Lub Liquidating Trust (LUB) 15 Jul 192019 Q3 Earnings call transcript

Greetings and welcome to the Luby’s Fiscal 2019 Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mr. Financial Analysis. of VP Goodweather, Planning and Steve Thank you. Mr. you begin. may Goodweather,

webcast again Thank This Luby’s being lubysinc.com. accessed Information welcome speaks Luby’s XXXX this as link And the call can audio through fiscal also recorded call. to XXXX. website conference of everyone you. today, on XX, be earnings third is call on and only quarter July

session would statements made and include continue, but taxes, I statements. Company’s like well Luby’s question-and-answer Company’s in during on competition, other labor business of general and the discussion, we success well governmental you credit disclosed forward-looking inflation, the seasonality limited the in to not as the and periodic costs Before operating that of risks changes financial food in impact statements as business, this initiatives, including and and uncertainties the as commodity Forms as are including operating reports of regarding availability future remind to, conditions, regulations risks and XX-Q. results of uncertainties, statements XX-K of and Forms Those supply

With Pappas. I CEO, to and Luby’s would Chris call now like President the that, turn over Chris? to

followed for Good the call call. over us morning thanks. update remarks I then turn thank progress our quarter. by will Coutee you from Gray. everyone will and and to today’s turnaround Steve, COO, conference begin our on joining CFO, I on an with comments Scott Todd about our

last we making turnaround for and plans discussed are with our you the As we quarter, on focused I progress. company

business; traffic establishing for One, two-fold. guest structures plan sales. growing two, our Our turnaround and and cost is appropriate

side. cost the on First

profit in despite the expenses resulting efficiently margin same-store the decline third to restaurant in continue store make progress, in sales managing improvement, quarter. We the level level

operational level times. more structure capital restaurant a fiscal some maintenance steadily our been rightsizing we’ve streamlining we’ve throughout at and of our expenditures corporate In addition to support XXXX, also these constrained expenses to of

regard that with we depends to fully recognize critical Second, and aspect. traffic success sales turnaround this our growing guest on

loyal capture these and are especially. visits our to guests brands of more and are we marketing guests to frequent Our more attract

operations in guest value are to while premium marketing can $X that traffic promoting $X which and everyday starting is still price improving options into sales. offer increased orientation points perspective, offerings and From trends, compelling the including points. an range, providing higher menu aimed at The value then translate we at additional price

not initiatives our reducing of yet Our striving sales aimed improvement and for, number achieved we have growing recent a efforts guest at -- on based developments same-store are traffic. sales the positive

our at instance, For Cafeteria has brand, our steadily trended year XXXX. throughout traffic guest better fiscal

we have we work still see our trending core do, right the that brands way. considerable to are While both toward

lower stronger As leverage the from shareholder to through this and And a grow every to is around while increase obviously we company flow our same-store sales, created day structure work generate the process, value. enhance operating to remains cash and clear will our our to goal profitability and turning serve guests cost line. a bottom

into the leadership restaurant members positions operations has teams. initiatives This substantially and Todd right is our team both within of complete. Coutee within our moving to our addition, In with by the management align restaurants led field involved

This our turnaround We help align parallels that many us [offer] better strategy. to will propel [ph] have individuals forward. efforts talented support our with

Marketing will hiring his Todd section. Technology of two also and lead departments. discuss executives further are We pleased the our our in new VPs Information new to to announce

seasoned join these Let excited very to say leaders organization me of areas lead industry in our to respective all just their have expertise. we’re

franchise Fuddruckers an plans Now refinance our system. on for update our in

market five locations restaurants San the As transitioned in company-operated Antonio previously locations. reported, from to quarter, during the franchise-operated

refranchising seek to Texas. market home of our additional Houston, outside opportunities continue We

them the Since properties are Fuddruckers, for market sales them Luby's XX program. quarter last of $XX began proceeds of underperforming XX beginning million year, restaurants, described sales stores. transitioned Paradise to also I We of were of of we asset program Cheeseburger actively franchisees our Cafeterias, and Six in generated six last plus asset those were third in $XX.X we we five that continue Through closed year to million. earlier. sale stores as our

Finally, like I achieved progress our to would Culinary business. Services strong has in the acknowledge our team Contract

excellent saw Our in with our potential business and Culinary were increase This to actively sales year-over-year be signature Contract for net incremental new Service pursuing generating growth we're which a offerings. and an seven locations segment continues business clients our profit. of

have on a that of a quarters continue turnaround to area and and two our been progress lot [indiscernible] we quite work -- past turnaround efforts work The to efforts.

when We pieces growth, we that to better the in turn positioned sales future the profitability. all return and are will so we for place, be corner putting

like Todd And to with would hard time, thank their few to comments. reality. call the employees for make our Todd? work a more and I dedicated X,XXX would for that, At this like over to turn than talented this a I to

