LRI Holdings, Inc., the Parent Company of Logan's Roadhouse, Inc., Announces Financial Results for the First Quarter of Fiscal Year 2014

NASHVILLE, Tenn., Dec. 10, 2013 /PRNewswire/ -- LRI Holdings, Inc., the parent company of Logan's Roadhouse, Inc., today announced financial results for the first quarter of fiscal year 2014 ended October 27, 2013.

 




Thirteen weeks ended

(In thousands)


October 27, 2013


October 28, 2012

Net sales


$

147,023



$

150,258


Net loss


(12,070)



(10,061)


Adjusted EBITDA


6,695



12,061


 

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

  • Net sales decreased 2.2% to $147.0 million from $150.3 million.
  • Comparable restaurant sales decreased 5.2%, average check increased by 1.4%, and customer traffic decreased by 6.5%
  • Net loss of $12.1 million compared to net loss of $10.1 million.
  • Adjusted EBITDA decreased 44.5% to $6.7 million from $12.1 million. (*)

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

Mike Andres, President, Chief Executive Officer and Chairman, stated "The first quarter continued to be challenging with respect to the economic and competitive environment which contributed to a decrease in customer traffic. Also, as we focus on providing our guests with a better quality dining experience, we continue to work through some difficult sales comparisons as we lap over heavy discount promotions that drove traffic in the prior year, but sometimes at the detriment of the overall guest experience. This has produced choppy sales results this year and is compounded by increased promotional activity from our competitors and continued pressure on the discretionary income of our guests."

Mr. Andres continued, "We continue to focus on our sources of growth, including restaurant-level execution and revitalizing our concept and brand to position ourselves for long-term sustainable growth."

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 quarterly period ended October 27, 2013. It is available at www.logansroadhouse.com under the investor relations section.

Conference Call

The Company will host a conference call on Thursday, December 12, 2013 at 10:30 a.m. ET to discuss its financial results for the first quarter 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, December 12, 2013 through 11:59 p.m. ET on Thursday, December 19, 2013, and may be accessed by using the domestic replay number 877-870-5176 or the international replay number 858-384-5517; the passcode is 13573075. The archived webcast may be accessed at http://public.viavid.com/index.php?id=107034 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
InvestorRelations@logansroadhouse.com
(855) 255-2789


 




LRI HOLDINGS, INC CONSOLIDATED STATEMENTS OF OPERATIONS










Thirteen weeks ended

(In thousands)

October 27, 2013


October 28, 2012


(unaudited)


(unaudited)

Revenues:




  Net sales

$

147,023



$

150,258


  Franchise fees and royalties

507



512


     Total revenues

147,530



150,770


Costs and expenses:




  Restaurant operating costs:




     Cost of goods sold

50,004



49,940


     Labor and other related expenses

46,497



45,706


     Occupancy costs

13,613



12,768


     Other restaurant operating expenses

25,490



24,661


  Depreciation and amortization

5,171



5,312


  Pre-opening expenses

6



911


  General and administrative

7,183



7,321


  Restaurant impairment and closing charges

1,317




     Total costs and expenses

149,281



146,619


     Operating (loss) income

(1,751)



4,151


Interest expense, net

10,319



10,149


    Loss before income taxes

(12,070)



(5,998)


Income tax expense



4,063


     Net loss

$

(12,070)



$

(10,061)


 


LRI HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS









(In thousands, except share data)

October 27, 2013


July 28, 2013


ASSETS

(unaudited)



Current assets:




  Cash and cash equivalents

$

3,646



$

23,708


  Receivables

9,324



9,583


  Inventories

13,356



12,887


  Prepaid expenses and other current assets

5,473



4,337


  Income taxes receivable

432



432


     Total current assets

32,231



50,947


Property and equipment, net

220,339



223,724


Other assets

15,556



16,085


Goodwill

192,590



192,590


Tradename

71,694



71,694


Other intangible assets, net

18,751



19,272


     Total assets

$

551,161



$

574,312


LIABILITIES AND STOCKHOLDER'S EQUITY




Current liabilities:




  Accounts payable

$

20,333



$

18,770


  Payable to RHI

1,458



1,118


  Other current liabilities and accrued expenses

37,794



52,383


     Total current liabilities

59,585



72,271


Long-term debt

356,000



355,000


Deferred income taxes

27,745



27,745


Other long-term obligations

44,254



43,649


     Total liabilities

487,584



498,665


Commitments and contingencies




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

(166,423)



(154,353)


     Total stockholder's equity

63,577



75,647


     Total liabilities and stockholder's equity

$

551,161



$

574,312


 

 

LRI HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS










Thirteen weeks ended

(In thousands)

October 27, 2013


October 28, 2012

Cash flows from operating activities:




  Net loss

$

(12,070)



$

(10,061)


  Adjustments to reconcile net loss to net cash used in operating activities:




    Depreciation and amortization

5,171



5,312


    Other amortization

504



521


    Loss on sale/disposal of property and equipment

500



139


    Amortization of deferred gain on sale and leaseback transactions

(12)



(9)


    Impairment charges for long-lived assets

1,317




    Share-based compensation expense

396



218


  Changes in operating assets and liabilities:




    Receivables

259



(682)


    Inventories

(526)



(325)


    Prepaid expenses and other current assets

(1,136)



(1,487)


    Other non-current assets and intangibles

(138)



(258)


    Accounts payable

1,504



(1,164)


    Payable to RHI

(56)



(8)


    Income taxes payable/receivable



7,749


    Other current liabilities and accrued expenses

(14,589)



(19,450)


    Other long-term obligations

919



1,091


       Net cash used in operating activities

(17,957)



(18,414)


Cash flows from investing activities:




  Purchase of property and equipment

(3,105)



(7,551)


  Proceeds from sale and leaseback transactions, net of expenses



1,861


       Net cash used in investing activities

(3,105)



(5,690)


Cash flows from financing activities:




  Payments on revolving credit facility

(600)




  Borrowings on revolving credit facility

1,600



6,000


       Net cash provided by financing activities

1,000



6,000


       Decrease in cash and cash equivalents

(20,062)



(18,104)


Cash and cash equivalents, beginning of period

23,708



21,732


Cash and cash equivalents, end of period

$

3,646



$

3,628


 

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, the most directly comparable GAAP financial measure to EBITDA, Adjusted EBITDA and Adjusted EBITDAR.











Thirteen weeks ended

(In thousands)

October 27, 2013


October 28, 2012

Net loss

$

(12,070)



$

(10,061)


Interest expense, net

10,319



10,149


Income tax expense



4,063


Depreciation and amortization

5,171



5,312


      EBITDA

3,420



9,463


Adjustments




Sponsor management fees(a)

250



250


Non-cash asset write-offs:




  Restaurant impairment(b)

1,317




  Loss on disposal of property and equipment(c)

498



138


Restructuring costs(d)

(460)



167


Pre-opening expenses (excluding rent)(e)

2



755


Losses on sales of property(f)

4



1


Non-cash rent adjustment(g)

801



965


Costs related to the Transactions(h)



20


Non-cash stock-based compensation(i)

396



218


Other adjustments(j)

467



84


     Adjusted EBITDA

6,695



12,061


Cash rent expense(k)

10,420



9,715


     Adjusted EBITDAR

$

17,115



$

21,776


     



(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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