Carrols Restaurant Group, Inc. Reports Financial Results for the Fourth Quarter and Full Year of 2013
Highlights for the fourth quarter of 2013 versus the fourth quarter of 2012 include:
-
Restaurant sales increased 1.8% to
$165.5 million from$162.6 million ; - Comparable restaurant sales increased 1.7% compared to a 7.3% increase in the prior year period, marking ten consecutive quarters of positive comparable restaurant sales growth;
-
Net loss from continuing operations was
$2.1 million , or$0.09 per diluted share, compared to a net loss from continuing operations of$8.8 million , or$0.39 per diluted share, in the prior year period; -
Net loss from continuing operations included impairment and other
lease charges of
$0.6 million , or$0.01 per diluted share, after tax. Net loss from continuing operations in the prior year period included certain charges, including integration costs related to theMay 2012 acquisition and costs related to the conclusion and settlement of the long-standing litigation with the EEOC. In aggregate these charges were approximately$4.0 million , or$0.11 per diluted share, after tax; and -
Adjusted EBITDA, a non-GAAP financial measure, increased over 200% to
$10.4 million from$3.3 million in the prior year period. (Please refer to the reconciliation of Adjusted EBITDA to net loss from continuing operations in the tables at the end of this release).
Highlights for the full year 2013 versus the full year 2012 include:
-
Restaurant sales increased 23.0% to
$663.5 million in 2013 from$539.6 million in 2012, and included$295.4 million and$174.3 million , respectively, from restaurants acquired inMay 2012 ; - Comparable restaurant sales increased 1.0% compared to a 7.1% increase in the prior year;
- Net loss from continuing operations was $13.5 million, or $0.59 per diluted share, compared to a net loss from continuing operations of $18.8 million, or $0.83 per diluted share, in the prior year;
-
Net loss from continuing operations in 2013 included impairment and
other lease charges of approximately
$4.5 million , or$0.12 per diluted share, after tax. Net loss from continuing operations in 2012 included acquisition and integration-related costs, costs for the conclusion and settlement of the EEOC litigation, and a loss on extinguishment of debt from theMay 2012 refinancing. In aggregate these charges were approximately$12.9 million , or$0.35 per diluted share, after tax; and - Adjusted EBITDA increased 37.2% to $34.3 million from $25.0 million in the prior year period.
As of December 29, 2013,
Accordino continued, "The fourth quarter marked ten consecutive quarters of positive comparable restaurant sales growth and was notable given the difficult 7.3% comparison from the prior year and the continuing competitive pressures throughout the QSR segment. Our fourth quarter comparable restaurant sales trends, while tracking at approximately 3% through November, were dampened somewhat by the severe weather conditions in December. And while we have solid expectations for 2014, the persistent weather conditions have adversely affected sales in many of our markets early in the year making for a difficult start."
Fourth Quarter 2013 Financial Results
Restaurant sales increased 1.8% to
Adjusted EBITDA was
General and administrative expenses were
Interest expense remained flat at
Net loss from continuing operations in the fourth quarter of 2013 was
2014 Guidance
The Company is providing the following guidance for 2014:
-
Total restaurant sales of
$665 million to$680 million including a comparable restaurant sales increase of 1.5% to 3.5%. Comparable restaurant sales are expected to decrease 1.5% to 2.5% in the first quarter as a result of the severe winter weather; - A commodity cost increase of 2.0% to 3.0%;
-
General and administrative expenses of approximately
$39 million to$41 million (excluding stock compensation costs); -
Adjusted EBITDA of
$38 million to$42 million ; - An effective income tax benefit of 33% to 35% which could increase if the Work Opportunity Tax Credit is reinstated and extended;
-
Capital expenditures of approximately
$30 million to$35 million , including$18 million to$20 million for remodeling 65 to 75 restaurants and$4 million to$5 million for costs to scrape and rebuild three restaurants; and - 15 to 20 restaurant closures.
Accordino concluded, "Our long-term plan includes expanding our ownership of Burger King restaurants. We believe that there is considerable opportunity for future growth, as our right of first refusal in 20 states acquired from Burger King provides us with the ability to selectively acquire additional restaurants over time. We also believe that our progress in improving operations and profitability at the restaurants acquired in 2012 demonstrates how we can enhance shareholder value through expansion."
