Form 8-K Ignite Restaurant Group, For: Mar 12

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 ______________

 

FORM 8-K

 ______________

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): March 12, 2015

 ______________

 

IGNITE RESTAURANT GROUP, INC.

(Exact name of registrant as specified in its charter)

 

______________

 

Delaware		001-35549		94-3421359
(State or other jurisdiction of Company or organization)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

9900 Westpark Drive, Suite 300, Houston, Texas		77063
(Address of principal executive offices)		(Zip Code)

 

Registrant’s telephone number, including area code: (713) 366-7500

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

______________

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02.   Results of Operations and Financial Condition.

 

On March 12, 2015, Ignite Restaurant Group, Inc. (the “Company”) issued a press release reporting financial results for the quarter and fiscal year ended December 29, 2014. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein. In the press release, the Company used non-GAAP financial measures discussed in Appendix A hereto (incorporated herein by reference), which contains certain statements of the Company’s management regarding the use and purpose of the non-GAAP financial measures used therein.

 

The information contained in this Current Report on Form 8-K, including the Exhibit attached hereto, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. Furthermore, the information contained in this Current Report on Form 8-K shall not be deemed to be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

 

 

Item 9.01.   Financial Statements and Exhibits.

 

(d) Exhibits.

 

99.1	Press release dated March 12, 2015.

 

 

Signatures

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Date: March 12, 2015

 

IGNITE RESTAURANT GROUP, INC.
By:		/s/ Michael J. Dixon
		Michael J. Dixon
		President and Chief Financial Officer

 

 

APPENDIX A

 

Use of Non-GAAP Financial Measures

 

We occasionally utilize financial measures and terms not calculated in accordance with accounting principles generally accepted in the United States (“GAAP”) to evaluate our operating performance. These non-GAAP measures are provided to enhance the reader’s overall understanding of our current financial performance. These measurements are used by many investors as a supplemental measure to evaluate the overall operating performance of companies in our industry. Management believes that investors’ understanding of our performance is enhanced by including these non-GAAP financial measures as a reasonable basis for comparing our ongoing results of operations. Many investors are interested in understanding the performance of our business by comparing our results from ongoing operations from one period to the next and would ordinarily add back events that are not part of normal day-to-day operations of our business. Management and our principal stockholder also use such measures as measurements of operating performance, for planning purposes, and to evaluate the performance and effectiveness of our operational strategies.

 

These non-GAAP measures may not be comparable to similarly titled measures used by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. We have provided a definition below for these non-GAAP financial measures, together with an explanation of why management uses these measures and why management believes that these non-GAAP financial measures are useful to investors. In addition, we have provided a reconciliation of these non-GAAP financial measures utilized to its equivalent GAAP financial measure.

 

Adjusted net loss and adjusted net loss per share

 

We calculate adjusted net income (loss) by eliminating from net income (loss) the impact of items we do not consider indicative of our ongoing operations. Specifically, we believe that this non-GAAP measure provides greater comparability and enhanced visibility into our results of operations, excluding the impact of special charges and certain other expenses. Adjusted net income represents net income (loss) less items such as (a) transaction costs including those related to our acquisition of Romano’s Macaroni Grill, (b) costs related to the preparation and filing of a registration statement for a proposed secondary offering of our common stock, (c) costs related to conversions, remodels and closures, (d) write-off of debt issuance costs, (e) asset impairment, (f) non-recurring recruiting and training expenses related to increased restaurant-level staffing at our Macaroni Grill restaurants, (g) gain on insurance settlements, (h) the income tax effect of the above described adjustments, and (i) the valuation allowance. We believe this measure provides additional information to facilitate the comparison of our past and present financial results. We utilize results that both include and exclude the identified items in evaluating business performance. However, our inclusion of this adjusted measure should not be construed as an indication that our future results will be unaffected by unusual or infrequent items. In the future, we may incur expenses or generate income similar to these adjustments.

