Form 8-K Ignite Restaurant Group, For: Mar 03

---

---

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 3, 2016

 

---

 

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 3, 2016, Ignite Restaurant Group, Inc. (the “Company”) issued a press release reporting financial results for the quarter and fiscal year ended December 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 March 3, 2016.

 

 

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 3, 2016

 

	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 loss from continuing operations and adjusted loss from continuing operations per share

 

We calculate adjusted loss from continuing operations by eliminating from 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 loss from continuing operations represents 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 and debt discount, (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 Fourth Quarter 2015 Financial Results

 

 

Houston, TX—(BUSINESS WIRE)—March 3, 2016 - Ignite Restaurant Group (NASDAQ: IRG) today reported financial results for the fourth quarter and fiscal year ended December 28, 2015.

 

Highlights for the fourth quarter of 2015 were as follows:

 

●

Total revenues were $93.3 million, compared to $97.9 million in the fourth quarter of 2014;

●

Comparable restaurant sales decreased 2.8% at Brick House Tavern + Tap and decreased 2.9% at Joe’s Crab Shack;

●

Loss from continuing operations was $19.1 million, or $0.74 per diluted share, compared to $33.5 million, or $1.30 per diluted share in the fourth quarter of 2014; and

●

Adjusted loss from continuing operations (a non-GAAP measure) was $7.5 million, or $0.29 per diluted share, compared to $7.9 million, or $0.31 per diluted share in the fourth quarter of 2014.

 

Highlights for the fiscal year of 2015 were as follows:

 

●

Total revenues were $492.0 million, compared to $503.5 million in 2014;

●

Comparable restaurant sales increased 1.0% at Brick House Tavern + Tap and decreased 4.5% at Joe’s Crab Shack;

●

Loss from continuing operations was $24.9 million, or $0.97 per diluted share, compared to $33.4 million, or $1.30 per diluted share in 2014; and

●

Adjusted loss from continuing operations (a non-GAAP measure) was $4.3 million, or $0.17 per diluted share, compared to $5.0 million, or $0.19 per diluted share in 2014

 

Robert S. Merritt, Chief Executive Officer of Ignite Restaurant Group, stated, “We continued to experience declining sales at Joe’s during the fourth quarter and we also began to see sales declines at Brick House later in the year. In order to reverse the negative sales trends, we have narrowed the focus of the operations team to three core areas that we believe provide the best opportunity to increase sales and operating margins in both brands– execution, people, and food. We believe that these core areas are critical to making sure that we are providing a more consistent dining experience for our guests including high quality food and excellent service on every visit. We also initiated several new weekday value programs at Joe’s, including All-You-Can-Eat crab on Wednesdays, which have contributed to increases in comparable sales and guest traffic in sequential periods at Joe’s since being rolled out system-wide in mid-November.”                

 

Review of Fourth Quarter 2015 Operating Results

 

Total revenues were $93.3 million in the fourth quarter of 2015, a decrease of 4.7% compared to $97.9 million in the fourth quarter of last year.

 

●

Revenues at Joe’s Crab Shack were $74.1 million during the fourth quarter of 2015 versus $80.0 million in the prior year fourth quarter. Comparable restaurant sales at Joe’s Crab Shack decreased 2.9%.

●

Revenues at Brick House Tavern + Tap were $19.2 million in the fourth quarter of 2015 compared to $17.9 million in the prior year fourth quarter. Comparable restaurant sales at Brick House Tavern + Tap decreased 2.8%.

 

 

Loss from continuing operations for the fourth quarter of 2015 was $19.1 million, or $0.74 per diluted share. The Company’s loss from continuing operations for the fourth quarter of 2015 included a $7.5 million deferred tax valuation allowance, a $5.5 million non-cash impairment charge, a $1.0 million write-off of debt issuance costs and debt discount, and $0.3 million of costs related to conversions, remodels and closures. Excluding the impact of these items, adjusted loss from continuing operations and adjusted loss from continuing operations per diluted share (which are non-GAAP financial measures), net of tax, were $7.5 million and $0.29, respectively, in the fourth quarter of 2015.

 

Loss from continuing operations for the fourth quarter of 2014 was $33.5 million, or $1.30 per diluted share. The Company’s loss from continuing operations for the fourth quarter of 2014 included a $25.6 million deferred tax valuation allowance. Excluding the impact of this item, adjusted loss from continuing operations and adjusted loss from continuing operations per diluted share (which are non-GAAP financial measures), net of tax, were $7.9 million and $0.31, respectively, in the fourth quarter of 2014.

