Luby's Reports Second Quarter Fiscal 2020 Results
Company Added
Company Removed
Apply to Request List

Luby's Reports Second Quarter Fiscal 2020 Results

HOUSTON, June 3, 2020 // PRNewswire // - Luby's, Inc. (NYSE: LUB) ("Luby's") today announced unaudited financial results for its twelve-week second quarter fiscal 2020 ended March 11, 2020, referred to as "second quarter." Comparisons in this earnings release are for the second quarter compared to the twelve-week second quarter fiscal 2019.

Same-Store Sales Year-over-Year Comparison:

 

Q1
2020

Q2
2020

YTD Q2
2020

Luby's Cafeterias

1.7%

1.3

%

1.5

%

Fuddruckers

0.1%

0.4

%

0.2

%

Combo locations (1)

6.6%

6.8

%

6.7

%

Cheeseburger in Paradise

(1.0)%

9.4

%

3.2

%

Total same-store sales (2)

1.7%

1.6

%

1.7

%

   

(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 second quarter, there were 72 Luby's Cafeterias locations, 33 Fuddruckers locations, all six Combo locations, and one Cheeseburger in Paradise location that met the definition of same-stores.

Second Quarter Restaurant Sales:
($ thousands)

Restaurant Brand

Q2
2020

Q2
2019

Change
($)

Change
(%)

   Luby's Cafeterias

$

43,302

 

$

44,266

 

$

(964)

 

(2.2)

%

   Combo locations

4,653

 

4,355

 

298

 

6.8

%

Luby's cafeteria segment

47,955

 

48,621

 

(666)

 

(1.4)

%

Fuddruckers restaurants segment

11,789

 

16,156

 

(4,367)

 

(27.0)

%

Cheeseburger in Paradise segment

647

 

592

 

55

 

9.3

%

Total Restaurant Sales

$

60,391

 

$

65,369

 

$

(4,978)

 

(7.6)

%

 

Note:  Luby's Cafeterias store count reduced from 76 at Q2 2019 start to 72 at Q2 2020 end; Fuddruckers store count reduced from 51 at Q2 2019 start to 33 at Q2 2020 end; Combo location count at six (12 restaurants) at Q2 2019 start and at Q2 2020 end; Cheeseburger in Paradise store count at one at Q2 2019 and at Q2 2020 end.

Restaurant Counts:

 

August 28,
2019

 

FY20 YTDQ2
Openings

 

FY20 YTDQ2
Closings

 

March 11,
2020

Luby's Cafeterias(1)

79

   

   

(1)

   

78

 

Fuddruckers Restaurants(1)

44

   

   

(5)

   

39

 

Cheeseburger in Paradise

1

   

   

   

1

 

Total

124

   

   

(6)

   

118

 
   

(1)

Includes 6 restaurants that are part of Combo locations

Comments related to COVID-19:

After the end of our fiscal second quarter, the spread of the COVID-19 pandemic has affected the United States economy, our operations and those of third parties on which we rely. Beginning on March 17, 2020, we began suspending on-premise dining at our restaurants and substantially all employees at those locations were placed on furlough. By March 31, 2020 we had suspended on-premise dining at all 118 of our company-owned restaurants and had suspended all operations at 50 of our Luby's Cafeteria's, 36 company-owned Fuddruckers restaurants and our one Cheeseburger in Paradise restaurant. The 28 Luby's Cafeteria's and 3 Fuddruckers restaurants that remained open were providing take-out, drive-through and curbside pickup, or delivery with reduced operating hours and on-site staff. In addition, more than 50 percent of our general and administrative staff were placed on furlough and salaries were temporarily reduced by 50 percent for the remaining general and administrative staff and other salaried employees, including all senior management. Furthermore, our franchise owners suspended operations or moved to limited food-to-go operations at their locations, reducing the number of franchise locations in operation to 37 by early April 2020 from 90 prior to the COVID-19 pandemic.

