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Item 1. Financial Statements

2024-11-06 compared with 2024-08-22 · 98 added, 67 removed, 356 unchanged (32% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except for per share amounts) July 14, 2024 December 31, 2023

(in thousands, except for per share amounts) October 6, 2024 December 31, 2023

Current assets:

29 unchanged sentences

20,449 shares issued;

15,755 and 15,528 shares outstanding as of July 14, 2024 and December 31, 2023

15,779 and 15,528 shares outstanding as of October 6, 2024 and December 31, 2023

Preferred stock, $ 0.001 par value:

3,000 shares authorized;

no shares issued and outstanding as of July 14, 2024 and December 31, 2023

Treasury stock 4,694 and 4,921 shares, at cost, as of July 14, 2024 and December 31, 2023

no shares issued and outstanding as of October 6, 2024 and December 31, 2023

Treasury stock 4,670 and 4,921 shares, at cost, as of October 6, 2024 and December 31, 2023

( 165,747 ) ( 174,702 )

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Twelve Weeks Ended Twenty-Eight Weeks Ended

(in thousands, except for per share amounts) July 14, 2024 July 9, 2023 July 14, 2024 July 9, 2023

Twelve Weeks Ended Forty Weeks Ended

(in thousands, except for per share amounts) October 6, 2024 October 1, 2023 October 6, 2024 October 1, 2023

Restaurant revenue $ 270,605 $ 273,133 $ 943,630 $ 973,307

18 unchanged sentences

( 225 ) ( 158 ) ( 676 ) ( 814 )

Income (loss) before income taxes

( 9,529 ) 4,078 ( 18,808 ) 840

Loss before income taxes ( 18,974 ) ( 7,883 ) ( 37,782 ) ( 7,043 )

Income tax provision (benefit)

( 98 ) 278 43 453

Net income (loss) $ ( 9,489 ) $ 3,922 $ ( 18,949 ) $ 664

Income (loss) per share:

Net loss $ ( 18,876 ) $ ( 8,161 ) $ ( 37,825 ) $ ( 7,496 )

Loss per share:

Basic $ ( 1.20 ) $ ( 0.52 ) $ ( 2.42 ) $ ( 0.47 )

6 unchanged sentences

Other comprehensive income (loss), net of tax 3 ( 12 ) ( 12 ) 1

Total comprehensive income (loss) $ ( 9,485 ) $ 3,926 $ ( 18,963 ) $ 675

Total comprehensive loss $ ( 18,873 ) $ ( 8,173 ) $ ( 37,837 ) $ ( 7,495 )

See Notes to Condensed Consolidated Financial Statements.

17 unchanged sentences

Balance, July 14, 2024 20,449 $ 20 4,694 $ ( 166,585 ) $ 224,425 $ ( 36 ) $ ( 94,367 ) $ ( 36,543 )

Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan — — ( 24 ) 838 ( 897 ) — — ( 59 )

Non-cash stock compensation — — — — 2,138 — — 2,138

Net loss — — — — — — ( 18,876 ) ( 18,876 )

Other comprehensive income (loss), net of tax — — — — — 3 — 3

Balance, October 6, 2024 20,449 $ 20 4,670 $ ( 165,747 ) $ 225,666 $ ( 33 ) $ ( 113,243 ) $ ( 53,337 )

Common Stock Treasury Stock Accumulated

6 unchanged sentences

Non-cash stock compensation — — — — 2,179 — — 2,179

Net income (loss) — — — — — — ( 3,256 ) ( 3,256 )

Net loss — — — — — — ( 3,256 ) ( 3,256 )

Other comprehensive income (loss), net of tax — — — — — 8 — 8

3 unchanged sentences

Non-cash stock compensation — — — — 1,519 — — 1,519

Net income (loss) — — — — — — 3,922 3,922

— — — — — — 3,922 3,922

Other comprehensive income (loss), net of tax — — — — — 4 — 4

Balance, July 9, 2023 20,449 $ 20 4,518 $ ( 172,546 ) $ 229,098 $ ( 22 ) $ ( 53,524 ) $ 3,026

Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan — — ( 31 ) 694 ( 809 ) — — ( 115 )

Acquisition of treasury stock — — 480 ( 4,961 ) — — — ( 4,961 )

Non-cash stock compensation — — — — 1,480 — — 1,480

Net loss — — — — — — ( 8,161 ) ( 8,161 )

Other comprehensive income (loss), net of tax — — — — — ( 12 ) — ( 12 )

Balance, October 1, 2023 20,449 $ 20 4,967 $ ( 176,813 ) $ 229,769 $ ( 34 ) $ ( 61,685 ) $ ( 8,743 )

See Notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Twenty-Eight Weeks Ended

(in thousands) July 14, 2024 July 9, 2023

Forty Weeks Ended

(in thousands) October 6, 2024 October 1, 2023

Cash flows from operating activities:

Net income (loss) $ ( 18,949 ) $ 664

Net loss $ ( 37,825 ) $ ( 7,496 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

21 unchanged sentences

Acquisition of franchised restaurants — ( 3,529 )

Net cash provided by (used in) investing activities 9,415 ( 98 )

Net cash provided by investing activities

Cash flows from financing activities:

4 unchanged sentences

Purchase of treasury stock — ( 9,960 )

Debt issuance costs ( 2,726 ) —

(Uses) Proceeds from other financing activities, net ( 3,098 ) 1,744

Net cash used in financing activities ( 7,990 ) ( 33,741 )

Effect of exchange rate changes on cash ( 2 ) —

Net change in cash and cash equivalents, and restricted cash ( 1,277 ) 2,612

11 unchanged sentences

Red Robin Gourmet Burgers, Inc., a Delaware corporation, together with its subsidiaries ("Red Robin" or the "Company"), primarily operates, franchises, and develops full-service restaurants in North America.

As of July 14, 2024, the Company owned and operated 411 restaurants located in 39 states.

As of October 6, 2024, the Company owned and operated 408 restaurants located in 39 states.

The Company also had 92 franchised full-service restaurants in 14 states and one Canadian province.

31 unchanged sentences

December 31, 2023 53

Upcoming fiscal year:

Fiscal Year 2025

December 28, 2025 52

Reclassifications

46 unchanged sentences

In the following table, revenue is disaggregated by type of good or service (in thousands):

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 14, 2024 July 9, 2023 July 14, 2024 July 9, 2023

Twelve Weeks Ended Forty Weeks Ended

October 6, 2024 October 1, 2023 October 6, 2024 October 1, 2023

Restaurant revenue $ 270,605 $ 273,133 $ 943,630 $ 973,307

5 unchanged sentences

Components of Unearned revenue in the Condensed Consolidated Balance Sheets are as follows (in thousands):

July 14, 2024 December 31, 2023

October 6, 2024 December 31, 2023

Unearned gift card revenue $ 13,005 $ 28,558

3 unchanged sentences

Revenue recognized in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the redemption and breakage of gift cards that were included in the liability balance at the beginning of the fiscal year was as follows (in thousands):

Twenty-Eight Weeks Ended

July 14, 2024 July 9, 2023

Forty Weeks Ended

October 6, 2024 October 1, 2023

Gift card revenue $ 15,672 $ 16,865

2 unchanged sentences

Changes in our unearned revenue balance related to our Royalty program (in thousands):

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 14, 2024 July 9, 2023 July 14, 2024 July 9, 2023

Twelve Weeks Ended Forty Weeks Ended

October 6, 2024 October 1, 2023 October 6, 2024 October 1, 2023

Unearned Royalty revenue, beginning balance

7 unchanged sentences

The components of lease expense, including variable lease costs primarily consisting of common area maintenance charges and real estate taxes, are included in Occupancy on our Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) as follows (in thousands):

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 14, 2024 July 9, 2023 July 14, 2024 July 9, 2023

Twelve Weeks Ended Forty Weeks Ended

October 6, 2024 October 1, 2023 October 6, 2024 October 1, 2023

Operating lease cost $ 17,339 $ 16,691 $ 57,757 $ 53,865

5 unchanged sentences

Total $ 22,096 $ 22,017 $ 73,702 $ 70,292

Refer to Footnote 5, Other Charges (Gains), net , for information regarding the sale-leaseback transactions completed during the year to date periods ended July 14, 2024 and July 9, 2023, respectively.

