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.

For additional information contact:

Dennard-Lascar Investor Relations
Rick Black / Ken Dennard
Investor Relations
713-529-6600

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


 

Cision View original content:http://www.prnewswire.com/news-releases/lubys-reports-second-quarter-fiscal-2020-results-301070364.html

SOURCE Luby's, Inc.

Copyright 2020 PR Newswire

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