Beginning in May 2020, we began to gradually reopen the dining rooms with state-mandated limits on guest capacity at the 28 Luby's locations and 3 Fuddruckers locations that had been previously operating with food-to-go service only. We also began to reopen restaurants that were temporarily closed. As of the date of this release, there were 31 Luby's Cafeteria's and 8 Fuddruckers restaurants operating, all of which had their dining rooms open at limited capacity; these restaurants were operating at approximately 75% of their pre-pandemic weekly sales levels. Additionally, there were 59 franchise locations in operation as of the date of this release.

The full extent and duration of the impact of the COVID-19 pandemic on our operations and financial performance is currently unknown, and depends on future developments that are uncertain and unpredictable, including the duration of the spread of the pandemic, its impact of capital and financial markets on a macro-scale and any new information that may emerge concerning the severity of the virus, its spread to other regions, the actions to contain the virus or treat its impact, and consumer attitudes and behaviors, among others.

In response to the changed operating environment from the COVID-19 pandemic, we took the following actions to minimize the financial impact and preserve the prospects for emerging from this unprecedented period.

  • We revamped restaurant operations to generate cost efficiencies resulting in higher restaurant operating margins even if sales levels do not return to pre-COVID-19 pandemic levels. As the restaurants adapted to the new operating environment, a lower cost labor model was deployed, food costs declined as menu offerings were concentrated among the historically top selling items, and various restaurant service and supplier costs were reevaluated.
  • We began restructuring corporate overhead earlier in calendar 2020 prior to the pandemic, including a transition to a 3rd party provider for certain accounting and payroll function. Significant further restructuring took place in April and May of 2020, as we reviewed all corporate service providers, information technology needs, and personnel requirements to support a reduced level of operations going forward.
  • We obtained a $10.0 million "Payroll Protection Program" loan under the Coronavirus Aid, Relief and Economic Security Act which was necessary for funding continuing operations. We believe that a portion of the loan will be eligible for forgiveness; however, that amount cannot currently be calculated.
  • We continued efforts to close real estate sales transactions with anticipated aggregate sales proceeds in excess of $20.0 million prior to the end of fiscal 2020. In addition, the Company has identified other real estate properties that may be sold to generate funds for ongoing operations.

About Luby's

Luby's, Inc. (NYSE: LUB) operates 118 restaurants nationally as of March 11, 2020: 78 Luby's Cafeterias, 39 Fuddruckers, one Cheeseburger in Paradise restaurants. Luby's is the franchisor for 90 Fuddruckers franchise locations across the United States (including Puerto Rico), Canada, Mexico, Colombia, and Panama. Luby's Culinary Contract Services provides food service management to 28 sites consisting of healthcare, corporate dining locations, sports stadiums, and sales through retail grocery stores.

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

 

Two Quarters Ended

 

March 11,

2020

 

March 13,

2019

 

March 11,

2020

 

March 13,

2019

 

(12 weeks)

 

(12 weeks)

 

(28 weeks)

 

(28 weeks)

SALES:

             

Restaurant sales

$

60,391

   

$

65,369

   

$

143,949

   

$

156,468

 

Culinary contract services

6,998

   

7,543

   

16,772

   

17,039

 

Franchise revenue

1,158

   

1,421

   

2,865

   

3,644

 

Vending revenue

14

   

90

   

124

   

190

 

TOTAL SALES

68,561

   

74,423

   

163,710

   

177,341

 

COSTS AND EXPENSES:

             

Cost of food

17,399

   

18,145

   

41,341

   

43,226

 

Payroll and related costs

23,782

   

24,730

   

55,915

   

59,244

 

Other operating expenses

10,065

   

11,412

   

24,860

   

27,914

 

Occupancy costs

3,783

   

4,166

   

8,773

   

10,041

 

Opening costs

2

   

11

   

14

   

44

 

Cost of culinary contract services

6,400

   

6,717

   

15,348

   

15,532

 

Cost of franchise operations

409

   

247

   

974

   

519

 

