Fiesta Restaurant Group, Inc. Reports Third Quarter 2012 Results
Provides Initial Operating Targets for 2013
ADDISON, Texas--(BUSINESS WIRE)--
Fiesta Restaurant Group, Inc. ("Fiesta" or the "Company") (NASDAQ:
FRGI), the owner, operator, and franchisor of the Pollo Tropical® and
Taco Cabana® fast-casual restaurant brands, today reported results for
the third quarter of 2012 which ended on September 30, 2012. Fiesta also
provided certain initial operating targets for 2013.
Highlights of Third Quarter 2012 Results Include:
-
Total revenues increased 5.8% to $128.2 million compared to $121.2
million in the prior year period;
-
Comparable restaurant sales increased 7.0% at Pollo Tropical and 1.8%
at Taco Cabana;
-
Comparable restaurant guest traffic increased 5.9% at Pollo Tropical
and 0.6% at Taco Cabana;
-
Three new company-owned restaurants opened, including one Pollo
Tropical restaurant and two Taco Cabana restaurants; and
-
Net Income increased $1.2 million to $3.6 million in the third quarter
of 2012, or $0.16 per diluted share, compared to net income of $2.4
million, or $0.10 per diluted share, in the third quarter of 2011.
Tim Taft, President and Chief Executive Officer of Fiesta Restaurant
Group, Inc., commented, "Fiesta delivered outstanding results in the
third quarter characterized by healthy revenue gains, positive guest
traffic, expanding operating margins and profitability growth. Pollo
Tropical continues to post strong comparable restaurant sales. Taco
Cabana continues to post positive comparable restaurant sales with
transaction growth, while being affected by lapping significant price
increases taken last year. In October, both brands produced strong sales
performance driven by transaction growth, with comparable restaurant
sales increases of 7.5% at Pollo Tropical and 6.4% at Taco Cabana."
Taft continued, "We are committed to building restaurants in target
markets where we can achieve a compelling return on investment. In
addition to the 10 new Company-owned restaurants that we have and will
develop in 2012, we are planning to open an additional 14 to 17 new
Company-owned restaurants in 2013, including further Pollo Tropical
expansion in Atlanta, Georgia and our initial entry into Nashville,
Tennessee. We continue to pursue international franchise expansion, with
more than 10 Pollo Tropical franchised restaurant openings planned in
2013, including our first new restaurant in India."
Taft concluded, "With the spin-off now behind us, we are continuing to
build out our capabilities within various functional areas, and to that
end, have established our corporate headquarters in the city of Addison,
Texas, within Dallas County. We hope to complete our infrastructure and
administrative transition from Carrols Restaurant Group by the end of
2013, well ahead of the full three-year term of our transition services
agreement."
Third Quarter Financial Review
Revenues
Total revenues increased 5.8% in the third quarter of 2012 to $128.2
million from $121.2 million in the third quarter of 2011. Restaurant
sales in the third quarter of 2012 increased 5.7% to $127.6 million from
$120.8 million in the third quarter of 2011, due primarily to comparable
restaurant sales growth at both Pollo Tropical and Taco Cabana.
Franchise revenues in the third quarter of 2012 increased to $0.5
million from $0.4 million in the prior year period.
Operating Expenses
Cost of sales, restaurant wages and related expenses, and other
restaurant operating expenses each decreased as a percentage of
restaurant sales in the third quarter of 2012 compared to the third
quarter of 2011, due to the positive impact of a sales increase on fixed
costs and lower utility rates. Advertising expense declined as a
percentage of restaurant sales due primarily to the timing of
advertising.
Rent expense increased $2.1 million to $6.3 million compared to $4.2
million in the prior year period. Rent expense was $1.6 million higher
in the third quarter of 2012 compared to the third quarter of 2011 as a
result of the qualification for sale treatment of certain sale-leaseback
transactions upon completion of the spin-off on May 7, 2012, as
previously disclosed.
