Red Robin Gourmet Burgers Reports Results for the Fiscal Fourth Quarter and Year Ended December 29, 2019
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Red Robin Gourmet Burgers Reports Results for the Fiscal Fourth Quarter and Year Ended December 29, 2019

Delivered Second Consecutive Quarter of Comparable Restaurant Revenue Growth

Consistent Measurable Progress Executing on Transformation Strategy

GREENWOOD VILLAGE, Colo. - (BUSINESS WIRE) - Feb. 25, 2020 - Red Robin Gourmet Burgers, Inc. (NASDAQ: RRGB) (“Red Robin” or the “Company”), 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 and year ended December 29, 2019.

Fourth Quarter 2019 Financial Summary Compared to Fourth Quarter 2018

  • Total revenues were $302.9 million, a decrease of 1.2%;
  • Comparable restaurant revenue increased 1.3%, the second consecutive quarter of positive comparable restaurant revenue;
  • Comparable average guest check increased 4.7%, resulting from a 1.1% increase in menu mix, a 1.8% increase in pricing, and a 1.8% increase from lower discounting;
  • Comparable restaurant guest counts decreased 3.4%;
  • Off-premise sales, including catering, increased 26.9% and comprised 13.9% of total food and beverage sales;
  • GAAP loss per diluted share was $0.60 compared to $0.82;
  • Adjusted loss per diluted share was $0.36 compared to adjusted earnings per diluted share of $0.43 (see Schedule I);
  • Net loss was $7.7 million compared to $10.6 million; and
  • Adjusted EBITDA was $26.7 million compared to $28.4 million (see Schedule III).

Paul J.B. Murphy III, Red Robin’s President and Chief Executive Officer, said, “We are pleased with the continued, measurable progress we are making to deliver on our strategic plan, as we achieved the second consecutive quarter of comparable restaurant revenue growth in the fourth quarter of 2019, while intentionally unwinding significant discounting from the prior-year period. Importantly, our comparable restaurant revenue momentum has continued, and we expect it to accelerate in 2020, which we attribute to the foundational enhancements we made last year. These improvements include our focus on staffing, training, and retaining our Team Members; our commitment to delivering exceptional dining experiences at a compelling value; and our accentuation of brand attributes through the ‘All the Fulls’ creative campaign.”

Murphy continued, “Having recently articulated a vision to accelerate Red Robin’s turnaround, transform the business, and create long-term value for our shareholders at the ICR investor conference in January, we are now focused on successfully executing that strategy. Today, our strategic priorities include recapturing the essence of what makes Red Robin an iconic brand; delivering consistent, quality execution of our brand promise; and reinforcing emotional connections and core brand equities through our omni-channel messaging. We are also focused on accelerating profitable growth by beginning the rollout of Donatos® pizza in our restaurants, implementing a new service model, growing our off-premise platforms, and building our digital capabilities to drive increased guest engagement and frequency. I am encouraged by the growing momentum we continue to see across the business, and look forward to building on this progress in 2020 and beyond as we deliver value for Red Robin guests, shareholders, and other stakeholders.”

Fourth Quarter 2019 Operating Results

Total revenues, which primarily include Company-owned restaurant revenue and franchise royalties, decreased 1.2% to $302.9 million in the fourth quarter of 2019, from $306.8 million in the fourth quarter of 2018. Restaurant revenue decreased $4.1 million due to a $7.8 million decrease from restaurant closures, partially offset by a $3.7 million, or 1.3%, increase in comparable restaurant revenue(1).

System-wide restaurant revenue (which includes franchised units) for the fourth quarter of 2019 totaled $361.6 million, compared to $363.1 million for the fourth quarter of 2018.

Comparable restaurant revenue(1) increased 1.3% in the fourth quarter of 2019 compared to the same period a year ago, driven by a 4.7% increase in average guest check, partially offset by a 3.4% decrease in guest count. The increase in average guest check resulted from a 1.1% increase in menu mix, a 1.8% increase in pricing, and a 1.8% increase from lower discounting. The increase in menu mix was primarily driven by the Company’s current menu and promotional strategy, resulting in lower Tavern burger sales and higher Gourmet and Finest burger sales.

