MARYVILLE, TN -October 06, 2016 - (BUSINESS WIRE) - Ruby Tuesday, Inc. (NYSE:RT) today announced financial results for the fiscal quarter ended August 30, 2016.
Fiscal First Quarter 2017 Highlights (13 weeks ended August 30, 2016, compared to the 13 weeks ended September 1, 2015):
* Restaurant Level Margin, EBITDA, Adjusted EBITDA, Adjusted Net Loss and Adjusted Net Loss per share are non-GAAP measures. Reconciliations of Restaurant Level Margin, EBITDA, Adjusted EBITDA, Adjusted Net Loss and Adjusted Net Loss per share to the most directly comparable financial measures presented in accordance with United States Generally Accepted Accounting Principles (GAAP) are set forth in the schedules accompanying this release. See “Non-GAAP Financial Measures” and “Condensed Consolidated Statements of Operations.”
Lane Cardwell, Interim President and Chief Executive Officer, commented, “While the casual dining environment remains highly competitive and challenging as evidenced by our negative quarterly same-restaurant sales, our trend improved sequentially during the first quarter as we made investments in highlighting value aimed at building guest counts. In fact, we generated positive traffic in August through a successful 3 Course Meal offer for $12.99.”
Cardwell continued, “Our underlying goal is to drive traffic through the key strategies of our Fresh Start initiatives that we are launching in the coming months. These include our Fresh New Menu, Fresh New Garden Bar, and Fresh Experience. In each of these key areas, we are accelerating our actions as we believe these improvements will have a positive impact on our performance through increasing guest count and frequency. We are focused on showcasing the affordability and value that Ruby Tuesday offers through a redesign of our core menu. Our team has never been more excited and focused on the plan ahead. We are moving with greater urgency to change the trajectory of our business through a renewed focus on our guests.”
Total revenue was $256.7 million, a decrease of 8.2% or $22.8 million from the first quarter of the prior fiscal year. This decrease was due to a net reduction of 109 Company-owned Ruby Tuesday restaurants as compared to the first quarter of the prior fiscal year and a same-restaurant sales decline of 2.7% at Company-owned Ruby Tuesday restaurants.
The first quarter same-restaurant sales decrease was driven in part by guest traffic declines resulting from a challenging and competitive external environment. Year-over-year guest counts fell 3.1% while average check rose 0.3%.
Selling, general and administrative expenses, net (SG&A) increased to $31.6 million from $29.4 million in the first quarter of the prior fiscal year. As a percentage of total revenue, SG&A expenses increased 180 basis points to 12.3% from 10.5%. The increase in SG&A was primarily due to an increase in marketing spend and, to a lesser extent, higher incentive compensation expense.
Net Loss was $39.7 million, or ($0.66) per diluted share, compared to Net Loss of $4.2 million, or ($0.07) per diluted share, in the first quarter of the prior fiscal year.
Restaurant level margin* decreased to $35.6 million from $44.1 million in the first quarter of the prior fiscal year. As a percentage of restaurant sales and operating revenue, restaurant level margin declined 200 basis points to 13.9% driven mainly by increases in payroll and related costs and cost of goods sold.
Adjusted Net Loss* was $6.8 million, or ($0.11) per diluted share, compared to Adjusted Net Loss of $1.6 million, or ($0.03) per diluted share, in the first quarter of the prior fiscal year. Adjusted Net Loss for the first quarter of fiscal year 2017 excluded adjustments of $32.9 million, primarily related to closure and impairment charges. Adjusted Net Loss for the first quarter of fiscal year 2016 excluded adjustments of $2.6 million, primarily related to closure and impairment charges, debt prepayment penalties, and deferred financing fees, partially offset by executive transition. A reconciliation between Net Loss and Adjusted Net Loss is included in the accompanying financial data.
The Company ended the fiscal 2017 first quarter with cash and cash equivalents totaling $68.7 million and debt of $223.5 million. This compares to cash and cash equivalents totaling $67.3 million and debt of $223.7 million as of May 31, 2016.
As of August 30, 2016, there were 615 Ruby Tuesday restaurants system-wide, of which 547 were Company-owned. During the first quarter, 99 Company-owned Ruby Tuesday restaurants were closed, including 95 restaurants closed in connection with the Fresh Start Initiative. The Company also closed one Company-owned Lime Fresh Mexican Grill restaurant during the quarter. Additionally, one domestic franchised Ruby Tuesday restaurant was opened and ten were closed. One international franchised Ruby Tuesday restaurant was closed during the current quarter.
On September 22, 2016, Ruby Tuesday announced that it has entered into an agreement to sell its property at 150 W. Church Avenue in Maryville, Tennessee for $2.8 million. The completion of the transaction is targeted for October 2016, subject to customary closing conditions. Team members of the impacted property will be relocated into the Company’s other Tennessee-based Restaurant Support Center at 333 E. Broadway Avenue in Maryville, Tennessee by the end of January 2017.
Cardwell commented “We are embarking on a period of accelerated strategic change for Ruby Tuesday, and we believe that with a thoughtful but decisive approach, we can deliver improved profitability and enhance shareholder value. We are excited about the new products coming to market this fiscal year including our new menu in November, the relaunch of successful promotions, and the roll out of the enhanced Garden Bar system-wide in January. I am confident that these strategies coupled with our service improvements will bring same-restaurant sales back into positive territory in fiscal 2017.”
The Company plans to accelerate the execution of its Fresh Start Initiatives under new leadership to better address the challenges currently facing the business, and as a result is discontinuing providing guidance so that it can focus on long-term strategic objectives.
