Delaware | 001-8308 | 74-1335253 |
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (IRS Employer Identification Number) |
13111 Northwest Freeway, Suite 600 Houston, Texas 77040 | ||
(Address of principal executive offices, including zip code) |
(713) 329-6800 | ||
(Registrant's telephone number, including area code) |
(Former name, former address and former fiscal year, if changed since last report) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. | Results of Operations and Financial Condition. |
Item 9.01. | Financial Statements and Exhibits. |
Luby’s Press Release dated April 23, 2018 |
LUBY'S, INC. | |||||
(Registrant) | |||||
Date: | April 23, 2018 | By: | /s/Christopher J. Pappas | ||
Christopher J. Pappas | |||||
President and Chief Executive Officer |
Exhibit No. | Description |
Luby’s Press Release dated April 23, 2018 |
![]() | ||
For additional information contact: | ||
FOR IMMEDIATE RELEASE | Dennard-Lascar Associates | |
Rick Black / Ken Dennard | ||
Investor Relations | ||
713-529-6600 |
• | Total sales were $82.2 million, a decrease of 4.8% |
• | Same-store sales decreased 3.7% |
• | Culinary Contract Services sales increased $3.0 million; Opened three new locations in the second quarter |
• | Loss from continuing operations of $11.1 million in the second quarter compared to loss from continuing operations of $12.8 million in the second quarter fiscal 2017 |
• | Adjusted EBITDA decreased $5.3 million (see non-GAAP reconciliation below) |
• | Re-opened one company-owned Fuddruckers location that was restored after Hurricane Harvey and one new Fuddruckers franchise location opened (in Florida) in the second quarter |
Q1 2018(3) | Q2 2018(3) | YTD 2018 | |
Luby's Cafeterias | 1.5% | (1.8)% | 0.1% |
Fuddruckers | 0.6% | (6.4)% | (2.5)% |
Combo locations (1) | 1.3% | (5.4)% | (1.5)% |
Cheeseburger in Paradise | (10.5)% | (13.9)% | (11.9)% |
Total same-store sales (2) | 0.8% | (3.7)% | (1.1)% |
(1) | Combo locations consist of a side-by-side Luby’s Cafeteria and Fuddruckers Restaurant at one property location. |
(2) | Luby’s includes a restaurant’s sales results into the same-store sales calculation in the quarter after that store has been open for six complete consecutive quarters. In the second quarter, there were 80 Luby’s Cafeterias locations, 59 Fuddruckers locations, all six Combo locations, and all seven Cheeseburger in Paradise locations that met the definition of same-stores. |
(3) | Q1 2018 and Q2 2018 same-store sales reflect the change in restaurant sales for the locations included in the same-store grouping for each of the comparable periods. |
Restaurant Brand | Q2 2018 | Q2 2017 | Change ($) | Change (%) | |||||||
Luby’s Cafeterias | $ | 47,261 | $ | 49,975 | $ | (2,714 | ) | (5.4 | )% | ||
Fuddruckers | 19,941 | 22,860 | (2,919 | ) | (12.8 | )% | |||||
Combo locations | 4,685 | 4,951 | (266 | ) | (5.4 | )% | |||||
Cheeseburger in Paradise | 2,465 | 3,278 | (813 | ) | (24.8 | )% | |||||
Total Restaurant Sales | $ | 74,352 | $ | 81,064 | $ | (6,712 | ) | (8.3 | )% |
• | Luby’s Cafeterias sales decreased $2.7 million versus the second quarter fiscal 2017, due to the closure of six locations over the prior year and a 1.8% decrease in Luby’s same-store sales. The 1.8% decrease in same-store sales was the result of a 8.6% decrease in guest traffic, partially offset by a 7.5% increase in average spend per guest. |