Thank join you, and morning. Chris, I’m to call today. pleased good the

qualified As of leaders new John Holzem, and welcome Vice of and we're Marketing highly to to Chris David our Information President experienced excited Technology. Greenberg, team. deeply two mentioned, We’ve Vice hired President

and categories. and management of product demonstrated innovation, David Luby's. dining Vice product of years campaign Greenberg, campaigns more casual Marketing brand national record food throughout across to than restaurant marketing marketing, David President restaurant brings sales the and XX fast numerous experience a brands consumer successful has of including

to few. span has impressive worked as marketing name Friday's with in career Over Box, Jack such he Evans Restaurants, national notable a Burger TGI Bob his brands Wendy's, the the of and King,

qualified Vice President uniquely John He to leveraging long -- are in with he to both where comes add a technology and Holzem their at IT Technology. of recently in process value expertise industry improvements. iconic Business John Fuddruckers of most seasoned over most and was experienced of Sysco are Vice experience years he specializes with David and areas President brands. John and our XX driving foodservice where Corporation, is an executive recently our efficiencies operational of tenure of Information and leaders Technology. respective Luby's new is

positions the that the sales, succeed By provided we and be our right enhance the with to Now successful, to our and people in sales. new place operational put are an tools with mentioned. brand right need and initiative for members positioned better coaching organization each team marketing they in update in Chris on initiatives realigning to

everyday are focused Our offering guest choices. value our orientation we're teams on traffic through growing where value

part are premise important dining. We how meal and convenience the in an factor the off on role focusing specifically plays also dinner

Luby's, an As I mentioned last at option which a natural extension quarter, weekend breakfast our as Cafeterias. is introduced we've of

we end the now weekends the of the offering at locations. on XX breakfast are quarter, As of

Key our Cafeteria tasting to was Luby's approach quarter home-style our we’ve the removal third at value a substantially with in to Within an guests business, provide of all continued convenient, in meals the comfortable environment. discounts. great excellent

what structure guests a this expect. provides pricing We is and Our goal frequent have value. is everyday most appreciate and that to believe our loyal consistent

when a that are our We not see year that this which was heavily is higher call day those I a discounted, the we're year. right counts guest on this comparing day, approach generally prior days because normal

markets. we're to various marketing proud in speaks Texas a Our Cafeterias heritage the brand way directly are and Texas with a that local speaking that within our to demographics born our

$X restaurants, chef our regarded. is along widely $X, truffle-infused start value specialty brand we as $X Fuddruckers promoting and combo such Nashville hot the premium remains with to burger our well burger known our strong chicken are orientation higher-price offerings, our and a and options, that Cafeteria Angus inspired Similar amazing at sandwich.

your that with cheese. are offerings fresh that the and way to ourselves crowded segment While hypercompetitive imaginative our melted in we and craveable one is burger distinguish using top No strive bar it with it else complementary does produce differentiation way. you and

new is this to healthcare, dining be continues no and facilities meet venues senior with living in brand growing food this advantage business the service tailor provides retail Luby's huge requirements a to grocery opportunities asset with one and with amenity segment. outlets. our appreciate sales We This food clients. our Culinary custom along the corporate competitive valued solutions communities an Services, Luby's contract The represents. a quality through unique stadium brand, of variety preferences the to and business that and our us account of varied that brand

facilities last net compared year. increase a seven time when have We to this of

years our within have packaged expanded in now. and the addition, two complements This Texas. Services existing Business Luby's of the for the varieties cheese goods offerings addition we've in about tetrazzini Culinary freezer our segment, H-E-B fish famous of that supermarkets chicken been selling two offerings In with our of macaroni fried of section

be So the beyond offerings us the to of to extend good for opportunity line a nice continues package our restaurant. area

cherish. the digital our a comfortable in from space. we’ve marketing of efforts advertising ramped familiarity offer value our The up our that guests brands we Lastly and the responses confirm the perspective,

that nostalgic and will Luby's this use in] advantage. community generations. [out with people bond in while Fudds and memories that have unique Texas [ph] are We will friend ingrained go for our with inspires to the back it favorite producing With we family, culturally

and story. Luby's through channels. Fudds connection and Ads of Everyone such includes InApp powerful. reinforce more. our has Banner or This a to guest much discovered it That we’re Yelp, directory and emotional now each paid We’ve our connection a is that with as going social, digital

We will no mind. be of out out longer sight, of

bringing intelligently to the brands our are We forefront.

