Provides Strategic Updates on Fresh Start
Initiatives
Ruby Tuesday, Inc. (NYSE:RT) today announced financial results
for the fiscal quarter ended November 29, 2016.
Fiscal Second Quarter 2017 Highlights (13 weeks ended
November 29, 2016, compared to the 13 weeks ended December 1,
2015):
- Total revenue declined 17.7% to $214.7
million, which included a net reduction of 109 Company-owned Ruby
Tuesday restaurants compared to the second quarter of the prior
fiscal year, including 95 restaurants closed in connection with our
Fresh Start Initiative announced on August 11, 2016.
- Same-restaurant sales declined 4.1%
compared to a 0.8% increase in the second quarter of the prior
fiscal year.
- Closures and Impairments expense was
$15.7 million compared to $12.1 million in the second quarter of
the prior fiscal year.
- Net Loss was $38.0 million, or ($0.63)
per diluted share, compared to a Net Loss of $15.8 million, or
($0.26) per diluted share in second quarter of the prior fiscal
year.
- Restaurant level margin* declined 410
basis points to 11.5%.
- Adjusted Net Loss* was $10.9 million,
or ($0.18) per diluted share, compared to an Adjusted Net Loss of
$2.4 million, or ($0.04) per diluted share in the second quarter of
the prior fiscal year.
- Adjusted EBITDA* was negative $2.7
million compared to $14.1 million in the second quarter of the
prior fiscal year.
- As of November 29, 2016, the Company
had cash on hand of $38.6 million.
* Restaurant Level Margin, EBITDA, Adjusted EBITDA, Adjusted Net
Loss and Adjusted Net Loss per share are non-GAAP measures.
Reconciliations of Restaurant Level Margin, EBITDA, Adjusted
EBITDA, Adjusted Net Loss and Adjusted Net Loss per share to the
most directly comparable financial measures presented in accordance
with United States Generally Accepted Accounting Principles (GAAP)
are set forth in the schedules accompanying this release. See
“Non-GAAP Financial Measures” and “Condensed Consolidated
Statements of Operations.”
Lane Cardwell, Interim President and Chief Executive Officer,
commented, “While the results of our fiscal second quarter were
disappointing, I am excited about the strategic changes and the new
product rollouts that began with the introduction of our Fresh New
Menu in November and will continue in January with the national
launch of our Fresh New Garden Bar.”
Cardwell continued, “Our progress in executing the key
strategies of the Fresh Start initiative should be viewed in two
stages. The first is marked by the launch of our Fresh New Menu in
mid-November while the second is marked by the launch of the
enhanced Garden Bar in mid-January. We believe this combination
will ultimately have a positive impact on our performance through
increasing guest count and frequency.”
Cardwell concluded, “Our new menu has been designed to showcase
the affordability and value that Ruby Tuesday offers. We view the
national launch of our reinvented Garden Bar as our greatest brand
differentiator by appealing to customers’ desire for fresh, healthy
options. Furthermore, based on market survey data the New Garden
Bar resonates well and scores high with our target customer base.
Most importantly, the entire team is focused on providing an
enhanced guest experience through new product offerings as well as
service improvements. We believe these efforts should change the
trajectory of our business and drive shareholder value.”
Update on Fresh Start Initiatives
As announced on October 6, 2016, the Company plans to accelerate
the execution of its Fresh Start Initiatives to better address the
challenges currently facing the business, improve financial
profitability, and create long-term value for shareholders.
The Company has continued to make progress on its Fresh Start
Initiatives. Key updates include:
Fresh New Menu
- The Company launched a new core menu
mid-November 2016 across all Ruby Tuesday restaurants which has
been redesigned to better communicate freshness and affordability
to our guests and in order to connect with our target demographic
of women and families.
- The Fresh New Menu added new menu items
that feature high quality ingredients including new shareable
appetizers, garden fresh salads, pastas, and desserts, as well as a
new drink and redesigned kids menu.
- There are four new freshly prepared
salads (BBQ Chicken Salad, Crispy Chicken Cobb Salad, Mediterranean
Chicken Salad or Kale Caesar Salad) that can be served three ways
(tossed, chopped or chopped and stuffed in a warm baguette).
