Carrols Restaurant Group, Inc. Reports Financial Results for the Fourth Quarter and Full Year 2018
Highlights for the Fourth Quarter of 2018 versus the Fourth Quarter of 2017 Include:
-
Restaurant sales increased 8.4% to
$307.8 million from$284.0 million in the fourth quarter of 2017; - Comparable restaurant sales increased 2.7% compared to an 8.9% increase in the prior year quarter;
-
Adjusted EBITDA(1) was
$24.3 million compared to$25.8 million in the prior year quarter; -
Net income was
$1.8 million , or$0.04 per diluted share, compared to net income of$3.9 million , or$0.09 per diluted share, in the prior year quarter; and -
Adjusted net income(1) was
$2.4 million , or$0.05 per diluted share, compared to adjusted net income of$3.8 million , or$0.08 per diluted share, in the prior year quarter.
Highlights for Full Year of 2018 versus Full Year of 2017 Include:
-
Restaurant sales increased 8.3% to
$1.18 billion from$1.09 billion in 2017; - Comparable restaurant sales increased 3.8% compared to a 5.2% increase in 2017;
-
Adjusted EBITDA(1) increased 12.0% to
$102.3 million from$91.4 million in 2017; -
Net income was
$10.1 million , or$0.22 per diluted share, compared to net income of$7.2 million , or$0.16 per diluted share, in 2017; and -
Adjusted net income(1) was
$13.6 million , or$0.30 per diluted share, compared to adjusted net income of$9.0 million , or$0.20 per diluted share, in 2017.
(1) |
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 or to income from operations in the tables at the end of this release. |
||
Accordino continued, “We improved Adjusted EBITDA margin modestly in
2018, however, the impact from the heightened promotional environment
was evident in our fourth quarter results. The variety of promotional
deals included the
On
Accordino concluded, “Looking ahead, 2019 should be an exciting year at
Fourth Quarter 2018 Financial Results
Restaurant sales increased 8.4% to
Restaurant-level EBITDA(1) was
General and administrative expenses were
Adjusted EBITDA(1) decreased 5.9% to
Income from operations decreased to
Interest expense held at
Net income was
Adjusted net income(1) in the fourth quarter of 2018 was
Full Year 2019 Outlook
The Company is providing the following guidance for 2019 which does not
include the impact from the merger with Cambridge or any other potential
acquisition that the Company may complete in 2019. The Company will
update guidance after completion of the merger with Cambridge which is
currently expected to close in late
-
Total restaurant sales are expected to be
$1.25 billion to $1.28 billion including comparable restaurant sales growth of 2.0% to 3.5%; - Commodity costs are expected to increase approximately 1% to 2% including a 2% to 3% increase in beef costs;
-
General and administrative expenses are expected to be
$62 million to$64 million , excluding stock compensation expense and acquisition-related costs; -
Adjusted EBITDA is expected to be
$100 million to $110 million ; -
Capital expenditures are expected to be
$75 million to $95 million , including$25 million to $35 million for construction of 15 to 20 new units; -
Proceeds from sale/leasebacks are expected to be approximately
$10 million to $15 million ; and - The Company expects to close 10 to 15 restaurants.
