From: SANFORD TELLER COMMUNICATIONS [LOGO]
1365 York Avenue
New York, New York 10021
(212) 717-0332
For: MORTON'S RESTAURANT GROUP, INC. FOR IMMEDIATE RELEASE
325 North LaSalle Street
Chicago, Illinois 60610
(312) 923-0030
www.mortons.com
May 4, 2006
Contact: RONALD M. DINELLA, SENIOR VICE PRESIDENT, CHIEF
FINANCIAL OFFICER, MORTON'S RESTAURANT GROUP, INC.
MORTON'S RESTAURANT GROUP, INC. REPORTS RESULTS
FOR FIRST QUARTER 2006
- RECORD-SETTING FIRST QUARTER REVENUES -
- COMPARABLE RESTAURANT REVENUES UP 4.4% -
- COMPANY PROVIDES GUIDANCE FOR SECOND QUARTER 2006 AND FULL YEAR 2006 -
HIGHLIGHTS FOR THE FIRST QUARTER OF FISCAL 2006 AS COMPARED TO
THE FIRST QUARTER OF FISCAL 2005
o Revenues increased 7.4% to $83.1 million.
o Comparable restaurant revenues increased 4.4%.
o After non-recurring items associated with the Company's
February 2006 Initial Public Offering ("IPO"), the net loss
reported in accordance with generally accepted accounting
principles ("GAAP") was $(21.6) million, or $(1.57) per diluted
share, which compares to GAAP net income of $0.2 million, or
$0.02 per diluted share in the first quarter of 2005 (refer to
the reconciliation of pro forma net income to GAAP net income
(loss) in the financial tables that follow).
o Pro forma net income was $5.4 million or $0.32 per diluted share,
up 33.3% when compared to $4.1 million, or $0.24 per diluted
share last year (refer to the reconciliation of pro forma net
income to GAAP net income (loss) in the financial tables that
follow).
Chicago, IL. May 4, 2006... Morton's Restaurant Group, Inc. (NYSE:MRT) today
reported unaudited financial results for its 2006 fiscal first quarter ended
April 2, 2006.
"The strength of our Morton's brand and our business model is clearly evident"
said Thomas J. Baldwin, Chairman, Chief Executive Officer and President of
Morton's Restaurant Group, Inc. "We are happy to report first quarter
record-setting revenues of $83.1 million and the opening of our 70th Morton's
Steakhouse, in Troy, Michigan."
"We have a clear and focused strategy, including a disciplined approach to
developing new restaurants and expanding our Boardroom private dining and Bar
12-21 businesses. We are continually committed to our Morton's standards of
providing the highest quality guest experience levels in the industry," he
added.
FIRST QUARTER OF FISCAL 2006 RESULTS
Revenues for the first quarter of fiscal 2006 increased 7.4% to $83.1 million
from $77.3 million for the first quarter of fiscal 2005. The growth in revenues
is attributable to a 4.4% increase in comparable restaurant revenues (13 weeks
to 13 weeks) and revenues from four new Morton's steakhouse restaurants, which
opened in fiscal 2005, and one new Morton's steakhouse restaurant, which opened
in March 2006. The Company believes that Morton's 2006 first quarter revenues
were favorably impacted by an April 2006 Easter versus March 2005.
Management fee paid to related party was $0.4 million for the first quarter of
fiscal 2006, compared to $0.7 million in the first quarter of fiscal 2005. The
related management agreement was terminated in connection with the Company's IPO
in February 2006 and the Company incurred an $8.4 million termination fee.
(Refer to the reconciliation of pro forma net income to GAAP net income (loss)
in the financial tables that follow.)
In connection with the IPO, during the first quarter of fiscal 2006, the Company
incurred costs associated with debt repayment of $28.0 million, primarily
consisting of prepayment penalties that were incurred with the early repayment
of the 7.5% senior secured notes and the 14.0% senior secured notes. The debt
was refinanced in conjunction with the Company's IPO. Costs associated with debt
repayment of $0.2 million for the three month period ended April 3, 2005
represents prepayment penalties that were incurred with the early repayment of
certain mortgages. (Refer to the reconciliation of pro forma net income to GAAP
net income (loss) in the financial tables that follow.)
Interest expense, net was $2.2 million for the first quarter of fiscal 2006
compared to $4.3 million in the first quarter of fiscal 2005. The decrease is
due to the repayment, in connection with the IPO, of the 7.5% senior secured
notes and the 14% senior secured notes partially offset by the interest relating
to borrowings under our new revolving credit facility (Refer to the
reconciliation of pro forma net income to GAAP net income (loss) in the
financial tables that follow).
