McCormick & Schmick’s Seafood Restaurants, Inc. (Nasdaq: MSSR) today
reported financial results for its first quarter ended March 28, 2009.
Financial results for the first quarter 2009 compared to the first
quarter 2008:
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Revenues decreased 0.5% to $91.9 million from $92.3 million
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Comparable restaurant sales decreased 13.9%
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Incurred a net loss of $1.1 million, or $(0.08) per diluted share,
compared to net income of $0.1 million, or $0.01 per diluted share
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Incurred a pro forma net loss of $0.7 million, or $(0.05) per diluted
share, due to a restructuring charge and the normalization of the
effective tax rate (see attached reconciliation to GAAP)
Revenues for the first quarter of 2009 decreased 0.5% to $91.9 million
from $92.3 million in the first quarter of 2008. The decrease in
revenues is primarily attributable to the decline in comparable
restaurant sales, partially offset by revenue from new restaurants not
in the comparable restaurant base. The Company added two restaurants
during the first quarter of 2009 in Roseville, California and St. Louis,
Missouri.
Bill Freeman, Chief Executive Officer said, “During the first quarter of
this year, we have focused on implementing aggressive cost control
initiatives to help mitigate the impact of this challenging economic
environment. I am pleased with the initial results of these initiatives
and the effect they have had on our financial results for the quarter.
We will continue to focus in the second quarter on gaining additional
traction with the cost cutting initiatives while also exploring new
revenue building programs to improve our top line through the rest of
the year.”
2009 Outlook
The Company has affirmed its revenues guidance of approximately $370.0
million, assuming a 13% comparable restaurant sales decrease for the
full year. The Company has increased its diluted earnings per share
guidance to approximately $0.25-$0.30, compared to its prior guidance of
$0.20, primarily due to better than expected results in the first
quarter, combined with a lower expected annualized effective tax rate
for the full year. Furthermore, for every percentage point change in
annual comparable restaurant sales, the Company expects a corresponding
change in annual earnings per share of approximately $0.04 to $0.06.
The Company now expects its annualized effective tax rate to be 5% to
10%. The lower expected annualized effective income tax rate is
primarily due to the anticipated realization in 2009 of reserved FICA
tax credits and net operating loss carryforwards.
The Company opened two new restaurants in the first quarter and does not
plan to open any additional restaurants in 2009. Capital expenditures
for 2009 are expected to be approximately $8.0 million, including the
$3.1 million expended in the first quarter for the opening of the two
restaurants. Based on capital availability and economic conditions
improving, the Company may open an additional restaurant in 2009.
Conference Call
The Company will host a conference call to discuss first quarter 2009
financial results today at 5:00 PM ET. Hosting the call will be Bill
Freeman, Chief Executive Officer, and Manny Hilario, Chief Financial
Officer.
The conference call can be accessed live over the phone by dialing
888-244-2435, or, for international callers, 913-312-0852. A replay will
be available one hour after the call and can be accessed by dialing
888-203-1112, or 719-457-0820 for international callers; the conference
ID is 4150948. The replay will be available until Wednesday, May 20,
2009.
The call will be webcast live from the Company’s website at www.McCormickandSchmicks.com
under the investor relations section.
About McCormick & Schmick’s Seafood Restaurants, Inc.
McCormick & Schmick’s Seafood Restaurants, Inc. is a leading seafood
restaurant operator in the affordable upscale dining segment. The
Company now operates 94 restaurants, including 88 restaurants in the
United States and six restaurants in Canada under The Boathouse brand.
McCormick & Schmick’s has successfully grown over the past 37 years by
focusing on serving a broad selection of fresh seafood. McCormick &
Schmick’s inviting atmosphere and high quality, diverse menu offering
and compelling price-value proposition appeals to a diverse base of
casual diners, families, travelers and the business community.
Definition of Comparable Restaurant Sales
Comparable restaurant sales represent sales at all the restaurants owned
by the Company, in operation at least eighteen months from the beginning
of the period being discussed. Comparable restaurant sales exclude the
impact of currency translation. Management reviews the increase or
decrease in comparable restaurant sales with the same period in the
prior year to assess business trends.
