Red Robin Gourmet Burgers Reports Results for the Fiscal Third Quarter Ended October 1, 2017

GREENWOOD VILLAGE, Colo. - (BUSINESS WIRE) - Nov. 6, 2017 - Red Robin Gourmet Burgers, Inc., (NASDAQ:RRGB), a full-service restaurant chain serving an innovative selection of high-quality gourmet burgers in a family-friendly atmosphere, today reported financial results for the quarter ended October 1, 2017.

Third Quarter 2017 Financial Highlights Compared to Third Quarter 2016

  • Total revenues were $304.2 million, an increase of 2.3%;
  • Net income was $2.7 million compared to net loss of $1.3 million;
  • Comparable restaurant revenue decreased 0.1% (using constant currency rates);
  • Off-premise increased to 7.6% of total food and beverage sales compared to 5.4%;
  • Adjusted EBITDA was $25.5 million compared to $26.8 million (see Schedule III);
  • GAAP earnings per diluted share were $0.21 compared to GAAP diluted loss per share of $0.10; and
  • Adjusted earnings per diluted share were $0.21 compared to $0.38 (see Schedule I).

“Despite topline results that fell short of our expectations, Red Robin significantly outperformed the casual dining industry on traffic for a fifth consecutive quarter. Our focus on compelling Every Day Value and the progress we have made in growing our off-premise business continued to pull us away from the category and we are now competing favorably with best-in-class casual dining chains,” said Denny Marie Post, Red Robin Gourmet Burgers, Inc. chief executive officer. “Although we grew our share while beginning to implement service model changes that address rising labor costs, category volatility underscores our cautious outlook for the remainder of 2017 and our intention to pause unit growth as of year-end 2018. This decision will give us needed time to test new approaches to inform future growth.”

Operating Results

Total revenues, which primarily include Company-owned restaurant revenue and franchise royalties, increased 2.3% to $304.2 million in the third quarter of 2017 from $297.3 million in the third quarter of 2016. Restaurant revenue increased $7.2 million, primarily due to a $9.7 million increase in revenue from new restaurant openings and a $0.4 million favorable foreign currency impact, partially offset by $2.7 million from closed restaurants and a $0.2 million, or 0.1%, decrease in comparable restaurant revenue.

System-wide restaurant revenue (which includes franchised units) for the third quarter of 2017 totaled $361.0 million, compared to $355.5 million for the third quarter of 2016.

Comparable restaurant revenue(1) decreased 0.1% in the third quarter of 2017 compared to the same period a year ago, driven by a 0.1% decrease in average guest check and flat guest counts. The decrease in average guest check comprised a 1.6% decrease in menu mix, partially offset by a 1.5% increase in pricing.

Restaurant-level operating profit margin (a non-GAAP financial measure) was 17.4% in the third quarter of 2017 compared to 18.6% in the same period a year ago. The 120 basis point margin decrease in the third quarter of 2017 resulted from a 50 basis point increase in labor costs, a 40 basis point increase in other restaurant operating expenses, a 20 basis point increase in cost of sales, and a 10 basis point increase in occupancy 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.

________________________________________
(1) Comparable restaurants are those Company-owned restaurants that have operated five full quarters during the period presented, and such restaurants are only included in the comparable metrics if they are comparable for the entirety of both periods presented.

 

        Q3 2017   Q3 2016
Average weekly sales per unit(1):            
Company-owned – Total       $ 52,955     $ 52,439
Company-owned – Comparable       $ 53,233     $ 53,022
Franchised units – Comparable       $ 57,980     $ 59,767
Total operating weeks:            
Company-owned units       5,686   5,613
Franchised units       1,032   1,032

Restaurant Revenue Performance

________________________________________

(1)   Calculated using constant currency rates. Using historical currency rates, the average weekly sales per unit in the third quarter of 2016 for Company-owned – Total and Company-owned – Comparable was $52,362 and $52,940. The Company calculates non-GAAP constant currency average weekly sales per unit by translating prior year local currency average weekly sales per unit to U.S. dollars based on current quarter average exchange rates. The Company considers non-GAAP constant currency average weekly sales per unit to be a useful metric to investors and management as they facilitate a more useful comparison of current performance to historical performance.
     

