Carrols Restaurant Group, Inc. (“Carrols” or the “Company”)
(Nasdaq: TAST) today reported financial results for the fourth
quarter and full year ended January 3, 2021.
Highlights for the 14-Week Fourth
Quarter of 2020 versus the 13-Week Fourth Quarter of
2019
- Total restaurant sales increased
5.8% to $420.5 million compared to $397.6 million in the prior year
quarter, with $28.4 million in restaurant sales during the 14th
week of the fourth quarter of 2020;
- Comparable restaurant sales for the
Company's Burger King® restaurants decreased 0.9%;
- Comparable restaurant sales for the
Company’s Popeyes® restaurants decreased 12.9%;
- Adjusted EBITDA(1) increased to
$31.8 million from $22.8 million in the prior year quarter, with an
estimated $5.3 million contribution from the 14th week of the
fourth quarter of 2020;
- Adjusted Restaurant-Level EBITDA(1)
increased to $51.9 million from $42.9 million in the prior year
quarter, with an estimated $6.3 million contribution from the 14th
week of the fourth quarter of 2020;
- Net Loss was $18.6 million, or
$0.37 per diluted share, which includes a non-cash income tax
expense of $12.9 million related to an evaluation of the potential
usability of certain tax credits, compared to Net Loss of $9.9
million, or $0.20 per diluted share, in the prior year
quarter;
- Adjusted Net Loss(1) was five
thousand dollars, or $0.00 per diluted share, compared to Adjusted
Net Loss of $6.1 million, or $0.12 per diluted share, in the prior
year quarter; and
- The Company generated $9.4 million
of Free Cash Flow(2) during the fourth quarter of 2020.
Highlights for the 53-Week Full Year of
2020 versus the 52-Week Full Year of 2019
- Total restaurant sales increased
6.5% to $1,547.5 million compared to $1,452.5 million in the prior
year, with $28.4 million in restaurant sales during the 53rd week
of 2020;
- Comparable restaurant sales for the
Company's Burger King® restaurants decreased 2.8%;
- Comparable restaurant sales for the
Company’s Popeyes® restaurants decreased 0.1%;
- Adjusted EBITDA(1) increased to
$107.9 million from $86.4 million in the prior year, with an
estimated $5.3 million contribution from the 53rd week of
2020;
- Adjusted Restaurant-Level EBITDA(1)
increased to $181.6 million from $156.1 million in the prior year,
with an estimated $6.3 million contribution from the 53rd week of
2020;
- Net Loss was $29.5 million, or
$0.58 per diluted share, which includes a non-cash income tax
expense of $13.1 million related to an evaluation of the potential
usability of certain tax credits, compared to Net Loss of $31.9
million, or $0.74 per diluted share, in the prior year;
- Adjusted Net Loss(1) was $3.7
million, or $0.07 per diluted share, compared to Adjusted Net Loss
of $15.3 million, or $0.35 per diluted share, in the prior year;
and
- The Company generated $56.1 million
of Free Cash Flow(2) during the full year of 2020.
(1) Adjusted
EBITDA, Adjusted Restaurant-Level EBITDA and Adjusted Net 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.(2)
Free Cash Flow is a non-GAAP financial measure and is defined as
Net cash provided by operating activities less Net cash used for
investing activities adjusted to add back cash paid for
acquisitions. Refer to the definition and reconciliation of this
measure in the tables at the end of this release.
Recent Monthly Comparable Restaurant
Sales Trends
Monthly comparable restaurant sales increases /
(decreases) for the month ending November 1, 2020 through the month
ending February 7, 2021 are as follows:
|
Fourth Quarter 2020 |
First Quarter 2021 |
Fiscal Month |
October 2020 |
November 2020 |
December 2020 |
January 2021 |
Burger King |
(3.2)% |
1.0% |
0.2% |
5.5% |
Popeyes |
1.9% |
(26.8)% |
(12.6)% |
1.2% |
Management Commentary
Daniel T. Accordino, Chairman and Chief
Executive Officer of Carrols, commented, “Throughout 2020, and
despite the pandemic-related challenges that we faced, we
demonstrated that our business model and world-class brands are
well positioned to serve value and convenience-seeking customers
through our drive-thru, at-the-counter for take-out, and delivery
channels, and we did so while growing our top-line by 6.5%. We were
also able to increase our full year Adjusted Restaurant-Level
EBITDA and Adjusted EBITDA by $25.4 million and $21.5 million,
respectively, by managing food costs, optimizing labor hours
despite higher wage rates, and controlling other restaurant-level
and corporate overhead expenses. We believe we have a stronger
company as a result of the actions taken last year, particularly
with the addition of meaningful and profitable delivery sales and
the implementation of certain cost-saving initiatives that we
expect will continue to benefit us throughout 2021. We thank our
team profusely for their dedication and commitment to Carrols and
serving our communities during these unprecedented times.”
