Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - RED ROBIN GOURMET BURGERS INC | exhibit991q1-2017.htm |
| 8-K - 8-K - RED ROBIN GOURMET BURGERS INC | a8-kq1x2017.htm |
CLASSIFIED – INTERNAL USE
First Quarter 2017 Results
May 16, 2017
2CLASSIFIED – INTERNAL USE
Forward-Looking Statements
Forward-looking statements in this presentation regarding the Company’s strategic initiatives, future
performance, off-premise sales, marketing campaign, earnings per share, interest expense, statements under
the heading “Outlook for 2017” and all other statements that are not historical facts, are made under the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on
assumptions believed by the Company to be reasonable and speak only as of the date on which such
statements are made. Without limiting the generality of the foregoing, words such as “expect,” “anticipate,”
“intend,” “plan,” “project” or “estimate,” or the negative or other variations thereof or comparable terminology
are intended to identify forward-looking statements. Except as required by law, the Company undertakes no
obligation to update such statements to reflect events or circumstances arising after such date, and cautions
investors not to place undue reliance on any such forward-looking statements. Forward-looking statements
involve risks and uncertainties that could cause actual results to differ materially from those described in the
statements based on a number of factors, including but not limited to the following: the effectiveness of the
Company’s business improvement initiatives; the ability to fulfill planned expansion and restaurant
remodeling; the effectiveness of marketing strategies and initiatives to achieve restaurant sales growth; the
cost and availability of key food products, labor, and energy; the ability to achieve anticipated revenue and
cost savings from new technology systems and tools in the restaurants and other initiatives; the ability to
increase to-go and other off-premise sales; availability of capital or credit facility borrowings; the adequacy of
cash flows or available debt resources to fund operations and growth opportunities; federal, state, and local
regulation of the Company’s business; and other risk factors described from time to time in the Company’s
Form 10-K, Form 10-Q, and Form 8-K reports (including all amendments to those reports) filed with the U.S.
Securities and Exchange Commission.
This presentation may also contain non-GAAP financial information. Management uses this information in its
internal analysis of results and believes that this information may be informative to investors in gauging the
quality of the Company’s financial performance, identifying trends in results, and providing meaningful period-
to-period comparisons. For a reconciliation of non-GAAP measures presented in this document, see the
Appendix of this presentation or the Schedules to the Q1 press release posted on redrobin.com.
3CLASSIFIED – INTERNAL USE
Red Robin Q1-2017 Results
• Total revenues increased 4.1%
• Comparable restaurant revenue down
1.2% (using constant currency rates)
• Restaurant-level operating profit(1) was
20.7% compared to 22.5% in the prior
year
• Adjusted EBITDA(1) was $45.8 million
• Diluted earnings per share were $0.89
compared to $1.03 in Q1 2017.
Adjusted diluted EPS(1) were $0.89
compared to $1.27 in the prior year
• Opened 5 new Red Robin® restaurants
and reopened one unit
(1) See reconciliations of non-GAAP financial measures to the most
comparable GAAP financial measures in Appendix.
4CLASSIFIED – INTERNAL USE
Separating Red Robin from the Pack
• Upping our game on everyday value
leads to traffic outperformance of
120 bps(1)
• Reinforcing Gourmet Burger
Authority -- “Let’s Burger/Red Robin
Yummm!” Campaign
• Building awareness, investing to
meet growing To-Go demand
• Online ordering now at all corporate
locations
• Evaluating delivery solution that
meets Red Robin’s high standards
for quality & service
(1) Source: Black Box Intelligence
5CLASSIFIED – INTERNAL USE
Meeting Growing Off-Premise Demand
6CLASSIFIED – INTERNAL USE
Delivering a Superior Guest Experience
• Continuing gains in speed of service
• Achieving consistently strong
Net Promoter Scores
• Improving food-to-table times
• Retaining Team Members at record
levels
7CLASSIFIED – INTERNAL USE
Cyber Security Commitment to our Guests
We recognize the importance of data security to our Guests, so we use internal
resources and external expertise to help protect Guest data and help prevent
the occurrence of data breaches.
In the event of a data breach relating to information in Red Robin’s possession:
• We will share details about a data breach impacting our Guests when we have
complete and accurate information.
