Benzinga | Feb 1, 2021 05:19PM EST

Luby's Q1 Net Assets In Liquidation $3.82/Share

Luby's, Inc. (NYSE:LUB) ("Luby's") which is in the process of monetizing its assets for the benefit of its shareholders, announced today its financial results for the first quarter ended December 16, 2020.

Financial Results

Liquidation Basis of Accounting

As a result of Luby's shareholder approval of its plan of liquidation on November 17, 2020, effective November 19, 2020, in accordance with Generally Accepted Accounting Principles ("GAAP"), the Company began reporting its financial results on the liquidation basis of accounting. The liquidation basis of accounting requires, among other things, that management estimate net sales proceeds on an undiscounted basis as well as include in the Company's assets and liabilities the undiscounted estimate of future revenues and expenses of the Company through the end of the liquidation. Based on the liquidation basis of accounting, the net assets in liquidation at December 16, 2020 are currently estimated to result in future liquidating distributions of approximately $3.82 per common share based on the number of common shares outstanding on that date. The estimated liquidating distributions per share on a fully diluted basis, assuming all restricted stock awards vest and all in-the-money options are exercised, is not materially different than the amount stated above. This estimate of future liquidating distributions includes projections of sales proceeds and net operating revenues to be received and costs and expenses to be incurred, including costs to dispose of the Company's assets, during the period required to complete the plan of liquidation which is currently projected to be completed by June 30, 2022. There is inherent uncertainty with these projections, and accordingly, these projections could change materially based on a number of factors both within and outside of Luby's control including public health crises, general market conditions, the timing of the sales, the performance of the underlying assets, resolution of the Company's PPP loan, settlement of lease terminations, the exercise of outstanding stock options, the vesting of restricted stock awards and any changes in the underlying assumptions of projected cash flows. There can be no assurance that these estimated values will be realized. Such amounts should not be taken as an indication of the timing or the amount of future distributions or our actual dissolution.

The current estimate of net assets in liquidation at December 16, 2020 has been estimated based on undiscounted cash flow projections and assumes a final liquidation on June 30, 2022 even though the actual timing of the sale of the Company's operating businesses and real estate holdings cannot be determined with any specificity at this time. As such, the final liquidation of the Company is subject to future events and uncertainties. Liabilities are carried at their contractual amounts due as adjusted for the impact of timing of the planned liquidation. It is not possible to predict with certainty the timing or aggregate amount which may ultimately be distributed to our shareholders and no assurance can be given that the distributions will equal or exceed the estimate presented in this release.

The Company currently operates 58 Luby's Cafeterias and 24 Fuddruckers, as well as Culinary Contract Services at 26 locations, while pursuing sales of these businesses as part of its liquidation plan. Operationally, it is business as usual as we progress through this plan to find new stewards for these iconic brands.

Comments related to our operations in the context of COVID-19

The novel coronavirus disease ("COVID-19") pandemic has had a significant impact on our level of operations, guest behavior, guest traffic, and the number of locations where we and our Fuddruckers franchisees operate. As a result, at the onset of the COVID-19 pandemic in the spring of 2020, we modified our business operations within our restaurants and significantly reduced staffing at our corporate support office.

While the development of a vaccine for COVID-19 announced in December 2020 presents an encouraging sign, we continue to see rising cases of COVID-19 infection throughout the U.S. As we execute on our Plan of Liquidation, we are still operating a number of restaurants as described above. Uncertainty remains regarding the rate of immunization in the public and timing of an economic recovery. The COVID-19 pandemic could continue to materially impact our cash flows and value of net assets in liquidation, while we execute on our Plan of Liquidation.