Accordino continued, “We are encouraged that
comparable restaurant sales for the Company’s Burger King
restaurants strengthened in November and December compared to
October and that this sales trend further improved in January.
Comparable restaurant sales for the Company’s Popeyes restaurants
were more volatile in the fourth quarter of 2020 as the brand
lapped the full introduction of Popeyes’ well-received chicken
sandwich, but still increased on a two-year stacked basis of 8.3%.
We attribute some of our traction to recent stimulus action by the
government and believe that further actions taken at the federal
level to ensure food security for struggling families will be
beneficial to us. While unusually severe winter weather,
particularly in the southern regions of the country, has adversely
impacted quick-service restaurant results in February, we believe
that our comparable restaurant sales will regain momentum over the
next few months as we lap the onset of COVID-19 and Burger King
launches what we believe to be a best-in-class chicken sandwich
offering.”
Accordino concluded, “In 2020, we generated
$56.1 million in Free Cash Flow, and exited the year with
substantial available liquidity of approximately $200 million,
including cash and borrowing availability under our revolving
credit facility. Our projected net capital expenditures for 2021
are targeted to be approximately $60 million, which is modestly
higher than our earlier plan but reflects what we believe will be
strong ROI initiatives such as an acceleration of our digital menu
rollout, new equipment at our Burger King restaurants related to
preparing the brand’s new chicken sandwich, and remodels and new
builds that will be at or slightly above our previous intentions.
We feel very comfortable making these investments and they do not
detract from our commitment to generate meaningful free cash flow.
We are also pursuing a number of opportunistic bolt-on transactions
now that our Adjusted Leverage Ratio (as defined in our senior
credit facility) is below four times.”
Fourth Quarter 2020 Financial
Results
Total restaurant revenue increased 5.8% to
$420.5 million in the fourth quarter of 2020, including $28.4
million in the 14th week of the quarter, compared to $397.6 million
in the fourth quarter of 2019. Comparable restaurant sales for the
Company’s Burger King restaurants decreased 0.9% compared to a 2.0%
increase in the prior year quarter. Comparable restaurant sales for
the Company’s Popeyes restaurants decreased 12.9% compared to a
21.2% increase in the prior year quarter.
Adjusted Restaurant-Level EBITDA(1) increased to
$51.9 million in the fourth quarter of 2020 from $42.9 million in
the prior year period, including $6.3 million from the 14th week in
2020. Adjusted Restaurant-Level EBITDA margin was 12.3% of
restaurant sales and increased 160 basis points from the fourth
quarter of 2019, including 70 basis points of favorability from the
extra week but also reflecting lower cost of sales, wage and
related expenses, and other restaurant operating expenses. The
Company demonstrated its ability to continue to rationalize ongoing
expenses where possible, through reduced food waste, optimized
restaurant labor, and managing other restaurant-related operating
expenses.
General and administrative expenses increased to
$24.2 million in the fourth quarter of 2020 from $23.0 million in
the prior year period. The fourth quarter of 2020 includes $2.0
million higher bonus expense due to improved operational
performance and the fourth quarter of 2019 included $1.5 million of
certain non-recurring expenses primarily relating to acquisition
and integration costs. The fourth quarter 2020 total also reflects
the impact of many corporate cost efficiency initiatives such as
streamlining of the Company’s regional management structure and a
re-engineering of the training process that were completed in the
first half of 2020 that have since carried-over into 2021.
Adjusted EBITDA(1) increased to $31.8 million in
the fourth quarter of 2020 from $22.8 million in the fourth quarter
of 2019, which included an estimated $5.3 million from the 14th
week in 2020. Adjusted EBITDA margin was 7.6% of total restaurant
sales and increased 190 basis points from the fourth quarter of
2019 due to the factors discussed above and with favorability from
the 14th week of 80 basis points.
