LRI HOLDINGS, INC. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - June 16, 2015

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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 2015

Nashville, Tenn. – June 16, 2015 – 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 2015 ended May 3, 2015.

Highlights for the Third Quarter 2015 Compared to the Third Quarter 2014:
▪
Total revenue was $163.6 million compared to $169.7 million, a decrease of 3.6%.
▪
Comparable restaurant sales decreased 4.3%, including an average check increase of 4.6%, and customer traffic decrease of 8.5%.
▪
Net loss of $6.0 million compared to a net loss of $1.7 million.
▪
Adjusted EBITDA decreased 19.0% to $14.0 million from $17.2 million. (*)

Selected Highlights for Year-to-Date 2015 Compared to Year-to-Date 2014:
▪
Total revenue was $464.1 million compared to $470.8 million, a decrease of 1.4%.
▪
Comparable restaurant sales decreased 1.8%, including an average check increase of 5.1%, and customer traffic decrease of 6.6%.
▪
Net loss of $30.8 million compared to a net loss of $22.8 million.
▪
Adjusted EBITDA decreased 19.7% to $27.1 million from $33.7 million. (*)
(*) Please see reconciliation table at the end of this release.
Samuel Borgese, President and Chief Executive Officer of Logan's Roadhouse, Inc., stated, "Our financial results for the third quarter of 2015 reflect the effect of the purposed structural changes we are making in the business to rebuild the brand on the pillars of delivering the highest level of guest experience with consistent high quality menu items in an engaging environment at a very compelling everyday value. These pillars are supported by our foundation of great employees, engagement in our communities, and loyal guest satisfaction. We are confident our efforts are reaffirming the position of Logan’s Roadhouse as an enduring brand that is and will be the choice of multi-generational guests for lunch and dinner well into the future."

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 May 3, 2015. It is available at www.logansroadhouse.com under the investor relations section.

Conference Call
The Company will host a conference call on Thursday, June 18, 2015 at 10:30 a.m. ET to discuss its financial results for the third 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 Jim Hagan, Chief Financial Officer.

The domestic dial-in number for the call is 888-208-1379, and the international dial-in number is 913-981-5526. 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 18, 2015 through 11:59 p.m. ET on Thursday, June 25, 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 6508199. The archived webcast may be accessed at http://public.viavid.com/index.php?id=114848 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 230 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
 
Thirty-nine weeks ended
(In thousands)
May 3, 2015
 
April 27, 2014
 
May 3, 2015
 
April 27, 2014
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
Revenues:
 
 
 
 
 
 
 
  Net sales
$
162,989

 
$
169,126

 
$
462,415

 
$
469,210

  Franchise fees and royalties
620

 
582

 
1,710

 
1,617

     Total revenues
163,609

 
169,708

 
464,125

 
470,827

Costs and expenses:
 
 
 
 
 
 
 
  Restaurant operating costs:
 
 
 
 
 
 
 
     Cost of goods sold
58,406

 
57,716

 
166,319

 
159,511

     Labor and other related expenses
48,757

 
49,887

 
142,755

 
143,631

     Occupancy costs
13,693

 
13,675

 
42,187

 
41,503

     Other restaurant operating expenses
23,301

 
25,389

 
70,305

 
76,661

  Depreciation and amortization
5,132

 
5,039

 
15,297

 
15,171

  Pre-opening expenses
6

 
255

 
263

 
281

  General and administrative
8,298

 
8,685

 
23,234

 
23,408

  Restaurant impairment and closing charges
1,276

 
238

 
2,762

 
2,043

     Total costs and expenses
158,869

 
160,884

 
463,122

 
462,209

     Operating income (loss)
4,740

 
8,824

 
1,003

 
8,618

Interest expense, net
10,700

 
10,552

 
31,795

 
31,407

    Income (loss) before income taxes
(5,960
)
 
(1,728
)
 
(30,792
)
 
(22,789
)
Income tax provision (benefit)
8

 
—

 
8

 
—

     Net income (loss)
$
(5,968
)
 
$
(1,728
)
 
$
(30,800
)
 
$
(22,789
)


3


LRI HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
May 3, 2015
 
August 3, 2014

ASSETS
(unaudited)
 
 
Current assets:
 
 
 
  Cash and cash equivalents
$
7,903

 
$
9,170

  Receivables
10,816

 
9,734

  Inventories
14,424

 
13,832

  Prepaid expenses and other current assets
7,591

 
6,887

  Income taxes receivable
11

 
115

     Total current assets
40,745

 
39,738

Property and equipment, net
197,994

 
209,078

Other assets
9,867

 
13,273

Goodwill
163,368

 
163,368

Tradename
71,251

 
71,251

Other intangible assets, net
15,628

 
17,190

     Total assets
$
498,853

 
$
513,898

LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
 
 
 
Current liabilities:
 
 
 
