Delaware | 001-33174 | 83-3804854 |
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
968 James Street Syracuse, New York | 13203 | |
(Address of principal executive office) | (Zip Code) | |
Registrant’s telephone number, including area code (315) 424-0513 | ||
N/A | ||
(Former name or former address, if changed since last report.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, par value $.01 per share | TAST | The NASDAQ Global Market |
By: | /s/ Anthony E. Hull |
Name: | Anthony E. Hull |
Title: | Vice President, Chief Financial Officer and Treasurer |
• | Total revenue increased 30.3% to $401.1 million (including $73.6 million in restaurant sales and $3.4 million in other revenue from the Cambridge acquisition completed in the second quarter of 2019) from $307.8 million in the prior year quarter; |
• | Comparable restaurant sales for the Company’s Burger King restaurants increased 2.0% compared to a 2.7% increase in the prior year quarter, an increase of 4.7% on a two-year stacked basis; |
• | Comparable restaurant sales for the Company’s Popeyes restaurants increased 21.2% compared to comparable restaurant sales under previous ownership in the prior year quarter; |
• | Promotions and discounts were 19.0% of restaurant sales for the Company's comparable Burger King restaurants compared to 26.6% in the prior year quarter; |
• | Adjusted EBITDA(1) was $22.7 million compared to $24.5 million in the prior year quarter; |
• | Net loss was $9.9 million, or $0.20 per diluted share, compared to net income of $1.8 million, or $0.04 per diluted share, in the prior year quarter; and |
• | Adjusted net loss(1) was $6.2 million, or $0.12 per diluted share, compared to adjusted net income of $2.5 million, or $0.05 per diluted share, in the prior year quarter. |
• | Total revenue increased 24.0% to $1.46 billion (including $193.1 million in restaurant sales and $10.2 million in other revenue from the Cambridge acquisition completed in the second quarter of 2019) from $1.18 billion in 2018; |
• | Comparable restaurant sales for the Company’s Burger King restaurants increased 2.2% compared to a 3.8% increase in 2018, an increase of 6.0% on a two-year stacked basis; |
• | Comparable restaurant sales for the Company’s Popeyes restaurants increased 11.9% for our eight months of ownership compared to comparable restaurant sales under previous ownership in the prior year; |
• | Adjusted EBITDA(1) was $86.1 million compared to $103.0 million in 2018; |
• | Net loss was $31.9 million, or $0.74 per diluted share, compared to net income of $10.1 million, or $0.22 per diluted share, in 2018; and |
• | Adjusted net loss(1) was $15.5 million, or $0.36 per diluted share, compared to adjusted net income of $14.1 million, or $0.31 per diluted share, in 2018. |
(1) | Adjusted EBITDA, Adjusted Restaurant-level EBITDA and Adjusted net income (loss) are non-GAAP financial measures. Refer to the definitions and reconciliation of these measures to net income (loss) or to income (loss) from operations in the tables at the end of this release. |
• | Slowing down the pace of acquisition activity; |
• | Limiting new restaurant development in 2020 to six new Burger King restaurants with attractive expected returns on capital. We also are completing the new build of six Burger King restaurants during the first quarter of 2020 that were started in late 2019. In total, we will be opening 12 new Burger King restaurants in 2020 (by comparison we opened 21 Burger King restaurants and 10 Popeyes restaurants in 2019); |
• | Reducing our remodeling activity in 2020 to just 12 Burger King restaurants with high returns on capital (by comparison, we remodeled 74 Burger King restaurants and 4 Popeyes restaurants in 2019); and |
• | Taking a renewed look at operating expenses across the expanded business with the goal of creating greater efficiencies and improved margins over time. |
