Luby’s Reports Third Quarter Fiscal 2012 Results
Luby’s Reports Third Quarter Fiscal 2012 Results
~ Store Level Profit Margin Improved to 17.2%
HOUSTON, June 13, 2012 - Luby’s, Inc. (NYSE: LUB) (“Luby’s”) today announced its unaudited financial results for the third quarter fiscal 2012, a twelve-week period, which ended on May 9, 2012.
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2012 Third Fiscal Quarter Review
— Store level profit, defined as restaurant sales less food costs, payroll
and related costs, and other operating expenses, rose to $13.4 million
in the third quarter of fiscal 2012, or 17.2% of restaurant sales,
compared to $12.6 million in the third quarter of fiscal 2011, or 16.1%
of restaurant sales. Store level profit as a percentage of restaurant
sales rose due to same store sales growth and effective expense
controls. Food and payroll costs declined both in on an absolute and on
a percent of sales basis in this year’s third fiscal quarter versus last
year’s comparable quarter.
— Total sales rose 0.9% to $84.1 million in the third quarter fiscal 2012,
from $83.4 million in the comparable quarter last fiscal year.
— Same store sales rose 1.1%. Same store sales results include the 149
restaurants (93 Luby’s Cafeterias and 56 Fuddruckers and Koo Koo Roo
locations) that have been open for 18 consecutive accounting periods. At
Luby’s Cafeterias, average customer spend increased 3.2% and customer
traffic declined 3.0%. At Fuddruckers, average customer spend increased
3.8% and customer traffic grew 0.7%.
— Restaurant sales were $77.9 million, down 0.2%, or $0.1 million,
compared to the same quarter last year. Restaurant sales declined
slightly as the growth in same store sales and the sales contribution
from four new restaurants (including the opening of two Fuddruckers near
the end of the third quarter fiscal 2012) were offset by the sales lost
from the closure of five stores over the prior year. The 93 Luby’s
Cafeterias generated $54.6 million in restaurant sales, and the 61
company-operated Fuddruckers and Koo Koo Roo locations produced $23..3
million in restaurant sales.
Table 1: Same Store Sales by Quarter
Q1 Q2 Q3 Q4 YTD
—- —- —- —- —-
FY2012 Same-Store
Sales: 3.5% 2.2% 1.1% 2.1%
—- —- —- —- —-
FY2011 Same-Store
Sales: 5.5% 2.7% 3.5% (0.6%) 2.5%
—- —- —- —- ——- —-
Note: Beginning in the 2012 third fiscal quarter, 56 Fuddruckers and Koo Koo Roo locations have been included in the same store sales results. Luby’s begins including sales results into the same-store sales calculation once a restaurant has been open for 18 consecutive accounting periods. Luby’s locations include 92 cafeterias and one non-core restaurant.
Table 2: Restaurant Sales (In thousands)
Restaurant
Sales Q3 FY2012 Q3 FY2011 Variance %
12 weeks 12 weeks
Ended Ended 5/4/2011
5/9/2012
=== -
Luby’s
Cafeterias
(1) $54,622 $55,828 $(1,206) (2..2%)
—— ——-
Fuddruckers
and Koo
Koo Roo
(2) 23,321 22,249 1,072 4.8%
—— ——— ——— ——- —-
Restaurant
Sales $77,943 $78,077 $(134) (0..2%)
—- ——- ——-
(1) 96 stores at FY2011 Q3 end; 93 stores at FY2012 Q3 end.
(2) 59 stores at FY2011 Q3 end; 61 stores at FY2012 Q3 end.
— Revenue from Culinary Contract Services rose to $4.3 million in the
third quarter fiscal 2012 compared to $3.6 million in the same fiscal
quarter last year. Culinary Contract Services ended the third quarter of
fiscal 2012 operating 18 facilities, the same as the end of the third
quarter of fiscal 2011. The 21.8% year-over-year increase in revenue
from Culinary Contract Services resulted from rising sales volumes at
facilities we have operated for more than one year, and the contribution
from new facilities with higher sales volume replacing facilities with
smaller sales volume that terminated.
