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Red Robin Gourmet Burgers Reports Results for the Fiscal First Quarter Ended April 21, 2013



  Red Robin Gourmet Burgers Reports Results for the Fiscal First Quarter Ended
  April 21, 2013

Business Wire

GREENWOOD VILLAGE, Colo. -- May 21, 2013

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 21, 2013.

Fiscal First Quarter 2013 Financial Highlights:

  * Earnings per diluted share were $0.66, compared to fiscal first quarter
    2012 earnings per diluted share of $0.71.
  * Total revenues increased 2.3% to $306.3 million; Company-owned comparable
    restaurant revenues increased 2.2% compared to the same period a year ago.
  * Restaurant-level operating profit margin increased to 21.5% from 21.2%
    (See Schedule I).

Net income for the 16 weeks ended April 21, 2013, was $9.5 million compared to
$10.6 million in the 16 weeks ended April 15, 2012.

“Overall, we were pleased with Red Robin’s business performance during the
first quarter as we achieved our 11^th consecutive quarter of same store sales
growth and we continued expansion of our operating margins,” said Steve
Carley, Red Robin Gourmet Burgers, Inc. chief executive officer. “Seasonality
shifts from changes in our reporting period and media timing had a negative
impact on our guest traffic and earnings in the first quarter this year.
However, we remain encouraged by our strong guest counts relative to the
casual dining category as a whole. We also made significant progress on our
strategic road map initiatives, including the promising results we achieved
with our brand transformation initiative. Our success to date gives us the
confidence that we are positioning Red Robin for continued growth and
profitability.”

Operating Results

Total Company revenues, which include Company-owned restaurant revenues and
franchise royalties, increased 2.3% to $306.3 million in the first quarter of
2013 from $299.5 million in the fiscal first quarter of 2012.

System-wide restaurant revenues in the first quarter of 2013 totaled $416.6
million, compared to $414.2 million in the same period last year at constant
currency rates.

Comparable restaurant revenues increased 2.2% for Company-owned restaurants in
the first quarter of 2013 compared to the prior year. In the first quarter,
guest counts decreased 0.6% on a comparable basis while average guest check
increased 2.8%. The Company’s comparable revenue growth is calculated by
comparing the same calendar weeks which, for 2012, vary from the Company’s
fiscal reporting by one week.

Restaurant revenue performance

 
                                   Q1 2013     Q1 2012
Average weekly sales per unit:                  
Company-owned* - Total             $55,978     $56,303
Company-owned* - Comparable        $55,982     $54,794
Franchised units                   $54,171     $54,702
Total operating weeks:                          
Company-owned units                5,444       5,244
Franchised units                   2,128       2,186
*Includes Company-owned casual dining restaurants only

Restaurant-level operating profit margins at Company-owned restaurants were
21.5% in the first quarter of 2013 compared to 21.2% in the first quarter of
2012, an improvement of 30 basis points. The higher margins resulted primarily
from lower food and beverage costs and other operating costs as a percentage
of sales, partially offset by higher labor expenses and occupancy costs.
Schedule I 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.

Other Results

Depreciation and amortization costs were $17.8 million, an increase of $1.2
million from the first quarter of 2012 due primarily to the opening of new
restaurants and the placing of new information technology systems into
service.

General and administrative costs were $29.0 million, an increase of $3.5
million in the first quarter of 2013 due mainly to investments in talent to
support value-enhancing initiatives and higher incentive-based compensation.
Selling expenses were $8.6 million in the first quarter of 2013, an increase
of $0.3 million from a year ago.

Net interest expense was $1.1 million, a decrease of $0.7 million from the
same period a year ago as a result of the Company’s debt refinancing in
December 2012 as well as lower average borrowings.

The Company had an effective tax rate of 23.9% in the first quarter of 2013,
compared to a 24.1% rate in the same period a year ago.

Restaurant Openings

As of the end of the first quarter of 2013, there were 337 Company-owned Red
Robin^® restaurants, five Red Robin’s Burger Works^® and 133 franchised Red
Robin restaurants – a total of 475 locations. In the first quarter of 2013,
the Company opened three new Red Robin restaurants.

Balance Sheet and Liquidity

On April 21, 2013, the Company had cash and cash equivalents of $17.4 million
and total debt of $100.2 million, including $9.7 million of capital lease
liabilities.

