Carrols Corporation reported that revenues for the quarter ended March 31, 2001 increased $45.3 million, or 41%, to $155.1 million from $109.8 million in the prior year quarter. The sales increase was largely attributable to the addition of 120 restaurants from the Company’s acquisition of Taco Cabana, Inc. in December 2000. Also contributing to the sales increase were modest gains in comparable store sales at the Company’s Burger King restaurants and the addition of six Pollo Tropical restaurants since the first quarter of last year.
Due to its significant non-cash depreciation and amortization charges, the Company reports EBITDA (earnings before interest, income taxes, depreciation and amortization) as a measure of financial performance. The Company indicated that EBITDA increased approximately 40% and was $16.3 million in the first quarter of 2001 compared to $11.6 million in the prior year. It reported a net loss of $1.5 million for the quarter compared to a net loss of $.5 million in the first quarter last year.
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Carrols reported that sales from its Burger King restaurants were $88.2 million for the quarter compared to $87.0 million in the prior year, and that EBITDA for its Burger Kings was $6.0 million in the first quarter of 2001 compared to $6.8 million in the prior year. The Company also stated that sales from its Pollo Tropical restaurants increased to $24.3 million in the first quarter of 2001 from $22.5 million in 2000, and that Pollo Tropical’s EBITDA was $4.8 million or flat with the first quarter in 2000. The Company’s Taco Cabana restaurants that were acquired in December 2000 added $42.2 million in sales and $5.5 million in EBITDA for the first quarter of 2001.
Alan Vituli, Chairman and CEO of Carrols stated, “Both sales and EBITDA increased considerably from the first quarter of 2000 as a direct result of our acquisition of Taco Cabana late last year. This acquisition, as well as the steady performance from our Pollo Tropical restaurants in Florida, allowed us to post increases in both sales and EBITDA while maintaining cash flow margins that were comparable to last year’s first quarter. The acquisition of these two companies has allowed us to reduce our dependence upon Burger King Corporation while effectively employing our strong operating capabilities and infrastructure. As intended, the diversification of restaurant concepts, cash flows and geography has added both balance and stability for our Company.
“While sales at our Burger King restaurants increased modestly for the quarter, margins were negatively impacted by the heavy promotional activity during the period. Comparable unit sales for our Burger King restaurants increased 1.3% for the first quarter, however the effectiveness of the promotions, combined with poor winter weather in the Northeast, did not generate increases in traffic sufficient to offset the effect of the promotional discounting.”
Vituli added, “We strongly believe in the embedded power of the Burger King brand. Burger King’s superior cooking process and its system of dedicated franchisees give it enormous potential for rapid recovery. Nonetheless, Burger King Corporation’s newly installed senior management team, led by John Dasburg, is unproven from the perspective of a Burger King franchisee. The new management team’s honeymoon should be short, after which we will be better able to determine Carrols’ long-term growth strategy for its Burger King business.”
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By GlobalDataCommenting on Pollo Tropical’s results Vituli said, “Sales at our Pollo Tropical restaurants continued to increase reflecting the effect of six restaurants opened since the first quarter of last year. Comparable unit sales were essentially flat for the quarter, however this compares to a 5.1% increase in the first quarter of last year that included the effect of a new product launch in January 2000. In late February 2001, we introduced Steak Supremo, our new steak product, and have been extremely pleased with its initial sales trends.
“Although not included in our results last year, Taco Cabana sales increased 6.6% from $39.6 million in the first quarter of 2000 to $42.2 million with an increase in its comparable unit sales of .7%. EBITDA for the Taco Cabana restaurants was slightly lower in 2001 ($5.5 million vs. $5.9 million), however current year results include approximately $.7 million of additional rent expense related to our sale/leaseback of 25 Taco Cabana properties in December 2000.”
Carrols Corporation, which is privately owned, is one of the largest restaurant companies in the U.S. operating 526 restaurants in 17 states. It is the second largest franchisee of Burger King restaurants with 355 Burger Kings located in 13 Northeastern, Midwestern and Southeastern states. It also operates two regional Hispanic restaurant chains that operate or franchise more than 200 restaurants. Carrols owns and operates 121 Taco Cabana restaurants in Texas, Oklahoma and Arizona, and franchises 10 Taco Cabana restaurants. Carrols also owns and operates 50 Pollo Tropical restaurants in South and Central Florida, and franchises 24 Pollo Tropical restaurants in Puerto Rico (18 units), Ecuador, El Salvador and Aruba.
This report contains certain forward-looking statements that reflect management’s current expectations and are based upon currently available data; however, actual results are subject to future events, risks and uncertainties, which could cause actual results to differ materially from those projected in the forward-looking statements. Investors are referred to the full discussion of risks and uncertainties as contained in Carrols Corporation’s filings with the Securities and Exchange Commission.
This release will be followed by an investor conference call on Monday, May 21, 2001 at 2:00 pm EDT. To participate in the conference call, please dial 888-273-9887, or 612-332-0932 for international callers, at least 10 minutes before the call. A replay of the conference call will be available through May 28, 2001, by dialing 800-475-6701, or 320-365-3844 for international callers. The Access Code is 587528 for the replay.
Carrols Corporation
(unaudited)
(dollars in thousands) Thirteen Weeks
Ended March 31,
2001 2000
Revenues:
Burger King restaurants $88,239 $87,038
Pollo Tropical restaurants 24,309 22,485
Taco Cabana restaurants 42,183 —
Franchise fees and royalty income 381 228
Total Revenues 155,112 109,751
Cost of sales 45,449 31,412
Restaurant wages and related expenses 46,230 32,736
Other restaurant operating expenses 37,704 27,838
General and administrative 9,457 6,176
Depreciation and amortization 10,370 6,682
Total operating expenses 149,210 104,844
Income from operations 5,902 4,907
Interest expense 9,175 5,840
Loss before income taxes (3,273) (933)
Income tax benefit (1,741) (420)
Net loss $(1,532) $(513)
EBITDA(1) by Operating Segment:
Burger King $5,974 $6,751
Pollo Tropical 4,834 4,838
Taco Cabana 5,464 —
Total $16,272 $11,589
Total long-term debt at end of quarter(2) $377,346 $248,305
(1) Earnings before interest, income taxes, depreciation and
amortization.
(2) Outstanding debt at March 31, 2001 includes $170.0 million of
subordinated notes due 2008, $201.1 million outstanding under the
company’s senior credit facility and $6.2 million related to capital
leases and other long-term debt.