— In the third quarter fiscal 2012, we generated income from continuing
operations of $2.5 million, or $0.09 per share, compared to $2.1 million
in the same quarter last year, or $0.07 per share. Last year’s results
included $0.2 million in after-tax expenses associated with professional
fees related to the integration of Fuddruckers.
Chris Pappas, President and CEO, remarked, “Our store operating margins continue to move upward, rising 110 basis points to 17.2% in this year’s third fiscal quarter, versus last year’s comparable quarter. This increase is attributable to the process improvements we launched in 2011, as well as an invigorated and dedicated team. By focusing on improving each aspect of our operations, from inventory management to labor scheduling to marketing, we have been able to bring down costs while raising our level of customer service. We are not finished, since our company’s culture thrives on knowing we can always find opportunities to better serve our customers.
“We continue to invest in growing our brands. During the third quarter, we opened two company-owned Fuddruckers, one in Houston and the other in San Antonio. As planned, we anticipate opening our third company-owned location by the end of our 2012 fiscal year in August. In May, our first joint venture location debuted, bringing Fuddruckers’ Worlds’ Greatest Hamburgers ® to Mexico. With our new franchise location in Oregon that began operating in March, as well as the three franchise locations opened in earlier quarters, we are on track to reach our goal of expanding our franchise network by at least five locations in fiscal 2012.
“Along with opening new locations, we have remodeled some of our existing sites. To date, we have completed a total of 13 cafeteria remodels, of which seven were extensive in nature. We have also completed 13 limited remodels at Fuddruckers. By refreshing the look of our locations, we remain competitive, relevant, and attractive to grow our customer base over time.”
Operating Expense Review
Food costs declined approximately $0.6 million, to $21.4 million in the third quarter fiscal 2012 compared to the same fiscal quarter last year, as we continue to devote more time and attention to training and development of effective food cost management practices. We also continue to realize benefits from the restaurant back office system we implemented last fiscal year.. Commodity prices have stabilized and we have been able to maintain pricing at levels that supports expanded food cost margins. Food costs as a percentage of restaurant sales declined to 27.4% in the third quarter fiscal 2012 from 28.2% in the comparable quarter last year.
In the third quarter fiscal 2012, payroll and related costs of $25.7 million were down $0.6 million versus last year’s third fiscal quarter. As a percentage of restaurant sales, payroll and related costs declined to 33.0% in the third quarter fiscal 2012 from 33.6% in the same quarter last year, primarily due to the process improvements we have rolled out over the past year to schedule our hourly crew members more efficiently and react more quickly to changes in anticipated customer traffic.
Other operating expenses include restaurant-related expenses for utilities, repairs and maintenance, advertising, insurance, supplies, services, and occupancy costs. Other operating expenses in the third quarter fiscal 2012 rose approximately $0.2 million, to $17.4 million, compared to the same quarter last year. As a percentage of restaurant sales, other operating expenses rose to 22.3% compared to 22.1% in the same quarter last year; increases in marketing and advertising costs, restaurant supplies, and occupancy costs were partially offset by cost reductions in repairs and maintenance and restaurant services.
Depreciation and amortization expense increased $0.4 million to $4.3 million due to the investments made to remodeling existing locations as well as shortened depreciable lives on a few leased locations.
General and administrative expenses rose approximately $0.2 million to $7.2 million in the third quarter fiscal 2012 compared to the same quarter last year due to an increase in salaries and benefits. As a percentage of total revenues, general and administrative expenses rose 8.6%, versus 8.4% in the same quarter last year.
Capital Expenditures and Balance Sheet
At the end of the third fiscal quarter 2012, we had $1.3 million in cash, $169.4 million in shareholders’ equity and $34.6 million available under our credit facility. During the first three fiscal quarters 2012, we generated $20.7 million in cash from operating activities and spent $16.1 million on capital expenditures. During the first three quarters, we reduced our balance under our credit facility by $7.0 million and ended the third quarter of fiscal 2012 with a balance of $14.5 million.