Conference Call Today
The conference call can be accessed live over the phone by dialing
888-846-5003 or for international callers by dialing 480-629-9856. A
replay will be available one hour after the call and can be accessed by
dialing 800-406-7325 or for international callers by dialing
303-590-3030; the passcode is 4667646. The replay will be available
until
About the Company
Forward-Looking Statements
Except for the historical information contained in this news release,
the matters addressed are forward-looking statements. Forward-looking
statements, written, oral or otherwise made, represent
Consolidated Statements of Operations (in thousands except per share amounts) |
||||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||
Three Months Ended (a) | Twelve Months Ended (a) | |||||||||||||||||
2013 |
2012 |
2013 |
2012 |
|||||||||||||||
Restaurant sales | $ | 165,514 | $ | 162,583 | $ | 663,483 | $ | 539,608 | ||||||||||
Costs and expenses: | ||||||||||||||||||
Cost of sales | 48,906 | 53,243 | 201,532 | 172,698 | ||||||||||||||
Restaurant wages and related expenses (b) | 51,677 | 51,049 | 208,404 | 169,857 | ||||||||||||||
Restaurant rent expense | 11,841 | 12,059 | 47,198 | 37,883 | ||||||||||||||
Other restaurant operating expenses (b) | 25,752 | 28,199 | 106,508 | 88,883 | ||||||||||||||
Advertising expense | 7,119 | 7,120 | 29,615 | 22,257 | ||||||||||||||
General and administrative expenses (b) (c) | 9,886 | 12,474 | 37,228 | 36,085 | ||||||||||||||
Depreciation and amortization | 8,604 | 7,784 | 33,594 | 26,321 | ||||||||||||||
Impairment and other lease charges | 555 | 725 | 4,462 | 977 | ||||||||||||||
Other expense (income) | 202 | (481 | ) | 17 | (717 |
) |
||||||||||||
Total costs and expenses | 164,542 | 172,172 | 668,558 | 554,244 | ||||||||||||||
Income (loss) from operations | 972 | (9,589 | ) | (5,075 | ) | (14,636 |
) |
|||||||||||
Interest expense | 4,711 | 4,711 | 18,841 | 12,764 | ||||||||||||||
Loss on extinguishment of debt | — | — | — | 1,509 | ||||||||||||||
Loss from continuing operations before income taxes | (3,739 | ) | (14,300 | ) | (23,916 | ) | (28,909 |
) |
||||||||||
Benefit for income taxes | (1,677 | ) | (5,506 | ) | (10,397 | ) | (10,093 |
) |
||||||||||
Net loss from continuing operations | (2,062 | ) | (8,794 | ) | (13,519 | ) | (18,816 |
) |
||||||||||
Loss from discontinued operations, net of tax | — | (114 | ) | — | (72 |
) |
||||||||||||
Net loss | $ | (2,062 | ) | $ | (8,908 | ) | $ | (13,519 | ) | $ | (18,888 |
) |
||||||
Diluted net loss per share: | ||||||||||||||||||
Continuing operations | $ | (0.09 | ) | $ | (0.39 | ) | $ | (0.59 | ) | $ | (0.83 |
) |
||||||
Discontinued operations | $ | — | $ | (0.01 | ) | $ | — | $ | — | |||||||||
Diluted weighted average common shares outstanding (d) | 23,047 | 22,748 | 22,959 | 22,580 |
(a) |
The Company uses a 52 or 53 week fiscal year that ends on the Sunday
closest to |
||
(b) |
Acquisition and integration expenses were included for the three and
twelve months ended |
||
(c) |
General and administrative expenses include stock-based compensation
expense of |
||
(d) | Shares issuable for convertible preferred stock and non-vested restricted stock were not included in the computation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented. |
Supplemental Information |
|
The following table sets forth certain unaudited supplemental financial and other data for the periods indicated (in thousands, except number of restaurants, percentages and average weekly sales per restaurant): |
(unaudited) | (unaudited) | |||||||||||||||||||
Three Months Ended (a) | Twelve Months Ended (a) | |||||||||||||||||||
2013 |
2012 |
2013 |
2012 |
|||||||||||||||||
Restaurant Sales: (a) | ||||||||||||||||||||
Legacy restaurants | $ | 92,698 | $ | 90,842 | $ | 368,081 | $ | 365,331 | ||||||||||||
Acquired restaurants | 72,816 | 71,741 | 295,402 | 174,277 | ||||||||||||||||
Total restaurant sales | $ | 165,514 | $ | 162,583 | $ | 663,483 | $ | 539,608 | ||||||||||||