Forward-Looking Statements
The financial guidance we provide for 2009 are forward-looking
statements. These forward-looking statements are based on information
available to us on the date of this release and we assume no obligation
to update these forward-looking statements for any reason. These
statements are subject to risks and uncertainties that could cause
actual results to differ materially from those described in the
statements. These risks and uncertainties include, but are not limited
to, the following: general economic conditions or changes in consumer
preferences or discretionary spending; changes in the availability and
costs of food; potential fluctuation in our quarterly operating results
due to seasonality and other factors; the continued service of key
management personnel; our ability to protect our name and logo and other
proprietary information; health concerns about our food products; the
impact of federal, state or local government regulations relating to our
employees and the sale of food or alcoholic beverages; the impact of
litigation; the potential effects of inclement weather or terrorist
attacks; the effect of competition in the restaurant industry; cost and
availability of capital; and other risk factors described from time to
time in SEC reports filed by McCormick & Schmick’s Seafood Restaurants,
Inc.
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McCormick & Schmick’s Seafood Restaurants, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Margin
Analysis
(unaudited)
(in thousands, except per share data)
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Thirteen week period ended
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March 29, 2008
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March 28, 2009
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Revenues
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$
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92,337
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100.0
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%
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$
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91,894
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100.0
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%
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Restaurant operating costs
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Food and beverage
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28,071
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30.4
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%
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27,696
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30.1
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%
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Labor
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30,397
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32.9
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%
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30,489
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33.2
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%
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Operating
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14,501
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15.7
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%
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14,340
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15.6
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%
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Occupancy
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8,798
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9.5
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%
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9,489
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10.3
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%
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Total restaurant operating costs
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81,767
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88.5
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%
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82,014
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89.2
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%
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General and administrative expenses
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5,569
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6.0
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%
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5,845
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6.4
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%
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Restaurant pre-opening costs
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1,184
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1.3
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%
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562
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0.6
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%
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Depreciation and amortization
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3,394
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3.7
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%
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4,080
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4.4
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%
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Restructuring charges
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—
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—
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181
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0.2
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%
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Total costs and expenses
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91,914
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99.5
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%
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92,682
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100.9
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%
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Operating income (loss)
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423
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0.5
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%
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(788
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(0.9
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)%
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Interest expense, net
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329
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0.4
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%
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378
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0.4
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%
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Other (income) expense, net
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(75
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(0.1
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)%
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14
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—
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Income (loss) before income taxes
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169
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0.2
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%
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(1,180
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)
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(1.3
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)%
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Income tax expense (benefit)
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51
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0.1
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%
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(36
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)
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—
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Net income (loss)
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$
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118
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0.1
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%
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$
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(1,144
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)
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(1.2
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)%
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Net income (loss)
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Basic and diluted
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$
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0.01
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$
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(0.08
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)
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Shares used in computing net income (loss) per share
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Basic and diluted
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14,685
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14,728
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McCormick & Schmick’s Seafood Restaurants, Inc. and Subsidiaries
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Reconciliation of Actual / Pro forma Net Loss Per Share – GAAP to
Non-GAAP
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(unaudited)
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(in thousands, except per share data)
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Pro forma net loss per share outstanding at the end of the period
is a non-GAAP measurement. The
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following table reconciles actual net loss and net loss per share
determined in accordance with GAAP to
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pro forma net loss and net loss per share based on the shares
outstanding at the end of the period:
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Thirteen week
period ended
March 28, 2009
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Reconciliation of GAAP to Non-GAAP items
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Net loss (per GAAP)
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$
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(1,144
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)
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Income tax benefit
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(36
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Restructuring charges
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181
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Pro forma net loss before income taxes
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(999
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Income tax benefit*
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267
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Pro forma net loss
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$
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(732
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Pro forma net loss per share
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Basic and diluted
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$
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(0.05)
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Shares used in computing pro forma net loss per share
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Basic and diluted
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14,728
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* Based on the weighted average effective tax rate for the fiscal
years ended December 30, 2006 and
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December 29, 2007, which Management believes is a more normalized
effective tax rate.
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Management believes this non-GAAP measurement is useful to investors
since during the quarter presented
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the Company incurred charges that affected the Company’s performance
related to an unusually low
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effective tax rate in comparison to its historical effective tax
rate and the incurrence of
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restructuring charges. A lower effective tax rate in a loss position
results in a decrease to the tax
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benefit; however, in an income position, a lower effective tax rate
results in a smaller tax expense.
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ICR
Investor Relations:
Don Duffy / Raphael
Gross, 203-682-8200
or
Media:
Liz
Brady, 203-682-8200
