Carrols Restaurant Group, Inc. (“Carrols” or the “Company”)
(Nasdaq: TAST), the largest BURGER KING® franchisee in the United
States, today reported its financial results for the fourth quarter
and full year ended January 2, 2022.
Highlights for the 13-Week Fourth
Quarter of 2021 versus the 14-Week Fourth Quarter of 2020
include:
- Total restaurant sales were $416.1
million in the fourth quarter of 2021. Total restaurant sales were
$420.5 million in the prior year quarter, which included a $28.4
million contribution from the 14th week in the fourth quarter of
2020;
- Comparable restaurant sales for the
Company's Burger King® restaurants increased 7.4% (October +5.0%,
November +9.7%, December +8.3%);
- Comparable restaurant sales for the
Company’s Popeyes® restaurants increased 1.0%;
- Adjusted EBITDA(1) totaled $13.9
million compared to $31.8 million in the prior year quarter, which
included an estimated $5.3 million contribution from the 14th week
in the fourth quarter of 2020;
- Adjusted Restaurant-Level EBITDA(1)
totaled $34.2 million compared to $51.9 million in the prior year
quarter, which included an estimated $6.3 million contribution from
the 14th week in the fourth quarter of 2020;
- Net Loss was $16.4 million, or
$0.33 per diluted share, compared to Net Loss of $18.6 million, or
$0.37 per diluted share, in the prior year quarter;
- Adjusted Net Loss(1) was $7.5
million, or $0.15 per diluted share, compared to Adjusted Net Loss
of five thousand dollars, or $0.00 per diluted share, in the prior
year quarter; and
- Free Cash Flow(2) of $8.8 million
compared to $9.4 million in the prior year quarter.
Highlights for the 52-Week Full Year
2021 versus the 53-Week Full Year 2020 include:
- Total restaurant sales were
$1,652.4 million in the full year of 2021. Total restaurant sales
were $1,547.5 million in the prior year, which included a $28.4
million contribution from the 53rd week in 2020;
- Comparable restaurant sales for the
Company's Burger King® restaurants increased 9.1%;
- Comparable restaurant sales for the
Company’s Popeyes® restaurants decreased 1.9%;
- Adjusted EBITDA(1) totaled $81.6
million compared to $107.9 million in the prior year, which
included an estimated $5.3 million contribution from the 53rd week
in 2020;
- Adjusted Restaurant-Level EBITDA(1)
totaled $157.0 million compared to $181.6 million in the prior
year, which included an estimated $6.3 million contribution from
the 53rd week in 2020;
- Net Loss was $43.0 million, or
$0.86 per diluted share, compared to Net Loss of $29.5 million, or
$0.58 per diluted share, in the prior year;
- Adjusted Net Loss(1) was $21.3
million, or $0.43 per diluted share, compared to Adjusted Net Loss
of $3.7 million, or $0.07 per diluted share, in the prior year;
and
- Free Cash Flow(2) of $22.9 million
compared to $56.1 million in the prior year.
(1)Adjusted EBITDA, Adjusted 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.
(2)Free Cash flow is a non-GAAP financial measure. Refer to the
definition and reconciliation of this measure in the tables at the
end of this release.
Management Commentary
Daniel T. Accordino, Chairman, Chief Executive
Officer and President of Carrols, commented, “Our 7.4% quarterly
increase in Burger King comparable restaurant sales was driven by
an average check growth of 12.1%, inclusive of menu price increases
and lower promotional activity which was partially offset by a
traffic decline of 4.2%. Delivery rose to 5.0% of total restaurant
sales during the fourth quarter of 2021, up from 3.5% in the
year-ago period, and contributed to our average check growth. On a
calendar comparison basis, we exceeded the Burger King U.S. system
for comparable restaurant sales growth by approximately 600 basis
points during the fourth quarter of 2021, extending our track
record of outperforming the system to 22 of the last 24 quarters.
This was accomplished through both menu price actions and by
maintaining normal operating hours despite severe labor
constraints.”
