Carrols Restaurant Group, Inc. Reports Financial Results for the Fourth Quarter and Full Year of 2015
Provides Guidance for 2016
Company to Present at the
Highlights for fourth quarter of 2015 (14 weeks) versus fourth quarter of 2014 (13 weeks) include:
-
Restaurant sales increased 18.7% to
$229.1 million from$192.9 million in the fourth quarter of 2014, including$46.7 million in sales from BURGER KING® restaurants acquired in 2014 and 2015; - The Company has acquired a total of 178 BURGER KING® restaurants over the past two years including 55 restaurants in 2015 (46 in the fourth quarter) and 123 restaurants in 2014;
- Comparable restaurant sales increased 5.1% (on a comparable 14 week basis) compared to a 3.6% increase in the prior year period;
-
Adjusted EBITDA(1) more than doubled to
$23.7 million from$10.1 million in the prior year period; -
Net income was
$7.0 million , or$0.16 per diluted share, compared to a net loss of$27.0 million , or$0.78 per diluted share, in the prior year period. The net loss in the fourth quarter of 2014 included a non-cash charge of$24.3 million for a valuation allowance against the Company's net deferred income tax assets. As a result, there was no income tax expense in 2015; and -
Adjusted net income(1) was
$8.2 million , or$0.18 per diluted share, compared to a net loss of$0.9 million , or$0.03 per diluted share, in the prior year period.
Highlights for the full year 2015 (53 weeks) versus the full year 2014 (52 weeks) include:
-
Restaurant sales increased 24.0% to
$859.0 million from$692.8 million , including$157.6 million in sales from BURGER KING® restaurants acquired in 2014 and 2015; - Comparable restaurant sales increased 7.4% (on a comparable 53 week basis) compared to a 0.6% increase in the prior year;
-
Adjusted EBITDA(1) increased
$40.7 million to$76.7 million from$36.0 million in the prior year; -
Net income was
$4,000 , or$0.00 per diluted share, compared to a net loss of$38.1 million , or$1.23 per diluted share, in the prior year. Net income in 2015 included a charge of$12.6 million related to the refinancing of the Company's debt, and the net loss in 2014 included a$24.3 million non-cash charge for a valuation allowance against net deferred income tax assets; and -
Excluding those charges and certain other items, Adjusted net income(1)
was
$16.9 million , or$0.38 per diluted share, compared to a net loss of$10.4 million , or$0.34 per diluted share, in the prior year.
(1) Adjusted EBITDA, Restaurant-level EBITDA and Adjusted net income are non-GAAP financial measures. Refer to the definitions and reconciliation of these measures to net income (loss) or to income (loss) from operations in the tables at the end of this release.
At the end of the fiscal year (
Accordino added, "We continued to aggressively reimage restaurants and completed the remodeling of 94 restaurants in 2015. At the end of the year, more than 60% of our 705 restaurants featured the updated 20/20 design image. We anticipate reimaging another 85 to 95 restaurants in 2016 as we wind down our accelerated remodeling program, and expect our remodeling expenditures to return to more moderate levels in 2017."
Accordino concluded, "In 2015, we also continued to execute our expansion strategy with the acquisition of an additional 55 BURGER KING® restaurants. Our 2015 financial results further demonstrate our ability to positively impact sales, operating margins and overall operating performance of the restaurants that we've acquired. Looking ahead, we plan to opportunistically pursue additional acquisition opportunities as a key element of our growth strategy."
Fourth Quarter 2015 Financial Results
Restaurant sales increased 18.7% to
Restaurant-Level EBITDA was
General and administrative expenses were
Adjusted EBITDA was
Income from operations was
Interest expense decreased slightly to
Net income was
Adjusted net income was
Full Year 2016 Outlook
Carrols is providing the following guidance for the full year 2016 which is a 52-week period:
-
Total restaurant sales of
$930 million to$955 million including a comparable restaurant sales increase of 2% to 4% (on a comparable 52 week basis); - Between a 1% decrease and a 1% increase in commodity costs including a 5% to 10% decrease in beef costs;
-
General and administrative expenses (excluding stock compensation
costs) of
$50 million to$52 million ; -
Adjusted EBITDA of
$80 million to$90 million ; -
Capital expenditures of
$75 million to$85 million which includes remodeling a total of 85 to 95 restaurants (including the scrape and rebuilding of 4 to 6 restaurants) and the construction of 6 to 8 new restaurants (including relocations of 4 to 5 existing restaurants); -
The sale/leaseback of 13 properties acquired in 2015 for net proceeds
of
$18 million to$19 million ; and - As a consequence of establishing the net deferred income tax asset valuation allowance in 2014, the Company does not anticipate any income tax expense for 2016.