- New appetizers include Philly
Cheesesteak Potstickers, Buffalo Chicken Tostadas, and Italian
Five-Cheese Skillet.
- The Fresh New Menu also reduced the
total number of items offered by approximately 30% to remove
underutilized and overly complicated options which simplified
operations.
Fresh New Garden Bar
- On January 17, 2017, the Company will
be rolling out its Fresh New Garden Bar nationally across all Ruby
Tuesday restaurants.
- The launch will be supported by
marketing through national television, on-line video, social media,
and multiple other vehicles inside and outside the restaurant to
showcase and tell the story of the New Garden Bar.
- Ruby Tuesday will dramatically expand
the product offering from 36 to 58 items, which we believe will
provide enhanced value and variety for our guests.
- The Fresh New Garden Bar will include
fresh greens, raw vegetable toppings, roasted vegetables, crispy
toppings, as well as hummus, dips and fruits.
- The Company will also introduce a line
of eight new salad dressings made in-house that are naturally
gluten-free and utilize the freshest ingredients to ensure great
taste and high quality.
Fresh Experience
- The Company continues to improve
customer service through the execution of plans focused on key
measures of guest satisfaction. During the second quarter, Ruby
Tuesday reached its best ever overall satisfaction score.
- The Company expects to complete 13
store remodels by the end of January 2017 in certain markets, which
upon completion will be followed by re-grand openings supported by
local marketing.
- Pending the results of the market
tests, the Company is placing the remodeling program on a temporary
hold while measuring the combined results from a new look, new menu
and new Garden Bar.
Asset Rationalization Plan
- The Company is in the contract process
to sell 25 properties with average expected net proceeds of $1.6
million per location. This includes 20 properties closed as a
result of our Asset Rationalization Plan announced on August 11,
2016.
Fiscal Second Quarter 2017 Financial Results
Total revenue was $214.7 million, a decrease of 17.7% or $46.2
million from the second quarter of the prior fiscal year. This
decrease was due to a net reduction of 109 Company-owned Ruby
Tuesday restaurants as compared to the second quarter of the prior
fiscal year and a same-restaurant sales decline of 4.1% at
Company-owned Ruby Tuesday restaurants.
The second quarter same-restaurant sales decrease was driven in
part by guest traffic declines resulting from a challenging
external environment, with year-over-year guest counts down 2.8%.
Additionally, given the Company’s promotional activity during the
quarter, average check declined 1.3%.
Restaurant level margin* decreased to $24.6 million from $40.4
million in the second quarter of the prior fiscal year. As a
percentage of restaurant sales and operating revenue, restaurant
level margin declined 410 basis points to 11.5% driven primarily by
underperforming promotional activities which resulted in
inefficient management of controllable costs.
General and administrative expenses (G&A) increased to $18.4
million from $14.2 million in the second quarter of the prior
fiscal year. As a percentage of total revenue, G&A expenses
increased 320 basis points to 8.6% from 5.4%. The increase in
G&A was primarily due to an increase in costs associated with
executive transition.
Marketing expenses, net increased to $14.0 million from $13.7
million in the second quarter of the prior fiscal year. As a
percentage of revenue, marketing expenses, net increased 130 basis
points to 6.5% from 5.2%. The increase in marketing expenses, net
as a percentage of total revenue was primarily due to deleveraging
on lower sales.
Net Loss was $38.0 million, or ($0.63) per diluted share,
compared to Net Loss of $15.8 million, or ($0.26) per diluted
share, in the second quarter of the prior fiscal year.
Adjusted Net Loss* was $10.9 million, or ($0.18) per diluted
share, compared to Adjusted Net Loss of $2.4 million, or ($0.04)
per diluted share, in the second quarter of the prior fiscal year.
Adjusted Net Loss for the second quarter of fiscal year 2017
excluded adjustments of $27.1 million, primarily related to
closures and impairment charges. Adjusted Net Loss for the second
quarter of fiscal year 2016 excluded adjustments of $13.4 million,
primarily related to closures and impairment charges. A
reconciliation between Net Loss and Adjusted Net Loss is included
in the accompanying financial data.
