Form 8-K Ignite Restaurant Group, For: Aug 06

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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): August 6, 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 August 6, 2015, Ignite Restaurant Group, Inc. (the “Company”) issued a press release reporting financial results for the quarter ended June 29, 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 August 6, 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: August 6, 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 their 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) the income tax effect of the above described adjustments, and (d) 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 Second Quarter 2015 Financial Results

 

 

Houston, TX—(BUSINESS WIRE)—August 6, 2015 - Ignite Restaurant Group (NASDAQ: IRG) today reported financial results for the second quarter ended June 29, 2015.

 

The Company completed the sale of its Macaroni Grill subsidiary on April 17, 2015. Consequently, the results of operations for Macaroni Grill are reflected in discontinued operations for all periods presented.

 

Highlights for the second quarter of 2015 were as follows:

 

●

Total revenues were $143.2 million, compared to $143.3 million in the second quarter of 2014;

●

Comparable restaurant sales increased 2.8% at Brick House Tavern + Tap and decreased 4.0% at Joe’s Crab Shack;

●

Income from continuing operations was $1.7 million, or $0.07 per diluted share, compared to $2.3 million, or $0.09 per diluted share in the second quarter of 2014; and

●

Adjusted income from continuing operations (a non-GAAP measure) was $2.3 million, or $0.09 per diluted share, compared to $2.4 million, or $0.09 per diluted share in the second quarter of 2014.

 

Ray Blanchette, President and Chief Executive Officer of Ignite Restaurant Group, stated, “Our second quarter was marked by another solid performance at Brick House Tavern + Tap, led by a 2.8% increase in comparable restaurant sales, even as we lapped a very strong quarter from last year. We are looking forward to resuming our development plan for Brick House later this year to capitalize on its enormous growth opportunity. We are also pleased with the improvement in restaurant-level profitability that we achieved during the quarter. While we acknowledge the continued challenges at Joe’s Crab Shack, we remain confident with the long-term prospect of the brand and are actively identifying new growth layers that can complement our business model and drive guest traffic to our restaurants.”

 

Review of Second Quarter 2015 Operating Results

Total revenues were $143.2 million in the second quarter of 2015, a decrease of 0.1% compared to $143.3 million in the second quarter of last year.

 

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Revenues at Joe’s Crab Shack were $122.4 million during the second quarter of 2015 versus $125.5 million in the prior year second quarter. Comparable restaurant sales at Joe’s Crab Shack decreased 4.0%.

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Revenues at Brick House Tavern + Tap were $20.8 million in the second quarter of 2015 compared to $17.8 million in the prior year second quarter. Comparable restaurant sales at Brick House Tavern + Tap increased 2.8%.

 

For the second quarter of 2015, income from continuing operations was $1.7 million, or $0.07 per diluted share, compared to $2.3 million, or $0.09 per diluted share in the second quarter of 2014. Income from continuing operations for the second quarter of 2015 included charges of approximately $0.6 million related to a deferred tax asset valuation allowance and costs of conversions, remodels and closures. Excluding these items, adjusted income from continuing operations and adjusted income from continuing operations per diluted share (which are non-GAAP financial measures) was $2.3 million and $0.09, respectively, compared to $2.4 million, or $0.09 per diluted share in the second quarter of 2014.

 

 

Liquidity

At June 29, 2015, the Company had $48.4 million of cash and approximately $24.3 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 second 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 877-397-0292 or for international callers by dialing 719-325-4753. 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 3869905. The replay will be available until Thursday, August 13, 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 twenty-six weeks ended June 29, 2015 and June 30, 2014, and selected consolidated balance sheet information as of June 29, 2015 and December 29, 2014:

 

Consolidated Statements of Operations		Thirteen Weeks Ended June 29, 2015								Thirteen Weeks Ended June 30, 2014
		(In thousands, except percent and per share data)
Revenues		$	143,170				100.0	%		$	143,283				100.0	%
Costs and expenses
Restaurant operating costs and expenses
Cost of sales			44,065				30.8	%			47,116				32.9	%
Labor expenses			39,990				27.9	%			39,117				27.3	%
Occupancy expenses			10,422				7.3	%			9,719				6.8	%
Other operating expenses			27,571				19.3	%			26,910				18.8	%
General and administrative			8,363				5.8	%			9,400				6.6	%
Depreciation and amortization			6,177				4.3	%			5,871				4.1	%
Pre-opening costs			46				0.0	%			558				0.4	%
Asset impairments and closures			53				0.0	%			65				0.0	%
Loss on disposal of assets			194				0.1	%			227				0.2	%
Total costs and expenses			136,881				95.6	%			138,983				97.0	%
Income from operations			6,289				4.4	%			4,300				3.0	%
Interest expense, net			(3,849	)			(2.7	)%			(1,764	)			(1.2	)%
Income from continuing operations before income taxes			2,440				1.7	%			2,536				1.8	%
Income tax expense			709				0.5	%			202				0.1	%
Income from continuing operations			1,731				1.2	%			2,334				1.6	%
Loss from discontinued operations, net			(1,645	)			(1.1	)%			(567	)			(0.4	)%
Net income		$	86				0.1	%		$	1,767				1.2	%
Basic and diluted net income (loss) per share data:
Net income (loss) per share
Basic and diluted
Income from continuing operations		$	0.07							$	0.09
Loss from discontinued operations, net		$	(0.06	)						$	(0.02	)
Net income		$	0.00							$	0.07
Weighted average shares outstanding
Basic			25,721								25,651
Diluted			25,730								25,749

