2014

LRI Holdings, Inc., the Parent Company of Logan's Roadhouse, Inc., Announces Financial Results for the Fourth Quarter and Fiscal Year 2013

NASHVILLE, Tenn., Oct. 28, 2013 /PRNewswire/ -- LRI Holdings, Inc., the parent company of Logan's Roadhouse, Inc., today announced financial results for the fourth quarter and fiscal year ended July 28, 2013.

 

(In thousands)


Thirteen weeks ended July 28, 2013

Thirteen weeks ended July 29, 2012


Fifty-two weeks ended July 28, 2013

Fifty-two weeks ended July 29, 2012

Net sales


$

161,676


$

159,753



$

647,425


$

629,987


Restaurant operating profit


17,093


19,620



78,468


88,992


Restaurant operating margin


10.6

%

12.3

%


12.1

%

14.1

%

Net loss


(104,374)


(52,096)



(108,405)


(46,528)


Adjusted EBITDA


12,198


16,336



60,303


75,218


 

Selected Highlights for the Fourth Quarter 2013 Compared to the Fourth Quarter 2012:

  • Net sales increased 1.2% to $161.7 million from $159.8 million.
  • Restaurant operating profit decreased 12.9% to $17.1 million from $19.6 million.
  • Comparable restaurant sales decreased 3.9%, average check increased by 1.9%, and customer traffic decreased by 5.7%.
  • Net loss of $104.4 million compared to net loss of $52.1 million.  Included in the fourth quarter 2013 and fourth quarter 2012 results were non-cash goodwill impairment charges of $91.5 million and $48.5 million, respectively. Excluding non-cash goodwill impairment charges, adjusted net loss for the fourth quarter 2013 and fourth quarter 2012 was $12.9 million and $3.6 million, respectively.  
  • Adjusted EBITDA decreased 25.3% to $12.2 million from $16.3 million. (*)

Selected Highlights for Fiscal Year 2013 Compared to Fiscal Year 2012:

  • Opened 13 new company-owned Logan's Roadhouse® restaurants.
  • Net sales increased 2.8% to $647.4 million from $630.0 million.
  • Comparable restaurant sales decreased 2.5%, average check increased by 1.0%, and customer traffic decreased by 3.5%.
  • Restaurant operating profit decreased 11.8% to $78.5 million from $89.0 million.
  • Net loss was $108.4 million compared to net loss of $46.5 million.  Included in the fiscal year 2013 and fiscal year 2012 results were non-cash goodwill impairment charges of $91.5 million and $48.5 million, respectively. Excluding non-cash goodwill impairment charges, adjusted net loss for the fiscal year 2013 was $16.9 million and adjusted net income for fiscal year 2012 was $2.0 million.  
  • Adjusted EBITDA decreased 19.8% to $60.3 million from $75.2 million. (*)

(*) Please see reconciliation table 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 28, 2013.  It is available at www.logansroadhouse.com under the investor relations section.

Mike Andres, President, Chief Executive Officer and Chairman, stated "Our fourth quarter and fiscal year results reflect a challenging economic environment, continued pressure on margins due to commodity inflation and sales de-leveraging.   In spite of these headwinds, we always recognize that this is, and will always be, a market share game.  We continue to focus on our sources of growth, including restaurant-level execution and revitalizing our concept and brand.  These efforts will help to ensure that our offering and experience will be relevant and meets or exceeds the needs of our guests enabling us to increase our share of a very competitive marketplace. "

Conference Call

The Company will host a conference call on Thursday, October 31, 2013 at 10:30 a.m. ET to discuss its financial results for the fourth quarter and fiscal year 2013, which encompasses the three and twelve-month periods ended July 28, 2013. 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 888-713-3587, and the international dial-in number is 913-312-1481. 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, October 31, 2013 through 11:59 p.m. ET on Friday, October 31, 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 5333898.

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







(In thousands)

Thirteen weeks ended July 28,

2013

Thirteen weeks

ended July 29,

 2012


Fifty-two weeks ended July 28, 2013

Fifty-two weeks ended July 29, 2012


(unaudited)    

(unaudited)




Revenues:





Net sales

$161,676

$159,753


$647,425

$629,987

  Franchise fees and royalties

560

565


2,175

2,186

     Total revenues

162,236

160,318


649,600

632,173

Costs and expenses:





  Restaurant operating costs:





     Cost of goods sold

54,789

53,098


218,327

207,225

     Labor and other related expenses

48,448

46,533


191,945

184,310

     Occupancy costs

13,467

12,570


52,926

48,780

     Other restaurant operating expenses

27,879

27,932


105,759

100,680

  Depreciation and amortization

5,270

5,355


20,949

20,309

  Pre-opening expenses

198

720


2,721

4,808

  General and administrative

7,805

6,789


30,901

25,373

  Goodwill and intangible asset impairment

91,488

48,526


91,488

48,526

  Store impairment and closing charges

1,515

4,330


4,658

4,438

     Total costs and expenses

250,859

205,853


719,674

644,449

     Operating loss

(88,623)

(45,535)


(70,074)

(12,276)

Interest expense, net

10,285

10,134


40,917

39,748

     Loss before income taxes

(98,908)

(55,669)


(110,991)

(52,024)

Income tax expense (benefit)

5,466

(3,573)


(2,586)

(5,496)

 Net loss

$(104,374)

$(52,096)


$(108,405)

$(46,528)

 

 

LRI HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS


(In thousands, except share data)

July 28, 2013

July 29, 2012

ASSETS




Current assets:



  Cash and cash equivalents

$23,708


$21,732

  Receivables

9,583


8,288

  Inventories

12,887


12,349

  Prepaid expenses and other current assets

4,337


4,294

  Income taxes receivable

432


3,911

  Deferred income taxes


2,046

     Total current assets

50,947


52,620

Property and equipment, net

223,724


239,553

Other assets

16,085


18,527

Goodwill

192,590


284,078

Tradename

71,694


71,694

Other intangible assets, net

19,272


21,354

     Total assets

$574,312


$687,826

LIABILITIES AND STOCKHOLDER'S EQUITY



Current liabilities:



  Accounts payable

$18,770


$21,193

  Payable to RHI

1,118


50

  Other current liabilities and accrued expenses

52,383


55,268

     Total current liabilities

72,271


76,511

Long-term debt

355,000


355,000

Deferred income taxes

27,745


32,561

Other long-term obligations

43,649


39,702

     Total liabilities

498,665


503,774

Commitments and contingencies (Note 13)


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

(154,353)


(45,948)

     Total stockholder's equity

75,647


184,052

     Total liabilities and stockholder's equity

$574,312


$687,826

 

 

LRI HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS




(In thousands)

Fiscal year 2013


Fiscal year 2012

Cash flows from operating activities:




  Net loss

$(108,405)


$(46,528)

  Adjustments to reconcile net loss to net cash provided by operating activities:




    Depreciation and amortization

20,949


20,309

    Other amortization

1,863


1,289

    Loss on sale/disposal of property and equipment

2,147


3,467

    Amortization of deferred gain on sale and leaseback transactions

(43)


(23)

    Impairment charges for long-lived assets

4,658


4,438

    Goodwill impairment

91,488


48,526

    Share-based compensation expense

1,107


746

    Deferred income taxes

(2,770)


(5,024)

  Changes in operating assets and liabilities:



    Receivables

(1,295)


1,672

    Inventories

(538)


(979)

    Prepaid expenses and other current assets

(44)


(927)

    Other non-current assets and intangibles

(69)


(2,009)

    Accounts payable

171


3,459

    Payable to RHI

(38)


(48)

    Income taxes payable/receivable

3,479


(223)

    Other current liabilities and accrued expenses

(2,775)


2,898

    Other long-term obligations

4,780


5,445

       Net cash provided by operating activities

14,665


36,488

Cash flows from investing activities:




  Loan to parent to repurchase shares


(1,450)

  Purchase of property and equipment

(29,300)


(48,609)

  Proceeds from sale and leaseback transactions, net of expenses

16,611


16,200

       Net cash used in investing activities

(12,689)


(33,859)

Cash flows from financing activities:



  Payments on revolving credit facility

(12,600)


(18,400)

  Borrowings on revolving credit facility

12,600


18,400

       Net cash provided by financing activities


       Increase in cash and cash equivalents

1,976


2,629

Cash and cash equivalents, beginning of period

21,732


19,103

Cash and cash equivalents, end of period

$23,708


$21,732

 

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.

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:

 


(In thousands)

Thirteen weeks ended July 28, 2013

Thirteen weeks ended July 29, 2012


Fifty-two weeks ended July 28, 2013

Fifty-two weeks ended July 29, 2012







Net sales (A)

$161,676

$159,753


 

$647,425

$629,987

Restaurant operating expenses:






  Cost of goods sold

54,789

53,098


218,327

207,225

  Labor and other related expenses

48,448

46,533


191,945

184,310

  Occupancy costs

13,467

12,570


52,926

48,780

  Other restaurant operating expenses

27,879

27,932


105,759

100,680

     Restaurant operating profit (B)

$17,093

 

$19,620


 

$78,468

$88,992

     Restaurant operating margin (B / A)

10.6%

12.3%


12.1%

14.1%

 

EBITDA and Adjusted EBITDA

The following table sets forth a reconciliation of net loss, the most directly comparable GAAP financial measure to EBITDA, Adjusted EBITDA and Adjusted EBITDAR.

(In thousands)

 

Thirteen weeks ended July 28, 2013

 

Thirteen weeks

ended July 29,

2012


 

Fifty-two

weeks ended July 28, 2013

 

Fifty-two

weeks ended

July 29, 2012







Net loss

$(104,374)

$(52,096)


$(108,405)

$(46,528)

Interest expense, net

10,285

10,134


40,917

39,748

Income tax expense (benefit)

5,466

(3,573)


(2,586)

(5,496)

Depreciation and amortization

5,270

5,355


20,949

20,309

      EBITDA

(83,353)

(40,180)


(49,125)

8,033

Adjustments


Sponsor management fees(a)

250

250


1,000

1,000

Non-cash asset write-offs:


  Goodwill impairment(b)

91,488

48,526


91,488

48,526

  Restaurant impairment(c)

1,515

4,330


4,658

4,438

  Loss on disposal of property and equipment(d)

208

1,256


1,974

3,341

Restructuring costs(e)

(37)

12


1,789

442

Pre-opening expenses (excluding rent)(f)

198

545


2,387

3,882

Losses on sales of property(g)

596

117


676

125

Non-cash rent adjustment(h)

876

1,257


4,091

4,610

Costs related to the Transactions(i)


20

43

Non-cash stock-based compensation(j)

393

216


1,107

746

Other adjustments(k)

64

7


238

32

     Adjusted EBITDA

12,198

16,336


60,303

75,218

Cash rent expense(l)

10,195

9,238


39,889

36,626

     Adjusted EBITDAR

$22,393

 

$25,574


$100,192

 

$111,844

 

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

(b) We recorded goodwill impairment charges in fiscal year 2013 and fiscal year 2012.

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

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

(e) Restructuring costs include severance, hiring replacement and other related costs.

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

(g) 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.

(h) 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.

(i) 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").

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

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

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

 

SOURCE LRI Holdings, Inc.




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