Carrols Restaurant Group, Inc. Reports Financial Results for the Fourth Quarter and Full Year of 2012
Highlights for the fourth quarter of 2012 versus the fourth quarter of 2011 include:
-
Restaurant sales increased 87.5% to
$162.6 million including$71.7 million in sales from the 278 BURGER KING® restaurants that were acquired onMay 30, 2012 ; - Comparable restaurant sales at legacy restaurants were strong and increased 7.3%, including customer traffic growth of 1.1% and an average check increase of 6.2%;
-
Net loss from continuing operations was
$8.8 million , or$0.39 per diluted share, compared to a net loss from continuing operations of$0.3 million , or$0.02 per diluted share, in the prior year period; -
Net loss from continuing operations included certain charges,
including integration costs related to the acquisition and costs
related to the conclusion and settlement of long-standing litigation
with the EEOC. In aggregate these charges were approximately
$4.0 million , or$0.11 per diluted share after tax. Net income from continuing operations in the prior year period included acquisition costs of$0.5 million , or$0.01 per diluted share after tax; -
Adjusted EBITDA, a non-GAAP measure, was
$3.3 million compared to$5.5 million in the prior year period. (Please refer to the reconciliation of Adjusted EBITDA to net loss from continuing operations in the tables at the end of this release).
Highlights for the full year 2012 versus the full year 2011 include:
-
Restaurant sales increased 55.3% to
$539.6 million including$174.3 million in sales from the acquired restaurants and an increase in comparable restaurant sales at legacy restaurants of 7.1%; -
Net loss from continuing operations was
$18.8 million , or$0.83 per diluted share, compared to a net loss from continuing operations of$0.5 million , or$0.02 per diluted share, in the prior year period; -
Net loss from continuing operations included acquisition and
integration-related costs, costs for the conclusion and settlement of
the EEOC litigation and a loss from the refinancing completed in
May 2012 . In aggregate these charges were approximately$12.9 million , or$0.35 per diluted share after tax. Net loss from continuing operations in the prior year included charges of$1.9 million , or$0.05 per diluted share after tax, related to the acquisition, the EEOC litigation and a loss on the 2011 refinancing; -
Adjusted EBITDA, a non-GAAP measure, was
$25.0 million compared to$25.4 million in the prior year period.
As of
Accordino continued, "Solid results at our legacy restaurants, however, are being offset by the relatively weaker results experienced thus far at the acquired restaurants, including integration costs. There remains a considerable opportunity to improve financial results at these restaurants, and while not evident by our fourth quarter results, we have in fact begun to make progress. We closed the gap on both labor expense and cost of sales in the quarter, have continued to do so early in 2013 and expect our progress in improving restaurant profitability to accelerate throughout 2013. We continue to focus on improving the operating culture in these restaurants, instilling our P&L disciplines and improving both sales and margins. These are things that will take a little time, but after operating these restaurants now for a few months, we remain confident that we understand and are addressing the challenges."
Fourth Quarter 2012 Financial Results
Restaurant sales grew 87.5% to
Adjusted EBITDA was
General and administrative expenses were
Loss from operations was
Interest expense increased to
Net loss from continuing operations was
2013 Guidance
The Company is providing the following annual guidance:
-
Total sales of
$670 million to $700 million including a comparable restaurant sales increase at legacy restaurants of 2% to 4%; - A commodity cost increase of 3% to 4%;
-
General and administrative expenses of approximately
$34 million to$36 million ; - An effective income tax benefit of 45% to 50% including the carryover benefit for 2012 WOTC credits;
-
Capital expenditures of approximately
$40 million to $50 million , including$30 million to $40 million for remodeling 90 to 120 restaurants; and - Four to six restaurant closures.
Accordino concluded, "Sales have slowed initially in 2013 and we expect comparable restaurant sales to decrease modestly in the first quarter. We believe that there are a number of causes including challenging prior year comparisons, worse weather conditions, increased competitive activity, and lower consumer spending as customers adjust to the higher payroll tax and rising gas prices. Nevertheless, we expect consumer trends to improve as we move further into the year, and anticipate regaining the momentum of Burger King's brand initiatives and our remodeling activity."