brands growing we and guests. have loyal making shown are and the our do really We has response relevant passionate again

outstanding coming team We back our in with engage that guests. members lot are is to art beginning. going hospitality. mastering about diversity learn them our still a our the are superior of We with have And then and the just them, this to the product of get and

our leverage directly that will we forward, relevant guests to messages Going and tailor market offers identify to intelligence and specifically technology and them. speak

throughout on the of I’m we’re work which goal dedicated seeing in guests alongside as teams. to about Company. colleagues work everyday, well our many we good know so excited result will focus positive operations for that our I'm outcomes delighting thankful the our

to over like the Scott? call would our turn I that, Gray. With Scott CFO, to

touch third results. upon Thank financial I quarter you, will the Todd. quickly

from quarter million This continuing last year. million we loss compared out to in $XX third operations of the loss quarter, $X.X a reported before income to cut taxes

comparison loss property slight and to a X.X of you pretax asset of this a A However, if sales, the remove year loss is year-over-year. and improvement pre-tax last losses impairment compared year. gains on X.X the

third total company sales total decline Adjusted zero essentially year million. the on last $XX.X of on in -- decreased decline sales company EBITDA quarter from a $XXX,XXX

in the decreased segment same-store quarter. Business X% Restaurant sales Our

mentioned, Chris as due That’s the basis store profit improvement. a was from up level to restaurant up management, cost XX.X%, point improved X.X%. XXX However, to

from line down profit store $X.X top million million $X.X while in by year-over-year, restaurant $XX.X quarter. So were level the restaurants the increased sales to million

is general here inflation. are pruning managing aggressively underperforming we portfolio declines are important despite The cost our and that of segue units and restaurant

decreased sales same-store despite Food on in restaurant in cost cost was improvement to favorable as the several favorites, a a focused at a with The result cost. we areas. sales restaurant classic return level of decline percentage as store profit food management of

to We restaurant per also focus on continued manage team labor staffing. store basis costs member on our a a hourly through

to Our significant opportunity these expense maintenance repairs experience areas in and expense for as cost restaurant and prior expense management. year supplies over continued areas of the remained reductions

Franchise increased the profit $X.X this segments by and marketing is segment as of Todd. million media year-over-year Included net investments or outlined quarter Both administrative driven in Business increased and the commit advertising in by Selling $XXX,XXX by $XXX,XXX. or in we general as spending Contract our $X.X level and additional combined million Culinary the digital to revenues. million increase Service efforts in expenses $X.X increases

and fees is relates in the restructuring related in $X.X Of related expenses professional consulting to and functions and these in due offsetting a other salaries million priorities, one-time other a included upgrades quarter. G&A to increase, $X.X corporate enhancing net accounting in software $X.X $XXX,XXX Also was million third-party evaluations increase to terminations. IT, and and of increase cost the the structure revenue fees decrease partially surrounding million expenses our restructuring

to $X.X third $X.X last expenditures million in quarter same to the quarter, our the During decreased also year. compared capital million

levels. Based XXXX in expected While and date capital $X the in that below year the we approximately path we our spend This on to up results, million. costs, remain of fiscal to CapEx million be now spend we one-time our recurring to estimated to $X.X primarily our items, pace adjusted at estimate project sensitive EBITDA turnaround previously for current EBITDA were XXXX, considering the restructuring sales to and previously $X expect restaurant targeting. we million expense now

revolver less turning net sheet, Now debt with million. we breaks quarter million the in which equivalents the the end is million and and cash balance as, quarter net a includes $X credit cash, out a at the from our which revolver in the million cash. the debt is agreement of This $XX.X $XX.X restricted say of is $XX.X That of in decrease end ended term fiscal The on third XXXX. debt to last balance the debt our $XX.X third XX.X less cash year, at total million on the debt and to $XX.X debt term and in fiscal cash million sheet.

The XXXX of interest is with reduction already along over will of value a asset service future significant debt the XX.X in in in appraised plan of our in amortization agreement cash in a requirements. property the debt The December credit outstanding locations provide reduction value closing $XX reduction corresponding book debt held of sales our for a sale $XX funded XX% and for an of our million resulted XXXX. at million with

fiscal met the its next million as year improvements company addition, in already in year allocation has of debt the XXXX. the amortization principal Management $X.X the continues million of the to fiscal requirement for amortization portfolio million current required evaluate as well capital. $XX XXXX $XX In for

to And over I would back call with the the that, to operator. like turn

Thank questions [Operator Instructions] closing you. I remarks. would over for time. turn There the like back Pappas call are Mr. any at to this to no

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we Thank to have all speaking summer, to improve rest And forward very the again and operator. Thank At progress we summer. results. have next in place our our believe Service Culinary Luby's, you leadership our Contract the plans Thank look good the quarter. members turnaround and make right investors you, our we to the during business, a on team and you. of with to Fuddruckers, continue in in

Ladies gentlemen, thank does you teleconference. you. for participation. your conclude This Thank and today’s

and your a You have may wonderful lines disconnect day.