General and administrative expenses increased $2.1 million to $11.2
million in the third quarter of 2012 from $9.1 million in the third
quarter of 2011, due primarily to Fiesta employee additions and a $0.6
million expense associated with retirement agreements that were entered
into during the quarter.
Depreciation and amortization decreased $0.4 million to $4.5 million in
the third quarter of 2012 from $4.8 million in the third quarter of
2011, primarily due to the elimination of depreciation expense of $0.5
million as a result of the qualification for sale treatment of certain
sale-leaseback transactions upon completion of the spin-off.
Interest expense decreased $1.6 million to $5.0 million in the third
quarter of 2012 from $6.7 million in the third quarter 2011, primarily
because of the elimination of $2.7 million in interest expense as a
result of the qualification for sale treatment of certain sale-leaseback
transactions, partially offset by interest expense associated with the
issuance of $200 million of 8.875% Senior Secured Second Lien Notes in
the third quarter of 2011.
The provision for income taxes in the third quarter of 2012 was derived
using an estimated effective annual income tax rate of 39.3%. During the
third quarter, Fiesta was able to lower its estimated effective annual
income tax rate primarily as a result of adopting a consolidated tax
filing position in the state of Florida. However, the estimated
effective annual rate does not include any impact from a reenactment of
the Work Opportunity Tax Credit. If reenacted, the related benefit would
be recognized in the period of reenactment.
Net Income increased $1.2 million to $3.6 million in the third quarter
of 2012, or $0.16 per diluted share, compared to net income of $2.4
million, or $0.10 per diluted share, in the third quarter of 2011.
Brand Results
Pollo Tropical restaurant sales increased 9.8% to $57.4 million in the
third quarter of 2012 from $52.4 million in the third quarter of 2011,
primarily due to a comparable restaurant sales increase of 7.0%. The
growth in comparable restaurant sales resulted from a 5.9% increase in
guest traffic along with a 1.1% increase in average check. Pollo
Tropical franchise revenues increased to $0.4 million in the third
quarter of 2012 from $0.3 million in the third quarter of 2011. Adjusted
Segment EBITDA for Pollo Tropical increased to $9.1 million in the third
quarter of 2012 from $8.5 million in the third quarter of 2011. Adjusted
Segment EBITDA was negatively impacted by a $0.3 million expense
associated with a retirement agreement that was entered into during the
quarter and an increase in rent expense of $0.6 million in the third
quarter of 2012 compared to the third quarter of 2011 due to the
qualification for sale treatment of sale-leaseback transactions, as
discussed above.
Taco Cabana restaurant sales increased 2.8% to $70.3 million in the
third quarter of 2012 from $68.4 million in the third quarter of 2011,
primarily due to a comparable restaurant sales increase of 1.8%. The
growth in comparable restaurant sales resulted from a 0.6% increase in
guest traffic along with a 1.2% increase in average check. Taco Cabana
franchise revenues of $0.1 million in the third quarter of 2012 were
consistent with the third quarter of 2011. Adjusted Segment EBITDA for
Taco Cabana decreased to $6.7 million in the third quarter of 2012 from
$7.3 million in the third quarter of 2011. Adjusted Segment EBITDA was
negatively impacted by a $0.3 million expense associated with a
retirement agreement that was entered into during the quarter and an
increase in rent expense of $1.0 million in the third quarter 2012
compared to the third quarter of 2011 due to the qualification for sale
treatment of sale-leaseback transactions, as discussed above.
Restaurant Development
Fiesta opened three company-owned restaurants during the third quarter
of 2012 including one Pollo Tropical restaurant in Miami and two Taco
Cabana restaurants, one each in the Houston and Dallas markets. During
the third quarter of 2012, the Company entered into a development
agreement with a new franchisee in India that has committed to opening
10 Pollo Tropical franchised restaurants in India over the next five
years.
As of September 30, 2012, the Company owned 90 Pollo Tropical
restaurants and 160 Taco Cabana restaurants and franchised 35 Pollo
Tropical restaurants in the U.S., Puerto Rico, the Bahamas, Costa Rica,
Ecuador, Honduras, Panama, Trinidad & Tobago, and Venezuela, and five
Taco Cabana restaurants in the U.S.
