Carrols Restaurant Group, Inc. Reports Financial Results for the Third Quarter of 2016
Highlights for third quarter of 2016 versus third quarter of 2015 include:
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Restaurant sales increased 9.7% to
$238.9 million from$217.7 million in the third quarter of 2015, including$62.7 million in sales from the 207 BURGER KING® restaurants acquired from 2014 to 2016(1); - Comparable restaurant sales were flat compared to an increase of 6.5% in the prior year period;
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Adjusted EBITDA(2) increased 3.2% to
$22.7 million from$22.0 million in the prior year period; -
Net income was
$4.5 million , or$0.10 per diluted share, compared to net income of$7.2 million , or$0.16 per diluted share, in the prior year period; and -
Adjusted net income(2) was
$5.6 million , or$0.13 per diluted share, compared to adjusted net income of$7.7 million , or$0.17 per diluted share, in the prior year period. Net income and Adjusted net income were lower largely reflecting a$2.7 million increase in depreciation and amortization expense from remodeling and acquisitions over the past year.
(1) "Acquired restaurants" refer to those restaurants acquired from 2014 through 2016. "Legacy restaurants" include all of the Company's other restaurants including restaurants acquired before 2014.
(2) 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 from operations in the tables at the end of this release.
At the end of the third quarter of 2016, Carrols owned and operated 734
BURGER KING® restaurants. On
Accordino concluded, "We are making meaningful progress executing our acquisition and reimaging strategies. We have purchased 32 restaurants so far this year and have agreements to purchase an additional 24 restaurants that we believe will be completed in the next few weeks. We are also on track to complete a total of approximately 85 remodel projects and rebuild or relocate another 10 restaurants for the full year. This will bring the total number of our locations that have been upgraded to the 20/20 design image since 2012 to over 525 restaurants by year-end."
Third Quarter 2016 Financial Results
Restaurant sales increased 9.7% to
Restaurant-Level EBITDA was
General and administrative expenses were
Adjusted EBITDA was
Income from operations was
Interest expense increased slightly to
Net income was
Net income in the third quarter of 2016 included
Adjusted net income was
Full Year 2016 Outlook
Carrols is providing the following revised guidance for 2016 (a 52-week period):
-
Total restaurant sales of
$940 million to$950 million (previously$945 million to$960 million ) including a comparable restaurant sales increase of 1.5% to 2% (previously 2% to 4%). Comparable restaurant sales are on a comparable 52 week basis; - Commodity cost decrease of approximately 3% (previously 2% to 3%) including a 13% to 14% decrease in beef costs (previously a 10% to 12% decrease);
-
General and administrative expenses (excluding stock compensation
costs) of
$51 million to$53 million ; -
Adjusted EBITDA of
$88 million to$92 million (previously$90 million to$95 million ); -
Capital expenditures of
$90 million to$95 million (previously$85 million to$90 million ) which includes remodeling approximately 85 restaurants, the rebuilding of four restaurants and the construction of six new restaurants (all of which are relocations of existing restaurants); and -
The sale/leaseback of owned restaurant properties for net proceeds of
$47 million to$51 million (previously$27 million to$32 million ) including$18 million to$22 million in the fourth quarter. The Company received$29.4 million from sale/leaseback transactions completed through the end of the third quarter of 2016.
The Company has not reconciled guidance for Adjusted EBITDA (a non-GAAP financial measure) to the corresponding GAAP financial measure because we do not provide guidance for net income or for the various reconciling items. The Company is unable to provide guidance for these reconciling items since certain items that impact net income are outside of the Company's control or cannot be reasonably predicted.
