RRGB
$26.23
Red Robin Gourmet Burgers
($.95)
(3.50%)
Earnings Details
1st Quarter March 2021
Tuesday, May 25, 2021 4:05:00 PM
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Summary

Red Robin Gourmet Burgers Beats

Red Robin Gourmet Burgers (RRGB) reported a 1st Quarter March 2021 loss of $0.30 per share on revenue of $326.3 million. The consensus estimate was a loss of $1.24 per share on revenue of $309.0 million. The Earnings Whisper number was for a loss of $1.05 per share. Revenue grew 6.6% on a year-over-year basis.

Red Robin Gourmet Burgers Inc along with its subsidiaries develops and operates casual-dining and fast-casual restaurants. The Company operates casual dining restaurant chain in North America.

Results
Reported Earnings
($0.30)
Earnings Whisper
($1.05)
Consensus Estimate
($1.24)
Reported Revenue
$326.3 Mil
Revenue Estimate
$309.0 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Red Robin Gourmet Burgers, Inc. Reports Results for the Fiscal First Quarter Ended April 18, 2021

Company announces all Company-owned indoor dining rooms open with varying levels of capacity, 10.0% comparable revenue growth, improved first quarter trends

GREENWOOD VILLAGE, Colo.--(BUSINESS WIRE)--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 ended April 18, 2021.

Key Highlights

  • As of the end of our fiscal fifth period, all Company-owned restaurants have re-opened indoor dining rooms with varying levels of capacity;
  • Restaurant revenue of $318.7 million and Restaurant Level Operating Profit (a non-GAAP metric) of 15.7%, an increase of 690 basis points over the same period in 2020;
  • First quarter 2021 comparable(1) restaurant revenue increased 10.0% over the same period in 2020, and decreased 12.8% compared to the same period in 2019;
  • At the end of the first quarter 2021, 55% of Company-owned restaurants had positive comparable(1) restaurant revenue compared to 2019;
  • First quarter 2021 off-premises sales increased 75.5% compared to the period ended April 19, 2020, and comprised 41.7%, 26.3%, and 11.6% of total food and beverage sales for the first fiscal quarter of 2021, 2020, and 2019; and,
  • For the last four weeks of the fiscal first quarter of 2021, 85 comparable(1) Company-owned restaurants with no capacity or social distancing restrictions realized comparable restaurant revenue of 5.2% over the same period in 2019, while maintaining off-premises mix of 29.9%, more than double pre-pandemic levels. These restaurants also realized comparable(1) restaurant margin of 21.1%, an increase of 1.5% over the same period in 2019. While these restaurants are able to operate with no restrictions, several are still operating below 100% capacity due to limited operating hours due to staffing challenges and COVID exclusions.

Paul J. B. Murphy III, Red Robin’s President and Chief Executive Officer, said, "We are very excited to share the progress we have made towards recovery. Our initiatives to enhance the Red Robin Guest experience and enterprise business model since the onset of the pandemic, coupled with decreasing COVID cases and pent-up demand, have resulted in a meaningful improvement in our liquidity and enterprise margins. We are encouraged that by the end of our first fiscal quarter, more than half of our Company-owned restaurants had positive comparable restaurant revenue compared to 2019, despite pronounced capacity restrictions in our largest markets. For the first time since the beginning of the pandemic, all of our Company-owned restaurants are open for indoor dining at varying levels of capacity. As we welcome back our Guests, we are sustaining off-premises sales that are more than double pre-pandemic levels, even in comparable Company-owned restaurants we are able to operate at full indoor capacity."

Murphy continued, "We believe the foundation that we have put in place will drive Guest activation, deliver a great brand experience, continue to generate incremental off-premises sales, and leverage our strengthened business model, together creating long-term value for our shareholders."

