Attached files
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| 8-K - FORM 8-K - LRI HOLDINGS, INC. | form8k.htm |
Exhibit 99.1
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LRI Holdings, Inc., the Parent Company of Logan’s Roadhouse, Inc., Announces Financial Results for the Fourth Quarter and Fiscal Year 2012
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Nashville, Tenn. – October 23, 2012 – LRI Holdings, Inc., the parent company of Logan’s Roadhouse, Inc., today announced financial results for the fourth quarter and fiscal year ended July 29, 2012.
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Successor
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Predecessor
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(In thousands)
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Thirteen weeks ended July 29, 2012
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Thirteen weeks ended July 31, 2011
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Fifty-two weeks ended July 29, 2012
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Period from October 4, 2010 to July 31, 2011
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Period from August 2, 2010 to October 3, 2010
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Combined fifty-two weeks ended July 31, 2011 (Non-GAAP)
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Net sales
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$ | 159,753 | $ | 150,988 | $ | 629,987 | $ | 497,170 | $ | 93,762 | $ | 590,932 | ||||||||||||
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Restaurant operating profit
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19,620 | 23,063 | 88,992 | 80,582 | 12,488 | 93,070 | ||||||||||||||||||
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Restaurant operating margin
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12.3 | % | 15.3 | % | 14.1 | % | 16.2 | % | 13.3 | % | 15.7 | % | ||||||||||||
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Net (loss) income
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(52,096 | ) | 1,674 | (46,528 | ) | 580 | (224 | ) | 356 | |||||||||||||||
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Adjusted EBITDA
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$ | 16,336 | $ | 19,951 | $ | 75,218 | $ | 71,816 | $ | 8,567 | $ | 80,383 | ||||||||||||
Selected Highlights for the Fourth Quarter 2012 Compared to the Fourth Quarter 2011:
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§
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Net sales increased 5.8% to $159.8 million from $151.0 million.
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§
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Comparable restaurant sales declined 1.9%, average check increased by 3.1%, and customer traffic decreased by 4.9%.
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§
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Restaurant operating profit decreased 14.9% to $19.6 million from $23.1 million.
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§
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Net loss of $52.1 million compared to net income of $1.7 million. Included in the fourth quarter 2012 results was a non-cash goodwill impairment charge of $48.5 million and non-cash restaurant impairment charges of $4.3 million. Excluding these non-cash impairment charges, adjusted net income for the fourth quarter of fiscal year 2012 was $0.8 million.
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§
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Adjusted EBITDA decreased 18.1% to $16.3 million from $20.0 million.
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Selected Highlights for Fiscal Year 2012 Compared to the Combined Fiscal Year 2011:
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§
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Opened 19 new company-owned Logan’s Roadhouse® restaurants.
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§
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Net sales increased 6.6% to $630.0 million from $590.9 million.
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§
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Comparable restaurant sales declined 1.2%, average check increased by 3.7%, and customer traffic decreased by 4.7%.
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§
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Restaurant operating profit decreased 4.4% to $89.0 million from $93.1 million.
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§
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Net loss was $46.5 million compared to net income of $0.4 million. Included in the fiscal year 2012 results was a non-cash goodwill impairment charge of $48.5 million and non-cash restaurant impairment charges of $4.4 million. Excluding these non-cash impairment charges, adjusted net income for the fiscal year 2012 was $6.4 million.
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§
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Adjusted EBITDA decreased 6.4% to $75.2 million compared to $80.4 million.
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Please see reconciliation tables of the non-GAAP measures of restaurant operating profit and margin and Adjusted EBITDA, to the most directly comparable GAAP measures included at the end of this release.
Additional discussion and analysis of the Company’s financial condition and results of operations can be found in its Annual Report on Form 10-K for the fiscal year ended July 29, 2012. It is available at www.logansroadhouse.com under the investor relations section.
- 1 -
Thomas Vogel, President, Chairman, and Chief Executive Officer of Logan’s Roadhouse, Inc., stated, “Our fourth quarter and fiscal year results reflect a challenging economic and competitive environment, as well as the operational challenges we face with commodity inflation and sales deleveraging. Traffic growth remains our top priority and we have focused our efforts on operational execution, menu innovation, traffic building messages, and refreshing our bars where we are encouraged to have gained traction in driving increased alcohol sales.”
