Carrols Restaurant Group, Inc. and Carrols Corporation Report Financial Results for the Third Quarter 2008.Updates Outlook SYRACUSE Syracuse, city, Italy Syracuse (sĭr`əky  s, –kyz), Ital. Siracusa, city (1991 pop. , N.Y. -- Carrols Carrols is the name for several fast food restaurant chains including:
TAST Threaded Algebraic Space-Time TAST Tima Asynchronous Synthesis Tools ), the parent company of Carrols Corporation Carrols is a company that owns fast-food restaurants in the north east and southern United States. It is one of the largest operators of Burger King franchises. They also own the restaurant chains Pollo Tropical and Taco Cabana. , today announced financial results for the third quarter ended September September: see month. 28, 2008. Highlights for the third quarter of 2008 versus the third quarter of 2007 include: * Total revenues increased 2.7% to $209.1 million from $203.5 million, including a 3.6% increase for the Company's Hispanic Hispanic Multiculture A person of Mexican, Puerto Rican, Cuban, Central or South American, or other Spanish culture or origin, regardless of race Social medicine Any of 17 major Latino subcultures, concentrated in California, Texas, Chicago, Miam, NY, and elsewhere Brands; * Comparable restaurant sales increased 3.5% at Burger King[R], decreased 1.9% at Pollo Tropical Pollo Tropical (lit. Tropical Chicken in Spanish) is a Miami-based fast food restaurant chain specializing in Caribbean food. Pollo Tropical is owned and operated by Carrols Corporation. The first Pollo Tropical opened in November 1988, in Miami. [R], and decreased 0.9% at Taco Cabana[R]; * Income from operations was $12.7 million compared to $14.3 million; the third quarter of 2007 included a $1.7 million impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge for an underperforming Pollo Tropical restaurant; and * Net income was $3.7 million, or $0.17 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to net income of $4.9 million, or $0.23 per diluted share (which included the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. impairment charge of $0.05 per diluted share after-tax). As of September 28, 2008, the Company owned and operated a total of 559 restaurants, including 317 Burger King, 89 Pollo Tropical and 153 Taco Cabana restaurants. Alan Vituli, Chairman and Chief Executive Officer of Carrols Restaurant Group, Inc., commented, "We are operating in a difficult environment and our third quarter results reflect these broad economic challenges. Our Caribbean Hispanic Brand, Pollo Tropical, has been challenged by the economy in Florida where all but three of our 89 Pollo Tropical restaurants are located. While comparable restaurant sales at Taco Cabana, our Tex Mex TEX MEX Texas Mexican Railway brand, have been somewhat flat, they have held up reasonably well against the onslaught of increased competitive activity. Revenues at Taco Cabana, however, reflected the loss of approximately 150 total restaurant operating days in the third quarter from restaurant closures in the Houston market caused by Hurricane Ike. Last but not least, our Burger King business has been very stable and continues to perform well as evidenced by the solid comparable sales increase over a formidable comparison from 2007." "Earnings and operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: have also been under continued pressure from higher commodity and utility costs. Our focus right now is to effectively manage what we can control and make decisions that we believe are best for both our Company's short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. and long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. success. We are addressing top-line growth with targeted promotions, new products and strong execution. Due to our planned reduction in new restaurant openings we are reducing administrative support costs which we believe will further improve bottom line results." Third Quarter 2008 Results Total revenues for the third quarter of 2008 increased 2.7% to $209.1 million from $203.5 million in the third quarter of 2007. During the third quarter of 2008, the Company opened one new Pollo Tropical restaurant, three new Taco Cabana restaurants and one new Burger King restaurant. The Company also closed three Burger King restaurants. Revenues from the Company's Hispanic Brands increased 3.6% to $107.5 million in the third quarter of 2008 from $103.8 million in the same period last year. Pollo Tropical revenues increased 1.9% to $43.4 million during the third quarter of 2008 compared to $42.6 million in the third quarter of 2007. This was due primarily to the opening of 10 new Pollo Tropical restaurants since the beginning of the same period in 2007. Comparable restaurant sales at Pollo Tropical decreased 1.9% in the third quarter of 2008. Taco Cabana revenues increased 4.7% to $64.1 million during the third quarter of 2008 compared to $61.3 million in the third quarter of 2007. This was due primarily to the opening of 13 new Taco Cabana restaurants since the beginning of the same period in 2007. Comparable restaurant sales at Taco Cabana decreased 0.9% in the third quarter of 2008. Burger King revenues increased 1.9% to $101.5 million during the third quarter