GREENWOOD VILLAGE, Colo.--(BUSINESS WIRE)--Feb. 13, 2015-- 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 quarter and year endedDecember 28, 2014 compared to the quarter and year ended December 29, 2013.
Net income for the 12 weeks ended December 28, 2014 was $3.9 million compared to $7.0 million for the same period a year ago. For the 52 weeks ended December 28, 2014, net income was $32.6 million compared to$32.2 million for the year ended December 29, 2013.
Fourth quarter GAAP diluted earnings per share were $0.28 compared to $0.48 during the same period in prior year. Adjusted earnings per diluted share were $0.66 compared to $0.62 during the same period in prior year. In the fourth quarter of fiscal year 2014, the Company recorded an $8.8 million pre-tax impairment charge while the 2013 fourth quarter was impacted by an impairment charge and a non-recurring special bonus totaling $3.1 million.
GAAP earnings per diluted share for fiscal year 2014 were $2.25 compared to $2.22 in fiscal year 2013. On an adjusted basis, fiscal 2014 diluted earnings per share were $2.66 compared to $2.37 in the prior year. See Schedule I for a reconciliation of adjusted net income and earnings per share.
"Our commitment to providing guests with a great dining experience, combined with effective marketing and menu strategies, enabled us to continue to take market share in the fourth quarter as we capped off another successful year at Red Robin," said Steve Carley, Red Robin Gourmet Burgers, Inc. chief executive officer. "In 2015 we will build on those achievements through everyday value, menu innovation, and promotional tie-ins while remodeling at least 125 additional restaurants to our new brand standards."
Total Company revenues, which include Company-owned restaurant revenue and franchise royalties, increased$40.2 million or 16.6% to $282.1 million in the fourth quarter of 2014 from $241.9 million in the fourth quarter of 2013. Restaurants acquired in 2014 generated $22.9 million of restaurant revenue in the fourth quarter of 2014.
System-wide restaurant revenue (including franchised units) for the fourth quarter of 2014 totaled $348.0 million, compared to $324.2 million for the fourth quarter of 2013 at constant currency rates.
Comparable restaurant revenue increased 3.6% in the fourth quarter of 2014 compared to the prior year. In the fourth quarter, guest counts increased 1.2% and average guest check increased 2.4%. Comparable restaurants are those Company-owned restaurants that have achieved five full quarters of operations during the period presented, and such restaurants are only included in our comparable metrics if they are comparable for the entirety of both periods presented.
Restaurant-level operating profit margins (a non-GAAP financial measure) were 21.3% in the fourth quarter of 2014 compared to 21.7% in the fourth quarter of 2013, a decline of 40 basis points. Excluding the 36 restaurants acquired in 2014, restaurant-level operating profit margins increased 50 basis points to 22.2% primarily driven by a decrease in labor 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
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Depreciation and amortization costs increased $2.8 million to $16.4 million in the fourth quarter of 2014 compared to $13.6 million in the fourth quarter of 2013. The increased depreciation was primarily related to restaurants acquired and opened since the fourth quarter of 2013 and restaurants remodeled under our brand transformation initiative.
General and administrative costs were $22.1 million, a decrease of $0.7 million from the fourth quarter of 2013, primarily driven by lower incentive compensation, partially offset by an increase in salaries and benefits. The fourth quarter of 2013 included a $1.6 million nonrecurring special bonus awarded by the board.
Selling expenses were $9.5 million, or 3.4% of total revenues, in the fourth quarter of 2014, compared to $8.0 million or 3.3% of total revenues a year ago. This increase was primarily due to increased advertising.
Pre-opening costs in the fourth quarter of 2014 totaled $1.2 million compared to $1.9 million in the comparable period a year ago. The decrease was primarily driven by fewer Red Robin restaurants opening in the fourth quarter of 2014 compared to the fourth quarter of 2013.
The Company recorded asset impairment charges of $8.8 million, of which $7.6 million related to the write-off of in-development software, and $1.2 million related to impairments of three restaurants.
The Company's fiscal 2014 effective tax rate was 22.2%, compared to 21.8% in fiscal year 2013.