Mr. Vogel concluded, “In view of the current environment, we are taking a conservative approach to managing our business and capital structure. We have already proactively amended our credit agreement so that we can maintain adequate cushions in our financial covenants and we have also limited restaurant development to approximately 15 restaurants in fiscal year 2013 compared to 19 openings in fiscal year 2012. We intend to continue funding our growth through operating cash flows and lease financing to protect our balance sheet and ensure that we can meet all of our financial obligations. And while we are certainly disappointed to have incurred goodwill and restaurant impairment charges during the fourth quarter, these non-cash charges in no way affect our day to day operations, cash balances, or operating cash flows.”
Conference Call
The Company will host a conference call on Tuesday, October 30, 2012 at 4:00 p.m. ET to discuss its financial results for the fourth quarter and fiscal year 2012. The conference call will be hosted by Thomas Vogel, President and Chief Executive Officer, and Amy Bertauski, Chief Financial Officer.
The domestic dial-in number for the call is 888-661-5140, and the international dial-in number is 913-312-0866. Please call approximately 10 minutes in advance to ensure that you are connected prior to the presentation. A telephone replay may be accessed by using the domestic replay number 877-870-5176 or the international replay number 858-384-5517; the passcode is 7604115.
About Logan’s Roadhouse
Logan’s opened its first restaurant in 1991 in Lexington, KY, and has grown as an affordable, full-service restaurant chain to 225 company-owned and 26 franchised Logan's Roadhouse restaurants in 23 states. The Company’s mission is to recreate the traditional American roadhouse by offering consumers value-oriented, high quality, “craveable” meals for lunch and dinner served in the hospitable tradition and distinctive atmosphere reminiscent of an American roadhouse of the 1930’s and 1940’s. Logan’s menu features specially seasoned aged steaks, fresh ground steak burgers, fresh chicken dishes and salads, fall-off-the-bone ribs, distinctive fresh-baked yeast rolls and bottomless buckets of peanuts. LRI Holdings, Inc. is the parent company of Logan’s Roadhouse.
Contact
Investor Relations
InvestorRelations@logansroadhouse.com
(855) 255-2789
- 2 -
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LRI HOLDINGS, INC CONSOLIDATED STATEMENTS OF OPERATIONS
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Successor
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Predecessor
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(In thousands)
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Thirteen weeks ended July 29, 2012
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Thirteen weeks ended July 31, 2011
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Fifty-two weeks ended July 29, 2012
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Period from October 4, 2010 to July 31, 2011
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Period from August 2, 2010 to October 3, 2010
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Combined fifty-two weeks ended July 31, 2011 (Non-GAAP)
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(unaudited)
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(unaudited)
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Revenues:
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Net sales
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$ | 159,753 | $ | 150,988 | $ | 629,987 | $ | 497,170 | $ | 93,762 | $ | 590,932 | ||||||||||||
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Franchise fees and royalties
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565 | 548 | 2,186 | 1,793 | 348 | 2,141 | ||||||||||||||||||
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Total revenues
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160,318 | 151,536 | 632,173 | 498,963 | 94,110 | 593,073 | ||||||||||||||||||
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Costs and expenses:
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Restaurant operating costs:
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Cost of goods sold
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53,098 | 49,838 | 207,225 | 162,805 | 29,172 | 191,977 | ||||||||||||||||||
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Labor and other related expenses
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46,533 | 44,269 | 184,310 | 145,258 | 28,578 | 173,836 | ||||||||||||||||||
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Occupancy costs
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12,570 | 11,484 | 48,780 | 36,817 | 8,046 | 44,863 | ||||||||||||||||||
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Other restaurant operating expenses
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27,932 | 22,334 | 100,680 | 71,708 | 15,478 | 87,186 | ||||||||||||||||||
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Depreciation and amortization
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5,355 | 4,569 | 20,309 | 14,588 | 3,112 | 17,700 | ||||||||||||||||||
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Pre-opening expenses
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720 | 542 | 4,808 | 2,984 | 783 | 3,767 | ||||||||||||||||||
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General and administrative
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6,789 | 6,076 | 25,373 | 30,460 | 14,440 | 44,900 | ||||||||||||||||||
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Goodwill and intangible asset impairment
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48,526 | - | 48,526 | - | - | - | ||||||||||||||||||
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Store impairment and closing charges
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4,330 | 25 | 4,438 | 25 | - | 25 | ||||||||||||||||||
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Total costs and expenses
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205,853 | 139,137 | 644,449 | 464,645 | 99,609 | 564,254 | ||||||||||||||||||
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Operating (loss) income
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(45,535 | ) | 12,399 | (12,276 | ) | 34,318 | (5,499 | ) | 28,819 | |||||||||||||||
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Interest expense, net
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10,134 | 10,237 | 39,748 | 33,823 | 3,147 | 36,970 | ||||||||||||||||||
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Other income, net
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- | - | - | (15 | ) | (182 | ) | (197 | ) | |||||||||||||||
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(Loss) income before income taxes
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(55,669 | ) | 2,162 | (52,024 | ) | 510 | (8,464 | ) | (7,954 | ) | ||||||||||||||
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Income tax (benefit) expense
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(3,573 | ) | 488 | (5,496 | ) | (70 | ) | (8,240 | ) | (8,310 | ) | |||||||||||||
