Form 8-K Ignite Restaurant Group, For: Nov 05

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

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FORM 8-K

 

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CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): November 5, 2015

 

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IGNITE RESTAURANT GROUP, INC.

(Exact name of registrant as specified in its charter)

 

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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)

 

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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))

 

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Item 2.02.    Results of Operations and Financial Condition.

 

On November 5, 2015, Ignite Restaurant Group, Inc. (the “Company”) issued a press release reporting financial results for the quarter ended September 28, 2015. 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 Exhibits 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 November 5, 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: November 5, 2015

 

IGNITE RESTAURANT GROUP, INC.
By:		/s/ Brad A. Leist
		Brad A. Leist
		Senior Vice 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 their equivalent GAAP financial measures.

 

Adjusted income from continuing operations and adjusted income from continuing operations per share

 

We calculate adjusted income from continuing operations by eliminating from income (loss) from continuing operations the impact of items we do not consider indicative of our ongoing operations. Specifically, we believe that these non-GAAP measures provide greater comparability and enhanced visibility into our results of operations, excluding the impact of special charges and certain other expenses. Adjusted income from continuing operations represents income (loss) from continuing operations less items such as (a) transaction costs, (b) costs related to conversions, remodels and closures, (c) write-off of debt issuance costs, (d) asset impairment, (e) loss (gain) on insurance settlements, (f) the income tax effect of the above described adjustments, and (g) the deferred tax asset valuation allowance. We believe these measures provide 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 these adjusted measures 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 Third Quarter 2015 Financial Results

 

 

Houston, TX—(BUSINESS WIRE)—November 5, 2015 - Ignite Restaurant Group (NASDAQ: IRG) today reported financial results for the third quarter ended September 28, 2015.

 

Highlights for the third quarter of 2015 were as follows:

 

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Total revenues were $133.4 million, compared to $139.3 million in the third quarter of 2014;

●

Comparable restaurant sales decreased 0.7% at Brick House Tavern + Tap and decreased 6.6% at Joe’s Crab Shack;

●

Loss from continuing operations was $4.3 million, or $0.17 per diluted shares, compared to $2.4 million, or $0.09 per diluted shares in the third quarter of 2014; and

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Adjusted income from continuing operations (a non-GAAP measure) was $1.9 million, or $0.07 per diluted share, compared to $0.3 million, or $0.01 per diluted share in the third quarter of 2014.

 

Ray Blanchette, President and Chief Executive Officer of Ignite Restaurant Group, stated, “We are obviously disappointed with the sales results at Joe’s but we remain enthusiastic about the new initiatives we have identified and that we have been testing during the quarter. We also closed several underperforming Joe’s during the quarter as we continue to optimize our real estate portfolio which not only improves the operating results at Joe’s but also provides another growth avenue for Brick House. We also experienced a modest slowdown at Brick House during the quarter as we saw a decrease in comparable restaurant sales for the first time in over three and a half years. However, we believe we have identified a clear strategy to strengthen our performance in key day parts and provide opportunities for improvement in guest traffic and sales.”

 

Review of Third Quarter 2015 Operating Results

Total revenues were $133.4 million in the third quarter of 2015, a decrease of 4.2% compared to $139.3 million in the third quarter of last year.

 

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Revenues at Joe’s Crab Shack were $114.8 million during the third quarter of 2015 versus $122.2 million in the prior year third quarter. Comparable restaurant sales at Joe’s Crab Shack decreased 6.6%.

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Revenues at Brick House Tavern + Tap were $18.6 million in the third quarter of 2015 compared to $17.1 million in the prior year third quarter. Comparable restaurant sales at Brick House Tavern + Tap decreased 0.7%.

 

Loss from continuing operations for the third quarter of 2015 was $4.3 million, or $0.17 per diluted share. The Company’s loss from continuing operations for the third quarter of 2015 included a $2.6 million deferred tax valuation allowance, a $3.9 million impairment charge, $1.6 million of costs related to conversions, remodels and closures, and a $0.4 million loss on insurance settlements. Excluding the impact of these items, adjusted income from continuing operations and adjusted income from continuing operations per diluted share (which are non-GAAP financial measures), net of tax, were $1.9 million and $0.07, respectively, in the third quarter of 2015.

