November 5, 2015

Ignite Restaurant Group Reports Third Quarter 2015 Financial Results

HOUSTON--(BUSINESS WIRE)-- Ignite Restaurant Group (NASDAQ:IRG) today reported financial results for the third quarter ended September 28, 2015.

Highlights for the third quarter of 2015 were as follows:

  • Total revenues were $133.4 million, compared to $139.3 million in the third quarter of 2014;
  • Comparable restaurant sales decreased 0.7% at Brick House Tavern + Tap and decreased 6.6% at Joe's Crab Shack;
  • Loss from continuing operations was $4.3 million, or $0.17 per diluted shares, compared to $2.4 million, or $0.09 per diluted shares in the third quarter of 2014; and
  • Adjusted income from continuing operations (a non-GAAP measure) was $1.9 million, or $0.07 per diluted share, compared to $0.3 million, or $0.01 per diluted share in the third quarter of 2014.

Ray Blanchette, President and Chief Executive Officer of Ignite Restaurant Group, stated, "We are obviously disappointed with the sales results at Joe's but we remain enthusiastic about the new initiatives we have identified and that we have been testing during the quarter. We also closed several underperforming Joe's during the quarter as we continue to optimize our real estate portfolio which not only improves the operating results at Joe's but also provides another growth avenue for Brick House. We also experienced a modest slowdown at Brick House during the quarter as we saw a decrease in comparable restaurant sales for the first time in over three and a half years. However, we believe we have identified a clear strategy to strengthen our performance in key day parts and provide opportunities for improvement in guest traffic and sales."

Review of Third Quarter 2015 Operating Results

Total revenues were $133.4 million in the third quarter of 2015, a decrease of 4.2% compared to $139.3 million in the third quarter of last year.

  • Revenues at Joe's Crab Shack were $114.8 million during the third quarter of 2015 versus $122.2 million in the prior year third quarter. Comparable restaurant sales at Joe's Crab Shack decreased 6.6%.
  • Revenues at Brick House Tavern + Tap were $18.6 million in the third quarter of 2015 compared to $17.1 million in the prior year third quarter. Comparable restaurant sales at Brick House Tavern + Tap decreased 0.7%.

Loss from continuing operations for the third quarter of 2015 was $4.3 million, or $0.17 per diluted share. The Company's loss from continuing operations for the third quarter of 2015 included a $2.6 million deferred tax valuation allowance, a $3.9 million impairment charge, $1.6 million of costs related to conversions, remodels and closures, and a $0.4 million loss on insurance settlements. 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 $1.9 million and $0.07, respectively, in the third quarter of 2015.

Loss from continuing operations for the third quarter of 2014 was $2.4 million, or $0.09 per diluted share. The Company's loss from continuing operations for the third quarter of 2014 included a $1.8 million impairment charge, a $2.2 million write-off of debt issuance costs, and $0.5 million in costs related to conversions, remodels and closures, transaction costs partially offset by a gain on insurance settlements. 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 $0.3 million and $0.01, respectively, in the third quarter of 2014.

Development

During the third quarter of 2015, the Company closed seven Joe's Crab Shack locations. Of these closures, two will be converted to Brick House Tavern + Tap restaurants.

Liquidity

At September 28, 2015, the Company had $51.6 million of cash and approximately $25.9 million of available borrowing capacity under its current credit facility. The Company was in compliance with the credit facility's financial covenants.

Conference Call

Ignite will host a conference call to discuss third quarter financial results today at 5:00 PM Eastern Standard Time. Hosting the call will be Ray Blanchette, President and Chief Executive Officer and Brad Leist, Chief Financial Officer.

The conference call can be accessed live over the phone by dialing 888-395-3227 or for international callers by dialing 719-785-1765. 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 2918497. The replay will be available until Thursday, November 12, 2015. 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. (NASDAQ:IRG) owns and operates restaurants throughout the U.S. Headquartered in Houston, Ignite's portfolio of restaurant concepts currently includes Joe's Crab Shack and Brick House Tavern + Tap. Each brand offers a variety of high-quality, chef-inspired food and beverages 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. Such statements include, but are not limited to, statements regarding the scheduled conversions of restaurants, the anticipated growth of Brick House Tavern + Tap and our effective tax rate.