Net loss was $7.7 million for the fourth quarter of 2019 compared to a net loss of $10.6 million for the same period a year ago. Adjusted net loss (a non-GAAP financial measure) was $4.7 million for the fourth quarter of 2019 compared to adjusted net income of $5.4 million for the same period a year ago (see Schedule I).

Restaurant-level operating profit as a percentage of restaurant revenue (a non-GAAP financial measure) was 18.9% in the fourth quarter of 2019 compared to 19.4% in the same period a year ago. Cost of sales as a percentage of restaurant revenue decreased 60 basis points primarily due to lower pork and steak fry costs, partially offset by higher ground beef costs. Restaurant labor costs as a percentage of restaurant revenue decreased 20 basis points due to lower group insurance costs, partially offset by increased wage rates and higher levels of staffing at the restaurant manager level. Other restaurant operating costs increased 110 basis points primarily due to an increase in third-party delivery fees driven by higher off-premise sales volume, and higher restaurant technology costs compared to a favorable adjustment in the prior year. Occupancy costs increased 20 basis points primarily due to higher general liability costs, partially offset by lower rent expense due to restaurant closures. 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, in each case under GAAP.

(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 have operated for the entirety of both periods presented.

Restaurant Revenue Performance

 

 

Q4 2019

 

Q4 2018

Average weekly sales per unit:

 

 

 

 

Company-owned – Total

 

$

52,983

 

 

$

51,701

 

Company-owned – Comparable

 

$

53,256

 

 

$

52,579

 

Franchised units – Comparable

 

$

58,228

 

 

$

58,726

 

Total operating weeks:

 

 

 

 

Company-owned units

 

5,601

 

5,819

Franchised units

 

1,145

 

1,080

Other Results

Depreciation and amortization costs decreased to $20.7 million in the fourth quarter of 2019 from $22.0 million in the fourth quarter of 2018.

General and administrative costs were $19.3 million, or 6.4% of total revenues, in the fourth quarter of 2019, compared to $18.3 million, or 6.0% of total revenues, in the same period a year ago. The increase was primarily driven by increased Team Member salaries and benefits, partially offset by decreases in miscellaneous corporate expenses.

Selling expenses were $16.5 million, or 5.4% of total revenues, in the fourth quarter of 2019, compared to $17.4 million, or 5.7% of total revenues, during the same period a year ago. The decrease was primarily driven by a reduction in local media spend.

Other charges in the fourth quarter of 2019 included $1.4 million in restaurant closure and refranchising costs, $1.0 million in asset impairments, $0.8 million of board and stockholder matter costs, $0.5 million in executive transition and severance, and $0.4 million in executive retention.

Tax expense was $7.3 million in the fourth quarter of 2019, compared to a tax benefit of $7.3 million during the same period in the prior year. The decrease in the Company’s 2019 effective tax benefit is attributable to a decrease in tax credits and an increase in the valuation allowance related to Canada, primarily driven by closing and refranchising all remaining Company-operated restaurants in Canada in the fourth quarter of 2019.

Loss per diluted share for the fourth quarter of 2019 was $0.60 compared to loss per diluted share of $0.82 in the fourth quarter of 2018. Excluding costs per diluted share included in Other charges of $0.08 related to restaurant closure and refranchising costs, $0.06 related to asset impairments, $0.04 for board and stockholder matter costs, $0.03 for executive retention, and $0.03 for executive transition and severance, adjusted loss per share for the fourth quarter ended December 29, 2019, was $0.36. Excluding charges per diluted share of $1.07 for asset impairment, $0.14 for smallwares disposal, and $0.04 for litigation costs, adjusted earnings per diluted share for the fourth quarter ended December 30, 2018, was $0.43. 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.

Financial Highlights for the 52 Weeks Ended December 29, 2019 Compared to the 52 Weeks Ended December 30, 2018

Total revenues for the 52 weeks ended December 29, 2019, were $1.3 billion, a decrease of 1.8% from the 52 weeks ended December 30, 2018, primarily due to restaurant closures. GAAP loss per diluted share was $0.61 compared to GAAP loss per diluted share of $0.49 in the prior year, and adjusted earnings per diluted share was $0.62 compared to $1.73 in the prior year (see Schedule I for the reconciliation between GAAP loss per share and non-GAAP adjusted earnings per share). Off-premise sales, including catering, increased 28% during 2019, now comprising 12.4% of total food and beverage sales. For the 52 weeks ended December 29, 2019, comparable restaurant revenue(1) decreased 0.6% and comparable restaurant guest counts decreased 4.7% compared to 2018.

