Form 8-K Ignite Restaurant Group, For: May 04

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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): May 4, 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 May 4, 2015, Ignite Restaurant Group, Inc. (the “Company”) issued a press release reporting financial results for the quarter ended March 30, 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 Company also released unaudited condensed consolidated statements of operations and the calculation of adjusted income (loss) from continuing operations for the quarterly periods of fiscal year 2014 and the annual period of fiscal year 2013. The unaudited condensed consolidated statements of operations and the calculation of adjusted income (loss) from continuing operations have been prepared to illustrate the impact of the reclassification of Macaroni Grill’s results of operations to discontinued operations for fiscal years 2014 and 2013.

 

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 May 4, 2015.

 

99.2	Unaudited Condensed Consolidated Statements of Operations and Non-GAAP Financial Measures

 

 

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: May 4, 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 its equivalent GAAP financial measure.

 

Adjusted income (loss) from continuing operations and adjusted income (loss) from continuing operations per share

 

We calculate adjusted income (loss) 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 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 income (loss) from continuing operations represents income (loss) from continuing operations less items such as (a) transaction costs including those related to our debt refinancing, (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 impairments, (f) loss (gain) on insurance settlements, (g) the income tax effect of the above described adjustments, and (h) the deferred tax asset 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

 

 

 

Ignite Restaurant Group Reports First Quarter 2015 Financial Results

 

 

Houston, TX—(BUSINESS WIRE)—May 4, 2015 - Ignite Restaurant Group (NASDAQ: IRG) today reported financial results for the first quarter ended March 30, 2015.

 

On April 17, 2015, subsequent to the end of the first quarter, the Company completed the sale of its Macaroni Grill subsidiary. Consequently, the results of operations for Macaroni Grill are reflected in discontinued operations for all periods presented.

 

Highlights for the first quarter of 2015 were as follows:

 

●

Total revenues were $122.2 million, compared to $123.1 million in the first quarter of 2014;

●

Comparable restaurant sales increased 5.4% at Brick House Tavern + Tap and decreased 3.8% at Joe’s Crab Shack;

●

Loss from continuing operations was $3.2 million, or $0.12 per diluted shares, compared to income from continuing operations of $0.1 million, or $0.01 per diluted shares in the first quarter of 2014; and

●

Adjusted income (loss) from continuing operations (a non-GAAP measure) was a loss of $1.0 million, or $0.04 per diluted share, compared to income of $145,000, or $0.01 per diluted share in the first quarter of 2014.

 

Ray Blanchette, President and Chief Executive Officer of Ignite Restaurant Group, stated, “We’re pleased with the continued momentum at Brick House Tavern + Tap, led by another quarter of impressive comparable store sales growth. While sales challenges persisted at Joe’s Crab Shack, we have streamlined our organizational structure to allow us to refocus our management team, reduce costs, and position ourselves to create momentum heading into the summer.”

 

 

Review of First Quarter 2015 Operating Results

 

Total revenues were $122.2 million in the first quarter of 2015, a decrease of 0.7% compared to $123.1 million in the first quarter of last year.

 

●

Revenues at Joe’s Crab Shack were $103.1 million during the first quarter of 2015 versus $105.3 million in the prior year first quarter. Comparable restaurant sales at Joe’s Crab Shack decreased 3.8%.

 

●

Revenues at Brick House Tavern + Tap were $19.1 million in the first quarter of 2015 compared to $17.8 million in the prior year first quarter. Comparable restaurant sales at Brick House Tavern + Tap increased 5.4%.

 

 

For the first quarter of 2015, loss from continuing operations was $3.2 million, or $0.12 per diluted share compared to income from continuing operations of $0.1 million, or $0.01 per diluted share in the first quarter of 2014.

 

 

Development

 

During the first quarter of 2015, the Company opened two company-owned Brick House restaurants, one in Princeton, New Jersey and one in Grapevine, Texas.