Accordino continued, “Despite our top-line
growth, inflationary challenges meaningfully impacted our
profitability metrics. Commodity costs and team member average
hourly wage costs both increased in the mid-teens on a percentage
basis compared to the same period last year. However, these cost
components sequentially remained relatively stable as a percentage
of net sales comparing the third quarter to the fourth quarter in
2021. Due to recent and future anticipated pricing actions,
continued menu and promotional activity optimization, and a
potentially easing of cost pressures on a year-over-year basis, we
believe that we will able to claw back a portion of the margin
erosion experienced in 2021 in the back half of 2022.”
Accordino concluded, “We remain focused on
disciplined capital allocation while maintaining substantial
liquidity, which we believe has served us well in this challenging
business environment. At present, we intend to use free cash flow
generated by our business primarily to reduce debt levels and
strengthen our balance sheet. In 2021, our net capital expenditure
spend was approximately $48 million. In 2022, we expect to spend a
similar amount which is reflective of the construction supply chain
delays we have been experiencing.”
Fourth Quarter 2021 Financial
Results
Total restaurant sales were $416.1 million in
the fourth quarter of 2021, which was a 13-week period, compared to
$420.5 million in the fourth quarter of 2020, which was a 14-week
period. Total restaurants sales were $28.4 million for the 14th
week in the fourth quarter of 2020.
Comparable restaurant sales for the Company’s
Burger King restaurants increased 7.4% compared to a 0.9% decrease
in the prior year quarter. Comparable restaurant sales for the
Company’s Burger King restaurants increased 7.0% compared to the
fourth quarter of 2019.
Restaurant sales for the Company’s Popeyes
restaurants, which represented 4.8% of total restaurant sales in
the fourth quarter of 2021, increased on a comparable restaurant
sales basis by 1.0% compared to the fourth quarter of 2020.
Staffing challenges during evening operating hours this past
quarter impacted Popeyes comparable restaurant sales. On a calendar
comparison basis, the Company outperformed the Popeyes U.S. system
in comparable restaurant sales in the fourth quarter of 2021 by
approximately 300 basis points. Comparable restaurant sales for the
Company’s Popeyes restaurants decreased 12.6% compared to the
fourth quarter of 2019.
Adjusted Restaurant-Level EBITDA(1) was $34.2
million in the fourth quarter of 2021 compared to $51.9 million in
the prior year period. Adjusted Restaurant-Level EBITDA margin
declined to 8.2% of restaurant sales from 12.3% in the fourth
quarter of 2020, reflecting higher food, beverage and packaging
costs, higher wage and related expenses, and higher other
restaurant operating expenses. The hourly cost and availability of
labor remain a challenge for the restaurant industry and the
Company. Supply chain cost pressures also continue to adversely
impact the Company’s margins although we believe such costs are
stabilizing.
General and administrative expenses decreased to
$22.4 million in the fourth quarter of 2021 from $24.2 million in
the prior year period.
Adjusted EBITDA(1) was $13.9 million in the
fourth quarter of 2021 compared to $31.8 million in the fourth
quarter of 2020. Adjusted EBITDA margin decreased to 3.3% of total
restaurant sales from 7.6% due to the factors discussed above.
Loss from operations was $10.0 million in the
fourth quarter of 2021 compared to income from operations of $1.6
million in the prior year quarter.
Interest expense increased to $7.4 million in
the fourth quarter of 2021 from $7.1 million in the fourth quarter
of 2020.
Net Loss was $16.4 million in the fourth quarter
of 2021, or $0.33 per diluted share, compared to a Net Loss of
$18.6 million, or $0.37 per diluted share, in the prior year
quarter. Net Loss in the fourth quarter of 2021 included a $1.1
million gain related to the sale of certain litigation claims,
additional insurance recoveries from previous property damage at
our restaurants of $0.2 million and a loss on disposal of assets of
$0.3 million. Net Loss in the fourth quarter of 2020 included a
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.
Adjusted Net Loss(1) was $7.5 million, or $0.15
per diluted share in the fourth quarter of 2021, compared to an
Adjusted Net Loss of five thousand dollars, or $0.00 per diluted
share, in the prior year quarter.