See Note 5, Other Charges (Gains), net , for information regarding the sale-leaseback transactions completed during the quarter and year to date periods ended October 6, 2024 and October 1, 2023, respectively.

Earnings (Loss) Per Share

3 unchanged sentences

Diluted earnings per share reflects the potential dilution that could occur if holders of options exercised their options into common stock.

As the Company was in a net loss position for both the quarter to date and year to date periods ended July 14, 2024, all potentially dilutive common shares are considered anti-dilutive.

As the Company was in a net loss position for both the quarter to date and year to date periods ended October 6, 2024, all potentially dilutive common shares are considered anti-dilutive.

The Company uses the treasury stock method to calculate the effect of outstanding stock options and awards.

Basic weighted average shares outstanding is reconciled to diluted weighted average shares outstanding as follows (in thousands):

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 14, 2024 July 9, 2023 July 14, 2024 July 9, 2023

Twelve Weeks Ended Forty Weeks Ended

October 6, 2024 October 1, 2023 October 6, 2024 October 1, 2023

Basic weighted average shares outstanding 15,754 15,799 15,652 15,949

4 unchanged sentences

Other charges (gains), net consisted of the following (in thousands):

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 14, 2024 July 9, 2023 July 14, 2024 July 9, 2023

Twelve Weeks Ended Forty Weeks Ended

October 6, 2024 October 1, 2023 October 6, 2024 October 1, 2023

Gain on sale of restaurant property

2 unchanged sentences

271 3,600 1,047 9,140

Restaurant closure costs, net

Restaurant closure costs (gains), net

( 175 ) ( 91 ) 422 1,546

9 unchanged sentences

During the first quarter of fiscal 2024, the Company sold ten restaurant properties for total proceeds of $ 23.9 million in a sale-leaseback transaction that resulted in a gain, net of expenses of $ 7.4 million.

During the third quarter of fiscal 2023, the Company sold nine restaurant properties for total proceeds of $ 30.4 million in a sale-leaseback transaction that resulted in a gain, net of expenses of $ 14.9 million.

During the second quarter of fiscal 2023, the Company sold nine restaurant properties for total proceeds of $ 28.5 million in a sale-leaseback transaction that resulted in a gain, net of expenses of $ 14.6 million.

Restaurant Closure Costs, net

Restaurant closure costs (gains) include the ongoing restaurant operating costs for closed Company-owned restaurants and closed restaurant lease termination gains or losses.

Severance and Executive Transition

During the quarter and year to date periods of fiscal 2024, the Company incurred costs primarily related to a reduction in force of Team Members.

During the second quarter and year to date periods of fiscal 2023, the Company incurred severance and executive transition costs associated with changes in leadership positions.

During the third quarter and year to date periods of fiscal 2024, the Company incurred costs primarily related to a reduction in force of Team Members.

During the third quarter and year to date periods of fiscal 2023, the Company incurred severance and executive transition costs associated with changes in leadership positions.

Asset Impairment

During the second quarter of fiscal 2024, the Company recognized non-cash impairment charges primarily related to the closure of two locations.

During the second quarter and year to date periods of fiscal 2023, the Company recognized non-cash impairment charges primarily related to impairments of long-lived assets at four underperforming locations and the closed corporate office.

During the third quarter and year to date periods of fiscal 2024, the Company recognized non-cash impairment charges primarily related to the closure of three and five locations, respectively.

During the third quarter and year to date periods of fiscal 2023, the Company recognized non-cash impairment charges primarily related to impairments of long-lived assets at eight and twelve Company-owned locations, respectively.

The Company also recognized non-cash impairment charges related to the closed corporate office during the year to date period of fiscal 2023.

