Ignite Restaurant Group Reports Second Quarter 2014 Financial Results

HOUSTON - August 07, 2014 - (BUSINESS WIRE) - Ignite Restaurant Group (NASDAQ:IRG) today reported financial results for the second quarter ended June 30, 2014.

Highlights for the second quarter of 2014 were as follows:

  • Total revenues were $229.8 million, compared to $228.1 million in the second quarter of 2013;
  • Comparable restaurant sales increased 8.5% at Brick House Tavern + Tap, decreased 4.7% at Joe's Crab Shack and decreased 2.6% at Macaroni Grill;
  • Net income and net income per diluted share were $1.8 million and $0.07, respectively;
  • Adjusted net income and adjusted net income per diluted share (which are non-GAAP financial measures) were $2.0 million and $0.08, respectively.

Ray Blanchette, Chief Executive Officer of Ignite Restaurant Group, stated, “Our second quarter results were challenged as we faced what we believe were residual effects of 2014’s winter weather, combined with some cannibalization of Joe’s Crab Shack sales as we significantly increased the number of locations in the Northeast over the past three years. Results at Macaroni Grill were generally in line with our internal expectations, however our team continues to focus on a robust pipeline of initiatives to drive sales growth and improve profitability. We remain pleased with the ongoing sales success at Brick House Tavern + Tap and with the improvements in store level execution. Our near-term development strategy is expected to provide further opportunities to expand the Brick House concept as we continue to optimize our real estate portfolio through conversions.”

Review of Second Quarter 2014 Operating Results

Total revenues were $229.8 million in the second quarter of 2014, an increase of 0.8% compared to $228.1 million in the second quarter of last year. The increase was largely driven by the inclusion of Macaroni Grill for the full 13 weeks of the second quarter of 2014, versus 12 weeks for the comparable period of 2013 and new restaurant development, partially offset by a 3.1% decrease in comparable restaurant sales.

  • Revenues at Joe’s Crab Shack were $125.5 million during the second quarter of 2014 versus $129.6 million in the prior year. Comparable restaurant sales at Joe’s Crab Shack decreased 4.7%.
  • Revenues at Brick House Tavern + Tap were $17.8 million in the second quarter of 2014 compared to $12.5 million in the prior year. Comparable restaurant sales at Brick House Tavern + Tap increased 8.5%.
  • Revenues at Macaroni Grill were $86.6 million in the second quarter of 2014 compared to $86.0 million in the prior year. Comparable restaurant sales at Macaroni Grill decreased 2.6%. Macaroni Grill was acquired on April 9, 2013.

Net income for the second quarter of 2014 was $1.8 million, or $0.07 per diluted share. The Company’s net income for the second quarter of 2014 included approximately $330,000 of costs related to three restaurant closures, losses on disposal of assets and transaction related costs. Excluding the impact of these items, adjusted net income and adjusted net income per diluted share (which are non-GAAP financial measures) were $2.0 million and $0.08, respectively, in the second quarter of 2014. Net loss for the second quarter of 2013 was $2.5 million, or a loss of $0.10 per diluted share. The Company incurred approximately $5.3 million of primarily acquisition related and labor related transition costs in connection with the acquisition of Romano's Macaroni Grill in the second quarter of 2013. Excluding the impact of these items, adjusted net income and adjusted net income per diluted share (which are non-GAAP financial measures) were $1.0 million and $0.04, respectively. A reconciliation between GAAP net income (loss) and adjusted net income is included in the accompanying financial data.

Development

During the second quarter of 2014, the Company closed three Macaroni Grill locations. Of these closures, one has been converted and re-opened as a Brick House Tavern + Tap and one is currently under construction and will re-open as a Brick House restaurant in the fourth quarter of 2014 or in early 2015. Subsequent to the end of the second quarter, three additional Macaroni Grill locations were closed in July for a total of eight Macaroni Grill closures year to date.

Liquidity

At June 30, 2014, the Company had approximately $20.4 million of available borrowing capacity under its current credit facility and was in compliance with the credit facility’s financial covenants. “In light of our desire to move quickly on new Brick House locations and the recent sales volatility in casual dining, we are currently reviewing refinancing alternatives of our existing credit facility,” stated Michael Dixon, President and Chief Financial Officer of Ignite Restaurant Group.

