New Replacement Restaurant Expected to Open in Houston in July 2008
New Restaurant in North Houston Expected to Open in July 2008
Same-Store Sales Declined 3.3%
HOUSTON, June 10 /PRNewswire-FirstCall/ -- Luby's, Inc. (NYSE: LUB) todayannounced unaudited financial results for the third quarter of fiscal 2008,which ended on May 7, 2008.
Third Quarter Fiscal 2008 Highlights:
-- Culinary contract services sales increased to $1.8 million compared to $0.4 million in the same quarter last year -- Restaurant sales were $72.8 million, a decrease of 4.1% compared to last year, approximately 0.8% of the decline relates to the net effect of sales from closed stores in the prior year partially offset by new store sales in the current year -- Store level profit, which the Company defines as restaurant sales minus costs of food, payroll and related costs and other operating expenses, were $10.3 million, or 14.3% compared to $14.3 million, or 18.9% last year -- Same-store sales, which includes 121 units, declined 3.3% in the third quarter compared to the same quarter last year
Total sales decreased $1.6 million, or 2.1% in the third quarter fiscal2008 to $74.6 million, compared to $76.2 million in the same quarter lastyear. Income from continuing operations in the third quarter was $1.0 million,or $0.03 per diluted share, compared to $3.9 million, or $0.14 per dilutedshare in the same quarter last year.
'Despite an extremely challenging consumer environment, our team continuedto operate well in the field,' said Chris Pappas, president and CEO. 'Therestaurant industry remains under pressure from a number of economic factorswhich include higher gasoline prices, rising commodity costs and in general,negative economic news. The continued rise in gasoline prices is having animpact on how consumers eat out and at what frequency, as evidenced by thedecline in the consumer confidence index. While our restaurant sales declinedduring the third quarter, our team managed food and labor costs well in adifficult environment. We remain confident that our long-term strategic planto enhance and grow the Luby's brand will optimize our competitive valueproposition to the market and enhance shareholder value.'
Food costs decreased approximately $0.2 million, or 1.2%, in the thirdquarter fiscal 2008 compared to the same quarter last year. Food costs as apercentage of restaurant sales increased to 27.4% in the third quarter fiscal2008 from 26.6% in the third quarter last year. Food commodity costs increasedin most categories with oils and cheese having the greatest impact on foodcosts, partially offset by lower produce prices.
Payroll and related costs decreased $0.1 million in the third quarterfiscal 2008 compared to the same quarter last year. Payroll and related costsas a percentage of restaurant sales increased to 34.8% in the third quarterfiscal 2008 from 33.5% in the third last year, primarily due to the lowersales level.
Other operating expenses primarily include restaurant related expenses forutilities, repairs and maintenance, advertising, insurance, supplies, servicesand occupancy costs. Other operating expenses increased by approximately $1.2million, or 7.6%, in the third quarter fiscal 2008 compared to the samequarter last year. As a percentage of restaurant sales, other operatingexpenses increased to 23.5% in the third quarter fiscal 2008 from 21.0% lastyear. Other operating expenses increased primarily due to 1) an approximate$0.4 million increase in repairs and maintenance expenses focused on improvingthe appearance and functionality of the cafeterias for the guests andemployees; and 2) an approximate $0.8 million increase in utility expenseresulting from higher utility rates.
Opening costs were approximately $0.2 million in the third quarter fiscal2008 and reflects the labor, supplies, occupancy, and other costs necessary tosupport the unit through its opening period.
Cost of culinary contract services increased by approximately $1.2 millionin the third quarter fiscal 2008 compared to the same quarter last year. Thisincrease was related to the food, labor and other operating expensesassociated with the increase in revenue for this line of business.
Depreciation and amortization expense increased approximately $0.4million, or 10.6%, in third quarter fiscal 2008 compared with the same quarterlast year due to higher depreciation resulting from new restaurant openingsand existing restaurant upgrades and remodels.