(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 have operated for the entirety of both periods presented.

Restaurant Portfolio

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

 

 

Twelve Weeks Ended

 

Fifty-two Weeks Ended

 

 

December 29,
2019

 

December 30,
2018

 

December 29,
2019

 

December 30,
2018

Company-owned:

 

 

 

 

 

 

 

 

Beginning of period

 

471

 

485

 

484

 

480

Opened during the period(1)

 

 

 

 

8

Sold to franchisees

 

(12)

 

 

(12)

 

Closed during the period

 

(5)

 

(1)

 

(18)

 

(4)

End of period

 

454

 

484

 

454

 

484

Franchised:

 

 

 

 

 

 

 

 

Beginning of period

 

90

 

89

 

89

 

86

Opened during the period

 

 

 

1

 

3

Acquired from corporate

 

12

 

 

12

 

End of period

 

102

 

89

 

102

 

89

Total number of restaurants

 

556

 

573

 

556

 

573

Balance Sheet and Liquidity

As of December 29, 2019, the Company had cash and cash equivalents of $30.0 million and total debt of $206.9 million. The Company funded capital expenditures with cash flow from operations and made net draws of $18.0 million on its credit facility during the fourth quarter of 2019. As of December 29, 2019, the Company had outstanding borrowings under its credit facility of $206.0 million, in addition to amounts issued under letters of credit of $7.5 million. Amounts issued under letters of credit reduce the amount available under the credit facility but are not recorded as debt.

The Company’s lease adjusted leverage ratio was 4.72x, and it was in compliance with all covenants as of December 29, 2019. On January 10, 2020, the Company replaced its credit facility with a new five-year Amended and Restated Credit Agreement which provides for a $161.5 million revolving line of credit and a $138.5 million term loan for a total borrowing capacity of $300 million. The Credit Agreement is included as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 13, 2020.

Outlook for 2020

  • The Company currently expects the following in 2020:
  • Comparable restaurant revenue growth in the low single digits;
  • Incremental restaurant-level operating profit expected to be offset by pre-opening expenses, marketing expenses, and project expenses associated with growth initiatives;
  • Net income of at least $2 million, including a tax benefit of $10 million to $12 million;
  • Adjusted EBITDA, a non-GAAP financial measure, of at least flat compared to approximately $101 million in 2019; and
  • Capital expenditures of $50 million to $60 million, including restaurant support center and systems; restaurant maintenance, refreshes and remodels; introduction of Donatos®; technology; and other investments to support growth initiatives.

Guidance Policy

The Company provides guidance as it relates to selected information related to the Company’s financial and operating performance, and such measures may differ from year to year.

Investor Conference Call and Webcast

Red Robin will host an investor conference call to discuss its fourth quarter 2019 results today at 5:00 p.m. Eastern Time. The conference call number is (201) 689-8560. 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 “Calendar of Events” 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 Tuesday, March 3, 2020. The replay can be accessed by dialing (412) 317-6671. The conference ID is 13698036.

Red Robin Management to Present at Raymond James & Associates Annual Investor Conference

On Monday, March 2, 2020, Red Robin will present at the Raymond James & Associates 41st Annual Institutional Investors Conference at the JW Marriott Orlando Grande Lakes in Orlando, Florida and hold investor meetings. The presentation will begin at 1:05 p.m. Eastern Time.

