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



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

Business Wire

SYRACUSE, N.Y. -- August 6, 2013

Carrols Restaurant Group, Inc. ("Carrols" or the “Company”) (Nasdaq: TAST)
today announced financial results for the second quarter ended June 30, 2013.
The Company also updated its prior annual guidance for 2013.

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

  * Restaurant sales increased 42.1% to $173.5 million including $78.2 million
    in sales from the BURGER KING® restaurants that were acquired on May 30,
    2012;
  * Comparable restaurant sales at legacy restaurants increased 1.4% compared
    to an 8.8% increase in the prior year period, marking eight consecutive
    quarters of positive comparable restaurant sales;
  * Net loss from continuing operations was $3.5 million, or $0.15 per diluted
    share, compared to a net loss from continuing operations of $779,000, or
    $0.03 per diluted share, in the prior year period;
  * Net loss from continuing operations included a charge of $2.2 million
    ($0.06 per diluted share after tax) related to impairment and other lease
    charges (largely attributable to restaurant closings during the period).
    Net loss from continuing operations in the second quarter of 2012 included
    a loss on extinguishment of debt of $1.5 million ($0.04 per diluted share
    after tax), costs related to the Company's now settled EEOC litigation of
    $0.7 million ($0.02 per diluted share after tax) and acquisition-related
    expenses of $0.8 million ($0.02 per diluted share after tax); and
  * Adjusted EBITDA, a non-GAAP measure, was $10.4 million compared to $8.6
    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 June 30, 2013, Carrols owned and operated 566 BURGER KING® restaurants.

Daniel T. Accordino, Chief Executive Officer of Carrols Restaurant Group, Inc.
said, “We continued our trend of comparable restaurant sales gains with a 1.4%
increase for the quarter at our legacy restaurants which we view as a solid
accomplishment in the face of lapping an 8.8% comparison from 2012 and a
somewhat heightened competitive environment. Restaurant-level profitability
and margins also improved at our legacy restaurants as we effectively
leveraged the higher sales, while also benefiting from favorable mix changes
and higher check averages brought about by the brand initiatives over the past
year.”

Accordino continued, “We also made additional progress on a number of fronts
with the Burger King restaurants that we acquired last year as we increased
average weekly sales, continued to improve operations, and expanded both
restaurant-level profitability and margins. On a sequential basis, operating
margins increased 438 basis points at the acquired restaurants from the first
quarter of 2013, and the overall difference compared to our legacy restaurants
narrowed by 112 basis points in the quarter. We expect to make continual
progress in improving the profitability at these restaurants in the future.”

Accordino concluded, “On a macro level, it appears that there has recently
been a modest pullback in consumer spending. And, while our July 2013
comparable sales were approximately 1% negative, this was against a strong
8.7% comparable sales increase in July 2012. Overall, we believe that Burger
King's product pipeline and balanced promotional activity position the brand
well as we move through the balance of the year.”

Second Quarter 2013 Financial Results

Restaurant sales grew 42.1% to $173.5 million in the second quarter of 2013,
including $78.2 million of sales from the acquired restaurants, compared to
$122.1 million in the second quarter of 2012. From the period of May 30, 2012
to July 1, 2012, the acquired BURGER KING® restaurants generated sales of
$27.5 million.

Comparable restaurant sales at the legacy restaurants increased 1.4% including
an increase in average check of 1.0% and a 0.4% increase in customer traffic.
In the second quarter of 2012, comparable restaurant sales at legacy
restaurants increased 8.8%.

Average weekly sales for the acquired restaurants were $21,950 and increased
0.7% from the second quarter of 2012. This increase was net of an approximate
2% decline at the acquired restaurants from our elimination of 24 hour
operations in a large number of such restaurants in the third quarter last
year.

Adjusted EBITDA was $10.4 million in the second quarter of 2013, or 6.0% of
restaurant sales, compared to $8.6 million in the second quarter of 2012, or
7.1% of restaurant sales. Although both the legacy and acquired restaurants
contributed positively to Adjusted EBITDA, Adjusted EBITDA margin was lower
compared to the prior year period due to inclusion of the acquired restaurants
for the entire quarter in 2013. The acquired restaurants also demonstrated a
sequential improvement from the first quarter of 2013 in both Adjusted EBITDA
and Adjusted EBITDA margin.

General and administrative expenses were $9.5 million in the second quarter of
2013 compared to $8.1 million in the second quarter of 2012 but decreased, as
a percentage of sales, from 6.6% to 5.5%.

Included in the second quarter 2013 results were impairment and other lease
charges of $2.2 million. This included impairment charges of $0.6 million for
certain underperforming restaurants and a $1.6 million reserve for future
rental payments and lease related costs due to the closing of four of the
acquired restaurants. These four restaurants had negative restaurant-level
cash flow of approximately $0.74 million for the prior twelve month period.

