LUBY'S, INC. HOUSTON, July 12, 2017 /PRNewswire/ -- Luby's, Inc. (NYSE: LUB) ("Luby's") today announced unaudited financial results for its twelve-week third quarter fiscal 2017, which ended on June 7, 2017. Comparisons in this earnings release for the third quarter fiscal 2017 are referred to as "third quarter."
Third Quarter Key Metrics
-- Same-store sales decreased 2.7% compared to third quarter fiscal 2016,
which also represented an improvement sequentially compared to the
second quarter fiscal 2017
-- Culinary Contract Services opened three new locations contributing
approximately $1.0 million of revenue in the third quarter
-- Retail product sales generated approximately $0.4 million in revenue in
the third quarter
-- Fuddruckers opened its newest company-owned location with first
self-order kiosks near The Woodlands, Texas
-- Capital expenditures decreased $1.2 million in the third quarter
compared to the third quarter fiscal 2016
Chris Pappas, President and CEO, commented, "In the third quarter, our team continued to exercise solid cost controls and reduce capital expenditures as previously planned, despite persistent economic and restaurant industry pressures that challenged same-store sales results. At our core brands, Luby's Cafeterias and Fuddruckers, same-store sales improved sequentially, but reported declines of 2.5% and 0.9%, respectively, for the third quarter compared to the same period last year.
During the quarter, we were pleased with the addition of three new Culinary Contact Services locations which contributed over $1.0 million in revenue for this segment. In addition, retail product sales added $0.4 million in revenue in the third quarter. We also opened a new company-operated Fudduckers location near The Woodlands, Texas, with our first self-order kiosks."
Same-Store Sales Year-Over-Year Comparison
Quarter Ended Three Quarters
Ended
-----
December 21, March 15, June 7, June 7,
2016 2017 2017 2017
---- ---- ----
Q1 Q2 Q3 YTD Q3
2017(3) 2017(3) 2017(3) 2017(3)
------ ------ ------ ------
(16 weeks vs 16 weeks) (12 weeks vs 12 weeks) (12 weeks vs 12 weeks) (40 weeks vs 40 weeks)
--------------------- --------------------- --------------------- ---------------------
Luby's Cafeterias (2.2)% (4.4)% (2.5)% (2.9)%
----------------- ----- ----- ----- -----
Fuddruckers (1.6)% (1.1)% (0.9)% (1.2)%
----- ----- ----- -----
Combo locations (1) (2.3)% (6.5)% (5.5)% (4.7)%
------------------ ----- ----- ----- -----
Cheeseburger in
Paradise (7.8)% (7.3)% (9.8)% (8.4)%
--------------- ----- ----- ----- -----
Total same-store
sales (2) (2.3)% (3.8)% (2.7)% (2.9)%
---------------- ----- ----- ----- -----
(1) Combo locations consist of a side-
by-side Luby's Cafeteria and
Fuddruckers Restaurant at one
property location.
(2) Luby's includes a restaurant's
sales results into the same-
store sales calculation in the
quarter after that store has been
open for six complete consecutive
quarters. In the third quarter,
there were 84 Luby's Cafeterias
locations, 62 Fuddruckers
locations, all six Combo
locations, and all eight
Cheeseburger in Paradise
locations that met the definition
of same-stores.
(3) Q1 2017, Q2 2017, Q3 2017, and YTD
Q3 Fiscal 2017 same-store sales
reflect the change in restaurant
sales for the locations included
in the same-store grouping for
each of the comparable periods.
