Carrols Restaurant Group, Inc. Reports Financial Results for the Second Quarter of 2013
Highlights for the second quarter of 2013 versus the second quarter of 2012 include:
-
Restaurant sales increased 42.1% to
$173.5 million including$78.2 million in sales from the BURGER KING® restaurants that were acquired onMay 30, 2012 ; - Comparable restaurant sales at legacy restaurants increased 1.4% compared to an 8.8% increase in the prior year period, marking eight consecutive quarters of positive comparable restaurant sales;
-
Net loss from continuing operations was
$3.5 million , or$0.15 per diluted share, compared to a net loss from continuing operations of$779,000 , or$0.03 per diluted share, in the prior year period; -
Net loss from continuing operations included a charge of
$2.2 million ($0.06 per diluted share after tax) related to impairment and other lease charges (largely attributable to restaurant closings during the period). Net loss from continuing operations in the second quarter of 2012 included a loss on extinguishment of debt of$1.5 million ($0.04 per diluted share after tax), costs related to the Company's now settled EEOC litigation of$0.7 million ($0.02 per diluted share after tax) and acquisition-related expenses of$0.8 million ($0.02 per diluted share after tax); and -
Adjusted EBITDA, a non-GAAP measure, was
$10.4 million compared to$8.6 million in the prior year period. (Please refer to the reconciliation of Adjusted EBITDA to net loss from continuing operations in the tables at the end of this release).
As of June 30, 2013,
Accordino continued, "We also made additional progress on a number of fronts with the Burger King restaurants that we acquired last year as we increased average weekly sales, continued to improve operations, and expanded both restaurant-level profitability and margins. On a sequential basis, operating margins increased 438 basis points at the acquired restaurants from the first quarter of 2013, and the overall difference compared to our legacy restaurants narrowed by 112 basis points in the quarter. We expect to make continual progress in improving the profitability at these restaurants in the future."
Accordino concluded, "On a macro level, it appears that there has
recently been a modest pullback in consumer spending. And, while our
Second Quarter 2013 Financial Results
Restaurant sales grew 42.1% to
Comparable restaurant sales at the legacy restaurants increased 1.4% including an increase in average check of 1.0% and a 0.4% increase in customer traffic. In the second quarter of 2012, comparable restaurant sales at legacy restaurants increased 8.8%.
Average weekly sales for the acquired restaurants were
Adjusted EBITDA was
General and administrative expenses were
Included in the second quarter 2013 results were impairment and other
lease charges of
Interest expense increased to
Net loss from continuing operations was
Net loss from continuing operations included a charge of
2013 Guidance
Based upon the Company's year-to-date performance and expectations for the remainder of the year, the Company has refined its prior annual guidance:
-
Total restaurant sales of
$660 million to$680 million including a comparable restaurant sales increase at legacy restaurants of 1.5% to 3.5%; - A commodity cost increase of 1% to 2%;
-
General and administrative expenses of approximately
$35 million to$36 million (excluding stock compensation costs); - An effective income tax benefit of 42% to 45% including the carryover benefit for 2012 WOTC credits;
-
Capital expenditures of approximately
$45 million to$50 million , including$35 million to$40 million for remodeling 100 to 110 restaurants, of which 71 were completed in the first half of 2013. Estimated remodeling expenditures include$6.5 million for the relocation of two restaurants to new sites and for costs to scrape and completely rebuild four restaurants; and - Eight to ten restaurant closures for the year (excluding the two restaurants to be relocated).
