For additional information contact: Rick Black, 713-329-6808
For Immediate Release:
Luby’s Announces Second Quarter Fiscal 2007 Results
HOUSTON, TX - March 20, 2007 - Luby's, Inc. (NYSE: LUB) today announced unaudited financial results for the second quarter fiscal 2007, which ended on February 14, 2007. Sales in the second quarter fiscal 2007 were $72.1 million compared to $75.0 million in the second quarter fiscal 2006, which ended on February 15, 2006.
As the Company reported on March 1, 2007, sales were adversely affected in the second quarter primarily due to severe winter weather throughout Texas. Many of the Company’s Texas markets experienced harsh winter conditions during January for over one week, including snow and ice storms. Same-store sales declined 3.6 percent during the second quarter compared to the same quarter last year. The Company estimated that approximately half of the decline in same-store sales, or 1.5 to 2.0 percent, was related to severe weather.
Net income in the second quarter was $1.9 million, or $0.07 per share diluted, compared to net income of $3.3 million, or $0.12 per share diluted, in the second quarter 2006. Second quarter fiscal 2007 earnings were reduced by approximately $0.02 per share diluted after taxes by the impact of asset impairments and restaurant closings, the net loss on disposition of property and equipment, and discontinued operations.
Net income in the second quarter fiscal 2007 included income tax expense of $1.1 million primarily consisting of a regular federal income tax provision at an effective rate of approximately 35 percent. Second quarter 2006 tax expense did not reflect a provision for regular income tax, as it was fully offset by the release of previously deferred tax benefits.
“Second quarter sales were negatively impacted by severe winter weather in Texas. In comparison, weather in the prior year was very good and contributed to that quarter’s strong same-store sales growth of 6.7 percent. While bad weather and a difficult prior year comparison pressured our sales results, we managed expenses well and improved our prime cost as a percentage of sales in the second quarter,” said Chris Pappas, President and CEO. “The macroeconomic environment for our industry has tightened over the past six months; however, we believe that our team is executing well in the field. Our game plan to focus on preparing quality foods and providing excellent service will drive sales and profitability. We also plan to grow our organization by opening two new restaurants this year.”
Total prime costs of food and payroll in the second quarter were 60.8 percent of sales, an improvement compared to 61.7 percent last year. As a percentage of sales, food costs in the second quarter increased 0.1 percent compared to last year. Payroll costs as a percentage of sales in the second quarter decreased by 1.0 percent compared to last year. The decrease was primarily due to the continued focus on labor productivity, and there was also a benefit related to the reduction in workers compensation and employee injury costs. Other operating costs increased as a percentage of sales in the second quarter by 0.5 percent compared to last year primarily due to higher marketing and advertising expense related to promotions, offset by lower repairs and maintenance expense and lower utility costs. General and administrative costs remained the same at 6.9 percent compared to last year.
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Conference Call
The company will host a conference call today at 10:00 a.m. Central Time, March 20, 2007, to discuss second quarter fiscal 2007 results. The second quarter conference call can be accessed live telephonically at (866) 711-8198, pin code Lubys (58297). A replay of the call will be available approximately two hours after the call ends through March 27, 2007. The replay number is (888) 286-8010 and the pin code is 78712033. A live audio webcast of the conference call will also be available via the Company’s website at http://www.lubys.com.
About Luby’s
Luby’s operates 127 restaurants in Austin, Dallas, Houston, San Antonio, the Rio Grande Valley and other locations throughout Texas and other states. Luby’s provides its customers with quality home-style food, value pricing, and outstanding customer service. For more information about Luby’s, visit the Company’s website at www.lubys.com.
