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 third quarter
ended October 2, 2022.
Highlights for the Third Quarter of 2022 versus the Third
Quarter of 2021 include:
- Total restaurant sales increased 5.3% to $444.0 million
compared to $421.7 million in the third quarter of 2021;
- Comparable restaurant sales for the Company’s Burger King®
restaurants increased 4.9%;
- Comparable restaurant sales for the Company’s Popeyes®
restaurants increased 6.5%;
- Adjusted EBITDA(1) totaled $17.7 million compared to $18.6
million in the prior year quarter;
- Adjusted Restaurant-Level EBITDA(1) totaled $37.9 million
compared to $35.4 million in the prior year quarter;
- Net Loss of $8.7 million, or $0.17 per diluted share, compared
to a Net Loss of $9.9 million, or $0.20 per diluted share, in the
prior year quarter; and
- Adjusted Net Loss(1) of $7.3 million, or $0.14 per diluted
share, compared to an Adjusted Net Loss of $7.8 million, or $0.16
per diluted share, in the prior year quarter.(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.
Management CommentaryPaulo A.
Pena, President and Chief Executive Officer of Carrols, commented,
“Our third quarter results reflect our continued top-line momentum
with strong comparable sales growth at both our Burger King and
Popeyes restaurants. Moreover, we believe our ongoing effort to
strengthen our restaurant operations has allowed us to not only
improve restaurant-level profitability during the quarter, but also
to continue making progress on our growth drivers. This, combined
with moderating inflationary pressures on commodities and labor,
helps fuel our optimism for coming quarters. While there is still
more work to be done, I am proud of the accomplishments our team
has made thus far.”
Pena continued, "We generated $14.0 million of
free cash flow this past quarter, which reflects the improvements
we are making to our business. We believe our ample available
liquidity provides us a capital cushion to ensure that we can make,
in a disciplined manner, any investments necessary to strengthen
our operations and provide a platform for continued growth in
coming years. During the quarter, continued improvement in our
operating results coupled with our repayment of approximately 60%
of our revolver balance reinforced our commitment to driving
long-term shareholder value through a combination of organic
growth, margin improvements and debt reduction."
Pena concluded, “We are pleased to have been part of a working
group of franchisees that worked hand in hand with Burger King to
help develop the 'Reclaim the Flame' initiative, which is designed
to not only drive traffic but also improve franchisee economics. We
believe the benefits to Carrols of this initiative will be
multi-faceted. First, the increased marketing spend and menu
innovation should serve to boost brand awareness, traffic and
sales. Second, refocusing the brand on customer and crew experience
should have a positive impact on guest experience, speed of service
and employee retention. Finally, the renewed focus on franchisee
economics will help ensure that Burger King franchisees and our
franchisor are aligned around restaurant profitability and higher
returns on restaurant remodels. This, we believe, will enhance
franchisees' financial footing and allow the brand to grow from a
position of strength for years to come.”
Third Quarter
2022 Financial Results
Total restaurant sales increased 5.3% to $444.0
million in the third quarter of 2022 compared to $421.7 million in
the third quarter of 2021. Comparable restaurant sales for the
Company’s Burger King restaurants increased 4.9%, which follows the
2.7% increase achieved in the third quarter of 2021. Average check
at our Burger King restaurants grew 11.0%, inclusive of 10.0% of
menu price increases and lower promotional activity, which was
partially offset by a traffic decline of 5.5%.
Restaurant sales for the Company’s Popeyes
restaurants, which represented 5.0% of total restaurant sales in
the third quarter of 2022, increased on a comparable restaurant
sales basis by 6.5% compared to a 3.2% decrease in the third
quarter of 2021. Traffic at our Popeyes restaurants grew 3.6% and
average check increased 2.8%.
Adjusted Restaurant-Level EBITDA(1) was $37.9
million in the third quarter of 2022 compared to $35.4 million in
the prior year period. Adjusted Restaurant-Level EBITDA margin
improved to 8.5% of restaurant sales from 8.4% in the third quarter
of 2021, reflecting improved sales against stable labor and food,
beverage and packaging costs as a percentage of restaurant sales.