Fair Value Measurements.

Asset Disposal and Other

Asset disposals and other relate primarily to terminated capital projects.

Borrowings as of July 14, 2024 and December 31, 2023 are summarized below (in thousands):

July 14, 2024 Variable

Asset disposals and other relate primarily to terminated capital projects, special projects, and initiatives costs.

Borrowings as of October 6, 2024 and December 31, 2023 are summarized below (in thousands):

October 6, 2024 Variable

Interest Rate December 31, 2023 Variable

Interest Rate

Revolving line of credit $ 20,000 12.62 % $ — — %

Term loan $ 167,911 12.76 % $ 189,143 11.62 %

3 unchanged sentences

Revolving line of credit unamortized deferred financing charges:

$ 1,116 $ 752

Credit Agreement

3 unchanged sentences

The Credit Facility will mature on March 4, 2027.

No amortization is required with respect to the revolving Credit Facility.

No amortization is required with respect to the revolving line of credit.

The term loans require quarterly principal payments in an aggregate annual amount equal to 1.0 % of the original principal amount of the term loan.

As of July 14, 2024, quarterly principal payments are no longer required as a result of the debt repayments from the proceeds of the recent sale-leaseback transactions.

Quarterly principal payments are no longer required as a result of the debt repayments from the proceeds of the sale-leaseback transactions.

The Credit Agreement's interest rate references the Secured Overnight Financing Rate ("SOFR"), a new index calculated by short-term repurchase agreements and backed by U.S.

Treasury securities, or the Alternate Base Rate, which represents the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.5 % per annum, or (c) one-month term SOFR plus 1.0 % per annum.

As of July 14, 2024, the Company had outstanding borrowings under the Credit Facility of $ 162.3 million, in addition to amounts issued under letters of credit of $ 7.7 million.

As of December 31, 2023, the Company had outstanding borrowings under the Credit Facility of $ 182.6 million, in addition to amounts issued under letters of credit of $ 7.7 million.

As of October 6, 2024, the Company had outstanding borrowings under the Credit Facility of $ 180.7 million, including $ 20.0 million drawn on its revolving line of credit.

As of December 31, 2023, the Company had outstanding borrowings under the Credit Facility of $ 182.6 million, with no amounts drawn on its revolving line of credit.

In addition, the Company had amounts issued under letters of credit of $ 8.1 million and $ 7.7 million as of October 6, 2024 and December 31, 2023, respectively.

Red Robin International, Inc., is the borrower under the Credit Agreement, and certain of its subsidiaries and the Company are guarantors of the borrower’s obligations under the Credit Agreement.

4 unchanged sentences

as the borrower is obligated to pay customary fees to the agents, lenders and issuing banks under the Credit Agreement with respect to providing, maintaining, or administering, as applicable, the credit facilities.

On July 17, 2023, the Company amended the Credit Agreement (the “Credit Agreement Amendment”) to, among other things, remove the previously included $ 50.0 million aggregate cap on sale-leasebacks of Company-owned real property that are permitted under the Credit Agreement, subject to certain conditions set forth in the Credit Agreement.

The summary descriptions of the Credit Agreement, the Security Agreement, and the Credit Agreement Amendment do not purport to be complete and are qualified in their entirety by reference to the full text of each agreement, each of which was filed February 28, 2024, as an exhibit to the Annual Report on Form 10-K.

On July 17, 2023, the Company amended the Credit Agreement (the “First Amendment”) to, among other things, remove the previously included $ 50.0 million aggregate cap on sale-leasebacks of Company-owned real property that are permitted under the Credit Agreement, subject to certain conditions set forth in the Credit Agreement.

On August 21, 2024, the Company entered into the second amendment to our Credit Agreement (the “Second Amendment”).