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. At Red Robin, burgers are more than just something guests eat; they’re a bonding experience that brings together friends and families, kids and adults. In addition to its many burger offerings, Red Robin serves 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 cocktails. It’s now easy to take Red Robin anywhere with online ordering for to-go and Gourmet Burger Bar catering. There are more than 550 Red Robin restaurants across the United States and Canada, including those 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, comparable restaurant revenue, restaurant-level operating profit, pre-opening expenses, marketing expenses, project expenses, net income, adjusted EBITDA, capital expenditures, and statements under the heading “Outlook for 2020”, 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 strategic initiatives, including alternative labor models, service, and operational improvement initiatives; the ability to train and retain the Company’s workforce for service execution, including the complexities related to growth of multiple revenue streams within the restaurants; the effectiveness of the Company’s marketing strategies and promotions; menu changes, including the anticipated sales growth, costs, and timing of the Donatos® expansion; the implementation and rollout of new technology solutions in the restaurants and timing thereof; the ability to increase off-premise sales; the ability to achieve revenue and cost savings from these and other initiatives; the Company’s franchise strategy; competition in the casual dining market and discounting by competitors; the cost and availability of key food products, distribution, labor, and energy; general economic conditions; the cost and availability of capital or credit facility borrowings; the adequacy of cash flows or available debt resources to fund operations and growth opportunities; limitations on the Company’s ability to execute stock repurchases at all or at the times or in the amounts the Company currently anticipates or to achieve anticipated benefits of a share repurchase program; the impact of 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.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

         

 

 

Twelve Weeks Ended

 

Fifty-two Weeks Ended

 

 

December 29,
2019

 

December 30,
2018

 

December 29,
2019

 

December 30,
2018

Revenues:

 

 

 

 

 

 

 

 

Restaurant revenue

 

$

296,757

 

 

$

300,897

 

 

$

1,289,521

 

 

$

1,316,209

 

Franchise and other revenue

 

6,188

 

 

5,882

 

 

25,493

 

 

22,354

 

Total revenues

 

302,945

 

 

306,779

 

 

1,315,014

 

 

1,338,563

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

Restaurant operating costs (exclusive of depreciation
and amortization shown separately below):

 

 

 

 

 

 

 

 

Cost of sales

 

68,285

 

 

71,112

 

 

303,404

 

 

313,504

 

Labor

 

102,476

 

 

104,449

 

 

456,778

 

 

456,262

 

Other operating

 

43,594

 

 

40,779

 

 

186,476

 

 

182,084

 

Occupancy

 

26,378

 

 

26,047

 

 

111,798

 

 

114,146

 

Depreciation and amortization

 

20,703

 

 

22,036

 

 

91,790

 

 

95,371

 

General and administrative

 

19,345

 

 

18,335

 

 

90,446

 

 

84,087

 

Selling

 

16,507

 

 

17,408

 

 

65,532

 

 

62,371

 

Pre-opening costs and acquisition costs

 

 

 

 

 

319

 

 

2,092

 

Other charges

 

4,110

 

 

21,708

 

 

21,598

 

 

39,131

 

Total costs and expenses

 

301,398

 

 

321,874

 

 

1,328,141

 

 

1,349,048

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

1,547

 

 

(15,095

)

 

(13,127

)

 

(10,485

)

 

 

 

 

 

 

 

 

 

Other expense:

 

 

 

 

 

 

 

 

Interest expense, net and other

 

1,907

 

 

2,838

 

 

9,110

 

 

10,925

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

(360

)

 

(17,933

)

 

(22,237

)

 

(21,410

)

Income tax expense (benefit)

 

7,342

 

 

(7,299

)

 

(14,334

)

 

(14,991

)

Net loss

 

$

(7,702

)

 

$

(10,634

)

 

$

(7,903

)

 

$

(6,419

)

Loss per share:

 

 

 

 

 

 

 

 

Basic

 

$

(0.60

)

 

$

(0.82

)

 

$

(0.61

)

 

$

(0.49

)

Diluted

 

$

(0.60

)

 

$

(0.82

)

 

$

(0.61

)

 

$

(0.49

)

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

12,931

 

 

12,974

 

 

12,959

 

 

12,976

 

Diluted

 

12,931

 

 

12,974

 

 

12,959

 

 

12,976

 

 

RED ROBIN GOURMET BURGERS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

         

 

 

December 29, 2019

 

December 30, 2018

Assets:

 

 

 

 

Current Assets:

 

 

 

 

Cash and cash equivalents

 

$

30,045

 

 

$

18,569

 

Accounts receivable, net

 

22,372

 

 

25,034

 

Inventories

 

26,424

 

 

27,370

 

Prepaid expenses and other current assets

 

26,646

 

 

27,576

 

Total current assets

 

105,487

 

