Carrols Restaurant Group, Inc. (“Carrols” or the “Company”)
(Nasdaq: TAST) today reported financial results for the third
quarter ended September 29, 2019.
Highlights for the Third Quarter of 2019 versus the Third
Quarter of 2018 Include:
- Total restaurant sales increased 34.2% to $398.4 million
(including $71.6 million in restaurant sales from the Cambridge
acquisition completed in the second quarter) from $296.9 million in
the prior year quarter;
- Comparable restaurant sales for the Company’s Burger King
restaurants increased 4.5% compared to a 1.6% increase in the prior
year quarter;
- As described below, the Company realized it had been combining
the sales discounts with respect to separate Whopper® value meal
promotions between June 3 and August 26, 2019, which resulted in
significant additional sales discounts relative to the advertised
promotions that reduced restaurant sales by approximately $8.3
million. Excluding the impact of the excess sales discounts,
comparable restaurant sales for the third quarter would have
increased approximately 7.4%;
- Adjusted EBITDA(1) was $25.6 million compared to $26.5 million
in the prior year quarter. The impact of the excess sales discounts
above reduced Adjusted EBITDA in the third quarter by approximately
$7.3 million. Excluding the impact of the excess sales discounts
Adjusted EBITDA in the third quarter of 2019 would have been
approximately $32.9 million;
- Net loss was $6.8 million, or $0.15 per diluted share, compared
to net income of $3.6 million, or $0.08 per diluted share, in the
prior year quarter; and
- Adjusted net loss(1) was $3.9 million, or $0.09 per diluted
share, compared to adjusted net income of $4.2 million, or $0.09
per diluted share, in the prior year quarter. (1) Adjusted EBITDA,
Restaurant-level EBITDA and Adjusted net income (loss) are non-GAAP
financial measures. Refer to the definitions and reconciliation of
these measures to net income (loss) or to income (loss) from
operations in the tables at the end of this release.
Daniel T. Accordino, Chairman and Chief Executive Officer of
Carrols, commented, “Our comparable restaurant sales growth during
the third quarter included the successful introduction of the
Impossible™ Whopper®, which has contributed incremental restaurant
sales since its launch in August and we believe will continue to
positively impact our restaurant sales. The 2 for $6 Mix &
Match sandwich platform has also performed consistently well while
the $1 Crispy Taco provided a new value offering to the Burger King
menu. Although a strong quarter from a comparable restaurant sales
perspective, we were negatively impacted by the excess discounts we
applied to all Whopper value meals relative to the advertised
promotions. As a result, our comparable restaurant sales growth was
reduced by approximately 290 basis points and Adjusted EBITDA was
reduced by approximately $7.3 million. Excluding this impact, our
comparable restaurant sales would have increased in the third
quarter by approximately 7.4% and our Adjusted EBITDA would have
been approximately $32.9 million. Once these excess sales discounts
were identified and removed in our pricing of Whopper value meals,
our top line results subsequently improved as our September
comparable restaurant sales increased 7.9%. Looking ahead, we
believe that Burger King’s marketing calendar will allow us to
maintain the momentum we experienced through the end of the third
quarter and which continued into October.”
Accordino continued, “Restaurant-level profitability and
Adjusted EBITDA during the third quarter were also challenged by
higher commodity costs, including a 10.7% increase in beef costs,
continued labor rate increases, as well the lower restaurant-level
EBITDA margins at the Cambridge restaurants, due largely to the
investment in training restaurant staff as part of the integration.
We also began installation of our point-of sale systems at the
Cambridge Burger King restaurants during the third quarter and
expect to have all Burger King restaurants installed by the middle
of November. This will be an important step in improving controls
over sales and optimizing food and labor costs at these restaurants
in 2020. We anticipate the full integration of the Cambridge
restaurants will be complete by year end. As has been the case with
past acquisitions, the investments we are making in training
reduced temporarily restaurant-level profitability at the Cambridge
restaurants, however we are confident that we will be able to
deliver meaningful value creation from the Cambridge restaurants,
as we have done in the past with other acquisitions.”
Accordino concluded, “Longer-term, Carrols’ foundation of two
world-class brands with significant scale advantages and a
supportive franchisor partner bode well for realizing growth
opportunities across multiple attractive markets. We believe we are
well positioned to capture growth from two of our recent impactful
product innovations, the Impossible Whopper at Burger King and the
Popeye’s chicken sandwich.