Other Results

Depreciation and amortization costs decreased to $21.3 million in the third quarter of 2017 from $21.5 millionin the third quarter of 2016. The decrease was primarily related to depreciation of certain corporate assets in the third quarter of 2016 prior to the Company’s migration to a cloud-based Enterprise Resource Planning system.

General and administrative costs were $18.6 million, or 6.1% of total revenues, in the third quarter of 2017, compared to $20.3 million, or 6.8% of total revenues in the same period a year ago.

Selling expenses were $10.3 million, or 3.4% of total revenues, in the third quarter of 2017, compared to $8.7 million, or 2.9%, of total revenues during the same period in the prior year.

Pre-opening and acquisition costs were $1.5 million in the third quarter of 2017, compared to $2.4 million in the same period a year ago. The decrease was primarily due to the number of restaurant openings.

The Company realized a tax benefit of 34.1% in the third quarter of 2017, compared to a tax benefit of 77.8% for the third quarter of 2016. The change in the effective tax rate is primarily due to the asset impairment and restaurant closure costs recognized in the third quarter of 2016, which resulted in a larger quarterly tax benefit.

Net income for the third quarter ended October 1, 2017 was $2.7 million compared to net loss of $1.3 million for the same period a year ago. Earnings per diluted share for the third quarter of 2017 were $0.21 compared to diluted loss per share of $0.10 in third quarter 2016.

Earnings per diluted share and adjusted earnings per diluted share for the third quarter ended October 1, 2017were $0.21. Excluding charges of $0.48 per diluted share for restaurant impairment and closure, adjusted earnings per diluted share for the third quarter ended October 2, 2016 were $0.38. See Schedule I for a reconciliation of adjusted net income and adjusted earnings per share (each, a non-GAAP financial measure) to net income and earnings per share.

Restaurant Development

During the third quarter of 2017, the Company opened seven Red Robin restaurants. The Company plans to open two Red Robin restaurants during the remainder of 2017.

The following table details restaurant unit data for Company-owned and franchised locations for the periods indicated:

             
        Twelve Weeks Ended   Forty Weeks Ended
        October 1, 2017   October 2, 2016   October 1, 2017   October 2, 2016
Company-owned:                    
Beginning of period       472     460     465     439  
Opened during the period       7     11     16     21  
Acquired from franchisees                  

13

 
Closed during the period           (9 )   (2 )   (11 )
End of period       479     462     479     462  
Franchised:                    
Beginning of period       86     86     86     99  
Opened during the period               1      
Sold or closed during the period               (1 )   (13 )
End of period       86     86     86     86  
Total number of restaurants       565     548     565     548  
                             

Balance Sheet and Liquidity

As of October 1, 2017, the Company had cash and cash equivalents of $15.0 million and total debt of $276.8 million, excluding $11.0 million of capital lease liabilities. The Company funded construction of new restaurants and other capital expenditures with cash flow from operations and made net repayments of $3.4 million on its credit facility during the third quarter of 2017. As of October 1, 2017, the Company had outstanding borrowings under its credit facility of $275.9 million, in addition to amounts issued under letters of credit of $7.6 million, which reduce the amount available under its credit facility but are not recorded as debt.

The Company’s lease adjusted leverage ratio was 4.20x as of October 1, 2017. The lease adjusted leverage ratio is defined in Section 1.1 of the Company's credit facility, which is filed as Exhibit 10.32 in the Annual Report on Form 10-K filed on February 21, 2017.

Outlook for 2017

  • Earnings per diluted share is projected to range from $0.45 to $0.60 for the fourth quarter and range from $2.16 to $2.31 for full-year 2017.
  • Comparable restaurant revenue is projected to range from flat to up 0.5% for full-year 2017.

The sensitivity of the Company’s earnings per diluted share to a 1% change in guest counts for fiscal year 2017 is estimated to be approximately $0.40 on an annualized basis. Additionally, a 10 basis point change in restaurant-level operating profit margin is expected to impact earnings per diluted share by approximately $0.10, and a change of approximately $145,000 in pre-tax income or expense is equivalent to approximately $0.01 per diluted share.

