Ruby Tuesday (RT) Q3 2012 Earnings Call April 04, 2012 5:00 pm ET Executives Greg Ashley - Vice President of Finance Samuel E. Beall - Co-Founder, Executive Chairman, Chief Executive Officer and President Marguerite N. Duffy - Chief Financial Officer, Senior Vice President and Principal Accounting Officer Daniel P. Dillon - Senior Vice President of Brand Development Kimberly M. Grant - Chief Operations Officer and Executive Vice President Analysts Keith Siegner - Crédit Suisse AG, Research Division Bryan C. Elliott - Raymond James & Associates, Inc., Research Division Presentation Operator
As usual, our format today includes the following: an overview of our third quarter financial results, our fiscal 2012 outlook and a review of our plans and strategies. At the conclusion of our prepared remarks, we will respond to your questions.I will now turn the call over to Sandy Beall. Samuel E. Beall Thank you, Greg. I'd like to welcome all of you listening in this evening and thank you for joining us on our third quarter earnings call. I will begin with a brief overview of our quarter and an update of our key value creation initiatives. Margie and Greg will then provide a financial review and guidance update, and then Dan and Kimberly will provide additional detail on our marketing and operations plan. As noted in our press release today, we reported diluted earnings per share of $0.07 or $0.18 per share excluding the impairment cost of the 25 to 27 underperforming restaurants we plan to close in the fourth quarter and final purchase price adjustments associated with the fiscal 2011 franchise partner acquisitions. Our results, excluding impairment cost and purchase price adjustments, were ahead of our guidance range of $0.12 to $0.16 per share. Our continued focus on controlling costs enabled us to realize good profitability during the quarter, even with minus 5 same-restaurant sales for the quarter, primarily due to the double-digit year-over-year sales -- or not sales, but competitive ad spending with combined aggressive value for most of our competition. During the quarter, we had several positive accomplishments including the following: first of all, we continue to make progress on our upgraded and focused brand position with television test, leveraging our Garden Bar that's free with select entrées, our free bread. Our Garden Bar is a unique differentiator for us among our peers. At the start of our fourth quarter, we increased our television coverage to approximately 50% of the system, and we're pleased with the same-restaurant sales and traffic trends through the end of March, which has led us to accelerate our national rollout of television to 100% of the system on April 9.
Our March sales were the best sales results we've had this fiscal year by far, actually beating KNAPP-TRACK performance in the most recent weeks. This increased television coverage levels should enable us to see sales improvements in fiscal '13, and Dan will provide more details on this later in the call.Second, we increased our annualized projected cost savings discussed last quarter and the quarter before from our cost savings initiative to a range of $35 million to $40 million or approximately $40 million higher than our previous estimates. The cost savings project has gone very well, needless to say, with significant savings in areas of procurement, occupancy, maintenance, utilities. We plan on utilizing these savings primarily to fund our television marketing to drive awareness and trial of our brand. We're pleased that our cost savings have exceeded our original estimates, and we'll continue to search for additional savings that have no impact to the overall guest experience. Next, in today's press release, we announced a very positive announcement, and that's our plans to acquire the Lime Fresh Mexican Grill for $24 million purchase price. We're excited about this brand as it represents excellent new unit growth opportunity in the high-quality fast casual sector and has the potential to create extremely good returns given the lower capital needs, location and good EBITDA margin economics. Acquisition opens up development opportunities for us all over the United States, in particular Florida, where the brand has realized much success to date, and the brand is also achieving same-store sales in the high single double -- low double-digit range for year-to-date this year. We tentatively have plans to add 20 Lime locations next year and 30 in fiscal 2014, with the speed of openings really being dictated by the site-selection process -- progress and being able to find high-quality A locations. Read the rest of this transcript for free on seekingalpha.com