Published:
Morton's Restaurant Group, Inc. Reports Results For Third Quarter 2009
CHICAGO, Nov. 5 /PRNewswire-FirstCall/ -- Morton's Restaurant Group, Inc. (NYSE: MRT) today reported unaudited financial results for its fiscal 2009 third quarter ended October 4, 2009.
The three month period ended October 4, 2009 as compared to the three month period ended September 28, 2008 (13 weeks to 13 weeks)
-- Revenues decreased 12.2% to $64.1 million.
-- Comparable restaurant revenues for Morton's steakhouses decreased 16.8%
for the third quarter of fiscal 2009 ended October 4, 2009.
-- The decrease in revenues is primarily attributable to the decrease in
comparable restaurant revenues. A portion of the decrease was offset by
an increase in revenues from four new Morton's steakhouses opened during
fiscal 2008 and two new Morton's steakhouses opened during fiscal 2009.
-- The three month period ended October 4, 2009 included a charge of $1.1
million pre-tax and $0.7 million after-tax, or $0.05 per diluted share,
which represents the change in the fair value of the share-based
component to be issued in connection with the settlement of certain wage
and hour claims that we announced in the second quarter of fiscal 2009.
The Company previously reported in the second quarter of fiscal 2009
that it had recorded a charge related to the settlement of certain wage
and hour and similar labor claims of approximately $10.6 million pre-tax
and approximately $6.7 million after-tax, or approximately $0.42 per
diluted share. A portion of these claims will be settled with the
issuance of Company shares and, as a result, the portion of the
liability attributed to the share-based component will be adjusted to
fair value at each quarter-end, with fair value estimated based on the
trading price of our common stock per share and other observable inputs,
until the settlement has been approved by the court at which time a
final adjustment will be recorded.
-- The three month period ended September 28, 2008 included a non-cash
impairment charge of $66.2 million pre-tax and $57.6 million after-tax
from continuing operations and $3.6 million pre-tax and $3.1 million
after-tax from discontinued operations.
-- Including these unusual items, the Company's GAAP net loss from
continuing operations was $(3.3) million, or $(0.21) per diluted share,
for the three month period ended October 4, 2009, compared to a net loss
from continuing operations of $(60.1) million, or $(3.79) per diluted
share, for the three month period ended September 28, 2008.
-- Excluding these unusual items, the Company's adjusted net loss from
continuing operations was $(2.6) million, or $(0.16) per diluted share,
for both the three month periods ended October 4, 2009 and September 28,
2008. (Please refer to the reconciliation of adjusted net income (loss)
to GAAP net income (loss) in the financial tables that follow.)
The nine month period ended October 4, 2009 as compared to the nine month period ended September 28, 2008 (39 weeks to 39 weeks)
-- Revenues decreased 16.8% to $203.3 million.
-- Comparable restaurant revenues for Morton's steakhouses decreased 22.4%
for the nine month period ended October 4, 2009.
-- The decrease in revenues is primarily attributable to the decrease in
comparable restaurant revenues. A portion of the decrease was offset by
an increase in revenues from four new Morton's steakhouses opened during
fiscal 2008 and two new Morton's steakhouses opened during fiscal 2009.
The nine month period ended October 4, 2009 included three unusual
items:
-- The Company incurred a charge of $11.7 million pre-tax and $7.4
million after-tax, or $(0.47) per diluted share, relating to the
settlement of certain wage and hour claims and similar labor claims.
-- The Company incurred a first quarter charge of $0.2 million pre-tax
and $0.1 million after-tax, or $0.01 per diluted share, for the
partial write-off of deferred financing costs related to the
amendment of the Company's senior revolving credit facility that was
executed on March 4, 2009, pursuant to which the amount available
under the credit facility was reduced from $115.0 million to $75.0
million, with a further reduction to $70.0 million effective
December 31, 2009.
-- The Company's effective tax rate for the nine month period ended
October 4, 2009 was negatively impacted by a non-cash charge of $0.7
million, or $0.04 per diluted share, related to the tax treatment of
the vesting of certain restricted stock awards, compared to a
similar non-cash charge of $0.3 million, or $0.02 per diluted share,
incurred in the nine month period ended September 28, 2008.
-- The nine month period ended September 28, 2008 included a non-cash
impairment charge of $66.2 million pre-tax and $57.6 million after-tax
from continuing operations and $3.6 million pre-tax and $3.1 million
after-tax from discontinued operations.
