Ruby Tuesday, Inc. Conference Call Highlights

Ruby Tuesday, Inc. RT reported its Q1 earnings on Thursday. Shares of the company are up 15 percent.

Below are some key highlights and takeaways from its conference call.

Operational and Financial Highlights:

• As you saw in our earnings release, for the first quarter, our same-restaurant sales increased 1.1%.
• Same-restaurant guest counts increased 1.3%.
• We've developed new advertising that better communicates the fun and casual nature of Ruby Tuesday.
• We remain focused on our goal of driving profitable and sustainable guest count and sales growth.
• We've made solid progress in our brand and business transformation strategies, and we're pleased to see the continued momentum in our sales and guest counts coupled with improved restaurant level margins.
• For the quarter, total revenue was $281.2 million, a decrease of $8.5 million versus the prior year.
• This decline was primarily due to the closing of 38 underperforming company-owned restaurants, partially offset by a 1.1% same-restaurant sales growth.
• Payroll and related costs were 34.3% of sales versus 35.7% of sales in the prior year.
• For the quarter, we reported net income of $2.6 million compared to a prior year net loss of $21.9 million.
• Our book debt was $257.5 million at the end of the quarter compared to $274.7 million in the prior year quarter, a reduction of $17.2 million.
• We ended the quarter with $56.9 million in cash.
• As you may know, in the last 18 months, we've introduced 40 new and improved items to our menu.
• We've now eliminated redundant or unnecessary tasks which has freed up our managers to spend more time directly interacting with guests.

Outlook/Guidance:

• The annual guidance is revised from prior guidance of flat to up 2%.
• We anticipate same-restaurant sales for the second quarter and the year to be positive 1% to 2%.
• Annual restaurant level operating margin is estimated to be between 16% and 17% of sales, as compared to 15.1% in fiscal 2014.
• This is an increase from our previous guidance of 15% to 16%.
• Improvements in cost of goods sold, payroll and related costs and other restaurant operating costs are expected to be partially offset by a return to more normalized incentive compensation level.
• In fiscal 2015, total SG&A spending is estimated to be $127 million to $130 million, which compares to $137.2 million in fiscal 2014.
• We also expect marketing expense for the year to be lower than prior year as we continue to leverage a more efficient marketing strategy that began in the back half of last year.
• These savings are partially offset by a return to more normalized incentive compensation levels.
• During the year, we plan to open one new company-owned Ruby Tuesday restaurant and one re-built Ruby Tuesday restaurant.
• Our international franchisees expect to open five Ruby Tuesday restaurants to eight Ruby Tuesday restaurants.
• We expect to close 10 company-owned Ruby Tuesday restaurants to 13 company-owned Ruby Tuesday restaurants and our domestic franchisees expect to close three Ruby Tuesday restaurants.
• Also in fiscal 2015, our domestic franchisees expect to open two Lime Fresh restaurants.