Third Quarter 2019 Financial Results
Restaurant sales increased 34.2% to $398.4 million in the third
quarter of 2019, including $71.6 million in restaurant sales from
Cambridge, compared to $296.9 million in the third quarter of 2018.
Comparable restaurant sales (which excludes recently acquired
restaurants) increased 4.5%, consisting of an average check
increase of 2.3%, which included 1.2% of pricing, and an average
customer traffic increase of 2.2%.
The Company’s results in both the second and third quarter were
significantly impacted by combining the sales discounts with
respect to separate Whopper value meal promotions between June 3
and August 26, 2019. The Company removed these excess sales
discounts from the pricing of its Whopper value meals in late
August 2019 and that action decreased significantly the level of
the Company’s promotional sales discounts and increased restaurant
sales. The Company had a comparable restaurant sales increase of
7.9% in September.
The excess discounts described above resulted in reduced
restaurant sales on all Whopper value meals of approximately $8.3
million in the third quarter of 2019 and approximately $12.4
million for the first nine months of 2019, reduced Adjusted EBITDA
of approximately $7.3 million in the third quarter of 2019 and
approximately $10.9 million for the first nine months of 2019 and
increased the Company’s net loss by approximately $5.5 million in
the third quarter and approximately $8.2 million in the first nine
months of 2019.
Restaurant-level EBITDA(1) was $43.0 million in the third
quarter of 2019 compared to $41.6 million in the prior year period.
Restaurant-level EBITDA margin was 10.7% of restaurant sales and
decreased 330 basis points from the third quarter of 2018,
reflecting the excess sales discounts described above, as well as
higher cost of sales including a 10.7% increase in beef costs, and
higher wage and related expenses, rent expenses, and other
operating expenses, which reflect the impact of the lower margin
Cambridge restaurants.
General and administrative expenses were $21.4 million in the
third quarter of 2019, including $2.2 million in Cambridge
acquisition and integration costs, compared to $17.6 million in the
prior year period, which included $0.8 million in acquisition costs
and integration costs. Excluding acquisition and integration costs
in both periods, general and administrative expenses declined 102
basis points to 4.6%, as a percentage of total revenues.
Adjusted EBITDA(1) was $25.6 million in the third quarter of
2019 compared to $26.5 million in the third quarter of 2018.
Adjusted EBITDA margin decreased 250 basis points to 6.4% of
restaurant sales due to the factors discussed above.
Loss from operations was $1.1 million in the third quarter of
2019 compared to income from operations of $9.7 million in the
prior year period.
Interest expense increased to $7.6 million in the third quarter
of 2019 from $5.9 million in the third quarter of 2018, reflecting
the Company’s higher indebtedness.
Net loss was $6.8 million in the third quarter of 2019, or $0.15
per diluted share, compared to net income of $3.6 million, or $0.08
per diluted share, in the prior year period. Net loss in the third
quarter of 2019 included $0.5 million of impairment charges and
other lease charges and $2.8 million of integration expenses. Net
income in the third quarter of 2018 included $0.2 million of
impairment and other lease charges and $0.8 million of acquisition
expenses.
Adjusted net loss(1) was $3.9 million, or $0.09 per diluted
share, compared to adjusted net income of $4.2 million, or $0.09
per diluted share, in the prior year quarter.
Carrols repurchased 283,069 shares of its outstanding common
stock in open market transactions during the third quarter of 2019
under the $25 million stock repurchase program that was approved by
the Board of Directors in early August 2019. The Company has no
obligation to repurchase stock under this program, and the timing,
actual number and value of shares purchased will depend on the
stock price, trading volume, general market and economic
conditions, and other factors.
With regard to liquidity, we ended the third quarter with $2.6
million of cash and long-term debt and finance lease liabilities of
$486.5 million. At the end of the third quarter we had availability
under our revolving credit facility of $53.9 million. Our net
leverage ratio was approximately four times Consolidated EBITDA as
defined in our Senior Credit Facility.
