Carrols Restaurant Group, Inc. Reports Financial Results for the First Quarter of 2012 and Announces Completion of the Spin-off of Fiesta Restaurant Group, Inc.
Financial results for the first quarter include Fiesta, which owns and operates the Pollo Tropical® and Taco Cabana® brands, as the spin-off was completed after the first quarter had concluded. Fiesta is now an independent, public company and its common stock is traded on The NASDAQ Global Select Market under the symbol FRGI.
Highlights for the first quarter of 2012 versus the first quarter of 2011 include:
-
Total revenues grew 7.3% to
$211.6 million in the first quarter of 2012 compared to$197.2 million in the first quarter of 2011. Revenues for Fiesta grew 9.1% to$126.1 million from$115.6 million in the year-ago period. - Comparable restaurant sales increased 5.9% at Burger King®, 9.4% at Pollo Tropical, and 6.1% at Taco Cabana;
-
Net loss for the first quarter of 2012 was
$3.5 million , or$0.16 per diluted share, compared to net income of$2.2 million , or$0.10 per diluted share in the first quarter of 2011; and -
Earnings in the first quarter of 2012 included certain charges
totaling
$9.8 million , or$0.32 per diluted share after tax, consisting of impairment and other lease charges, stock-based compensation expense related to stock option conversion charges in connection with the spin-off and accelerated vesting of certain restricted stock, and spin-off and acquisition related expenses. Earnings in the first quarter of 2011 included impairment and other lease charges of$1.1 million , or$0.03 per diluted share after tax, and spin-off related expenses of$0.3 million , or$0.01 per diluted share after tax.
As of
Commenting on Carrols' Burger King restaurant business,
Accordino continued, "With the Fiesta spin-off behind us, we are now
solely focused on the considerable opportunities available to us within
the Burger King system. We believe that our pending acquisition of 278
Burger King restaurants from
Commenting on Fiesta's Pollo Tropical and Taco Cabana restaurant
businesses,
Taft continued, "Our strategic focus is three-fold: first, to grow comparable restaurant sales by accentuating our brands' competitive qualities; second, to develop new units and selectively remodel existing locations; and finally, to improve operating margins through sales leverage and supply chain initiatives. As our first quarter results suggest, we believe that we are executing well against these initiatives and are confident that both brands have compelling long-term opportunities."
First Quarter 2012 Financial Results
Total revenues grew 7.3% to
Fiesta revenues grew 9.1% to
General and administrative expenses were
Impairment and other lease charges were
Income from operations was
Interest expense increased to
Net loss for the first quarter of 2012 was
Full Year 2012 Guidance
The following annual outlook is being provided for
- Comparable restaurant sales are expected to increase 3% to 5%;
- Commodity costs are expected to increase 3% to 4%;
- Two restaurants are expected to close in 2012;
-
Annualized run rate for general and administrative expenses (excluding
stock compensation) is expected to be approximately
$20 to $ 22 million following the spin-off of Fiesta; -
The Company currently expects to record an income tax benefit for all
of 2012 ranging from
$0.7 million to $1.3 million due in part to the deductibility of stock compensation costs related to the conversion of outstanding stock options in the first quarter of 2012; and -
Capital expenditures of approximately
$30 million to $35 million including$19 million to $24 million for remodeling more than 50 restaurants.
As previously announced, on
The acquisition of BKC's restaurants is conditioned upon, among other
things, completion of a financing, which along with anticipated
operating cash flows, will be used to: (i) fund the remodeling of
approximately 450 Burger King restaurants over the next three and half
years, (ii) fund the cash paid to BKC in connection with the
transaction, and (iii) refinance outstanding borrowings under
The financial impact on
Fiesta (Pollo Tropical and
- Comparable restaurant sales are expected to increase approximately 6% to 7% for Pollo Tropical and 4% to 5% for Taco Cabana;
- Commodity costs are expected to increase 1% to 2% for Pollo Tropical and 2.5% to 3.5% for Taco Cabana;
- Approximately 10 to 12 new restaurants are expected to be opened and 6 restaurants are expected to close for the entire year;
-
Annualized run rate for general and administrative expenses (excluding
stock compensation) is expected to be approximately
$38 to $40 million following the spin-off fromCarrols ; - Effective tax rate of 41% to 43%; and
-
Capital expenditures of approximately
$42 million to $46 million .