 

Liquidity

 

At March 30, 2015, the Company had $32.1 million of cash and approximately $22.2 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 first quarter financial results today at 4:30 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 888-663-2254 or for international callers by dialing 913-312-1463. 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 7592396. The replay will be available until May 11, 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 weeks ended March 30, 2015 and March 31, 2014, and selected consolidated balance sheet information as of March 30, 2015 and December 29, 2014:

 

 

Consolidated Statements of Operations		Thirteen Weeks Ended March 30, 2015								Thirteen Weeks Ended March 31, 2014
		(In thousands, except percent and per share data)
Revenues		$	122,219				100.0	%		$	123,095				100.0	%
Costs and expenses
Restaurant operating costs and expenses
Cost of sales			38,601				31.6	%			39,035				31.7	%
Labor expenses			34,817				28.5	%			35,748				29.0	%
Occupancy expenses			10,222				8.4	%			9,500				7.7	%
Other operating expenses			22,099				18.1	%			21,000				17.1	%
General and administrative			8,395				6.9	%			10,643				8.6	%
Depreciation and amortization			6,229				5.1	%			5,822				4.7	%
Pre-opening costs			468				0.4	%			204				0.2	%
Asset impairments and closures			30				0.0	%			84				0.1	%
Loss on disposal of assets			158				0.1	%			172				0.1	%
Total costs and expenses			121,019				99.0	%			122,208				99.3	%
Income from operations			1,200				1.0	%			887				0.7	%
Interest expense, net			(3,876	)			(3.2	)%			(1,878	)			(1.5	)%
Loss from continuing operations before income taxes			(2,676	)			(2.2	)%			(991	)			(0.8	)%
Income tax expense (benefit)			520				0.4	%			(1,136	)			(0.9	)%
Income (loss) from continuing operations			(3,196	)			(2.6	)%			145				0.1	%
Loss from discontinued operations, net			(19,039	)			(15.6	)%			(410	)			(0.3	)%
Net loss		$	(22,235	)			(18.2	)%		$	(265	)			(0.2	)%
Basic and diluted net income (loss) per share data:
Net loss per share
Basic and diluted
Income (loss) from continuing operations		$	(0.12	)						$	0.01
Loss from discontinued operations, net		$	(0.74	)						$	(0.02	)
Net loss		$	(0.87	)						$	(0.01	)
Weighted average shares outstanding
Basic			25,674								25,639
Diluted			25,674								25,680

 

 

 

Selected Consolidated Balance Sheet Information		March 30, 2015				December 29, 2014
		(In thousands)
Cash and cash equivalents		$	32,100			$	20,564
Total assets			308,968				327,720
Long term debt (including current portion)			162,408				162,702
Total liabilities			278,876				276,421
Total stockholders' equity			30,092				51,299

 

 

 

 

 

		Thirteen Weeks Ended				Thirteen Weeks Ended
		March 30, 2015				March 31, 2014
		(dollars in thousands)
Selected Other Data(1):
Restaurants opened during the period			2				-
Number of restaurants open (end of period):
Joe's Crab Shack			138				136
Brick House Tavern + Tap			23				20
Total restaurants			161				156
Restaurant operating weeks
Joe's Crab Shack			1,805				1,768
Brick House Tavern + Tap			279				260
Average weekly sales
Joe's Crab Shack		$	57			$	60
Brick House Tavern + Tap		$	68			$	68
Change in comparable restaurant sales
Joe's Crab Shack			(3.8	%)			(6.0	%)
Brick House Tavern + Tap			5.4	%			10.0	%
Total			(2.7	%)			(4.3	%)

 

 

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 May 4, 2015.

 

		Thirteen Weeks Ended				Thirteen Weeks Ended
		March 30, 2015				March 31, 2014
		(In thousands, except per share data)
Income (loss) from continuing operations - GAAP		$	(3,196	)		$	145
Adjustments - continuing operations:
Costs related to conversions, remodels and closures			49				-
Income tax effect of adjustments above			(19	)			-
Deferred tax asset valuation allowance			2,126				-
Adjusted income (loss) from continuing operations - non-GAAP		$	(1,040	)		$	145
Weighted average shares outstanding (GAAP)
Basic			25,674				25,639
Diluted			25,674				25,680
Income (loss) from continuing operations per share (GAAP)
Basic and diluted		$	(0.12	)		$	0.01
Adjusted income (loss) from continuing operations per share (non-GAAP)
Basic and diluted		$	(0.04	)		$	0.01

 

 

Exhibit 99.2

 

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

The unaudited condensed consolidated statements of operations and the calculation of adjusted income (loss) from continuing operations have been prepared to illustrate the impact of the reclassification of Macaroni Grill’s results of operations to discontinued operations for fiscal years 2014 and 2013.