 

 

Consolidated Statements of Operations		Twenty-Six Weeks Ended June 29, 2015								Twenty-Six Weeks Ended June 30, 2014
		(In thousands, except percent and per share data)
Revenues		$	265,389				100.0	%		$	266,378				100.0	%
Costs and expenses
Restaurant operating costs and expenses
Cost of sales			82,666				31.1	%			86,151				32.3	%
Labor expenses			74,807				28.2	%			74,865				28.1	%
Occupancy expenses			20,644				7.8	%			19,219				7.2	%
Other operating expenses			49,670				18.7	%			47,910				18.0	%
General and administrative			16,758				6.3	%			20,043				7.5	%
Depreciation and amortization			12,406				4.7	%			11,693				4.4	%
Pre-opening costs			514				0.2	%			762				0.3	%
Asset impairments and closures			83				0.0	%			149				0.1	%
Loss on disposal of assets			352				0.1	%			399				0.1	%
Total costs and expenses			257,900				97.2	%			261,191				98.1	%
Income from operations			7,489				2.8	%			5,187				1.9	%
Interest expense, net			(7,725	)			(2.9	)%			(3,642	)			(1.4	)%
Income (loss) from continuing operations before income taxes			(236	)			(0.1	)%			1,545				0.6	%
Income tax expense (benefit)			1,229				0.5	%			(934	)			(0.4	)%
Income (loss) from continuing operations			(1,465	)			(0.6	)%			2,479				0.9	%
Loss from discontinued operations, net			(20,684	)			(7.8	)%			(977	)			(0.4	)%
Net income (loss)		$	(22,149	)			(8.3	)%		$	1,502				0.6	%
Basic and diluted net income (loss) per share data:
Net income (loss) per share
Basic and diluted
Income (loss) from continuing operations		$	(0.06	)						$	0.10
Loss from discontinued operations, net		$	(0.80	)						$	(0.04	)
Net income (loss)		$	(0.86	)						$	0.06
Weighted average shares outstanding
Basic			25,698								25,645
Diluted			25,698								25,715

 

Selected Consolidated Balance Sheet Information		June 29, 2015				December 29, 2014
		(In thousands)
Cash and cash equivalents		$	48,418			$	20,564
Total assets			268,410				327,720
Long term debt (including current portion)			162,117				162,702
Total liabilities			238,358				276,421
Total stockholders' equity			30,052				51,299

 

 

		Thirteen Weeks Ended				Thirteen Weeks Ended				Twenty-Six Weeks Ended				Twenty-Six Weeks Ended
		June 29, 2015				June 30, 2014				June 29, 2015				June 30, 2014
		(dollars in thousands)
Selected Other Data:
Restaurants opened during the period			-				-				2				-
Number of restaurants open (end of period):
Joe's Crab Shack			138				136				138				136
Brick House Tavern + Tap			23				20				23				20
Total restaurants			161				156				161				156
Restaurant operating weeks
Joe's Crab Shack			1,794				1,768				3,599				3,536
Brick House Tavern + Tap			299				260				578				520
Average weekly sales
Joe's Crab Shack		$	68			$	71			$	63			$	65
Brick House Tavern + Tap		$	70			$	68			$	69			$	68
Change in comparable restaurant sales
Joe's Crab Shack			(4.0	%)			(4.7	%)			(3.9	%)			(5.3	%)
Brick House Tavern + Tap			2.8	%			8.5	%			4.0	%			9.2	%
Total			(3.3	%)			(3.4	%)			(3.0	%)			(3.8	%)

 

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 August 6, 2015.

 

		Thirteen Weeks Ended				Thirteen Weeks Ended				Twenty-Six Weeks Ended				Twenty-Six Weeks Ended
		June 29, 2015				June 30, 2014				June 29, 2015				June 30, 2014
		(In thousands, except per share data)
Income (loss) from continuing operations - GAAP		$	1,731			$	2,334			$	(1,465	)		$	2,479
Adjustments - continuing operations:
Transaction costs			-				89				-				89
Costs related to conversions, remodels and closures			14				-				63				-
Income tax effect of adjustments above			(6	)			(35	)			(25	)			(35	)
Deferred tax asset valuation allowance			607				-				2,733				-
Adjusted income from continuing operations - non-GAAP		$	2,346			$	2,388			$	1,306			$	2,533
Weighted average shares outstanding (GAAP)
Basic			25,721				25,651				25,698				25,645
Diluted			25,730				25,749				25,698				25,715
Income (loss) from continuing operations per share (GAAP)
Basic and diluted		$	0.07			$	0.09			$	(0.06	)		$	0.10
Adjusted income from continuing operations per share (non-GAAP)
Basic and diluted		$	0.09			$	0.09			$	0.05			$	0.10

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