Market Snapshot
  • U.S.
  • Europe
  • Asia
Ticker Volume Price Price Delta
DJIA 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 2.54 0.14%
NASDAQ 4,095.52 9.29 0.23%
Ticker Volume Price Price Delta
STOXX 50 3,155.81 16.55 0.53%
FTSE 100 6,625.25 41.08 0.62%
DAX 9,409.71 91.89 0.99%
Ticker Volume Price Price Delta
NIKKEI 14,516.27 98.74 0.68%
TOPIX 1,173.37 6.78 0.58%
HANG SENG 22,760.24 64.23 0.28%

Carrols Restaurant Group, Inc. Reports Financial Results for the Fourth Quarter and Full Year of 2012



  Carrols Restaurant Group, Inc. Reports Financial Results for the Fourth
  Quarter and Full Year of 2012

Business Wire

SYRACUSE, N.Y. -- February 28, 2013

Carrols Restaurant Group, Inc. ("Carrols" or the “Company”) (Nasdaq: TAST)
today announced financial results for the fourth quarter and full year ended
December 30, 2012. The Company also provided guidance for 2013.

Highlights for the fourth quarter of 2012 versus the fourth quarter of 2011
include:

  * 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).

Highlights for the full year 2012 versus the full year 2011 include:

  * 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.

As of December 30, 2012, Carrols owned and operated 572 BURGER KING®
restaurants.

Daniel T. Accordino, Chief Executive Officer of Carrols Restaurant Group, Inc.
said, “Comparable restaurant sales at our legacy restaurants remained strong
and increased 7.3% for the quarter, the sixth consecutive quarter of positive
trends. We believe that the combination of innovation and targeted promotions
from Burger King® has enabled us to broaden our customer demographic, attract
new customers and raise our average check. Profitability and restaurant
operating margins have improved at our legacy restaurants reflecting the
positive impact of Burger King's brand initiatives. We are also experiencing
positive momentum from our remodeling initiatives and upgraded 80 restaurants
in 2012 to the new 20/20 design.”

Accordino continued, “Solid results at our legacy restaurants, however, are
being offset by the relatively weaker results experienced thus far at the
acquired restaurants, including integration costs. There remains a
considerable opportunity to improve financial results at these restaurants,
and while not evident by our fourth quarter results, we have in fact begun to
make progress. We closed the gap on both labor expense and cost of sales in
the quarter, have continued to do so early in 2013 and expect our progress in
improving restaurant profitability to accelerate throughout 2013. We continue
to focus on improving the operating culture in these restaurants, instilling
our P&L disciplines and improving both sales and margins. These are things
that will take a little time, but after operating these restaurants now for a
few months, we remain confident that we understand and are addressing the
challenges.”

Fourth Quarter 2012 Financial Results

Restaurant sales grew 87.5% to $162.6 million in the fourth quarter of 2012,
including $71.7 million of sales from the acquired restaurants, compared to
$86.7 million in the fourth quarter of 2011. Comparable restaurant sales at
our legacy restaurants increased 7.3% as customer traffic grew 1.1% and
average check rose 6.2%, including an effective price increase of 1.8%.
Average weekly sales for our legacy restaurants increased 8.0% to $23,967 from
$22,198 in the same period last year. Average weekly sales for the acquired
restaurants were $20,160.

Adjusted EBITDA was $3.3 million in the fourth quarter of 2012, or 2.0% of
restaurant sales, compared to $5.5 in the fourth quarter of 2011, or 6.3% of
restaurant sales. Legacy restaurants contributed positively to Adjusted EBITDA
and Adjusted EBITDA Margin, as their restaurant-level expenses were leveraged
on the comparable restaurant sales increase. However, the operating
performance of the acquired restaurants negatively impacted both Adjusted
EBITDA and Adjusted EBITDA Margin.

General and administrative expenses were $12.5 million in the fourth quarter
of 2012 compared to $6.2 million in the fourth quarter of 2011, and as a
percentage of sales, increased to 7.7% from 7.2%. Included in general and
administrative expenses were $2.6 million in costs related to the conclusion
and settlement of the Company's long-standing litigation with the EEOC.