Guidance Policy

The Company provides only annual guidance as it relates to revenues, comparable restaurant revenue growth, operating weeks associated with locations opened, cost of sales and restaurant labor costs as a percentage of restaurant revenue, other operating expenses (other than interest expense), depreciation and amortization, general and administrative expense, selling expense, pre-opening expense, income tax rate, EBITDA, earnings per diluted share, overall capital expenditures and restaurant openings and closings. The Company intends to only provide updates if there is a material change versus the previously communicated guidance.

Investor Conference Call and Webcast

Red Robin will host an investor conference call to discuss its third quarter 2017 results today at 5:00 p.m. ET. The conference call number is (877) 723-9521, or for international callers (719) 325-4765. The financial information that the Company intends to discuss during the conference call is included in this press release and will be available in the “Company” section of the Company’s website at www.redrobin.com by selecting the “Investor Relations” link, then the “News Releases” link. 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 “Company” section, then the “Investor Relations” link, then the “Presentations” link. A replay of the live conference call will be available from two hours after the call until midnight on Monday, November 13, 2017. The replay can be accessed by dialing (844) 512-2921, or (412) 317-6671 for international callers. The conference ID is 3106139.

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., and under the trade name Red Robin Gourmet Burgers and Brews, 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. Whether a family dining with kids, adults grabbing a drink at the bar, or teens enjoying a meal, Red Robin offers an unparalleled experience for its guests. In addition to its many burger offerings, Red Robinserves a wide variety of salads, soups, appetizers, entrees, desserts, and signature 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, earning the restaurant a VIBE Vista Award for Best Beer Program in a Multi-Unit Chain Restaurant. There are more than 560 Red Robin restaurants across the United Statesand Canada, including locations operating under franchise agreements. Red Robin… YUMMM®! Connect with Red Robin on Facebook, Instagram, and Twitter.

Forward-Looking Statements

Forward-looking statements in this press release regarding the Company’s future performance, revenues and timing thereof, service model changes, new restaurant openings, tax rate, sensitivity of earnings per share and other projected financial measures, statements under the heading “Outlook for 2017”, 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,” “will” or “estimate,” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. Except as required by law, the Company undertakes no obligation to update such statements to reflect events or circumstances arising after such date, and cautions 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 business improvement initiatives; the ability to fulfill planned, and realize the anticipated benefits of completed, expansion and restaurant remodeling; the effectiveness of our marketing strategies and initiatives to achieve restaurant sales growth; the cost and availability of key food products, labor, and energy; the ability to achieve anticipated revenue and cost savings from anticipated new technology systems and tools in the restaurants and other initiatives; the ability to develop, test, implement and increase online ordering, to-go services, catering and other off-premise sales; 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 the Company’s 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)
             
        Twelve Weeks Ended   Forty Weeks Ended
       

October 1, 
2017

 

October 2, 
2016

 

October 1, 
2017

 

October 2, 
2016

Revenues:                    
Restaurant revenue       $ 301,100     $ 293,858     $ 1,026,902     $ 992,745
Franchise royalties, fees and other revenue       3,148     3,449     11,674     12,237
Total revenues       304,248     297,307     1,038,576     1,004,982
                     
Costs and expenses:                    
Restaurant operating costs (exclusive of depreciation
and amortization shown separately below):
                   
Cost of sales       71,642     69,447     240,152     232,603
Labor       106,205     102,294     360,146     338,125
Other operating       44,846     42,463     142,238     132,446
Occupancy       25,868     25,121     84,127     82,524
Depreciation and amortization       21,258     21,468     70,475     64,578
General and administrative       18,562     20,328     71,402     72,280
Selling       10,308     8,718     32,837     31,173
Pre-opening and acquisition costs       1,503     2,382     4,735     6,992
Other charges(1)           9,321     1,584     17,906
Total costs and expenses       300,192     301,542     1,007,696     978,627
                     
Income (loss) from operations       4,056     (4,235 )   30,880     26,355
                     
Other expense:                    
Interest expense, net and other       2,032     1,612     7,469     4,736
                     
