Red Robin Gourmet Burgers, Inc. Reports Results for the Fiscal Second Quarter Ended July 11, 2021

Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) yesterday reported financial results for the quarter ended July 11, 2021.

Key Highlights

  • Restaurant revenue of $272.2 million and Restaurant Level Operating Profit as a percentage of restaurant revenue (a non-GAAP metric) of 15.7%;
  • Second quarter 2021 comparable restaurant revenue(1) increased 66.3% over the same period in 2020, and decreased 2.4% compared to the same period in 2019;
  • Average weekly sales per fiscal period grew by a total of $2,503 during the second quarter of 2021;
  • Off-premises sales comprised 32.8%, 63.8% and 12.5% of total food and beverage sales for the second quarters of 2021, 2020 and 2019, respectively;
  • By the end of the second fiscal quarter, restaurants that were able to operate at 100% indoor dining capacity and with full hours delivered a comparable restaurant revenue increase of 7.0% compared to 2019 and restaurant margin of 19.5%, representing an increase of 1.8% compared to 2019; and,
  • Restaurants that offered Donatos® pizza outperformed the rest of the system by 550 basis points as compared to 2019 and outperformed our original restaurant sales growth target by 250 basis points. Donatos® pizza generated sales of $2.9 million dollars in the second quarter of 2021.

Paul J. B. Murphy III, Red Robin’s President and Chief Executive Officer, said, “While we have reasons to be optimistic about the recovery, overall performance in the second quarter was below our expectation. Contributing factors included ongoing jurisdictional restrictions and challenging labor availability which resulted in reduced operating hours to ensure a quality Guest experience and reduce impact on our restaurant management teams. Notably, we generated strong sales and margins at restaurants where staffing levels supported elevated traffic compared to 2019. Specific initiatives that are addressing our staffing needs include national hiring events, technology enhancements to the application and hiring processes, and incremental hiring and training resources to grow staffing levels above 2019.”

Murphy continued, “Off-premises sales are holding at roughly a third of total sales mix, more than double pre-pandemic levels, demonstrating that Guests are enjoying the convenience of takeout and delivery even as dining room sales recover. While we continue to monitor developments regarding the COVID-19 variants, at this time we remain confident that we can capture heightened demand with full capacity, and restored staffing and operating hours, providing substantial opportunity for additional sales. Importantly, our conviction that Donatos® will be a long-term growth driver is stronger than ever, with sales exceeding expectations and positioning Red Robin to deliver annual pizza sales of over $60 million and profitability of over $25 million by 2023.”

Second Quarter 2021 Financial Summary Compared to Second Quarter 2020 and 2019

The following table presents financial highlights for the fiscal second quarter of 2021, compared to results from the same period in 2020 and 2019:

Twelve weeks
ended

Twelve weeks
ended

July 11, 2021

July 12, 2020

Change

July 14, 2019(1)

Change

Total revenues (millions)

$

277.0

$

161.1

71.9

%

$

308.0

(10.1

)%

Net (loss) income (millions)

(5.0

)

(56.3

)

(91.1

)%

1.0

*

Adjusted EBITDA (millions)(2)

$

19.0

$

(15.3

)

*

$

25.5

(25.6

)%

(Loss) income per diluted share ($ per share)

$

(0.32

)

$

(4.09

)

(95.9

)%

$

0.08

*

Adjusted (loss) income per diluted share ($ per share)(3)

$

(0.22

)

$

(3.31

)

(95.5

)%

$

1.03

*

________________________

(1)

 

Presented for improved comparability.

(2)

 

See schedule III for a reconciliation of Adjusted EBITDA, a non-GAAP measure, to net (loss) income.

(3)

 

See schedule II for a reconciliation of Adjusted (loss) income per diluted share, a non-GAAP measure, to (Loss) income per diluted share.

*  

Percentage increases and decreases over 100 percent were not considered meaningful.