 

Development

During the fourth quarter of 2015, the Company closed one Joe's restaurant, which will be converted to a Brick House, and opened one Joe's franchise restaurant in Dubai, U.A.E. For the year, the Company opened two Brick House restaurants and closed nine Joe's restaurants, of which three were converted to Brick Houses and opened in the first quarter of 2016. The three converted Brick House restaurants are located in Latham, NY, Sugarland, TX, and Methuen, MA.

 

Liquidity

At December 28, 2015, the Company had $7.8 million of cash and approximately $26.4 million of available borrowing capacity under its current credit facility. The Company was in compliance with the financial covenants under the credit facility.

 

Conference Call

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

 

The conference call can be accessed live over the phone by dialing 800-839-7875 or for international callers by dialing 913-312-0408. 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 4357030. The replay will be available until Thursday, March 10, 2016. 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., headquartered in Houston, Texas, operates a portfolio of restaurant concepts, including Joe's Crab Shack and Brick House Tavern + Tap, in a diverse set of markets across the United States. Each brand offers a variety of high-quality food 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 28, 2015 (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 fifty-two weeks ended December 28, 2015 and December 29, 2014, and selected consolidated balance sheet information as of December 28, 2015 and December 29, 2014:

 

Consolidated Statements of Operations		Thirteen Weeks Ended December 28, 2015								Thirteen Weeks Ended December 29, 2014
		(In thousands, except percent and per share data)
Revenues		$	93,298				100.0	%		$	97,858				100.0	%
Costs and expenses
Restaurant operating costs and expenses
Cost of sales			30,112				32.3	%			31,846				32.5	%
Labor expenses			30,212				32.4	%			30,297				31.0	%
Occupancy expenses			9,655				10.3	%			10,062				10.3	%
Other operating expenses			20,274				21.7	%			19,154				19.6	%
General and administrative			7,263				7.8	%			9,012				9.2	%
Depreciation and amortization			5,663				6.1	%			6,246				6.4	%
Pre-opening costs			391				0.4	%			827				0.8	%
Asset impairments and closures			5,662				6.1	%			26				0.0	%
Loss on disposal of assets			435				0.5	%			509				0.5	%
Total costs and expenses			109,667				117.5	%			107,979				110.3	%
Loss from operations			(16,369	)			(17.5	)%			(10,121	)			(10.3	)%
Interest expense, net			(4,801	)			(5.1	)%			(3,839	)			(3.9	)%
Loss from continuing operations before income taxes			(21,170	)			(22.7	)%			(13,960	)			(14.3	)%
Income tax expense (benefit)			(2,074	)			(2.2	)%			19,527				20.0	%
Loss from continuing operations			(19,096	)			(20.5	)%			(33,487	)			(34.2	)%
Loss from discontinued operations, net			(1,223	)			(1.3	)%			(15,034	)			(15.4	)%
Net loss		$	(20,319	)			(21.8	)%		$	(48,521	)			(49.6	)%
Basic and diluted net loss per share data:
Net loss per share
Basic and diluted
Loss from continuing operations		$	(0.74	)						$	(1.30	)
Loss from discontinued operations, net		$	(0.05	)						$	(0.59	)
Net loss		$	(0.79	)						$	(1.89	)
Weighted average shares outstanding
Basic and diluted			25,769								25,673

 

 

 

