McCormick & Schmick’s Seafood Restaurants, Inc. (Nasdaq: MSSR) today
reported financial results for its second quarter ended June 27, 2009.
Financial results for the second quarter 2009 compared to the second
quarter 2008:
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Revenues decreased 7.0% to $92.7 million from $99.7 million
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Comparable restaurant sales decreased 17.3%
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Net income of $1.2 million, or $0.08 per diluted share, compared to
net income of $2.4 million, or $0.16 per diluted share
-
Pro forma net income was $1.3 million, or $0.09 per diluted share,
excluding impairment, restructuring and other charges (see attached
reconciliation to GAAP)
Revenues for the second quarter of 2009 decreased 7.0% to $92.7 million
from $99.7 million in the second 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 decrease in comparable restaurant
sales of 17.3% was a result of a 16.7% decrease in traffic, which was
coupled with a decrease in net pricing of 0.6%.
Bill Freeman, Chief Executive Officer said, “While the challenging
economic environment resulted in a decrease in comparable sales for the
quarter, we are pleased with the impact our cost savings initiatives
have had on our operating results. Throughout the second quarter we
remained focused on our efforts to contain costs while introducing new
revenue building initiatives for the future. I am encouraged by the
evolution of our marketing strategy as we focus on communicating to a
broader audience to strengthen our connectivity to our guests.”
2009 Outlook
The Company reaffirms its annual guidance of approximately $370.0
million in revenues and diluted earnings per share of $0.25-$0.30.
The Company expects its annualized effective tax rate to be between 5%
to 10% due to the projection of modest taxable income for the year in
certain taxing jurisdictions and the change in net deferred tax assets
will be insignificant.
The Company opened two new restaurants in the first quarter and did not
open any restaurants in the second quarter of 2009. The Company does not
plan to open any additional restaurants in 2009. Capital expenditures
for 2009 are expected to be approximately $8.0 million.
Conference Call
The Company will host a conference call to discuss second quarter 2009
financial results today at 5:00 PM ET. Hosting the call will be Bill
Freeman, Chief Executive Officer.
The conference call can be accessed live over the phone by dialing
888-778-9060, or, for international callers, 913-312-1473. 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 4540695. The replay will be available until Wednesday, August 19,
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 93 restaurants, including 87 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 and outlook 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 Income and Margin Analysis
(unaudited)
(in thousands, except per share data)
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|
Thirteen week period ended
|
|
|
|
|
June 28, 2008
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|
June 27, 2009
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Revenues
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|
$
|
99,699
|
|
|
100.0
|
%
|
|
$
|
92,742
|
|
|
100.0
|
%
|
|
Restaurant operating costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and beverage
|
|
|
30,038
|
|
|
30.1
|
%
|
|
|
27,517
|
|
|
29.7
|
%
|
|
Labor
|
|
|
32,095
|
|
|
32.2
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%
|
|
|
30,269
|
|
|
32.6
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%
|
|
Operating
|
|
|
15,384
|
|
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15.4
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%
|
|
|
14,158
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|
|
15.3
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%
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|
Occupancy
|
|
|
9,297
|
|
|
9.3
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%
|
|
|
9,501
|
|
|
10.2
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%
|
|
Total restaurant operating costs
|
|
|
86,814
|
|
|
87.1
|
%
|
|
|
81,445
|
|
|
87.8
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%
|
|
General and administrative expenses
|
|
|
5,138
|
|
|
5.2
|
%
|
|
|
4,947
|
|
|
5.3
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%
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|
Restaurant pre-opening costs
|
|
|
692
|
|
|
0.7
|
%
|
|
|
80
|
|
|
0.1
|
%
|
|
Depreciation and amortization
|
|
|
3,652
|
|
|
3.7
|
%
|
|
|
4,293
|
|
|
4.6
|
%
|
|
Impairment, restructuring and other charges
|
|
|
452
|
|
|
0.5
|
%
|
|
|
371
|
|
|
0.4
|
%
|
|
Total costs and expenses
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|
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96,748
|
|
|
97.0
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%
|
|
|
91,136
|
|
|
98.3
|
%
|
|
Operating income
|
|
|
2,951
|
|
|
3.0
|
%
|
|
|
1,606
|
|
|
1.7
|
%
|
|
Interest expense, net
|
|
|
87
|
|
|
0.1
|
%
|
|
|
469
|
|
|
0.5
|
%
|
|
Other expense (income), net
|
|
|
(184
|
)
|
|
(0.2
|
)%
|
|
|
13
|
|
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─
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Income before income taxes
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3,048
|
|
|
3.1
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%
|
|
|
1,124
|
|
|
1.2
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%
|
|
Income tax expense (benefit)
|
|
|
691
|
|
|
0.7
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%
|
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(64
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)
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|
(0.1
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)%
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Net income
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$
|
2,357
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|
|
2.4
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%
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$
|
1,188
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|
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1.3
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%
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Net income per share
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|
|
|
|
|
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|
|
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Basic
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|
$
|
0.16
|
|
|
|
|
|
$
|
0.08
|
|
|
|
|
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Diluted
|
|
$
|
0.16
|
|
|
|
|
|
$
|
0.08
|
|
|
|
|
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Shares used in computing net income per share
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|
|
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|
|
|
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Basic
|
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|
14,699
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|
|
|
|
|
|
14,773
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|
|
|
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Diluted
|
|
|
14,699
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|
|
|
|
|
|
14,807
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|
|
|
|
|
|
|
|
|
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Twenty-six week period ended
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June 28, 2008
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|
June 27, 2009
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Revenues
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|
$
|
192,039
|
|
|
100.0
|
%
|
|
$
|
184,636
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|
100.0
|
%
|
|
Restaurant operating costs
|
|
|
|
|
|
|
|
|
|
|
|
|
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Food and beverage
|
|
|
58,109
|
|
|
30.3
|
%
|
|
|
55,214
|
|
29.9
|
%
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|
Labor
|
|
|
62,492
|
|
|
32.5
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%
|
|
|
60,757
|
|
32.9
|
%
|
|
Operating
|
|
|
29,885
|
|
|
15.6
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%
|
|
|
28,498
|
|
15.4
|
%
|
|
Occupancy
|
|
|
18,095
|
|
|
9.4
|
%
|
|
|
18,990
|
|
10.3
|
%
|
|
Total restaurant operating costs
|
|
|
168,581
|
|
|
87.8
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%
|
|
|
163,459
|
|
88.5
|
%
|
|
General and administrative expenses
|
|
|
10,709
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|
|
5.6
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%
|
|
|
10,793
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|
5.8
|
%
|
|
Restaurant pre-opening costs
|
|
|
1,876
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|
|
1.0
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%
|
|
|
641
|
|
0.3
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%
|
|
Depreciation and amortization
|
|
|
7,047
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|
|
3.7
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%
|
|
|
8,373
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|
4.5
|
%
|
|
Impairment, restructuring and other charges
|
|
|
452
|
|
|
0.2
|
%
|
|
|
552
|
|
0.3
|
%
|
|
Total costs and expenses
|
|
|
188,665
|
|
|
98.2
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%
|
|
|
183,818
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|
99.6
|
%
|
|
Operating income
|
|
|
3,374
|
|
|
1.8
|
%
|
|
|
818
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|
0.4
|
%
|
|
Interest expense, net
|
|
|
416
|
|
|
0.2
|
%
|
|
|
847
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|
0.5
|
%
|
|
Other expense (income), net
|
|
|
(258
|
)
|
|
(0.1
|
)%
|
|
|
27
|
|
─
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|
Income (loss) before income taxes
|
|
|
3,216
|
|
|
1.7
|
%
|
|
|
(56
|
)
|
─
|
|
|
Income tax expense (benefit)
|
|
|
741
|
|
|
0.4
|
%
|
|
|
(100
|
)
|
(0.1
|
)%
|
|
Net income
|
|
$
|
2,475
|
|
|
1.3
|
%
|
|
$
|
44
|
|
─
|
|
|
Net income per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.17
|
|
|
|
|
|
$
|
0.00
|
|
|
|
|
Diluted
|
|
$
|
0.17
|
|
|
|
|
|
$
|
0.00
|
|
|
|
|
Shares used in computing net income per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
14,692
|
|
|
|
|
|
|
14,750
|
|
|
|
|
Diluted
|
|
|
14,692
|
|
|
|
|
|
|
14,763
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|
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|
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McCormick & Schmick’s Seafood Restaurants, Inc. and Subsidiaries
Reconciliation of Actual / Pro forma Net Income Per Share –
GAAP to Non-GAAP
(unaudited)
(in thousands, except per share data)
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|
Pro forma net income per share outstanding at the end of the
period is a non-GAAP measurement. The following tables reconcile
actual net income and net income per share determined in
accordance with GAAP to pro forma net income and net income per
share based on the shares outstanding at the end of the period
presented:
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|
|
|
|
Thirteen week
period ended
June 27, 2009
|
|
|
Reconciliation of GAAP to Non-GAAP items
|
|
|
|
|
|
Net income (per GAAP)
|
|
$
|
1,188
|
|
|
Income tax benefit
|
|
|
(64
|
)
|
|
Impairment, restructuring and other charges
|
|
|
371
|
|
|
Pro forma income before income taxes
|
|
|
1,495
|
|
|
Income tax expense *
|
|
|
150
|
|
|
Pro forma net income
|
|
$
|
1,345
|
|
|
Pro forma net income per share
|
|
|
|
|
|
Basic
|
|
$
|
0.09
|
|
|
Diluted
|
|
$
|
0.09
|
|
|
Shares used in computing pro forma net income per share
|
|
|
|
|
|
Basic
|
|
|
14,773
|
|
|
Diluted
|
|
|
14,807
|
|
|
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|
* The Company utilized the estimated effective annualized tax rate
of 10.0% for the calculation of pro forma income tax expense in
the presentations above.
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The Company believes this non-GAAP measurement is useful to investors
since during the periods presented the Company incurred charges that
affected the Company’s performance related to the incurrence of
impairment, restructuring and other charges. During the second quarter
the Company incurred a $371,000 net charge which includes a net charge
of $132,000 related to a restaurant closing in the second quarter of
2009 due to expiration of its lease, a net credit of $156,000 related to
the subleasing and sale of leasehold improvements in the second quarter
of 2009 of a previously closed restaurant, which we closed in June of
2008, and severance and other employee termination costs of $395,000.
ICR
Investor Relations:
Don Duffy/Raphael
Gross, 203-682-8200
or
Media:
Liz
Brady, 203-682-8200
