Carrols Restaurant Group, Inc. Reports Financial Results for the Second Quarter of 2014
Highlights for the second quarter of 2014 versus the second quarter of 2013 include:
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Restaurant sales decreased 2.8% to
$168.6 million from$173.5 million ; - Comparable restaurant sales decreased 2.0% compared to a 1.4% increase in the prior year period;
-
Net loss was reduced to
$1.9 million , or$0.06 per diluted share, compared to a net loss of$3.5 million , or$0.15 per diluted share, in the prior year period; -
The net loss included impairment and other lease charges in both
years. Such charges totaled
$0.4 million ($0.01 per diluted share after tax) in the second quarter of 2014 and$2.2 million ($0.06 per diluted share after tax) in the prior year period; -
Restaurant-Level EBITDA (a non-GAAP financial measure) totaled
$19.7 million compared to$19.6 million in the prior year period, and Restaurant-Level EBITDA margin increased 38 basis points; and -
Adjusted EBITDA (a non-GAAP financial measure) increased
$0.9 million to$11.4 million from$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).
As of June 29, 2014,
Accordino continued, "Having raised approximately
Second Quarter 2014 Financial Results
Restaurant sales decreased 2.8% to
Adjusted EBITDA increased
General and administrative expenses were
Interest expense remained flat at
Net loss in the second quarter of 2014 was
Acquisition Summary
During the second quarter,
2014 Guidance
The following revised guidance is being provided for 2014:
-
Total restaurant sales of
$665 million to$675 million including a comparable restaurant sales change of (1%) to 0%; - A commodity cost increase of 3% to 4% due to higher than expected ground beef costs, compared to 2.0% to 3.0% previously estimated;
-
General and administrative expenses of approximately
$37 million to$39 million (excluding stock compensation costs) compared to$39 million to$41 million previously estimated; -
Adjusted EBITDA of
$36 million to$40 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, excluding acquisitions, of approximately
$51 million to$54 million , including$38 million to$40 million for remodeling a total of 100 to 110 restaurants and$4 million for costs to scrape and rebuild three restaurants compared to total capital expenditures of$42 million to$47 million previously estimated; -
Cash expenditures totaling approximately
$11.5 million (excluding inventory) for the purchase of the 29 BURGER KING® restaurants that have been completed throughJuly 2014 ; and - 15 to 20 restaurant closures, including nine units that were closed during the first half of the year.
Accordino concluded, "We are revising our annual guidance provided earlier in light of our performance to date and a more cautious outlook over the next couple of quarters given what seems to be a continuing slow recovery for our core customer. These updates also reflect higher commodity costs and the effect of the acquisitions we have completed so far in 2014. We have also accelerated our remodeling efforts and expect to complete a total of 100 to 110 remodels to Burger King Corporation's 20/20 restaurant image by year-end, including the 28 completed through the end of the second quarter."
Conference Call Today
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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) |
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(unaudited) | (unaudited) | |||||||||||||||||||
Three Months Ended (a) | Six Months Ended (a) | |||||||||||||||||||
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Restaurant sales | $ | 168,583 | $ | 173,518 | $ | 320,036 | $ | 329,657 | ||||||||||||
Costs and expenses: | ||||||||||||||||||||
Cost of sales | 50,088 | 52,870 | 93,437 | 101,501 | ||||||||||||||||
Restaurant wages and related expenses | 52,804 | 53,665 | 103,741 | 104,332 | ||||||||||||||||
Restaurant rent expense | 11,626 | 11,869 | 23,064 | 23,578 | ||||||||||||||||
Other restaurant operating expenses | 27,060 | 27,547 | 53,085 | 53,783 | ||||||||||||||||
Advertising expense | 7,284 | 7,926 | 13,827 | 15,020 | ||||||||||||||||
General and administrative expenses (b) | 8,625 | 9,524 | 18,892 | 18,602 | ||||||||||||||||
Depreciation and amortization | 9,045 | 8,391 | 17,803 | 16,454 | ||||||||||||||||
Impairment and other lease charges | 429 | 2,198 | 1,049 | 2,828 | ||||||||||||||||
Other income | 25 | — | 25 | (185 | ) | |||||||||||||||
Total costs and expenses | 166,986 | 173,990 | 324,923 | 335,913 | ||||||||||||||||
Income (loss) from operations | 1,597 | (472 | ) | (4,887 | ) | (6,256 | ) | |||||||||||||
Interest expense | 4,694 | 4,711 | 9,397 | 9,422 | ||||||||||||||||
Loss before income taxes | (3,097 | ) | (5,183 | ) | (14,284 | ) | (15,678 | ) | ||||||||||||
Benefit for income taxes | (1,165 | ) | (1,687 | ) | (4,923 | ) | (6,983 | ) | ||||||||||||
Net loss | $ | (1,932 | ) | $ | (3,496 | ) | $ | (9,361 | ) | $ | (8,695 | ) | ||||||||
Basic and diluted net loss per share | $ | (0.06 | ) | $ | (0.15 | ) | $ | (0.35 | ) | $ | (0.38 | ) | ||||||||
Basic and diluted weighted average common shares outstanding (c) | 30,767 | 22,899 | 26,959 | 22,884 | ||||||||||||||||
(a) |
The Company uses a 52 or 53 week fiscal year that ends on the
Sunday closest to |
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(b) |
General and administrative expenses include stock-based
compensation expense of |
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(c) |
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. |
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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) | Six Months Ended (a) | |||||||||||||||||||
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Restaurant Sales: (a) | ||||||||||||||||||||
Legacy restaurants | $ | 94,424 | $ | 95,311 | $ | 178,336 | $ | 181,076 | ||||||||||||
Acquired BKC restaurants | 74,159 | 78,207 | 141,700 | 148,581 | ||||||||||||||||
Total restaurant sales | $ | 168,583 | $ | 173,518 | $ | 320,036 | $ | 329,657 | ||||||||||||
Change in Comparable Restaurant Sales (b) | (2.0 | )% | 1.4 | % | (2.2 | )% | 1.2 | % | ||||||||||||
Adjusted EBITDA (c) | 11,362 | 10,413 | 14,552 | 13,708 | ||||||||||||||||
Adjusted EBITDA margin (c) | 6.7 | % | 6.0 | % | 4.5 | % | 4.2 | % | ||||||||||||
Restaurant-Level EBITDA (c) | 19,721 | 19,641 | 32,882 | 31,443 | ||||||||||||||||
Restaurant-Level EBITDA margin (c) | 11.7 | % | 11.3 | % | 10.3 | % | 9.5 | % | ||||||||||||
Average Weekly Sales per Restaurant: (d) | ||||||||||||||||||||
Legacy restaurants | 24,958 | 25,142 | 23,578 | 23,804 | ||||||||||||||||
Acquired BKC restaurants | 21,594 | 21,950 | 20,473 | 20,848 | ||||||||||||||||
Expenses - |
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Cost of sales | 29.5 | % | 29.8 | % | 29.0 | % | 29.7 | % | ||||||||||||
Restaurant wages and related expenses | 31.0 | % | 29.9 | % | 32.1 | % | 30.9 | % | ||||||||||||
Restaurant rent expense | 6.0 | % | 6.0 | % | 6.4 | % | 6.4 | % | ||||||||||||
Other restaurant operating expenses | 15.1 | % | 14.8 | % | 15.7 | % | 15.2 | % | ||||||||||||
Advertising expense | 4.1 | % | 4.4 | % | 4.1 | % | 4.3 | % | ||||||||||||
Expenses - |
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Cost of sales | 29.9 | % | 31.3 | % | 29.4 | % | 32.1 | % | ||||||||||||
Restaurant wages and related expenses | 31.8 | % | 32.1 | % | 32.9 | % | 32.6 | % | ||||||||||||
Restaurant rent expense | 8.0 | % | 7.8 | % | 8.3 | % | 8.1 | % | ||||||||||||
Other restaurant operating expenses | 17.2 | % | 17.2 | % | 17.7 | % | 17.6 | % | ||||||||||||
Advertising expense | 4.6 | % | 4.8 | % | 4.6 | % | 4.8 | % | ||||||||||||
Number of Restaurants: | ||||||||||||||||||||
Restaurants at beginning of period | 560 | 571 | 564 | 572 | ||||||||||||||||
New restaurants | — | — | 1 | — | ||||||||||||||||
Acquired restaurants | 4 | — | 4 | — | ||||||||||||||||
Closed restaurants | (4) | (5) | (9) | (6) | ||||||||||||||||
Restaurants at end of period | 560 | 566 | 560 | 566 | ||||||||||||||||
At |
At |
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Long-term debt (f) |
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Cash (including |
75,972 |
28,302 |
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(a) |
Acquired BKC restaurants represent the restaurants acquired from
Burger King Corporation on |
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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) |
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 total restaurant sales. |
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(d) |
Average weekly restaurant sales are derived by dividing restaurant sales by the average number of restaurants operating during the period. |
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(e) |
Represents restaurant expenses as a percentage of sales for the respective group of restaurants. |
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(f) |
Long-term debt (including current portion) at |
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Reconciliation of Non-GAAP Measures |
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(unaudited) | (unaudited) | |||||||||||||||||||
Three Months Ended (a) | Six Months Ended (a) | |||||||||||||||||||
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Reconciliation of EBITDA and Adjusted EBITDA: (a) | ||||||||||||||||||||
Net loss | $ | (1,932 | ) | $ | (3,496 | ) | $ | (9,361 | ) | $ | (8,695 | ) | ||||||||
Benefit for income taxes | (1,165 | ) | (1,687 | ) | (4,923 | ) | (6,983 | ) | ||||||||||||
Interest expense | 4,694 | 4,711 | 9,397 | 9,422 | ||||||||||||||||
Depreciation and amortization | 9,045 | 8,391 | 17,803 | 16,454 | ||||||||||||||||
EBITDA | 10,642 | 7,919 | 12,916 | 10,198 | ||||||||||||||||
Impairment and other lease charges | 429 | 2,198 | 1,049 | 2,828 | ||||||||||||||||
EEOC litigation and settlement costs | — | — | — | 85 | ||||||||||||||||
Stock compensation expense | 291 | 296 | 587 | 597 | ||||||||||||||||
Adjusted EBITDA | $ | 11,362 | $ | 10,413 | $ | 14,552 | $ | 13,708 | ||||||||||||
Reconciliation of Restaurant-Level EBITDA: (a) | ||||||||||||||||||||
Restaurant-Level EBITDA (a) | $ | 19,721 | $ | 19,641 | $ | 32,882 | $ | 31,443 | ||||||||||||
Less: | ||||||||||||||||||||
General and administrative expenses | 8,625 | 9,524 | 18,892 | 18,602 | ||||||||||||||||
Depreciation and amortization | 9,045 | 8,391 | 17,803 | 16,454 | ||||||||||||||||
Impairment and other lease charges | 429 | 2,198 | 1,049 | 2,828 | ||||||||||||||||
Other expense (income) | 25 | — | 25 | (185 | ) | |||||||||||||||
Income (loss) from operations | $ | 1,597 | $ | (472 | ) | $ | (4,887 | ) | $ | (6,256 | ) | |||||||||
(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 income (loss) from 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, EEOC litigation and settlement costs and stock compensation expense. Restaurant-Level EBITDA represents income (loss) from operations before general and administrative expenses, depreciation and amortization, impairment and other lease charges, and other income and expense. |
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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 and other income and expense which are not directly related to restaurant operations. 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 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 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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