SYRACUSE — Carrols Restaurant Group (NASDAQ: TAST) reported net income of $7.8 million, or 13 cents a share, during the second quarter of 2020 as the pandemic continued. The figures compare with a net loss of $3.7 million, or 9 cents a share, during the same quarter in 2019, the firm said in its Aug. […]
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SYRACUSE — Carrols Restaurant Group (NASDAQ: TAST) reported net income of $7.8 million, or 13 cents a share, during the second quarter of 2020 as the pandemic continued.
The figures compare with a net loss of $3.7 million, or 9 cents a share, during the same quarter in 2019, the firm said in its Aug. 6 earnings report. Syracuse–based Carrols is the largest Burger King franchisee in the U.S.
The restaurant company’s adjusted net income was $9.6 million, or 16 cents a share, in this year’s second quarter, up from $4.6 million, or 8 cents, in the year-earlier quarter. That beat the consensus analyst estimate of 2 cents, according to Zacks Equity Research.
Carrols reported total restaurant revenue of $368.4 million in the second quarter compared to $365.7 million in the prior-year quarter. That also topped the Zacks consensus estimate.
Comparable restaurant sales for the company’s Burger King restaurants decreased 6.4 percent during this year’s second quarter, driven mainly by April and May results. June comparable restaurant sales for the Burger King eateries rose 2.5 percent, Carrols said.
Comparable restaurant sales for Carrols’ Popeyes restaurants increased 17.1 percent in the second quarter, including rising 13.3 percent in June.
Adjusted EBITDA increased to $38 million from $24.1 million in the year-ago quarter. EBITDA is short for earnings before interest, taxes, depreciation, and amortization.
“We believe our robust second quarter results are demonstrative of the agility and efficacy of our business model in providing customers great value and convenience through drive-thru, at-the-counter take-out, and delivery options along with our executional prowess in the face of a challenging operating environment,” Daniel Accordino, chairman and CEO of Carrols, said in the company’s earnings report. “Despite the ongoing pandemic, we were encouraged by the resiliency in our comparable restaurant sales during the second quarter as well as our ability to generate higher restaurant-level profitability and adjusted EBITDA in both dollar and margin terms compared to the year-ago period on similar revenue. This was accomplished by successfully managing food waste, optimizing labor, and effectively controlling other restaurant-level and corporate overhead expenses. Although volatility may persist, our underlying trend is undeniably strengthening and absent a major setback, we are hopeful that we can retain and possibly build further momentum in our overall performance.”
Accordino went on to say that in February, and pre-COVID-19 in the U.S., Carrols Restaurant Group expressed its intention to generate up to $25 million in free cash flow in 2020 and reduce its outstanding debt level by year-end.
“Through the second quarter, we have generated $22.9 million of free cash flow. We also now have in excess of $180 million in available liquidity (cash and borrowing availability under our revolving credit facility) which we believe gives us the ability to weather just about any adverse economic situation,” the CEO said.
For the remainder of 2020, the firm’s intention is to remain “nimble” in its operations, focus on improving profitability within its existing restaurant portfolio, manage capital expenditures, and continue to generate positive free cash flow to reduce its leverage, he added.
Longer term, the company currently expects to spend about $40 million to $50 million annually in capital expenditures over the next three years “mainly for maintenance,” with about 25 restaurant remodels per year and systemwide upgrades and initiatives.
Carrols is one of the largest restaurant franchisees in the U.S., and currently operates about 1,092 restaurants. The firm operates 1,027 Burger King restaurants and 65 Popeyes restaurants. It has owned Burger King restaurants since 1976.
Carrols’ stock price is back to nearly unchanged year to date after falling precipitously in late February and March amid the broader stock market selloff. The stock started the year at $7.05 and fell as low as 98 cents on March 18. Carrols shares closed at a price of $7.14 on Aug. 11.