Carrols Restaurant Group, Inc. Reports Financial Results for the Fourth Quarter and Full Year of 2013

  Carrols Restaurant Group, Inc. Reports Financial Results for the Fourth
  Quarter and Full Year of 2013

Business Wire

SYRACUSE, N.Y. -- February 27, 2014

Carrols Restaurant Group, Inc. ("Carrols" or the “Company”) (Nasdaq:TAST)
today announced financial results for the fourth quarter and full year ended
December29, 2013. The Company also provided guidance for 2014.

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

  *Restaurant sales increased 1.8% to $165.5 million from $162.6 million;
  *Comparable restaurant sales increased 1.7% compared to a 7.3% increase in
    the prior year period, marking ten consecutive quarters of positive
    comparable restaurant sales growth;
  *Net loss from continuing operations was $2.1 million, or $0.09 per diluted
    share, compared to a net loss from continuing operations of $8.8 million,
    or $0.39 per diluted share, in the prior year period;
  *Net loss from continuing operations included impairment and other lease
    charges of $0.6 million, or $0.01 per diluted share, after tax. Net loss
    from continuing operations in the prior year period included certain
    charges, including integration costs related to the May 2012 acquisition
    and costs related to the conclusion and settlement of the long-standing
    litigation with the EEOC. In aggregate these charges were approximately
    $4.0 million, or $0.11 per diluted share, after tax; and
  *Adjusted EBITDA, a non-GAAP financial measure, increased over 200% to
    $10.4 million from $3.3 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 2013 versus the full year 2012 include:

  *Restaurant sales increased 23.0% to $663.5 million in 2013 from $539.6
    million in 2012, and included $295.4 million and $174.3 million,
    respectively, from restaurants acquired in May 2012;
  *Comparable restaurant sales increased 1.0% compared to a 7.1% increase in
    the prior year;
  *Net loss from continuing operations was$13.5 million, or$0.59per
    diluted share, compared to a net loss from continuing operations of$18.8
    million, or$0.83per diluted share, in the prior year;
  *Net loss from continuing operations in 2013 included impairment and other
    lease charges of approximately $4.5 million, or $0.12 per diluted share,
    after tax. Net loss from continuing operations in 2012 included
    acquisition and integration-related costs, costs for the conclusion and
    settlement of the EEOC litigation, and a loss on extinguishment of debt
    from the May 2012 refinancing. In aggregate these charges were
    approximately $12.9 million, or $0.35 per diluted share, after tax; and
  *Adjusted EBITDA increased 37.2% to$34.3 millionfrom$25.0 millionin the
    prior year period.

As of December29, 2013, Carrols owned and operated 564 BURGER KING®
restaurants.

Daniel T. Accordino, the Company's Chief Executive Officer said, “We consider
2013 to have been a very successful and transitional year for the Company. Our
financial performance reflected the effectiveness of Burger King’s product and
marketing initiatives as sales continued to grow and operating margins
increased across our entire business. In addition, our fourth quarter results
provide further evidence of the progress that we made throughout 2013
improving operations and profitability of the restaurants acquired from Burger
King in 2012. The acquired restaurants significantly contributed to the
increase in Adjusted EBITDA and our overall operating margins for both the
quarter and the full year. We also completed the remodeling of 111 restaurants
in 2013, and have now upgraded more than 200 restaurants to the new 20/20
design over the past 18 months.”

Accordino continued, “The fourth quarter marked ten consecutive quarters of
positive comparable restaurant sales growth and was notable given the
difficult 7.3% comparison from the prior year and the continuing competitive
pressures throughout the QSR segment. Our fourth quarter comparable restaurant
sales trends, while tracking at approximately 3% through November, were
dampened somewhat by the severe weather conditions in December. And while we
have solid expectations for 2014, the persistent weather conditions have
adversely affected sales in many of our markets early in the year making for a
difficult start.”

Fourth Quarter 2013 Financial Results

Restaurant sales increased 1.8% to $165.5 million in the fourth quarter of
2013 compared to $162.6 million in the fourth quarter of 2012 despite having
eight fewer restaurants in operation at the end of the fourth quarter this
year compared to last year. Comparable restaurant sales increased 1.7% on an
overall basis including an increase of 1.8% at legacy restaurants and a 1.6%
increase at the 2012 acquired restaurants. Average check was 3% higher while
customer traffic decreased 1.3%.

