LRI HOLDINGS, INC. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - November 2, 2015

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

Nashville, Tenn. – November 2, 2015 – LRI Holdings, Inc., the parent company of Logan’s Roadhouse, Inc., today announced financial results for the fourth quarter and fiscal year 2015 ended August 2, 2015.

Highlights for the Fourth Quarter 2015 Compared to the Fourth Quarter 2014 (*):
▪
Total revenue was $150.2 million compared to $170.1 million, a decrease of 11.7%.
▪
Comparable restaurant sales decreased 3.8%, including an average check increase of 4.4% and customer traffic decrease of 7.9%.
▪
Net loss of $114.0 million compared to a net loss of $40.0 million.
▪
Adjusted EBITDA decreased 69.6% to $4.3 million from $14.1 million. (**)

Selected Highlights for Fiscal year 2015 Compared to Fiscal year 2014 (*):
▪
Total revenue was $614.3 million compared to $640.9 million, a decrease of 4.1%.
▪
Comparable restaurant sales decreased 2.4%, including an average check increase of 4.9%, which was offset by customer traffic decrease of 6.9%.
▪
Net loss of $144.8 million compared to a net loss of $62.8 million.
▪
Adjusted EBITDA decreased 34.4% to $31.4 million from $47.9 million. (**)

(*)Fiscal year 2014 was a 53 week year and the fourth quarter 2014 contained 14 weeks versus 52 weeks in fiscal year 2015 and 13 weeks in the fourth quarter 2015.
(**) 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 fourth quarter of 2015 continue to reflect the effect of the purposed structural changes we are making in the business. We continue to focus our efforts on building a foundation of quality in the food we serve and the services our employees provide to all of our loyal customers. The business has endured headwinds both internally, due to operations and consumer positioning, and externally from highly volatile beef commodity pricing and unpredictable consumer sentiment towards casual dining. Furthermore, our focus on significantly improving key metrics of guest satisfaction, achieving improved commodity pricing and the implementation of controls over costs in all areas of our business will further validate that our business strategy is the right one. We are confident that our current business approach will ultimately build strength back into the Logan's Roadhouse brand as we continue it's repositioning in the marketplace. We are intensely focused on maintaining Logan's as a favored destination with an unmatched guest experience for many years to come."

Additional discussion and analysis of the Company’s financial condition and results of operations can be found in its Annual Report on Form 10-K for the fiscal year ended August 2, 2015. It is available at www.logansroadhouse.com under the investor relations section.

Conference Call
The Company will host a conference call on Monday, November 2, 2015 at 4:00 p.m. ET to discuss its financial results for the fourth 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 Ed Schwartz, Chief Financial Officer.

The domestic dial-in number for the call is 888-820-9418, and the international dial-in number is 913-312-1276. 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 7:00 p.m. ET on Monday, November 2, 2015 through 11:59 p.m. ET on Monday, November 9, 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 456887. The archived webcast may be accessed at http://public.viavid.com/index.php?id=117023 and will be available for one year.


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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
(In thousands)
Thirteen weeks ended August 2, 2015
 
Fourteen weeks ended August 3, 2014
 
Fifty-two weeks ended August 2, 2015
 
Fifty-three weeks ended August 3, 2014
 
(unaudited)
 
(unaudited)
 

 

Revenues:
 
 
 
 
 
 
 
  Net sales
$
149,583

 
$
169,455

 
$
611,998

 
$
638,665

  Franchise fees and royalties
601

 
599

 
2,311

 
2,216

     Total revenues
150,184

 
170,054

 
614,309

 
640,881

Costs and expenses:
 
 
 
 
 
 
 
  Restaurant operating costs:
 
 
 
 
 
 
 
     Cost of goods sold
55,273

 
58,937

 
221,592

 
218,448

     Labor and other related expenses
46,132

 
51,614

 
188,887

 
195,245

     Occupancy costs
14,181

 
13,697

 
56,368

 
55,200

     Other restaurant operating expenses
24,132

 
26,363

 
94,437

 
103,024

  Depreciation and amortization
4,955

 
5,195

 
20,252

 
20,366

  Pre-opening expenses
—

 
43

 
263

 
324

  General and administrative
10,056

 
8,156

 
33,290

 
31,564

  Goodwill and intangible asset impairment
104,010

 
29,665

 
104,010

 
29,665

  Store impairment and closing charges
7,826

 
5,096

 
10,588

 
7,139

     Total costs and expenses
266,565

 
198,766

 
729,687

 
660,975

     Operating loss
(116,381
)
 
(28,712
)
 
(115,378
)
 
(20,094
)
Interest expense, net
10,735

 
11,163

 
42,530

 
42,570

     Loss before income taxes
(127,116
)
 
(39,875
)
 
(157,908
)
 
(62,664
)
Income tax (benefit) provision
(13,130
)
 
109

 
(13,122
)
 
109

     Net loss
$
(113,986
)
 
$
(39,984
)
 
$
(144,786
)
 
$
(62,773
)


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LRI HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
August 2, 2015
 
August 3, 2014
ASSETS
 
 
 
Current assets:

 

  Cash and cash equivalents
$
26,331

 
$
9,170

  Receivables
10,201

 
9,734

  Inventories
13,192

 
13,832

  Prepaid expenses and other current assets
6,293

 
6,887

  Income taxes receivable
—

 
115

  Deferred income taxes
1,745

 
—

     Total current assets
57,762

 
39,738

Property and equipment, net
176,165

 
209,078

Other assets
9,905

 
13,273

Goodwill
93,988

 
163,368

Tradename
36,621

 
71,251

Other intangible assets, net
15,083

 
17,190

     Total assets
$
389,524

 
$
513,898

LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
 
 
 
Current liabilities:
 
 
 
  Accounts payable
$
16,647

 
$
17,414

  Payable to RHI
2,943

 
2,721

  Income taxes payable
20

 
—

  Other current liabilities and accrued expenses
50,841

 
51,683

     Total current liabilities
70,451

 
71,818

Long-term debt
374,175

 
355,000

Deferred income taxes
15,990

 
27,607

Other long-term obligations
60,820

 
46,599

     Total liabilities
521,436

 
501,024

Commitments and contingencies
—

 
—

Stockholder’s equity (deficit):
 
 
 
  Common stock ($0.01 par value; 100 shares authorized; 1 share issued and outstanding)
—

 
—

  Additional paid-in capital
230,000

 
230,000

  Retained earnings (deficit)
(361,912
)
 
(217,126
)
     Total stockholder’s equity (deficit)
(131,912
)
 
12,874

     Total liabilities and stockholder’s equity (deficit)
$
389,524

 
$
513,898




4

LRI HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Fiscal year
Cash flows from operating activities:
2015
 
2014
  Net loss
$
(144,786
)
 
$
(62,773
)
  Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
 
 
 
    Depreciation and amortization
20,252

 
20,366

    Other amortization
2,180

 
2,197

    Loss on sale/disposal of property and equipment
3,144

 
3,023

    Amortization of deferred gain on sale and leaseback transactions
(132
)
 
(50
)
    Impairment charges for long-lived assets
3,852

 
7,139

    Goodwill and intangible asset impairment
104,010

 
29,665

    Share-based compensation
(49
)
 
1,728

    Deferred income taxes
(13,362
)
 
(138
)
  Changes in operating assets and liabilities:
 
 
 
    Receivables
(467
)
 
(151
)
    Inventories
79

 
(1,140
)
    Prepaid expenses and other current assets
1,444

 
(2,550
)
    Other non-current assets and intangibles
1,216

 
(33
)
    Accounts payable
(34
)
 
(1,611
)
    Payable to RHI
271

 
(125
)
    Income taxes payable/receivable
135

 
317

    Other current liabilities and accrued expenses
(859
)
 
(669
)
    Other long-term obligations
10,966

 
4,179

       Net cash (used in) provided by operating activities
(12,140
)
 
(626
)
Cash flows from investing activities:
 
 
 
  Purchase of property and equipment
(12,332
)
 
(15,663
)
  Proceeds from sale and leaseback transactions, net of expenses
22,458

 
1,751

       Net cash provided by (used in) investing activities
10,126

 
(13,912
)
Cash flows from financing activities:
 
 
 
  Payments on revolving credit facility
(25,925
)
 
(36,000
)
  Borrowings on revolving credit facility
45,100

 
36,000

       Net cash provided by (used in) financing activities
19,175

 
—

       Increase (decrease) in cash and cash equivalents
17,161

 
(14,538
)
Cash and cash equivalents, beginning of period
9,170

 
23,708

Cash and cash equivalents, end of period
$
26,331

 
$
9,170



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 2, 2015, 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.
(In thousands)
Thirteen weeks ended August 2, 2015
 
Fourteen weeks ended August 3, 2014
 
Fifty-two weeks ended August 2, 2015
 
Fifty-three weeks ended August 3, 2014
Net loss
$
(113,986
)
 
$
(39,984
)
 
$
(144,786
)
 
$
(62,773
)
Interest expense, net
10,735

 
11,163

 
42,530

 
42,570

Income tax expense (benefit)
(13,130
)
 
109

 
(13,122
)
 
109

Depreciation and amortization
4,955

 
5,195

 
20,252

 
20,366

      EBITDA
(111,426
)
 
(23,517
)
 
(95,126
)
 
272

Adjustments
 
 
 
 
 
 
 
Sponsor management fees(a)
250

 
250

 
1,000

 
1,000

Non-cash asset write-offs:
 
 
 
 
 
 
 
  Goodwill and tradename impairment(b)
104,010

 
29,665

 
104,010

 
29,665

  Restaurant impairment(c)
920

 
5,096

 
3,682

 
7,139

  Loss on disposal of property and equipment(d)
526

 
750

 
2,369

 
2,283

Restructuring costs(e)
1,743

 
161

 
3,815

 
14

Pre-opening expenses (excluding rent)(f)
—

 
29

 
237

 
282

Hedging (gain) loss (g)
(44
)
 
—

 
—

 
—

Losses on sales of property(h)
137

 
747

 
476

 
758

Non-cash rent adjustment(i)
777

 
679

 
3,372

 
3,647

Non-cash stock-based compensation(j)
121

 
374

 
(49
)
 
1,728

Other adjustments(k)
7,291

 
(93
)
 
7,620

 
1,089

     Adjusted EBITDA
4,305

 
14,141

 
31,406

 
47,877

Cash rent expense(l)
10,930

 
10,526

 
42,975

 
41,790

     Adjusted EBITDAR
$
15,235

 
$
24,667

 
$
74,381

 
$
89,667

     
(a)
Sponsor management fees consist of fees payable to certain affiliates of Kelso & Company, L.P. ("Kelso") under an advisory agreement.
(b)
We recorded goodwill and tradename impairment charges in fiscal year 2015 and fiscal year 2014.
(c)
Restaurant impairment charges were recorded in connection with the determination that the carrying value of certain of our restaurants exceeded their estimated fair value.
(d)
Loss on disposal of property and equipment consists of the loss on disposal or retirement of assets that are not fully depreciated.
(e)
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.
(f)
Pre-opening expenses (excluding rent) include expenses directly associated with the opening of a new restaurant.
(g)
Hedging (gain) loss represents the gain or loss on the forward contract for fuel which expired in July 2015.
(h)
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.
(i)
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.
(j)
Non-cash stock-based compensation represents compensation expense recognized for time-based stock options issued by Roadhouse Holding Inc.
(k)
Other adjustments include non-recurring expenses and professional fees, legal and settlement fees related to contract termination, legal fees associated with Fair Labor Standards Act litigation, ongoing expenses of closed

7

restaurants, as well as inventory write-offs, employee termination buyouts and incidental charges related to restaurant closings.
(l)
Cash rent expense represents actual cash payments required under our leases.

8

LRI HOLDINGS, INC. Reports