Depreciation and amortization

2,677

   

3,222

   

6,440

   

8,126

 

Selling, general and administrative expenses

6,816

   

7,753

   

16,974

   

17,763

 

Other Charges

1,509

   

1,263

   

2,748

   

2,477

 

Provision for asset impairments and restaurant closings

661

   

1,195

   

1,770

   

2,422

 

Net gain on disposition of property and equipment

(2,527)

   

(12,651)

   

(2,498)

   

(12,501)

 

Total costs and expenses

70,976

   

66,210

   

172,659

   

174,807

 

INCOME (LOSS) FROM OPERATIONS

(2,415)

   

8,213

   

(8,949)

   

2,534

 

Interest income

5

   

19

   

28

   

19

 

Interest expense

(1,473)

   

(1,554)

   

(3,435)

   

(3,269)

 

Other income, net

148

   

55

   

388

   

86

 

Income (loss) before income taxes and discontinued operations

(3,735)

   

6,733

   

(11,968)

   

(630)

 

Provision for income taxes

62

   

93

   

156

   

213

 

Income (loss) from continuing operations

(3,797)

   

6,640

   

(12,124)

   

(843)

 

Loss from discontinued operations, net of income taxes

(6)

   

(8)

   

(17)

   

(13)

 

NET INCOME (LOSS)

$

(3,803)

   

$

6,632

   

$

(12,141)

   

$

(856)

 

Income (loss) per share from continuing operations:

             

Basic

$

(0.13)

   

$

0.22

   

$

(0.40)

   

$

(0.03)

 

Assuming dilution

$

(0.13)

   

$

0.22

   

$

(0.40)

   

$

(0.03)

 

Loss per share from discontinued operations:

             

Basic

$

0.00

   

$

0.00

   

$

0.00

   

$

0.00

 

Assuming dilution

$

0.00

   

$

0.00

   

$

0.00

   

$

0.00

 

Net income (loss) per share:

             

Basic

$

(0.13)

   

$

0.22

   

$

(0.40)

   

$

(0.03)

 

Assuming dilution

$

(0.13)

   

$

0.22

   

$

(0.40)

   

$

(0.03)

 

Weighted average shares outstanding:

             

Basic

30,215

   

29,769

   

30,123

   

29,671

 

Assuming dilution

30,215

   

29,799

   

30,123

   

29,671

 

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.

 

Quarter Ended

 

Two Quarters Ended

 

March 11,

2020

 

March 13,

2019

 

March 11,

2020

 

March 13,

2019

 

(12 weeks)

 

(12 weeks)

 

(28 weeks)

 

(28 weeks)

               

Restaurant sales

88.1

%

 

87.8

%

 

87.9

%

 

88.2

%

Culinary contract services

10.2

%

 

10.1

%

 

10.2

%

 

9.6

%

Franchise revenue

1.7

%

 

1.9

%

 

1.8

%

 

2.1

%

Vending revenue

0.0

%

 

0.1

%

 

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

28.8

%

 

27.8

%

 

28.7

%

 

27.6

%

Payroll and related costs

39.4

%

 

37.8

%

 

38.8

%

 

37.9

%

Other operating expenses

16.7

%

 

17.5

%

 

17.3

%

 

17.8

%

Occupancy costs

6.3

%

 

6.4

%

 

6.1

%

 

6.4

%

Vending revenue

0.0

%

 

(0.1)

%

 

(0.1)

%

 

(0.1)

%

Store level profit

8.9

%

 

10.7

%

 

9.2

%

 

10.4

%

               

(As a percentage of total sales)

             

General and administrative expenses

7.8

%

 

9.4

%

 

8.5

%

 

9.0

%

Marketing and advertising expenses

2.1

%

 

1.0

%

 

1.9

%

 

1.0

%

Selling, general and administrative expenses

9.9

%

 

10.4

%

 

10.4

%

 

10.0

%

Luby's, Inc.