Income from operations increased to $1.6 million
in the fourth quarter of 2020 compared to loss from operations of
$4.6 million in the prior year quarter.
Interest expense decreased to $7.1 million in
the fourth quarter of 2020 from $7.4 million in the fourth quarter
of 2019.
Net Loss was $18.6 million in the fourth quarter
of 2020, or $0.37 per diluted share, compared to a Net Loss of $9.9
million, or $0.20 per diluted share, in the prior year quarter. Net
Loss in the fourth quarter of 2020 and 2019 included $5.0 million
and $1.8 million of impairment and other lease charges,
respectively. The Net Loss in the fourth quarter of 2020 also
includes a federal tax expense of $12.9 million to record an
incremental tax valuation allowance for certain income tax credits
as they may expire prior to their utilization by the Company.
Adjusted Net Loss(1) was five thousand dollars,
or $0.00 per diluted share, compared to an Adjusted Net Loss of
$6.1 million, or $0.12 per diluted share, in the prior year
quarter.
Stock Repurchase Update
During the fourth quarter of 2020, the Company utilized $10.0
million of cash to repurchase 1.5 million shares of its common
stock for an average price of $6.52 per share.
The Company currently has $11.0 million remaining for
repurchases under its stock repurchase program.
Balance Sheet Update
The Company ended the fourth quarter of 2020
with cash and cash equivalents of $65.0 million, and long-term debt
(including current portion) and finance lease liabilities of $494.2
million. As of the end of the fourth quarter of 2020, the Company
did not have any outstanding revolving credit borrowings under its
$145.8 million revolving credit facility and had $9.7 million of
letters of credit issued under such facility. The Company’s
Adjusted Leverage Ratio (as defined in our senior credit facility)
was 3.82 times at the end of 2020.
Conference Call Today
Daniel T. Accordino, Chairman and Chief
Executive Officer, and Anthony E. Hull, Chief Financial Officer,
will host a conference call to discuss fourth quarter and full year
2020 financial results and provide a business update 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 13716116. The replay will be available until
Wednesday, March 10, 2021.
Investors and interested parties may also listen
to a webcast of this conference call and review an investor
presentation related to the fourth quarter and full year 2020
financial results by visiting www.carrols.com under the tab
“Investor Relations”.
About the Company
Carrols is one of the largest restaurant
franchisees in the United States, and currently operates
approximately 1,075 restaurants. It is the largest BURGER KING®
franchisee in the United States, currently operating 1,010 BURGER
KING® restaurants and also operating 65 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, including the impact of COVID-19 on Carrols’
business, as included in Carrols' filings with the Securities and
Exchange Commission.
Carrols Restaurant Group,
Inc.Consolidated Statements of
Operations(In thousands, except share and per share
amounts)
|
|
(unaudited) |
|
(unaudited ) |
|
|
Three Months Ended (a) |
|
Twelve Months Ended (a) |
|
|
January 3,2021 |
|
December 29,2019 |
|
January 3,2021 |
|
December 29,2019 |
Revenue: |
|
|
|
|
|
|
|
|
Restaurant sales |
|
$ |
420,530 |
|
|
$ |
397,639 |
|
|
$ |
1,547,502 |
|
|
$ |
1,452,516 |
|
Other revenue |
|
— |
|
|
3,433 |
|
|
— |
|
|
10,249 |
|
Total revenue |
|
420,530 |
|
|
401,072 |
|
|
1,547,502 |
|
|
1,462,765 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
Cost of sales |
|
123,880 |
|
|
118,954 |
|
|
452,738 |
|
|
431,969 |
|
Restaurant wages and related expenses |
|
135,624 |
|
|
132,876 |
|
|
498,127 |
|
|
485,278 |
|
Restaurant rent expense |
|
29,470 |
|
|
29,241 |
|
|
118,444 |
|
|
107,147 |
|
Other restaurant operating expenses |
|
63,285 |
|
|
62,741 |
|
|
236,059 |
|
|
227,364 |
|
Advertising expense |
|
16,454 |
|
|
16,088 |
|
|
60,735 |
|
|
58,689 |
|
General and administrative expenses (b) (c) |
