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 November 6, 2012 |
▪ | Restaurant sales increased 87.1% to $169.5 million including $75.1 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 6.2%, including customer traffic growth of 3.6%; |
▪ | Net loss from continuing operations was $6.7 million, or $0.29 per diluted share, compared to net income from continuing operations of $0.4 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 Company's EEOC litigation, which in total were approximately $5.3 million, or $0.14 per diluted share after tax. The net loss also included a $1.4 million charge ($0.06 per diluted share) to tax expense for a valuation allowance against certain deferred tax assets. Net income from continuing operations in the prior year period included a loss on refinancing of $1.2 million, or $0.03 per diluted share after tax; |
▪ | Adjusted EBITDA, a non-GAAP measure, was $7.1 million compared to $8.4 million in the prior year period. (Adjusted EBITDA is before $3.4 million of integration costs but includes a $1.9 million charge related to the EEOC litigation. Refer to the reconciliation of Adjusted EBITDA to net income (loss) from continuing operations in the tables at the end of this release). |
▪ | Annual comparable restaurant sales for legacy restaurants are now expected to increase 6% to 7%; |
▪ | Commodity costs are expected to increase 3% to 4%; |
▪ | General and administrative expenses are expected to be approximately $8.0 million to $9.0 million in the fourth quarter excluding any additional legal costs that may be incurred in conjunction with the EEOC litigation during the fourth quarter; |
▪ | Annual effective income tax rate (before any discrete items and the valuation allowance recorded in the third quarter) is expected to be 41% to 43%; and |
▪ | Capital expenditures are expected to be approximately $38 million to $42 million, including $24 million to $26 million for remodeling more than 80 restaurants. |
(unaudited) | (unaudited) | ||||||||||||||
Three Months Ended (a) | Nine Months Ended (a) | ||||||||||||||
September 30, | October 2, | September 30, | October 2, | ||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Restaurant sales | $ | 169,471 | $ | 90,599 | $ | 377,025 | $ | 260,816 | |||||||
Costs and expenses: | |||||||||||||||
Cost of sales | 54,456 | 26,868 | 119,455 | 77,336 | |||||||||||
Restaurant wages and related expenses (c) | 53,494 | 27,616 | 118,808 | 82,003 | |||||||||||
Restaurant rent expense | 12,348 | 5,749 | 26,010 | 17,151 | |||||||||||
Other restaurant operating expenses (c) | 28,820 | 13,686 | 60,684 | 40,162 | |||||||||||
Advertising expense | 7,837 | 3,802 | 15,137 | 10,884 | |||||||||||
General and administrative expenses (b) (c) | 9,331 | 4,778 | 23,610 | 14,753 | |||||||||||
Depreciation and amortization | 8,176 | 3,924 | 19,215 | 11,712 | |||||||||||
Impairment and other lease charges | 125 | 57 | 252 | 1,028 | |||||||||||
Other income | (236 | ) | (2 | ) | (236 | ) | (450 | ) | |||||||
Total costs and expenses | 174,351 | 86,478 | 382,935 | 254,579 | |||||||||||
Income (loss) from operations | (4,880 | ) | 4,121 | (5,910 | ) | 6,237 | |||||||||
Interest expense | 4,475 | 1,696 | 8,030 | 6,385 | |||||||||||
Loss on extinguishment of debt | — | 1,233 | 1,509 | 1,233 | |||||||||||
Income (loss) from continuing operations before income taxes | (9,355 | ) | 1,192 | (15,449 | ) | (1,381 | ) | ||||||||
Provision (benefit) for income taxes | (2,663 | ) | 835 | (4,936 | ) | (1,206 | ) | ||||||||
Net income (loss) from continuing operations | (6,692 | ) | 357 | (10,513 | ) | (175 | ) | ||||||||
Income (loss) from discontinued operations, net of tax | (2 | ) | 3,048 | 42 | 11,334 | ||||||||||
Net income (loss) | $ | (6,694 | ) | $ | 3,405 | $ | (10,471 | ) | $ | 11,159 | |||||
Diluted net income (loss) per share: | |||||||||||||||
Continuing operations | $ | (0.29 | ) | $ | 0.02 | $ | (0.47 | ) | $ | (0.01 | ) | ||||
Discontinued operations | 0.00 | 0.14 | 0.00 | 0.52 | |||||||||||
Diluted weighted average common shares outstanding | 22,747 | 22,233 | 22,525 | 21,666 |
(a) | The Company uses a 52 or 53 week fiscal year that ends on the Sunday closest to December 31. The three and nine months ended September 30, 2012 and October 2, 2011 each included 13 and 39 weeks, respectively. |
(b) | General and administrative expenses include stock-based compensation expense of $309 and $273 for the three months ended September 30, 2012 and October 2, 2011, respectively, and $588 and $795 for the nine months ended September 30, 2012 and October 2, 2011, respectively. General and administrative expenses also include costs related to the Company's litigation with the EEOC of $1,938 and $0 for the three months ended September 30, 2012 and October 2, 2011, respectively, and $2,707 and $187 for the nine months ended September 30, 2012 and October 2, 2011, respectively. |
(c) | Results for the three months ended September 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, $1,100 for previously deferred repairs and maintenance, and $500 of general and administrative costs for above normal recruiting and management training, meeting costs and moving expenses. General and administrative expenses for the nine months ended September 30, 2012 also included legal and other professional fees incurred in connection with the acquisition of $1,247. |
(unaudited) | (unaudited) | ||||||||||||||
Three Months Ended (a) | Nine Months Ended (a) | ||||||||||||||
September 30, | October 2, | September 30, | October 2, | ||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Restaurant Sales: (a) | |||||||||||||||
Legacy restaurants | $ | 94,405 | $ | 90,599 | $ | 274,489 | $ | 260,816 | |||||||
Acquired restaurants | 75,066 | — | 102,536 | — | |||||||||||
Total sales | $ | 169,471 | $ | 90,599 | $ | 377,025 | $ | 260,816 | |||||||
Change in Comparable Restaurant Sales (b) | 6.2 | % | 1.6 | % | 7.0 | % | (2.3 | )% | |||||||
Adjusted EBITDA (c) | 7,130 | 8,375 | 18,792 | 19,772 | |||||||||||
Adjusted EBITDA margin (c) | 4.2 | % | 9.2 | % | 5.0 | % | 7.6 | % | |||||||
Average Weekly Sales per Restaurant: (d) | |||||||||||||||
Legacy restaurants | 24,833 | 23,247 | 23,919 | 22,183 | |||||||||||
Acquired restaurants | 20,804 | 21,061 | |||||||||||||
Expenses - Legacy Restaurants: (e) | |||||||||||||||
Cost of sales | 30.0 | % | 29.7 | % | 30.6 | % | 29.7 | % | |||||||
Restaurant wages and related expenses | 29.5 | % | 30.5 | % | 30.7 | % | 31.4 | % | |||||||
Restaurant rent expense | 6.2 | % | 6.3 | % | 6.3 | % | 6.6 | % | |||||||
Other restaurant operating expenses | 14.7 | % | 15.1 | % | 15.0 | % | 15.4 | % | |||||||
Advertising expense | 4.4 | % | 4.2 | % | 3.8 | % | 4.2 | % | |||||||
Expenses - Acquired Restaurants: (e) | |||||||||||||||
Cost of sales | 34.8 | % | 34.7 | % | |||||||||||
Restaurant wages and related expenses | 34.2 | % | 33.7 | % | |||||||||||
Restaurant rent expense | 8.7 | % | 8.5 | % | |||||||||||
Other restaurant operating expenses | 19.9 | % | 19.0 | % | |||||||||||
Advertising expense | 5.0 | % | 4.7 | % | |||||||||||
Number of Company Owned Restaurants: | |||||||||||||||
Restaurants at beginning of period | 574 | 303 | 298 | 305 | |||||||||||
New restaurants | — | — | — | 2 | |||||||||||
Acquired restaurants | — | — | 278 | — | |||||||||||
Closed restaurants | (2) | (1) | (4) | (5) | |||||||||||
Restaurants at end of period | 572 | 302 | 572 | 302 |
At 9/30/12 | At 1/1/12 | ||||||
Long-term Debt (f) | $ | 161,873 | $ | 68,705 | |||
Cash (g) | 77,403 | 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 restaurant sales are derived by dividing restaurant sales for such period 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 September 30, 2012 included $150,000 of the Company's 11.25% Senior Secured Second Lien Notes, $1,196 of lease financing obligations and $10,677 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 September 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) | Nine Months Ended (a) | ||||||||||||||
September 30, | October 2, | September 30, | October 2, | ||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
EBITDA and Adjusted EBITDA: (a) | |||||||||||||||
Net income (loss) from continuing operations | $ | (6,692 | ) | $ | 357 | $ | (10,513 | ) | $ | (175 | ) | ||||
Provision (benefit) for income taxes | (2,663 | ) | 835 | (4,936 | ) | (1,206 | ) | ||||||||
Interest expense | 4,475 | 1,696 | 8,030 | 6,385 | |||||||||||
Depreciation and amortization | 8,176 | 3,924 | 19,215 | 11,712 | |||||||||||
EBITDA | 3,296 | 6,812 | 11,796 | 16,716 | |||||||||||
Impairment and other lease charges | 125 | 57 | 252 | 1,028 | |||||||||||
Acquisition and integration costs | 3,400 | — | 4,647 | — | |||||||||||
Stock compensation expense | 309 | 273 | 588 | 795 | |||||||||||
Loss on extinguishment of debt | — | 1,233 | 1,509 | 1,233 | |||||||||||
Adjusted EBITDA | $ | 7,130 | $ | 8,375 | $ | 18,792 | $ | 19,772 |
(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, 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. |