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 2015

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Mar 12, 2015, 12:55 ET

NASHVILLE, Tenn., March 12, 2015 /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 2015 ended February 1, 2015.


	Thirteen weeks ended				Twenty-six weeks ended
(In thousands)	February 1, 2015		January 26, 2014		February 1, 2015		January 26, 2014
Net sales	$	154,213	$	153,061	$	299,426	$	300,084
Net loss	(11,850)		(8,991)		(24,832)		(21,061)
Adjusted EBITDA*	8,681		9,802		13,133		16,497

Selected Highlights for the Second Quarter 2015 Compared to the Second Quarter 2014:

Opened one new company owned restaurant.
Net sales increased 0.8% to $154.2 million from $153.1 million.
Comparable restaurant sales increased 0.1%, average check increased by 5.9%, and customer traffic decreased by 5.5%.
Net loss of $11.9 million compared to net loss of $9.0 million.
Adjusted EBITDA decreased 11.4% to $8.7 million from $9.8 million. (*)

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

Opened one new company owned restaurant.
Net sales decreased 0.2% to $299.4 million from $300.1 million.
Comparable restaurant sales decreased 0.5%, average check increased by 5.4%, and customer traffic decreased by 5.5%.
Net loss of $24.8 million compared to net loss of $21.1 million.
Adjusted EBITDA decreased 20.4% to $13.1 million from $16.5 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 Quarterly Report on Form 10-Q for the fiscal period ended February 1, 2015. It is available at www.logansroadhouse.com under the investor relations section.

Conference Call

The Company will host a conference call on Thursday, March 19, 2015 at 10:30 a.m. ET to discuss its financial results for the second 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 Nicole Williams, Vice President of Finance.

The domestic dial-in number for the call is 888-211-9951, and the international dial-in number is 913-981-5596. 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 19, 2015 through 11:59 p.m. ET on Thursday, March 26, 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 2971021. The archived webcast may be accessed at http://public.viavid.com/index.php?id=113593 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 235 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				Twenty-six weeks ended
(In thousands)	February 1, 2015		January 26, 2014		February 1, 2015		January 26, 2014
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Revenues:
Net sales	$	154,213	$	153,061	$	299,426	$	300,084
Franchise fees and royalties	561		528		1,090		1,035
Total revenues	154,774		153,589		300,516		301,119
Costs and expenses:
Restaurant operating costs:
Cost of goods sold	55,617		51,791		107,913		101,795
Labor and other related expenses	47,666		47,247		93,998		93,744
Occupancy costs	14,690		14,215		28,494		27,828
Other restaurant operating expenses	23,411		25,782		47,004		51,272
Depreciation and amortization	5,095		4,961		10,165		10,132
Pre-opening expenses	222		20		257		26
General and administrative	7,754		7,540		14,936		14,723
Restaurant impairment and closing charges	1,486		488		1,486		1,805
Total costs and expenses	155,941		152,044		304,253		301,325
Operating (loss) income	(1,167)		1,545		(3,737)		(206)
Interest expense, net	10,683		10,536		21,095		20,855
Loss before income taxes	(11,850)		(8,991)		(24,832)		(21,061)
Income tax benefit	—		—		—		—
Net loss	$	(11,850)	$	(8,991)	$	(24,832)	$	(21,061)

LRI HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)	February 1, 2015		August 3, 2014
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	20,178	$	9,170
Receivables	10,445		9,734
Inventories	14,459		13,832
Prepaid expenses and other current assets	6,760		6,887
Income taxes receivable	111		115
Total current assets	51,953		39,738
Property and equipment, net	203,989		209,078
Other assets	12,244		13,273
Goodwill	163,368		163,368
Tradename	71,251		71,251
Other intangible assets, net	16,149		17,190
Total assets	$	518,954	$	513,898
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable	$	17,841	$	17,414
Payable to RHI	2,499		2,721
Other current liabilities and accrued expenses	57,270		51,683
Total current liabilities	77,610		71,818
Long-term debt	376,000		355,000
Deferred income taxes	27,607		27,607
Other long-term obligations	49,695		46,599
Total liabilities	530,912		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	(241,958)		(217,126)
Total stockholder's equity	(11,958)		12,874
Total liabilities and stockholder's equity	$	518,954	$	513,898

LRI HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Twenty-six weeks ended
(In thousands)	February 1, 2015		January 26, 2014
Cash flows from operating activities:	(unaudited)		(unaudited)
Net loss	$	(24,832)	$	(21,061)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	10,165		10,132
Other amortization	1,167		1,025
Loss on sale/disposal of property and equipment	1,365		1,062
Amortization of deferred gain on sale and leaseback transactions	(25)		(25)
Impairment charges for long-lived assets	1,486		1,805
Share-based compensation expense	(206)		856
Changes in operating assets and liabilities:
Receivables	(711)		(786)
Inventories	(633)		(1,018)
Prepaid expenses and other current assets	127		(1,960)
Other non-current assets and intangibles	(462)		(241)
Accounts payable	325		945
Payable to RHI	(16)		(102)
Income taxes payable/receivable	4		(318)
Other current liabilities and accrued expenses	5,587		6,244
Other long-term obligations	3,715		2,870
Net cash used in operating activities	(2,944)		(572)
Cash flows from investing activities:
Purchase of property and equipment	(7,048)		(6,786)
Net cash used in investing activities	(7,048)		(6,786)
Cash flows from financing activities:
Payments on revolving credit facility	(8,100)		(4,500)
Borrowings on revolving credit facility	29,100		24,500
Net cash provided by financing activities	21,000		20,000
Increase in cash and cash equivalents	11,008		12,642
Cash and cash equivalents, beginning of period	9,170		23,708
Cash and cash equivalents, end of period	$	20,178	$	36,350

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				Twenty-six weeks ended
(In thousands)	February 1, 2015		January 26, 2014		February 1, 2015		January 26, 2014
Net loss	$	(11,850)	$	(8,991)	$	(24,832)	$	(21,061)
Interest expense, net	10,683		10,536		21,095		20,855
Income tax benefit	—		—		—		—
Depreciation and amortization	5,095		4,961		10,165		10,132
EBITDA	3,928		6,506		6,428		9,926
Adjustments
Sponsor management fees(a)	250		250		500		500
Non-cash asset write-offs:
Restaurant impairment(b)	1,486		488		1,486		1,805
Loss on disposal of property and equipment(c)	494		566		1,362		1,064
Restructuring costs(d)	460		11		954		(449)
Pre-opening expenses (excluding rent)(e)	216		5		231		7
Losses on sales of property(f)	3		—		4		4
Non-cash rent adjustment(g)	1,453		1,500		2,106		2,301
Non-cash stock-based compensation(h)	124		460		(206)		856
Hedging loss (i)	131		—		131		—
Other adjustments(j)	136		16		137		483
Adjusted EBITDA	8,681		9,802		13,133		16,497
Cash rent expense(k)	10,696		10,357		21,317		20,777
Adjusted EBITDAR	$	19,377	$	20,159	$	34,450	$	37,274

(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, 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 loss represents the loss on our forward contract for fuel which will expire in July 2015.
(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.