 

98,549

 

Property and equipment, net

 

518,013

 

 

565,142

 

Right of use assets, net

 

426,248

 

 

 

Goodwill

 

96,397

 

 

95,838

 

Intangible assets, net

 

29,975

 

 

34,609

 

Other assets, net

 

61,460

 

 

49,803

 

Total assets

 

$

1,237,580

 

 

$

843,941

 

 

 

 

 

 

Liabilities and Stockholders’ Equity:

 

 

 

 

Current Liabilities:

 

 

 

 

Accounts payable

 

$

33,040

 

 

$

39,024

 

Accrued payroll and payroll related liabilities

 

35,221

 

 

37,922

 

Unearned revenue

 

54,223

 

 

55,360

 

Current portion of lease obligations

 

42,699

 

 

786

 

Accrued liabilities and other

 

29,403

 

 

38,057

 

Total current liabilities

 

194,586

 

 

171,149

 

Deferred rent

 

 

 

75,675

 

Long-term debt

 

206,875

 

 

193,375

 

Long-term portion of lease obligations

 

465,435

 

 

9,414

 

Other non-current liabilities

 

10,164

 

 

11,523

 

Total liabilities

 

877,060

 

 

461,136

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

Common stock; $0.001 par value: 45,000 shares authorized; 17,851 shares issued; 12,923 and 12,971 shares outstanding

 

18

 

 

18

 

Preferred stock, $0.001 par value: 3,000 shares authorized; no shares issued and outstanding

 

 

 

 

Treasury stock 4,928 and 4,880 shares, at cost

 

(202,313

)

 

(201,505

)

Paid-in capital

 

213,922

 

 

212,752

 

Accumulated other comprehensive loss, net of tax

 

(4,373

)

 

(4,801

)

Retained earnings

 

353,266

 

 

376,341

 

Total stockholders’ equity

 

360,520

 

 

382,805

 

Total liabilities and stockholders’ equity

 

$

1,237,580

 

 

$

843,941

 

Schedule I

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

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 twelve and fifty-two weeks ended December 29, 2019 and December 30, 2018, net income and basic and diluted earnings per share, excluding the effects of executive transition and severance, board and stockholder matter costs, asset impairments, litigation contingencies, asset disposals, restaurant closure and refranchising costs, reorganization costs, executive retention costs, and related income tax effects. The Company believes the presentation of net income and earnings 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

 

Fifty-two Weeks Ended

 

 

December 29, 2019

 

December 30, 2018

 

December 29, 2019

 

December 30, 2018

Net loss as reported

 

$

(7,702

)

 

$

(10,634

)

 

$

(7,903

)

 

$

(6,419

)

Executive transition and severance

 

492

 

 

 

 

3,450

 

 

 

Board and stockholder matter costs

 

798

 

 

 

 

3,261

 

 

 

Asset impairment

 

1,030

 

 

18,483

 

 

15,094

 

 

28,127

 

Litigation contingencies

 

 

 

795

 

 

 

 

4,795

 

Smallwares disposal

 

 

 

2,430

 

 

 

 

2,936

 

Restaurant closures and refranchising costs

 

1,430

 

 

 

 

(1,187

)

 

 

Reorganization costs

 

 

 

 

 

 

 

3,273

 

Executive retention

 

360

 

 

 

 

980

 

 

 

Income tax effect of reconciling items

 

(1,069

)

 

(5,644

)

 

(5,615

)

 

(10,174

)

Adjusted net (loss) income

 

$

(4,661

)

 

$

5,430

 

 

$

8,080

 

 

$

22,538

 

 

 

 

 

 

 

 

 

 

Basic net (loss) income per share:

 

 

 

 

 

 

 

 

Net loss as reported

 

$

(0.60

)

 

$

(0.82

)

 

$

(0.61

)

 

$

(0.49

)

Executive transition and severance

 

0.04

 

 

 

 

0.26

 

 

 

Board and stockholder matter costs

 

0.06

 

 

 

 

0.25

 

 

 

Asset impairment

 

0.08

 

 

1.43

 

 

1.16

 

 

2.17

 

Litigation contingencies

 

 

 

0.06

 

 

 

 

0.37

 

Smallwares disposal

 

 

 

