Carrols Restaurant Group reports Q3 net loss of US$2.8M, compared with year-ago loss of US$6.3M; restaurant sales fall 0.7% to US$168.3M due to eight fewer restaurants in operation
SYRACUSE, New York
November 5, 2013
– Carrols Restaurant Group, Inc. ("Carrols" or the “Company”) (Nasdaq:TAST) today announced financial results for the third quarter ended September 29, 2013.
Highlights for the third quarter of 2013 versus the third quarter of 2012 include:
Restaurant sales were $168.3 million compared to $169.5 million in the prior year and decreased 0.7% due to eight fewer restaurants in operation;
Comparable restaurant sales increased 0.4% compared to a 6.2% increase in the prior year period, marking nine consecutive quarters of positive comparable restaurant sales growth.
Comparable restaurant sales increased 0.6% at legacy restaurants and increased 0.2% at the restaurants acquired in May 2012;
Net loss from continuing operations was $2.8 million, or $0.12 per diluted share, compared to a net loss from continuing operations of $6.3 million, or $0.28 per diluted share, in the prior year period;
Net loss from continuing operations included a charge of $1.1 million ($0.03 per diluted share after tax) related to impairment charges. Net loss from continuing operations in the prior year period included integration costs related to the acquisition and costs related to the EEOC litigation settled in early 2013, which were approximately $5.3 million in total ($0.14 per diluted share after tax); and
Adjusted EBITDA, a non-GAAP measure, increased 10% to $10.1 million from $9.2 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 September 29, 2013, Carrols owned and operated 564 BURGER KING® restaurants.
Daniel T. Accordino, Chief Executive Officer of Carrols Restaurant Group, Inc. said, “Our increased restaurant-level profitability and higher operating margins demonstrate our progress over the past year in improving operating performance at the acquired restaurants while continuing to maintain strong margins at our legacy restaurants. The contribution from the acquired restaurants was reflected in both an increase in Adjusted EBITDA and a reduction in our net loss from continuing operations versus the prior year period. In addition, comparable restaurant sales remained positive despite general weakness in consumer spending, heightened competition within the QSR segment, and a difficult 6.2% comparison to the prior year.”
Accordino concluded, “We have lowered our full year sales projection slightly to reflect our third quarter results. However, October sales trends have reaccelerated and we expect fourth quarter comparable restaurant sales to increase 2.0% to 2.5% as we finish the year.”
Third Quarter 2013 Financial Results
Restaurant sales decreased 0.7% to $168.3 million in the third quarter of 2013 compared to $169.5 million in the third quarter of 2012 due to eight fewer restaurants in operation at the end of the third quarter of this year. Comparable restaurant sales increased 0.4% on an overall basis including an increase of 0.6% at legacy restaurants and a 0.2% increase at acquired restaurants. Average check was 0.1% lower due to higher promotional activity but was more than offset by an increase in customer traffic of 0.5%.
Adjusted EBITDA, a non-GAAP measure, was $10.1 million in the third quarter of 2013, or 6.0% of restaurant sales, compared to $9.2 million in the third quarter of 2012, or 5.4% of restaurant sales. The improvement in Adjusted EBITDA margin reflected a 1.8% decrease in cost of sales (as a percentage of restaurant sales) due to favorable sales mix changes and performance improvements at both legacy and acquired restaurants, offset in part by the effect of higher promotional activity and commodity increases. A number of other restaurant operating costs were also favorably leveraged in the quarter due to cost improvements at the acquired restaurants.
General and administrative expenses were $8.7 million in the third quarter of 2013, or 5.2% of restaurant sales, compared to $9.3 million in the third quarter of 2012, or 5.5% of restaurant sales. Such expenses in 2012 included $1.9 million related to the EEOC litigation settled in early 2013 and $0.5 million of integration costs related to the acquisition.
Interest expense was $4.7 million in the third quarter of 2013 compared to $4.5 million in the third quarter of 2012.
Net loss from continuing operations in the third quarter of 2013 was $2.8 million, or $0.12 per diluted share, including impairment charges of $1.1 million, or $0.03 per diluted share after tax. Net loss from continuing operations in the third quarter of 2012 was $6.3 million, or $0.28 per diluted share, including integration costs related to the acquisition and EEOC litigation costs of $5.3 million in total, or $0.14 per diluted share after tax.
Carrols has updated its prior guidance for 2013 to the following:
Total restaurant sales of $660 million to $665 million ($660 million to $680 million previously) including a comparable restaurant sales increase of 2.0% to 2.5% in the fourth quarter;
A commodity cost increase of 1% to 2%;
General and administrative expenses of approximately $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 $50 million to $52 million ($45 million to $50 million previously) including $40 million to $42 million for remodeling 110 to 115 restaurants, 93 of which were completed during the first nine months of the year. Estimated remodeling expenditures include approximately $6.5 million for the relocation of two restaurants to new sites and for costs to scrape and completely rebuild four restaurants; and
Approximately ten restaurant closures for the year (excluding the two restaurant relocations).
Conference Call Today
Daniel T. Accordino, Chief Executive Officer, and Paul Flanders, Chief Financial Officer, will host a conference call to discuss third 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 4646528. The replay will be available until Tuesday, November 12, 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 564 BURGER KING® restaurants as of September 29, 2013 and has operated BURGER KING® restaurants since 1976. For more information on Carrols, please visit the company's website at www.carrols.com.
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