Adjusted EBITDA was $10.4 million in the fourth quarter of 2013, or 6.3% of
restaurant sales, compared to $3.3 million, or 2.0% of restaurant sales, in
the fourth quarter of 2012. Adjusted Restaurant-Level EBITDA, also a non-GAAP
financial measure, increased $7.8 million to $20.2 million from $12.4 million
in the prior year quarter. Adjusted Restaurant-Level EBITDA margin increased
from 7.6% to 12.2% in the fourth quarter of 2013, reflecting improvements at
the legacy restaurants, a 5.1% decrease in cost of sales (as a percentage of
sales) at the 2012 acquired restaurants, and additional profitability
improvements at the 2012 acquired restaurants. (Please refer to the
reconciliation of Adjusted Restaurant-Level EBITDA to income (loss) from
operations in the tables at the end of this release).

General and administrative expenses were $9.9 million in the fourth quarter of
2013, or 6.0% of restaurant sales, compared to $12.5 million in the fourth
quarter of 2012, or 7.7% of restaurant sales. Such expenses in 2012 included
$2.6 million related to the EEOC litigation.

Interest expense remained flat at $4.7 million in the fourth quarter of 2013
compared to the same period last year.

Net loss from continuing operations in the fourth quarter of 2013 was $2.1
million, or $0.09 per diluted share, including impairment and other lease
charges of $0.6 million, or $0.01 per diluted share after tax. Net loss from
continuing operations in the fourth quarter of 2012 was $8.8 million, or $0.39
per diluted share, 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 in
2012, or $0.11 per diluted share, after tax.

2014 Guidance

The Company is providing the following guidance for 2014:

  *Total restaurant sales of $665 million to $680 million including a
    comparable restaurant sales increase of 1.5% to 3.5%. Comparable
    restaurant sales are expected to decrease 1.5% to 2.5% in the first
    quarter as a result of the severe winter weather;
  *A commodity cost increase of 2.0% to 3.0%;
  *General and administrative expenses of approximately $39 million to $41
    million (excluding stock compensation costs);
  *Adjusted EBITDA of $38 million to $42 million;
  *An effective income tax benefit of 33% to 35% which could increase if the
    Work Opportunity Tax Credit is reinstated and extended;
  *Capital expenditures of approximately $30 million to $35 million,
    including $18 million to $20 million for remodeling 65 to 75 restaurants
    and $4 million to $5 million for costs to scrape and rebuild three
    restaurants; and
  *15 to 20 restaurant closures.

Accordino concluded, “Our long-term plan includes expanding our ownership of
Burger King restaurants. We believe that there is considerable opportunity for
future growth, as our right of first refusal in 20 states acquired from Burger
King provides us with the ability to selectively acquire additional
restaurants over time. We also believe that our progress in improving
operations and profitability at the restaurants acquired in 2012 demonstrates
how we can enhance shareholder value through expansion.”

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 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 480-629-9856. 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 4667646. The replay will be available until Thursday, March 6,
2014. Investors and interested parties may listen to a live webcast of this
conference call by visiting www.carrols.com under the tab "Investor
Relations”.

About the Company

Carrols Restaurant Group, Inc. is Burger King Corporation's largest
franchisee, globally, with 564 BURGER KING® restaurants as of December29,
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)        Twelve Months Ended (a)
                    December 29,   December 30,   December 29,   December
                                                               30,
                    2013           2012           2013
                                                                 2012
Restaurant          $  165,514     $  162,583     $  663,483     $ 539,608
sales
Costs and
expenses:
Cost of sales       48,906         53,243         201,532        172,698
Restaurant
wages and           51,677         51,049         208,404        169,857
related
expenses (b)
Restaurant rent     11,841         12,059         47,198         37,883
expense
Other
restaurant          25,752         28,199         106,508        88,883
operating
expenses (b)
Advertising         7,119          7,120          29,615         22,257
expense
General and
administrative      9,886          12,474         37,228         36,085
expenses (b)
(c)
Depreciation
and                 8,604          7,784          33,594         26,321
amortization
Impairment and
other lease         555            725            4,462          977
charges
Other expense       202           (481       )   17            (717      )
(income)
Total costs and     164,542       172,172       668,558       554,244   
expenses
Income (loss)       972            (9,589     )   (5,075     )   (14,636   )
from operations
Interest            4,711          4,711          18,841         12,764
expense
Loss on
extinguishment      —             —             —             1,509     
of debt
Loss from
continuing
operations          (3,739     )   (14,300    )   (23,916    )   (28,909   )
before income
taxes
Benefit for         (1,677     )   (5,506     )   (10,397    )   (10,093   )
income taxes
Net loss from
continuing          (2,062     )   (8,794     )   (13,519    )   (18,816   )
operations
Loss from
discontinued        —             (114       )   —             (72       )
operations, net
of tax
Net loss            $  (2,062  )   $  (8,908  )   $  (13,519 )   $ (18,888 )
                                                                             
