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Ignite Restaurant Group Announces Preliminary Second Quarter Financial 2013 Results

Stocks in this article: IRG

Ignite Restaurant Group (NASDAQ: IRG) today announced preliminary, unaudited financial results for the second quarter ended July 1, 2013.

The Company estimates total revenues increased 72% to $228.1 million for the second quarter of 2013 versus $132.9 million in the comparable 13 week period of 2012. This increase includes approximately $86.0 million attributable to the company’s Romano’s Macaroni Grill business, which was acquired on April 9, 2013. The Company estimates comparable restaurant sales for the Company’s legacy business increased 1.3% for the quarter, driven by a 0.7% increase at Joe’s Crab Shack and a 6.4% increase at Brick House Tavern + Tap. Comparable restaurant sales for Macaroni Grill decreased approximately 7.4% during the quarter.

The Company anticipates that diluted net loss per share for the second quarter 2013 will range between ($0.10) to ($0.12). Excluding certain costs, primarily related to acquisition related costs and specific labor related transition costs associated with the acquisition of Macaroni Grill of approximately $5.3 million pre-tax, adjusted net income per share (which is a non-GAAP financial measure) is expected to range between $0.02 and $0.04. Second quarter results were also negatively affected by an increase in marketing expenses of approximately $2 million and inefficiencies associated with our significant investment in labor, primarily related to our strategic efforts to stabilize and increase Macaroni Grill revenues. These expenses were undertaken to offset an approximate 600 basis point deterioration in the Macaroni Grill sales trends between the Company’s signing of a letter of intent and the closing of the acquisition.

Ray Blanchette, CEO of Ignite Restaurant Group, stated, “While we’re pleased with the sales improvement at Joe’s, reflecting positive comparable store sales for 18 out of the last 19 quarters, and the continued sales growth at Brick House, our second quarter operating results were significantly impacted by our decision to increase spending in the Macaroni Grill business to help drive immediate sales improvement. Returning the Mac Grill units to appropriate staffing levels along with an enhanced media buy to offset the negative sales trends required a greater initial spend than originally expected. We believe these investments have allowed us to improve sales trends, as evidenced by the sequential improvement in comparable sales from (11.5%) in March to (1.0%) in the first four weeks of the current third quarter. Our vision for the potential of the Macaroni Grill brand and its benefit to the Ignite business are unchanged, however, it will likely take longer to prove accretive to our earnings than originally anticipated. We are encouraged by the improving trends in the Macaroni Grill sales and determined to demonstrate further progress across the entire P&L over the next several quarters.”

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