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.) |
By: | /s/ Paul R. Flanders |
Name: | Paul R. Flanders |
Title: | Vice President, Chief Financial Officer and Treasurer |
▪ | Restaurant sales increased 6.8% to $179.8 million , including $7.8 million in sales from 29 BURGER KING® restaurants that were acquired in 2014 through the end of the third quarter, from $168.3 million in the prior year period; |
▪ | Comparable restaurant sales increased 3.3% compared to a 0.4% increase in the prior year period; |
▪ | Net loss was reduced to $1.7 million, or $0.05 per diluted share, compared to a net loss of $2.8 million, or $0.12 per diluted share, in the prior year period; |
▪ | The net loss included acquisition and integration costs in the third quarter of 2014 as well as impairment and other lease charges in both years. Such charges totaled $1.2 million ($0.02 per diluted share after tax) in the third quarter of 2014 and $1.1 million ($0.03 per diluted share after tax) in the prior year period; |
▪ | Restaurant-Level EBITDA (a non-GAAP financial measure) increased $1.9 million to $20.5 million from $18.6 million in the prior year period and Restaurant-Level EBITDA margin increased 34 basis points to 11.4%; and |
▪ | Adjusted EBITDA (a non-GAAP financial measure) increased $1.0 million to $11.1 million from $10.1 million in the prior year period. (Please refer to the reconciliation of Adjusted EBITDA to net loss and Restaurant-Level EBITDA to income (loss) from operations in the tables at the end of this release). |
• | On April 30, 2014, Carrols purchased four restaurants in Fort Wayne, IN; |
• | On June 30, 2014, Carrols purchased four restaurants in the Pittsburgh, PA market; |
• | On July 22, 2014, Carrols purchased 21 restaurants in or around Rochester, NY and the Southern Tier region of Western New York State; |
• | On October 8, 2014, Carrols purchased 30 restaurants in Eastern North Carolina; and |
• | On November 4, 2014, Carrols purchased 64 restaurants located primarily in the Nashville, TN, Springfield, IL, Terre Haute, IN and Evansville, IN markets. |
▪ | Total restaurant sales of $690 million to $700 million (compared to $665 million to $675 million previously estimated); |
▪ | Comparable restaurant sales increase of 0% to 1% (compared to -1% to 0% previously estimated); |
▪ | A commodity cost increase of approximately 5% which has risen primarily because of persistently high beef costs (compared to 3% to 4% previously estimated); |
▪ | General and administrative expenses of approximately $37 million to $39 million (unchanged and excluding stock compensation costs); |
▪ | Adjusted EBITDA of $36 million to $38 million (compared to $36 million to $40 million previously estimated); |
▪ | An effective income tax benefit of 36% to 38% excluding non-recurring 2013 WOTC adjustments recorded in the third quarter of 2014 and any WOTC for 2014 (compared to 33% to 35% previously estimated); |
▪ | Capital expenditures, excluding acquisitions, of approximately $55 million to $58 million (compared to $51 million to $54 million previously estimated) including $38 million to $40 million for remodeling a total of 100 to 110 restaurants and $4 million for costs to scrape and rebuild three restaurants; |
▪ | Cash expenditures totaling approximately $50.9 million (excluding inventory) for the purchase of 123 BURGER KING® restaurants which includes approximately $14.6 million for the purchase of real estate; |
▪ | Sale/leasebacks of real estate are expected to generate approximately $16 million to $18 million of gross proceeds (including a number of fee properties purchased as part of the Company's 2014 acquisitions); and |
▪ | 12 restaurant closings in 2014 (excluding relocations) with an additional 6 to 8 restaurants scheduled to close at the beginning of 2015 (compared to 15 to 20 closings previously estimated). |
(unaudited) | (unaudited) | ||||||||||||||
Three Months Ended (a) | Nine Months Ended (a) | ||||||||||||||