Second Quarter 2021 Operating Results

Comparable restaurant revenue(1) increased 66.3% in the second quarter of 2021 compared to the same period a year ago, driven by a 47.7% increase in Guest count and a 18.6% increase in average Guest check. The increase in average Guest check resulted from a 3.0% increase in pricing, a 14.9% increase in menu mix, and a 0.7% increase from lower discounts. The increase in menu mix was primarily driven by higher sales of beverages and appetizers, partially offset by lower gourmet burger mix. Comparable restaurant revenue decreased 2.4% in the second quarter of 2021 compared to the same period of fiscal year 2019. Average weekly sales per fiscal period grew by a total of $2,503 during the second quarter of 2021.

(1)

 

Comparable restaurant revenue, representing revenue from Company-owned restaurants that have operated five full quarters as of the end of the period presented.

 
 

Twelve weeks ended

 

July 11, 2021

 

July 12, 2020

 

July 14, 2019

Average weekly sales per unit:

     

Company-owned – Total

 

$

53,135

 

$

32,287

 

$

52,907

Company-owned – Comparable

 

53,866

 

32,429

 

55,122

Franchised units – Comparable

 

$

57,416

 

$

33,835

 

$

55,580

Total operating weeks:

     

Company-owned units

 

5,122

 

4,960

 

5,716

Franchised units

 

1,212

 

1,116

 

1,075

________________________

System-wide restaurant revenue (which includes franchised restaurants) for the second quarter of 2021 totaled $341.8 million, compared to $200.4 and $366.4 million for the second quarter of 2020 and 2019, respectively.

Twelve weeks ended

July 11, 2021

 

July 12, 2020

 

July 14, 2019(1)

Restaurant sales (millions)

$

272.2

 

$

160.1

 

$

302.4

Restaurant level operating profit(2) (millions)

$

42.7

 

$

3.2

 

$

55.0

Restaurant level operating profit percentage(2)

15.7

%

 

2.0

%

 

18.2

%

________________________

(1)

 

Presented for improved comparability.

(2)

 

See schedule II for a reconciliation of Restaurant level operating profit, a non-GAAP measure, to Loss from operations.

The increase in restaurant-level operating profit(2) compared to 2020 was due to the following:

  • Restaurant revenue increased by $112.0 million, primarily driven by increased Guest traffic due to the continued lifting of jurisdictional indoor dining restrictions;
  • Cost of goods sold decreased by 140 basis points, primarily driven by pricing, favorable mix shifts, and discounts, partially offset by commodity inflation;
  • Labor costs decreased by 280 basis points, primarily driven by staffing shortages and sales leverage, partially offset by higher wage rates, staffing costs and increased restaurant management compensation costs in 2021. $1.6 million of incremental labor costs were incurred due to increased hiring ads, incremental hiring and training resources, and retention and sign-on bonuses to support our staffing initiatives;
  • Other operating expenses decreased by 440 basis points, primarily driven by lower third party delivery fees and supplies due to lower off-premises sales volumes, and sales leverage; and
  • Occupancy costs decreased by 510 basis points, primarily driven by savings from permanently closed restaurants and restructuring of lease payments, rent concessions, and sales leverage.

The decrease in restaurant-level operating profit compared to 2019 was due to the following:

  • Restaurant revenue decreased $30.2 million, primarily driven by reduced Guest traffic due to jurisdictional indoor dining restrictions, and restaurant closures;
  • Cost of goods sold decreased 110 basis points primarily driven by pricing, lower discounts, and favorable rebates, partially offset by commodity inflation;
  • Labor costs increased 120 basis points primarily driven by higher wage rates, and sales deleverage, partially offset by our new management labor structure. $1.6 million of incremental labor costs were incurred due to increased hiring ads, incremental hiring and training resources, and retention and sign-on bonuses to support our staffing initiatives;
  • Other operating expenses increased 290 basis points primarily driven by higher third party delivery fees and supplies due to higher off-premises sales volumes, and hiring costs, and sales deleverage; and
  • Occupancy costs decreased 50 basis points primarily driven by permanently closed restaurants, restructuring of lease payments and rent concessions, and fewer restaurants, partially offset by sales deleverage.

Twelve weeks ended

July 11, 2021

 

July 12, 2020

 

July 14, 2019(1)

General and administrative costs (millions)

$

17.7

 

$

14.1

 

$

21.8

General and administrative costs as a percentage of total revenues

6.4

%

 

8.8

%

 

7.1

%

(1) Presented for improved comparability.