 

Exhibit 99.1

 

For Immediate Release

 

Ignite Restaurant Group Reports Fourth Quarter 2014 Financial Results

 

 

Houston, TX—(BUSINESS WIRE)—March 12, 2015 - Ignite Restaurant Group (NASDAQ: IRG) today reported financial results for the fourth quarter and fiscal year ended December 29, 2014.

 

Highlights for the fourth quarter of 2014 were as follows:

 

●

Total revenues were $177.3 million, compared to $186.9 million in the fourth quarter of 2013;

●

Comparable restaurant sales increased 5.7% at Brick House Tavern + Tap, decreased 4.5% at Joe’s Crab Shack and decreased 2.8% at Macaroni Grill;

●

Net loss, which includes a deferred tax asset valuation allowance of $36.0 million, was $48.5 million, or a loss of $1.89 per diluted share, compared to a net loss of $4.4 million, or a loss of $0.17 per diluted share in the fourth quarter of 2013; and

●

Adjusted net loss (a non-GAAP measure) was $6.4 million, or a loss of $0.25 per diluted share, compared to an adjusted net loss of $4.1 million, or a loss of $0.16 per diluted share in the fourth quarter of 2013.

 

 

Highlights for the fiscal year of 2014 were as follows:

 

●

Total revenues were $837.2 million, compared to $760.8 million in 2013;

●

Comparable restaurant sales increased 7.9% at Brick House Tavern + Tap, decreased 4.9% at Joe’s Crab Shack and decreased 4.5% at Macaroni Grill;

●

Net loss, which includes a deferred tax asset valuation allowance of $36.0 million, was $53.5 million, or a loss of $2.09 per diluted share, compared to a net loss of $6.6 million, or a loss of $0.26 per diluted share in 2013; and

●

Adjusted net loss (a non-GAAP measure) was $6.2 million, or a loss of $0.24 per diluted share, compared to an adjusted net loss of $1.3 million, or a loss of $0.05 per diluted share in 2013.

 

 

Ray Blanchette, Chief Executive Officer of Ignite Restaurant Group, stated, “While pleased with the twelve consecutive quarters of same store sales growth at Brick House Tavern + Tap, I’m disappointed by the continuing sales pressure in Joe’s Crab Shack. With the divestiture of Romano’s Macaroni Grill announced earlier this week, we will sharpen our focus on driving same store sales growth at Joe’s and growing the national footprint of Brick House Tavern + Tap.”

 

 

Review of Fourth Quarter 2014 Operating Results

 

Total revenues were $177.3 million in the fourth quarter of 2014, a decrease of 5.1% compared to $186.9 million in the fourth quarter of last year.

 

●

Revenues at Joe’s Crab Shack were $80.0 million during the fourth quarter of 2014 versus $83.6 million in the prior year. Comparable restaurant sales at Joe’s Crab Shack decreased 4.5%.

 

●

Revenues at Brick House Tavern + Tap were $17.9 million in the fourth quarter of 2014 compared to $15.0 million in the prior year. Comparable restaurant sales at Brick House Tavern + Tap increased 5.7%.

 

●

Revenues at Macaroni Grill were $79.4 million in the fourth quarter of 2014 compared to $88.3 million in the prior year. Comparable restaurant sales at Macaroni Grill decreased 2.8%.

 

 

The fourth quarter and full year 2014 results include a $36.0 million deferred tax asset valuation allowance. Due to the continued operating losses generated by Macaroni Grill and the asset impairments recorded during 2014, we determined that a valuation allowance against our deferred tax asset balance was required.

 

Net loss for the fourth quarter of 2014 was $48.5 million, or $1.89 per diluted share. The Company’s net loss for the fourth quarter of 2014 included a $36.0 million deferred tax asset valuation allowance and a $7.1 million charge related to asset impairments and loss on insurance settlements, partially offset by a $0.3 million gain on disposal of assets. Excluding the impact of these items, adjusted net loss and adjusted net loss per diluted share (which are non-GAAP financial measures) were $6.4 million and $0.25, respectively, in the fourth quarter of 2014.

