Carrols Restaurant Group (TAST) Misses Q2 EPS by 6c, Beats on Revenues; Boosts FY17 Revenue Midpoint Outlook Above Consensus

Carrols Restaurant Group (NASDAQ: TAST) reported Q2 EPS of $0.14, $0.06 worse than the analyst estimate of $0.20. Revenue for the quarter came in at $279.48 million versus the consensus estimate of $275.46 million.

Full Year 2017 Outlook

The Company is providing the following updated guidance for 2017. As a reminder, while the Company may acquire additional BURGER KING® restaurants in 2017, this guidance does not include any impact from such potential future transactions:

• Total restaurant sales of $1.05 billion to $1.07 billion (previously $1.03 billion to $1.06 billion), including a comparable restaurant sales increase of 2% to 3%;
• Commodity cost increases of 2% to 4% including an 8% to 10% increase in beef costs (previously 1% to 3% including a 2% to 4% increase in beef costs);
• General and administrative expenses (excluding stock compensation and acquisition costs) of $53 million to $55 million (previously $54 million to $56 million);
• Adjusted EBITDA is still expected to be $90 million to $95 million;
• Capital expenditures are still expected to be approximately $65 million to $85 million which includes remodeling a total of 28 to 32 restaurants, the rebuilding of 6 to 8 restaurants and the construction of 10 to 15 new restaurants including 2 or 3 relocations of existing restaurants. Capital expenditures also include $10 million to $12 million for non-recurring investments in new kitchen production and product holding systems, new training systems and certain POS system upgrades;
• The closing of 15 to 20 existing restaurants of which 16 had been closed as of July 2, 2017; and
• An effective income tax rate of 18% to 20%.

GUIDANCE:

Carrols Restaurant Group sees FY2017 revenue of $1.05-1.07 billion, versus the consensus of $1.05 billion.

Highlights for second quarter of 2017 versus second quarter of 2016 include:

• Restaurant sales increased 15.8% to $279.5 million from $241.4 million in the second quarter of 2016, including $53.3 million in sales from 170 BURGER KING® restaurants acquired from 2015 to 2017(1);
• Comparable restaurant sales increased 4.6% compared to a 0.7% increase in the prior year period;
• Adjusted EBITDA(2) was $27.5 million compared to $27.9 million in the prior year period;
• Net income was $6.0 million, or $0.13 per diluted share, compared to net income of $9.4 million, or $0.21 per diluted share, in the prior year period; and
• Adjusted net income(2) was $6.6 million, or $0.14 per diluted share, compared to adjusted net income of $8.0 million, or $0.18 per diluted share, in the prior year period.(1) “Acquired restaurants” refer to those restaurants acquired from 2015 through 2017. “Legacy restaurants” include all of the Company’s other restaurants including restaurants acquired before 2015.(2) Adjusted EBITDA, Restaurant-level EBITDA and Adjusted net income are non-GAAP financial measures. Refer to the definitions and reconciliation of these measures to net income or to income from operations in the tables at the end of this release.

For earnings history and earnings-related data on Carrols Restaurant Group (TAST) click here.

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