Interest expense increased to $4.7 million from $2.6 million in the second
quarter of 2012 from higher outstanding indebtedness and higher interest rates
from the refinancing completed on May 30, 2012.

Net loss from continuing operations was $3.5 million, or $0.15 per diluted
share, compared to a net loss from continuing operations of $779,000, or $0.03
per diluted share, in the prior year period.

Net loss from continuing operations included a charge of $2.2 million ($0.06
per diluted share after tax) related to impairment and other lease charges.
Net loss from continuing operations in the second quarter of 2012 included
certain charges, including a loss on extinguishment of debt of $1.5 million
($0.04 per diluted share after tax), costs related to the Company's EEOC
litigation settled in the first quarter of 2013 of $0.7 million ($0.02 per
diluted share after tax), and acquisition related expenses of $0.8 million
($0.02 per diluted share after tax).

2013 Guidance

Based upon the Company's year-to-date performance and expectations for the
remainder of the year, the Company has refined its prior annual guidance:

  * Total restaurant sales of $660 million to $680 million including a
    comparable restaurant sales increase at legacy restaurants of 1.5% to
    3.5%;
  * A commodity cost increase of 1% to 2%;
  * General and administrative expenses of approximately $35 million to $36
    million (excluding stock compensation costs);
  * An effective income tax benefit of 42% to 45% including the carryover
    benefit for 2012 WOTC credits;
  * Capital expenditures of approximately $45 million to $50 million,
    including $35 million to $40 million for remodeling 100 to 110
    restaurants, of which 71 were completed in the first half of 2013.
    Estimated remodeling expenditures include $6.5 million for the relocation
    of two restaurants to new sites and for costs to scrape and completely
    rebuild four restaurants; and
  * Eight to ten restaurant closures for the year (excluding the two
    restaurants to be relocated).

Conference Call Today

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

The conference call can be accessed live over the phone by dialing
877-941-4774 or for international callers by dialing 480-629-9760. 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 4629724. The replay will be available until Tuesday, August 13,
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 566 BURGER KING® restaurants as of June 30, 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)                    (unaudited)
                    Three Months Ended (a)         Six Months Ended (a)
                    June 30,       July 1,         June 30,      July 1,
                    2013           2012            2013          2012
Restaurant          $  173,518     $ 122,104       $ 329,657       207,554
sales
Costs and
expenses:
Cost of sales          52,870        38,877          101,501       64,999
Restaurant
wages and              53,665        37,446          104,332       65,314
related
expenses
Restaurant rent        11,869        7,932           23,578        13,615
expense
Other
restaurant             27,547        18,221          53,783        31,864
operating
expenses
Advertising            7,926         4,604           15,020        7,300
expense
General and
administrative         9,524         8,081           18,602        14,280
expenses (b)
Depreciation
and                    8,391         6,149           16,454        10,842
amortization
Impairment and
other lease            2,198         101             2,828         127
charges
Other income           —             —               (185    )     —        
Total costs and        173,990       121,411         335,913       208,341  
expenses
Loss from              (472    )     693             (6,256  )     (787    )
operations
Interest               4,711         2,646           9,422         3,561
expense
Loss on
extinguishment         —             1,509           —             1,509    
of debt
Loss from
continuing
operations             (5,183  )     (3,462  )       (15,678 )     (5,857  )
before income
taxes
Benefit for            (1,687  )     (2,683  )       (6,983  )     (2,175  )
income taxes
Income from
continuing             (3,496  )     (779    )       (8,695  )     (3,682  )
operations
Loss from
discontinued           —             668             —             44       
operations, net
of tax
Net loss            $  (3,496  )   $ (111    )     $ (8,695  )   $ (3,638  )
                                                                              
Diluted net
income (loss)
per share:
Continuing          $  (0.15   )   $ (0.03   )     $ (0.38   )   $ (0.16   )
operations
Discontinued           —             0.03            —             —
operations
Diluted
weighted
average common         22,899        22,742          22,884        22,413
shares
outstanding (c)

      The Company uses a 52 or 53 week fiscal year that ends on the Sunday
(a)   closest to December 31. The three and six months ended June 30, 2013 and
      July 1, 2012 each included thirteen and twenty six weeks, respectively.
      General and administrative expenses include stock-based compensation
      expense of $296 and $177 for the three months ended June 30, 2013 and
      July 1, 2012, respectively, and $597 and $279 for the six months ended
      June 30, 2013 and July 1, 2012, respectively. General and administrative
      expenses for the six months ended June 30, 2013 also included $85 of
(b)   costs related to the Company's litigation with the EEOC that was settled
      in January 2013. General and administrative expenses for the three and
      six months ended months ended July 1, 2012 also included $836 and
      $1,247, respectively, of legal and professional fees incurred in
      connection with the acquisition, and $674 and $769, respectively of
      costs related to the Company's litigation with the EEOC.
      Shares issuable for convertible preferred stock and non-vested
(c)   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.

