Carrols Restaurant Group, Inc. Reports Financial Results for the Second Quarter 2009

Carrols Restaurant Group, Inc. (Nasdaq:TAST), the parent company of Carrols Corporation, today announced financial results for the second quarter ended June 28, 2009.

Highlights for the second quarter of 2009 versus the second quarter of 2008 include:

• Income from operations increased to $16.1 million from $12.1 million;

• Net income was $7.1 million, or $0.32 per diluted share, compared to net income of $3.3 million, or $0.15 per diluted share;

• Total revenues were $203.9 million compared to $210.7 million;

• Comparable restaurant sales decreased 3.1% at Pollo Tropical(R), 3.8% at Taco Cabana(R), and 4.7% at Burger King(R).

As of June 28, 2009, the Company owned and operated 559 restaurants, including 314 Burger King, 91 Pollo Tropical and 154 Taco Cabana restaurants.

Alan Vituli, Chairman and Chief Executive Officer of Carrols Restaurant Group, Inc. commented, 'While significant pressures on consumer spending, coupled with aggressive marketing and promotional activity across the industry, negatively impacted our top-line, we experienced a significant improvement in profitability. Net income and EPS more than doubled compared to the year-ago period, due to our focus on cost containment, the easing of commodity and utility costs, and a shift in some advertising spending from the first to second half of the year compared to 2008. Earnings were also favorably impacted by reductions in general and administrative costs and by lower interest expense due to reductions in outstanding indebtedness and lower interest rates. Lastly, we benefited from a $0.6 million insurance recovery related to Hurricane Ike.'

'Overall, we believe that our focus on cost reduction has helped us navigate through the current economic cycle reasonably well. However, in an effort to drive sales, we have substantially increased product development activity at our Hispanic Brands and are intently focused on improving comparable restaurant sales in the face of aggressive promotional activity in our industry. We believe the Burger King system will experience improved sales later this year driven by more successful product offerings than experienced in the second quarter of 2009 and as year-to-year comparisons become less challenging.'

Mr. Vituli added, 'In the past few quarters, we have made significant progress in strengthening our financial condition, and the recent period reflects a continuation of these efforts. With improved earnings and lower capital expenditures we reduced our debt balances by another $14.8 million during the second quarter of 2009, bringing the total reduction in outstanding indebtedness over the past twelve months to $61.2 million. While we continue to make debt reduction a high priority, our capital ratios are approaching levels which we believe should provide investors with a high degree of confidence in the long-term financial stability of the Company.'

Second Quarter 2009 Results

Total revenues for the second quarter of 2009 decreased 3.2% to $203.9 million from $210.7 million in the second quarter of 2008. During the second quarter of 2009, the Company opened one new Taco Cabana restaurant, one new Pollo Tropical restaurant, and closed two Burger King restaurants.

Revenues from the Company's Hispanic Brands decreased 0.4% to $108.4 million in the second quarter of 2009 from $108.8 million in the same period last year. Pollo Tropical revenues were $44.6 million during the second quarter of 2009 compared to $45.4 million in the second quarter of 2008 including a comparable restaurant sales decrease of 3.1% in the second quarter of 2009. This was substantially offset by the net increase of five new Pollo Tropical restaurants opened since the beginning of the same period in 2008.

Taco Cabana revenues increased 0.6% to $63.8 million during the second quarter of 2009 compared to $63.4 million in the second quarter of 2008 reflecting the opening of 12 new Taco Cabana restaurants since the beginning of the same period in 2008. Comparable restaurant sales at Taco Cabana decreased 3.8% in the second quarter of 2009.

Burger King revenues decreased 6.2% to $95.5 million during the second quarter of 2009 compared to $101.8 million in the second quarter of 2008. This reflected a decrease in comparable restaurant sales of 4.7% in the second quarter of 2009 and the net closing of eight Burger King restaurants since the beginning of the same period in 2008.

General and administrative expenses decreased $1.0 million to $12.7 million in the second quarter of 2009 compared to $13.7 million in the second quarter of 2008, and decreased from 6.5% to 6.2% of total revenues.

Income from operations increased from $12.1 million in the second quarter of 2008 to $16.1 million in the second quarter of 2009, and as a percentage of total revenues, improved from 5.7% to 7.9%.

Interest expense was $4.9 million in the second quarter of 2009 and $2.2 million lower than the second quarter of 2008 due to debt reductions in 2008 and 2009, and lower interest rates on the Company's LIBOR-based borrowings. During the second quarter of 2009, the Company reduced its outstanding debt balances by $14.8 million to $294.9 million at June 28, 2009.

Net income for the second quarter of 2009 was $7.1 million, or $0.32 per diluted share, compared to net income for the second quarter of 2008 of $3.3 million, or $0.15 per diluted share.

Six Month Results

For the six months ended June 28, 2009, total revenues decreased 0.3% to $405.3 million from $406.4 million in the same period last year. Net income increased to $12.1 million, or $0.56 per diluted share, from $4.7 million, or $0.22 per diluted share, for the six months ended June 29, 2008.

Outlook

The Company is providing the following revised guidance noting that 2009 is a 53-week fiscal period, whereas 2008 was a 52-week fiscal period. The major earnings drivers warrant conservatism in projections for the second half compared to the first half of 2009.

• A more modest revenue increase of approximately 1.0% to 1.5% for the year reflecting first half 2009 results, more difficult sales trends at Burger King and Taco Cabana and anticipated improvements at Pollo Tropical compared to the first half of 2009;

• New unit openings of one to two Pollo Tropical restaurants and three to four Taco Cabana restaurants, along with the closing of two Taco Cabana restaurants and one Pollo Tropical restaurant;

• The opening of two to three new Burger King restaurants, all of which are planned relocations of existing units, along with the closing of four Burger King restaurants in addition to the relocated units;

• Total general and administrative expenses comparable with 2008;

• Total capital expenditures of $35 million to $40 million;

• Total debt reduction of $30 million to $35 million;

• An estimated annual effective tax rate of 37.3%; and

• Diluted earnings per share of $0.94 to $0.99, which includes the 53rd week of the fiscal year estimated to positively impact earnings by approximately $0.07 per diluted share. This compares to the Company's previous guidance of diluted earnings per share of $0.90 to $0.95, inclusive of the extra fiscal week.

Mr. Vituli concluded, 'We are taking a more cautious outlook to sales growth for the balance of the year in light of the uncertain consumer environment and the significant competitive activity that exists. Yet, cost trends have been favorable, and accordingly, our revised earnings guidance reflects that positive impact on profitability. Our actions to improve the Company's capital structure through debt reduction, demonstrates that our highest short-term priority is financial stability, while we are poised to accelerate growth of our Hispanic brands when economic conditions warrant that.'

Logos, product and company names mentioned are the property of their respective owners.

Reader Comments:

Be the first to leave a comment for this article

Tweet