 

Net loss for the fourth quarter of 2013 was $4.4 million, or $0.17 per diluted share. The Company's net loss for the fourth quarter of 2013 included approximately $1.1 million related to asset impairments and losses on disposal of assets, partially offset by a $0.6 million gain on an insurance settlement. Excluding the impact of these items, adjusted net loss and adjusted net loss per diluted share (which are non-GAAP financial measures) were $4.1 million and $0.16, respectively, in the fourth quarter of 2013.

 

A reconciliation between GAAP net loss and adjusted net loss is included in the accompanying financial data.

 

Development

 

During the fourth quarter of 2014, the Company opened one company owned Joe’s and one franchised Macaroni Grill restaurant. Fourteen company owned Macaroni Grill locations closed during the quarter and 26 were closed in fiscal 2014. Three of these locations are being utilized for conversion to Brick House restaurants. One of the locations opened on July 29, 2014 in Fort Worth, Texas, another location, Princeton, New Jersey, opened as a Brick House on February 24, 2015 and the third one, Grapevine, Texas, is scheduled to open in late March.

 

Liquidity

 

At December 29, 2014, the Company had $18.3 million of cash and approximately $23.7 million of available borrowing capacity under its current credit facility. The Company was in compliance with the credit facility’s financial covenants.

 

Subsequent Event

 

On March 10, 2015, the Company announced that it had entered into a definitive agreement to sell its Romano’s Macaroni Grill subsidiary to Redrock Partners, LLC. Under terms of the agreement, the Company will receive approximately $8.0 million in cash, prior to any adjustments for transaction related costs. The transaction is expected to close by April 10, 2015, subject to customary closing conditions.

 

Conference Call

 

Ignite will host a conference call to discuss fourth quarter financial results and the pending divesture of Romano’s Macaroni Grill today at 5:00 PM Eastern Standard Time. Hosting the call will be Ray Blanchette, Chief Executive Officer, Michael Dixon, President and Chief Financial Officer and Brad Leist, Chief Accounting Officer. The conference call can be accessed live over the phone by dialing 888-670-2246 or for international callers by dialing 913-312-1496. A replay will be available one hour after the call and can be accessed by dialing 877-870-5176 or 858-384-5517 for international callers; the password is 1792516. The replay will be available until March 19, 2015. The call will also be webcast live from the Company's website at www.igniterestaurants.com under the “Investors” section.

 

 

About Ignite Restaurant Group

 

Ignite Restaurant Group, Inc. (NASDAQ: IRG) owns and operates restaurants throughout the U.S. Headquartered in Houston, Ignite's portfolio of restaurant concepts currently includes Joe's Crab Shack, Romano's Macaroni Grill and Brick House Tavern + Tap. Each brand offers a variety of high-quality, chef-inspired food and beverages in a distinctive, casual, high-energy atmosphere. For more information on Ignite and its distinctive brands visit www.igniterestaurantgroup.com.

 

 

 

 

 

 

Cautionary Note Regarding Forward-Looking Statements

 

This press release includes “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond the Company’s control. The Company cautions you that the forward-looking information presented in this press release is not a guarantee of future events, and that actual events and results may differ materially from those made in or suggested by the forward-looking information contained in this press release. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “plan,” “seek,” “comfortable with,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or the negative thereof or variations thereon or similar terminology. Such statements include, but are not limited to, statements regarding the anticipated disposition of Romano’s Macaroni Grill, scheduled conversions of restaurants, the anticipated growth of Brick House

Tavern + Tap and our effective tax rate.

