Carrols Restaurant Group, Inc. 's ( TAST ) posted
first-quarter 2013 adjusted loss of 27 cents per share as compared
with an earnings of 16 cents per share in the comparable year-ago
quarter. Earnings were in line with the Zacks Consensus Estimate.
Moderated performance of the company's acquired Burger King
Worldwide, Inc. 's ( BKW ) restaurants
during the second quarter of 2012 and higher operating as well as
integration costs hurt the company's results.
Carrols Restaurant's restaurant sales surged 82.7% year over
year to $156.1 million, beating the Zacks Consensus Estimate of
$159 million by 1.8%. Revenues in the quarter have gained from
positive comparable restaurant sales (comps) growth and higher
traffic. The company's acquisition of Burger King restaurants has
also positively impacted on the sales.
Carrols Restaurant, a franchisee of Burger King, earned revenue
from its legacy as well as franchised restaurants.
Revenues at legacy restaurants increased 0.4% to $85.8 million,
gaining from higher comps and a 1.3% improvement in the average
weekly sales. Comps at legacy restaurants were up 1%, aided by a
4.4% rise in average check, 0.8% increase in price and favorable
product mix. Revenues at acquired restaurants were $70.4
Carrols Restaurant's adjusted EBITDA, slipped 13.2% year over
year to $3.3 million. Adjusted EBITDA margin were down 240 basis
points (bps) to 2.1%. The drop in EBITDA margin was attributed to
higher restaurant-level expenses, poor performance of the acquired
restaurants and higher general and administrative expenses,
partially offset by the favorable performance of legacy restaurant
, higher comps and traffic growth.
Restaurant level operating margins (G&A expenses excluded)
expanded 70 bps to 11.8% on lower cost of sales. In the reported
quarter, cost of sales declined 100 bps to 29.6%, attributed to
reduced commodity costs and improved average guest check.
During the quarter, one restaurant was closed. As of Mar 31,
2013, Carrols Restaurant franchised and operated 571 Burger King
For 2013, the company expects that the total sales will be within
$670 million and $700 million. Moreover, management expects comps
at legacy restaurant will grow 2%-4%.
Carrols Restaurant expects commodity expenses to continue
increasing in the range of 2-3%. Capital expenditure is anticipated
to be in the range of $40 million to $50 million, of which includes
$40 million for the restoration of 90-120 restaurants in 2013. The
company is planning to close 6-8 restaurants.
Higher operating as well as integration costs is continuously
pressuring on the company's earnings and margin. However, these
expenses are justified for future growth. However, in the near
term this costs and the uncertain economy remains a
Finally, on a positive note, Carrols Restaurant anticipates
performance at acquired restaurants will improve from higher
productivity and effective cost management, moving ahead.
Carrols Restaurant carries a Zacks Rank #3 (Hold). Some other
restaurateurs like McDonald's Corp. ( MCD ) missed our
estimates on both lines this season while Yum! Brands
Inc. ( YUM
) beat earnings but missed out on revenues.BURGER KING WWD (BKW): Free Stock Analysis
ReportMCDONALDS CORP (MCD): Free Stock Analysis
ReportCARROLS RESTRNT (TAST): Free Stock Analysis
ReportYUM! BRANDS INC (YUM): Free Stock Analysis
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