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Ruby Tuesday (RT)
Q4 2011 Earnings Call
July 21, 2011 5:00 pm ET
Dan Dillon - Senior Vice President of Brand Development
Greg Ashley - Vice President - Finance
Kimberly Grant - Chief Operations Officer and Executive Vice President
Marguerite Duffy - Chief Financial Officer, Principal Accounting Officer, Senior Vice President and Assistant Secretary
Samuel Beall - Co-Founder, Executive Chairman, Chief Executive Officer and President
Robert Derrington - Morgan Keegan & Company, Inc.
Brad Ludington - KeyBanc Capital Markets Inc.
Keith Siegner - Crédit Suisse AG
Jeffrey Omohundro - Wells Fargo Securities, LLC
Christopher O'Cull - SunTrust Robinson Humphrey, Inc.
Michael Wolleben - Sidoti & Company, LLC
Joseph Buckley - BofA Merrill Lynch
Peter Saleh - Telsey Advisory Group
Previous Statements by RT
» Ruby Tuesday's CEO Discusses Q3 2011 Results - Earnings Call Transcript
» Ruby Tuesday CEO Discusses Q2 2011 Results - Earnings Call Transcript
» Ruby Tuesday CEO Discusses F1Q11 Results - Earnings Call Transcript
Thank you, Bob, and thanks to all of you for joining us this evening. With me today are Sandy Beall, Ruby Tuesday Chairman and CEO; Margie Duffy, Chief Financial Officer; Dan Dillon, Senior Vice President, Brand Development; and Kimberly Grant, Executive Vice President.
I would like to remind you that there are likely to be forward-looking statements in our comments, and I refer you to the note regarding forward-looking information in our press release and most recently filed Form 8-K . We plan to release first quarter fiscal '12 earnings in early October.
Our fourth quarter earnings were released today after the market closed. A copy of our press release can be found on the Investor Relations section of our website at rubytuesday.com and is also available on Business Wire, FirstCall and other financial media outlets.
Our format today includes an overview of our fourth quarter and fiscal 2011 financial results, our fiscal 2012 outlook and a review of our plans and strategies. At the conclusion, as usual, we will respond to your questions. I will now turn the call over to Sandy.
Thank you, Greg. I'd like to welcome all of you listening in this afternoon. Thank you for joining us. Our fourth quarter is marked by several accomplishments, including the completion of our franchise partner acquisitions, the opening of our second Marlin & Ray's restaurant on June 1, and the launch of several exciting limited time offers.
We're glad to have closed this year with positive same-store sales of 0.9%, our first positive same-restaurant sales results in 5 years. However, the quarter was very challenging as you've seen from both the sales and profitability standpoint.
We saw a very aggressive promotional environment within the casual dining bar grill segment, especially at the lower end of casual dining during the quarter, which was also supported by very heavy media TV levels. We began the first month of the quarter with negative sales, as March showed sequential monthly improvement, which included positive same-restaurant sales in May, and we ended the quarter with the nearly flat same-restaurant sales. These results trailed KNAPP-TRACK on a one-year basis by approximately 2 points, and we're approximately in line with KNAPP-TRACK on a 2-year basis.
Although we did have success with our promotional strategies during the fourth quarter, the competitive promotions had recently become even more aggressive. and our current promotional programs do not compete as well versus high-value, heavy TV advertisements in this type of environment. While we were slow to react, we believe we have a better plan beginning in August and more so in September to drive traffic and sales.
Our diluted earnings per share of $0.21 trailed our prior results of $0.33 per share in part due to basically flat same-restaurant sales, not providing any cost leverage on the various investments we've made this year. Higher levels of advertising expense and various charges we incurred during the quarter, which resulted in earnings per share dilution of $0.04 per share. Margie will comment on those later.
While investments we made this year on a new bread program, additional labor hand service and a marketing research will benefit our brand longer term, we're very disappointed with our financial results of the year and believe me, we're actively working on it. We expect the competitive pressures that impacted our results in the fourth quarter will remain for the near term.
To combat this environment, our efforts in energy in fiscal year '12 will be sharply focused on 4 primary goals; first one is increasing our same-restaurant sales; second, lowering our cost; third, enhancing our margins; and fourth, maximizing our strong free cash flow position, 4 critically important directional points. Executing on each of these goals is key to getting ourselves and earnings back to stronger levels and building shareholder value.
Our balance sheet is in good shape, and we're very comfortable with compliance of our debt covenants. Our book debt-to-EBITDA ratio was 2.66 at the end of the quarter. It's an increase over the prior year, which was 2.1, but that's due to the assumption of debt from the franchise partner acquisitions. And Margie will provide more details in the call regarding our balance sheet, including our revolver credit facility which we just raised.
I'd like to briefly review our 3-year strategic plan, which we still believe very much in to create shareholder value and increase our returns. First and foremost, we're focused on many ways. We just spent 2 days with our board, reviewing all of our business plans for this year, which all support our 3-year plan, and we feel very good about those.