While the hourly cost and availability of labor remain challenging
for us and the restaurant industry, we were able to continue to
increase hours of operation at our restaurants this past quarter.
Elevated commodity supply chain cost pressures also continue to
adversely impact margins, although we are beginning to see
stabilization and, with certain commodities, reductions in cost, so
far this quarter.
General and administrative expenses increased
slightly to $22.6 million in the third quarter of 2022 from $19.2
million in the prior year period and increased 50 basis points to
5.1% of restaurant sales. The increase over last year includes an
impact from the timing of bonus accrual adjustments in the prior
year which reduced expense.
Adjusted EBITDA(1) was $17.7 million in the
third quarter of 2022 compared to $18.6 million in the third
quarter of 2021. Adjusted EBITDA margin decreased to 4.0% of
restaurant sales from 4.4% in the prior year quarter but improved
sequentially from 3.4% in the second quarter of 2022.
Loss from operations was $3.5 million in the
third quarter of 2022 compared to a loss from operations of $3.6
million in the prior year quarter.
Interest expense increased to $7.9 million in
the third quarter of 2022 from $7.7 million in the third quarter of
2021 as our interest cost hedging efforts have largely shielded us
from the current elevated interest rate environment. At the end of
the third quarter, approximately 90% of the Company's long-term
debt (including current portion) was at a fixed rate.
Net loss was $8.7 million in the third quarter
of 2022, or $0.17 per diluted share, compared to net loss of $9.9
million, or $0.20 per diluted share, in the prior year quarter. Net
loss in the third quarter of 2022 included, among other items, $1.2
million of impairment and other lease charges, $1.4 million of
executive transition, litigation and other professional expenses,
$1.8 million of other income, net, and a $0.7 million increase in
the valuation allowance for deferred taxes. Net loss in the third
quarter of 2021 included, among other items, $1.1 million of gains
from insurance recoveries related to property damage at two
restaurants, $0.8 million of impairment and other lease charges and
a tax valuation allowance charge of $1.6 million.
Adjusted Net Loss(1) was $7.3 million, or $0.14
per diluted share, in the third quarter of 2022, compared to
Adjusted Net Income of $7.8 million, or $0.16 per diluted share, in
the prior year quarter.
Free Cash Flow, a non-GAAP financial measure,
for the third quarter of 2022 was $14.0 million compared to $13.5
million in the prior year period. Refer to the definition and
reconciliation of Free Cash Flow in the tables at the end of this
release.
Balance Sheet Update
We ended the third quarter of 2022 with cash and
cash equivalents of $3.2 million and long-term debt (including
current portion) and finance lease liabilities of $492.3 million.
There was $10.0 million in revolving credit borrowings outstanding
and $9.6 million of letters of credit issued under our $215.0
million revolving credit facility, leaving $195.4 million of
borrowing availability as of October 2, 2022. Including the
cash balance, we had $198.6 million of cash and unused revolver
balance at the end of the third quarter of 2022.
We currently have no covenants or other
restrictions that prohibit us from accessing the available
quarter-end balance of $195.4 million under our $215.0 million
revolving credit facility. Under our credit facility, we are only
subject to a senior secured leverage ratio covenant if our
aggregate total revolver borrowings exceed $75.3 million (including
the amount by which outstanding letters of credit exceed $12.0
million). With $10.0 million of revolving credit borrowings
outstanding (and only $9.6 million of outstanding letters of
credit) at the end of the third quarter of 2022, we were not
governed by a senior secured leverage ratio covenant at that time.
Furthermore, we do not expect revolver borrowings to increase to
levels that would require measurement of this covenant for the
foreseeable future. Our senior secured leverage ratio which, when
applicable, is subject to a limit of 5.75 times in our credit
agreement, was 3.35x times at the end of the third quarter of
2022.