During the first quarter of 2013, cash generated from operations totaled $40.4
million compared to $29.6 million in the first quarter of 2012, and capital
investments amounted to $13.6 million compared to $10.4 million in the same
period a year ago.

Outlook for 2013

Red Robin’s 2013 fiscal year consists of 52 weeks ending on December 29, 2013,
compared to fiscal 2012, which consisted of 53 weeks.

In 2013, the Company expects comparable restaurant sales growth of 2.5% to
3.0% compared to 2012 based on a combination of increases in prices, items
sold per guest and increased guest visits.

The Company is increasing its projected capital investments to approximately
$70 million. The Company plans to open 20 new company-owned Red Robin
restaurants in addition to several Red Robin’s Burger Works restaurants and
intends to remodel 20 existing Red Robin restaurants as part of its brand
transformation initiative.

Restaurant-level operating profit margins in 2013 are expected to be near
20.9%.

General and administrative costs are expected to be near $87 million, while
selling expenses are expected to be approximately 2.8% of sales. Depreciation
is projected to be between $59 million and $60 million, including accelerated
depreciation associated with the remodeling program.

The income tax rate in 2013 is expected to be near 24%.

The sensitivity of the Company’s earnings per diluted share to a 1% change in
guest counts for fiscal 2013 is estimated to be $0.23 on an annualized basis.
Additionally, a 10 basis point change in restaurant-level operating margin is
expected to impact earnings per diluted share by approximately $0.05, and a
change of $187,000 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
2013 results today at 10:00 a.m. ET. The conference call number is (877)
741-4249, or for international callers (719) 325-4805. 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 28, 2013. The replay can be accessed by dialing (877)
870-5176, or (858) 384-5517 for international callers. The conference ID is
6811617. The webcast replay will also be available on the Company’s website
until midnight on Sunday, July 14, 2013.

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 expert, famous for serving
more than two dozen craveable, high-quality burgers with Bottomless Steak
Fries^® in a fun environment. Red Robin’s award-winning burgers have earned
the title of Best Burger in the full-service category in the Zagat Fast Food
Survey four years in a row. In addition to its many burger offerings, Red
Robin serves a wide variety of salads, soups, appetizers, entrees, desserts
and signature Mad Mixology^® Beverages. There currently are 475 Red Robin
locations across the United States and Canada, including 337 company-owned Red
Robin restaurants and five Red Robin’s Burger Works ^ locations, and 133 Red
Robin restaurants 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 expected
earnings per share, restaurant sales, new restaurant growth, brand
transformation initiative, future economic performance, costs and capital
expenditures, certain statements under the heading “Outlook for 2013” and all
other statements that are not historical facts, are made under the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. These
statements are based on assumptions believed by the Company to be reasonable
and speak only as of the date on which such statements are made. Without
limiting the generality of the foregoing, words such as “expect,” “believe,”
“anticipate,” “intend,” “plan,” “project,” 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, loyalty
program and guest count initiatives to achieve restaurant sales growth; the
ability to fulfill planned expansion; 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 21, 2013   April 15, 2012
                                                                 
Revenues:
Restaurant revenue                             $  301,313       $  294,642   
Franchise royalties, fees and other revenue       5,036            4,817     
Total revenues                                    306,349          299,459   
                                                                 
Costs and expenses:
Restaurant operating costs (exclusive of
depreciation
 and amortization shown separately below):
Cost of sales                                     74,982           75,075
Labor                                             101,882          98,606
Other operating                                   37,090           37,405
Occupancy                                         22,573           21,114
Depreciation and amortization                     17,834           16,652
General and administrative                        28,967           25,500
Selling                                           8,641            8,377
Pre-opening costs                                 834              983       
Total costs and expenses                          292,803          283,712   
                                                                 
Income from operations                            13,546           15,747
                                                                 
Other expense:
Interest expense, net and other                   1,089            1,833     
                                                                 
Income before income taxes                        12,457           13,914
Provision for income taxes                        2,977            3,356     
Net income                                     $  9,480         $  10,558    
Earnings per share:
Basic                                          $  0.67          $  0.72      
Diluted                                        $  0.66          $  0.71      
Weighted average shares outstanding:
Basic                                             14,062           14,611    
Diluted                                           14,341           14,894    