Change in Comparable Restaurant Sales (b) | 1.7 | % | 7.3 | % | 1.0 | % | 7.1 | % | ||||||||||||
Adjusted EBITDA (c) | 10,437 | 3,288 | 34,271 | 24,972 | ||||||||||||||||
Adjusted EBITDA margin (c) | 6.3 | % | 2.0 | % | 5.2 | % | 4.6 | % | ||||||||||||
Adjusted Restaurant-Level EBITDA (c) | 20,219 | 12,398 | 70,226 | 52,415 | ||||||||||||||||
Adjusted Restaurant-Level EBITDA margin (c) | 12.2 | % | 7.6 | % | 10.6 | % | 9.7 | % | ||||||||||||
Average Weekly Sales per Restaurant: (d) | ||||||||||||||||||||
Legacy restaurants | 24,494 | 23,967 | 24,290 | 23,931 | ||||||||||||||||
Acquired restaurants | 20,721 | 20,160 | 20,856 | 20,681 | ||||||||||||||||
Expenses - |
||||||||||||||||||||
Cost of sales | 29.2 | % | 30.8 | % | 29.6 | % | 30.6 | % | ||||||||||||
Restaurant wages and related expenses | 30.8 | % | 30.4 | % | 30.6 | % | 30.6 | % | ||||||||||||
Restaurant rent expense | 6.2 | % | 6.4 | % | 6.2 | % | 6.3 | % | ||||||||||||
Other restaurant operating expenses | 14.5 | % | 15.1 | % | 15.0 | % | 15.0 | % | ||||||||||||
Advertising expense | 4.1 | % | 4.2 | % | 4.2 | % | 3.9 | % | ||||||||||||
Expenses - |
||||||||||||||||||||
Cost of sales | 30.0 | % | 35.2 | % | 31.4 | % | 34.9 | % | ||||||||||||
Restaurant wages and related expenses | 31.8 | % | 32.7 | % | 32.4 | % | 33.3 | % | ||||||||||||
Restaurant rent expense | 8.4 | % | 8.7 | % | 8.2 | % | 8.5 | % | ||||||||||||
Other restaurant operating expenses | 16.9 | % | 20.2 | % | 17.4 | % | 19.5 | % | ||||||||||||
Advertising expense | 4.6 | % | 4.6 | % | 4.7 | % | 4.6 | % | ||||||||||||
Number of Restaurants: | ||||||||||||||||||||
Restaurants at beginning of period | 564 | 572 | 572 | 298 | ||||||||||||||||
New restaurants | 2 | — | 2 | — | ||||||||||||||||
Acquired restaurants | 1 | — | 1 | 278 | ||||||||||||||||
Closed restaurants | (3 | ) | — | (11) | (4) | |||||||||||||||
Restaurants at end of period | 564 | 572 | 564 | 572 | ||||||||||||||||
At |
At |
|||||||||||||||||||
Long-term Debt (f) | $ | 160,536 | $ | 161,492 | ||||||||||||||||
Cash (including |
28,302 | 58,290 |
(a) |
Acquired restaurants represent the Burger King restaurants acquired
from Burger King Corporation on |
|
(b) | Restaurants are generally included in comparable restaurant sales after they have been open or owned for 12 months. | |
(c) | EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Restaurant-Level EBITDA, and Adjusted Restaurant-Level EBITDA margin are non-GAAP financial measures and may not necessarily be comparable to other similarly titled captions of other companies due to differences in methods of calculation. Refer to the Company's reconciliation of EBITDA and Adjusted EBITDA to net loss from continuing operations and to the Company's reconciliation of Adjusted Restaurant-Level EBITDA to income (loss) from operations for further detail. Both Adjusted EBITDA margin and Adjusted Restaurant-Level EBITDA margin are calculated as a percentage of total restaurant sales. | |
(d) | Average weekly restaurant sales are derived by dividing restaurant sales by the average number of restaurants operating during the period. | |
(e) | Represents restaurant expenses as a percentage of sales for the respective group of restaurants. | |
(f) |
Long-term debt (including current portion) at |
Reconciliation of Non-GAAP Measures |
|||||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||
Three Months Ended (a) | Twelve Months Ended (a) | ||||||||||||||||||
|
2012 |
2013 |
2012 |
||||||||||||||||
Reconciliation of EBITDA and Adjusted EBITDA: (a) | |||||||||||||||||||
Net loss from continuing operations | $ | (2,062 | ) | $ | (8,794 | ) | $ | (13,519 | ) | $ | (18,816 | ) | |||||||
Benefit for income taxes | (1,677 | ) | (5,506 | ) | (10,397 | ) | (10,093 | ) | |||||||||||
Interest expense | 4,711 | 4,711 | 18,841 | 12,764 | |||||||||||||||
Depreciation and amortization | 8,604 | 7,784 | 33,594 | 26,321 | |||||||||||||||
