LRI HOLDINGS, INC. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - December 14, 2015

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LRI Holdings, Inc., the Parent Company of Logan’s Roadhouse, Inc., Announces Financial Results for the Period from August 3, 2015 to October 28, 2015

Nashville, Tenn. – December 14, 2015 – LRI Holdings, Inc., the parent company of Logan’s Roadhouse, Inc., today announced financial results for the period from August 3, 2015 to October 28, 2015, which represents a quarter ended within the Transition Period which will end on December 30, 2015.

Highlights for the period from August 3, 2015 to October 28, 2015 Compared to the period from August 4, 2014 to November 2, 2014 (*):
▪
Total revenue was $131.3 million compared to $145.7 million, a decrease of 9.9%.
▪
Comparable restaurant sales decreased 4.3%, including an average check increase of 3.4% and customer traffic decrease of 7.4%.
▪
Net loss of $24.4 million compared to a net loss of $13.0 million.
▪
Adjusted EBITDA decreased 95.0% to $0.2 million from $4.5 million. (**)

(*)The period from August 3, 2015 to October 28, 2015 is comprised of four fewer days than the period from August 4, 2014 to November 2, 2014 (which is the first quarter of fiscal year 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 first quarter of the Stub Year Transition Period contain four fewer days than the fiscal year 2015 quarter to which they are being compared. The current period also contains costs associated with identifying operational efficiencies that we are beginning to deploy throughout our restaurant operations. Our brand repositioning strategy that is now in place is expected to help us gain traction in our business approach which should lead to improved performance. Meanwhile, we continue to focus on key metrics in our business directed at improving guest satisfaction, employing targeted marketing programs to promote Logan’s innovation of exciting new menu items and applying new tools to help predict and reduce our reaction time to changing industry trends. Our entire focus is purposed to deliver on the renewal of the Logan’s Roadhouse brand."

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 period ended October 28, 2015. It is available at www.logansroadhouse.com under the investor relations section.

Conference Call
The Company will host a conference call on Wednesday, December 16, 2015 at 10:00 a.m. ET to discuss its financial results for the quarter ended October 28, 2015, which encompasses the period from August 3, 2015 to October 28, 2015. The conference call will be hosted by Sam Borgese, President and Chief Executive Officer, and Ed Schwartz, Interim Chief Financial Officer.

The domestic dial-in number for the call is 800-289-0544, and the international dial-in number is 913-312-0658. 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 Wednesday, December 16, 2015 through 11:59 p.m. ET on Wednesday, December 23, 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 9919284. The archived webcast may be accessed at http://public.viavid.com/index.php?id=117517 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
 
Period from
(In thousands)
August 3, 2015 to October 28, 2015
 
August 4, 2014 to November 2, 2014
 
(unaudited)
 
(unaudited)
Revenues:
 
 
 
  Net sales
$
130,816

 
$
145,213

  Franchise fees and royalties
529

 
529

     Total revenues
131,345

 
145,742

Costs and expenses:
 
 
 
  Restaurant operating costs:
 
 
 
     Cost of goods sold
47,004

 
52,296

     Labor and other related expenses
41,504

 
46,332

     Occupancy costs
13,429

 
13,804

     Other restaurant operating expenses
21,910

 
23,593

  Depreciation and amortization
4,470

 
5,070

  Pre-opening expenses
—

 
35

  General and administrative
13,885

 
7,182

  Store impairment and closing charges
1,103

 
—

     Total costs and expenses
143,305

 
148,312

     Operating loss
(11,960
)
 
(2,570
)
Interest expense, net
12,412

 
10,412

     Loss before income taxes
(24,372
)
 
(12,982
)
Income tax provision (benefit)
—

 
—

     Net loss
$
(24,372
)
 
$
(12,982
)


3


LRI HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
October 28, 2015
 
August 2, 2015
ASSETS
 
 
 
Current assets:

 

  Cash and cash equivalents
$
12,941

 
$
26,331

  Receivables
6,624

 
10,201

  Inventories
13,767

 
13,192

  Prepaid expenses and other current assets
6,433

 
6,293

  Deferred income taxes
1,745

 
1,745

     Total current assets
41,510

 
57,762

Property and equipment, net
172,371

 
176,165

Other assets
9,979

 
9,905

Goodwill
93,988

 
93,988

Tradename
36,621

 
36,621

Other intangible assets, net
14,634

 
15,083

     Total assets
$
369,103

 
$
389,524

LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
 
 
 
Current liabilities:
 
 
 
  Accounts payable
$
15,062

 
$
16,647

  Payable to RHI
2,935

 
2,943

  Income taxes payable
86

 
20

  Other current liabilities and accrued expenses
39,122

 
50,841

     Total current liabilities
57,205

 
70,451

Long-term debt
391,365

 
374,175

Deferred income taxes
15,990

 
15,990

Other long-term obligations
60,827

 
60,820

     Total liabilities
525,387

 
521,436

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)
(386,284
)
 
(361,912
)
     Total stockholder’s equity (deficit)
(156,284
)
 
(131,912
)
     Total liabilities and stockholder’s equity (deficit)
$
369,103

 
$
389,524




4

LRI HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Period from
Cash flows from operating activities:
August 3, 2015 to October 28, 2015
 
August 4, 2014 to November 2, 2014
  Net loss
$
(24,372
)
 
$
(12,982
)
  Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
 
 
 
    Depreciation and amortization
4,470

 
5,070

    Other amortization
606

 
586

    Loss on sale/disposal of property and equipment
234

 
868

    Amortization of deferred gain on sale and leaseback transactions
(91
)
 
(13
)
    Impairment charges for long-lived assets
923

 
—

    Share-based compensation expense
—

 
(330
)
    Paid-in-kind interest
11,222

 
—

  Changes in operating assets and liabilities:
 
 
 
    Receivables
3,577

 
(2,482
)
    Inventories
(575
)
 
(484
)
    Prepaid expenses and other current assets
(140
)
 
377

    Other non-current assets and intangibles
(821
)
 
(40
)
    Accounts payable
624

 
(1,355
)
    Payable to RHI
(8
)
 
(7
)
    Income taxes payable/receivable
66

 
(2
)
    Other current liabilities and accrued expenses
(11,719
)
 
(8,766
)
    Other long-term obligations
368

 
708

       Net cash (used in) provided by operating activities
(15,636
)
 
(18,852
)
Cash flows from investing activities:
 
 
 
  Purchase of property and equipment
(1,458
)
 
(4,298
)
       Net cash used in investing activities
(1,458
)
 
(4,298
)
Cash flows from financing activities:
 
 
 
  Payments on revolving credit facility
(32
)
 
(3,900
)
  Borrowings on revolving credit facility
6,000

 
20,900

  Payments for debt issue costs
(2,264
)
 
—

       Net cash provided by financing activities
3,704

 
17,000

       (Decrease) increase in cash and cash equivalents
(13,390
)
 
(6,150
)
Cash and cash equivalents, beginning of period
26,331

 
9,170

Cash and cash equivalents, end of period
$
12,941

 
$
3,020



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.
 
Period from
(In thousands)
August 3, 2015 to October 28, 2015
 
August 4, 2014 to November 2, 2014
Net loss
$
(24,372
)
 
$
(12,982
)
Interest expense, net
12,412

 
10,412

Income tax expense (benefit)
—

 
—

Depreciation and amortization
4,470

 
5,070

      EBITDA
(7,490
)
 
2,500

Adjustments
 
 
 
Sponsor management fees(a)
250

 
250

Non-cash asset write-offs:
 
 
 
  Restaurant impairment(b)
965

 
—

  Loss on disposal of property and equipment(c)
229

 
868

Restructuring costs(d)
1,602

 
494

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

 
15

Losses on sales of property(f)
5

 
1

Non-cash rent adjustment(g)
538

 
653

Costs related to transactions (h)
3,834

 
—

Non-cash stock-based compensation(i)
—

 
(330
)
Other adjustments(j)
290

 
1

     Adjusted EBITDA
223

 
4,452

Cash rent expense(k)
10,423

 
10,621

     Adjusted EBITDAR
$
10,646

 
$
15,073

(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 as well as additional losses incurred as a result of these transactions.
(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)
Costs related to transactions include legal, professional and other third-party fees associated with the note exchange.
(i)
Non-cash stock-based compensation represents compensation expense recognized for time-based stock options issued by RHI.
(j)
Other adjustments include non-recurring expenses and professional fees, legal and settlement fees related to contract termination, legal fees associated with FLSA litigation, ongoing expenses of closed restaurants, as well as inventory write-offs, employee termination buyouts and incidental charges related to restaurant closings.
(k)
Cash rent expense represents actual cash payments required under our leases.

7

LRI HOLDINGS, INC. Reports