Carrols reports Q3 profit decline, lowers sales guidance

SYRACUSE, N.Y. — Carrols Restaurant Group, Inc. (NASDAQ: TAST), the world’s largest Burger King franchisee, has reported that its third-quarter net income fell to $4.5 million, or 10 cents a share, from $7.2 million, or 16 cents, in the prior-year period.

The Syracuse–based restaurant company also reported adjusted net income of $5.6 million, or 13 cents a share, down from $7.7 million, or 17 cents, a year ago. 

The reduced net income and adjusted net income largely resulted from a $2.7 million increase in depreciation and amortization expense from remodeling and acquisitions over the past year, Carrols said.

Restaurant sales increased 9.7 percent to nearly $239 million in the latest quarter, from $218 million in the third quarter of 2015. 

The most recent quarterly sales figure includes $62.7 million in sales from the 207 Burger King restaurants acquired from 2014 to 2016, Carrols said.

Comparable restaurant sales were “flat” compared to an increase of 6.5 percent in the prior-year period, the firm added.

Carrols owned and operated 734 Burger King restaurants at the end of the third quarter. 

Carrols on Oct. 4 completed the acquisition of three additional Burger King restaurants in Raleigh, North Carolina to bring its total up to 737 Burger King restaurants.

Expanding its restaurant portfolio more than 11 percent over the past year enabled Carrols to increase both sales and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) during the quarter, Daniel Accordino, CEO of Carrols Restaurant Group, said in the earnings report.

“However, comparable restaurant sales were flat, reflecting our strong performance last year as well as the cautious state of the consumer in what has been a highly competitive and promotional [quick-service restaurant] environment. While we remain confident in the longer-term Burger King strategy, based on our year-to-date results we have modestly revised our previous guidance for the year.”

Carrols is now forecasting it will finish 2016 with total restaurant sales of between $940 million and $950 million, down its prior expectation of full-year sales in the range of $945 million to $960 million. 

The company now expects a comparable-restaurant sales increase of between 1.5 percent and 2 percent, which is lower than its previous estimate of between 2 percent and 4 percent. 

Carrols is also expecting adjusted EBITDA of between $88 million and $92 million, down from the previous estimate of between $90 million and $95 million.

Carrols issued its earnings report and guidance on Tuesday morning, before the open of trading. Its stock price fell $1.25 to $11.25 Tuesday, but has since regained some of the loss. Carrols was trading at $12 at 2:05 pm on Thursday.

Contact Reinhardt at ereinhardt@cnybj.com