September 28, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | ||||||||||||
Restaurant sales | $ | 179,822 | $ | 168,312 | $ | 499,858 | $ | 497,969 | |||||||
Costs and expenses: | |||||||||||||||
Cost of sales | 55,169 | 51,125 | 148,606 | 152,626 | |||||||||||
Restaurant wages and related expenses | 56,023 | 52,395 | 159,764 | 156,727 | |||||||||||
Restaurant rent expense | 12,205 | 11,779 | 35,269 | 35,357 | |||||||||||
Other restaurant operating expenses | 29,179 | 26,973 | 82,264 | 80,756 | |||||||||||
Advertising expense | 6,794 | 7,476 | 20,621 | 22,496 | |||||||||||
General and administrative expenses (b) | 10,031 | 8,740 | 28,923 | 27,342 | |||||||||||
Depreciation and amortization | 9,318 | 8,536 | 27,121 | 24,990 | |||||||||||
Impairment and other lease charges | 773 | 1,079 | 1,822 | 3,907 | |||||||||||
Other income | — | — | 25 | (185 | ) | ||||||||||
Total costs and expenses | 179,492 | 168,103 | 504,415 | 504,016 | |||||||||||
Income (loss) from operations | 330 | 209 | (4,557 | ) | (6,047 | ) | |||||||||
Interest expense | 4,683 | 4,708 | 14,080 | 14,130 | |||||||||||
Loss before income taxes | (4,353 | ) | (4,499 | ) | (18,637 | ) | (20,177 | ) | |||||||
Benefit for income taxes | (2,632 | ) | (1,737 | ) | (7,555 | ) | (8,720 | ) | |||||||
Net loss | $ | (1,721 | ) | $ | (2,762 | ) | $ | (11,082 | ) | $ | (11,457 | ) | |||
Basic and diluted net loss per share | $ | (0.05 | ) | $ | (0.12 | ) | $ | (0.37 | ) | $ | (0.50 | ) | |||
Basic and diluted weighted average common shares outstanding (c) | 34,797 | 23,021 | 29,572 | 22,930 |
(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 28, 2014 and September 29, 2013 each included thirteen and thirty-nine weeks, respectively. |
(b) | General and administrative expenses include stock-based compensation expense of $296 and $302 for the three months ended September 28, 2014 and September 29, 2013, respectively, and $883 and $899 for the nine months ended September 28, 2014 and September 29, 2013, respectively. General and administrative expenses for the nine months ended September 29, 2013 included $85 of costs related to the Company's litigation with the EEOC that was settled in January 2013. |
(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. |
(unaudited) | (unaudited) | ||||||||||||||
Three Months Ended (a) | Nine Months Ended (a) | ||||||||||||||
September 28, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | ||||||||||||
Restaurant Sales: (a) | |||||||||||||||
Legacy restaurants | $ | 96,861 | $ | 94,307 | $ | 274,394 | $ | 275,383 | |||||||
Restaurants acquired in 2012 | 75,180 | 74,005 | 216,880 | 222,586 | |||||||||||
Restaurants acquired in 2014 | 7,781 | — | 8,584 | — | |||||||||||
Total restaurant sales | $ | 179,822 | $ | 168,312 | $ | 499,858 | $ | 497,969 | |||||||
Change in Comparable Restaurant Sales (b) | 3.3 | % | 0.4 | % | (0.4 | )% | 0.7 | % | |||||||
Average Weekly Sales per Restaurant: (c) | |||||||||||||||
Legacy restaurants | 25,799 | 25,069 | 24,317 | 24,222 | |||||||||||
Restaurants acquired in 2012 | 22,039 | 21,008 | 20,989 | 20,901 | |||||||||||
Restaurants acquired in 2014 | 26,695 | — | 26,502 | — | |||||||||||
Restaurant-Level EBITDA: (d) | |||||||||||||||
Legacy restaurants | 13,630 | 14,295 | 36,356 | 38,692 | |||||||||||
Restaurants acquired in 2012 | 6,014 | 4,269 | 16,136 | 11,315 | |||||||||||
Restaurants acquired in 2014 | 808 | — | 842 | — | |||||||||||
Total restaurant-Level EBITDA | 20,452 | 18,564 | 53,334 | 50,007 | |||||||||||
Restaurant-Level EBITDA margin: (d) | |||||||||||||||
Legacy restaurants | 14.1 | % | 15.2 | % | 13.2 | % | 14.1 | % | |||||||
Restaurants acquired in 2012 | 8.0 | % | 5.8 | % | 7.4 | % | 5.1 | % | |||||||
Restaurants acquired in 2014 | 10.4 | % | 9.8 | % | |||||||||||
Restaurant-Level EBITDA Margin | 11.4 | % | 11.0 | % | 10.7 | % | 10.0 | % | |||||||
Adjusted EBITDA (d) | 11,129 | 10,126 | 25,955 | 23,834 | |||||||||||
Adjusted EBITDA margin (d) | 6.2 | % | 6.0 | % | 5.2 | % | 4.8 | % | |||||||
Number of Company-Owned Restaurants: | |||||||||||||||
Restaurants at beginning of period | 560 | 566 | 564 | 572 | |||||||||||
New restaurants | — | — | 1 | — | |||||||||||
Acquired restaurants | 25 | — | 29 | — | |||||||||||
Closed restaurants | (4) | (2) | (13) | (8) | |||||||||||
Restaurants at end of period | 581 | 564 | 581 | 564 |
At 9/28/2014 | At 12/29/2013 | ||||||
Long-term debt (e) | $ | 158,730 | $ | 160,536 | |||
Cash (including $20 million of restricted cash) | 63,309 | 28,302 |
(a) | Restaurants acquired in 2012 represent the restaurants acquired from Burger King Corporation on May 30, 2012. Legacy restaurants refer to the Company's Burger King restaurants owned prior to 2012. Restaurants acquired in 2014 represent the 29 restaurants acquired in 2014. |
(b) | Restaurants are generally included in comparable restaurant sales after they have been open or owned by the Company for 12 months. |
(c) | Average weekly restaurant sales are derived by dividing restaurant sales by the average number of restaurants operating during the period. |
(d) | EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Restaurant-Level EBITDA, and Restaurant-Level 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 and to the Company's reconciliation of Restaurant-Level EBITDA to income (loss) from operations for further detail. Both Adjusted EBITDA margin and Restaurant-Level EBITDA margin are calculated as a percentage of restaurant sales for the respective group of restaurants. |
(e) | Long-term debt (including current portion) at September 28, 2014 included $150,000 of the Company's 11.25% Senior Secured Second Lien Notes, $1,201 of lease financing obligations and $7,529 of capital lease obligations. Long-term debt (including current portion) at December 29, 2013 included $150,000 of the Company's 11.25% Senior Secured Second Lien Notes, $1,200 of lease financing obligations and $9,336 of capital lease obligations. |
(unaudited) | (unaudited) | ||||||||||||||
Three Months Ended (a) | Nine Months Ended (a) | ||||||||||||||
September 28, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | ||||||||||||
Reconciliation of EBITDA and Adjusted EBITDA: (a) | |||||||||||||||
Net loss | $ | (1,721 | ) | $ | (2,762 | ) | $ | (11,082 | ) | $ | (11,457 | ) | |||
Benefit for income taxes | (2,632 | ) | (1,737 | ) | (7,555 | ) | (8,720 | ) | |||||||
Interest expense | 4,683 | 4,708 | 14,080 | 14,130 | |||||||||||
Depreciation and amortization | 9,318 | 8,536 | 27,121 | 24,990 | |||||||||||
EBITDA | 9,648 | 8,745 | 22,564 | 18,943 | |||||||||||
Impairment and other lease charges | 773 | 1,079 | 1,822 | 3,907 | |||||||||||
Acquisition and integration costs | 412 | — | 686 | — | |||||||||||
EEOC litigation and settlement costs | — | — | — | 85 | |||||||||||
Stock compensation expense | 296 | 302 | 883 | 899 | |||||||||||
Adjusted EBITDA | $ | 11,129 | $ | 10,126 | $ | 25,955 | $ | 23,834 | |||||||
Reconciliation of Restaurant-Level EBITDA: (a) | |||||||||||||||
Restaurant-Level EBITDA (a) | $ | 20,452 | $ | 18,564 | $ | 53,334 | $ | 50,007 | |||||||
Less: | |||||||||||||||
General and administrative expenses | 10,031 | 8,740 | 28,923 | 27,342 | |||||||||||
Depreciation and amortization | 9,318 | 8,536 | 27,121 | 24,990 | |||||||||||
Impairment and other lease charges | 773 | 1,079 | 1,822 | 3,907 | |||||||||||
Other expense (income) | — | — | 25 | (185 | ) | ||||||||||
Income (loss) from operations | $ | 330 | $ | 209 | $ | (4,557 | ) | $ | (6,047 | ) |
(a) | Within our press release, we make reference to EBITDA, Adjusted EBITDA and Restaurant-Level EBITDA which are non-GAAP financial measures. EBITDA represents net income (loss) from 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 and stock compensation expense. Restaurant-Level EBITDA represents income (loss) from operations before general and administrative expenses, depreciation and amortization, impairment and other lease charges, and other income and expense. |