Carrols Restaurant Group (TAST) Misses Q4 EPS by 5c, Revenues Beat; Comp. Sales Up 2.7%; Offers FY19 Revenue Guidance Below Consensus

Carrols Restaurant Group (NASDAQ: TAST) reported Q4 EPS of $0.05, $0.05 worse than the analyst estimate of $0.10. Revenue for the quarter came in at $307.8 million versus the consensus estimate of $305.93 million.

• Restaurant sales increased 8.4% to $307.8 million from $284.0 million in the fourth quarter of 2017;
• Comparable restaurant sales increased 2.7% compared to an 8.9% increase in the prior year quarter;
• Adjusted EBITDA(1) was $24.3 million compared to $25.8 million in the prior year quarter;
• Net income was $1.8 million, or $0.04 per diluted share, compared to net income of $3.9 million, or $0.09 per diluted share, in the prior year quarter; and
• Adjusted net income(1) was $2.4 million, or $0.05 per diluted share, compared to adjusted net income of $3.8 million, or $0.08 per diluted share, in the prior year quarter.

Daniel T. Accordino, the Company's Chief Executive Officer said, “In 2018, we generated growth of 8.3% in restaurant sales and 12.0% in Adjusted EBITDA compared to 2017, achieving the high-end of our top-line and comparable restaurant sales guidance and the midpoint of our profitability expectation for the year. We were pleased with our comparable restaurant sales performance during the fourth quarter as we outpaced the U.S. Burger King system by almost 200 basis points while lapping a formidable 8.9% comparable restaurant sales comparison from the prior year period.”

Accordino continued, “We improved Adjusted EBITDA margin modestly in 2018, however, the impact from the heightened promotional environment was evident in our fourth quarter results. The variety of promotional deals included the $1 Chicken Nuggets offer, the $3.49 King Deal, a 2 for $6 Mix & Match, the $6 King Box and the 2 for $10 Meal Deal, balanced somewhat with the Cheesy Bacon Crispy Chicken and Philly Cheese King offers. Despite driving higher sales, Adjusted EBITDA margin decreased from the prior year quarter reflecting the impact of these deals combined with ongoing pressure on our labor costs.”

GUIDANCE:

Carrols Restaurant Group sees FY2019 revenue of $1.25-1.28 billion, versus the consensus of $1.34 billion.

• Commodity costs are expected to increase approximately 1% to 2% including a 2% to 3% increase in beef costs;
• General and administrative expenses are expected to be $62 million to $64 million, excluding stock compensation expense and acquisition-related costs;
• Adjusted EBITDA is expected to be $100 million to $110 million;
• Capital expenditures are expected to be $75 million to $95 million, including $25 million to $35 million for construction of 15 to 20 new units;
• Proceeds from sale/leasebacks are expected to be approximately $10 million to $15 million; and
• The Company expects to close 10 to 15 restaurants.

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

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