The Company's pro forma net income was $5.4 million, or $0.32 per diluted share
for the first quarter of fiscal 2006, compared to pro forma net income of $4.1
million, or $0.24 per diluted share, for the first quarter of fiscal 2005 (refer
to the reconciliation of pro forma net income to GAAP net income (loss) in the
financial tables that follow).
RESTAURANT DEVELOPMENT
On March 29, 2006, the Company opened a Morton's steakhouse restaurant in Troy,
MI. The Company has executed leases to open new Morton's steakhouse restaurants
in Anaheim, CA; Coral Gables, FL; Houston, TX; Northbrook, IL and San Jose, CA.
SECOND QUARTER 2006 AND FULL YEAR 2006 FINANCIAL GUIDANCE
The Company expects second quarter 2006 revenues to range between $76 million
and $77 million including increases in comparable restaurant revenues between 2%
to 3%. Diluted net income per share is expected to approximate $0.14 to $0.15.
This range includes estimated compensation expense pursuant to Statement of
Financial Accounting Standards No. 123R "Share Based Payment" (SFAS No. 123R),
which requires the expensing of stock issued to employees (approximately $0.01
per diluted share).
The Company expects fiscal year 2006 revenues to be between $313 million and
$318 million including increases in comparable restaurant revenues of
approximately 2% to 3%. Excluding all non-recurring items associated with the
IPO and other costs associated with the early retirement of debt, pre-IPO
management fees, management termination contract costs, the one-time
compensation expense attributable to the vesting of the executive units
previously granted to certain employees and adjusting the interest expense for
the pro forma effects of the change in the debt structure, pro forma diluted net
income per share is expected to be between $0.74 and $0.77. This range includes
estimated compensation expense pursuant to SFAS No. 123R (approximately $0.03
per diluted share). This range includes expectations that the Company's 2006 pro
forma income tax rate approximates 32% to 34%. The Company expects to open four
to five new Morton's steakhouses in fiscal 2006.
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, May 4, 2006
Time: 5:00 p.m. ET (please dial in by 4:45 p.m.)
Dial-In #: (866) 558-6338 U.S. & Canada
(213) 785-2437 International
Alternatively, the conference call will be webcast at www.mortons.com under the
"investor relations" tab.
ABOUT THE COMPANY
Morton's Restaurant Group, Inc. is the world's largest owner and operator of
company-owned upscale steakhouse restaurants. 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 April 2, 2006, the Company owned and operated 70 Morton's Steakhouses
located in 61 cities across 28 states and four international locations (Toronto,
Vancouver, Singapore and Hong Kong) and 4 Bertolini's Authentic Trattoria
restaurants.
FORWARD-LOOKING STATEMENTS
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED IN THIS NEWS RELEASE, THE
MATTERS ADDRESSED ARE FORWARD-LOOKING STATEMENTS THAT INVOLVE CERTAIN RISKS AND
UNCERTAINTIES, INCLUDING, BUT NOT LIMITED TO, RISKS OF THE RESTAURANT INDUSTRY,
INCLUDING A HIGHLY COMPETITIVE INDUSTRY WITH MANY WELL-ESTABLISHED COMPETITORS
WITH GREATER FINANCIAL AND OTHER RESOURCES THAN THE COMPANY, THE IMPACT OF
CHANGES IN CONSUMER TASTES, LOCAL, REGIONAL AND NATIONAL ECONOMIC AND MARKET
CONDITIONS, RESTAURANT PROFITABILITY LEVELS, EXPANSION PLANS, DEMOGRAPHIC
TRENDS, TRAFFIC PATTERNS, EMPLOYEE AVAILABILITY, BENEFITS AND COST INCREASES,
PRODUCT SAFETY AND AVAILABILITY, GOVERNMENT REGULATION, THE COMPANY'S ABILITY TO
MAINTAIN ADEQUATE FINANCING FACILITIES AND OTHER RISKS DETAILED FROM TIME TO
TIME IN THE COMPANY'S REPORTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
YOU SHOULD BE AWARE THAT THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. THE COMPANY ASSUMES NO
OBLIGATION TO UPDATE THE FORWARD-LOOKING INFORMATION.
# # #
Morton's Restaurant Group, Inc.