0.19

 

 

 

 

0.22

 

Restaurant closures and refranchising costs

 

0.11

 

 

 

 

(0.09

)

 

 

Reorganization costs

 

 

 

 

 

 

 

0.25

 

Executive retention

 

0.03

 

 

 

 

0.08

 

 

 

Income tax effect of reconciling items

 

(0.08

)

 

(0.43

)

 

(0.43

)

 

(0.78

)

Adjusted (loss) earnings per share - basic

 

$

(0.36

)

 

$

0.43

 

 

$

0.62

 

 

$

1.74

 

 

 

 

 

 

 

 

 

 

Diluted net (loss) income per share:

 

 

 

 

 

 

 

 

Net loss as reported

 

$

(0.60

)

 

$

(0.82

)

 

$

(0.61

)

 

$

(0.49

)

Executive transition and severance

 

0.04

 

 

 

 

0.26

 

 

 

Board and stockholder matter costs

 

0.06

 

 

 

 

0.25

 

 

 

Asset impairment

 

0.08

 

 

1.43

 

 

1.16

 

 

2.16

 

Litigation contingencies

 

 

 

0.06

 

 

 

 

0.37

 

Smallwares disposal

 

 

 

0.19

 

 

 

 

0.22

 

Restaurant closures and refranchising costs

 

0.11

 

 

 

 

(0.09

)

 

 

Reorganization costs

 

 

 

 

 

 

 

0.25

 

Executive retention

 

0.03

 

 

 

 

0.08

 

 

 

Income tax effect of reconciling items

 

(0.08

)

 

(0.43

)

 

(0.43

)

 

(0.78

)

Adjusted (loss) earnings per share - diluted

 

$

(0.36

)

 

$

0.43

 

 

$

0.62

 

 

$

1.73

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

Basic

 

12,931

 

 

12,974

 

 

12,959

 

 

12,976

 

Diluted(1)

 

12,931

 

 

13,033

 

 

13,049

 

 

13,057

 

____________________________________

(1)

 

For the 52 weeks ended December 29, 2019 and the 12 and 52 weeks ended December 30, 2018, the impact of dilutive shares is included in the calculation as the adjustments for the quarter resulted in adjusted net income. For diluted shares reported on the consolidated statement of operations, the impact of dilutive shares is excluded due to the reported net loss for the fiscal year.

Schedule II

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

The Company believes 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 that 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 equipment, 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 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 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 in our industry. The table below sets forth certain unaudited information for the twelve and fifty-two week periods ended December 29, 2019 and December 30, 2018, expressed as a percentage of total revenues, except for the components of restaurant-level operating profit that are expressed as a percentage of restaurant revenue.

 

 

Twelve Weeks Ended

 

Fifty-two Weeks Ended

 

 

December 29, 2019

 

December 30, 2018

 

December 29, 2019

 

December 30, 2018

Restaurant revenues

 

$

296,757

 

 

98.0

%

 

$

300,897

 

 

98.1

%

 

$

1,289,521

 

 

98.1

%

 

$

1,316,209

 

 

98.3

%

Restaurant operating costs(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

68,285

 

 

23.0

%

 

71,112

 

 

23.6

%

 

303,404

 

 

23.5

%

 

313,504

 

 

23.8

%

Labor

 

102,476

 

 

34.5

%

 

104,449

 

 

34.7

%

 

456,778

 

 

35.4

%

 

456,262

 

 

34.7

%

Other operating

 

43,594

 

 

14.7

%

 

40,779

 

 

13.6

%

 

186,476

 

 

14.5

%

 

182,084

 

 

13.8

%

Occupancy

 

26,378

 

 

8.9

%

 

26,047

 

 

8.7

%

 

111,798

 

 

8.7

%

 

114,146

 

 

8.7

%

Restaurant-level operating profit

 

56,024

 

 

18.9

%

 

58,510

 

 

19.4

%

 

231,065

 

 

17.9

%

 

250,213

 

 

19.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Add – Franchise royalties, fees and other revenue

 

6,188

 

 

2.0

%

 

5,882

 

 

1.9

%

 

25,493

 

 

1.9

%

 

22,354

 

 

1.7

%

Deduct – other operating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

20,703

 

 

