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Red Robin Gourmet Burgers Reports Results For The Fiscal Third Quarter Ended September 30, 2012

During the first 40 weeks of 2012, cash generated from operations totaled $72.3 million compared to $73.1 million for the same period in 2011, and capital investments amounted to $42.9 million, including $3.2 million for the acquisition of a franchised restaurant, compared to $32.7 million through the fiscal third quarter of 2011.

Updated Outlook for 2012

Red Robin’s 2012 fiscal year consists of 53 weeks ending on December 30, 2012.

In fiscal 2012, the Company expects comparable restaurant sales growth at or slightly above 0.5% compared to the prior year. In the fourth quarter, the Company plans to open three new restaurants bringing the total new openings for 2012 to 14, including four Red Robin’s Burger Works ®.

Restaurant-level operating profit margins are expected to be approximately 20.5% of restaurant sales in fiscal 2012.

SG&A costs are expected to be approximately $110 million, including approximately $6.0 million in costs related to investments in technology infrastructure and testing of the Company’s brand transformation initiatives. The income tax rate in fiscal 2012 is expected to be approximately 24%.

During fiscal 2012, the Company expects to have made between $55 million and $60 million in capital expenditures, which will have been used to open new restaurants, as well as fund restaurant and technology infrastructure improvements and remodeling investments.

The sensitivity of the Company’s earnings per diluted share to a 1% change in guest counts for fiscal 2012 is estimated to be $0.23 on an annualized basis. Additionally, a 10 basis point change in restaurant-level operating margin is expected to impact earnings per diluted share by approximately $0.05, and a change of $193,000 in pre-tax income or expense is equivalent to approximately $0.01 per diluted share.

Investor Conference Call and Webcast

Red Robin will host an investor conference call to discuss its fiscal third quarter 2012 results today at 10:00 a.m. ET. The conference call number is (888) 505-4375, or for international callers (719) 325-2435. The financial information that the Company intends to discuss during the conference call is included in this press release and will be available on the “Investors” link of the Company's website at www.redrobin.com. Prior to the conference call, the Company will post supplemental financial information that will be discussed during the call and live webcast. To access the supplemental financial information and webcast, please visit www.redrobin.com and select the “Investors” link from the menu. A replay of the live conference call will be available from one hour after the call until midnight on Monday, November 5, 2012. The replay can be accessed by dialing (877) 870-5176, or (858) 384-5517 for international callers. The conference ID is 7934629. The webcast replay will also be available on the Company’s website until midnight on Sunday, December 30, 2012.

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., is the gourmet burger expert, famous for serving more than two dozen craveable, high-quality burgers with Bottomless Steak Fries® in a fun environment welcoming to guests of all ages. In addition to its many burger offerings, Red Robin serves a wide variety of salads, soups, appetizers, entrees, desserts and signature Mad Mixology® Beverages. There currently are 471 Red Robin® restaurants located across the United States and Canada, including 333 company-owned full-size restaurants and five Red Robin’s Burger Works ® locations, and 133 restaurants operating under franchise agreements.

Forward-Looking Statements:

Forward-looking statements in this press release regarding our expected earnings per share, restaurant sales, new restaurant growth, future economic performance, certain statements under the heading “Updated Outlook for 2012” 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 “will,” “expect,” “believe,” “anticipate,” “intend,” or “estimate,” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. We undertake no obligation to update such statements to reflect events or circumstances arising after such date, and we caution investors not to place undue reliance on any such forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those described in the statements based on a number of factors, including but not limited to the following: the effectiveness of the Company’s marketing strategies, loyalty program and guest count initiatives; the ability to achieve anticipated revenue and cost savings from our anticipated new technology systems and other initiatives; the uncertain general economic conditions; the cost and availability of key food products, labor and energy; availability of capital or credit facility borrowings; the adequacy of cash flows or available debt resources to fund operations and growth opportunities; the ability to fulfill planned expansion; federal, state and local regulation of our business; and other risk factors described from time to time in the Company’s Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports) filed with the U.S. Securities and Exchange Commission.

