make it
relevant for more everyday occasions, we will be able to more effectively
compete in the marketplace.

While the current operating environment is likely to remain volatile, we are
optimistic about the potential of our brand. We believe that with the right
combination of strategy, consumer insights, positioning, and execution, we can
return to a path of same-restaurant guest count and sales growth, and create
value for our shareholders as a result.”

                            Concept Closing Update

During the quarter, we incurred pre-tax lease reserve and other charges of
$4.6 million related to our previously-announced decision to close and exit
the Marlin & Ray’s, Truffles Grill, and Wok Hay concepts, and to close two
Company-developed Lime Fresh restaurants. Subsequent to our quarter end, we
made the decision to close our two Truffles Grill locations instead of
continuing to market them for sale. In addition to the aggregate pre-tax
impairment charges of $16.9 million incurred in the second quarter in
connection with the decision to exit our non-core brands and to close two
Company-developed Lime Fresh restaurants, as well as the third quarter charges
of $4.6 million outlined above, we also will incur an estimated $1.0-$2.0
million in pre-tax lease reserves and other charges in the fourth quarter
primarily related to the closure of our two Truffles Grill locations.

For accounting purposes, we have presented all current and prior-year amounts
within our Statements of Operations and Comprehensive Income/(Loss) related to
the Marlin & Ray’s, Truffles Grill, and Wok Hay concepts as discontinued
operations.

   Fiscal Year 2013 Guidance From Continuing Operations (Except for Capital
                       Expenditures and Free Cash Flow)

  * Same-Restaurant Sales – Company-owned restaurant same-restaurant sales are
    estimated to be approximately flat for the year
  * Company-Owned Restaurant Development – Plan to open eight to nine Lime
    Fresh restaurants, close two Lime Fresh restaurants, and close six to
    seven Company-owned Ruby Tuesday restaurants
  * Franchise Restaurant Development – Our domestic franchisees plan to open
    one Lime Fresh restaurant. Our international franchisees plan to open four
    to five restaurants, two of which are Lime Fresh restaurants, and close
    four to five restaurants.
  * Restaurant Operating Margins – Estimated to improve approximately 100
    basis points due to cost savings initiatives
  * Depreciation – Estimated to  be in the range of $59-$60 million for the
    year
  * Selling, General, and Administrative Expenses – Advertising expense is
    estimated to be in the range of $71-$75 million for the year compared to
    $47 million in fiscal 2012, primarily due to incremental television
    advertising expense which is largely funded by our cost savings
    initiatives and reductions in promotional spending. Excluding advertising
    expense, selling, general, and administrative expenses are estimated to be
    slightly lower primarily due to lower consulting fees and other cost
    savings initiatives being partially offset by the projected fourth quarter
    pension settlement expense attributable to the upcoming lump sum payout to
    our former CEO.
  * Interest Expense – Estimated to be $27 million for the year
  * Tax Benefit – Based on our lower pre-tax income coupled with our
    employment-related tax credits, we anticipate a net tax benefit of $5 to
    $10 million for the year
  * Diluted Earnings Per Share from Continuing Operations – Estimated to be in
    the $0.18 to $0.22 range for the year. Excluding the CEO pension
    settlement expense, new CEO transition expenses, and other closing-related
    costs primarily from our previously-announced non-core brand and Lime
    Fresh closures, diluted earnings per share for the year are estimated to
    be in the $0.28 to $0.32 range. Both guidance ranges above are exclusive
    of the net loss per share from discontinued operations for the year.
  * Fully-Diluted Weighted Average Shares Outstanding – Estimated to be
    approximately 61 million for the year
  * Capital Expenditures – Estimated to be $38-$42 million for the year
  * Free Cash Flow – Estimated to be $10-$15 million for the year. On an
    adjusted basis, free cash flow is estimated to be $22-$27 million after
    excluding the impact of our former CEO’s pension payout (approximately $8
    million) and estimated lease reserve settlements from restaurants closed
    in the fourth quarter of fiscal year 2012 and the third and fourth
    quarters of fiscal 2013 (approximately $4 million).
  * Sale Leaseback – We plan to sell approximately five to seven
    sale-leaseback locations during the fourth quarter which should generate
    estimated aggregate gross proceeds of approximately $11-$15 million

                           Non-GAAP Reconciliation

The Company believes excluding special items from its financial results
provides investors with a clearer understanding of the Company’s operating
performance and comparison to prior-period results.

