Carrols Restaurant Group, Inc. Reports Financial Results for the Second Quarter of 2015
Company Raises 2015 Outlook
Highlights for the second quarter of 2015 versus the second quarter of 2014 include:
-
Restaurant sales increased 30.0% to
$219.1 million from$168.6 million in the second quarter of 2014, which included$38.8 million in sales from 127 BURGER KING® restaurants that were acquired in 2014 and 2015; - Comparable restaurant sales increased 10.3% compared to a 2.0% decrease in the prior year period;
-
Restaurant-Level EBITDA (a non-GAAP financial measure) increased 80.5%
to
$35.6 million compared to$19.7 million in the prior year period and Restaurant-Level EBITDA margin increased over 450 basis points to 16.2%; -
Adjusted EBITDA (a non-GAAP financial measure) more than doubled to
$23.3 million from$11.5 million in the prior year period. (Please refer to the reconciliation of Adjusted EBITDA to net loss and Restaurant-Level EBITDA to income (loss) from operations in the tables at the end of this release.); -
Income from operations increased to
$12.4 million from$1.6 million in the prior year period; and -
Net loss was
$5.0 million reflecting a$12.6 million charge for the tender and redemption premium and write-off of deferred financing costs associated with the refinancing of the Company's debt inApril 2015 . Net loss in the second quarter of 2014 was$1.9 million which included a$1.2 million income tax benefit. No benefit from income taxes was recorded in 2015 since the Company has recorded a valuation allowance against its net deferred income tax assets.
At the end of the second quarter (
Accordino concluded, "As we move forward we remain focused on the
effective execution of our strategic objectives. We have already made
considerable progress integrating the restaurants acquired over the past
year and will continue to direct attention to those activities. Our
sales trends also reflect the impact from remodeling almost 350
restaurants over the past three years and we continue to aggressively
invest in these initiatives. Lastly, after completing the recent
refinancing we had more than
Second Quarter 2015 Financial Results
Restaurant sales increased 30.0% to
Restaurant-Level EBITDA was
General and administrative expenses were
Adjusted EBITDA was
Interest expense held steady at
Income from operations increased to
Net loss was
2015 Outlook
The Company provided the following updated guidance and expectations for 2015, which is a 53-week fiscal period:
-
Total restaurant sales of
$830 million to$845 million (previously$815 million to$830 million ); - A comparable restaurant sales increase of 5% to 7% on a comparable 52-week basis (previously 3% to 5%);
- A commodity cost decrease of approximately 1.5% to 2.5% primarily due to more benign beef cost expectations for the remainder of the year (previously an overall commodity increase of 1% to 2%);
-
General and administrative expenses (excluding stock compensation
costs) of approximately
$47 million to$49 million increasing primarily due to higher bonus expense (previously$44 million to$46 million ); -
Adjusted EBITDA of
$60 million to$65 million (previously$48 million to$52 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 , which includes remodeling a total of 90 to 95 restaurants and the scrape and rebuild of four restaurants (previously$45 million to$50 million of total capital expenditures, which included remodeling a total of 80 to 90 restaurants); and - Up to 25 restaurant closings (generally unchanged from previous estimates) of which 20 restaurants have been closed through the end of the second quarter of 2015.
Conference Call Today
The conference call can be accessed live over the phone by dialing
888-556-4997 or for international callers by dialing 719-325-2329. 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 3839106. 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
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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) | Six Months Ended (a) | |||||||||||||||
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Restaurant sales | $ | 219,102 | $ | 168,583 | $ | 412,272 | $ | 320,036 | ||||||||
Costs and expenses: | ||||||||||||||||
Cost of sales | 60,496 | 50,088 | 117,346 | 93,437 | ||||||||||||
Restaurant wages and related expenses | 66,707 | 52,804 | 130,019 | 103,741 | ||||||||||||
Restaurant rent expense | 14,571 | 11,626 | 28,995 | 23,064 | ||||||||||||
Other restaurant operating expenses | 33,654 | 27,060 | 66,146 | 53,085 | ||||||||||||
Advertising expense | 8,080 | 7,284 | 15,363 | 13,827 | ||||||||||||
General and administrative expenses (b) (c) | 12,903 | 8,625 | 24,499 | 18,892 | ||||||||||||
Depreciation and amortization | 9,793 | 9,045 | 19,798 | 17,803 | ||||||||||||
Impairment and other lease charges | 706 | 429 | 2,336 | 1,049 | ||||||||||||
Other expense (income) | (166 | ) | 25 | (126 | ) | 25 | ||||||||||
Total costs and expenses | 206,744 | 166,986 | 404,376 | 324,923 | ||||||||||||
Income (loss) from operations | 12,358 | 1,597 | 7,896 | (4,887 | ) | |||||||||||
Interest expense | 4,700 | 4,694 | 9,514 | 9,397 | ||||||||||||
Loss on extinguishment of debt | 12,635 | — | 12,635 | — | ||||||||||||
Loss before income taxes | (4,977 | ) | (3,097 | ) | (14,253 | ) | (14,284 | ) | ||||||||
Benefit for income taxes | — | (1,165 | ) | — | (4,923 | ) | ||||||||||
Net loss | $ | (4,977 | ) | $ | (1,932 | ) | $ | (14,253 | ) | $ | (9,361 | ) | ||||
Basic and diluted net loss per share | $ | (0.14 | ) | $ | (0.06 | ) | $ | (0.41 | ) | $ | (0.35 | ) | ||||
