Fiesta Restaurant Group, Inc. Reports First Quarter 2013 Results

  Fiesta Restaurant Group, Inc. Reports First Quarter 2013 Results

Business Wire

ADDISON, Texas -- May 7, 2013

Fiesta Restaurant Group, Inc. (“Fiesta” or the “Company”) (NASDAQ: FRGI), the
owner, operator, and franchisor of the Pollo Tropical® and Taco Cabana®
fast-casual restaurant brands, today reported results for the first quarter of
2013 which ended on March 31, 2013.

Highlights of First Quarter 2013 Results Include:

  *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.

Tim Taft, President and Chief Executive Officer of Fiesta, commented,
“Comparable restaurant sales were solid at both brands despite macro-economic
headwinds, strong growth in the prior year, and adverse weather conditions for
Taco Cabana. During the first quarter, we generated higher operating
profitability through effective cost controls and sales leverage. We also made
incremental investments in our corporate infrastructure ahead of future growth
and to enable us to substantially complete our administrative transition from
Carrols later this year. Four Company-owned restaurants were opened, and we
are on track to add a total of 14 to 17 new Company-owned restaurants in 2013,
along with more than ten international franchised locations.”

Taft continued, “We believe that our robust business model will enable us to
generate earnings per share growth on an annual basis in excess of 20%,
predicated on expanding our top-line through new restaurant development and
positive comparable sales while increasing our bottom-line by leveraging fixed
and operating costs. We are pleased with the ongoing process of evolving our
brands and I am confident that Pollo Tropical and Taco Cabana are well
positioned to appeal to a broader demographic and build frequency through
customer satisfaction and loyalty. We intend to capitalize on what we believe
are both brands' many opportunities to realize additional economies of scale
in the marketplace.”

First Quarter Financial Review

Consolidated Results

Total revenues increased 5.9% in the first quarter of 2013 to $133.6 million
from $126.1 million in the first quarter of 2012. Restaurant sales in the
first quarter of 2013 increased 6.0% to $133.1 million from $125.6 million in
the first quarter of 2012, due to new Company-owned restaurant development and
comparable restaurant sales growth.

Cost of sales improved as a percentage of restaurant sales in the first
quarter of 2013 compared to the prior year period primarily due to modest menu
price increases and effective supply chain management that more than offset
higher commodity costs. Restaurant wages and related expenses improved as a
percentage of restaurant sales in the first quarter of 2013 as compared to the
prior year period primarily due to the positive impact of our sales increase
on fixed costs and lower medical and other benefit costs, partially offset by
higher workers' compensation claims. Other restaurant operating expenses
decreased as a percentage of restaurant sales primarily due to lower repair
and maintenance costs that were positively impacted by timing and management
initiatives, and lower utility costs. Pre-opening costs increased by $0.7
million.

Rent expense increased $2.5 million to $6.4 million in the first quarter of
2013 compared to $3.9 million in the prior year period. This increase was
primarily due to certain transactions that qualified for sale-leaseback
accounting treatment (and the related leases being treated as operating
leases) upon the spin-off on May 7, 2012, that, until that time, had been
classified as lease financing obligations, which increased rent expense by
$1.9 million in the first quarter of 2013 compared to the first quarter of
2012, and new restaurant development.

General and administrative expenses increased $1.2 million to $12.2 million in
the first quarter of 2013 from $11.0 million in the first quarter of 2012, due
primarily to Fiesta employee additions and costs incurred to transition
various functions from the Company's former parent company, Carrols Restaurant
Group, Inc. ("Carrols"). General and administrative expenses were negatively
impacted $0.4 million in the first quarter of 2013 due to costs associated
with the underwritten secondary public equity offering that was completed
during the quarter.

Depreciation and amortization remained relatively consistent at $4.8 million
in the first quarter of 2013 as compared to the prior year period, primarily
due to the elimination of depreciation expense of $0.5 million as a result of
the qualification for sale treatment of certain sale-leaseback transactions
upon completion of the spin-off that offset the impact of new restaurant
development.

Fiesta recognized a $0.5 million gain in the first quarter of 2013 associated
with the sale of an excess property.

Interest expense decreased $3.0 million to $5.0 million in the first quarter
of 2013 from $8.0 million in the first quarter 2012, primarily due to the
elimination of $2.7 million in interest expense as a result of the
qualification for sale treatment of certain sale-leaseback transactions upon
the completion of the spin-off.

Our provision for income taxes in the first quarter of 2013 was derived using
an estimated annual effective income tax rate for 2013 of 35.8%, while the
provision for income taxes for the first quarter of 2012 was derived using an
estimated annual effective income tax rate of 42.6%, both excluding discrete
items. A discrete tax adjustment, related to the retroactive effect of
renewing the 2012 Work Opportunity Tax Credit in early 2013, decreased the
provision by $0.6 million in the first quarter of 2013.

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. The first quarter of
2012 included impairment and other lease charges of $6.9 million related to
the closure of five Pollo Tropical restaurants in New Jersey and for the
impairment of two Taco Cabana restaurants.