First Quarter 2021 Financial Summary Compared to First Quarter 2020 and 2019

The following table presents financial highlights for the fiscal first quarter of 2021, compared to results from the same period in 2020 and 2019:

 

 

Sixteen weeks
ended

 

 

 

Sixteen weeks
ended

 

 

 

 

April 18, 2021

 

April 19, 2020

 

Change

 

April 21, 2019(1)

 

Change

Total revenues (millions)

 

$

326.3

 

 

$

306.1

 

 

6.6

%

 

$

409.9

 

 

(20.4)

%

Net (loss) income (millions)

 

(8.7)

 

 

(174.3)

 

 

(95.0)

%

 

0.6

 

 

*

Adjusted EBITDA (millions)(2)

 

$

27.4

 

 

$

(10.7)

 

 

*

 

$

34.3

 

 

(20.2)

%

 

 

 

 

 

 

 

 

 

 

 

(Loss) income per diluted share ($ per share)

 

$

(0.56)

 

 

$

(13.51)

 

 

(95.9)

%

 

$

0.05

 

 

*

Adjusted (loss) income per diluted share ($ per share)(3)

 

$

(0.30)

 

 

$

(6.66)

 

(95.5)

%

 

$

0.19

 

*

(1)

Presented for improved comparability.

(2)

See schedule III for a reconciliation of Adjusted EBITDA, a non-GAAP measure, to net (loss) income.

(3)

See schedule II for a reconciliation of Adjusted (loss) income per diluted share, a non-GAAP measure, to (Loss) income per diluted share.

*

Percentage increases and decreases over 100 percent were not considered meaningful.

 

First Quarter 2021 Operating Results

Comparable restaurant revenue(1) increased 10.0% in the first quarter of 2021 compared to the same period a year ago, driven by a 4.4% increase in Guest count and a 5.6% increase in average Guest check. The increase in average Guest check resulted from a 3.7% increase in pricing, a 1.3% increase in menu mix, and a 0.6% increase from lower discounts. The increase in menu mix was primarily driven by higher sales of appetizers and Gourmet burgers, partially offset by lower beverage mix. Comparable restaurant revenue(1) decreased 12.8% in the first quarter of 2021 compared to the same period of fiscal year 2019.

(1)

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

 

 

Sixteen Weeks Ended

 

April 18, 2021

 

April 19, 2020

Average weekly sales per unit:

 

 

 

Company-owned – Total

$

46,515

 

$

41,785

Company-owned – Comparable(1)

47,535

 

43,062

Franchised units – Comparable(1)

$

50,240

 

$

43,647

Total operating weeks:

 

 

 

Company-owned units

6,851

 

7,214

Franchised units

1,648

 

1,632

(1)

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

 

 

 

Sixteen weeks ended

 

 

April 18, 2021

April 19, 2020

April 21, 2019(1)

Restaurant level operating profit(2) (millions)

 

50.0

 

26.5

 

73.3

Restaurant level operating profit percentage(2)

 

15.7

%

8.8

%

18.3

%

 
(1)

Presented for improved comparability.

(2)

See schedule II for a reconciliation of Restaurant level operating profit, a non-GAAP measure, to Loss from operations.

 

The increase in restaurant-level operating profit was due to the following:

  • Restaurant revenue increased by 5.7 %, driven by favorable Guest counts, pricing, and sales mix;
  • Cost of goods sold decreased by 170 basis points, primarily driven by favorable commodity costs and rebates;
  • Labor costs decreased by 430 basis points, primarily driven by a more efficient management labor structure, staffing shortages, and simplifying our menu resulting in reduced kitchen labor hours, partially offset by higher wage rates;
  • Other operating expenses increased by 80 basis points, primarily driven by higher third party delivery commissions and supply costs, due to higher off-premises sales; and
  • Occupancy costs decreased by 180 basis points, primarily driven by savings from permanently closed restaurants and restructuring of lease payments and rent concessions.

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 loss from operations and net loss, the most directly comparable GAAP metrics.

