WICHITA, Kan., April 9, 2001 (PRIMEZONE) -- Lone Star Steakhouse & Saloon, Inc. (Nasdaq:STAR) announced earnings and revenues for the twelve-week quarter ended March 20, 2001. Net income in the first quarter increased 16.0% to $8,240,000 from $7,102,000 for the same period last year. Earnings per share, compared to the same period last year, increased to $.34 ($.34 diluted) per share from $.25 ($.25 diluted) per share. This year's first quarter results include an after tax gain of $898,000 ($.04 per share) from the sale of assets in Australia. First quarter revenues increased 3.2% to $143,753,000 compared with $139,254,000 last year.
Comparable store sales, by concept, increased 1.3% for domestic Lone Star Steakhouse and Saloon restaurants, 16.3% for Sullivan's Steakhouse restaurants, and 2.9% for Del Frisco's Double Eagle Steak House restaurants.
The Company's financial position remains strong, with cash of $39.5 million, no debt, and EBITDA for the quarter of $19.6 million or $.80 per share. Book value per share increased to $18.26 at the end of the quarter. These factors should allow for the continuation of the dividend, share repurchases and new unit growth.
Jamie B. Coulter, Chairman and CEO, stated, "We have just completed a gratifying quarter with comp store increases in all of our domestic steakhouse brands. Sales at domestic Lone Star restaurants were positive for the first time in several quarters. The 15 Sullivan's continued to produce outstanding results in all areas. Sullivan's average unit sales, comp store sales and restaurant level profits all increased from the impressive performance recorded last fiscal year." While the Sullivan's brand was initially conceptualized as a concept for development in mid-size cities, its performance in larger metropolitan areas has proven the concept's broad appeal and the Company intends to accelerate its development. Del Frisco's Double Eagle Steak House restaurants also continue to perform well, and the Company is actively seeking new locations for both upscale concepts.
Labor costs have increased over the past three years of low unemployment and a strong economy. However, the Company continues adding managers at Lone Star to increase staffing levels. These actions will continue to impact the costs of recruiting, training and relocation, as well as average labor rates as more experienced, higher salaried managers are brought on board.
Lone Star domestic margins were in line with sales volumes with the exception of advertising, natural gas and labor, all of which were higher than last year.
The Company opened two new Lone Star Steakhouse & Saloon restaurants in Tulsa, Okla. and Houma, La. in the first quarter, and, while relatively new, these units are experiencing substantially higher volumes than the system average.
Australian Lone Star's comparable store sales declined 10.3%. Sales and operating margins in Australia are still suffering from the effects of the National General Sales Tax implemented by the Australian government in July 2000, the weakening overall economy and the continued decline of the Australian dollar.
During the first quarter the Company purchased 245,700 shares of its common stock. The total number of shares repurchased by the Company since the announcement of its stock buy back program is 17.2 million at an average price of $9.61 per share.
The Company remains concerned about beef commodity prices which are currently trending higher, and are subject to extreme volatility due to speculation about future live cattle prices. A lot of the speculation centers around the current turmoil in Europe concerning "Mad Cow and Hoof and Mouth Diseases," and the impact on domestic beef prices if export levels or domestic consumption change dramatically. The Company's strategy to help minimize the impact of this volatility is to continue to test non-beef additions to menu choices, and to develop marketing that can be quickly implemented to feature items with more favorable margins.
Future reported earnings will be impacted by FASB Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation, an interpretation of APB No. 25," which will require a quarterly non-cash charge for the "in-the-money" component of stock options that have been modified. The Company currently has options outstanding for approximately 4,731,000 shares affected by this accounting requirement. At the first quarter end when the Company's common stock closes above $10.125 (the stock price on the effective date of the accounting rule), the Company will be required to record a non-cash compensation charge for the excess over $10.125 for each of those option shares. In subsequent quarters, the charge or credit to non-cash compensation expense will be for the change, either up or down from the previous reported quarter. This could introduce extreme volatility in reported earnings which could increase volatility in the stock price.
The Board of Directors declared the Company's quarterly cash dividend of $.125 per share payable April 27, 2001 to shareholders of record on April 13, 2001.
Lone Star owns and operates 243 domestic and 26 international Lone Star Steakhouse & Saloon restaurants; 15 Sullivan's Steakhouse restaurants; and five Del Frisco's Double Eagle Steak House restaurants.
For interested parties, there will be a conference call with management at 9 a.m. Central Time on Tuesday, April 10, 2001 to discuss this first quarter earnings release. The call in number is (719) 457-2621 and the confirmation code is 761268. A recorded replay of the conference call will be available from 12 p.m. on April 10, 2001 through midnight April 24, 2001. The replay call in number is (719) 457-0820 and the confirmation code is 761268. A listen only connection to the conference call, as well as the replay, will be available on the Internet through the Company's Website, www.lonestarsteakhouse.com.
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Although the Company believes the assumptions underlying the forward-looking statements contained herein, including the development plans of the Company, are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements contained in the press release will prove to be accurate.
Lone Star Steakhouse & Saloon, Inc.
Unaudited Summary Financial Data for the First Quarter 2001
(In thousands except for per share amounts)
Mar. 20, Dec. 26,
2001 2000
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Current Assets:
Cash and cash equivalents $ 39,453 $ 29,029
Other current assets 16,931 18,119
56,384 47,148
Property and equipment, net 398,276 406,761
Intangibles and other assets 34,887 35,014
$489,547 $488,923
Current liabilities $ 47,802 $ 48,864
Noncurrent liabilities 2,882 2,276
Stockholders' equity 438,863 437,783
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$489,547 $488,923
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For the first quarter ended
Mar. 20, 2001 Mar. 21, 2000
12 Weeks 12 Weeks
$ % $ %
------- ---- ------- ----
Net Sales $143,753 $139,254
Costs and expenses:
Costs of sales 49,703 34.6 47,657 34.2
Restaurant operating expenses 67,904 47.2 63,109 45.3
Depreciation and amortization 6,455 4.5 6,550 4.7
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Restaurant costs and expenses 124,062 86.3 117,316 84.2
------- ---- ------- ----
Restaurant operating income 19,691 13.7 21,938 15.8
General and administrative
expenses 9,158 6.4 11,341 8.1
------- ---- ------- ----
Earnings from operations 10,533 7.3 10,597 7.7
Other income 1,699 1.2 416 0.3
------- ---- ------- ----
Earnings before income taxes 12,232 8.5 11,013 8.0
Provision for income taxes 3,992 2.8 3,911 2.8
------- ---- ------- ----
Net earnings $ 8,240 5.7 $ 7,102 5.2
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Basic earnings per share $ 0.34 $ 0.25
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Diluted earnings per share $ 0.34 $ 0.25
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Average Shares
outstanding-Basic 24,033 28,376
Average shares
outstanding-Diluted 24,435 28,567
Restaurants included
at end of period 290 300
Comparable sales growth 2.3% 0.5%
Analysis of components of net earnings and
basic per share amounts
For the first quarter ended
Mar. 20, 2001 Mar. 21, 2000
12 Weeks 12 Weeks
Per Per
$ Amt. Share $ Amt. Share
------- ----- ------- -----
Net earnings excluding
unusual charges $ 7,342 $0.30 $ 7,102 $0.25
Gain on sale of assets -
net of tax 898 0.04
Net earnings $ 8,240 $0.34 $ 7,102 $0.25
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