Conference Call

We will host a conference call to discuss our second quarter financial results today at 5:00 PM Eastern Standard Time. Hosting the call will be Ray Blanchette, Chief Executive Officer, and Michael Dixon, President and Chief Financial Officer. The conference call can be accessed live over the phone by dialing 877-852-6579 or for international callers by dialing 719-325-4794. 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 1127123. The replay will be available until August 14, 2014. 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 over 300 restaurants throughout the U.S. Headquartered in Houston, Ignite's portfolio of restaurant concepts includes Joe's Crab Shack, Romano's Macaroni Grill 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. The Company is also a franchisor for Macaroni Grill in locations in the U.S., U.S. territories and internationally. For more information on Ignite and its distinctive brands visit www.igniterestaurantgroup.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 30, 2013 (which can be found at the SEC’s website www.sec.gov) and 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 30, 2014 and July 1, 2013, and selected consolidated balance sheet information as of June 30, 2014 and December 30, 2013:

      Thirteen Weeks Ended     Thirteen Weeks Ended
Consolidated Statements of Operations     June 30, 2014     July 1, 2013
          (In thousands, except percent and per share data)
                             
Revenues     $ 229,847     100.0   %     $ 228,132     100.0   %
Costs and expenses                        
  Restaurant operating costs and expenses                        
    Cost of sales       70,722     30.8   %       66,765     29.3   %
    Labor expenses       68,995     30.0   %       71,465     31.3   %
    Occupancy expenses       19,577     8.5   %       18,896     8.3   %
    Other operating expenses       47,454     20.6   %       48,039     21.1   %
  General and administrative       11,202     4.9   %       16,611     7.3   %
  Depreciation and amortization       7,945     3.5   %       7,356     3.2   %
  Pre-opening costs       558     0.2   %       1,477     0.6   %
  Asset impairments and closures       135     0.1   %       14     0.0   %
  Loss on disposal of property and equipment       504     0.2   %       197     0.1   %
    Total costs and expenses       227,092     98.8   %       230,820     101.2   %
Income (loss) from operations       2,755     1.2   %       (2,688 )   (1.2 ) %
Interest expense, net       (1,765 )   (0.8 ) %       (1,741 )   (0.8 ) %
Income (loss) before income taxes       990     0.4   %       (4,429 )   (1.9 ) %
Income tax benefit       (777 )   (0.3 ) %       (1,967 )   (0.9 ) %
Net income (loss)     $ 1,767     0.8   %     $ (2,462 )   (1.1 ) %
                             
Basic and diluted net income (loss) per share data:                        
  Net income (loss) per share                        
    Basic and diluted     $ 0.07             $ (0.10 )      
  Weighted average shares outstanding                        
    Basic       25,651               25,624        
    Diluted       25,749               25,624        
                                     

 

      Twenty-Six Weeks Ended     Twenty-Six Weeks Ended
Consolidated Statements of Operations     June 30, 2014     July 1, 2013
          (In thousands, except percent and per share data)
                             
Revenues     $ 444,706   100.0 %     $ 346,372   100.0 %
Costs and expenses                        
  Restaurant operating costs and expenses                        
    Cost of sales     134,140   30.2 %     103,086   29.8 %
    Labor expenses     135,842   30.5 %     103,372   29.8 %
    Occupancy expenses     39,035   8.8 %     27,450   7.9 %
    Other operating expenses     91,455   20.6 %     69,843   20.2 %
  General and administrative     23,476   5.3 %     26,902   7.8 %
  Depreciation and amortization     16,081   3.6 %     12,169   3.5 %
  Pre-opening costs     762   0.2 %     2,568   0.7 %
  Asset impairments and closures     1,092   0.2 %     31   0.0 %
  Loss on disposal of property and equipment     769   0.2 %     392   0.1 %
    Total costs and expenses     442,652   99.5 %     345,813   99.8 %
Income from operations     2,054   0.5 %     559   0.2 %
Interest expense, net     (3,643)   (0.8) %     (2,136)   (0.6) %
Gain on insurance settlements     -   0.0 %     300   0.1 %
Loss before income taxes     (1,589)   (0.4) %     (1,277)   (0.4) %
Income tax benefit     (3,091)   (0.7) %     (1,000)   (0.3) %
Net income (loss)     $ 1,502   0.3 %     $ (277)   (0.1) %
                             