Full Year 2019 Outlook
Carrols is revising its annual guidance for certain items to
reflect the following. These estimates exclude any other potential
acquisitions that the Company may complete in 2019:
- Total restaurant sales are still expected to be $1.44 billion
to $1.47 billion, including approximately $200 million of total
sales from Cambridge for approximately eight months in 2019;
- Comparable restaurant sales are still expected to grow 2.0% to
3.0%;
- Commodity costs are still expected to increase 3% to 4% with
beef costs increasing 7% to 9%;
- General and administrative expenses are still expected to be
$68 million to $72 million, excluding stock compensation expense
and acquisition and integration costs. The Company expects to fully
integrate the Cambridge corporate functions by the end of the
year;
- Our previous guidance of Adjusted EBITDA of $100 million to
$105 million remains unchanged other than for the negative impact
on Adjusted EBITDA of approximately $10.9 million in the second and
third quarters due to the excess sales discounts discussed
above;
- Capital expenditures are now expected to be $145 million to
$155 million (previously $120 million to $130 million), including
$55 million to $65 million for construction of 22 to 24 new Burger
King restaurants and 9 to 11 new Popeyes restaurants and remodeling
approximately 92 Burger King restaurants and 4 Popeyes restaurants.
The Company will be receiving $8 million of landlord contributions
for certain of the 2019 Burger King remodels in 2020;
- Proceeds from sale/leasebacks are now expected to be
approximately $44 million to $48 million (previously $15 million to
$25 million);
- The Company expects to close up to 15 Burger King® restaurants,
including two restaurant relocations within their trade areas,
which 13 have been closed through the end of third quarter of
2019.
Carrols has not reconciled guidance for Adjusted EBITDA to the
corresponding GAAP financial measure because the Company does not
provide guidance for net income or for the various reconciling
items. The Company is unable to provide guidance for these
reconciling items since certain items that impact net income are
outside of Carrols’ control or cannot be reasonably predicted.
Conference Call Today
Daniel T. Accordino, Chairman and Chief Executive Officer, and
Timothy J. LaLonde, interim Chief Financial Officer, will host a
conference call to discuss third quarter 2019 financial results
today at 8:30 AM ET.
The conference call can be accessed live over the phone by
dialing 201-493-6725. A replay will be available one hour after the
call and can be accessed by dialing 412-317-6671; the passcode is
13695332. The replay will be available until Thursday, November 14,
2019. Investors and interested parties may listen to a webcast of
this conference call by visiting www.carrols.com under the tab
“Investor Relations”.
Investor Conference Participation
As a reminder, Carrols will host a fireside chat at the Stephens
2019 Nashville Investment Conference on Thursday, November 14th at
10:45 AM ET. Investors and interested parties may listen to a
webcast by visiting www.carrols.com under the tab “Investor
Relations”.
About the Company
Carrols is one of largest restaurant franchisees in the United
States, and currently operates 1,093 restaurants. It is the largest
BURGER KING® franchisee in the United States currently operating
1,032 BURGER KING® restaurants and also operating 61 POPEYES®
restaurants. It 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, plans or guidance 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)
Nine Months Ended (a)
September 29, 2019
September 30, 2018
September 29, 2019
September 30, 2018
Revenue:
Restaurant sales
$
398,414
$
296,917
$
1,054,877
$
871,553
Other revenue
3,931
—
6,816
—
Total revenue
402,345
296,917
1,061,693
871,553
Costs and expenses:
Cost of sales
121,283
82,082
313,015
237,004
Restaurant wages and related expenses
131,070
95,391
352,402
283,489
Restaurant rent expense
29,300
20,259
77,906
60,112
Other restaurant operating expenses
62,710
45,510
164,623
132,938
Advertising expense
16,052
12,120
42,601
35,741
General and administrative expenses (b)
(c)
21,365
17,602
61,709
49,758
Depreciation and amortization
21,200
14,555
53,613
43,426
Impairment and other lease charges
500
164
1,777
3,354
Other income, net (d)
(20
)
(434
)
(1,773
)
(434
)
Total costs and expenses
403,460
287,249
1,065,873
845,388
Income (loss) from operations
(1,115
)
9,668
(4,180
)
26,165
Interest expense
7,578
5,909
20,425
17,752
Loss on extinguishment of debt
—
—
7,443
—
Gain on bargain purchase
—
—
—
(230
)
Income (loss) before income taxes
(8,693
)
3,759
(32,048
)
8,643
Provision (benefit) for income taxes
(1,881
)
148
(10,035
)
346
Net income (loss)
$
(6,812
)
$
3,611
$
(22,013
)
$
8,297
Basic and diluted net income (loss) per
share (e)(f)
$
(0.15
)
$
0.08
$
(0.54
)
$
0.18
Basic weighted average common shares
outstanding
45,947
35,736
41,015
35,707
Diluted weighted average common shares
outstanding
45,947
45,411
41,015
45,293
(a)
The Company uses a 52 or 53 week fiscal year that ends on
the Sunday closest to December 31. The three and nine months ended
September 29, 2019 and September 30, 2018 each included thirteen
and thirty-nine weeks, respectively.
