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FOR IMMEDIATE RELEASE Dennard-Lascar Associates Rick Black / Ken Dennard Investor Relations

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Luby's Reports Fiscal Year 2016 and Fourth Quarter Results

Positive Same-Store Sales at all Brands in 2016 Company Announces New Five Year Credit Agreement

HOUSTON, TX - November 8, 2016 - Luby's, Inc. (NYSE: LUB) ("Luby's") today announced unaudited financial results for its thirteen-week fourth quarter fiscal 2016, which ended on August 31, 2016. Comparisons in this press release for the fourth quarter fiscal 2016 are referred to as "fourth quarter". Comparisons to the fourth quarter fiscal 2015 are to the sixteen-week period that ended August 26, 2015. In fiscal 2016, the company changed the number of reporting weeks included in its fiscal quarters in part to minimize the Thanksgiving calendar shift by extending the first fiscal quarter until after Thanksgiving, and to better align its reporting period with other restaurant companies. The company now reports 16 weeks in its first fiscal quarter, and the remaining three quarters typically include 12 weeks. The fourth fiscal quarter will be 13 weeks in certain fiscal years to adjust for our standard 52-week, or 364-day, fiscal year compared to the 365-day calendar year. Fiscal 2016 is such a year where the fourth quarter has 13 weeks, resulting in a 53-week fiscal year.

Comparability between quarters may be affected by varying lengths of the quarters, as well as, the seasonality associated with the restaurant business.

Fiscal Year 2016 Highlights:
  • Total sales were $402.6 million, including $378.1 million in restaurant sales for the 53-week fiscal year. On a comparable 52-week basis, total sales increased approximately $1.0 million and restaurant sales increased $0.8 million.

  • Same-store sales increased 0.7%, led by a 1.1% same-store sales increase at the Luby's Cafeterias; Fuddruckers sales were level with the prior fiscal year.

  • Store level profit was $55.4 million, or 14.7% of restaurant sales (for 53 weeks of fiscal 2016), a $3.6 million increase from $51.8 million or 14.0% of restaurant sales (for 52 weeks of fiscal 2015).

  • Loss from continuing operations was $10.3 million in fiscal 2016 compared to a loss of $1.6 million in fiscal 2015.

  • Adjusted EBITDA grew to $21.0 million in fiscal 2016 compared to $18.2 million in fiscal 2015.

  • Three Fuddruckers Restaurants opened during fiscal 2016: two locations converted from the Cheeseburger in Paradise brand and one newly constructed restaurant in a new retail space.

Chris Pappas, President and CEO, commented, "We ended the year with positive same-store sales at each of our brands, Luby's Cafeterias, Fuddruckers, and Cheeseburger in Paradise despite what remains a challenging economic environment in our industry for sales growth. Revenues grew year over year and our store level profit margins increased contributing to Adjusted EBITDA growth of over 15%. We realized improvement in our expense management efforts with reduction in corporate headcount, travel expenses, and store repairs and maintenance costs. We also benefited from lower opening costs as we pared back our store openings in 2016, and benefited from lower food commodity costs and utility costs. In addition, we continued to reduce capital expenditures on an annualized basis, spending $18.3 million in fiscal 2016 compared to $20.4 million last year.

Our GAAP earnings in 2016 were adversely impacted by non-recurring and non-cash impairment charges and tax accounting charges. Excluding these non-recurring charges, we realized income from continuing operations of $0.01 per share in the fourth quarter and narrowed our loss from continuing operations by $0.02 per share in fiscal year 2016. In 2017 we will continue to focus on growing sales and improving profitability."

