GREER, S.C., Oct. 19 /PRNewswire-FirstCall/ -- Ryan's Restaurant
Group, Inc. (NASDAQ:RYAN) reported third quarter 2005 results
today. Third quarter restaurant sales were $202,967,000 in 2005
compared to $205,331,000 for the comparable quarter in 2004. Net
earnings for the quarter amounted to $4,164,000 in 2005 and
$9,226,000 in 2004. Earnings per share (diluted) amounted to 10
cents in 2005 compared to 22 cents in 2004. For the nine months
ended September 28, 2005, restaurant sales amounted to $628,116,000
compared to $633,534,000 for the comparable period in 2004. Net
earnings were $22,237,000 in 2005 and $38,756,000 in 2004. Earnings
per share (diluted) were 52 cents in 2005 compared to 89 cents in
2004. Commenting on the quarter, Charles D. Way, CEO of the
Company, said "Ryan's was challenged during the third quarter with
lower sales and higher costs. Same-store sales decreased by 3.7%
during the quarter. We believe that high gasoline and utility costs
continue to adversely affect our customers' disposable income,
resulting in lower dining-out expenditures. Furthermore, third
quarter sales were impacted by Hurricanes Katrina and Rita, not
only in the areas of immediate landfall but also in many of our
other operating areas. During the quarter, we lost 243
restaurant-days, representing less than 1.0% of total available
restaurant-days, at 41 locations due to the hurricanes. Except for
three locations that are still closed, the affected restaurants
re-opened quickly and have generally enjoyed very good business
since that time due to high demand from repair and emergency crews
and returning residents. We are very grateful for the heroic
efforts of our construction and maintenance personnel and our
dedicated restaurant managers and hourly team members, many of whom
also suffered significant property loss from the hurricanes.
Restaurant sales in southern and mid-Atlantic states generally were
adversely affected by the heavy storms that resulted after the
immediate landfalls and by gasoline pricing and shortages. We
believe that these factors as well as the related extensive
television coverage decreased dining visits by our customers." "Our
third quarter's profits were also impacted by higher cost of sales,
particularly higher payroll, utility and store closing costs. Food
and beverage costs decreased compared to the prior year's
comparable quarter aided by lower beef costs, which decreased
year-over-year by 9%. However, similar to the first and second
quarters of 2005, hourly labor increased by 1% of sales as we
increased staffing at our restaurants to improve customer service
and retain sales. We also paid over $200,000 of disaster assistance
to store personnel at restaurants closed by the hurricanes. Utility
costs also continued their rise, and we saw electricity and natural
gas costs increase by a combined 0.6% of sales due to higher unit
prices and warmer temperatures. Finally, we had property
write-downs amounting to $2.6 million ($1.9 million in accelerated
depreciation and $700,000 in other restaurant expenses) during the
quarter related to five underperforming stores, which have been
closed. These write-downs were partially offset by a $700,000 net
change in the gain on sale of closed properties, which is reflected
in "Other income, net" in the accompanying financial statements."
"As we look at the remainder of 2005 and 2006, we are concerned
about the forecasted significant increases in utility costs that
have been publicized by the media and the related impact on
consumer spending. Over time we believe that consumers will adjust
their spending and eat out more often since dining- out is so
ingrained in many daily routines and represents a relatively
inexpensive form of entertainment, especially with the excellent
price/value relationship at Ryan's. Our plan for building and
retaining sales is to provide great dining experiences to our
customers so that we are top-of-mind when they choose a restaurant.
As mentioned earlier, our increased restaurant staffing levels are
designed to improve customer service. Also, we are implementing
weekend seafood nights and are aggressively continuing to add
weekend breakfast at our restaurants. We are particularly excited
about breakfast as it represents an excellent means to increase
sales at existing locations with minimal capital investment. At the
end of September, there were 38 locations serving breakfast, and
our plans call for breakfast at approximately 160 locations by
year-end." "Our plans for 2006 and 2007 focus on building sales at
existing locations. We intend to reduce the number of new
restaurants to around four new restaurants per year for these two
years so that our operations management can concentrate their
efforts on operational improvements and local marketing
initiatives. Our remodeling efforts will be slightly scaled back to
about 12 locations per year as we refine and test our conversion
designs. We are also aggressively looking for opportunities to
reduce costs, both at our restaurants and at our corporate office.
These measures should significantly increase our free cash flow,
enabling us to reduce our outstanding debt. Current projections
indicate we can reduce debt from current levels by approximately
$75 million, including scheduled debt payments, through the end of
2007. Our Board of Directors and senior management enthusiastically
endorse this plan and look forward to being well-positioned to
pursue growth opportunities in the future." Management notes that
it is continuing discussions with the Company's lenders to amend
current debt agreements in light of the Company not meeting
covenant requirements regarding the fixed charge coverage ratio
calculation. The Company was not in compliance with this ratio
requirement at the end of the second quarter, and, as anticipated
by all parties, this non-compliance continued at the end of the
third quarter. Management is optimistic that an agreement with the
Company's lenders will be reached, and that such agreement will
permit the capital expenditure plans for 2006 and 2007 as noted
above. Until the credit agreements are amended, the Company's
outstanding debt must be classified as a current liability in
accordance with generally accepted accounting principles and is
presented as such in the accompanying financial statements.
Management expects that the amendments will be executed prior to
the filing of the Company's quarterly report on Form 10-Q with the
U.S. Securities and Exchange Commission on or around November 2,
2005. At September 28, 2005, the Company owned and operated 339
restaurants, including the three locations that continue to be
closed as a result of Hurricane Katrina. In connection with this
press release, members of Ryan's executive management will be
holding a conference call with investment analysts today at 4:00
p.m. EDT. The public can listen to a live webcast of this call by
logging on to the web at http://www.ryans.com/ and following the
appropriate links. Certain matters discussed in this press release
are forward-looking statements within the meaning of the federal
securities laws and are subject to uncertainties and risks,
including, but not limited to, general economic conditions,
including consumer confidence levels; competition; developments
affecting the public's perception of buffet-style restaurants; real
estate availability; food, utility and labor supply costs; food and
labor availability; an adverse food safety event; weather
fluctuations; interest rate fluctuations; stock market conditions;
political environment (including acts of terrorism and wars); and
other such risks described from time to time in the Company's
reports filed with the Securities and Exchange Commission. RYAN'S
RESTAURANT GROUP, INC. CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited) Quarter Ended September 28, September 29, 2005 2004
Restaurant sales $202,967,000 205,331,000 Cost of sales: Food and
beverage 70,169,000 72,880,000 Payroll and benefits 68,187,000
67,455,000 Depreciation 10,524,000 8,857,000 Other restaurant
expenses 35,190,000 29,879,000 Total cost of sales 184,070,000
179,071,000 General and administrative expenses 11,270,000
10,185,000 Interest expense 2,378,000 2,598,000 Royalties from
franchised restaurants (35,000) (265,000) Other income, net
(1,127,000) (238,000) Earnings before income taxes 6,411,000
13,980,000 Income taxes 2,247,000 4,754,000 Net earnings $4,164,000
9,226,000 Net earnings per common share: Basic $ .10 .22 Diluted
.10 .22 Weighted-average shares: Basic 41,934,000 41,679,000
Diluted 42,592,000 42,849,000 RYAN'S RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) Nine Months Ended
September 28, September 29, 2005 2004 Restaurant sales $
628,116,000 633,534,000 Cost of sales: Food and beverage
219,133,000 221,653,000 Payroll and benefits 205,915,000
203,500,000 Depreciation 27,661,000 25,602,000 Other restaurant
expenses 100,654,000 88,046,000 Total cost of sales 553,363,000
538,801,000 General and administrative expenses 37,501,000
30,762,000 Interest expense 7,143,000 8,032,000 Royalties from
franchised restaurants (344,000) (951,000) Other income, net
(2,889,000) (1,697,000) Earnings before income taxes 33,342,000
58,587,000 Income taxes 11,105,000 19,831,000 Net earnings $
22,237,000 38,756,000 Net earnings per common share: Basic $ .53
.93 Diluted .52 .89 Weighted-average shares: Basic 41,941,000
41,800,000 Diluted 42,742,000 43,339,000 RYAN'S RESTAURANT GROUP,
INC. CONSOLIDATED BALANCE SHEETS September 28, December 29, 2005
2004 ASSETS (Unaudited) Current assets: Cash and cash equivalents $
11,117,000 7,354,000 Receivables 4,700,000 4,639,000 Inventories
5,663,000 5,611,000 Prepaid expenses 1,569,000 1,016,000 Deferred
income taxes 7,277,000 5,110,000 Total current assets 30,326,000
23,730,000 Property and equipment: Land and improvements
170,267,000 162,082,000 Buildings 508,584,000 480,781,000 Equipment
285,424,000 271,431,000 Construction in progress 30,923,000
31,531,000 995,198,000 945,825,000 Less accumulated depreciation
319,574,000 295,852,000 Net property and equipment 675,624,000
649,973,000 Other assets 10,593,000 10,643,000 Total assets $
716,543,000 684,346,000 LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities: Accounts payable 6,681,000 5,963,000 Current
portion of long-term debt 180,250,000 18,750,000 Income taxes
payable 2,989,000 1,842,000 Accrued liabilities 51,655,000
42,569,000 Total current liabilities 241,575,000 69,124,000
Long-term debt - 164,250,000 Other long-term liabilities 5,714,000
7,692,000 Deferred income taxes 50,826,000 47,674,000 Total
liabilities 298,115,000 288,740,000 Shareholders' equity: Common
stock of $1.00 par value; authorized 100,000,000 shares; issued
41,977,000 shares in 2005 and 41,890,000 shares in 2004 41,977,000
41,890,000 Additional paid-in capital 4,376,000 3,878,000 Retained
earnings 372,075,000 349,838,000 Total shareholders' equity
418,428,000 395,606,000 Commitments and contingencies Total
liabilities and shareholders' equity $ 716,543,000 684,346,000
RYAN'S RESTAURANT GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) Nine Months Ended September 28, September 29, 2005 2004
Cash flows from operating activities: Net earnings $ 22,237,000
38,756,000 Adjustments to reconcile net earnings to net cash
provided by operating activities: Depreciation and amortization
29,012,000 26,936,000 Loss (gain) on sale of property and equipment
(622,000) 253,000 Tax benefit from exercise of stock options
789,000 2,820,000 Deferred income taxes 985,000 252,000 Decrease
(increase) in: Receivables (61,000) 285,000 Inventories (52,000)
(338,000) Prepaid expenses (553,000) 111,000 Other assets (94,000)
(2,066,000) Increase (decrease) in: Accounts payable 718,000
2,251,000 Income taxes payable 1,147,000 2,026,000 Accrued
liabilities 9,086,000 2,051,000 Other long-term liabilities
(1,978,000) 506,000 Net cash provided by operating activities
60,614,000 73,843,000 Cash flows from investing activities:
Proceeds from sale of property and equipment 6,854,000 6,403,000
Capital expenditures (60,751,000) (51,108,000) Net cash used in
investing activities (53,897,000) (44,705,000) Cash flows from
financing activities: Repayment of senior notes (18,750,000) - Net
borrowings from (repayment of) revolving credit facility 16,000,000
(9,000,000) Proceeds from stock options exercised 1,648,000
5,360,000 Purchase of common stock (1,852,000) (18,207,000) Net
cash used in financing activities (2,954,000) (21,847,000) Net
increase in cash and cash equivalents 3,763,000 7,291,000 Cash and
cash equivalents - beginning of period 7,354,000 8,617,000 Cash and
cash equivalents - end of period $ 11,117,000 15,908,000
Supplemental disclosures Cash paid during period for: Interest, net
of amount capitalized $ 9,032,000 9,853,000 Income taxes 8,751,000
15,413,000 DATASOURCE: Ryan's Restaurant Group CONTACT: Fred T.
Grant, Jr., Senior Vice President - Finance of Ryan's Restaurant
Group, +1-864-879-1000 Web site: http://www.ryans.com/
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