In the third fiscal quarter 2012, our capital expenditures totaled $6.8 million, including investments of $5.7 million on new unit development, remodeling of existing restaurants, and properties that we acquired and leased to a franchisee operating Fuddruckers restaurants. We expect to invest approximately $20 million to $25 million in capital projects during fiscal 2012, with up to $11.0 million dedicated to new unit development, including the purchase of property for development of stores opening in the next fiscal year, and an estimated $6.0 million allocated to refurbishing approximately 30 existing restaurants.
Fiscal Year-to-Date Review
— Restaurant sales increased $4.4 million, to $224.5 million, during the
first three fiscal quarters of 2012; Luby’s Cafeterias generated sales
of $159.8 million and Fuddruckers contributed sales of $64.8 million.
— Luby’s Culinary Contract Services produced $13.1 million in sales during
the first three fiscal quarters versus $10.0 million during the
comparable quarters last fiscal year.
— Income from continuing operations grew to $4.5 million in the first
three fiscal quarters of 2012, compared to a loss of $0.3 million in the
comparable quarters of fiscal 2011.
— Store level profit rose to $34.6 million during the first three fiscal
quarters of 2012, up from $27.1 million in the comparable quarters of
fiscal 2011. As a percentage of restaurant sales, store level profit
improved to 15.4% during the first three fiscal quarters of 2012,
compared to 12.3% in the comparable quarters last year.
Outlook
We anticipate that our same store sales will grow between 1.5% and 2.0% for the full fiscal year 2012 and that our earnings from continuing operations per diluted share will be in the range of $0.18 to $0.21. Total restaurants sales for fiscal year 2012 are expected to be between $321 million and $324 million. This compares to total restaurant sales of $319 million in fiscal year 2011 when adjusted for a comparable 52-week year.
Profitability is contingent on same store sales growth as well as effective management of our expenses. While encouraged that gasoline prices at the beginning of the summer are not as high as some predicted, we continue to remain cautious about the general economic environment and its impact on customer traffic.
Conference Call
The Company will host a conference call tomorrow, June 14, 2012, at 11:00 a..m., Central Time, to discuss further its 2012 fiscal third quarter results.. To access the call live, dial (480) 629-9835 and ask for the Luby’s conference call at least 10 minutes prior to the start time, or listen live over the Internet by visiting the events page in the investor relations section of http://www.lubys.com. For those who cannot listen to the live call, a telephonic replay will be available through June 21, 2012 and may be accessed by calling (303) 590-3030 and using the pass code 4537695#. Also, an archive of the webcast will be available after the call for a period of 90 days on the “Investors” section of the Company’s website.
About Luby’s
Luby’s, Inc. operates restaurants under the brands Luby’s Cafeteria and Fuddruckers and provides food service management through its Luby’s Culinary Services division. The company-operated restaurants include 92 Luby’s cafeterias, 58 Fuddruckers restaurants, three Koo Koo Roo Chicken Bistros, and one Bob Luby’s Seafood Grill. Its 92 Luby’s cafeterias are located throughout Texas and other states. Its Fuddruckers restaurants include 58 company-operated locations and 125 franchises across the United States (including Puerto Rico), Canada, and Mexico. Luby’s Culinary Services provides food service management to 18 sites consisting of healthcare, higher education and corporate dining locations.
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, the expected financial impact of Fuddruckers restaurants, anticipated financial results in future periods and expectations of industry conditions.