 

Loss from continuing operations for the third quarter of 2014 was $2.4 million, or $0.09 per diluted share. The Company’s loss from continuing operations for the third quarter of 2014 included a $1.8 million impairment charge, a $2.2 million write-off of debt issuance costs, and $0.5 million in costs related to conversions, remodels and closures, transaction costs partially offset by a gain on insurance settlements. Excluding the impact of these items, adjusted income from continuing operations and adjusted income from continuing operations per diluted share (which are non-GAAP financial measures), net of tax, were $0.3 million and $0.01, respectively, in the third quarter of 2014.

 

 

Development

 

During the third quarter of 2015, the Company closed seven Joe’s Crab Shack locations. Of these closures, two will be converted to Brick House Tavern + Tap restaurants.

 

Liquidity

At September 28, 2015, the Company had $51.6 million of cash and approximately $25.9 million of available borrowing capacity under its current credit facility. The Company was in compliance with the credit facility’s financial covenants.

 

Conference Call

Ignite will host a conference call to discuss third quarter financial results today at 5:00 PM Eastern Standard Time. Hosting the call will be Ray Blanchette, President and Chief Executive Officer and Brad Leist, Chief Financial Officer.

 

The conference call can be accessed live over the phone by dialing 888-395-3227 or for international callers by dialing 719-785-1765. 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 2918497. The replay will be available until Thursday, November 12, 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 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.igniterestaurants.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 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 29, 2014 (which can be found at the SEC’s website www.sec.gov). 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 thirty-nine weeks ended September 28, 2015 and September 29, 2014, and selected consolidated balance sheet information as of September 28, 2015 and December 29, 2014:

 

Consolidated Statements of Operations		Thirteen Weeks Ended September 28, 2015								Thirteen Weeks Ended September 29, 2014
		(In thousands, except percent and per share data)
Revenues		$	133,357				100.0	%		$	139,272				100.0	%
Costs and expenses
Restaurant operating costs and expenses
Cost of sales			41,492				31.1	%			45,410				32.6	%
Labor expenses			37,190				27.9	%			37,500				26.9	%
Occupancy expenses			10,591				7.9	%			10,120				7.3	%
Other operating expenses			25,440				19.1	%			27,022				19.4	%
General and administrative			6,502				4.9	%			9,614				6.9	%
Depreciation and amortization			7,762				5.8	%			5,962				4.3	%
Pre-opening costs			22				0.0	%			1,210				0.9	%
Asset impairments and closures			4,752				3.6	%			1,805				1.3	%
Loss (gain) on disposal of assets			(908	)			(0.7	)%			432				0.3	%
Total costs and expenses			132,843				99.6	%			139,075				99.9	%
Income from operations			514				0.4	%			197				0.1	%
Interest expense, net			(3,837	)			(2.9	)%			(5,040	)			(3.6	)%
Gain (loss) on insurance settlements			(428	)			(0.3	)%			89				0.1	%
Loss from continuing operations before income taxes			(3,751	)			(2.8	)%			(4,754	)			(3.4	)%
Income tax expense (benefit)			537				0.4	%			(2,380	)			(1.7	)%
Loss from continuing operations			(4,288	)			(3.2	)%			(2,374	)			(1.7	)%
Income (loss) from discontinued operations, net			391				0.3	%			(4,156	)			(3.0	)%
Net loss		$	(3,897	)			(2.9	)%		$	(6,530	)			(4.7	)%
Basic and diluted net income (loss) per share data:
Net income (loss) per share
Basic and diluted
Loss from continuing operations		$	(0.17	)						$	(0.09	)
Income (loss) from discontinued operations, net		$	0.02							$	(0.16	)
Net income		$	(0.15	)						$	(0.25	)
Weighted average shares outstanding
Basic			25,761								25,672
Diluted			25,761								25,672

 

 