Balance Sheet
The Company ended the fiscal 2017 second quarter with cash and
cash equivalents totaling $38.6 million and debt of $223.2
million.
Sale of Property
During the quarter, Ruby Tuesday completed the sale of its
property at 150 W. Church Avenue in Maryville, Tennessee for $2.8
million. Team members will be relocated to the Company’s other
Tennessee-based Restaurant Support Center at 333 E. Broadway Avenue
in Maryville, Tennessee by the end of January 2017.
Restaurant Activity
As of November 29, 2016, there were 613 Ruby Tuesday
restaurants system-wide, of which 546 were Company-owned. During
the second quarter, one Company-owned Ruby Tuesday restaurant was
closed. Additionally, one international franchised Ruby Tuesday
restaurant was closed during the quarter.
Conference Call & Webcast
The Company will host a conference call today to discuss fiscal
second quarter 2017 financial results at 5:00 PM Eastern Time. The
conference call can be accessed live by dialing 888-778-9058 or for
international callers by dialing 913-312-1495. A replay will be
available after the call and can be accessed by dialing
877-870-5176 or for international callers by dialing 858-384-5517.
The passcode is 1690932. The replay will be available through
Sunday, February 5, 2017.
The conference call will also be webcast live and later archived
on the Investor Relations page of Ruby Tuesday’s corporate website
at www.rubytuesday.com under the ‘Events & Presentations’
section.
About Ruby Tuesday, Inc.
Ruby Tuesday, Inc. owns and franchises Ruby Tuesday brand
restaurants. As of November 29, 2016, there were 613 Ruby Tuesday
restaurants in 42 states, 14 foreign countries, and Guam. Of those
restaurants, we owned and operated 546 Ruby Tuesday restaurants and
franchised 67 Ruby Tuesday restaurants, comprised of 18 domestic
and 49 international restaurants. Our Company-owned and operated
restaurants are concentrated primarily in the Southeast, Northeast,
Mid-Atlantic, and Midwest of the United States, which we consider
to be our core markets. For more information about Ruby Tuesday,
please visit www.rubytuesday.com. Ruby Tuesday, Inc. is traded on
the New York Stock Exchange (Symbol: RT).
Forward-looking Information
This press release contains various forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements represent our expectations or
beliefs concerning future events, including one or more of the
following: future financial performance (including our estimates of
changes in same-restaurant sales, average unit volumes, operating
margins, expenses, and other items), future capital expenditures,
the effect of strategic initiatives (including statements relating
to our asset rationalization project, cost savings initiatives, and
the benefits of our marketing), the opening or closing of
restaurants by us or our franchisees, sales of our real estate or
purchases of new real estate, future borrowings and repayments of
debt, availability of financing on terms attractive to the Company,
compliance with financial covenants in our debt instruments,
payment of dividends, stock and bond repurchases, restaurant
acquisitions and dispositions, and changes in senior management and
in the Board of Directors. We caution the reader that a number of
important factors and uncertainties could, individually or in the
aggregate, cause our actual results to differ materially from those
included in the forward-looking statements, including, without
limitation, the following: general economic conditions; changes in
promotional, couponing and advertising strategies; changes in our
customers’ disposable income; consumer spending trends and habits;
increased competition in the restaurant market; laws and
regulations, including those affecting labor and employee benefit
costs, such as further potential increases in state and federally
mandated minimum wages and healthcare reform; changes in senior
management or in the Board of Directors; the impact of pending
litigation; customers’ acceptance of changes in menu items; changes
in the availability and cost of capital; potential limitations
imposed by debt covenants under our debt instruments; weather
conditions in the regions in which Company-owned and franchised
restaurants are operated; costs and availability of food and
beverage inventory, including supply and delivery shortages or
interruptions; significant fluctuations in energy prices; security
breaches of our customers’ or employees’ confidential information
or personal data or the failure of our information technology and
computer systems; our ability to attract and retain qualified
managers, franchisees and team members; impact of adoption of new
accounting standards; impact of food-borne illnesses resulting from
an outbreak at either one of our restaurants or other competing
restaurant concepts; effects of actual or threatened future
terrorist attacks in the United States; prevailing conditions in
the real estate market that may affect expected results under our
Asset Rationalization Plan, our ability to obtain waivers under, or
amendments to, certain of our credit facilities by the lenders
under such facilities, and other risks and uncertainties described
in the Risk Factors included in Part I, Item A of our Annual Report
on Form 10-K for the year ended May 31, 2016.
