Carrols Restaurant Group, Inc. Reports Financial Results for the Second Quarter of 2011
Highlights for the second quarter of 2011 versus the second quarter of 2010 include:
-
Total revenues increased 2.6% to
$209.8 million in the second quarter of 2011 compared to$204.5 million in the second quarter of 2010. Revenues forFiesta Restaurant Group, Inc. , an indirect wholly owned subsidiary of the Company that owns and operates the Pollo Tropical and Taco Cabana restaurant businesses, increased 9.2% to$121.2 million from$111.0 million in the same period last year. - Comparable restaurant sales increased 10.7% at Pollo Tropical, increased 4.5% at Taco Cabana, and decreased 3.6% at Burger King;
-
Net income for the second quarter of 2011 was
$5.5 million , or$0.25 per diluted share, compared to net income of$2.4 million , or$0.11 per diluted share in the second quarter of 2010. -
Earnings in the second quarter of 2011 included certain non-recurring
items which reduced earnings before taxes by
$0.8 million , or$0.03 per diluted share after tax, and a favorable income tax adjustment of$0.2 million , which increased net income by$0.01 per diluted share. Earnings in the second quarter of 2010 included impairment and other lease charges totaling$3.6 million , or$0.11 per diluted share, after tax.
As of
Second Quarter 2011 Results
Total revenues increased 2.6% to
Pollo Tropical revenues increased 12.5% to
Taco Cabana revenues increased 6.9% to
Burger King revenues decreased 5.2% to
Income from operations increased to
Interest expense decreased to
Impairment and other lease charges were
Net income for the second quarter of 2011 was
Six Months Results
For the six months ended
Refinancing
On
2011 Outlook
The Company is not providing specific earnings guidance for 2011.
However, the Company is providing the following updated information
which does not include any impact from the planned spin-off of
- Comparable restaurant sales are now expected to increase approximately 7% to 9% for Pollo Tropical (compared to 6% to 8% announced previously) and to increase approximately 3% to 5% for Taco Cabana (compared to 2% to 3% announced previously). Burger King comparable restaurant sales are expected to improve in the second half of the year and to be approximately 1% to 3% negative for the full year;
-
Commodity costs are now expected to increase 5% to 6% for
Pollo Tropical, 8% to 9% for Taco Cabana and 5% to 6% for Burger King; - In 2011, the Company plans to open five to seven new Hispanic Brand restaurants, one new Burger King restaurant and to relocate one Burger King restaurant. The Company also plans to close two Pollo Tropical, one Taco Cabana and five Burger King restaurants (excluding the relocated restaurant);
-
Total capital expenditures are now estimated to be in the
$45 million to$50 million range; -
Total interest expense is anticipated to increase approximately
$2.0 million to $2.5 million in the second half of 2011 as a result of the recently completed refinancing of the Company's debt; and - The Company's annual effective tax rate is now estimated to be 28% to 30%.
Conference Call Today
The Company will host a conference call to discuss the second quarter
2011 financial results today at
The conference call can be accessed live over the phone by dialing
877-941-8416 or for international callers by dialing 480-629-9808. 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 4459726. 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 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 consideration of a potential spin-off transaction) 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 the Company's and Carrols Corporation's
filings with the
Carrols Restaurant Group, Inc. | ||||||||||||||||
Consolidated Statements of Operations | ||||||||||||||||
(in thousands except per share amounts) | ||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, (a) | June 30, (a) | |||||||||||||||
2011 |
2010 |
2011 |
2010 |
|||||||||||||
Revenues: | ||||||||||||||||
Restaurant sales | $ | 209,343 | $ | 204,141 | $ | 406,216 | $ | 398,808 | ||||||||
Franchise royalty revenues and fees | 501 | 335 | 866 | 812 | ||||||||||||
Total revenues | 209,844 | 204,476 | 407,082 | 399,620 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of sales | 66,172 | 62,969 | 126,487 | 122,167 | ||||||||||||
Restaurant wages and related expenses (b) | 60,232 | 59,611 | 118,800 | 118,745 | ||||||||||||
Restaurant rent expense | 12,208 | 12,232 | 24,262 | 24,588 | ||||||||||||
Other restaurant operating expenses | 29,039 | 29,105 | 56,963 | 57,337 | ||||||||||||
Advertising expense | 7,472 | 7,758 | 14,975 | 14,604 | ||||||||||||
General and administrative expenses (b) | 13,749 | 12,677 | 27,605 | 25,174 | ||||||||||||
Depreciation and amortization | 8,389 | 8,113 | 16,497 | 16,235 | ||||||||||||
Impairment and other lease charges | 975 | 3,631 | 2,055 | 3,901 | ||||||||||||
Other income | (342 | ) | - | (448 | ) | - | ||||||||||
Total costs and expenses | 197,894 | 196,096 | 387,196 | 382,751 | ||||||||||||
Income from operations | 11,950 | 8,380 | 19,886 | 16,869 | ||||||||||||
Interest expense | 4,579 | 4,708 | 9,192 | 9,451 | ||||||||||||
Income before income taxes | 7,371 | 3,672 | 10,694 | 7,418 | ||||||||||||
Provision for income taxes | 1,863 | 1,237 | 2,940 | 2,669 | ||||||||||||
Net income (c) | $ | 5,508 | $ | 2,435 | $ | 7,754 | $ | 4,749 | ||||||||
Basic net income per share | $ | 0.25 | $ | 0.11 | $ | 0.35 | $ | 0.22 | ||||||||
