Carrols Restaurant Group, Inc. Reports Financial Results for the Fourth Quarter and Full Year of 2014
Company to Present at the
Highlights for the fourth quarter of 2014 versus the fourth quarter of 2013 include:
-
Restaurant sales increased 16.5% to
$192.9 million , including$25.4 million in sales from 123 BURGER KING® restaurants that were acquired in 2014, from$165.5 million in the prior year period; - Comparable restaurant sales increased 3.6% compared to a 1.7% increase in the prior year period;
-
Restaurant-Level EBITDA (a non-GAAP financial measure) was
$19.6 million compared to$20.2 million in the prior year period and Restaurant-Level EBITDA margin decreased 204 basis points to 10.2%; -
Adjusted EBITDA (a non-GAAP financial measure) was
$10.1 million compared to$10.4 million in the prior year period. (Please refer to the reconciliation of Adjusted EBITDA to net loss and Restaurant-Level EBITDA to income (loss) from operations in the tables at the end of this release.); and -
Loss from operations was
$3.0 million compared to income from operations of$1.0 million in the prior year period. Loss from operations included$1.2 million of acquisition and integration costs and$1.7 million of impairment and other lease charges in the fourth quarter of 2014. Impairment and other lease charges were$0.6 million in the prior year period.
Highlights for the full year 2014 versus the full year 2013 include:
-
Restaurant sales increased 4.4% to
$692.8 million , including$34.0 million in sales from 123 BURGER KING® restaurants that were acquired in 2014, from$663.5 million in 2013; - Comparable restaurant sales increased 0.6% compared to a 1.0% increase in the prior year;
-
Restaurant-Level EBITDA (a non-GAAP financial measure) increased
$2.7 million to$73.0 million from$70.2 million in the prior year and Restaurant-Level EBITDA margin was essentially flat at 10.5%; -
Adjusted EBITDA (a non-GAAP financial measure) increased
$1.7 million to$36.0 million from$34.3 million in the prior year. (Please refer to the reconciliation of Adjusted EBITDA to net loss and Restaurant-Level EBITDA to income (loss) from operations in the tables at the end of this release.); and -
Loss from operations was
$7.6 million compared to$5.1 million in the prior year period. Loss from operations included$1.9 million of acquisition and integration costs as well as$3.5 million of impairment and other lease charges in 2014. Impairment and other lease charges were$4.5 million in the prior year.
As of
Accordino continued, "As expected, Restaurant-Level EBITDA and Restaurant-Level EBITDA margin were negatively impacted during the fourth quarter of 2014 by significantly higher ground beef costs and, to a lesser extent, the impact from the restaurants acquired late in the year. The effect of these factors was largely offset by improved financial performance at the restaurants we acquired in 2012, enabling us to hold Restaurant-Level EBITDA margin essentially unchanged for the full year."
Accordino concluded, "We believe we made measurable progress in 2014 in
executing on our strategic objectives. We raised approximately
Fourth Quarter 2014 Financial Results
Restaurant sales increased 16.5% to
Restaurant-Level EBITDA was
General and administrative expenses were
Adjusted EBITDA was
Loss from operations was
Interest expense was flat at
Income tax expense was
2015 Guidance
The Company is providing the following guidance for 2015 which is a 53-week fiscal period:
-
Total restaurant sales of
$810 million to$830 million including a comparable restaurant sales increase of 2% to 4% (on a comparable 52-week basis); - A commodity cost increase of approximately 2% to 3% primarily due to higher beef costs expected in the first half of the year;
-
General and administrative expenses of approximately
$44 million to$46 million (excluding stock compensation costs). Increases from 2014 reflect, among other things, higher incentive compensation costs (versus minimal expense in 2014), the full year impact of field management, training and other support costs related to the 2014 acquired restaurants, and the extra week in 2015; -
Adjusted EBITDA of
$44 million to$48 million ; - As a result of the net deferred tax asset valuation allowance established in 2014, the Company does not anticipate any income tax expense or benefit for 2015;
-
Capital expenditures of
$37 million to$44 million , including$25 million to$30 million for remodeling a total of 60 to 70 restaurants and final expenditures on certain 2014 remodels. Further expansion of these remodeling plans may be considered if we complete a possible refinancing of the Company's debt; and - 15 to 20 restaurant closings.
