Form 8-K Ignite Restaurant Group, For: Oct 29

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October 29, 2014 4:39 PM EDT

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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): October 29, 2014

�

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)

�

Registrants 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 October 29, 2014, Ignite Restaurant Group, Inc. (the Company) issued a press release reporting financial results for the quarter ended September 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 Companys 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 October 29, 2014.

�

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: October 29, 2014

�

�	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 readers 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 income (loss) and adjusted net income (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 (loss) represents net income (loss) less items such as (a)�transaction costs including those related to our acquisition of Romanos Macaroni Grill in 2013 and our debt refinancing in 2014, (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, and (h)�the income tax effect of the above described adjustments. 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 Third Quarter 2014 Financial Results

�

Houston, TX(BUSINESS WIRE)October 29, 2014Ignite Restaurant Group (NASDAQ: IRG) today reported financial results for the third quarter ended September 29, 2014.

�

Highlights for the third quarter of 2014 were as follows:

�

Total revenues were $215.2 million, compared to $227.6 million in the third quarter of 2013;

�

Comparable restaurant sales increased 7.5% at Brick House Tavern + Tap, decreased 4.4% at Joes Crab Shack and decreased 8.5% at Macaroni Grill;

�

Net loss was $6.5 million, or a loss of $0.25 per diluted share, compared to a net loss of $1.9 million, or a loss of $0.08 per diluted share in the third quarter of 2013;

�

Adjusted net loss (a non-GAAP measure) was $2.1 million, or a loss of $0.08 per diluted share, compared to an adjusted net loss of $1.0 million, or a loss of $0.04 per diluted share in the third quarter of 2013.

�

Ray Blanchette, Chief Executive Officer of Ignite Restaurant Group, stated, With the new credit facility we put in place early in the quarter, we believe we have the near term financial flexibility to grow Brick House Tavern + Tap, while addressing brand specific issues at Joes and Mac Grill. I am excited to announce a major new counter service initiative at Romanos Macaroni Grill. This program was just rolled out nationwide and will be publicly introduced with national TV advertising starting the week of November third.

�

Mr. Blanchette continued, Romanos Macaroni Grills third quarter results reflected the conscious decision to walk away from unprofitable sales by not repeating the heavy discounting we tested in the prior year. Joes Crab Shacks decrease in comparable store sales was largely focused in the northeast, where the markets are settling in after three years of heavy regional growth. Brick House Tavern + Tap continued its strong run with its eleventh consecutive quarter of same store sales growth.

�

Review of Third Quarter 2014 Operating Results

�

Total revenues were $215.2 million in the third quarter of 2014, a decrease of 5.4% compared to $227.6 million in the third quarter of last year.

�

Revenues at Joes Crab Shack were $122.2 million during the third quarter of 2014 versus $128.0 million in the prior year. Comparable restaurant sales at Joes Crab Shack decreased 4.4%.

�

Revenues at Brick House Tavern + Tap were $17.1 million in the third quarter of 2014 compared to $12.2 million in the prior year. Comparable restaurant sales at Brick House Tavern + Tap increased 7.5%.

�

Revenues at Macaroni Grill were $76.0 million in the third quarter of 2014 compared to $87.4 million in the prior year. Comparable restaurant sales at Macaroni Grill decreased 8.5%.

�

Net loss for the third quarter of 2014 was $6.5 million, or $0.25 per diluted share. The Companys net loss for the third quarter of 2014 included approximately $3.0 million of closure-related expenses due to restaurant conversions and closures; approximately $2.2 million of expenses related to a debt issuance write-off; a $1.8 million�asset impairment�charge; and approximately $0.4 million in transaction expenses. Excluding the impact of these items, adjusted net loss and adjusted net loss per diluted share (which are non-GAAP financial measures) were $2.1 million and $0.08, respectively, in the third quarter of 2014.

�

Net loss for the third quarter of 2013 was $1.9 million, or a loss of $0.08 per diluted share. The Company incurred approximately $0.8 million of acquisition related costs in connection with the acquisition of Macaroni Grill; an approximate $0.6 million loss on the disposal of fixed assets related to restaurant conversions, remodels and closures; approximately $0.5 million of expenses related to a proposed secondary stock offering and a $0.3 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 $1.0 million and $0.04, respectively.

