November 2, 2016

Ignite Restaurant Group Reports Third Quarter 2016 Financial Results

HOUSTON, Nov. 02, 2016 (GLOBE NEWSWIRE) -- Ignite Restaurant Group (NASDAQ:IRG) today reported financial results for the third quarter ended September 26, 2016

Highlights for the third quarter of 2016 were as follows:

  • Total revenues were $119.9 million, compared to $133.4 million in the third quarter of 2015;
  • Comparable restaurant sales decreased 6.8% company-wide, comprised of a 6.5% decrease at Joe's Crab Shack and a 8.9% decrease at Brick House Tavern + Tap;
  • Loss from continuing operations was $15.2 million, or $0.59 per diluted share, compared to a loss from continuing operations of $4.3 million, or $0.17 per diluted share in the third quarter of 2015; and
  • Adjusted income from continuing operations (a non-GAAP measure) was $0.8 million, or $0.03 per diluted share, compared to adjusted income from continuing operations of $1.9 million, or $0.07 per diluted share in the third quarter of 2015.

Robert S. Merritt, Chief Executive Officer of Ignite Restaurant Group, stated, "We experienced downward pressure on our comparable restaurant sales during the current quarter, most significantly in the Texas market, which was a reflection of an overall challenging environment for casual dining.  Consumers have continued to be prudent with discretionary spending and remain extremely value conscious.  We remain sensitive to this consumer sentiment and are currently testing some menu items that we believe increase the overall value perception of our guest.  We were successful in improving certain areas of our operating margin during the quarter, but the negative impacts from commodity price inflation prevented us from seeing an overall improvement from last year.  We also continued our focus on improving our balance sheet as we used excess cash flow to pay down almost $7 million of additional debt since last quarter."     

Review of Third Quarter 2016 Operating Results

Total revenues were $119.9 million in the third quarter of 2016, a decrease of 10.1% compared to $133.4 million in the third quarter of last year.  

  • Revenues at Joe's Crab Shack were $100.8 million during the third quarter of 2016 versus $114.8 million in the prior year third quarter. Comparable restaurant sales at Joe's Crab Shack decreased 6.5%.
  • Revenues at Brick House Tavern + Tap were $19.1 million in the third quarter of 2016 compared to $18.6 million in the prior year third quarter.  Comparable restaurant sales at Brick House Tavern + Tap decreased 8.9%.

Loss from continuing operations for the third quarter of 2016 was $15.2 million, or $0.59 per diluted share. The Company's loss from continuing operations for the third quarter of 2016 included certain non-recurring items, the more significant of which are asset impairment charges of $11.1 million, a $6.4 million deferred tax valuation allowance, and costs related to stores closures of $4.5 million. 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 $0.8 million and $0.03, respectively, in the third quarter of 2016.

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 also included certain non-recurring items, the most significant of which are $3.9 million in asset impairment charges, $2.6 million deferred tax valuation allowance and $1.6 million in costs related to store closures. 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.

Development

During the third quarter of 2016, the Company closed 14 Joe's restaurants and one Brick House restaurant and opened one Joe's franchise restaurant in Dubai, U.A.E. For the year, the Company closed 17 Joe's restaurants and one Brick House restaurant.

Liquidity

At September 26, 2016, the Company had $0.7 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 third quarter financial results today at 5:00 PM Eastern 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 888-264-8926 or for international callers by dialing 913-905-1087. 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 8578396. The replay will be available until Wednesday, November 9, 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 thirty-nine weeks ended September 26, 2016 and September 28, 2015, and selected consolidated balance sheet information as of September 26, 2016 and December 28, 2015:

Consolidated Statements of Operations Thirteen Weeks Ended
September 26, 2016
 Thirteen Weeks Ended
September 28, 2015
                    
  (In thousands, except percent and per share data)
            
Revenues $  119,937   100.0 % $  133,357   100.0 %
Costs and expenses          
Restaurant operating costs and expenses          
Cost of sales    39,751   33.1 %    41,172   30.9 %
Labor expenses    33,716   28.1 %    37,190   27.9 %
Occupancy expenses    9,702   8.1 %    10,591   7.9 %
Other operating expenses    21,409   17.9 %    25,760   19.3 %
General and administrative    5,473   4.6 %    6,502   4.9 %
Depreciation and amortization    5,933   4.9 %    7,762   5.8 %
Pre-opening costs    -   0.0 %    22   0.0 %
Asset impairments and closures    15,337   12.8 %    4,752   3.6 %
Loss (gain) on disposal of assets    472   0.4 %    (908)  (0.7)%
Total costs and expenses    131,793   109.9 %    132,843   99.6 %
Income (loss) from operations    (11,856)  (9.9)%    514   0.4 %
Interest expense, net    (3,158)  (2.6)%    (3,837)  (2.9)%
Loss on insurance settlements    -   0.0 %    (428)  (0.3)%
Loss from continuing operations before income taxes   (15,014)  (12.5)%     (3,751)  (2.8)%
Income tax expense    149   0.1 %    537   0.4 %
Loss from continuing operations    (15,163)  (12.6)%    (4,288)  (3.2)%
Income from discontinued operations, net    -   0.0 %    391   0.3 %
Net loss $  (15,163)  (12.6)% $  (3,897)  (2.9)%
           
