SYRACUSE, N.Y. — Carrols Restaurant Group, Inc. (NASDAQ: TAST) on Tuesday reported a net loss of $1.9 million, or 6 cents per share, in the second quarter that ended June 29.
The Syracuse–based firm is the nation’s largest Burger King franchisee.
The latest quarterly loss is an improvement over the net loss of $3.5 million, or 15 cents a share, that Carrols reported in the prior-year quarter.
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The net loss included impairment and other lease charges in both years. Such charges totaled $400,000, or 1 cent per share after tax, in the second quarter of 2014 and $2.2 million, or 6 cents after tax, in the prior-year period, Carrols said in its earnings news release.
Restaurant sales totaled $168.6 million in this year’s second quarter, down 2.8 percent from $173.5 million in the same period a year ago, Carrols said.
Comparable-restaurant sales decreased 2 percent in the quarter, compared to a 1.4 percent increase in the year-earlier period, according to Carrols.
The company’s sales trends were “weaker than anticipated” in the second quarter due to several factors, but it believes a reduction in spending on local advertising compared to the second quarter of 2013 “significantly impacted” its sales, Daniel Accordino, CEO of Carrols Restaurant Group, said in the news release.
“Burger King Corporation’s (BKC) non-renewal of a matching-contribution program impacted the advertising spending in a number of our markets. Total sales increases from our remodeling program were also lower due to more than a 50 percent reduction in the number of remodels completed thus far in 2014 compared to the first half of 2013. We anticipate this trend will reverse given our reacceleration of remodeling planned for the second half of this year,” said Accordino.
Carrols’ comparable restaurant sales trends “improved sequentially” throughout the second quarter, and “turned positive” in July, he said.
“Although restaurant sales decreased in the second quarter, we held restaurant-level EBITDA (earnings before interest, taxes, depreciation, and amortization) steady due to margin improvements at the [year] 2012 acquired restaurants and we increased adjusted EBITDA by 9.1 percent to $11.4 million compared to the second quarter of 2013,” Accordino added.
The Syracuse–based company was active in restaurant acquisitions during the second quarter.
Carrols on April 30 closed on the purchase of four Burger King restaurants located in Fort Wayne, Ind. It also closed on the acquisition of four additional Burger King restaurants in the Pittsburgh, Pa. market on June 30.
Carrols early in the current third quarter acquired another 21 Burger King restaurants located in or around Rochester and in the Southern Tier of Western New York on July 22.
Carrols said it owned and operated 583 Burger King restaurants as of July 31.
Carrols has also revised its guidance for 2014 to include an increase in projected total restaurant sales from $665 million to $675 million. It also raised its projected increase in commodity costs from 3 percent to 4 percent due to higher-than-expected ground-beef costs compared to the previous estimate of 2 percent to 3 percent. But, the company lowered projections for general and administrative expenses to a range of about $37 million to $39 million (excluding stock-compensation costs), compared to the previous estimate of $39 million to $41 million.
Carrols issued its earnings report before the open of trading Tuesday.
Shares of Carrols Restaurant Group fell 38 cents to close at $7.05 per share Tuesday, amid a broad stock-market decline.
Contact Reinhardt at ereinhardt@cnybj.com