• | We expect total restaurant sales of $1.64 billion to $1.69 billion; |
• | Comparable restaurant sales growth for our Burger King restaurants owned for more than 12 months as of December 29, 2019 is expected to be 2% to 3%. Please note that the Cambridge Burger King restaurants will enter the comparable base on May 1st; |
• | Commodity costs are expected to increase 2% to 3%, with beef costs expected to increase 9%; |
• | General and administrative expenses are expected to be $80 million to $85 million, excluding stock compensation expense, reflecting the full year impact of overhead costs required to support our enlarged restaurant base; |
• | Adjusted EBITDA is expected to be $100 million to $110 million; |
• | Interest expense is expected to be approximately $30 million based on our debt pricing and expected stable LIBOR levels; |
• | Gross capital expenditures are expected to be $70 million to $75 million, including approximately 35% for maintenance, 15% for remodeling; and 40% for construction of new restaurants. Of that total, approximately $25 million will be expended in the first quarter of 2020 primarily relating to the completion of new restaurants and remodels that commenced in 2019; and |
• | Proceeds from sale/leasebacks are expected to be approximately $10 million to $15 million; resulting in net capital expenditures of $55 million to $65 million. |
(unaudited) | (unaudited) | ||||||||||||||
Three Months Ended (a) | Twelve Months Ended (a) | ||||||||||||||
December 29, 2019 | December 30, 2018 | December 29, 2019 | December 30, 2018 | ||||||||||||
Revenue: | |||||||||||||||
Restaurant sales | $ | 397,639 | $ | 307,754 | $ | 1,452,516 | $ | 1,179,307 | |||||||
Other revenue | 3,433 | — | 10,249 | — | |||||||||||
Total revenue | $ | 401,072 | $ | 307,754 | $ | 1,462,765 | $ | 1,179,307 | |||||||
Operating expenses: | |||||||||||||||
Cost of sales | 118,954 | 89,304 | 431,969 | 326,308 | |||||||||||
Restaurant wages and related expenses | 132,876 | 99,340 | 485,278 | 382,829 | |||||||||||
Restaurant rent expense | 29,241 | 21,297 | 107,147 | 81,409 | |||||||||||
Other restaurant operating expenses (b) | 62,741 | 45,812 | 227,364 | 178,750 | |||||||||||
Advertising expense | 16,088 | 12,599 | 58,689 | 48,340 | |||||||||||
General and administrative expenses (c) (d) | 23,025 | 16,829 | 84,734 | 66,587 | |||||||||||
Depreciation and amortization | 21,061 | 15,042 | 74,674 | 58,468 | |||||||||||
Impairment and other lease charges | 1,787 | 331 | 3,564 | 3,685 | |||||||||||
Other expense (income), net (e) | (138 | ) | 10 | (1,911 | ) | (424 | ) | ||||||||
Total operating expenses | 405,635 | 300,564 | 1,471,508 | 1,145,952 | |||||||||||
Income (loss) from operations | (4,563 | ) | 7,190 | (8,743 | ) | 33,355 | |||||||||
Interest expense | 7,431 | 5,886 | 27,856 | 23,638 | |||||||||||
Loss on extinguishment of debt | — | — | 7,443 | — | |||||||||||
Gain on bargain purchase | — | — | — | (230 | ) | ||||||||||
Income (loss) before income taxes | (11,994 | ) | 1,304 | (44,042 | ) | 9,947 | |||||||||
Provision (benefit) for income taxes | (2,088 | ) | (503 | ) | (12,123 | ) | (157 | ) | |||||||
Net income (loss) | $ | (9,906 | ) | $ | 1,807 | $ | (31,919 | ) | $ | 10,104 | |||||
Basic and diluted net income (loss) per share (f)(g) | $ | (0.20 | ) | $ | 0.04 | $ | (0.74 | ) | $ | 0.22 | |||||
Basic weighted average common shares outstanding | 50,643 | 35,742 | 43,422 | 35,715 | |||||||||||
Diluted weighted average common shares outstanding | 50,643 | 45,403 | 43,422 | 45,320 |
(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 29, 2019 and December 30, 2018 each included thirteen and fifty-two weeks, respectively. |
(b) | Other restaurant operating expenses include one-time repair and other operating costs of $1.4 million and $2.4 million for the three and twelve months ended December 29, 2019, respectively. |