Income (loss) before income taxes       2,024     (5,847 )   23,411     21,619
Provision (benefit) for income taxes       (690 )   (4,547 )   2,199     1,142
Net income (loss)       $ 2,714     $ (1,300 )   $ 21,212     $ 20,477
Earnings (loss) per share:                    
Basic       $ 0.21     $ (0.10 )   $ 1.65     $ 1.52
Diluted       $ 0.21     $ (0.10 )   $ 1.63     $ 1.50
Weighted average shares outstanding:                    
Basic       12,927   13,214   12,888   13,471
Diluted       13,023   13,214   12,986   13,606
                     
(1) Certain amounts presented in prior periods have been reclassified to conform with the current period presentation. For the twelve weeks ended October 2, 2016, the Company reclassified restaurant impairment charges and closure costs of $9.3 million from Restaurant impairment and closure to Other charges on the condensed consolidated statement of operations. For the forty weeks ended October 2, 2016, the Company reclassified impairment charges of $14.0 million from Restaurant impairment and closure and litigation contingencies of $3.9 million from Selling, general, and administrative expenses to Other charges on the condensed consolidated statement of operations. Management believes separating these special items on the condensed consolidated statement of operations provides more clarity of the Company’s ongoing operating performance and a more relevant comparison to prior period results.
 
             
RED ROBIN GOURMET BURGERS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
             
        (Unaudited)

October 1, 2017

  December 25, 2016
Assets:            
Current Assets:            
Cash and cash equivalents       $ 14,984     $ 11,732  
Accounts receivable, net       12,253     24,166  
Inventories       29,480     29,899  
Prepaid expenses and other current assets       28,384     27,049  
Total current assets       85,101     92,846  
             
Property and equipment, net       647,301     656,439  
Goodwill       97,064     95,935  
Intangible assets, net       39,680     42,270  
Other assets, net       29,089     31,055  
Total assets       $ 898,235     $ 918,545  
             
Liabilities and Stockholders’ Equity:            
Current Liabilities:            
Trade accounts payable       $ 21,119     $ 13,740  
Construction related payables       11,695     12,862  
Accrued payroll and payroll related liabilities       38,967     34,703  
Unearned revenue       37,905     50,199  
Accrued liabilities and other       41,079     29,505  
Total current liabilities       150,765     141,009  
             
Deferred rent       73,780     72,431  
Long-term debt       276,775     336,375  
Long-term portion of capital lease obligations       10,286     10,805  
Other non-current liabilities       9,864     9,872  
Total liabilities       521,470     570,492  
             
Stockholders’ Equity:            
Common stock; $0.001 par value: 45,000 shares authorized; 17,851 and 17,851 shares issued; 12,935 and 12,828 shares outstanding       18     18  
Preferred stock, $0.001 par value: 3,000 shares authorized; no shares issued and outstanding            
Treasury stock 4,916 and 5,023 shares, at cost       (203,296 )   (207,720 )
Paid-in capital       209,520     208,022  
Accumulated other loss, net of tax       (3,430 )   (5,008 )
Retained earnings       373,953     352,741  
Total stockholders’ equity       376,765     348,053  
Total liabilities and stockholders’ equity       $ 898,235     $ 918,545  
                     

Schedule I

Reconciliation of Non-GAAP Results to GAAP Results 
(In thousands, except per share data)

In addition to the results provided in accordance with Generally Accepted Accounting Principles (“GAAP”) throughout this press release, the Company has provided non-GAAP measurements which present the 12 and 40 weeks ended October 1, 2017 and October 2, 2016, net income (loss) and basic and diluted earnings (loss) per share, excluding the effects of litigation contingencies, asset impairment, and the related income tax effects. The Company believes the presentation of net income (loss) and earnings (loss) per share exclusive of the identified item gives the reader additional insight into the ongoing operational results of the Company. This supplemental information will assist with comparisons of past and future financial results against the present financial results presented herein. Income tax effect of reconciling items was calculated based on the change in the total tax provision calculation after adjusting for the identified item. The non-GAAP measurements are intended to supplement the presentation of the Company’s financial results in accordance with GAAP.