EBITDA | 9,576 | (1,805 | ) | 28,519 | 10,176 | ||||||||||||||
Impairment and other lease charges | 555 | 725 | 4,462 | 977 | |||||||||||||||
Acquisition and integration costs | — | 1,395 | — | 6,042 | |||||||||||||||
EEOC litigation and settlement costs | — | 2,636 | 85 | 5,343 | |||||||||||||||
Stock compensation expense | 306 | 337 | 1,205 | 925 | |||||||||||||||
Loss on extinguishment of debt | — | — | — | 1,509 | |||||||||||||||
Adjusted EBITDA | $ | 10,437 | $ | 3,288 | $ | 34,271 | $ | 24,972 | |||||||||||
Reconciliation of Adjusted Restaurant-Level EBITDA: (a) | |||||||||||||||||||
Adjusted Restaurant-Level EBITDA (a) | $ | 20,219 | $ | 12,398 | $ | 70,226 | $ | 52,415 | |||||||||||
Less: | |||||||||||||||||||
Restaurant-level integration costs | — | 1,485 | — | 4,385 | |||||||||||||||
General and administrative expenses | 9,886 | 12,474 | 37,228 | 36,085 | |||||||||||||||
Depreciation and amortization | 8,604 | 7,784 | 33,594 | 26,321 | |||||||||||||||
Impairment and other lease charges | 555 | 725 | 4,462 | 977 | |||||||||||||||
Other expense (income) | 202 | (481 | ) | 17 | (717 | ) | |||||||||||||
Income (loss) from operations | $ | 972 | $ | (9,589 | ) | $ | (5,075 | ) | $ | (14,636 | ) |
(a) | Within our press release, we make reference to EBITDA, Adjusted EBITDA and Adjusted Restaurant-Level EBITDA which are non-GAAP financial measures. EBITDA represents net loss from continuing operations, before benefit for income taxes, interest expense and depreciation and amortization. Adjusted EBITDA represents EBITDA as adjusted to exclude impairment and other lease charges, acquisition and integration costs, EEOC litigation and settlement costs, stock compensation expense and loss on extinguishment of debt. Adjusted Restaurant-Level EBITDA represents income (loss) from operations as adjusted to exclude restaurant-level integration costs, general and administrative expenses, depreciation and amortization, impairment and other lease charges, and other expense (income). | ||
We are presenting Adjusted EBITDA and Adjusted Restaurant-Level EBITDA because we believe that they provide a more meaningful comparison than EBITDA of the Company's core business operating results, as well as with those of other similar companies. Additionally, we present Adjusted Restaurant-Level EBITDA because it excludes the impact of general and administrative expenses, restaurant-level integration costs, and other expense (income), all of which are non-recurring at the restaurant level. Management believes that Adjusted EBITDA and Adjusted Restaurant-Level EBITDA, when viewed with the Company's results of operations in accordance with GAAP and the accompanying reconciliations in the table above, provide useful information about operating performance and period-over-period growth, and provide additional information that is useful for evaluating the operating performance of the Company's core business without regard to potential distortions. Additionally, management believes that Adjusted EBITDA and Adjusted Restaurant-Level EBITDA permit investors to gain an understanding of the factors and trends affecting our ongoing cash earnings, from which capital investments are made and debt is serviced. | |||
However, EBITDA, Adjusted EBITDA and Adjusted Restaurant-Level EBITDA are not measures of financial performance or liquidity under GAAP and, accordingly, should not be considered as alternatives to net income (loss), income (loss) from operations or cash flow from operating activities as indicators of operating performance or liquidity. Also, these measures may not be comparable to similarly titled captions of other companies. The tables above provide reconciliations between net loss from continuing operations and EBITDA and Adjusted EBITDA and between Adjusted Restaurant-Level EBITDA and income (loss) from operations. |
Investor Relations:
800-348-1074,
ext. 3333
investorrelations@carrols.com
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