Carrols Restaurant Group, Inc. Reports Financial Results for the First Quarter of 2013

  Carrols Restaurant Group, Inc. Reports Financial Results for the First
  Quarter of 2013

Business Wire

SYRACUSE, N.Y. -- May 7, 2013

Carrols Restaurant Group, Inc. ("Carrols" or the “Company”) (Nasdaq: TAST)
today announced financial results for the first quarter ended March31, 2013.
The Company also updated its guidance for 2013.

Highlights for the first quarter of 2013 versus the first quarter of 2012
include:

  *Restaurant sales increased 82.7% to $156.1 million, including $70.4
    million in sales from the BURGER KING® restaurants that were acquired on
    May 30, 2012;
  *Comparable restaurant sales at legacy restaurants increased 1.0% compared
    to an increase of 5.9% in the prior year period, marking seven consecutive
    quarters of comparable restaurant sales increases;
  *Net loss from continuing operations was $5.2 million, or $0.23 per diluted
    share, compared to a net loss from continuing operations of $2.9 million,
    or $0.13 per diluted share, in the prior year period; and
  *Adjusted EBITDA, a non-GAAP measure, was $3.3 million compared to $3.8
    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).

As of March31, 2013, Carrols owned and operated 571 BURGER KING® restaurants.

Daniel T. Accordino, Chief Executive Officer of Carrols Restaurant Group, Inc.
said, “Despite a challenging consumer environment early in the year, our sales
trends improved in March resulting in an increase in comparable restaurant
sales at our legacy restaurants of 1.0% for the first quarter. This was better
than our initial expectations, and we were generally pleased given the
challenging 5.9% comparable restaurant sales comparison from the prior year
and the more seasonable weather conditions experienced in 2013. Profitability
and operating margins also increased at our legacy restaurants reflecting
favorable sales mix changes and a higher average check from Burger King’s
product innovation and marketing initiatives over the past year.”

Accordino continued, “Our financial results also demonstrate our progress in
integrating the acquired restaurants, and are beginning to reflect the
operating improvements that we have made. Relative to our legacy restaurants,
we have begun to narrow the gap in average unit sales and we have also
improved operating margins at the acquired units. In the first quarter, the
overall difference in operating margins between our legacy and acquired
restaurants was reduced by 5.0% (as a percentage of sales) on a sequential
basis from the fourth quarter of 2012, or by 2.9% excluding the impact of
integration costs in the fourth quarter. We anticipate that we will continue
to improve restaurant profitability at these units with our ongoing focus on
enhancing operations, increasing sales, and expanding margins as we continue
to instill our P&L disciplines.”

First Quarter 2013 Financial Results

Restaurant sales grew 82.7% to $156.1 million in the first quarter of 2013,
including $70.4 million of sales from the acquired restaurants, compared to
$85.5 million in the first quarter of 2012. Comparable restaurant sales at our
legacy restaurants increased 1.0% from an increase in average check of 4.4%,
including an effective price increase of 0.8%. In 2012, comparable restaurant
sales at legacy restaurants increased 5.9%.

Average weekly sales for legacy restaurants increased 1.3% to $22,475 from
$22,179 in the same period last year. Average weekly sales for the acquired
restaurants were $19,746, 12.1% lower than legacy restaurants, improving
sequentially compared to a 15.9% gap in the fourth quarter of 2012.

Adjusted EBITDA was $3.3 million in the first quarter of 2013, or 2.1% of
restaurant sales, compared to $3.8 million in the first quarter of 2012, or
4.5% of restaurant sales. Legacy restaurants contributed positively to
Adjusted EBITDA and Adjusted EBITDA Margin (also a non-GAAP measure), as their
restaurant-level expenses were leveraged on the comparable restaurant sales
increase, and margins were favorably impacted by sales mix changes and a
higher average check. Although the operating performance of the acquired
restaurants demonstrated a sequential improvement relative to both their
performance in the fourth quarter of 2012 and when compared to the legacy
restaurants, they still negatively impacted Adjusted EBITDA Margin on an
overall basis in the first quarter of 2013.

General and administrative expenses were $9.1 million in the first quarter of
2013 compared to $6.2 million in the first quarter of 2012, but as a
percentage of sales, decreased to 5.8% from 7.3%.

Loss from operations was $5.8 million in the first quarter of 2013 compared to
a loss from operations of $1.5 million in the first quarter of 2012.

Interest expense increased to $4.7 million for the first quarter of 2013 from
$0.9 million in the first quarter of 2012 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 $5.2 million, or $0.23 per diluted
share, compared to a net loss from continuing operations of $2.9 million, or
$0.13 per diluted share, in the same period last year. The benefit for income
taxes in the first quarter of 2013 included a benefit of $1.0 million from the
2012 WOTC credits which were all recorded in the first quarter of 2013 due to
the legislative delay in extending the credits.

2013 Guidance

The Company is providing the following updated 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 2% to 3%;
  *General and administrative expenses of approximately $34 million to $36
    million;
  *An effective income tax benefit of 45% to 47% including the carryover
    benefit for 2012 WOTC credits recognized in the first quarter;
  *Capital expenditures of approximately $40 million to $50 million,
    including $30 million to $40 million for remodeling 90 to 120 restaurants
    including 39 remodels completed in the first quarter; and
  *Six to eight restaurant closures.

Conference Call Today

Daniel T. Accordino, Chief Executive Officer, and Paul Flanders, Chief
Financial Officer, will host a conference call to discuss first quarter 2013
financial results today at 8:30 AM ET.