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Consolidated Statements of Operations (unaudited)
(In thousands except per share data)
Quarter Ended | Two Quarters Ended | ||||||||||||
February 14, | February 15, | February 14, | February 15, | ||||||||||
2007 | 2006 | 2007 | 2006 | ||||||||||
(84 days) | (84 days) | (168 days) | (168 days) | ||||||||||
SALES | $ | 72,129 | $ | 75,034 | $ | 145,815 | $ | 147,615 | |||||
COSTS AND EXPENSES: | |||||||||||||
Cost of food | 19,557 | 20,224 | 39,372 | 39,931 | |||||||||
Payroll and related costs | 24,337 | 26,055 | 49,640 | 51,823 | |||||||||
Other operating expenses | 16,256 | 16,482 | 33,103 | 32,418 | |||||||||
Depreciation and amortization | 3,570 | 3,567 | 7,155 | 7,115 | |||||||||
General and administrative expenses | 4,981 | 5,151 | 10,023 | 9,771 | |||||||||
Asset impairments and restaurant closings | 190 | — | 190 | (167 | ) | ||||||||
Net loss/(gain) on disposition of property and equipment | 312 | 259 | 494 | (7 | ) | ||||||||
Total costs and expenses | 69,203 | 71,738 | 139,977 | 140,884 | |||||||||
INCOME FROM OPERATIONS | 2,926 | 3,296 | 5,838 | 6,731 | |||||||||
Interest income | 242 | 68 | 412 | 93 | |||||||||
Interest expense | (199 | ) | (247 | ) | (391 | ) | (520 | ) | |||||
Other income, net | 198 | 270 | 409 | 415 | |||||||||
Income before income taxes and discontinued operations | 3,167 | 3,387 | 6,268 | 6,719 | |||||||||
Provision for income taxes | 1,114 | 45 | 2,209 | 64 | |||||||||
Income from continuing operations | 2,053 | 3,342 | 4,059 | 6,655 | |||||||||
Discontinued operations, net of income taxes | (171 | ) | (45 | ) | (262 | ) | (1,135 | ) | |||||
NET INCOME | $ | 1,882 | $ | 3,297 | $ | 3,797 | $ | 5,520 | |||||
Income per share - from continuing operations | |||||||||||||
- basic | $ | 0.08 | $ | 0.13 | $ | 0.16 | $ | 0.26 | |||||
- assuming dilution | 0.08 | 0.12 | 0.15 | 0.24 | |||||||||
Loss per share - from discontinued operations | |||||||||||||
- basic | $ | (0.01 | ) | $ | — | $ | (0.01 | ) | $ | (0.05 | ) | ||
- assuming dilution | (0.01 | ) | — | (0.01 | ) | (0.04 | ) | ||||||
Net income per share | |||||||||||||
- basic | $ | 0.07 | $ | 0.13 | $ | 0.15 | $ | 0.21 | |||||
- assuming dilution | 0.07 | 0.12 | 0.14 | 0.20 | |||||||||
Weighted average shares outstanding: | |||||||||||||
- basic | 26,101 | 26,020 | 26,090 | 25,988 | |||||||||
- assuming dilution | 27,238 | 27,536 | 27,170 | 27,481 |
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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 | Two Quarters Ended | ||||||||||||
February 14, | February 15, | February 14, | February 15, | ||||||||||
2007 | 2006 | 2007 | 2006 | ||||||||||
(84 days) | (84 days) | (168 days) | (168 days) | ||||||||||
SALES | 100 | % | 100 | % | 100 | % | 100 | % | |||||
COSTS AND EXPENSES: | |||||||||||||
Cost of food | 27.1 | % | 27.0 | % | 27.0 | % | 27.1 | % | |||||
Payroll and related costs | 33.7 | % | 34.7 | % | 34.0 | % | 35.1 | % | |||||
Total prime costs | 60.8 | % | 61.7 | % | 61.0 | % | 62.2 | % | |||||
Other operating expenses | 22.5 | % | 22.0 | % | 22.7 | % | 22.0 | % | |||||
Depreciation and amortization | 5.0 | % | 4.8 | % | 4.9 | % | 4.8 | % | |||||
General and administrative expenses | 6.9 | % | 6.9 | % | 6.9 | % | 6.6 | % | |||||
Asset impairments and restaurant closings | 0.3 | % | — | % | 0.1 | % | (0.1 | %) | |||||
Net loss/(gain) on disposition of property and equipment | 0.4 | % | 0.3 | % | 0.4 | % | — | % | |||||
Total costs and expenses | 95.9 | % | 95.7 | % | 96.0 | % | 95.7 | % | |||||
INCOME FROM OPERATIONS | 4.1 | % | 4.3 | % | 4.0 | % | 4.3 | % |
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Consolidated Balance Sheets
(In thousands except share data)
February 14, | August 30, | ||||||
2007 | 2006 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 4,270 | $ | 9,715 | |||