The Company has not reconciled guidance for Adjusted EBITDA to the corresponding GAAP financial measure because it does 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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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
Carrols Restaurant Group, Inc. | |||||||||||||||||||||
Consolidated Statements of Income | |||||||||||||||||||||
(in thousands, except per share amounts) |
|||||||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||||
Three Months Ended (a) | Twelve Months Ended (a) | ||||||||||||||||||||
December 30, |
December 31, |
December 30, |
December 31, |
||||||||||||||||||
Restaurant sales | $ | 307,754 | $ | 283,967 | $ | 1,179,307 | $ | 1,088,532 | |||||||||||||
Costs and expenses: | |||||||||||||||||||||
Cost of sales | 89,304 | 79,783 | 326,308 | 304,593 | |||||||||||||||||
Restaurant wages and related expenses | 99,340 | 89,495 | 382,829 | 350,054 | |||||||||||||||||
Restaurant rent expense | 21,297 | 19,885 | 81,409 | 75,948 | |||||||||||||||||
Other restaurant operating expenses | 45,812 | 42,797 | 178,750 | 166,786 | |||||||||||||||||
Advertising expense | 12,599 | 11,652 | 48,340 | 44,677 | |||||||||||||||||
General and administrative expenses (b) (c) | 16,828 | 15,662 | 66,586 | 60,348 | |||||||||||||||||
Depreciation and amortization | 15,042 | 13,987 | 58,468 | 54,159 | |||||||||||||||||
Impairment and other lease charges (d) | 331 | 825 | 3,685 | 2,827 | |||||||||||||||||
Other expense (income), net | 10 | 21 | (424 | ) | (333 | ) | |||||||||||||||
Total costs and expenses | 300,563 | 274,107 | 1,145,951 | 1,059,059 | |||||||||||||||||
Income from operations | 7,191 | 9,860 | 33,356 | 29,473 | |||||||||||||||||
Gain on bargain purchase | — | — | (230 | ) | — | ||||||||||||||||
Interest expense | 5,886 | 5,943 | 23,638 | 21,710 | |||||||||||||||||
Income before income taxes | 1,305 | 3,917 | 9,948 | 7,763 | |||||||||||||||||
Provision (benefit) for income taxes | (503 | ) | (4 | ) | (157 | ) | 604 | ||||||||||||||
Net income | $ | 1,808 | $ | 3,921 | $ | 10,105 | $ | 7,159 | |||||||||||||
Basic and diluted net income per share (e) (f): | $ | 0.04 | $ | 0.09 | $ | 0.22 | $ | 0.16 | |||||||||||||
Basic weighted average common shares outstanding | 35,742 | 35,435 | 35,715 | 35,417 | |||||||||||||||||
Diluted weighted average common shares outstanding | 45,403 | 45,007 | 45,320 | 44,977 |
(a) | The Company uses a 52 or 53 week fiscal year that ends on the Sunday closest to December 31. The three and twelve months ended December 30, 2018 and December 31, 2017 each included thirteen and fifty-two weeks, respectively. | ||
(b) | General and administrative expenses include acquisition costs of $409 and $125 for the three months ended December 30, 2018 and December 31, 2017, respectively, and $1,445 and $1,793 for the twelve months ended December 30, 2018 and December 31, 2017, respectively. | ||
(c) | General and administrative expenses include stock-based compensation expense of $1,311 and $1,009 for the three months ended December 30, 2018 and December 31, 2017, respectively, and $5,812 and $3,518 for the twelve months ended December 30, 2018 and December 31, 2017, respectively. | ||
(d) | Impairment and other lease charges for the twelve months ended December 30, 2018 included, among other things, a $1.9 million write down for defective restaurant equipment that was replaced in approximately 300 restaurants. The Company has commenced litigation against the equipment supplier. | ||
(e) | Basic net income per share was computed excluding income attributable to preferred stock and non-vested restricted shares. | ||
(f) | Diluted net income per share was computed including shares issuable for convertible preferred stock and non-vested restricted shares unless 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 | Twelve Months Ended | |||||||||||||||||||||
December 30, |
December 31, |
December 30, |
December 31, |
|||||||||||||||||||
