Landry's Restaurants, Inc. ('LNY'/NYSE) Reports Fourth Quarter Adjusted EBITDA of $34.6 Million and Full Year 2009 Adjusted EBITDA of $178.6 Million
Revenues from continuing operations for the three months ended December 31, 2009, totaled $245.3 million, as compared to $253.7 million a year earlier, including $51.9 million and $56.4 million from the Golden Nugget, respectively.
Revenues from continuing operations for the three months ended December 31, 2009, totaled $245.3 million, as compared to $253.7 million a year earlier, including $51.9 million and $56.4 million from the Golden Nugget, respectively. Net income (loss) from continuing operations for the quarter was ($32.3) million, compared to $4.8 million reported last year. Earnings (loss) per share for the quarter were ($2.20), compared to $0.28 diluted reported last year. Results for the fourth quarter of 2009 reflect an additional charge of $23.2 million after-tax related to accelerated amortization of the original issue discount and deferred loan costs resulting from the Company's refinancing its 14.0% Senior Secured Notes in November 2009 recorded as interest expense, and additional interest expense of $8.1 million after-tax due to substantially higher interest rates associated with the new financing, while the comparable period in the prior year includes an impairment gain of $11.5 million after tax from insurance proceeds arising from Hurricane Ike. The three months ended December 31, 2009, also include a $1.6 million after-tax non-cash gain for the change in fair value of interest rate swaps compared to an $8.0 million after-tax non-cash expense for interest rate swaps in the prior comparable period. Excluding the items noted above, net of 2009 asset gains and impairments, the pre-tax loss from continuing operations for the quarter would have been $5.2 million as compared to pre-tax income of $1.4 million for the prior comparable period. Same store sales for the Company's restaurants were negative 5.0% for the quarter, while gaming operations were negative 8.0%.
Adjusted EBITDA, as defined below, for the quarter was $34.6 million as compared to $39.2 million for the same period in the prior year. The restaurant and hospitality division contributed $24.1 million compared to $24.9 million in the prior year, while gaming operations contributed $10.5 million in the fourth quarter of 2009 versus $14.3 million in the fourth quarter of 2008.
Revenues from continuing operations for the year ended December 31, 2009, totaled $1,060.2 million, as compared to $1,143.9 million a year earlier, including $216.8 million and $253.3 million from the Golden Nugget, respectively. Net income (loss) from continuing operations for the year was ($7.3) million, compared to $13.7 million reported last year. Earnings (loss) per share from continuing operations for the year were ($0.99), compared to $0.82 diluted in the prior year. Included in earnings from continuing operations after-tax for the year ended December 31, 2009 is a gain on debt extinguishment of $12.6 million, gains on insurance proceeds of $3.2 million, a favorable lease termination of $4.9 million offset by the fourth quarter refinancing charges of $23.2 million, resulting in a net charge of $2.5 million compared to a $9.3 million non-cash after-tax charge related to interest rate swaps not designated as hedges in the prior year. Interest expense for 2009 increased by approximately $22.6 million after-tax, primarily due to the higher interest rates on the Company's new borrowings and higher borrowings outstanding.
Excluding the non-recurring items described above, adjusted EBITDA, as defined below, for 2009 was $178.6 million as compared to $191.8 million for the same period in the prior year. The restaurant and hospitality division contributed $136.1 million compared to $129.8 million in the prior year, while gaming operations contributed $42.5 million in 2009 versus $62.0 million for 2008.
The loss from discontinued operations, net of taxes, for the quarter ended December 31, 2009 and 2008 was less than $0.1 million and less than $0.01 per share. The consolidated net loss for the quarter, including a $2.9 million charge to accrete a redeemable non-controlling interest in the Company's T-Rex subsidiary, was ($35.6) million or ($2.20) per share, compared to net income of $4.6 million or $0.28 per share in 2008. The loss from discontinued operations, net of taxes, was $0.2 million and $10.6 million for the year ended December 31, 2009 and 2008, respectively, and the consolidated net income (loss) for 2009, including a $7.7 million charge for the redeemable non-controlling interest, was ($16.2) million or ($1.00) per share compared to $2.9 million or $0.18 per share diluted in 2008.