Same-Store Sales Year-Over-Year Comparison

Quarter Ended

Four Quarters Ended

December 16,

2015

March 9,

2016

June 1,

2016

August 31,

2016

August 31,

2016

Q1 2016(3)

Q2 2016(3)

Q3 2016(3)

Q4 2016(3)

Full Year 2016(3)

(16 weeks vs 16 weeks)

(12 weeks vs 12 weeks)

(12 weeks vs 12 weeks)

(12 weeks vs 12 weeks)

(52 weeks vs 52 weeks)

Luby's Cafeterias

1.2%

3.1%

(0.2)%

0.0%

1.1%

Fuddruckers Restaurants

1.3%

0.0%

(1.0)%

(0.8)%

0.0%

Cheeseburger in Paradise

5.5%

4.2%

(0.7)%

(3.7)%

0.8%

Combo locations (1)

(1.3)%

0.1%

(3.3)%

(0.3)%

(1.4)%

Total same-store sales (2)

1.4%

2.2%

(0.6)%

(0.5)%

0.7%

  1. Combo locations consist of a side-by-side Luby's Cafeteria and Fuddruckers Restaurant at one property location.

  2. Luby's includes a restaurant's sales results into the same-store sales calculation in the quarter after that store has been open for six complete consecutive quarters. In the fourth quarter, there were 86 Luby's Cafeterias, 61 Fuddruckers Restaurants, 5 Combo locations, and 8 Cheeseburger in Paradise locations that met the definition of same-stores.

  3. Q1 2016, Q2 2016, Q3 2016, Q4 2016 and YTDQ4 2016 same-store sales reflect the year-over-year change in restaurant sales for the locations included in the same-store grouping for each of the comparable periods.

    Fourth Quarter Highlights:
    • Luby's Cafeterias same-store sales were unchanged in the fourth quarter from the prior year. A 3.6% increase in guest traffic was offset by similar decrease in average spend per guest as promotional activity and discounting were greater than the same period in the prior fiscal year.

    • Fuddruckers Restaurants same-store sales decreased 0.8% in the fourth quarter. The 0.8% decrease was the result of a 2.5% decrease in guest traffic offset by a 1.7% increase in average spend per guest.

    • Cheeseburger in Paradise same-store sales (representing all eight Cheeseburger in Paradise locations) decreased 3.7% in the fourth quarter.

    • Combo location same-store sales (representing five Combo locations) declined 0.3% in the fourth quarter.

      Fourth Quarter Total Restaurant Sales:

      ($ thousands)

      Restaurant Brand

      Quarter Ended

      Quarter Ended

      August 31,

      2016

      % of Total

      August 26,

      2015

      % of Total

      (13 weeks)

      (13 weeks)

      (16 weeks)

      (16 weeks)

      Luby's Cafeterias

      $ 54,252

      59.1%

      $ 67,872

      58.8%

      Fuddruckers Restaurants

      26,219

      28.6%

      32,815

      28.5%

      Combo locations

      5,512

      6.0%

      7,385

      6.4%

      Cheeseburger in Paradise

      5,792

      6.3%

      7,289

      6.3%

      Total Restaurant Sales

      $ 91,775

      100.0%

      $ 115,361

      100.0%

    • Restaurant sales in the fourth quarter decreased to $91.8 million versus $115.4 million in the fourth quarter fiscal 2015. The decrease was due to three fewer operating weeks in the fourth quarter fiscal 2016 compared to the fourth quarter fiscal 2015, and to a lesser extent, the impact of closed restaurants. One Luby's Cafeteria and two Fuddruckers Restaurants closed during the fourth quarter.

    • Store level profit, defined as restaurant sales plus vending revenue less cost of food, payroll and related costs, other operating expenses, and occupancy costs, was $12.9 million, or 14.0% of restaurant sales, in the fourth quarter compared to $16.4 million, or 14.2% of restaurant sales, during the fourth quarter fiscal 2015. Higher payroll and related costs partially offset by lower cost of food and lower other operating expenses led to this decrease in profitability. Higher payroll and related costs were impacted by changes in workers' compensation liability estimates in both fourth quarter fiscal 2016 and fiscal 2015; these changes in estimates amounted to an approximate increase of 0.3% of restaurant sales. Other operating expense decreases included a reduction in repairs and maintenance expense of approximately 0.9% of restaurant sales. Store level profit is a non-GAAP measure, and reconciliation to income from continuing operations is presented after the financial statements.

    • Culinary Contract Services revenues decreased to $4.0 million with 24 operating locations at the end of the fourth quarter compared to $4.4 million with 23 operating locations at the end of fourth quarter fiscal 2015; the decrease was due in part to three fewer operating weeks. Culinary profit was 12.3% of Culinary Contract Services sales in the fourth quarter and 9.8% in the fourth quarter fiscal 2015.

