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Ruby Tuesday, Inc. Reports Third Quarter Diluted Earnings Per Share of $0.50 on Positive Same-Restaurant Sales of 4.7% at Company-Owned Ruby Tuesday Restaurants, Increases Fourth Quarter Guidance, and Provides Outlook for Fiscal 2007

03/29/2006

MARYVILLE, Tenn.--(BUSINESS WIRE)--March 29, 2006--Ruby Tuesday, Inc. (NYSE: RI) today reported diluted earnings per share of $0.50 on net income of $30.2 million for the Company's third quarter of fiscal 2006 ended February 28, 2006. This represents a 19% increase compared to $0.42 per diluted share on net income of $27.5 million for the third quarter of the prior year.

Same-restaurant sales at Company-owned Ruby Tuesday restaurants increased 4.7% for the quarter, while same-restaurant sales at domestic franchise Ruby Tuesday restaurants increased 5.4% during the third quarter.

For the first four weeks of the fourth quarter, same-restaurant sales at Company-owned Ruby Tuesday restaurants increased 6.0-6.5%, while same-restaurant sales at domestic franchise Ruby Tuesday restaurants increased 9.5-10.0%.

Third quarter and March period-to-date fiscal 2006 monthly period same-restaurant sales:


                                                      Third
                   December  January(a) February(a)  Quarter   March
Company-owned         3.9%      9.5%       1.5%       4.7%    6.0-6.5%
Domestic Franchise    4.0%      8.0%       4.5%       5.4%   9.5-10.0%

(a) - As others in the industry have previously reported, January
period same-restaurant sales benefited from more favorable weather
year over year, while February period same-restaurant sales were
negatively impacted from more severe weather this year as compared to
the same period in the prior year.
    Other highlights for the third quarter include:

    --  Total revenue increased 17.1% over the same period of the
        prior year.

    --  Average restaurant volumes at Company-owned Ruby Tuesday
        restaurants increased 4.5% over the same period of the prior
        year.

    --  The Company opened 10 new Ruby Tuesday restaurants during the
        quarter, while none were closed.

    --  Franchisees opened 5 new Ruby Tuesday restaurants during the
        quarter, while two were closed; one domestic restaurant due to
        lease expiration and one international.

    --  Sales at franchise Ruby Tuesday restaurants (which is the
        basis for determining royalty fees included in franchise
        income on the Company's income statement) totaled $117,444,000
        and $102,614,000 for the third quarter of fiscal 2006 and
        2005, respectively.

    --  Capital expenditures were $40.1 million for the quarter.

    --  Total management turnover (including management trainees) was
        17% for the quarter.

    --  The Company repurchased 2.3 million shares of its common stock
        during the third quarter at an average price of $25.99 per
        share. As of the end of the third quarter, 6.2 million shares
        remained authorized for share repurchase under the Company's
        ongoing share repurchase program.

    --  The Company had 58.5 million shares of common stock
        outstanding at the end of the quarter.

    Year-to-Date Highlights

    --  Forty-five Company-owned Ruby Tuesday restaurants were opened
        and five were closed at or near lease expiration.

    --  Twenty-three franchise restaurants were opened and six were
        closed.

    --  Sales at franchise Ruby Tuesday restaurants (which is the
        basis for determining royalty fees included in franchise
        income on the Company's income statement) totaled $330,932,000
        and $321,269,000 for third quarter year-to-date of fiscal 2006
        and fiscal 2005, respectively. The Company reminds investors
        that 44 restaurants were acquired by the Company from
        franchisees subsequent to the first quarter of the prior year.

    --  Total annualized management turnover (including management
        trainees) was 20% as of the end of the quarter.

    --  The Company repurchased 6.8 million shares (approximately 11%)
        of its common stock through the end of the third quarter of
        fiscal 2006 at an average price of $23.42.

Sandy Beall, Founder, Chairman and CEO commented, "We are extremely pleased with the results from our investments in the business - positive guest counts, sales, and earnings after a year of investing heavily in the business and transitioning from a coupon based marketing strategy to one based on television advertising. We are excited about experiencing consistent same-restaurant sales growth since our September period, despite the consumer environment remaining somewhat challenging with several pressures having impacted the middle income consumer over the last six to nine months. We believe our transition to a media-based marketing strategy in conjunction with the investments we have made in other areas of our business has certainly better positioned us for continued same-restaurant sales and earnings growth. We remain committed to continuing to invest in our business and display the capital discipline that will result in future value creation for our shareholders."

Fiscal 2006 Guidance

For the first four weeks of the Company's fourth quarter, same-restaurant sales at Company-owned Ruby Tuesday restaurants increased 6.0-6.5% while same-restaurant sales at domestic franchise Ruby Tuesday restaurants increased 9.5-10.0%. The Company estimates that period-to-date Company-owned March same-restaurant sales have been positively impacted by approximately 1.5% due to the timing of the Easter holiday, which will occur in the Company's April period this year as compared to its March period in fiscal 2005. For the fourth quarter of fiscal 2006, the Company increased its diluted earnings per share growth projection from approximately 20.0-22.5% to 25-30% diluted earnings per share growth. The Company's guidance for fourth quarter is based on same-restaurant sales growth of 3.5-4.5% at Company-owned Ruby Tuesday restaurants. The Company reminds investors that fiscal 2006 is a 53 week year and, as such, its fourth quarter will contain 14 weeks as opposed to 13 weeks in the prior year.