(c) | General and administrative expenses include acquisition and integration costs of $1.5 million and $0.4 million for the three months ended December 29, 2019 and December 30, 2018, respectively and $8.5 million and $1.4 million for the twelve months ended December 29, 2019 and December 30, 2018, respectively. |
(d) | General and administrative expenses include stock-based compensation expense of $1.2 million and $1.3 million for the three months ended December 29, 2019 and December 30, 2018, respectively and $5.8 million for both the twelve months ended December 29, 2019 and December 30, 2018, respectively. |
(e) | Other income, net, for the twelve months ended December 29, 2019, included, among other things, a $1.9 million gain related to a settlement with Burger King Corporation for the approval of new restaurant development by other franchisees which unfavorably impacted our restaurants. Other income, net, for the three and twelve months ended December 30, 2018 included a $0.4 million gain related to an insurance recovery from a restaurant fire. |
(f) | Basic net income (loss) per share was computed excluding loss attributable to preferred stock and non-vested restricted shares unless the effect would have been anti-dilutive for the periods presented. |
(g) | Diluted net income (loss) per share was computed including common shares issuable for convertible preferred stock and non-vested restricted shares unless their effect would have been anti-dilutive for the periods presented. |
(unaudited) | (unaudited) | ||||||||||||||
Three Months Ended | Twelve Months Ended (a) | ||||||||||||||
December 29, 2019 | December 30, 2018 | December 29, 2019 | December 30, 2018 | ||||||||||||
Revenue: | |||||||||||||||
Burger King restaurant sales | $ | 374,945 | $ | 307,754 | $ | 1,398,660 | $ | 1,179,307 | |||||||
Popeyes restaurant sales | 22,694 | — | 53,856 | — | |||||||||||
Total restaurant sales | 397,639 | 307,754 | 1,452,516 | 1,179,307 | |||||||||||
Other revenue | 3,433 | — | 10,249 | — | |||||||||||
Total revenue | $ | 401,072 | $ | 307,754 | $ | 1,462,765 | $ | 1,179,307 | |||||||
Change in Comparable Burger King Restaurant Sales (a) | 2.0 | % | 2.7 | % | 2.2 | % | 3.8 | % | |||||||
Average Weekly Sales per Burger King Restaurant (b) | $ | 28,232 | $ | 28,226 | $ | 28,065 | $ | 27,865 | |||||||
Average Weekly Sales per Popeyes Restaurant (b) | $ | 28,431 | $ | — | $ | 26,458 | $ | — | |||||||
Adjusted Restaurant-Level EBITDA (c) | $ | 42,920 | $ | 39,520 | $ | 156,131 | $ | 162,133 | |||||||
Adjusted Restaurant-Level EBITDA margin (c) | 10.8 | % | 12.8 | % | 10.7 | % | 13.7 | % | |||||||
Adjusted EBITDA (c) | $ | 22,701 | $ | 24,461 | $ | 86,115 | $ | 102,990 | |||||||
Adjusted EBITDA margin (c) | 5.7 | % | 7.9 | % | 5.9 | % | 8.7 | % | |||||||
Adjusted net income (loss) (c) | $ | (6,182 | ) | $ | 2,495 | $ | (15,514 | ) | $ | 14,091 | |||||
Adjusted diluted net income (loss) per share (c) | $ | (0.12 | ) | $ | 0.05 | $ | (0.36 | ) | $ | 0.31 | |||||
Number of Burger King restaurants: | |||||||||||||||
Restaurants at beginning of period | 1,028 | 838 | 849 | 807 | |||||||||||
New restaurants (including offsets) | 8 | 2 | 21 | 8 | |||||||||||
Restaurants acquired | — | 10 | 179 | 44 | |||||||||||
Restaurants closed (including offsets) | — | (1 | ) | (13 | ) | (10 | ) | ||||||||
Restaurants at end of period | 1,036 | 849 | 1,036 | 849 | |||||||||||
Average Number of Restaurants: | 1,021.6 | 838.7 | 958.4 | 813.9 | |||||||||||
Number of Popeyes restaurants: | |||||||||||||||
Restaurants at beginning of period | 60 | — | — | — | |||||||||||
Restaurants acquired | — | — | 55 | — | |||||||||||
New restaurants | 5 | — | 10 | — | |||||||||||
Restaurants at end of period | 65 | — | 65 | — | |||||||||||
Average Number of Restaurants: | 61.4 | — | 58.9 | — |
At 12/29/19 | At 12/30/18 | ||||||
