Morton’s Restaurant Group, Inc. (NYSE:MRT) has reported unaudited financial results for its 2007 fiscal first quarter ended April 1, 2007.
“During the quarter, we opened a new Morton’s steakhouse in San Jose, CA, resulting in ten Morton’s steakhouses in California, more than in any other state. We signed a new lease to open our second Morton’s steakhouse in Boston, in the heart of the exciting, rapidly expanding Boston Seaport District. We also renovated our Bertolini’s Authentic Trattoria in Las Vegas and opened at this location, Trevi, our spectacular Italian restaurant, with an updated menu offering both classic Italian favorites and new menu items,” said Thomas J. Baldwin, Chairman, Chief Executive Officer and President of Morton’s Restaurant Group, Inc.
“Our first quarter results were adversely impacted by severe winter weather conditions in parts of the Midwest, Mid-Atlantic and Northeast regions. We believe that our strategic initiatives are on target and we remain firmly focused on continuing to grow our world-class brand.”
First Quarter of Fiscal 2007 Results
Revenues for the first quarter of fiscal 2007 increased 7.0% to $88.9 million compared to $83.1 million for the first quarter of fiscal 2006. The growth in revenues is attributable to revenues from the four new Morton’s steakhouses which opened in fiscal 2006, and one new Morton’s steakhouse which opened in February 2007, as well as a 0.4% (Morton’s + 0.5%, Bertolini’s – 3.3%) increase in comparable restaurant revenues (13 weeks to 13 weeks). The Company believes that fiscal 2007 first quarter revenues and results were adversely impacted by severe winter weather conditions in parts of the Midwest, Mid-Atlantic and Northeast regions. Further, the Company believes that revenues and results for the first quarter of fiscal 2007, when compared to the first quarter of fiscal 2006, were adversely impacted by the timing of certain marketing promotions.
Trevi opened on February 2, 2007. Last year, for the period from January 2, 2006 (first day of fiscal 2006 quarter) through February 1, 2006, the Bertolini’s formerly at that location generated approximately $1.0 million in revenues and approximately $0.2 million in income from operations, or approximately $0.01 per diluted share.
Management fee paid to related party was $0.4 million for the first quarter of fiscal 2006. The related management agreement was terminated in conjunction with the initial public offering (“IPO”) in February 2006. Costs associated with the termination of the management agreement of $8.4 million also were recorded during the first quarter of fiscal 2006. (Please see the reconciliation of fiscal 2006 first quarter pro forma net income to GAAP net 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 the repayment of certain debt 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. (Please see the reconciliation of fiscal 2006 first quarter pro forma net income to GAAP net loss in the financial tables that follow.)
Interest expense, net was $0.9 million for the first quarter of fiscal 2007 compared to $2.2 million for the first quarter of fiscal 2006. The decrease is due to the repayment, in connection with the IPO, of the 7.5% senior secured notes and the 14.0% senior secured notes during the first quarter of fiscal 2006, partially offset by the interest relating to borrowings under the senior revolving credit facility. (Please see the reconciliation of fiscal 2006 first quarter pro forma net income to GAAP net loss in the financial tables that follow.)
The Company’s GAAP net income was $5.0 million, or $0.29 per diluted share, for the first quarter of fiscal 2007, compared to pro forma net income of $5.4 million, or $0.32 per diluted share, for the first quarter of fiscal 2006. (Please see the reconciliation of fiscal 2006 first quarter pro forma net income to GAAP net loss in the financial tables that follow.)
Restaurant Development
On February 2, 2007, the Company opened a Morton’s steakhouse in San Jose, CA. The Company also has entered into leases to open new Morton’s steakhouses in Annapolis, MD; Boston (Seaport District), MA; Cincinnati, OH; Coral Gables, FL; Naperville, IL; Woodland Hills, CA and Macau, China.
During late March 2007, the Company completed the introduction of Bar 12- 21 in our Boca Raton, FL and Atlanta (Buckhead), GA Morton’s steakhouses.
From mid September 2006 through early February 2007, the Bertolini’s at the Forum Shops at Caesars Palace in Las Vegas was closed for renovation. The new Italian restaurant, Trevi, opened at that location on February 2, 2007.
Due to the timing and the concentration of new restaurant development anticipated during the summer months, the Company expects to incur higher pre- opening costs for the second and third quarters and less in the fourth quarter of fiscal 2007 versus the comparable fiscal quarters of 2006.
