EX-99 2 exhibit99.htm LUBY'S PRESS RELEASE ANNOUNCING 2ND QTR EARNINGS exhibit99.htm
 
 
 

 
Luby’s Announces Second Quarter Fiscal 2008 Results
Total Revenue Grew Year Over Year
Same-Store Sales Declined 1.6%
New Restaurant Expected to Open in Port Arthur on March 27, 2008
Company Plans to Open 5 Additional New Restaurants in Calendar Year 2008

HOUSTON, TX – March 20, 2008 – Luby’s, Inc. (NYSE: LUB) today announced unaudited financial results for the second quarter of fiscal 2008, which ended on February 13, 2008.

Second Quarter Fiscal 2008 Highlights:
·  Total revenue increased to $72.6 million compared to $72.2 million in the second quarter fiscal 2007
·  Culinary contract services revenue increased to $1.7 million compared to $0.1 million in the secondquarter fiscal 2007
·  Added one new culinary service contract in Dallas, Texas
·  New prototype restaurant that opened in August, 2007 has continued to perform well and remains on paceto generate annual revenue inexcess of $3.25 million for its first year, an increase of 30%, compared tothe restaurant system per unit average revenue 
       of  $2.5 million
·  Repurchased 500,000 shares of common stock on February 15, 2008, in a privately negotiated blocktrade at $9.50 per share

Total sales in the second quarter were $72.6 million, an increase of 0.6% compared to $72.2 million in the second quarter last year. Restaurant sales declined approximately $1.1 million, due primarily to declines in guest traffic partially offset by higher menu prices and more favorable menu mix. On a same-store basis, sales declined 1.6%. The decline in restaurant sales was more than offset by a $1.7 million increase in culinary contracts services sales.

“During the quarter we initiated construction development on new sites and hired additional staff to support these efforts. We invested approximately $6.9 million in capital expenditures, which included $1.5 million to upgrade our restaurant facilities including dining room updates, restroom remodels and the addition of new furniture in many of our restaurants. Our team remains committed to programs that are focused on customer service, menu innovation, food quality assurance and staff training and development. The long-term consistent execution of these programs is designed to enhance overall customer satisfaction and increase profitability,” said Chris Pappas, President and CEO.

“Our financial results in the second quarter were negatively impacted by the challenging restaurant operating environment, which included softer consumer demand and higher gasoline prices as well as increased commodity and labor costs that impacted margins during the quarter,” said Mr. Pappas. “However, despite the current macro-economic challenges, we remain confident that our long-term strategic plan to enhance and grow the Luby’s brand will optimize our competitive value proposition to the market and enhance shareholder value.”

Income from continuing operations in the second quarter was $354,000, or $0.01 per diluted share, compared to $2.1 million, or $0.08 per diluted share in the second quarter last year. Second quarter 2008 income from operations was reduced by approximately $0.03 per diluted share by the after tax impact of expenses related to the Company’s contested proxy election in January and a reduction in interest related to income taxes partially offset by a net gain on disposition of property and equipment.
 
 
 
 

 
 
 
 
 
 
Food costs in the second quarter as a percentage of restaurant sales were 28.1%, an increase of 1.0% compared to the second quarter last year. Food commodity costs increased in most categories with higher poultry, seafood, oils and grain costs having the greatest impact on food costs compared to the prior year.

Payroll and related costs in the second quarter as a percentage of restaurant sales were 34.5%, an increase of  0.8% compared to the second quarter last year. The increase was primarily due to higher store management and training costs partially offset by lower workers’ compensation expense, including the effects of reduced actuarial estimates of potential losses resulting from favorable claims expense.

Other operating expenses in the second quarter as a percentage of restaurant sales were 21.9%, a decrease of 0.7% compared to the second quarter last year. Other operating expenses decreased primarily due to 1) an approximate $1.0 million reduction in marketing and advertising expense due to the Company’s use of a mix of lower cost marketing mediums in geographically consolidated markets; and 2) an approximate $0.3 million reduction in insurance expense which included the effect of reduced estimates of potential losses from general liability claims. These favorable expense items were offset by approximately $0.6 million increase compared to last year for higher repairs and maintenance expense associated with efforts to further improve the appearance of restaurants.

Cost of culinary contract services in the second quarter increased approximately $1.4 million compared to the second quarter last year. This increase was related to the food, labor, and other operating expenses associated with the increase in revenue for this line of business.

General and administrative expenses in the second quarter fiscal 2008 as a percentage of total sales were 9.5% compared to 6.9% last year. The increase was primarily due to 1) an approximate $0.5 million increase in corporate salary expense related to staffing costs supporting our culinary services initiative to provide services at healthcare facilities and other departments to support our strategic growth plan; and 2) an approximate $1.1 million increase in professional service fees primarily related to costs incurred in connection with the proxy contest in the second quarter of 2008.

Company Outlook
The Company expects to open one new restaurant on March 27, 2008, one replacement restaurant in May and five additional new restaurants in calendar 2008.

