Exhibit 99.1

 

Red Robin Gourmet Burgers Reports Financial Results For The Fourth

Quarter And Fiscal Year Ended December 28, 2003, Increases

Guidance for First Quarter and Full Year 2004.

 

Greenwood Village, CO — (BUSINESS WIRE) – February 26, 2004 – Red Robin Gourmet Burgers, Inc. (Nasdaq: RRGB), a casual dining restaurant chain that serves an imaginative selection of high quality gourmet burgers to America’s families, particularly women, teens and tweens, today reported revenues and earnings for the twelve weeks and fifty-two weeks ended December 28, 2003 and updated its earnings forecast for the first quarter of fiscal 2004 and full year 2004.

 

Financial and Operational Highlights:

 

Highlights for the fourth quarter of 2003 compared to the same quarter last year were as follows:

 

  Total Company revenues increased 23.2% to $80.8 million

 

  Company-owned comparable restaurant sales grew 5.3%

 

  Restaurant-level operating profit increased 12.5% to $15.0 million

 

  Income from operations increased 53.9% to $7.0 million

 

  Diluted earnings per share increased 51.0% to $0.27

 

Highlights for the fiscal year ended December 28, 2003 compared to the fiscal year ended December 29, 2002 were as follows:

 

  Total Company revenues increased 19.8% to $328.6 million

 

  Company-owned comparable restaurant sales grew 4.1%

 

  Restaurant-level operating profit increased 17.8% to $61.1 million

 

  Income from operations increased 20.4% to $26.7 million

 

  Diluted earnings per share increased 55.9% to $1.02

 

“We finished 2003 on a strong note with company-owned comparable restaurant sales increasing 5.3% in the fourth quarter, for a 4.1% improvement for the full year. Importantly, the majority of our comparable restaurant sales growth continues to come from guest count improvements, which we believe reflects Red Robin’s special appeal to our target market of women, teens and tweens. In addition, we were able to effectively manage cost pressures throughout the year while we aggressively pursued our company-owned and franchise restaurant growth plan. Our success in 2003 would not have been possible without the incredible contributions from the entire Red Robin team,” said Mike Snyder, Chairman, Chief Executive Officer and President.

 

During the fourth quarter, Red Robin opened five new company-owned restaurants, bringing its total openings for the year to 18. Four new franchisee restaurants opened in the fourth quarter, increasing the full year franchise openings to ten. As of the end the year, there were 115 company-owned and 103 franchised Red Robin restaurants.


Comparable restaurant sales increased 5.3% for company-owned restaurants in the fourth quarter of 2003, marking the 28th consecutive quarter that Red Robin has reported increased comparable sales for company-owned restaurants. Comparable sales for U.S. franchisees increased 3.5%, while comparable sales at Canadian franchise restaurants were unchanged. Effective at the beginning of 2003, the Company changed its method of calculating comparable restaurant sales (see Schedule 1 to this earnings release for a description of the change). Under the new method, new restaurants become comparable in the first period following five full quarters of operations. Prior to this change, new restaurants became comparable in the first period following the first full fiscal year of operations.

 

The Company’s restaurant-level operating profit metric does not represent operating income or net income calculated in accordance with generally accepted accounting principles. Schedule 2 to this earnings release reconciles restaurant-level operating profit to income from operations and net income.

 

Total Company revenues, which includes company-owned restaurant sales, as well as franchise royalties and fees, increased by 23.2%, to $80.8 million in the fourth quarter, compared to $65.6 million in the prior year period. Average weekly sales for comparable company-owned restaurants were $58,512 for the fourth quarter compared to $55,571 the same quarter last year.

 

The Company’s franchise royalties and fees increased $471,000, or 25.0%, in the fourth quarter, compared to the same period last year. This increase was primarily a result of royalties attributable to the ten new franchise restaurants opened during 2003. For the fourth quarter, Red Robin’s franchise system reported an increase in total U.S. franchise restaurant sales of 3.5%, to $45.1 million, compared to $43.6 million in the prior year period. Average weekly sales for Red Robin’s comparable franchise restaurants were $52,208 in the U.S. versus $50,439 for the same period last year, and $36,095 in Canada versus $36,097 for the same period last year. The Canadian results are in Canadian dollars.

 

Net income for the fourth quarter of 2003 was $4.2 million, or $0.27 per diluted share, as compared to pro forma net income of $3.6 million, or $0.24 per pro forma diluted share, in the prior year period. Actual net income for the fourth quarter of 2002 was $2.7 million, or $0.18 per diluted share. Schedule 3 to this earnings release reconciles actual fourth quarter 2002 net income and diluted net income per share to the pro forma figures used for comparison purposes.

 

In November 2003, the Company completed a secondary offering of 3,458,673 shares of common stock, of which it sold 750,000 shares, at a price of $26.50 per share. The remaining 2,708,673 shares were offered by selling stockholders. The Company received net proceeds of approximately $18.0 million from the offering, which were used to pay indebtedness under its revolving credit agreement. On December 4, 2003, the underwriters exercised their over-allotment option for an additional 518,801 shares offered by selling stockholders. The Company received no proceeds from the over-allotment exercise.


Outlook

 

For the first quarter and sixteen weeks ending April 18, 2004, the Company expects total revenues of approximately $112 to $115 million and net income of approximately $0.27 to $0.28 per diluted share. These projected results are based upon certain assumptions, including an expected comparable restaurant sales increase of 5% to 7%, the opening of seven new company-owned restaurants during the quarter and the expensing of the associated pre-opening costs. The Company previously reported that it expected revenues for first quarter 2004 to be approximately $108 to $112 million and net income to be approximately $0.25 to $0.26 per diluted share.

 

For fiscal 2004, the Company expects revenues of approximately $395 to $400 million and net income of $1.17 to $1.19 per diluted share. This estimate assumes a comparable restaurant sales increase of 3.5% to 4.5%, the addition of 20 to 22 new corporate restaurants and 15 to 17 new franchise restaurants during fiscal 2004. The Company previously reported that it expected revenues for full fiscal year 2004 to be approximately $390 to $395 million and net income to be approximately $1.15 to $1.17 per diluted share.

 

Investor Conference Call and Webcast

 

Red Robin will host an investor conference call to discuss its financial results on Thursday, February 26, 2004, at 5:00 p.m. ET. The conference call number is (877) 691-0878 and the Company will broadcast its conference call over the Internet. To access the broadcast, please visit http://irpage.com/rrgb/, or the Company’s website at www.redrobin.com and select the “Investor” link from the menu. The quarterly financial information that we intend to discuss during the conference call is included in this press release and will be available on the Company’s website at http://irpage.com/rrgb/ for 12 months following the conference call. To listen to a webcast replay of the conference call and to access any additional financial information that may be discussed on the call, please visit http://irpage.com/rrgb/. The webcast replay will be available for 12 months following the conference call.

 

About Red Robin Gourmet Burgers

 

Red Robin Gourmet Burgers (www.redrobin.com) is a casual dining restaurant chain that serves an imaginative selection of high quality gourmet burgers to America’s families, particularly women, teens and tweens. Red Robin serves gourmet burgers in a variety of recipes with bottomless fries, as well as many other items including, salads, soups, appetizers, entrees, desserts and its signature Mad Mixology® specialty beverages. There are more than 200 Red Robin locations across the United States and Canada, which includes both company-owned locations and those operating under franchise or license agreements.


Forward-Looking Statements

 

Certain information contained in this press release includes forward-looking statements. Forward-looking statements include statements regarding our expectations, beliefs, intentions, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements which are other than statements of historical facts. These statements may be identified, without limitation, by the use of forward-looking terminology such as “may,” “will,” “anticipates,” “expects,” “believes,” “intends,” “should” or comparable terms or the negative thereof. All forward-looking statements included in this press release are based on information available to us on the date hereof. Such statements speak only as of the date hereof and we assume no obligation to update such forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. These statements involve risks and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include, but are not limited to, the following: our ability to achieve and manage our planned expansion; our ability to raise capital in the future; the ability of our franchisees to open and manage new restaurants; our franchisees’ adherence to our practices, policies and procedures; changes in the availability and costs of food; potential fluctuation in our quarterly operating results due to seasonality and other factors; the continued service of key management personnel; the concentration of our restaurants in the Western United States; our ability to protect our name and logo and other proprietary information; changes in consumer preferences, general economic conditions or consumer discretionary spending; health concerns about our food products; our ability to attract, motivate and retain qualified team members; the impact of federal, state or local government regulations relating to our team members or the sale of food or alcoholic beverages; the impact of litigation; the effect of competition in the restaurant industry; cost and availability of capital; additional costs associated with compliance and corporate governance, including the Sarbanes-Oxley Act and related regulations and requirements; and other risk factors described from time to time in SEC reports filed by Red Robin.