On November 3, 2009, the Company entered into a definitive merger agreement with a company wholly-owned by the Company's Chairman and Chief Executive Officer, Mr. Tilman J. Fertitta. Pursuant to the agreement, the Fertitta owned company has agreed to acquire all of the Company's outstanding common stock not already owned by Mr. Fertitta for $14.75 per share in cash. The offer price represents a premium of approximately 37% over the closing share price of the Company's common stock on November 2, 2009, the last trading day before the announcement of the transaction. The total value of the transaction is approximately $1.2 billion. On November 2, 2009, Mr. Fertitta beneficially owned approximately 55.1% of the Company's outstanding shares of common stock.
The proposed merger transaction is subject to approval by Company stockholders, including approval by the holders of a majority of the Company's common stock not owned by Mr. Fertitta. The transaction is also subject to regulatory approvals and other customary closing conditions.
In November 2009, the Company entered into a $235.6 million Amended and Restated Credit Agreement and issued $406.5 million in 11 5/8 Senior Secured Notes due 2015. The proceeds were used to repay all of the Company's outstanding $295.5 million Senior Secured Notes due 2011, provide liquidity and pay expenses. As previously announced on February 17, 2010, the Golden Nugget entered into Amendment No 2 and Waiver to its First and Second Lien Credit Agreements whereby affiliates of the Golden Nugget will provide $50.0 million in additional funds to the Golden Nugget, $20.0 million of which will be used for operating liquidity and $30.0 million of which will be available to purchase and retire second lien debt at 40% of face value. At closing approximately $62.8 million of second lien indebtedness was acquired and retired. In addition, the financial covenants were amended to become less restrictive, cash distributions from the Golden Nugget became more restrictive, a consent fee of 0.5% will be paid on all outstanding first lien amounts annually and an additional 1% "PIK" interest will accrue on all outstanding first lien indebtedness, or be payable in cash at the discretion of Golden Nugget.
The new Company financing combined with the Golden Nugget existing debt agreements as amended will result in consolidated annual interest expense of approximately $109.0 million, with approximately $99.0 million in cash interest, and the remainder from PIK interest, amortization of financing costs and original issue discount.
Due to a number of factors affecting consumers, including rising unemployment, home foreclosures, a slowdown in global economies, contracting credit markets, and reduced consumer spending, the near term outlook for the restaurant, hospitality, entertainment and gaming industries remains uncertain. In response to the current economic conditions, the Company has taken measures to increase efficiencies and reduce its cost structure across its businesses. As a result of the higher interest costs, lower consumer spending and continued economic uncertainty, the Company expects to reduce its unit growth and conserve capital for debt repayment.
The Company's continuing operations include restaurants primarily under the trade names Landry's Seafood House, Chart House, Rainforest Cafe, Saltgrass Steak House and the Signature Group as well as other businesses including hotels, marinas, amusements, retail and the Golden Nugget Hotels and Casinos in Las Vegas and Laughlin, Nevada at December 31, 2009.
LANDRY'S RESTAURANTS, INC.
