Landry’s swings to 3Q profit

HOUSTON Landry’s Restaurants Inc., which is in the midst of a going-private deal with chief executive Tilman Fertitta, reported Friday that the company swung to a profit in its third quarter on cost controls and comparisons to a year-ago when it booked large impairment charges.

Landry’s reported profit of $6.7 million, or 42 cents per share, for the quarter ended Sept. 30, compared with a loss of $17.1 million, or $1.06 per share, in the same quarter last year. Asset impairment expenses totaled $20.1 million in the year-ago quarter.

Latest-quarter revenue fell 4.3 percent to $276.6 million. Revenue from the restaurant and hospitality group, which includes the Landry’s Seafood House, Chart House, Rainforest Café and Saltgrass Steak House brands, slipped 2.1 percent, to $224.2 million, the company said. Revenues from Landry’s Golden Nugget hotel-gaming properties fell 13.5 percent to $52.4 million. Same-store restaurant sales fell 6.5 percent.

Rick Liem, Landry’s chief financial officer, said, “Operating income from the restaurant and hospitality group held up well in a very difficult economic environment.

“Results from the gaming operations reflect lower traffic compounded by heightened competitive pressure, particularly on room rates,” he noted.

Landry’s board agreed on Tuesday to accept a $1.2 billion going-private offer by Fertitta. The company said it planned to refinance its debt, and Fertitta’s acquisition company would fund part of the takeover with $550 million in new senior secured debt securities issued in a private placement. Fertitta already controls more than 55 percent of Landry’s outstanding stock and offered $14.75 per share for the remaining shares.

In its third-quarter 2009 report, Landry’s said its interest expenses rose to $29.3 million compared with $19.5 million in the same period last year. The company said the increase was because of its debt refinancing and higher borrowing costs associated with the construction of a new hotel tower at the Golden Nugget in Las Vegas, Nev. That new hotel tower is scheduled to open at the end of November.

Landry’s also said it needed to restate earnings for the six months ended in June because of a change in the accretive value of its interest in the T-Rex subsidiary. The changes dropped net income for the six months by $2.7 million to total $12.6 million.

Besides the restaurant chains, Landry’s operates a number of upper-end dining locations as well as hotels, marinas, amusements, retail and the Golden Nugget Hotels and Casinos in Las Vegas, Nev., and Laughlin, Nev.

Contact Ron Ruggless at [email protected] [3].