LRI Holdings, Inc., the Parent Company of Logan's Roadhouse, Inc., Announces Financial Results for the Second Quarter and Year-to-Date Periods of Fiscal Year 2014

News provided by

LRI Holdings, Inc.

Mar 11, 2014, 04:56 ET

NASHVILLE, Tenn., March 11, 2014 /PRNewswire/ -- LRI Holdings, Inc., the parent company of Logan's Roadhouse, Inc., today announced financial results for the second quarter and year-to-date periods of fiscal year 2014 ended January 26, 2014.

Thirteen weeks ended

Twenty-six weeks ended

(In thousands)

January 26,

2014

January 27,

2013

January 26,

2014

January 27,

2013

Net sales

$

153,061

$

160,567

$

300,084

$

310,825

Net (loss) income

(8,991)

5,515

(21,061)

(4,546)

Adjusted EBITDA

9,802

14,663

16,497

26,724

Selected Highlights for the Second Quarter 2014 Compared to the Second Quarter 2013:

  • Net sales decreased 4.7% to $153.1 million from $160.6 million.
  • Comparable restaurant sales decreased 5.3%, average check increased by 2.9%, and customer traffic decreased by 8.0%.
  • Net loss of $9.0 million compared to net income of $5.5 million. 
  • Adjusted EBITDA decreased 33.2% to $9.8 million from $14.7 million. (*)

Selected Highlights for Year-to-Date 2014 Compared to Year-to-Date 2013:

  • Net sales decreased 3.5% to $300.1 million from $310.8 million.
  • Comparable restaurant sales decreased 5.2%, average check increased by 2.1%, and customer traffic decreased by 7.2%.
  • Net loss of $21.1 million compared to net loss of $4.5 million. 
  • Adjusted EBITDA decreased 38.3% to $16.5 million from $26.7 million. (*)

(*) Please see reconciliation table at the end of this release.

Mike Andres, President, Chief Executive Officer and Chairman, stated, "We continue to be focused on building a strong foundation that will provide a platform for long-term sustainable growth. We recognize that this is and will always be a market share game. To win share, we must ensure that our operators have the essential components, including better food and beverage, better training and better operating tools and systems that will lead to a superior guest experience at each of our restaurants in each trading area. We have a strong sense of urgency to deploy these components quickly, however we will also do so prudently. In the meantime, our results reflect the realities of the challenging competitive environment that we are yet to distinguish ourselves in."

Additional discussion and analysis of the Company's financial condition and results of operations can be found in its Quarterly Report on Form 10-Q for the fiscal period ended January 26, 2014. It is available at www.logansroadhouse.com under the investor relations section.

Conference Call

The Company will host a conference call on Thursday, March 13, 2014 at 10:30 a.m. ET to discuss its financial results for the second quarter and year-to-date periods of fiscal year 2014. The conference call will be hosted by Mike Andres, President, Chief Executive Officer, and Chairman, and Amy Bertauski, Chief Financial Officer.

The domestic dial-in number for the call is 877-407-0784, and the international dial-in number is 201-689-8560. Please call approximately 10 minutes in advance to ensure that you are connected prior to the presentation. A telephone replay will be available beginning at 1:30 p.m. ET on Thursday, March 13, 2014 through 11:59 p.m. ET on Thursday, March 20, 2014 and may be accessed by using the domestic replay number 877-870-5176 or the international replay number 858-384-5517; the passcode is 13574873. The archived webcast may be accessed at http://public.viavid.com/index.php?id=107574 and will be available for one year.

About Logan's Roadhouse

Logan's opened its first restaurant in 1991 in Lexington, KY, and has grown as an affordable, full-service casual dining steakhouse offering specially seasoned aged steaks and sizzling southern-inspired dishes in a roadhouse atmosphere. Headquartered in Nashville, Tennessee, Logan's Roadhouse presently runs 233 company-operated and 26 franchised Logan's Roadhouse restaurants in 23 states. LRI Holdings, Inc. is the parent company of Logan's Roadhouse.

Contact
Investor Relations
[email protected]
(855) 255-2789

LRI HOLDINGS, INC CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

















Thirteen weeks ended

Twenty-six weeks ended

(In thousands)

January 26,

2014

January 27,

2013

January 26,

2014

January 27,

2013

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Revenues:






     Net sales

$

153,061

$

160,567

$

300,084

$

310,825

     Franchise fees and royalties

528

526

1,035

1,038

          Total revenues

153,589

161,093

301,119

311,863

Costs and expenses:






     Restaurant operating costs:






          Cost of goods sold

51,791

53,942

101,795

103,882

          Labor and other related expenses

47,247

47,545

93,744

93,251

          Occupancy costs

14,215

13,596

27,828

26,364

          Other restaurant operating expenses

25,782

26,831

51,272

51,492

     Depreciation and amortization

4,961

5,102

10,132

10,414

     Pre-opening expenses

20

763

26

1,674

     General and administrative

7,540

6,722

14,723

14,043

     Restaurant impairment and closing charges

488

701

1,805

701

          Total costs and expenses

152,044

155,202

301,325

301,821

          Operating income (loss)

1,545

5,891

(206)

10,042

Interest expense, net

10,536

10,112

20,855

20,261

     Loss before income taxes

(8,991)

(4,221)

(21,061)

(10,219)

Income tax benefit

—

(9,736)

—

(5,673)

     Net (loss) income

$

(8,991)

$

5,515

$

(21,061)

$

(4,546)

LRI HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS








(In thousands, except share data)

January 26, 2014

July 28, 2013

ASSETS

(unaudited)

Current assets:


     Cash and cash equivalents

$

36,350

$

23,708

     Receivables

10,369

9,583

     Inventories

13,783

12,887

     Prepaid expenses and other current assets

6,297

4,337

     Income taxes receivable

750

432

          Total current assets

67,549

50,947

Property and equipment, net

218,452

223,724

Other assets

14,976

16,085

Goodwill

192,590

192,590

Tradename

71,694

71,694

Other intangible assets, net

18,231

19,272

          Total assets

$

583,492

$

574,312

     LIABILITIES AND STOCKHOLDER'S EQUITY


Current liabilities:


     Accounts payable

$

19,768

$

18,770

     Payable to RHI

1,872

1,118

     Other current liabilities and accrued expenses

58,627

52,383

          Total current liabilities

80,267

72,271

Long-term debt

375,000

355,000

Deferred income taxes

27,745

27,745

Other long-term obligations

45,894

43,649

          Total liabilities

528,906

498,665

Stockholder's equity:


     Common stock ($0.01 par value; 100 shares authorized;

     1 share issued and outstanding)

—

—

     Additional paid-in capital

230,000

230,000

     Retained deficit

(175,414)

(154,353)

          Total stockholder's equity

54,586

75,647

          Total liabilities and stockholder's equity

$

583,492

$

574,312

LRI HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS









Twenty-six weeks ended

(In thousands)

January 26,

2014

January 27,

2013

Cash flows from operating activities:

(unaudited)

(unaudited)

     Net loss

$

(21,061)

$

(4,546)

     Adjustments to reconcile net loss to net cash (used in) provided by operating activities:


          Depreciation and amortization

10,132

10,414

          Other amortization

1,025

902

          Loss on sale/disposal of property and equipment

1,062

543

          Amortization of deferred gain on sale and leaseback transactions

(25)

(19)

          Impairment charges for long-lived assets

1,805

701

          Share-based compensation expense

856

473

Changes in operating assets and liabilities:


     Receivables

(786)

(2,611)

     Inventories

(1,018)

(216)

     Prepaid expenses and other current assets

(1,960)

(783)

     Other non-current assets and intangibles

(241)

176

     Accounts payable

945

(972)

     Payable to RHI

(102)

(16)

     Income taxes payable/receivable

(318)

(2,106)

     Other current liabilities and accrued expenses

6,244

(772)

     Other long-term obligations

2,870

2,359

          Net cash (used in) provided by operating activities

(572)

3,527

Cash flows from investing activities:


     Purchase of property and equipment

(6,786)

(16,163)

     Proceeds from sale and leaseback transactions, net of expenses

—

5,045

          Net cash used in investing activities

(6,786)

(11,118)

Cash flows from financing activities:


     Payments on revolving credit facility

(4,500)

(12,600)

     Borrowings on revolving credit facility

24,500

12,600

          Net cash provided by financing activities

20,000

—

          Increase (decrease) in cash and cash equivalents

12,642

(7,591)

Cash and cash equivalents, beginning of period

23,708

21,732

Cash and cash equivalents, end of period

$

36,350

$

14,141

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. 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 28, 2013, and other 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 supplemental report, 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 EBITDA, Adjusted EBITDA, and Adjusted EBITDAR. 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 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.

EBITDA, Adjusted EBITDA and Adjusted EBITDAR

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.

















Thirteen weeks ended

Twenty-six weeks ended

(In thousands)

January 26, 2014

January 27, 2013

January 26, 2014

January 27, 2013

Net (loss) income

$

(8,991)

$

5,515

$

(21,061)

$

(4,546)

Interest expense, net

10,536

10,112

20,855

20,261

Income tax benefit

—

(9,736)

—

(5,673)

Depreciation and amortization

4,961

5,102

10,132

10,414

          EBITDA

6,506

10,993

9,926

20,456

Adjustments






Sponsor management fees(a)

250

250

500

500

Non-cash asset write-offs:






     Restaurant impairment(b)

488

701

1,805

701

     Loss on disposal of property and equipment(c)

566

393

1,064

531

Restructuring costs(d)

11

—

(449)

167

Pre-opening expenses (excluding rent)(e)

5

637

7

1,392

Losses on sales of property(f)

—

12

4

13

Non-cash rent adjustment(g)

1,500

1,416

2,301

2,381

Costs related to the Transactions(h)

—

—

—

20

Non-cash stock-based compensation(i)

460

255

856

473

Other adjustments(j)

16

6

483

90

          Adjusted EBITDA

9,802

14,663

16,497

26,724

Cash rent expense(k)

10,357

9,906

20,777

19,621

          Adjusted EBITDAR

$

20,159

$

24,569

$

37,274

$

46,345


(a) 

Sponsor management fees consist of fees payable to certain affiliates of Kelso & Company, L.P. (the "Kelso Affiliates") under an advisory agreement.

(b) 

Restaurant impairment charges were recorded in connection with the determination that the carrying value of certain of our restaurants exceeded their estimated fair value.

(c) 

Loss on disposal of property and equipment consists of the loss on disposal or retirement of assets that are not fully depreciated.

(d) 

Restructuring costs include severance, hiring replacement costs and other related charges, including the reversal of any such charges.

(e) 

Pre-opening expenses (excluding rent) include expenses directly associated with the opening of a new restaurant.

(f) 

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.

(g) 

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.

(h) 

Costs related to the Transactions include legal, professional and other fees incurred in connection with our acquisition by the Kelso Affiliates and Management Investors (the "Transactions").

(i) 

Non-cash stock-based compensation represents compensation expense recognized for time-based stock options issued by Roadhouse Holding Inc.

(j) 

Other adjustments include non-recurring expenses and professional fees and ongoing expenses of closed restaurants.

(k) 

Cash rent expense represents actual cash payments required under our leases.

SOURCE LRI Holdings, Inc.

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