Consolidated Statements of Operations		Thirty-Nine Weeks Ended September 28, 2015								Thirty-Nine Weeks Ended September 29, 2014
		(In thousands, except percent and per share data)
Revenues		$	398,746				100.0	%		$	405,650				100.0	%
Costs and expenses
Restaurant operating costs and expenses
Cost of sales			124,158				31.1	%			131,561				32.4	%
Labor expenses			111,997				28.1	%			112,365				27.7	%
Occupancy expenses			31,235				7.8	%			29,339				7.2	%
Other operating expenses			75,110				18.8	%			74,932				18.5	%
General and administrative			23,260				5.8	%			29,657				7.3	%
Depreciation and amortization			20,168				5.1	%			17,655				4.4	%
Pre-opening costs			536				0.1	%			1,972				0.5	%
Asset impairments and closures			4,835				1.2	%			1,954				0.5	%
Loss (gain) on disposal of assets			(556	)			(0.1	)%			831				0.2	%
Total costs and expenses			390,743				98.0	%			400,266				98.7	%
Income from operations			8,003				2.0	%			5,384				1.3	%
Interest expense, net			(11,562	)			(2.9	)%			(8,682	)			(2.1	)%
Gain (loss) on insurance settlements			(428	)			(0.1	)%			89				0.0	%
Loss from continuing operations before income taxes			(3,987	)			(1.0	)%			(3,209	)			(0.8	)%
Income tax expense (benefit)			1,766				0.4	%			(3,314	)			(0.8	)%
Income (loss) from continuing operations			(5,753	)			(1.4	)%			105				0.0	%
Loss from discontinued operations, net			(20,293	)			(5.1	)%			(5,133	)			(1.3	)%
Net loss		$	(26,046	)			(6.5	)%		$	(5,028	)			(1.2	)%
Basic and diluted net income (loss) per share data:
Net income (loss) per share
Basic and diluted
Income (loss) from continuing operations		$	(0.22	)						$	0.00
Loss from discontinued operations, net		$	(0.79	)						$	(0.20	)
Net loss		$	(1.01	)						$	(0.20	)
Weighted average shares outstanding
Basic			25,719								25,654
Diluted			25,719								25,701

 

 

Selected Consolidated Balance Sheet Information		September 28, 2015				December 29, 2014
		(In thousands)
Cash and cash equivalents		$	51,637			$	20,564
Total assets			256,175				327,720
Long term debt (including current portion)			161,828				162,702
Total liabilities			229,300				276,421
Total stockholders' equity			26,875				51,299

 

 

 

 

		Thirteen Weeks Ended				Thirteen Weeks Ended				Thirty-Nine Weeks Ended				Thirty-Nine Weeks Ended
		September 28, 2015				September 29, 2014				September 28, 2015				September 29, 2014
		(dollars in thousands)
Selected Other Data:
Restaurants opened during the period			-				-				2				-
Number of restaurants open (end of period):
Joe's Crab Shack			131				138				131				138
Brick House Tavern + Tap			23				21				23				21
Total restaurants			154				159				154				159
Restaurant operating weeks
Joe's Crab Shack			1,769				1,774				5,368				5,310
Brick House Tavern + Tap			299				269				877				789
Average weekly sales
Joe's Crab Shack		$	65			$	69			$	63			$	66
Brick House Tavern + Tap		$	62			$	64			$	67			$	67
Change in comparable restaurant sales
Joe's Crab Shack			(6.6%	)			(4.4%	)			(4.9%	)			(5.0%	)
Brick House Tavern + Tap			(0.7%	)			7.5	%			2.5	%			8.7	%
Total			(6.1%	)			(3.4%	)			(4.1%	)			(3.6%	)

 

 

Reconciliation of Non-GAAP Results to GAAP Results

The Company provided detailed explanation of these non-GAAP financial measures, including a discussion of the usefulness and purpose of the measures, in its Form 8-K, filed with the Securities and Exchange Commission on November 5, 2015.

 

 

		Thirteen Weeks Ended				Thirteen Weeks Ended				Thirty-Nine Weeks Ended				Thirty-Nine Weeks Ended
		September 28, 2015				September 29, 2014				September 28, 2015				September 29, 2014
		(In thousands, except per share data)
Income (loss) from continuing operations - GAAP		$	(4,288	)		$	(2,374	)		$	(5,753	)		$	105
Adjustments - continuing operations:
Transaction costs			-				421				-				510
Costs related to conversions, remodels and closures			1,559				127				1,622				127
Write-off of debt issuance costs			-				2,241				-				2,241
Asset impairment			3,881				1,770				3,881				1,770
Loss (gain) on insurance settlements			428				(89	)			428				(89	)
Income tax effect of adjustments above			(2,324	)			(1,761	)			(2,349	)			(1,796	)
Deferred tax asset valuation allowance			2,624				-				5,357				-
Adjusted income from continuing operations - non-GAAP		$	1,880			$	335			$	3,186			$	2,868
Weighted average shares outstanding (GAAP)
Basic			25,761				25,672				25,719				25,654
Diluted			25,792				25,674				25,738				25,701
Income (loss) from continuing operations per share (GAAP)
Basic and diluted		$	(0.17	)		$	(0.09	)		$	(0.22	)		$	0.00
Adjusted income from continuing operations per share (non-GAAP)
Basic and diluted		$	0.07			$	0.01			$	0.12			$	0.11

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