The Company 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 the Company. 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 the Company’s actual results to differ materially from the expectations the Company describes in its “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 the Company’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 the Company’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 Three Quarters Ended
——— ———
May 9, May 4, May 9, May 4,
2012 2011 2012 2011
—— —— —— ——
(12 weeks) (12 weeks) (36 weeks) (36 weeks)
SALES:
Restaurant sales $77,943 $78,077 $224,535 $220,124
Culinary contract services 4,336 3,560 13,069 10,018
Franchise revenue 1,702 1,602 4,838 4,622
Vending revenue 148 160 426 445
—- —- —- —-
TOTAL SALES 84,129 83,399 242,868 235,209
COSTS AND EXPENSES:
Cost of food 21,379 22,011 62,642 64,270
Payroll and related costs 25,708 26,259 76,195 76,493
Other operating expenses 17,412 17,219 51,073 52,256
Opening costs 33 34 110 178
Cost of culinary contract
services 3,979 3,316 12,222 9,180
Depreciation and amortization 4,322 3,875 12,568 12,022
General and administrative
expenses 7,195 6,981 20,742 19,985
Provision for asset impairments,
net - - 175 84
Net loss on disposition of
property and equipment 124 28 205 -
—- —- —- —-
Total costs and expenses 80,152 79,723 235,932 234,468
——— ———
INCOME FROM OPERATIONS 3,977 3,676 6,936 741
Interest income 3 - 6 4
Interest expense (201) (579) (694) (1,751)
Other income, net 265 356 672 870
—- —- —- —-
Income (loss) before income
taxes and discontinued
operations 4,044 3,453 6,920 (136)
Provision for income taxes 1,535 1,393 2,464 177
——- ——- ——- —-
Income (loss) from continuing
operations 2,509 2,060 4,456 (313)
Income (loss) from discontinued
operations, net of income taxes (86) (369) (742) 432
—- —— —— —-
NET INCOME $2,423 $1,691 $3,714 $119
====== ====== ====== ====
Income (loss) per share from continuing operations:
Basic $0.09 $0.07 $0.16 $(0.01)
Assuming dilution 0.09 0.07 0.16 (0.01)
==== ==== ==== =====
Income (loss) per share from discontinued operations:
Basic $ - $(0.01) $(0.03) $0.01
Assuming dilution - (0.01) (0.03) 0.01
=== ===== ===== ====
Net income per share:
Basic $0.09 $0.06 $0.13 $ -
Assuming dilution 0.09 0.06 0.13 -
==== ==== ==== ===
Weighted average shares outstanding:
Basic 28,377 28,257 28,344 28,224
Assuming dilution 28,445 28,304 28,396 28,224
The accompanying notes are an integral part of these consolidated financial statements.
The following table contains information derived from the Company’s Consolidated Statements of Operations expressed as a percentage of sales. Percentages may not add due to rounding.
Quarter Ended Three Quarters Ended
——— ———
May 9, May 4, May 9, May 4,
2012 2011 2012 2011
—— —— —— ——
(12 weeks) (12 weeks) (36 weeks) (36 weeks)
Restaurant
sales 92.6% 93.6% 92..5% 93.6%
Culinary
contract
services 5.2% 4.3% 5..4% 4.3%
Franchise
revenue 2.0% 1.9% 2..0% 2.0%
Vending
revenue 0.2% 0.2% 0..2% 0.2%
—- —- —- —-
TOTAL
SALES 100.0% 100.0% 100..0% 100.0%
COSTS
AND
EXPENSES:
(As a
percentage
of
restaurant
sales)
Cost
of
food 27.4% 28.2% 27..9% 29.2%
Payroll
and
related
costs 33.0% 33.6% 33..9% 34.7%
Other
operating
expenses 22.3% 22.1% 22..7% 23.7%
—— —— —— ——
Store
level
profit 17.2% 16.1% 15..4% 12.3%
==== ==== ==== ====
(As a
percentage
of
total
sales)
General
and
administrative
expenses 8.6% 8.4% 8..5% 8.5%
INCOME
FROM
OPERATIONS 4.7% 4.4% 2..9% 0.3%
Luby’s, Inc.