CONSOLIDATED INCOME STATEMENTS (000's except per share amounts)
---------------------------------------------------------------
FOR THE QUARTER FOR THE QUARTER
ENDED ENDED
December 31, 2009 December 31, 2008
----------------- -----------------
REVENUES $245,330 100.0% $253,729 100.0%
-------- ----- -------- -----
COST OF REVENUES 51,368 20.9% 53,739 21.2%
LABOR 79,312 32.4% 81,521 32.1%
OTHER OPERATING EXPENSES 67,225 27.4% 63,997 25.2%
------ ---- ------ ----
UNIT LEVEL PROFIT 47,425 19.3% 54,472 21.5%
GENERAL & ADMINISTRATIVE 13,054 5.3% 14,419 5.7%
PRE-OPENING COSTS 202 0.1% 874 0.3%
DEPRECIATION & AMORTIZATION 18,673 7.6% 17,171 6.8%
GAIN ON INSURANCE CLAIMS (440) -0.2% - 0.0%
LOSS (GAIN) ON DISPOSAL OF ASSETS (735) -0.3% (59) 0.0%
ASSET IMPAIRMENT EXPENSE 2,280 0.9% (17,676) -7.0%
----- --- ------- ----
TOTAL OPERATING INCOME 14,391 5.9% 39,743 15.7%
Interest expense, net 67,804 19,642
Other, net (1,387) 13,253
------ ------
OTHER EXPENSE (INCOME) 66,417 32,895
------ ------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE TAXES (52,026) 6,848
TAX PROVISION (BENEFIT) (19,749) 2,075
------- -----
INCOME (LOSS) FROM CONTINUING
OPERATIONS (32,277) 4,773
INCOME (LOSS) FROM DISCONTINUED
OPERATIONS, NET OF TAXES (51) (33)
--- ---
NET INCOME (LOSS) (32,328) 4,740
LESS: NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTEREST 330 170
--- ---
NET INCOME (LOSS) ATTRIBUTABLE
TO LANDRY'S (32,658) 4,570
LESS: ACCRETION OF REDEEMABLE
NONCONTROLLING INTEREST 2,906 -
----- ---
NET INCOME (LOSS) AVAILABLE TO
LANDRY'S STOCKHOLDERS $(35,564) $4,570
======== ======
AMOUNTS AVAILABLE TO LANDRY'S
STOCKHOLDERS:
EARNINGS (LOSS) PER SHARE - BASIC:
INCOME (LOSS) FROM CONTINUING
OPERATIONS $(2.20) $0.29
INCOME (LOSS) FROM DISCONTINUED
OPERATIONS - (0.01)
--- -----
NET INCOME (LOSS) $(2.20) $0.28
====== =====
AVERAGE SHARES 16,170 16,140
EARNINGS (LOSS) PER SHARE - DILUTED:
INCOME (LOSS) FROM CONTINUING
OPERATIONS $(2.20) $0.28
INCOME (LOSS) FROM DISCONTINUED
OPERATIONS - -
--- ---
NET INCOME (LOSS) $(2.20) $0.28
====== =====
AVERAGE SHARES 16,170 16,260
Adjusted EBITDA:
Net income (loss) $(32,328) $4,740
Add back:
Loss from discontinued operations 51 33
Tax provision (benefit) (19,749) 2,075
Interest expense, net 67,804 19,642
Depreciation and amortization 18,673 17,171
Asset impairment expense 2,280 (17,676)
Swaps (2,486) 12,240
Gain on debt buy back - -
Gain on insurance claims (440) -
Stock based compensation 819 1,003
Lease termination benefit - -
Adjusted EBITDA $34,624 $39,228
FOR THE FOR THE
TWELVE MONTHS ENDED TWELVE MONTHS ENDED
December 31, 2009 December 31, 2008
----------------- -----------------
REVENUES $1,060,234 100.0% $1,143,889 100.0%
---------- ----- ---------- -----
COST OF REVENUES 218,555 20.6% 245,381 21.5%
LABOR 340,757 32.1% 366,395 32.0%
OTHER OPERATING EXPENSES 264,759 25.0% 288,090 25.2%
------- ---- ------- ----
UNIT LEVEL PROFIT 236,163 22.3% 244,023 21.3%
GENERAL & ADMINISTRATIVE 49,279 4.7% 51,294 4.5%
PRE-OPENING COSTS 1,095 0.1% 2,266 0.2%
DEPRECIATION & AMORTIZATION 72,038 6.8% 70,292 6.1%
GAIN ON INSURANCE CLAIMS (4,851) -0.5% - 0.0%
LOSS (GAIN) ON DISPOSAL OF ASSETS (2,098) -0.2% (59) 0.0%
ASSET IMPAIRMENT EXPENSE 2,888 0.3% 2,409 0.2%
----- --- ----- ---
TOTAL OPERATING INCOME 117,812 11.1% 117,821 10.3%
Interest expense, net 150,269 79,817
Other, net (15,371) 17,035
------- ------