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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) | Nine Months Ended (a) | ||||||||||||||
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Restaurant sales | $ | 238,870 | $ | 217,676 | $ | 702,757 | $ | 629,948 | |||||||
Costs and expenses: | |||||||||||||||
Cost of sales | 63,844 | 60,676 | 184,981 | 178,022 | |||||||||||
Restaurant wages and related expenses | 75,678 | 67,116 | 221,306 | 197,135 | |||||||||||
Restaurant rent expense | 16,081 | 14,106 | 48,077 | 43,101 | |||||||||||
Other restaurant operating expenses | 37,606 | 34,261 | 110,611 | 100,407 | |||||||||||
Advertising expense | 10,857 | 8,188 | 30,755 | 23,551 | |||||||||||
General and administrative expenses (b) (c) | 13,000 | 11,764 | 40,561 | 36,263 | |||||||||||
Depreciation and amortization | 12,070 | 9,418 | 34,613 | 29,216 | |||||||||||
Impairment and other lease charges | 685 | 396 | 1,193 | 2,732 | |||||||||||
Other expense (income) | — | — | 1,035 | (126 | ) | ||||||||||
Total costs and expenses | 229,821 | 205,925 | 673,132 | 610,301 | |||||||||||
Income from operations | 9,049 | 11,751 | 29,625 | 19,647 | |||||||||||
Interest expense | 4,560 | 4,512 | 13,615 | 14,026 | |||||||||||
Loss on extinguishment of debt | — | — | — | 12,635 | |||||||||||
Income (loss) before income taxes | 4,489 | 7,239 | 16,010 | (7,014 | ) | ||||||||||
Provision (benefit) for income taxes | — | — | — | — | |||||||||||
Net income (loss) | $ | 4,489 | $ | 7,239 | $ | 16,010 | $ | (7,014 | ) | ||||||
Basic and diluted net income (loss) per share (d)(e) | $ | 0.10 | $ | 0.16 | $ | 0.35 | $ | (0.20 | ) | ||||||
Diluted weighted average common shares outstanding | 44,856 | 44,679 | 44,892 | 34,930 |
(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 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. |
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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. Due to the calculation of basic net income (loss) per share for the periods presented including the allocation of earnings to participating securities, basic net income (loss) per share is lower than diluted net income (loss) per share calculated under the treasury-stock method. |
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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) | Nine Months Ended (a) | ||||||||||||||||||
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Restaurant Sales: (a) | |||||||||||||||||||
Legacy restaurants | $ | 176,215 | $ | 178,243 | $ | 526,183 | $ | 519,138 | |||||||||||
Acquired restaurants | 62,655 | 39,433 | 176,574 | 110,810 | |||||||||||||||
Total restaurant sales | $ | 238,870 | $ | 217,676 | $ | 702,757 | $ | 629,948 | |||||||||||
Change in Comparable Restaurant Sales (b) | 0.0 | % | 6.5 | % | 2.0 | % | 8.4 | % | |||||||||||
Average Weekly Sales per Restaurant: (c) | |||||||||||||||||||
Legacy restaurants | $ | 26,058 | $ | 25,974 | $ | 25,856 | $ | 25,170 | |||||||||||
Acquired restaurants | 24,175 | 23,347 | 23,840 | 22,686 | |||||||||||||||
Restaurant-Level EBITDA: (d) | |||||||||||||||||||
Legacy restaurants | $ | 27,277 | $ | 28,765 | $ | 84,877 | $ | 76,464 | |||||||||||
Acquired restaurants | 7,527 | 4,564 | 22,150 | 11,268 | |||||||||||||||
Total Restaurant-Level EBITDA | $ | 34,804 | $ | 33,329 | $ | 107,027 | $ | 87,732 | |||||||||||
Restaurant-Level EBITDA margin: (d) | |||||||||||||||||||
Legacy restaurants | 15.5 | % | 16.1 | % | 16.1 | % | 14.7 | % | |||||||||||
Acquired restaurants | 12.0 | % | 11.6 | % | 12.5 | % | 10.2 | % | |||||||||||
All restaurants | 14.6 | % | 15.3 | % | 15.2 | % | 13.9 | % | |||||||||||
Adjusted EBITDA (d) | $ | 22,713 | $ | 22,011 | $ | 69,093 | $ | 53,005 | |||||||||||
Adjusted EBITDA margin (d) | 9.5 | % | 10.1 | % | 9.8 | % | 8.4 | % | |||||||||||
Adjusted net income (d) | $ | 5,627 | $ | 7,714 | $ | 19,238 | $ | 8,692 | |||||||||||
Adjusted diluted net earnings per share (d) | $ | 0.13 | $ | 0.17 | $ | 0.43 | $ | 0.19 | |||||||||||
Number of Restaurants: | |||||||||||||||||||
Restaurants at beginning of period | 723 | 657 | 705 | 674 | |||||||||||||||
New restaurants | 1 | — | 3 | — | |||||||||||||||
Restaurants acquired | 11 | 5 | 29 | 9 | |||||||||||||||
Restaurants closed | (1 | ) | (2 | ) | (3 | ) | (22 | ) | |||||||||||
Restaurants sold | — | — | — | (1 | ) | ||||||||||||||
Restaurants at end of period | 734 | 660 | 734 | 660 | |||||||||||||||
At |
At |
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Long-term debt (e) |
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Cash |
10,137 |
22,274 |
(a) |
Acquired restaurants represent the 207 restaurants acquired in 17 acquisitions from 2014 through 2016. Legacy restaurants represent all other restaurants including restaurants acquired before 2014. |
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(b) |
Restaurants are generally included in comparable restaurant sales after they have been open or acquired for 12 months. The calculation of changes in comparable restaurant sales is based on the comparable 13-week or 26-week period, respectively. |
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(c) |
Average weekly sales per restaurant are derived by dividing restaurant sales for the comparable 13-week or 26-week period by the average number of restaurants operating during such period. |
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(d) |
EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Restaurant-Level EBITDA, Restaurant-Level EBITDA margin and Adjusted net income 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 net income (loss) to EBITDA, Adjusted EBITDA and Adjusted net income, and to the Company's reconciliation of income from operations to Restaurant-Level EBITDA 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. Adjusted diluted net earnings per share is calculated based on Adjusted net income and reflects the dilutive impact of shares based on Adjusted net income. |
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(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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(unaudited) | (unaudited) | |||||||||||||||
Three Months Ended (a) | Nine Months Ended (a) | |||||||||||||||
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Reconciliation of EBITDA and Adjusted EBITDA: (a) | ||||||||||||||||
Net income (loss) | $ | 4,489 | $ | 7,239 | $ | 16,010 | $ | (7,014 | ) | |||||||
Provision (benefit) for income taxes | — | — | — | — | ||||||||||||
Interest expense | 4,560 | 4,512 | 13,615 | 14,026 | ||||||||||||
Depreciation and amortization | 12,070 | 9,418 | 34,613 | 29,216 | ||||||||||||
EBITDA | 21,119 | 21,169 | 64,238 | 36,228 | ||||||||||||
Impairment and other lease charges | 685 | 396 | 1,193 | 2,732 | ||||||||||||
Acquisition costs | 453 | 79 | 1,091 | 339 | ||||||||||||
Gain on partial condemnation and insurance proceeds from fire (b) | — | — | (906 | ) | — | |||||||||||
Litigation settlement (c) | — | — | 1,850 | — | ||||||||||||
Stock-based compensation expense | 456 | 367 | 1,627 | 1,071 | ||||||||||||
Loss on extinguishment of debt | — | — | — | 12,635 | ||||||||||||
Adjusted EBITDA | $ | 22,713 | $ | 22,011 | $ | 69,093 | $ | 53,005 | ||||||||
Reconciliation of Restaurant-Level EBITDA: (a) | ||||||||||||||||
Income from operations | $ | 9,049 | $ | 11,751 | $ | 29,625 | $ | 19,647 | ||||||||
Add: | ||||||||||||||||
General and administrative expenses | 13,000 | 11,764 | 40,561 | 36,263 | ||||||||||||
Depreciation and amortization | 12,070 | 9,418 | 34,613 | 29,216 | ||||||||||||
Impairment and other lease charges | 685 | 396 | 1,193 | 2,732 | ||||||||||||
Other expense (income) | — | — | 1,035 | (126 | ) | |||||||||||
Restaurant-Level EBITDA | $ | 34,804 | $ | 33,329 | $ | 107,027 | $ | 87,732 | ||||||||
Reconciliation of Adjusted net income: (a) | ||||||||||||||||
Net income (loss) | $ | 4,489 | $ | 7,239 | $ | 16,010 | $ | (7,014 | ) | |||||||
Add: | ||||||||||||||||
Loss on extinguishment of debt | — | — | — | 12,635 | ||||||||||||
Impairment and other lease charges | 685 | 396 | 1,193 | 2,732 | ||||||||||||
Gain on partial condemnation and insurance proceeds from fire (b) | — | — | (906 | ) | — | |||||||||||
Litigation settlement (c) | — | — | 1,850 | — | ||||||||||||
Acquisition costs | 453 | 79 | 1,091 | 339 | ||||||||||||
Adjusted net income | $ | 5,627 | $ | 7,714 | $ | 19,238 | $ | 8,692 | ||||||||
Adjusted diluted net earnings per share | $ | 0.13 | $ | 0.17 | $ | 0.43 | $ | 0.19 |
(a) |
Within our press release, we make reference to EBITDA, Adjusted EBITDA, Restaurant-Level EBITDA and Adjusted net income which are non-GAAP financial measures. EBITDA represents net income (loss) before provision (benefit) for income taxes, interest expense and depreciation and amortization. Adjusted EBITDA represents EBITDA as adjusted to exclude loss on extinguishment of debt, impairment and other lease charges, acquisition costs, stock-based compensation expense and other non-recurring income or expense. Restaurant-Level EBITDA represents income from operations as adjusted to exclude general and administrative expenses, depreciation and amortization, impairment and other lease charges and other income. Adjusted net income represents net income (loss) as adjusted to exclude loss on extinguishment of debt, impairment and other lease charges, acquisition costs and other non-recurring income or expense. |
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We are presenting Adjusted EBITDA, Restaurant-Level EBITDA and Adjusted net income 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 income, all of which are non-recurring at the restaurant level. Management believes that Adjusted EBITDA, Restaurant-Level EBITDA and Adjusted net income, 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 are not measures of financial performance or liquidity under GAAP and, accordingly, should not be considered as alternatives to net income (loss), income 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, Adjusted EBITDA and Adjusted net income and between income from operations and Restaurant-Level EBITDA. | ||
(b) |
Other income (expense) for the nine months ended |
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(c) |
Other income (expense) for the nine months ended |
View source version on businesswire.com: http://www.businesswire.com/news/home/20161108005531/en/
Investor Relations:
800-348-1074,
ext. 3333
investorrelations@carrols.com
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