Carrols reports narrower Q1 loss

SYRACUSE, N.Y. — Carrols Restaurant Group, Inc. (NASDAQ: TAST) reported a loss from operations of $4.5 million in the first quarter that ended March 29.

That’s down from a $6.5 million loss from operations it reported during the same quarter in 2014.

The loss from operations included $1.6 million in impairment and other lease charges and $200,000 in acquisition and integration costs in this year’s first quarter.

Those figures compare to impairment and other lease charges of $600,000 and acquisition and integration costs of $100,000 in the prior-year period.

Syracuse–based Carrols, the world’s largest Burger King franchisee, announced its first-quarter financial results in a news release Tuesday.

Comparable restaurant sales increased 8.4 percent compared to a 2.5 percent decrease in the prior-year period, the company said.

Restaurant-level EBITDA increased nearly 43 percent to $18.8 million compared to $13.2 million in the prior year period and restaurant-level EBITDA margin increased more than 100 basis points to 9.7 percent, according to its earnings release.

EBITDA is short for earnings before interest, taxes, depreciation, and amortization.

Adjusted EBITDA more than doubled to $7.7 million from $3.3 million in the prior-year period.

Carrols generated revenue of more than $193 million during its first quarter, up more than 27 percent from $151 million in the same quarter last year.

The company had included the figures in preliminary results released April 16.

The first-quarter figure includes $32.5 million in sales from 123 Burger King restaurants that Carrols acquired in 2014.

Carrols owned and operated 659 Burger King restaurants at the end of the first quarter on March 29. It then acquired four additional Burger King restaurants in northern Vermont on March 31, the company said.

Carrols had a “very good start” to 2015, including double-digit sales growth following its acquisition of 123 restaurants last year and a “strong” 8.4 percent increase in comparable-restaurant sales, Daniel Accordino, CEO of Carrols, said in the earnings release.

“In part, sales improved due to the relatively better weather in early 2015 particularly in the Midwest and Mid-Atlantic regions. More importantly, Burger King’s marketing and promotional offerings were extremely effective in driving strong customer traffic and higher sales in all of our markets. This momentum has continued early in the second quarter. We were also able to meaningfully expand our restaurant-level EBITDA and restaurant-level EBITDA margin due to effective leveraging of our higher sales and by margin improvements over the past year at the restaurants acquired in 2012,” said Accordino.

He also noted that Carrols on April 29 completed a refinancing of the firm’s debt, selling $200 million of 8 percent senior secured second lien notes to replace its existing $150 million of 11.25 percent notes and increasing its borrowing capacity under its senior credit facility.

Accordino said the move “enhanced the positioning of the company for continued growth.”

He also noted the refinancing “significantly reduces its cost of capital while increasing the funds that Carrols has available for “continued expansion” for its remodeling program.

The firm looks to “opportunistically employ this additional capital and expect to selectively pursue acquisition opportunities as we move forward,” said Accordino.

 

Future results

In addition, Carrols updated its guidance and outlook for the remainder of 2015, a 53-week fiscal period.

The company expects total restaurant sales of between $815 million and $830 million, which is up compared to the previous expectation of a figure between $810 million and $830 million.

Carrols also anticipates a comparable-restaurant sales increase of between 3 percent and 5 percent on a comparable 52-week basis. The firm had previously estimated an increase between 2 percent and 4 percent.

The firm also expects capital expenditures of between $45 million and $50 million, which includes remodeling a total of between 80 and 90 restaurants. The company had previously estimated expenditures between $37 million and $44 million, which included remodeling between 60 and 70 restaurants.

Carrols also expects to close between 20 and 25 restaurants. It had previously expected to close between 15 and 20 restaurants.

 

Contact Reinhardt at ereinhardt@cnybj.com