LRI Holdings, Inc., the Parent Company of Logan's Roadhouse, Inc., Announces Financial Results for the Third Quarter and Year-to-Date Periods of Fiscal Year 2015

News provided by

LRI Holdings, Inc.

Jun 16, 2015, 06:36 ET

NASHVILLE, Tenn., June 16, 2015 /PRNewswire/ -- LRI Holdings, Inc., the parent company of Logan's Roadhouse, Inc., today announced financial results for the third quarter and year-to-date periods of fiscal year 2015 ended May 3, 2015.

Highlights for the Third Quarter 2015 Compared to the Third Quarter 2014:

  • Total revenue was $163.6 million compared to $169.7 million, a decrease of 3.6%.  
  • Comparable restaurant sales decreased 4.3%, including an average check increase of 4.6%, and customer traffic decrease of 8.5%.
  • Net loss of $6.0 million compared to a net loss of $1.7 million. 
  • Adjusted EBITDA decreased 19.0% to $14.0 million from $17.2 million. (*)

Selected Highlights for Year-to-Date 2015 Compared to Year-to-Date 2014:

  • Total revenue was $464.1 million compared to $470.8 million, a decrease of 1.4%. 
  • Comparable restaurant sales decreased 1.8%, including an average check increase of 5.1%, and customer traffic decrease of 6.6%.
  • Net loss of $30.8 million compared to a net loss of $22.8 million. 
  • Adjusted EBITDA decreased 19.7% to $27.1 million from $33.7 million. (*)

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

Samuel Borgese, President and Chief Executive Officer of Logan's Roadhouse, Inc., stated, "Our financial results for the third quarter of 2015 reflect the effect of the purposed structural changes we are making in the business to rebuild the brand on the pillars of delivering the highest level of guest experience with consistent high quality menu items in an engaging environment at a very compelling everyday value. These pillars are supported by our foundation of great employees, engagement in our communities, and loyal guest satisfaction. We are confident our efforts are reaffirming the position of Logan's Roadhouse as an enduring brand that is and will be the choice of multi-generational guests for lunch and dinner well into the future."

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 May 3, 2015. It is available at www.logansroadhouse.com under the investor relations section.

Conference Call

The Company will host a conference call on Thursday, June 18, 2015 at 10:30 a.m. ET to discuss its financial results for the third quarter and year-to-date periods of fiscal year 2015. The conference call will be hosted by Sam Borgese, President and Chief Executive Officer and Jim Hagan, Chief Financial Officer.

The domestic dial-in number for the call is 888-208-1379, and the international dial-in number is 913-981-5526. 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, June 18, 2015 through 11:59 p.m. ET on Thursday, June 25, 2015, and may be accessed by using the domestic replay number 877-870-5176 or the international replay number 858-384-5517; the passcode is 6508199. The archived webcast may be accessed at http://public.viavid.com/index.php?id=114848 and will be available for one year.

About Logan's Roadhouse

Logan's Roadhouse is a casual dining steakhouse offering our guests wood-fire-grilled steaks, made-from-scratch recipes, fresh ingredients and southern-inspired signature dishes in a roadhouse atmosphere. Logan's opened its first restaurant in 1991 in Lexington, KY, and is headquartered in Nashville, TN. Logan's Roadhouse consists of 230 company-operated and 26 franchised 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

Thirty-nine weeks ended

(In thousands)

May 3, 2015

April 27, 2014

May 3, 2015

April 27, 2014

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Revenues:






   Net sales

$

162,989

$

169,126

$

462,415

$

469,210

   Franchise fees and royalties

620

582

1,710

1,617

      Total revenues

163,609

169,708

464,125

470,827

Costs and expenses:






   Restaurant operating costs:






      Cost of goods sold

58,406

57,716

166,319

159,511

      Labor and other related expenses

48,757

49,887

142,755

143,631

      Occupancy costs

13,693

13,675

42,187

41,503

      Other restaurant operating expenses

23,301

25,389

70,305

76,661

Depreciation and amortization

5,132

5,039

15,297

15,171

Pre-opening expenses

6

255

263

281

General and administrative

8,298

8,685

23,234

23,408

Restaurant impairment and closing charges

1,276

238

2,762

2,043

   Total costs and expenses

158,869

160,884

463,122

462,209

   Operating income (loss)

4,740

8,824

1,003

8,618

Interest expense, net

10,700

10,552

31,795

31,407

   Income (loss) before income taxes

(5,960)

(1,728)

(30,792)

(22,789)

Income tax provision (benefit)

8

—

8

—

   Net income (loss)

$

(5,968)

$

(1,728)

$

(30,800)

$

(22,789)

LRI HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS








(In thousands, except share data)

May 3, 2015

August 3, 2014

ASSETS

(unaudited)

Current assets:


   Cash and cash equivalents

$

7,903

$

9,170

   Receivables

10,816

9,734

   Inventories

14,424

13,832

   Prepaid expenses and other current assets

7,591

6,887

   Income taxes receivable

11

115

      Total current assets

40,745

39,738

Property and equipment, net

197,994

209,078

Other assets

9,867

13,273

Goodwill

163,368

163,368

Tradename

71,251

71,251

Other intangible assets, net

15,628

17,190

   Total assets

$

498,853

$

513,898

LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)


Current liabilities:


   Accounts payable

$

14,426

$

17,414

   Payable to RHI

2,527

2,721

   Other current liabilities and accrued expenses

42,314

51,683

      Total current liabilities

59,267

71,818

Long-term debt

380,260

355,000

Deferred income taxes

27,607

27,607

Other long-term obligations

49,645

46,599

   Total liabilities

516,779

501,024

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

(247,926)

(217,126)

      Total stockholder's equity (deficit)

(17,926)

12,874

      Total liabilities and stockholder's equity (deficit)

$

498,853

$

513,898

LRI HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS









Thirty-nine weeks ended

(In thousands)

May 3, 2015

April 27, 2014

Cash flows from operating activities:

(unaudited)

(unaudited)

   Net income (loss)

$

(30,800)

$

(22,789)

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


      Depreciation and amortization

15,297

15,171

      Other amortization

1,747

1,574

      Loss on sale/disposal of property and equipment

2,172

1,533

      Amortization of deferred gain on sale and leaseback transactions

(38)

(37)

      Impairment charges for long-lived assets

2,762

2,043

      Share-based compensation expense

(170)

1,354

   Changes in operating assets and liabilities:


      Receivables

(1,082)

(26)

      Inventories

(682)

(1,509)

      Prepaid expenses and other current assets

(704)

(1,405)

      Other non-current assets and intangibles

1,173

3

      Accounts payable

(2,832)

(360)

      Payable to RHI

(24)

(110)

      Income taxes payable/receivable

104

(297)

      Other current liabilities and accrued expenses

(9,369)

(8,592)

      Other long-term obligations

3,956

3,255

         Net cash provided by (used in) operating activities

(18,490)

(10,192)

Cash flows from investing activities:


    Purchase of property and equipment

(9,514)

(10,523)

    Proceeds from sale and leaseback transactions, net of expenses

1,477

—

        Net cash provided by (used in) investing activities

(8,037)

(10,523)

Cash flows from financing activities:


    Payments on revolving credit facility

(8,840)

(24,500)

    Borrowings on revolving credit facility

34,100

25,000

         Net cash provided by (used in) financing activities

25,260

500

         Increase in cash and cash equivalents

(1,267)

(20,215)

Cash and cash equivalents, beginning of period

9,170

23,708

Cash and cash equivalents, end of period

$

7,903

$

3,493

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 August 3, 2014, 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

Thirty-nine weeks ended

(In thousands)

May 3, 2015

April 27, 2014

May 3, 2015

April 27, 2014

Net income (loss)

$

(5,968)

$

(1,728)

$

(30,800)

$

(22,789)

Interest expense, net

10,700

10,552

31,795

31,407

Income tax provision (benefit)

8

—

8

—

Depreciation and amortization

5,132

5,039

15,297

15,171

    EBITDA

9,872

13,863

16,300

23,789

Adjustments






Sponsor management fees(a)

250

250

750

750

Non-cash asset write-offs:






   Restaurant impairment(b)

1,276

238

2,762

2,043

   Loss on disposal of property and equipment(c)

481

469

1,843

1,533

Restructuring costs(d)

1,118

302

2,072

(147)

Pre-opening expenses (excluding rent)(e)

6

246

237

253

Losses on sales of property(f)

335

7

339

11

Non-cash rent adjustment(g)

489

667

2,595

2,968

Non-cash stock-based compensation(h)

36

498

(170)

1,354

Hedging (gain) loss (i)

(87)

—

44

—

Other adjustments(j)

192

699

329

1,182

    Adjusted EBITDA

13,968

17,239

27,101

33,736

Cash rent expense(k)

10,728

10,487

32,045

31,264

    Adjusted EBITDAR

$

24,696

$

27,726

$

59,146

$

65,000


(a)

Sponsor management fees consist of fees payable to certain affiliates of Kelso & Company, L.P. ("Kelso") 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, consulting fees related to improving our supply chain practices, 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)

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


(i)

Hedging (gain) loss represents the gain or loss on our forward contract for fuel which will expire in July 2015.


(j)

Other adjustments include non-recurring expenses and professional fees, ongoing expenses of closed restaurants, legal and settlement charges related to a contract termination and legal fees associated with Fair Labor Standards Act litigation.


(k)

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

SOURCE LRI Holdings, Inc.

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