Conference Call Today
The conference call can be accessed live over the phone by dialing
888-364-3109 or for international callers by dialing 719-325-2329. A
replay will be available one hour after the call and can be accessed by
dialing 888-203-1112 or for international callers by dialing
719-457-0820; the passcode is 5396839. The replay will be available
until
Investor Conference Participation
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
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Consolidated Statements of Operations |
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(in thousands except per share amounts) |
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(unaudited) | (unaudited) | ||||||||||||||
Three Months Ended (a) | Twelve Months Ended (a) | ||||||||||||||
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Restaurant sales | $ | 192,897 | $ | 165,514 | $ | 692,755 | $ | 663,483 | |||||||
Costs and expenses: | |||||||||||||||
Cost of sales | 61,058 | 48,906 | 209,664 | 201,532 | |||||||||||
Restaurant wages and related expenses | 59,954 | 51,677 | 219,718 | 208,404 | |||||||||||
Restaurant rent expense | 13,596 | 11,841 | 48,865 | 47,198 | |||||||||||
Other restaurant operating expenses | 31,322 | 25,752 | 113,586 | 106,508 | |||||||||||
Advertising expense | 7,340 | 7,119 | 27,961 | 29,615 | |||||||||||
General and administrative expenses (b) (c) | 11,078 | 9,886 | 40,001 | 37,228 | |||||||||||
Depreciation and amortization | 9,802 | 8,604 | 36,923 | 33,594 | |||||||||||
Impairment and other lease charges | 1,719 | 555 | 3,541 | 4,462 | |||||||||||
Other expense | 22 | 202 | 47 | 17 | |||||||||||
Total costs and expenses | 195,891 | 164,542 | 700,306 | 668,558 | |||||||||||
Income (loss) from operations | (2,994 | ) | 972 | (7,551 | ) | (5,075 | ) | ||||||||
Interest expense | 4,721 | 4,711 | 18,801 | 18,841 | |||||||||||
Loss before income taxes | (7,715 | ) | (3,739 | ) | (26,352 | ) | (23,916 | ) | |||||||
Provision (benefit) for income taxes | 19,320 | (1,677 | ) | 11,765 | (10,397 | ) | |||||||||
Net loss | $ | (27,035 | ) | $ | (2,062 | ) | $ | (38,117 | ) | $ | (13,519 | ) | |||
Diluted net loss per share: | $ | (0.78 | ) | $ | (0.09 | ) | $ | (1.23 | ) | $ | (0.59 | ) | |||
Diluted weighted average common shares outstanding (d) | 34,826 | 23,047 | 30,885 | 22,959 |
(a) |
The Company uses a 52 or 53 week fiscal year that ends on the
Sunday closest to |
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(b) |
Acquisition and integration expenses of |
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(c) |
General and administrative expenses include stock-based
compensation expense of |
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(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) | ||||||||||||||||
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Restaurant Sales: (a) | |||||||||||||||||
Legacy restaurants | $ | 93,434 | $ | 92,698 | $ | 367,828 | $ | 368,081 | |||||||||
Restaurants acquired in 2012 | 74,065 | 72,816 | 290,945 | 295,402 | |||||||||||||
Restaurants acquired in 2014 | 25,398 | — | 33,982 | — | |||||||||||||
Total restaurant sales | $ | 192,897 | $ | 165,514 | $ | 692,755 | $ | 663,483 | |||||||||
Change in Comparable Restaurant Sales (b) | 3.6 | % | 1.7 | % | 0.6 | % | 1.0 | % | |||||||||
Average Weekly Sales per Restaurant: (c) | |||||||||||||||||
Legacy restaurants | $ | 25,284 | $ | 24,494 | $ | 24,555 | $ | 24,290 | |||||||||
Restaurants acquired in 2012 | 21,851 | 20,721 | 21,202 | 20,856 | |||||||||||||
Restaurants acquired in 2014 | 20,694 | — | 21,882 | — | |||||||||||||
Restaurant-Level EBITDA (d) | |||||||||||||||||
Legacy restaurants | $ | 12,345 | $ | 14,201 | $ | 48,701 | $ | 52,893 | |||||||||
Restaurants acquired in 2012 | 5,886 | 6,018 | 22,022 | 17,333 | |||||||||||||
Restaurants acquired in 2014 | 1,396 | — | 2,238 | — | |||||||||||||
Total restaurant-Level EBITDA | $ | 19,627 | $ | 20,219 | $ | 72,961 | $ | 70,226 | |||||||||
Restaurant-Level EBITDA margin (d) | |||||||||||||||||
Legacy restaurants | 13.2 | % | 15.3 | % | 13.2 | % | 14.4 | % | |||||||||
Restaurants acquired in 2012 | 7.9 | % | 8.3 | % | 7.6 | % | 5.9 | % | |||||||||
Restaurants acquired in 2014 | 5.5 | % | 6.6 | % | |||||||||||||
All restaurants | 10.2 | % | 12.2 | % | 10.5 | % | 10.6 | % | |||||||||
Adjusted EBITDA (d) | $ | 10,053 | $ | 10,437 | $ | 36,008 | $ | 34,271 | |||||||||
Adjusted EBITDA margin (d) | 5.2 | % | 6.3 | % | 5.2 | % | 5.2 | % | |||||||||
