Red Robin Gourmet Burgers Reports Results for the Fiscal Fourth Quarter and Year Ended December 27, 2015 and Announces Executive Promotions

GREENWOOD VILLAGE, Colo.--(BUSINESS WIRE)-- Red Robin Gourmet Burgers, Inc., (NASDAQ:RRGB), a casual dining 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 27, 2015.

In addition, the Company announced that Denny Marie Post has been promoted to President from Executive Vice President and Chief Concept Officer. Further, Stuart Brown has been promoted to Executive Vice President from Senior Vice President and will remain as Chief Financial Officer.

Fiscal Year 2015 Financial Highlights

• Total revenues were $1.3 billion, an increase of 9.7% over 2014
• Comparable restaurant revenue increased 2.1% over 2014
• Adjusted earnings per diluted share was $3.32 compared to $2.66 in 2014, an increase of 24.8% (See Schedule I)

Fourth Quarter 2015 Financial Highlights

• Total revenues were $286.3 million, an increase of 1.5% over the same period a year ago
• Comparable restaurant revenue decreased 2.0% from the same period a year ago (using constant currency rates)
• Restaurant-level operating profit, as a percent of restaurant revenue, increased to 21.9% from 21.3% in the fourth quarter of 2014 (see Schedule II)
• Net income increased to $11.7 million from $3.9 million in the fourth quarter of 2014
• Adjusted EBITDA increased 12.4% to $35.0 million from $31.1 million in the fourth quarter of 2014 (see Schedule III)
• GAAP earnings per diluted share was $0.84. Adjusted earnings per diluted share was $0.86, an increase of 30.3% from the same period a year ago (See Schedule I)

Net income for the fourth quarter ended December 27, 2015 was $11.7 million compared to $3.9 million for the same period a year ago. For the fiscal year ended December 27, 2015, net income was $47.7 million, an increase of 46.5% compared to $32.6 million for the fiscal year ended December 28, 2014. Earnings per diluted share for fiscal year 2015 was $3.36 compared to $2.25 a year ago, an increase of 49.3%.

Adjusted net income increased 28.2% to $12.0 million for the fourth quarter ended December 27, 2015, from $9.4 million for the same period a year ago. Earnings per diluted share on an adjusted basis for the fourth quarter 2015 was $0.86 compared to $0.66 a year ago, an increase of 30.3%. Adjusted net income for fiscal year 2015 increased 22.8% to $47.1 million from $38.4 million in fiscal year 2014. Earnings per diluted share on an adjusted basis for fiscal year 2015 was $3.32 compared to $2.66 a year ago, an increase of 24.8%. 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, respectively.

“Despite a challenging end to 2015, our comparable restaurant revenue for the year increased 2.1%, marking our sixth consecutive year of taking market share from peers. We believe our outperformance is sustainable going forward due to our intense guest focus along with our RED² roadmap we laid out earlier this year,” said Steve Carley, Red Robin Gourmet Burgers, Inc. chief executive officer. “In 2016, we expect to complete our Brand Transformation Initiative and have a strong lineup of craveable new food and beverage offerings, both of which are critical in this competitive environment and to setting pace for our success over the next five years.”

Operating Results

Total Company revenues, which primarily include Company-owned restaurant revenue and franchise royalties, increased 1.5% to $286.3 million in the fourth quarter of 2015 from $282.1 million in the fourth quarter of 2014. A $10.8 million increase in revenue from new restaurant openings, net of closures, and a $0.4 million increase in franchise and other revenue were partially offset by a $5.3 million, or 2.0% decrease in comparable restaurant revenue and a $1.7 million unfavorable foreign exchange impact.

System-wide restaurant revenue (including franchised units) for the fourth quarter of 2015 totaled $352.1 million, compared to $348.0 million for the fourth quarter in 2014. System-wide restaurant revenue for fiscal year 2015 totaled $1.6 billion, compared to $1.5 billion in 2014 at constant currency rates.

Comparable revenue increased 2.1% in fiscal year 2015 compared to 2014, driven by a 2.5% increase in average guest check and offset by a 0.4% decrease in guest counts. Using constant currency rates, comparable revenue decreased 2.0% in the fourth quarter of 2015 compared to the same period a year ago, driven by a 4.6% decrease in guest counts offset by a 2.6% increase in average guest check. 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 are comparable for the entirety of both periods presented. The Canadian restaurants were added to the comparable restaurant group in the fourth quarter of 2015 and are not included in the 2015 fiscal year comparable restaurant group.

Restaurant-level operating profit margin (a non-GAAP financial measure) was 21.9% in the fourth quarter of 2015 compared to 21.3% in the same period a year ago, an improvement of 60 basis points. The improved margin resulted from a 180 basis point decrease in cost of sales, partially offset by an 80 basis point increase in labor costs, a 30 basis point increase in occupancy costs and 10 basis points increase in other restaurant operating expenses. 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.

Other Results

Depreciation and amortization costs increased to $18.5 million in the fourth quarter of 2015 from $16.4 million in the fourth quarter of 2014. The increased depreciation was primarily related to restaurants remodeled under the Brand Transformation Initiative and new restaurants opened since the fourth quarter 2014, partially offset by a change in estimated useful lives of certain assets.

General and administrative costs were $21.3 million, or 7.4% of total revenues, in the fourth quarter of 2015, compared to $22.1 million, or 7.8% of revenues in the same period a year ago. The decrease of $0.8 million resulted primarily from decreased incentive-related compensation.

Selling expenses decreased to $8.0 million, or 2.8% of total revenues, in the fourth quarter of 2015, compared to $9.5 million, or 3.4% of total revenues in the prior year.

Pre-opening costs, including acquisition-related costs, were $2.4 million in the fourth quarter of 2015, compared to $1.2 million in the same period a year ago. The increase in restaurant pre-opening costs was due to the timing of restaurant openings in 2015, as 11 of our 24 restaurant openings in fiscal year 2015 occurred during the fourth quarter.

In the fourth quarter of 2015, the Company determined that two Company-owned restaurants were impaired, recognizing a non-cash pre-tax impairment charge of $0.6 million.

The Company's fiscal year 2015 effective tax rate was 24.6%, compared to a 22.2% effective tax rate in fiscal year 2014.

Restaurant Development

As of the end of the fourth quarter of 2015, there were 429 Company-owned Red Robin^® restaurants, ten Red Robin Burger Works^® and 99 franchised Red Robin restaurants, for a total of 538 restaurants. During the fourth quarter, the Company opened 11 full-size Red Robin restaurants, bringing the total restaurant openings for the year to 24.

Under the Brand Transformation Initiative, the Company completed 157 restaurant remodels during fiscal year 2015. The Company has over 325 restaurants conforming to its new brand standards as of the end of fiscal year 2015, including new restaurant openings.

Balance Sheet and Liquidity

As of December 27, 2015, the Company had cash and cash equivalents of $22.7 million and total debt of $210.8 million, including $8.0 million of capital lease liabilities. The Company increased debt by $63.0 million since the beginning of fiscal year 2015.

Cash generated from operations in 2015 totaled $140.9 million compared to $123.6 million in 2014. Capital investments in 2015 totaled $168.8 million, compared to $155.2 million in the prior year.

During the fourth quarter of 2015, the Company purchased 419,481 shares of the Company’s common stock for $29.4 million. In 2015, the Company purchased a total of 556,049 shares of the Company’s common stock for $40.0 million. As of December 27, 2015, there was approximately $10.0 million remaining under the current board authorization for stock repurchases.

On February 11, 2016, the Company’s board of directors re-authorized the Company’s share repurchase program, and approved the repurchase of up to a total of $100 million of the Company’s common stock. The share repurchase authorization was effective as of February 11, 2016, and will terminate upon completing repurchases of $100 million of common stock unless otherwise terminated by the board. Pursuant to the repurchase program, purchases may be made from time to time at the Company’s discretion and the Company is not obligated to acquire any particular amount of common stock.

Outlook for 2016

Red Robin’s 2016 fiscal year consists of 52 weeks and will end on December 25, 2016 (“2016”).

The Company expects total revenues to grow between 8.5% and 9.5% in 2016, comprised of comparable revenue growth in the low single digits and the remainder due to increased operating weeks associated with locations opened in 2015 and 2016. The Company plans to open approximately 25 new Red Robins and five Burger Works in 2016.

Earnings before interest taxes and depreciation (EBITDA) is expected to range between $155 million and $165 million in 2016. EBITDA is a non-GAAP number and defined in Schedule III.

Depreciation and amortization is projected to be between $82 million and $84 million in 2016 while interest expense is expected to be approximately $5 million. The 2016 annual tax rate is projected to be approximately 25.5%.

The Company expects capital investments to range between $150 million and $155 million. In addition to new restaurant openings, the Company expects to remodel around 70 locations as part of its Brand Transformation Initiative.

The sensitivity of the Company’s earnings per diluted share to a 1% change in guest counts for fiscal year 2016 is estimated to be $0.34 on an annualized basis. Additionally, a 10 basis point change in restaurant-level operating profit margin is expected to impact earnings per diluted share by approximately $0.09, and a change of approximately $143,000 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 fourth quarter 2015 results today at 10:00 a.m. ET. The conference call number is (800) 750-4984, or for international callers (913) 312-0860. 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 two hours after the call until midnight on Friday, February 19, 2016. The replay can be accessed by dialing (877) 870-5176, or (858) 384-5517 for international callers. The conference ID is 9549831.

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. Whether a family dining with kids, adults grabbing a drink at the bar, or teens enjoying a meal, Red Robin offers an unparalleled experience for its guests. 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 innovative adult beer shakes and cocktails, earning the restaurant a VIBE Vista Award for Best Beer Program in a Multi-Unit Chain Restaurant. There are more than 530 Red Robin restaurants across the United States and Canada, including Red Robin Burger Works^® locations and 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 our strategic initiatives, future performance, revenues, EBITDA, capital investments, anticipated number and timing of new restaurant openings (including Red Robin Burger Works) and operating weeks, the anticipated number and timing of restaurant remodels under the Brand Transformation Initiative, anticipated costs, expenses including depreciation, amortization, and interest expense, tax rate, sensitivity of earnings per share and other projected financial measures, statements under the heading “Outlook for 2016” 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. 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 our business improvement initiatives, effectiveness of our marketing strategies and initiatives to achieve restaurant sales growth; the ability to fulfill planned expansion and restaurant remodeling; the cost and availability of key food products, labor, and energy; our ability to achieve anticipated revenue and cost savings from our anticipated new technology systems and tools in the restaurants and other initiatives; availability of capital or credit facility borrowings; our ability to increase our to-go and other offerings; the adequacy of cash flows or available debt resources to fund operations and growth opportunities; 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.

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.

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Source: Red Robin Gourmet Burgers, Inc.

Released February 12, 2016