Consolidated Balance Sheets
———
(In thousands, except share data)
May 9, August 31,
2012 2011
—— ——
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $1,308 $1,252
Trade accounts and other receivables, net 3,355 4,429
Food and supply inventories 5,047 4,191
Prepaid expenses 1,739 1,960
Assets related to discontinued operations 37 67
Deferred income taxes 2,875 2,865
——- ——-
Total current assets 14,361 14,764
Note receivable 187 -
Property held for sale 596 1,046
Assets related to discontinued operations 5,341 7,837
Property and equipment, net 171,211 166,963
Intangible assets, net 27,115 28,098
Goodwill 195 195
Deferred incomes taxes 6,066 7,680
Other assets 1,571 1,437
——- ——-
Total assets $226,643 $228,020
======== ========
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable $14,412 $14,226
Liabilities related to discontinued
operations 521 608
Accrued expenses and other liabilities 18,490 18,588
——— ———
Total current liabilities 33,423 33,422
Credit facility debt 14,500 21,500
Liabilities related to discontinued
operations 1,287 1,220
Other liabilities 8,073 6,841
——- ——-
Total liabilities 57,283 62,983
——— ———
Commitments and Contingencies
SHAREHOLDERS’ EQUITY
Common stock, $0.32 par value; 100,000,000
shares authorized; Shares issued were
28,685,610 and 28,651,277, respectively;
Shares outstanding were 28,185,610 and
28,151,277, respectively 9,179 9,168
Paid-in capital 24,370 23,772
Retained earnings 140,586 136,872
Less cost of treasury stock, 500,000 shares (4,775) (4,775)
——— ———
Total shareholders’ equity 169,360 165,037
Total liabilities and shareholders’ equity $226,643 $228,020
======== ========
The accompanying notes are an integral part of these consolidated financial statements.
Luby’s, Inc.
Consolidated Statements of Cash Flows (unaudited)
———
(In thousands)
Three Quarters ended
———
May 9, May 4,
2012 2011
—— ——
(36 weeks) (36 weeks)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $3,714 $119
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Provision for asset impairments,
net of gains and losses on
property sales 907 (1,501)
Depreciation and amortization 12,570 12,072
Amortization of debt issuance
cost 77 619
Non-cash compensation expense 185 135
Share-based compensation expense 424 355
Reduction in tax benefit on
stock options - 61
Deferred tax expense (benefit) 1,604 (26)
——- —-
Cash provided by operating
activities before changes in
operating assets and
liabilities 19,481 11,834
Changes in operating assets and liabilities:
(Increase) decrease in trade
accounts and other receivables,
net 1,081 (1,521)
Increase in food and supply
inventories (856) (913)
(Increase) decrease in prepaid
expenses and other assets 49 (715)
Increase (decrease) in accounts
payable, accrued expenses and
other liabilities 959 (2,087)
—- ———
Net cash provided by operating
activities 20,714 6,598
——— ——-
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in note receivable (187) -
Proceeds from disposal of assets
and property held for sale 2,586 8,494
Acquisition of Fuddruckers
assets - (265)
Purchases of property and
equipment (16,056) (5,140)
———
Net cash (used in) provided by
investing activities (13,657) 3,089
——-
CASH FLOWS FROM FINANCING ACTIVITIES:
Credit facility borrowings 31,400 95,750
Credit facility repayments (38,400) (106,250)
Debt issuance costs (1) (221)
Tax benefit on stock options - (61)
Proceeds received on the
exercise of stock options - 27
—- —-
Net cash used in financing
activities (7,001) (10,755)
———
Net increase (decrease) in cash
and cash equivalents 56 (1,068)
Cash and cash equivalents at
beginning of period 1,252 2,300
——- ——-
Cash and cash equivalents at end
of period $1,308 $1,232
====== ======
Cash paid for:
Income taxes $ - $ -
Interest 600 1,185
The accompanying notes are an integral part of these consolidated financial statements.
For additional information contact:
DRG&L / 713-529-6600
Ken Dennard / Sheila Stuewe
Investor Relations
SOURCE Luby’s, Inc.
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Luby’s, Inc.
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