Brand Results

Pollo Tropical restaurant sales increased 7.9% to $61.9 million in the first
quarter of 2013 from $57.3 million in the first quarter of 2012 due to a
comparable restaurant sales increase of 3.8% along with a net increase in
Company-owned restaurants. The growth in comparable restaurant sales resulted
from a 1.2% increase in guest traffic along with a 2.6% increase in average
check. Adjusted EBITDA, a non-GAAP financial measure, decreased to $9.8
million in the first quarter of 2013 from $11.2 million in the first quarter
of 2012. Adjusted EBITDA was negatively impacted by an increase in rent
expense of $0.7 million in the first quarter of 2013 compared to the first
quarter of 2012 due to the qualification for sale treatment of sale-leaseback
transactions upon the completion of the spin-off, as discussed above, in
addition to higher general and administrative and pre-opening costs associated
with new restaurant development.

Taco Cabana restaurant sales increased 4.4% to $71.2 million in the first
quarter of 2013 from $68.2 million in the first quarter of 2012 due to a
comparable restaurant sales increase of 2.0% along with a net increase in
Company-owned restaurants. The growth in comparable restaurant sales resulted
from a 2.6% increase in average check partially offset by a (0.6)% decrease in
guest traffic. Adjusted EBITDA, a non-GAAP financial measure, increased to
$6.5 million in the first quarter of 2013 from $6.2 million in the first
quarter of 2012. Adjusted EBITDA was negatively impacted by an increase in
rent expense of $1.2 million in the first quarter of 2013 compared to the
first quarter of 2012 due to the qualification for sale treatment of
sale-leaseback transactions upon the completion of the spin-off, as discussed
above.

Restaurant Development

During the first quarter of 2013, Fiesta opened two new Company-owned Pollo
Tropical restaurants in Smyrna, Tennessee and Fort Myers, Florida and two new
Company-owned Taco Cabana restaurants in Arlington and Richland Hills. As of
March 31, 2013, the Company owned and operated 93 Pollo Tropical restaurants
and 162 Taco Cabana restaurants and franchised 36 Pollo Tropical restaurants
in the U.S., Puerto Rico, the Bahamas, Costa Rica, Ecuador, Honduras, Panama,
Trinidad & Tobago and Venezuela, and eight Taco Cabana restaurants in the U.S.

Investor Conference Call Today

Fiesta will host a conference call to review first quarter 2013 results today
at 4:30 PM ET. Hosting the call will be Tim Taft, President and Chief
Executive Officer, and Lynn Schweinfurth, Vice President and Chief Financial
Officer.

The conference call can be accessed live over the phone by dialing
800-946-0708 or for international callers by dialing 719-457-2642. A replay
will be available after the call and can be accessed by dialing 877-870-5176
or for international callers by dialing 858-384-5517; the passcode is 5793203.
The replay will be available until Tuesday, May 14, 2013.

The conference call will also be webcast live from the corporate website at
www.frgi.com, under the investor relations section. A replay of the webcast
will be available through the corporate website shortly after the call has
concluded.

About Fiesta Restaurant Group, Inc.

Fiesta Restaurant Group, Inc. owns, operates and franchises the Pollo
Tropical® and Taco Cabana® restaurant brands with 255 company-owned and
operated restaurants and 44 franchised restaurants in the U.S., Puerto Rico,
the Bahamas, Costa Rica, Ecuador, Honduras, Panama, Trinidad & Tobago and
Venezuela as of March 31, 2013. The brands specialize in the operation of
fast-casual, ethnic restaurants that offer distinct and unique flavors with
broad appeal at a compelling value. Both brands feature made-from-scratch
cooking, fresh salsa bars, and drive-thru service and catering. For more
information about Fiesta Restaurant Group, Inc., visit the corporate website
at www.frgi.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 Fiesta's 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 Fiesta's 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 Fiesta's control. Investors are referred to the full
discussion of risks and uncertainties as included in Fiesta's filings with the
Securities and Exchange Commission.

                                                             
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           12,211             11,016
(b)(d)(e)
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       $    0.20          $   (0.08   )
share (g)
                                                                 
Basic and diluted weighted average common     22,868,894         23,161,822  
shares outstanding
                                                                             

(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            200,875            200,889
portion
Lease financing obligations               3,031              3,029
Deferred income sale-leaseback of         35,457             36,096
real estate
Other liabilities                         11,827            11,933
Total liabilities                         284,310            293,225
Stockholders' equity                      15,729            10,504
Total liabilities and stockholders'       $    300,039      $     303,729
equity
                                                                   


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                255                       243
restaurants
                                                             
Company-Owned Restaurant
Openings:
Pollo Tropical                     2                         —
Taco Cabana                        2                         —             
Total new restaurant               4                         —
openings
                                                             
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                   44                        38
restaurants


(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  )

Contact:

Investor Relations:
Raphael Gross, 203-682-8253
investors@frgi.com