�

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

�

Development

�

During the third quarter of 2014, the Company opened two Joes Crab Shack restaurants, and one Brick House Tavern + Tap converted from a Macaroni Grill. Seven company-owned and one franchised Macaroni Grill locations closed during the quarter. Subsequent to the end of the third quarter, two additional company-owned Macaroni Grill locations were closed for a total of 14 Macaroni Grill closures during 2014. One Macaroni Grill that closed in a previous quarter is currently under construction and will re-open as a Brick House restaurant in late 2014 or early 2015.

�

Liquidity

�

At September 29, 2014, the Company had $32.9 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 facilitys financial covenants.

�

Conference Call

�

We will host a conference call to discuss our third quarter financial results today at 5:00 PM Eastern Standard Time. Hosting the call will be Ray Blanchette, Chief Executive Officer, and Michael Dixon, President and Chief Financial Officer. The conference call can be accessed live over the phone by dialing 888-221-9542 or for international callers by dialing 913-312-1513. 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 6720636. The replay will be available until November 5, 2014. 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 over 300 restaurants throughout the U.S. Headquartered in Houston, Ignite's portfolio of restaurant concepts 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. The Company is also a franchisor for Macaroni Grill in locations in the U.S., U.S. territories and internationally. 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 Companys 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.

�

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 Companys Form 10-K for the year ended December 30, 2013 (which can be found at the SECs website www.sec.gov) and 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 29, 2014 and September 30, 2013, and selected consolidated balance sheet information as of September 29, 2014 and December 30, 2013:

�

Consolidated Statements of Operations

�

Thirteen Weeks Ended

September 29, 2014

�

Thirteen Weeks Ended

September 30, 2013

�

(In thousands, except percent and per share data)

�

Revenues

�

215,228

�

100.0

�

227,626

�

100.0

Costs and expenses

�

Restaurant operating costs and expenses

�

Cost of sales

�

65,886

�

30.6

�

69,191

�

30.4

Labor expenses

�

64,018

�

29.7

�

69,925

�

30.7

Occupancy expenses

�

19,660

�

9.1

�

19,746

�

8.7

Other operating expenses

�

47,619

�

22.1

�

48,241

�

21.2

General and administrative

�

11,229

�

5.2

�

13,825

�

6.1

Depreciation and amortization

�

8,845

�

4.1

�

7,506

�

3.3

Pre-opening costs

�

1,210

�

0.6

�

1,480

�

0.7

Asset impairments and closures

�

3,308

�

1.5

�

220

�

0.1

Loss on disposal of assets

�

1,034

�

0.5

�

1,165

�

0.5

Total costs and expenses

�

222,809

�

103.5

�

231,299

�

101.6

Loss from operations

�

(7,581

)

�

(3.5

�

(3,673

)

�

(1.6

Interest expense, net

�

(5,039

)

�

(2.3

�

(1,335

)

�

(0.6

Gain on insurance settlements

�

0.0

�

300

�

0.1

Loss before income taxes

�

(12,531

)

�

(5.8

�

(4,708

)

�

(2.1

Income tax benefit

�

(6,001

)

�

(2.8

�

(2,771

)

�

(1.2

Net loss

�

(6,530

)

�

(3.0

�

(1,937

)

�

(0.9

�

Basic and diluted net loss per share data:

�

Net loss per share

�

Basic and diluted

�

(0.25

)

�

(0.08

)

�

Weighted average shares outstanding

�

Basic and diluted

�

25,672

�

25,632

�

Consolidated Statements of Operations

�

Thirty-Nine Weeks Ended

September 29, 2014

�

Thirty-Nine Weeks Ended

September 30, 2013

�

(In thousands, except percent and per share data)

�

Revenues

�

659,934

�

100.0

�

573,998

�

100.0

Costs and expenses

�

Restaurant operating costs and expenses

�

Cost of sales

�

200,026

�

30.3

�

172,277

�

30.0

Labor expenses

�

199,860

�

30.3

�

173,297

�

30.2

Occupancy expenses

�

58,695

�

8.9

�

46,799

�

8.2

Other operating expenses

�

139,074

�

21.1

�

118,481

�

20.6

General and administrative

�

34,705

�

5.3

�

40,727

�

7.1

Depreciation and amortization

�

24,926

�

3.8

�

19,675

�

3.4

Pre-opening costs

�

1,972

�

0.3

�

4,048

�

0.7

Asset impairments and closures

�

4,400

�

0.7

�

251

�

0.0

Loss on disposal of assets

�

1,803

�

0.3

�

1,557

�

0.3

Total costs and expenses

�

665,461

�

100.8

�

577,112

�

100.5

Loss from operations

�

(5,527

)

�

(0.8

�

(3,114

)

�

(0.5

Interest expense, net

�

(8,682

)