The Company will host a conference call today to discuss fiscal first quarter 2017 financial results at 5:00 PM Eastern Time. The conference call can be accessed live by dialing 888-670-2260 or for international callers by dialing 913-312-0686. A replay will be available after the call and can be accessed by dialing 877-870-5176 or for international callers by dialing 858-384-5517. The passcode is 9127398. The replay will be available through Sunday, November 6, 2016.
The conference call will also be webcast live and later archived on the Investor Relations page of Ruby Tuesday’s corporate website at www.rubytuesday.com under the ‘Events & Presentations’ section.
Ruby Tuesday, Inc. owns and franchises Ruby Tuesday brand restaurants. As of August 30, 2016, there were 615 Ruby Tuesday restaurants in 42 states, 14 foreign countries, and Guam. Of those restaurants, we owned and operated 547 Ruby Tuesday restaurants and franchised 68 Ruby Tuesday restaurants, comprised of 18 domestic and 50 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. We also owned and operated one Lime Fresh Mexican Grill restaurant as of August 30, 2016. For more information about Ruby Tuesday, please visitwww.rubytuesday.com. Ruby Tuesday, Inc. is traded on the New York Stock Exchange (Symbol: RT).
This press release contains various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements represent our expectations or beliefs concerning future events, including one or more of the following: future financial performance (including our estimates of changes in same-restaurant sales, average unit volumes, operating margins, expenses, and other items), future capital expenditures, the effect of strategic initiatives (including statements relating to our asset rationalization project, cost savings initiatives, and the benefits of our marketing), the opening or closing of restaurants by us or our franchisees, sales of our real estate or purchases of new real estate, 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 dispositions, 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, 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, including those affecting labor and employee benefit costs, such as further potential increases in state and federally mandated minimum wages and healthcare reform; changes in senior management or in the Board of Directors; the impact of pending litigation; customers’ acceptance of changes in menu items; changes in the availability and cost of capital; potential limitations imposed by debt covenants under our debt instruments; weather conditions in the regions in which Company-owned and franchised restaurants are operated; costs and availability of food and beverage inventory, including supply and delivery shortages or interruptions; significant fluctuations in energy prices; security breaches of our customers’ or employees’ confidential information or personal data or the failure of our information technology and computer systems; 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 one of our restaurant concepts or other competing restaurant concepts; effects of actual or threatened future terrorist attacks in the United States; and other risks and uncertainties described in the Risk Factors included in Part I, Item A of our Annual Report on Form 10-K for the year ended May 31, 2016.
The Company believes excluding certain items from its financial results provides investors with a clearer understanding of the Company’s operating performance and comparison to prior-period results. In addition, management uses these non-GAAP financial measures and ratios to assess the results of the Company’s operations.
We have included Restaurant Level Margin, EBITDA, Adjusted EBITDA, Adjusted Net Loss and Adjusted Net Loss per share to provide investors with supplemental measures of our operating performance. We believe these are important supplemental measures of operating performance because they eliminate items that have less bearing on our Company-wide operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on financial measures in accordance with GAAP. We also believe that securities analysts, investors and other interested parties frequently use Restaurant Level Margin, EBITDA, Adjusted EBITDA, Adjusted Net Income/(Loss) and Adjusted Net Income (Loss) per share in evaluating issuers. Because other companies in some cases calculate Restaurant Level Margin, Adjusted EBITDA, Adjusted Net Income (Loss), or Adjusted Net Income (Loss) per share differently from the way we calculate such measures, these metrics may not be comparable to similarly titled measures reported by other companies. Additionally, supplemental non-GAAP financial measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.
The use of these measures permits a comparative assessment of the Company's operating performance relative to its performance based on GAAP results, while isolating the effects of certain items that vary from period to period without correlation to core operating performance and certain items that vary widely among similar companies. However, the inclusion of these adjusted measures should not be construed as an indication that future results will be unaffected by unusual or infrequent items or that the items for which the adjustments have been made are necessarily unusual or infrequent.
Available in this release is the reconciliation of Net Loss, the most directly comparable GAAP measure, to EBITDA, Adjusted EBITDA, Adjusted Net Loss and Adjusted Net Loss per share, all of which are non-GAAP financial measures. Reconciliation of Restaurant Level Margin, which is also a non-GAAP measure, to Net Loss are presented in the Condensed Consolidated Statements of Operations. The Company defines Restaurant Level Margin as Restaurant Sales and Operating Revenue less Cost of Goods Sold, Payroll and Related Costs, and Other Restaurant Operating Costs. EBITDA is defined as Net Loss before interest, taxes, and depreciation and amortization and Adjusted EBITDA as EBITDA, excluding certain expenses (income) including, but not limited to, Closures and Impairments, Net, and Executive Transition. Adjusted Net Loss is defined as Net Loss, excluding certain expenses/(income) as detailed in Adjusted EBITDA as well as adjustments related to Debt Prepayment Penalties, Deferred Financing Fees, Income Tax Benefit from Adjustments, and Income Tax Benefit Adjusted to the Statutory Rate. Adjusted Net Loss per share is defined as Adjusted Net Loss divided by diluted shares outstanding.
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SOURCE Ruby Tuesday, Inc.
Melissa Calandruccio
ICR
Investor Relations
646-277-1273
RubyTuesdayIR@icrinc.com
Christine Beggan
Media Relations
203-682-8329
RubyTuesday@icrinc.com
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.