Ruby Tuesday Reports First Quarter Fiscal 2014 Results

  Ruby Tuesday Reports First Quarter Fiscal 2014 Results

Business Wire

MARYVILLE, Tenn. -- October 9, 2013

Ruby Tuesday, Inc. (NYSE: RT) today reported financial results for the fiscal
first quarter ended September 3, 2013.

Results for the first quarter include:

  *Same-restaurant sales decreased 11.4% at Company-owned Ruby Tuesday
    restaurants and decreased 8.4% at domestic Ruby Tuesday franchise
  *Net loss from continuing operations of $21.9 million compared to net
    income from continuing operations of $3.1 million for the prior year
  *Diluted loss per share from continuing operations of $0.36 compared to
    diluted earnings per share from continuing operations of $0.05 for the
    prior year
  *Recorded $7.5 million in pre-tax impairment charges, which are non-cash,
    and lease reserves related to underperforming or closed Company-owned
  *Repurchased $12.9 million of our high yield bonds at a slight premium to
    par, and prepaid $9.9 million of mortgage debt
  *Maintained a cash position at the end of the first quarter of $35.9
    million, compared to $65.5 million of cash on hand in the prior year
  *Opened three domestic Company-owned Lime Fresh restaurants and two
    franchise Lime Fresh restaurants, one of which was international
  *Closed three Ruby Tuesday Company-owned locations and two international
    franchise Ruby Tuesday locations

JJ Buettgen, President and CEO, commented, “The first quarter was challenging
as the overall economy failed to realize any significant improvements which
adversely affected us and the casual dining industry. We are disappointed that
our first quarter same-restaurant sales came in below our expectations.
However, we made progress during the quarter in our strategy to re-establish
Ruby Tuesday as a fun, energetic, and broadly-appealing brand, with the
highlight being the August 12 launch of our new pretzel burgers and
flatbreads. These items represented the first wave of our core menu
transformation and the feedback from our guests has been encouraging as these
new food platforms at price points of $5.99 to $9.99 address our guests’
desire for innovation, variety, and affordability.

I remain confident in our brand transformation strategy and in our team’s
ability to successfully execute our plans. Looking ahead to the remainder of
fiscal 2014, our top priorities are driving increased guest counts and
profitable sales growth. In addition, we will aggressively work to lower our
cost structure and have engaged a leading enterprise improvement consulting
firm to assist us with cost reduction initiatives focused in the areas of cost
of goods sold and selling, general, and administrative expenses. We are in the
early stages of this initiative and plan on providing more details in our
second quarter earnings release.”

                           Fiscal Year 2014 Outlook

As we discussed on our earnings call last quarter, as a result of a number of
strategic initiatives we are implementing to reposition our brand, combined
with the challenging casual dining environment, we are not providing earnings
guidance for fiscal 2014. There are, however, certain items which we would
like to highlight, including the following:

  *Same-Restaurant Sales – We anticipate same-restaurant sales to be down
    high single digits in the second quarter with sequential improvement in
    the third and fourth quarter, including positive same-restaurant sales in
    the fourth quarter, reflecting traction from our new menu offerings and
    marketing campaign which were rolled out in the first quarter
  *Tax Credits – We do not anticipate recognizing a benefit from FICA Tip and
    Work Opportunity Tax Credits generated during fiscal 2014. The historical
    income tax benefit from these tax credits has been $2.2 -  $2.4 million
    per quarter.
  *Capital Expenditures – Estimated to be $30 - $34 million for the year,
    inclusive of approximately $5 million in capital initiatives to drive
    expense savings
  *Excess Real Estate – We expect to generate $10 - $15 million of cash
    proceeds from the disposition of excess real estate

                                 Other Items

New Revolving Credit Facility

We are in the process of finalizing a four-year $50 million new Revolving
Credit Facility (“New Credit Facility”) and have received signed commitment
levels in excess of $50 million from our syndicate bank group. The New Credit
Facility will provide additional covenant flexibility which is designed to
enable us to make the necessary long-term investments in the business with
less covenant pressure near term as we implement our brand repositioning. We
anticipate closing on the New Credit Facility by the end of our second quarter
of fiscal 2014.