 

 

Sixteen weeks ended

 

 

April 18, 2021

April 19, 2020

April 21, 2019(1)

General and administrative costs (millions)

 

$

22.3

 

 

$

26.7

 

 

$

30.1

 

General and administrative costs as a percentage of total revenues

 

6.8

%

 

8.7

%

 

7.3

%

(1) Presented for improved comparability.

The decrease in general and administrative costs in 2021 was primarily driven by a decrease in travel and entertainment costs and a permanent reduction in force in 2020, partially offset by higher Team Member benefit costs.

 

 

Sixteen weeks ended

 

 

April 18, 2021

April 19, 2020

April 21, 2019(1)

Selling costs (millions)

 

$

8.4

 

 

$

14.8

 

 

$

18.0

 

Selling costs as a percentage of total revenues

 

2.6

%

 

4.8

%

 

4.4

%

(1) Presented for improved comparability.

The decrease in selling costs in 2021 was primarily driven by reduced marketing due to capacity limitations and a shift to an all-digital marketing strategy, which has enabled us to communicate with our Guests in a more compelling and cost effective way.

Balance Sheet and Liquidity

The Company made net repayments of $6.4 million on its Amended and Restated Credit Agreement (the "credit facility") during the first quarter of 2021. As of April 18, 2021, the Company had outstanding borrowings under its credit facility of $163.3 million, in addition to amounts issued under letters of credit of $8.6 million, and liquidity of approximately $107.0 million including cash on hand and available borrowing capacity under its credit facility.

Income Taxes

The Company will be able to carry back federal and state net operating losses that are expected to generate approximately $16 million in cash tax refunds during 2021.

Restaurant Portfolio

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

 

 

Sixteen Weeks Ended

 

 

April 18, 2021

 

April 19, 2020

Company-owned:

 

 

 

 

Beginning of period

 

443

 

 

454

 

Closed during the period

 

(3)

 

 

(2)

 

End of period

 

440

 

 

452

 

Franchised:

 

 

 

 

Beginning of period

 

103

 

 

102

 

End of period

 

103

 

 

102

 

Total number of restaurants

 

543

 

 

554

 

As of May 16, 2021, the Company had 440 total (comparable and non-comparable) restaurants. In addition to the permanent closures shown in the table above, the Company determined during the first quarter that it intends to permanently close 10 of 12 remaining Company-owned restaurants that were closed in 2020 due to the COVID-19 pandemic and will re-open the remaining two restaurants in 2021.

Current Operational Trends

Selected operating metrics are presented below for the Company's 28 day accounting periods through the fifth period of fiscal year 2021:

 

 

Period Ended(2)

Company-owned Restaurants

 

24-Jan

 

21-Feb(3)

 

21-Mar

 

18-Apr

 

16-May(6)

Net comparable(1) restaurant revenues

 

(26.7)%

 

(22.9)%

 

21.9%

 

165.9%

 

102.6%

Net comparable(1) restaurant revenues compared to Fiscal Year 2019

 

N/A(4)

 

N/A(4)

 

(8.5)%

 

0.0%

 

(3.3)%

Average weekly net sales per restaurant

 

$

39,701

 

$

41,384

 

$

53,240

 

$

55,600

 

$

52,731

Number of comparable Company-owned restaurants(1)

 

413

 

411

 

410

 

410

 

410

Company-owned restaurants with closed dining rooms(1)

 

114

 

57

 

9

 

6

 

0

Average weekly off-premises net sales per restaurant

 

$

20,896

 

$

18,696

 

$

20,056

 

$

19,894

 

$

19,078

Open system capacity(5)

 

40%

 

41%

 

48%

 

61%

 

65%

(1)

Comparable restaurants are those Company-owned restaurants that have operated five full fiscal quarters as of the period presented. Restaurant count shown is as of the end of the period presented.