Conference Call Today
Paulo A. Pena, President and Chief Executive
Officer, and Anthony E. Hull, Chief Financial Officer, will host a
conference call to discuss third quarter 2022 financial results at
8:30 a.m. (ET) today.
The conference call can be accessed live over
the telephone by dialing 201-493-6779. A replay will be available
three hours after the call and can be accessed by dialing
412-317-6671; the passcode is 13732611. The replay will be
available until Wednesday, November 16, 2022. Investors and
interested parties may listen to a webcast of the 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 1,022 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) |
|
Nine Months Ended (a) |
|
October 2, 2022 |
October 3, 2021 |
|
October 2, 2022 |
October 3, 2021 |
Restaurant sales |
$ |
443,961 |
|
$ |
421,703 |
|
|
$ |
1,285,382 |
|
$ |
1,236,237 |
|
Costs and expenses: |
|
|
|
|
|
Food, beverage and packaging costs |
|
138,012 |
|
|
131,103 |
|
|
|
401,244 |
|
|
371,317 |
|
Restaurant wages and related expenses |
|
148,838 |
|
|
141,303 |
|
|
|
439,773 |
|
|
408,541 |
|
Restaurant rent expense |
|
31,244 |
|
|
30,551 |
|
|
|
93,487 |
|
|
91,456 |
|
Other restaurant operating expenses |
|
70,237 |
|
|
66,733 |
|
|
|
204,676 |
|
|
193,280 |
|
Advertising expense |
|
17,841 |
|
|
16,619 |
|
|
|
51,446 |
|
|
48,927 |
|
General and administrative expenses (b)(c) |
|
22,572 |
|
|
19,209 |
|
|
|
65,416 |
|
|
61,276 |
|
Depreciation and amortization |
|
19,284 |
|
|
20,101 |
|
|
|
58,897 |
|
|
61,131 |
|
Impairment and other lease charges |
|
1,196 |
|
|
784 |
|
|
|
19,868 |
|
|
1,281 |
|
Other income, net (d) |
|
(1,750 |
) |
|
(1,053 |
) |
|
|
(1,109 |
) |
|
(111 |
) |
Total costs and expenses |
|
447,474 |
|
|
425,350 |
|
|
|
1,333,698 |
|
|
1,237,098 |
|
Loss from operations |
|
(3,513 |
) |
|
(3,647 |
) |
|
|
(48,316 |
) |
|
(861 |
) |
Interest expense |
|
7,896 |
|
|
7,724 |
|
|
|
22,968 |
|
|
21,392 |
|
Loss on extinguishment of
debt |
|
— |
|
|
— |
|
|
|
— |
|
|
8,538 |
|
Loss before income taxes |
|
(11,409 |
) |
|
(11,371 |
) |
|
|
(71,284 |
) |
|
(30,791 |
) |
Benefit from income taxes |
|
(2,712 |
) |
|
(1,469 |
) |
|
|
(14,842 |
) |
|
(4,162 |
) |
Net loss |
$ |
(8,697 |
) |
$ |
(9,902 |
) |
|
$ |
(56,442 |
) |
$ |
(26,629 |
) |
|
|
|
|
|
|
Basic and diluted net loss per
share (e)(f) |
$ |
(0.17 |
) |
$ |
(0.20 |
) |
|
$ |
(1.11 |
) |
$ |
(0.53 |
) |
Basic and diluted weighted
average common shares outstanding |
|
50,805 |
|
|
49,928 |
|
|
|
50,690 |
|
|
49,890 |
|
(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 October 2, 2022 and
October 3, 2021 each included thirteen and thirty-nine weeks,
respectively.
(b) General and administrative expenses
include acquisition costs of $0.1 million and $0.4 million for the
three and nine months ended October 3, 2021, respectively.
(c) General and administrative expenses
includes stock-based compensation expense of $0.9 million and $1.5
million for the three months ended October 2, 2022 and
October 3, 2021, respectively, and $3.8 million and $4.5
million for the nine months ended October 2, 2022 and
October 3, 2021, respectively.
(d) Other income, net, for the three
months ended October 2, 2022 included a loss on sale leaseback
transactions of $0.5 million and a gain from a settlement with
a vendor of $2.5 million. Other income, net, for the nine
months ended October 2, 2022 included a loss on disposal of
assets of $1.0 million and a gain from a settlement with a vendor
of $2.5 million. Other income, net, for the three months ended
October 3, 2021 included gain from insurance recoveries of
$1.1 million related to property damage at two of the
Company's restaurants. Other income, net, for the nine months ended
October 3, 2021 included gain from insurance recoveries of
$1.1 million related to property damage at two of the Company's
restaurants and a loss on disposal of assets of $0.9 million.
(e) Basic net 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 |
|
Nine Months Ended |
|
October 2, 2022 |
October 3, 2021 |
|
October 2, 2022 |
October 3, 2021 |
Revenue: |
|
|
|
|
|
Burger King restaurant sales |
$ |
421,853 |
|
$ |
401,308 |
|
|
$ |
1,219,440 |
|
$ |
1,172,455 |
|
Popeyes restaurant sales |
|
22,108 |
|
|
20,395 |
|
|
|
65,942 |
|
|
63,782 |
|
Total revenue |
$ |
443,961 |
|
$ |
421,703 |
|
|
$ |
1,285,382 |
|
$ |
1,236,237 |
|
Change in Comparable Burger
King Restaurant Sales (a) |
|
4.9 |
% |
|
2.7 |
% |
|
|
3.2 |
% |
|
9.6 |
% |
Change in Comparable Popeyes
Restaurant Sales (a) |
|
6.5 |
% |
|
(3.2) |
% |
|
|
3.5 |
% |
|
(2.7) |
% |
|
|
|
|
|
|
Average Weekly Sales per
Burger King Restaurant (b) |
$ |
31,735 |
|
$ |
30,186 |
|
|
$ |
30,544 |
|
$ |
29,662 |
|
Average Weekly Sales per
Popeyes Restaurant (b) |
$ |
26,157 |
|
$ |
24,487 |
|
|
$ |
26,011 |
|
$ |
25,284 |
|
|
|
|
|
|
|
Adjusted Restaurant-Level
EBITDA (c) |
$ |
37,873 |
|
$ |
35,424 |
|
|
$ |
94,929 |
|
$ |
122,775 |
|
Adjusted Restaurant-Level
EBITDA margin (c) |
|
8.5 |
% |
|
8.4 |
% |
|
|
7.4 |
% |
|
9.9 |
% |
|
|
|
|
|
|
Adjusted EBITDA (c) |
$ |
17,677 |
|
$ |
18,582 |
|
|
$ |
37,087 |
|
$ |
67,755 |
|
Adjusted EBITDA margin
(c) |
|
4.0 |
% |
|
4.4 |
% |
|
|
2.9 |
% |
|
5.5 |
% |
|
|
|
|
|
|
Adjusted Net Loss (c) |
$ |
(7,291 |
) |
$ |
(7,759 |
) |
|
$ |
(33,257 |
) |
$ |
(13,821 |
) |
Adjusted Diluted Net Loss per
share (c) |
$ |
(0.14 |
) |
$ |
(0.16 |
) |
|
$ |
(0.66 |
) |
$ |
(0.28 |
) |
|
|
|
|
|
|
Number of Burger King
restaurants: |
|
|
|
|
|
Restaurants at beginning of period |
|
1,023 |
|
|
1,027 |
|
|
|
1,026 |
|
|
1,009 |
|
New restaurants (including offsets) |
|
1 |
|
|
1 |
|
|
|
4 |
|
|
3 |
|
Acquired Burger King units |
|
— |
|
|
— |
|
|
|
— |
|
|
19 |
|
Restaurants closed (including offsets) |
|
(2 |
) |
|
(1 |
) |
|
|
(8 |
) |
|
(4 |
) |
Restaurants at end of period |
|
1,022 |
|
|
1,027 |
|
|
|
1,022 |
|
|
1,027 |
|
Average Number of operating Burger King restaurants |
|
1,022.8 |
|
|
1,024.5 |
|
|
|
1,023.8 |
|
|
1,014.1 |
|
|
|
|
|
|
|
Number of Popeyes
restaurants: |
|
|
|
|
|
Restaurants at beginning and end of period |
|
65 |
|
|
65 |
|
|
|
65 |
|
|
65 |
|
Average Number of operating Popeyes restaurants |
|
65.0 |
|
|
64.2 |
|
|
|
65.0 |
|
|
64.7 |
|
(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. The calculation of changes in comparable restaurant sales
is based on a comparison to the comparable thirteen or thirty-nine
week period 52-weeks prior.
(b) Average weekly sales per
restaurant are derived by dividing restaurant sales for the
thirteen or thirty-nine week period 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 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)
|
(unaudited) |
|
Three Months Ended (a) |
|
Nine Months Ended (a) |
|
October 2, 2022 |
October 3, 2021 |
|
October 2, 2022 |
October 3, 2021 |
Reconciliation of
EBITDA and Adjusted EBITDA: (b) |
|
|
|
|
|
Net loss |
$ |
(8,697 |
) |
$ |
(9,902 |
) |
|
$ |
(56,442 |
) |
$ |
(26,629 |
) |
Benefit from income taxes |
|
(2,712 |
) |
|
(1,469 |
) |
|
|
(14,842 |
) |
|
(4,162 |
) |
Interest expense |
|
7,896 |
|
|
7,724 |
|
|
|
22,968 |
|
|
21,392 |
|
Depreciation and amortization |
|
19,284 |
|
|
20,101 |
|
|
|
58,897 |
|
|
61,131 |
|
EBITDA |
|
15,771 |
|
|
16,454 |
|
|
|
10,581 |
|
|
51,732 |
|
Impairment and other lease charges |
|
1,196 |
|
|
784 |
|
|
|
19,868 |
|
|
1,281 |
|
Acquisition costs (c) |
|
— |
|
|
108 |
|
|
|
— |
|
|
400 |
|
Stock-based compensation expense |
|
940 |
|
|
1,458 |
|
|
|
3,817 |
|
|
4,541 |
|
Pre-opening costs (d) |
|
84 |
|
|
30 |
|
|
|
173 |
|
|
59 |
|
Executive transition, litigation and other professional expenses
(e) |
|
1,436 |
|
|
801 |
|
|
|
3,757 |
|
|
1,315 |
|
Loss on extinguishment of debt |
|
— |
|
|
— |
|
|
|
— |
|
|
8,538 |
|
Other income, net (f)(g) |
|
(1,750 |
) |
|
(1,053 |
) |
|
|
(1,109 |
) |
|
(111 |
) |
Adjusted
EBITDA |
$ |
17,677 |
|
$ |
18,582 |
|
|
$ |
37,087 |
|
$ |
67,755 |
|
|
|
|
|
|
|
Reconciliation of
Adjusted Restaurant-Level EBITDA: (b) |
|
|
|
|
|
Loss from operations |
$ |
(3,513 |
) |
$ |
(3,647 |
) |
|
$ |
(48,316 |
) |
$ |
(861 |
) |
Add: |
|
|
|
|
|
General and administrative expenses |
|
22,572 |
|
|
19,209 |
|
|
|
65,416 |
|
|
61,276 |
|
Pre-opening costs (d) |
|
84 |
|
|
30 |
|
|
|
173 |
|
|
59 |
|
Depreciation and amortization |
|
19,284 |
|
|
20,101 |
|
|
|
58,897 |
|
|
61,131 |
|
Impairment and other lease charges |
|
1,196 |
|
|
784 |
|
|
|
19,868 |
|
|
1,281 |
|
Other income, net (f)(g) |
|
(1,750 |
) |
|
(1,053 |
) |
|
|
(1,109 |
) |
|
(111 |
) |
Adjusted
Restaurant-Level EBITDA |
$ |
37,873 |
|
$ |
35,424 |
|
|
$ |
94,929 |
|
$ |
122,775 |
|
|
|
|
|
|
|
Reconciliation
of Adjusted Net Loss:
(b) |
|
|
|
|
|
Net loss |
$ |
(8,697 |
) |
$ |
(9,902 |
) |
|
$ |
(56,442 |
) |
$ |
(26,629 |
) |
Add: |
|
|
|
|
|
Impairment and other lease charges |
|
1,196 |
|
|
784 |
|
|
|
19,868 |
|
|
1,281 |
|
Acquisition costs (c) |
|
— |
|
|
108 |
|
|
|
— |
|
|
400 |
|
Pre-opening costs (d) |
|
84 |
|
|
30 |
|
|
|
173 |
|
|
59 |
|
Executive transition, litigation and other professional expenses
(e) |
|
1,436 |
|
|
801 |
|
|
|
3,757 |
|
|
1,315 |
|
Other income, net (f)(g) |
|
(1,750 |
) |
|
(1,053 |
) |
|
|
(1,109 |
) |
|
(111 |
) |
Loss on extinguishment of debt |
|
— |
|
|
— |
|
|
|
— |
|
|
8,538 |
|
Income tax effect on above adjustments (h) |
|
(242 |
) |
|
(168 |
) |