OTHER EXPENSE (INCOME) 134,898 96,852
------- ------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE TAXES (17,086) 20,969
TAX PROVISION (BENEFIT) (9,789) 7,227
------ -----
INCOME (LOSS) FROM CONTINUING
OPERATIONS (7,297) 13,742
INCOME (LOSS) FROM DISCONTINUED
OPERATIONS, NET OF TAXES (206) (10,569)
---- -------
NET INCOME (LOSS) (7,503) 3,173
LESS: NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTEREST 1,010 265
----- ---
NET INCOME (LOSS) ATTRIBUTABLE
TO LANDRY'S (8,513) 2,908
LESS: ACCRETION OF REDEEMABLE
NONCONTROLLING INTEREST 7,717 -
----- ---
NET INCOME (LOSS) AVAILABLE TO
LANDRY'S STOCKHOLDERS $(16,230) $2,908
======== ======
AMOUNTS AVAILABLE TO LANDRY'S STOCKHOLDERS:
EARNINGS (LOSS) PER SHARE - BASIC:
INCOME (LOSS) FROM CONTINUING
OPERATIONS $(0.99) $0.84
INCOME (LOSS) FROM DISCONTINUED
OPERATIONS (0.01) (0.66)
----- -----
NET INCOME (LOSS) $(1.00) $0.18
====== =====
AVERAGE SHARES 16,150 16,140
EARNINGS (LOSS) PER SHARE - DILUTED:
INCOME (LOSS) FROM CONTINUING
OPERATIONS $(0.99) $0.82
INCOME (LOSS) FROM DISCONTINUED
OPERATIONS (0.01) (0.64)
----- -----
NET INCOME (LOSS) $(1.00) $0.18
====== =====
AVERAGE SHARES 16,150 16,345
Adjusted EBITDA:
Net income (loss) $(7,503) $3,173
Add back:
Loss from discontinued operations 206 10,569
Tax provision (benefit) (9,789) 7,227
Interest expense, net 150,269 79,817
Depreciation and amortization 72,038 70,292
Asset impairment expense 2,888 2,409
Swaps (1,179) 14,294
Gain on debt buy back (19,407) -
Gain on insurance claims (4,851) -
Stock based compensation 3,487 4,066
Lease termination benefit (7,500) -
Adjusted EBITDA $178,659 $191,847
Adjusted EBITDA includes asset impairment expense as we consider asset
impairment expense to be additional depreciation expense. Adjusted EBITDA
has certain limitations and is not a generally accepted accounting
principles (“GAAP”) measurement and is presented solely as a supplemental
disclosure because we believe that it is a widely used measure of
operating performance. Adjusted EBITDA is also not intended to be viewed
as a source of liquidity or as a cash flow measure as used in the
statement of cash flows. We compensate for these limitations by relying
primarily on our GAAP results and using adjusted EBITDA only
supplementally as a valuation statistic. Adjusted EBITDA as shown differs
from that used in our credit agreements primarily due to non-guarantor
subsidiaries and other specifically defined calculations.
LANDRY'S RESTAURANTS, INC.
CONDENSED UNAUDITED BALANCE SHEETS
($ in millions)
December 31, 2009 December 31, 2008
----------------- -----------------
Cash & equivalents $71.6 $51.1
Restricted cash 73.1 -
Assets related to
discontinued
operations 3.0 3.0
Other current assets 85.3 81.2
---- ----
Total current
assets 233.0 135.3
Property & equipment,
net 1,334.3 1,259.2
Other assets 132.8 120.8
----- -----
Total assets $1,700.1 $1,515.3
======== ========
Current liabilities $216.8 $216.3
Liabilities related
to discontinued
operations 2.9 5.1
Long-term debt 1,064.7 862.3
Other non-current 103.8 134.5
----- -----
Total liabilities 1,388.2 1,218.2
Redeemable
noncontrolling
interest 10.3 1.6
Total equity 301.6 295.5
----- -----
Total liabilities &
equity $1,700.1 $1,515.3
======== ========
Logos, product and company names mentioned are the property of their respective owners.
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