    • Franchise revenue decreased to $1.8 million during the fourth quarter compared to $2.2 million during the fourth quarter fiscal 2015; the decrease was due in part to three fewer operating weeks. In the fourth quarter, a franchisee opened one international location in Colombia. We ended the year with a franchise network of 113 domestic and international locations, compared to 106 total locations at the end of fiscal 2015.

    • Income (loss) from continuing operations was a loss of $7.8 million, or a loss of $0.27 per diluted share, in the fourth quarter compared to income of $0.1 million or $0.00 per diluted share, in the fourth quarter fiscal 2015. Excluding special items, income from continuing operations was $0.3 million, or $0.01 per diluted share, in the fourth quarter compared to a loss of $1.0 million, or $0.03 per diluted share, in the fourth quarter fiscal 2015.

      Reconciliation of income (loss) from continuing operations to income (loss) from continuing operations, before special items (1,2):

      Q4 FY2016

      Q4 FY2015

      Amount ($000s)

      Per Share ($)

      Amount ($000s)

      Per Share ($)

      Income (loss) from continuing operations

      $ (7,789)

      $ (0.27)

      $ 65

      $ 0.00

      Provision for asset impairments and restaurant closings, net

      814

      0.03

      276

      0.01

      Net loss (gain) on disposition of property and equipment

      73

      0.00

      (1,517)

      (0.05)

      Losses from stores subsequently closed

      289

      0.01

      194

      0.01

      Deferred tax asset valuation allowance

      6,905

      0.24

      -

      $ -

      Income (loss) from continuing operations, before special items

      $ 292

      $ 0.01

      $ (982)

      $ (0.03)

      Item

    • Income from continuing operations was a loss of $10.3 million, or a loss of $0.35 per diluted share in fiscal 2016, compared to a loss of $1.6 million or $0.06 per diluted share, in fiscal 2015. Excluding special items, loss from continuing operations was $1.6 million, or $0.06 per diluted share, in fiscal 2016, compared to a loss of $2.2 million, or $0.08 per diluted share, in the fiscal 2015.

FY2016

FY2015

Amount ($000s)

Per Share ($)

Amount ($000s)

Per Share ($)

Loss from continuing operations

$ (10,256) $ (0.35) $ (1,616) $ (0.06)

Provision for asset impairments and restaurant closings, net

952 0.03 420 0.01

Net loss (gain) on disposition of property and equipment

(451) (0.02) (2,636) (0.09)

Losses from stores subsequently closed

1,216 0.04 1,587 0.06

Deferred tax asset valuation allowance

6,905 0.24 - $ -

Loss from continuing operations, before special items

$ (1,634) $ (0.06) $ (2,245) $ (0.08)

  1. We use income (loss) from continuing operations, before special items, in analyzing results, which is a non-GAAP financial measure. This information should be considered in addition to the results presented in accordance with GAAP, and should not be considered a substitute for the GAAP results. Luby's has reconciled loss from continuing operations, before special items, to loss from continuing operations, the nearest GAAP measure in context.

  2. Per share amounts are per diluted share after tax.

Balance Sheet and Capital Expenditures

We ended the fourth quarter with a debt balance outstanding of $37.0 million, down from $37.5 million at the end of fiscal 2015. During the fourth quarter, our capital expenditures were $3.9 million, compared to $3.9 million in the fourth quarter fiscal 2015 and $18.3 million compared to $20.4 million for fiscal 2016 and 2015, respectively. At the end of the fourth quarter, we had $1.3 million in cash and $165.8 million in total shareholders' equity.

New Five Year Credit Agreement

Today, we entered into a new senior secured credit agreement with a five year term for a total loan commitment of $65.0 million. Of the total $65.0 million commitment, $35.0 million is permanent variable-rate debt that amortizes 7.0% per year for the five year term. We will hedge interest rate risk on at least 50% of the $35.0 million term debt within 60 days as required by the credit agreement. The remaining $30.0 million is a revolving credit facility.

Luby's Inc. published this content on 08 November 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 08 November 2016 22:11:03 UTC.

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