Carrols Restaurant Group (TAST) Tops Q4 EPS by 3c, Beats on Revenues; Offers FY18 Revenue Mid-Point Outlook Above Consensus

Carrols Restaurant Group (NASDAQ: TAST) reported Q4 EPS of $0.08, $0.03 better than the analyst estimate of $0.05. Revenue for the quarter came in at $284 million versus the consensus estimate of $272.65 million.

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

• Restaurant sales increased 17.9% to $284.0 million from $240.8 million in the fourth quarter of 2016, including $59.6 million in sales from the 175 BURGER KING® restaurants acquired from 2015 through 2017(1);
• Comparable restaurant sales were robust and increased 8.9% compared to a 3.2% increase in the prior year quarter;
• Adjusted EBITDA(2) increased 26.5% to $25.8 million from $20.4 million in the prior year quarter;
• Net income was $3.9 million, or $0.09 per diluted share, compared to net income of $29.5 million, or $0.65 per diluted share, in the prior year quarter. Among other things, 2016 net income included $30.4 million from the reversal of a valuation allowance against net deferred tax assets ($0.68 per diluted share); and
• Adjusted net income(2) was $3.8 million, or $0.08 per diluted share, compared to adjusted net income of $2.0 million, or $0.04 per diluted share, in the prior year quarter.

Full Year 2018 Outlook

The Company is providing the following guidance for 2018. As a reminder, while the Company may acquire additional BURGER KING® restaurants, this guidance does not include any impact from such potential future acquisitions:

• Total restaurant sales are expected to be $1.14 billion to $1.17 billion (previously estimated to be $1.12 billion to $1.15 billion), including a comparable restaurant sales increase of 3% to 5%;
• Commodity costs are expected to increase 2% to 3% including a 3% to 5% increase in beef costs;
• General and administrative expenses are expected to be $58 million to $60 million, excluding stock compensation expense and acquisition-related costs;
• Adjusted EBITDA is expected to be $93 million (previously $90 million) to $100 million;
• Capital expenditures before discretionary growth-related expenditures (i.e., new restaurant development and acquisitions) are expected to be $45 million to $50 million. In addition, capital expenditures for the construction of 10 to 15 new units and remaining costs from 2017 construction late in the year are expected to be $15 million to $25 million;
• Proceeds from sale/leasebacks are expected to be $10 million to $15 million;
• The Company expects to close 20 to 25 existing restaurants; and
• The effective income tax rate is expected to be 0% to 5%.

GUIDANCE:

Carrols Restaurant Group sees FY2018 revenue of $1.14-1.17 billion, versus the consensus of $1.14 billion.

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

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