Third Quarter Restaurant Sales:
($ thousands)
Quarter Ended
Restaurant Brand June 7, June 1, Change Change
2017 2016
($) (%)
--- --- ---
(12 weeks) (12 weeks) (12 weeks vs 12 weeks)
--------- --------- ---------------------
Luby's Cafeterias $49,746 $51,808 $(2,062) (4.0)%
----------------- ------- ------- ------- -----
Fuddruckers 23,713 24,790 (1,077) (4.3)%
----------- ------ ------ ------ -----
Combo locations 4,988 5,280 (292) (5.5)%
--------------- ----- ----- ---- -----
Cheeseburger in
Paradise 4,147 4,598 (451) (9.8)%
--------------- ----- ----- ---- -----
Total Restaurant
Sales $82,594 $86,476 $(3,882) (4.5)%
---------------- ------- ------- ------- -----
-- Luby's Cafeterias sales decreased $2.1 million versus the third quarter
fiscal 2016, due to the closure of three locations over the prior year
and a 2.5% decrease in Luby's same-store sales. The decrease was the
result of a 7.1% decrease in guest traffic partially offset by a 4.6%
increase in average spend per guest primarily due to a modest price
increase and reduced discounting. We made a tactical discounting
decision last year to promote our brand through BOGO ("buy one get one
free") offers, which we estimate increased guest traffic by
approximately 2.9% in the third quarter fiscal 2016.
-- Fuddruckers sales at company-owned restaurants decreased $1.1 million
versus the third quarter fiscal 2016, due to five restaurant closings
over the prior year and a 0.9% decrease in same-store sales, offset by
the opening of one company-owned Fuddruckers location. The 0.9% decrease
in same-store sales was the result of a 5.6% decrease in guest traffic
offset by a 4.7% increase in average spend per guest.
-- Combo location sales decreased $0.3 million and represented 6.0% of
total restaurant sales in the third quarter. Approximately 70% of the
decline in sales occurred at one Combo location. Two of the six Combo
locations increased sales by 5.5% and 1.2%, respectively.
-- Cheeseburger in Paradise sales decreased $0.5 million, or 9.8%.
-- 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 $11.6 million, or 14.0% of restaurant sales, in
the third quarter compared to $13.0 million, or 15.0% of restaurant
sales, during the third quarter fiscal 2016. While cost controls were
more efficient in labor scheduling, food cost management and lower
restaurant supplies costs, an increase in certain restaurant services
costs and utilities expense with lower overall sales volumes, led to the
decrease in store level profitability. 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 $0.6 million to $4.5
million with 25 operating locations during the third quarter. Culinary
Contract Services benefited from the opening of four locations over the
prior year, adding over $1.0 million in revenue in the third quarter,
and from retail product sales that added $0.4 million in revenue in the
third quarter. These new sources of revenue were partially offset by the
closure of six locations over the prior year. Culinary Contract Services
profit margin decreased to 7.1% of Culinary Contract Services sales in
the third quarter compared to 9.2% in the third quarter fiscal 2016.
-- Franchise revenue decreased $109 thousand, or 6.9%, in the third quarter
compared to the third quarter fiscal 2016. In the third quarter,
franchisees closed two locations (one in Maryland and one in the
Dominican Republic). Domestic same-store Fuddruckers franchise sales
decreased 4.0% in the third quarter compared to the third quarter fiscal
2016.
-- Loss from continuing operations was $0.4 million, or a loss of $0.01 per
diluted share, compared to a loss of $0.1 million, or a loss of $0.01
per diluted share, in the third quarter fiscal 2016. Excluding special
non-cash items, loss from continuing operations was $0.7 million, or a
loss of $0.02 per diluted share, in the third quarter compared to a loss
of $6 thousand, or $0.00 per diluted share, in the third quarter fiscal
2016. Loss from continuing operations, excluding special items, is a
non-GAAP measure, and reconciliation to loss from continuing operations
is presented below.
Reconciliation of loss from continuing operations to loss from continuing operations, before special items ((1,2)):
Q3 FY2017 Q3 FY2016
Item Amount ($000s) Per Share Amount ($000s) Per Share
($) ($)
---
Loss from
continuing
operations $(377) $(0.01) $(147) $(0.01)
Net loss (gain)
on disposition
of property and
equipment, and
provision for
asset
impairments and
restaurant
closings, net 445 0.02 141 0.01
Fair value
adjustment to
performance
awards
liability (772) (0.03) - -
Loss from
continuing
operations,
before special
items $(704) $(0.02) $(6) $(0.00)
(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 34% tax rate).