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 29, 2014 (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 thirty-nine weeks ended September 28, 2015 and September 29, 2014, and selected consolidated balance sheet information as of September 28, 2015 and December 29, 2014:

Consolidated Statements of Operations    

Thirteen Weeks Ended

September 28, 2015

   

Thirteen Weeks Ended

September 29, 2014

(In thousands, except percent and per share data)
   
Revenues $ 133,357 100.0 % $ 139,272 100.0 %
Costs and expenses
Restaurant operating costs and expenses
Cost of sales 41,492 31.1 % 45,410 32.6 %
Labor expenses 37,190 27.9 % 37,500 26.9 %
Occupancy expenses 10,591 7.9 % 10,120 7.3 %
Other operating expenses 25,440 19.1 % 27,022 19.4 %
General and administrative 6,502 4.9 % 9,614 6.9 %
Depreciation and amortization 7,762 5.8 % 5,962 4.3 %
Pre-opening costs 22 0.0 % 1,210 0.9 %
Asset impairments and closures 4,752 3.6 % 1,805 1.3 %
Loss (gain) on disposal of assets   (908 ) (0.7 ) %   432   0.3   %
Total costs and expenses   132,843   99.6   %   139,075   99.9   %
Income from operations 514 0.4 % 197 0.1 %
Interest expense, net (3,837 ) (2.9 ) % (5,040 ) (3.6 ) %
Gain (loss) on insurance settlements   (428 ) (0.3 ) %   89   0.1   %
Loss from continuing operations before income taxes (3,751 ) (2.8 ) % (4,754 ) (3.4 ) %
Income tax expense (benefit)   537   0.4   %   (2,380 ) (1.7 ) %
Loss from continuing operations (4,288 ) (3.2 ) % (2,374 ) (1.7 ) %
Income (loss) from discontinued operations, net   391   0.3   %   (4,156 ) (3.0 ) %
Net loss $ (3,897 ) (2.9 ) % $ (6,530 ) (4.7 ) %
 
Basic and diluted net income (loss) per share data:
Net income (loss) per share
Basic and diluted
Loss from continuing operations $ (0.17 ) $ (0.09 )
Income (loss) from discontinued operations, net $ 0.02 $ (0.16 )
Net income $ (0.15 ) $ (0.25 )
Weighted average shares outstanding
Basic 25,761 25,672
Diluted 25,761 25,672
       
 
Consolidated Statements of Operations

Thirty-Nine Weeks Ended

September 28, 2015

Thirty-Nine Weeks Ended

September 29, 2014

(In thousands, except percent and per share data)
   
Revenues $ 398,746 100.0 % $ 405,650 100.0 %
Costs and expenses
Restaurant operating costs and expenses

 

Cost of sales 124,158 31.1 % 131,561 32.4 %
Labor expenses 111,997 28.1 % 112,365 27.7 %
Occupancy expenses 31,235 7.8 % 29,339 7.2 %
Other operating expenses 75,110 18.8 % 74,932 18.5 %
General and administrative 23,260 5.8 % 29,657 7.3 %
Depreciation and amortization 20,168 5.1 % 17,655 4.4 %
Pre-opening costs 536 0.1 % 1,972 0.5 %
Asset impairments and closures 4,835 1.2 % 1,954 0.5 %
Loss (gain) on disposal of assets   (556 ) (0.1 ) %   831   0.2   %
Total costs and expenses   390,743   98.0   %   400,266   98.7   %
Income from operations 8,003 2.0 % 5,384 1.3 %
Interest expense, net (11,562 ) (2.9 ) % (8,682 ) (2.1 ) %
Gain (loss) on insurance settlements   (428 ) (0.1 ) %   89   0.0   %
Loss from continuing operations before income taxes (3,987 ) (1.0 ) % (3,209 ) (0.8 ) %
Income tax expense (benefit)   1,766   0.4   %   (3,314 ) (0.8 ) %
Income (loss) from continuing operations (5,753 ) (1.4 ) % 105 0.0 %
Loss from discontinued operations, net   (20,293 ) (5.1 ) %   (5,133 ) (1.3 ) %
Net loss $ (26,046 ) (6.5 ) % $ (5,028 ) (1.2 ) %
 