 

A number of important factors could cause actual events and results to differ materially from those contained in or implied by the forward-looking statements included in this press release, including the risk factors discussed in the Company’s Form 10-K for the year ended December 30, 2013 (which can be found at the SEC’s website www.sec.gov) and those risk factors discussed in the Company’s Form 10-K for the year ended December 29, 2014 which will be filed with the SEC by March 16, 2015. Each such risk factor is specifically incorporated into this press release. Any forward-looking information presented herein is made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

 

 

Results of Operations

 

The following tables present the consolidated statements of operations and selected other data for the thirteen and fifty-two weeks ended December 29, 2014 and December 30, 2013, and selected consolidated balance sheet information as of December 29, 2014 and December 30, 2013:

 

Consolidated Statements of Operations				Thirteen Weeks Ended December 29, 2014								Thirteen Weeks Ended December 30, 2013
				(In thousands, except percent and per share data)
Revenues				$	177,251				100.0	%		$	186,850				100.0	%
Costs and expenses
	Restaurant operating costs and expenses
		Cost of sales			53,229				30.0	%			55,294				29.6	%
		Labor expenses			57,275				32.3	%			60,024				32.1	%
		Occupancy expenses			19,205				10.8	%			18,970				10.2	%
		Other operating expenses			36,439				20.6	%			41,831				22.4	%
	General and administrative				10,583				6.0	%			11,738				6.3	%
	Depreciation and amortization				8,848				5.0	%			7,832				4.2	%
	Pre-opening costs				827				0.5	%			776				0.4	%
	Asset impairments and closures				8,294				4.7	%			1,120				0.6	%
	Loss (gain) on disposal of assets				(1,322	)			(0.7	)%			1,044				0.6	%
		Total costs and expenses			193,378				109.1	%			198,629				106.3	%
Loss from operations					(16,127	)			(9.1	)%			(11,779	)			(6.3	)%
Interest expense, net					(3,839	)			(2.2	)%			(1,775	)			(0.9	)%
Gain (loss) on insurance settlements					(124	)			(0.1	)%			561				0.3	%
Loss before income taxes					(20,090	)			(11.3	)%			(12,993	)			(7.0	)%
Income tax expense (benefit)					28,431				16.0	%			(8,622	)			(4.6	)%
Net loss				$	(48,521	)			(27.4	)%		$	(4,371	)			(2.3	)%
Basic and diluted net loss per share data:
	Net loss per share
		Basic and diluted		$	(1.89	)						$	(0.17	)
	Weighted average shares outstanding
		Basic and diluted			25,673								25,636

 

 

Consolidated Statements of Operations				Fifty-Two Weeks Ended December 29, 2014								Fifty-Two Weeks Ended December 30, 2013
				(In thousands, except percent and per share data)
Revenues				$	837,185				100.0	%		$	760,848				100.0	%
Costs and expenses
	Restaurant operating costs and expenses
		Cost of sales			253,255				30.3	%			227,571				29.9	%
		Labor expenses			257,135				30.7	%			233,321				30.7	%
		Occupancy expenses			77,900				9.3	%			65,769				8.6	%
		Other operating expenses			175,513				21.0	%			160,312				21.1	%
	General and administrative				45,288				5.4	%			52,465				6.9	%
	Depreciation and amortization				33,774				4.0	%			27,507				3.6	%
	Pre-opening costs				2,799				0.3	%			4,824				0.6	%
	Asset impairments and closures				12,694				1.5	%			1,371				0.2	%
	Loss on disposal of assets				481				0.1	%			2,601				0.3	%
		Total costs and expenses			858,839				102.6	%			775,741				102.0	%
Loss from operations					(21,654	)			(2.6	)%			(14,893	)			(2.0	)%
Interest expense, net					(12,521	)			(1.5	)%			(5,246	)			(0.7	)%
Gain (loss) on insurance settlements					(35	)			(0.0	)%			1,161				0.2	%
Loss before income taxes					(34,210	)			(4.1	)%			(18,978	)			(2.5	)%
Income tax expense (benefit)					19,339				2.3	%			(12,393	)			(1.6	)%
Net loss				$	(53,549	)			(6.4	)%		$	(6,585	)			(0.9	)%
Basic and diluted net loss per share data:
	Net loss per share
		Basic and diluted		$	(2.09	)						$	(0.26	)
	Weighted average shares outstanding
		Basic and diluted			25,659								25,629