Loss from operations was $9.6 million in the fourth quarter of 2012 compared
to income from operations of $0.2 million in the fourth quarter of 2011.

Interest expense increased to $4.7 million during the fourth quarter of 2012
from $1.0 million in the fourth quarter of 2011 as a result of higher
outstanding indebtedness and higher interest rates on indebtedness as a result
of the refinancing completed on May 30, 2012.

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 same period last year. The net loss from
continuing operations in 2012 included $1.4 million in acquisition and
integration costs with respect to the acquired restaurants ($0.04 per diluted
share after tax). These integration costs primarily consisted of $1.0 million
in above-normal repairs and maintenance costs and $0.5 million for the early
termination of an armored-car service contract at many of the acquired
restaurants which is estimated to save $1.2 million annually. Also included in
the net loss from continuing operations were $2.6 million in costs related to
settling litigation with the EEOC ($0.07 per diluted share after tax).

2013 Guidance

The Company is providing the following annual guidance:

  * 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.

Accordino concluded, “Sales have slowed initially in 2013 and we expect
comparable restaurant sales to decrease modestly in the first quarter. We
believe that there are a number of causes including challenging prior year
comparisons, worse weather conditions, increased competitive activity, and
lower consumer spending as customers adjust to the higher payroll tax and
rising gas prices. Nevertheless, we expect consumer trends to improve as we
move further into the year, and anticipate regaining the momentum of Burger
King's brand initiatives and our remodeling activity.”

Conference Call Today

Daniel T. Accordino, Chief Executive Officer, and Paul Flanders, Chief
Financial Officer, will host a conference call to discuss fourth quarter and
full year 2012 financial results today at 8:30 AM ET.

The conference call can be accessed live over the phone by dialing
877-941-8416 or for international callers by dialing 480-629-9808. A replay
will be available one hour after the call and can be accessed by dialing
800-406-7325 or for international callers by dialing 303-590-3030; the
passcode is 4596727. The replay will be available until Thursday, March 7,
2013. The call will also be webcast live from www.carrols.com under the
investor relations section.

Investor Conference Participation

Carrols also announced today that Paul Flanders, Chief Financial Officer, will
be presenting at the Raymond James 34th Annual Institutional Investors
Conference in Orlando, Florida on Monday, March 4, 2013 at 4:00 PM ET. The
presentation will be webcast live from www.carrols.com under the investor
relations section.

About the Company

Carrols Restaurant Group, Inc. is Burger King Corporation's largest
franchisee, globally, with 572 BURGER KING® restaurants as of December 30,
2012 and has operated BURGER KING® restaurants since 1976. For more
information on Carrols, please visit the company's website at www.carrols.com.

Forward-Looking Statements

Except for the historical information contained in this news release, the
matters addressed are forward-looking statements. Forward-looking statements,
written, oral or otherwise made, represent Carrols' expectation or belief
concerning future events. Without limiting the foregoing, these statements are
often identified by the words "may," "might," "believes," "thinks,"
"anticipates," "plans," "expects", "intends" or similar expressions. In
addition, expressions of our strategies, intentions or plans are also
forward-looking statements. Such statements reflect management's current views
with respect to future events and are subject to risks and uncertainties, both
known and unknown. You are cautioned not to place undue reliance on these
forward-looking statements as there are important factors that could cause
actual results to differ materially from those in forward-looking statements,
many of which are beyond our control. Investors are referred to the full
discussion of risks and uncertainties as included in Carrols' filings with the
Securities and Exchange Commission.

                                                    
                                                      
Carrols Restaurant Group, Inc.
Consolidated Statements of Operations
(in thousands except per share amounts)
 