                                                            
                                                              
RED ROBIN GOURMET BURGERS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
(Unaudited)
                                                              
                                            April 21, 2013   December 30, 2012
Assets:
Current Assets:
Cash and cash equivalents                   $  17,375        $   22,440
Accounts receivable, net                       9,198             16,386
Inventories                                    18,325            18,371
Prepaid expenses and other current assets      8,952             13,439
Deferred tax asset and other                   3,238             3,868       
Total current assets                           57,088            74,504      
                                                              
Property and equipment, net                    410,573           413,258
Goodwill                                       62,525            62,525
Intangible assets, net                         36,892            37,203
Other assets, net                              9,633             9,642       
Total assets                                $  576,711       $   597,132     
                                                              
Liabilities and Stockholders’ Equity:
Current Liabilities:
Trade accounts payable                      $  13,974        $   14,241
Construction-related payables                  4,682             4,694
Accrued payroll and related liabilities        33,371            31,476
Unearned revenue, net                          20,552            28,187
Accrued liabilities and other                  29,738            23,685      
Total current liabilities                      102,317           102,283     
                                                              
Deferred rent                                  46,327            44,801
Long-term portion of credit facility           90,500            125,000
Long-term portion of capital lease             8,960             9,211
obligations
Other non-current liabilities                  8,656             8,918       
Total liabilities                              256,760           290,213     
                                                              
Stockholders’ Equity:
Common stock, $0.001 par value: 30,000
shares authorized; 17,656                      18                17
 and 17,499 shares issued; 14,156 and
13,999 shares outstanding
Preferred stock, $0.001 par value: 3,000
shares authorized; no shares                   -                 -
 issued and outstanding
Treasury stock, 3,500 and 3,500 shares,        (107,589  )       (107,589   )
at cost
Paid-in capital                                189,561           185,974
Accumulated other comprehensive gain           (31       )       5
(loss), net of tax
Retained earnings                              237,992           228,512     
Total stockholders’ equity                     319,951           306,919     
Total liabilities and stockholders’         $  576,711       $   597,132     
equity

                                                                    Schedule I

Reconciliation of Non-GAAP Restaurant-Level Operating Profit to Income
from Operations and Net Income
(In thousands, except percentage data)
 
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 revenues 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
sixteen weeks ended April 21, 2013 and April 15, 2012, expressed as a
percentage of total revenues, except for the components of restaurant
operating costs, which are expressed as a percentage of restaurant revenues.

                                                                     
                               Sixteen Weeks Ended
                               April 21, 2013           April 15, 2012
      Restaurant revenues      $ 301,313       98.4 %   $ 294,642       98.4 %
      Restaurant operating
      costs (exclusive of
      depreciation and
      amortization shown
      separately below):
      Cost of sales              74,982        24.9       75,075        25.5
      Labor                      101,882       33.8       98,606        33.5
      Other operating            37,090        12.3       37,405        12.7
      Occupancy                  22,573        7.5        21,114        7.2   
      Restaurant-level           64,786        21.5       62,442        21.2  
      operating profit
                                                                       
      Add – Franchise
      royalties, fees and        5,036         1.6        4,817         1.6
      other revenue
      Deduct – other
      operating:
      Depreciation and           17,834        5.8        16,652        5.6
      amortization
      General and                28,967        9.5        25,500        8.5
      administrative
      Selling                    8,641         2.8        8,377         2.8
      Pre-opening costs          834           0.3        983           0.3   
      Total other operating      56,276        18.4       51,512        17.2  
                                                                       
      Income from operations     13,546        4.4        15,747        5.3
                                                                       
      Interest expense, net      1,089         0.4        1,833         0.6
      and other
      Income tax expense         2,977         1.0        3,356         1.1   
      Total other                4,066         1.3        5,189         1.7   
      Net income               $ 9,480         3.1  %   $ 10,558        3.5  %
______________________

Certain percentage amounts in the table above do not total due to rounding as
well as the fact that restaurant operating costs are expressed as a percentage
of restaurant revenues and not total revenues.

Contact:

For media relations questions contact:
Kevin Caulfield, Senior Director of Communications
303-846-5470
or
For investor relations questions contact:
Stuart Brown, Chief Financial Officer
303-846-6000
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