Total Restaurant Sales | $ | 307,754 | $ | 283,967 | $ | 1,179,307 | $ | 1,088,532 | ||||||||||||||
Change in Comparable Restaurant Sales (a) | 2.7 | % | 8.9 | % | 3.8 | % | 5.2 | % | ||||||||||||||
Average Weekly Sales per Restaurant: (b) | $ | 28,228 | $ | 27,576 | $ | 27,866 | $ | 26,690 | ||||||||||||||
Restaurant-Level EBITDA (c) | $ | 39,402 | $ | 40,355 | $ | 161,671 | $ | 146,474 | ||||||||||||||
Restaurant-Level EBITDA margin (c) | 12.8 | % | 14.2 | % | 13.7 | % | 13.5 | % | ||||||||||||||
Adjusted EBITDA (c) | $ | 24,294 | $ | 25,827 | $ | 102,342 | $ | 91,408 | ||||||||||||||
Adjusted EBITDA margin (c) | 7.9 | % | 9.1 | % | 8.7 | % | 8.4 | % | ||||||||||||||
Adjusted net income (c) | $ | 2,370 | $ | 3,761 | $ | 13,588 | $ | 9,037 | ||||||||||||||
Adjusted diluted net income per share | $ | 0.05 | $ | 0.08 | $ | 0.30 | $ | 0.20 | ||||||||||||||
Number of Restaurants: | ||||||||||||||||||||||
Restaurants at beginning of period | 838 | 798 | 807 | 753 | ||||||||||||||||||
New restaurants | 2 | 9 | 8 | 11 | ||||||||||||||||||
Acquired restaurants | 10 | 4 | 44 | 64 | ||||||||||||||||||
Closed restaurants | (1 | ) | (4 | ) | (10 | ) | (21 | ) | ||||||||||||||
Restaurants at end of period | 849 | 807 | 849 | 807 | ||||||||||||||||||
Average Number of Restaurants: | 838.7 | 792.2 | 813.9 | 784.3 | ||||||||||||||||||
At 12/30/18 | At 12/31/17 | |||||||||||||||||||||
Long-term debt (d) | $ | 280,144 | $ | 281,884 | ||||||||||||||||||
Cash | $ | 4,014 | $ | 29,412 |
(a) | Restaurants are generally included in comparable restaurant sales after they have been open or acquired for twelve months. For the three and twelve months ended December 30, 2018 the changes in comparable restaurant sales are calculated on a thirteen week and fifty-two week basis, respectively. | ||
(b) | Average weekly restaurant sales are derived by dividing restaurant sales for the comparable thirteen-week or fifty-two week period by the average number of restaurants operating during such period. | ||
(c) | 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 EBITDA, Adjusted EBITDA and Adjusted net income to net income, and to the Company's reconciliation of Restaurant-Level EBITDA to income 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. Adjusted diluted net income per share is calculated based on Adjusted net income. | ||
(d) | Long-term debt (including current portion and excluding deferred financing costs and bond premium) at December 30, 2018 included $275,000 of the Company's 8.0% Senior Secured Second Lien Notes, $1,203 of lease financing obligations and $3,941 of capital lease obligations. Long-term debt (including current portion and excluding deferred financing costs) at December 31, 2017 included $275,000 of the Company's 8.0% Senior Secured Second Lien Notes, $1,203 of lease financing obligations and $5,681 of capital lease obligations. | ||
Carrols Restaurant Group, Inc. | |||||||||||||||||||||
Reconciliation of Non-GAAP Measures | |||||||||||||||||||||
(in thousands, except per share data) | |||||||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||
December 30, |
December 31, |
December 30, |
December 31, |
||||||||||||||||||
Reconciliation of EBITDA and Adjusted EBITDA: (a) | |||||||||||||||||||||
Net income | $ | 1,808 | $ | 3,921 | $ | 10,105 | $ | 7,159 | |||||||||||||
Provision (benefit) for income taxes | (503 | ) | (4 | ) | (157 | ) | 604 | ||||||||||||||
Interest expense | 5,886 | 5,943 | 23,638 | 21,710 | |||||||||||||||||
Gain on bargain purchase | — | — | (230 | ) | — | ||||||||||||||||
Depreciation and amortization | 15,042 | 13,987 | 58,468 | 54,159 | |||||||||||||||||
EBITDA | 22,233 | 23,847 | 91,824 | 83,632 | |||||||||||||||||
Impairment and other lease charges | 331 | 825 | 3,685 | 2,827 | |||||||||||||||||
Acquisition costs (b) | 409 | 125 | 1,445 | 1,793 | |||||||||||||||||
Gain on insurance proceeds from fire, net | 10 | 21 | (424 | ) | (362 | ) | |||||||||||||||
Stock compensation expense | 1,311 | 1,009 | 5,812 | 3,518 | |||||||||||||||||
