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Ruby Tuesday, Inc. Reports Third Quarter Fiscal 2007 Results, Plans and Earnings Outlook for Remainder of Fiscal 2007 and Fiscal 2008; Changes NYSE Symbol to ''RT''

04/11/2007

MARYVILLE, Tenn.--(BUSINESS WIRE)--April 11, 2007--Ruby Tuesday, Inc. (NYSE: RI) today reported diluted earnings per share of $0.49 on net income of $28.7 million for the Company's third quarter of fiscal 2007, which ended on March 6, 2007. This compares to diluted earnings per share of $0.50 on net income of $30.2 million for the third quarter of the prior year. During the first quarter of fiscal year 2007, the Company adopted Statement of Financial Accounting Standards No. 123R "Share-Based Payment" ("SFAS 123R") on a modified prospective basis, which reduced diluted earnings per share by $0.02 in the third quarter. During the third quarter of fiscal year 2007, the Company recorded a lease-related charge associated with the bankruptcy of Specialty Restaurant Group, LLC ("SRG"), which reduced diluted earnings per share by $0.06. Excluding the impact of SFAS 123R and the charge for SRG, adjusted diluted earnings per share was $0.57 and increased 14% over the prior year. Effective at the start of trading on April 12, 2007, the Company's NYSE ticker symbol will be changed from RI to RT.

Quarterly Highlights

Same-restaurant sales for the third quarter decreased 1.0% and increased 1.8% at Company-owned and domestic franchise Ruby Tuesday restaurants, respectively, as compared to same-restaurant sales increases of 4.7% and 5.4%, respectively, in the third quarter of the prior year. The Company estimates the third quarter of fiscal 2007 was negatively impacted by approximately 0.5% due to heavier winter weather than in the same period of the prior year. From March 7, 2007 through April 3, 2007, period-to-date same-restaurant sales were down approximately 4.7% and 2.6% at Company-owned and domestic franchise restaurants, respectively, as compared to same-restaurant sales increases of 6.3% and 10.6% for the same period in the prior year. Included in March sales is an estimated 1.0% negative impact due to heavier winter weather compared to the same period of fiscal 2006.

Sandy Beall, Founder and CEO commented, "We had a good quarter. Our financial performance excluding the SRG write off was very good. Our sales, while not great, were reasonably good as compared to our competitors and our very positive same-restaurant sales last year. In addition, we made significant headway on our three key initiatives of uncompromising freshness and quality, gracious hospitality, and our remodeling / re-imaging program, that we are especially excited about, which continue to move our brand towards a high-quality casual dining restaurant.

"Our fourth quarter sales started off weaker than we would have liked, and we believe this is due to a combination of very strong same-restaurant sales performance last March where we were up 6.3% and 10.6% at Company-owned and domestic franchise restaurants, respectively, for the first four weeks, combined with weather, an even softer economic environment, and significant discount pricing by almost all of our competitors. We will continue focusing on our plans and profitability until the economic and consumer restaurant spending environment improves.

"As a result of our focused plans and strategies, we continued to create value for our shareholders. We generated solid free cash flow from our business, our normalized earnings were up 14%, and we executed on our capital structure plans resulting in significantly fewer outstanding shares - approximately 7% repurchased this quarter and almost 20% of shares repurchased over the last 18 months. Finally, we paid out a dividend which amounts to an approximate 1.7% yield on an annual basis."

    Third quarter fiscal 2007 period-to-date same-restaurant sales:
                                                                Third
                                  December  January  February  Quarter
                                  --------  -------  --------  -------
Company-owned                         2.0%    -3.8%     -1.9%    -1.0%
Domestic Franchise                    6.3%    -1.9%      0.1%     1.8%

    Other highlights for the 13-week third quarter:

    --  Total revenue increased 11.6% over the same period of the
        prior year.

    --  Average restaurant volumes at Company-owned Ruby Tuesday
        restaurants increased 0.8% over the same period of the prior
        year.

    --  The Company opened six new Ruby Tuesday restaurants during the
        quarter and acquired eleven restaurants from its South Florida
        franchisee. Eight restaurants were closed during the quarter,
        while four were sold to an existing franchisee.