-- Including these unusual items, the Company's GAAP net loss from
continuing operations was $(10.8) million, or $(0.68) per diluted share,
for the nine month period ended October 4, 2009 compared to a net loss
from continuing operations of $(55.5) million, or $(3.43) per diluted
share, for the nine month period ended September 28, 2008.
-- Excluding these unusual items, the Company's adjusted net loss from
continuing operations was $(2.6) million, or $(0.16) per diluted share,
for the nine month period ended October 4, 2009, which compares to
adjusted net income from continuing operations of $2.3 million, or $0.14
per diluted share, for the nine month period ended September 28, 2008.
As previously reported, Morton's revenues and results have been pressured by the continuing global recession, which has impacted guest traffic throughout the industry. Negative comparable restaurant revenues adversely impacted earnings due to the deleveraging effect on the fixed cost base.
"Over the past year we have seen unprecedented economic conditions which have impacted business travel, convention business, hotel occupancy and air travel, all of which have had a direct impact on our Morton's business," said Thomas J. Baldwin, Chairman and Chief Executive Officer of Morton's Restaurant Group, Inc. "Throughout this period, we have taken many action steps to drive our marketing initiatives, profit enhancements and cost management programs, meeting these economic challenges head on. These steps are fully aligned with our uncompromising commitment to our guests' experience and we believe that our strong Morton's brand continues to remain well positioned for long-term growth as the economy improves. At Morton's we offer 'The Best Steak Anywhere,' the best service and the best people in the fine dining steakhouse segment and believe the best is yet to come."
Restaurants
On March 3, 2009, the Company opened a Morton's steakhouse in Mexico City, Mexico (through a joint venture) and on October 2, 2009, opened a Morton's steakhouse in Miami Beach, FL. The Company has entered into a lease to open a new Morton's steakhouse in Indian Wells, CA.
During the second quarter of fiscal 2009, the Company closed its Morton's steakhouses in Southfield, MI; Westchester, IL; and Minneapolis, MN and during the third quarter of fiscal 2009 closed its Morton's steakhouses in Columbus, OH and Vancouver, Canada and its Bertolini's restaurant in King of Prussia, PA. During fiscal 2008, the Company closed its Bertolini's restaurant in Indianapolis, IN, and its Morton's steakhouses in Kansas City, MO and in Charlotte (Southpark), NC. The Company has determined that all closed restaurants should be accounted for as discontinued operations due to the fact that the Company does not expect any further direct or indirect cash inflows from these restaurants. Accordingly, the results of operations for the closed restaurants listed above have been reclassified to discontinued operations in the statements of operations for all periods presented.
Fourth Quarter Fiscal 2009 and Revised Full Year Fiscal 2009 Financial Guidance
The current economic environment significantly increases the inherent uncertainty of guidance. Actual results could differ materially from the guidance provided herein as a result of numerous factors, many of which are beyond the Company's control and are highly dependent upon overall economic conditions. In particular, a further decrease in consumer and/or business spending in one or more of the geographic areas in which the Company operates could cause actual results to differ materially from the Company's guidance. Refer to "Cautionary Note on Forward-Looking Statements" later in this press release.
The Company currently expects fourth quarter of fiscal 2009 revenues to range between $82 million and $84 million, including decreases in comparable restaurant revenues for Morton's steakhouses of approximately 10% to 12% as compared to the fourth quarter of fiscal 2008. The Company's guidance takes into account a 13 week quarter for the fourth quarter of fiscal 2009 compared to a 14 week quarter for the fourth quarter of fiscal 2008. Fourth quarter diluted net income per share from continuing operations is expected to approximate $0.22 to $0.25. This range assumes an expected effective income tax rate for the fourth quarter of fiscal 2009 not exceeding 45%.
