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 June 20, 2017 |
99.2 | Excerpts from the Carrols Restaurant Group, Inc. Preliminary Offering Memorandum, dated June 20, 2017 |
Date: | June 20, 2017 |
By: | /s/ Paul R. Flanders |
Name: | Paul R. Flanders |
Title: | Vice President, Chief Financial Officer and Treasurer |
• | EBITDA, Adjusted EBITDA, Restaurant-Level EBITDA and Pro Forma Adjusted EBITDA do not reflect our capital expenditures, future requirements for capital expenditures or contractual commitments to purchase capital equipment; |
• | EBITDA, Adjusted EBITDA, Restaurant-Level EBITDA and Pro Forma Adjusted EBITDA do not reflect the interest expense or the cash requirements necessary to service principal or interest payments on our debt; |
• | although depreciation and amortization are non-cash charges, the assets that we currently depreciate and amortize will likely have to be replaced in the future, and EBITDA, Adjusted EBITDA, Restaurant-Level EBITDA and Pro Forma Adjusted EBITDA do not reflect the cash required to fund such replacements; and |
• | EBITDA, Adjusted EBITDA, Restaurant-Level EBITDA, Pro Forma Adjusted EBITDA and Adjusted net income (loss) do not reflect the effect of earnings or charges resulting from matters that our management does not consider to be indicative of our ongoing operations. However, some of these charges (such as impairment and other lease charges and acquisition costs) have recurred and may reoccur. |
Fiscal Year ended | Three Months Ended | Twelve Months Ended | |||||||||||||||||||||
(Dollars in thousands) | December 28, 2014 | January 3, 2016 | January 1, 2017 | April 3, 2016 | April 2, 2017 | April 2, 2017 | |||||||||||||||||
Statements of operations data: | |||||||||||||||||||||||
Restaurant sales | $ | 692,755 | $ | 859,004 | $ | 943,583 | $ | 222,519 | $ | 239,852 | $ | 960,916 | |||||||||||
Costs and expenses: | |||||||||||||||||||||||
Cost of sales | 209,664 | 240,322 | 250,112 | 59,020 | 64,236 | 255,328 | |||||||||||||||||
Restaurant wages and related expenses | 219,718 | 267,950 | 297,766 | 72,083 | 81,071 | 306,754 | |||||||||||||||||
Restaurant rent expense | 48,865 | 58,096 | 64,814 | 15,878 | 17,597 | 66,533 | |||||||||||||||||
Other restaurant operating expenses | 113,586 | 135,874 | 148,946 | 35,689 | 39,195 | 152,452 | |||||||||||||||||
Advertising expense | 27,961 | 32,242 | 41,299 | 9,128 | 9,901 | 42,072 | |||||||||||||||||
General and administrative (including stock-based compensation expense of $1,180, $1,438, $2,053, $565, $883 and $2,371, respectively) (1) | 40,001 | 50,515 | 54,956 | 13,206 | 15,576 | 57,326 | |||||||||||||||||
Depreciation and amortization | 36,923 | 39,845 | 47,295 | 11,057 | 13,151 | 49,389 | |||||||||||||||||
Impairment and other lease charges | 3,541 | 3,078 | 2,355 | 222 | 531 | 2,664 | |||||||||||||||||
Other expense (income) (2) | 47 | (126 | ) | 338 | (444 | ) | — | 782 | |||||||||||||||
Total operating expenses | 700,306 | 827,796 | 907,881 | 215,839 | 241,258 | 933,300 | |||||||||||||||||
Income (loss) from operations | (7,551 | ) | 31,208 | 35,702 | 6,680 | (1,406 | ) | 27,616 | |||||||||||||||
Interest expense | 18,801 | 18,569 | 18,315 | 4,535 | 4,801 | 18,581 | |||||||||||||||||
Loss on extinguishment of debt | — | 12,635 | — | — | — | — | |||||||||||||||||
Income (loss) before income taxes | (26,352 | ) | 4 | 17,387 | 2,145 | (6,207 | ) | 9,035 | |||||||||||||||
Provision (benefit) for income taxes | 11,765 | — | (28,085 | ) | — | (611 | ) | (28,696 | ) | ||||||||||||||
Net income (loss) | $ | (38,117 | ) | $ | 4 | $ | 45,472 | $ | 2,145 | $ | (5,596 | ) | $ | 37,731 | |||||||||
Other financial data: | |||||||||||||||||||||||