(b)
General and administrative expenses include acquisition and
integration costs of $2.2 million and $0.8 million for the three
months ended September 29, 2019 and September 30, 2018,
respectively and $7.0 million and $1.0 million for the nine months
ended September 29, 2019 and September 30, 2018, respectively.
(c)
General and administrative expenses include stock-based
compensation expense of $1.7 million and $1.5 million for the three
months ended September 29, 2019 and September 30, 2018 respectively
and $4.5 million for both the nine months ended September 29, 2019
and September 30, 2018, respectively.
(d)
Other income, net, for the nine months ended September 29,
2019, included, among other things, a $1.9 million gain related to
a settlement with Burger King Corporation for the approval of new
restaurant development by other franchisees which unfavorably
impacted our restaurants. Other income, net, for the three and nine
months ended September 30, 2018 included a $0.4 million gain
related to an insurance recovery from a restaurant fire.
(e)
Basic net income (loss) per share was computed excluding
loss attributable to preferred stock and non-vested restricted
shares unless the effect would have been anti-dilutive for the
periods presented.
(f)
Diluted net income (loss) per share was computed including
shares issuable for convertible preferred stock and non-vested
restricted shares unless 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
Nine Months Ended (a)
September 29, 2019
September 30, 2018
September 29, 2019
September 30, 2018
Revenue:
Burger King restaurant sales
$
379,212
$
296,917
$
1,023,715
$
871,553
Popeyes restaurant sales
19,202
—
31,162
—
Total restaurant sales
398,414
296,917
1,054,877
871,553
Other revenue
3,931
—
6,816
—
Total revenue
$
402,345
$
296,917
$
1,061,693
$
871,553
Change in Comparable Burger King
Restaurant Sales (a)
4.5
%
1.6
%
2.3
%
4.2
%
Average Weekly Sales per Burger King
Restaurant (b)
$
28,766
$
28,217
$
28,006
$
27,733
Average Weekly Sales per Popeyes
Restaurant (b)
$
24,711
$
—
$
24,623
$
—
Restaurant-Level EBITDA (c)
$
43,004
$
41,616
$
113,211
$
122,613
Restaurant-Level EBITDA margin (c)
10.7
%
14.0
%
10.7
%
14.1
%
Adjusted EBITDA (c)
$
25,648
$
26,483
$
63,414
$
78,529
Adjusted EBITDA margin (c)
6.4
%
8.9
%
6.0
%
9.0
%
Adjusted net income (loss) (c)
$
(3,920
)
$
4,158
$
(9,331
)
$
11,660
Adjusted diluted net income (loss) per
share (c)
$
(0.09
)
$
0.09
$
(0.23
)
$
0.25
Number of Burger King restaurants:
Restaurants at beginning of period
1,023
807
849
807
New restaurants (including offsets)
7
2
13
6
Restaurants acquired
1
33
179
34
Restaurants closed (including offsets)
(3
)
(4
)
(13
)
(9
)
Restaurants at end of period
1,028
838
1,028
838
Average Number of Restaurants:
1,014.1
809.4
937.3
805.8
Number of Popeyes restaurants:
Restaurants at beginning of period
58
—
—
—
Restaurants acquired
—
—
55
—
New restaurants
2
—
5
—
Restaurants at end of period
60
—
60
—
Average Number of Restaurants:
59.6
—
57.4
—
At 9/29/19
At 12/30/2018
Long-term debt and finance lease
liabilities (d)
$
486,517
$
278,941
Cash and cash equivalents
2,615
4,014
(a)
Restaurants we acquire are included in comparable restaurant
sales after they have been operated by us for 12 months. Sales from
restaurants we develop are included in comparable sales after they
have been open for 15 months. The calculation of changes in
comparable restaurant sales is based on the comparable 13-week or
39-week period.