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Net (loss) income
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(52,096 | ) | 1,674 | (46,528 | ) | 580 | (224 | ) | 356 | |||||||||||||||
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Undeclared preferred dividend
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- | - | - | - | (2,270 | ) | (2,270 | ) | ||||||||||||||||
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Net (loss) income attributable to common stockholders
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$ | (52,096 | ) | $ | 1,674 | $ | (46,528 | ) | $ | 580 | $ | (2,494 | ) | $ | (1,914 | ) | ||||||||
- 3 -
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LRI HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS
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(In thousands, except share data)
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July 29, 2012 (Successor)
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July 31, 2011 (Successor)
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ASSETS
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Current assets:
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Cash and cash equivalents
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$ | 21,732 | $ | 19,103 | ||||
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Receivables
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8,288 | 9,960 | ||||||
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Inventories
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12,349 | 11,370 | ||||||
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Prepaid expenses and other current assets
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4,294 | 3,367 | ||||||
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Income taxes receivable
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3,911 | 3,688 | ||||||
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Deferred income taxes
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2,046 | 2,207 | ||||||
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Total current assets
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52,620 | 49,695 | ||||||
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Property and equipment, net
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239,553 | 232,940 | ||||||
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Other assets
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18,527 | 19,492 | ||||||
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Goodwill
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284,078 | 331,788 | ||||||
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Tradename
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71,694 | 71,694 | ||||||
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Other intangible assets, net
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21,354 | 23,215 | ||||||
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Total assets
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$ | 687,826 | $ | 728,824 | ||||
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LIABILITIES AND STOCKHOLDER'S EQUITY
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Current liabilities:
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Accounts payable
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$ | 21,193 | $ | 17,573 | ||||
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Payable to RHI
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50 | 802 | ||||||
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Other current liabilities and accrued expenses
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55,268 | 52,315 | ||||||
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Total current liabilities
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76,511 | 70,690 | ||||||
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Long-term debt
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355,000 | 355,000 | ||||||
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Deferred income taxes
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32,561 | 37,746 | ||||||
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Other long-term obligations
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39,702 | 34,808 | ||||||
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Total liabilities
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503,774 | 498,244 | ||||||
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Commitments and contingencies
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- | - | ||||||
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Stockholder’s equity:
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Common stock ($0.01 par value; 100 shares authorized; 1 share issued and outstanding)
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- | - | ||||||
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Additional paid-in capital
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230,000 | 230,000 | ||||||
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Retained (deficit) earnings
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(45,948 | ) | 580 | |||||
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Total stockholder’s equity
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184,052 | 230,580 | ||||||
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Total liabilities and stockholder’s equity
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$ | 687,826 | $ | 728,824 | ||||
- 4 -
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LRI HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
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(In thousands)
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Fiscal year 2012 (Successor)
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Period from October 4, 2010 to July 31, 2011 (Successor)
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Period from August 2, 2010 to
October 3, 2010
(Predecessor)
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Cash flows from operating activities:
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Net (loss) income
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$ | (46,528 | ) | $ | 580 | $ | (224 | ) | ||||
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Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
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Depreciation and amortization
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20,309 | 14,588 | 3,112 | |||||||||
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Other amortization
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1,289 | 4,502 | 241 | |||||||||
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Unrealized gain on interest rate swap
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- | - | (182 | ) | ||||||||
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Loss on sale/disposal of property and equipment
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3,467 | 765 | 203 | |||||||||
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Amortization of deferred gain on sale and leaseback transactions
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(23 | ) | (3 | ) | (18 | ) | ||||||