                         (unaudited)                 (unaudited)
                         Three Months Ended (a)      Twelve Months Ended (a)
                         December 30,   January 1,   December 30,   January 1,
                         2012           2012         2012           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     51,049         27,152       169,857        109,155
related expenses (c)
Restaurant rent          12,059         5,514        37,883         22,665
expense
Other restaurant         28,199         13,227       88,883         53,389
operating expenses (c)
Advertising expense      7,120          3,540        22,257         14,424
General and
administrative           12,474         6,229        36,085         20,982
expenses (b) (c)
Depreciation and         7,784          4,346        26,321         16,058
amortization
Impairment and other     725            265          977            1,293
lease charges
Other income             (481       )   (270     )   (717       )   (720     )
Total costs and          172,172        86,527       554,244        341,106   
expenses
Income (loss) from       (9,589     )   175          (14,636    )   6,412
operations
Interest expense         4,711          968          12,764         7,353
Loss on extinguishment   —              11           1,509          1,244     
of debt
Loss from continuing
operations before        (14,300    )   (804     )   (28,909    )   (2,185   )
income taxes
Benefit for income       (5,506     )   (455     )   (10,093    )   (1,661   )
taxes
Net loss from            (8,794     )   (349     )   (18,816    )   (524     )
continuing operations
Income (loss) from
discontinued             (114       )   408          (72        )   11,742    
operations, net of tax
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             (0.01      )   0.02         —              0.54
operations
Diluted weighted
average common shares    22,748         21,715       22,580         21,678
outstanding

    The Company uses a 52 or 53 week fiscal year that ends on the Sunday
(a) closest to December 31. The three and twelve months ended December 30,
    2012 and January 1, 2012 each included 13 and 52 weeks, respectively.
    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
(b) 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.
    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
(c) 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.
     

                        Carrols Restaurant Group, Inc.
                           Supplemental Information

The following table sets forth certain unaudited supplemental financial and
other data for the periods indicated (in thousands, except number of
restaurants, percentages and average weekly sales per restaurant):

                       (unaudited)                 (unaudited)
                       Three Months Ended (a)      Twelve Months Ended (a)
                       December 30,   January 1,   December 30,   January 1,
                       2012           2012         2012           2012
Restaurant Sales:
(a)
Legacy restaurants     $  90,842      $ 86,702     $  365,331     $ 347,518
Acquired               71,741         —            174,277        —          
restaurants
Total sales            $  162,583     $ 86,702     $  539,608     $ 347,518  
Change in
Comparable             7.3        %   1.5      %   7.1        %   (1.4      )%
Restaurant Sales
(b)
Adjusted EBITDA        3,288          5,489        24,972         25,448
(c)
Adjusted EBITDA        2.0        %   6.3      %   4.6        %   7.3       %
margin (c)
Average Weekly
Sales per
Restaurant: (d)
Legacy restaurants     23,967         22,198       23,931         22,187
Acquired               20,160         —            20,681         —
restaurants
Expenses - Legacy
Restaurants: (e)
Cost of sales          30.8       %   30.6     %   30.6       %   29.9      %
Restaurant wages
and related            30.4       %   31.3     %   30.6       %   31.4      %
expenses
Restaurant rent        6.4        %   6.4      %   6.3        %   6.5       %
expense
Other restaurant       15.1       %   15.3     %   15.0       %   15.4      %
operating expenses
Advertising            4.2        %   4.1      %   3.9        %   4.2       %
expense
Expenses -
Acquired
Restaurants: (e)
Cost of sales          35.2       %                34.9       %
Restaurant wages
and related            32.7       %                33.3       %
expenses
Restaurant rent        8.7        %                8.5        %
expense
Other restaurant       20.2       %                19.5       %
operating expenses
Advertising            4.6        %                4.6        %
expense
Number of Company
Owned Restaurants:
Restaurants at
beginning of           572            302          298            305
period
New restaurants        —              —            —              2
Acquired               —              —            278            —
restaurants
Closed restaurants     —              (4       )   (4         )   (9        )
Restaurants at end     572            298          572            298        
of period

                                 At 12/30/12          At 1/1/12
    Long-term Debt (f)           $   161,492          $   68,705
    Cash (g)                     58,290               10,991

    Acquired restaurants represent the Burger King restaurants acquired from
(a) 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.
    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.
(c) 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.
    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
(f) $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.
    Cash balance includes $20 million of restricted cash at December 30, 2012
(g) held as collateral for the Company's revolving credit facility. Cash
    balances at January 1, 2012 exclude Fiesta Restaurant Group, Inc. cash.
     