Short-term investments | 13,996 | — | |||||
Trade accounts and other receivables, net | 416 | 1,461 | |||||
Food and supply inventories | 2,445 | 2,392 | |||||
Prepaid expenses | 1,690 | 1,609 | |||||
Deferred income taxes | 828 | 1,160 | |||||
Total current assets | 23,645 | 16,337 | |||||
Property and equipment, net | 182,840 | 183,990 | |||||
Property held for sale | 1,446 | 1,661 | |||||
Deferred income taxes | 1,968 | 3,600 | |||||
Other assets | 920 | 1,111 | |||||
Total assets | $ | 210,819 | $ | 206,699 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current Liabilities: | |||||||
Accounts payable | $ | 11,833 | $ | 10,932 | |||
Accrued expenses and other liabilities | 22,163 | 23,119 | |||||
Total current liabilities | 33,996 | 34,051 | |||||
Other liabilities | 6,616 | 7,089 | |||||
Total liabilities | 40,612 | 41,140 | |||||
Commitments and Contingencies | |||||||
SHAREHOLDERS' EQUITY | |||||||
Common stock, $0.32 par value; 100,000,000 shares authorized; 27,799,027 shares and 27,748,983 shares issued and outstanding as of February 14, 2007 and August 30, 2006, respectively | 8,896 | 8,880 | |||||
Paid-in capital | 42,534 | 41,699 | |||||
Retained earnings | 154,381 | 150,584 | |||||
Less cost of treasury stock, 1,676,403 shares | (35,604 | ) | (35,604 | ) | |||
Total shareholders' equity | 170,207 | 165,559 | |||||
Total liabilities and shareholders' equity | $ | 210,819 | $ | 206,699 |
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Consolidated Statements of Cash Flows (unaudited)
(In thousands)
Two Quarters Ended | |||||||
February 14, | February 15, | ||||||
2007 | 2006 | ||||||
(84 days) | (84 days) | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 3,797 | $ | 5,520 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Provision for asset impairments, net of gains/losses on property sales | 908 | 436 | |||||
Depreciation and amortization | 7,155 | 7,122 | |||||
Amortization of debt issuance cost | 215 | 216 | |||||
Non-cash compensation expense | 109 | 86 | |||||
Share-based compensation expense | 429 | 195 | |||||
Deferred income tax expense | 1,964 | 93 | |||||
Cash provided by operating activities before changes in operating assets and liabilities | 14,577 | 13,668 | |||||
Changes in operating assets and liabilities: | |||||||
(Increase) decrease in trade accounts and other receivables, net | 1,045 | (283 | ) | ||||
Increase in food and supply inventories | (53 | ) | (324 | ) | |||
Increase in prepaid expenses and other assets | (105 | ) | (1,343 | ) | |||
Decrease in accounts payable, accrued expenses and other liabilities | (653 | ) | (2,749 | ) | |||
Net cash provided by operating activities | 14,811 | 8,969 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Proceeds from redemption/maturity of short-term investments | 10,926 | 1,667 | |||||
Purchases of short-term investments | (24,922 | ) | — | ||||
Proceeds from disposal of assets and property held for sale | 70 | 3,697 | |||||
Purchases of property and equipment | (6,643 | ) | (6,131 | ) | |||
Net cash used in investing activities | (20,569 | ) | (767 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Proceeds from issuance of debt | — | 2,000 | |||||
Repayment of debt | — | (8,300 | ) | ||||
Proceeds received on exercise of stock options | 313 | 937 | |||||
Net cash provided by (used in) financing activities | 313 | (5,363 | ) | ||||
Net increase (decrease) in cash and cash equivalents | (5,445 | ) | 2,839 | ||||
Cash and cash equivalents at beginning of period | 9,715 | 2,789 | |||||
Cash and cash equivalents at end of period | $ | 4,270 | $ | 5,628 | |||
Cash paid for: | |||||||
Income taxes | $ | 167 | $ | 181 | |||
Interest | 76 | 416 |
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 company’s 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.
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