Basic and diluted net loss per share data:          
Net loss per share          
Basic and diluted           
Loss from continuing operations $  (0.59 )    $  (0.17)   
Income from discontinued operations, net$  -     $  0.02    
Net loss $  (0.59)    $  (0.15)   
Weighted average shares outstanding          
Basic    25,866        25,761    
Diluted    25,866        25,761    
           

 

Consolidated Statements of Operations  Thirty-Nine Weeks Ended
September 26, 2016
 Thirty-Nine Weeks Ended
September 28, 2015
                    
   (In thousands, except percent and per share data)
            
Revenues  $  368,593   100.0 % $  398,746   100.0 %
Costs and expenses           
Restaurant operating costs and expenses           
Cost of sales     119,574   32.4 %     123,838   31.1 %
Labor expenses     107,800   29.2 %    111,997   28.1 %
Occupancy expenses     29,784   8.1 %    31,235   7.8 %
Other operating expenses     68,351   18.5 %    75,430   18.9 %
General and administrative     17,707   4.8 %    23,260   5.8 %
Depreciation and amortization     18,076   4.9 %    20,168   5.1 %
Pre-opening costs     876   0.2 %    536   0.1 %
Asset impairments and closures     23,770   6.4 %    4,835    1.2 %
Loss (gain) on disposal of assets     896   0.2 %    (556)  (0.1)%
Total costs and expenses     386,834   104.9 %    390,743   98.0 %
Income (loss) from operations     (18,241)  (4.9)%    8,003   2.0 %
Interest expense, net     (9,426)  (2.6)%    (11,562)  (2.9)%
Gain (loss) on insurance settlements     755   0.2 %    (428)  (0.1)%
Loss from continuing operations before income taxes     (26,912)  (7.3)%    (3,987)  (1.0)%
Income tax expense     320   0.1 %    1,766   0.4 %
Loss from continuing operations     (27,232)  (7.4)%    (5,753)  (1.4)%
Loss from discontinued operations, net     -   0.0 %    (20,293)  (5.1)%
Net loss  $  (27,232)  (7.4)% $  (26,046)  (6.5)%
             
Basic and diluted net loss per share data:           
Net loss per share           
Basic and diluted           
Loss from continuing operations  $  (1.05)    $  (0.22)   
Loss from discontinued operations, net  $  -     $  (0.79)    
Net loss  $  (1.05)    $  (1.01)   
Weighted average shares outstanding            
Basic     25,819        25,719    
Diluted     25,819        25,719    
            

 

Selected Consolidated Balance Sheet Information September 26,
2016
 December 28,
2015
        
    (In thousands) 
   
Cash and cash equivalents $  729  $  7,817
Total assets    159,277     205,182
Long term debt (including current portion)    113,309     124,733
Total liabilities    178,906     198,569
Total stockholders' equity (deficit)    (19,629)    6,613
     

 

   Thirteen
Weeks Ended
 Thirteen
Weeks Ended
 Thirty-Nine
Weeks Ended
 Thirty-Nine
Weeks Ended
   September 26,
2016
 September 28,
2015
 September 26,
2016
 September 28,
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     113     131     113     131 
Brick House Tavern + Tap     25     23     25     23 
Total restaurants     138     154     138     154 
Restaurant operating weeks          
Joe's Crab Shack     1,622     1,769     4,988     5,368 
Brick House Tavern + Tap     332     299     991     877 
Average weekly sales         
Joe's Crab Shack  $  62  $  65  $  61   $  63 
Brick House Tavern + Tap  $  58  $  62  $  64  $  67 
Change in comparable restaurant sales         
Joe's Crab Shack     (6.5%)   (6.6%)   (5.0%)   (4.9%)
Brick House Tavern + Tap    (8.9%)   (0.7%)   (6.5%)  2.5%
Total    (6.8%)   (6.1%)   (5.2%)   (4.1%)
          

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 November 2, 2016.

 Thirteen
Weeks Ended
 Thirteen
Weeks Ended
 Thirty-Nine
Weeks Ended
 Thirty-Nine
Weeks Ended
 September 26,
2016
 September 28,
2015
 September 26,
2016
 September 28,
2015
                
 (In thousands, except per share data)
  
Loss from continuing operations - GAAP$  (15,163) $  (4,288) $  (27,232) $  (5,753)
Adjustments - continuing operations:       
Costs related to conversions, remodels and closures   4,530      1,559     4,768     1,622  
Loss (gain) on insurance settlements   -      428     (755)    428 
Write-off of debt issuance costs and debt discount   145     -      266     -  
Asset impairments   11,099     3,881     19,102     3,881 
Income tax effect of adjustments above       
Current benefit   (198)    -      (130)    (8)
Deferred benefit   (5,953)    (2,324)     (8,989)    (2,341)
Deferred tax asset valuation allowance   6,368     2,624     11,674     5,357 
Adjusted income (loss) from continuing operations - non-GAAP$  828  $  1,880  $  (1,296) $  3,186 
        
Weighted average shares outstanding (GAAP)       
Basic   25,866      25,761     25,819     25,719  
Diluted   25,866     25,792     25,819     25,738 
Loss from continuing operations per share (GAAP)       
Basic and diluted$  (0.59) $  (0.17) $  (1.05) $  (0.22)
Adjusted income (loss) from continuing operations per share (non-GAAP)       
Basic and diluted$  0.03  $  0.07  $  (0.05) $  0.12 
        


Investor Relations

Fitzhugh Taylor

(203) 682-8261

fitzhugh.taylor@icrinc.com

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Source: Ignite Restaurant Group, Inc.

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