Company: RRGB
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001171759-25-000028
Chunk: 37

Company: RED ROBIN GOURMET BURGERS INC
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 1
Chunk 37
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Second Amendment”). The Second Amendment, among other things, provides certain relief from the financial covenant by increasing the required maximum net total leverage ratio beginning in the third quarter of 2024 through the third quarter of 2025, increases the aggregate revolving commitments by $15.0 million to $40.0 million through the third quarter of 2025, removes the variable pricing grid and increases the applicable margin on all term loans and revolving loans that are SOFR-based loans to 7.50% per annum and that are ABR-based loans to 6.50% per annum, and adds additional reporting requirements.

On November 4, 2024, the Company entered into the third amendment to our Credit Agreement (the "Third Amendment") which extends the provisions of the Second Amendment through the end of the first fiscal quarter of 2026. 

As of July 13, 2025, the Company had outstanding borrowings under the Credit Facility of $163.1 million, net of $6.1 million of unamortized deferred financing charges and discounts, none of which was classified as current. As of July 13, 2025, the Company had $37.5 million of available borrowing capacity under its Credit Facility and $8.8 million of letters of credit issued against cash collateral. The Company's cash collateral is reported in Restricted cash on our Condensed Consolidated Balance Sheets.

Covenants

We are subject to a number of customary covenants under our Credit Facility, including limitations on additional borrowings, acquisitions, stock repurchases, sales of assets, and dividend payments, as well as a net total leverage ratio covenant. As of July 13, 2025, we were in compliance with all debt covenants.  

Working Capital

We typically maintain current liabilities in excess of our current assets which results in a working capital deficit. We are able to operate with a working capital deficit because restaurant sales are primarily conducted on a cash or credit card basis. Rapid turnover of inventory results in limited investment in inventories, and cash from sales is usually received before related payables for food, supplies, and payroll become due. In addition, receipts from the sale of gift cards are received well in advance of related redemptions. Rather than maintain higher cash balances that would result from this pattern of operating cash flows, we typically utilize operating cash flows in excess of those required for currently maturing liabilities to pay for capital expenditures, debt repayment, or to repurchase stock. When necessary