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6.9% Same-Store Sales Growth;
Total Debt Reduced to $10 Million
HOUSTON, Dec. 29 /PRNewswire-FirstCall/ -- Lubys, Inc. (NYSE: LUB) today
announced unaudited financial results for the first quarter fiscal 2006, which
ended on November 23, 2005. Same-store sales increased 6.9% over the first
quarter fiscal 2005 and the Company generated net income of $2.2 million and
reduced outstanding debt by $3.5 million in the first quarter to
$10.0 million.
Sales in the first quarter fiscal 2006 were $73.3 million, an increase of
6.9% compared to the first quarter fiscal 2005. All of the Companys sales
during the first quarter were characterized as same-store sales. Fiscal 2005
was a 53 week year for the Company which caused a calendar shift comparison
for fiscal year 2006. The first quarter fiscal 2006 ended on November 23,
2005, one week closer to Thanksgiving than the first quarter fiscal 2005 that
ended on November 17, 2004. Excluding this calendar shift, same-store sales
increased 5.5%. Thanksgiving Day fell in the second quarter of fiscal 2005 and
2006.
The Company reported net income of $2.2 million, or $0.08 per share fully
diluted, in the first quarter fiscal 2006 compared to a net loss of $1.0
million, or $0.05 per share fully diluted, in the first quarter fiscal 2005.
First quarter sales were adversely affected by Hurricane Rita which
resulted in a loss of approximately 236 store days of operations. After
Hurricane Rita passed through Southeast Texas, one unit in Port Arthur, TX
suffered permanent damage and remains closed while all other Lubys
restaurants impacted by the storm suffered minimal damage and were reopened.
The loss of revenue caused by Hurricane Rita was offset by increased traffic
at certain locations, and catering events related to the hurricane relief
effort.
"We are pleased with our teams solid performance in the first quarter
despite a challenging economic environment that included rising energy costs
and the impact of store closures due to Hurricane Rita," said Chris Pappas,
President and CEO. "The first quarter marked our eighth consecutive quarter of
same-store sales growth, much of which we credit to effective marketing and
operations initiatives, strong brand loyalty and the competitive value
proposition of our offerings."
Income from operations in the first quarter fiscal 2006 was $3.4 million
compared to $0.3 million for the first quarter fiscal 2005. EBITDA in the
first quarter fiscal 2006 was $6.6 million, an increase of 60.4% compared to
EBITDA of $4.1 million in the first quarter of fiscal 2005. Included in the
financial tables of this press release is a reconciliation of EBITDA, which is
a Non-GAAP financial measure, to income from operations.
Total prime costs of food and payroll in the first quarter fiscal 2006
were 62.9% of sales, an improvement compared to 65.3% in the first quarter
fiscal 2005. The improvement in food costs came from lower commodity costs for
poultry, fresh produce, beef and dairy products, which were partially offset
by higher seafood, shortening and oil commodity prices. The improvement in
payroll costs was primarily the result of increased sales, a reduction in
worker compensation expense and enhanced productivity and effective labor
deployment. Other operating expenses were 21.6% of sales in the first quarter
fiscal 2006, an improvement compared to 22.8% of sales in the same quarter of
fiscal 2005. General and Administrative costs were 6.6% of sales in the first
quarter fiscal 2006 compared to 6.0% of sales in the first quarter fiscal
2005. This increase was due primarily to staffing increases and consulting
fees associated with the implementation of new business systems.
Conference Call
The company will host a conference call at 10:00 a.m. Central time on
December 29, 2005 to discuss financial results for the quarter. Those
interested in participating may call (800) 561-2718 and use the pin code
69784825. A replay of the call will be available approximately two hours after
the call ends through January 5, 2006. The replay number is (888) 286-8010 and
the pin code is 34729949. A live audio webcast of the conference call will
also be available via the Companys website at http://www.lubys.com/aboutusEvents.asp
to listen online. A replay of the webcast will be available on the Companys
website soon after the call is concluded. This press release will also be
available on the Companys website, http://www.lubys.com .
About Lubys
Lubys provides its customers with delicious, home-style food, value
pricing, and outstanding customer service at its 131 restaurants in Dallas,
Houston, San Antonio, the Rio Grande Valley, and other locations throughout
Texas and other states. For more information about Lubys, visit the Companys
website at http://www.lubys.com .
Prior period results have been reclassified to show the retroactive effect
of discontinued operations per the new business plan. Reclassification
facilitates more meaningful comparability to the Companys current
information. As stores are closed in the future and presented in discontinued
operations, quarterly and annual financial statements, where applicable, will
be reclassified for further comparability.
Certain reclassifications of prior period results have been made to
conform to current year presentation. In this regard, store management
compensation has been reclassified from "Other Operating Expenses" to "Payroll
and Related Costs" to provide comparability to financial results reported by
our peers in the industry. These amounts were $7.5 million and $7.2 million
for the quarters ended November 23, 2005 and November 17, 2004 respectively.
A quarterly historical reclassification of these costs in fiscal 2005 are
included in the table on page 5.
Consolidated Statements of Operations (unaudited)
(In thousands except per share data)
Quarter Ended
November 23, November 17,
2005 2004
(84 days) (84 days)
SALES $73,291 $68,584
COSTS AND EXPENSES:
Cost of food 19,912 19,187
Payroll and related costs 26,190 25,581
Other operating expenses 15,866 15,621
Depreciation and amortization 3,553 3,537
Relocation and voluntary severance costs --- 272
General and administrative expenses 4,836 4,082
Reversal of asset impairments and
restaurant closings (433) ---
69,924 68,280
INCOME FROM OPERATIONS 3,367 304
Interest expense, net (249) (671)
Other income (loss), net 145 (69)
Income (loss) from continuing operations
before income taxes 3,263 (436)
Provision (benefit) for income taxes 18 ---
Income (loss) from continuing operations 3,245 (436)
Discontinued operations (1,022) (587)
NET INCOME (LOSS) $2,223 $(1,023)
Income (loss) per share -- before
discontinued operations
- basic $0.13 $(0.02)
- assuming dilution (A) $0.12 $(0.02)
Loss per share - from discontinued operations
- basic $(0.04) $(0.03)
- assuming dilution (A) $(0.04) $(0.03)
Net income (loss) per share
- basic $0.09 $(0.05)
- assuming dilution (A) $0.08 $(0.05)
Weighted average shares outstanding:
- basic 25,955 22,494
- assuming dilution (A) 27,325 22,494
(A) In loss periods, earnings per share assuming dilution equals basic
earnings per share since potentially dilutive securities are
antidilutive.
Consolidated Balance Sheets
(In thousands except per share data)
November 23, August 31,
2005 2005
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $3,196 $2,789
Short-term investments 1,659 1,667
Trade accounts and other receivables, net 460 151
Food and supply inventories 3,638 2,215
Prepaid expenses 2,282 1,639
Deferred income taxes 577 865
Total current assets 11,812 9,326
Property, plant, and equipment, net 186,104 186,009
Property held for sale 5,969 9,346
Other assets 1,423 1,533
Total assets $205,308 $206,214
LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities:
Accounts payable $17,142 $17,759
Accrued expenses and other liabilities 18,013 17,720
Total current liabilities 35,155 35,479
Credit facility debt 10,000 13,500
Other liabilities 7,967 7,910
Deferred income taxes 4,797 5,039
Total liabilities $57,919 $61,928
SHAREHOLDERS EQUITY
Common stock, $.32 par value; authorized
100,000,000 shares, issued 27,684,728
shares and 27,610,708 shares as of
November 23, 2005, and August 31, 2005,
respectively $8,859 $8,835
Paid-in capital 40,888 40,032
Retained earnings 133,246 131,023
Less cost of treasury stock,
1,676,403 shares (35,604) (35,604)
Total shareholders equity 147,389 144,286
Total liabilities and shareholders equity $205,308 $206,214
The Companys operating performance is evaluated using several measures.
One of those measures, EBITDA, is a financial measure, not in conformity with
Generally Accepted Accounting Principles in the United States ("GAAP"), that
is derived from the Companys Income (Loss) From Operations, which is a GAAP
measurement. EBITDA has historically been used by the Companys lenders to
measure compliance with certain financial debt covenants and the Company
believes that EBITDA provides a meaningful measure of liquidity, providing
additional information regarding the Companys cash earnings from ongoing
operations and the Companys ability to service its long-term debt and other
fixed obligations. The Companys revolving credit facility defines EBITDA as
the consolidated income (loss) from operations set forth in the Companys
consolidated statements of operations before depreciation, amortization, other
noncash expenses, interest expense, taxes, noncash income and extraordinary
gains or losses, and other nonrecurring items of income or expense as approved
by the required lenders.
The following table reconciles the Companys non-GAAP financial measure,
EBITDA, with Income from Operations, prepared in accordance with GAAP.
Quarter Ended
November 23, November 17,
2005 2004
(In thousands)
Income from operations $3,367 $304
Plus (less) excluded items:
Reversal of asset impairments and restaurant
closings, net of gains on property sales (433) ---
Relocation and voluntary severance costs --- 272
Depreciation and amortization 3,553 3,537
Noncash compensation expense 112 ---
EBITDA $6,599 $4,113
While the Company and many in the financial community consider EBITDA to
be an important measure of operating performance, it should be considered in
addition to, but not as a substitute for or superior to, other measures of
financial performance prepared in accordance with U.S. generally accepted
accounting principles, such as operating income, net income and cash flow from
operating activities. In addition, the Companys definition of EBITDA is not
necessarily comparable to similarly titled measures reported by other
companies.
The following table contains the reclassification of store management
compensation from "Other Operating Expenses" to "Payroll and Related Costs" to
provide comparability to financial results reported by our peers in the
industry.
Quarter 1 Quarter 2 Quarter 3 Quarter 4
2005 2005 2005 2005
(In thousands)
Payroll and related costs:
Payroll and related costs
(previous classification) $18,404 $18,391 $19,016 $25,948
Manager compensation 7,177 7,610 7,856 11,080
Payroll and related costs
(as reported) $25,581 26,001 26,872 37,028
Other operating expenses:
Other operating expenses
(previous classification) 22,798 22,245 22,905 30,702
Manager compensation
reclassification (7,177) (7,610) (7,856) (11,080)
Other operating expenses
(as reported) $15,621 $14,635 $15,049 $19,622
The company wishes to caution 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. Except for historical information, matters
discussed in such oral and written communications are forward-looking
statements that involve risks and uncertainties, including but not limited to
general business conditions, the impact of competition, the success of
operating initiatives, changes in the cost and supply of food and labor, the
seasonality of the companys business, taxes, inflation, governmental
regulations, and the availability of credit, as well as other risks and
uncertainties disclosed in periodic reports on Form 10-K and Form 10-Q.
For additional information contact: Rick Black, 713-329-6808
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