Conference Call
The company will host a conference call today at 4:00 p.m. Central Time, March 20, 2008, to discuss second quarter fiscal 2008 results. To access the call live, dial 866-383-8108 and use the participant pin code, Lubys (58297), at least 10 minutes prior to the start time, or listen live over the Internet by logging on to www.lubys.com.

About Luby’s
Luby’s operates 122 restaurants in Austin, Dallas, Houston, San Antonio, the Rio Grande Valley and other locations throughout Texas and other states.  Luby’s provides its customers with quality home-style food, value pricing, and outstanding customer service.
 
 
 

 
 
 
 



Consolidated Statements of Operations (unaudited)
(In thousands except per share data)


   
Quarter Ended
  
Two Quarters Ended
  
   
February 13,
  
February 14,
  
February 13,
  
February 14,
  
   
2008
  
2007
  
2008
  
2007
  
   
(84 days)
  
(84 days)
  
(168 days)
  
(168 days)
  
       
SALES
                          
Restaurant sales
  
$
70,972
  
$
72,101
  
$
142,606
  
$
145,759
  
Culinary contract services
    
1,668
    
97
    
3,396
    
126
  
TOTAL SALES
    
72,640
    
72,198
    
146,002
    
145,885
  
COSTS AND EXPENSES:
                          
Cost of food
    
19,938
    
19,541
    
39,595
    
39,339
  
Payroll and related costs
    
24,495
    
24,300
    
48,934
    
49,604
  
Other operating expenses
    
15,575
    
16,262
    
31,282
    
33,076
  
Cost of culinary contract services
    
1,500
    
116
    
3,078
    
166
  
Depreciation and amortization
    
4,004
    
3,570
    
7,960
    
7,155
  
General and administrative expenses
    
6,888
    
4,981
    
12,856
    
10,023
  
Provision for (reversal of) asset impairments
    
—
    
190
    
717
    
190
  
Net loss (gain) on disposition of property and equipment
    
(222
)
  
312
    
94
    
494
  
 Total costs and expenses
    
72,178
    
69,272
    
144,516
    
140,047
  
INCOME FROM OPERATIONS
    
462
    
2,926
    
1,486
    
5,838
  
Interest income
    
375
    
242
    
673
    
412
  
Interest expense
    
(49
)
  
(199
)
  
(100
)
  
(391
)
Interest related to income taxes
    
(578
)
  
—
    
1,319
    
—
  
Other income, net
    
229
    
198
    
412
    
409
  
Income before income taxes and discontinued operations
    
439
    
3,167
    
3,790
    
6,268
  
Provision (benefit) for income taxes
    
85
    
1,114
    
(1,409
)
  
2,209
  
Income from continuing operations
    
354
    
2,053
    
5,199
    
4,059
  
Discontinued operations, net of income taxes
    
(68
)
  
(171
)
  
(142
)
  
(262
)
NET INCOME
  
$
286
  
$
1,882
  
$
5,057
  
$
3,797
  
Income per share - from continuing operations
                          
- basic
  
$
0.01
  
$
0.08
  
$
0.19
  
$
0.16
  
- assuming dilution
    
0.01
    
0.08
    
0.19
    
0.15
  
Loss per share - from discontinued operations
                          
- basic
  
$
—
  
$
(0.01
)
$
(0.01
)
$
(0.01
)
- assuming dilution
    
—
    
(0.01
)
  
(0.01
)
  
(0.01
)
Net income per share
                          
- basic
  
$
0.01
  
$
0.07
  
$
0.18
  
$
0.15
  
- assuming dilution
    
0.01
    
0.07
    
0.18
    
0.14
  
Weighted average shares outstanding:
                          
- basic
    
28,408
    
26,101
    
27,645
    
26,090
  
- assuming dilution
    
28,518
    
27,238
    
28,057
    
27,170
  







 
 
 


The following table contains information derived from the Company’s Consolidated Statements of Operations expressed as a percentage of sales.  Percentages may not add due to rounding.


   
Quarter Ended
  
Two Quarters Ended
  
   
February 13,
  
February 14,
  
February 13,
  
February 14,
  
   
2008
  
2007
  
2008
  
2007
  
   
(84 days)
  
(84 days)
  
(168 days)
  
(168 days)
  
       
Restaurant sales
    
97.7
%
  
99.9
%
  
97.7
%
  
99.9
%
Culinary contract services
    
2.3
%
  
0.1
%
  
2.3
%
  
0.1
%
TOTAL SALES
    
100
%
  
100
%
  
100
%
  
100
%
                           
COSTS AND EXPENSES:
                          
(As a percentage of restaurant sales)
                          
Cost of food
    
28.1
%
  
27.1
%
  
27.8
%
  
27.0
%
Payroll and related costs
    
34.5
%
  
33.7
%
  
34.3
%
  
34.0
%
Other operating expenses
    
21.9
%
  
22.6
%
  
21.9
%
  
22.7
%
Store level profit
    
15.5
%
  
16.6
%
  
16.0
%
  
16.3
%
                           
(As a percentage of total sales)
                          
General and administrative expenses
    
9.5
%
  
6.9
%
  
8.8
%
  
6.9
%
INCOME FROM OPERATIONS
    
0.6
%
  
4.1
%
  
1.0
%
  
4.0
%








 
 
 


Consolidated Balance Sheets
(In thousands except share data)


   
February 13,
    
August 29,
  
   
2008
    
2007
  
   
(Unaudited)
        
ASSETS
      
Current Assets:
            
Cash and cash equivalents
  
$
17,996
    
$
17,514
  
Short-term investments
    
17,650
      
8,600
  
Trade accounts and other receivables, net
    
2,827
      
1,657
  
Food and supply inventories
    
2,876
      
2,574
  
Prepaid expenses
    
1,341
      
1,398
  
Deferred income taxes
    
548
      
624
  
     Total current assets
    
43,238
      
32,367
  
Property and equipment, net
    
185,049
      
185,983
  
Property held for sale
    
5,411
      
736
  
Other assets
    
457
      
548
  
     Total assets
  
$
234,155
    
$
219,634
  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                
Current Liabilities:
                
Accounts payable
  
$
14,173
    
$
12,882
  
Accrued expenses and other liabilities
    
17,353
      
21,400
  
     Total current liabilities
    
31,526
      
34,282
  
Other liabilities
    
7,925
      
7,088
  
     Total liabilities
    
39,451
      
41,370
  
Commitments and Contingencies
                
SHAREHOLDERS' EQUITY
                
Common stock, $0.32 par value; 100,000,000 shares authorized;
Shares issued were 28,410,996 and 27,835,901, respectively;
Shares outstanding were 28,410,996 and 26,159,498, respectively
    
9,091
      
8,907
  
Paid-in capital
    
19,603
      
43,514
  
Retained earnings
    
166,010
      
161,447
  
Less cost of treasury stock, zero and 1,676,403 shares, respectively
    
—
      
(35,604
)
     Total shareholders' equity
    
194,704
      
178,264
  
        Total liabilities and shareholders' equity
  
$
234,155
    
$
219,634
  








 
 
 


Consolidated Statements of Cash Flows (unaudited)
(In thousands)


   
Two Quarters Ended
  
   
February 13,
    
February 14,
  
   
2008
    
2007
  
   
(168 days)
    
(168 days)
  
CASH FLOWS FROM OPERATING ACTIVITIES:
            
Net income
  
$
5,057
    
$
3,797
  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Provision for (reversal of) asset impairments, net of gains and losses on property sales
    
811
      
908
  
Depreciation and amortization
    
7,960
      
7,155
  
Amortization of debt issuance cost
    
21
      
215
  
Non-cash compensation expense
    
113
      
109
  
Share-based compensation expense
    
559
      
429
  
Interest related to income taxes
    
(1,319
)
    
—
  
Deferred tax provision (benefit)
    
(931
)
    
1,964
  
Cash provided by operating activities before changes in operating assets and liabilities
    
12,271
      
14,577
  
Changes in operating assets and liabilities:
                
(Increase) decrease in trade accounts and other receivables
    
(978
)
    
1,045
  
Increase in food and supply inventories
    
(302
)
    
(53
)
(Increase) decrease in prepaid expenses and other assets
    
127
      
(105
)
Decrease in accounts payable, accrued expenses and other liabilities
    
(292
)
    
(653
)
Net cash provided by operating activities
    
10,826
      
14,811
  
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Proceeds from redemption or maturity of short-term investments
    
16,600
      
6,399
  
Purchases of short-term investments
    
(25,650
)
    
(20,395
)
Proceeds from disposal of assets
    
2,300
      
70
  
Purchases of property and equipment
    
(14,799
)
    
(6,643
)
Net cash used in investing activities
    
(21,549
)
    
(20,569
)
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Proceeds received on exercise of stock options
    
11,205
      
313
  
Net cash provided by financing activities
    
11,205
      
313
  
Net increase (decrease) in cash and cash equivalents
    
482
      
(5,445
)
Cash and cash equivalents at beginning of period
    
17,514
      
9,715
  
Cash and cash equivalents at end of period
  
$
17,996
    
$
4,270
  
Cash paid for:
                
     Income taxes
  
$
302
    
$
167
  
     Interest
    
56
      
76
  


The Company wishes to caution readers that various factors could cause its actual financial and operational results to differ materially from those indicated by forward-looking statements made from time to time in news releases, reports, proxy statements, registration statements, and other written communications, as well as oral statements made from time to time by representatives of the Company. Any statements made in this news release and in such oral and written communications other than historical statements, including statements regarding the expected financial performance of the Company’s prototype restaurant, the execution of the Company’s strategic plan, and future openings of new or replacement restaurants are forward-looking statements. Forward-looking statements involve risks and uncertainties, including but not limited to general business conditions, the impact of competition, the success of operating initiatives, changes in the cost and supply of food and labor, the seasonality of the company’s business, taxes, inflation, governmental regulations, and the availability of credit, as well as other risks and uncertainties disclosed in the Company’s periodic reports on Form 10-K and Form 10-Q.
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