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 2013

NASHVILLE, Tenn., June 11, 2013 /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 2013 ended April 28, 2013.



Thirteen weeks ended


Thirty-nine weeks ended


(In thousands)


April 28,

2013

April 29,

2012


April 28,

2013

April 29,

2012










Net sales


$     174,924

$    169,585


$      485,749

$     470,234


Net income (loss)


515

8,297


(4,031)

5,568


Adjusted EBITDA


21,381

26,255


48,105

58,882


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

  • Opened four new company-owned Logan's Roadhouse® restaurants during the third quarter 2013.
  • Net sales increased 3.1% to $174.9 million from $169.6 million.
  • Comparable restaurant sales declined 1.4%, which consisted of an average check increase of 0.1% and a traffic decrease of 1.5%.
  • Net income of $0.5 million compared to $8.3 million.
  • Adjusted EBITDA decreased 18.6% to $21.4 million from $26.3 million. (*)

Selected Highlights for Year-to-Date 2013 Compared to Year-to-Date 2012:

  • Opened 12 new company-owned Logan's Roadhouse® restaurants during fiscal year 2013.
  • Net sales increased 3.3% to $485.7 million from $470.2 million.
  • Comparable restaurant sales declined 2.1%, which consisted of an average check increase of 0.7% and a traffic decrease of 2.8%.
  • Net loss of $4.0 million compared to net income of $5.6 million.
  • Adjusted EBITDA decreased 18.3% to $48.1 million from $58.9 million. (*)

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

Mike Andres, President and Chief Executive Officer, stated, "During the third quarter, comparable restaurant sales and guest counts both improved on a sequential basis and we extended our track record of growing liquor, beer and wine sales to eight consecutive quarters.  While these trends are encouraging, we remain cautious as a result of sales volatility within the quarter given the continued economic headwinds facing our core customer base and continued competitive activity.  From a profitability standpoint, the decrease in comparable restaurant sales along with higher commodity inflation yielded year-over-year declines in restaurant operating margins and adjusted EBITDA."

Andres continued, "We are in the process of developing a comprehensive framework that addresses how we will improve our brand marketing, menu offering, and restaurant-level execution to better meet and exceed the needs of our guests.  We look forward to providing more texture on these topics during this week's conference call.  With respect to new restaurant growth, we remain confident in Logan's Roadhouse as a viable growth-oriented concept, however we intend to limit expansion in fiscal 2014 so that we can devote more resources to rebuilding traffic and driving higher profitability within our existing portfolio."

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 April 28, 2013.  It is available at www.logansroadhouse.com under the investor relations section.

Conference Call

The Company will host a conference call on Thursday, June 13, 2013 at 10:30 a.m. ET to discuss its financial results for the third quarter and year-to-date periods of fiscal year 2013.  The conference call will be hosted by Mike Andres, President and Chief Executive Officer, and Amy Bertauski, Chief Financial Officer. 

The domestic dial-in number for the call is 888-240-9314, and the international dial-in number is 913-312-1466.  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 13, 2013 through 11:59 p.m. ET on Friday, June 13, 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 9510265. 

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 233 company-owned and 26 franchised Logan's Roadhouse restaurants in 23 states with approximately 15,000 employees.  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 holding company of Logan's Roadhouse.

Contact
Investor Relations
InvestorRelations@logansroadhouse.com
(855) 255-2789 

 

 

LRI HOLDINGS, INC CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)







Thirteen weeks ended


Thirty-nine weeks ended





(In thousands)

April 28, 2013

April 29, 2012


April 28, 2013

April 29, 2012

Revenues:






  Net sales 

$        174,924

$        169,585


$        485,749

$        470,234

  Franchise fees and royalties 

577

584


1,615

1,621

     Total revenues 

175,501

170,169


487,364

471,855

Costs and expenses:






  Restaurant operating costs:






     Cost of goods sold 

59,656

54,792


163,538

154,127

     Labor and other related expenses 

50,246

48,187


143,497

137,777

     Occupancy costs 

13,095

12,281


39,459

36,210

     Other restaurant operating expenses 

26,388

25,473


77,880

72,748

  Depreciation and amortization 

5,265

5,165


15,679

14,954

  Pre-opening expenses 

849

1,020


2,523

4,088

  General and administrative 

9,053

6,193


23,096

18,584

  Restaurant impairment and closing charges 

2,442

-


3,143

108

     Total costs and expenses 

166,994

153,111


468,815

438,596

     Operating income

8,507

17,058


18,549

33,259

Interest expense, net 

10,371

10,124


30,632

29,614

    (Loss) income before income taxes 

(1,864)

6,934


(12,083)

3,645

Income tax benefit

(2,379)

(1,363)


(8,052)

(1,923)

     Net income (loss)

$               515

$            8,297


$          (4,031)

$            5,568

 

 

LRI HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS






(In thousands, except share data)