Adjusted EBITDA | $ | 24,294 | $ | 25,827 | $ | 102,342 | $ | 91,408 | |||||||||||||
Reconciliation of Restaurant-Level EBITDA: (a) | |||||||||||||||||||||
Income from operations | $ | 7,191 | $ | 9,860 | $ | 33,356 | $ | 29,473 | |||||||||||||
Add: | |||||||||||||||||||||
General and administrative expenses | 16,828 | 15,662 | 66,586 | 60,348 | |||||||||||||||||
Depreciation and amortization | 15,042 | 13,987 | 58,468 | 54,159 | |||||||||||||||||
Impairment and other lease charges | 331 | 825 | 3,685 | 2,827 | |||||||||||||||||
Other expense (income), net (c) | 10 | 21 | (424 | ) | (333 | ) | |||||||||||||||
Restaurant-Level EBITDA | $ | 39,402 | $ | 40,355 | $ | 161,671 | $ | 146,474 | |||||||||||||
|
|
|
|||||||||||||||||||
Reconciliation of Adjusted Net Income: (a) |
|||||||||||||||||||||
Net income |
$ |
1,808 |
$ |
3,921 |
$ |
10,105 |
$ |
7,159 |
|||||||||||||
Add: | |||||||||||||||||||||
Impairment and other lease charges |
331 |
825 |
3,685 |
2,827 |
|||||||||||||||||
Acquisition costs (b) |
409 |
125 |
1,445 |
1,793 |
|||||||||||||||||
Gain on bargain purchase |
— |
— |
(230 |
) |
— |
||||||||||||||||
Gain on insurance proceeds from fire, net |
10 |
21 |
(424 |
) |
(362 |
) |
|||||||||||||||
Income tax effect of above adjustments (d) |
(188 |
) |
(369 |
) |
(993 |
) |
(1,618 |
) |
|||||||||||||
Adjust income tax benefit from deferred tax adjustments (e) |
— |
(762 |
) |
— |
(762 |
) |
|||||||||||||||
Adjusted net income |
$ |
2,370 |
$ |
3,761 |
$ |
13,588 |
$ |
9,037 |
|||||||||||||
Adjusted diluted net income per share |
$ |
0.05 |
$ |
0.08 |
$ |
0.30 |
$ |
0.20 |
(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 before income taxes, interest expense and depreciation and amortization. Adjusted EBITDA represents EBITDA as adjusted to exclude impairment and other lease charges, acquisition costs, stock compensation expense, and gain on insurance proceeds. 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 expense (income). Adjusted net income represents net income as adjusted to exclude, impairment and other lease charges, acquisition costs, gain on bargain purchase and gain on insurance proceeds. | ||
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 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 expense (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, 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 and EBITDA, Adjusted EBITDA and Adjusted net income and between income from operations and Restaurant-Level EBITDA. | |||
(b) | Acquisition costs for the periods presented primarily include legal and professional fees incurred in connection with restaurant acquisitions, and in 2017, include certain payroll and other costs associated with the wind-down of the corporate headquarters from an acquisition in June 2017, which were included in general and administrative expense. | ||
(c) | Other income, net for the twelve months ended December 30, 2018 and December 31, 2017 each include a gain related to an insurance recovery from a fire at one of its restaurants. | ||
(d) | The income tax effect related to the adjustments for impairment and other lease charges, gain on bargain purchase, gain on insurance proceeds and acquisition costs during the periods presented was calculated using an effective income tax rate of 25% and 22.2% for the three and twelve months ended December 30, 2018, respectively, and 38% for the three and twelve months ended December 31, 2017. | ||
(e) | The provision (benefit) for income taxes in 2017 includes a $0.8 million discrete tax benefit recorded in the fourth quarter to remeasure net deferred taxes due to the lowering of the Federal income tax rate to 21% under the Tax Cuts and Jobs Act ("Tax Act") signed into law in the fourth quarter of 2017. | ||
View source version on businesswire.com: https://www.businesswire.com/news/home/20190227005233/en/
Source:
Investor Relations:
800-348-1074, ext. 3333
investorrelations@carrols.com