                              ABOUT RUBY TUESDAY

Ruby Tuesday, Inc. has 778 Company-owned and/or franchise Ruby Tuesday brand
restaurants in 45 states, the District of Columbia,11 foreign countries, and
Guam, in addition to 29 Company-owned and/or franchise Lime Fresh brand
restaurants in six states, the District of Columbia, and one foreign country.
As of September 3, 2013, we owned and operated 703 Ruby Tuesday restaurants
and franchised 75 Ruby Tuesday restaurants, comprised of 33 domestic and 42
international restaurants. We also owned and operated 21 Lime Fresh
restaurants and franchised eight Lime Fresh restaurants, comprised of six
domestic and two 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:

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, compliance with financial covenants in our debt
instruments, 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 customers’
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; customers’ acceptance of
changes in menu items; changes in the availability and cost of capital;
potential limitations imposed by debt covenants under our revolving credit
facility; mall-traffic trends; 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; customers’ acceptance of our
development prototypes and remodeled restaurants; impact of adoption of new
accounting standards; impact of food-borne illnesses resulting from an
outbreak at either one of our restaurant concepts or other competing
restaurant concepts; effects of actual or threatened future terrorist attacks
in the United States; and significant fluctuations in energy prices.


Financial Results For the First Quarter of Fiscal Year 2014
(Amounts in thousands except per share amounts)

                         13 Weeks                    13 Weeks
                         Ended                       Ended
                         September 3,   Percent      September 4,   Percent
                         2013          of Revenue   2012          of Revenue
Restaurant sales and     $  288,092     99.5         $  326,267     99.5
operating revenue
Franchise revenue          1,582      0.5            1,656      0.5
Total revenue               289,674     100.0           327,923     100.0   
Operating Costs and
(as a percent of
Restaurant sales and
operating revenue)
Cost of merchandise         79,938      27.7            87,863      26.9
Payroll and related         102,733     35.7            107,192     32.9
Other restaurant            67,534      23.4            65,854      20.2
operating costs
Depreciation                14,209      4.9             15,011      4.6
(as a percent of Total
Selling, general and        37,015      12.8            43,007      13.1
administrative, net
Closures and               8,033      2.8            1,087      0.3
impairments, net
Total operating costs      309,462                   320,014 
and expenses
(Loss)/Earnings From        (19,788 )   (6.8    )       7,909       2.4     
Interest expense, net       6,753       2.3             6,790       2.1
Loss on extinguishment     511        0.2            -          0.0
of debt
Pre-tax (loss)/income
from continuing             (27,052 )   (9.3    )       1,119       0.3     
Benefit for income
taxes from continuing      (5,153  )   (1.8    )      (1,955  )   (0.6    )
Net (loss)/income from      (21,899 )   (7.6    )       3,074       0.9     
continuing operations
Loss from discontinued     (343    )   (0.1    )      (475    )   (0.1    )
operations, net of tax
Net (Loss)/Income        $  (22,242 )   (7.7    )    $  2,599      0.8     
Basic (Loss)/Income
Per Share:
(Loss)/Income from       $  (0.36   )                $  0.05        
continuing operations
Loss from discontinued     (0.01   )                  (0.01   )
Basic Net
(Loss)/Income Per        $  (0.37   )                $  0.04    
Diluted (Loss)/Income
Per Share:
(Loss)/Income from       $  (0.36   )                $  0.05        
continuing operations
Loss from discontinued     (0.01   )                  (0.01   )
Diluted Net
(Loss)/Income Per        $  (0.37   )                $  0.04    
Basic                      60,026                    62,813  
Diluted                    60,026                    62,956  


Financial Results For the First Quarter
of Fiscal Year 2014
(Amounts in thousands)

                                                September 3,   June 4,
CONDENSED BALANCE SHEETS                          2013             2013
Cash and Cash Equivalents                         $  35,853        $ 52,907
Accounts Receivable                                  4,541           4,834
Inventories                                          28,768          30,872
Income Tax Receivable                                3,334           1,900
Deferred Income Taxes                                6,164           7,296
Prepaid Rent and Other Expenses                      14,097          14,180
Assets Held for Sale                                8,076          9,175
Total Current Assets                                 100,833         121,164
Property and Equipment, Net                          845,031         859,830
Other Assets                                        61,225         62,189
Total Assets                                      $  1,007,089     $ 1,043,183
Current Portion of Long Term Debt, including      $  6,130         $ 8,487
Capital Leases
Other Current Liabilities                           109,812        97,145
Total Current Liabilities                            115,942         105,632
Long-Term Debt, including Capital Leases             268,530         290,515
Deferred Income Taxes                                4,543           5,753
Deferred Escalating Minimum Rents                    47,759          46,892
Other Deferred Liabilities                          72,582         77,556
Total Liabilities                                    509,356         526,348
Shareholders' Equity                                497,733        516,835
Total Liabilities and Shareholders' Equity        $  1,007,089     $ 1,043,183


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