Landry’s Restaurants Inc. (LNY) reported second-quarter 2010 adjusted loss of 1 cent per share, much lower than the Zacks Consensus Estimate of earnings of 25 cents and the year-ago quarterly profit of 20 cents. On a GAAP basis, net loss per share was 87 cents versus net earnings of 41 cents recorded in the comparable quarter last year.
The reported quarter includes expenses like impairment charge, litigation settlement charge and transaction merger cost. However in the year-ago quarter, the company recorded a benefit related to asset sales and insurance proceeds.
Total revenues climbed 4.5% year-over-year to $294.6 million and also topped the Zacks Consensus Estimate of $288.0 million. Sales at Restaurant and Hospitality group rose 5.1% to $236.9 million, despite being hurt by the Gulf oil spill at its three locations. Gaming revenues grew 2.1% to $57.7 million in the reported quarter. However, the industry continues to struggle with lower consumer spending and excess supply, which is impacting pricing strength. Same store sales for company-operated restaurants were flat year over year.
Adjusted EBITDA of the company inched up only 0.4% from the prior year quarter to $52.9 million. Adjusted EBITDA of Restaurant and Hospitality group climbed 3.5% to $41.9 million and of gaming operations dropped 8.2% to $11.0 million.
Interest expense for the quarter increased 3.5% to $29.5 million, attributed to higher borrowings from the company for the construction of the new Rush Tower at the Golden Nugget.
Operating margin contracted 660 basis points (bps) to 5.8%, due to a major rise in general and administrative expenses. Additionally, other costs like labor expense, depreciation and amortization, cost of revenue and other operating expense also increased.
Financial Position
Landry’s Restaurants ended second quarter 2010 with cash and cash equivalents of $59.5 million and shareholders’ equity of $302.6 million. Long-term debt of the company reduced to $1.0 billion in second quarter 2010 from $1.1 billion in second quarter 2009.
Landry’s Restaurants’s close competitors Buffalo Wild Wings Inc. (BWLD) and BJ’s Restaurants Inc. (BJRI) reported their second quarter earnings, which were higher than the Zacks Consensus Estimate. Buffalo’s second quarter 2010 earnings of 50 cents per share were ahead of the Zacks Consensus Estimate of 42 cents. Even BJ’s second quarter earnings of 23 cents topped the Zacks Consensus Estimate of 20 cents.
We currently have a short-term Zacks #3 Rank (Hold) rating on the stock.
BJ’S RESTAURANT (BJRI): Free Stock Analysis Report
BUFFALO WLD WNG (BWLD): Free Stock Analysis Report
LANDRYS RESTRNT (LNY): Free Stock Analysis Report
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