General and administrative expenses include corporate salaries andbenefits related costs, including restaurant area leaders, share-basedcompensation, professional fees, travel and recruiting expenses and otheroffice expenses. General and administrative expenses increased byapproximately $0.4 million, or 7.3% in the third quarter fiscal 2008 comparedto the same quarter last year. As a percentage of total sales, general andadministrative expenses increased to 7.7% in the third quarter fiscal 2008,from 7.0% last year. The increase was primarily due to an approximate $0.4million increase in corporate salary expense related to staffing costs tosupport the culinary contract services business and other departments tosupport the Company's strategic growth plan.
Company Outlook
The Company expects to open one replacement restaurant and one newrestaurant in the Houston area in July 2008. Additionally, the Company hasplans to open two to three new restaurants in calendar year 2008 and initiatenew culinary contract services operations in two to three new healthcarefacilities.
Conference Call
The company will host a conference call today at 4:00 p.m. Central Time,June 10, 2008, to discuss third quarter fiscal 2008 results. To access thecall live, dial 888-755-9496 and use the participant pin code, Lubys (58297),at least 10 minutes prior to the start time, or listen live over the Internetby logging on to http://www.lubys.com.
About Luby's
Luby's operates 123 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, andoutstanding customer service.
Consolidated Statements of Operations (unaudited) (In thousands except per share data)
Quarter Ended Three Quarters Ended May 7, May 9, May 7, May 9, 2008 2007 2008 2007 (84 days) (84 days) (252 days) (252 days) SALES Restaurant sales $72,753 $75,836 $215,360 $221,596 Culinary contract services 1,843 363 5,239 489 TOTAL SALES 74,596 76,199 220,599 222,085 COSTS AND EXPENSES: Cost of food 19,965 20,208 59,560 59,547 Payroll and related costs 25,322 25,396 74,256 74,999 Other operating expenses 17,125 15,921 48,458 49,071 Opening costs 190 - 212 - Cost of culinary contract services 1,582 395 4,660 561 Depreciation and amortization 4,088 3,698 12,058 10,853 General and administrative expenses 5,711 5,320 18,568 15,344 Provision for (reversal of) asset impairments - 15 717 205 Net loss on disposition of property and equipment 114 57 209 551 Total costs and expenses 74,097 71,010 218,698 211,131 INCOME FROM OPERATIONS 499 5,189 1,901 10,954 Interest income 231 281 904 693 Interest expense (58) (191) (158) (582) Interest related to income taxes - - 1,319 - Other income, net 308 198 720 607 Income before income taxes and discontinued operations 980 5,477 4,686 11,672 Provision (benefit) for income taxes (27) 1,579 (1,435) 3,789 Income from continuing operations 1,007 3,898 6,121 7,883 Discontinued operations, net of income taxes (58) 21 (116) (168) NET INCOME $949 $3,919 $6,005 $7,715 Income per share from continuing operations basic $0.03 $0.15 $0.22 $0.31 assuming dilution 0.03 0.14 0.21 0.29 Loss per share from discontinued operations basic $- $- $- $(0.01) assuming dilution - - - (0.01) Net income per share basic $0.03 $0.15 $0.22 $0.30 assuming dilution 0.03 0.14 0.21 0.28 Weighted average shares outstanding: basic 27,925 26,132 27,739 26,104 assuming dilution 28,042 27,173 28,052 27,171
The following table contains information derived from the Company'sConsolidated Statements of Operations expressed as a percentage of sales.Percentages may not add due to rounding.