Reconciliation of Net Income from Continuing Operations Excluding Special
Items
(Amounts in thousands except per share amounts)
(Unaudited)
                                                     13 Weeks     13 Weeks
                                                     Ended        Ended
                                                     March 5,     February 28,
                                                     2013         2012
                                                                   
Net Income from Continuing Operations                $  4,716     $  6,869
CEO Transition (net of tax)                             351          -
Senior Management Departures (net of tax)               306          -
Franchise Partnership Net Acquisition Gain (net         -            (534    )
of tax)
Closure and Impairment (net of tax) (1,2)               908          7,501    
Net Income from Continuing Operations Excluding      $  6,281     $  13,836   
Special Items
                                                                   
Diluted Earnings Per Share from Continuing           $  0.08      $  0.11
Operations
CEO Transition (net of tax)                             0.01         -
Senior Management Departures (net of tax)               0.00         -
Franchise Partnership Net Acquisition Gain (net         -            (0.01   )
of tax)
Closure and Impairment (net of tax) (1,2)               0.01         0.12     
Diluted Earnings Per Share Excluding Special         $  0.10      $  0.22     
Items

      Q3 FY13 includes impairments, lease reserves, and other closing-related
(1)   costs resulting from the two Q3 FY13 Lime Fresh closures, as well as
      lease reserve and other closing cost adjustments related to the 21 Q4
      FY12 closures
      Q3 FY12 includes impairment costs related to the planned closure of
(2)   25-27 underperforming restaurants, 21 of which actually closed and two
      of which (Wok Hay) are classified in discontinued operations
       

        Reporting Reclassifications to Prior-Year Financial Statements

As previously disclosed in the first and second quarter, we made several
reporting reclassifications to our prior-year statements of operations for the
13 week period ended February 28, 2012 to better align our financial statement
presentation with our peer group. These reclassifications, which had no effect
on pre-tax or net loss were primarily in two key areas: 1) Amortization of
deferred debt issuance costs and revolving credit facility commitment fees of
$0.6 million were reclassified from other restaurant operating costs to
interest expense, net; and 2) Corporate and field executive fringe benefits
and payroll taxes of $1.9 million were reclassified primarily from payroll and
related costs to selling, general, and administrative, net, where the
corresponding salary expenses are reported. In the current year quarter, these
amounts were $0.6 million and $2.0 million, respectively.

                              ABOUT RUBY TUESDAY

Ruby Tuesday, Inc. has Company-owned and/or franchise Ruby Tuesday brand
restaurants in 45 states, the District of Columbia, 11 foreign countries, and
Guam. As of March 5, 2013, we owned and operated 709 Ruby Tuesday restaurants
and franchised 77 Ruby Tuesday restaurants, comprised of 33 domestic and 44
international restaurants. Our Company-owned and operated restaurants are
concentrated primarily in the Southeast, Northeast, Mid-Atlantic, and Midwest
of the United States, which we consider to be our core markets.

Ruby Tuesday, Inc. is traded on the New York Stock Exchange (Symbol: RT).

