McCormick & Schmick’s Seafood Restaurants, Inc. (Nasdaq: MSSR) today reported financial results for its fourth quarter and fiscal year ended December 29, 2010.
Financial results for the fourth quarter 2010 compared to the fourth quarter 2009:
- Revenues increased 3.4% to $91.6 million from $88.6 million.
- Comparable restaurant sales decreased 1.0%.
- Total restaurant operating costs held steady at 86.6% of revenues.
- Operating loss of $24.2 million compared to operating loss of $17.0 million. Included in operating loss for the fourth quarter of 2010 were non-cash impairment, restructuring and other charges of $28.4 million, including the impairment of long-lived assets at 13 restaurants. Included in operating loss for the fourth quarter of 2009 were non-cash impairment, restructuring and other charges of $19.8 million, including the impairment of long-lived assets at eight restaurants.
- Net loss of $25.1 million, or $1.69 per diluted share, compared to net loss of $16.6 million, or $1.12 per diluted share.
- Pro forma net income of $3.3 million, or $0.22 per diluted share (see attached reconciliation to GAAP), an increase of 47% from pro forma net income of $2.3 million, or $0.15 per diluted share.
Financial results for fiscal year 2010 compared to fiscal year 2009:
- Revenues decreased 2.3% to $351.1 million from $359.2 million.
- Comparable restaurant sales decreased 4.9%.
- Total restaurant operating costs were 87.9% of revenues compared to 87.8%.
- Operating loss of $20.8 million compared to operating loss of $14.6 million. Included in operating loss for fiscal year 2010 were non-cash impairment, restructuring and other charges of $28.4 million, including the impairment of long-lived assets at 13 restaurants. Included in operating loss for fiscal year 2009 were impairment, restructuring and other charges of $20.4 million, including the impairment of long-lived assets at eight restaurants.
- Net loss of $23.2 million, or $1.57 per diluted share, compared to net loss of $15.6 million, or $1.05 per diluted share.
- Pro forma net income of $5.2 million, or $0.35 per diluted share (see attached reconciliation to GAAP), an increase of 33% from pro forma net income of $3.9 million, or $0.26 per diluted share.
Revenues for the fourth quarter of 2010 increased 3.4% to $91.6 million from $88.6 million in the fourth quarter of 2009. Private dining improved in the fourth quarter of 2010, an increase of 13% compared to the same period in 2009. Comparable restaurant sales decreased 1.0%.
Bill Freeman, Chief Executive Officer, said, “I applaud our team for their perseverance last year in navigating through demanding and, in many cases, unanticipated and uncontrollable circumstances. Despite the economic and environmental challenges that affected our business, we were able to generate pro-forma earnings growth of 35% to $0.35 per diluted share. In doing so, we demonstrated our ability to balance the delivery of a great guest experience with continued prudent cost management and discipline at every level of our operations.”
Freeman continued, “In the second half of 2010, we completed a comprehensive strategic review of our Brand DNA and restaurant portfolio to determine what changes might be necessary to maximize our potential. Based on our findings, we put together a strategic plan, as a complement to those initiatives that were implemented over the past two years, to further improve our financial performance and guest experience. As part of these efforts, we are pleased to announce the launch of a multi-year service, hospitality and portfolio upgrade program designed to improve long term top line sales, traffic and restaurant-level margins, while leveraging our current leases and refining our key design principles. By investing capital back into our portfolio, along with our ongoing strategic initiatives to evolve the brand, strengthen our connection to the guest, and broaden our outreach, we anticipate further enhancing shareholder value in the years to come.”
Outlook and 2011 Financial Guidance
The Company is providing annual guidance for 2011 of between $345 and $355 million in revenue and between $0.35 and $0.40 in earnings per fully diluted share. This figure does not include the impact of temporary restaurant closures during remodeling in connection with the strategic upgrade project identified above. Adjusting for these interruptions, and for additional non-capital costs associated with the remodeling projects, earnings are expected to be between $0.26 and $0.31 per fully diluted share. The Company estimates the reduction of 40 to 50 restaurant operating weeks to accommodate upgrade projects in 2011.
The annualized effective tax rate is expected to be between 15% and 20%, while we expect capital expenditures to fall between $17 and $21 million.
Depreciation and amortization are expected to be approximately $15 million, while G&A is expected to be between $19.5 and $20.5 million.
McCormick & Schmick’s Seafood Restaurants, Inc. is a leading seafood restaurant operator in the affordable upscale dining segment. The Company now operates 96 restaurants, including 89 restaurants in the United States and seven restaurants in Canada under The Boathouse brand. McCormick & Schmick’s has successfully grown over the past 39 years by focusing on serving a broad selection of fresh seafood. The inviting atmosphere at McCormick & Schmick’s and its high quality, diverse menu offering and compelling price-value proposition appeal to a broad base including the business community, casual diners, families and travelers.