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Form 8-K CARROLS RESTAURANT GROUP For: Jun 23

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June 23, 2021 8:22 AM EDT


Exhibit 99.1


image_0.jpg
FOR IMMEDIATE RELEASE
Investor Relations:
Raphael Gross
203-682-8253
investorrelations@carrols.com

Carrols Restaurant Group, Inc. Announces Offering of Senior Notes

Syracuse, New York. June 23, 2021 - (Businesswire) - Carrols Restaurant Group, Inc. (NASDAQ: TAST) (“Carrols Restaurant Group”) announced today that it plans to offer, in a private placement, senior notes due 2029 in the aggregate principal amount of $300 million (the “Notes”). Carrols Restaurant Group is the largest U.S. Burger King® franchisee based on the number of restaurants and has owned and operated Burger King restaurants since 1976. As of April 4, 2021, the Company owned and operated 1,010 Burger King restaurants and 65 Popeyes® restaurants. Carrols Restaurant Group intends to use the net proceeds of the private placement of the Notes and $46 million of revolving credit borrowings under its senior credit facility (i) to repay $74.0 million of outstanding term loan B-1 borrowings and $244.0 million of outstanding term loan B borrowings under its senior credit facility, (ii) to pay fees and expenses related to the offering of the Notes and the amendment to its senior credit facility, and (iii) for working capital and general corporate purposes, including for possible future repurchases of its common stock and/or a dividend payment and/or payments on its common stock.

The Notes will be offered only to persons reasonably believed to be qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S. persons in transactions outside the United States under Regulation S under the Securities Act. The Notes will not be registered under the Securities Act and may not be offered or sold in the U.S. or to U.S. persons absent registration or an applicable exemption from registration requirements.



This press release is being issued pursuant to and in accordance with Rule 135(c) under the Securities Act. This press release is for informational purposes only and is not an offer to sell or a solicitation of an offer to purchase the Notes.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Except for the historical information contained in this news release, the matters addressed are forward-looking statements. Forward-looking statements, written, oral or otherwise made, represent Carrols Restaurant Group's expectation or belief concerning future events. Without limiting the foregoing, these statements are often identified by the words "may", "might", "believes", "thinks", "anticipates", "plans", "expects", "intends" or similar expressions. In addition, expressions of our strategies, intentions, plans or guidance are also forward-looking statements. Such statements reflect management's current views with respect to future events and are subject to risks and uncertainties, both known and unknown. You are cautioned not to place undue reliance on these forward-looking statements as there are important factors that could cause actual results to differ materially from those in forward-looking statements, many of which are beyond our control. Investors are referred to the full discussion of risks and uncertainties, including without limitation the impact of COVID-19 on Carrols Restaurant Group’s business, as included in Carrols Restaurant Group's filings with the Securities and Exchange Commission.






EXHIBIT 99.2

EXCERPTS FROM THE CARROLS RESTAURANT GROUP, INC.
CONFIDENTIAL PRELIMINARY OFFERING MEMORANDUM DATED JUNE 23, 2021

The inclusion of the information presented below should not be viewed as a determination that such information is material.

