Carrols Restaurant Group (TAST) Tops Q2 EPS by 17c, Revenues Beat

Carrols Restaurant Group (NASDAQ: TAST) reported Q2 EPS of $0.16, $0.17 better than the analyst estimate of ($0.01). Revenue for the quarter came in at $368.4 million versus the consensus estimate of $363.62 million.

Highlights for the Second Quarter of 2020 versus the Second Quarter of 2019

• Total restaurant revenue was $368.4 million compared to $365.7 million in the prior year quarter;
• Comparable restaurant sales for the Company’s Burger King® restaurants decreased 6.4%; June comparable restaurant sales increased 2.5%;
• Comparable restaurant sales for the Company’s Popeyes® restaurants increased 17.1%; June comparable restaurant sales increased 13.3%;
• Adjusted EBITDA(1) increased to $38.0 million from $24.1 million in the prior year quarter;
• Adjusted Restaurant-Level EBITDA(1) increased to $54.1 million from $41.1 million in the prior year quarter;
• Net income was $7.8 million, or $0.13 per diluted share, compared to net loss of $(3.7) million, or $(0.09) per diluted share, in the prior year quarter;
• Adjusted Net Income(1) increased to $9.6 million, or $0.16 per diluted share, from $4.6 million, or $0.08 per diluted share, in the prior year quarter; and
• The Company generated $48.6 million of Free Cash Flow(2) during the second quarter of 2020.

Daniel T. Accordino, Chairman and Chief Executive Officer of Carrols, commented, “We believe our robust second quarter results are demonstrative of the agility and efficacy of our business model in providing customers great value and convenience through drive-thru, at-the-counter take-out, and delivery options along with our executional prowess in the face of a challenging operating environment. Despite the ongoing pandemic, we were encouraged by the resiliency in our comparable restaurant sales during the second quarter as well as our ability to generate higher restaurant-level profitability and Adjusted EBITDA in both dollar and margin terms compared to the year-ago period on similar revenue. This was accomplished by successfully managing food waste, optimizing labor, and effectively controlling other restaurant-level and corporate overhead expenses. Although volatility may persist, our underlying trend is undeniably strengthening and absent a major setback, we are hopeful that we can retain and possibly build further momentum in our overall performance.”

Accordino concluded, “In February, and pre-COVID-19 in the US, we expressed our intention to generate up to $25 million in free cash flow in 2020 and reduce our outstanding debt level by year end. Through the second quarter, we have generated $22.9 million of Free Cash Flow. We also now have in excess of $180 million in available liquidity (cash and borrowing availability under our revolving credit facility) which we believe gives us the ability to weather just about any adverse economic situation. For the remainder of 2020, our intention is to remain nimble in our operations, focus on improving profitability within our existing restaurant portfolio, manage capital expenditures, and continue to generate positive Free Cash Flow to reduce our leverage. Longer term, we currently expect to expend approximately $40 million to $50 million annually in capital expenditures over the next three years mainly for maintenance, approximately 25 restaurant remodels per year and system-wide upgrades and initiatives. We also intend to continue our pause on acquisitions and to only develop build-to-suit new restaurants with attractive ROI potential until our adjusted leverage ratio (as defined in our senior credit facility) drops below four times.”

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

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