• We will take reasonable efforts to communicate with you if your credit card or other
personal information has been compromised. We will:
• Attempt to notify you by email, mail or telephone within 30 days, if we have
your contact information, or
• Post information on our website about the data breach.
• We will cooperate with law enforcement in their investigation of a suspected data
breach.
• We will provide impacted Guests who have had fraudulent accounts opened in
their name with the opportunity to register for free credit monitoring for 2 years.
• We will provide impacted Guests with the opportunity to receive free identity theft
restoration services.
• We will provide impacted Guests with the opportunity to register for identity theft
insurance in the amount of $1 million to reimburse them for any financial loss.
• We will reimburse impacted Guests for reasonable non-insurable out-of-pocket
expenses incurred as a result of a data breach.
CLASSIFIED – INTERNAL USE 8
Financial Update
9CLASSIFIED – INTERNAL USE
Q1-17 Sales Highlights
Q1-17
(16 Weeks)
Q1-16
(16 Weeks)
Change
Restaurant revenue $413.5 million $396.8 million 4.2%
Total company revenues $418.6 million $402.1 million 4.1%
Company-owned comp revenue(1) -1.2% -2.6%
Price/Mix 0.5% 1.5%
Guest counts -1.7% -4.1%
Franchised comp revenue -3.3% 0.0%
Company avg. weekly revenue/unit(1) – total $55,408 $56,019 -1.1%
Company avg. weekly revenue/unit(1) – comp $56,342 $57,024 -1.2%
Avg. weekly restaurant level operating profit/unit(1) – comp $11,783 $13,053 -9.7%
Red Robin operating weeks 7,462 7,088 5.3%
Net Sales/ sq. ft (TTM) $447 $461 -3.0%
(1) Calculated at constant currency rates.
10CLASSIFIED – INTERNAL USE
Comparable Restaurant Revenue
Trend(1)
3.1%
2.9%
3.5%
-2.0%
-2.6%
-3.2%
-3.6%
-4.3%
-1.2%
-4.5%
-2.5%
-0.5%
1.5%
3.5%
5.5%
Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17
(1) Calculated at constant currency rates.
11CLASSIFIED – INTERNAL USE
23.0%
22.5%
21.6%
21.9%
22.5%
20.9%
18.6%
19.0%
20.7%
16.0%
17.0%
18.0%
19.0%
20.0%
21.0%
22.0%
23.0%
24.0%
25.0%
Q1 Q2 Q3 Q4
2015 2016 2017
Restaurant Level Operating Profit
(1)
Margins
11
(1) See Appendix for reconciliation of non-GAAP restaurant-level operating profit to net income (loss)
12CLASSIFIED – INTERNAL USE
Q1-17 Restaurant Results
12
% of Restaurant
Revenue
Q1-17
% of Restaurant
Revenue
Q1-16
Favorable
(Unfavorable)
Cost of sales 22.9% 23.3% 40 bps
Labor 35.2% 33.5% (170 bps)
Other operating 13.2% 12.5% (70 bps)
Occupancy 8.0% 8.2% 20 bps
Restaurant Level Operating Profit(1) 20.7% 22.5% (180 bps)
(1) See Appendix for reconciliation of non-GAAP restaurant-level operating profit to net income (loss)
13CLASSIFIED – INTERNAL USE
$45.5
$33.6
$30.0
$34.3
$48.9
$33.5
$26.8
$29.2
$45.8
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
$45.0
$50.0
$55.0
Q1 Q2 Q3 Q4
2015 2016 2017
Adjusted EBITDA(1)(2)
($ in millions)
13
(1) See Appendix for reconciliation of non-GAAP Adjusted EBITDA to Net Income (Loss)
(2) To conform with current period presentation and to provide an EBITDA measure comparable to other companies in our industry,
stock-based compensation is included in EBITDA in all prior periods presented.