Conference Call Today
The Company will host a conference call to discuss the first quarter of
2012 financial results today at
The conference call can be accessed live over the phone by dialing
877-941-4775 or for international callers by dialing 480-629-9761. A
replay will be available one hour after the call and can be accessed by
dialing 800-406-7325 or for international callers by dialing
303-590-3030; the passcode is 4536686. The replay will be available
until
About
About
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 the Company's
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 or plans, (including, without limitation, the
Company's anticipated acquisition of 278 restaurants from
Consolidated Statements of Operations (in thousands except per share amounts) |
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(unaudited) | ||||||||||
Three Months Ended | ||||||||||
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2012 |
2011 |
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Revenues: | ||||||||||
Restaurant sales | $ | 211,016 | $ | 196,873 | ||||||
Franchise royalty revenues and fees | 576 | 365 | ||||||||
Total revenues | 211,592 | 197,238 | ||||||||
Costs and expenses: | ||||||||||
Cost of sales | 66,906 | 60,315 | ||||||||
Restaurant wages and related expenses (b) | 61,696 | 58,568 | ||||||||
Restaurant rent expense | 11,933 | 12,054 | ||||||||
Other restaurant operating expenses | 29,472 | 27,924 | ||||||||
Advertising expense | 6,991 | 7,503 | ||||||||
General and administrative expenses (b) (c) | 17,370 | 13,856 | ||||||||
Depreciation and amortization | 9,014 | 8,108 | ||||||||
Impairment and other lease charges | 6,926 | 1,080 | ||||||||
Other income | - | (106 | ) | |||||||
Total costs and expenses | 210,308 | 189,302 | ||||||||
Income from operations | 1,284 | 7,936 | ||||||||
Interest expense | 6,297 | 4,613 | ||||||||
Income (loss) before income taxes | (5,013 | ) | 3,323 | |||||||
Provision (benefit) for income taxes | (1,486 | ) | 1,077 | |||||||
Net income (loss) | $ | (3,527 | ) | $ | 2,246 | |||||
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$ | (0.16 | ) | $ | 0.10 | |||||
Diluted net income (loss) per share | $ | (0.16 | ) | $ | 0.10 | |||||
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21,856 | 21,643 | ||||||||
Diluted weighted average common shares outstanding | 21,856 | 22,068 | ||||||||
(a) |
The Company uses a 52 or 53 week fiscal year that ends on the Sunday
closest to |
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(b) |
Restaurant wages and related expenses include stock-based
compensation expense of |
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(c) |
General and administrative expenses for the three months ended |
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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 number of restaurants): | ||||||||||
(unaudited) | ||||||||||
Three Months Ended | ||||||||||
March 31, | ||||||||||
2012 |
2011 |
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Segment Revenues: | ||||||||||
Burger King | $ | 85,450 | $ | 81,622 | ||||||
Pollo Tropical | 57,834 | 52,235 | ||||||||
Taco Cabana | 68,308 | 63,381 | ||||||||
Total revenues | $ | 211,592 | $ | 197,238 | ||||||
Change in Comparable Restaurant Sales: (a) | ||||||||||
Burger King | 5.9 | % | -5.0 | % | ||||||
Pollo Tropical | 9.4 | % | 13.5 | % | ||||||
Taco Cabana | 6.1 | % | 2.0 | % | ||||||
Adjusted Segment EBITDA: (b) | ||||||||||
Burger King | $ | 3,403 | $ | 3,765 | ||||||
Pollo Tropical | 10,269 | 8,924 | ||||||||
Taco Cabana | 4,860 | 5,004 | ||||||||
Average Sales per Restaurant: (c) | ||||||||||
Burger King | 288 | 270 | ||||||||
Pollo Tropical | 632 | 577 | ||||||||
Taco Cabana | 434 | 408 | ||||||||
Number of |
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Burger King | 297 | 304 | ||||||||
Pollo Tropical | 86 | 90 | ||||||||
Taco Cabana |
157 | 156 | ||||||||
Total company owned restaurants | 540 | 550 | ||||||||
Restaurant openings: | ||||||||||
Burger King | - | 1 | ||||||||
Pollo Tropical | - | - | ||||||||
Taco Cabana | - | 1 | ||||||||
Total new restaurant openings | - | 2 | ||||||||
Restaurant closings: | ||||||||||
Burger King | (1 | ) | (2 | ) | ||||||
Pollo Tropical | (5 | ) | (1 | ) | ||||||
Taco Cabana |
(1 | ) | - | |||||||
Net change in restaurants | (7 | ) | (1 | ) | ||||||
At |
At |
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Long-term Debt (d) | 274,047 | 278,583 | ||||||||
Cash | 5,271 | 24,661 | ||||||||
(a) | Restaurants are included in comparable restaurant sales after they have been open for 12 months for Burger King restaurants and 18 months for Pollo Tropical and Taco Cabana restaurants. | |
