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, 2016

 

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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, 2016, Ignite Restaurant Group, Inc. (the “Company”) issued a press release reporting financial results for the quarter and fiscal year ended March 28, 2016. 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 May 4, 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: May 4, 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) costs related to conversions, remodels and closures, (b) loss on insurance settlements, (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 First Quarter 2016 Financial Results

 

 

Houston, TX—(BUSINESS WIRE)—May 4, 2016 - Ignite Restaurant Group (NASDAQ: IRG) today reported financial results for the first quarter ended March 28, 2016.

 

Highlights for the first quarter of 2016 were as follows:

 

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Total revenues were $117.9 million, compared to $122.2 million in the first quarter of 2015;

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Comparable restaurant sales decreased 1.8% company-wide, comprised of a 1.3% decrease at Joe’s Crab Shack and a 4.5% decrease at Brick House Tavern + Tap;

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Loss from continuing operations was $1.6 million, or $0.06 per diluted share, compared to $3.2 million, or $0.12 per diluted share in the first quarter of 2015; and

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Adjusted loss from continuing operations (a non-GAAP measure) was $1.1 million, or $0.04 per diluted share, compared to $1.0 million, or $0.04 per diluted share in the first quarter of 2015.

 

Robert S. Merritt, Chief Executive Officer of Ignite Restaurant Group, stated, “We are encouraged by the results that we continue to experience from our weekday value initiatives including the All You Can Eat crab offering on Wednesdays. We generated positive comparable restaurant sales at Joe’s for most of the quarter but were negatively affected by the Easter holiday shift into March this year. We rolled out a new menu this week at Joe’s and Brick House that we believe will positively impact sales and execution in both brands. Both of the menus have a reduced number of items which will provide an opportunity to reduce ticket times while also offering the items that are most popular with our guests.”                

 

Review of First Quarter 2016 Operating Results

 

Total revenues were $117.9 million in the first quarter of 2016, a decrease of 3.5% compared to $122.2 million in the first quarter of last year.

 

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Revenues at Joe’s Crab Shack were $96.2 million during the first quarter of 2016 versus $103.1 million in the prior year first quarter. Comparable restaurant sales at Joe’s Crab Shack decreased 1.3%.

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Revenues at Brick House Tavern + Tap were $21.7 million in the first quarter of 2016 compared to $19.1 million in the prior year first quarter. Comparable restaurant sales at Brick House Tavern + Tap decreased 4.5%.

 

Loss from continuing operations for the first quarter of 2016 was $1.6 million, or $0.06 per diluted share. The Company’s loss from continuing operations for the first quarter of 2016 included certain non-recurring items, the most significant of which is a $0.5 million deferred tax valuation allowance. 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 $1.1 million and $0.04, respectively, in the first quarter of 2016.

 

Loss from continuing operations for the first quarter of 2015 was $3.2 million, or $0.12 per diluted share. The Company’s loss from continuing operations for the first quarter of 2015 also included certain non-recurring items, the most significant of which is a $2.1 million deferred tax valuation allowance. 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 $1.0 million and $0.04, respectively, in the first quarter of 2015.

 

 

Development

 

During the first quarter of 2016, the Company opened three Brick House restaurants (located in Latham, NY, Sugarland, TX, and Methuen, MA), all of which were conversions from Joe’s restaurants.

 

Liquidity

 

At March 28, 2016, the Company had $7.5 million of cash and approximately $25.9 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 first 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 800-289-0438 or for international callers by dialing 913-312-0636. 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 4318629. The replay will be available until Wednesday, May 11, 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.