The increase in general and administrative costs in 2021 was primarily driven by increased Team Member benefits, and temporary salary reductions in 2020, partially offset by lower professional services spend.

Twelve weeks ended

July 11, 2021

 

July 12, 2020

 

July 14, 2019(1)

Selling costs (millions)

$

10.6

 

$

5.6

 

$

13.4

Selling costs as a percentage of total revenues

3.8

%

 

3.4

%

 

4.4

%

(1) Presented for improved comparability.

The increase in selling costs in 2021 was primarily driven by lapping the significant reduction in marketing spend in 2020 due to the COVID-19 pandemic.

Balance Sheet and Liquidity

The Company made net repayments of $9.4 million on its Amended and Restated Credit Agreement (the “credit facility”) during the Second quarter of 2021. As of July 11, 2021, the Company had outstanding borrowings under its credit facility of $153.9 million, in addition to amounts issued under letters of credit of $8.6 million, and liquidity of approximately $116.9 million including cash on hand and available borrowing capacity under its credit facility.

Income Taxes

The Company has filed federal and state cash tax refund claims totaling approximately $16 million during 2021 from net operating loss carrybacks. While we expect to receive a portion of the refunds in 2021, due to government delays in processing these claims we do not expect to receive the majority until 2022.

Restaurant Portfolio

The following table details restaurant unit data for Company-owned and franchised locations for the periods indicated:

 

Twelve Weeks Ended

 

Twenty-Eight Weeks Ended

 

July 11, 2021

 

July 12, 2020

 

July 11, 2021

 

July 12, 2020

Company-owned:

       

Beginning of period

 

440

 

452

 

443

 

454

Closed during the period

 

(10

)

 

(2

)

 

(13

)

 

(4

)

End of period

 

430

 

450

 

430

 

450

Franchised:

       

Beginning of period

 

103

 

102

 

103

 

102

Closed during the period

 

(2

)

 

 

(2

)

 

End of period

 

101

 

102

 

101

 

102

Total number of restaurants

 

531

 

552

 

531

 

552

As of July 11, 2021, the Company had 430 total (comparable and non-comparable) restaurants.

Outlook for 2021 and Guidance Policy

The Company provides guidance as it relates to select information related to the Company’s financial and operating performance, and such measures may differ from year to year. Due to the uncertainty caused by the on-going COVID-19 pandemic, limited guidance is being provided for fiscal year 2021.

The Company currently expects the following in 2021:

  • Capital expenditures of $45 million to $55 million, including continued investment in maintaining our restaurants and infrastructure with maintenance and systems capital, Donatos® expansion to approximately 120 restaurants, including approximately 80 restaurants in the second half of the fiscal year, digital guest and operational technology solutions, and off-premises execution enhancements;
  • An effective tax benefit between 1% to 5%; and
  • Selling, general and administrative costs between $125 and $135 million.

About Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB)

Red Robin Gourmet Burgers, Inc. (www.redrobin.com), is 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.

RED ROBIN GOURMET BURGERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

Twelve Weeks Ended

 

Twenty-Eight Weeks Ended

 

July 11, 2021

 

July 12, 2020

 

July 11, 2021

 

July 12, 2020

Revenues:

       

Restaurant revenue

 

$

272,157

 

$

160,144

 

$

590,834

 

$

461,578

Franchise royalties, fees, and other revenue

 

4,818

 

978

 

12,416

 

5,609

Total revenues

 

276,975

 

161,122

 

603,250

 

467,187

       

Costs and expenses:

       

Restaurant operating costs (exclusive of depreciation and amortization shown separately below):

       

Cost of sales

 

61,917

 

38,780

 

131,083

 

109,206

Labor

 

98,949

 

62,742

 

210,608

 

181,308

Other operating

 

46,928

 

34,663

 

104,640

 

86,954

Occupancy

 

21,614

 

20,758

 

51,714

 

54,415

Depreciation and amortization

 

19,215

 

20,560

 

45,103

 

48,880

General and administrative

 

17,718

 

14,141

 

39,973

 

40,864

Selling

 

10,628

 

5,556

 

18,983

 

20,335

Pre-opening costs and acquisition costs

 

374

 

3

 

374

 

156

Other charges

 

2,196

 