USE OF NON-GAAP FINANCIAL MEASURES
EBITDA, Adjusted EBITDA, Adjusted Restaurant-Level EBITDA and Adjusted net income (loss) are non-GAAP financial measures. EBITDA represents net income or loss before income taxes, interest expense and depreciation and amortization. Adjusted EBITDA represents EBITDA adjusted to exclude impairment and other lease charges, acquisition and integration costs, stock-based compensation expense, abandoned development costs, restaurant pre-opening costs, non-recurring litigation and other professional expenses, gain on bargain purchase, loss on extinguishment of debt and other income and expense. Adjusted Restaurant-Level EBITDA represents income or loss from operations as adjusted to exclude general and administrative expenses, depreciation and amortization, impairment and other lease charges, restaurant-level integration costs, pre-opening costs and other income and expense. Adjusted net income (loss) represents net income or loss as adjusted to exclude loss on extinguishment of debt, impairment and other lease charges, acquisition and integration costs, abandoned development costs, pre-opening expense, gain on bargain purchase, non-recurring litigation and other professional expenses and other income or expense, the related income tax effect of these adjustments and the establishment or reversal of a valuation allowance on our net deferred income tax assets.
We are presenting Adjusted EBITDA, Adjusted Restaurant-Level EBITDA and Adjusted net income (loss) because we believe that they provide a more meaningful comparison than EBITDA and net income (loss) of our core business operating results, as well as with those of other similar companies. Additionally, we present Adjusted Restaurant-Level EBITDA because it excludes the impact of general and administrative expenses such as salaries and expenses associated with corporate and administrative functions that support the development and operations of our restaurants, legal, auditing and other professional fees, as well as restaurant integration costs related to acquisitions, restaurant pre-opening costs, and other income and expense. Although these costs are not directly related to restaurant-level operations, these costs are necessary for the profitability of our restaurants. Management believes that Adjusted EBITDA, Adjusted Restaurant-Level EBITDA and Adjusted net income (loss), when viewed with our results of operations in accordance with GAAP and the accompanying reconciliations, provide useful information about operating performance and period-over-period growth, and provide additional information that is useful for evaluating the operating performance of our core business without regard to potential distortions. Additionally, management believes that Adjusted EBITDA, Adjusted Restaurant-Level EBITDA and Adjusted net income (loss) permit investors to gain an understanding of the factors and trends affecting our ongoing cash earnings, from which capital investments are made and debt is serviced.
However, EBITDA, Adjusted EBITDA, Adjusted Restaurant-Level EBITDA and Adjusted net income (loss) are not measures of financial performance or liquidity under GAAP and, accordingly, should not be considered as alternatives to net income (loss), income from operations or cash flow from operating activities as indicators of operating performance or liquidity. EBITDA, Adjusted EBITDA, Adjusted Restaurant-Level EBITDA, and Adjusted net income (loss) have important limitations as analytical tools. These limitations include the following:


•EBITDA, Adjusted EBITDA, Adjusted Restaurant-Level EBITDA, and Adjusted net income (loss) do not reflect our capital expenditures, future requirements for capital expenditures or contractual commitments to purchase capital equipment;
•EBITDA, Adjusted EBITDA and Adjusted Restaurant-Level EBITDA do not reflect the interest expense or the cash requirements necessary to service principal or interest payments on our debt;
•although depreciation and amortization are non-cash charges, the assets that we currently depreciate and amortize will likely have to be replaced in the future, and EBITDA, Adjusted EBITDA, Adjusted Restaurant-Level EBITDA, and Adjusted net income (loss) do not reflect the cash required to fund such replacements; and
•EBITDA, Adjusted EBITDA, Adjusted Restaurant-Level EBITDA and Adjusted net income (loss) do not reflect the effect of earnings or charges resulting from matters that our management does not consider to be indicative of our ongoing operations. However, some of these charges (such as impairment and other lease charges and acquisition costs) have recurred and may reoccur.
See “Summary — Summary Historical and Selected Unaudited Financial and Operating Data” for a quantitative reconciliation of EBITDA, Adjusted EBITDA, Adjusted Restaurant-Level EBITDA and Adjusted net income (loss) to the most directly comparable GAAP financial performance measure, which we believe is net income (loss) for EBITDA and Adjusted EBITDA, income (loss) from operations for Adjusted Restaurant-Level EBITDA, and net income (loss) for Adjusted net income (loss).

Summary Historical and Selected Unaudited
Financial and Operating Data
The following table sets forth our summary historical and selected unaudited financial and operating information for the periods presented. The summary historical financial information has been derived from our audited consolidated financial statements prepared in accordance with GAAP for each of the fiscal years ended December 30, 2018, December 29, 2019 and January 3, 2021. Our fiscal years ended December 30, 2018 and December 29, 2019 each contained 52 weeks. Our fiscal year ended January 3, 2021 contained 53 weeks.
The summary unaudited consolidated financial statements for the three months ended April 4, 2021 and March 29, 2020 include all adjustments, consisting of normal recurring which, in our opinion, are necessary for a fair presentation of the financial position and results of operation for these periods. The summary unaudited consolidated financial information has been prepared on a basis consistent with our audited consolidated financial statements. The results of operations for the three months ended April 4, 2021 and March 29, 2020 are not necessarily indicative of the results to be expected for the full year.
All of the financial and operating data for the twelve months ended April 4, 2021 included herein has been derived by adding the financial and operating data for the year ended January 3, 2021, which contained 53 weeks, to the financial and operating data for the three months ended April 4, 2021 and subtracting the financial and operating data for the three months ended March 29, 2020.
The information in the tables below is only a summary and should be read together with our consolidated financial statements as of January 3, 2021 and December 29, 2019 and for the years ended January 3, 2021, December 29, 2019 and December 30, 2018 included in our Annual Report on From 10-K for the fiscal year ended January 3, 2021 and as of April 4, 2021 and for the three months ended April 4, 2021 and March 29, 2020 included in our Quarterly Report on Form 10-Q which are incorporated by reference herein.


Fiscal Year EndedThree Months EndedTwelve Months Ended
December 30, 2018December 29, 2019January 3, 2021March 29, 2020April 4, 2021April 4, 2021
(Dollars in thousands, other than operating data)
Statements of Operations data:
Restaurant sales$1,179,307 $1,452,516 $1,547,502 $351,518 $389,993 $1,585,977 
Other Revenue— 10,249 — — — — 
  Total Revenue1,179,307 1,462,765 1,547,502351,518 389,993 1,585,977 
Costs and expenses:
Cost of sales326,308 431,969 452,738 102,927 113,790 463,601 
Restaurant wages and related expenses382,829 485,278 498,127 124,575 129,646 503,198 
Restaurant rent expense81,409 107,147 118,444 29,454 30,314 119,304 
Other restaurant operating expenses178,750 227,364 236,059 57,978 61,419 239,500 
Advertising expense48,340 58,689 60,735 13,876 15,369 62,228 
General and administrative(1)
66,587 84,734 84,051 20,787 21,369 84,633 
Depreciation and Amortization58,468 74,674 81,727 21,031 20,609 81,305 
Impairment and other lease charges3,685 3,564 12,778 2,881 353 10,250 
Other expense (income)(2)
(424)(1,911)(1,271)56 227 (1,100)
Total operating expenses1,145,952 1,471,508 1,543,388 373,565 393,096 1,562,919 
Income (loss) from operations33,355 (8,743)4,114 (22,047)(3,103)23,058 
Interest expense23,638 27,856 27,283 7,140 6,726 26,869 
Loss on extinguishment of debt— 7,443 — — — — 
Gain on bargain purchase(230)— — — — — 
Income (loss) before income taxes9,947 (44,042)(23,169)(29,187)(9,829)(3,811)
Provision (benefit) for income taxes(157)(12,123)6,294 (6,978)(2,661)10,611 
Net income (loss)$10,104 $(31,919)$(29,463)$(22,209)$(7,168)$(14,422)
Other financial data:
Net cash provided by (used in) operating activities$80,769 $48,708 $103,945 $(3,790)$7,036 $114,771 
Total capital expenditures75,735 134,879 56,890 24,597 10,627 42,920 
Net cash used for (provided by) investing activities106,894 218,045 47,857 21,968 10,627 36,516 
Net cash provided by (used in) financing activities727 168,297 5,902 64,056 (1,444)(59,598)

Operating Data:
Restaurants (at end of period)849 1,101 1,074 1,093 1,075 1,075 
Average number of operating restaurants813.9 998.5 1,078.0 1,095.0 1,074.0 1,072.8 
Average annual sales per restaurant(3)
$1,449 $1,455 $1,436 $1,478 
Adjusted EBITDA(4)
102,990 86,371 107,855 3,972 19,866 123,749 
Adjusted Restaurant-Level EBITDA(4)
162,133 156,131 181,562 22,797 39,484 198,249 
Adjusted net income (loss)(4)
14,091 (15,323)(3,733)(19,317)(6,500)9,084 
Change in comparable restaurant sales(5)
3.8 %2.2 %(2.7)%(5.7)%13.8 %1.6 %


December 30, 2018December 29, 2019January 3, 2021March 29, 2020April 4, 2021
(Dollars in thousands)
Balance sheet data (at end of period):
Cash and cash equivalents$4,014 $2,974 $64,964 $41,272 $59,929 
Total assets600,251 1,751,460 1,757,085 1,778,134 1,745,190 
Working capital(47,461)(109,540)(44,396)(64,583)(45,637)
Debt:
Senior secured second lien notes$275,000 $422,875 $— $— $— 
Senior credit facility term loan B borrowings— — 419,375 421,813 418,312 
Senior credit facility term loan B-1 borrowings— — 73,875 — 73,688 
Senior credit facility revolving credit borrowings— 45,750 — 111,750 — 
Senior Unsecured Notes— — — — — 
Finance leases3,941 2,524 908 1,958 1,315 
Total debt$278,941 $471,149 $494,158 $535,521 $493,315 
Stockholders’ equity$185,540 $309,462 $271,532 $283,122 $268,935 


Fiscal Year EndedThree Months EndedTwelve Months Ended
December 30, 2018December 29, 2019January 3, 2021March 29, 2020April 4, 2021April 4, 2021
(Dollars in thousands)
Reconciliation of EBITDA and Adjusted EBITDA:
Net income (loss)$10,104 $(31,919)$(29,463)$(22,209)$(7,168)$(14,422)
Provision (benefit) for income taxes(157)(12,123)6,294 (6,978)(2,661)10,611 
Interest expense23,638 27,856 27,283 7,140 6,726 26,869 
Depreciation and amortization58,468 74,674 81,727 21,031 20,609 81,305 
EBITDA92,053 58,488 85,841 (1,016)17,506 104,363 
Impairment and other lease charges3,685 3,564 12,778 2,881 353 10,250 
Acquisition & integration costs(6)
1,445 10,827 273 81 — 192 
Abandoned development costs(7)
— 256 3,464 688 — 2,776 
Pre-opening costs(8)
462 1,449 163 89 29 103 
Other (income) and expense, net(9)
(424)(1,911)(1,271)56 227 (1,100)
Litigation and other professional expenses(10)
187 502 1,384 61 282 1,605 
Stock compensation expense(1)
5,812 5,753 5,223 1,132 1,469 5,560 
Gain on bargain purchase(230)— — — — — 
Loss on extinguishment of debt— 7,443 — — — — 
Adjusted EBITDA$102,990 $86,371 $107,855 $3,972 $19,866 $123,749 
COVID-19 other supplies expense2,871 
Travel restructuring savings143 
Training restructuring savings575 
Proforma EBITDA from stores closed525 
Lost earnings due to First Data outage250 
Cash payments previously included in impairment(657)
Covenant Adjusted EBITDA$127,456 


 Fiscal Year EndedThree Months EndedTwelve Months Ended
December 30, 2018December 29, 2019January 3, 2021March 29, 2020April 4, 2021April 4, 2021
(Dollars in thousands)
Reconciliation of Adjusted Restaurant-Level EBITDA
Income (loss) from operations $33,355 $(8,743)$4,114 $(22,047)$(3,103)$23,058 
Add:
General and administrative expenses66,587 84,734 84,051 20,787 21,369 84,633 
Restaurant integration costs— 2,364 — — — — 
Pre-opening costs(8)
462 1,449 163 89 29 103 
Depreciation and amortization58,468 74,674 81,727 21,031 20,609 81,305 
Impairment and other lease charges3,685 3,564 12,778 2,881 353 10,250 
Other (income) and expense, net(9)
(424)(1,911)(1,271)56 227 (1,100)
Adjusted Restaurant-Level EBITDA$162,133 $156,131 $181,562 $22,797 $39,484 $198,249 
Reconciliation of Adjusted net income (loss)
Net income (loss) 10,104 (31,919)(29,463)(22,209)(7,168)(14,422)
Add:
Impairment and other lease charges3,685 3,564 12,778 2,881 353 10,250 
Acquisition & integration costs(6)
1,445 10,827 273 81 — 192 
Abandoned development costs(7)
— 256 3,464 688 — 2,776 
Pre-opening costs(8)
462 1,449 163 89 29 103 
Other (income) and expense, net(9)
(424)(1,911)(1,271)56 227 (1,100)
Litigation and other professional expenses(10)
187 502 1,384 61 282 1,605 
Gain on bargain purchase(230)— — — — — 
Loss on extinguishment of debt— 7,443 — — — — 
Income tax effect on above adjustments(11)
(1,138)(5,534)(4,199)(964)(223)(3,458)
Adjustments to income tax benefit(12)
— — 13,138 — — 13,138 
Adjusted net income (loss)$14,091 $(15,323)$(3,733)$(19,317)$(6,500)9,084 
(1)Acquisition costs of $1.4 million, $8.5 million and $0.3 million were included in general and administrative expense for the years ended December 30, 2018, December 29, 2019 and January 3, 2021, respectively and $0.1 million for the three months ended March 29, 2020. Additionally, stock-based compensation expense of $5.8 million, $5.8 million and $5.2 million were included in general and administrative expense for the years ended December 30, 2018, December 29, 2019, January 3, 2021, respectively, $1.1 million and $1.5 million for the three months ended March 29, 2020 and April 4, 2021, respectively and $5.6 million for the twelve months ended April 4, 2021.
(2)In 2020, we recorded gains related to insurance recoveries from property damage at four of the our restaurants of $2.1 million, a net gain on twelve sale-leaseback transactions of $0.2 million and a loss on disposal of assets of $1.0 million. In fiscal 2019, we recorded, among other things, a $1.9 million gain related to a settlement with BKC for the approval of new restaurant development by other franchisees which unfavorably impacted our restaurants. In fiscal 2018, we recorded a net gain of $0.4 million, primarily related to insurance recoveries from fires at two restaurants.
(3)Average annual sales per restaurant are derived by dividing restaurant sales by the average number of restaurants operating during the period. The twelve months ended January 3, 2021 and April 4, 2021 each contained 53 weeks.
(4)EBITDA, Adjusted EBITDA, Adjusted Restaurant-Level EBITDA and Adjusted net income (loss) are non-GAAP financial measures. EBITDA represents net income or loss before income taxes, interest expense and depreciation and amortization. Adjusted EBITDA represents EBITDA as adjusted to exclude impairment and other lease charges, acquisition and integration costs, stock compensation expense, pre-opening costs, gain on bargain purchase, loss on extinguishment of debt and other income or expense. Adjusted Restaurant-Level EBITDA represents income or loss from operations adjusted to exclude general and administrative expenses, restaurant integration costs, pre-opening costs, depreciation and amortization, impairment and other lease charges, and other income or expense. Adjusted net income (loss) represents net income or loss as adjusted to exclude loss on extinguishment of debt, impairment and other lease charges, acquisition and integration costs, pre-opening expense gain on bargain purchase, litigation costs, legal settlement gains and other income or expense, the related income tax effect of these adjustments and the establishment or reversal of a valuation allowance on our net deferred income tax assets.


(5)Restaurants we acquire are included in comparable restaurant sales after they have been operated by us for 12 months. Sales from restaurants we develop are included in comparable sales after they have been open for 15 months. Comparable restaurant sales are on a 53-week basis for the year ended January 3, 2021.
(6)Acquisition and integration costs for the periods presented include certain legal and professional fees, corporate payroll, and other general and administrative costs related to the integration of acquisitions as well as one-time repair and other operating costs which are included in other restaurant operating expenses.
(7)Abandoned development costs for the twelve months ended January 3, 2021 and December 29, 2019 and three months ended March 29, 2020 represent the write-off of capitalized costs due to the abandoned development of future restaurant locations.
(8)Pre-opening costs for the periods presented include training, labor and occupancy costs incurred during the construction of new restaurants.
(9)The year ended January 3, 2021 included gains related to insurance recoveries from property damage at four of our restaurants of $2.1 million, a net gain on twelve sale-leaseback transactions of $0.2 million and a loss on disposal of assets of $1.0 million. The year ended December 29, 2019, includes, among other things, a gain of $1.9 million from a settlement with BKC for the approval of new restaurant development by other franchisees which unfavorably impacted our restaurants. In fiscal 2018, we recorded a net gain of $0.4 million, primarily related to insurance recoveries from fires at two restaurants.
(10)Litigation and other professional expenses in fiscal 2020 include legal costs pertaining to an ongoing lawsuit with one of our vendors, costs to settle a class action claim and other non-recurring professional service expenses. In fiscal 2019 and 2018, this included legal costs pertaining to an ongoing lawsuit with one of our vendors. Litigation and other professional expenses for the three months ended April 4, 2021 and March 29, 2020 includes litigation expenses pertaining to an ongoing lawsuit with one of the Company's former vendors and other non-recurring professional service expenses.
(11)The income tax effect related to all adjustments, other than the deferred income tax valuation allowance provision (benefit), was calculated using an incremental income tax rate of 25% in fiscal 2020 and fiscal 2019, 22.2% in fiscal 2018 and 25% for the three months ended April 4, 2021 and March 29, 2020.
(12)Fiscal 2020 includes tax expense of $13.1 million to record an incremental tax valuation allowance for certain income tax credits as they may expire prior to their utilization.



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