Delaware | 001-35373 | 90-0712224 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
14800 Landmark Boulevard, Suite 500, Addison, Texas | 75254 | |||
(Address of principal executive offices) | (Zip Code) |
▪ | Total revenues increased 5.9% to $133.6 million compared to $126.1 million in the prior year period; |
▪ | Comparable restaurant sales increased 3.8% at Pollo Tropical and 2.0% at Taco Cabana; |
▪ | Comparable restaurant guest traffic increased 1.2% at Pollo Tropical and decreased (0.6)% at Taco Cabana; |
▪ | Two Company-owned Pollo Tropical and two Company-owned Taco Cabana restaurants were opened; and |
▪ | Net income increased $6.7 million to $4.8 million in the first quarter of 2013, or $0.20 per diluted share, compared to a net loss of $(1.9) million, or $(0.08) per diluted share, in the first quarter of 2012. |
Fiesta Restaurant Group, Inc. Consolidated Statements of Operations (in thousands, except share and per share amounts) | |||||||
(unaudited) | |||||||
Three months ended (a) | |||||||
March 31, 2013 | April 1, 2012 | ||||||
Revenues: | |||||||
Restaurant sales | $ | 133,090 | $ | 125,566 | |||
Franchise royalty revenues and fees | 534 | 576 | |||||
Total revenues | 133,624 | 126,142 | |||||
Costs and expenses: | |||||||
Cost of sales | 42,411 | 40,784 | |||||
Restaurant wages and related expenses (b) | 35,116 | 33,825 | |||||
Restaurant rent expense (c) | 6,435 | 3,915 | |||||
Other restaurant operating expenses | 16,164 | 15,829 | |||||
Advertising expense | 4,549 | 4,292 | |||||
General and administrative expenses (b)(d)(e) | 12,211 | 11,016 | |||||
Depreciation and amortization (c) | 4,810 | 4,840 | |||||
Pre-opening costs | 831 | 119 | |||||
Impairment and other lease charges (f) | 95 | 6,900 | |||||
Other income | (497 | ) | — | ||||
Total costs and expenses | 122,125 | 121,520 | |||||
Income from operations | 11,499 | 4,622 | |||||
Interest expense (c) | 5,007 | 7,969 | |||||
Income (loss) before income taxes | 6,492 | (3,347 | ) | ||||
Provision for (benefit from) income taxes | 1,693 | (1,482 | ) | ||||
Net income (loss) | $ | 4,799 | $ | (1,865 | ) | ||
Basic and diluted net income (loss) per share (g) | $ | 0.20 | $ | (0.08 | ) | ||
Basic and diluted weighted average common shares outstanding | 22,868,894 | 23,161,822 | |||||
(a) The Company uses a 52 or 53 week fiscal year that ends on the Sunday closest to December 31. The three month periods ended March 31, 2013 and April 1, 2012 included 13 weeks, respectively. | |||||||
(b) Restaurant wages and related expenses include stock-based compensation expense of $1 and $4 for the three month periods ended March 31, 2013 and April 1, 2012, respectively. General and administrative expenses include stock-based compensation expense of $425 and $1,046 for the three month periods ended March 31, 2013 and April 1, 2012, respectively. | |||||||
(c) Prior to the spin-off from Carrols Restaurant Group, Inc. ("Carrols"), certain sale-leaseback transactions were classified as lease financing transactions because Carrols guaranteed the related lease payments. Effective upon the spin-off, the provisions that previously precluded sale-leaseback accounting were cured or eliminated. As a result, the real property leases entered into in connection with these transactions are now recorded as operating leases. Additionally, in the second quarter of 2012, we exercised purchase options associated with the leases for five restaurant properties also previously accounted for as lease financing obligations and purchased those properties from the lessor. Subsequently, four of the five properties have been sold in qualifying sale-leaseback transactions. Because of the qualification of these leases and purchase of the five properties, restaurant rent expense was $1.9 million higher, depreciation expense was $0.5 million lower, and interest expense was $2.7 million lower in the first quarter of 2013 as compared to the first quarter of 2012. | |||||||
(d) General and administrative expenses include expenses related directly to Fiesta and corporate expenses allocated from Carrols (parent company of Fiesta until May 7, 2012). Such allocated expenses are for administrative support including executive management, information systems and certain legal and other administrative functions. Following the spin-off, the Company performs these functions or purchases services from either Carrols (under a transition services agreement) or third parties. | |||||||
(e) General and administrative expenses for the three months ended March 31, 2013 include expenses related to the underwritten secondary public equity offering completed during March 2013 totaling $403. The Company did not receive any proceeds from the sale of shares in the offering. | |||||||
(f) Impairment and other lease charges in the three months ended April 1, 2012 consisted of asset impairment charges and lease charges associated with the closure of five Pollo Tropical restaurants in New Jersey and two Taco Cabana restaurants. | |||||||
(g) As previously disclosed, Fiesta has granted shares of restricted stock to certain of its employees. Because the unvested shares participate in any dividends declared, the unvested shares are considered a second class of common stock for accounting purposes, impacting the calculation of net income per share. For further information, please see the Company's unaudited financial statements to be included in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013. |
Fiesta Restaurant Group, Inc. Condensed Consolidated Balance Sheet (in thousands) (unaudited) | ||||||||
March 31, 2013 | December 30, 2012 | |||||||
Assets | ||||||||
Cash | $ | 6,454 | $ | 15,533 | ||||
Other current assets | 17,192 | 15,424 | ||||||
Property and equipment, net | 130,936 | 126,516 | ||||||
Goodwill | 123,484 | 123,484 | ||||||
Intangible assets, net | 182 | 202 | ||||||
Deferred income taxes | 12,919 | 13,101 | ||||||
Deferred financing costs, net | 5,306 | 5,690 | ||||||
Other assets | 3,566 | 3,779 | ||||||
Total assets | $ | 300,039 | $ | 303,729 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities | $ | 33,120 | $ | 41,278 | ||||
Long-term debt, net of current portion | 200,875 | 200,889 | ||||||
Lease financing obligations | 3,031 | 3,029 | ||||||
Deferred income sale-leaseback of real estate | 35,457 | 36,096 | ||||||
Other liabilities | 11,827 | 11,933 | ||||||
Total liabilities | 284,310 | 293,225 | ||||||
Stockholders' equity | 15,729 | 10,504 | ||||||
Total liabilities and stockholders' equity | $ | 300,039 | $ | 303,729 |
Fiesta Restaurant Group, Inc. Supplemental Information The following table sets forth certain unaudited supplemental financial and other data for the periods indicated (in thousands, except percentages and number of restaurants): | |||||||
(unaudited) | |||||||
Three months ended | |||||||
March 31, 2013 | April 1, 2012 | ||||||
Segment Revenues: | |||||||
Pollo Tropical | $ | 62,282 | $ | 57,834 | |||
Taco Cabana | 71,342 | 68,308 | |||||
Total revenues | 133,624 | 126,142 | |||||
Change in comparable restaurant sales: (a) | |||||||
Pollo Tropical | 3.8 | % | 9.4 | % | |||
Taco Cabana | 2.0 | % | 6.1 | % | |||
Average Sales per Restaurant (b): | |||||||
Pollo Tropical | $ | 672 | $ | 632 | |||
Taco Cabana | 443 | 434 | |||||
Income (loss) before income taxes: | |||||||
Pollo Tropical | $ | 5,718 | $ | (658 | ) | ||
Taco Cabana | 774 | (2,689 | ) | ||||
Adjusted EBITDA (c): | |||||||
Pollo Tropical | $ | 9,805 | $ | 11,214 | |||
Taco Cabana | 6,528 | 6,198 | |||||
Number of Company-Owned Restaurants: | |||||||
Pollo Tropical | 93 | 86 | |||||
Taco Cabana | 162 | 157 | |||||
Total company-owned restaurants | 255 | 243 | |||||
Company-Owned Restaurant Openings: | |||||||
Pollo Tropical | 2 | — | |||||
Taco Cabana | 2 | — | |||||
Total new restaurant openings | 4 | — | |||||
Company-Owned Restaurant Closings: | |||||||
Pollo Tropical | — | (5 | ) | ||||
Taco Cabana | — | (1 | ) | ||||
Net change in restaurants | — | (6 | ) | ||||
Number of Franchised Restaurants: | |||||||
Pollo Tropical | 36 | 33 | |||||
Taco Cabana | 8 | 5 | |||||
Total franchised restaurants | 44 | 38 | |||||
(a) Restaurants are included in comparable restaurant sales after they have been open for 18 months. | |||||||
(b) Average sales for company-owned or operated restaurants are derived by dividing restaurant sales for such period for the applicable segment by the average number of open restaurants for the applicable segment for such period. | |||||||
(c) Adjusted EBITDA is a non-GAAP financial measure. Please see the reconciliation of Adjusted EBITDA to net income in the table on the following page of this release. Adjusted EBITDA is defined as earnings attributable to the applicable segment before interest, income taxes, depreciation and amortization, impairment and other lease charges, stock-based compensation expense, and other income and expense. Adjusted EBITDA is used because it is a measure of segment profit or loss reported to our chief operating decision maker along with earnings before taxes for purposes of allocating resources to the segments and assessing each segment’s performance. This may not be necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation. |
Fiesta Restaurant Group, Inc. Supplemental Non-GAAP Information The following table sets forth certain unaudited supplemental financial data for the periods indicated (in thousands, except per share amounts): | |||||||
Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA is defined as earnings attributable to the applicable segment before interest, income taxes, depreciation and amortization, impairment and other lease charges, stock-based compensation expense and other income and expense. Adjusted EBITDA for each of our segments includes an allocation of general and administrative expenses associated with administrative support for executive management, information systems and certain accounting, legal and other administrative functions. Consolidated Adjusted EBITDA represents the sum of Adjusted EBITDA for both of our Pollo Tropical and Taco Cabana segments. Adjusted EBITDA for each of our segments is a measure of segment profitability reported to our chief operating decision maker for purposes of allocating resources to the segments and assessing each segment's performance. In addition, management believes that Adjusted EBITDA, when viewed with our results of operations calculated in accordance with GAAP and our reconciliation of Adjusted EBITDA (both on a consolidated basis and on a segment basis) to net income i) provides useful information about our operating performance and period-over-period growth, (ii) provides additional information that is useful for evaluating the operating performance of our business, and (iii) permits investors to gain an understanding of the factors and trends affecting our ongoing earnings, from which capital investments are made and debt is serviced. However, such measure is not a measure of financial performance or liquidity under GAAP and, accordingly should not be considered as an alternative to net income or net income per share as indicators of operating performance or liquidity. Also this measure may not be comparable to similarly titled captions of other companies. | |||||||
(unaudited) | |||||||
Three months ended | |||||||
March 31, 2013 | April 1, 2012 | ||||||
Adjusted EBITDA: | |||||||
Pollo Tropical | $ | 9,805 | $ | 11,214 | |||
Taco Cabana | 6,528 | 6,198 | |||||
Consolidated | 16,333 | 17,412 | |||||
Less: | |||||||
Depreciation and amortization | 4,810 | 4,840 | |||||
Impairment and other lease charges | 95 | 6,900 | |||||
Interest expense | 5,007 | 7,969 | |||||
Provision for (benefit from) income taxes | 1,693 | (1,482 | ) | ||||
Stock-based compensation | 426 | 1,050 | |||||
Other income | (497 | ) | — | ||||
Net income (loss) | $ | 4,799 | $ | (1,865 | ) |