Diluted net
loss per share:
Continuing          $  (0.09   )   $  (0.39   )   $  (0.59   )   $ (0.83   )
operations
Discontinued        $  —           $  (0.01   )   $  —           $ —
operations
Diluted
weighted
average common      23,047         22,748         22,959         22,580
shares
outstanding (d)

    
      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 29,
      2013 and December 30, 2012 each included thirteen and fifty-two weeks,
      respectively.
      Acquisition and integration expenses were included for the three and
      twelve months ended December 30, 2012, respectively, as follows: $0 and
(b)   $1,800 in restaurant wages and related expenses, $1,485 and $2,585 in
      other restaurant operating expenses, and $(90) and $1,657 in general
      and administrative expenses.
      General and administrative expenses include stock-based compensation
      expense of $306 and $337 for the three months ended December 29, 2013
      and December 30, 2012, respectively, and $1,205 and $925 for the twelve
      months ended December 29, 2013 and December 30, 2012, respectively.
(c)   General and administrative expenses for the twelve months ended
      December 29, 2013 also included $85 of costs related to the Company's
      litigation with the EEOC that was settled in January 2013. General and
      administrative expenses for the three and twelve months ended December
      30, 2012 included $2,636 and $5,343, respectively of costs related to
      the Company's litigation with the EEOC settled in early 2013.
      Shares issuable for convertible preferred stock and non-vested
(d)   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)        Twelve Months Ended (a)
                     December      December        December      December
                     29,          30,             29,          30,

                     2013          2012            2013          2012
Restaurant
Sales: (a)
Legacy               $ 92,698      $ 90,842        $ 368,081     $ 365,331
restaurants
Acquired             72,816       71,741         295,402      174,277   
restaurants
Total restaurant     $ 165,514    $ 162,583      $ 663,483    $ 539,608 
sales
Change in
Comparable           1.7       %   7.3       %     1.0       %   7.1       %
Restaurant Sales
(b)
Adjusted EBITDA      10,437        3,288           34,271        24,972
(c)
Adjusted EBITDA      6.3       %   2.0       %     5.2       %   4.6       %
margin (c)
Adjusted
Restaurant-Level     20,219        12,398          70,226        52,415
EBITDA (c)
Adjusted
Restaurant-Level     12.2      %   7.6       %     10.6      %   9.7       %
EBITDA margin
(c)
Average Weekly
Sales per
Restaurant: (d)
Legacy               24,494        23,967          24,290        23,931
restaurants
Acquired             20,721        20,160          20,856        20,681
restaurants
Expenses -
Legacy
Restaurants: (e)
Cost of sales        29.2      %   30.8      %     29.6      %   30.6      %
Restaurant wages
and related          30.8      %   30.4      %     30.6      %   30.6      %
expenses
Restaurant rent      6.2       %   6.4       %     6.2       %   6.3       %
expense
Other restaurant
operating            14.5      %   15.1      %     15.0      %   15.0      %
expenses
Advertising          4.1       %   4.2       %     4.2       %   3.9       %
expense
Expenses -
Acquired
Restaurants: (e)
Cost of sales        30.0      %   35.2      %     31.4      %   34.9      %
Restaurant wages
and related          31.8      %   32.7      %     32.4      %   33.3      %
expenses
Restaurant rent      8.4       %   8.7       %     8.2       %   8.5       %
expense
Other restaurant
operating            16.9      %   20.2      %     17.4      %   19.5      %
expenses
Advertising          4.6       %   4.6       %     4.7       %   4.6       %
expense
Number of
Restaurants:
Restaurants at
beginning of         564           572             572           298
period
New restaurants      2             —               2             —
Acquired             1             —               1             278
restaurants
Closed               (3        )   —              (11)          (4)
restaurants
Restaurants at       564           572             564           572
end of period
                                                                             