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Impairment charges for long-lived assets
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4,438 | 25 | - | |||||||||
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Goodwill impairment
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48,526 | - | - | |||||||||
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Share-based compensation expense
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746 | 821 | - | |||||||||
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Tax benefit upon cancellation/exercise of Predecessor stock options
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- | - | 6,431 | |||||||||
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Deferred income taxes
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(5,024 | ) | (1,103 | ) | (10,701 | ) | ||||||
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Changes in operating assets and liabilities:
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Receivables
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1,672 | (113 | ) | 126 | ||||||||
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Inventories
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(979 | ) | (1,114 | ) | (205 | ) | ||||||
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Prepaid expenses and other current assets
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(927 | ) | 5,158 | 1,668 | ||||||||
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Other non-current assets and intangibles
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(2,009 | ) | (651 | ) | (179 | ) | ||||||
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Accounts payable
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3,459 | 238 | 413 | |||||||||
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Payable to RHI
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(48 | ) | (19 | ) | - | |||||||
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Income taxes payable/receivable
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(223 | ) | 849 | (3,985 | ) | |||||||
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Other current liabilities and accrued expenses
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2,898 | (12,389 | ) | 4,942 | ||||||||
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Other long-term obligations
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5,445 | 4,415 | 1,022 | |||||||||
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Net cash provided by operating activities
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36,488 | 16,549 | 2,664 | |||||||||
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Cash flows from investing activities:
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Acquisition of LRI Holdings, net of cash acquired
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- | (311,633 | ) | - | ||||||||
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Loan to parent for repurchase of shares
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(1,450 | ) | - | - | ||||||||
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Purchase of property and equipment
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(48,609 | ) | (32,998 | ) | (7,036 | ) | ||||||
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Proceeds from sale and leaseback transactions, net of expenses
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16,200 | 1,793 | 1,656 | |||||||||
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Net cash used in investing activities
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(33,859 | ) | (342,838 | ) | (5,380 | ) | ||||||
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Cash flows from financing activities:
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Proceeds from issuance of Senior Secured Notes
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- | 355,000 | - | |||||||||
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Payments for debt issuance costs
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- | (19,207 | ) | - | ||||||||
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Contribution from parent
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- | 230,000 | - | |||||||||
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Repayment of Predecessor’s senior secured credit facility
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- | (132,825 | ) | - | ||||||||
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Repayment of Predecessor’s senior subordinated unsecured mezzanine
term notes, including prepayment premium
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- | (87,576 | ) | - | ||||||||
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Payments on revolving credit facility
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(18,400 | ) | - | - | ||||||||
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Borrowings on revolving credit facility
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18,400 | - | - | |||||||||
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Net cash (used in) provided by financing activities
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- | 345,392 | - | |||||||||
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Increase (decrease) in cash and cash equivalents
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2,629 | 19,103 | (2,716 | ) | ||||||||
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Cash and cash equivalents, beginning of period
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19,103 | - | 52,211 | |||||||||
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Cash and cash equivalents, end of period
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$ | 21,732 | $ | 19,103 | $ | 49,495 | ||||||
- 5 -
Forward-Looking Statements
This press release contains statements about future events and expectations that constitute forward-looking statements. These forward-looking statements can generally be identified by the use of forward-looking terminology such as “may,” “plan,” “seek,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or the negative thereof or similar terminology. These statements are based on management’s beliefs, assumptions and expectations of our future financial and operating performance and growth plans, taking into account the information currently available. These statements are not statements of historical fact. Examples of forward-looking statements in this press release include our targets for future new unit growth. Forward-looking statements involve risks and uncertainties that may cause the Company’s actual results to differ materially from the expectations of future results we express or imply in any forward-looking statements and you should not place undue reliance on such statements. Please refer to our Annual Report on Form 10-K for the fiscal year ended July 29, 2012, and subsequent periodic reports that we have filed with the Securities and Exchange Commission, for a discussion of risk factors that may contribute to these differences. Any forward-looking information presented herein is made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events or otherwise.