 

		Quarter Ended																Full Year				Full Year
		March 31, 2014				June 30, 2014				September 29, 2014				December 29, 2014				2014				2013
Revenues		$	123,095			$	143,283			$	139,272			$	97,858			$	503,508			$	499,151
Costs and expenses
Restaurant operating costs and expenses
Cost of sales			39,035				47,116				45,410				31,846				163,407				153,820
Labor expenses			35,748				39,117				37,500				30,297				142,662				137,286
Occupancy expenses			9,500				9,719				10,120				10,062				39,401				35,471
Other operating expenses			21,000				26,910				27,022				19,154				94,086				90,727
General and administrative			10,643				9,400				9,614				9,012				38,669				42,321
Depreciation and amortization			5,822				5,871				5,962				6,246				23,901				21,415
Pre-opening costs			204				558				1,210				827				2,799				4,824
Asset impairments and closures			84				65				1,805				26				1,980				169
Loss on disposal of assets			172				227				432				509				1,340				2,067
Total costs and expenses			122,208				138,983				139,075				107,979				508,245				488,100
Income (loss) from operations			887				4,300				197				(10,121	)			(4,737	)			11,051
Interest expense, net			(1,878	)			(1,764	)			(5,040	)			(3,839	)			(12,521	)			(5,245	)
Gain (loss) on insurance settlements			-				-				89				-				89				1,161
Income (loss) from continuing operations before income taxes			(991	)			2,536				(4,754	)			(13,960	)			(17,169	)			6,967
Income tax expense (benefit)			(1,136	)			202				(2,380	)			19,527				16,213				(868	)
Income (loss) from continuing operations			145				2,334				(2,374	)			(33,487	)			(33,382	)			7,835
Loss from discontinued operations, net of tax			(410	)			(567	)			(4,156	)			(15,034	)			(20,167	)			(14,420	)
Net income (loss)		$	(265	)		$	1,767			$	(6,530	)		$	(48,521	)		$	(53,549	)		$	(6,585	)
Net income (loss) per share
Basic and diluted
Income (loss) from continuing operations		$	0.01			$	0.09			$	(0.09	)		$	(1.30	)		$	(1.30	)		$	0.31
Loss from discontinued operations		$	(0.02	)		$	(0.02	)		$	(0.16	)		$	(0.59	)		$	(0.79	)		$	(0.56	)
Net income (loss)		$	(0.01	)		$	0.07			$	(0.25	)		$	(1.89	)		$	(2.09	)		$	(0.26	)
Weighted average shares outstanding
Basic			25,639				25,651				25,672				25,673				25,659				25,629
Diluted			25,680				25,749				25,672				25,673				25,659				25,636

 

 

Non-GAAP Financial Measures

 

		Quarter Ended																Full Year				Full Year
		March 31, 2014				June 30, 2014				September 29, 2014				December 29, 2014				2014				2013
Income (loss) from continuing operations		$	145			$	2,334			$	(2,374	)		$	(33,487	)		$	(33,382	)		$	7,835
Adjustments - continuing operations:
Transaction costs			-				89				421				-				510				-
Proposed secondary offering expenses			-				-				-				-				-				759
Costs related to conversions, remodels and closures			-				-				127				-				127				677
Write-off of debt issuance costs			-				-				2,241				-				2,241				507
Asset impairments			-				-				1,770				-				1,770				-
Gain on insurance settlements			-				-				(89	)			-				(89	)			(1,161	)
Income tax effect of adjustments above			-				(35	)			(1,761	)			-				(1,796	)			(308	)
Valuation allowance			-				-				-				25,632				25,632				-
Adjusted income (loss) from continuing operations		$	145			$	2,388			$	335			$	(7,855	)		$	(4,987	)		$	(8,309	)
Weighted average shares outstanding
Basic			25,639				25,651				25,672				25,673				25,659				25,629
Diluted			25,680				25,749				25,672				25,673				25,659				25,636
Income (loss) from continuing operations per share
Basic and diluted		$	0.01			$	0.09			$	(0.09	)		$	(1.30	)		$	(1.30	)		$	0.31
Adjusted income (loss) from continuing operations per share
Basic and diluted		$	0.01			$	0.09			$	0.01			$	(0.31	)		$	(0.19	)		$	0.32

 

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