Conference Call Today
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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
Consolidated Statements of Operations (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 | $ | 173,518 | $ | 122,104 | $ | 329,657 | 207,554 | ||||||||||||
Costs and expenses: | |||||||||||||||||||
Cost of sales | 52,870 | 38,877 | 101,501 | 64,999 | |||||||||||||||
Restaurant wages and related expenses | 53,665 | 37,446 | 104,332 | 65,314 | |||||||||||||||
Restaurant rent expense | 11,869 | 7,932 | 23,578 | 13,615 | |||||||||||||||
Other restaurant operating expenses | 27,547 | 18,221 | 53,783 | 31,864 | |||||||||||||||
Advertising expense | 7,926 | 4,604 | 15,020 | 7,300 | |||||||||||||||
General and administrative expenses (b) | 9,524 | 8,081 | 18,602 | 14,280 | |||||||||||||||
Depreciation and amortization | 8,391 | 6,149 | 16,454 | 10,842 | |||||||||||||||
Impairment and other lease charges | 2,198 | 101 | 2,828 | 127 | |||||||||||||||
Other income | — | — | (185 | ) | — | ||||||||||||||
Total costs and expenses | 173,990 | 121,411 | 335,913 | 208,341 | |||||||||||||||
Loss from operations | (472 | ) | 693 | (6,256 | ) | (787 | ) | ||||||||||||
Interest expense | 4,711 | 2,646 | 9,422 | 3,561 | |||||||||||||||
Loss on extinguishment of debt | — | 1,509 | — | 1,509 | |||||||||||||||
Loss from continuing operations before income taxes | (5,183 | ) | (3,462 | ) | (15,678 | ) | (5,857 | ) | |||||||||||
Benefit for income taxes | (1,687 | ) | (2,683 | ) | (6,983 | ) | (2,175 | ) | |||||||||||
Income from continuing operations | (3,496 | ) | (779 | ) | (8,695 | ) | (3,682 | ) | |||||||||||
Loss from discontinued operations, net of tax | — | 668 | — | 44 | |||||||||||||||
Net loss | $ | (3,496 | ) | $ | (111 | ) | $ | (8,695 | ) | $ | (3,638 | ) | |||||||
Diluted net income (loss) per share: | |||||||||||||||||||
Continuing operations | $ | (0.15 | ) | $ | (0.03 | ) | $ | (0.38 | ) | $ | (0.16 | ) | |||||||
Discontinued operations | — | 0.03 | — | — | |||||||||||||||
Diluted weighted average common shares outstanding (c) | 22,899 | 22,742 | 22,884 | 22,413 |
(a) |
The Company uses a 52 or 53 week fiscal year that ends on the Sunday
closest to |
|
(b) |
General and administrative expenses include stock-based compensation
expense of |
|
(c) | 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 |
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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 | $ | 95,311 | $ | 94,634 | $ | 181,076 | $ | 180,084 | |||||||||||
Acquired restaurants | 78,207 | 27,470 | 148,581 | 27,470 | |||||||||||||||
Total restaurant sales | $ | 173,518 | $ | 122,104 | $ | 329,657 | $ | 207,554 | |||||||||||
Change in Comparable Restaurant Sales (b) | 1.4 | % | 8.8 | % | 1.2 | % | 7.4 | % | |||||||||||
Adjusted EBITDA (c) | 10,413 | 8,630 | 13,708 | 12,477 | |||||||||||||||
Adjusted EBITDA margin (c) | 6.0 | % | 7.1 | % | 4.2 | % | 6.0 | % | |||||||||||
Average Weekly Sales per Restaurant: (d) | |||||||||||||||||||
Legacy restaurants | 25,142 | 24,763 | 23,804 | 23,461 | |||||||||||||||
Acquired restaurants | 21,950 | 21,798 | 20,848 | 21,798 | |||||||||||||||
Expenses - |
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Cost of sales | 29.8 | % | 31.1 | % | 29.7 | % | 30.8 | % | |||||||||||
Restaurant wages and related expenses | 29.9 | % | 30.2 | % | 30.9 | % | 31.3 | % | |||||||||||
Restaurant rent expense | 6.0 | % | 6.1 | % | 6.4 | % | 6.4 | % | |||||||||||
Other restaurant operating expenses | 14.8 | % | 14.5 | % | 15.2 | % | 15.2 | % | |||||||||||
Advertising expense | 4.4 | % | 3.7 | % | 4.3 | % | 3.5 | % | |||||||||||
Expenses - |
|||||||||||||||||||
Cost of sales | 31.3 | % | 34.4 | % | 32.1 | % | 34.4 | % | |||||||||||
Restaurant wages and related expenses | 32.1 | % | 32.4 | % | 32.6 | % | 32.4 | % | |||||||||||
Restaurant rent expense | 7.8 | % | 7.8 | % | 8.1 | % | 7.8 | % | |||||||||||
Other restaurant operating expenses | 17.2 | % | 16.5 | % | 17.6 | % | 16.5 | % | |||||||||||
Advertising expense | 4.8 | % | 3.9 | % | 4.8 | % | 3.9 | % | |||||||||||
Number of Restaurants: | |||||||||||||||||||
Restaurants at beginning of period | 571 | 297 | 572 | 298 | |||||||||||||||
New restaurants | — | — | — | — | |||||||||||||||
Acquired restaurants | — | 278 | — | 278 | |||||||||||||||
Closed restaurants | (5 | ) | (1 | ) | (6 | ) | (2 | ) | |||||||||||
Restaurants at end of period | 566 | 574 | 566 | 574 | |||||||||||||||
At |
At |
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Long-term Debt (f) |
$ |
160,972 |
$ |
161,492 |
|||||||||||||||
Cash (including |
33,129 |
58,290 |
(a) |
Acquired restaurants represent the Burger King restaurants acquired
from |
|
(b) |
Restaurants are generally included in comparable restaurant sales
after they have been open or owned for 12 months. Sales from the
acquired restaurants are excluded from changes in the comparable
restaurant sales in the three months ended |
|
(c) | EBITDA, Adjusted EBITDA and Adjusted 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 from continuing operations for further detail. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of total restaurant sales. | |
(d) | Average weekly restaurant sales are derived by dividing restaurant sales by the average number of restaurants operating during the period. | |
(e) | Represents restaurant expenses as a percentage of sales for the respective group of restaurants. | |
(f) |
Long-term debt (including current portion) at |
EBITDA and Adjusted EBITDA GAAP Reconciliation |
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(unaudited) | (unaudited) | |||||||||||||||||||
Three Months Ended (a) | Six Months Ended (a) | |||||||||||||||||||
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EBITDA and Adjusted EBITDA: (a) | ||||||||||||||||||||
Net loss from continuing operations | $ | (3,496 | ) | $ | (779 | ) | $ | (8,695 | ) | $ | (3,682 | ) | ||||||||
Benefit for income taxes | (1,687 | ) | (2,683 | ) | (6,983 | ) | (2,175 | ) | ||||||||||||
Interest expense | 4,711 | 2,646 | 9,422 | 3,561 | ||||||||||||||||
Depreciation and amortization | 8,391 | 6,149 | 16,454 | 10,842 | ||||||||||||||||
EBITDA | 7,919 | 5,333 | 10,198 | 8,546 | ||||||||||||||||
Impairment and other lease charges | 2,198 | 101 | 2,828 | 127 | ||||||||||||||||
Acquisition and integration costs | — | 836 | — | 1,247 | ||||||||||||||||
EEOC litigation and settlement costs | — | 674 | 85 | 769 | ||||||||||||||||
Stock compensation expense | 296 | 177 | 597 | 279 | ||||||||||||||||
Loss on extinguishment of debt | — | 1,509 | — | 1,509 | ||||||||||||||||
Adjusted EBITDA | $ | 10,413 | $ | 8,630 | $ | 13,708 | $ | 12,477 |
(a) | EBITDA and Adjusted EBITDA are non-GAAP financial measures. EBITDA represents net loss from continuing 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, EEOC litigation and settlement costs, stock compensation expense and loss on extinguishment of debt. Management excludes these items from EBITDA when evaluating the Company's operating performance and believes that Adjusted EBITDA provides a more meaningful comparison than EBITDA of the Company's core business operating results, as well as with those of other similar companies. Management believes that EBITDA and Adjusted EBITDA, when viewed with the Company's results of operations calculated in accordance with GAAP and the accompanying reconciliation 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 EBITDA and Adjusted 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 and Adjusted EBITDA are not measures of financial performance or liquidity under GAAP and, accordingly, should not be considered as alternatives to net income (loss) 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 table above provides a reconciliation between net loss from continuing operations and EBITDA and Adjusted EBITDA. | |
Investor Relations:
800-348-1074,
ext. 3333
investorrelations@carrols.com
Source:
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