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 20.9% to $351.5 million (including $67.4 million in restaurant sales from restaurants acquired in the Cambridge acquisition completed in the second quarter of 2019) from $290.8 million in the prior year quarter; |
• | Comparable restaurant sales for the Company’s Burger King® restaurants decreased 5.7% compared to a 2.4% increase in the prior year quarter, and during the last month of the quarter comparable restaurant sales decreased 16.8%; |
• | Comparable restaurant sales for the Company’s Popeyes® restaurants increased 3.2% compared to comparable restaurant sales under previous ownership in the prior year quarter, and during the last month of the quarter comparable restaurant sales decreased 2.8%; |
• | Adjusted EBITDA(1) was $4.0 million compared to $13.3 million in the prior year quarter; |
• | Adjusted Restaurant-Level EBITDA(1) was $22.8 million compared to $28.7 million in the prior year quarter; |
• | Net loss was $22.2 million, or $0.44 per diluted share, compared to net loss of $11.5 million, or $0.32 per diluted share, in the prior year quarter; and |
• | Adjusted Net Loss(1) was $19.3 million, or $0.38 per diluted share, compared to Adjusted Net Loss of $10.2 million, or $0.28 per diluted share, in the prior year quarter. |
(1) | Adjusted EBITDA, Adjusted Restaurant-Level EBITDA and Adjusted Net 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. |
• | Continuing to serve drive-thru and, at certain locations, at the counter for take-out as we prioritize the health and safety of our employees and customers. Take-out and drive-thru orders comprised approximately 75% of restaurant sales in 2019; |
• | Keeping our restaurants stocked with hand sanitizers, masks, gloves, and thermometers; |
• | Launching delivery services to the majority of our Burger King and Popeyes restaurants, ahead of our original timetable. Delivery sales are now approximately $800,000 per week (approximately 3% of total restaurant sales); |
• | Modifying restaurant operating hours based on day-part sales trends and local ordinances while making adjustments to have the appropriate amount of labor for all operating day parts; |
• | Rationalizing all ongoing expenses, and where possible, reducing corporate and regional overhead and restaurant labor, cost of sales, and operating expense levels. These adjustments include reducing regional and corporate overhead by $5 million to $7 million on an annualized basis, achieved by streamlining our regional management structure, a 10% reduction in non-restaurant wages, instituting a company-wide hiring freeze, and adjusting restaurant labor costs to reflect revised restaurant hours and accessibility; |
• | Working closely with our landlords to negotiate reduced or deferred cash rent obligations and optimizing payment terms with key vendors and suppliers; |
• | Revaluating all capital expenditures and delaying all projects that have not yet commenced other than critical restaurant maintenance issues. Approximately $25 million of capital expenditure spending was incurred during the first quarter, the majority of which was carryover spend from projects commenced in 2019. Full year estimated range of capital expenditure spending is $35 million to $40 million, net of sale lease-back proceeds; |
• | Suspending any acquisition activity and our stock repurchase program; |
• | Temporarily closing 46 locations in March, 2020, including 42 Burger King and four Popeyes restaurants that were geographically close to other Company restaurants; |
• | Opening five Burger King restaurants to date in 2020 that commenced construction in 2019 and closing 11 restaurants year-to-date that were EBITDA negative; and |
• | Enhancing our sources of liquidity by increasing our revolver borrowing capacity by $30.8 million to a total of $145.8 million on April 8, 2020. As of May 5, 2020, we had $111.8 million of outstanding borrowings and $9.7 million of letters of credit issued under our revolving credit facility. In terms of liquidity, as of May 5, 2020 the Company had $77.8 million of available funds consisting of $24.4 million available to be drawn on the Company’s revolving credit facility and approximately $53.4 million in cash deposits. |
Fiscal Month | March 2020 | April 2020 | May 2020 | ||||