During the fourth quarter, the Company anticipates opening 10-12 additional Company-owned restaurants and anticipates its franchisees will also open 10-12 additional Ruby Tuesday restaurants. Thus, for fiscal 2006, the Company anticipates 55-57 Company-owned openings with capital expenditures of approximately $175 million for the year. In addition, the Company anticipates its franchisees will open 33-35 Ruby Tuesday restaurants during fiscal 2006.

Fiscal 2007 Guidance

Beginning with the first quarter of fiscal 2007, the Company will be adopting Statement of Financial Accounting Standards No. 123R, "Share-Based Payment" ("SFAS 123R"). The impact of this on fiscal 2007 diluted earnings per share is estimated to be $0.10 to $0.12. Excluding the impact of stock compensation expense, the Company is targeting diluted earnings per share growth within the lower end of the Company's long-term goal of 12.5-15% for fiscal 2007 as it will be overlapping a 53-week year in fiscal 2006 (without the positive impact from the 53-week year in fiscal 2006, the Company's target for diluted earnings per share growth for fiscal 2007 would be slightly in excess of its long-term growth goal of 12.5-15%). The following are assumptions included in the above estimate:

    --  3.0-4.0% same-restaurant sales growth at Company-owned
        restaurants

    --  45 to 50 Company-owned openings for the year

    --  Approximately 40 franchise openings for the year

    --  $140-$150 million in capital expenditures for the year

    --  Continued future investments in the areas of food and labor

Beall commented, "We feel very good about the plans and strategies we have in place to achieve our overall goal of growing diluted earnings per share consistently in the 12.5-15% range with 3.0-4.0% coming from same-restaurant sales growth, 6-8% coming from new restaurant development and 3-6% coming from a combination of franchise growth, margin leverage and our share repurchase program. On top of our projected annual 12.5-15% earnings per share growth goal, we still anticipate committing to return a higher portion of our excess cash flow through increased dividends to further enhance long-term shareholder value. It is a challenging environment, however, we believe our brand, menu, operations and marketing continue to get stronger and build momentum."

Ruby Tuesday, Inc. has Company-owned, and/or franchise Ruby Tuesday brand restaurants in 42 states, the District of Columbia, Puerto Rico, and 13 foreign countries. As of February 28, 2006, the Company owned and operated 619 Ruby Tuesday restaurants, while domestic and international franchisees (including Hawaii) operated 200 and 43 restaurants, respectively. Ruby Tuesday, Inc. is traded on the New York Stock Exchange (Symbol: RI).

The Company will host a conference call which will be a live web-cast tomorrow morning at 8:30 Eastern Time. The call will be available live at the following websites:

    http://www.rubytuesday.com
    http://www.fulldisclosure.com

    Special Note Regarding Forward-Looking Information

This press release contains various "forward-looking statements," which represent the Company's expectations or beliefs concerning future events, including one or more of the following: future financial performance and restaurant growth (both Company-owned and franchised), future capital expenditures, future borrowings and repayment of debt, payment of dividends, stock repurchase, and restaurant and franchise acquisitions. The Company cautions the reader that a number of important factors and uncertainties could, individually or in the aggregate, cause actual results to differ materially from those included in the forward-looking statements, including, without limitation, the following: changes in promotional, couponing and advertising strategies; guests' acceptance of changes in menu items; changes in our guests' disposable income; consumer spending trends and habits; mall-traffic trends; increased competition in the casual dining restaurant market; weather conditions in the regions in which Company-owned and franchised restaurants are operated; guests' acceptance of the Company's development prototypes; laws and regulations affecting labor and employee benefit costs; costs and availability of food and beverage inventory; the Company's ability to attract qualified managers, franchisees and team members; changes in the availability of capital; impact of adoption of new accounting standards; effects of actual or threatened future terrorist attacks in the United States; significant fluctuations in energy prices; and general economic conditions.

RUBY TUESDAY, INC.