 

For further information contact:

Don Duffy/Tom Ryan

Integrated Corporate Relations

203-222-9013


RED ROBIN GOURMET BURGERS, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

 

     Twelve Weeks Ended

    Year Ended

 
    

December 28,

2003


   

December 29,

2002


   

December 28,

2003


   

December 29,

2002


 
     (Unaudited)     (Unaudited)        

Revenues:

                                

Restaurant

   $ 78,410     $ 63,640     $ 318,878     $ 265,518  

Franchise royalties and fees

     2,353       1,882       9,320       8,565  

Rent revenue

     40       45       409       327  
    


 


 


 


Total revenues

     80,803       65,567       328,607       274,410  
    


 


 


 


Costs and Expenses:

                                

Restaurant operating costs:

                                

Cost of sales

     18,720       14,394       75,172       61,084  

Labor

     27,755       21,972       112,872       94,030  

Operating

     11,723       9,841       48,085       40,428  

Occupancy

     5,261       4,140       21,637       18,095  

Restaurant closures and impairment

     —         1,133       —         1,133  

Depreciation and amortization

     4,016       3,466       16,126       12,883  

General and administrative

     4,872       5,178       22,022       20,260  

Franchise development

     668       601       2,848       3,256  

Pre-opening costs

     751       270       3,165       1,879  

Gain on lease buy-out

     —         —         —         (945 )

Impairment of real estate held for sale

     —         —         —         150  
    


 


 


 


Total costs and expenses

     73,766       60,995       301,927       252,253  
    


 


 


 


Income from operations

     7,037       4,572       26,680       22,157  

Other (Income) Expense:

                                

Interest expense

     643       911       2,974       5,769  

Interest income

     (85 )     (193 )     (341 )     (398 )

Loss on extinguishment of debt

     1       65       258       4,336  

Other

     (33 )     44       (14 )     105  
    


 


 


 


Total other expenses

     526       827       2,877       9,812  
    


 


 


 


Income before income taxes

     6,511       3,745       23,803       12,345  

Provision for income taxes

     (2,318 )     (1,079 )     (8,069 )     (4,081 )
    


 


 


 


Net income

   $ 4,193     $ 2,666     $ 15,734     $ 8,264  
    


 


 


 


Net income per share:

                                

Basic

   $ 0.27     $ 0.18     $ 1.04     $ 0.67  
    


 


 


 


Diluted

   $ 0.27     $ 0.18     $ 1.02     $ 0.65  
    


 


 


 


Weighted average shares outstanding:

                                

Basic

     15,483       15,004       15,182       12,278  
    


 


 


 


Diluted

     15,824       15,195       15,465       12,660  
    


 


 


 



RED ROBIN GOURMET BURGERS, INC. AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

 

    

December 28,

2003


   

December 29,

2002


 
     (unaudited)        

Assets

                

Current Assets:

                

Cash and cash equivalents

   $ 4,871     $ 4,797  

Accounts receivable, net

     1,146       1,642  

Inventories

     4,357       3,289  

Prepaid expenses and other current assets

     3,977       3,118  

Income tax refund receivable

     1,172       155  

Deferred tax asset

     1,075       1,055  

Restricted current assets—marketing funds

     959       617  
    


 


Total current assets

     17,557       14,673  
    


 


Real estate held for sale

     —         843  

Property and equipment, net

     151,061       110,176  

Deferred tax asset

     4,710       8,141  

Goodwill, net

     25,720       25,720  

Other intangible assets, net

     8,118       8,354  

Other assets, net

     3,047       1,719  
    


 


Total assets

   $ 210,213     $ 169,626  
    


 


Liabilities and Stockholders’ Equity

                

Current Liabilities:

                

Trade accounts payable

   $ 9,139     $ 8,343  

Accrued payroll and payroll-related liabilities

     12,931       7,627  

Unredeemed gift certificates

     3,997       3,110  

Accrued liabilities

     6,622       6,336  

Accrued liabilities—marketing funds

     959       617  

Current portion of long-term debt and capital lease obligations

     1,422       1,828  
    


 


Total current liabilities

     35,070       27,861  
    


 


Deferred rent payable

     5,296       4,624  

Long-term debt and capital lease obligations

     36,206       38,152  

Commitments and contingencies

     —         —    

Stockholders’ Equity:

                

Common stock; $.001 par value: 30,000,000 shares authorized; 15,969,723 and 15,108,172 shares issued and outstanding

     16       15  

Preferred stock, $.001 par value: 3,000,000 shares authorized; no shares issued and outstanding

     —         —    

Additional paid-in capital

     122,184       103,142  

Deferred compensation

     (130 )     (209 )

Receivables from stockholders/officers

     (6,432 )     (6,252 )

Accumulated other comprehensive loss, net of tax

     (108 )     (84 )

Retained earnings

     18,111       2,377  
    


 


Total stockholders’ equity

     133,641       98,989  
    


 


Total liabilities and stockholders’ equity

   $ 210,213     $ 169,626  
    


 



RED ROBIN GOURMET BURGERS, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

    

December 28,

2003


   

December 29,

2002


 
     (unaudited)        

Cash Flows From Operating Activities:

                

Net income

   $ 15,734     $ 8,264  

Non-cash adjustments to reconcile net income to net cash provided by operating activities

     20,403       18,503  

Changes in operating assets and liabilities

     3,798       2,347  
    


 


Net cash provided by operating activities

     39,935       29,114  
    


 


Cash Flows From Investing Activities:

                

Proceeds from sales of real estate, property and equipment

     860       921  

Purchases of property and equipment

     (54,645 )     (39,649 )

Acquisition, net of cash acquired

     —         (6,296 )
    


 


Net cash used in investing activities

     (53,785 )     (45,024 )
    


 


Cash Flows From Financing Activities:

                

Borrowings of long-term debt

     38,000       18,769  

Payments of long-term debt and capital leases

     (42,057 )     (58,876 )

Debt issuance costs

     (756 )     (1,529 )

Proceeds from sales of common stock, net

     18,658       43,351  

Other

     79       —    
    


 


Net cash provided by financing activities

     13,924       1,715  
    


 


Net increase (decrease) in cash and cash equivalents

   $ 74     $ (14,195 )

Cash and cash equivalents, beginning of period

     4,797       18,992  
    


 


Cash and cash equivalents, end of period

   $ 4,871     $ 4,797  
    


 


 


Schedule 1

 

Change in Method of Calculating Comparable Restaurant Sales

 

As of the beginning of fiscal 2003, the Company changed its method of calculating comparable restaurant sales. Under the new method, new restaurants become comparable in the first period following five full quarters of operations. Prior to this change, new restaurants became comparable in the first period following the first full fiscal year of operations. The Company believes its new method of calculating comparable restaurant sales is a more meaningful measure given its accelerated new restaurant unit growth. In addition, the Company believes its new methodology is more in line with industry practice.

 

In addition, the ten restaurants that the Company acquired from two franchisees during the first quarter of 2002 have been included as comparable restaurants for 2003. Company-owned comparable restaurant sales for the fourth quarter of 2003, excluding these ten acquired restaurants, would have increased 5.6%, over the fourth quarter of 2002.

 

During the fourth quarter of 2003 the Company had 91 company-owned, 72 U.S. franchise, and 20 Canadian franchise comparable restaurants for a total of 183 total system-wide comparable restaurants.

 

The following table presents the percentage change in comparable restaurant sales for the past four quarters and full-year fiscal 2003 and 2002, over the comparable prior year period, assuming that the Company’s new method of calculating comparable restaurant sales had been in effect during each of the periods presented, as well as a comparison to the previously reported results under the Company’s old method (unaudited):

 

Method


   2003

    Q4-2003

    Q3-2003

    Q2-2003

    Q1-2003

    2002

 

Company-owned

                                    

New method

   4.1 %   5.3 %   6.0 %   3.6 %   2.1 %   1.8 %

Old method

   4.1 %   5.1 %   6.2 %   3.6 %   2.1 %   1.6 %

U.S. Franchise

                                    

New method

   3.7 %   3.5 %   5.9 %   3.7 %   2.1 %   0.0 %

Old method

   3.5 %   3.7 %   6.4 %   3.7 %   1.1 %   -0.5 %

Canada

                                    

New method

   0.1 %   0.0 %   0.6 %   0.6 %   -0.6 %   -8.1 %

Old method

   0.1 %   0.0 %   0.6 %   0.6 %   -0.6 %   -8.1 %

 


Schedule 2

 

Reconciliation of Restaurant-Level Operating Profit to Income

from Operations and Net Income

 

The Company defines restaurant-level operating profit to be restaurant revenues minus restaurant-level operating costs, excluding restaurant closures and impairment costs. It does not include general and administrative costs, depreciation and amortization, franchise development costs and pre-opening costs. The Company believes that restaurant-level operating profit is an important measure of financial performance because it is widely regarded in the restaurant industry as a useful metric by which to evaluate a company’s restaurant-level operating efficiency and performance. 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 that follows sets forth the Company’s calculation of restaurant-level operating profit and a reconciliation to income from operations and net income, the most directly comparable GAAP measures.