                                                                              
                                                                              
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)           Six Months Ended (a)
                  June 30, 2013   July 1, 2012     June 30,      July 1,
                                                   2013          2012
Restaurant
Sales: (a)
Legacy            $  95,311       $  94,634        $ 181,076     $ 180,084
restaurants
Acquired             78,207          27,470          148,581       27,470   
restaurants
Total
restaurant        $  173,518      $  122,104       $ 329,657     $ 207,554  
sales
Change in
Comparable           1.4      %      8.8     %       1.2     %     7.4     %
Restaurant
Sales (b)
Adjusted             10,413          8,630           13,708        12,477
EBITDA (c)
Adjusted
EBITDA margin        6.0      %      7.1     %       4.2     %     6.0     %
(c)
Average
Weekly Sales
per
Restaurant:
(d)
Legacy               25,142          24,763          23,804        23,461
restaurants
Acquired             21,950          21,798          20,848        21,798
restaurants
Expenses -
Legacy
Restaurants:
(e)
Cost of sales        29.8     %      31.1    %       29.7    %     30.8    %
Restaurant
wages and            29.9     %      30.2    %       30.9    %     31.3    %
related
expenses
Restaurant           6.0      %      6.1     %       6.4     %     6.4     %
rent expense
Other
restaurant           14.8     %      14.5    %       15.2    %     15.2    %
operating
expenses
Advertising          4.4      %      3.7     %       4.3     %     3.5     %
expense
Expenses -
Acquired
Restaurants:
(e)
Cost of sales        31.3     %      34.4    %       32.1    %     34.4    %
Restaurant
wages and            32.1     %      32.4    %       32.6    %     32.4    %
related
expenses
Restaurant           7.8      %      7.8     %       8.1     %     7.8     %
rent expense
Other
restaurant           17.2     %      16.5    %       17.6    %     16.5    %
operating
expenses
Advertising          4.8      %      3.9     %       4.8     %     3.9     %
expense
Number of
Restaurants:
Restaurants
at beginning         571             297             572           298
of period
New                  —               —               —             —
restaurants
Acquired             —               278             —             278
restaurants
Closed               (5       )      (1      )       (6      )     (2      )
restaurants
Restaurants
at end of            566             574             566           574      
period
                                                                              
                                                   At            At
                                                   6/30/2013     12/30/2012
Long-term                                          $ 160,972     $ 161,492
Debt (f)
Cash
(including
$20 million                                          33,129        58,290
of restricted
cash)

      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.
      Restaurants are generally included in comparable restaurant sales after
      they have been open or owned for 12 months. Sales from the acquired
(b)   restaurants are excluded from changes in the comparable restaurant sales
      in the three months ended June 30, 2013 as they were not operated by us
      for the entire three months ended July 1, 2012.
      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 total 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 June 30, 2013 included
      $150,000 of the Company's 11.25% Senior Secured Second Lien Notes,
      $1,198 of lease financing obligations and $9,774 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.

                                                                              
                                                                              
Carrols Restaurant Group, Inc.

EBITDA and Adjusted EBITDA GAAP Reconciliation
                                                    
                      (unaudited)                    (unaudited)
                      Three Months Ended (a)         Six Months Ended (a)
                      June 30, 2013   July 1,        June 30,     July 1,
                                      2012           2013         2012
EBITDA and
Adjusted
EBITDA: (a)
Net loss from
continuing            $  (3,496  )    $ (779   )     $ (8,695 )   $ (3,682 )
operations
Benefit for              (1,687  )      (2,683 )       (6,983 )     (2,175 )
income taxes
Interest                 4,711          2,646          9,422        3,561
expense
Depreciation
and                      8,391          6,149          16,454       10,842  
amortization
EBITDA                   7,919          5,333          10,198       8,546
Impairment and
other lease              2,198          101            2,828        127
charges
Acquisition and
integration              —              836            —            1,247
costs
EEOC litigation
and settlement           —              674            85           769
costs
Stock
compensation             296            177            597          279
expense
Loss on
extinguishment           —              1,509          —            1,509   
of debt
Adjusted EBITDA       $  10,413       $ 8,630        $ 13,708     $ 12,477  

      EBITDA and Adjusted EBITDA are non-GAAP financial measures. EBITDA
      represents net loss from continuing 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, 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:

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