Balance Sheet and Capital Expenditures
We ended the third quarter with a debt balance outstanding of $40.4 million, up from $37.0 million at the end of fiscal 2016. During the third quarter, our capital expenditures decreased to $2.2 million compared to $3.4 million in the third quarter fiscal 2016. At the end of the third quarter, we had $1.3 million in cash and $147.8 million in total shareholders' equity.
Restaurant Counts:
August 31, FY17 YTD Q3 FY17 YTD Q3 June 7,
2016 Openings Closings 2017
---- -------- -------- ----
Luby's
Cafeterias(1) 91 (2) 89
Fuddruckers
Restaurants(1) 75 1 (4) 72
Cheeseburger
in Paradise 8 - 8
Other
restaurants(2) 1 - 1
--- --- ---
Total 175 1 (6) 170
=== === === ===
(1) Includes 6 restaurants that
are part of Combo locations
(2) Other restaurants include one
Bob Luby's Seafood Grill
Conference Call
Luby's will host a conference call on July 13, 2017 at 10:00 a.m. Central Time to discuss further its third quarter fiscal 2017 results. To access the call live, dial (412) 902-0030 and use the access code 13664737# at least 10 minutes prior to the start time, or listen live over the Internet by visiting the events page in the investor relations section of www.lubysinc.com. For those who cannot listen to the live call, a telephonic replay will be available through July 20, 2017 and may be accessed by calling (201) 612-7415 and using the access code 13664737#. Also, an archive of the webcast will be available after the call for a period of 90 days on the "Investors" section of the Company's website.
About Luby's
Luby's, Inc. (NYSE: LUB) operates 169 restaurants nationally as of July 12, 2017: 89 Luby's Cafeterias, 71 Fuddruckers, eight Cheeseburger in Paradise and one Bob Luby's Seafood Grill. Luby's is the franchisor for 113 Fuddruckers franchise locations across the United States (including Puerto Rico), Canada, Mexico, Italy, the Dominican Republic, Panama, and Colombia. Additionally, a licensee operates 34 restaurants with the exclusive right to use the Fuddruckers proprietary marks, trade dress, and system in certain countries in the Middle East. The Company does not receive revenue or royalties from these Middle East restaurants. Luby's Culinary Contract Services provides food service management to 25 sites consisting of healthcare and corporate dining locations.
This press release contains statements that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements contained in this press release, other than statements of historical fact, are "forward-looking statements" for purposes of these provisions, including the statements under the caption "Outlook" and any other statements regarding scheduled openings of units, scheduled closures of units, sales of assets, expected proceeds from the sale of assets, expected levels of capital expenditures, effects of food commodity costs, anticipated financial results in future periods and expectations of industry conditions.
Luby's cautions 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 Luby's. The following factors, as well as any other cautionary language included in this press release, provide examples of risks, uncertainties and events that may cause Luby's actual results to differ materially from the expectations Luby's describes in such forward-looking statements: general business and economic conditions; the impact of competition; our operating initiatives; fluctuations in the costs of commodities, including beef, poultry, seafood, dairy, cheese and produce; increases in utility costs, including the costs of natural gas and other energy supplies; changes in the availability and cost of labor; the seasonality of Luby's business; changes in governmental regulations, including changes in minimum wages; the effects of inflation; the availability of credit; unfavorable publicity relating to operations, including publicity concerning food quality, illness or other health concerns or labor relations; the continued service of key management personnel; and other risks and uncertainties disclosed in Luby's annual reports on Form 10-K and quarterly reports on Form 10-Q.
Luby's, Inc.
Consolidated Statements of Operations (unaudited)
(In thousands, except per share data)
------------------------------------
Quarter Ended Three Quarters Ended
------------- --------------------
June 7, June 1, June 7, June 1,
2017 2016 2017 2016
---- ---- ---- ----
(12 weeks) (12 weeks) (40 weeks) (40 weeks)
SALES:
Restaurant sales $82,594 86,476 271,741 286,336
$ $ $
Culinary contract
services 4,515
3,892 12,117 12,726
Franchise revenue 1,477
1,586 5,167 5,411
Vending revenue 133
143 417 437
TOTAL SALES 88,719
92,097 289,442 304,910
COSTS AND EXPENSES:
Cost of food 22,922 24,221 76,353 81,256
Payroll and related
costs 29,519 30,748 97,486 100,007
Other operating
expenses 13,796 13,572 47,207 45,728
Occupancy costs 4,923 5,065 16,720 17,242
Opening costs 134 117 431 688
Cost of culinary
contract services 4,194 3,534 10,966 11,476
Cost of franchise
operations 361 441 1,378 1,480
Depreciation and
amortization 4,639 5,304 15,977 17,538
Selling, general
and administrative
expenses 6,764 9,227 29,531 32,312
Provision for asset
impairments and
restaurant
closings 869 172 7,120 209
Net loss (gain) on
disposition of
property and
equipment (195) 42 219 (793)
---- --- --- ----
Total costs and
expenses 87,926 92,443 303,388 307,143
------ ------ ------- -------
INCOME (LOSS) FROM
OPERATIONS 793 (346) (13,946) (2,233)
Interest income 3 - 5 3
Interest expense (569) (482) (1,898) (1,674)
Other income
(expense), net (173) 88 (312) (2)
---- --- ---- ---
Income (loss)
before income
taxes and
discontinued
operations 54 (740) (16,151) (3,906)
Provision (benefit)
for income taxes 431 (593) 2,576 (1,438)
--- ---- ----- ------
Loss from
continuing
operations (377) (147) (18,727) (2,468)
Income (loss) from
discontinued
operations, net of
income taxes (19) 13 (434) (77)
--- --- ---- ---
NET LOSS $(396) (134) (19,161) (2,545)
$ $ $
Loss per share from continuing
operations:
Basic $(0.01) (0.01) (0.64) (0.09)
$ $ $
Assuming dilution $(0.01) (0.01) (0.64) (0.09)
$ $ $
Income (loss) per share from
discontinued operations:
Basic $(0.00) 0.00 (0.01) (0.00)
$ $ $
Assuming dilution $(0.00) 0.00 (0.01) (0.00)
$ $ $
Net loss per share:
Basic $(0.01) (0.01) (0.65) (0.09)
$ $ $
Assuming dilution $(0.01) (0.01) (0.65) (0.09)
$ $ $
Weighted average shares outstanding:
Basic 29,536 29,259 29,453 29,207
Assuming dilution 29,536 29,259 29,453 29,207
The following table contains information derived from the Company's Consolidated Statements of Operations expressed as a percentage of sales. Percentages may not total due to rounding.
Three Quarters Ended
March 15, March 9, June 7, June 1,
2017 2016 2017 2016
---- ---- ---- ----
(12 weeks) (12 weeks) (40 weeks) (40 weeks)
Restaurant sales 93.1% 93.9% 93.9% 93.9%
Culinary contract
services 5.1% 4.2% 4.2% 4.2%
Franchise revenue 1.7% 1.7% 1.8% 1.8%
Vending revenue 0.1% 0.2% 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 27.8% 28.0% 28.1% 28.4%
Payroll and
related costs 35.7% 35.6% 35.9% 34.9%
Other operating
expenses 16.7% 15.7% 17.4% 16.0%
Occupancy costs 6.0% 5.9% 6.2% 6.0%
Vending revenue (0.2)% (0.2)% (0.2)% (0.2)%
----- ----- ----- -----
Store level
profit 14.0% 15.0% 12.7% 14.9%
(As a percentage
of total sales)
Marketing and
advertising
expenses 0.9% 1.2% 1.6% 1.4%
General and
administrative
expenses 6.7% 8.8% 8.6% 9.2%
--- --- --- ---
Selling, general
and
administrative
expenses 7.6% 10.0% 10.2% 10.6%
INCOME (LOSS)
FROM OPERATIONS 0.9% (0.4)% (4.8)% (0.7)%
Luby's, Inc.
Consolidated Balance Sheets
(In thousands, except per share data)
------------------------------------
June 7, August 31,
2017 2016
---- ----
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $1,326 $1,339
Trade accounts and other
receivables, net 6,380 5,919
Food and supply
inventories 4,528 4,596
Prepaid expenses 3,894 3,147
Assets related to
discontinued operations - 1
Deferred income taxes 176 540
--- ---
Total current assets 16,304 15,542
Property held for sale 3,614 5,522
Assets related to
discontinued operations 2,817 3,192
Property and equipment,
net 182,084 193,218
Intangible assets, net 19,968 21,074
Goodwill 1,068 1,605
Deferred income taxes 6,737 8,738
Other assets 2,623 3,334
----- -----
Total assets $235,215 $252,225
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $14,741 $17,539
Liabilities related to
discontinued operations 394 412
Current portion of credit
facility debt 613 -
Accrued expenses and other
liabilities 24,902 23,752
------ ------
Total current liabilities 40,650 41,703
Credit facility debt, less
current portion 39,520 37,000
Liabilities related to
discontinued operations 16 17
Other liabilities 7,234 7,752
----- -----
Total liabilities $87,420 $86,472
======= =======
Commitments and Contingencies
SHAREHOLDERS' EQUITY
Common stock, $0.32 par
value; 100,000,000 shares
authorized; shares issued
were 29,591,836 and
29,440,041, respectively;
shares outstanding were
29,091,836 and
28,940,041, respectively 9,469 9,421
Paid-in capital 31,503 30,348
Retained earnings 111,598 130,759
Less cost of treasury
stock, 500,000 shares (4,775 (4,775
------ ------
Total shareholders' equity 147,795 165,753
------- -------
Total liabilities and
shareholders' equity $235,215 $252,225
======== ========
Luby's, Inc.
Consolidated Statements of Cash Flows (unaudited)
(In thousands)
-------------
Three Quarters Ended
--------------------
June 7, June 1,
2017 2016
---- ----
(40 weeks) (40 weeks)
CASH FLOWS
FROM
OPERATING
ACTIVITIES:
Net loss $(19,161) $(2,545)
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Provision for
asset
impairments
and net
(gains) on
property
sales 7,338 (609)
Depreciation
and
amortization 15,977 17,555
Amortization
of debt
issuance cost 316 255
Share-based
compensation
expense 1,203 1,143
Deferred tax
provision
(benefit) 2,922 (1,983
----- ------
Cash provided
by operating
activities
before
changes in
operating
assets and
liabilities 8,595 13,816
Changes in operating assets and
liabilities:
Increase in
trade
accounts and
other
receivables (460) (967)
Decrease
(Increase) in
food and
supply
inventories 68 (516
Increase in
prepaid
expenses and
other assets (5) (614)
Decrease in
accounts
payable,
accrued
expenses and
other
liabilities (4,522) (311)
------ ----
Net cash
provided by
operating
activities 3,676 11,408
----- ------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Proceeds from
disposal of
assets and
property held
for sale 3,640 4,308
Decrease in
notes
receivable - 17
Purchases of
property and
equipment (10,114) (14,358)
------- -------
Net cash used
in investing
activities (6,474) (10,033)
------ -------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Revolver
borrowings 94,400 77,900
Revolver
repayments (122,900) (79,400)
Proceeds from
term loan 35,000 -
Term loan
repayments (3,063) -
Debt issuance
costs (652) (42)
Proceeds
received on
the exercise
of employee
stock options - 75
--- ---
Net cash
provided by
(used in)
financing
activities 2,785 (1,467)
----- ------
Net decrease
in cash and
cash
equivalents (13) (92)
Cash and cash
equivalents
at beginning
of period 1,339 1,501
----- -----
Cash and cash
equivalents
at end of
period $1,326 $1,409
====== ======
Cash paid for:
Income taxes $ - $ -
Interest 1,228 1,368
Although store level profit, defined as restaurant sales plus vending revenue, less cost of food, payroll and related costs, other operating expenses, and occupancy costs is a non-GAAP measure, we believe its presentation is useful because it explicitly shows the results of our most significant reportable segment. The following table reconciles between store level profit, a non-GAAP measure to loss from continuing operations, a GAAP measure:
Quarter Ended Three Quarters Ended
------------- --------------------
June 7, June 1, June 7, June 1,
2017 2016 2017 2016
---- ---- ---- ----
(12 weeks) (12 weeks) (40 weeks) (40 weeks)
Store level profit $11,567 13,013 34,392 42,540
$ $ $
Plus:
Sales from culinary
contract services 4,515 3,892 12,117 12,726
Sales from
franchise
operations 1,477 1,586 5,167 5,411
Less:
Opening costs 134 117 431 688
Cost of culinary
contract services 4,194 3,534 10,966 11,476
Cost of franchise
operations 361 441 1,378 1,480
Depreciation and
amortization 4,639 5,304 15,977 17,538
Selling, general
and administrative
expenses 6,764 9,227 29,531 32,312
Provision for asset
impairments and
restaurant
closings 869 172 7,120 209
Net loss (gain) on
disposition of
property and
equipment (195) 42 219 (793)
Interest income (3) - (5) (3)
Interest expense 569 482 1,898 1,674
Other income
(expense), net 173 (88) 312 2
Provision (benefit)
for income taxes 431 (593) 2,576 (1,438)
--- ---- ----- ------
Loss from
continuing
operations $(377) (147) (18,727) (2,468)
$ $ $
===
Adjusted EBITDA
Adjusted EBITDA is defined as income (loss) from continuing operations before interest, provision (benefit) for income taxes and depreciation and amortization and excluding net gain (loss) on disposing of property and equipment, provision for asset impairments and restaurant closings, non-cash compensation expense, franchise taxes, and decrease / (increase) in fair value of derivatives.
Adjusted EBITDA is intended as a supplemental measure of our performance that is not required by, or presented in accordance with GAAP. We believe Adjusted EBITDA provides useful information to management and investors in valuing the Company and evaluating ongoing operating results and trends and in comparing our results to other competitors. Our management uses Adjusted EBITDA in evaluating management's performance when determining incentive compensation.
Adjusted EBITDA, as defined, may not be comparable to other similarly titled measures as computed by other companies. These measures should be considered supplemental and not a substitute or superior to other GAAP performance measures.
($ thousands) Quarter Ended Three Quarters Ended
------------- --------------------
June 7, June 1, June 7, June 1,
2017 2016 2017 2016
---- ---- ---- ----
(12 weeks) (12 weeks) (40 weeks) (40 weeks)
Loss from
continuing
operations $(377) $(147) $(18,727) $(2,468)
Depreciation and
amortization 4,639 5,304 15,977 17,538
Provision
(benefit) for
income taxes 431 (593) 2,576 (1,438)
Interest expense 569 482 1,898 1,674
Interest income (3) - (5) (3)
Net loss (gain) on
disposition of
property and
equipment (195) 42 219 (793)
Provision for
asset impairments
and restaurant
closings 869 172 7,120 209
Non-cash
compensation
expense (benefit) (584) 425 874 1,594
Franchise Taxes 49 42 146 139
Decrease in Fair
Value of
Derivative 176 - 221 -
Adjusted EBITDA $5,574 $5,727 $10,299 $16,452
====== ====== ======= =======
For additional information contact:
Dennard-Lascar Associates
Rick Black / Ken Dennard
Investor Relations
713-529-6600
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SOURCE Luby's, Inc.