Week Ended | Mar 22 | Mar 29 | Apr 5 | Apr 12 | Apr 19 | Apr 26 | May 3 |
Burger King | (27.30)% | (33.80)% | (30.60)% | (29.40)% | (12.80)% | (13.70)% | (6.40)% |
Popeyes | (9.20)% | (19.00)% | (15.10)% | (10.10)% | 13.8% | 21.4% | 14.5% |
(unaudited) | |||||||
Three Months Ended (a) | |||||||
March 29, 2020 | March 31, 2019 | ||||||
Revenue: | |||||||
Restaurant sales | $ | 351,518 | $ | 290,789 | |||
Costs and expenses: | |||||||
Cost of sales | 102,927 | 82,575 | |||||
Restaurant wages and related expenses | 124,575 | 100,192 | |||||
Restaurant rent expense | 29,454 | 21,916 | |||||
Other restaurant operating expenses | 57,978 | 45,605 | |||||
Advertising expense | 13,876 | 11,872 | |||||
General and administrative expenses (b) (c) | 20,787 | 19,724 | |||||
Depreciation and amortization | 21,031 | 15,292 | |||||
Impairment and other lease charges | 2,881 | 910 | |||||
Other expense (income), net (d) | 56 | (2,129 | ) | ||||
Total costs and expenses | 373,565 | 295,957 | |||||
Loss from operations | (22,047 | ) | (5,168 | ) | |||
Interest expense | 7,140 | 5,947 | |||||
Loss before income taxes | (29,187 | ) | (11,115 | ) | |||
Provision (benefit) for income taxes | (6,978 | ) | 354 | ||||
Net loss | $ | (22,209 | ) | $ | (11,469 | ) | |
Basic and diluted net loss per share (e)(f) | $ | (0.44 | ) | $ | (0.32 | ) | |
Basic weighted average common shares outstanding | 50,821 | 36,045 | |||||
Diluted weighted average common shares outstanding | 50,821 | 36,045 |
(a) | The Company uses a 52 or 53 week fiscal year that ends on the Sunday closest to December 31. The three months ended March 29, 2020 and March 31, 2019 each included thirteen weeks, respectively. |
(b) | General and administrative expenses include acquisition and integration costs of $0.1 million and $2.7 million for the three months ended March 29, 2020 and March 31, 2019, respectively. |
(c) | General and administrative expenses include stock-based compensation expense of $1.1 million and $1.5 million for the three months ended March 29, 2020 and March 31, 2019 respectively. |
(d) | Other income, net, for the three months ended March 31, 2019 included 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. |
(e) | Basic net 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. |
(f) | Diluted net loss 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. |
(unaudited) | |||||||
Three Months Ended (a) | |||||||
March 29, 2020 | March 31, 2019 | ||||||
Revenue: | |||||||
Burger King restaurant sales | $ | 329,637 | $ | 290,789 | |||
Popeyes restaurant sales | 21,881 | — | |||||
Total revenue | $ | 351,518 | $ | 290,789 | |||
Change in Comparable Burger King Restaurant Sales (a) | (5.7 | )% | 2.4 | % | |||
Average Weekly Sales per Burger King Restaurant (b) | $ | 24,614 | $ | 26,529 | |||
Average Weekly Sales per Popeyes Restaurant (b) | $ | 25,978 | $ | — | |||
Adjusted Restaurant-Level EBITDA (c) | $ | 22,797 | $ | 28,697 | |||
Adjusted Restaurant-Level EBITDA margin (c) | 6.5 | % | 9.9 | % | |||
Adjusted EBITDA (c) | $ | 3,972 | $ | 13,348 | |||
Adjusted EBITDA margin (c) | 1.1 | % | 4.6 | % | |||
Adjusted Net Loss (c) | $ | (19,317 | ) | $ | (10,196 | ) | |
Adjusted diluted net loss per share (c) | $ | (0.38 | ) | $ | (0.28 | ) | |
Number of Burger King restaurants: | |||||||
Restaurants at beginning of period | 1,036 | 849 | |||||
New restaurants (including offsets) | 3 | 2 | |||||
Restaurants closed (including offsets) | (11 | ) | (6 | ) | |||
Restaurants at end of period | 1,028 | 845 | |||||
Average Number of Restaurants: | 1,030.2 | 843.2 | |||||
Number of Popeyes restaurants: | |||||||
Restaurants at beginning of period | 65 | — | |||||
New restaurants | — | — | |||||
Restaurants at end of period | 65 | — | |||||
Average Number of Restaurants: | 64.8 | — |
At 3/29/2020 | At 12/29/2019 | ||||||
Long-term debt and finance lease liabilities (d) | $ | 536,714 | $ | 472,343 | |||
Cash and cash equivalents | 41,272 | 2,974 |
(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 period. |
(b) | Average weekly sales per restaurant are derived by dividing restaurant sales for the comparable 13-week 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 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 loss to EBITDA, Adjusted EBITDA and Adjusted Net Loss, and to the Company's reconciliation of 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 restaurant sales. Adjusted diluted net loss per share is calculated based on Adjusted Net Loss and reflects the dilutive impact of shares, where applicable, based on Adjusted Net Loss. |
(d) | Long-term debt and finance lease liabilities (including current portion and excluding deferred financing costs and original issue discount) at March 29, 2020 included $421,813 of the Company's Term Loan B under our senior credit facility, $111,750 of outstanding revolving borrowings under the Company's senior credit facility, $1,193 of lease financing obligations and $1,958 of finance lease liabilities. Long-term debt and finance lease liabilities (including current portion and excluding deferred financing costs and original issue discount) at December 29, 2020 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. |
(unaudited) | |||||||
Three Months Ended | |||||||
March 29, 2020 | March 31, 2019 | ||||||
Reconciliation of EBITDA and Adjusted EBITDA: (a) | |||||||
Net loss | $ | (22,209 | ) | $ | (11,469 | ) | |
Provision (benefit) for income taxes | (6,978 | ) | 354 | ||||
Interest expense | 7,140 | 5,947 | |||||
Depreciation and amortization | 21,031 | 15,292 | |||||
EBITDA | (1,016 | ) | 10,124 | ||||
Impairment and other lease charges | 2,881 | 910 | |||||
Acquisition and integration costs (b) | 81 | 2,656 | |||||
Abandoned development costs (c) | 688 | 57 | |||||
Pre-opening costs (d) | 89 | 68 | |||||
Litigation costs (e) | 61 | 136 | |||||
Other expense (income), net (f) | 56 | (2,129 | ) | ||||
Stock-based compensation expense | 1,132 | 1,526 | |||||
Adjusted EBITDA | $ | 3,972 | $ | 13,348 | |||
Reconciliation of Adjusted Restaurant-Level EBITDA: (a) | |||||||
Loss from operations | $ | (22,047 | ) | $ | (5,168 | ) | |
Add: | |||||||
General and administrative expenses | 20,787 | 19,724 | |||||
Pre-opening costs (d) | 89 | 68 | |||||
Depreciation and amortization | 21,031 | 15,292 | |||||
Impairment and other lease charges | 2,881 | 910 | |||||
Other expense (income), net (f) | 56 | (2,129 | ) | ||||
Adjusted Restaurant-Level EBITDA | $ | 22,797 | $ | 28,697 | |||
Reconciliation of Adjusted Net Loss: (a) | |||||||
Net loss | $ | (22,209 | ) | $ | (11,469 | ) | |
Add: | |||||||
Impairment and other lease charges | 2,881 | 910 | |||||
Acquisition and integration costs (b) | 81 | 2,656 | |||||
Abandoned development costs (c) | 688 | 57 | |||||
Pre-opening costs (d) | 89 | 68 | |||||
Litigation costs (e) | 61 | 136 | |||||
Other expense (income), net (f) | 56 | (2,129 | ) | ||||
Income tax effect on above adjustments (g) | (964 | ) | (425 | ) | |||
Adjusted Net Loss | $ | (19,317 | ) | $ | (10,196 | ) | |
Adjusted diluted net loss per share | $ | (0.38 | ) | $ | (0.28 | ) | |
Adjusted diluted weighted average common shares outstanding | 50,821 | 36,045 |
(a) | Within our press release, we make reference to EBITDA, Adjusted EBITDA, Adjusted Restaurant-Level EBITDA and Adjusted Net Loss which are non-GAAP financial measures. EBITDA represents net 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 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 Loss represents net 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 months ended March 31, 2019 of $2.7 million, mostly include legal and professional fees incurred in connection with the acquisition of 165 Burger King and 55 Popeyes restaurants from Cambridge Holdings, LLC, which were included in general and administrative expense. |
(c) | Abandoned development costs for the three months ended March 29, 2020 and March 31, 2019 represent the write off of capitalized costs due to the abandoned development of future restaurant locations. |
(d) | Pre-opening costs for the three months ended March 29, 2020 and March 31, 2019 include training, labor and occupancy costs incurred during the construction of new restaurants. |
(e) | Legal costs for the three months ended March 29, 2020 include litigation expenses pertaining to an ongoing lawsuit with one of the Company's former vendors. |
(f) | Other income, net for the three months ended March 31, 2019 included 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. |
(g) | The income tax effect related to the adjustments to Adjusted Net Loss during the periods presented was calculated using an incremental income tax rate of 25% for the three months ended March 29, 2020 and March 31, 2019. |