Net cash provided from operating activities | $ | 14,707 | $ | 70,702 | $ | 62,288 | $ | 10,806 | $ | 9,996 | $ | 61,478 | |||||||||||
Total capital expenditures | 52,010 | 56,848 | 94,099 | 18,682 | 12,470 | 87,887 | |||||||||||||||||
Net cash used for investing activities | 68,003 | 103,429 | 96,221 | 20,294 | 32,843 | 108,770 | |||||||||||||||||
Net cash provided from (used for) financing activities | 66,215 | 33,780 | 13,661 | (456 | ) | 23,498 | 37,615 | ||||||||||||||||
Operating Data: | |||||||||||||||||||||||
Restaurants (at end of period) | 674 | 705 | 753 | 717 | 788 | 788 | |||||||||||||||||
Average number of restaurants | 581.9 | 662.1 | 719.5 | 704.1 | 764.3 | 734.5 | |||||||||||||||||
Average annual sales per restaurant (3) | 1,191 | 1,274 | 1,312 | 1,308 | |||||||||||||||||||
Adjusted EBITDA (4) | 36,008 | 76,737 | 89,505 | 18,482 | 13,877 | 84,900 | |||||||||||||||||
Restaurant-Level EBITDA (4) | 72,961 | 124,520 | 140,646 | 30,721 | 27,852 | 137,777 | |||||||||||||||||
Adjusted net income (loss) (4) | (10,408 | ) | 13,429 | 17,860 | 2,221 | (4,822 | ) | 10,817 | |||||||||||||||
Change in comparable restaurant sales (5) | 0.6 | % | 7.4 | % | 2.3 | % | 5.7 | % | (0.6 | )% | 0.8 | % | |||||||||||
Pro Forma Operating Data: | |||||||||||||||||||||||
Pro Forma restaurant sales (4) | $ | 1,032,315 | |||||||||||||||||||||
Pro Forma Adjusted EBITDA (4) | 91,417 | ||||||||||||||||||||||
Pro Forma Adjusted net income (4) | 11,034 |
Pro Forma (7) | |||||||||||||||||||
December 28, 2014 | January 3, 2016 | January 1, 2017 | April 2, 2017 | April 2, 2017 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Balance sheet data (at end of period): | |||||||||||||||||||
Total assets | $ | 364,573 | $ | 427,256 | $ | 490,155 | $ | 514,295 | $ | ||||||||||
Working capital | (13,554 | ) | (26,259 | ) | (39,231 | ) | (36,231 | ) | |||||||||||
Debt: | |||||||||||||||||||
Senior secured second lien notes | $ | 150,000 | $ | 200,000 | $ | 200,000 | $ | 200,000 | $ | 250,000 | |||||||||
Senior credit facility - revolving credit borrowings | — | — | 13,500 | 37,500 | — | ||||||||||||||
Capital leases | 8,694 | 8,006 | 7,039 | 6,738 | 6,738 | ||||||||||||||
Lease financing obligations | 1,202 | 1,203 | 3,020 | 1,195 | 1,195 | ||||||||||||||
Total debt | $ | 159,896 | $ | 209,209 | $ | 223,559 | $ | 245,433 | $ | 257,933 | |||||||||
Stockholders’ equity | $ | 106,535 | $ | 107,999 | $ | 154,656 | $ | 153,677 | $ | 153,677 |
Pro Forma credit statistics (6): | April 2, 2017 | ||||||||||
Pro Forma debt (7) | $ | 257,933 | |||||||||
Ratio of Pro Forma Adjusted EBITDA to Pro Forma interest expense (8) | 4.21x | ||||||||||
Ratio of Pro Forma debt to Pro Forma Adjusted EBITDA | 2.82x | ||||||||||
Pro Forma lease adjusted leverage ratio (9) | 5.11x |
Year Ended | Three Months Ended | Twelve Months Ended | |||||||||||||||||||||
December 28, 2014 | January 3, 2016 | January 1, 2017 | April 3, 2016 | April 2, 2017 | April 2, 2017 | ||||||||||||||||||
Reconciliation of EBITDA and Adjusted EBITDA: | |||||||||||||||||||||||
Net income (loss) | $ | (38,117 | ) | $ | 4 | $ | 45,472 | $ | 2,145 | $ | (5,596 | ) | $ | 37,731 | |||||||||
Provision (benefit) for income taxes | 11,765 | — | (28,085 | ) | — | (611 | ) | (28,696 | ) | ||||||||||||||
Interest expense | 18,801 | 18,569 | 18,315 | 4,535 | 4,801 | 18,581 | |||||||||||||||||
Depreciation and amortization | 36,923 | 39,845 | 47,295 | 11,057 | 13,151 | 49,389 | |||||||||||||||||
EBITDA | 29,372 | 58,418 | 82,997 | 17,737 | 11,745 | 77,005 | |||||||||||||||||
Impairment and other lease charges | 3,541 | 3,078 | 2,355 | 222 | 531 | 2,664 | |||||||||||||||||
Acquisition costs | 1,915 | 1,168 | 1,853 | 408 | 718 | 2,163 | |||||||||||||||||
Gains on partial condemnation and fires (2) | — | — | (1,603 | ) | (450 | ) | — | (1,153 | ) | ||||||||||||||