Conference Call Today
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replay will be available one hour after the call and can be accessed by
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Investor Conference Participation
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
|
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(unaudited) | (unaudited) | |||||||||||||||
Three Months Ended (a) | Twelve Months Ended (a) | |||||||||||||||
December 30, |
January 1, |
December 30, |
January 1, |
|||||||||||||
Restaurant sales | $ | 162,583 | 86,702 | $ | 539,608 | 347,518 | ||||||||||
Costs and expenses: | ||||||||||||||||
Cost of sales | 53,243 | 26,524 | 172,698 | 103,860 | ||||||||||||
Restaurant wages and related expenses (c) | 51,049 | 27,152 | 169,857 | 109,155 | ||||||||||||
Restaurant rent expense | 12,059 | 5,514 | 37,883 | 22,665 | ||||||||||||
Other restaurant operating expenses (c) | 28,199 | 13,227 | 88,883 | 53,389 | ||||||||||||
Advertising expense | 7,120 | 3,540 | 22,257 | 14,424 | ||||||||||||
General and administrative expenses (b) (c) | 12,474 | 6,229 | 36,085 | 20,982 | ||||||||||||
Depreciation and amortization | 7,784 | 4,346 | 26,321 | 16,058 | ||||||||||||
Impairment and other lease charges | 725 | 265 | 977 | 1,293 | ||||||||||||
Other income | (481 | ) | (270 | ) | (717 | ) | (720 | ) | ||||||||
Total costs and expenses | 172,172 | 86,527 | 554,244 | 341,106 | ||||||||||||
Income (loss) from operations | (9,589 | ) | 175 | (14,636 | ) | 6,412 | ||||||||||
Interest expense | 4,711 | 968 | 12,764 | 7,353 | ||||||||||||
Loss on extinguishment of debt | — | 11 | 1,509 | 1,244 | ||||||||||||
Loss from continuing operations before income taxes | (14,300 | ) | (804 | ) | (28,909 | ) | (2,185 | ) | ||||||||
Benefit for income taxes | (5,506 | ) | (455 | ) | (10,093 | ) | (1,661 | ) | ||||||||
Net loss from continuing operations | (8,794 | ) | (349 | ) | (18,816 | ) | (524 | ) | ||||||||
Income (loss) from discontinued operations, net of tax | (114 | ) | 408 | (72 | ) | 11,742 | ||||||||||
Net income (loss) | $ | (8,908 | ) | $ | 59 | $ | (18,888 | ) | $ | 11,218 | ||||||
Diluted net income (loss) per share: | ||||||||||||||||
Continuing operations | $ | (0.39 | ) | $ | (0.02 | ) | $ | (0.83 | ) | $ | (0.02 | ) | ||||
Discontinued operations | (0.01 | ) | 0.02 | — | 0.54 | |||||||||||
Diluted weighted average common shares outstanding | 22,748 | 21,715 | 22,580 | 21,678 |
(a) |
The Company uses a 52 or 53 week fiscal year that ends on the Sunday
closest to |
(b) |
General and administrative expenses include stock-based compensation
expense of |
(c) |
Results for the twelve months ended |
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) | ||||||||||||||||
December 30, |
January 1, |
December 30, |
January 1, |
||||||||||||||
Restaurant Sales: (a) | |||||||||||||||||
Legacy restaurants | $ | 90,842 | $ | 86,702 | $ | 365,331 | $ | 347,518 | |||||||||
Acquired restaurants | 71,741 | — | 174,277 | — | |||||||||||||
Total sales | $ | 162,583 | $ | 86,702 | $ | 539,608 | $ | 347,518 | |||||||||
Change in Comparable Restaurant Sales (b) | 7.3 | % | 1.5 | % | 7.1 | % | (1.4 | )% | |||||||||
Adjusted EBITDA (c) | 3,288 | 5,489 | 24,972 | 25,448 | |||||||||||||
Adjusted EBITDA margin (c) | 2.0 | % | 6.3 | % | 4.6 | % | 7.3 | % | |||||||||
Average Weekly Sales per Restaurant: (d) | |||||||||||||||||
Legacy restaurants | 23,967 | 22,198 | 23,931 | 22,187 | |||||||||||||
Acquired restaurants | 20,160 | — | 20,681 | — | |||||||||||||
Expenses - |
|||||||||||||||||
Cost of sales | 30.8 | % | 30.6 | % | 30.6 | % | 29.9 | % | |||||||||