As stated above, the additional operating week in 2015 contributed
approximately
While the Company intends to pursue opportunities to acquire additional BURGER KING® restaurants in 2016, the annual guidance detailed above does not include any impact for other possible acquisitions.
Carrols also amended its revolving credit facility on
Conference Call Today
The conference call can be accessed live over the phone by dialing
888-468-2440 or for international callers by dialing 719-325-2495. 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
1-719-457-0820; the passcode is 2999334. The replay will be available
until
Investor Conference Participation
Carrols also announced today that
About the Company
Carrols is the largest BURGER KING® franchisee in
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 Carrols'
expectation or belief concerning future events. Without limiting the
foregoing, these statements are often identified by the words "may",
"might", "believes", "thinks", "anticipates", "plans", "expects",
"intends" or similar expressions. In addition, expressions of our
strategies, intentions, plans or guidance are also forward-looking
statements. Such statements reflect management's current views with
respect to future events and are subject to risks and uncertainties,
both known and unknown. You are cautioned not to place undue reliance on
these forward-looking statements as there are important factors that
could cause actual results to differ materially from those in
forward-looking statements, many of which are beyond our control.
Investors are referred to the full discussion of risks and uncertainties
as included in Carrols' filings with the
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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 | $ | 229,056 | $ | 192,897 | $ | 859,004 | $ | 692,755 | ||||||||
Costs and expenses: | ||||||||||||||||
Cost of sales | 62,300 | 61,058 | 240,322 | 209,664 | ||||||||||||
Restaurant wages and related expenses | 70,815 | 59,954 | 267,950 | 219,718 | ||||||||||||
Restaurant rent expense | 14,995 | 13,596 | 58,096 | 48,865 | ||||||||||||
Other restaurant operating expenses | 35,467 | 31,322 | 135,874 | 113,586 | ||||||||||||
Advertising expense | 8,691 | 7,340 | 32,242 | 27,961 | ||||||||||||
General and administrative expenses (b) (c) | 14,252 | 11,078 | 50,515 | 40,001 | ||||||||||||
Depreciation and amortization | 10,629 | 9,802 | 39,845 | 36,923 | ||||||||||||
Impairment and other lease charges | 346 | 1,719 | 3,078 | 3,541 | ||||||||||||
Other expense (income) | — | 22 | (126 | ) | 47 | |||||||||||
Total costs and expenses | 217,495 | 195,891 | 827,796 | 700,306 | ||||||||||||
Income (loss) from operations | 11,561 | (2,994 | ) | 31,208 | (7,551 | ) | ||||||||||
Interest expense | 4,543 | 4,721 | 18,569 | 18,801 | ||||||||||||
Loss on extinguishment of debt | — | — | 12,635 | — | ||||||||||||
Income (loss) before income taxes | 7,018 | (7,715 | ) | 4 | (26,352 | ) | ||||||||||
Provision for income taxes | — | 19,320 | — | 11,765 | ||||||||||||
Net income (loss) | $ | 7,018 | $ | (27,035 | ) | $ | 4 | $ | (38,117 | ) | ||||||
Basic and diluted net income (loss) per share (d) (e): | $ | 0.16 | $ | (0.78 | ) | $ | 0.00 | $ | (1.23 | ) | ||||||
Basic weighted average common shares outstanding | 35,038 | 34,826 | 34,959 | 30,885 | ||||||||||||
Diluted weighted average common shares outstanding | 44,698 | 34,826 | 44,623 | 30,885 |
(a) |
The Company uses a 52 or 53 week fiscal year that ends on the
Sunday closest to |
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(b) |
Acquisition costs of |
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(c) |
General and administrative expenses include stock-based
compensation expense of |
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(d) |
Basic net income (loss) per share was computed excluding income attributable to preferred stock and non-vested restricted shares. |
|
(e) |