The Company will host a conference call, which will be a live web-cast, this
afternoon at 5:00 p.m. Eastern Time. The call will be available live at the
following websites:

http://www.rubytuesday.com
http://www.earnings.com

Special Note Regarding Forward-Looking Information

This press release contains various forward-looking statements, which
represent our expectations or beliefs concerning future events, including one
or more of the following: future financial performance and restaurant growth
(both Company-owned and franchised), future capital expenditures, future
borrowings and repayments of debt, availability of financing on terms
attractive to the Company, payment of dividends, stock and bond repurchases,
restaurant acquisitions, and changes in senior management and in the Board of
Directors. We caution the reader that a number of important factors and
uncertainties could, individually or in the aggregate, cause our actual
results to differ materially from those included in the forward-looking
statements (such statements include, but are not limited to, statements
relating to cost savings that we estimate may result from any programs we
implement, our estimates of future capital spending and free cash flow, our
targets for annual growth in same-restaurant sales and average annual sales
per restaurant, and the benefits of our television marketing), including,
without limitation, the following: general economic conditions; changes in
promotional, couponing and advertising strategies; changes in our guests’
disposable income; consumer spending trends and habits; increased competition
in the restaurant market; laws and regulations affecting labor and employee
benefit costs, including further potential increases in state and federally
mandated minimum wages, and healthcare reform; guests’ acceptance of changes
in menu items; guests’ acceptance of our development prototypes and remodeled
restaurants; our ability to successfully integrate acquired companies;
mall-traffic trends; changes in the availability and cost of capital; weather
conditions in the regions in which Company-owned and franchised restaurants
are operated; costs and availability of food and beverage inventory; our
ability to attract and retain qualified managers, franchisees and team
members; impact of adoption of new accounting standards; impact of food-borne
illnesses resulting from an outbreak at either Ruby Tuesday or other
restaurant concepts; our ability to complete our planned sale-leaseback
transactions; effects of actual or threatened future terrorist attacks in the
United States; and significant fluctuations in energy prices.

RUBY TUESDAY, INC.
 
Financial Results For the Third Quarter of Fiscal Year 2013
(Amounts in thousands except per share amounts)
(Unaudited)
 
CONDENSED STATEMENTS OF OPERATIONS
                    13 Weeks                    13 Weeks                                39 Weeks                    39 Weeks                   
                    Ended                       Ended                                   Ended                       Ended
                    March 5,        Percent     February        Percent     Percent     March 5,        Percent     February        Percent     Percent
                                                28,                                                                 28,
                    2013            of          2012            of          Change      2013            of          2012            of          Change
                                    Revenue                     Revenue                                 Revenue                     Revenue
                                                                                                                                                 
Revenue:
Restaurant
sales and           $ 305,835       99.5        $ 319,350       99.6                    $ 930,699       99.5        $ 949,765       99.6
operating
revenue
Franchise             1,548         0.5           1,363         0.4                       4,684         0.5           4,104         0.4
revenue
Total revenue         307,383       100.0         320,713       100.0       (4.2  )       935,383       100.0         953,869       100.0       (1.9   )
                                                                                                                                                 
Operating Costs
and Expenses:
(as a percent
of Restaurant
sales and
operating
revenue)
Cost of               83,795        27.4          91,644        28.7                      254,505       27.3          279,078       29.4
merchandise
Payroll and           105,364       34.5          108,343       33.9                      313,287       33.7          322,573       34.0
related costs
Other
restaurant            61,946        20.3          61,444        19.2                      193,448       20.8          193,354       20.4
operating costs
Depreciation          14,614        4.8           15,941        5.0                       44,303        4.8           48,244        5.1
(as a percent
of Total
revenue)
Selling,
general and           30,276        9.8           24,506        7.6                       111,823       12.0          77,451        8.1
administrative,
net
Closures and          2,096         0.7           11,630        3.6                       5,074         0.5           12,548        1.3
impairments
Total operating
costs and             298,091                     313,508                                 922,440                     933,248  
expenses
                                                                                                                                                 
Earnings From         9,292         3.0           7,205         2.2         29.0          12,943        1.4           20,621        2.2         (37.2  )
Operations
                                                                                                                                                 
Interest              6,591         2.1           4,400         1.4                       20,562        2.2           13,295        1.4
expense, net
                                                                                                                                                 
Gain on
extinguishment        -             0.0           -             0.0                       (571    )     (0.1  )       -             0.0
of debt
                                                                                                                                                 