Basic and diluted weighted average common shares outstanding (d) | 34,899 | 30,767 | 34,891 | 26,959 |
(a) |
The Company uses a 52 or 53 week fiscal year that ends on the
Sunday closest to |
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(b) |
Acquisition and integration expenses of |
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(c) |
General and administrative expenses include stock-based
compensation expense of |
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(d) |
Shares issuable for convertible preferred stock and non-vested restricted stock were not included in the computation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented. |
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) | Six Months Ended (a) | |||||||||||||||
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Restaurant Sales: (a) | ||||||||||||||||
Legacy restaurants | $ | 100,519 | $ | 93,621 | $ | 188,693 | $ | 177,533 | ||||||||
Restaurants acquired in 2012 |
79,746 | 74,159 | 152,202 | 141,700 | ||||||||||||
Restaurants acquired in 2014 and 2015 | 38,837 | 803 | 71,377 | 803 | ||||||||||||
Total restaurant sales | $ | 219,102 | $ | 168,583 | $ | 412,272 | $ | 320,036 | ||||||||
Change in Comparable Restaurant Sales (b) | 10.3 | % | (2.0 | )% | 9.4 | % | (2.2 | )% | ||||||||
Average Weekly Sales per Restaurant: (c) | ||||||||||||||||
Legacy restaurants | $ | 27,616 | $ | 24,971 | $ | 25,726 | $ | 23,578 | ||||||||
Restaurants acquired in 2012 | 24,608 | 21,594 | 23,109 | 20,473 | ||||||||||||
Restaurants acquired in 2014 and 2015 | 23,648 | 23,487 | 22,056 | 23,487 | ||||||||||||
Restaurant-Level EBITDA: (d) | ||||||||||||||||
Legacy restaurants |
$ | 18,112 | $ | 13,439 | 28,288 | 22,726 | ||||||||||
Restaurants acquired in 2012 | 12,646 | 6,249 | 19,411 | 10,123 | ||||||||||||
Restaurants acquired in 2014 and 2015 | 4,836 | 33 | 6,704 | 33 | ||||||||||||
Total Restaurant-Level EBITDA | $ | 35,594 | $ | 19,721 | 54,403 | 32,882 | ||||||||||
Restaurant-Level EBITDA margin: (d) | ||||||||||||||||
Legacy restaurants | 18.0 | % | 14.4 | % | 15.0 | % | 12.8 | % | ||||||||
Restaurants acquired in 2012 | 15.9 | % | 8.4 | % | 12.8 | % | 7.1 | % | ||||||||
Restaurants acquired in 2014 and 2015 | 12.5 | % | 4.1 | % | 9.4 | % | 4.1 | % | ||||||||
All restaurants | 16.2 | % | 11.7 | % | 13.2 | % | 10.3 | % | ||||||||
Adjusted EBITDA (d) | $ | 23,269 | $ | 11,514 | 30,994 | 14,826 | ||||||||||
Adjusted EBITDA margin (d) | 10.6 | % | 6.8 | % | 7.5 | % | 4.6 | % | ||||||||
Number of Restaurants: | ||||||||||||||||
Restaurants at beginning of period | 659 | 560 | 674 | 564 | ||||||||||||
New restaurants | — | — | — | 1 | ||||||||||||
Acquired restaurants | 4 | 4 | 4 | 4 | ||||||||||||
Closed restaurants | (5 | ) | (4 | ) | (20 | ) | (9 | ) | ||||||||
Sold restaurants | (1 | ) | — | (1 | ) | — | ||||||||||
Restaurants at end of period | 657 | 560 | 657 | 560 |
At |
At |
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Long-term debt (e) | $ | 209,249 | $ | 159,896 | ||||
Cash | 61,004 | 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. |
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(c) |
Average weekly restaurant sales are derived by dividing restaurant sales by the average number of restaurants operating during the period. |
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(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 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. |
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(e) |
Long-term debt (including current portion) at |
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Reconciliation of Non-GAAP Measures |
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(unaudited) | (unaudited) | ||||||||||||||
Three Months Ended (a) | Six Months Ended (a) | ||||||||||||||
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Reconciliation of EBITDA and Adjusted EBITDA: (a) | |||||||||||||||
Net loss | $ | (4,977 | ) | $ | (1,932 | ) | $ | (14,253 | ) | $ | (9,361 | ) | |||
Benefit for income taxes | — | (1,165 | ) | — | (4,923 | ) | |||||||||
Interest expense | 4,700 | 4,694 | 9,514 | 9,397 | |||||||||||
Depreciation and amortization | 9,793 | 9,045 | 19,798 | 17,803 | |||||||||||
EBITDA | 9,516 | 10,642 | 15,059 | 12,916 | |||||||||||
Impairment and other lease charges | 706 | 429 | 2,336 | 1,049 | |||||||||||
Acquisition and integration costs | 49 | 152 | 260 | 274 | |||||||||||
Stock compensation expense | 363 | 291 | 704 | 587 | |||||||||||
Loss on extinguishment of debt | 12,635 | — | 12,635 | — | |||||||||||
Adjusted EBITDA | $ | 23,269 | $ | 11,514 | $ | 30,994 | $ | 14,826 | |||||||
Reconciliation of Restaurant-Level EBITDA: (a) | |||||||||||||||
Restaurant-Level EBITDA (a) | $ | 35,594 | $ | 19,721 | $ | 54,403 | $ | 32,882 | |||||||
Less: | |||||||||||||||
General and administrative expenses | 12,903 | 8,625 | 24,499 | 18,892 | |||||||||||
Depreciation and amortization | 9,793 | 9,045 | 19,798 | 17,803 | |||||||||||
Impairment and other lease charges | 706 | 429 | 2,336 | 1,049 | |||||||||||
Other expense (income) | (166 | ) | 25 | (126 | ) | 25 | |||||||||
Income (loss) from operations | $ | 12,358 | $ | 1,597 | $ | 7,896 | $ | (4,887 | ) |
(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 and integration 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. |
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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. | ||
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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