Non-GAAP Financial
Measures
The Company believes excluding certain items from its financial
results provides investors with a clearer understanding of the
Company’s operating performance and comparison to prior-period
results. In addition, management uses these non-GAAP financial
measures and ratios to assess the results of the Company’s
operations.
We have included Restaurant Level Margin, EBITDA, Adjusted
EBITDA, Adjusted Net Loss and Adjusted Net Loss per share to
provide investors with supplemental measures of our operating
performance. We believe these are important supplemental measures
of operating performance because they eliminate items that have
less bearing on our Company-wide operating performance and thus
highlight trends in our core business that may not otherwise be
apparent when relying solely on financial measures in accordance
with GAAP. We also believe that securities analysts, investors and
other interested parties frequently use Restaurant Level Margin,
EBITDA, Adjusted EBITDA, Adjusted Net Income/(Loss) and Adjusted
Net Income (Loss) per share in evaluating issuers. Because other
companies in some cases calculate Restaurant Level Margin, EBITDA,
Adjusted EBITDA, Adjusted Net Income/(Loss), or Adjusted Net
Income/(Loss) per share differently from the way we calculate such
measures, these metrics may not be comparable to similarly titled
measures reported by other companies. Additionally, supplemental
non-GAAP financial measures should not be considered in isolation
or as a substitute for measures of performance prepared in
accordance with GAAP.
The use of these measures permits a comparative assessment of
the Company's operating performance relative to its performance
based on GAAP results, while isolating the effects of certain items
that vary from period to period without correlation to core
operating performance and certain items that vary widely among
similar companies. However, the inclusion of these adjusted
measures should not be construed as an indication that future
results will be unaffected by unusual or infrequent items or that
the items for which the adjustments have been made are necessarily
unusual or infrequent.
Available in this release is the reconciliation of Net Loss, the
most directly comparable GAAP measure, to EBITDA, Adjusted EBITDA,
Adjusted Net Loss and Adjusted Net Loss per share, all of which are
non-GAAP financial measures. Reconciliation of Restaurant Level
Margin, which is also a non-GAAP measure, to Net Loss are presented
in the Condensed Consolidated Statements of Operations. The Company
defines Restaurant Level Margin as Restaurant Sales and Operating
Revenue less Cost of Goods Sold, Payroll and Related Costs, and
Other Restaurant Operating Costs. EBITDA is defined as Net Loss
before interest, taxes, and depreciation and amortization and
Adjusted EBITDA as EBITDA, excluding certain expenses (income)
including, but not limited to, Closures and Impairments, Net, and
Executive Transition. Adjusted Net Loss is defined as Net Loss,
excluding certain expenses/(income) as detailed in Adjusted EBITDA
as well as adjustments related to Debt Prepayment Penalties,
Deferred Financing Fees, Income Tax Benefit from Adjustments, and
Income Tax Benefit Adjusted to the Statutory Rate. Adjusted Net
Loss per share is defined as Adjusted Net Loss divided by diluted
shares outstanding.
Financial Results For the Second Quarter of Fiscal Year
2017 (Amounts in thousands) (Unaudited)
November 29, May 31,
CONDENSED
BALANCE SHEETS 2016 2016 Assets Cash and Cash
Equivalents $ 38,565 $ 67,341 Accounts and Other Receivables 7,018
12,827 Inventories 21,257 21,595 Income Tax Receivable 5,213 3,003
Prepaid Rent and Other Expenses 9,628 11,508 Assets Held for Sale
26,728 4,642 Total Current Assets 108,409
120,916 Property and Equipment, Net 617,433 671,250 Other
Assets 43,493 45,751 Total Assets $ 769,335 $
837,917 Liabilities Current Maturities of Long-Term Debt,
including Capital Leases $ 13,629 $ 9,934 Deferred Revenue - Gift
Cards 14,780 16,354 Other Current Liabilities 91,053
71,418 Total Current Liabilities 119,462 97,706
Long-Term Debt and Capital Leases, less Current Maturities 209,609
213,803 Deferred Escalating Minimum Rents 43,157 51,535 Other
Deferred Liabilities 63,799 67,093 Total
Liabilities 436,027 430,137 Shareholders' Equity
333,308 407,780 Total Liabilities and Shareholders'
Equity $ 769,335 $ 837,917
Financial Results For the Second
Quarter and First 26 Weeks of Fiscal Year 2017(Amounts in thousands
except per share amounts)(Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
13 Weeks 13
Weeks 26 Weeks 26 Weeks Ended Percent of Ended Percent of Ended
Percent of Ended Percent of November 29, Total December 1, Total
November 29, Total December 1, Total 2016 Revenue 2015 Revenue 2016
Revenue 2015 Revenue
Revenue: Restaurant sales and
operating revenue $ 213,815 99.6 $ 259,330 99.4 $ 469,579 99.6 $
537,237 99.4 Franchise revenue 904 0.4 1,626
0.6 1,797 0.4 3,199 0.6
Total
Revenue 214,719 100.0
260,956 100.0
471,376 100.0
540,436 100.0 Operating Costs and
Expenses: (as a percent of Restaurant sales and operating revenue)
Cost of goods sold 62,142 29.1 70,305 27.1 134,332 28.6 146,546
27.3 Payroll and related costs 80,418 37.6 92,284 35.6 171,025 36.4
187,619 34.9 Other restaurant operating costs 46,620
21.8 56,385 21.7 103,983 22.1 118,592 22.1
Restaurant Level Margin (excludes franchise revenue)
24,635 11.5
40,356 15.6
60,239 12.8
84,480 15.7
Depreciation and amortization 10,488 4.9 12,936 5.0 21,717
4.6 25,742 4.8 (as a percent of Total revenue) General and
administrative expenses 18,394 8.6 14,156 5.4 34,483 7.3 30,078 5.6
Marketing expenses, net 14,025 6.5 13,692 5.2 29,521 6.3 27,166 5.0
Closures and impairments, net 15,708 7.3
12,072 4.6 45,900 9.7 14,784 2.7
Total operating costs and expenses 247,795
271,830 540,961 550,527
Loss From Operations (33,076 ) (15.4 )
(10,874 ) (4.2 )
(69,585 ) (14.8 )
(10,091 ) (1.9 ) Interest expense, net
4,844 2.3 5,105 2.0 9,721 2.1
11,105 2.1 Loss before income taxes (37,920 )
(17.7 ) (15,979 ) (6.1 ) (79,306 ) (16.8 ) (21,196 ) (3.9 )
Provision / (benefit) for income taxes 36 0.0
(180 ) (0.1 ) (1,658 ) (0.4 ) (1,203 ) (0.2 )
Net Loss $ (37,956 ) (17.7
) $ (15,799 ) (6.1 )
$ (77,648 ) (16.5 ) $
(19,993 ) (3.7 ) Net
Loss Per Share: Basic $ (0.63 ) $ (0.26 ) $ (1.29 ) $ (0.33 )
Diluted $ (0.63 ) $ (0.26 ) $ (1.29 ) $ (0.33 )
Shares: Basic
60,170
61,455 59,980
61,400 Diluted
60,170
61,455 59,980
61,400 Non-GAAP Reconciliation
Table Reconciliation of EBITDA, Adjusted EBITDA, Adjusted
Net Loss, and Adjusted Net Loss Per Share (Amounts in
thousands except per share amounts) (Unaudited)
13 Weeks 13 Weeks 26 Weeks 26 Weeks Ended