April 28,

2013

July 29,

2012

ASSETS

(unaudited)


Current assets:



  Cash and cash equivalents 

$         6,153

$       21,732

  Receivables 

9,808

8,288

  Inventories 

12,902

12,349

  Prepaid expenses and other current assets 

4,955

4,294

  Income taxes receivable 

8,212

3,911

  Deferred income taxes 

2,112

2,046

     Total current assets 

44,142

52,620

Property and equipment, net 

233,388

239,553

Other assets 

16,625

18,527

Goodwill 

284,078

284,078

Tradename 

71,694

71,694

Other intangible assets, net 

19,793

21,354

     Total assets 

$     669,720

$     687,826

LIABILITIES AND STOCKHOLDER'S EQUITY



Current liabilities:



  Accounts payable 

$       18,975

$       21,193

  Payable to RHI

741

50

  Other current liabilities and accrued expenses 

40,032

55,268

     Total current liabilities 

59,748

76,511

Long-term debt 

355,000

355,000

Deferred income taxes 

32,361

32,561

Other long-term obligations 

42,590

39,702

     Total liabilities 

489,699

503,774

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 

(49,979)

(45,948)

     Total stockholder's equity 

180,021

184,052

     Total liabilities and stockholder's equity 

$     669,720

$     687,826

 

LRI HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



(unaudited)




Thirty-nine weeks ended

(In thousands)

April 28,

2013

April 29,

2012

Cash flows from operating activities:



  Net (loss) income

$        (4,031)

$         5,568

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



    Depreciation and amortization 

15,679

14,954

    Other amortization 

1,375

764

    Loss on sale/disposal of property and equipment 

1,410

2,093

    Amortization of deferred gain on sale and leaseback transactions

(30)

(16)

    Impairment charges for long-lived assets 

3,143

108

    Share-based compensation expense 

714

530

    Deferred income taxes 

(266)

(182)

  Changes in operating assets and liabilities:



    Receivables 

(1,520)

1,150

    Inventories 

(553)

(742)

    Prepaid expenses and other current assets 

(661)

(1,048)

    Other non-current assets and intangibles 

41

(1,774)

    Accounts payable 

(2,357)

1,208

    Payable to RHI

(23)

(33)

    Income taxes payable/receivable 

(4,301)

(1,864)

    Other current liabilities and accrued expenses 

(15,236)

(12,840)

    Other long-term obligations 

3,514

4,224

       Net cash (used in) provided by operating activities 

(3,102)

12,100

Cash flows from investing activities:



  Purchase of property and equipment 

(22,574)

(35,736)

  Proceeds from sale and leaseback transactions, net of expenses 

10,097

11,290

       Net cash used in investing activities 

(12,477)

(24,446)

Cash flows from financing activities:



  Payments on revolving credit facility 

(12,600)

(18,400)

  Borrowings on revolving credit facility 

12,600

18,400

  Repurchase of shares

-

(1,450)

       Net cash used in financing activities 

-

(1,450)

       Decrease in cash and cash equivalents 

(15,579)

(13,796)

Cash and cash equivalents, beginning of period 

21,732

19,103

Cash and cash equivalents, end of period 

$         6,153

$         5,307

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 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 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.

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

 



Thirteen weeks ended


Thirty-nine weeks ended

(In thousands)

April 28,

2013

April 29,

2012


April 28,

2013

April 29,

2012

Net income (loss)

$            515

$      8,297


$       (4,031)

$       5,568

Interest expense, net 

10,371

10,124


30,632

29,614

Income tax (benefit) expense 

(2,379)

(1,363)


(8,052)

(1,923)

Depreciation and amortization 

5,265

5,165


15,679

14,954

     EBITDA 

13,772

22,223


34,228

48,213

Adjustments






Sponsor management fees(a) 

250

250


750

750

Non-cash asset write-offs:






  Restaurant impairment(b) 

2,442

-


3,143

108

  Loss on disposal of property and equipment(c) 

1,235

1,616


1,766

2,085

Restructuring costs(d) 

1,659

430


1,826

430

Pre-opening expenses (excluding rent)(e) 

797

773


2,189

3,337

Losses on sales of property(f) 

67

-


80

8

Non-cash rent adjustment(g) 

834

918


3,215

3,353

Costs related to the Transactions(h) 

-

-


20

43

Non-cash stock-based compensation(i) 

241

40


714

530

Other adjustments(j) 

84

5


174

25

     Adjusted EBITDA 

21,381

26,255


48,105

58,882

Cash rent expense(k) 

10,073

9,448


29,694

27,388

     Adjusted EBITDAR 

$       31,454

$    35,703


$       77,799

$     86,270







(a)

Sponsor management fees consist of fees paid 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.

(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 professional fees, ongoing expenses of closed restaurants, inventory write-offs, employee termination buyouts and incidental charges related to restaurant closings.

(k)

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

SOURCE LRI Holdings, Inc.



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