Pre-tax
income/(loss)         2,701         0.9           2,805         0.9         (3.7  )       (7,048  )     (0.8  )       7,326         0.8         (196.2 )
from continuing
operations
Benefit for
income taxes          (2,015  )     (0.7  )       (4,064  )     (1.3  )                   (10,634 )     (1.1  )       (2,934  )     (0.3  )
from continuing
operations
Net income from
continuing            4,716         1.5           6,869         2.1         (31.3 )       3,586         0.4           10,260        1.1         (65.0  )
operations
                                                                                                                                                 
Loss from
discontinued          (2,520  )     (0.8  )       (2,333  )     (0.7  )                   (13,859 )     (1.5  )       (4,632  )     (0.5  )
operations, net
of tax
                                                                                                                                                 
Net                 $ 2,196         0.7         $ 4,536         1.4         (51.6 )     $ (10,273 )     (1.1  )     $ 5,628         0.6         (282.5 )
Income/(Loss)
                                                                                                                                                 
                                                                                                                                                 
Basic
Earnings/(Loss)
Per Share:
Income from
continuing          $ 0.08                      $ 0.11                      (27.3 )     $ 0.06                      $ 0.16                      (62.5  )
operations
Loss from
discontinued          (0.04   )                   (0.04   )                               (0.23   )                   (0.07   )
operations
Basic Net
Earnings/(Loss)     $ 0.04                      $ 0.07                                  $ (0.17   )                 $ 0.09     
Per Share
                                                                                                                                                 
Diluted
Earnings/(Loss)
Per Share:
Income from
continuing          $ 0.08                      $ 0.11                      (27.3 )     $ 0.06                      $ 0.16                      (62.5  )
operations
Loss from
discontinued          (0.04   )                   (0.04   )                               (0.22   )                   (0.07   )
operations
Diluted Net
Earnings/(Loss)     $ 0.04                      $ 0.07                                  $ (0.16   )                 $ 0.09     
Per Share
                                                                                                                                                 
Shares:
Basic                 59,778                      62,643                                  61,532                      62,999   
Diluted               60,312                      63,053                                  61,986                      63,503   
                                                                                                                                                 

 
RUBY TUESDAY, INC.
 
Financial Results For the Third Quarter of Fiscal Year 2013
(Amounts in thousands)
(Unaudited)
                                                 March 5,        June 5,
CONDENSED BALANCE SHEETS                         2013            2012
Assets
Cash and Cash Equivalents                        $ 31,760        $ 48,184
Accounts Receivable                                5,067           4,700
Inventories                                        33,280          29,030
Income Tax Receivable                              2,327           837
Deferred Income Taxes                              35,913          27,134
Prepaid Rent and Other Expenses                    13,877          13,670
Assets Held for Sale                               9,193           4,713
                                                                  
Total Current Assets                               131,417         128,268
                                                                  
Property and Equipment, Net                        888,112         966,605
Goodwill                                           9,022           7,989
Other Assets                                       68,142          70,675
                                                                  
Total Assets                                     $ 1,096,693     $ 1,173,537
                                                                  
Liabilities
Current Portion of Long Term Debt, including
Capital Leases                                   $ 9,167         $ 12,454
Other Current Liabilities                          106,056         119,770
                                                                  
Total Current Liabilities                          115,223         132,224
                                                                  
Long-Term Debt, including Capital Leases           296,666         314,209
Deferred Income Taxes                              22,420          37,567
Deferred Escalating Minimum Rents                  45,966          45,259
Other Deferred Liabilities                         75,793          68,054
                                                                  
Total Liabilities                                  556,068         597,313
                                                                  
Shareholders’ Equity                               540,625         576,224
                                                                  
Total Liabilities and Shareholders’ Equity       $ 1,096,693     $ 1,173,537

Contact:

Ruby Tuesday, Inc.
Greg Ashley, 865-379-5700
VP Finance and Treasurer
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