Ended Ended Ended November 29, December 1, November 29, December 1,
2016 2015 2016 2015
Net Loss $ (37,956
) $ (15,799 ) $ (77,648
) $ (19,993 ) Depreciation and
Amortization 10,488 12,936 21,717 25,742 Interest Expense, net
4,844 5,105 9,721 11,105 Provision / (Benefit) for Income Taxes
36 (180 ) (1,658 ) (1,203 )
EBITDA $ (22,588 ) $
2,062 $ (47,868 ) $
15,651 Closures and Impairments, Net (1) 15,708 12,072
45,900 14,784 Executive Transition (2) 4,208 -
4,208 (1,274 )
Adjusted EBITDA
$ (2,672 ) $ 14,134
$ 2,240 $ 29,161
Net Loss $ (37,956 ) $
(15,799 ) $ (77,648 ) $
(19,993 ) Closures and Impairments, Net (1)
15,708 12,072 45,900 14,784 Executive Transition (2) 4,208 - 4,208
(1,274 ) Debt Prepayment Penalties & Deferred Financing Fees
(3) - - - 1,084 Income Tax Benefit from Adjustments (4) (7,905 )
(4,792 ) (19,888 ) (5,792 ) Income Tax Benefit Adjusted to
Statutory Rate (5) 15,086 6,162
29,819 7,210
Adjusted Net Loss $
(10,859 ) $ (2,357 ) $
(17,609 ) $ (3,981 )
Net Loss Per Share $ (0.63 ) $
(0.26 ) $ (1.29 ) $
(0.33 ) Adjusted Net Loss Per Share
$ (0.18 ) $ (0.04 )
$ (0.29 ) $ (0.06 )
Basic Shares Outstanding (6) 60,170
61,455 59,980 61,400 Diluted Shares
Outstanding (6) 60,170 61,455
59,980 61,400
(1) Includes property impairments,
closed restaurant lease reserves, other closing expenses, losses /
(gains) on sales of properties, and a $2.0 million partial
trademark impairment charge of the Lime Fresh trademark during Q2
FY16. (2) On September 13, 2016, our then Chairman, President, and
Chief Executive Officer left the Company. Accordingly, we recorded
severance, unused vacation, and other benefit costs of $3.0
million, a charge of approximately $0.9 million in connection with
the accelerated vesting of certain share-based awards, and other
related payments of $0.3 million. In Q1 FY16, our then President
Ruby Tuesday Concept and Chief Operations Officer left the Company.
Accordingly, included within our share-based compensation expense
for Q1 FY16 is a forfeiture credit of $1.3 million in connection
with the forfeiture of certain share-based awards. (3) Debt
prepayment penalties and the write-off of deferred financing fees
are classified within Interest expense and included in EBITDA
calculation and therefore not a separate add-back for Adjusted
EBITDA. (4) Represents the tax impact of the adjustments to Net
Loss at the Company's statutory tax rate (39.69%). (5) Represents
the Company's Income Tax Benefit adjusted to the Company's
statutory tax rate. (6) Net Loss and Adjusted Net Loss per share
figures are calculated based on diluted shares outstanding.
Ruby Tuesday, Inc. Number of Restaurants at End of Period
November 29, December 1, 2016
2015
Ruby Tuesday: Company-Owned 546 655 Domestic Franchised
18 28 International Franchised 49 50 Total 613 733
Lime
Fresh: Company-Owned 0 8 Domestic Franchised 0 8 Total 0 16
Total Restaurants: Company-Owned 546 663 Domestic
Franchised 18 36 International Franchised 49 50
System-wide
total 613 749
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170105006374/en/
ICRInvestor RelationsMelissa Calandruccio,
646-277-1273RubyTuesdayIR@icrinc.comorMedia
RelationsChristine Beggan,
203-682-8329RubyTuesday@icrinc.com
Ruby Tuesday, Inc. (NYSE:RT)
Historical Stock Chart
From Jun 2024 to Jul 2024
Ruby Tuesday, Inc. (NYSE:RT)
Historical Stock Chart
From Jul 2023 to Jul 2024