                        Carrols Restaurant Group, Inc.
                EBITDA and Adjusted EBITDA GAAP Reconciliation

                         (unaudited)                 (unaudited)
                         Three Months Ended (a)      Twelve Months Ended (a)
                         December 30,   January 1,   December 30,   January 1,
                         2012           2012         2012           2012
EBITDA and Adjusted
EBITDA: (a)
Net loss from
continuing               $  (8,794  )   $  (349  )   $  (18,816 )   $ (524   )
operations
Benefit for income       (5,506     )   (455     )   (10,093    )   (1,661   )
taxes
Interest expense         4,711          968          12,764         7,353
Depreciation and         7,784          4,346        26,321         16,058    
amortization
EBITDA                   (1,805     )   4,510        10,176         21,226
Impairment and other     725            265          977            1,293
lease charges
Acquisition and          1,395          458          6,042          458
integration costs
EEOC litigation and      2,636          3            5,343          190
settlement costs
Stock compensation       337            242          925            1,037
expense
Loss on
extinguishment of        —              11           1,509          1,244     
debt
Adjusted EBITDA          $  3,288       $  5,489     $  24,972      $ 25,448  

    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
(a) 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.
     

                        Carrols Restaurant Group, Inc.
               Consolidated Quarterly Statements of Operations
                   (in thousands except per share amounts)

In the fourth quarter of 2012, the Company finalized its allocation of the
purchase price for the acquisition of 278 Burger King restaurants from Burger
King Corporation, to the tangible and identifiable intangible assets acquired
and liabilities assumed with the acquisition. Adjustments to the preliminary
purchase price allocation recorded during the period ended December 30, 2012
were primarily related to changes in the valuations in the preliminary
appraisals of identifiable intangible assets, tangible assets, the Company's
determination of the fair value of restaurant equipment and leasehold
improvements and the valuation of favorable and unfavorable lease
arrangements. The impact of these adjustments included a reduction of rent
expense of $186 and a reduction of depreciation expense of $678 pertaining to
the second and third quarters of 2012. The following table sets forth certain
unaudited supplemental quarterly financial data for the periods indicated,
recast to reflect the impact of the fair value adjustments for the acquisition
as if they had originally been recorded on May 30, 2012.

                         (unaudited)
                         Quarter Ended
                         April 1,     July 1,     September 30,   December 30,
                         2012         2012        2012            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     27,868       37,446      53,494          51,049
related expenses
Restaurant rent          5,683        7,932       12,209          12,059
expense
Other restaurant         13,643       18,221      28,820          28,199
operating expenses
Advertising expense      2,696        4,604       7,837           7,120
General and
administrative           6,199        8,081       9,331           12,474
expenses
Depreciation and         4,693        6,149       7,695           7,784
amortization
Impairment and other     26           101         125             725
lease charges
Other income             —            —           (236        )   (481       )
Total costs and          86,930       121,411     173,731         172,172     
expenses
Income (loss) from       (1,480   )   693         (4,260      )   (9,589     )
operations
Interest expense         915          2,646       4,492           4,711
Loss on extinguishment   —            1,509       —               —           
of debt
Loss from continuing
operations before        (2,395   )   (3,462  )   (8,752      )   (14,300    )
income taxes
Provision (benefit)      508          (2,683  )   (2,412      )   (5,506     )
for income taxes
Net loss from            (2,903   )   (779    )   (6,340      )   (8,794     )
continuing operations
Income (loss) from
discontinued             (624     )   668         (2          )   (114       )
operations, net of tax
Net loss                 $ (3,527 )   $  (111 )   $  (6,342   )   $  (8,908  )
Supplemental Data:
Stock compensation       $ 102        $  177      $  309          $  337
expense (a)
Integration and
acquisition expenses     411          836         3,400           1,395
(b)
EEOC litigation and      95           674         1,938           2,636
settlement costs
EBITDA (c)               3,213        5,333       3,435           (1,805     )
Adjusted EBITDA (c)      3,847        8,630       9,207           3,288
Adjusted EBITDA margin   4.5      %   7.1     %   5.4         %   2.0        %
(c)

(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.
    EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial
    measures and may not necessarily be comparable to other similarly titled
(c) 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.

Contact:

Carrols Restaurant Group, Inc.
Investor Relations:
800-348-1074, ext. 3333
investorrelations@carrols.com
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement