LRI HOLDINGS, INC. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - March 12, 2015

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8-K - 8-K LGNS Q2FY15 - LRI HOLDINGS, INC.a8-klgnsq2fy15.htm

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

Nashville, Tenn. – March 12, 2015 – 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.


1

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

2

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
)


3


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




4

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



5

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.



6

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.

7

LRI HOLDINGS, INC. Reports