Red Robin Gourmet Burgers(RRGB) - 2024 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements (unaudited) Unaudited statements show decreased assets, a widened stockholders' deficit, and a larger net loss despite positive operating cash flow Condensed Consolidated Balance Sheets | Balance Sheet Items (in thousands) | April 21, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $30,594 | $23,634 | | Total current assets | $93,268 | $91,781 | | Total assets | $717,086 | $741,934 | | Liabilities & Stockholders' Equity (Deficit) | | | | Total current liabilities | $197,643 | $186,337 | | Long-term debt | $161,961 | $182,594 | | Total liabilities | $746,187 | $762,376 | | Total stockholders' equity (deficit) | $(29,101) | $(20,442) | - Total assets decreased to $717.1 million while the total stockholders' deficit widened to $(29.1) million[10] Condensed Consolidated Statements of Operations and Comprehensive Loss | Income Statement Items (in thousands) | Q1 2024 (ended Apr 21) | Q1 2023 (ended Apr 16) | | :--- | :--- | :--- | | Total revenues | $388,541 | $417,812 | | Total costs and expenses | $390,652 | $413,631 | | Income (loss) from operations | $(2,111) | $4,181 | | Net loss | $(9,460) | $(3,256) | | Diluted loss per share | $(0.61) | $(0.20) | - Total revenues decreased to $388.5 million in Q1 2024, swinging from an operating income of $4.2 million to an operating loss of $2.1 million[13] - The total stockholders' deficit increased to $(29.1) million as of April 21, 2024, driven by a $9.5 million net loss during the quarter[17] Condensed Consolidated Statements of Cash Flows | Cash Flow Items (in thousands) | Q1 2024 (ended Apr 21) | Q1 2023 (ended Apr 16) | | :--- | :--- | :--- | | Net cash provided by operating activities | $13,734 | $17,342 | | Net cash provided by (used in) investing activities | $15,145 | $(16,084) | | Net cash used in financing activities | $(21,894) | $(1,017) | | Net change in cash, cash equivalents, and restricted cash | $6,987 | $240 | - Investing activities provided $15.1 million in cash, driven by a $23.4 million sale-leaseback transaction, while financing activities used $21.9 million for debt repayment[20] - As of April 21, 2024, the company operated 413 owned and 92 franchised restaurants[22] - A Q1 2024 sale-leaseback of ten properties generated net proceeds of $23.4 million and a net gain of $7.4 million[40] - Total term loan borrowings stood at $167.9 million as of April 21, 2024, with a variable interest rate of 11.59%[42] Management's Discussion and Analysis of Financial Condition and Results of Operations Revenues declined 7.0% due to a drop in guest count, while costs rose, leading to a lower Adjusted EBITDA and a wider net loss Highlights and Key Performance Indicators | Key Metrics | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total Revenues | $388.5 million | $417.8 million | | Comparable Restaurant Revenue | -6.5% | N/A | | Net Loss | $9.5 million | $3.3 million | | Adjusted EBITDA | $12.2 million | $35.9 million | | Restaurant Level Operating Profit | $41.5 million (11.0%) | $60.0 million (14.7%) | - The company generated net proceeds of approximately $23.4 million from a sale-leaseback of ten restaurants[68] - A total of $21.2 million of debt was repaid during the first quarter of fiscal 2024[66] Results of Operations - Revenues: Restaurant revenue decreased by 7.0% to $378.6 million, primarily due to a 6.5% decrease in comparable restaurant revenue driven by a 9.4% drop in Guest count[86] - Cost of Sales: Decreased by 70 basis points to 23.8% of restaurant revenue, driven by menu price increases and cost savings initiatives[89] - Labor Costs: Increased by 360 basis points to 39.3% of restaurant revenue due to investments in wages, benefits, and a new bonus plan[91] - Selling, General, and Administrative (SG&A): Increased by $4.9 million (14.1%), primarily driven by a $5.2 million increase in selling costs[96][98] Liquidity and Capital Resources - Total liquidity was approximately $55.6 million as of April 21, 2024, including $25.0 million available under its credit facility[103] - Net cash from operating activities decreased to $13.7 million from $17.3 million year-over-year, mainly due to lower profitability[104][105] - Q1 2024 capital expenditures were significantly reduced to $8.2 million from $16.1 million in the prior year[107] - The company was in compliance with all debt covenants as of April 21, 2024[112] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks remain interest rate fluctuations on its variable-rate debt and commodity price volatility - A 1.0% change in interest rates on its $167.9 million of variable-rate debt would impact annualized pre-tax interest expense by $1.7 million[125] - A 1.0% increase in food and beverage costs would negatively impact the annual cost of sales by approximately $2.9 million[126] Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the quarter-end[127] - No material changes to internal control over financial reporting occurred during the most recent fiscal quarter[128] PART II - OTHER INFORMATION Legal Proceedings The company faces routine litigation but believes existing reserves are adequate and outcomes will not be materially adverse - The company is subject to various claims and litigation arising in the normal course of business, including employment, guest, and commercial disputes[58] - As of April 21, 2024, the company maintained reserves of $9.2 million for loss contingencies, included within Accrued liabilities[59] Risk Factors No material changes to the risk factors disclosed in the 2023 Annual Report on Form 10-K have occurred - No material changes have occurred to the risk factors disclosed in the Annual Report on Form 10-K for fiscal year 2023[133] Unregistered Sales of Equity Securities and Use of Proceeds The company did not engage in any unregistered equity sales or share repurchases during the first quarter of fiscal 2024 - The company made no unregistered sales of equity securities and no share repurchases during the first quarter of fiscal 2024[134] Other Information No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the first quarter - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading plan during the first quarter of 2024[136] Exhibits This section lists all exhibits filed with the report, including certifications and interactive data files - The exhibits filed with this Form 10-Q include CEO and CFO certifications under Rule 13a-14(a) and Section 1350, as well as financial statements formatted in XBRL[138]