Diluted net income (loss) per share was computed including shares issuable for convertible preferred stock and non-vested restricted stock unless 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 | $ | 103,510 | $ | 93,434 | $ | 392,754 | $ | 367,828 | ||||||||||
Restaurants acquired in 2012 | 78,806 | 74,065 | 308,700 | 290,945 | ||||||||||||||
Restaurants acquired in 2014 and 2015 | 46,740 | 25,398 | 157,550 | 33,982 | ||||||||||||||
Total Restaurant Sales | $ | 229,056 | $ | 192,897 | $ | 859,004 | $ | 692,755 | ||||||||||
Change in Comparable Restaurant Sales (b) | 5.1 | % | 3.6 | % | 7.4 | % | 0.6 | % | ||||||||||
Average Weekly Sales per Restaurant: (c) | ||||||||||||||||||
Legacy restaurants | $ | 26,596 | $ | 25,284 | $ | 26,445 | $ | 24,555 | ||||||||||
Restaurants acquired in 2012 | 22,962 | 21,851 | 23,328 | 21,202 | ||||||||||||||
Restaurants acquired in 2014 and 2015 | 22,346 | 20,694 | 22,480 | 21,882 | ||||||||||||||
Restaurant-Level EBITDA (d) | ||||||||||||||||||
Legacy restaurants | $ | 19,137 | $ | 12,345 | $ | 65,509 | $ | 48,701 | ||||||||||
Restaurants acquired in 2012 | 11,492 | 5,886 | 41,584 | 22,022 | ||||||||||||||
Restaurants acquired in 2014 and 2015 | 6,159 | 1,396 | 17,427 | 2,238 | ||||||||||||||
Total Restaurant-Level EBITDA | $ | 36,788 | $ | 19,627 | $ | 124,520 | $ | 72,961 | ||||||||||
Restaurant-Level EBITDA margin (d) | ||||||||||||||||||
Legacy restaurants | 18.5 | % | 13.2 | % | 16.7 | % | 13.2 | % | ||||||||||
Restaurants acquired in 2012 | 14.6 | % | 7.9 | % | 13.5 | % | 7.6 | % | ||||||||||
Restaurants acquired in 2014 and 2015 | 13.2 | % | 5.5 | % | 11.1 | % | 6.6 | % | ||||||||||
All restaurants |
16.1 | % | 10.2 | % | 14.5 | % | 10.5 | % | ||||||||||
Adjusted EBITDA (d) | $ | 23,732 | $ | 10,053 | $ | 76,737 | $ | 36,008 | ||||||||||
Adjusted EBITDA margin (d) | 10.4 | % | 5.2 | % | 8.9 | % | 5.2 | % | ||||||||||
Adjusted net income (loss) (d) | $ | 8,193 | $ | (881 | ) | $ | 16,885 | $ | (10,408 | ) | ||||||||
Diluted adjusted net earnings (loss) per share | $ | 0.18 | $ | (0.03 | ) | $ | 0.38 | $ | (0.34 | ) | ||||||||
Number of Restaurants: | ||||||||||||||||||
Restaurants at beginning of period | 660 | 581 | 674 | 564 | ||||||||||||||
New restaurants | — | — | — | 1 | ||||||||||||||
Acquired restaurants | 46 | 94 | 55 | 123 | ||||||||||||||
Closed restaurants | (1 | ) | (1 | ) | (23 | ) | (14 | ) | ||||||||||
Sold restaurants | — | — | (1 | ) | — | |||||||||||||
Restaurants at end of period | 705 | 674 | 705 | 674 | ||||||||||||||
At |
At |
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Long-term Debt (e) |
$ 209,209 |
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Cash |
22,274 |
21,221 |
(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. For the three
and twelve months ended |
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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, Restaurant-Level EBITDA margin and Adjusted net income (loss) 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, Adjusted EBITDA and Adjusted net income (loss) to net income (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. Diluted adjusted net earnings (loss) per share is calculated based on Adjusted net income (loss). |
|
(e) |
Long-term debt (including current portion and excluding deferred
financing costs) at |
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Reconciliation of Non-GAAP Measures |
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(in thousands, except per share data) |
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(unaudited) | (unaudited) | |||||||||||||||
Three Months Ended (a) | Twelve Months Ended (a) | |||||||||||||||
2016 |
2014 |
2016 |
2014 |
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Reconciliation of EBITDA and Adjusted EBITDA: (a) | ||||||||||||||||
Net income (loss) | $ | 7,018 | $ | (27,035 | ) | $ | 4 | $ | (38,117 | ) | ||||||
Provision for income taxes | — | 19,320 | — | 11,765 | ||||||||||||