Long-term debt and finance lease liabilities (d) | $ | 472,343 | $ | 280,144 | |||
Cash and cash equivalents | $ | 2,974 | $ | 4,014 |
(a) | Restaurants we acquire are included in comparable restaurant sales after they have been operated by us for 12 months. Sales from restaurants we develop are included in comparable sales after they have been open for 15 months. The calculation of changes in comparable restaurant sales is based on the comparable 13-week or 52-week period. |
(b) | Average weekly sales per restaurant are derived by dividing restaurant sales for the comparable 13-week or 52-week period by the average number of restaurants operating during such period. |
(c) | EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Restaurant-Level EBITDA, Adjusted Restaurant-Level EBITDA margin and Adjusted net income (loss) 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 net income (loss) to EBITDA, Adjusted EBITDA and Adjusted net income (loss), and to the Company's reconciliation of income (loss) from operations to Adjusted Restaurant-Level EBITDA for further detail. Both Adjusted EBITDA margin and Adjusted Restaurant-Level EBITDA margin are calculated as a percentage of total restaurant sales. Adjusted diluted net income (loss) per share is calculated based on Adjusted net income (loss) and reflects the dilutive impact of shares, where applicable, based on Adjusted net income (loss). |
(d) | Long-term debt and finance lease liabilities (including current portion and excluding deferred financing costs and original issue discount) at December 29, 2019 included $422,875 of the Company's Term Loan B under our senior credit facility, $45,750 of outstanding revolving borrowings under the Company's senior credit facility, $1,194 of lease financing obligations and $2,524 of finance lease liabilities. Long-term debt and finance lease liabilities (including current portion and excluding deferred financing costs) at December 30, 2018 included $275,000 of the Company's 8% Senior Secured Second Lien Notes, $1,203 of lease financing obligations and $3,941 of finance lease liabilities. |
(unaudited) | (unaudited) | ||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||
December 29, 2019 | December 30, 2018 | December 29, 2019 | December 30, 2018 | ||||||||||||
Reconciliation of EBITDA and Adjusted EBITDA: (a) | |||||||||||||||
Net income (loss) | $ | (9,906 | ) | $ | 1,807 | $ | (31,919 | ) | $ | 10,104 | |||||
Provision (benefit) for income taxes | (2,088 | ) | (503 | ) | (12,123 | ) | (157 | ) | |||||||
Interest expense | 7,431 | 5,886 | 27,856 | 23,638 | |||||||||||
Depreciation and amortization | 21,061 | 15,042 | 74,674 | 58,468 | |||||||||||
EBITDA | 16,498 | 22,232 | 58,488 | 92,053 | |||||||||||
Impairment and other lease charges | 1,787 | 331 | 3,564 | 3,685 | |||||||||||
Acquisition and integration costs (b) | 2,844 | 409 | 10,827 | 1,445 | |||||||||||
Pre-opening costs (c) | 386 | 118 | 1,449 | 462 | |||||||||||
Litigation costs (d) | 86 | 50 | 502 | 187 | |||||||||||
Other income, net (e) | (138 | ) | 10 | (1,911 | ) | (424 | ) | ||||||||
Gain on bargain purchase | — | — | — | (230 | ) | ||||||||||
Stock-based compensation expense | 1,238 | 1,311 | 5,753 | 5,812 | |||||||||||
Loss on extinguishment of debt | — | — | 7,443 | — | |||||||||||
Adjusted EBITDA | $ | 22,701 | $ | 24,461 | $ | 86,115 | $ | 102,990 | |||||||
Reconciliation of Adjusted Restaurant-Level EBITDA: (a) | |||||||||||||||
Income (loss) from operations | $ | (4,563 | ) | $ | 7,190 | $ | (8,743 | ) | $ | 33,355 | |||||
Add: | |||||||||||||||
General and administrative expenses | 23,025 | 16,829 | 84,734 | 66,587 | |||||||||||
Restaurant integration costs (b) | 1,362 | — | 2,364 | — | |||||||||||
Pre-opening costs (c) | 386 | 118 | 1,449 | 462 | |||||||||||
Depreciation and amortization | 21,061 | 15,042 | 74,674 | 58,468 | |||||||||||