Consolidated Statements of Operations		Fifty-Two Weeks Ended December 28, 2015								Fifty-Two Weeks Ended December 29, 2014
		(In thousands, except percent and per share data)
Revenues		$	492,044				100.0	%		$	503,508				100.0	%
Costs and expenses
Restaurant operating costs and expenses
Cost of sales			154,270				31.4	%			163,407				32.5	%
Labor expenses			142,209				28.9	%			142,662				28.3	%
Occupancy expenses			40,890				8.3	%			39,401				7.8	%
Other operating expenses			95,384				19.4	%			94,086				18.7	%
General and administrative			30,523				6.2	%			38,669				7.7	%
Depreciation and amortization			25,831				5.2	%			23,901				4.7	%
Pre-opening costs			927				0.2	%			2,799				0.6	%
Asset impairments and closures			10,497				2.1	%			1,980				0.4	%
Loss (gain) on disposal of assets			(121	)			(0.0	)%			1,340				0.3	%
Total costs and expenses			500,410				101.7	%			508,245				100.9	%
Loss from operations			(8,366	)			(1.7	)%			(4,737	)			(0.9	)%
Interest expense, net			(16,363	)			(3.3	)%			(12,521	)			(2.5	)%
Gain (loss) on insurance settlements			(428	)			(0.1	)%			89				0.0	%
Loss from continuing operations before income taxes			(25,157	)			(5.1	)%			(17,169	)			(3.4	)%
Income tax expense (benefit)			(308	)			(0.1	)%			16,213				3.2	%
Loss from continuing operations			(24,849	)			(5.1	)%			(33,382	)			(6.6	)%
Loss from discontinued operations, net			(21,516	)			(4.4	)%			(20,167	)			(4.0	)%
Net loss		$	(46,365	)			(9.4	)%		$	(53,549	)			(10.6	)%
Basic and diluted net loss per share data:
Net loss per share
Basic and diluted
Loss from continuing operations		$	(0.97	)						$	(1.30	)
Loss from discontinued operations, net		$	(0.84	)						$	(0.79	)
Net loss		$	(1.80	)						$	(2.09	)
Weighted average shares outstanding
Basic and diluted			25,731								25,659

 

 

Selected Consolidated Balance Sheet Information		December 28, 2015				December 29, 2014
		(In thousands)
Cash and cash equivalents		$	7,817			$	20,564
Total assets			207,371				327,720
Long term debt (including current portion)			126,922				162,702
Total liabilities			200,758				276,421
Total stockholders' equity			6,613				51,299

 

 

		Thirteen Weeks Ended				Thirteen Weeks Ended				Fifty-Two Weeks Ended				Fifty-Two Weeks Ended
		December 28, 2015				December 29, 2014				December 28, 2015				December 29, 2014
		(dollars in thousands)
Selected Other Data:
Restaurants opened during the period			-				1				2				4
Number of restaurants open (end of period):
Joe's Crab Shack			130				139				130				139
Brick House Tavern + Tap			23				21				23				21
Total restaurants			153				160				153				160
Restaurant operating weeks
Joe's Crab Shack			1,690				1,797				7,058				7,107
Brick House Tavern + Tap			299				273				1,176				1,062
Average weekly sales
Joe's Crab Shack		$	44			$	45			$	59			$	61
Brick House Tavern + Tap		$	65			$	65			$	66			$	66
Change in comparable restaurant sales
Joe's Crab Shack			(2.9%	)			(4.5%	)			(4.5%	)			(4.9%	)
Brick House Tavern + Tap			(2.8%	)			5.7	%			1.0	%			7.9	%
Total			(2.9%	)			(3.1%	)			(3.9%	)			(3.5%	)

 

 

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 3, 2016.

 

 

		Thirteen Weeks Ended				Thirteen Weeks Ended				Fifty-Two Weeks Ended				Fifty-Two Weeks Ended
		December 28, 2015				December 29, 2014				December 28, 2015				December 29, 2014
		(In thousands, except per share data)
Loss from continuing operations - GAAP		$	(19,096	)		$	(33,487	)		$	(24,849	)		$	(33,382	)
Adjustments - continuing operations:
Transaction costs			-				-				-				510
Costs related to conversions, remodels and closures			332				-				1,954				127
Write-off of debt issuance costs and debt discount			962				-				962				2,241
Asset impairment			5,528				-				9,409				1,770
Loss (gain) on insurance settlements			-				-				428				(89	)
Income tax effect of adjustments above			(2,626	)			-				(4,975	)			(1,796	)
Deferred tax asset valuation allowance			7,450				25,632				12,807				25,632
Adjusted loss from continuing operations - non-GAAP		$	(7,450	)		$	(7,855	)		$	(4,264	)		$	(4,987	)
Weighted average shares outstanding (GAAP)
Basic and diluted			25,769				25,673				25,731				25,659
Loss from continuing operations per share (GAAP)
Basic and diluted		$	(0.74	)		$	(1.30	)		$	(0.97	)		$	(1.30	)
Adjusted loss from continuing operations per share (non-GAAP)
Basic and diluted		$	(0.29	)		$	(0.31	)		$	(0.17	)		$	(0.19	)

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• FORVIA SUCCESSFULLY PRICES AN ADDITIONAL €200 MILLION OF 5.500% SENIOR NOTES DUE 2031
• Littelfuse to Present at Upcoming Investor Conferences
• Vantiva - First quarter 2024 revenues