Restaurant wages and related expenses | 30.4 | % | 31.3 | % | 30.6 | % | 31.4 | % | |||||||||
Restaurant rent expense | 6.4 | % | 6.4 | % | 6.3 | % | 6.5 | % | |||||||||
Other restaurant operating expenses | 15.1 | % | 15.3 | % | 15.0 | % | 15.4 | % | |||||||||
Advertising expense | 4.2 | % | 4.1 | % | 3.9 | % | 4.2 | % | |||||||||
Expenses - |
|||||||||||||||||
Cost of sales | 35.2 | % | 34.9 | % | |||||||||||||
Restaurant wages and related expenses | 32.7 | % | 33.3 | % | |||||||||||||
Restaurant rent expense | 8.7 | % | 8.5 | % | |||||||||||||
Other restaurant operating expenses | 20.2 | % | 19.5 | % | |||||||||||||
Advertising expense | 4.6 | % | 4.6 | % | |||||||||||||
Number of |
|||||||||||||||||
Restaurants at beginning of period | 572 | 302 | 298 | 305 | |||||||||||||
New restaurants | — | — | — | 2 | |||||||||||||
Acquired restaurants | — | — | 278 | — | |||||||||||||
Closed restaurants | — | (4 | ) | (4 | ) | (9 | ) | ||||||||||
Restaurants at end of period | 572 | 298 | 572 | 298 |
At |
At |
||||||||||||||||||
Long-term Debt (f) | $ | 161,492 | $ | 68,705 | |||||||||||||||
Cash (g) | 58,290 | 10,991 |
(a) |
Acquired restaurants represent the Burger King restaurants acquired
from |
(b) | Restaurants are included in comparable restaurant sales after they have been open or owned for 12 months. |
(c) | EBITDA, Adjusted EBITDA and Adjusted 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) from continuing operations for further detail. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of restaurant sales. |
(d) | Average weekly restaurant sales are derived by dividing restaurant sales by the average number of restaurants operating during the period. |
(e) | Represent restaurant expenses as a percentage of sales for the respective group of restaurants. |
(f) |
Long-term debt (including current portion) at |
(g) |
Cash balance includes |
EBITDA and Adjusted EBITDA
GAAP Reconciliation
(unaudited) | (unaudited) | ||||||||||||||||
Three Months Ended (a) | Twelve Months Ended (a) | ||||||||||||||||
December 30, |
January 1, |
December 30, |
January 1, |
||||||||||||||
EBITDA and Adjusted EBITDA: (a) | |||||||||||||||||
Net loss from continuing operations | $ | (8,794 | ) | $ | (349 | ) | $ | (18,816 | ) | $ | (524 | ) | |||||
Benefit for income taxes | (5,506 | ) | (455 | ) | (10,093 | ) | (1,661 | ) | |||||||||
Interest expense | 4,711 | 968 | 12,764 | 7,353 | |||||||||||||
Depreciation and amortization | 7,784 | 4,346 | 26,321 | 16,058 | |||||||||||||
EBITDA | (1,805 | ) | 4,510 | 10,176 | 21,226 | ||||||||||||
Impairment and other lease charges | 725 | 265 | 977 | 1,293 | |||||||||||||
Acquisition and integration costs | 1,395 | 458 | 6,042 | 458 | |||||||||||||
EEOC litigation and settlement costs | 2,636 | 3 | 5,343 | 190 | |||||||||||||
Stock compensation expense | 337 | 242 | 925 | 1,037 | |||||||||||||
Loss on extinguishment of debt | — | 11 | 1,509 | 1,244 | |||||||||||||
Adjusted EBITDA | $ | 3,288 | $ | 5,489 | $ | 24,972 | $ | 25,448 |
(a) | EBITDA represents net income (loss) from continuing operations, before provision (benefit) for income taxes, interest expense and depreciation and amortization. Adjusted EBITDA represents EBITDA as adjusted to exclude impairment and other lease charges, acquisition and integration costs, EEOC litigation and settlement costs, stock compensation expense and loss on extinguishment of debt. Management excludes these items from EBITDA when evaluating the Company's operating performance and believes that Adjusted EBITDA provides a more meaningful comparison than EBITDA of the Company's core business operating