|
|
(5,672 |
) |
|
(2,871 |
) |
Valuation allowance for deferred taxes (i) |
|
682 |
|
|
1,641 |
|
|
|
6,168 |
|
|
4,197 |
|
Adjusted Net
Loss |
$ |
(7,291 |
) |
$ |
(7,759 |
) |
|
$ |
(33,257 |
) |
$ |
(13,821 |
) |
Adjusted diluted net income
(loss) per share (j) |
$ |
(0.14 |
) |
$ |
(0.16 |
) |
|
$ |
(0.66 |
) |
$ |
(0.28 |
) |
Adjusted diluted weighted
average common shares outstanding |
|
50,805 |
|
|
49,928 |
|
|
|
50,690 |
|
|
49,890 |
|
(a) The Company uses a 52 or 53
week fiscal year that ends the Sunday closest to December 31. The
three and nine months ended October 2, 2022 and
October 3, 2021 both included thirteen and thirty-nine 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,
restaurant pre-opening costs, non-recurring executive transition,
litigation and other professional expenses, loss on extinguishment
of debt, and other expense, net. Adjusted Restaurant-Level EBITDA
represents loss from operations as adjusted to exclude general and
administrative expenses, acquisition costs, pre-opening costs,
depreciation and amortization, impairment and other lease charges
and other expense, net. Adjusted Net Loss represents net loss as
adjusted, net of tax, to exclude impairment and other lease
charges, acquisition costs, restaurant pre-opening costs,
non-recurring executive transition, litigation and other
professional expenses, loss on extinguishment of debt, other
expense, net and the valuation allowance for deferred taxes.
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 expense, 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. 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 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 loss from operations and Adjusted Restaurant-Level
EBITDA.
(c) Acquisition costs for the
three and nine months ended October 3, 2021 primarily include
integration, travel, legal and professional fees incurred in
connection with restaurant acquisitions during the third quarter of
2021, which were included in general and administrative
expenses.
(d) Pre-opening costs for the three and
nine months ended October 2, 2022 and October 3, 2021
include training, labor and occupancy costs incurred during the
construction of new restaurants.
(e) Executive transition, litigation and
other professional expenses for the three and nine months ended
October 2, 2022 and October 3, 2021 include executive
search and transition costs, costs pertaining to an ongoing lawsuit
with one of the Company's former vendors and other non-recurring
professional service expenses.
(f) Other income, net, for the
three months ended October 2, 2022 included a loss on sale
leaseback transactions of $0.5 million and a gain from a
settlement with a vendor of $2.5 million. Other income, net,
for the nine months ended October 2, 2022 included a loss on
disposal of assets of $1.0 million and a gain from a settlement
with a vendor of $2.5 million.
(g) Other income, net, for the three
months ended October 3, 2021 included gain from insurance
recoveries of $1.1 million related to property damage at two of the
Company's restaurants. Other income, net, for the nine months ended
October 3, 2021 included gain from insurance recoveries of
$1.1 million related to property damage at two of the Company's
restaurants and a loss on disposal of assets of $0.9 million.
(h) The income tax effect related to
the adjustments to Adjusted Net Loss was calculated using an
incremental income tax rate of 25% for the three and nine months
ended October 2, 2022 and October 3, 2021.
(i) 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 nine months ended October 2, 2022 and
October 3, 2021.
(j) 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.
Carrols Restaurant Group,
Inc.
Reconciliation of Non-GAAP
Measures
(In thousands)
|
(unaudited) |
|
Three Months Ended (a) |
|
Nine Months Ended (a) |
|
October 2, 2022 |
October 3, 2021 |
|
October 2, 2022 |
October 3, 2021 |
Reconciliation of Free
Cash Flow: (b) |
|
|
|
|
|
Net cash (used for) provided by operating activities |
$ |
20,891 |
|
$ |
23,612 |
|
|
$ |
(2,142 |
) |
|
50,227 |
|
Net cash (used for) provided
by investing activities |
|
(6,929 |
) |
|
10,091 |
|
|
|
(28,766 |
) |
|
(46,703 |
) |
Add: Net cash paid for
(proceeds received from) acquisitions, net of related
sale-leasebacks |
|
— |
|
|
(20,186 |
) |
|
|
— |
|
|
10,633 |
|
Total Free Cash
Flow |
$ |
13,962 |
|
$ |
13,517 |
|
|
$ |
(30,908 |
) |
$ |
14,157 |
|
|
At 10/2/2022 |
|
At 1/2/2022 |
|
At 10/3/2021 |
Long-term debt and finance lease liabilities (c) |
$ |
492,258 |
|
$ |
478,181 |
|
$ |
523,307 |
Cash and cash equivalents |
|
3,237 |
|
|
29,151 |
|
|
89,373 |
Net Debt (d) |
|
489,021 |
|
|
449,030 |
|
|
433,934 |
Senior Secured Net Debt
(e) |
|
189,021 |
|
|
149,030 |
|
|
133,934 |
Total Net Debt Leverage Ratio
(f) |
8.67x |
|
5.02x |
|
4.03x |
Senior Secured Net Debt
Leverage Ratio (g) |
3.35x |
|
1.67x |
|
1.24x |
(a) The Company uses a 52 or 53 week
fiscal year that ends the Sunday closest to December 31. The three
and nine months ended October 2, 2022 and October 3, 2021
both included thirteen and thirty-nine 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.
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 (used for)
provided by operating activities, net cash (used for) provided by
investing activities and net cash provided by financing activities
as indicators of liquidity or cash flow. Free Cash Flow for the
three months ended October 2, 2022 and October 3, 2021 is
derived from the Company's consolidated statements of cash flows
for the respective nine month periods to be presented in the
Company’s Interim Condensed Consolidated Financial Statements in
its Form 10-Q for the period ended October 2, 2022 and the
Company's consolidated statements of cash flows for the previously
reported six month periods ended July 3, 2022 and July 4, 2021
contained in the Company’s Form 10-Q for the period ended
July 3, 2022.
(c) Long-term debt and finance lease
liabilities (including current portion and excluding deferred
financing costs and original issue discount) at October 2,
2022 included $168,688 of outstanding Term B loans and $10,000 of
outstanding revolving borrowings under the Company's senior credit
facilities, $300,000 of 5.875% Senior Notes due 2029 and $13,570 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 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 October 3, 2021 included
$172,938 of Term B loans and $47,063 of outstanding revolving
borrowings under the Company's senior credit facilities, $300,000
of 5.875% Senior Notes due 2029 and $3,306 of finance lease
liabilities.
(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 facilities 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 facilities for each period
presented.
Investor Relations:Jeff
Priester332-242-4370investorrelations@carrols.com
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