       

RED ROBIN GOURMET BURGERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 
 
Twelve Weeks Ended Forty Weeks Ended

September 30, 2012

October 2, 2011

September 30, 2012

October 2, 2011

 
Revenues:
Restaurant revenue $ 209,754 $ 202,679 $ 724,328 $ 696,338
Franchise royalties and fees and other revenues   3,563   3,565     12,125   12,531
Total revenues   213,317   206,244     736,453   708,869
 
Costs and expenses:

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

Cost of sales 52,066 51,688 182,945 175,599
Labor 71,729 68,143 243,410 235,588
Operating 28,374 29,226 94,656 96,968
Occupancy 16,309 15,458 53,213 50,215
Depreciation and amortization 13,284 13,006 42,468 42,751
Selling, general and administrative 24,469 22,926 83,920 79,508
Pre-opening costs 1,250 622 2,835 2,799
Asset impairment charge   -   1,919     -   1,919
Total costs and expenses   207,481   202,988     703,447   685,347
 
Income from operations 5,836 3,256 33,006 23,522
 
Other expense:
Interest expense, net and other   1,093   1,556     4,193   4,424
 
Income before income taxes 4,743 1,700 28,813 19,098
Income tax expense (benefit)   1,210   (369 )   6,974   1,426
Net income $ 3,533 $ 2,069   $ 21,839 $ 17,672
Earnings per share:
Basic $ 0.25 $ 0.14   $ 1.50 $ 1.17
Diluted $ 0.24 $ 0.14   $ 1.48 $ 1.15
Weighted average shares outstanding:
Basic   14,300   15,024     14,517   15,154
Diluted   14,539   15,277     14,778   15,395
     

RED ROBIN GOURMET BURGERS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

(Unaudited)

 
 

September 30, 2012

December 25, 2011

Assets:
Current Assets:
Cash and cash equivalents $ 26,866 $ 35,036
Accounts receivable, net 9,479 14,785
Inventories 17,386 18,040
Prepaid expenses and other current assets 10,707 9,970
Income tax receivable 1,065 1,387
Deferred tax asset   2,745     1,429  
Total current assets   68,248     80,647  
 
Property and equipment, net 405,429 402,360
Goodwill 62,525 61,769
Intangible assets, net 38,009 38,969
Other assets, net   10,106     9,231  
Total assets $ 584,317   $ 592,976  
 
Liabilities and Stockholders’ Equity:
Current Liabilities:
Trade accounts payable $ 13,755 $ 14,798
Construction-related payables 5,230 3,328
Accrued payroll and payroll-related liabilities 33,559 35,044
Unearned revenue 14,738 24,139
Accrued liabilities 25,989 19,045
Current portion of term loan, credit facility and capital lease obligations   13,880     10,132  
Total current liabilities   107,151     106,486  
 
Deferred rent 44,185 40,025
Notes payable, long-term portion 108,750 136,875
Other long-term debt and capital lease obligations 9,341 9,924
Other non-current liabilities   7,823     4,968  
Total liabilities   277,250     298,278  
 
Stockholders’ Equity:

Common stock, $0.001 par value: 30,000,000 shares authorized; 17,472,862 and 17,276,404 shares issued; 14,254,270 and 14,579,257 shares outstanding

17 17

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

- -
Treasury stock, 3,218,592 and 2,697,147 shares, at cost (98,940 ) (83,285 )
Paid-in capital 184,715 178,111
Accumulated other comprehensive loss, net of tax (744 ) (326 )
Retained earnings   222,019     200,181  
Total stockholders’ equity   307,067     294,698  
Total liabilities and stockholders’ equity $ 584,317   $ 592,976  
       

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 forty weeks ended September 30, 2012 and October 2, 2011, net income and basic and diluted earnings per share, excluding the effects of the severance expense, executive transition costs, and initial gift card breakage revenue. The Company believes that the presentation of net income and earnings per share exclusive of the identified items 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. The 2011 non-GAAP results were calculated using an assumed 11.5% normalized tax rate on income and expense items before taxes, excluding the identified items. 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