 

     Twelve Weeks Ended

   Year Ended

 
    

December 28,

2003


  

December 29,

2002


  

December 28,

2003


  

December 29,

2002


 

Restaurant revenues

   $ 78,410    $ 63,640    $ 318,878    $ 265,518  
    

  

  

  


Restaurant operating costs:

                             

Cost of sales

     18,720      14,394      75,172      61,084  

Labor

     27,755      21,972      112,872      94,030  

Operating

     11,723      9,841      48,085      40,428  

Occupancy

     5,261      4,140      21,637      18,095  
    

  

  

  


Restaurant-level operating profit

     14,951      13,293      61,112      51,881  
    

  

  

  


Add – Other Revenues

     2,393      1,927      9,729      8,892  
    

  

  

  


Deduct – Other Operating Expenses:

                             

Restaurant closures and impairment

     —        1,133      —        1,133  

Depreciation and amortization

     4,016      3,466      16,126      12,883  

General and administrative

     4,872      5,178      22,022      20,260  

Franchise development

     668      601      2,848      3,256  

Pre-opening costs

     751      270      3,165      1,879  

Gain on lease buy-out

     —        —        —        (945 )

Impairment of real estate held for sale

     —        —        —        150  
    

  

  

  


Total Other Operating Expenses

     10,307      10,648      44,161      38,616  
    

  

  

  


Income from operations

     7,037      4,572      26,680      22,157  
    

  

  

  


Total other expenses

     526      827      2,877      9,812  

Provision for income taxes

     2,318      1,079      8,069      4,081  
    

  

  

  


Total Other

     2,844      1,906      10,946      13,893  
    

  

  

  


Net income

   $ 4,193    $ 2,666    $ 15,734    $ 8,264  
    

  

  

  


 


Schedule 3

 

Fourth Quarter 2002 Pro Forma Net Income Reconciliation

 

The Company’s pro forma net income and net income per share for the fourth quarter of 2002, as presented below, were calculated based upon an assumption that the Company’s initial public offering of stock, and concurrent repayment of certain borrowings under its term loan agreement, revolving credit facility and other indebtedness occurred at the beginning of fiscal 2002. A restaurant impairment charge of approximately $1.1 million has also been excluded. The Company believes that pro forma results provide additional information useful in analyzing the underlying business results for fourth quarter 2003, compared to fourth quarter 2002 because of the significance of the non-cash impairment charge on fourth quarter 2002 results. However, pro forma results are not determined in accordance with GAAP and should not be considered in isolation or as an alternative to net income determined in accordance with GAAP.

 

The following table provides a reconciliation of actual net income and diluted net income per share for the fourth quarter of 2002, to pro forma net income and pro forma diluted net income per share (unaudited) (in thousands, except per share data):

 

    

Net

Income


   

Diluted

Shares

Outstanding


   

Diluted

Net
Income

Per Share


Actual

   $ 2,666     15,195     $ 0.18
            

 

Adjustment to exclude non-recurring charges related to early extinguishment of debt (1)

     65              

Adjustment to exclude restaurant impairment charge (2)

     1,133              

Adjustment to provision for income taxes to reflect the impact of pre-tax pro forma adjustments

     (260 )            
    


           

Pro forma

   $ 3,604     15,200 (3)   $ 0.24
    


 

 


(1) This charge resulted because the Company used proceeds from its initial public offering, together with borrowings under its revolving credit facility, to repay borrowings then outstanding.
(2) During the fourth quarter we recognized a site-specific impairment charge to fully write down all of the long-lived assets related to one restaurant.
(3) Pro forma weighted average diluted shares outstanding reflects the estimated impact of the issuance of 4,000,000 shares of the Company’s common stock in its initial public offering, as well as other estimated changes to weighted-average diluted shares outstanding assuming that the initial public offering and related transactions occurred as of the beginning of fiscal year 2002.