(2)

The periods ended January 24, February 21, March 21, and April 18, 2021 comprise the Company's first fiscal quarter. The period ended May 16, 2021 falls within our second fiscal quarter of 2021, and amounts presented for the period are preliminary and subject to closing adjustments.

(3)

Period includes the impact of reduced traffic due to winter weather in February of approximately 2% to 3%.

(4)

This metric is presented to compare current year operating results to periods that are not impacted by the COVID-19 pandemic. There was no meaningful COVID-19 impact in P1 or P2 of 2020.

(5)

Represents the percentage of indoor seating of Company-owned restaurants with open dining rooms, as of the end of the period presented.

(6)

Period includes the impact of limited operating hours, in part due to staffing shortages.

We expect that the recovery of our restaurants in our largest markets on the West Coast, which have had capacity restrictions at 50% or less through May 16, 2021, will provide significant average comparable restaurant revenue benefits as we increase capacity in these dining rooms. As of the end of our fiscal first quarter, the majority of our restaurants in our West Coast market were open at limited indoor capacity. The restaurants in these states had average weekly net sales per restaurant as presented in the table below:

State

 

Restaurant
Count

 

Sixteen weeks
ended April 18,
2021

 

May 16, 2021(1)

 

Fiscal Year
2019

 

First Quarter 2021 to
Fiscal Year 2019
Change

 

Period Ended May 16,
2021 to Fiscal Year 2019
Change(1)

California

 

64

 

$44,592

 

$

64,735

 

 

$63,586

 

(29.9)

%

 

1.8

%

Oregon

 

15

 

$53,784

 

$

57,710

 

 

$70,119

 

(23.3)

%

 

(17.7)

%(2)

Washington

 

38

 

$59,888

 

$

75,175

 

 

$73,326

 

(18.3)

%

 

2.5

%

(1)

Amounts presented for this period are preliminary and subject to closing adjustments.

(2)

During our fiscal fifth period ended May 16, 2021, certain restaurants in Oregon were mandated to revert to off-premises only due to increased COVID-19 restrictions in these states and localities.

 

We also expect to see continued benefits from outdoor seating expansion, allowing us to capture incremental demand by offering a Red Robin occasion to Guests who would still prefer a more socially distanced full service dining option, or outdoor dining experiences during seasons with good weather.

Outlook for 2021 and Guidance Policy

The Company provides guidance as it relates to select information related to the Company's financial and operating performance, and such measures may differ from year to year. Due to the uncertainty caused by the on-going COVID-19 pandemic, limited guidance is being provided for fiscal year 2021.

The Company currently expects the following in 2021:

  • We reiterate our expectation of full-year capital expenditures of $45 million to $55 million, including continued investment in maintaining our restaurants and infrastructure with maintenance and systems capital, Donatos® expansion to approximately 120 restaurants, including approximately 40 restaurants in our second fiscal quarter, and approximately 80 restaurants in the second half of the fiscal year, digital guest and operational technology solutions, and off-premises execution enhancements.
  • We currently expect to realize a full-year 2021 effective tax rate between 1% and 5%.

Investor Conference Call and Webcast

Red Robin will host an investor conference call to discuss its first quarter 2021 results today at 5:00 p.m. ET. The conference call can be accessed live over the phone by dialing (412) 317-6026. A replay will be available from approximately two hours after the end of the call and can be accessed by dialing (412) 317-6671; the conference ID is 10155328. The replay will be available through Tuesday, June 1, 2021.

The call will be webcast live and later archived from the Company's website at www.redrobin.com under the investor relations section.

About Red Robin Gourmet Burgers, Inc. (NASDAQ: RRGB)

Red Robin Gourmet Burgers, Inc. (www.redrobin.com), is 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. We believe nothing brings people together like burgers and fun around our table, and no one makes moments of connection over craveable food more memorable than Red Robin. We serve a variety of burgers and mainstream favorites to Guests of all ages in a casual, playful atmosphere. In addition to our many burger offerings, Red Robin serves a wide array of salads, appetizers, entrees, desserts, signature beverages and Donatos® pizza at select locations. It's now easy to enjoy Red Robin anywhere with online ordering available for to-go, delivery and catering. There are more than 540 Red Robin restaurants across the United States and Canada, including those operating under franchise agreements. Red Robin… YUMMM®!