The Company has revised its fiscal 2009 guidance and now expects fiscal year 2009 revenues to range between $285 million and $287 million, which reflects a decrease in comparable restaurant revenues for Morton's steakhouses of approximately 19% to 21% as compared to fiscal 2008. The Company's revenue guidance takes into account a 52 week year for fiscal 2009 compared to a 53 week year for fiscal 2008. Furthermore, fiscal 2009 will include revenue from one New Year's Eve (December 31, 2009) whereas fiscal 2008 included revenue from two New Year's Eves (December 31, 2007 in the first quarter and December 31, 2008 in the fourth quarter). Diluted net income per share from continuing operations for fiscal 2009 is expected to approximate $0.06 to $0.09. The range excludes the aforementioned charge related to the settlement of certain wage and hour and similar labor claims of $11.7 million pre-tax and $7.4 million after-tax or $0.47 per diluted share, a non-cash charge of $0.7 million or $0.04 per diluted share related to the tax treatment of the vesting of certain restricted stock awards, the partial write-off of deferred financing costs of $0.2 million pre-tax and $0.1 million after-tax or $0.01 per diluted share recorded during the first quarter of fiscal 2009 and includes the full year impact of the additional interest expense of approximately $0.7 million pre-tax and $0.4 million after-tax or $0.03 per diluted share. This range assumes an expected effective income tax rate not exceeding 38%. During fiscal 2009, the Company opened Morton's steakhouses in Mexico City and Miami Beach. In addition, during fiscal 2009, the Company has retrofit one Morton's steakhouse to include Bar 12-21.
Conference Call
Morton's Restaurant Group, Inc. (NYSE: MRT) has scheduled a conference call and webcast for investors at 5:00 p.m. ET today to discuss these results. Details of the conference call are as follows:
Date: Thursday, November 5, 2009
Time: 5:00 p.m. ET (please dial in by 4:45 p.m.)
Dial-In #: 866-730-5763 U.S. & Canada
857-350-1587 International
Confirmation code: 25249087
Alternatively, the conference call will be available via webcast at www.mortons.com under the "Investor Relations" tab.
About the Company
Morton's Restaurant Group, Inc. is the world's largest operator of company-owned upscale steakhouses. Morton's steakhouses have remained true to our founders' original vision of combining generous portions of high quality food prepared to exacting standards with exceptional service in an enjoyable dining environment. As of November 5, 2009, the Company owned and operated 77 Morton's steakhouses located in 65 cities across 27 states, Puerto Rico and five international locations (Hong Kong, Macau, Mexico City, Singapore and Toronto) and two Italian restaurants. Please visit our Morton's website at www.mortons.com.
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
Except for the historical information contained in this news release, the matters addressed are forward-looking statements within the meaning of Sections 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements, written, oral or otherwise made, represent the Company's expectations or beliefs concerning future events. Without limiting the foregoing, the words "believes," "thinks," "anticipates," "estimates," "plans," "expects" and similar expressions are intended to identify forward-looking statements. The Company cautions that forward-looking statements are subject to risks, uncertainties, assumptions and other important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including, without limitation, (i) a reduction in consumer and/or business spending in one or more of the Company's markets due to business layoffs or budget reductions, negative consumer sentiment, access to consumer credit, commodity and other prices, events or occurrences affecting the securities and/or financial markets, occurrences affecting the Company's common stock, housing values, changes in federal, state, foreign and/or local tax levels or other factors, (ii) risks relating to the restaurant industry and the Company's business, including competition, changes in consumer tastes and preferences, risks associated with opening new locations, increases in food and other raw materials costs, increases in energy costs, demographic trends, traffic patterns, weather conditions, employee availability, benefits and cost increases, perceived product safety issues, supply interruptions, litigation, judgments or settlements in pending litigation, government regulation, the Company's ability to maintain adequate financing facilities, the Company's liquidity and capital resources, prevailing interest rates and legal and regulatory matters, (iii) public health issues, including, without limitation risks relating to the spread of H1N1 influenza and other pandemic diseases and (iv) other risks detailed from time to time in the Company's most recent Form 10-K, Forms 10-Q and other reports filed with the Securities and Exchange Commission. In addition, the Company's ability to expand is dependent upon various factors, such as the availability of attractive sites for new restaurants, the ability to negotiate suitable lease terms, the ability to generate or borrow funds to develop new restaurants, the ability to obtain various government permits and licenses, limitations on permitted capital expenditures under the Company's credit facility and the recruitment and training of skilled management and restaurant employees. Other unknown or unpredictable factors also could harm the Company's business, financial condition and results. Consequently, there can be no assurance that actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by applicable securities laws.
Morton's Restaurant Group, Inc.
Consolidated Statements of Operations and Margin Analysis - Unaudited
(Amounts in thousands, except per share data)
Three Month Periods Ended
-------------------------
October 4, 2009 September 28, 2008
--------------- ---------------
Revenues $64,134 100.0% $73,030 100.0%
Food and beverage costs 19,800 30.9% 24,310 33.3%
Restaurant operating expenses 38,532 60.1% 40,003 54.8%
Pre-opening costs 602 0.9% 815 1.1%
Depreciation and amortization 2,829 4.4% 3,189 4.4%
General and administrative
expenses 3,642 5.7% 5,846 8.0%
Marketing and promotional expenses 1,423 2.2% 1,586 2.2%
Non-cash impairment charge - 0.0% 66,204 90.7%
Charge related to legal
settlements 1,129 1.8% - 0.0%
----- ---
Operating loss (3,823) (6.0%) (68,923) (94.4%)
Write-off of deferred
financing costs - 0.0% - 0.0%
Interest expense, net 1,051 1.6% 737 1.0%
----- ---
Loss before income taxes from
continuing operations (4,874) (7.6%) (69,660) (95.4%)
Income tax benefit (1,636) (2.6%) (9,528) (13.0%)
------ ------
Loss from continuing
operations (3,238) (5.0%) (60,132) (82.3%)
Discontinued operations,
net of taxes (31) 0.0% (3,592) (4.9%)
--- ------
Net loss (3,269) (5.1%) (63,724) (87.3%)
Net income (loss) attributable to
noncontrolling interest 31 0.0% - 0.0%
-- ---
Net loss attributable to
controlling interest $(3,300) (5.1%) $(63,724) (87.3%)
======= ========
Amounts attributable to
controlling interest:
Loss from continuing operations,
net of taxes $(3,269) $(60,132)
Discontinued operations,
net of taxes (31) (3,592)
--- ------
Net loss $(3,300) $(63,724)
======= ========
Basic net loss per share:
Continuing operations $(0.21) $(3.79)
Discontinued operations $(0.00) $(0.23)
Basic net loss per share $(0.21) $(4.02)
Diluted net loss per share:
Continuing operations $(0.21) $(3.79)
Discontinued operations $(0.00) $(0.23)
Diluted net loss per share $(0.21) $(4.02)
Shares used in computing
loss per share:
Basic 15,892.3 15,863.1
Diluted 15,892.3 15,863.1
Nine Month Periods Ended
------------------------
October 4, 2009 September 28, 2008
---------------- ----------------
Revenues $203,298 100.0% $244,217 100.0%
Food and beverage costs 62,773 30.9% 80,192 32.8%
Restaurant operating expenses 116,808 57.5% 122,401 50.1%
Pre-opening costs 1,788 0.9% 2,467 1.0%
Depreciation and amortization 8,879 4.4% 9,577 3.9%
General and administrative
expenses 12,191 6.0% 19,078 7.8%
Marketing and promotional expenses 4,807 2.4% 5,478 2.2%
Non-cash impairment charge - 0.0% 66,204 27.1%
Charge related to legal
settlements 11,696 5.8% - 0.0%
------ ---
Operating loss (15,644) (7.7%) (61,180) (25.1%)
Write-off of deferred
financing costs 206 0.1% - 0.0%
Interest expense, net 2,716 1.3% 2,136 0.9%
----- -----
Loss before income taxes from
continuing operations (18,566) (9.1%) (63,316) (25.9%)
Income tax benefit (7,508) (3.7%) (7,784) (3.2%)
------ ------
Loss from continuing
operations (11,058) (5.4%) (55,532) (22.7%)
Discontinued operations,
net of taxes (800) (0.4%) (4,097) (1.7%)
---- ------
Net loss (11,858) (5.8%) (59,629) (24.4%)
Net income (loss) attributable to
noncontrolling interest (272) (0.1%) - 0.0%
---- ---
Net loss attributable to
controlling interest $(11,586) (5.7%) $(59,629) (24.4%)
======== ========
Amounts attributable to
controlling interest:
Loss from continuing operations,
net of taxes $(10,786) $(55,532)
Discontinued operations,
net of taxes (800) (4,097)
---- ------
Net loss $(11,586) $(59,629)
======== ========
Basic net loss per share:
Continuing operations $(0.68) $(3.43)
Discontinued operations $(0.05) $(0.25)
Basic net loss per share $(0.73) $(3.68)
Diluted net loss per share:
Continuing operations $(0.68) $(3.43)
Discontinued operations $(0.05) $(0.25)
Diluted net loss per share $(0.73) $(3.68)
Shares used in computing
loss per share:
Basic 15,879.4 16,201.6
Diluted 15,879.4 16,201.6
Morton's Restaurant Group, Inc.