14CLASSIFIED – INTERNAL USE
Adjusted Earnings Per Diluted Share
$1.10
$0.78
$0.58
$0.86
$1.27
$0.75
$0.38
$0.35
$0.89
$0.15
$0.35
$0.55
$0.75
$0.95
$1.15
$1.35
Q1 Q2 Q3 Q4
2015 2016 2017
14
See Appendix for reconciliation of non-GAAP Adjusted Earnings Per Diluted Share to Earnings (Loss) Per Diluted Share
15CLASSIFIED – INTERNAL USE
Outlook for 2017
• Diluted EPS projected to be from $2.80 to $3.10, with
approximately 45% expected in the first half of 2017
and 55% during second half of 2017
• Interest expense for 2017 of approximately $10 million
Note on Guidance Policy: The Company intends to provide only annual guidance as it relates to revenues,
comparable restaurant revenue growth, operating weeks associated with locations opened, cost of sales
and restaurant labor costs as a percentage of restaurant revenue, other operating expenses (other than
interest expense), depreciation and amortization, general and administrative expense, selling expense,
pre-opening expense, income tax rate, EBITDA, earnings per diluted share, overall capital expenditures
and restaurant openings and closings. The Company intends to only provide updates if there is a material
change versus the previously communicated guidance.
16CLASSIFIED – INTERNAL USE
In Closing
16
17CLASSIFIED – INTERNAL USE
Thank you to all of our Team Members!
17
CLASSIFIED – INTERNAL USE 18
Appendix
19CLASSIFIED – INTERNAL USE
Adjusted Net Income(1)
$15.6
$11.2
$8.3
$12.0
$17.6
$10.3
$5.0
$4.5
$11.6
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
$16.0
$18.0
Q1 Q2 Q3 Q4
2015 2016 2017
($ in millions)
19
(1) See Appendix for reconciliation of non-GAAP Adjusted Net Income to Net Income (Loss)
20CLASSIFIED – INTERNAL USE
$36.0
$31.3
$34.0
$39.6
$42.5
$24.6
$27.6
$4.3
$70.0
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
Q1 Q2 Q3 Q4
2015 2016 2017
Cash Flow from Operations
($ in millions)
20
21CLASSIFIED – INTERNAL USE
Q1-17 Commodity Update
21
% of Total
COGS in Q1-17
Market vs. Contract
Ground beef 12.6% Market
Steak fries 11.2% 100% contracted through 10/17
Poultry 10.0% 100% contracted though 1/18
Meat 7.7%
Bacon 80% through 6/17; Prime rib 100% through
10/17
Produce 7.6% 70% contracted through 10/17
Bread 6.4% 100% contracted through 6/17
Seafood 2.9% Cod and Shrimp 100% contracted through 6/17
Fry oil 1.7% 100% contracted through 9/17
22CLASSIFIED – INTERNAL USE
Reconciliation of Adjusted Net Income to Net
Income (Loss) and Adjusted Earnings Per Diluted
Share to Earnings (Loss) Per Diluted Share
22
($ in thousands, except per share data)
2015 2016 2017
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Net income (loss) as reported $ 16,565 $ 11,166 $ 8,282 $ 11,691 $ 14,225 $ 7,552 $ (1,300) $ (8,752) $ 11,567
Adjustments to net income (loss):
Asset impairment and restaurant closure costs - - - 581 825 3,860 9,321 20,420 -
Litigation contingencies - - - - 3,900 - - - -
Reorganization costs - - - - - - - 1,322 -
Change in estimate for gift card breakage (1,369) - - - - - - - -
Income tax (expense) benefit of adj. 439 - - (227) (1,356) (1,153) (2,993) (8,470) -
Adjusted net income $ 15,635 $ 11,166 $ 8,282 $ 12,045 $ 17,594 $ 10,259 $ 5,028 $ 4,520 $ 11,567
Diluted net income (loss) per share(1):
Net income (loss) as reported $ 1.16 $ 0.78 $ 0.58 $ 0.84 $ 1.03 $ 0.55 $ (0.10) $ (0.68) $ 0.89
Adjustments to net income (loss):
Asset impairment and restaurant closure costs - - - 0.04 0.06 0.28 0.70 1.58 -
Litigation contingencies - - - - 0.28 - - - -
Reorganization costs - - - - - - - 0.10 -
Change in estimate for gift card breakage (0.09) - - - - - - - -
Income tax (expense) benefit of adj. 0.03 - - (0.02) (0.10) (0.08) (0.22) (0.65) -
Adjusted EPS - diluted $ 1.10 $ 0.78 $ 0.58 $ 0.86 $ 1.27 $ 0.75 $ 0.38 $ 0.35 $ 0.89
(1) For the third and fourth quarters of 2016, the impact of dilutive shares is included in the calculations as the adjustments for the quarter resulted in
adjusted net income. In the fourth quarter of 2016, the calculation for Asset impairment and restaurant closure costs includes $0.01 related to the effect
of the diluted shares on net loss per share as reported.