Forward-Looking Statements

Forward-looking statements in this press release regarding the Company's future performance, demand and business recovery, growth drivers, long-term value creation, revenue and comparable revenue growth, sales and profitability including sales trajectory, off-premises sales and incrementality, enterprise margin improvement, preliminary results including net comparable restaurant revenue and average weekly net sales per restaurant, tax rate and NOL cash tax refunds, capital expenditures including restaurant maintenance and infrastructure and rollout of Donatos® to additional locations and timing thereof, digital guest and operational technology solutions, and off-premises execution enhancements, commodity inflation, 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," "could," "should," "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 impact of COVID-19 on our results of operations, supply chain, and liquidity; the effectiveness of the Company's strategic initiatives, including alternative labor models, service, and operational improvement initiatives; our ability to staff, train, and retain our workforce for service execution; the effectiveness and timing of the Company's marketing strategies and promotions; menu changes and pricing strategy; the anticipated sales growth, costs, and timing of the Donatos® expansion; the implementation, rollout, and timing of new technology solutions; our ability to achieve revenue and cost savings from off-premises sales and other initiatives; competition in the casual dining market and discounting by competitors; changes in consumer spending trends and habits; changes in the cost and availability of key food products, distribution, labor, and energy; general economic conditions, including changes in consumer disposable income, weather conditions, and related events in regions where our restaurants are operated; the adequacy of cash flows and the cost and availability of capital or credit facility borrowings; the impact of federal, state, and local regulation of the Company's business; changes in federal, state, or local laws and regulations affecting the operation of our restaurants, including minimum wages, consumer health and safety, health insurance coverage, nutritional disclosures, and employment eligibility-related documentation requirements; costs and other effects of legal claims by Team Members, franchisees, customers, vendors, stockholders, and others, including negative publicity regarding food safety or cyber security; 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)

 

 

 

Sixteen Weeks Ended

 

 

April 18, 2021

 

April 19, 2020

Revenues:

 

 

 

 

Restaurant revenue

 

$

318,677

 

 

$

301,434

 

Franchise royalties, fees, and other revenue

 

7,598

 

 

4,631

 

Total revenues

 

326,275

 

 

306,065

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

Restaurant operating costs (exclusive of depreciation

and amortization shown separately below):

 

 

 

 

Cost of sales

 

69,166

 

 

70,426

 

Labor

 

111,659

 

 

118,566

 

Other operating

 

57,712

 

 

52,291

 

Occupancy

 

30,100

 

 

33,657

 

Depreciation and amortization

 

25,888

 

 

28,320

 

General and administrative

 

22,255

 

 

26,723

 

Selling

 

8,355

 

 

14,779

 

Pre-opening costs and acquisition costs

 

 

 

153

 

Other charges

 

5,471

 

 

119,379

 

Total costs and expenses

 

330,606

 

 

464,294

 

 

 

 

 

 

Loss from operations

 

(4,331)

 

 

(158,229)

 

 

 

 

 

 

Other expense:

 

 

 

 

Interest expense, net and other

 

4,330

 

 

3,370

 

 

 

 

 

 

Loss before income taxes

 

(8,661)

 

 

(161,599)

 

Income tax provision

 

52

 

 

12,699

 

Net loss

 

$

(8,713)

 

 

$

(174,298)

 

Loss per share:

 

 

 

 

Basic

 

$

(0.56)

 

 

$

(13.51)

 

Diluted

 

$

(0.56)

 

 

$

(13.51)

 

Weighted average shares outstanding:

 

 

 

 

Basic

 

15,579

 

 

12,903

 