The Second Amendment, among other things, provides certain relief from the financial covenant by increasing the required maximum net total leverage ratio beginning in the third quarter of 2024 through the end of the third quarter of 2025;

increases the aggregate revolving commitments by $ 15.0 million to $ 40.0 million through the end of the third quarter of 2025;

removes the variable pricing grid and increases the applicable margin on all term loans and revolving loans that are SOFR-based loans to 7.50 % per annum and that are ABR-based loans to 6.50 % per annum;

and adds certain additional reporting requirements.

In conjunction with the execution of the Second Amendment, the Company paid certain customary amendment fees to the lenders under the credit facility totaling approximately $ 2.9 million.

The Company performed an analysis of the Second Amendment under ASC Topic 470, Debt , and determined that debt modification accounting was appropriate for our term loan and revolving line of credit due to the change in total capacity and the increase in applicable margin interest rates under the new amendment.

During the third quarter of 2024, the Company capitalized $ 2.7 million of the amendment fees as deferred loan fees which will be amortized over the remaining term of the Credit Facility, and expensed the remaining $ 0.2 million of fees.

The summary descriptions of the Credit Agreement, the Security Agreement, the First Amendment, and the Second Amendment, do not purport to be complete and are qualified in their entirety by reference to the full text of each agreement, each of which was filed February 28, 2024, as an exhibit to the Annual Report on Form 10-K, except for the Second Amendment which was filed August 22, 2024 as an exhibit to the Quarterly Report on Form 10-Q for the period ended July 14, 2024.

On November 4, 2024, the Company entered into the third amendment to our Credit Agreement (the "Third Amendment").

Subsequent Event .

Fair Value Measurements

5 unchanged sentences

The following tables present the Company's assets measured at fair value on a recurring basis (in thousands):

July 14, 2024 Level 1 Level 2 Level 3

October 6, 2024 Level 1 Level 2 Level 3

Investments in rabbi trust $ 1,853 $ 1,853 $ — $ —

7 unchanged sentences

During 2024 and 2023, the Company measured non-financial assets for impairment using continuing and projected future cash flows, which were based on significant inputs not observable in the market and thus represented a level 3 fair value measurement.

During the second quarter of fiscal 2024, we impaired long-lived assets at two restaurant locations that we closed during the quarter with a carrying value of approximately $ 3.1 million.

We determined the fair value of these long-lived assets to be $ 0.9 million as a result of the closures, resulting in a $ 1.1 million impairment charge and a $ 1.1 million decrease in right of use assets due to remeasurement.

During the first half of fiscal 2023, we impaired long-lived assets at four restaurant locations and the closed corporate office with carrying values of $ 12.4 million.

We determined the fair value of these long-lived assets to be $ 10.0 million, resulting in impairment charges of $ 2.4 million during the quarter and year to date periods ended July 9, 2023.

During the third quarter and year to date periods of fiscal 2024, we impaired long-lived assets at three and five restaurant locations, respectively, with a carrying value of approximately $ 1.9 million and $ 5.0 million, respectively.

We determined the fair value of these long-lived assets to be $ 1.1 million and $ 2.0 million as a result of the closures, resulting in a $ 0.2 million and $ 1.3 million impairment charge and a $ 0.6 million and $ 1.7 million decrease in right of use assets due to remeasurement for the quarter and year to date periods of fiscal 2024, respectively.

During the third quarter and year to date periods of fiscal 2023, we impaired long-lived assets at eight and twelve restaurant locations, respectively.

We also impaired the closed corporate office during the year to date period of 2023.

The carrying value of the assets impaired in the third quarter of 2023 was $ 15.3 million and the carrying value of the assets impaired during the year to date period of 2023 was $ 27.7 million.

We determined the fair value of these long-lived assets to be $ 10.5 million and $ 20.5 million, resulting in a $ 4.8 million and $ 7.2 million impairment charge during the quarter and year to date periods of fiscal 2023, respectively.

Disclosures of Fair Value of Other Assets and Liabilities

The Company's liability under its Credit Facility is carried at historical cost in the accompanying Condensed Consolidated Balance Sheets.

As of July 14, 2024, the fair value of the credit facility was approximately $ 168.3 million and the principal amount carrying value was $ 167.9 million.