14,501

 

7,667

 

133,880

Total costs and expenses

 

279,539

 

211,704

 

610,145

 

675,998

       

Loss from operations

 

(2,564

)

 

(50,582

)

 

(6,895

)

 

(208,811

)

       

Other expense:

       

Interest expense, net and other

 

2,786

 

1,979

 

7,116

 

5,349

       

Loss before income taxes

 

(5,350

)

 

(52,561

)

 

(14,011

)

 

(214,160

)

Income tax (benefit) provision

 

(354

)

 

3,700

 

(302

)

 

16,399

Net loss

 

$

(4,996

)

 

$

(56,261

)

 

$

(13,709

)

 

$

(230,559

)

Loss per share:

       

Basic

 

$

(0.32

)

 

$

(4.09

)

 

$

(0.88

)

 

$

(17.38

)

Diluted

 

$

(0.32

)

 

$

(4.09

)

 

$

(0.88

)

 

$

(17.38

)

Weighted average shares outstanding:

       

Basic

 

15,665

 

13,741

 

15,617

 

13,262

Diluted

 

15,665

 

13,741

 

15,617

 

13,262

RED ROBIN GOURMET BURGERS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

July 11, 2021

December 27, 2020

Assets:

Current Assets:

Cash and cash equivalents

$

25,569

$

16,116

Accounts receivable, net

11,323

16,510

Inventories

23,926

23,802

Income tax receivable

16,352

16,662

Prepaid expenses and other current assets

12,342

13,818

Total current assets

89,512

86,908

Property and equipment, net

396,746

427,033

Right of use assets, net

424,647

425,573

Intangible assets, net

23,069

24,714

Other assets, net

8,129

10,511

Total assets

$

942,103

$

974,739

Liabilities and Stockholders’ Equity:

Current Liabilities:

Accounts payable

$

31,396

$

20,179

Accrued payroll and payroll related liabilities

34,106

27,653

Unearned revenue

43,531

50,138

Current portion of lease obligations

51,022

55,275

Current portion of long-term debt

9,692

9,692

Accrued liabilities and other

44,258

39,617

Total current liabilities

214,005

202,554

Long-term debt

145,106

160,952

Long-term portion of lease obligations

457,896

465,233

Other non-current liabilities

15,933

25,287

Total liabilities

832,940

854,026

Stockholders’ Equity:

Common stock; $0.001 par value: 45,000 shares authorized; 20,449 shares issued; 15,717 and 15,548 shares outstanding as of July 11, 2021 and December 27, 2020

20

20

Preferred stock, $0.001 par value: 3,000 shares authorized; no shares issued and outstanding as of July 11, 2021 and December 27, 2020

Treasury stock, 4,732 and 4,901 shares, at cost as of July 11, 2021 and December 27, 2020

(193,039

)

(199,908

)

Paid-in capital

238,677

243,407

Accumulated other comprehensive income (loss), net of tax

16

(4

)

Retained earnings

63,489

77,198

Total stockholders’ equity

109,163

120,713

Total liabilities and stockholders’ equity

$

942,103

$

974,739

Schedule I

Reconciliation of Non-GAAP Results to GAAP Results
(In thousands, except per share data, unaudited)

In addition to the results provided in accordance with Generally Accepted Accounting Principles (“GAAP”) throughout this press release, the Company has provided non-GAAP measurements which present the twelve and twenty-eight weeks ended July 11, 2021, July 12, 2020 and July 14, 2019(1) Net (loss) income and basic and diluted loss per share, excluding the effects of goodwill impairment, restaurant asset impairment, litigation contingencies, board and stockholder matters costs, restaurant closure and refranchising costs, severance costs, COVID-19 related costs, and related income tax effects. The Company believes the presentation of net loss and loss per share exclusive of the identified item gives the reader additional insight into the ongoing operational results of the Company. This supplemental information will assist with comparisons of past and future financial results against the present financial results presented herein. Income tax effect of reconciling items was calculated based on the change in the total tax provision calculation after adjusting for the identified item. The non-GAAP measurements are intended to supplement the presentation of the Company’s financial results in accordance with GAAP.

 

Twelve Weeks Ended

 

Twenty-Eight Weeks Ended

 

July 11, 2021

 

July 12, 2020

 

July 14, 2019(1)

 

July 11, 2021

 

July 12, 2020

 

July 14, 2019(1)

Net (loss) income as reported

 

$

(4,996

)

 

$

(56,261

)

 

$

981

 

$

(13,709

)

 

$

(230,559

)

 

$

1,620

Restaurant closure and refranchising costs

 

1,752

 

7,602

 

1,001

 

4,199

 

9,008

 

1,305

Asset impairment

 

115

 

5,281

 

14,064

 

1,357

 

20,779

 

14,064

Litigation contingencies

 

85

 

 

 

1,170

 

4,500

 

COVID-19 related costs

 

244

 

651

 

 

813

 

849

 

Board and stockholder matter costs

 

 

967

 

1,152

 

128

 

2,449

 

1,152

Severance costs

 

 

 

370

 

 

881

 

2,364

Goodwill impairment

 

 

 

 

 

95,414

 

Executive retention

 

 

 

260

 

 

 

360

Income tax effect

 

(571

)

 

(3,770

)

 

(4,380

)

 

(1,993

)

 

(34,809

)

 

(5,004

)

Adjusted net (loss) income

 

$

(3,371

)

 

$

(45,530

)

 

$

13,448

 

$

(8,035

)

 

$

(131,488

)

 

$

15,861

           

(Loss) earnings per share – basic:

           

Net loss as reported

 

$

(0.32

)

 

$

(4.09

)

 

$

0.08

 

$

(0.88

)

 

$

(17.38

)

 

$

0.12

Restaurant closure and refranchising costs

 

0.11

 

0.55

 

0.07

 

0.27

 

0.68

 

0.10

Asset impairment

 

0.01

 

0.38

 

1.08

 

0.09

 

1.57

 

1.08

Litigation contingencies

 

 

 

 

0.07

 

0.34

 

COVID-19 related costs

 

0.02

 

0.05

 

 

0.05

 

0.06

 

Board and stockholder matter costs

 

 

0.07

 

0.09

 

0.01

 

0.18

 

0.09

Severance and executive transition

 

 

 

0.03

 

 

0.07

 

0.18

Executive retention

 

 

 

0.02

 

 

 

0.03

Income tax effect

 

(0.04

)

 

(0.27

)

 

(0.34

)

 

(0.13

)

 

(2.62

)

 

(0.38

)

Adjusted (loss) earnings per share – basic

 

$

(0.22

)

 

$

(3.31

)

 

$

1.03

 

$

(0.52

)

 

$

(9.91

)

 

$

1.22

           

(Loss) earnings per share – diluted:

           

Net loss as reported

 

$

(0.32

)

 

$

(4.09

)

 

$

0.08

 

$

(0.88

)

 

$

(17.38

)

 

$

0.12

Restaurant closure and refranchising costs

 

0.11

 

0.55

 

0.07

 

0.27

 

0.68

 

0.10

Asset impairment

 

0.01

 

0.38

 

1.08

 

0.09

 

1.57

 

1.08

Litigation contingencies

 

 

 

 

0.07

 

0.34

 

COVID-19 related costs

 

0.02

 

0.05

 

 

0.05

 

0.06

 

Board and stockholder matter costs

 

 

0.07

 

0.09

 

0.01

 

0.18

 

0.09

Severance and executive transition

 

 

 

0.03

 

 

0.07

 

0.18

Executive retention

 

 

 

0.02

 

 

 

0.03

Income tax effect

 

(0.04

)

 

(0.27

)

 

(0.34

)

 

(0.13

)

 

(2.62

)

 

(0.38

)

Adjusted (loss) earnings per share – diluted

 

$

(0.22

)

 

$

(3.31

)

 

$

1.03

 

$

(0.52

)

 

$

(9.91

)

 

$

1.22

           

Weighted average shares outstanding

           

Basic

 

15,665

 

13,741

 

12,970

 

15,617

 

13,262

 

12,969

Diluted

 

15,665

 

13,741

 

13,043

 

15,617

 

13,262

 

13,047

(1) Presented for improved comparability.

Schedule II

Reconciliation of Non-GAAP Restaurant-Level Operating Profit to (Loss) Income from Operations and Net (Loss) Income
(In thousands, unaudited)

The Company believes restaurant-level operating profit is an important measure for management and investors because it is widely regarded in the restaurant industry as a useful metric by which to evaluate restaurant-level operating efficiency and performance. The Company defines restaurant-level operating profit to be restaurant revenue minus restaurant-level operating costs, excluding restaurant impairment and closure costs. The measure includes restaurant-level occupancy costs that include fixed rents, percentage rents, common area maintenance charges, real estate and personal property taxes, general liability insurance, and other property costs, but excludes depreciation related to restaurant equipment, buildings, and leasehold improvements. The measure excludes depreciation and amortization expense, substantially all of which is related to restaurant-level assets, because such expenses represent historical sunk costs which do not reflect current cash outlay for the restaurants. The measure also excludes selling, general, and administrative costs, and therefore excludes costs associated with selling, general, and administrative functions, and pre-opening costs. 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 GAAP and should not be considered in isolation, or as an alternative, to loss from operations or net loss as indicators of financial performance. Restaurant-level operating profit as presented may not be comparable to other similarly titled measures of other companies in the Company’s industry. The table below sets forth certain unaudited information for the twelve and twenty-eight weeks ended July 11, 2021, July 12, 2020, and July 14, 2019(2) expressed as a percentage of total revenues, except for the components of restaurant-level operating profit that are expressed as a percentage of restaurant revenue.

Twelve Weeks Ended

Twenty-Eight Weeks Ended

July 11, 2021

July 12, 2020

July 14. 2019(2)

July 11, 2021

July 12, 2020

July 14, 2019(2)

Restaurant revenues

$272,157

98.3

%

$160,144

99.4

%

$302,418

98.2

%

$590,834

97.9

%

$461,578

98.8

%

$702,902

97.9

%

Restaurant operating costs(1):

Cost of sales

61,917

22.8

38,780

24.2

72,387

23.9

131,083

22.2

109,206

23.7

166,102

23.6

%

Labor

98,949

36.4

62,742

39.2

106,538

35.2

210,608

35.6

181,308

39.3

249,432

35.5

%

Other operating

46,928

17.2

34,663

21.6

43,000

14.3

104,640

17.7

86,954

18.8

98,565

14.0

%

Occupancy

21,614

7.9

20,758

13.0

25,458

8.4

51,714

8.8

54,415

11.8

60,478

8.6

%

Restaurant-level operating profit

42,749

15.7

%

3,201

2.0

%

55,035

18.2

%

92,789

15.6

%

29,695

6.4

%

128,823

18.3

%

Add – Franchise royalties, fees, and other revenue

4,818

1.7

%

978

0.6

%

5,563

1.8

12,416

2.1

%

5,609

1.2

%

14,945

2.1

%

Deduct – other operating:

Depreciation and amortization

19,215

6.9

20,560

12.8

21,369

6.9

45,103

7.5

48,880

10.5

49,807

6.9

%

General and administrative expenses

17,718

6.4

14,141

8.8

21,791

7.1

39,973

6.6

40,864

8.7

51,881

7.2

%

Selling

10,628

3.8

5,556

3.4

13,443

4.4

18,983

3.1

20,335

4.4

31,469

4.4

%

Pre-opening & acquisition costs

374

0.1

3

374

0.1

156

319

%

Other charges

2,196

0.8

14,501

9.0

16,847

5.5

7,667

1.3

133,880

28.7

19,245

2.7

%

Total other operating

50,131

18.1

%

54,761

34.0

%

73,450

23.8

112,100

18.6

%

244,115

52.3

%

152,721

21.3

%

Loss from operations

(2,564

)

(0.9

)%

(50,582

)

(31.4

)%

(12,852

)

(4.2

)

(6,895

)

(1.1

)%

(208,811

)

(44.7

)%

(9,451

)

(1.3

)%

Interest expense, net and other

2,786

1.0

1,979

1.2

2,153

0.7

7,116

1.2

5,349

1.1

5,391

0.8

%

Income tax (benefit) provision

(354

)

(0.1

)

3,700

2.3

(15,986

)

(5.2

)

(302

)

(0.1

)

16,399

3.5

(16,462

)

(2.3

)%

Total other

2,432

0.9

5,679

3.5

(13,833

)

(4.5

)

6,814

1.1

21,748

4.7

(11,071

)

(1.5

)%

Net (loss) income

$(4,996

)

(1.8

)%

$(56,261

)

(34.9

)%

$981

0.3

%

$(13,709

)

(2.3

)%

$(230,559

)

(49.4

)%

$1,620

0.2

%

________________________

(1)

 

Excluding depreciation and amortization, which is shown separately.

