Luby's Returns to First-Quarter Profit

Luby's, Inc. (NYSE: LUB) announced unaudited financial results for the first quarter fiscal 2006, which ended on November 23, 2005. Same-store sales increased 6.9% over the first quarter fiscal 2005 and the Company generated net income of $2.2 million and reduced outstanding debt by $3.5 million in the first quarter to $10.0 million.

Sales in the first quarter fiscal 2006 were $73.3 million, an increase of 6.9% compared to the first quarter fiscal 2005. All of the Company's sales during the first quarter were characterized as same-store sales. Fiscal 2005 was a 53 week year for the Company which caused a calendar shift comparison for fiscal year 2006. The first quarter fiscal 2006 ended on November 23, 2005, one week closer to Thanksgiving than the first quarter fiscal 2005 that ended on November 17, 2004. Excluding this calendar shift, same-store sales increased 5.5%. Thanksgiving Day fell in the second quarter of fiscal 2005 and 2006.

The Company reported net income of $2.2 million, or $0.08 per share fully diluted, in the first quarter fiscal 2006 compared to a net loss of $1.0 million, or $0.05 per share fully diluted, in the first quarter fiscal 2005.

First quarter sales were adversely affected by Hurricane Rita which resulted in a loss of approximately 236 store days of operations. After Hurricane Rita passed through Southeast Texas, one unit in Port Arthur, TX suffered permanent damage and remains closed while all other Luby's restaurants impacted by the storm suffered minimal damage and were reopened. The loss of revenue caused by Hurricane Rita was offset by increased traffic at certain locations, and catering events related to the hurricane relief effort.

"We are pleased with our team's solid performance in the first quarter despite a challenging economic environment that included rising energy costs and the impact of store closures due to Hurricane Rita," said Chris Pappas, President and CEO. "The first quarter marked our eighth consecutive quarter of same-store sales growth, much of which we credit to effective marketing and operations initiatives, strong brand loyalty and the competitive value proposition of our offerings."

Income from operations in the first quarter fiscal 2006 was $3.4 million compared to $0.3 million for the first quarter fiscal 2005. EBITDA in the first quarter fiscal 2006 was $6.6 million, an increase of 60.4% compared to EBITDA of $4.1 million in the first quarter of fiscal 2005. Included in the financial tables of this press release is a reconciliation of EBITDA, which is a Non-GAAP financial measure, to income from operations.

Total prime costs of food and payroll in the first quarter fiscal 2006 were 62.9% of sales, an improvement compared to 65.3% in the first quarter fiscal 2005. The improvement in food costs came from lower commodity costs for poultry, fresh produce, beef and dairy products, which were partially offset by higher seafood, shortening and oil commodity prices. The improvement in payroll costs was primarily the result of increased sales, a reduction in worker compensation expense and enhanced productivity and effective labor deployment. Other operating expenses were 21.6% of sales in the first quarter fiscal 2006, an improvement compared to 22.8% of sales in the same quarter of fiscal 2005. General and Administrative costs were 6.6% of sales in the first quarter fiscal 2006 compared to 6.0% of sales in the first quarter fiscal 2005. This increase was due primarily to staffing increases and consulting fees associated with the implementation of new business systems.



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