  Accounts payable
$
14,426

 
$
17,414

  Payable to RHI
2,527

 
2,721

  Other current liabilities and accrued expenses
42,314

 
51,683

     Total current liabilities
59,267

 
71,818

Long-term debt
380,260

 
355,000

Deferred income taxes
27,607

 
27,607

Other long-term obligations
49,645

 
46,599

     Total liabilities
516,779

 
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
(247,926
)
 
(217,126
)
     Total stockholder’s equity (deficit)
(17,926
)
 
12,874

     Total liabilities and stockholder’s equity (deficit)
$
498,853

 
$
513,898




4

LRI HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Thirty-nine weeks ended
(In thousands)
May 3, 2015
 
April 27, 2014
Cash flows from operating activities:
(unaudited)
 
(unaudited)
  Net income (loss)
$
(30,800
)
 
$
(22,789
)
  Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 
 
    Depreciation and amortization
15,297

 
15,171

    Other amortization
1,747

 
1,574

    Loss on sale/disposal of property and equipment
2,172

 
1,533

    Amortization of deferred gain on sale and leaseback transactions
(38
)
 
(37
)
    Impairment charges for long-lived assets
2,762

 
2,043

    Share-based compensation expense
(170
)
 
1,354

  Changes in operating assets and liabilities:
 
 
 
    Receivables
(1,082
)
 
(26
)
    Inventories
(682
)
 
(1,509
)
    Prepaid expenses and other current assets
(704
)
 
(1,405
)
    Other non-current assets and intangibles
1,173

 
3

    Accounts payable
(2,832
)
 
(360
)
    Payable to RHI
(24
)
 
(110
)
    Income taxes payable/receivable
104

 
(297
)
    Other current liabilities and accrued expenses
(9,369
)
 
(8,592
)
    Other long-term obligations
3,956

 
3,255

       Net cash provided by (used in) operating activities
(18,490
)
 
(10,192
)
Cash flows from investing activities:
 
 
 
  Purchase of property and equipment
(9,514
)
 
(10,523
)
  Proceeds from sale and leaseback transactions, net of expenses
1,477

 
—

       Net cash provided by (used in) investing activities
(8,037
)
 
(10,523
)
Cash flows from financing activities:
 
 
 
  Payments on revolving credit facility
(8,840
)
 
(24,500
)
  Borrowings on revolving credit facility
34,100

 
25,000

       Net cash provided by (used in) financing activities
25,260

 
500

       Increase in cash and cash equivalents
(1,267
)
 
(20,215
)
Cash and cash equivalents, beginning of period
9,170

 
23,708

Cash and cash equivalents, end of period
$
7,903

 
$
3,493



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
 
Thirty-nine weeks ended
(In thousands)
May 3, 2015
 
April 27, 2014
 
May 3, 2015
 
April 27, 2014
Net income (loss)
$
(5,968
)
 
$
(1,728
)
 
$
(30,800
)
 
$
(22,789
)
Interest expense, net
10,700

 
10,552

 
31,795

 
31,407

Income tax provision (benefit)
8

 
—

 
8

 
—

Depreciation and amortization
5,132

 
5,039

 
15,297

 
15,171

      EBITDA
9,872

 
13,863

 
16,300

 
23,789

Adjustments
 
 
 
 
 
 
 
Sponsor management fees(a)
250

 
250

 
750

 
750

Non-cash asset write-offs:
 
 
 
 
 
 
 
  Restaurant impairment(b)
1,276

 
238

 
2,762

 
2,043

  Loss on disposal of property and equipment(c)
481

 
469

 
1,843

 
1,533

Restructuring costs(d)
1,118

 
302

 
2,072

 
(147
)
Pre-opening expenses (excluding rent)(e)
6

 
246

 
237

 
253

Losses on sales of property(f)
335

 
7

 
339

 
11

Non-cash rent adjustment(g)
489

 
667

 
2,595

 
2,968

Non-cash stock-based compensation(h)
36

 
498

 
(170
)
 
1,354

Hedging (gain) loss (i)
(87
)
 
—

 
44

 
—

Other adjustments(j)
192

 
699

 
329

 
1,182

     Adjusted EBITDA
13,968

 
17,239

 
27,101

 
33,736

Cash rent expense(k)
10,728

 
10,487

 
32,045

 
31,264

     Adjusted EBITDAR
$
24,696

 
$
27,726

 
$
59,146

 
$
65,000

     
(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, consulting fees related to improving our supply chain practices, 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 (gain) loss represents the gain or loss on our forward contract for fuel which will expire in July 2015.
(j)
Other adjustments include non-recurring expenses and professional fees, ongoing expenses of closed restaurants, legal and settlement charges related to a contract termination and legal fees associated with Fair Labor Standards Act litigation.
(k)
Cash rent expense represents actual cash payments required under our leases.

7

LRI HOLDINGS, INC. Reports