Balance Sheet Update
The Company ended the fourth quarter of 2021
with cash and cash equivalents of $29.2 million, and long-term debt
(including current portion) and finance lease liabilities of $478.2
million. There were no outstanding revolving credit borrowings
under the Company’s $215.0 million revolving credit facility and
$9.0 million of letters of credit issued under such facility,
leaving $206.0 million of availability under its revolving credit
facility as of January 2, 2022. Including the cash balance, the
Company had $235.1 million of available liquidity at the end of the
fourth quarter of 2021. As of February 23, 2022, the Company had
$25.0 million of outstanding borrowings on its revolving credit
facility which is expected to be fully repaid as the Company enters
its stronger seasonal periods.
Paulo Pena Appointed Chief Executive
Officer
On February 22, 2022, Carrols Board of Directors
named Paulo Pena as Chief Executive Officer and President,
effective April 1, 2022. Mr. Pena succeeds Daniel T. Accordino,
who, as previously announced, will retire at that time from his
role as Chairman, Chief Executive Officer and President after a
50-year career with the Company. Mr. Accordino will remain
available to assist Mr. Pena in an advisory capacity to ensure a
successful transition of leadership. David S. Harris, a member of
the Carrols Board since 2012 and its Lead Independent Director,
will assume the role of Non-Executive Chairman effective April 1,
2022.
Conference Call Today
Daniel T. Accordino, Chairman, Chief Executive
Officer and President, and Anthony E. Hull, Chief Financial
Officer, will host a conference call to discuss fourth quarter and
full year 2021 financial results at 8:00 a.m. (ET).
The conference call can be accessed live over
the telephone by dialing 201-493-6725. A replay will be available
three hours after the call and can be accessed by dialing
412-317-6671; the passcode is 13726339. The replay will be
available until Thursday, March 3, 2022. Investors and interested
parties may listen to a webcast of this conference call by visiting
the Investor Relations page of the Company’s website located at
www.carrols.com. The press release and related presentation slides
will be accessible via the same website page prior to the scheduled
call.
About the Company
Carrols is one of the largest restaurant
franchisees in North America. It is the largest BURGER KING®
franchisee in the United States, currently operating 1,028 BURGER
KING® restaurants in 23 states as well as 65 POPEYES® restaurants
in seven states. Carrols has operated BURGER KING® restaurants
since 1976 and POPEYES® restaurants since 2019. For more
information, 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 without limitation 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 per share amounts)
|
(unaudited) |
|
Three Months Ended (a) |
|
Twelve Months Ended (a) |
|
January 2,2022 |
|
January 3,2021 |
|
January 2,2022 |
|
January 3,2021 |
Restaurant sales |
$ |
416,133 |
|
|
$ |
420,530 |
|
|
$ |
1,652,370 |
|
|
$ |
1,547,502 |
|
Costs and expenses: |
|
|
|
|
|
|
|
Food, beverage and packaging costs |
|
128,368 |
|
|
|
123,880 |
|
|
|
499,685 |
|
|
|
452,738 |
|
Restaurant wages and related expenses |
|
141,392 |
|
|
|
135,624 |
|
|
|
549,933 |
|
|
|
498,127 |
|
Restaurant rent expense |
|
31,206 |
|
|
|
29,470 |
|
|
|
122,662 |
|
|