23CLASSIFIED – INTERNAL USE
Restaurant Level Operating Profit Reconciliation
to Income from Operations and Net Income (Loss)
($ in thousands)
2015 2016 2017
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Restaurant revenue $ 388,509 $ 288,704 $ 279,496 $ 282,189 $ 396,770 $ 302,117 $ 293,858 $ 287,924 $ 413,451
Restaurant operating costs(1):
Cost of sales 97,950 71,665 68,197 66,825 92,325 70,831 69,447 65,646 94,607
Labor 124,356 93,513 92,097 93,551 132,984 102,847 102,294 101,107 145,519
Other operating 46,584 35,356 36,144 36,260 49,708 40,275 42,463 41,531 54,680
Occupancy 30,147 23,210 22,804 23,846 32,498 24,905 25,121 24,884 33,119
Restaurant-level operating profit 89,472 64,960 60,254 61,707 89,255 63,259 54,533 54,756 85,526
Add – Franchise royalties, fees, and other
revenue
6,392 4,275 3,916 4,111 5,356 3,432 3,449 3,535 5,106
Deduct – Other operating:
Depreciation and amortization 23,003 17,260 18,618 18,493 23,951 19,159 21,468 22,117 28,044
General and administrative expenses 34,995 23,044 23,709 21,257 31,980 19,972 20,328 19,015 30,913
Selling 13,066 11,082 7,899 8,027 11,408 11,047 8,718 9,169 12,362
Pre-opening and acquisition costs 955 1,369 2,239 2,445 2,372 2,238 2,382 1,033 1,855
Other charges(2) - - - 581 4,725 3,860 9,321 21,742 -
Total other operating 72,019 52,755 52,465 50,803 74,436 56,276 62,217 73,076 73,174
Income (loss) from operations 23,845 16,480 11,705 15,015 20,175 10,415 (4,235) (14,785) 17,458
Interest expense, net and other 1,060 904 1,098 747 1,638 1,486 1,612 2,046 2,984
Income tax expense (benefit) 6,220 4,410 2,325 2,577 4,312 1,377 (4,547) (8,079) 2,907
Total other 7,280 5,314 3,423 3,324 5,950 2,863 (2,935) (6,033) 5,891
Net income (loss) $ 16,565 $ 11,166 $ 8,282 $ 11,691 $ 14,225 $ 7,552 $ (1,300) $ (8,752) $ 11,567
(1) Excluding depreciation and amortization, which is shown separately.
(2) Certain amounts presented in prior periods have been reclassified to conform with the current period presentation. See condensed consolidated
statement of operations in Exhibit 99.1 for explanation of Other charges.
24CLASSIFIED – INTERNAL USE
EBITDA and Adjusted EBITDA
Reconciliation to Net Income (Loss)
24
2015 2016 2017
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Net income (loss) as reported $16,565 $ 11,166 $ 8,282 $11,691 $14,225 $ 7,552 $ (1,300) $ (8,752) $ 11,567
Adjustments to net income (loss):
Income tax expense (benefit) 6,220 4,410 2,325 2,577 4,312 1,377 (4,547) (8,079) 2,907
Interest expense, net 1,088 805 777 959 1,655 1,555 1,822 2,161 3,249
Depreciation and amortization 23,003 17,260 18,618 18,493 23,951 19,159 21,468 22,117 28,044
EBITDA(1) $ 48,322 $ 33,641 $ 30,002 $ 33,720 $ 44,143 $ 29,643 $ 17,443 $ 7,447 $ 45,767
Asset impairment and restaurant closure
costs
- - - 581 825 3,860 9,321 20,420 -
Litigation contingencies - - - - 3,900 - - - -
Reorganization costs - - - - - - - 1,322 -
Change in estimate for gift card breakage (1,369) - - - - - - - -
Adjusted EBITDA $ 45,507 $ 33,641 $ 30,002 $ 34,301 $ 48,868 $ 33,503 $ 26,764 $ 29,189 $ 45,767
($ in thousands)
(1) To conform with current period presentation and to provide an EBITDA measure comparable to other companies in our industry,
stock-based compensation was excluded from EBITDA in all prior periods presented.