Diluted

 

15,579

 

 

12,903

 

 

RED ROBIN GOURMET BURGERS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)

 

 

 

(Unaudited)

 

 

 

 

April 18, 2021

 

December 27, 2020

Assets:

 

 

 

 

Current Assets:

 

 

 

 

Cash and cash equivalents

 

$

22,284

 

 

$

16,116

 

Accounts receivable, net

 

10,916

 

 

16,510

 

Inventories

 

23,736

 

 

23,802

 

Income tax receivable

 

16,176

 

 

16,662

 

Prepaid expenses and other current assets

 

12,823

 

 

13,818

 

Total current assets

 

85,935

 

 

86,908

 

Property and equipment, net

 

405,157

 

 

427,033

 

Right of use assets, net

 

427,182

 

 

425,573

 

Intangible assets, net

 

23,741

 

 

24,714

 

Other assets, net

 

9,122

 

 

10,511

 

Total assets

 

$

951,137

 

 

$

974,739

 

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

Current Liabilities:

 

 

 

 

Accounts payable

 

$

25,520

 

 

$

20,179

 

Accrued payroll and payroll related liabilities

 

30,090

 

 

27,653

 

Unearned revenue

 

42,996

 

 

50,138

 

Current portion of lease obligations

 

51,369

 

 

55,275

 

Current portion of long-term debt

 

9,692

 

 

9,692

 

Accrued liabilities and other

 

44,524

 

 

39,617

 

Total current liabilities

 

204,191

 

 

202,554

 

Long-term debt

 

154,529

 

 

160,952

 

Long-term portion of lease obligations

 

463,729

 

 

465,233

 

Other non-current liabilities

 

16,402

 

 

25,287

 

Total liabilities

 

838,851

 

 

854,026

 

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

Common stock; $0.001 par value: 45,000 shares authorized; 20,449 shares issued; 15,622 and 15,548 shares outstanding as of April 18, 2021 and December 27, 2020

 

20

 

 

20

 

Preferred stock, $0.001 par value: 3,000 shares authorized; no shares issued and outstanding as of April 18, 2021 and December 27, 2020

 

 

 

 

Treasury stock, 4,827 and 4,901 shares, at cost as of April 18, 2021 and December 27, 2020

 

(196,883)

 

 

(199,908)

 

Paid-in capital

 

240,647

 

 

243,407

 

Accumulated other comprehensive loss, net of tax

 

17

 

 

(4)

 

Retained earnings

 

68,485

 

 

77,198

 

Total stockholders' equity

 

112,286

 

 

120,713

 

Total liabilities and stockholders' equity

 

$

951,137

 

 

$

974,739

 

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 sixteen weeks ended April 18, 2021, April 19, 2020 and April 21, 2019(1) Net (loss) income and basic and diluted loss per share, excluding the effects of goodwill impairment, restaurant asset impairment, litigation contingencies, board and stockholder matters costs, restaurant closure and refranchising costs, severance costs, COVID-19 related costs, and related income tax effects. The Company believes the presentation of net loss and 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.

 

 

Sixteen Weeks Ended

 

 

April 18, 2021

 

April 19, 2020

 

April 21. 2019(1)

Net (loss) income as reported

 

$

(8,713)

 

 

$

(174,298)

 

 

$

639

 

Restaurant closure and refranchising costs

 

2,447

 

 

1,406

 

 

304

 

Restaurant asset impairment

 

1,242

 

 

15,498

 

 

 

Litigation contingencies

 

1,085

 

 

4,500

 

 

 

COVID-19 related costs

 

569

 

 

198

 

 

 

Board and stockholder matter costs

 

128

 

 

1,482

 

 

 

Severance costs

 

 

 

881

 

 

1,994

 

Goodwill impairment

 

 

 

95,414

 

 

 

Executive retention

 

 

 

 

 

100

 

Income tax effect

 

(1,422)

 

 

(31,039)