|
118,444 |
|
Other restaurant operating expenses |
|
64,494 |
|
|
|
63,285 |
|
|
|
257,774 |
|
|
|
236,059 |
|
Advertising expense |
|
16,506 |
|
|
|
16,454 |
|
|
|
65,433 |
|
|
|
60,735 |
|
General and administrative expenses (b) (c) |
|
22,384 |
|
|
|
24,243 |
|
|
|
83,660 |
|
|
|
84,051 |
|
Depreciation and amortization |
|
19,667 |
|
|
|
20,780 |
|
|
|
80,798 |
|
|
|
81,727 |
|
Impairment and other lease charges |
|
3,189 |
|
|
|
5,002 |
|
|
|
4,470 |
|
|
|
12,778 |
|
Other expense (income), net (d) |
|
(1,075 |
) |
|
|
161 |
|
|
|
(1,186 |
) |
|
|
(1,271 |
) |
Total costs and expenses |
|
426,131 |
|
|
|
418,899 |
|
|
|
1,663,229 |
|
|
|
1,543,388 |
|
Income (loss) from
operations |
|
(9,998 |
) |
|
|
1,631 |
|
|
|
(10,859 |
) |
|
|
4,114 |
|
Interest expense |
|
7,399 |
|
|
|
7,124 |
|
|
|
28,791 |
|
|
|
27,283 |
|
Loss on extinguishment of
debt |
|
— |
|
|
|
— |
|
|
|
8,538 |
|
|
|
— |
|
Loss before income taxes |
|
(17,397 |
) |
|
|
(5,493 |
) |
|
|
(48,188 |
) |
|
|
(23,169 |
) |
Provision (benefit) for income
taxes |
|
(997 |
) |
|
|
13,134 |
|
|
|
(5,159 |
) |
|
|
6,294 |
|
Net loss |
$ |
(16,400 |
) |
|
$ |
(18,627 |
) |
|
$ |
(43,029 |
) |
|
$ |
(29,463 |
) |
|
|
|
|
|
|
|
|
Basic and diluted net loss per
share (e)(f) |
$ |
(0.33 |
) |
|
$ |
(0.37 |
) |
|
$ |
(0.86 |
) |
|
$ |
(0.58 |
) |
Basic and Diluted weighted
average common shares outstanding |
|
49,928 |
|
|
|
50,372 |
|
|
|
49,899 |
|
|
|
50,751 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 2, 2022 included thirteen and fifty-two weeks,
respectively. The three and twelve months ended January 3,
2021 included fourteen and fifty-three weeks, respectively. |
|
|
|
(b) |
|
General and administrative expenses include acquisition costs of
$0.4 million and $0.3 million for the twelve months ended
January 2, 2022 and January 3, 2021, 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 for each of the three months
ended January 2, 2022 and January 3, 2021 and $6.2
million and $5.2 million for the twelve months ended
January 2, 2022 and January 3, 2021, respectively. |
|
|
|
(d) |
|
Other expense (income), net, for the three months ended
January 2, 2022 included a gain of $1.1 million from the sale
of a litigation claim during the period, insurance recoveries from
previous property damage at our restaurants of $0.2 million and a
loss on disposal of assets of $0.3 million. Other expense (income),
net, for the twelve months ended January 2, 2022, included a
$1.1 million gain from the sale of a litigation claim during the
period, a gain from insurance recoveries of $1.3 million related to
property damage at two of the Company's restaurants and a loss on
disposal of assets of $1.2 million. Other expense (income), net,
for the three months ended January 3, 2021, included a net gain of
$0.4 million related 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. |
|
|
|
(e) |
|
Basic net income (loss) per share was computed without attributing
any loss to preferred stock and non-vested restricted shares as
losses are not allocated to participating securities under the
two-class method. |
|
|
|
(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) |
|
Three Months Ended |
|
Twelve Months Ended |
|
January 2,2022 |
|
January 3,2021 |
|
January 2,2022 |
|
January 3,2021 |
Revenue: |
|
|
|
|
|
|
|
Burger King restaurant sales |
$ |
395,976 |
|
|
$ |
398,318 |
|
