Delaware | 001-33174 | 16-1287774 |
(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.) |
99.1 | Carrols Restaurant Group, Inc. Press Release, dated February 28, 2013 |
▪ | Restaurant sales increased 87.5% to $162.6 million including $71.7 million in sales from the 278 BURGER KING® restaurants that were acquired on May 30, 2012; |
▪ | Comparable restaurant sales at legacy restaurants were strong and increased 7.3%, including customer traffic growth of 1.1% and an average check increase of 6.2%; |
▪ | Net loss from continuing operations was $8.8 million, or $0.39 per diluted share, compared to a net loss from continuing operations of $0.3 million, or $0.02 per diluted share, in the prior year period; |
▪ | Net loss from continuing operations included certain charges, including integration costs related to the acquisition and costs related to the conclusion and settlement of long-standing litigation with the EEOC. In aggregate these charges were approximately $4.0 million, or $0.11 per diluted share after tax. Net income from continuing operations in the prior year period included acquisition costs of $0.5 million, or $0.01 per diluted share after tax; |
▪ | Adjusted EBITDA, a non-GAAP measure, was $3.3 million compared to $5.5 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). |
▪ | Restaurant sales increased 55.3% to $539.6 million including $174.3 million in sales from the acquired restaurants and an increase in comparable restaurant sales at legacy restaurants of 7.1%; |
▪ | Net loss from continuing operations was $18.8 million, or $0.83 per diluted share, compared to a net loss from continuing operations of $0.5 million, or $0.02 per diluted share, in the prior year period; |
▪ | Net loss from continuing operations included acquisition and integration-related costs, costs for the conclusion and settlement of the EEOC litigation and a loss from the refinancing completed in May 2012. In aggregate these charges were approximately $12.9 million, or $0.35 per diluted share after tax. Net loss from continuing operations in the prior year included charges of $1.9 million, or $0.05 per diluted share after tax, related to the acquisition, the EEOC litigation and a loss on the 2011 refinancing; |
▪ | Adjusted EBITDA, a non-GAAP measure, was $25.0 million compared to $25.4 million in the prior year period. |
▪ | Total sales of $670 million to $700 million including a comparable restaurant sales increase at legacy restaurants of 2% to 4%; |
▪ | A commodity cost increase of 3% to 4%; |
▪ | General and administrative expenses of approximately $34 million to $36 million; |
▪ | An effective income tax benefit of 45% to 50% including the carryover benefit for 2012 WOTC credits; |
▪ | Capital expenditures of approximately $40 million to $50 million, including $30 million to $40 million for remodeling 90 to 120 restaurants; and |
▪ | Four to six restaurant closures. |
(unaudited) | (unaudited) | ||||||||||||||
Three Months Ended (a) | Twelve Months Ended (a) | ||||||||||||||
December 30, 2012 | January 1, 2012 | December 30, 2012 | January 1, 2012 | ||||||||||||
Restaurant sales | $ | 162,583 | 86,702 | $ | 539,608 | 347,518 | |||||||||
Costs and expenses: | |||||||||||||||
Cost of sales | 53,243 | 26,524 | 172,698 | 103,860 | |||||||||||
Restaurant wages and related expenses (c) | 51,049 | 27,152 | 169,857 | 109,155 | |||||||||||
Restaurant rent expense | 12,059 | 5,514 | 37,883 | 22,665 | |||||||||||
Other restaurant operating expenses (c) | 28,199 | 13,227 | 88,883 | 53,389 | |||||||||||
Advertising expense | 7,120 | 3,540 | 22,257 | 14,424 | |||||||||||
General and administrative expenses (b) (c) | 12,474 | 6,229 | 36,085 | 20,982 | |||||||||||
Depreciation and amortization | 7,784 | 4,346 | 26,321 | 16,058 | |||||||||||
Impairment and other lease charges | 725 | 265 | 977 | 1,293 | |||||||||||
Other income | (481 | ) | (270 | ) | (717 | ) | (720 | ) | |||||||
Total costs and expenses | 172,172 | 86,527 | 554,244 | 341,106 | |||||||||||
Income (loss) from operations | (9,589 | ) | 175 | (14,636 | ) | 6,412 | |||||||||
Interest expense | 4,711 | 968 | 12,764 | 7,353 | |||||||||||
Loss on extinguishment of debt | — | 11 | 1,509 | 1,244 | |||||||||||
Loss from continuing operations before income taxes | (14,300 | ) | (804 | ) | (28,909 | ) | (2,185 | ) | |||||||
Benefit for income taxes | (5,506 | ) | (455 | ) | (10,093 | ) | (1,661 | ) | |||||||
Net loss from continuing operations | (8,794 | ) | (349 | ) | (18,816 | ) | (524 | ) | |||||||
Income (loss) from discontinued operations, net of tax | (114 | ) | 408 | (72 | ) | 11,742 | |||||||||
Net income (loss) | $ | (8,908 | ) | $ | 59 | $ | (18,888 | ) | $ | 11,218 | |||||
Diluted net income (loss) per share: | |||||||||||||||
Continuing operations | $ | (0.39 | ) | $ | (0.02 | ) | $ | (0.83 | ) | $ | (0.02 | ) | |||
Discontinued operations | (0.01 | ) | 0.02 | — | 0.54 | ||||||||||
Diluted weighted average common shares outstanding | 22,748 | 21,715 | 22,580 | 21,678 |
(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, 2012 and January 1, 2012 each included 13 and 52 weeks, respectively. |
(b) | General and administrative expenses include stock-based compensation expense of $337 and $242 for the three months ended December 30, 2012 and January 1, 2012, respectively, and $925 and $1,037 for the twelve months ended December 30, 2012 and January 1, 2012, respectively. General and administrative expenses also include costs related to the Company's litigation and settlement with the EEOC of $2,636 and $3 for the three months ended December 30, 2012 and January 1, 2012, respectively, and $5,343 and $190 for the twelve months ended December 30, 2012 and January 1, 2012, respectively. |
(c) | Results for the twelve months ended December 30, 2012 included certain excess or above normal costs due to the integration of the 278 Burger King restaurants acquired from Burger King Corporation. These included approximately $1,800 in restaurant labor, $2,100 for previously deferred repairs and maintenance, $485 for an early contract termination penalty, and $500 of general and administrative costs for above normal recruiting and management training, meeting costs and moving expenses. Such integration costs for the three months ended December 30, 2012 included $1,000 for previously deferred repairs and maintenance and $485 for an early contract termination penalty. General and administrative expenses also included legal and other professional fees incurred in connection with the acquisition of $(90) and $458 for the three months ended December 30, 2012 and January 1, 2012, respectively, and $1,180 and $458 for the twelve months ended December 30, 2012 and January 1, 2012, respectively. |
(unaudited) | (unaudited) | ||||||||||||||
Three Months Ended (a) | Twelve Months Ended (a) | ||||||||||||||
December 30, 2012 | January 1, 2012 | December 30, 2012 | January 1, 2012 | ||||||||||||
Restaurant Sales: (a) | |||||||||||||||
Legacy restaurants | $ | 90,842 | $ | 86,702 | $ | 365,331 | $ | 347,518 | |||||||
Acquired restaurants | 71,741 | — | 174,277 | — | |||||||||||
Total sales | $ | 162,583 | $ | 86,702 | $ | 539,608 | $ | 347,518 | |||||||
Change in Comparable Restaurant Sales (b) | 7.3 | % | 1.5 | % | 7.1 | % | (1.4 | )% | |||||||
Adjusted EBITDA (c) | 3,288 | 5,489 | 24,972 | 25,448 | |||||||||||
Adjusted EBITDA margin (c) | 2.0 | % | 6.3 | % | 4.6 | % | 7.3 | % | |||||||
Average Weekly Sales per Restaurant: (d) | |||||||||||||||
Legacy restaurants | 23,967 | 22,198 | 23,931 | 22,187 | |||||||||||
Acquired restaurants | 20,160 | — | 20,681 | — | |||||||||||
Expenses - Legacy Restaurants: (e) | |||||||||||||||
Cost of sales | 30.8 | % | 30.6 | % | 30.6 | % | 29.9 | % | |||||||
Restaurant wages and related expenses | 30.4 | % | 31.3 | % | 30.6 | % | 31.4 | % | |||||||
Restaurant rent expense | 6.4 | % | 6.4 | % | 6.3 | % | 6.5 | % | |||||||
Other restaurant operating expenses | 15.1 | % | 15.3 | % | 15.0 | % | 15.4 | % | |||||||
Advertising expense | 4.2 | % | 4.1 | % | 3.9 | % | 4.2 | % | |||||||
Expenses - Acquired Restaurants: (e) | |||||||||||||||
Cost of sales | 35.2 | % | 34.9 | % | |||||||||||
Restaurant wages and related expenses | 32.7 | % | 33.3 | % | |||||||||||
Restaurant rent expense | 8.7 | % | 8.5 | % | |||||||||||
Other restaurant operating expenses | 20.2 | % | 19.5 | % | |||||||||||
Advertising expense | 4.6 | % | 4.6 | % | |||||||||||
Number of Company Owned Restaurants: | |||||||||||||||
Restaurants at beginning of period | 572 | 302 | 298 | 305 | |||||||||||
New restaurants | — | — | — | 2 | |||||||||||
Acquired restaurants | — | — | 278 | — | |||||||||||
Closed restaurants | — | (4) | (4) | (9) | |||||||||||
Restaurants at end of period | 572 | 298 | 572 | 298 |
At 12/30/12 | At 1/1/12 | ||||||
Long-term Debt (f) | $ | 161,492 | $ | 68,705 | |||
Cash (g) | 58,290 | 10,991 |
(a) | Acquired restaurants represent the Burger King restaurants acquired from Burger King Corporation on May 30, 2012. Legacy restaurants refer to the Company's Burger King restaurants other than the acquired restaurants. |
(b) | Restaurants are included in comparable restaurant sales after they have been open or owned for 12 months. |
(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 income (loss) from continuing operations for further detail. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of restaurant sales. |
(d) | Average weekly restaurant sales are derived by dividing restaurant sales by the average number of restaurants operating during the period. |
(e) | Represent restaurant expenses as a percentage of sales for the respective group of restaurants. |
(f) | Long-term debt (including current portion) at December 30, 2012 included $150,000 of the Company's 11.25% Senior Secured Second Lien Notes, $1,197 of lease financing obligations and $10,295 of capital lease obligations. Long-term debt (including current portion) at January 1, 2012 included $63,375 of outstanding term loan borrowings under Carrols LLC’s prior senior credit facility, $4,000 of outstanding revolving credit borrowings under Carrols LLC’s prior senior credit facility, $1,194 of lease financing obligations and $136 of capital lease obligations. Debt balances at January 1, 2012 exclude Fiesta Restaurant Group, Inc. debt. |
(g) | Cash balance includes $20 million of restricted cash at December 30, 2012 held as collateral for the Company's revolving credit facility. Cash balances at January 1, 2012 exclude Fiesta Restaurant Group, Inc. cash. |
(unaudited) | (unaudited) | ||||||||||||||
Three Months Ended (a) | Twelve Months Ended (a) | ||||||||||||||
December 30, 2012 | January 1, 2012 | December 30, 2012 | January 1, 2012 | ||||||||||||
EBITDA and Adjusted EBITDA: (a) | |||||||||||||||
Net loss from continuing operations | $ | (8,794 | ) | $ | (349 | ) | $ | (18,816 | ) | $ | (524 | ) | |||
Benefit for income taxes | (5,506 | ) | (455 | ) | (10,093 | ) | (1,661 | ) | |||||||
Interest expense | 4,711 | 968 | 12,764 | 7,353 | |||||||||||
Depreciation and amortization | 7,784 | 4,346 | 26,321 | 16,058 | |||||||||||
EBITDA | (1,805 | ) | 4,510 | 10,176 | 21,226 | ||||||||||
Impairment and other lease charges | 725 | 265 | 977 | 1,293 | |||||||||||
Acquisition and integration costs | 1,395 | 458 | 6,042 | 458 | |||||||||||
EEOC litigation and settlement costs | 2,636 | 3 | 5,343 | 190 | |||||||||||
Stock compensation expense | 337 | 242 | 925 | 1,037 | |||||||||||
Loss on extinguishment of debt | — | 11 | 1,509 | 1,244 | |||||||||||
Adjusted EBITDA | $ | 3,288 | $ | 5,489 | $ | 24,972 | $ | 25,448 |
(a) | EBITDA represents net income (loss) from continuing operations, before provision (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, 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 income (loss) from continuing operations and EBITDA and Adjusted EBITDA. |
(unaudited) | |||||||||||||||
Quarter Ended | |||||||||||||||
April 1, 2012 | July 1, 2012 | September 30, 2012 | December 30, 2012 | ||||||||||||
Restaurant sales | $ | 85,450 | 122,104 | $ | 169,471 | 162,583 | |||||||||
Costs and expenses: | |||||||||||||||
Cost of sales | 26,122 | 38,877 | 54,456 | 53,243 | |||||||||||
Restaurant wages and related expenses | 27,868 | 37,446 | 53,494 | 51,049 | |||||||||||
Restaurant rent expense | 5,683 | 7,932 | 12,209 | 12,059 | |||||||||||
Other restaurant operating expenses | 13,643 | 18,221 | 28,820 | 28,199 | |||||||||||
Advertising expense | 2,696 | 4,604 | 7,837 | 7,120 | |||||||||||
General and administrative expenses | 6,199 | 8,081 | 9,331 | 12,474 | |||||||||||
Depreciation and amortization | 4,693 | 6,149 | 7,695 | 7,784 | |||||||||||
Impairment and other lease charges | 26 | 101 | 125 | 725 | |||||||||||
Other income | — | — | (236 | ) | (481 | ) | |||||||||
Total costs and expenses | 86,930 | 121,411 | 173,731 | 172,172 | |||||||||||
Income (loss) from operations | (1,480 | ) | 693 | (4,260 | ) | (9,589 | ) | ||||||||
Interest expense | 915 | 2,646 | 4,492 | 4,711 | |||||||||||
Loss on extinguishment of debt | — | 1,509 | — | — | |||||||||||
Loss from continuing operations before income taxes | (2,395 | ) | (3,462 | ) | (8,752 | ) | (14,300 | ) | |||||||
Provision (benefit) for income taxes | 508 | (2,683 | ) | (2,412 | ) | (5,506 | ) | ||||||||
Net loss from continuing operations | (2,903 | ) | (779 | ) | (6,340 | ) | (8,794 | ) | |||||||
Income (loss) from discontinued operations, net of tax | (624 | ) | 668 | (2 | ) | (114 | ) | ||||||||
Net loss | $ | (3,527 | ) | $ | (111 | ) | $ | (6,342 | ) | $ | (8,908 | ) | |||
Supplemental Data: | |||||||||||||||
Stock compensation expense (a) | $ | 102 | $ | 177 | $ | 309 | $ | 337 | |||||||
Integration and acquisition expenses (b) | 411 | 836 | 3,400 | 1,395 | |||||||||||
EEOC litigation and settlement costs | 95 | 674 | 1,938 | 2,636 | |||||||||||
EBITDA (c) | 3,213 | 5,333 | 3,435 | (1,805 | ) | ||||||||||
Adjusted EBITDA (c) | 3,847 | 8,630 | 9,207 | 3,288 | |||||||||||
Adjusted EBITDA margin (c) | 4.5 | % | 7.1 | % | 5.4 | % | 2.0 | % |
(a) | Stock compensation expense is included in general and administrative expenses. |
(b) | Represents expenses incurred in connection with the acquisition and integration of 278 Burger King restaurants from Burger King Corporation. |
(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 income (loss) from continuing operations for further detail. |