As of the end of the fourth quarter of 2014, there were 408 Company-owned Red Robin® restaurants, seven Red Robin Burger Works® and 99 franchised Red Robin restaurants for a total of 514 restaurants. In the fourth quarter of fiscal 2014, the Company opened six new Red Robin restaurants, opened one Red Robin Burger Works and closed one Red Robin Burger Works. One franchise location opened in the fourth quarter.
Under our brand transformation initiative, the Company has remodeled a total of 104 Red Robin restaurants to our new brand standards through fiscal year 2014.
As of December 28, 2014, the Company had cash and cash equivalents of $22.4 million and total debt of $147.9 million, including $8.5 million of capital lease liabilities. The Company decreased debt by $8.2 million during the fourth quarter.
Cash generated from operations in 2014 totaled $123.6 million compared to $113.5 million in 2013. 2014 Capital investments, including the acquisition of 36 franchised restaurants, totaled $155.2 million compared to $78.9 million in the prior year.
During the fourth quarter, the Company purchased 19,900 shares of treasury stock for $1.2 million. As of December 28, 2014, there was approximately $18.1 million remaining under the current board authorization for stock repurchases. In 2014, the Company purchased a total of 463,780 shares of treasury stock for $26.9 million. The Company’s Board of Directors recently reauthorized its share repurchase program and approved the repurchase of up to a total of $50 million in the Company’s common stock. Pursuant to the repurchase program, purchases may be made from time to time at the Company’s discretion and the Company is not obligated to acquire any particular amount of common stock.
Red Robin’s 2015 fiscal year consists of 52 weeks and will end on December 27, 2015.
In fiscal year 2015, the Company expects total revenue growth of 12.0% to 13.0% including comparable restaurant revenue growth of 2.0% to 3.0%. The Company plans to open 20 new Red Robin restaurants and five Red Robin Burger Works resulting in operating week growth from new locations of approximately 6%.
Capital investments in fiscal year 2015 are expected to total near $140.0 million. In addition to the new restaurant openings, the Company plans to remodel at least 125 Red Robin restaurants as part of its brand transformation initiative.
Restaurant-level operating profit margins in fiscal year 2015 are expected to approach 21.4%.
General and administrative costs are expected to be between $97.0 million and $99.0 million, while selling expenses are expected to be approximately 3.2% of total revenues. Pre-opening and acquisition costs are expected to total near $7.0 million in fiscal 2015. Depreciation and amortization is projected to be approximately $77.0 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 27.0%.
The sensitivity of the Company’s earnings per diluted share to a 1.0% change in guest counts for fiscal year 2015 is estimated to be $0.34 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 $0.08, and a change of approximately $145,000 in pre-tax income or expense is equivalent to approximately $0.01 per diluted share.
Red Robin will host an investor conference call to discuss its fourth quarter 2014 results today at 10:00 a.m. ET. The conference call number is (888) 312-3046, or for international callers (719) 325-2425. 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 Friday, February 20, 2015. The replay can be accessed by dialing (877) 870-5176, or (858) 384-5517 for international callers. The conference ID is 2573559.
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, recently 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 in this press release regarding our expectations related to strategic initiatives, restaurant revenue and profit margins, new restaurant openings and operating weeks, capital investments including our brand transformation initiative and restaurant remodeling, future economic performance, anticipated costs, expenses, tax rate, sensitivity of earnings per share, and other 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, loyalty program, and guest count initiatives to achieve restaurant sales growth; the ability to fulfill planned expansion and restaurant remodeling; the ability to successfully integrate and achieve anticipated revenues from recently acquired restaurants; 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; the macro economic and competitive environment; 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.
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SOURCE Red Robin Gourmet Burgers, Inc.
Jennifer DeNick
Media Relations
Coyne PR
(973) 588-2000
Stuart Brown
Investor Relations
Chief Financial Officer
(303) 846-6000
Red Robin Gourmet Burgers, Inc., a casual dining restaurant chain founded in 1969 that operates through its wholly-owned subsidiary, Red Robin International, Inc.