(b) | Adjusted Segment EBITDA is defined as earnings attributable to the applicable segment before interest, income taxes, depreciation and amortization, impairment and other lease charges, stock-based compensation expense, other income and expense and gains or losses on extinguishment of debt. Adjusted Segment EBITDA is used because it is the measure of segment profit or loss reported to our chief operating decision maker for purposes of allocating resources to the segments and assessing each segment's performance. This may not be necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation. | |
Adjusted Segment EBITDA includes general and administrative expenses related directly to each segment as well as allocated expenses associated with administrative support including executive management, information systems and certain accounting, legal and other administrative functions. Prior to the first quarter of 2012, Adjusted Segment EBITDA for our Burger King restaurants included general and administrative expenses related directly to the Burger King segment as well as certain corporate expenses associated with administrative support provided to all three of the Company's segments. Previously reported Adjusted Segment EBITDA amounts were recast in the first quarter of 2012 to reflect the allocation of such corporate expenses to the Company's three segments. | ||
(c) | Average sales for company-owned or operated restaurants are derived by dividing restaurant sales for such period for the applicable segment by the average number of restaurants for the applicable segment for such period. | |
(d) |
Long-term debt (including current portion) at |
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Supplemental Information |
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The following table sets forth certain unaudited supplemental financial data for the periods indicated (in thousands) with respect to the Company's adjusted segment EBITDA. | |||||||||||||||||||||||||
Quarter Ended | |||||||||||||||||||||||||
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Adjusted Segment EBITDA, Burger King segment as historically reported (a) | $ | 1,141 | $ | 5,111 | $ | 6,150 | $ | 2,002 | $ | 369 | |||||||||||||||
Allocation of general and administrative expense to Pollo Tropical and Taco Cabana (b) | 2,624 | 2,424 | 2,418 | 3,581 | 3,034 | ||||||||||||||||||||
Adjusted Segment EBITDA, Burger King segment as recast | 3,765 | 7,535 | 8,568 | 5,583 | 3,403 | ||||||||||||||||||||
Adjustment to exclude allocated spin-off and acquisition expenses (c) | 123 | 77 | 94 | 431 | 890 | ||||||||||||||||||||
Burger King Adjusted Segment EBITDA excluding spin-off and acquisition expenses | $ | 3,888 | $ | 7,612 | $ | 8,662 | $ | 6,014 | $ | 4,293 | |||||||||||||||
Adjusted Segment EBITDA, as historically reported: (a) | |||||||||||||||||||||||||
Pollo Tropical | $ | 10,059 | $ | 9,581 | $ | 8,582 | $ | 8,561 | $ | 11,615 | |||||||||||||||
Taco Cabana | 6,493 | 7,003 | 7,353 | 6,635 | 6,548 | ||||||||||||||||||||
16,552 | 16,584 | 15,935 | 15,196 | 18,163 | |||||||||||||||||||||
Allocation of general and administrative expenses (b) | (2,624 | ) | (2,424 | ) | (2,418 | ) | (3,581 | ) | (3,034 | ) | |||||||||||||||
Adjusted Segment EBITDA, Pollo Tropical and Taco Cabana segments as recast | 13,928 | 14,160 | 13,517 | 11,615 | 15,129 | ||||||||||||||||||||
Adjustment to exclude allocated spin-off expenses (c) | 174 | 108 | 130 | 567 | 630 | ||||||||||||||||||||
Pollo Tropical and Taco Cabana Adjusted Segment EBITDA excluding spin-off expenses | $ | 14,102 | $ | 14,268 | $ | 13,647 | $ | 12,182 | $ | 15,759 |
(a) | Adjusted Segment EBITDA is defined as earnings attributable to the applicable segment before interest, income taxes, depreciation and amortization, impairment and other lease charges, stock-based compensation expense, other income and expense and gains or losses on extinguishment of debt. Prior to the first quarter of 2012, Adjusted Segment EBITDA for our Burger King restaurants included general and administrative expenses related directly to the Burger King segment as well as certain corporate expenses associated with administrative support provided to all three of the Company's segments. Previously reported Adjusted Segment EBITDA amounts were recast in the first quarter of 2012 to reflect the allocation of such corporate expenses to the Company's three segments. | |
(b) |
Represents general and administrative expense allocable to the |
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(c) |
Represents expenses incurred in connection with the spin-off of
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