(b)
Average weekly sales per restaurant are derived by dividing
restaurant sales for the comparable 13-week or 39-week period by
the average number of restaurants operating during such period.
(c)
EBITDA, Adjusted EBITDA, Adjusted EBITDA margin,
Restaurant-Level EBITDA, Restaurant-Level EBITDA margin and
Adjusted net income (loss) are non-GAAP financial measures and may
not necessarily be comparable to other similarly titled captions of
other companies due to differences in methods of calculation. Refer
to the Company's reconciliation of net income (loss) to EBITDA,
Adjusted EBITDA and Adjusted net income (loss), and to the
Company's reconciliation of income (loss) from operations to
Restaurant-Level EBITDA for further detail. Both Adjusted EBITDA
margin and Restaurant-Level EBITDA margin are calculated as a
percentage of restaurant sales. Adjusted diluted net income (loss)
per share is calculated based on Adjusted net income (loss) and
reflects the dilutive impact of shares, where applicable, based on
Adjusted net income (loss).
(d)
Long-term debt and finance lease liabilities (including
current portion and excluding deferred financing costs and original
issue discount) at September 29, 2019 included $423,937 of the
Company's Term Loan B under our senior credit facility, $59,500 of
outstanding revolving borrowings under the Company's senior credit
facility and $3,086 of finance lease liabilities. Long-term debt
and finance lease liabilities (including current portion and
excluding deferred financing costs) at December 30, 2018 included
$275,000 of the Company's 8% Senior Secured Second Lien Notes and
$3,941 of finance lease liabilities.
Carrols Restaurant Group,
Inc.
Reconciliation of Non-GAAP
Measures
(In thousands, except per share
amounts)
(unaudited)
(unaudited)
Three Months Ended
Nine Months Ended
September 29, 2019
September 30, 2018
September 29, 2019
September 30, 2018
Reconciliation of EBITDA and Adjusted
EBITDA: (a)
Net income (loss)
$
(6,812
)
$
3,611
$
(22,013
)
$
8,297
Provision (benefit) for income taxes
(1,881
)
148
(10,035
)
346
Interest expense
7,578
5,909
20,425
17,752
Depreciation and amortization
21,200
14,555
53,613
43,426
EBITDA
20,085
24,223
41,990
69,821
Impairment and other lease charges
500
164
1,777
3,354
Acquisition and integration costs (b)
2,754
842
7,983
1,036
Pre-opening costs (c)
478
61
1,063
344
Litigation costs (d)
144
96
416
137
Other income, net (e)
(20
)
(434
)
(1,773
)
(434
)
Gain on bargain purchase
—
—
—
(230
)
Stock-based compensation expense
1,707
1,531
4,515
4,501
Loss on extinguishment of debt
—
—
7,443
—
Adjusted EBITDA
$
25,648
$
26,483
$
63,414
$
78,529
Reconciliation of Restaurant-Level
EBITDA: (a)
Income (loss) from operations
$
(1,115
)
$
9,668
$
(4,180
)
$
26,165
Add:
General and administrative expenses
21,365
17,602
61,709
49,758
Integration costs (b)
596
—
1,002
—
Pre-opening costs (c)
478
61
1,063
344
Depreciation and amortization
21,200
14,555
53,613
43,426
Impairment and other lease charges
500
164
1,777
3,354
Other income, net (e)
(20
)
(434
)
(1,773
)
(434
)
Restaurant-Level EBITDA
$
43,004
$
41,616
$
113,211
$
122,613
Reconciliation of Adjusted net income
(loss): (a)
Net income (loss)
$
(6,812
)
$
3,611
$
(22,013
)
$
8,297
Add:
Impairment and other lease charges
500
164
1,777
3,354
Acquisition and integration costs (b)
2,754
842
7,983
1,036
Pre-opening costs (c)
478
61
1,063
344
Litigation costs (d)
144
96
416
137
Other income, net (e)
(20
)
(434
)
(1,773
)
(434
)
Gain on bargain purchase
—
—
—
(230
)
Loss on extinguishment of debt
—
—
7,443
—
Income tax effect on above adjustments
(f)
(964
)
(182
)
(4,227
)
(844
)
Adjusted net income (loss)
$
(3,920
)
$
4,158
$
(9,331
)
$
11,660
Adjusted diluted net income (loss) per
share
$
(0.09
)
$
0.09
$
(0.23
)
$
0.26
Adjusted diluted weighted average common
shares outstanding
45,947
45,411
41,015
45,293
(a)
Within our press release, we make reference to EBITDA,
Adjusted EBITDA, Restaurant-Level EBITDA and Adjusted net income
(loss) which are non-GAAP financial measures. EBITDA represents net
income (loss) before 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, stock-based compensation expense, loss on
extinguishment of debt, restaurant pre-opening costs, non-recurring
litigation costs and other non-recurring income or expense.