Diluted net income per share | $ | 0.25 | $ | 0.11 | $ | 0.35 | $ | 0.22 | ||||||||
Basic weighted average common shares outstanding |
21,663 |
21,619 |
21,653 |
21,616 |
||||||||||||
Diluted weighted average common shares outstanding |
22,161 |
21,844 |
22,114 |
21,841 |
||||||||||||
(a) |
The Company uses a 52 or 53 week fiscal year that ends on the Sunday closest to December 31. For convenience, all references to the three and six months ended July 3, 2011 and July 4, 2010 are referred to as the three and six months ended June 30, 2011 and June 30, 2010, respectively. The three and six months ended June 30, 2011 and 2010 each included 13 and 26 weeks, respectively. |
|||
(b) |
Restaurant wages and related expenses include stock-based compensation expense of $10 and $14 for the three months ended June 30, 2011 and 2010, respectively, and $20 and $28 for the six months ended June 30, 2011 and 2010, respectively. General and administrative expenses include stock-based compensation expense of $713 and $402 for the three months ended June 30, 2011 and 2010, respectively, and $1,378 and $781 for the six months ended June 30, 2011 and 2010, respectively. |
|||
(c) |
The consolidated financial results for Carrols Corporation, the sole operating subsidiary of Carrols Restaurant Group, Inc., differ from the above by a slight difference in rent expense. Consolidated net income for Carrols Corporation for the three months ended June 30, 2011 and 2010 was $5,509 and $2,436, respectively, and $7,757 and $4,752 for the six months ended June 30, 2011 and 2010, respectively. |
Carrols Restaurant Group, Inc. | ||||||||||||||||||
The following table sets forth certain unaudited supplemental
financial and other restaurant data for the |
||||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||
June 30, | June 30, (a) | |||||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||||
Segment revenues: | ||||||||||||||||||
Burger King | $ | 88,595 | $ | 93,456 | $ | 170,217 | $ | 181,075 | ||||||||||
Pollo Tropical | 52,642 | 46,813 | 104,877 | 92,306 | ||||||||||||||
Taco Cabana | 68,607 | 64,207 | 131,988 | 126,239 | ||||||||||||||
Total revenues | $ | 209,844 | $ | 204,476 | $ | 407,082 | $ | 399,620 | ||||||||||
Change in comparable restaurant sales: (a) | ||||||||||||||||||
Burger King | (3.6 | )% | (1.4 | )% | (4.3 | )% | (3.9 | )% | ||||||||||
Pollo Tropical | 10.7 | % | 6.3 | % | 12.0 | % | 5.0 | % | ||||||||||
Taco Cabana | 4.5 | % | (0.1 | )% | 3.3 | % | (1.0 | )% | ||||||||||
Adjusted Segment EBITDA: (b) | ||||||||||||||||||
Burger King | $ | 5,111 | $ | 5,522 | $ | 6,252 | $ | 9,308 | ||||||||||
Pollo Tropical | 9,581 | 8,145 | 19,640 | 14,872 | ||||||||||||||
Taco Cabana | 7,003 | 6,873 | 13,496 | 13,634 | ||||||||||||||
Average sales per restaurant: (c) | ||||||||||||||||||
Burger King | $ | 294 | $ | 302 | $ | 563 | $ | 584 | ||||||||||
Pollo Tropical | 580 | 515 | 1,157 | 1,011 | ||||||||||||||
Taco Cabana | 435 | 412 | 844 | 810 | ||||||||||||||
New restaurant openings: | ||||||||||||||||||
Burger King | 1 | 1 | 2 | 1 | ||||||||||||||
Pollo Tropical | - | - | - | - | ||||||||||||||
Taco Cabana | 2 | - | 3 | - | ||||||||||||||
Total new restaurant openings | 3 | 1 | 5 | 1 | ||||||||||||||
Restaurant closings: | ||||||||||||||||||
Burger King | (2 | ) | (3 | ) | (4 | ) | (4 | ) | ||||||||||
Pollo Tropical | - | (1 | ) | (1 | ) | (1 | ) | |||||||||||
Taco Cabana | (1 | ) | (1 | ) | (1 | ) | (1 | ) | ||||||||||
Net new restaurants | - | (4 | ) | (1 | ) | (5 | ) | |||||||||||
Number of company owned restaurants: | ||||||||||||||||||
Burger King | 303 | 309 | ||||||||||||||||
Pollo Tropical | 90 | 90 | ||||||||||||||||
Taco Cabana | 157 | 155 | ||||||||||||||||
Total company owned restaurants | 550 | 554 | ||||||||||||||||
At 7/3/11 |
At 1/2/11 |
|||||||||||||||||
Long-term debt (d) | $ | 258,182 | $ | 263,513 | ||||||||||||||
(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 for our Burger King restaurants includes general and administrative expenses related directly to the Burger King segment as well as the expenses associated with administrative support to all three of the Company's segments including executive management, information systems and certain accounting, legal and other administrative functions. For the three and six months ended June 30, 2011, the administrative support expenses provided to Pollo Tropical included in the Burger King segment were $1.2 million and $2.6 million, respectively, and the administrative support expenses provided to Taco Cabana included in the Burger King segment were $1.4 million and $3.3 million respectively. For the three and six months ended June 30, 2010, these expenses included in the Burger King segment were $1.1 million and $2.2 million, respectively, for Pollo Tropical and $1.4 million and $2.8 million, respectively, for Taco Cabana. |
|
(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 July 3, 2011 included $165,000 of the Company's 9% senior subordinated notes, $80,214 of outstanding borrowings under its senior credit facility, $11,799 of lease financing obligations and $1,170 of capital lease obligations. Long-term debt at January 2, 2011 (including current portion) included $165,000 of the Company's 9% senior subordinated notes, $87,250 of outstanding borrowings under its senior credit facility, $10,061 of lease financing obligations and $1,202 of capital lease obligations. |
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