Basic and diluted net income (loss) per share data:
Net income (loss) per share
Basic and diluted
Income (loss) from continuing operations $ (0.22 ) $ 0.00
Loss from discontinued operations, net $ (0.79 ) $ (0.20 )
Net loss $ (1.01 ) $ (0.20 )
Weighted average shares outstanding
Basic 25,719 25,654
Diluted 25,719 25,701
             
 
Selected Consolidated Balance Sheet Information

September 28,

2015

December 29,

2014

(In thousands)
Cash and cash equivalents $ 51,637 $ 20,564
Total assets 256,175 327,720
Long term debt (including current portion) 161,828 162,702
Total liabilities 229,300 276,421
Total stockholders' equity 26,875 51,299
         
 

Thirteen

Weeks Ended

Thirteen

Weeks Ended

Thirty-Nine

Weeks Ended

Thirty-Nine

Weeks Ended

September 28,

2015

September 29,

2014

September 28,

2015

September 29,

2014

(dollars in thousands)
Selected Other Data:
Restaurants opened during the period - - 2 -
Number of restaurants open (end of period):
Joe's Crab Shack 131 138 131 138
Brick House Tavern + Tap   23     21     23     21  
Total restaurants 154 159 154 159
Restaurant operating weeks
Joe's Crab Shack 1,769 1,774 5,368 5,310
Brick House Tavern + Tap 299 269 877 789
Average weekly sales
Joe's Crab Shack $ 65 $ 69 $ 63 $ 66
Brick House Tavern + Tap $ 62 $ 64 $ 67 $ 67
Change in comparable restaurant sales
Joe's Crab Shack (6.6 %) (4.4 %) (4.9 %) (5.0 %)
Brick House Tavern + Tap (0.7 %) 7.5 % 2.5 % 8.7 %
Total (6.1 %) (3.4 %) (4.1 %) (3.6 %)
 
 

Reconciliation of Non-GAAP Results to GAAP Results

The Company provided detailed explanation of these non-GAAP financial measures, including a discussion of the usefulness and purpose of the measures, in its Form 8-K, filed with the Securities and Exchange Commission on November 5, 2015.

         

Thirteen Weeks

Ended

Thirteen Weeks

Ended

Thirty-Nine Weeks

Ended

Thirty-Nine Weeks

Ended

September 28,

2015

September 29,

2014

September 28,

2015

September 29,

2014

(In thousands, except per share data)
Income (loss) from continuing operations - GAAP $ (4,288 ) $ (2,374 ) $ (5,753 ) $ 105
Adjustments - continuing operations:
Transaction costs - 421 - 510
Costs related to conversions, remodels and closures 1,559 127 1,622 127
Write-off of debt issuance costs - 2,241 - 2,241
Asset impairment 3,881 1,770 3,881 1,770
Loss (gain) on insurance settlements 428 (89 ) 428 (89 )
Income tax effect of adjustments above (2,324 ) (1,761 ) (2,349 ) (1,796 )
Deferred tax asset valuation allowance   2,624     -     5,357     -  
Adjusted income from continuing operations - non-GAAP $ 1,880   $ 335   $ 3,186   $ 2,868  
 
Weighted average shares outstanding (GAAP)
Basic 25,761 25,672 25,719 25,654
Diluted 25,792 25,674 25,738 25,701
Income (loss) from continuing operations per share (GAAP)
Basic and diluted $ (0.17 ) $ (0.09 ) $ (0.22 ) $ 0.00
Adjusted income from continuing operations per share (non-GAAP)
Basic and diluted $ 0.07 $ 0.01 $ 0.12 $ 0.11

Investor Relations:
Fitzhugh Taylor, 203-682-8261
fitzhugh.taylor@icrinc.com

Source: Ignite Restaurant Group

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