Number of Restaurants: | |||||||||||||||||
Restaurants at beginning of period | 581 | 564 | 564 | 572 | |||||||||||||
New restaurants | — | 2 | 1 | 2 | |||||||||||||
Acquired restaurants | 94 | 1 | 123 | 1 | |||||||||||||
Closed restaurants | (1 | ) | (3 | ) | (14 |
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(11 |
) |
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Restaurants at end of period | 674 | 564 | 674 | 564 | |||||||||||||
At |
At |
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Long-term Debt (e) |
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Cash (f) |
21,221 |
28,302 |
(a) |
Restaurants acquired in 2012 represent the restaurants acquired
from |
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(b) |
Restaurants are generally included in comparable restaurant sales after they have been open or owned for 12 months. |
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(c) |
Average weekly restaurant sales are derived by dividing restaurant sales by the average number of restaurants operating during the period. |
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(d) |
EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Restaurant-Level EBITDA, and 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 and to the Company's reconciliation of Restaurant-Level EBITDA to income (loss) from operations for further detail. Both Adjusted EBITDA margin and Restaurant-Level EBITDA margin are calculated as a percentage of restaurant sales for the respective group of restaurants. |
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(e) |
Long-term debt (including current portion) at |
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(f) |
Includes |
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Reconciliation of Non-GAAP Measures |
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(unaudited) | (unaudited) | ||||||||||||||
Three Months Ended (a) | Twelve Months Ended (a) | ||||||||||||||
2014 |
2013 |
2014 |
2013 |
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Reconciliation of EBITDA and Adjusted EBITDA: (a) | |||||||||||||||
Net loss from continuing operations | $ | (27,035 | ) | $ | (2,062 | ) | $ | (38,117 | ) | $ | (13,519 | ) | |||
Provision (benefit) for income taxes | 19,320 | (1,677 | ) | 11,765 | (10,397 | ) | |||||||||
Interest expense | 4,721 | 4,711 | 18,801 | 18,841 | |||||||||||
Depreciation and amortization | 9,802 | 8,604 | 36,923 | 33,594 | |||||||||||
EBITDA | 6,808 | 9,576 | 29,372 | 28,519 | |||||||||||
Impairment and other lease charges | 1,719 | 555 | 3,541 | 4,462 | |||||||||||
Acquisition and integration costs | 1,229 | — | 1,915 | — | |||||||||||
EEOC litigation and settlement costs | — | — | — | 85 | |||||||||||
Stock compensation expense | 297 | 306 | 1,180 | 1,205 | |||||||||||
Adjusted EBITDA | $ | 10,053 | $ | 10,437 | $ | 36,008 | $ | 34,271 | |||||||
Reconciliation of Restaurant-Level EBITDA: (a) |
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Restaurant-Level EBITDA |
$ |
19,627 |
$ |
20,219 |
$ |
72,961 |
$ |
70,226 |
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Less: |
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General and administrative expenses |
11,078 |
9,886 |
40,001 |
37,228 |
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Depreciation and amortization |
9,802 |
8,604 |
36,923 |
33,594 |
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Impairment and other lease charges |
1,719 |
555 |
3,541 |
4,462 |
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Other expense |
22 |
202 |
47 |
17 |
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Income (loss) from operations |
$ |
(2,994 |
) |
$ |
972 |
$ |
(7,551 |
) |
$ |
(5,075 |
) |
(a) |
Within our press release, we make reference to EBITDA, Adjusted EBITDA and 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. 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). |
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We are presenting Adjusted EBITDA and 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 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 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 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 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 Restaurant-Level EBITDA and income (loss) from operations. |
Investor Relations:
800-348-1074, ext. 3333
investorrelations@carrols.com
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