• | Fuddruckers sales at company-owned restaurants decreased $2.9 million versus the second quarter fiscal 2017, due to eight restaurant closings (seven permanent closings and one temporary closing which we re-opened during the second quarter) and a 6.4% decrease in same-store sales. The 6.4% decrease in same-store sales was the result of a 11.8% decrease in guest traffic, partially offset by a 6.0% increase in average spend per guest. |
• | Combo location sales decreased $0.3 million, or 5.4%, versus second quarter fiscal 2017. |
• | Cheeseburger in Paradise sales decreased $0.8 million. The closure of one location in the first quarter fiscal 2018 reduced sales by $0.4 million and declines in sales at the remaining seven locations reduced sales by $0.4 million. |
• | Loss from continuing operations was $11.1 million, or a loss of $0.37 per diluted share, compared to a loss of $12.8 million, or a loss of $0.44 per diluted share, in the second quarter fiscal 2017. Excluding special non-cash items, loss from continuing operations was $5.2 million, or a loss of $0.17 per diluted share, in the second quarter compared to a loss of $2.1 million, or $0.07 per diluted share, in the second quarter fiscal 2017. Loss from continuing operations, excluding special items, is a non-GAAP measure, and reconciliation to loss from continuing operations is presented on page 10 of this release. |
• | Store level profit, defined as restaurant sales plus vending revenue less cost of food, payroll and related costs, other operating expenses, and occupancy costs, was $5.7 million, or 7.7% of restaurant sales, in the second quarter compared to $10.2 million, or 12.6% of restaurant sales, during the second quarter fiscal 2017. The decline in store level profit was primarily the result of the decline in same-store sales combined with increased investment in hourly labor, restaurant supplies, and repairs and maintenance. The decline in same-store sales was partially impacted by a significant reduction in menu item discounting and reduced promotional activity compared to the second quarter fiscal 2017. In addition, we accepted a reduced level of catering orders, re-directing focus on our restaurant teams excelling at core operations within the restaurant. Furthermore, sales were adversely impacted to a lesser extent by a disruption in our point of sale system functioning which also affected our volume of mobile ordering through third party channels. The increase in hourly labor was due in part to a concerted effort to reinvest in training programs as well as continue to increase the service level offered to our guests. The increase in restaurant supplies and repairs and maintenance was part of our program to refresh our stores in lieu of completing full remodels in the current fiscal year. Store level profit is a non-GAAP measure, and reconciliation to loss from continuing operations is presented after the financial statements. |
• | Culinary Contract Services revenues increased by $3.0 million to $6.3 million with 24 operating locations during the second quarter. New Culinary Contract Services locations and retail sales combined contributed approximately $3.7 million (primarily driven by the addition of one higher sales volume location) in revenue which was partially offset by a $0.5 million decrease in revenue from locations that ceased operations and an approximate $0.2 million decrease in revenue at locations continually operated over the prior full year. Culinary Contract Services profit margin decreased to 9.5% of Culinary Contract Services sales in the second quarter compared to 10.5% in the second quarter fiscal 2017. |
• | Franchise revenue decreased $418 thousand, or 23.0%, in the second quarter compared to the second quarter fiscal 2017. The decrease reflects 1) a $348 thousand decrease in non-royalty fee income mostly due to comparison to the second quarter fiscal 2017 when approximately $365 thousand in fee income was realized related to franchise development fees and franchise store openings and 2) a $71 thousand decrease in franchise royalty income. In the second quarter, one franchise location opened in Florida |
August 30, 2017 | FY18 YTDQ2 Openings | FY18 YTDQ2 Closings | March 14, 2018 | ||||||||
Luby’s Cafeterias(1) | 88 | — | (2 | ) | 86 | ||||||
Fuddruckers Restaurants(1) | 71 | — | (4 | ) | 67 | ||||||
Cheeseburger in Paradise | 8 | — | (1 | ) | 7 | ||||||
Total | 167 | — | (7 | ) | 160 |
(1) | Includes 6 restaurants that are part of Combo locations |
Quarter Ended | Two Quarters Ended | ||||||||||||||
March 14, 2018 | March 15, 2017 | March 14, 2018 | March 15, 2017 | ||||||||||||
(12 weeks) | (12 weeks) | (28 weeks) | (28 weeks) | ||||||||||||
SALES: | |||||||||||||||
Restaurant sales | $ | 74,352 | $ | 81,064 | $ | 178,934 | $ | 189,147 | |||||||
Culinary contract services | 6,276 | 3,306 | 13,796 | 7,602 | |||||||||||
Franchise revenue | 1,401 | 1,819 | 3,288 | 3,691 | |||||||||||
Vending revenue | 151 | 125 | 294 | 284 | |||||||||||
TOTAL SALES | 82,180 | 86,314 | 196,312 | 200,724 | |||||||||||
COSTS AND EXPENSES: | |||||||||||||||
Cost of food | 21,181 | 22,583 | 50,936 | 53,433 | |||||||||||
Payroll and related costs | 28,512 | 29,295 | 66,640 | 67,968 | |||||||||||
Other operating expenses | 14,360 | 13,763 | 33,858 | 33,411 | |||||||||||
Occupancy costs | 4,707 | 5,322 | 10,968 | 11,797 | |||||||||||
Opening costs | 331 | 132 | 406 | 298 | |||||||||||
Cost of culinary contract services | 5,677 | 2,960 | 12,009 | 6,771 | |||||||||||
Cost of franchise operations | 369 | 436 | 856 | 1,016 | |||||||||||
Depreciation and amortization | 3,998 | 4,788 | 9,351 | 11,338 | |||||||||||
Selling, general and administrative expenses | 9,188 | 9,008 | 20,712 | 22,767 | |||||||||||
Provision for asset impairments and restaurant closings | 1,407 | 5,963 | 2,252 | 6,250 | |||||||||||
Net loss (gain) on disposition of property and equipment | (204 | ) | 329 | 18 | 414 | ||||||||||
Total costs and expenses | 89,526 | 94,579 | 208,006 | 215,463 | |||||||||||
LOSS FROM OPERATIONS | (7,346 | ) | (8,265 | ) | (11,694 | ) | (14,739 | ) | |||||||
Interest income | 5 | 1 | 11 | 3 | |||||||||||
Interest expense | (545 | ) | (727 | ) | (1,194 | ) | (1,330 | ) | |||||||
Other income (expense), net | 194 | (242 | ) | 309 | (139 | ) | |||||||||
Loss before income taxes and discontinued operations | (7,692 | ) | (9,233 | ) | (12,568 | ) | (16,205 | ) | |||||||
Provision for income taxes | 3,382 | 3,603 | 3,373 | 2,145 | |||||||||||
Loss from continuing operations | (11,074 | ) | (12,836 | ) | (15,941 | ) | (18,350 | ) | |||||||
Loss from discontinued operations, net of income taxes | (111 | ) | (343 | ) | (146 | ) | (415 | ) | |||||||
NET LOSS | $ | (11,185 | ) | $ | (13,179 | ) | $ | (16,087 | ) | $ | (18,765 | ) | |||
Loss per share from continuing operations: | |||||||||||||||
Basic | $ | (0.37 | ) | $ | (0.44 | ) | $ | (0.53 | ) | $ | (0.62 | ) | |||
Assuming dilution | $ | (0.37 | ) | $ | (0.44 | ) | $ | (0.53 | ) | $ | (0.62 | ) | |||
Loss per share from discontinued operations: | |||||||||||||||
Basic | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | |||
Assuming dilution | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | |||
Net loss per share: | |||||||||||||||
Basic | $ | (0.37 | ) | $ | (0.45 | ) | $ | (0.54 | ) | $ | (0.64 | ) | |||
Assuming dilution | $ | (0.37 | ) | $ | (0.45 | ) | $ | (0.54 | ) | $ | (0.64 | ) | |||
Weighted average shares outstanding: | |||||||||||||||
Basic | 29,950 | 29,522 | 29,802 | 29,418 | |||||||||||
Assuming dilution | 29,950 | 29,522 | 29,802 | 29,418 |
Quarter Ended | Two Quarters Ended | ||||||||||
March 14, 2018 | March 15, 2017 | March 14, 2018 | March 15, 2017 | ||||||||
(12 weeks) | (12 weeks) | (28 weeks) | (28 weeks) | ||||||||
Restaurant sales | 90.5 | % | 93.9 | % | 91.1 | % | 94.2 | % | |||
Culinary contract services | 7.6 | % | 3.8 | % | 7.0 | % | 3.8 | % | |||
Franchise revenue | 1.7 | % | 2.1 | % | 1.7 | % | 1.8 | % | |||
Vending revenue | 0.2 | % | 0.1 | % | 0.1 | % | 0.1 | % | |||
TOTAL SALES | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||
COSTS AND EXPENSES: | |||||||||||
(As a percentage of restaurant sales) | |||||||||||
Cost of food | 28.5 | % | 27.9 | % | 28.5 | % | 28.2 | % | |||
Payroll and related costs | 38.3 | % | 36.1 | % | 37.2 | % | 35.9 | % | |||
Other operating expenses | 19.3 | % | 17.0 | % | 18.9 | % | 17.7 | % | |||
Occupancy costs | 6.3 | % | 6.6 | % | 6.1 | % | 6.2 | % | |||
Vending revenue | (0.2 | )% | (0.2 | )% | (0.2 | )% | (0.2 | )% | |||
Store level profit | 7.7 | % | 12.6 | % | 9.4 | % | 12.1 | % | |||
(As a percentage of total sales) | |||||||||||
Marketing and advertising expenses | 0.9 | % | 1.7 | % | 1.1 | % | 1.9 | % | |||
General and administrative expenses | 10.3 | % | 8.7 | % | 9.5 | % | 9.4 | % | |||
Selling, general and administrative expenses | 11.2 | % | 10.4 | % | 10.6 | % | 11.3 | % | |||
LOSS FROM OPERATIONS | (8.9 | )% | (9.6 | )% | (6.0 | )% | (7.3 | )% |
March 14, 2018 | August 30, 2017 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 1,605 | $ | 1,096 | |||
Trade accounts and other receivables, net | 9,409 | 8,011 | |||||
Food and supply inventories | 4,641 | 4,453 | |||||
Prepaid expenses | 2,900 | 3,431 | |||||
Total current assets | 18,555 | 16,991 | |||||
Property held for sale | 2,856 | 3,372 | |||||
Assets related to discontinued operations | 2,269 | 2,755 | |||||
Property and equipment, net | 169,539 | 172,814 | |||||
Intangible assets, net | 18,836 | 19,640 | |||||
Goodwill | 795 | 1,068 | |||||
Deferred income taxes | 4,018 | 7,254 | |||||
Other assets | 2,844 | 2,563 | |||||
Total assets | $ | 219,712 | $ | 226,457 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current Liabilities: | |||||||
Accounts payable | $ | 16,756 | $ | 15,937 | |||
Liabilities related to discontinued operations | 4 | 367 | |||||
Current portion of credit facility debt | — | — | |||||
Accrued expenses and other liabilities | 29,014 | 28,076 | |||||
Total current liabilities | 45,774 | 44,380 | |||||
Credit facility debt, less current portion | 37,921 | 30,698 | |||||
Liabilities related to discontinued operations | 16 | 16 | |||||
Other liabilities | 6,784 | 7,311 | |||||
Total liabilities | $ | 90,495 | $ | 82,405 | |||
Commitments and Contingencies | |||||||
SHAREHOLDERS’ EQUITY | |||||||
Common stock, $0.32 par value; 100,000,000 shares authorized; shares issued were 29,951,161 and 29,624,083, respectively; shares outstanding were 29,451,161 and 29,124,083, respectively | 9,585 | 9,480 | |||||
Paid-in capital | 32,997 | 31,850 | |||||
Retained earnings | 91,410 | 107,497 | |||||
Less cost of treasury stock, 500,000 shares | (4,775 | ) | (4,775 | ) | |||
Total shareholders’ equity | 129,217 | 144,052 | |||||
Total liabilities and shareholders’ equity | $ | 219,712 | $ | 226,457 |
Two Quarters Ended | |||||||
March 14, 2018 | March 15, 2017 | ||||||
(28 weeks) | (28 weeks) | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net loss | $ | (16,087 | ) | $ | (18,765 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Provision for asset impairments and net (gains) on property sales | 1,921 | 6,664 | |||||
Depreciation and amortization | 9,351 | 11,338 | |||||
Amortization of debt issuance cost | 70 | 283 | |||||
Share-based compensation expense | 1,252 | 870 | |||||
Deferred tax provision | 3,494 | 2,399 | |||||
Cash provided by operating activities before changes in operating assets and liabilities | 1 | 2,789 | |||||
Changes in operating assets and liabilities: | |||||||
Decrease (Increase) in trade accounts and other receivables | (1,804 | ) | 530 | ||||
Decrease in insurance receivables | 407 | — | |||||
Decrease (Increase) in food and supply inventories | (188 | ) | 7 | ||||
Decrease in prepaid expenses and other assets | 218 | 210 | |||||
Insurance proceeds | 276 | — | |||||
Increase (Decrease) in accounts payable, accrued expenses and other liabilities | (1,047 | ) | 3,067 | ||||
Net cash provided by (used in) operating activities | (2,137 | ) | 6,603 | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Proceeds from disposal of assets and property held for sale | 2,805 | 1,631 | |||||
Insurance proceeds | 756 | — | |||||
Purchases of property and equipment | (8,030 | ) | (7,962 | ) | |||
Net cash used in investing activities | (4,469 | ) | (6,331 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Revolver borrowings | 47,900 | 65,700 | |||||
Revolver repayments | (39,300 | ) | (99,700 | ) | |||
Proceeds from term loan | — | 35,000 | |||||
Term loan repayments | (1,415 | ) | (613 | ) | |||
Debt issuance costs | — | (646 | ) | ||||
Taxes paid for shares withheld | (70 | ) | — | ||||
Net cash provided by financing activities | 7,115 | (259 | ) | ||||
Net increase in cash and cash equivalents | 509 | 13 | |||||
Cash and cash equivalents at beginning of period | 1,096 | 1,339 | |||||
Cash and cash equivalents at end of period | $ | 1,605 | $ | 1,352 | |||
Cash paid for: | |||||||
Income taxes | $ | — | $ | — | |||
Interest | 1,065 | 679 |
($ thousands) | Quarter Ended | Two Quarters Ended | |||||||||||||
March 14, 2018 | March 15, 2017 | March 14, 2018 | March 15, 2017 | ||||||||||||
(12 weeks) | (12 weeks) | (28 weeks) | (28 weeks) | ||||||||||||
Store level profit | $ | 5,743 | $ | 10,226 | $ | 16,826 | $ | 22,822 | |||||||
Plus: | |||||||||||||||
Sales from culinary contract services | 6,276 | 3,306 | 13,796 | 7,602 | |||||||||||
Sales from franchise operations | 1,401 | 1,819 | 3,288 | 3,691 | |||||||||||
Less: | |||||||||||||||
Opening costs | 331 | 132 | 406 | 298 | |||||||||||
Cost of culinary contract services | 5,677 | 2,960 | 12,009 | 6,771 | |||||||||||
Cost of franchise operations | 369 | 436 | 856 | 1,016 | |||||||||||
Depreciation and amortization | 3,998 | 4,788 | 9,351 | 11,338 | |||||||||||
Selling, general and administrative expenses | 9,188 | 9,008 | 20,712 | 22,767 | |||||||||||
Provision for asset impairments and restaurant closings | 1,407 | 5,963 | 2,252 | 6,250 | |||||||||||
Net loss (gain) on disposition of property and equipment | (204 | ) | 329 | 18 | 414 | ||||||||||
Interest income | (5 | ) | (1 | ) | (11 | ) | (3 | ) | |||||||
Interest expense | 545 | 727 | 1,194 | 1,330 | |||||||||||
Other income (expense), net | (194 | ) | 242 | (309 | ) | 139 | |||||||||
Provision for income taxes | 3,382 | 3,603 | 3,373 | 2,145 | |||||||||||
Loss from continuing operations | $ | (11,074 | ) | $ | (12,836 | ) | $ | (15,941 | ) | $ | (18,350 | ) |
Q2 FY2018 | Q2 FY2017 | ||||||||||||||||
Item | Amount ($000s) | Per Share ($) | Amount ($000s) | Per Share ($) | |||||||||||||
Loss from continuing operations | $ | (11,074 | ) | $ | (0.37 | ) | $ | (12,836 | ) | $ | (0.44 | ) | |||||
Provision for asset impairments | 1,112 | 0.04 | 3,936 | 0.13 | |||||||||||||
Net loss (gain) on disposition of property and equipment | (161 | ) | (0.01 | ) | 217 | 0.01 | |||||||||||
Deferred tax valuation allowance | 1,720 | 0.06 | 6,627 | 0.22 | |||||||||||||
Revaluation of Deferred Tax asset related to changed federal statutory tax rates | 3,166 | 0.11 | — | — | |||||||||||||
Loss from continuing operations, before special items | $ | (5,237 | ) | $ | (0.17 | ) | $ | (2,056 | ) | $ | (0.07 | ) |
(1) | We use income (loss) from continuing operations, before special items, in analyzing results, which is a non-GAAP financial measure. This information should be considered in addition to the results presented in accordance with GAAP, and should not be considered a substitute for the GAAP results. Luby’s has reconciled loss from continuing operations, before special items, to loss from continuing operations, the nearest GAAP measure in context. |
(2) | Per share amounts are per diluted share after tax (adjustments assume an effective 21% tax rate in second quarter fiscal 2018 and an effective 34% tax rate in second quarter fiscal 2017 ) |
($ thousands) | Quarter Ended | Two Quarters Ended | |||||||||||||
March 14, 2018 | March 15, 2017 | March 14, 2018 | March 15, 2017 | ||||||||||||
(12 weeks) | (12 weeks) | (28 weeks) | (28 weeks) | ||||||||||||
Loss from continuing operations | $ | (11,074 | ) | $ | (12,836 | ) | $ | (15,941 | ) | $ | (18,350 | ) | |||
Depreciation and amortization | 3,998 | 4,788 | 9,351 | 11,338 | |||||||||||
Provision for income taxes | 3,382 | 3,603 | 3,373 | 2,145 | |||||||||||
Interest expense | 545 | 727 | 1,194 | 1,330 | |||||||||||
Interest income | (5 | ) | (1 | ) | (11 | ) | (3 | ) | |||||||
Net loss (gain) on disposition of property and equipment | (204 | ) | 329 | 18 | 414 | ||||||||||
Provision for asset impairments and restaurant closings | 1,407 | 5,963 | 2,252 | 6,250 | |||||||||||
Non-cash compensation expense | 291 | 689 | 848 | 1,458 | |||||||||||
Franchise taxes | 42 | 42 | 101 | 97 | |||||||||||
Decrease / (Increase) in Fair Value of Derivative | (454 | ) | (46 | ) | (627 | ) | 45 | ||||||||
Adjusted EBITDA | $ | (2,072 | ) | $ | 3,258 | $ | 558 | $ | 4,724 |
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