Impairment and other lease charges | 1,787 | 331 | 3,564 | 3,685 | |||||||||||
Other income, net (e) | (138 | ) | 10 | (1,911 | ) | (424 | ) | ||||||||
Adjusted Restaurant-Level EBITDA | $ | 42,920 | $ | 39,520 | $ | 156,131 | $ | 162,133 | |||||||
Reconciliation of Adjusted net income (loss): (a) | |||||||||||||||
Net income (loss) | $ | (9,906 | ) | $ | 1,807 | $ | (31,919 | ) | $ | 10,104 | |||||
Add: | |||||||||||||||
Impairment and other lease charges | 1,787 | 331 | 3,564 | 3,685 | |||||||||||
Acquisition and integration costs (b) | 2,844 | 409 | 10,827 | 1,445 | |||||||||||
Pre-opening costs (c) | 386 | 118 | 1,449 | 462 | |||||||||||
Litigation costs (d) | 86 | 50 | 502 | 187 | |||||||||||
Other income, net (e) | (138 | ) | 10 | (1,911 | ) | (424 | ) | ||||||||
Gain on bargain purchase | — | — | — | (230 | ) | ||||||||||
Loss on extinguishment of debt | — | — | 7,443 | — | |||||||||||
Income tax effect on above adjustments (f) | (1,241 | ) | (230 | ) | (5,469 | ) | (1,138 | ) | |||||||
Adjusted net income (loss) | $ | (6,182 | ) | $ | 2,495 | $ | (15,514 | ) | $ | 14,091 | |||||
Adjusted diluted net income (loss) per share | $ | (0.12 | ) | $ | 0.05 | $ | (0.36 | ) | $ | 0.31 | |||||
Diluted weighted average common shares outstanding | 50,643 | 45,403 | 43,422 | 45,320 |
(a) | Within our press release, we make reference to EBITDA, Adjusted EBITDA, Adjusted Restaurant-Level EBITDA and Adjusted net income (loss) which are non-GAAP financial measures. EBITDA represents net income (loss) before 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-based compensation expense, loss on extinguishment of debt, restaurant pre-opening costs, non-recurring litigation costs and other non-recurring income or expense. Adjusted Restaurant-Level EBITDA represents income (loss) from operations as adjusted to exclude general and administrative expenses, depreciation and amortization, impairment and other lease charges, restaurant-level integration costs, pre-opening costs, loss on extinguishment of debt, and other non-recurring income or expense. Adjusted net income (loss) represents net income (loss) as adjusted, net of tax, to exclude impairment and other lease charges, acquisition costs and integration costs, gain on bargain purchase, pre-opening costs, non-recurring litigation costs and other non-recurring income or expense. |
(b) | Acquisition and integration costs for the three and twelve months ended December 29, 2019 of $2.8 million and $10.8 million, respectively, include certain legal and professional fees; corporate payroll, and other costs related to the integration of the Cambridge merger and one-time repair and other operating costs which are included in Adjusted Restaurant-Level EBITDA. |
(c) | Pre-opening costs for the three and twelve months ended December 29, 2019 and December 30, 2018 include training, labor and occupancy costs incurred during the construction of new restaurants. |
(d) | Legal costs for the three and twelve months ended December 29, 2019 include litigation expenses pertaining to an ongoing lawsuit with one of the Company's former vendors. |
(e) | Other income, net, for the twelve months ended December 29, 2019, included, among other things, a $1.9 million gain related to a settlement with Burger King Corporation for the approval of new restaurant development by other franchisees which unfavorably impacted our restaurants. Other income, net, for the three and twelve months ended December 30, 2018 included a $0.4 million gain related to an insurance recovery from a restaurant fire. |
(f) | The income tax effect related to the adjustments to net income (loss) during the periods presented was calculated using an incremental income tax rate of 25% for the three and twelve months ended December 29, 2019 and 25% and 22.2% for the three and twelve months ended December 30, 2018 , respectively. |