|
24,243 |
|
|
23,025 |
|
|
84,051 |
|
|
84,734 |
|
Depreciation and amortization |
|
20,780 |
|
|
21,061 |
|
|
81,727 |
|
|
74,674 |
|
Impairment and other lease charges |
|
5,002 |
|
|
1,787 |
|
|
12,778 |
|
|
3,564 |
|
Other expense (income), net (d) |
|
161 |
|
|
(138 |
) |
|
(1,271 |
) |
|
(1,911 |
) |
Total costs and expenses |
|
418,899 |
|
|
405,635 |
|
|
1,543,388 |
|
|
1,471,508 |
|
Income (loss) from
operations |
|
1,631 |
|
|
(4,563 |
) |
|
4,114 |
|
|
(8,743 |
) |
Interest expense |
|
7,124 |
|
|
7,431 |
|
|
27,283 |
|
|
27,856 |
|
Loss on extinguishment of
debt |
|
— |
|
|
— |
|
|
— |
|
|
7,443 |
|
Loss before income taxes |
|
(5,493 |
) |
|
(11,994 |
) |
|
(23,169 |
) |
|
(44,042 |
) |
Provision (benefit) for income
taxes |
|
13,134 |
|
|
(2,088 |
) |
|
6,294 |
|
|
(12,123 |
) |
Net loss |
|
$ |
(18,627 |
) |
|
$ |
(9,906 |
) |
|
$ |
(29,463 |
) |
|
$ |
(31,919 |
) |
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per
share (e)(f) |
|
$ |
(0.37 |
) |
|
$ |
(0.20 |
) |
|
$ |
(0.58 |
) |
|
$ |
(0.74 |
) |
Basic and Diluted weighted
average common shares outstanding |
|
50,372 |
|
|
50,643 |
|
|
50,751 |
|
|
43,422 |
|
(a) The Company uses a 52 or 53 week fiscal year
that ends on the Sunday closest to December 31. The three and
twelve months ended January 3, 2021 included fourteen and
fifty-three weeks, respectively. The three and twelve months ended
December 29, 2019 included thirteen and fifty-two weeks,
respectively.(b) General and administrative expenses include
acquisition and integration costs of $1.5 million for the three
months ended December 29, 2019 and $0.3 million and $8.5
million for the twelve months ended January 3, 2021 and
December 29, 2019, respectively. General and administrative
expenses include a reduction of expense of $0.1 million for the
three months ended January 3, 2021.(c) General and
administrative expenses include stock-based compensation expense of
$1.7 million and $1.2 million for the three months ended
January 3, 2021 and December 29, 2019, respectively, and
$5.2 million and $5.8 million for the twelve months ended
January 3, 2021 and December 29, 2019,
respectively.(d) Other expense (income), net, for the three
months ended January 3, 2021, included a net gain of $0.4
million related to adjustments to insurance recoveries from
previous property damage at our restaurants and a loss on disposal
of assets of $0.5 million. Other expense (income), net, for the
twelve months ended January 3, 2021, included a gain of $2.1
million related to insurance recoveries from property damage at
four of our restaurants, a net gain on sale-leaseback transactions
of $0.2 million, and loss on disposal of assets of $1.0 million.
Other expense (income), net, for the twelve months ended
December 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.(e) Basic net loss per
share was computed without attributing any loss to preferred stock
and non-vested restricted shares as the effect would have been
anti-dilutive for the periods presented.(f) Diluted net 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 |
|
Twelve Months Ended |
|
|
January 3,2021 |
|
December 29,2019 |
|
January 3,2021 |
|
December 29,2019 |
Revenue: |
|
|
|
|
|
|
|
|
Burger King restaurant sales |
|
$ |
398,318 |
|
|
$ |
374,945 |
|
|
$ |
1,459,016 |
|
|
$ |
1,398,660 |
|
Popeyes restaurant sales |
|
22,212 |
|
|
22,694 |
|
|
88,486 |
|
|
53,856 |
|
Total restaurant sales |
|
420,530 |
|
|
397,639 |
|
|
1,547,502 |
|
|
1,452,516 |
|
Other revenue |
|
— |
|
|
3,433 |
|
|
— |
|
|
10,249 |
|
Total revenue |
|
$ |
420,530 |
|
|
$ |
401,072 |
|
|
$ |
1,547,502 |
|
|
$ |
1,462,765 |
|
Change in Comparable Burger
King Restaurant Sales (a) |
|
(0.9 |
)% |
|
2.0 |
% |
|
(2.8 |
)% |
|
2.2 |
% |
Change in Comparable Popeyes
Restaurant Sales (a) |
|
(12.9 |
)% |
|
|
|
(0.1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
Average Weekly Sales per
Burger King Restaurant (b) |
|
$ |
27,963 |
|
|
$ |
28,232 |
|
|
$ |
27,166 |
|
|
$ |
28,065 |