6.8

%

 

22,036

 

 

7.2

%

 

91,790

 

 

7.0

%

 

95,371

 

 

7.1

%

General and administrative expenses

 

19,345

 

 

6.4

%

 

18,335

 

 

6.0

%

 

90,446

 

 

6.9

%

 

84,087

 

 

6.3

%

Selling

 

16,507

 

 

5.4

%

 

17,408

 

 

5.7

%

 

65,532

 

 

5.0

%

 

62,371

 

 

4.7

%

Pre-opening & acquisition costs

 

 

 

%

 

 

 

%

 

319

 

 

%

 

2,092

 

 

0.2

%

Other charges

 

4,110

 

 

1.4

%

 

21,708

 

 

7.1

%

 

21,598

 

 

1.6

%

 

39,131

 

 

2.9

%

Total other operating

 

60,665

 

 

20.0

%

 

79,487

 

 

26.0

%

 

269,685

 

 

20.5

%

 

283,052

 

 

21.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

1,547

 

 

0.5

%

 

(15,095

)

 

(4.9

)%

 

(13,127

)

 

(1.0

)%

 

(10,485

)

 

(0.8

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net and other

 

1,907

 

 

0.6

%

 

2,838

 

 

0.9

%

 

9,110

 

 

0.7

%

 

10,925

 

 

0.8

%

Income tax expense (benefit)

 

7,342

 

 

2.4

%

 

(7,299

)

 

(2.4

)%

 

(14,334

)

 

(1.1

)%

 

(14,991

)

 

(1.1

)%

Total other

 

9,249

 

 

3.1

%

 

(4,461

)

 

(1.5

)%

 

(5,224

)

 

(0.4

)%

 

(4,066

)

 

(0.3

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(7,702

)

 

(2.5

)%

 

$

(10,634

)

 

(3.5

)%

 

$

(7,903

)

 

(0.6

)%

 

$

(6,419

)

 

(0.5

)%

______________________________________

(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 to EBITDA and Adjusted EBITDA
(In thousands, unaudited)

The Company defines EBITDA as net income before interest expense, benefit for income taxes, and depreciation and amortization. EBITDA and adjusted EBITDA are presented because the Company believes 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 executive transition and severance, board and stockholder matter costs, asset impairments, litigation contingencies, asset disposals, restaurant closure and refranchising costs, reorganization costs, executive retention costs, and related income tax effects. 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

 

Fifty-two Weeks Ended

 

 

December 29,
2019

 

December 30, 2018

 

December 29,
2019

 

December 30,
2018

Net loss as reported

 

$

(7,702

)

 

$

(10,634

)

 

$

(7,903

)

 

$

(6,419

)

Interest expense, net

 

2,245

 

 

2,550

 

 

10,141

 

 

10,675

 

Income tax expense (benefit)

 

7,342

 

 

(7,299

)

 

(14,334

)

 

(14,991

)

Depreciation and amortization

 

20,703

 

 

22,036

 

 

91,790

 

 

95,371

 

EBITDA

 

$

22,588

 

 

$

6,653

 

 

$

79,694

 

 

$

84,636

 

 

 

 

 

 

 

 

 

 

Executive transition and severance

 

$

492

 

 

$

 

 

$

3,450

 

 

$

 

Board and stockholder matter costs

 

798

 

 

 

 

3,261

 

 

 

Asset impairment

 

1,030

 

 

18,483

 

 

15,094

 

 

28,127

 

Litigation contingencies

 

 

 

795

 

 

 

 

4,795

 

Smallwares disposal

 

 

 

2,430

 

 

 

 

2,936

 

Restaurant closures and refranchising costs

 

1,430

 

 

 

 

(1,187

)

 

 

Reorganization costs

 

 

 

 

 

 

 

3,273

 

Executive retention

 

360

 

 

 

 

980

 

 

 

Adjusted EBITDA

 

$

26,698

 

 

$

28,361

 

 

$

101,292

 

 

$

123,767

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20200225005977/en/

For media relations questions contact:
Danielle Paleafico, Coyne PR
(973) 588-2000

For investor relations questions contact:
Raphael Gross, ICR
(203) 682-8253

Source: Red Robin Gourmet Burgers, Inc.

###

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