Ignite Restaurant Group (IRG) was losing more than one-fifth of its market cap Thursday, a day after saying it would restate some past results because of accounting mistakes.
The company, which went public in May, said it had undertaken a review of its lease and fixed-asset accounting. Ignite saw its shares fall $4.20, or 22%, to $14.86, making it the steepest percentage decliner of the session, according to Yahoo! Finance data. The stock's trading range during its time on the public market, prior to today, was $16.50 to $19.87.
Ignite, the owner of restaurants Joe's Crab Shack and Brick House Tavern + Tap, said it needed to "correct non-cash related errors related to its accounting treatment of certain leases." The lease errors go back to 2006, the year the company started, Ignite said in a press release.
The Houston-based company estimated the pretax cost of the lease-related restatement at $3.4 million to $3.8 million. Ignite is also working on a review of its accounting for fixed assets and the related depreciation expenses, an analysis that will probably result in added adjustments to its previous financial results. At this point, the company believes the fixed-asset accounting review will lead to at least $1.2 million of pretax non-cash adjustments from 2006 through the first quarter of 2012. The adjustment will lower Ignite's net income over that span, the company said.
"In connection with the restatement, we are carefully reviewing potential weaknesses or deficiencies in our internal controls and disclosure controls," Ignite said. "As a result of the restatement, the financial statements contained in the Company's prior filings with the SEC should no longer be relied upon."
Additionally, Ignite provided estimates for its second quarter ended June 18, forecasting revenue of around $119.9 million, up 16.2% from the prior year. Same-restaurant sales grew 3%, the company projects.