                                                   At 12/29/13   At 12/30/12
Long-term Debt                                     $ 160,536     $ 161,492
(f)
Cash (including
$20 million of                                     28,302        58,290
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.
(b)   Restaurants are generally included in comparable restaurant sales after
      they have been open or owned for 12 months.
      EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted
      Restaurant-Level EBITDA, and Adjusted Restaurant-Level 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 and to the
      Company's reconciliation of Adjusted Restaurant-Level EBITDA to income
      (loss) from operations for further detail. Both Adjusted EBITDA margin
      and Adjusted Restaurant-Level EBITDA margin are calculated 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 December 29, 2013 included
      $150,000 of the Company's 11.25% Senior Secured Second Lien Notes,
      $1,200 of lease financing obligations and $9,336 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.

Reconciliation of Non-GAAP Measures
                                              
                      (unaudited)                  (unaudited)
                      Three Months Ended (a)       Twelve Months Ended (a)
                      December      December       December      December
                      29,          30,            29,          30,
                      2013          2012           2013          2012
Reconciliation of
EBITDA and
Adjusted EBITDA:
(a)
Net loss from
continuing            $  (2,062 )   $ (8,794 )     $ (13,519 )   $ (18,816 )
operations
Benefit for           (1,677    )   (5,506   )     (10,397   )   (10,093   )
income taxes
Interest expense      4,711         4,711          18,841        12,764
Depreciation and      8,604        7,784         33,594       26,321    
amortization
EBITDA                9,576         (1,805   )     28,519        10,176
Impairment and
other lease           555           725            4,462         977
charges
Acquisition and       —             1,395          —             6,042
integration costs
EEOC litigation
and settlement        —             2,636          85            5,343
costs
Stock
compensation          306           337            1,205         925
expense
Loss on
extinguishment of     —            —             —            1,509     
debt
Adjusted EBITDA       $  10,437    $ 3,288       $ 34,271     $ 24,972  
Reconciliation of
Adjusted
Restaurant-Level
EBITDA: (a)
Adjusted
Restaurant-Level      $  20,219     $ 12,398       $ 70,226      $ 52,415
EBITDA (a)
Less:
Restaurant-level      —             1,485          —             4,385
integration costs
General and
administrative        9,886         12,474         37,228        36,085
expenses
Depreciation and      8,604         7,784          33,594        26,321
amortization
Impairment and
other lease           555           725            4,462         977
charges
Other expense         202          (481     )     17           (717      )
(income)
Income (loss)         $  972       $ (9,589 )     $ (5,075  )   $ (14,636 )
from operations

    
      Within our press release, we make reference to EBITDA, Adjusted EBITDA
      and Adjusted Restaurant-Level EBITDA which 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
(a)   impairment and other lease charges, acquisition and integration costs,
      EEOC litigation and settlement costs, stock compensation expense and
      loss on extinguishment of debt. Adjusted Restaurant-Level EBITDA
      represents income (loss) from operations as adjusted to exclude
      restaurant-level integration costs, general and administrative
      expenses, depreciation and amortization, impairment and other lease
      charges, and other expense (income).
                                                                             
      We are presenting Adjusted EBITDA and Adjusted Restaurant-Level EBITDA
      because we believe that they provide a more meaningful comparison than
      EBITDA of the Company's core business operating results, as well as
      with those of other similar companies. Additionally, we present
      Adjusted Restaurant-Level EBITDA because it excludes the impact of
      general and administrative expenses, restaurant-level integration
      costs, and other expense (income), all of which are non-recurring at
      the restaurant level. Management believes that Adjusted EBITDA and
      Adjusted Restaurant-Level EBITDA, when viewed with the Company's
      results of operations in accordance with GAAP and the accompanying
      reconciliations in the table 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 Adjusted EBITDA
      and Adjusted Restaurant-Level 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, Adjusted EBITDA and Adjusted Restaurant-Level EBITDA
      are not measures of financial performance or liquidity under GAAP and,
      accordingly, should not be considered as alternatives to net income
      (loss), income (loss) from operations 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 tables above provide reconciliations between net
      loss from continuing operations and EBITDA and Adjusted EBITDA and
      between Adjusted Restaurant-Level EBITDA and income (loss) from
      operations.

Contact:

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