Basic and diluted net income (loss) per share data:                        
  Net income (loss) per share                        
    Basic and diluted     $ 0.06           $ (0.01)      
  Weighted average shares outstanding                        
    Basic     25,645           25,624      
    Diluted     25,715           25,624      
                             

 

     

  June 30,  

  December 30,
Selected Consolidated Balance Sheet Information     2014   2013
      (In thousands)
Cash and cash equivalents     $ 999   $ 972
Total assets     344,819   347,084
Long term debt (including current portion)     118,676   131,982
Total liabilities     240,452   245,477
Total stockholders' equity     104,367   101,607
           

 

      Thirteen   Thirteen   Twenty-Six   Twenty-Six
      Weeks Ended   Weeks Ended   Weeks Ended   Weeks Ended
      June 30, 2014   July 1, 2013   June 30, 2014   July 1, 2013
      (dollars in thousands)
Selected Other Data(1):                
Restaurants opened during the period     -       4       -       6  
Number of restaurants open (end of period):                
  Joe's Crab Shack     136       134       136       134  
  Brick House Tavern + Tap     20       16       20       16  
  Romano's Macaroni Grill     174       186       174       186  
  Total restaurants     330       336       330       336  
Restaurant operating weeks                
  Joe's Crab Shack     1,768       1,727       3,536       3,404  
  Brick House Tavern + Tap     260       201       520       396  
  Romano's Macaroni Grill     2,281       2,232       4,595       2,232  
Average weekly sales                
  Joe's Crab Shack   $ 71     $ 75     $ 65     $ 69  
  Brick House Tavern + Tap   $ 68     $ 62     $ 68     $ 61  
  Romano's Macaroni Grill   $ 37     $ 38     $ 38     $ 38  
Change in comparable restaurant sales                
  Joe's Crab Shack     (4.7 %)     0.7 %     (5.3 %)     (0.5 %)
  Brick House Tavern + Tap     8.5 %     6.4 %     9.2 %     5.2 %
  Romano's Macaroni Grill     (2.6 %)     (7.4 %)     (3.4 %)     (7.4 %)
  Total     (3.1 %)     (2.5 %)     (3.6 %)     (2.2 %)
                   

(1) Activity for Romano's Macaroni Grill commenced from the acquisition date of April 9, 2013.

     

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 7, 2014.

      Thirteen   Thirteen   Twenty-Six   Twenty-Six
      Weeks Ended   Weeks Ended   Weeks Ended   Weeks Ended
      June 30, 2014   July 1, 2013   June 30, 2014   July 1, 2013
      (In thousands, except per share data)
Net income (loss) - GAAP   $ 1,767     $ (2,462 )   $ 1,502     $ (277 )
Adjustments:                
  Transaction costs     89       4,185       89       5,203  
  Proposed secondary offering expenses     -       300       -       300  
  Costs related to conversions, remodels and closures     241       -       1,227       -  
  Write-off of debt issuance costs     -       483       -       483  
  Non-recurring recruitment and training expenses     -       327       -       327  
  Gain on insurance settlements     -       -       -       (300 )
  Income tax effect of adjustments above     (130 )     (1,860 )     (518 )     (2,037 )
Adjusted net income - non-GAAP   $ 1,967     $ 973     $ 2,300     $ 3,699  
                   
Weighted average shares outstanding (GAAP)                
  Basic     25,651       25,624       25,645       25,624  
  Diluted     25,749       25,624       25,715       25,624  
Net income (loss) per share (GAAP)                
  Basic and diluted   $ 0.07     $ (0.10 )   $ 0.06     $ (0.01 )
Adjusted net income per share (non-GAAP)                
  Basic and diluted   $ 0.08     $ 0.04     $ 0.09     $ 0.14  
                   

Contacts:

Fitzhugh Taylor
Ignite Restaurant Group, Inc.
Investor Relations
203-682-8261
fitzhugh.taylor@icrinc.com

Liz Brady DiTrapano
Ignite Restaurant Group, Inc.
Media Relations
646-277-1226
liz.ditrapano@icrinc.com

###

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