|
$ |
1,568,431 |
|
|
$ |
1,459,016 |
|
Popeyes restaurant sales |
|
20,157 |
|
|
|
22,212 |
|
|
|
83,939 |
|
|
|
88,486 |
|
Total revenue |
$ |
416,133 |
|
|
$ |
420,530 |
|
|
$ |
1,652,370 |
|
|
$ |
1,547,502 |
|
Change in Comparable Burger
King Restaurant Sales (a) |
|
7.4 |
% |
|
|
(0.9) |
% |
|
|
9.1 |
% |
|
|
(2.8) |
% |
Change in Comparable Popeyes
Restaurant Sales (a) |
|
1.0 |
% |
|
|
(12.9) |
% |
|
|
(1.9) |
% |
|
|
(0.1) |
% |
|
|
|
|
|
|
|
|
Average Weekly Sales per
Burger King Restaurant (b) |
$ |
29,812 |
|
|
$ |
27,963 |
|
|
$ |
29,687 |
|
|
$ |
27,166 |
|
Average Weekly Sales per
Popeyes Restaurant (b) |
$ |
24,119 |
|
|
$ |
24,421 |
|
|
$ |
24,983 |
|
|
$ |
25,839 |
|
|
|
|
|
|
|
|
|
Adjusted Restaurant-Level
EBITDA (c) |
$ |
34,183 |
|
|
$ |
51,876 |
|
|
$ |
156,958 |
|
|
$ |
181,562 |
|
Adjusted Restaurant-Level
EBITDA margin (c) |
|
8.2 |
% |
|
|
12.3 |
% |
|
|
9.5 |
% |
|
|
11.7 |
% |
|
|
|
|
|
|
|
|
Adjusted EBITDA (c) |
$ |
13,853 |
|
|
$ |
31,769 |
|
|
$ |
81,608 |
|
|
$ |
107,855 |
|
Adjusted EBITDA margin
(c) |
|
3.3 |
% |
|
|
7.6 |
% |
|
|
4.9 |
% |
|
|
7.0 |
% |
|
|
|
|
|
|
|
|
Adjusted Net Loss (c) |
$ |
(7,457 |
) |
|
$ |
(5 |
) |
|
$ |
(21,278 |
) |
|
$ |
(3,733 |
) |
Adjusted Diluted Net Loss per
share (c) |
$ |
(0.15 |
) |
|
$ |
— |
|
|
$ |
(0.43 |
) |
|
$ |
(0.07 |
) |
|
|
|
|
|
|
|
|
Number of Burger King
restaurants: |
|
|
|
|
|
|
|
Restaurants at beginning of period |
|
1,027 |
|
|
|
1,023 |
|
|
|
1,009 |
|
|
|
1,036 |
|
New restaurants (including offsets) |
|
1 |
|
|
|
1 |
|
|
|
4 |
|
|
|
7 |
|
Restaurants acquired |
|
— |
|
|
|
— |
|
|
|
19 |
|
|
|
— |
|
Restaurants closed (including offsets) |
|
(2 |
) |
|
|
(15 |
) |
|
|
(6 |
) |
|
|
(34 |
) |
Restaurants at end of period |
|
1,026 |
|
|
|
1,009 |
|
|
|
1,026 |
|
|
|
1,009 |
|
Average Number of operating
Burger King restaurants: |
|
1,021.7 |
|
|
|
1,017.5 |
|
|
|
1,016.0 |
|
|
|
1,013.4 |
|
|
|
|
|
|
|
|
|
Number of Popeyes
restaurants: |
|
|
|
|
|
|
|
Restaurants at beginning and end of period |
|
65 |
|
|
|
65 |
|
|
|
65 |
|
|
|
65 |
|
Average Number of operating
Popeyes restaurants: |
|
64.3 |
|
|
|
65.0 |
|
|
|
64.6 |
|
|
|
64.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Restaurants are generally included in comparable restaurant sales
12 months after their acquisition. Sales from newly developed
restaurants are included in comparable restaurant sales after they
have been open for 15 months. For the three and twelve months ended
January 2, 2022, the calculation of changes in comparable
restaurant sales is based on the comparable 13-week and 52-week
period. 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. The 14th and 53rd
week in 2020 contributed $28.4 million in restaurant sales, $6.3
million in Adjusted Restaurant-Level EBITDA and $5.3 million in
Adjusted EBITDA. |
|
|
|
(b) |
|
Average weekly sales per restaurant are derived by dividing
restaurant sales for the 13-week and 52-week period ended
January 2, 2022 and 14-week and 53-week period ended
January 3, 2021 by the average number of restaurants operating
during such period. |
|
|
|
(c) |
|
EBITDA, Adjusted Restaurant-Level EBITDA, Adjusted Restaurant-Level
EBITDA margin, Adjusted EBITDA, Adjusted EBITDA margin, 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, 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. |
|
|
|
Carrols Restaurant Group, Inc.
Reconciliation of Non-GAAP Measures(In thousands,
except per share amounts)
|
(unaudited) |
|
Three Months Ended (a) |
|
Twelve Months Ended (a) |
|
January 2,2022 |
|
January 3,2021 |
|
January 2,2022 |
|
January 3,2021 |
Reconciliation of
EBITDA and Adjusted EBITDA: (b) |
|
|
|
|
|
|
|
Net loss |
$ |
(16,400 |
) |
|
$ |
(18,627 |
) |
|
$ |
(43,029 |
) |
|
$ |
(29,463 |
) |
Provision (benefit) for income taxes |
|
(997 |
) |
|
|
13,134 |
|
|
|
(5,159 |
) |
|
|
6,294 |
|
Interest expense |
|
7,399 |
|
|
|
7,124 |
|
|
|
28,791 |
|
|
|
27,283 |
|
Depreciation and amortization |
|
19,667 |
|
|
|
20,780 |
|
|
|
80,798 |
|
|
|
81,727 |
|
EBITDA |
|
9,669 |
|
|
|
22,411 |
|
|
|
61,401 |
|
|
|
85,841 |
|
Impairment and other lease charges |
|
3,189 |
|
|
|
5,002 |
|
|
|
4,470 |
|
|
|
12,778 |
|
Acquisition costs (c) |
|
(2 |
) |
|
|
(100 |
) |
|
|
398 |
|
|
|
273 |
|
Abandoned development costs (d) |
|
— |
|
|
|
1,718 |
|
|
|
— |
|
|
|
3,464 |
|
Pre-opening costs (e) |
|
16 |
|
|
|
59 |
|
|
|
75 |
|
|
|
163 |
|
Litigation and other professional expenses (f) |
|
363 |
|
|
|
839 |
|
|
|
1,678 |
|
|
|
1,384 |
|
Other expense (income), net (g)(h) |
|
(1,075 |
) |
|
|
161 |
|
|
|
(1,186 |
) |
|
|
(1,271 |
) |
Stock-based compensation expense |
|
1,693 |
|
|
|
1,679 |
|
|
|
6,234 |
|
|
|
5,223 |
|
Loss on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
8,538 |
|
|
|
— |
|
Adjusted
EBITDA |
$ |
13,853 |
|
|
$ |
31,769 |
|
|
$ |
81,608 |
|
|
$ |
107,855 |
|
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted Restaurant-Level EBITDA: (a) |
|
|
|
|
|
|
|
Income (loss) from operations |
$ |
(9,998 |
) |
|
$ |
1,631 |
|
|
$ |
(10,859 |
) |
|
$ |
4,114 |
|
Add: |
|
|
|
|
|
|
|
General and administrative expenses |
|
22,384 |
|
|
|
24,243 |
|
|
|
83,660 |
|
|
|
84,051 |
|
Pre-opening costs (e) |
|
16 |
|
|
|
59 |
|
|
|
75 |
|
|
|
163 |
|
Depreciation and amortization |
|
19,667 |
|
|
|
20,780 |
|
|
|
80,798 |
|
|
|
81,727 |
|
Impairment and other lease charges |
|
3,189 |
|
|
|
5,002 |
|
|
|
4,470 |
|
|
|
12,778 |
|
Other expense (income), net (g)(h) |
|
(1,075 |
) |
|
|
161 |
|
|
|
(1,186 |
) |
|
|
(1,271 |
) |
Adjusted
Restaurant-Level EBITDA |
$ |
34,183 |
|
|
$ |
51,876 |
|
|
$ |
156,958 |
|
|
$ |
181,562 |
|
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted Net Loss: (b) |
|
|
|
|
|
|
|
Net loss |
$ |
(16,400 |
) |
|
$ |
(18,627 |
) |
|
$ |
(43,029 |
) |
|
$ |
(29,463 |
) |
Add: |
|
|
|
|
|
|
|
Impairment and other lease charges |
|
3,189 |
|
|
|
5,002 |
|
|
|
4,470 |
|
|
|
12,778 |
|
Acquisition costs (c) |
|
(2 |
) |
|
|
(100 |
) |
|
|
398 |
|
|
|
273 |
|
Abandoned development costs (d) |
|
— |
|
|
|
1,718 |
|
|
|
— |
|
|
|
3,464 |
|
Pre-opening costs (e) |
|
16 |
|
|
|
59 |
|
|
|
75 |
|
|
|
163 |
|
Litigation and other professional expenses (f) |
|
363 |
|
|
|
839 |
|
|
|
1,678 |
|
|
|
1,384 |
|
Other expense (income), net (g)(h) |
|
(1,075 |
) |
|
|
161 |
|
|
|
(1,186 |
) |
|
|
(1,271 |
) |
Loss on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
8,538 |
|
|
|
— |
|
Income tax effect on above adjustments (i) |
|
(623 |
) |
|
|
(1,920 |
) |
|
|
(3,494 |
) |
|
|
(4,199 |
) |
Valuation allowance for deferred taxes (j) |
|
7,075 |
|
|
|
12,863 |
|
|
|
11,272 |
|
|
|
13,138 |
|
Adjusted Net
Loss |
$ |
(7,457 |
) |
|
$ |
(5 |
) |
|
$ |
(21,278 |
) |
|
$ |
(3,733 |
) |
Adjusted diluted net loss per
share (k) |
$ |
(0.15 |
) |
|
$ |
— |
|
|
$ |
(0.43 |
) |
|
$ |
(0.07 |
) |
Adjusted diluted weighted
average common shares outstanding |
|
49,928 |
|
|
|
50,372 |
|
|
|
49,899 |
|
|
|
50,751 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 2, 2022 included thirteen and fifty-two weeks,
respectively. The three and twelve months ended January 3,
2021 included fourteen and fifty-three weeks, respectively. |
|
|
|
(b) |
|
Within this 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 costs,
stock-based compensation expense, certain abandoned development
costs, restaurant pre-opening costs, non-recurring litigation and
other professional expenses, loss on extinguishment of debt and
other income and expense. Adjusted Restaurant-Level EBITDA
represents income (loss) from operations as adjusted to exclude
general and administrative expenses, restaurant pre-opening costs,
depreciation and amortization, impairment and other lease charges
and other income and expense. Adjusted Net Loss represents net loss
as adjusted, net of tax, to exclude impairment and other lease
charges, acquisition costs, certain abandoned development costs,
restaurant pre-opening costs, non-recurring litigation and other
professional expenses, other income and expense, loss on
extinguishment of debt and deferred tax valuation allowance
changes.Adjusted EBITDA, Adjusted Restaurant-Level EBITDA and
Adjusted Net Loss are presented because the Company believes that
they provide a more meaningful comparison than EBITDA and net loss
of its core business operating results, as well as with those of
other similar companies. Additionally, Adjusted Restaurant-Level
EBITDA is presented because it excludes restaurant pre-opening
costs, other income and expense, and the impact of general and
administrative expenses, which primarily represents salaries and
expenses for corporate and administrative functions that support
the development and operations of our restaurants as well as 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. 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 U.S. 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 U.S. 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 costs for the twelve months ended January 2, 2022
mostly include integration, travel, legal and professional fees
incurred in connection with restaurants acquired during the second
quarter of 2021, which were included in general and administrative
expenses. Acquisition 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. |
|
|
|
(d) |
|
Abandoned development costs for the three and twelve months ended
January 3, 2021 represents the write-off of capitalized costs
due to revisions of the Company's development plans in 2020. |
|
|
|
(e) |
|
Pre-opening costs for the three and twelve months ended
January 2, 2022 and January 3, 2021 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 2, 2022 and January 3, 2021 include
executive recruiting and severance costs, costs pertaining to an
ongoing lawsuit with one of the Company's former vendors and other
non-recurring professional service expenses. |
|
|
|
(g) |
|
Other expense (income), net, for the three months ended
January 2, 2022 included a gain of $1.1 million from the sale
of a litigation claim during the period, insurance recoveries from
previous property damage at our restaurants of $0.2 million and a
loss on disposal of assets of $0.3 million. Other expense (income),
net, for the twelve months ended January 2, 2022, included a
$1.1 million gain from the sale of a litigation claim during the
period, a gain from insurance recoveries of $1.3 million related to
property damage at two of the Company's restaurants and a loss on
disposal of assets of $1.2 million. |
|
|
|
(h) |
|
Other expense (income), net, for the three months ended January 3,
2021, included a net gain of $0.4 million related 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. |
|
|
|
(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 2, 2022 and January 3, 2021,
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 three and twelve months ended
January 2, 2022. |
|
|
|
(k) |
|
Adjusted Diluted Net Loss per share is calculated based on Adjusted
Net Loss and the dilutive weighted average common shares
outstanding for the respective periods, where applicable. |