�

(1.3

�

(3,471

)

�

(0.6

Gain on insurance settlements

�

0.0

�

600

�

0.1

Loss before income taxes

�

(14,120

)

�

(2.1

�

(5,985

)

�

(1.0

Income tax benefit

�

(9,092

)

�

(1.4

�

(3,771

)

�

(0.7

Net loss

�

(5,028

)

�

(0.8

�

(2,214

)

�

(0.4

�

Basic and diluted net loss per share data:

�

Net loss per share

�

Basic and diluted

�

(0.20

)

�

(0.09

)

�

Weighted average shares outstanding

�

Basic and diluted

�

25,654

�

25,627

�

Selected Consolidated Balance Sheet Information	�	September 29, 2014		�	�	December 30, 2013		�
�	�	(In thousands)						�
Cash and cash equivalents	�	$	32,932	�	�	$	972	�
Total assets	�	�	373,009	�	�	�	347,084	�
Long term debt (including current portion)	�	�	162,585	�	�	�	131,982	�
Total liabilities	�	�	274,170	�	�	�	245,477	�
Total stockholders' equity	�	�	98,839	�	�	�	101,607	�

�

Thirteen

Weeks Ended

�

Thirteen

Weeks Ended

�

Thirty-Nine

Weeks Ended

�

Thirty-Nine

Weeks Ended

�

September 29,

2014

�

September 30,

2013

�

September 29,

2014

�

September 30,

2013

�

(dollars in thousands)

�

Selected Other Data(1):

�

Restaurants opened during the period

�

Number of restaurants open (end of period):

�

Joe's Crab Shack

�

138

�

136

�

138

�

136

�

Brick House Tavern + Tap

�

Romano's Macaroni Grill

�

167

�

182

�

167

�

182

�

Total restaurants

�

326

�

334

�

326

�

334

�

Restaurant operating weeks

�

Joe's Crab Shack

�

1,774

�

1,740

�

5,310

�

5,144

�

Brick House Tavern + Tap

�

269

�

208

�

789

�

604

�

Romano's Macaroni Grill

�

2,215

�

2,391

�

6,810

�

4,623

�

Average weekly sales

�

Joe's Crab Shack

�

Brick House Tavern + Tap

�

Romano's Macaroni Grill

�

Change in comparable restaurant sales

�

Joe's Crab Shack

�

(4.4%

)

�

3.3

�

(5.0%

)

�

0.8

Brick House Tavern + Tap

�

7.5

�

4.0

�

8.7

�

4.8

Romano's Macaroni Grill

�

(8.5%

)

�

(2.7%

)

�

(5.0%

)

�

(5.1%

)

Total

�

(5.4%

)

�

0.7

�

(4.2%

)

�

(1.0%

)

�

(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 October 29, 2014.

�

Thirteen

Weeks Ended

�

Thirteen

Weeks Ended

�

Thirty-Nine

Weeks Ended

�

Thirty-Nine

Weeks Ended

�

September 29,

2014

�

September 30,

2013

�

September 29,

2014

�

September 30,

2013

�

(In thousands, except per share data)

�

Net loss - GAAP

�

(6,530

)

�

(1,937

)

�

(5,028

)

�

(2,214

)

Adjustments:

�

Transaction costs(a)

�

421

�

832

�

510

�

6,035

�

Proposed secondary offering expenses

�

459

�

759

�

Costs related to conversions, remodels and closures

�

3,011

�

633

�

4,238

�

633

�

Write-off of debt issuance costs

�

2,241

�

2,241

�

483

�

Asset impairment

�

1,770

�

1,770

�

Non-recurring recruitment and training expenses

�

327

�

Gain on insurance settlements

�

(89

)

�

(300

)

�

(89

)

�

(600

)

Income tax effect of adjustments above

�

(2,898

)

�

(639

)

�

(3,416

)

�

(2,676

)

Adjusted net income (loss) - non-GAAP

�

(2,074

)

�

(952

)

�

226

�

2,747

�

Weighted average shares outstanding (GAAP)

�

Basic

�

25,672

�

25,632

�

25,654

�

25,627

�

Diluted

�

25,672

�

25,632

�

25,654

�

25,627

�

Net loss per share (GAAP)

�

Basic and diluted

�

(0.25

)

�

(0.08

)

�

(0.20

)

�

(0.09

)

Adjusted net income (loss) per share (non-GAAP)

�

Basic and diluted

�

(0.08

)

�

(0.04

)

�

0.01

�

0.11

�

(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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