Interest expense | 4,543 | 4,721 | 18,569 | 18,801 | ||||||||||||
Depreciation and amortization | 10,629 | 9,802 | 39,845 | 36,923 | ||||||||||||
EBITDA | 22,190 | 6,808 | 58,418 | 29,372 | ||||||||||||
Impairment and other lease charges | 346 | 1,719 | 3,078 | 3,541 | ||||||||||||
Acquisition costs | 829 | 1,229 | 1,168 | 1,915 | ||||||||||||
Stock compensation expense | 367 | 297 | 1,438 | 1,180 | ||||||||||||
Loss on extinguishment of debt | — | — | 12,635 | — | ||||||||||||
Adjusted EBITDA | $ | 23,732 | $ | 10,053 | $ | 76,737 | $ | 36,008 | ||||||||
Reconciliation of Restaurant-Level EBITDA: (a) | ||||||||||||||||
Income (loss) from operations | $ | 11,561 | $ | (2,994 | ) | $ | 31,208 | $ | (7,551 | ) | ||||||
Add: | ||||||||||||||||
General and administrative expenses | 14,252 | 11,078 | 50,515 | 40,001 | ||||||||||||
Depreciation and amortization | 10,629 | 9,802 | 39,845 | 36,923 | ||||||||||||
Impairment and other lease charges | 346 | 1,719 | 3,078 | 3,541 | ||||||||||||
Other expense (income) | — | 22 | (126 | ) | 47 | |||||||||||
Restaurant-Level EBITDA | $ | 36,788 | $ | 19,627 | $ | 124,520 | $ | 72,961 | ||||||||
Reconciliation of Adjusted Net Income (Loss): (a) | ||||||||||||||||
Net income (loss) | $ | 7,018 | $ | (27,035 | ) | $ | 4 | $ | (38,117 | ) | ||||||
Add: | ||||||||||||||||
Loss on extinguishment of debt | — | — | 12,635 | — | ||||||||||||
Impairment and other lease charges | 346 | 1,719 | 3,078 | 3,541 | ||||||||||||
Acquisition costs | 829 | 1,229 | 1,168 | 1,915 | ||||||||||||
Income tax effect of adjustments (b) | — | (1,120 | ) | — | (2,073 | ) | ||||||||||
Valuation allowance for deferred taxes | — | 24,326 | — | 24,326 | ||||||||||||
Adjusted net income (loss) | $ | 8,193 | $ | (881 | ) | $ | 16,885 | $ | (10,408 | ) | ||||||
Adjusted diluted net earnings (loss) per share | $ | 0.18 | $ | (0.03 | ) | $ | 0.38 | $ | (0.34 | ) |
(a) |
Within our press release, we make reference to EBITDA, Adjusted EBITDA, Restaurant-Level EBITDA and Adjusted net income (loss) which are non-GAAP financial measures. EBITDA represents net income (loss) before provision for income taxes, interest expense and depreciation and amortization. Adjusted EBITDA represents EBITDA as adjusted to exclude impairment and other lease charges, acquisition costs, stock compensation expense and loss on extinguishment of debt. Restaurant-Level EBITDA represents income (loss) from operations as adjusted to exclude general and administrative expenses, depreciation and amortization, impairment and other lease charges and other expense (income). Adjusted net income (loss) represents net income (loss) as adjusted to exclude loss on extinguishment of debt, impairment and other lease charges, acquisition costs and the establishment of a valuation allowance on the Company's net deferred income tax assets. |
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We are presenting Adjusted EBITDA, Restaurant-Level EBITDA and Adjusted net income (loss) because we believe that they provide a more meaningful comparison than EBITDA and Net income (loss) 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 and other expense (income), all of which are non-recurring at the restaurant level. Management believes that Adjusted EBITDA, Restaurant-Level EBITDA and Adjusted net income (loss), 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, Restaurant-Level EBITDA and Adjusted net income (loss) 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 income (loss) and EBITDA and Adjusted EBITDA, between Restaurant-Level EBITDA and income (loss) from operations, and between net income (loss) and Adjusted net income (loss). | ||
(b) |
The income tax effect related to the adjustments for impairment
and other lease charges and acquisition costs during the three and
twelve months ended |
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Investor Relations:
800-348-1074,
ext. 3333
investorrelations@carrols.com
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