Consolidated Balance Sheets

(In thousands, except per share data)

 
 

March 11,

2020

 

August 28,

2019

 

(Unaudited)

   
       

ASSETS

     

Current Assets:

     

Cash and cash equivalents

$

7,080

   

$

3,640

 

Restricted cash and cash equivalents

8,704

   

9,116

 

Trade accounts and other receivables, net

8,413

   

8,852

 

Food and supply inventories

2,392

   

3,432

 

Prepaid expenses

1,970

   

2,355

 

Total current assets

28,559

   

27,395

 

Property held for sale

13,770

   

16,488

 

Assets related to discontinued operations

1,813

   

1,813

 

Property and equipment, net

117,430

   

121,743

 

Intangible assets, net

16,025

   

16,781

 

Goodwill

514

   

514

 

Operating lease right-of-use assets

24,296

   

 

Other assets

890

   

1,266

 

Total assets

$

203,297

   

$

186,000

 

LIABILITIES AND SHAREHOLDERS' EQUITY

     

Current Liabilities:

     

Accounts payable

$

7,945

   

$

8,465

 

Liabilities related to discontinued operations

5

   

14

 

Current portion of credit facility debt

2,567

   

 

Operating lease liabilities-current

5,916

   

 

Accrued expenses and other liabilities

24,015

   

24,475

 

Total current liabilities

40,448

   

32,954

 

Credit facility debt, less current portion

48,268

   

45,439

 

Operating lease liabilities-noncurrent

23,047

   

 

Other liabilities

922

   

6,577

 

Total liabilities

$

112,685

   

$

84,970

 

Commitments and Contingencies

     

SHAREHOLDERS' EQUITY

     

Common stock, 0.32 par value; 100,000,000 shares authorized; shares issued were 30,751,629 and 30,478,972; and shares outstanding were 30,251,629 and 29,978,972, at March 11, 2020 and August 28, 2019, respectively

9,841

   

9,753

 

Paid-in capital

35,478

   

34,870

 

Retained earnings

50,068

   

61,182

 

Less cost of treasury stock, 500,000 shares

(4,775)

   

(4,775)

 

Total shareholders' equity

90,612

   

101,030

 

Total liabilities and shareholders' equity

$

203,297

   

$

186,000

 

Luby's, Inc.

Consolidated Statements of Cash Flows (unaudited)

(In thousands)

 
 

Quarter Ended

 

March 11,

2020

 

March 13,

2019

 

(28 weeks)

 

(28 weeks)

CASH FLOWS FROM OPERATING ACTIVITIES:

     

Net loss

$

(12,141)

   

$

(856)

 

Adjustments to reconcile net loss to net cash used in operating activities:

     

Provision for asset impairments and net (gains) losses on property sales

(727)

   

(10,079)

 

Depreciation and amortization

6,440

   

8,126

 

Amortization of debt issuance cost

577

   

811

 

Share-based compensation expense

732

   

823

 

Cash used in operating activities before changes in operating assets and liabilities

(5,119)

   

(1,175)

 

Changes in operating assets and liabilities:

     

Decrease (increase) in trade accounts and other receivables

509

   

(414)

 

Increase in food and supply inventories

(94)

   

(45)

 

Decrease in prepaid expenses and other assets

197

   

1,115

 

Decrease in operating lease assets

2,407

   

 

Decrease in operating lease liabilities

(3,541)

   

 

Decrease in accounts payable, accrued expenses and other liabilities

(263)

   

(7,110)

 

Net cash used in operating activities

(5,904)

   

(7,629)

 

CASH FLOWS FROM INVESTING ACTIVITIES:

     

Proceeds from disposal of assets and property held for sale

5,453

   

20,444

 

Purchases of property and equipment

(1,490)

   

(1,781)

 

Net cash provided by investing activities

3,963

   

18,663

 

CASH FLOWS FROM FINANCING ACTIVITIES:

     

Revolver borrowings

3,300

   

34,500

 

Revolver repayments

   

(54,500)

 