Non-GAAP Financial Measures
This press release also contains non-GAAP financial measures such as Restaurant Operating Margin, EBITDA, Adjusted EBITDA, Adjusted EBITDAR, and the Combined presentation of the Predecessor and Successor periods of fiscal year 2011. The Company believes that these measures, together with reconciliations to the most comparable GAAP measure, are helpful to both management and investors in understanding and analyzing financial performance. However, the Company’s non-GAAP financial measures may not be comparable to similarly titled non-GAAP financial measures used by other companies. These non-GAAP measures and the Combined presentation for fiscal year 2011 have limitations as an analytical tool and should not be considered in isolation or as a substitute for GAAP financial measures.
To the extent we discuss any non-GAAP financial measures on the earnings call, a reconciliation of each measure to the most directly comparable GAAP measure is available in this press release. In addition, the Current Report on Form 8-K furnished to the SEC concurrent with the issuance of this press release includes a more detailed description of each of these non-GAAP financial measures, together with a discussion of the usefulness and purpose of such measures.
Restaurant Operating Margin
Restaurant operating margin represents net sales less (a) cost of goods sold, (b) labor and other related expenses, (c) occupancy costs and (d) other restaurant operating expenses, divided by net sales. The following table sets forth a reconciliation of net sales to restaurant operating margin:
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Successor
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Predecessor
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(In thousands)
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Thirteen weeks ended July 29, 2012
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Thirteen weeks ended July 31, 2011
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Fifty-two weeks ended July 29, 2012
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Period from October 4, 2010 to July 31, 2011
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Period from August 2, 2010 to October 3, 2010
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Combined fifty-two weeks ended July 31, 2011 (Non-GAAP)
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Net sales (A)
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$ | 159,753 | $ | 150,988 | $ | 629,987 | $ | 497,170 | $ | 93,762 | $ | 590,932 | ||||||||||||
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Restaurant operating expenses:
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Cost of goods sold
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53,098 | 49,838 | 207,225 | 162,805 | 29,172 | 191,977 | ||||||||||||||||||
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Labor and other related expenses
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46,533 | 44,269 | 184,310 | 145,258 | 28,578 | 173,836 | ||||||||||||||||||
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Occupancy costs
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12,570 | 11,484 | 48,780 | 36,817 | 8,046 | 44,863 | ||||||||||||||||||
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Other restaurant operating expenses
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27,932 | 22,334 | 100,680 | 71,708 | 15,478 | 87,186 | ||||||||||||||||||
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Restaurant operating profit (B)
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$ | 19,620 | $ | 23,063 | $ | 88,992 | $ | 80,582 | $ | 12,488 | $ | 93,070 | ||||||||||||
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Restaurant operating margin (B / A)
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12.3 | % | 15.3 | % | 14.1 | % | 16.2 | % | 13.3 | % | 15.7 | % | ||||||||||||
- 6 -
EBITDA and Adjusted EBITDA
The following table sets forth a reconciliation of net (loss) income, the most directly comparable GAAP financial measure, to EBITDA, Adjusted EBITDA and Adjusted EBITDAR.
