Carrols Restaurant Group, Inc. Reports Financial Results for the Third Quarter of 2015
Raises its 2015 Outlook
Highlights for the third quarter of 2015 versus the third quarter of 2014 include:
-
Restaurant sales increased 21.1% to
$217.7 million from$179.8 million in the third quarter of 2014, which included$39.4 million in sales from 132 BURGER KING® restaurants that were acquired in 2014 and 2015; - Comparable restaurant sales increased 6.5% compared to a 3.3% increase in the prior year period;
-
Restaurant-Level EBITDA (a non-GAAP financial measure) increased 63.0%
to
$33.3 million compared to$20.5 million in the prior year period and Restaurant-Level EBITDA margin increased over 390 basis points to 15.3%; -
Adjusted EBITDA (a non-GAAP financial measure) nearly doubled to
$22.0 million from$11.1 million in the prior year period. (Please refer to the reconciliation of Adjusted EBITDA to net income (loss) and Restaurant-Level EBITDA to income (loss) from operations in the tables at the end of this release); -
Income from operations increased to
$11.8 million from$0.3 million in the prior year period; and -
Net income was
$7.2 million in the third quarter of 2015, or$0.16 per diluted share, compared to a net loss of$1.7 million , or$0.05 per diluted share, in the prior year period. No income tax expense was recorded in 2015 since the Company has recorded a valuation allowance against its net deferred income tax assets. There was a$2.6 million benefit from income taxes recorded in the third quarter last year.
At the end of the third quarter, Carrols owned and operated 660 BURGER KING® restaurants.
Accordino concluded, "Our financial results also demonstrate the successful execution of our strategic objectives, namely our aggressive remodeling initiatives and our continued expansion. We have completed the remodeling of 54 restaurants during the first nine months of 2015 and expect to complete 90 to 95 by the end of the year bringing the total number of remodels to almost 400 since 2012. With regards to our expansion, we have made much progress improving the operating and financial performance of the restaurants that we have acquired, and continue to pursue additional acquisition opportunities. To date, we've acquired 15 restaurants in 2015 including six restaurants acquired early in the fourth quarter. We also have several transactions either under contract or in late-stage negotiations, and believe that we may complete the acquisition of as many as 40 more restaurants by the end of 2015."
Third Quarter 2015 Financial Results
Restaurant sales increased 21.1% to
Restaurant-Level EBITDA was
General and administrative expenses were
Adjusted EBITDA was
Interest expense decreased slightly to
Income from operations increased to
Net income was
2015 Outlook
Based on the Company's financial performance through the first nine months of 2015, the Company is updating its guidance for 2015 which is a 53-week fiscal period:
-
Total restaurant sales of
$840 million to$850 million (previously$830 million to$845 million ); - A comparable restaurant sales increase of 6% to 7% on a comparable 52-week basis (previously 5% to 7%);
- A commodity cost decrease of approximately 2.5% to 3.0% primarily due to lower beef costs (previously a decrease of 1.5% to 2.5%);
-
General and administrative expenses (excluding stock compensation
costs) of approximately
$47 million to$49 million (unchanged from previous estimates); -
Adjusted EBITDA of
$65 million to$70 million (previously$60 million to$65 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
$50 million to$55 million (unchanged from previous estimates), which includes remodeling a total of 90 to 95 restaurants (previously 94 to 99 restaurants) including the scrape and rebuild of four restaurants; and - Up to 25 restaurant closings (unchanged from previous estimates) of which 22 were closed through the end of the third quarter of 2015.
Acquisition Activity
Through
Conference Call Today
The conference call can be accessed live over the phone by dialing
888-430-8705 or for international callers by dialing 719-325-2435. 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 5331647. 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 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 | |||||||||||||||||||
(in thousands except per share amounts) |
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(unaudited) | (unaudited) | |||||||||||||||||
Three Months Ended (a) | Nine Months Ended (a) | ||||||||||||||||||
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2015 |
2014 |
2015 |
2014 |
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Restaurant sales | $ | 217,676 | $ | 179,822 | $ | 629,948 | $ | 499,858 | |||||||||||
Costs and expenses: | |||||||||||||||||||
Cost of sales | 60,676 | 55,169 | 178,022 | 148,606 | |||||||||||||||
Restaurant wages and related expenses | 67,116 | 56,023 | 197,135 | 159,764 | |||||||||||||||
Restaurant rent expense | 14,106 | 12,205 | 43,101 | 35,269 | |||||||||||||||
Other restaurant operating expenses | 34,261 | 29,179 | 100,407 | 82,264 | |||||||||||||||
Advertising expense | 8,188 | 6,794 | 23,551 | 20,621 | |||||||||||||||
General and administrative expenses (b) (c) | 11,764 | 10,031 | 36,263 | 28,923 | |||||||||||||||
Depreciation and amortization | 9,418 | 9,318 | 29,216 | 27,121 | |||||||||||||||
Impairment and other lease charges | 396 | 773 | 2,732 | 1,822 | |||||||||||||||
Other expense (income) | — | — | (126 | ) | 25 | ||||||||||||||
Total costs and expenses | 205,925 | 179,492 | 610,301 | 504,415 | |||||||||||||||
Income (loss) from operations | 11,751 | 330 | 19,647 | (4,557 | ) | ||||||||||||||
Interest expense | 4,512 | 4,683 | 14,026 | 14,080 | |||||||||||||||
Loss on extinguishment of debt | — | — | 12,635 | — | |||||||||||||||
Income (loss) before income taxes | 7,239 | (4,353 | ) | (7,014 | ) | (18,637 | ) | ||||||||||||
Benefit for income taxes | — | (2,632 | ) | — | (7,555 | ) | |||||||||||||
Net income (loss) | $ | 7,239 | $ | (1,721 | ) | $ | (7,014 | ) | $ | (11,082 | ) | ||||||||
Basic and diluted net income (loss) per share (d) (e) | $ | 0.16 | $ | (0.05 | ) | $ | (0.20 | ) | $ | (0.37 | ) | ||||||||
Basic weighted average common shares outstanding | 35,010 | 34,797 | 34,930 | 29,572 | |||||||||||||||
Diluted weighted average common shares outstanding |
44,679 |
34,797 | 34,930 | 29,572 |
(a) |
The Company uses a 52 or 53 week fiscal year that ends on the
Sunday closest to |
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(b) |
Acquisition expenses 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. |
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(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 |
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Supplemental Information |
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The following table sets forth certain unaudited supplemental financial and other data for the periods indicated (in thousands, except |
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number of restaurants, percentages and average weekly sales per restaurant): |
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(unaudited) |
(unaudited) |
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Three Months Ended (a) |
Nine Months Ended (a) |
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Restaurant Sales: (a) | ||||||||||||||||
Legacy restaurants | $ | 100,551 | $ | 96,861 | $ | 289,244 | $ | 274,394 | ||||||||
Restaurants acquired in 2012 | 77,692 | 75,180 | 229,894 | 216,880 | ||||||||||||
Restaurants acquired in 2014 and 2015 | 39,433 | 7,781 | 110,810 | 8,584 | ||||||||||||
Total restaurant sales | $ | 217,676 | $ | 179,822 | $ | 629,948 | $ | 499,858 | ||||||||
Change in Comparable Restaurant Sales (b) | 6.5 | % | 3.3 | % | 8.4 | % | (0.4 | )% | ||||||||
Average Weekly Sales per Restaurant: (c) | ||||||||||||||||
Legacy restaurants | $ | 27,737 | $ | 25,799 | $ | 26,391 | $ | 24,317 | ||||||||
Restaurants acquired in 2012 | 24,169 | 22,039 | 23,457 | 20,989 | ||||||||||||
Restaurants acquired in 2014 and 2015 | 23,465 | 26,695 | 22,536 | 26,502 | ||||||||||||
Restaurant-Level EBITDA: (d) | ||||||||||||||||
Legacy restaurants | $ | 18,084 | $ | 13,630 | 46,372 | 36,356 | ||||||||||
Restaurants acquired in 2012 | 10,681 | 6,014 | 30,092 | 16,136 | ||||||||||||
Restaurants acquired in 2014 and 2015 | 4,564 | 808 | 11,268 | 842 | ||||||||||||
Total Restaurant-Level EBITDA | $ | 33,329 | $ | 20,452 | 87,732 | 53,334 | ||||||||||
Restaurant-Level EBITDA margin: (d) | ||||||||||||||||
Legacy restaurants | 18.0 | % | 14.1 | % | 16.0 | % | 13.2 | % | ||||||||
Restaurants acquired in 2012 | 13.7 | % | 8.0 | % | 13.1 | % | 7.4 | % | ||||||||
Restaurants acquired in 2014 and 2015 | 11.6 | % | 10.4 | % | 10.2 | % | 9.8 | % | ||||||||
All restaurants | 15.3 | % | 11.4 | % | 13.9 | % | 10.7 | % | ||||||||
Adjusted EBITDA (d) | $ | 22,011 | $ | 11,129 | 53,005 | 25,955 | ||||||||||
Adjusted EBITDA margin (d) | 10.1 | % | 6.2 | % | 8.4 | % | 5.2 | % | ||||||||
Number of Restaurants: | ||||||||||||||||
Restaurants at beginning of period | 657 | 560 | 674 | 564 | ||||||||||||
New restaurants | — | — | 1 | |||||||||||||
Acquired restaurants | 5 | 25 | 9 | 29 | ||||||||||||
Closed restaurants | (2 | ) | (4 | ) | (22 | ) | (13 | ) | ||||||||
Sold restaurants | — | — | (1 | ) | — | |||||||||||
Restaurants at end of period | 660 | 581 | 660 | 581 |
At |
At |
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Long-term debt (e) | $ | 208,929 | $ | 159,896 | ||||
Cash | 71,833 | 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. | |
(c) | Average weekly restaurant sales are derived by dividing restaurant sales by the average number of restaurants operating during the period. | |
(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 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. | |
(e) |
Long-term debt (including current portion) at |
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Reconciliation of Non-GAAP Measures | ||||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||
Three Months Ended (a) | Nine Months Ended (a) | |||||||||||||||||
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2015 |
2014 |
2015 |
2014 |
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Reconciliation of EBITDA and Adjusted EBITDA: (a) |
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Net income (loss) |
$ | 7,239 | $ | (1,721 | ) | $ | (7,014 | ) | $ | (11,082 | ) | |||||||
Benefit for income taxes | — | (2,632 | ) | — | (7,555 | ) | ||||||||||||
Interest expense | 4,512 | 4,683 | 14,026 | 14,080 | ||||||||||||||
Depreciation and amortization | 9,418 | 9,318 | 29,216 | 27,121 | ||||||||||||||
EBITDA |
21,169 | 9,648 | 36,228 | 22,564 | ||||||||||||||
Impairment and other lease charges | 396 | 773 | 2,732 | 1,822 | ||||||||||||||
Acquisition costs | 79 | 412 | 339 | 686 | ||||||||||||||
Stock compensation expense | 367 | 296 | 1,071 | 883 | ||||||||||||||
Loss on extinguishment of debt | — | — | 12,635 | — | ||||||||||||||
Adjusted EBITDA | $ | 22,011 | $ | 11,129 | $ | 53,005 | $ | 25,955 | ||||||||||
Reconciliation of Restaurant-Level EBITDA: (a) |
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Restaurant-Level EBITDA (a) | $ | 33,329 | $ | 20,452 | $ | 87,732 | $ | 53,334 | ||||||||||
Less: | ||||||||||||||||||
General and administrative expenses | 11,764 | 10,031 | 36,263 | 28,923 | ||||||||||||||
Depreciation and amortization | 9,418 | 9,318 | 29,216 | 27,121 | ||||||||||||||
Impairment and other lease charges | 396 | 773 | 2,732 | 1,822 | ||||||||||||||
Other expense (income) | — | — | (126 | ) | 25 | |||||||||||||
Income (loss) from operations | $ | 11,751 | $ | 330 | $ | 19,647 | $ | (4,557 | ) |
(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, acquisition costs, stock compensation expense and loss on extinguishment of debt. 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. | |
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 income and other 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. |
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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 income (loss) and EBITDA and Adjusted EBITDA and between Restaurant-Level EBITDA and income (loss) from operations. |
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Investor Relations:
800-348-1074,
ext. 3333
investorrelations@carrols.com
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