 

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 weeks ended March 28, 2016 and March 30, 2015, and selected consolidated balance sheet information as of March 28, 2016 and December 28, 2015:

 

Consolidated Statements of Operations		Thirteen Weeks Ended March 28, 2016								Thirteen Weeks Ended March 30, 2015
		(In thousands, except percent and per share data)
Revenues		$	117,899				100.0	%		$	122,219				100.0	%
Costs and expenses
Restaurant operating costs and expenses
Cost of sales			37,166				31.5	%			38,601				31.6	%
Labor expenses			35,922				30.5	%			34,817				28.5	%
Occupancy expenses			9,906				8.4	%			10,222				8.4	%
Other operating expenses			19,663				16.7	%			22,099				18.1	%
General and administrative			6,550				5.6	%			8,395				6.9	%
Depreciation and amortization			6,026				5.1	%			6,229				5.1	%
Pre-opening costs			881				0.7	%			468				0.4	%
Asset impairments and closures			193				0.2	%			30				0.0	%
Loss on disposal of assets			101				0.1	%			158				0.1	%
Total costs and expenses			116,408				98.7	%			121,019				99.0	%
Income from operations			1,491				1.3	%			1,200				1.0	%
Interest expense, net			(3,020	)			(2.6	)%			(3,876	)			(3.2	)%
Loss on insurance settlements			(8	)			(0.0	)%			-				0.0	%
Loss from continuing operations before income taxes			(1,537	)			(1.3	)%			(2,676	)			(2.2	)%
Income tax expense			89				0.1	%			520				0.4	%
Loss from continuing operations			(1,626	)			(1.4	)%			(3,196	)			(2.6	)%
Loss from discontinued operations, net			-				0.0	%			(19,039	)			(15.6	)%
Net loss		$	(1,626	)			(1.4	)%		$	(22,235	)			(18.2	)%
Basic and diluted net loss per share data:
Net loss per share
Basic and diluted
Loss from continuing operations		$	(0.06	)						$	(0.12	)
Loss from discontinued operations, net		$	-							$	(0.74	)
Net loss		$	(0.06	)						$	(0.87	)
Weighted average shares outstanding
Basic and diluted			25,776								25,674

 

 

Selected Consolidated Balance Sheet Information		March 28, 2016				December 28, 2015
		(In thousands)
Cash and cash equivalents		$	7,477			$	7,817
Total assets			200,174				205,182
Long term debt (including current portion)			124,664				124,733
Total liabilities			194,774				198,569
Total stockholders' equity			5,400				6,613

 

 

		Thirteen Weeks Ended				Thirteen Weeks Ended
		March 28, 2016				March 30, 2015
		(dollars in thousands)
Selected Other Data:
Restaurants opened during the period			3				2
Number of restaurants open (end of period):
Joe's Crab Shack			130				138
Brick House Tavern + Tap			26				23
Total restaurants			156				161
Restaurant operating weeks
Joe's Crab Shack			1,690				1,805
Brick House Tavern + Tap			321				279
Average weekly sales
Joe's Crab Shack		$	57			$	57
Brick House Tavern + Tap		$	67			$	68
Change in comparable restaurant sales
Joe's Crab Shack			(1.3%	)			(3.8%	)
Brick House Tavern + Tap			(4.5%	)			5.4	%
Total			(1.8%	)			(2.7%	)

 

 

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, 2016.

 

		Thirteen Weeks Ended				Thirteen Weeks Ended
		March 28, 2016				March 30, 2015
		(In thousands, except per share data)
Loss from continuing operations - GAAP		$	(1,626	)		$	(3,196	)
Adjustments - continuing operations:
Costs related to conversions, remodels and closures			53				49
Loss on insurance settlements			8				-
Income tax effect of adjustments above			(24	)			(19	)
Deferred tax asset valuation allowance			539				2,126
Adjusted loss from continuing operations - non-GAAP		$	(1,050	)		$	(1,040	)
Weighted average shares outstanding (GAAP)
Basic and diluted			25,776				25,674
Loss from continuing operations per share (GAAP)
Basic and diluted		$	(0.06	)		$	(0.12	)
Adjusted loss from continuing operations per share (non-GAAP)
Basic and diluted		$	(0.04	)		$	(0.04	)

 

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