|
(unaudited) |
|
Three Months Ended (a) |
|
Twelve Months Ended (a) |
|
January 2,2022 |
|
January 3,2021 |
|
January 2,2022 |
|
January 3,2021 |
Reconciliation of Free
Cash Flow: (b) |
|
|
|
|
|
|
|
Net cash provided by operating activities |
$ |
20,644 |
|
|
$ |
23,168 |
|
|
$ |
70,871 |
|
|
$ |
103,945 |
|
Net cash provided by (used
for) investing activities |
|
(11,876 |
) |
|
|
(13,812 |
) |
|
|
(58,579 |
) |
|
|
(47,857 |
) |
Net cash paid for (proceeds
received from) acquisitions, net of related sale-leasebacks |
|
— |
|
|
|
— |
|
|
|
10,633 |
|
|
|
— |
|
Total Free Cash
Flow |
$ |
8,768 |
|
|
$ |
9,356 |
|
|
$ |
22,925 |
|
|
$ |
56,088 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1/2/2022 |
|
|
|
At 1/3/2021 |
|
Long-term debt and finance
lease liabilities (c) |
|
|
|
|
|
|
|
|
$ |
478,181 |
|
|
$ |
494,158 |
|
Cash and cash equivalents |
|
|
|
|
|
|
|
|
|
29,151 |
|
|
|
64,964 |
|
Net Debt (d) |
|
|
|
|
|
|
|
|
|
449,030 |
|
|
|
429,194 |
|
Senior Secured Net Debt
(e) |
|
|
|
|
|
|
|
|
|
149,030 |
|
|
|
429,194 |
|
Total Net Debt Leverage Ratio
(f) |
|
|
|
|
|
|
|
|
|
5.02x |
|
|
|
3.82x |
|
Senior Secured Net Debt
Leverage Ratio (g) |
|
|
|
|
|
|
|
|
|
1.67x |
|
|
|
3.82x |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 2, 2022 included thirteen and fifty-two weeks,
respectively. The three and twelve months ended January 3,
2021 included fourteen and fifty-three weeks, respectively. |
|
|
|
(b) |
|
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 net cash
paid for acquisitions (excluding proceeds from acquisition-related
sale-leaseback transactions completed in the third quarter of
2021). Management believes that Free Cash Flow, when viewed with
the Company's results of operations in accordance with U.S. 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 U.S 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 2, 2022 and January 3, 2021 is derived from the
Company's consolidated statements of cash flows for the respective
twelve month periods to be presented in the Company’s Condensed
Consolidated Financial Statements in its Form 10-K for the period
ended January 2, 2022 and the Company's consolidated
statements of cash flows for the previously reported nine month
periods ended October 3, 2021 and September 27, 2020 contained in
the Company’s Form 10-Q for the period ended October 3, 2021. |
|
|
|
(c) |
|
Long-term debt and finance lease liabilities (including current
portion and excluding deferred financing costs and original issue
discount) at January 2, 2022 included $171,875 of outstanding
term B loans, $300,000 of 5.875% Senior Notes due 2029 and $6,306
of finance lease liabilities. Long-term debt and finance lease
liabilities (including current portion and excluding deferred
financing costs and original issue discount) at January 3,
2021 included $419,375 of Term Loan B, $73,875 of Term Loan B-1
borrowings under the Company's senior credit facilities and $908 of
finance lease liabilities. As of February 23, 2022 the Company had
$25 million in outstanding revolving borrowings. |
|
|
|
(d) |
|
Net Debt represents total long-term debt and finance lease
liabilities less cash and cash equivalents. |
|
|
|
(e) |
|
Senior Secured Net Debt represents total net debt less the $300
million of unsecured 5.875% Senior Notes, due 2029. |
|
|
|
(f) |
|
Total Net Debt Leverage Ratio represents the Company's Total Net
Debt Leverage Ratio as calculated in accordance with its senior
credit facility for each period presented. |
|
|
|
(g) |
|
Senior Secured Net Debt Leverage Ratio represents the Company's Net
Debt Leverage Ratio as calculated in accordance with its senior
credit facility for each period presented. |
Investor Relations:Raphael
Gross203-682-8253investorrelations@carrols.com
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