             
        Twelve Weeks Ended   Forty Weeks Ended
       

October 1, 
2017

 

October 2, 
2016

 

October 1, 
2017

 

October 2, 
2016

Net income (loss) as reported       $ 2,714     $ (1,300 )   $ 21,212     $ 20,477  
Restaurant impairment and closure           9,321     1,584     14,006  
Litigation contingencies                   3,900  
Income tax effect of reconciling items           (2,993 )   (618 )   (5,502 )
Adjusted net income       $ 2,714     $ 5,028     $ 22,178     $ 32,881  
                     
Basic net income (loss) per share:                    
Net income (loss) as reported       $ 0.21     $ (0.10 )   $ 1.65     $ 1.52  
Restaurant impairment and closure           0.70     0.12     1.04  
Litigation contingencies                   0.29  
Income tax effect of reconciling items           (0.22 )   (0.05 )   (0.41 )
Adjusted earnings per share - basic       $ 0.21     $ 0.38     $ 1.72     $ 2.44  
                     
Diluted net income (loss) per share:                    
Net income (loss) as reported       $ 0.21     $ (0.10 )   $ 1.63     $ 1.50  
Restaurant impairment and closure           0.70     0.12     1.03  
Litigation contingencies                   0.29  
Income tax effect of reconciling items           (0.22 )   (0.04 )   (0.40 )
Adjusted earnings per share - diluted       $ 0.21     $ 0.38     $ 1.71     $ 2.42  
                     
Weighted average shares outstanding                    
Basic       12,927     13,214     12,888     13,471  
Diluted       13,023     13,214     12,986     13,606  
                             

Schedule II

Reconciliation of Non-GAAP Restaurant-Level Operating Profit to Income (Loss) 
from Operations and Net Income (Loss) 
(In thousands)

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 revenue minus restaurant-level operating costs, excluding restaurant impairment and closure 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 GAAP and should not be considered in isolation, or as an alternative, to income (loss) from operations or net income (loss) as indicators of financial performance. Restaurant-level operating profit as presented may not be comparable to other similarly titled measures of other companies in our industry. The table below sets forth certain unaudited information for the 12 and 40 weeks ended October 1, 2017 and October 2, 2016, expressed as a percentage of total revenues, except for the components of restaurant-level operating profit, which are expressed as a percentage of restaurant revenue.

             
        Twelve Weeks Ended   Forty Weeks Ended
        October 1, 2017   October 2, 2016   October 1, 2017   October 2, 2016
Restaurant revenue       $ 301,100     99.0 %   $ 293,858     98.8 %   $ 1,026,902   98.9 %   $ 992,745   98.8 %
Restaurant operating costs (1):                                    
Cost of sales       71,642     23.8 %   69,447     23.6 %   240,152   23.4 %   232,603   23.4 %
Labor       106,205     35.3 %   102,294     34.8 %   360,146   35.1 %   338,125   34.1 %
Other operating       44,846     14.9 %   42,463     14.5 %   142,238   13.9 %   132,446   13.3 %
Occupancy       25,868     8.6 %   25,121     8.5 %   84,127   8.2 %   82,524   8.3 %
Restaurant-level operating profit       52,539     17.4 %   54,533     18.6 %   200,239   19.5 %   207,047   20.9 %
                                     
Add – Franchise royalties, fees and other revenue       3,148     1.0 %   3,449     1.2 %   11,674   1.1 %   12,237   1.2 %
Deduct – other operating:                                    
Depreciation and amortization       21,258     7.0 %   21,468     7.2 %   70,475   6.8 %   64,578   6.4 %
General and administrative expenses       18,562     6.1 %   20,328     6.8 %   71,402   6.9 %   72,280   7.2 %
Selling       10,308     3.4 %   8,718     2.9 %   32,837   3.2 %   31,173   3.1 %
Pre-opening & acquisition costs       1,503     0.5 %   2,382     0.8 %   4,735   0.5 %   6,992   0.7 %
Other charges           %   9,321     3.1 %   1,584   0.2 %   17,906   1.8 %
Total other operating       51,631     17.0 %   62,217     20.8 %   181,033   17.6 %   192,929   19.2 %
                                     