The conference call can be accessed live over the phone by dialing
888-846-5003 or for international callers by dialing 480-629-9665. 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 4615844. The replay will be available until Tuesday, May 14, 2013.
The call will also 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 571 BURGER KING® restaurants as of March31, 2013
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)
                                              Three Months Ended (a)
                                              March 31, 2013   April 1, 2012
Restaurant sales                              $  156,139         $  85,450
Costs and expenses:
Cost of sales                                 48,631             26,122
Restaurant wages and related expenses         50,667             27,868
Restaurant rent expense                       11,709             5,683
Other restaurant operating expenses           26,236             13,643
Advertising expense                           7,094              2,696
General and administrative expenses (b)       9,078              6,199
Depreciation and amortization                 8,063              4,693
Impairment and other lease charges            630                26
Other income                                  (185        )      —          
Total costs and expenses                      161,923           86,930     
Loss from operations                          (5,784      )      (1,480     )
Interest expense                              4,711             915        
Loss from continuing operations before income (10,495     )      (2,395     )
taxes
Provision (benefit) for income taxes          (5,296      )      508        
Net loss from continuing operations           (5,199      )      (2,903     )
Loss from discontinued operations, net of tax —                 (624       )
Net loss                                      $  (5,199   )      $  (3,527  )
                                                                 
Diluted net loss per share:
Continuing operations                         $  (0.23    )      $  (0.13   )
Discontinued operations                       —                  (0.03      )
Diluted weighted average common shares        22,869             21,856
outstanding (c)
                                                                            

      The Company uses a 52 or 53 week fiscal year that ends on the Sunday
(a)  closest to December 31. The three months ended March 31, 2013 and April
      1, 2012 each included thirteen weeks.
      
      General and administrative expenses include stock-based compensation
      expense of $301 and $102 for the three months ended March 31, 2013 and
      April 1, 2012, respectively. General and administrative expenses for the
(b)   three months ended April 1, 2012 also included $411 of legal and
      professional fees incurred in connection with the acquisition, and $95
      of costs related to the Company's litigation with the EEOC that was
      settled in January 2013.
      
      Shares issuable for convertible preferred stock, stock options and
(c)   non-vested restricted stock were not included in the computation of
      diluted net loss per share because they would have been antidilutive for
      the periods presented.
      

                        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)
                                            Three Months Ended (a)
                                            March 31, 2013   April 1, 2012
Restaurant Sales: (a)
Legacy restaurants                          $   85,765         $   85,450
Acquired restaurants                        70,374            —           
Total restaurant sales                      $   156,139       $   85,450  
Change in Comparable Restaurant Sales (b)       1.0      %         5.9     %
Adjusted EBITDA (c)                             3,295              3,847
Adjusted EBITDA margin (c)                      2.1      %         4.5     %
Average Weekly Sales per Restaurant: (d)
Legacy restaurants                              22,475             22,179
Acquired restaurants                            19,746
Expenses - Legacy Restaurants: (e)
Cost of sales                                   29.6     %         30.6    %
Restaurant wages and related expenses           31.9     %         32.6    %
Restaurant rent expense                         6.7      %         6.7     %
Other restaurant operating expenses             15.7     %         16.0    %
Advertising expense                             4.3      %         3.2     %
Expenses - Acquired Restaurants: (e)
Cost of sales                                   33.0     %
Restaurant wages and related expenses           33.1     %
Restaurant rent expense                         8.5      %
Other restaurant operating expenses             18.1     %
Advertising expense                             4.8      %
Number of Company Owned Restaurants:
Restaurants at beginning of period              572                298
New restaurants                                 —                  —
Acquired restaurants                            —                  —
Closed restaurants                             (1       )        (1      )
Restaurants at end of period                   571              297     
                                                                           
                                                                           
                                            At 3/31/2013       At 12/30/2012
Long-term Debt (f)                          $   161,234        $   161,492
Cash (g)                                        46,686             58,290
                                                                           

      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
(c)   methods of calculation. Refer to the Company's reconciliation of EBITDA
      and Adjusted EBITDA to net 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)   Represents restaurant expenses as a percentage of sales for the
      respective group of restaurants.
      Long-term debt (including current portion) at March 31, 2013 included
      $150,000 of the Company's 11.25% Senior Secured Second Lien Notes,
      $1,197 of lease financing obligations and $10,037 of capital lease
(f)   obligations. 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.
      Cash balance includes $20 million of restricted cash at March 31, 2013
(g)   and December 30, 2012 held as collateral for the Company's revolving
      credit facility.
      

                                      
Carrols Restaurant Group, Inc.

EBITDA and Adjusted EBITDA GAAP Reconciliation
                                         
                                         (unaudited)
                                         Three Months Ended (a)
                                         March 31, 2013   April 1, 2012
EBITDA and Adjusted EBITDA: (a)
Net loss from continuing operations      $   (5,199  )      $  (2,903  )
Provision (benefit) for income taxes     (5,296      )      508
Interest expense                         4,711              915
Depreciation and amortization            8,063             4,693      
EBITDA                                   2,279              3,213
Impairment and other lease charges       630                26
Acquisition and integration costs        —                  411
EEOC litigation and settlement costs     85                 95
Stock compensation expense               301               102        
Adjusted EBITDA                          $   3,295         $  3,847   

    
      EBITDA and Adjusted EBITDA are non-GAAP financial measures. 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 in the table
(a)   above, 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 loss from continuing operations and EBITDA
      and Adjusted EBITDA.

Contact:

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