Adjusted Net (Loss) Income and Adjusted Diluted Net (Loss) Income Per
Share (Note 1)
(In thousands, except per share data)
Three Month Nine Month
Periods Ended Periods Ended
-------------------------- ----------------------------
October 4, September 28, October 4, September 28,
2009 2008 2009 2008
----------- ------------- ------------ --------------
Net loss from
continuing
operations
attributable
to controlling
interest, as
reported $(3,269) $(60,132) $(10,786) $(55,532)
Net income
(loss)
attributable to
noncontrolling
interest 31 - (272) -
Income tax
benefit (1,636) (9,528) (7,508) (7,784)
------ ------ ------ ------
Loss before
income taxes
from continuing
operations,
as reported (4,874) (69,660) (18,566) (63,316)
Adjustment[1]:
Charge related
to legal
settlements[2] 1,129 - 11,696 -
Write-off of
deferred
financing
costs[3] - - 206 -
Non-cash
impairment
charge[4] - 66,204 - 66,204
--- ------ --- ------
Adjusted
(loss) income
before income
taxes (3,745) (3,456) (6,664) 2,888
Adjusted
income tax
(benefit)
expense (1,226)[5] (882)[6] (3,820)[7] 583[6]
Net (loss)income
attributable to
noncontrolling
interest 31 - (272) -
-- --- ---- ---
Adjusted net
(loss) income
from continuing
operations
attributable to
controlling
interest $(2,550) $(2,574) $(2,572) $2,305
======= ======= ======= ======
Adjusted diluted
net (loss)
income per
share $(0.16) $(0.16) $(0.16) $0.14
Shares used
in computing
adjusted diluted
net(loss) income
per share 15,892.3 15,863.1 15,879.4 16,202.0
[1] The Company includes these adjusted calculations for the three and
nine month periods ended October 4, 2009 and September 28, 2008
because management believes they are useful to investors in allowing
for greater transparency with respect to supplemental information
used by management in its financial and operational decision making.
Accordingly, the Company believes that the presentation of this
analysis, when used in conjunction with GAAP financial measures, is a
useful financial analysis tool that can assist investors in assessing
the Company's financial condition, operating performance and
underlying strength. This analysis should not be considered in
isolation or as a substitute for net income (loss) prepared in
accordance with GAAP. This analysis, as well as the other information
in this press release, should be read in conjunction with the
Company's financial statements and footnotes contained in the
documents that the Company files with the U.S. Securities and
Exchange Commission.
[2] In the second quarter of fiscal 2009, the Company recorded a charge
in connection with the settlement of certain wage and hour and
similar labor claims of $10,567 pre-tax or $6,707 after-tax and $0.42
per diluted share. During the third quarter of fiscal 2009, the
Company recorded an additional charge which represents the change in
the fair value of the share-based component of the settlement of
$1,129 pre-tax or $717 after-tax and $0.05 per diluted share.
[3] In the first quarter of fiscal 2009, the Company wrote-off deferred
financing costs of $206 related to the amendment of the Company's
senior revolving credit facility that was executed on March 4, 2009.
[4] The non-cash impairment charge from continuing operations of $66,204
consisted of $41,600 for goodwill, $6,000 for the intangible asset
and $18,604 for long-lived assets.
[5] In connection with the additional charge related to the legal
settlements, the Company recorded income tax benefits of $412 for the
three month period ended October 4, 2009. The effective tax rate for
the three month period ended October 4, 2009 was negatively impacted
by a non-cash charge of $2 related to the tax treatment of the vesting
of certain restricted stock awards.
[6] In connection with the non-cash impairment charge, the Company
recorded an income tax benefit of $8,648. The Company's effective tax
rate for the three and nine month periods ended September 28, 2008 was
negatively impacted by a non-cash charge of $2 and $281, respectively,
related to the tax treatment of the vesting of certain restricted
stock awards.
[7] In connection with the charge related to the legal settlements and the
write-off of deferred financing costs, the Company recorded income tax
benefits of $4,273 and $75, respectively, for the nine month period
ended October 4, 2009. The Company's effective tax rate for the nine
month period ended October 4, 2009 was negatively impacted by a non-
cash charge of $659 related to the tax treatment of the vesting of
certain restricted stock awards.
SOURCE Morton's Restaurant Group, Inc.
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