Rubio's Restaurants, Inc. Reports 2008 Third Quarter Results

Rubio's(R) Restaurants, Inc. (NASDAQ:RUBO) today announced financial results for the third quarter and year-to-date period ended September 28, 2008.

Third Quarter Results

•Revenues rose 6.9% to $47.0 million, from $44.0 million for the same quarter last year.

•Comparable store sales decreased 2.1%, versus a comparable store sales increase of 7.1% for the same quarter last year. Transactions decreased 6.7% and check average increased 4.9% from the same quarter last year.

•Net income increased 7.8% to $789,000 from $732,000 for the same quarter last year.

•Earnings per share were $0.08 per diluted share as compared to $0.07 per diluted share for the same quarter last year.

•Restaurant operating margins (see definition below) increased 90 basis points to 17.7%, from 16.8% for the same quarter last year. As a percentage of restaurant sales, restaurant labor decreased by 80 basis points and cost of sales decreased by 60 basis points, while restaurant occupancy and other increased by 60 basis points.

•Adjusted EBITDA (see table below) was $4.3 million as compared to $3.8 million for the same quarter last year, an increase of 11.1%.

•Average unit volume for restaurants in our comp base for the trailing 52 weeks was $1,010,000.

Year-to-Date Results

•Revenues rose 4.9% to $134.3 million, from $128.0 million for the same three quarters last year.

•Comparable store sales decreased 3.1%, versus a comparable store sales increase of 7.7% for the same three quarters last year. Transactions decreased 5.9% and check average increased 3.0% from the same three quarters last year.

•Net income was $379,000 as compared to net income of $1.4 million for the same three quarters last year.

•Earnings per share were $0.04 per diluted share as compared to $0.14 per diluted share for the same three quarters last year.

•Restaurant operating margins (see definition below) decreased 20 basis points to 16.2% from 16.4% for the comparable period last year. As a percentage of restaurant sales, restaurant labor decreased by 70 basis points and cost of sales remained consistent, while restaurant occupancy and other increased by 90 basis points.

•Adjusted EBITDA (see table below) was $9.0 million as compared to $9.8 million for the same three quarters of last year, a decrease of 8.1%.

"We are encouraged by our third quarter results, which were highlighted by increased quarter-over-quarter EPS, restaurant operating margins and adjusted EBITDA, despite the continued macro-economic challenges. The enhanced menu we introduced in July, which includes our new Grilled Gourmet Tacos, demonstrates our commitment to delivering a wide variety of unique and delicious menu items and an extraordinary guest experience. We believe Rubio's food is priced to provide exceptional value for the quality of the ingredients. As I stated last quarter, we believe we have made adjustments in our strategy to respond to the challenges of the weak economy and have positioned Rubio's well for when the economy improves," said Dan Pittard, Rubio's President and CEO.

"On the Development front, we've now opened 16 restaurants in 2008 and have another unit under construction, which puts us right at our revised growth target. While we have more than 30 sites identified for next year, we are mindful of the challenges our economy faces. Consequently, we will take a disciplined approach and limit the number of binding lease agreements we sign each quarter to limit our exposure in this difficult economy. We are targeting 20 new units in 2009 as we continue to focus exclusively on mature trade areas that have not been as hard-hit by the sub-prime mortgage crisis and we're opportunistically looking for attractive opportunities in existing buildings given in the softening real estate market, rather than focusing on new developments."

Non-GAAP Term Definitions

Regulation G, "Disclosure of Non-GAAP Financial Measures," and other provisions of the Securities Exchange Act of 1934, as amended, define and prescribe the conditions for use of certain non-GAAP financial information. We provide two Non-GAAP financial measures: "restaurant operating margins" and "Adjusted EBITDA."

We use restaurant operating margins to evaluate the performance of our restaurants. We calculate restaurant operating margins by dividing restaurant sales less cost of sales, restaurant labor and restaurant occupancy and other by restaurant sales.

We also provide Adjusted EBITDA, which is not a recognized term under GAAP and does not purport to be an alternative to income from operations or net income or a measure of liquidity. We use Adjusted EBITDA in our evaluation of funding requirements for future development and other needs. We calculate Adjusted EBITDA as net income plus income tax expense, less other income, plus loss on disposal/sale of property, plus store closure reserve, plus depreciation and amortization and plus share-based compensation expense.

The differences between Adjusted EBITDA and GAAP net income for the third quarter and year-to-date are as follows:

                              13 weeks     13 weeks    39 weeks    39 weeks

                               ended        ended       ended       ended

                              9/28/08      9/30/07     9/28/08     9/30/07

                                 (in thousands)           (in thousands)



  Net income                     $789        $732         $379      $1,430

  Income tax expense              413         608          160       1,088

  Other expense (income)           42         (90)          73        (289)

  Loss on disposal/sale of

   property                        57          66          219         116

  Store closure reversal           --         (19)         (46)        (19)

  Depreciation and

   amortization                 2,420       2,212        7,011       6,619

  Share-based compensation        529         315        1,239         889

  Adjusted EBITDA              $4,250      $3,824       $9,035      $9,834

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