Litigation settlement (2) | — | — | 1,850 | — | — | 1,850 | |||||||||||||||||
Stock compensation expense | 1,180 | 1,438 | 2,053 | 565 | 883 | 2,371 | |||||||||||||||||
Loss on extinguishment of debt | — | 12,635 | — | — | — | — | |||||||||||||||||
Adjusted EBITDA | $ | 36,008 | $ | 76,737 | $ | 89,505 | $ | 18,482 | $ | 13,877 | 84,900 | ||||||||||||
Pro Forma adjustments (4) | 6,517 | ||||||||||||||||||||||
Pro Forma Adjusted EBITDA (4) | $ | 91,417 |
Year Ended | Three Months Ended | Twelve Months Ended | |||||||||||||||||||||
December 28, 2014 | January 3, 2016 | January 1, 2017 | April 3, 2016 | April 2, 2017 | April 2, 2017 | ||||||||||||||||||
Reconciliation of Restaurant-Level EBITDA: | |||||||||||||||||||||||
Income (loss) from operations | $ | (7,551 | ) | $ | 31,208 | $ | 35,702 | $ | 6,680 | $ | (1,406 | ) | $ | 27,616 | |||||||||
Add: | |||||||||||||||||||||||
General and administrative expenses | 40,001 | 50,515 | 54,956 | 13,206 | 15,576 | 57,326 | |||||||||||||||||
Depreciation and amortization | 36,923 | 39,845 | 47,295 | 11,057 | 13,151 | 49,389 | |||||||||||||||||
Impairment and other lease charges | 3,541 | 3,078 | 2,355 | 222 | 531 | 2,664 | |||||||||||||||||
Other expense (income) | 47 | (126 | ) | 338 | (444 | ) | — | 782 | |||||||||||||||
Restaurant-Level EBITDA | $ | 72,961 | $ | 124,520 | $ | 140,646 | $ | 30,721 | $ | 27,852 | $ | 137,777 |
Year Ended | Three Months Ended | Twelve Months Ended | |||||||||||||||||||||
December 28, 2014 | January 3, 2016 | January 1, 2017 | April 3, 2016 | April 2, 2017 | April 2, 2017 | ||||||||||||||||||
Reconciliation of Adjusted net income (loss): | |||||||||||||||||||||||
Net income (loss) | $ | (38,117 | ) | $ | 4 | $ | 45,472 | $ | 2,145 | $ | (5,596 | ) | $ | 37,731 | |||||||||
Add: | |||||||||||||||||||||||
Loss on extinguishment of debt | — | 12,635 | — | — | — | — | |||||||||||||||||
Impairment and other lease charges | 3,541 | 3,078 | 2,355 | 222 | 531 | 2,664 | |||||||||||||||||
Acquisition costs (1) | 1,915 | 1,168 | 1,853 | 408 | 718 | 2,163 | |||||||||||||||||
Gains on partial condemnation and fires (2) | — | — | (1,603 | ) | (450 | ) | — | (1,153 | ) | ||||||||||||||
Litigation settlement (2) | — | — | 1,850 | — | — | 1,850 | |||||||||||||||||
Income tax effect on above adjustments (10) | (2,073 | ) | (6,415 | ) | (1,693 | ) | (68 | ) | (475 | ) | (2,100 | ) | |||||||||||
Deferred income tax valuation allowance provision (benefit) (11) | 24,326 | 2,959 | (30,374 | ) | (36 | ) | — | (30,338 | ) | ||||||||||||||
Adjusted net income (loss) | $ | (10,408 | ) | $ | 13,429 | $ | 17,860 | $ | 2,221 | $ | (4,822 | ) | $ | 10,817 | |||||||||
Pro Forma adjustments (4) | 217 | ||||||||||||||||||||||
Pro Forma Adjusted net income (4) | $ | 11,034 |
(1) | Acquisition expenses of $1,915, $1,168, $1,853, $408, $718, and $2,163 were included in general and administrative expense for the years ended December 28, 2014, January 3, 2016 and January 1, 2017, three months ended April 3, 2016 and April 2, 2017 and the twelve months ended April 2, 2017, respectively. |
(2) | In the year ended January 1, 2017, other income (expense) includes $1.2 million of gains related to insurance recoveries from fires at two of our restaurants and $0.5 million related to a settlement for a partial condemnation on one of our operating restaurant properties offset by an expense of $1.85 million related to a litigation settlement. The three months ended April 3, 2016 includes a gain of $0.5 million related to a settlement for a partial condemnation on one of our operating restaurant properties. |
(3) | Average annual sales per restaurant are derived by dividing restaurant sales by the average number of restaurants operating during the period. |
(4) | EBITDA, Adjusted EBITDA, Restaurant-Level EBITDA, Pro Forma Adjusted EBITDA, Adjusted net income (loss) and Pro Forma Adjusted net income are non-GAAP financial measures. EBITDA represents net income or loss before provision or benefit for income taxes, interest expense and depreciation and amortization. Adjusted EBITDA represents EBITDA adjusted to exclude impairment and other lease charges, acquisition costs, stock compensation expense, losses on extinguishment of debt, and other non-recurring income or expense. Restaurant-Level EBITDA represents income or loss from operations adjusted to exclude general and administrative expenses, depreciation and amortization, impairment and other lease charges, and other income or expense. Pro Forma Adjusted EBITDA represents Adjusted EBITDA after giving effect to the acquisition of an aggregate of 87 Burger King restaurants in 2016 and the first quarter of 2017 from other Burger King franchisees as if they had occurred at the beginning of the period presented. Adjusted net income (loss) represents net income or loss adjusted to exclude loss on extinguishment of debt, impairment and other lease charges, acquisition costs, non-recurring income and expense and the related income tax effect of these adjustments. Adjusted net income (loss) also presents the provision or benefit for income taxes as if there was no valuation allowance on our net deferred income tax assets during all periods presented. Pro Forma Adjusted net income represents Adjusted net income (loss) after giving effect to the acquisitions in 2016 and the first quarter of 2017 and this offering (including the use of proceeds from this offering) as if they had occurred at the beginning of the period presented. |
(5) | Restaurants are included in comparable restaurant sales after they have been open or owned for 12 months. Comparable restaurant sales are on a 53-week basis for the year ended January 3, 2016. |
(6) | The pro forma credit statistics have been prepared assuming a full period of operating results for the 87 restaurants acquired in 2016 and the first quarter of 2017, consummation of the this offering and the use of proceeds from this offering. |
(7) | Pro Forma debt reflects the issuance of the notes in this offering and the use of proceeds from this offering. |
(8) | Pro forma interest expense includes interest on the notes offered in this offering, assumes no revolving credit borrowings under the senior credit facility and the amortization of deferred financing costs and the bond premium associated with this offering. |
(9) | The pro forma lease adjusted leverage ratio is calculated as the sum of Pro Forma debt and eight times pro forma restaurant rent expense of $72.3 million, divided by the sum of Pro Forma Adjusted EBITDA and pro forma restaurant rent expense. |
(10) | The income tax effect related to the adjustments for impairment and other lease charges, acquisition costs and gains on a partial condemnation and fires during the periods presented was calculated using an effective income tax rate of 38%. |
(11) | Prior to the fourth quarter of 2016, we recognized a valuation allowance on all of our net deferred income tax assets. This valuation allowance was reversed in the fourth quarter of 2016. For comparability, when presenting Adjusted net income (loss), this adjustment reflects the removal of the income tax provision recorded for the establishment of a valuation allowance on all our net deferred income tax assets during the years ended December 28, 2014 and January 3, 2016 and three months ended April 3, 2016 and as well as the income tax benefit recorded for its subsequent reversal during the year ended January 1, 2017 and twelve months ended April 2, 2017. |