LRI HOLDINGS, INC. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - December 22, 2014

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LRI Holdings, Inc., the Parent Company of Logan’s Roadhouse, Inc., Announces Financial Results for the First Quarter of Fiscal Year 2015

Nashville, Tenn. – December 22, 2014 – LRI Holdings, Inc., the parent company of Logan’s Roadhouse, Inc., today announced financial results for the first quarter of fiscal year 2015 ended November 2, 2014.
 
 
Thirteen weeks ended
(In thousands)
 
November 2, 2014
 
October 27, 2013
Net sales
 
$
145,213

 
$
147,023

Net loss
 
(12,982
)
 
(12,070
)
Adjusted EBITDA
 
4,452

 
6,695


Selected Highlights for the First Quarter 2015 Compared to the First Quarter 2014:
▪
Net sales decreased 1.2% to $145.2 million from $147.0 million.
▪
Comparable restaurant sales decreased 1.3%, average check increased by 4.7%, and customer traffic decreased by 5.7%.
▪
Net loss of $13.0 million compared to a net loss of $12.1 million.
▪
Adjusted EBITDA decreased 33.5% to $4.5 million from $6.7 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 November 2, 2014. It is available at www.logansroadhouse.com under the investor relations section.

Conference Call
The Company will host a conference call on Tuesday, December 23, 2014 at 10:30 a.m. ET to discuss its financial results for the first quarter of fiscal year 2015. The conference call will be hosted by Sam Borgese, President and Chief Executive Officer and Amy Bertauski, Chief Financial Officer.

The domestic dial-in number for the call is 800-475-6881, and the international dial-in number is 913-981-5550. 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 Tuesday, December 23, 2014 through 11:59 p.m. ET on Tuesday, December 30, 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 9806102. The archived webcast may be accessed at http://public.viavid.com/index.php?id=112323 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
InvestorRelations@logansroadhouse.com
(855) 255-2789

1

LRI HOLDINGS, INC CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
Thirteen weeks ended
(In thousands)
November 2, 2014
 
October 27, 2013
 
(unaudited)
 
(unaudited)
Revenues:
 
 
 
  Net sales
$
145,213

 
$
147,023

  Franchise fees and royalties
529

 
507

     Total revenues
145,742

 
147,530

Costs and expenses:
 
 
 
  Restaurant operating costs:
 
 
 
     Cost of goods sold
52,296

 
50,004

     Labor and other related expenses
46,332

 
46,497

     Occupancy costs
13,804

 
13,613

     Other restaurant operating expenses
23,593

 
25,490

  Depreciation and amortization
5,070

 
5,171

  Pre-opening expenses
35

 
6

  General and administrative
7,182

 
7,183

  Restaurant impairment and closing charges
—

 
1,317

     Total costs and expenses
148,312

 
149,281

     Operating loss
(2,570
)
 
(1,751
)
Interest expense, net
10,412

 
10,319

    Loss before income taxes
(12,982
)
 
(12,070
)
Income tax benefit
—

 
—

     Net loss
$
(12,982
)
 
$
(12,070
)


2


LRI HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
November 2, 2014
 
August 3, 2014

ASSETS
(unaudited)
 
 
Current assets:
 
 
 
  Cash and cash equivalents
$
3,020

 
$
9,170

  Receivables
12,216

 
9,734

  Inventories
14,316

 
13,832

  Prepaid expenses and other current assets
6,510

 
6,887

  Income taxes receivable
117

 
115

     Total current assets
36,179

 
39,738

Property and equipment, net
207,710

 
209,078

Other assets
12,565

 
13,273

Goodwill
163,368

 
163,368

Tradename
71,251

 
71,251

Other intangible assets, net
16,669

 
17,190

     Total assets
$
507,742

 
$
513,898

LIABILITIES AND STOCKHOLDER'S EQUITY
 
 
 
Current liabilities:
 
 
 
  Accounts payable
$
15,947

 
$
17,414

  Payable to RHI
2,384

 
2,721

  Other current liabilities and accrued expenses
42,917

 
51,683

     Total current liabilities
61,248

 
71,818

Long-term debt
372,000

 
355,000

Deferred income taxes
27,607

 
27,607

Other long-term obligations
46,995

 
46,599

     Total liabilities
507,850

 
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
(230,108
)
 
(217,126
)
     Total stockholder’s equity
(108
)
 
12,874

     Total liabilities and stockholder’s equity
$
507,742

 
$
513,898




3

LRI HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Thirteen weeks ended
(In thousands)
November 2, 2014
 
October 27, 2013
Cash flows from operating activities:
(unaudited)
 
(unaudited)
  Net loss
$
(12,982
)
 
$
(12,070
)
  Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
    Depreciation and amortization
5,070

 
5,171

    Other amortization
586

 
504

    Loss on sale/disposal of property and equipment
868

 
500

    Amortization of deferred gain on sale and leaseback transactions
(13
)
 
(12
)
    Impairment charges for long-lived assets
—

 
1,317

    Share-based compensation expense
(330
)
 
396

    Deferred income taxes
—

 
—

  Changes in operating assets and liabilities:
 
 
 
    Receivables
(2,482
)
 
259

    Inventories
(484
)
 
(526
)
    Prepaid expenses and other current assets
377

 
(1,136
)
    Other non-current assets and intangibles
(40
)
 
(138
)
    Accounts payable
(1,355
)
 
1,504

    Payable to RHI
(7
)
 
(56
)
    Income taxes payable/receivable
(2
)
 
—

    Other current liabilities and accrued expenses
(8,766
)
 
(14,589
)
    Other long-term obligations
708

 
919

       Net cash used in operating activities
(18,852
)
 
(17,957
)
Cash flows from investing activities:
 
 
 
  Purchase of property and equipment
(4,298
)
 
(3,105
)
       Net cash used in investing activities
(4,298
)
 
(3,105
)
Cash flows from financing activities:
 
 
 
  Payments on revolving credit facility
(3,900
)
 
(600
)
  Borrowings on revolving credit facility
20,900

 
1,600

       Net cash provided by financing activities
17,000

 
1,000

       Decrease in cash and cash equivalents
(6,150
)
 
(20,062
)
Cash and cash equivalents, beginning of period
9,170

 
23,708

Cash and cash equivalents, end of period
$
3,020

 
$
3,646



4

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.



5

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
(In thousands)
November 2, 2014
 
October 27, 2013
Net loss
$
(12,982
)
 
$
(12,070
)
Interest expense, net
10,412

 
10,319

Income tax benefit
—

 
—

Depreciation and amortization
5,070

 
5,171

      EBITDA
2,500

 
3,420

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)
868

 
498

Restructuring costs(d)
494

 
(460
)
Pre-opening expenses (excluding rent)(e)
15

 
2

Losses on sales of property(f)
1

 
4

Non-cash rent adjustment(g)
653

 
801

Non-cash stock-based compensation(h)
(330
)
 
396

Other adjustments(i)
1

 
467

     Adjusted EBITDA
4,452

 
6,695

Cash rent expense(j)
10,621

 
10,420

     Adjusted EBITDAR
$
15,073

 
$
17,115

     
(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)
Other adjustments include non-recurring expenses and professional fees and ongoing expenses of closed restaurants.
(j)
Cash rent expense represents actual cash payments required under our leases.

6

LRI HOLDINGS, INC. Reports