Quarter Ended Three Quarters Ended May 7, May 9, May 7, May 9, 2008 2007 2008 2007 (84 days) (84 days) (252 days) (252 days)
Restaurant sales 97.5% 99.5% 97.6% 99.8% Culinary contract services 2.5% 0.5% 2.4% 0.2% TOTAL SALES 100% 100% 100% 100%
COSTS AND EXPENSES: (As a percentage of restaurant sales) Cost of food 27.4% 26.6% 27.7% 26.9% Payroll and related costs 34.8% 33.5% 34.5% 33.8% Other operating expenses 23.5% 21.0% 22.5% 22.1% Store level profit 14.3% 18.9% 15.3% 17.2%
(As a percentage of total sales) General and administrative expenses 7.7% 7.0% 8.4% 6.9% INCOME FROM OPERATIONS 0.7% 6.8% 0.9% 4.9%
Consolidated Balance Sheets (In thousands except share data)
May 7, August 29, 2008 2007 (Unaudited) ASSETS Current Assets: Cash and cash equivalents $11,728 $17,514 Short-term investments 5,150 8,600 Trade accounts and other receivables, net 1,687 1,657 Food and supply inventories 2,887 2,574 Prepaid expenses 834 1,398 Deferred income taxes 712 624 Total current assets 22,998 32,367 Property and equipment, net 191,377 185,983 Property held for sale 5,411 736 Long-term investments 9,099 - Other assets 438 548 Total assets $229,323 $219,634
LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $14,926 $12,882 Accrued expenses and other liabilities 17,018 21,400 Total current liabilities 31,944 34,282 Other liabilities 6,504 7,088 Total liabilities 38,448 41,370 Commitments and Contingencies SHAREHOLDERS' EQUITY Common stock, $0.32 par value; 100,000,000 shares authorized; Shares issued were 28,429,854 and 27,835,901, respectively; Shares outstanding were 27,929,854 and 26,159,498, respectively 9,098 8,907 Paid-in capital 19,995 43,514 Retained earnings 166,958 161,447 Accumulated other comprehensive loss (401) - Less cost of treasury stock, 500,000 and 1,676,403 shares, respectively (4,775) (35,604) Total shareholders' equity 190,875 178,264 Total liabilities and shareholders' equity $229,323 $219,634
Consolidated Statements of Cash Flows (unaudited) (In thousands)
Three Quarters Ended May 7, May 9, 2008 2007 (252 days) (252 days)
CASH FLOWS FROM OPERATING ACTIVITIES: Net income $6,005 $7,715 Adjustments to reconcile net income to net cash provided by operating activities: Provision for asset impairments, net of gains and losses on property sales 926 648 Depreciation and amortization 12,058 10,853 Amortization of debt issuance cost 61 322 Non-cash compensation expense 169 165 Share-based compensation expense 865 664 Interest related to income taxes (1,319) - Deferred tax provision 1,400 3,240 Cash provided by operating activities before changes in operating assets and liabilities 20,165 23,607 Changes in operating assets and liabilities: Decrease in trade accounts and other receivables 162 1,101 Increase in food and supply inventories (313) (100) (Increase) decrease in prepaid expenses and other assets 613 (351) Increase (decrease) in accounts payable, accrued expenses and other liabilities (3,834) 687 Net cash provided by operating activities 16,793 24,944 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from redemption or maturity of short-term investments 19,600 9,500 Purchases of short-term investments (25,650) (31,877) Proceeds from disposal of assets 2,353 1,743 Purchases of property and equipment (25,350) (11,388) Net cash used in investing activities (29,047) (32,022) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds received on exercise of stock options 11,243 530 Purchase of treasury stock (4,775) - Net cash provided by financing activities 6,468 530 Net decrease in cash and cash equivalents (5,786) (6,548) Cash and cash equivalents at beginning of period 17,514 9,715 Cash and cash equivalents at end of period $11,728 $3,167 Cash paid for: Income taxes $1,602 $229 Interest 87 113
The Company wishes to caution readers that various factors could cause itsactual financial and operational results to differ materially from thoseindicated by forward-looking statements made from time to time in newsreleases, reports, proxy statements, registration statements, and otherwritten communications, as well as oral statements made from time to time byrepresentatives of the Company. Any statements made in this news release andin such oral and written communications other than historical statements,including statements regarding the expected financial performance of theCompany's prototype restaurant, the execution of the Company's strategic plan,and future openings of new or replacement restaurants are forward-lookingstatements. Forward-looking statements involve risks and uncertainties,including but not limited to general business conditions, the impact ofcompetition, the success of operating initiatives, changes in the cost andsupply of food and labor, the seasonality of the Company's business, taxes,inflation, governmental regulations, and the availability of credit, as wellas other risks and uncertainties disclosed in the Company's periodic reportson Form 10-K and Form 10-Q.
For additional information contact:
Rick Black, 713-329-6808
SOURCE Luby's, Inc.