September 30, 2012

October 2, 2011

September 30, 2012

October 2, 2011

 
Net income as reported $ 3,533 $ 2,069 $ 21,839 $ 17,672
Executive transition and severance expense - 541 - 2,228
Asset impairment and restaurant closure costs - 1,919 - 1,919
Initial cumulative gift card breakage income - - - (438 )
Income tax benefit   -   (846 )   -   (1,183 )
 
Adjusted net income $ 3,533 $ 3,683   $ 21,839 $ 20,198  
 
Basic net income per share:
Net income as reported $ 0.25 $ 0.14 $ 1.50 $ 1.17
Executive transition and severance expense - 0.04 - 0.15
Asset impairment and restaurant closure costs 0.12 0.12
Initial cumulative gift card breakage income - - - (0.03 )
Income tax benefit   -   (0.04 )   -   (0.06 )
 
Adjusted earnings per share - basic $ 0.25 $ 0.26   $ 1.50 $ 1.35  
 
 
Diluted net income per share:
Net income as reported $ 0.24 $ 0.14 $ 1.48 $ 1.15
Executive transition and severance expense - 0.04 0.15
Asset impairment and restaurant closure costs 0.12 0.12
Initial cumulative gift card breakage income - - - (0.03 )
Income tax benefit   -   (0.06 )   -   (0.08 )
 
Adjusted earnings per share - diluted $ 0.24 $ 0.24   $ 1.48 $ 1.31  
 
Weighted average shares outstanding:
Basic 14,300 15,024 14,517 15,154
Diluted 14,539 15,277 14,778 15,395
               

Schedule II

 

Reconciliation of Non-GAAP Restaurant-Level Operating Profit to Income

from Operations and Net Income

(In thousands, except percentage data)

(Unaudited)

 

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 revenues minus restaurant-level operating costs, excluding restaurant closures and impairment 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 generally accepted accounting principles (“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. The table below sets forth certain unaudited information for the twelve and forty weeks ended September 30, 2012, and October 2, 2011, expressed as a percentage of total revenues, except for the components of restaurant operating costs, which are expressed as a percentage of restaurant revenues.

 
Twelve Weeks Ended Forty Weeks Ended
September 30, 2012 October 2, 2011 September 30, 2012 October 2, 2011
Restaurant revenues $ 209,754 98.3 % $ 202,679 98.3 % $ 724,328 98.4 % $ 696,338 98.2 %
Restaurant operating costs (exclusive of depreciation and amortization shown separately below):
Cost of sales 52,066 24.8 51,688 25.5 182,945 25.3 175,599 25.2
Labor 71,729 34.2 68,143 33.6 243,410 33.6 235,588 33.8
Operating 28,374 13.5 29,226 14.4 94,656 13.1 96,968 13.9
Occupancy   16,309 7.8   15,458 7.6   53,213 7.3   50,215 7.2
Restaurant-level operating profit   41,276 19.7   38,164 18.8   150,104 20.7   137,968 19.8
 
Add – Franchise royalties and fees and other revenues 3,563 1.7 3,565 1.7 12,125 1.6 12,531 1.8
Deduct – other operating:
Depreciation and amortization 13,284 6.2 13,006 6.3 42,468 5.8 42,751 6.0
Selling, general, and administrative 24,469 11.5 22,926 11.1 83,920 11.4 79,508 11.2
Pre-opening costs 1,250 0.6 622 0.3 2,835 0.4 2,799 0.4
Asset impairment charge   - 0.0   1,919 0.9   - 0.0   1,919 0.3
Total other operating   39,003 18.3   38,473 18.6   129,223 17.6   126,977 17.9
 
Income from operations 5,836 2.7 3,256 1.6 33,006 4.5 23,522 3.3
 
Interest expense, net and other 1,093 0.5 1,556 0.8 4,193 0.6 4,424 0.6
Income tax expense (benefit)   1,210 0.6   (369) (0.2)   6,974 0.9   1,426 0.2
Total other 2,303 1.1 1,187 0.6 11,167 1.5 5,850 0.8
 
Net income $ 3,533 1.7 % $ 2,069 1.0 % $ 21,839 3.0 % $ 17,672 2.5 %

____________

Certain percentage amounts in the table above do not total due to rounding as well as the fact that restaurant operating costs are expressed as a percentage of restaurant revenues, as opposed to total revenues.





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