Carrols reports quarterly loss, lowers earnings forecast

SYRACUSE — Carrols Restaurant Group, Inc. (NASDAQ: TAST), a Syracuse–based Burger King franchisee, today announced a net loss from continuing operations of $3.5 million, or 15 cents per share, in the second quarter ending June 30.

 

That compares to a net loss from continuing operations of $779,000, or three cents a share, during the same period a year ago.

 

Carrols also revised down slightly its earnings guidance for the rest of this year.

 

The latest quarter’s net loss from continuing operations included a charge of $2.2 million, or six cents per share after tax, related to impairment and other lease charges. Those were “largely attributable” to restaurant closings during the period, the company said in a news release.

 

Net loss from continuing operations in the second quarter of 2012 included a loss on extinguishment of debt of $1.5 million, or four cents per share after tax. That included costs related to the firm’s now settled Equal Employment Opportunity Commission litigation of $700,000, or two cents a share after tax, and acquisition-related expenses of $800,000, or two cents per share after tax, Carrols said.

 

Carrols reported restaurant sales totaling more than $173 million during this year’s second quarter, up 42 percent from the year-earlier quarter, as the company picked up more than $78 million in sales from the Burger King restaurants that it acquired on May 30, 2012, according to Carrols, which is now Burger King’s largest franchisee.

 

Comparable restaurant sales at restaurants Carrols already owned increased 1.4 percent in the latest quarter compared to the year-ago period. This followed an 8.8 percent increase in such sales last year.

 

“Restaurant-level profitability and margins also improved at our legacy restaurants as we effectively leveraged the higher sales, while also benefiting from favorable mix changes and higher check averages brought about by the brand initiatives over the past year,” Daniel Accordino, CEO of Carrols Restaurant Group, Inc., said in the news release.

 

Accordino also noted what he said “appears” to have been a recent “modest pullback” in consumer spending.

 

“And, while our July 2013 comparable sales were approximately one-percent negative, this was against a strong 8.7 percent comparable-sales increase in July 2012,” he said.

 

For the remainder of 2013, Carrols is forecasting total restaurant sales of $660 million to $680 million, including a comparable-restaurant sales increase at “legacy” restaurants of 1.5 percent to 3.5 percent.

 

The company also expects to close eight to 10 restaurants, not including two restaurants that will relocate, the company said.

 

Carrols’ forecast is revised down from the company’s guidance at the end of the first quarter when Carrols forecast total sales of $670 million to $700 million, and the expectation of closing six to eight Burger King restaurants this year.

 

Carrols shares were trading down 38 cents, or 5.6 percent, as of almost 2 p.m. today. The company issued its earnings report before the open of trading today.

 

As of June 30, Carrols owned and operated 566 Burger King locations.

 

 

 

Contact Reinhardt at ereinhardt@cnybj.com