Income (loss) from operations       4,056     1.3 %   (4,235 )   (1.4 )%   30,880   3.0 %   26,355   2.6 %
                                     
Interest expense, net and other       2,032     0.7 %   1,612     0.6 %   7,469   0.7 %   4,736   0.4 %
Income tax expense (benefit)       (690 )   (0.2 )%   (4,547 )   (1.6 )%   2,199   0.2 %   1,142   0.2 %
Total other       1,342     0.5 %   (2,935 )   (1.0 )%   9,668   0.9 %   5,878   0.6 %
                                     
Net income (loss)       $ 2,714     0.9 %   $ (1,300 )   (0.4 )%   $ 21,212   2.0 %   $ 20,477   2.0 %
                                                         
(1) Excluding depreciation and amortization, which is shown separately.
 
Certain percentage amounts in the table above do not total due to rounding as well as the fact that components of restaurant-level operating profit are expressed as a percentage of restaurant revenue and not total revenues.
 

Schedule III

Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA 
(In thousands, unaudited)

The Company defines EBITDA as net income (loss) before interest expense, provision (benefit) for income taxes, and depreciation and amortization. EBITDA and adjusted EBITDA are presented because the Company believes that investors’ understanding of our performance is enhanced by including these non-GAAP financial measures as a reasonable basis for evaluating our ongoing results of operations without the effect of non-cash charges such as depreciation and amortization expenses, asset disposals, and asset impairment and restaurant closure charges. EBITDA and adjusted EBITDA are supplemental measures of operating performance that do not represent and should not be considered as alternatives to net income or cash flow from operations, as determined by GAAP, and our calculation thereof may not be comparable to that reported by other companies in our industry or otherwise. Adjusted EBITDA further adjusts EBITDA to reflect the additions and eliminations shown in the table below. The use of adjusted EBITDA as a performance measure permits a comparative assessment of our operating performance relative to our performance based on our GAAP results, while isolating the effects of some items that vary from period to period without any correlation to core operating performance. Adjusted EBITDA as presented may not be comparable to other similarly-titled measures of other companies, and our presentation of adjusted EBITDA should not be construed as an inference that our future results will be unaffected by excluded or unusual items. We have not provided a reconciliation of our adjusted EBITDA outlook to the most comparable GAAP measure of net income. Providing net income guidance is potentially misleading and not practical given the difficulty of projecting event driven transactional and other non-core operating items that are included in net income, including asset impairments and income tax valuation adjustments. The reconciliations of adjusted EBITDA to net income for the historical periods presented below are indicative of the reconciliations that will be prepared upon completion of the periods covered by the non-GAAP guidance.

             
        Twelve Weeks Ended   Forty Weeks Ended
        October 1, 2017   October 2, 2016   October 1, 2017   October 2, 2016
Net income (loss) as reported       $ 2,714     $ (1,300 )   $ 21,212     $ 20,477
Interest expense, net       2,222     1,822     8,097     5,032
Provision (benefit) for income taxes       (690 )   (4,547 )   2,199     1,142
Depreciation and amortization       21,258     21,468     70,475     64,578
EBITDA(1)       25,504     17,443     101,983     91,229
                     
Restaurant impairment and closure           9,321     1,584     14,006
Litigation contingencies                   3,900
Adjusted EBITDA       $ 25,504     $ 26,764     $ 103,567     $ 109,135
                                   
(1) EBITDA for the twelve and forty weeks ended October 2, 2016 was previously reported as $17.9 million and $94.8 million. To conform with current period presentation and to provide an EBITDA measure comparable to other companies in our industry, $0.5 million and $3.6 million of stock-based compensation is included in EBITDA for these prior periods.

Contacts:

Brian Farley
Media Relations
Coyne PR
(973) 588-2000

Raphael Gross/Dara Dierks
ICR
Investor Relations
(203) 682-8200

View source version on businesswire.com: http://www.businesswire.com/news/home/20171106006297/en/

SOURCE Red Robin Gourmet Burgers, Inc.

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