The credit facility term loan is reported net of $ 5.6 million in unamortized discount and debt issuance costs in the Condensed Consolidated Balance Sheet as of July 14, 2024.

As of October 6, 2024, the fair value of the Credit Facility was approximately $ 178.0 million and the principal amount carrying value was $ 187.9 million.

The Credit Facility term loan is reported net of $ 7.2 million in unamortized discount and debt issuance costs in the Condensed Consolidated Balance Sheet as of October 6, 2024.

The carrying value of the Credit Facility was $ 189.1 million and the fair value of the Credit Facility was $ 186.9 million as of December 31, 2023.

6 unchanged sentences

However, the ultimate resolution of litigated claims may differ from our current estimates.

As of July 14, 2024, we had reserves of $ 8.1 million for loss contingencies included within Accrued liabilities and other on our Condensed Consolidated Balance Sheet.

As of October 6, 2024, we had reserves of $ 8.3 million for loss contingencies included within Accrued liabilities and other on our Condensed Consolidated Balance Sheet.

In the normal course of business, there are various claims in process, matters in litigation, administrative proceedings, and other contingencies.

3 unchanged sentences

However, a significant increase in the number of these claims, or one or more successful claims resulting in greater liabilities than we currently anticipate, could materially and adversely affect our business, financial condition, results of operations, and cash flows.

As of July 14, 2024, we had non-cancellable purchase commitments primarily related to certain vendors who provide food and beverage and other supplies to our restaurants, for an aggregate of $ 202.2 million.

As of October 6, 2024, we had non-cancellable purchase commitments primarily related to certain vendors who provide food and beverage and other supplies to our restaurants, for an aggregate of $ 188.1 million.

We expect to fulfill our commitments under these agreements in the normal course of business, and as such, no liability has been recorded.

Subsequent Events

Subsequent to the second quarter of fiscal 2024, the Company entered into the Second Amendment to our Credit Agreement (the “Second Amendment”).

The Second Amendment amends the Credit Agreement to, among other things:

• increase the required Maximum Net Total Leverage Ratio beginning in the third fiscal quarter of 2024 through the third fiscal quarter of 2025;

• increase the aggregate revolving commitments by $ 15.0 million to $ 40.0 million on the Second Amendment effective date through the third fiscal quarter of 2025;

• remove the variable Pricing Grid and increase the Applicable Margin on all Term Loans and Revolving Facility Loans that are SOFR Loans to 7.50 % per annum and that are ABR Loans to 6.50 % per annum;

• add certain additional reporting requirements.

In conjunction with the Second Amendment, the Company paid certain customary amendment fees to the lenders under the credit facility totaling approximately $ 2.9 million.

Terms in this section that are capitalized but not defined have the meanings given to them in the Second Amendment.

The summary description of the Second Amendment does not purport to be complete and is qualified in its entirety to the full text of the Second Amendment, which is attached hereto as Exhibit 10.6 and is incorporated by reference herein.

Subsequent Event

Subsequent to the end of the third quarter of fiscal 2024, the Company entered into the Third Amendment to our Credit Agreement (the “Third Amendment”).

The Third Amendment amends the Credit Agreement to:

• increase the permitted Maximum Net Total Leverage Ratio beginning in the fourth fiscal quarter of 2025 through the end of the first fiscal quarter of 2026;

• maintain the revolving commitments under the Credit Agreement at $ 40 million through the end of the first fiscal quarter of 2026.

The revolving commitments were previously scheduled to be reduced to $ 25 million at the end of the third fiscal quarter of 2025.

In conjunction with the Third Amendment, the Company paid certain customary amendment fees to the lenders under the credit facility totaling approximately $ 1.6 million, which will be added to the term loan and payable at maturity.

Terms in this section that are capitalized but not defined have the meanings given to them in the Third Amendment.

The summary description of the Third Amendment does not purport to be complete and is qualified in its entirety to the full text of the Third Amendment, which is attached hereto as Exhibit 10.1 and is incorporated by reference herein.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements