Ignite Restaurant Group (NASDAQ:IRG) today reported financial results for the second quarter ended June 27, 2016.
Highlights for the second quarter of 2016 were as follows:
- Total revenues were $130.8 million, compared to $143.2 million in the second quarter of 2015;
- Comparable restaurant sales decreased 6.7% company-wide, comprised of a 6.8% decrease at Joe’s Crab Shack and a 6.3% decrease at Brick House Tavern + Tap;
- Loss from continuing operations was $10.4 million, or $0.40 per diluted share, compared to income from continuing operations of $1.7 million, or $0.07 per diluted share in the second quarter of 2015; and
- Adjusted loss from continuing operations (a non-GAAP measure) was $1.1 million, or $0.04 per diluted share, compared to adjusted income from continuing operations of $2.3 million, or $0.09 per diluted share in the second quarter of 2015.
Robert S. Merritt, Chief Executive Officer of Ignite Restaurant Group, stated, ”The sales environment for casual dining has remained extremely challenging and even more so in the Texas market. Significant discounting last year also negatively impacted our comparable restaurant sales in both brands during the current quarter. Our primary focus for both brands continues to be increasing sales and margins through improved operational and menu execution. We have made good progress, but there is still more work to be done.”
Review of Second Quarter 2016 Operating Results
Total revenues were $130.8 million in the second quarter of 2016, a decrease of 8.7% compared to $143.2 million in the second quarter of last year.
- Revenues at Joe’s Crab Shack were $108.4 million during the second quarter of 2016 versus $122.4 million in the prior year second quarter. Comparable restaurant sales at Joe’s Crab Shack decreased 6.8%.
- Revenues at Brick House Tavern + Tap were $22.4 million in the second quarter of 2016 compared to $20.8 million in the prior year second quarter. Comparable restaurant sales at Brick House Tavern + Tap decreased 6.3%.
Loss from continuing operations for the second quarter of 2016 was $10.4 million, or $0.40 per diluted share. The Company’s loss from continuing operations for the second quarter of 2016 included certain non-recurring items, the more significant of which are asset impairment charges of $8.0 million, a $4.8 million deferred tax valuation allowance, and a $0.8 million gain on insurance settlements. Excluding the impact of these items, adjusted loss from continuing operations and adjusted loss from continuing operations per diluted share (which are non-GAAP financial measures), net of tax, were $1.1 million and $0.04, respectively, in the second quarter of 2016.
Income from continuing operations for the second quarter of 2015 was $1.7 million, or $0.07 per diluted share. The Company’s loss from continuing operations for the second quarter of 2015 also included certain non-recurring items, the most significant of which is a $0.6 million deferred tax valuation allowance. Excluding the impact of these items, adjusted income from continuing operations and adjusted income from continuing operations per diluted share (which are non-GAAP financial measures), net of tax, were $2.3 million and $0.09, respectively, in the second quarter of 2015.
Liquidity
At June 27, 2016, the Company had $7.0 million of cash and approximately $25.9 million of available borrowing capacity under its current credit facility. The Company was in compliance with the financial covenants under the credit facility.
Conference Call
Ignite will host a conference call to discuss second quarter financial results today at 5:00 PM Eastern Standard Time. Hosting the call will be Robert S. Merritt, Chief Executive Officer, and Brad Leist, Chief Financial Officer.
The conference call can be accessed live over the phone by dialing 888-211-4435 or for international callers by dialing 913-312-1377. A replay will be available one hour after the call and can be accessed by dialing 877-870-5176 or 858-384-5517 for international callers; the password is 1307747. The replay will be available until Wednesday, August 10, 2016. The call will also be webcast live from the Company's website at www.igniterestaurants.com under the “Investors” section.
About Ignite Restaurant Group
Ignite Restaurant Group, Inc., headquartered in Houston, Texas, operates a portfolio of restaurant concepts, including Joe's Crab Shack and Brick House Tavern + Tap, in a diverse set of markets across the United States. Each brand offers a variety of high-quality food in a distinctive, casual, high-energy atmosphere. For more information on Ignite and its distinctive brands, visit www.igniterestaurants.com.
Cautionary Note Regarding Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond the Company’s control. The Company cautions you that the forward-looking information presented in this press release is not a guarantee of future events, and that actual events and results may differ materially from those made in or suggested by the forward-looking information contained in this press release. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “plan,” “seek,” “comfortable with,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or the negative thereof or variations thereon or similar terminology.
A number of important factors could cause actual events and results to differ materially from those contained in or implied by the forward-looking statements included in this press release, including the risk factors discussed in the Company’s Form 10-K for the year ended December 28, 2015 (which can be found at the SEC’s website www.sec.gov). Each such risk factor is specifically incorporated into this press release. Any forward-looking information presented herein is made only as of the date of this press release, 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.
Results of Operations
The following tables present the consolidated statements of operations and selected other data for the thirteen and twenty-six weeks ended June 27, 2016 and June 29, 2015, and selected consolidated balance sheet information as of June 27, 2016 and December 28, 2015:
Consolidated Statements of Operations | Thirteen Weeks Ended June 27, 2016 | Thirteen Weeks Ended June 29, 2015 | |||||||||||||||||||
| (In thousands, except percent and per share data) | |||||||||||||||||||||
| Revenues | $ | 130,757 | 100.0 | % | $ | 143,170 | 100.0 | % | |||||||||||||
| Costs and expenses | |||||||||||||||||||||
| Restaurant operating costs and expenses | |||||||||||||||||||||
| Cost of sales | 42,657 | 32.6 | % | 44,065 | 30.8 | % | |||||||||||||||
| Labor expenses | 38,162 | 29.2 | % | 39,990 | 27.9 | % | |||||||||||||||
| Occupancy expenses | 10,176 | 7.8 | % | 10,422 | 7.3 | % | |||||||||||||||
| Other operating expenses | 27,279 | 20.9 | % | 27,571 | 19.3 | % | |||||||||||||||
| General and administrative | 5,684 | 4.3 | % | 8,363 | 5.8 | % | |||||||||||||||
| Depreciation and amortization | 6,117 | 4.7 | % | 6,177 | 4.3 | % | |||||||||||||||
| Pre-opening costs | (5 | ) | (0.0 | ) | % | 46 | 0.0 | % | |||||||||||||
| Asset impairments and closures | 8,240 | 6.3 | % | 53 | 0.0 | % | |||||||||||||||
| Loss on disposal of assets | 323 | 0.2 | % | 194 | 0.1 | % | |||||||||||||||
| Total costs and expenses | 138,633 | 106.0 | % | 136,881 | 95.6 | % | |||||||||||||||
| Income (loss) from operations | (7,876 | ) | (6.0 | ) | % | 6,289 | 4.4 | % | |||||||||||||
| Interest expense, net | (3,248 | ) | (2.5 | ) | % | (3,849 | ) | (2.7 | ) | % | |||||||||||
| Gain on insurance settlements | 763 | 0.6 | % | - | 0.0 | % | |||||||||||||||
| Income (loss) from continuing operations before income taxes | (10,361 | ) | (7.9 | ) | % | 2,440 | 1.7 | % | |||||||||||||
| Income tax expense | 82 | 0.1 | % | 709 | 0.5 | % | |||||||||||||||
| Income (loss) from continuing operations | (10,443 | ) | (8.0 | ) | % | 1,731 | 1.2 | % | |||||||||||||
| Loss from discontinued operations, net | - | 0.0 | % | (1,645 | ) | (1.1 | ) | % | |||||||||||||
| Net income (loss) | $ | (10,443 | ) | (8.0 | ) | % | $ | 86 | 0.1 | % | |||||||||||
| Basic and diluted net income (loss) per share data: | |||||||||||||||||||||
| Net income (loss) per share | |||||||||||||||||||||
| Basic and diluted | |||||||||||||||||||||
| Income (loss) from continuing operations | $ | (0.40 | ) | $ | 0.07 | ||||||||||||||||
| Loss from discontinued operations, net | $ | - | $ | (0.06 | ) | ||||||||||||||||
| Net income (loss) | $ | (0.40 | ) | $ | 0.00 | ||||||||||||||||
| Weighted average shares outstanding | |||||||||||||||||||||
| Basic | 25,815 | 25,721 | |||||||||||||||||||
| Diluted | 25,815 | 25,730 | |||||||||||||||||||
Consolidated Statements of Operations | Twenty-Six Weeks Ended June 27, 2016 | Twenty-Six Weeks Ended June 29, 2015 | ||||||||||||||||||||
| (In thousands, except percent and per share data) | ||||||||||||||||||||||
| Revenues | $ | 248,656 | 100.0 | % | $ | 265,389 | 100.0 | % | ||||||||||||||
| Costs and expenses | ||||||||||||||||||||||
| Restaurant operating costs and expenses | ||||||||||||||||||||||
| Cost of sales | 79,823 | 32.1 | % | 82,666 | 31.1 | % | ||||||||||||||||
| Labor expenses | 74,084 | 29.8 | % | 74,807 | 28.2 | % | ||||||||||||||||
| Occupancy expenses | 20,082 | 8.1 | % | 20,644 | 7.8 | % | ||||||||||||||||
| Other operating expenses | 46,942 | 18.9 | % | 49,670 | 18.7 | % | ||||||||||||||||
| General and administrative | 12,234 | 4.9 | % | 16,758 | 6.3 | % | ||||||||||||||||
| Depreciation and amortization | 12,143 | 4.9 | % | 12,406 | 4.7 | % | ||||||||||||||||
| Pre-opening costs | 876 | 0.4 | % | 514 | 0.2 | % | ||||||||||||||||
| Asset impairments and closures | 8,433 | 3.4 | % | 83 | 0.0 | % | ||||||||||||||||
| Loss on disposal of assets | 424 | 0.2 | % | 352 | 0.1 | % | ||||||||||||||||
| Total costs and expenses | 255,041 | 102.6 | % | 257,900 | 97.2 | % | ||||||||||||||||
| Income (loss) from operations | (6,385 | ) | (2.6 | ) | % | 7,489 | 2.8 | % | ||||||||||||||
| Interest expense, net | (6,268 | ) | (2.5 | ) | % | (7,725 | ) | (2.9 | ) | % | ||||||||||||
| Gain on insurance settlements | 755 | 0.3 | % | - | 0.0 | % | ||||||||||||||||
| Loss from continuing operations before income taxes | (11,898 | ) | (4.8 | ) | % | (236 | ) | (0.1 | ) | % | ||||||||||||
| Income tax expense | 171 | 0.1 | % | 1,229 | 0.5 | % | ||||||||||||||||
| Loss from continuing operations | (12,069 | ) | (4.9 | ) | % | (1,465 | ) | (0.6 | ) | % | ||||||||||||
| Loss from discontinued operations, net | - | 0.0 | % | (20,684 | ) | (7.8 | ) | % | ||||||||||||||
| Net loss | $ | (12,069 | ) | (4.9 | ) | % | $ | (22,149 | ) | (8.3 | ) | % | ||||||||||
| Basic and diluted net loss per share data: | ||||||||||||||||||||||
| Net loss per share | ||||||||||||||||||||||
| Basic and diluted | ||||||||||||||||||||||
| Loss from continuing operations | $ | (0.47 | ) | $ | (0.06 | ) | ||||||||||||||||
| Loss from discontinued operations, net | $ | - | $ | (0.80 | ) | |||||||||||||||||
| Net loss | $ | (0.47 | ) | $ | (0.86 | ) | ||||||||||||||||
| Weighted average shares outstanding | ||||||||||||||||||||||
| Basic | 25,795 | 25,698 | ||||||||||||||||||||
| Diluted | 25,795 | 25,698 | ||||||||||||||||||||
Selected Consolidated Balance Sheet Information | June 27, 2016 | December 28, 2015 | |||||||||
| (In thousands) | |||||||||||
| Cash and cash equivalents | $ | 7,042 | $ | 7,817 | |||||||
| Total assets | 186,572 | 205,182 | |||||||||
| Long term debt (including current portion) | 119,721 | 124,733 | |||||||||
| Total liabilities | 191,294 | 198,569 | |||||||||
| Total stockholders' equity (deficit) | (4,722 | ) | 6,613 | ||||||||
| Thirteen Weeks Ended | Thirteen Weeks Ended | Twenty-Six Weeks Ended | Twenty-Six Weeks Ended | |||||||||||||||||||
| June 27, 2016 | June 29, 2015 | June 27, 2016 | June 29, 2015 | |||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||
| Selected Other Data: | ||||||||||||||||||||||
| Restaurants opened during the period | - | - | 3 | 2 | ||||||||||||||||||
| Number of restaurants open (end of period): | ||||||||||||||||||||||
| Joe's Crab Shack | 127 | 138 | 127 | 138 | ||||||||||||||||||
| Brick House Tavern + Tap | 26 | 23 | 26 | 23 | ||||||||||||||||||
| Total restaurants | 153 | 161 | 153 | 161 | ||||||||||||||||||
| Restaurant operating weeks | ||||||||||||||||||||||
| Joe's Crab Shack | 1,676 | 1,794 | 3,366 | 3,599 | ||||||||||||||||||
| Brick House Tavern + Tap | 338 | 299 | 659 | 578 | ||||||||||||||||||
| Average weekly sales | ||||||||||||||||||||||
| Joe's Crab Shack | $ | 65 | $ | 68 | $ | 61 | $ | 63 | ||||||||||||||
| Brick House Tavern + Tap | $ | 66 | $ | 70 | $ | 67 | $ | 69 | ||||||||||||||
| Change in comparable restaurant sales | ||||||||||||||||||||||
| Joe's Crab Shack | (6.8 | %) | (4.0 | %) | (4.3 | %) | (3.9 | %) | ||||||||||||||
| Brick House Tavern + Tap | (6.3 | %) | 2.8 | % | (5.4 | %) | 4.0 | % | ||||||||||||||
| Total | (6.7 | %) | (3.3 | %) | (4.4 | %) | (3.0 | %) | ||||||||||||||
Reconciliation of Non-GAAP Results to GAAP Results
The Company provided detailed explanation of this non-GAAP financial measure, including a discussion of the usefulness and purpose of the measure, in its Form 8-K filed with the Securities and Exchange Commission on August 3, 2016.
| Thirteen Weeks Ended | Thirteen Weeks Ended | Twenty-Six Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||||||
| June 27, 2016 | June 29, 2015 | June 27, 2016 | June 29, 2015 | ||||||||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||||||
| Income (loss) from continuing operations - GAAP | $ | (10,443 | ) | $ | 1,731 | $ | (12,069 | ) | $ | (1,465 | ) | ||||||||||||
| Adjustments - continuing operations: | |||||||||||||||||||||||
| Costs related to conversions, remodels and closures | 185 | 14 | 238 | 63 | |||||||||||||||||||
| Gain on insurance settlements | (763 | ) | - | (755 | ) | - | |||||||||||||||||
| Write-off of debt issuance costs and debt discount | 121 | - | 121 | - | |||||||||||||||||||
| Asset impairments | 8,003 | - | 8,003 | - | |||||||||||||||||||
| Income tax effect of adjustments above | |||||||||||||||||||||||
| Current expense (benefit) | 92 | (1 | ) | 68 | (8 | ) | |||||||||||||||||
| Deferred benefit | (3,036 | ) | (5 | ) | (3,036 | ) | (17 | ) | |||||||||||||||
| Deferred tax asset valuation allowance | 4,767 | 607 | 5,306 | 2,733 | |||||||||||||||||||
| Adjusted income (loss) from continuing operations - non-GAAP | $ | (1,074 | ) | $ | 2,346 | $ | (2,124 | ) | $ | 1,306 | |||||||||||||
| Weighted average shares outstanding (GAAP) | |||||||||||||||||||||||
| Basic | 25,815 | 25,721 | 25,795 | 25,698 | |||||||||||||||||||
| Diluted | 25,815 | 25,730 | 25,795 | 25,711 | |||||||||||||||||||
| Income (loss) from continuing operations per share (GAAP) | |||||||||||||||||||||||
| Basic and diluted | $ | (0.40 | ) | $ | 0.07 | $ | (0.47 | ) | $ | (0.06 | ) | ||||||||||||
| Adjusted income (loss) from continuing operations per share (non-GAAP) | |||||||||||||||||||||||
| Basic and diluted | $ | (0.04 | ) | $ | 0.09 | $ | (0.08 | ) | $ | 0.05 | |||||||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20160803006462/en/
Contacts:
ICR
Fitzhugh Taylor, 203-682-8261
fitzhugh.taylor@icrinc.com