results, as well as with those of other similar companies. Management believes that EBITDA and Adjusted EBITDA, when viewed with the Company's results of operations calculated in accordance with GAAP and the accompanying reconciliation, 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 EBITDA and Adjusted 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 and Adjusted EBITDA are not measures of financial performance or liquidity under GAAP and, accordingly, should not be considered as alternatives to net income (loss) 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 table above provides a reconciliation between net income (loss) from continuing operations and EBITDA and Adjusted EBITDA. |
Consolidated Quarterly
Statements of Operations
(in thousands except per share
amounts)
In the fourth quarter of 2012, the Company finalized its allocation of
the purchase price for the acquisition of 278 Burger King restaurants
from
(unaudited) | ||||||||||||||||
Quarter Ended | ||||||||||||||||
April 1, 2012 |
July 1, |
September 30, |
December 30, |
|||||||||||||
Restaurant sales | $ | 85,450 | 122,104 | $ | 169,471 | 162,583 | ||||||||||
Costs and expenses: | ||||||||||||||||
Cost of sales | 26,122 | 38,877 | 54,456 | 53,243 | ||||||||||||
Restaurant wages and related expenses | 27,868 | 37,446 | 53,494 | 51,049 | ||||||||||||
Restaurant rent expense | 5,683 | 7,932 | 12,209 | 12,059 | ||||||||||||
Other restaurant operating expenses | 13,643 | 18,221 | 28,820 | 28,199 | ||||||||||||
Advertising expense | 2,696 | 4,604 | 7,837 | 7,120 | ||||||||||||
General and administrative expenses | 6,199 | 8,081 | 9,331 | 12,474 | ||||||||||||
Depreciation and amortization | 4,693 | 6,149 | 7,695 | 7,784 | ||||||||||||
Impairment and other lease charges | 26 | 101 | 125 | 725 | ||||||||||||
Other income | — | — | (236 | ) | (481 | ) | ||||||||||
Total costs and expenses | 86,930 | 121,411 | 173,731 | 172,172 | ||||||||||||
Income (loss) from operations | (1,480 | ) | 693 | (4,260 | ) | (9,589 | ) | |||||||||
Interest expense | 915 | 2,646 | 4,492 | 4,711 | ||||||||||||
Loss on extinguishment of debt | — | 1,509 | — | — | ||||||||||||
Loss from continuing operations before income taxes | (2,395 | ) | (3,462 | ) | (8,752 | ) | (14,300 | ) | ||||||||
Provision (benefit) for income taxes | 508 | (2,683 | ) | (2,412 | ) | (5,506 | ) | |||||||||
Net loss from continuing operations | (2,903 | ) | (779 | ) | (6,340 | ) | (8,794 | ) | ||||||||
Income (loss) from discontinued operations, net of tax | (624 | ) | 668 | (2 | ) | (114 | ) | |||||||||
Net loss | $ | (3,527 | ) | $ | (111 | ) | $ | (6,342 | ) | $ | (8,908 | ) | ||||
Supplemental Data: | ||||||||||||||||
Stock compensation expense (a) | $ | 102 | $ | 177 | $ | 309 | $ | 337 | ||||||||
Integration and acquisition expenses (b) | 411 | 836 | 3,400 | 1,395 | ||||||||||||
EEOC litigation and settlement costs | 95 | 674 | 1,938 | 2,636 | ||||||||||||
EBITDA (c) | 3,213 | 5,333 | 3,435 | (1,805 | ) | |||||||||||
Adjusted EBITDA (c) | 3,847 | 8,630 | 9,207 | 3,288 | ||||||||||||
Adjusted EBITDA margin (c) | 4.5 | % | 7.1 | % | 5.4 | % | 2.0 | % |
(a) | Stock compensation expense is included in general and administrative expenses. |
(b) |
Represents expenses incurred in connection with the acquisition and
integration of 278 Burger King restaurants from |
(c) | EBITDA, Adjusted EBITDA and Adjusted 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) from continuing operations for further detail. |
Investor Relations:
800-348-1074,
ext. 3333
investorrelations@carrols.com
Source:
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