of 2008 compared to $99.7 million in the third quarter of 2007, despite the closing of 11 Burger King restaurants, excluding relocated re·lo·cate v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates v.tr. To move to or establish in a new place: relocated the business. v.intr. restaurants, since the beginning of the same period in 2007. Comparable restaurant sales at Burger King increased 3.5% in the third quarter of 2008. General and administrative expenses were $12.9 million in the third quarter of 2008, or 6.2% of total revenues, compared to $12.3 million, or 6.1% of total revenues, in the third quarter of 2007. Income from operations was $12.7 million in the third quarter of 2008, or 6.1% of total revenues, compared to $14.3 million, or 7.1% of total revenues, in the third quarter of 2007. Net income for the third quarter of 2008 was $3.7 million, or $0.17 per diluted share, compared to net income for the third quarter of 2007 of $4.9 million, or $0.23 per diluted share. The third quarter of 2007 included a $1.7 million impairment charge ($0.05 per diluted share after-tax) related to an underperforming Pollo Tropical restaurant that was subsequently closed. Nine Month Results For the nine months ended September 28, 2008, total revenues increased 3.9% to $615.5 million from $592.2 million in the same period last year. Net income was $8.4 million, or $0.39 per diluted share, compared to net income of $11.5 million, or $0.54 per diluted share, for the nine months ended September 30, 2007. Net income in 2007 included an after-tax non-recurring charge related to the refinancing Refinancing An extension and/or increase in amount of existing debt. of the Company's senior credit facility of $0.04 per diluted share in the first quarter, as well as an after-tax impairment charge of $0.05 per diluted share in the third quarter. Outlook The Company also provided the following guidance: * A total revenue increase in 2008 of approximately 3.4% to 3.6% including comparable restaurant sales in the fourth quarter of 2008 as follows: an increase of 2.5% to 3.0% for its Burger King restaurants, a decrease of 3.0% to 4.0% for Pollo Tropical and flat for Taco Cabana; * New unit openings in the fourth quarter of 2008 of three Pollo Tropical restaurants in the Northeast, three or four Taco Cabana restaurants and two Burger King restaurants, one of which is a relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. of an existing unit. The Company also plans to close three Burger King restaurants in the fourth quarter including the one being relocated; * Total capital expenditures of $65 million to $70 million in 2008 which we believe will likely be in the lower end of the range; * Total capital expenditures in 2009 of $20 million to $30 million; * An estimated annual effective tax rate of 36.7% in 2008; and * Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of ranging from $0.50 to $0.53 in 2008. Additional information will be available when the Company releases financial results for the fourth quarter ended December 28, 2008 in early March 2009. Mr. Vituli concluded, "We have an experienced management team with a long history of successfully managing a leveraged balance sheet. It is apparent, though, that in the current economic environment we must slow new unit growth, maximize free cash flow and reduce financial leverage. We have lowered capital expenditures in 2008 from what was planned earlier in the year and will further limit discretionary capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. in 2009. We are confident that these actions to reduce debt, combined with our ability to significantly reduce our lease financing obligations, ensure that we will maintain an acceptable margin of safety with respect to the financial covenants in our loans. We further believe that our diversified diversified (di·verˑ·s business model provides stability, helping to moderate risk during these uncertain times. Above all, our brands are well positioned to sustain themselves and to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. longer-term demographic trends that transcend the current economic challenges." Conference Call Today The Company will host a conference call to discuss third quarter 2008 financial results today at 8:30 AM Eastern Time. The conference call can be accessed live over the phone by dialing 800-257-2101 or for international callers by dialing 303-262-2161. A replay will be available one hour after the call and can be accessed by dialing 800-405-2236 or for international callers by dialing 303-590-3000; the passcode is 11121005. The replay will be available until Wednesday, November 12, 2008. The call will be webcast live from the Company's website at www.carrols.com, under the investor relations Investor relations The process by which the corporation communicates with its investors. section. About the Company Carrols Restaurant Group, Inc., operating through its subsidiaries, including Carrols Corporation, is one of the largest restaurant companies in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . The Company operates three restaurant brands in the quick-casual and quick-service restaurant segments with 559 company-owned and operated restaurants in 16 states as of September 28, 2008, and 31 franchised restaurants in the United States, Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. and Ecuador. Carrols Restaurant Group owns and operates two Hispanic Brand restaurants, Pollo Tropical and Taco Cabana. It is also the largest Burger King franchisee, based on number of restaurants, and has operated Burger King restaurants since 1976. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Except for the historical information contained in this news release, the matters addressed are forward-looking statements. Forward-looking statements, written, oral or otherwise made, represent the Company's expectation or belief concerning future events. Without limiting the foregoing, these statements are often identified by the words "may," "might," "believes," "thinks," "anticipates," "plans," "expects" or similar expressions. In addition, expressions of our strategies, intentions or plans are also forward-looking statements. Such statements reflect management's current views with respect to future events and are subject to risks and uncertainties, both known and unknown. You are cautioned not to place undue reliance on these forward-looking statements as there are important factors that could cause actual results to differ materially from those in forward-looking statements, many of which are beyond our control. Investors are referred to the full discussion of risks and uncertainties as included in the Company's and Carrols Corporation's filings with the Securities and Exchange Commission. [TABLE OMITTED] (a) The Company uses a 52 or 53 week fiscal year that ends on the Sunday Sunday: see Sabbath; week. closest to December 31. For convenience, all references to the three and nine months ended September 28, 2008 and September 30, 2007 are referred to as the three and nine months ended September 30, 2008 and September 30, 2007, respectively. (b) Restaurant wages and related expenses include stock-based compensation expense of $57 and $45 for the three months ended September 30, 2008 and 2007, respectively, and $171 and $121 for the nine months ended September 30, 2008 and 2007, respectively. General and administrative expenses include stock-based compensation expense of $438 and $314 for the three months ended September 30, 2008 and 2007, respectively, and $1,290 and $947 for the nine months ended September 30, 2008 and 2007, respectively. (c) Gain on extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of debt in 2008 is related to the Company's open market purchase of $2 million of its 9% senior subordinated notes. (d) The consolidated financial results for Carrols Corporation, the sole operating subsidiary An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. of Carrols Restaurant Group, Inc., differ from the above by a slight difference in rent expense. Consolidated net income for Carrols Corporation for the three months ended September 30, 2008 and 2007 was $3,682 and $4,865, respectively, and $8,388 and $11,543 for the nine months ended September 30, 2008 and 2007, respectively. [TABLE OMITTED] (a) The changes in comparable restaurant sales are calculated using only those company-owned and operated restaurants open since the beginning of the earliest period being compared and for the entirety The whole, in contradistinction to a moiety or part only. When land is conveyed to Husband and Wife, they do not take by moieties, but both are seised of the entirety. of both periods being compared. Restaurants are included in comparable restaurant sales after they have been open for 12 months for Burger King restaurants and 18 months for Pollo Tropical and Taco Cabana restaurants. (b) Segment EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become is defined as earnings attributable to the applicable segment before interest, income taxes, depreciation and amortization, impairment losses, stock-based compensation expense, other income and expense and (gain) loss on extinguishment of debt. We use segment EBITDA because it is the measure of segment profit or loss reported to our chief operating decision maker for purposes of allocating resources to the segments and assessing each segment's performance. This may not be necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation. Segment EBITDA for our Burger King restaurants includes general and administrative expenses related directly to our Burger King segment as well as the expenses associated with administrative support to all three of our segments including executive management, information systems and certain accounting, legal and other administrative functions. (c) Long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. (including current portion) at September 30, 2008 included $178,000 of the Company's 9% senior subordinated notes, $135,700 of outstanding borrowings under its senior credit facility, $46,495 of lease financing obligations and $1,322 of capital leases. Long-term debt at December 31, 2007 included $180,000 of the Company's 9% senior subordinated notes, $120,000 of outstanding borrowings under its senior credit facility, $52,689 of lease financing obligations and $1,283 of capital leases. |
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