Landry's Restaurants, Inc. ('LNY'/NYSE) Reports First Quarter 2010 Results

2010-05-12

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Landrys Restaurants Revenues from continuing operations for the three months ended March 31, 2010, totaled $258.7 million, as compared to $256.3 million a year earlier. Revenues from the restaurant and hospitality group were $199.2 million and $200.3 million for the first quarter of 2010 and 2009, respectively and $59.5 million and $56.0 million for the same periods from the Golden Nugget properties.

Income from continuing operations for the quarter was $14.6 million, compared to $7.4 million reported last year.

Results for the 2010 first quarter included a gain from the repurchase of a portion of the Golden Nugget debt and from receipt of certain insurance proceeds, while the corresponding period in 2009 included reduced rent expense from a one time lease termination payment and a gain on insurance proceeds partially offset by an expense for call premiums arising from the Company's successful refinancing in February 2009. In addition, the 2010 first quarter included a non-cash loss on the value of interest rate swaps not designated as hedges as compared to a gain during the same period in 2009. A summary of discrete items impacting the comparability between 2010 and 2009 results, net of tax is provided below.

Same store sales for the Company's restaurants were negative approximately 2% for the quarter. Earnings per share-diluted from continuing operations for the quarter were $0.87, compared to $0.37 reported last year. Excluding the discrete items noted above, earnings (loss) per share would have been ($0.09) for 2010 as compared to $0.07 for the same period in 2009.

Interest expense for the first quarter of 2010 was $29.0 million compared to $24.6 million in the first quarter of 2009 primarily due to higher borrowings associated with construction of the new tower at the Golden Nugget and higher interest rates.

Adjusted EBITDA, as described below, excluding the discrete items noted above for the first quarter of 2010 was $43.8 million comprised of $29.9 million for the restaurant and hospitality group and $13.9 million from gaming operations compared to $45.3 million in the comparable prior year period with $32.9 million from the restaurant and hospitality group and $12.4 million from gaming operations.

Rick Liem, Executive Vice President and CFO stated, "Operating margins from the restaurant and hospitality group suffered somewhat from higher marketing and promotion spend in the face of improving but still negative same store sales for the quarter. Results from the gaming operations reflect higher traffic from the new tower offset by continued competitive pressure, particularly on room rates."

As a result of the Company's 2006 sale of the Joe's Crab Shack concept and closure of certain additional locations, the results of operations for these restaurants are reflected as discontinued operations in the Company's financial statements. The loss from discontinued operations, net of taxes, for the quarters ended March 31, 2010 and 2009 were not material. Consolidated net income for the quarter was $14.3 million or $0.87 per share – diluted, compared to net income of $6.0 million or $0.37 per share – diluted in the comparable period in 2009.

As previously announced, in April the Company issued an additional $47.0 million face amount of its 11 5/8% Senior Secured Notes due 2015 and received gross proceeds of $49.8 million. The Company also acquired The Oceanaire Inc., (Oceanaire), comprised of the twelve remaining Oceanaire Seafood Room restaurants in an auction process through the U.S. Bankruptcy Court for a purchase consideration of approximately $23.4 million, assumption of certain working capital liabilities and transaction costs. The results of operations for these restaurants will be included in the Company's financial statements beginning April 30, 2010.

The Company's continuing operations include restaurants primarily under the trade names Landry's Seafood House, Chart House, Rainforest Cafe, Saltgrass Steak House, The Oceanaire Seafood Room, 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.

LANDRY'S RESTAURANTS, INC.

CONSOLIDATED INCOME STATEMENTS (000's except per share amounts)


	FOR THE QUARTER ENDED		FOR THE QUARTER ENDED
	March 31, 2010		March 31, 2009

REVENUES	$ 258,731	100.0%	$ 256,290	100.0%

COST OF REVENUES	52,494	20.3%	52,761	20.5%

LABOR	83,603	32.3%	82,811	32.3%

OTHER OPERATING EXPENSES	67,272	26.0%	56,257	22.0%

UNIT LEVEL PROFIT	55,362	21.4%	64,461	25.2%

GENERAL & ADMINISTRATIVE	12,699	4.9%	12,058	4.7%

PRE-OPENING COSTS	93	0.0%	256	0.1%

DEPRECIATION & AMORTIZATION	19,104	7.5%	17,760	6.9%

GAIN ON INSURANCE CLAIMS	(1,238)	-0.5%	(3,483)	-1.4%

LOSS (GAIN) ON DISPOSAL OF ASSETS	(938)	-0.4%	(622)	-0.1%


TOTAL OPERATING INCOME	25,642	9.9%	38,492	15.0%
Interest	29,034		24,615
Other	(22,644)		4,135
OTHER EXPENSE (INCOME)	6,390		28,750

INCOME FROM CONTINUING OPERATIONS
BEFORE TAXES	19,252		9,742

TAX PROVISION (BENEFIT)	4,666		2,388

INCOME (LOSS) FROM CONTINUING OPERATIONS	14,586		7,354

INCOME (LOSS) FROM DISCONTINUED
OPERATIONS, NET OF TAXES	(38)		(51)

NET INCOME (LOSS)	14,548		7,303

LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST	222		230

NET INCOME (LOSS) ATTRIBUTABLE TO LANDRY'S	$ 14,326		$ 7,073

LESS: ACCRETION OF REDEEMABLE NONCONTROLLING INTEREST	-		1,065

NET INCOME (LOSS) AVAILABLE TO LANDRY'S STOCKHOLDERS	$ 14,326		$ 6,008

AMOUNTS AVAILABLE TO LANDRY'S STOCKHOLDERS:

EARNINGS (LOSS) PER SHARE - BASIC:

INCOME (LOSS) FROM CONTINUING OPERATIONS	$ 0.88		$ 0.37

INCOME (LOSS) FROM DISCONTINUED
OPERATIONS	-		-

NET INCOME (LOSS)	0.88		0.37


AVERAGE SHARES	16,240		16,140

EARNINGS (LOSS) PER SHARE - DILUTED:

INCOME (LOSS) FROM CONTINUING OPERATIONS	$ 0.87		$ 0.37

INCOME (LOSS) FROM DISCONTINUED
OPERATIONS	-		-

NET INCOME (LOSS)	0.87		0.37

AVERAGE SHARES	16,500		16,155


Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization):

Net income	$ 14,548		$ 7,303

Add back:

Tax provision (benefit)	4,666		2,388

Interest expense, net	29,034		24,615

Depreciation and amortization	19,104		17,760

Swaps	10,043		(425)

Gain on debt buy back	(32,998)		-

Gain on Insurance Claims	(1,238)		(3,483)

Refinancing	-		3,973

Minority interest	(222)		(230)

Stock based compensation	817		948

Lease termination benefit	-		(7,500)

Adjusted EBITDA	$ 43,754		$ 45,349


Adjusted EBITDA is not a generally accepted accounting principles ("GAAP") measurement and is presented solely as a supplemental disclosure because the Company believes that it is a widely used measure of operating performance in the restaurant industry. Adjusted EBITDA is not intended to be viewed as a source of liquidity or as a cash flow measure as used in the statement of cash flows. Adjusted EBITDA is simply shown above as it is a commonly used non-GAAP valuation statistic.

SOURCE Landry's Restaurants, Inc.