Restaurant-Level EBITDA represents income (loss) from operations as
adjusted to exclude general and administrative expenses,
depreciation and amortization, impairment and other lease charges,
integration costs, pre-opening costs, loss on extinguishment of
debt, and other non-recurring income or expense. Adjusted net
income (loss) represents net income (loss) as adjusted to exclude
impairment and other lease charges, acquisition costs and
integration costs, gain on bargain purchase, non-recurring
litigation costs and other non-recurring income or expense.
We are presenting Adjusted EBITDA, Restaurant-Level EBITDA
and Adjusted net income (loss) because we believe that they provide
a more meaningful comparison than EBITDA and net income (loss) of
the Company's core business operating results, as well as with
those of other similar companies. Additionally, we present
Restaurant-Level EBITDA because it excludes the impact of general
and administrative expenses such as salaries and expenses
associated with corporate and administrative functions that support
the development and operations of our restaurants, legal, auditing
and other professional fees, acquisition costs, pre-opening costs
and stock-based compensation expense. Although these costs are not
directly related to restaurant-level operations, these expenses are
necessary for the profitability of our restaurants. Additionally,
this financial measure may not be comparable to a similarly titled
caption for other companies. Management believes that Adjusted
EBITDA, Restaurant-Level EBITDA and Adjusted net income (loss),
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
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, Restaurant-Level EBITDA
and Adjusted net income (loss) are not measures of financial
performance or liquidity under GAAP and, accordingly, should not be
considered as alternatives to net 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 income (loss) and
EBITDA, Adjusted EBITDA and Adjusted net income (loss) and between
income (loss) from operations and Restaurant-Level EBITDA.
(b)
Acquisition and integration costs for the three and nine
months ended September 29, 2019 of $2.8 million and $8.0 million,
respectively, include certain legal and professional fees;
corporate payroll, and other costs related to the integration of
the Cambridge merger and one-time repair costs which are included
in Restaurant-Level EBITDA.
(c)
Pre-opening costs for the three and nine months ended
September 29, 2019 and September 30, 2018 include training, labor
and occupancy costs incurred during the construction of new
restaurants.
(d)
Legal costs for the three and nine months ended September
29, 2019 include litigation expenses pertaining to an ongoing
lawsuit with one of the Company's former vendors.
(e)
Other income, net for the three months ended September 29,
2019 included a loss on disposal of assets of $0.1 million and a
gain on a sale-leaseback transaction of $0.1 million. Other income,
net for the nine months ended September 29, 2019 included a $1.9
million gain related to a settlement with Burger King Corporation
for the approval of new restaurant development by other franchisees
which unfavorably impacted our restaurants, a loss on disposal of
assets of $0.6 million, a gain on three sale-leaseback transactions
of $0.3 million, and a gain related to an insurance recovery from a
fire at one of our restaurants in the prior year of $0.1 million.
(f)
The income tax effect related to the adjustments for
impairment and other lease charges, gain on bargain purchase,
acquisition costs, and other non-recurring expense (income) during
the periods presented was calculated using an incremental income
tax rate of 25% for the three and nine months ended September 29,
2019 and 25% and 21.6% for the three and nine months ended
September 30, 2018, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191107005309/en/
Investor Relations: 800-348-1074, ext. 3333
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