    --  Domestic and international franchisees opened three new Ruby
        Tuesday restaurants during the quarter and closed one.

    --  Sales at domestic and international franchise Ruby Tuesday
        restaurants (which is the basis for determining royalty fees
        included in franchise income on the Company's income
        statement) totaled $121,725,000 and $117,444,000 for the third
        quarter of fiscal 2007 and 2006, respectively. Fiscal 2007
        sales at franchise restaurants were reduced due to the
        acquisition of the Orlando, Florida franchisee in the first
        quarter of fiscal 2007 and the South Florida franchisee at the
        beginning of the third quarter of fiscal 2007.

    --  Capital expenditures were $29.2 million for the quarter.

    --  The Company repurchased 3.9 million shares of its common stock
        during the third quarter at an average price of $28.70 per
        share. As of the end of the third quarter, 6.3 million shares
        remained authorized for repurchase under the Company's ongoing
        share repurchase program.

    --  During the first quarter of fiscal year 2007, the Company
        adopted SFAS 123R on a modified prospective basis, which
        reduced fiscal third quarter diluted earnings per share by
        $0.02.

    --  The Company had 56.1 million shares of common stock
        outstanding at the end of the quarter.

    Year-to-Date Highlights

    --  The Company opened thirty-eight new Ruby Tuesday restaurants,
        acquired twenty-eight restaurants from Florida franchisees,
        closed ten restaurants, and sold or leased seven restaurants
        to existing franchisees.

    --  Aside from the restaurants purchased from or sold to the
        Company, domestic and international franchisees opened twenty
        new Ruby Tuesday restaurants, while two were closed.

    --  Sales at domestic and international franchise Ruby Tuesday
        restaurants (which is the basis for determining royalty fees
        included in franchise income on the Company's income
        statement) totaled $353,671,000 and $330,932,000 for fiscal
        2007 and 2006, respectively. Fiscal 2007 sales at franchise
        restaurants were reduced due to the acquisition of the
        Orlando, Florida and South Florida franchisees.

    --  During the first quarter of fiscal year 2007, the Company
        adopted SFAS 123R on a modified prospective basis, which
        reduced fiscal year-to-date diluted earnings per share by
        $0.07.

    --  Year to date, including repurchases subsequent to the end of
        the third quarter of fiscal 2007, the Company has repurchased
        approximately 5.7 million shares (approximately 10% of shares
        outstanding at the end of the second fiscal quarter) of its
        common stock at an average price of $28.94 per share.

    Fiscal 2007 Guidance

The Company is targeting diluted earnings per share of $0.46 to $0.48 for its fourth quarter based on same-restaurant sales of down 2.0% to 2.5% at Company-owned restaurants, a decrease of approximately $0.03 to $0.04 per diluted share due to share-based compensation expense, and approximately $0.02 per diluted share for the accelerated depreciation associated with approximately 50 planned remodels. In addition, the Company will be lapping an approximate $0.04 impact from a 14th week in the fourth quarter of the prior year.

The Company is currently targeting diluted earnings per share of $1.59 to $1.61 for fiscal 2007 after deducting the lease-related charge of $0.06 per diluted share for SRG in the third quarter and the $0.02 charge for remodeling in the fourth quarter that was not included in previously issued guidance. Additional assumptions used to determine the targeted range include the following:

    --  Down approximately 1.0% same-restaurant sales growth at
        Company-owned restaurants for the year;

    --  Approximately 45 Company-owned openings for the year;

    --  25 to 30 franchise openings for the year;

    --  Continued investments in the areas of food and labor as
        previously disclosed;

    --  $145-$150 million in capital expenditures for the year; and

    --  Share-based compensation expense of $0.10 to $0.11 per diluted
        share.

    Preliminary Fiscal 2008 Outlook

The Company is targeting diluted earnings per share growth for its fiscal 2008 of 7.0% to 15.0%. The targeted growth excludes the impact of the SRG charge in fiscal 2007 of $0.06 as well as the impact of any potential accelerated depreciation associated with its proposed restaurant remodeling plan in fiscal 2008. Based on the results of the fourth quarter fiscal year 2007 remodeling effort, we anticipate beginning an aggressive remodeling program in fiscal year 2008. Our projections for fiscal 2008 will be reduced by the impact of the potential accelerated depreciation, projected to be $0.10 to $0.12 per diluted share, if we move forward. The following are assumptions included in the above estimate:

    --  0.0% to 2.0% same-restaurant sales growth at Company-owned
        restaurants;

    --  Approximately 30 Company-owned openings for the year;

    --  30 to 35 franchise openings for the year;

    --  $150-$160 million in capital expenditures for the year
        including $50-$60 million for the above mentioned full
        remodels of 450-500 restaurants and partial remodels of
        150-200 restaurants during the fiscal year if we move forward;
        and

    --  Continued share repurchases.

Beall commented, "We have very solid plans and strategies moving forward into fiscal 2008. These are not plans that have been thrown together quickly. They are the continuation of a set of focused strategies we have been building upon for over two years. In fiscal 2008, we will continue with more fresh, quality items on our menu; have increased focus on our team and guest experience through our gracious hospitality strategies; remodel at least half of company-owned restaurants starting with our largest markets; and continue executing on simple fresh American dining and high quality casual dining."

Ruby Tuesday, Inc. has Company-owned and/or franchise Ruby Tuesday brand restaurants in 44 states, the District of Columbia, Puerto Rico, and 13 foreign countries. As of March 6, 2007, the Company owned and operated 678 Ruby Tuesday restaurants, while domestic and international franchisees (including Hawaii) operated 196 and 52 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, this afternoon at 5:00 p.m. 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 repayments of debt, payment of dividends, stock repurchases, and restaurant and franchise acquisitions and re-franchises. 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 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, including potential increases in federally mandated minimum wage; costs and availability of food and beverage inventory; the Company's ability to attract qualified managers, franchisees and team members; changes in the availability and cost of capital; impact of adoption of new accounting standards; impact of food-borne illnesses resulting from an outbreak at either Ruby Tuesday or other restaurant concepts; effects of actual or threatened future terrorist attacks in the United States; significant fluctuations in energy prices; and general economic conditions.


RUBY TUESDAY, INC.

(Amounts in thousands except per share amounts)


                         13 Weeks           13 Weeks
                           Ended              Ended
                         March 6,  Percent  Feb. 28,  Percent  Percent
                                     of                 of
                           2007     Revenue   2006     Revenue Change
                         ------------------ ------------------ -------

Revenue:
  Restaurant sales and
   operating revenue     $374,192     99.0  $334,750     98.9
  Franchise revenue         3,748      1.0     3,893      1.1
                         ---------          ---------
Total revenue             377,940    100.0   338,643    100.0    11.6

Operating Costs and
 Expenses:
 (as a percent of
  Restaurant sales and
  operating revenue)
   Cost of merchandise    100,590     26.9    87,975     26.3
   Payroll and related
    costs                 112,416     30.0   100,589     30.0
   Other restaurant
    operating costs        66,341     17.7    58,881     17.6
   Depreciation and
    amortization           19,400      5.2    17,470      5.2
 (as a percent of Total
  revenue)
Loss from Specialty
 Restaurant Group, LLC
 bankruptcy                 5,771      1.5
Selling, general and
 administrative, net       27,191      7.2    25,299      7.5
Equity in (earnings) /
 losses of
 unconsolidated
 franchises                   (12)     0.0      (656)    (0.2)
                         ---------          ---------
Total operating costs
 and expenses             331,697            289,558
                         ---------          ---------

Earnings before Interest
 and Taxes                 46,243     12.2    49,085     14.5    (5.8)

  Interest expense, net     4,776      1.3     3,864      1.1
                         ---------          ---------

Pre-tax Profit             41,467     11.0    45,221     13.4

  Provision for income
   taxes                   12,812      3.4    15,029      4.4
                         ---------          ---------

Net Income                $28,655      7.6   $30,192      8.9    (5.1)
                         =========          =========


Earnings Per Share:
Basic                       $0.49              $0.51             (3.9)
                         =========          =========
Diluted                     $0.49              $0.50             (2.0)
                         =========          =========

Shares:
Basic                      58,124             58,395
                         =========          =========
Diluted                    58,595             59,280
                         =========          =========


                        39 Weeks            39 Weeks
                          Ended               Ended
                        March 6,   Percent  Feb. 28,  Percent  Percent
                                     of                 of
                          2007      Revenue   2006     Revenue Change
                       -------------------- ------------------ -------

Revenue:
  Restaurant sales
   and operating
   revenue             $1,042,319     98.9  $930,724     98.8
  Franchise revenue        11,099      1.1    11,204      1.2
                       -----------          ---------
Total revenue           1,053,418    100.0   941,928    100.0    11.8

Operating Costs and
 Expenses:
 (as a percent of
  Restaurant sales
  and operating
  revenue)
   Cost of
    merchandise           281,638     27.0   248,394     26.7
   Payroll and
    related costs         320,273     30.7   289,283     31.1
   Other restaurant
    operating costs       188,308     18.1   165,511     17.8
   Depreciation and
    amortization           56,775      5.4    51,878      5.6
 (as a percent of
  Total revenue)
Loss from Specialty
 Restaurant Group,
 LLC bankruptcy             6,022      0.6
Selling, general and
 administrative, net       87,515      8.3    74,763      7.9
Equity in (earnings)
 / losses of
 unconsolidated
 franchises                   626      0.1        68      0.0
                       -----------          ---------
Total operating costs
 and expenses             941,157            829,897
                       -----------          ---------

Earnings before
 Interest and Taxes       112,261     10.7   112,031     11.9     0.2

  Interest expense,
   net                     13,659      1.3     8,410      0.9
                       -----------          ---------

Pre-tax Profit             98,602      9.4   103,621     11.0

  Provision for
   income taxes            31,668      3.0    34,350      3.6
                       -----------          ---------

Net Income                $66,934      6.4   $69,271      7.4    (3.4)
                       ===========          =========


Earnings Per Share:
Basic                       $1.15              $1.13              1.8
                       ===========          =========
Diluted                     $1.14              $1.12              1.8
                       ===========          =========

Shares:
Basic                      58,353             61,167
                       ===========          =========
Diluted                    58,794             61,882
                       ===========          =========
RUBY TUESDAY, INC.

Financial Results For the Third Quarter
of Fiscal Year 2007
(Amounts in thousands)

                                               March 6,      June 6,
CONDENSED BALANCE SHEETS                         2007         2006
-----------------------------------------     -----------  -----------
Assets
   Cash and Short-Term Investments                $7,839      $22,365
   Accounts and Notes Receivable                   9,696       12,020
   Inventories                                    19,605       17,428
   Income Tax Receivable                               -          374
   Deferred Income Taxes                           3,156        2,343
   Assets Held for Disposal                       16,952       12,833
   Prepaid Rent and Other Expenses                14,631       10,977
                                              -----------  -----------

     Total Current Assets                         71,879       78,340

   Property and Equipment, Net                 1,032,946      984,127
   Goodwill, Net                                  16,935       17,017
   Notes Receivable, Net                           9,820       21,009
   Other Assets                                   70,241       71,075
                                              -----------  -----------

     Total Assets                             $1,201,821   $1,171,568
                                              ===========  ===========

Liabilities
   Current Portion of Long Term Debt,
    including
      Capital Leases                              $1,872       $1,461
   Income Tax Payable                              4,986            -
   Other Current Liabilities                     123,511      106,537
   Long-Term Debt, including Capital
    Leases                                       410,478      375,639
   Deferred Income Taxes                          43,421       49,727
   Deferred Escalating Minimum Rents              40,060       37,535
   Other Deferred Liabilities                     73,131       73,511
                                              -----------  -----------

     Total Liabilities                           697,459      644,410

Shareholders' Equity                             504,362      527,158
                                              -----------  -----------

     Total Liabilities and
     Shareholders' Equity                     $1,201,821   $1,171,568
                                              ===========  ===========

CONTACT: Ruby Tuesday, Inc.
Shannon Hepp, 865-379-5700

SOURCE: Ruby Tuesday, Inc.