Ruby Tuesday Second Quarter 2015 Revenues Down
Total revenue from continuing operations of $262.7 million compared to $276.2 million in the same quarter of the prior year, a decrease of $13.5 million, reflecting the closing of 42 restaurants since the second quarter of the prior year and a decrease in same-restaurant sales at Company-owned Ruby Tuesday restaurants.
Ruby Tuesday, Inc. (NYSE: RT) reported financial results for the fiscal second quarter ended December 2, 2014.
Results for the second quarter include:
- Total revenue from continuing operations of $262.7 million compared to $276.2 million in the same quarter of the prior year, a decrease of $13.5 million, reflecting the closing of 42 restaurants since the second quarter of the prior year and a decrease in same-restaurant sales at Company-owned Ruby Tuesday restaurants.
- Same-restaurant sales decreased 1.0% at Company-owned Ruby Tuesday restaurants compared to the same quarter of the prior year. Same-restaurant guest counts at Company-owned Ruby Tuesday restaurants were down 1.3% compared to the same quarter of the prior year.
- Net loss from continuing operations of $9.3 million compared to net loss of $34.7 million from continuing operations for the same quarter in the prior year. As shown below, excluding special items, net loss from continuing operations was $9.3 million compared to a net loss from continuing operations of $25.9 million in the same quarter of the prior year.
- Diluted loss per share from continuing operations of $0.15 compared to a diluted loss per share from continuing operations of $0.58 in the same quarter of the prior year. As shown below, excluding special items, diluted loss per share from continuing operations was $0.15 compared to a diluted loss per share from continuing operations of $0.43 in the same quarter of the prior year.
- Total book debt of $252.4 million at the end of the second quarter compared to $273.1 million at the end of the prior year second quarter, a decrease of $20.7 million.
- Ended the quarter with $48.2 million in cash on hand compared to $23.6 million at the end of the prior year quarter.
Restaurant Development
- The Company opened one and closed four Ruby Tuesday restaurants during the quarter. Domestic and international franchisees opened one and closed three Ruby Tuesday restaurants during the quarter.
- Franchisees opened one Lime Fresh restaurant during the quarter.
JJ Buettgen, Chairman of the Board, President and CEO, commented, “While our same-restaurant sales and guest count growth slowed, our same-restaurant guest count performance was in-line with the Knapp TrackTM industry benchmark. We believe one of the primary drivers of our softer results in the current quarter was the impact of lapping last year’s successful menu and value launch. We also lowered our marketing spend from prior year as we continued our efforts to make our marketing plans more cost effective. We continued to make progress on the business model by improving restaurant-level margins and reducing selling, general and administrative expense compared to last year. While our brand transformation is a journey, and near-term results may fluctuate, we remain confident in our strategy.”
Fiscal 2015 Outlook
As previously disclosed, we are not providing quarterly or annual earnings guidance for fiscal 2015. There are, however, certain items which we would like to highlight, including the following:
Third Quarter Outlook
- Same-Restaurant Sales – We estimate same-restaurant sales for the third quarter to be -2% to +1%.
Annual Outlook
- Same-Restaurant Sales – We estimate same-restaurant sales for the fiscal year to be -1% to +1%. The guidance for the year is revised from prior guidance of +1% to +2%.
- Restaurant-level Operating Margin – Estimated to be 16.0% to 17.0% of restaurant sales compared to 15.1% in fiscal 2014. The improvement is primarily due to decreases in cost of goods sold, payroll and related costs, and other restaurant operating costs associated with cost savings initiatives.
- Selling, General, and Administrative Expense – Estimated to be $127 to $130 million compared to $137.2 million in fiscal 2014. The reduction is primarily due to $5.3 million in costs incurred in 2014 for corporate restructuring and executive transition costs, and an additional $3.5 million in savings resulting from our 2014 cost reduction initiatives. We estimate that marketing expense for this fiscal year will be lower than fiscal 2014.
- Restaurant Development – During the year, we plan to open one new Company-owned Ruby Tuesday restaurant and expect to close 10 to 13 Company-owned Ruby Tuesday restaurants. Domestic franchisees expect to open two Lime Fresh restaurants and close one Ruby Tuesday restaurant. International franchisees expect to open five to eight and close three Ruby Tuesday restaurants.
- Tax – We are limited as to the amount of tax credits we can use each year based upon our taxable income for that year and cannot recognize a full benefit of any year’s currently generated tax credits or our tax credit carryforwards due to our deferred tax valuation allowance, which will remain until we generate sufficient levels of pre-tax income in the future.
- Capital Expenditures – Estimated to be $28 to $32 million for the year.
- Excess Real Estate – We expect to generate $8 to $12 million of cash proceeds for the year from the disposition of excess real estate.
Non-GAAP Earnings Reconciliation
The Company believes excluding special items from its financial results provides investors with a clearer understanding of the Company’s ongoing operating performance and comparison to prior-period results.
Ruby Tuesday, Inc. | |||||||||||||||||||||||||||||
Reconciliation of Net Loss from Continuing Operations Excluding Special Items | |||||||||||||||||||||||||||||
(Amounts in thousands except per share amounts) | |||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||
13 Weeks | 13 Weeks | 26 Weeks | 26 Weeks | ||||||||||||||||||||||||||
Ended | Ended | Ended | Ended | ||||||||||||||||||||||||||
December 2, | December 3, | December 2, | December 3, | ||||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||||||
Net Loss from Continuing Operations | $ | (9,273 | ) | $ | (34,737 | ) | $ | (6,708 | ) | $ | (56,636 | ) | |||||||||||||||||
Closure and Impairment (net of tax) (1) | - | 5,009 | - | 5,232 | |||||||||||||||||||||||||
Executive Transition (net of tax) (2) | - | 322 | - | 749 | |||||||||||||||||||||||||
Debt Prepay Penalties & Deferred Financing Fee Write-Offs (net of tax) | - | 1,167 | - | 1,167 | |||||||||||||||||||||||||
Severance and Other Corporate Restructure Costs (net of tax) | - | 2,324 | 3,384 | ||||||||||||||||||||||||||
Income Tax Valuation Allowance (3) | - | - | (3,174 | ) | - | ||||||||||||||||||||||||
Net Loss from Continuing Operations Excluding Special Items | $ | (9,273 | ) | $ | (25,915 | ) | $ | (9,882 | ) | $ | (46,104 | ) | |||||||||||||||||
Diluted Loss Per Share from Continuing Operations | $ | (0.15 | ) | $ | (0.58 | ) | $ | (0.11 | ) | $ | (0.94 | ) | |||||||||||||||||
Closure and Impairment (net of tax) (1) | - | 0.08 | - | 0.09 | |||||||||||||||||||||||||
Executive Transition (net of tax) (2) | - | 0.01 | - | 0.01 | |||||||||||||||||||||||||
Debt Prepay Penalties & Deferred Financing Fee Write-Offs (net of tax) | - | 0.02 | - | 0.02 | |||||||||||||||||||||||||
Severance and Other Corporate Restructure Costs (net of tax) | - | 0.04 | - | 0.05 | |||||||||||||||||||||||||
Income Tax Valuation Allowance (3) | - | - | (0.05 | ) | - | ||||||||||||||||||||||||
Diluted Loss Per Share from Continuing Operations Excluding Special Items | $ | (0.15 | ) | $ | (0.43 | ) | $ | (0.16 | ) | $ | (0.77 | ) | |||||||||||||||||
(1) Includes impairments, lease reserves, and other closing cost adjustments resulting from various publicly announced restaurant closures. | |||||||||||||||||||||||||||||
(2) Includes search fees, signing and retention bonuses, relocation, and travel-related expenses resulting from Executive transitions. | |||||||||||||||||||||||||||||
(3) Represents an immaterial prior period correction to our deferred tax valuation allowance. | |||||||||||||||||||||||||||||
ABOUT RUBY TUESDAY
Ruby Tuesday, Inc. has 744 Company-owned and/or franchise Ruby Tuesday brand restaurants in 44 states, 13 foreign countries, and Guam, in addition to 28 Company-owned and/or franchise Lime Fresh brand restaurants in six states and the District of Columbia. As of December 2, 2014, we owned and operated 663 Ruby Tuesday restaurants and franchised 81 Ruby Tuesday restaurants, comprised of 30 domestic and 51 international restaurants. We also owned and operated 20 Lime Fresh restaurants and franchised eight Lime Fresh 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.
Ruby Tuesday, Inc. is traded on the New York Stock Exchange (Symbol: RT).
RUBY TUESDAY, INC. | ||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Results For the Second Quarter of Fiscal Year 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||
(Amounts in thousands except per share amounts) | ||||||||||||||||||||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||||||||||||||||||||||||||||||||
13 Weeks | 13 Weeks | 26 Weeks | 26 Weeks | |||||||||||||||||||||||||||||||||||||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||||||||||||||||||||||||||||||||||||
December 2, | Percent | December 3, | Percent | December 2, | Percent | December 3, | Percent | |||||||||||||||||||||||||||||||||||||||||||
2014 | of Revenue | 2013 | of Revenue | 2014 | of Revenue | 2013 | of Revenue | |||||||||||||||||||||||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Restaurant sales and operating revenue | $ | 261,206 | 99.4 | $ | 274,719 | 99.5 | $ | 540,663 | 99.4 | $ | 562,811 | 99.5 | ||||||||||||||||||||||||||||||||||||||
Franchise revenue | 1,453 | 0.6 | 1,490 | 0.5 | 3,178 | 0.6 | 3,072 | 0.5 | ||||||||||||||||||||||||||||||||||||||||||
Total Revenue | 262,659 | 100.0 | 276,209 | 100.0 | 543,841 | 100.0 | 565,883 | 100.0 | ||||||||||||||||||||||||||||||||||||||||||
Operating Costs and Expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||
(as a percent of Restaurant sales and operating revenue) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cost of goods sold | 71,646 | 27.4 | 77,669 | 28.3 | 146,793 | 27.2 | 157,607 | 28.0 | ||||||||||||||||||||||||||||||||||||||||||
Payroll and related costs | 93,964 | 36.0 | 97,517 | 35.5 | 189,806 | 35.1 | 200,250 | 35.6 | ||||||||||||||||||||||||||||||||||||||||||
Other restaurant operating costs | 60,097 | 23.0 | 65,289 | 23.8 | 119,896 | 22.2 | 132,823 | 23.6 | ||||||||||||||||||||||||||||||||||||||||||
Restaurant Level Margin (excludes franchise revenue) | 35,499 | 13.6 | 34,244 | 12.5 | 84,168 | 15.6 | 72,131 | 12.8 | ||||||||||||||||||||||||||||||||||||||||||
Depreciation | 12,538 | 4.8 | 13,915 | 5.1 | 25,196 | 4.7 | 28,124 | 5.0 | ||||||||||||||||||||||||||||||||||||||||||
(as a percent of Total revenue) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Selling, general and administrative, net | 27,292 | 10.4 | 37,031 | 13.4 | 58,193 | 10.7 | 74,046 | 13.1 | ||||||||||||||||||||||||||||||||||||||||||
Closures and impairments, net | 1,075 | 0.4 | 14,143 | 5.1 | 2,557 | 0.5 | 22,176 | 3.9 | ||||||||||||||||||||||||||||||||||||||||||
Total operating costs and expenses | 266,612 | 305,564 | 542,441 | 615,026 | ||||||||||||||||||||||||||||||||||||||||||||||
(Loss)/Earnings From Operations | (3,953 | ) | (1.5 | ) | (29,355 | ) | (10.6 | ) | 1,400 | 0.3 | (49,143 | ) | (8.7 | ) | ||||||||||||||||||||||||||||||||||||
Interest expense, net | 5,915 | 2.3 | 6,620 | 2.4 | 11,337 | 2.1 | 13,373 | 2.4 | ||||||||||||||||||||||||||||||||||||||||||
Loss on extinguishment of debt | - | 0.0 | 672 | 0.2 | - | 0.0 | 1,183 | 0.2 | ||||||||||||||||||||||||||||||||||||||||||
Pre-tax loss from continuing operations | (9,868 | ) | (3.8 | ) | (36,647 | ) | (13.3 | ) | (9,937 | ) | (1.8 | ) | (63,699 | ) | (11.3 | ) | ||||||||||||||||||||||||||||||||||
Benefit for income taxes from continuing operations | (595 | ) | (0.2 | ) | (1,910 | ) | (0.7 | ) | (3,229 | ) | (0.6 | ) | (7,063 | ) | (1.2 | ) | ||||||||||||||||||||||||||||||||||
Net Loss from Continuing Operations | (9,273 | ) | (3.5 | ) | (34,737 | ) | (12.6 | ) | (6,708 | ) | (1.2 | ) | (56,636 | ) | (10.0 | ) | ||||||||||||||||||||||||||||||||||
Income from discontinued operations, net of tax | 0 | 0.0 | 354 | 0.1 | 0 | 0.0 | 11 | 0.0 | ||||||||||||||||||||||||||||||||||||||||||
Net Loss | $ | (9,273 | ) | (3.5 | ) | $ | (34,383 | ) | (12.4 | ) | $ | (6,708 | ) | (1.2 | ) | $ | (56,625 | ) | (10.0 | ) | ||||||||||||||||||||||||||||||
Basic Loss Per Share: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Loss from continuing operations | $ | (0.15 | ) | $ | (0.58 | ) | $ | (0.11 | ) | $ | (0.94 | ) | ||||||||||||||||||||||||||||||||||||||
Income from discontinued operations | - | 0.01 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Basic Net Loss Per Share | $ | (0.15 | ) | $ | (0.57 | ) | $ | (0.11 | ) | $ | (0.94 | ) | ||||||||||||||||||||||||||||||||||||||
Diluted Loss Per Share: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Loss from continuing operations | $ | (0.15 | ) | $ | (0.58 | ) | $ | (0.11 | ) | $ | (0.94 | ) | ||||||||||||||||||||||||||||||||||||||
Income from discontinued operations | - | 0.01 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Diluted Net Loss Per Share | $ | (0.15 | ) | $ | (0.57 | ) | $ | (0.11 | ) | $ | (0.94 | ) | ||||||||||||||||||||||||||||||||||||||
Shares: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Basic | 60,534 | 60,196 | 60,476 | 60,111 | ||||||||||||||||||||||||||||||||||||||||||||||
Diluted | 60,534 | 60,196 | 60,476 | 60,111 | ||||||||||||||||||||||||||||||||||||||||||||||
RUBY TUESDAY, INC. | ||||||||||||||
| ||||||||||||||
Financial Results For the Second Quarter | ||||||||||||||
of Fiscal Year 2015 | ||||||||||||||
(Amounts in thousands) | ||||||||||||||
(Unaudited) | ||||||||||||||
December 2, | June 3, | |||||||||||||
CONDENSED BALANCE SHEETS | 2014 | 2014 | ||||||||||||
Assets | ||||||||||||||
Cash and Cash Equivalents | $ | 48,170 | $ | 51,326 | ||||||||||
Receivables | 5,631 | 4,861 | ||||||||||||
Inventories | 26,720 | 21,174 | ||||||||||||
Income Tax Receivable | 3,174 | 2,133 | ||||||||||||
Deferred Income Taxes | - | 3,397 | ||||||||||||
Prepaid Rent and Other Expenses | 12,659 | 12,216 | ||||||||||||
Assets Held for Sale | 7,075 | 4,683 | ||||||||||||
Total Current Assets | 103,429 | 99,790 | ||||||||||||
Property and Equipment, Net | 771,826 | 794,846 | ||||||||||||
Other Assets | 59,460 | 61,791 | ||||||||||||
Total Assets | $ | 934,715 | $ | 956,427 | ||||||||||
Liabilities | ||||||||||||||
Current Portion of Long Term Debt, including | ||||||||||||||
Capital Leases | $ | 4,506 | $ | 4,816 | ||||||||||
Deferred Income Taxes | 58 | - | ||||||||||||
Other Current Liabilities | 104,436 | 109,007 | ||||||||||||
Total Current Liabilities | 109,000 | 113,823 | ||||||||||||
Long-Term Debt, including Capital Leases | 247,915 | 253,875 | ||||||||||||
Deferred Income Taxes | 2,224 | 3,500 | ||||||||||||
Deferred Escalating Minimum Rents | 49,742 | 48,827 | ||||||||||||
Other Deferred Liabilities | 66,503 | 75,193 | ||||||||||||
Total Liabilities | 475,384 | 495,218 | ||||||||||||
Shareholders’ Equity | 459,331 | 461,209 | ||||||||||||
Total Liabilities and | ||||||||||||||
Shareholders’ Equity | $ | 934,715 | $ | 956,427 |