 

 

(623)

 

Adjusted net (loss) income

 

$

(4,664)

 

 

$

(85,958)

 

 

$

2,414

 

 

 

 

 

 

 

 

(Loss) earnings per share - basic:

 

 

 

 

 

 

Net loss as reported

 

$

(0.56)

 

 

$

(13.51)

 

 

$

0.05

 

Restaurant closure and refranchising costs

 

0.16

 

 

0.11

 

 

0.03

 

Restaurant asset impairment

 

0.08

 

 

1.20

 

 

 

Litigation contingencies

 

0.07

 

 

0.35

 

 

 

COVID-19 related costs

 

0.03

 

 

0.02

 

 

 

Board and stockholder matter costs

 

0.01

 

 

0.11

 

 

 

Severance and executive transition

 

 

 

0.07

 

 

0.15

 

Goodwill impairment

 

 

 

7.40

 

 

 

Executive retention

 

 

 

 

 

0.01

 

Income tax effect

 

(0.09)

 

 

(2.41)

 

 

(0.05)

 

Adjusted (loss) earnings per share - basic

 

$

(0.30)

 

 

$

(6.66)

 

 

$

0.19

 

 

 

 

 

 

 

 

(Loss) earnings per share - diluted:

 

 

 

 

 

 

Net loss as reported

 

$

(0.56)

 

 

$

(13.51)

 

 

$

0.05

 

Restaurant closure and refranchising costs

 

0.16

 

 

0.11

 

 

0.03

 

Restaurant asset impairment

 

0.08

 

 

1.20

 

 

 

Litigation contingencies

 

0.07

 

 

0.35

 

 

 

COVID-19 related costs

 

0.03

 

 

0.02

 

 

 

Board and stockholder matter costs

 

0.01

 

 

0.11

 

 

 

Severance and executive transition

 

 

 

0.07

 

 

0.15

 

Goodwill impairment

 

 

 

7.40

 

 

 

Executive retention

 

 

 

 

 

0.01

 

Income tax effect

 

(0.09)

 

 

(2.41)

 

 

(0.05)

 

Adjusted (loss) earnings per share - diluted

 

$

(0.30)

 

 

$

(6.66)

 

 

$

0.19

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

Basic

 

15,579

 

 

12,903

 

 

12,967

 

Diluted

 

15,579

 

 

12,903

 

 

13,041

 

(1) Presented for improved comparability.

Schedule II

Reconciliation of Non-GAAP Restaurant-Level Operating Profit to (Loss) Income
from Operations and Net (Loss) 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 loss from operations or net 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 the Company's industry. The table below sets forth certain unaudited information for the sixteen weeks ended April 18, 2021, April 19, 2020, and April 21, 2019(2) 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.

 

 

Sixteen Weeks Ended

 

 

April 18, 2021

 

April 19, 2020

 

April 21. 2019(2)

Restaurant revenues

 

$

318,677

 

 

97.7%

 

$

301,434

 

 

98.5%

 

$

400,484

 

 

97.7%

Restaurant operating costs(1):

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

69,166

 

 

21.7

 

70,426

 

 

23.4

 

93,715

 

 

23.4

Labor

 

111,659

 

 

35.0

 

118,566

 

 

39.3

 

142,894

 

 

35.7

Other operating

 

57,712

 

 

18.1

 

52,291

 

 

17.3

 

55,565

 

 

13.9

Occupancy

 

30,100

 

 

9.4

 

33,657

 

 

11.2

 

35,020

 

 

8.7

Restaurant-level operating profit

 

50,040

 

 

15.7%

 

26,494

 

 

8.8%

 

73,290

 

 

18.3

 

 

 

 

 

 

 

 

 

 

 

 

 

Add – Franchise royalties, fees, and other revenue

 

7,598

 

 

2.3%

 

4,631

 

 

1.5%

 

9,382

 

2.3

Deduct – other operating:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

25,888

 