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Successor
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Predecessor
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(In thousands)
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Thirteen weeks ended July 29, 2012
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Thirteen weeks ended July 31, 2011
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Fifty-two weeks ended July 29, 2012
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Period from October 4, 2010 to July 31, 2011
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Period from August 2, 2010 to October 3, 2010
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Combined fifty-two weeks ended July 31, 2011 (Non-GAAP)
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Net (loss) income
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$ | (52,096 | ) | $ | 1,674 | $ | (46,528 | ) | $ | 580 | $ | (224 | ) | $ | 356 | |||||||||
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Interest expense, net
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10,134 | 10,237 | 39,748 | 33,823 | 3,147 | 36,970 | ||||||||||||||||||
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Income tax (benefit) expense
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(3,573 | ) | 488 | (5,496 | ) | (70 | ) | (8,240 | ) | (8,310 | ) | |||||||||||||
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Depreciation and amortization
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5,355 | 4,569 | 20,309 | 14,588 | 3,112 | 17,700 | ||||||||||||||||||
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EBITDA
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(40,180 | ) | 16,968 | 8,033 | 48,921 | (2,205 | ) | 46,716 | ||||||||||||||||
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Adjustments
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Sponsor management fees(a)
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250 | 188 | 1,000 | 795 | 205 | 1,000 | ||||||||||||||||||
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Non-cash asset write-offs:
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Goodwill impairment(b)
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48,526 | - | 48,526 | - | - | - | ||||||||||||||||||
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Restaurant impairment(c)
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4,330 | 25 | 4,438 | 25 | - | 25 | ||||||||||||||||||
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Loss on disposal of property and equipment(d)
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1,256 | 318 | 3,341 | 741 | 164 | 905 | ||||||||||||||||||
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Restructuring costs(e)
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12 | - | 442 | - | - | - | ||||||||||||||||||
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Pre-opening expenses (excluding rent)(f)
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545 | 270 | 3,882 | 2,296 | 598 | 2,894 | ||||||||||||||||||
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Hedging gain(g)
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- | - | - | - | (182 | ) | (182 | ) | ||||||||||||||||
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Losses on sales of property(h)
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117 | 9 | 125 | 23 | 39 | 62 | ||||||||||||||||||
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Non-cash rent adjustment(i)
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1,257 | 1,083 | 4,610 | 4,478 | (334 | ) | 4,144 | |||||||||||||||||
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Costs related to the Transactions(j)
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- | 802 | 43 | 13,671 | 10,272 | 23,943 | ||||||||||||||||||
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Non-cash stock-based compensation(k)
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216 | 252 | 746 | 821 | - | 821 | ||||||||||||||||||
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Other adjustments(l)
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7 | 36 | 32 | 45 | 10 | 55 | ||||||||||||||||||
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Adjusted EBITDA
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16,336 | 19,951 | 75,218 | 71,816 | 8,567 | 80,383 | ||||||||||||||||||
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Cash rent expense(m)
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9,238 | 8,653 | 36,626 | 26,877 | 7,128 | 34,005 | ||||||||||||||||||
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Adjusted EBITDAR
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$ | 25,574 | $ | 28,604 | $ | 111,844 | $ | 98,693 | $ | 15,695 | $ | 114,388 | ||||||||||||
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(a)
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Prior to the completion of the Transactions, sponsor management fees consisted of fees paid to our Predecessor owners under a management and consulting services agreement, which was terminated in connection with the Transactions. Following the completion of the Transactions, sponsor management fees consist of fees paid to the Kelso Affiliates under an advisory agreement.
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(b)
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We recorded a goodwill impairment charge in fiscal year 2012.
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(c)
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Restaurant impairment charges were recorded in connection with the determination that the carrying value of certain of our restaurants exceeded their estimated fair value.
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(d)
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Loss on disposal of property and equipment consists of the loss on disposal or retirement of assets that are not fully depreciated.
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(e)
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Restructuring costs include severance and other related costs.
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(f)
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Pre-opening expenses (excluding rent) include expenses directly associated with the opening of a new restaurant.
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(g)
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Hedging gain relates to fair market value changes of an interest rate swap and the related interest. The interest rate swap was terminated in connection with the Transactions.
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(h)
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We recognize losses in connection with the sale and leaseback of restaurants when the fair value of the property being sold is less than the undepreciated cost of the property.
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(i)
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Non-cash rent adjustments represent the non-cash rent expense calculated as the difference between GAAP rent expense and amounts payable in cash under the leases during such time period. In measuring our operational performance, we focus on our cash rent payments.
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(j)
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Costs related to the Transactions include: expenses related to business combination accounting recognized in connection with the Transactions, a one-time fee of $7.0 million paid to the Kelso Affiliates and legal, professional, and other fees incurred as a result of the Transactions.
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(k)
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Non-cash stock-based compensation represents compensation expense recognized for time-based stock options issued by RHI.
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(l)
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Other adjustments include ongoing expenses of closed restaurants, as well as inventory write-offs, employee termination buyouts and incidental charges related to restaurant closings.
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(m)
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Cash rent expense represents actual cash payments required under our leases.
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