|
Average Weekly Sales per
Popeyes Restaurant (b) |
|
$ |
24,421 |
|
|
$ |
28,431 |
|
|
$ |
25,839 |
|
|
$ |
26,458 |
|
|
|
|
|
|
|
|
|
|
Adjusted Restaurant-Level
EBITDA (c) |
|
$ |
51,876 |
|
|
$ |
42,920 |
|
|
$ |
181,562 |
|
|
$ |
156,131 |
|
Adjusted Restaurant-Level
EBITDA margin (c) |
|
12.3 |
% |
|
10.7 |
% |
|
11.7 |
% |
|
10.7 |
% |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (c) |
|
$ |
31,769 |
|
|
$ |
22,764 |
|
|
$ |
107,855 |
|
|
$ |
86,371 |
|
Adjusted EBITDA margin
(c) |
|
7.6 |
% |
|
5.7 |
% |
|
7.0 |
% |
|
5.9 |
% |
|
|
|
|
|
|
|
|
|
Adjusted Net Loss (c) |
|
$ |
(5 |
) |
|
$ |
(6,135 |
) |
|
$ |
(3,733 |
) |
|
$ |
(15,323 |
) |
Adjusted Diluted Net Loss per
share (c) |
|
$ |
— |
|
|
$ |
(0.12 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.35 |
) |
|
|
|
|
|
|
|
|
|
Number of Burger King
restaurants: |
|
|
|
|
|
|
|
|
Restaurants at beginning of period |
|
1,023 |
|
|
1,028 |
|
|
1,036 |
|
|
849 |
|
New restaurants (including offsets) |
|
1 |
|
|
8 |
|
|
7 |
|
|
21 |
|
Restaurants acquired |
|
— |
|
|
— |
|
|
— |
|
|
179 |
|
Restaurants closed (including offsets) |
|
(15 |
) |
|
— |
|
|
(34 |
) |
|
(13 |
) |
Restaurants at end of period |
|
1,009 |
|
|
1,036 |
|
|
1,009 |
|
|
1,036 |
|
Average Number of Burger King
restaurants: |
|
1,017.5 |
|
|
1,021.6 |
|
|
1,013.4 |
|
|
958.4 |
|
|
|
|
|
|
|
|
|
|
Number of Popeyes
restaurants: |
|
|
|
|
|
|
|
|
Restaurants at beginning of period |
|
65 |
|
|
60 |
|
|
65 |
|
|
— |
|
New restaurants |
|
— |
|
|
5 |
|
|
— |
|
|
10 |
|
Restaurants acquired |
|
— |
|
|
— |
|
|
— |
|
|
55 |
|
Restaurants at end of period |
|
65 |
|
|
65 |
|
|
65 |
|
|
65 |
|
Average Number of Popeyes
restaurants: |
|
65.0 |
|
|
61.4 |
|
|
64.6 |
|
|
40.1 |
|
|
|
At 1/3/2021 |
|
At 12/29/2019 |
Long-term debt and finance lease liabilities (d) |
|
$ |
494,158 |
|
|
$ |
471,149 |
|
Cash and cash equivalents |
|
64,964 |
|
|
2,974 |
|
(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. For the
three and twelve months ended January 3, 2021, the calculation of
changes in comparable restaurant sales is based on the comparable
14-week and 53-week period, respectively. For the three and twelve
months ended December 29, 2019, the calculation of changes in
comparable restaurant sales is based on the comparable 13-week and
52-week period, respectively(b) Average weekly sales per restaurant
are derived by dividing restaurant sales for the comparable 14-week
and 53-week period ended January 3, 2021 and 13-week and 52-week
period ended December 29, 2019, by the average number of
restaurants operating during such period.(c) Adjusted EBITDA,
Adjusted EBITDA margin, Adjusted Restaurant-Level EBITDA, Adjusted
Restaurant-Level EBITDA margin and Adjusted Net Loss and Adjusted
Diluted Net Loss per share 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 loss to EBITDA, Adjusted
EBITDA and Adjusted Net Loss, and to the Company's reconciliation
of Income (loss) from operations to Adjusted Restaurant-Level
EBITDA for further detail. Both Adjusted EBITDA margin and Adjusted
Restaurant-Level EBITDA margin are calculated as a percentage of
restaurant sales. Adjusted Diluted Net Loss per share is calculated
based on Adjusted Net Loss and reflects the dilutive impact of
shares, where applicable, based on Adjusted Net Loss.(d) Long-term
debt and finance lease liabilities (including current portion and
excluding deferred financing costs and original issue discount) at
January 3, 2021 included $418,625 of Term Loan B borrowings
under our senior credit facility, $74,625 of Term Loan B-1
borrowings under our senior credit facility and $908 of finance
lease liabilities. Long-term debt and finance lease liabilities
(including current portion and excluding deferred financing costs
and original issue discount) at December 29, 2019 included
$422,875 of Term Loan B borrowings under our senior credit
facility, $45,750 of outstanding revolving borrowings under our
senior credit facility and $2,524 of finance lease liabilities.
Carrols Restaurant Group,
Inc.Reconciliation of Non-GAAP
Measures(In thousands, except share and per share
amounts)
|
|
(unaudited) |
|
(unaudited) |
|
|
Three Months Ended (a) |
|
Twelve Months Ended (a) |
|
|
January 3,2021 |
|
December 29,2019 |
|
January 3,2021 |
|
December 29,2019 |
Reconciliation of
EBITDA and Adjusted EBITDA: (b) |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(18,627 |
) |
|
$ |
(9,906 |
) |
|
$ |
(29,463 |
) |
|
$ |
(31,919 |
) |
Provision (benefit) for income taxes |
|
13,134 |
|
|
(2,088 |
) |
|
6,294 |
|
|
(12,123 |
) |
Interest expense |
|
7,124 |
|
|
7,431 |
|
|
27,283 |
|
|
27,856 |
|
Depreciation and amortization |
|
20,780 |
|
|
21,061 |
|
|
81,727 |
|
|
74,674 |
|
EBITDA |
|
22,411 |
|
|
16,498 |
|
|
85,841 |
|
|
58,488 |
|
Impairment and other lease charges |
|
5,002 |
|
|
1,787 |
|
|
12,778 |
|
|
3,564 |
|
Acquisition and integration costs (c) |
|
(100 |
) |
|
2,844 |
|
|
273 |
|
|
10,827 |
|
Abandoned development costs (d) |
|
1,718 |
|
|
63 |
|
|
3,464 |
|
|
256 |
|
Pre-opening costs (e) |
|
59 |
|
|
386 |
|
|
163 |
|
|
1,449 |
|
Litigation and other professional expenses (f) |
|
839 |
|
|
86 |
|
|
1,384 |
|
|
502 |
|
Other expense (income), net (g)(h) |
|
161 |
|
|
(138 |
) |
|
(1,271 |
) |
|
(1,911 |
) |
Stock-based compensation expense |
|
1,679 |
|
|
1,238 |
|
|
5,223 |
|
|
5,753 |
|
Loss on extinguishment of debt |
|
— |
|
|
— |
|
|
— |
|
|
7,443 |
|
Adjusted
EBITDA |
|
$ |
31,769 |
|
|
$ |
22,764 |
|
|
$ |
107,855 |
|
|
$ |
86,371 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted Restaurant-Level EBITDA: (a) |
|
|
|
|
|
|
|
|
Income (loss) from operations |
|
$ |
1,631 |
|
|
$ |
(4,563 |
) |
|
$ |
4,114 |
|
|
$ |
(8,743 |
) |
Add: |
|
|
|
|
|
|
|
|
General and administrative expenses |
|
24,243 |
|
|
23,025 |
|
|
84,051 |
|
|
84,734 |
|
Restaurant integration costs (c) |
|
— |
|
|
1,362 |
|
|
— |
|
|
2,364 |
|
Pre-opening costs (e) |
|
59 |
|
|
386 |
|
|
163 |
|
|
1,449 |
|
Depreciation and amortization |
|
20,780 |
|
|
21,061 |
|
|
81,727 |
|
|
74,674 |
|
Impairment and other lease charges |
|
5,002 |
|
|
1,787 |
|
|
12,778 |
|
|
3,564 |
|
Other expense (income), net (g)(h) |
|
161 |
|
|
(138 |
) |
|
(1,271 |
) |
|
(1,911 |
) |
Adjusted
Restaurant-Level EBITDA |
|
$ |
51,876 |
|
|
$ |
42,920 |
|
|
$ |
181,562 |
|
|
$ |
156,131 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted Net Loss: (b) |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(18,627 |
) |
|
$ |
(9,906 |
) |
|
$ |
(29,463 |
) |
|
$ |
(31,919 |
) |
Add: |
|
|
|
|
|
|
|
|
Impairment and other lease charges |
|
5,002 |
|
|
1,787 |
|
|
12,778 |
|
|
3,564 |
|
Acquisition and integration costs (c) |
|
(100 |
) |
|
2,844 |
|
|
273 |
|
|
10,827 |
|
Abandoned development costs (d) |
|
1,718 |
|
|
63 |
|
|
3,464 |
|
|
256 |
|
Pre-opening costs (e) |
|
59 |
|
|
386 |
|
|
163 |
|
|
1,449 |
|
Litigation and other professional expenses (f) |
|
839 |
|
|
86 |
|
|
1,384 |
|
|
502 |
|
Other expense (income), net (g)(h) |
|
161 |
|
|
(138 |
) |
|
(1,271 |
) |
|
(1,911 |
) |
Loss on extinguishment of debt |
|
— |
|
|
— |
|
|
— |
|
|
7,443 |
|
Income tax effect on above adjustments (i) |
|
(1,920 |
) |
|
(1,257 |
) |
|
(4,199 |
) |
|
(5,534 |
) |
Valuation allowance for deferred taxes (j) |
|
12,863 |
|
|
— |
|
|
13,138 |
|
|
— |
|
Adjusted Net
Loss |
|
$ |
(5 |
) |
|
$ |
(6,135 |
) |
|
$ |
(3,733 |
) |
|
$ |
(15,323 |
) |
Adjusted diluted net loss per
share (k) |
|
$ |
— |
|
|
$ |
(0.12 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.35 |
) |
Adjusted diluted weighted
average common shares outstanding |
|
50,372 |
|
|
50,643 |
|
|
50,751 |
|
|
43,422 |
|
|
|
(unaudited) |
|
(unaudited) |
|
|
Three Months Ended (a) |
|
Twelve Months Ended |