 

7.9

 

28,320

 

 

9.3

 

28,438

 

6.9

General and administrative expenses

 

22,255

 

 

6.8

 

26,723

 

 

8.7

 

30,090

 

7.3

Selling

 

8,355

 

 

2.6

 

14,779

 

 

4.8

 

18,026

 

4.4

Pre-opening & acquisition costs

 

 

 

 

153

 

 

 

319

 

0.1

Other charges

 

5,471

 

 

1.7

 

119,379

 

 

39.0

 

2,398

 

0.6

Total other operating

 

61,969

 

 

19.0%

 

189,354

 

 

61.9%

 

79,271

 

19.3

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income from operations

 

(4,331)

 

 

(1.3)%

 

(158,229)

 

 

(51.7)%

 

3,401

 

0.8

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net and other

 

4,330

 

 

1.3

 

3,370

 

 

1.1

 

3,238

 

0.8

Income tax provision (benefit)

 

52

 

 

0.0

 

12,699

 

 

4.1

 

(476)

 

(0.1)

Total other

 

4,382

 

 

1.3

 

16,069

 

 

5.3

 

2,762

 

0.7

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(8,713)

 

 

(2.7)%

 

$

(174,298)

 

 

(56.9)%

 

$639

 

0.2%

(1) 

Excluding depreciation and amortization, which is shown separately.

(2)

 

Presented for improved comparability.

  

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

The Company defines EBITDA as net (loss) income before interest expense, income taxes, and depreciation and amortization. EBITDA and adjusted EBITDA are presented because the Company believes investors’ understanding of its performance is enhanced by including these non-GAAP financial measures as a reasonable basis for evaluating its ongoing results of operations excluding the effects of goodwill impairment, restaurant asset impairment, litigation contingencies, board and stockholder matters costs, restaurant closure and refranchising costs, severance costs, and COVID-19 related costs. EBITDA and adjusted EBITDA are supplemental measures of operating performance that do not represent and should not be considered as alternatives to net (loss) income or cash flow from operations, as determined by GAAP, and the Company's calculation thereof may not be comparable to that reported by other companies in its 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 the Company's performance based on its 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 the Company's presentation of adjusted EBITDA should not be construed as an inference that its future results will be unaffected by excluded or unusual items. The Company has not provided a reconciliation of its adjusted EBITDA outlook to the most comparable GAAP measure of Net (loss) income. Providing Net (loss) 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 (loss) income, including asset impairments and income tax valuation adjustments. The reconciliations of adjusted EBITDA to Net (loss) 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.

 

 

Sixteen Weeks Ended

 

 

April 18, 2021

 

April 19, 2020

 

4/21/2019(1)

Net (loss) income as reported

 

$

(8,713)

 

 

$

(174,298)

 

 

$

639

 

Interest expense, net

 

4,677

 

 

3,234

 

 

3,345

 

Income tax provision (benefit)

 

52

 

 

12,699

 

 

(476)

 

Depreciation and amortization

 

25,888

 

 

28,320

 

 

28,438

 

EBITDA

 

$

21,904

 

 

$

(130,045)

 

 

$

31,946

 

 

 

 

 

 

 

 

Restaurant closure and refranchising costs

 

$

2,447

 

 

$

1,406

 

 

$

304

 

Restaurant asset impairment

 

1,242

 

 

15,498

 

 

 

Litigation contingencies

 

1,085

 

 

4,500

 

 

 

COVID-19 related costs

 

569

 

 

198

 

 

 

Board and stockholder matter costs

 

128

 

 

1,482

 

 

 

Severance costs

 

 

 

881

 

 

1,994

 

Goodwill impairment

 

 

 

95,414

 

 

 

Executive retention

 

 

 

 

 

100

 

Adjusted EBITDA

 

$

27,375

 

 

$

(10,666)

 

 

$

34,344

 

(1) Presented for improved comparability.

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.