Margin Analysis - Unaudited
(In thousands, except per share data)
First Quarter Ended
------------------------------------------------------------------
April 2, 2006 April 3, 2005
------------------------------ ------------------------------
(Note 1)
Revenues $ 83,090 100.0% $77,338 100.0%
Food and beverage costs 27,645 33.3% 26,002 33.6%
Restaurant operating expenses 37,812 45.5% 34,776 45.0%
Pre-opening costs 629 0.8% 1,092 1.4%
Depreciation and amortization 1,717 2.1% 1,632 2.1%
General and administrative expenses 5,076 6.1% 5,199 6.7%
Marketing and promotional expenses 1,177 1.4% 1,423 1.8%
Stock compensation expense associated with IPO 488 0.6% - 0.0%
Management fee paid to related party 390 0.5% 700 0.9%
----------- -------
Operating income 8,156 9.8% 6,514 8.4%
Gain on sale of investment - 0.0% (648) (0.8%)
Costs associated with debt repayment 28,003 33.7% 174 0.2%
Costs associated with termination of management agreement 8,400 10.1% - 0.0%
Interest expense, net 2,185 2.6% 4,291 5.5%
----------- -------
(Loss) income before income taxes (30,432) (36.6%) 2,697 3.5%
Income tax (benefit) expense (8,806) (10.6%) 2,462 3.2%
----------- --------
Net (loss) income $ (21,626) (26.0%) $ 235 0.3%
=========== ========
Diluted net (loss) income per share $ (1.57) $ 0.02
Shares used in computing diluted net (loss) income per share 13,795.7 10,098.5
NOTE:
(1) In conjunction with the IPO, Morton's Holding Company, Inc. ("MHCI") was
merged into Morton's Restaurant Group, Inc ("MRG") with MRG being the
surviving corporation. In accordance with SFAS 141, these financial
statements are presented as if MHCI was merged with and into MRG at the
beginning of fiscal 2005.
Morton's Restaurant Group, Inc.
Pro Forma Net Income and Pro Forma Diluted Earnings Per Share (Note 1)
(In thousands, except per share data)
First Quarter Ended
---------------------------------
PRO FORMA ANALYSIS April 2, 2006 April 3, 2005
------------- -------------
Net (loss) income, as reported $ (21,626) $ 235
Income tax (benefit) expense (8,806) 2,462
------------- -------------
(Loss) income before income taxes, as reported (30,432) 2,697
Pro forma adjustments (1):
Gain on sale of investment (2) -- (648)
Costs associated with the early repayment of certain debt (3) 28,003 174
Stock compensation expense associated with IPO (4) 488 --
Management fee paid to a related party (5) 390 700
Costs associated with termination of management agreement (6) 8,400 --
Interest expense (7) 1,239 3,146
------------- -------------
Pro forma income before income taxes 8,088 6,069
Income tax expense (8) 2,643 1,983
------------- -------------
Pro forma net income $ 5,445 $ 4,086
============= =============
Pro forma diluted net income per share $ 0.32 $ 0.24
Shares used in computing pro forma diluted net income per share (9) 17,140.8 17,140.8
NOTES:
(1) These pro forma calculations provide meaningful supplemental information on
the Company's operating results on a basis comparable with that of future
periods.
(2) Gain on sale of investment represents a 2005 one-time gain from the sale of
stock of a privately owned company.
(3) Includes prepayment premiums relating to the repayment of the 7.5% and the
14% senior secured notes, investment banking and legal fees in connection
with the tender offer for the 7.5% senior secured notes and the repurchase
of the 14% senior secured notes, fees in connection with the termination of
the prior working capital facility and the write-off of deferred financing
fees relating to the 7.5% and 14% senior secured notes and the prior
working capital facility.
(4) Represents the non-recurring stock compensation expense attributable to the
vesting of the executive units previously granted to certain employees. The
vesting occurred in conjunction with the Company's IPO.
(5) The related management agreement was terminated in conjunction with the
Company's IPO in February 2006.
(6) Represents the fee paid to terminate the management agreement.
(7) Interest expense was adjusted to eliminate interest expense of $1.6 million
related to the 7.5% and 14% senior secured notes which were repaid in
February 2006 and to reflect the new senior revolving credit facility by
adding interest expense of $0.4 million.
(8) The Company expects the 2006 income tax rate to approximate 32% to 34%.
(9) Post IPO fully diluted shares outstanding including 240,300 unvested
restricted shares outstanding as of April 2, 2006. Assumes shares
outstanding entire period.