|
|
January 3,2021 |
|
December 29,2019 |
|
January 3,2021 |
|
December 29,2019 |
Reconciliation of Free
Cash Flow: (l) |
|
|
|
|
|
|
|
|
Net cash provided by operating activities (m) |
|
$ |
23,168 |
|
|
$ |
13,692 |
|
|
$ |
103,946 |
|
|
$ |
48,708 |
|
Net cash provided by (used
for) investing activities |
|
(13,812 |
) |
|
3,757 |
|
|
(47,857 |
) |
|
(218,045 |
) |
Add: cash paid for
acquisitions |
|
— |
|
|
(899 |
) |
|
— |
|
|
130,646 |
|
Total Free Cash
Flow |
|
$ |
9,356 |
|
|
$ |
16,550 |
|
|
$ |
56,089 |
|
|
$ |
(38,691 |
) |
(a) The Company uses a 52 or 53 week fiscal year
that ends on the Sunday closest to December 31. The three and
twelve months ended January 3, 2021 included fourteen and
fifty-three weeks, respectively. The three and twelve months ended
December 29, 2019 included thirteen and fifty-two weeks,
respectively.(b) Within our press release, we make reference to
EBITDA, Adjusted EBITDA, Adjusted Restaurant-Level EBITDA and
Adjusted Net Loss which are non-GAAP financial measures. EBITDA
represents net 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, abandoned development costs, restaurant
pre-opening costs, non-recurring litigation costs and other
non-recurring income or expense. Adjusted Restaurant-Level EBITDA
represents income (loss) from operations as adjusted to exclude
general and administrative expenses, depreciation and amortization,
impairment and other lease charges, restaurant-level integration
costs, pre-opening costs, and other non-recurring income or
expense. Adjusted Net Loss represents net loss as adjusted, net of
tax, to exclude impairment and other lease charges, acquisition
costs and integration costs, abandoned development costs,
pre-opening costs, non-recurring litigation costs, loss on
extinguishment of debt and other non-recurring income or expense.We
are presenting Adjusted EBITDA, Adjusted Restaurant-Level EBITDA
and Adjusted Net Loss because we believe that they provide a more
meaningful comparison than EBITDA and net loss 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 restaurant integration
costs, restaurant pre-opening costs, other expense (income), and
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. 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, Adjusted Restaurant-Level EBITDA and Adjusted
Net 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 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, Adjusted Restaurant-Level EBITDA and
Adjusted Net 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 Loss and EBITDA, Adjusted EBITDA and
Adjusted Net Loss and between Income (loss) from operations and
Adjusted Restaurant-Level EBITDA.(c) Acquisition and integration
costs for the three and twelve months ended January 3, 2021
mostly include legal and professional fees incurred in connection
with the acquisition of 165 Burger King and 55 Popeyes restaurants
from Cambridge Franchise Holdings, LLC in 2019, which were included
in general and administrative expense. Acquisition and integration
costs for the three and twelve months ended December 29, 2019
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 Adjusted
Restaurant-Level EBITDA.(d) Abandoned development costs for the
three and twelve months ended January 3, 2021 and
December 29, 2019 represents the write-off of capitalized
costs due to the abandoned development of future restaurant
locations.(e) Pre-opening costs for the three and twelve months
ended January 3, 2021 and December 29, 2019 include
training, labor and occupancy costs incurred during the
construction of new restaurants.(f) Litigation and other
professional expenses for the three and twelve months ended
January 3, 2021 and December 29, 2019 include costs