Financial Results For the Third Quarter of Fiscal Year 2006
(Amounts in thousands except per share amounts)

                             13 Weeks         13 Weeks
                               Ended            Ended
                             February  Percent  March  Percent
                                28,      of       1,     of    Percent
                               2006    Revenue   2005  Revenue  Change
                              ------- -------- ------- ------- -------
Revenue:
Restaurant sales and
 operating revenue           $334,750   98.9  $285,552   98.8
Franchise revenue               3,893    1.1     3,611    1.2
                              --------         --------
Total revenue                 338,643  100.0   289,163  100.0   17.1

Operating Costs and
 Expenses:
(as a percent of Restaurant
 sales and operating
 revenue)
Cost of merchandise            87,975   26.3    74,244   26.0
Payroll and related costs     100,589   30.0    88,245   30.9
Other restaurant operating
 costs                         58,881   17.6    48,529   17.0
Depreciation and
 amortization                  17,470    5.2    16,906    5.9
(as a percent of Total
 revenue)
Selling, general and
 administrative, net           25,299    7.5    19,879    6.9
Equity in (earnings)/losses
 of unconsolidated
 franchises                      (656)  (0.2)     (836)  (0.3)
                              --------         --------
Total operating costs and
 expenses                     289,558          246,967
                              --------         --------

Earnings before Interest and
 Taxes                         49,085   14.5    42,196   14.6   16.3

Interest expense, net           3,864    1.1     1,361    0.5
                              --------         --------

Pre-tax Profit                 45,221   13.4    40,835   14.1

Provision for income taxes     15,029    4.4    13,295    4.6
                              --------         --------

Net Income                   $ 30,192    8.9  $ 27,540    9.5    9.6
                              ========         ========



Earnings Per Share:
Basic                        $   0.51         $   0.43          18.6
                              ========         ========
Diluted                      $   0.50         $   0.42          19.0
                              ========         ========

Shares:
Basic                          58,395           64,168
                              ========         ========
Diluted                        59,280           65,063
                              ========         ========


                             39 Weeks         39 Weeks
                               Ended            Ended
                             February  Percent  March  Percent
                                28,      of       1,     of    Percent
                               2006    Revenue  2005   Revenue  Change
                              -------  ------- ------- ------- -------

Revenue:
Restaurant sales and
 operating revenue           $930,724   98.8  $803,070   98.5
Franchise revenue              11,204    1.2    11,834    1.5
                              --------         --------
Total revenue                 941,928  100.0   814,904  100.0    15.6

Operating Costs and
 Expenses:
(as a percent of Restaurant
 sales and operating
 revenue)
Cost of merchandise           248,394   26.7   208,287   25.9
Payroll and related costs     289,283   31.1   249,437   31.1
Other restaurant operating
 costs                        165,511   17.8   138,330   17.2
Depreciation and
 amortization                  51,878    5.6    49,312    6.1
(as a percent of Total
 revenue)
Selling, general and
 administrative, net           74,763    7.9    52,408    6.4
Equity in (earnings)/losses
 of unconsolidated
 franchises                        68    0.0    (2,381)  (0.3)
                              --------         --------
Total operating costs and
 expenses                     829,897          695,393
                              --------         --------

Earnings before Interest and
 Taxes                        112,031   11.9   119,511   14.7    (6.3)

Interest expense, net           8,410    0.9     3,120    0.4
                              --------         --------

Pre-tax Profit                103,621   11.0   116,391   14.3

Provision for income taxes     34,350    3.6    40,050    4.9
                              --------         --------

Net Income                   $ 69,271    7.4  $ 76,341    9.4    (9.3)
                              ========         ========



Earnings Per Share:
Basic                        $   1.13         $   1.18           (4.2)
                              ========         ========
Diluted                      $   1.12         $   1.16           (3.4)
                              ========         ========

Shares:
Basic                          61,167           64,672
                              ========         ========
Diluted                        61,882           65,742
                              ========         ========
RUBY TUESDAY, INC.

Financial Results For the Third Quarter
of Fiscal Year 2006
(Amounts in thousands)

                                            February 28,      May 31,
CONDENSED BALANCE SHEETS                        2006           2005
----------------------------------------    ------------   -----------
Assets
   Cash and Short-Term Investments               $9,844       $19,787
   Accounts and Notes Receivable                 12,448         7,627
   Inventories                                   17,404        16,988
   Deferred Income Taxes                          1,625         2,490
   Assets Held for Sale                           7,606         5,342
   Prepaid Rent and Other Expenses               10,966        10,180
                                             -----------   -----------

     Total Current Assets                        59,893        62,414

   Property and Equipment, Net                  971,154       901,142
   Goodwill, Net                                 17,017        17,017
   Notes Receivable, Net                         22,476        24,589
   Other Assets                                  71,261        68,905
                                             -----------   -----------

     Total Assets                            $1,141,801    $1,074,067
                                             ===========   ===========

Liabilities
   Current Portion of Long-Term Debt,
    including Capital Leases                     $1,794        $2,326
   Other Current Liabilities                    104,131        97,487
   Long-Term Debt, including Capital
    Leases                                      367,323       247,222
   Deferred Income Taxes                         47,365        50,825
   Deferred Escalating Minimum Rents             37,863        37,471
   Other Deferred Liabilities                    77,694        75,513
                                             -----------   -----------

     Total Liabilities                          636,170       510,844

Shareholders' Equity                            505,631       563,223
                                             -----------   -----------

     Total Liabilities and
       Shareholders' Equity                  $1,141,801    $1,074,067
                                             ===========   ===========

    CONTACT: Ruby Tuesday, Inc., Maryville
             Price Cooper, 865-379-5700

    SOURCE: Ruby Tuesday, Inc.