(2)

 

Presented for improved comparability.

 

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.

Schedule III

Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA
(In thousands, unaudited)

The Company defines EBITDA as net (loss) income before interest expense, income taxes, and depreciation and amortization. EBITDA and adjusted EBITDA are presented because the Company believes investors’ understanding of its performance is enhanced by including these non-GAAP financial measures as a reasonable basis for evaluating its ongoing results of operations excluding the effects of goodwill impairment, restaurant asset impairment, litigation contingencies, board and stockholder matters costs, restaurant closure and refranchising costs, severance costs, and COVID-19 related costs. EBITDA and adjusted EBITDA are supplemental measures of operating performance that do not represent and should not be considered as alternatives to net (loss) income or cash flow from operations, as determined by GAAP, and the Company’s calculation thereof may not be comparable to that reported by other companies in its industry or otherwise. Adjusted EBITDA further adjusts EBITDA to reflect the additions and eliminations shown in the table below. The use of adjusted EBITDA as a performance measure permits a comparative assessment of our operating performance relative to the Company’s performance based on its GAAP results, while isolating the effects of some items that vary from period to period without any correlation to core operating performance. Adjusted EBITDA as presented may not be comparable to other similarly-titled measures of other companies, and the Company’s presentation of adjusted EBITDA should not be construed as an inference that its future results will be unaffected by excluded or unusual items. The Company has not provided a reconciliation of its adjusted EBITDA outlook to the most comparable GAAP measure of Net (loss) income. Providing Net (loss) income guidance is potentially misleading and not practical given the difficulty of projecting event-driven transactional and other non-core operating items that are included in Net (loss) income, including asset impairments and income tax valuation adjustments. The reconciliations of adjusted EBITDA to Net (loss) income for the historical periods presented below are indicative of the reconciliations that will be prepared upon completion of the periods covered by the non-GAAP guidance.

 

Twelve Weeks Ended

 

Twenty-Eight Weeks Ended

 

July 11, 2021

 

July 12, 2020

 

July 14, 2019(1)

 

July 11, 2021

 

July 12, 2020

 

July 14, 2019(1)

Net (loss) income as reported

 

$

(4,996

)

 

$

(56,261

)

 

$

981

 

$

(13,709

)

 

$

(230,559

)

 

$

1,620

Interest expense, net

 

2,912

 

2,194

 

2,322

 

7,589

 

5,428

 

5,667

Income tax (benefit) provision

 

(354

)

 

3,700

 

(15,986

)

 

(302

)

 

16,399

 

(16,462

)

Depreciation and amortization

 

19,215

 

20,560

 

21,369

 

45,103

 

48,880

 

49,807

EBITDA

 

$

16,777

 

$

(29,807

)

 

$

8,686

 

$

38,681

 

$

(159,852

)

 

$

40,632

           

Restaurant closure and refranchising costs

 

$

1,752

 

$

7,602

 

$

1,001

 

$

4,199

 

$

9,008

 

$

1,305

Asset impairment

 

115

 

5,281

 

14,064

 

1,357

 

20,779

 

14,064

Litigation contingencies

 

85

 

 

 

1,170

 

4,500

 

COVID-19 related costs

 

244

 

651

 

 

813

 

849

 

Board and stockholder matter costs

 

 

967

 

1,152

 

128

 

2,449

 

1,152

Severance costs

 

 

 

370

 

 

881

 

2,364

Goodwill impairment

 

 

 

 

 

95,414

 

Executive retention

 

 

 

260

 

 

 

360

Adjusted EBITDA

 

$

18,973

 

$

(15,306

)

 

$

25,533

 

$

46,348

 

$

(25,972

)

 

$

59,877

(1) Presented for improved comparability.