pertaining to an ongoing lawsuit with one of the Company's former
vendors, costs to settle a class action claim, as well as other
non-recurring professional service expenses.(g) Other expense
(income), net for the three months ended January 3, 2021
included a net gain related to adjustments to insurance recoveries
from previous property damage at restaurants of $0.4 million and a
loss on disposal of assets of $0.5 million. For the twelve months
ended January 3, 2021, other expense (income), net included gains
related to insurance recoveries from property damage at four of the
Company's restaurants of $2.1 million, a net gain on twelve
sale-leaseback transactions of $0.2 million and a loss on disposal
of assets of $1.0 million.(h) Other expense (income), net for the
twelve months ended December 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 the Company's restaurants, net gains on
sale-leaseback transactions of $0.6 million, a gain related to an
insurance recovery from property damage at two of the Company's
restaurants of $0.2 million and a loss on a disposal of restaurant
equipment of $0.8 million.(i) The income tax effect related to the
adjustments to Adjusted Net Loss during the periods presented was
calculated using an incremental income tax rate of 25.0% for the
three and twelve months ended January 3, 2021 and December 29,
2019, respectively.(j) Reflects the removal of the income tax
provision recorded for the establishment of a valuation allowance
on all our net deferred income tax assets during the year ended
January 3, 2021.(k) Adjusted Diluted Net Income (Loss) per
share is calculated based on Adjusted Net Loss and the dilutive
weighted average common shares outstanding for the respective
periods, where applicable.(l) Free Cash Flow is a non-GAAP
financial measure and may not necessarily be comparable to other
similarly titled captions of other companies due to differences in
methods of calculation. Free Cash Flow is defined as cash provided
by operating activities less cash used for investing activities,
adjusted to add back cash paid for acquisitions. Management
believes that Free Cash Flow, when viewed with the Company's
results of operations in accordance with GAAP and the accompanying
reconciliations in the table above, provides useful information
about the Company's cash flow for liquidity purposes and to service
the Company's debt. However, Free Cash Flow is not a measure of
liquidity under GAAP and, accordingly, should not be considered as
an alternative to the Company's consolidated statements of cash
flows and net cash provided by operating activities, net cash used
for investing activities and net cash provided by financing
activities as indicators of liquidity or cash flow. Free Cash Flow
for the three months ended January 3, 2021 and
December 29, 2019 is derived from the Company's consolidated
statements of cash flows for the respective twelve month periods to
be presented in the Company’s Consolidated Financial Statements in
its Form 10-K for the period ended January 3, 2021 and
the Company's consolidated statements of cash flows for the
previously reported nine month periods ended September 27, 2020 and
September 29, 2019, respectively, contained in the Company’s Form
10-Q for the period ended September 27, 2020.(m) Working capital
changes in the three and twelve months ended January 3, 2021
include $7.3 million and $21.6 million, respectively, related to
deferred payments of the employer portion of social security taxes,
which will be repaid half at the end of 2021 and the remainder at
the end of 2022.
Investor Relations:Raphael
Gross203-682-8253investorrelations@carrols.com
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