 

 

Selected Consolidated Balance Sheet Information		December 29, 2014				December 30, 2013
		(In thousands)
Cash and cash equivalents		$	18,273			$	972
Total assets			327,720				347,084
Long term debt (including current portion)			162,702				131,982
Total liabilities			276,421				245,477
Total stockholders' equity			51,299				101,607

 

  

			Thirteen Weeks Ended				Thirteen Weeks Ended				Fifty-Two Weeks Ended				Fifty-Two Weeks Ended
			December 29, 2014				December 30, 2013				December 29, 2014				December 30, 2013
			(dollars in thousands)
Selected Other Data(1):
Restaurants opened during the period				1				4				4				14
Number of restaurants open (end of period):
	Joe's Crab Shack			139				136				139				136
	Brick House Tavern + Tap			21				20				21				20
	Romano's Macaroni Grill			153				179				153				179
	Total restaurants			313				335				313				335
Restaurant operating weeks
	Joe's Crab Shack			1,797				1,768				7,107				6,912
	Brick House Tavern + Tap			273				238				1,062				842
	Romano's Macaroni Grill			2,105				2,334				8,915				6,957
Average weekly sales
	Joe's Crab Shack		$	45			$	47			$	61			$	65
	Brick House Tavern + Tap		$	65			$	63			$	66			$	61
	Romano's Macaroni Grill		$	37			$	37			$	37			$	37
Change in comparable restaurant sales
	Joe's Crab Shack			(4.5%	)			1.9	%			(4.9%	)			1.0	%
	Brick House Tavern + Tap			5.7	%			6.6	%			7.9	%			5.3	%
	Romano's Macaroni Grill			(2.8%	)			(9.0%	)			(4.5%	)			(6.5%	)
	Total			(3.0%	)			(3.9%	)			(4.0%	)			(1.8%	)

 

(1)	Activity for Romano's Macaroni Grill commenced from the acquisition date of April 9, 2013.

 

 

Reconciliation of Non-GAAP Results to GAAP Results

 

The Company provided detailed explanation of this non-GAAP financial measure, including a discussion of the usefulness and purpose of the measure, in its Form 8-K filed with the Securities and Exchange Commission on March 12, 2015.

 

					Thirteen Weeks Ended				Thirteen Weeks Ended				Fifty-Two Weeks Ended				Fifty-Two Weeks Ended
					December 29, 2014				December 30, 2013				December 29, 2014				December 30, 2013
					(In thousands, except per share data)
Net loss - GAAP					$	(48,521	)		$	(4,371	)		$	(53,549	)		$	(6,585	)
Adjustments:
	Transaction costs(a)					-				-				510				6,035
	Proposed secondary offering expenses					-				-				-				759
	Costs related to conversions, remodels and closures					(303	)			367				3,935				1,000
	Write-off of debt issuance costs					-				24				2,241				507
	Asset impairment					6,964				682				8,734				682
	Non-recurring recruitment and training expenses					-				-				-				327
	Loss (gain) on insurance settlements					124				(561	)			35				(1,161	)
	Income tax effect of adjustments above					(602	)			(205	)			(4,018	)			(2,881	)
	Valuation allowance					35,953				-				35,953				-
Adjusted net loss - non-GAAP					$	(6,385	)		$	(4,064	)		$	(6,159	)		$	(1,317	)
Weighted average shares outstanding (GAAP)
	Basic					25,673				25,636				25,659				25,629
	Diluted					25,673				25,636				25,659				25,629
Net loss per share (GAAP)
	Basic and diluted				$	(1.89	)		$	(0.17	)		$	(2.09	)		$	(0.26	)
Adjusted net loss per share (non-GAAP)
	Basic and diluted				$	(0.25	)		$	(0.16	)		$	(0.24	)		$	(0.05	)

 

(a)     Transaction costs include costs related to our acquisition of Romano's Macaroni Grill in 2013 and our debt refinancing in 2014.

 

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