Proceeds from term loan

2,500

   

58,400

 

Term loan repayments

(831)

   

(35,169)

 

Debt issuance costs

   

(3,236)

 

Taxes paid on equity withheld

   

(12)

 

Net cash provided by (used in) financing activities

4,969

   

(17)

 

Net increase in cash and cash equivalents and restricted cash

3,028

   

11,017

 

Cash and cash equivalents and restricted cash at beginning of period

12,756

   

3,722

 

Cash and cash equivalents and restricted cash at end of period

$

15,784

   

$

14,739

 

Cash paid for:

     

Income taxes, net of (refunds)

$

7

   

$

51

 

Interest

2,647

   

1,951

 

Store Level Profit

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 segments.  The following table reconciles between store level profit, a non-GAAP measure to loss from continuing operations, a GAAP measure:

($ thousands)

Quarter Ended

 

Two Quarters Ended

 

March 11,

2020

 

March 13,

2019

 

March 11,

2020

 

March 13,

2019

 

(12 weeks)

 

(12 weeks)

 

(28 weeks)

 

(28 weeks)

               

Store level profit

$

5,376

   

$

7,006

   

$

13,184

   

$

16,233

 
               

Plus:

             

Sales from culinary contract services

6,998

   

7,543

   

16,772

   

17,039

 

Sales from franchise operations

1,158

   

1,421

   

2,865

   

3,644

 
               

Less:

             

Opening costs

2

   

11

   

14

   

44

 

Cost of culinary contract services

6,400

   

6,717

   

15,348

   

15,532

 

Cost of franchise operations

409

   

247

   

974

   

519

 

Depreciation and amortization

2,677

   

3,222

   

6,440

   

8,126

 

Selling, general and administrative expenses

6,816

   

7,753

   

16,974

   

17,763

 

Other Charges

1,509

   

1,263

   

2,748

   

2,477

 

Provision for asset impairments and restaurant closings

661

   

1,195

   

1,770

   

2,422

 

Net gain on disposition of property and equipment

(2,527)

   

(12,651)

   

(2,498)

   

(12,501)

 

Interest income

(5)

   

(19)

   

(28)

   

(19)

 

Interest expense

1,473

   

1,554

   

3,435

   

3,269

 

Other income, net

(148)

   

(55)

   

(388)

   

(86)

 

Provision for income taxes

62

   

93

   

156

   

213

 

Income (loss) from continuing operations

$

(3,797)

   

$

6,640

   

$

(12,124)

   

$

(843)

 

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 loss (gain) on disposing of property and equipment, provision for asset impairments and restaurant closings, other charges, 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

 

Two Quarters Ended

 

March 11,

2020

 

March 13,

2019

 

March 11,

2020

 

March 13,

2019

 

(12 weeks)

 

(12 weeks)

 

(28 weeks)

 

(28 weeks)

Income (loss) from continuing operations

$

(3,797)

   

$

6,640

   

(12,124)

   

(843)

 

Depreciation and amortization

2,677

   

3,222

   

6,440

   

8,126

 

Provision for income taxes

62

   

93

   

$

156

   

$

213

 

Interest expense

1,473

   

1,554

   

3,435

   

3,269

 

Interest income

(5)

   

(19)

   

(28)

   

(19)

 

Other Charges

1,509

   

1,263

   

2,748

   

2,477

 

Net loss on disposition of property and equipment

(2,527)

   

(12,651)

   

(2,498)

   

(12,501)

 

Provision for asset impairments and restaurant closings

661

   

1,195

   

1,770

   

2,422

 

Non-cash compensation expense

366

   

398

   

732

   

823

 

Franchise Taxes

42

   

42

   

98

   

108

 

Increase in fair value of derivative

   

   

   

88

 

Adjusted EBITDA

$

461

   

$

1,737

   

$

729

   

$

4,163

 


SOURCE Luby's, Inc.

###

Comments:

comments powered by Disqus
Share This Page

Subscribe to Franchising Express