Fiscal 2013 Initial Operating Targets
Initial operating targets expected in fiscal 2013:
-
Comparable restaurant sales growth of 5% to 6% for Pollo Tropical and
3% to 4% for Taco Cabana;
-
Commodity cost inflation will negatively impact margins as a percent
of restaurant sales by approximately 50 to 60 basis points, net of
price increases;
-
14 to 17 new Company-owned restaurant openings;
-
General and administrative expenses (excluding stock compensation) of
approximately $44 million to $46 million, including up to $2 million
of non-recurring, implementation expenses associated with establishing
self-sufficient corporate support functions;
-
Effective tax rate of 38% to 40%, excluding the reinstatement of the
Work Opportunity Tax Credits; and
-
Capital expenditures of approximately $45 million to $50 million.
Investor Conference Call Today
Fiesta will host a conference call and webcast to review third quarter
2012 results today at 8:30 AM ET. Hosting the call will be Tim Taft,
President and Chief Executive Officer, and Lynn Schweinfurth, Vice
President and Chief Financial Officer.
The conference call can be accessed live over the phone by dialing
888-401-4674 or for international callers by dialing 719-325-4756. A
replay will be available after the call and can be accessed by dialing
877-870-5176 or for international callers by dialing 858-384-5517; the
passcode is 7664129. The replay will be available until Tuesday,
November 20, 2012.
The conference call will also be webcast live from the corporate website
at www.FRGI.com,
under the investor relations section. A replay of the webcast will be
available through the corporate website shortly after the call has
concluded.
About Fiesta Restaurant Group, Inc.
Fiesta Restaurant Group, Inc. owns, operates, and franchises the Pollo
Tropical® and Taco Cabana® restaurant brands with 250 company-owned and
operated restaurants and 40 franchised restaurants in the U.S., Puerto
Rico, the Bahamas, Costa Rica, Ecuador, Honduras, Panama, Trinidad &
Tobago, and Venezuela as of September 30, 2012. The brands specialize in
the operation of fast-casual, ethnic restaurants that offer distinct and
unique flavors with a broad appeal at a compelling value. Both brands
feature made-from-scratch cooking, fresh salsa bars, and drive-thru
service and catering. For more information about Fiesta Restaurant
Group, Inc. visit our corporate website at www.FRGI.com.
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 Fiesta'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 Fiesta's
strategies, intentions or plans, 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 Fiesta's control. Investors are
referred to the full discussion of risks and uncertainties as included
in Fiesta's filings with the Securities and Exchange Commission.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiesta Restaurant Group, Inc.
Consolidated Statements
of Operations
(in thousands except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
Three Months Ended (a)
|
|
(unaudited)
Nine Months Ended (a)
|
|
|
|
|
|
Sep 30, 2012
|
|
Oct 2, 2011
|
|
Sep 30, 2012
|
|
Oct 2, 2011
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant sales
|
|
|
|
$
|
127,648
|
|
|
$
|
120,781
|
|
|
$
|
381,422
|
|
|
$
|
356,780
|
|
|
Franchise royalty revenues and fees
|
|
|
|
|
525
|
|
|
|
376
|
|
|
|
1,726
|
|
|
|
1,242
|
|
|
Total revenues
|
|
|
|
|
128,173
|
|
|
|
121,157
|
|
|
|
383,148
|
|
|
|
358,022
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
|
|
41,021
|
|
|
|
38,833
|
|
|
|
123,106
|
|
|
|
114,852
|
|
|
Restaurant wages and related expenses (b)
|
|
|
|
|
33,860
|
|
|
|
32,544
|
|
|
|
101,821
|
|
|
|
96,949
|
|
|
Restaurant rent expense (c)
|
|
|
|
|
6,311
|
|
|
|
4,232
|
|
|
|
15,700
|
|
|
|
12,526
|
|
|
Other restaurant operating expenses
|
|
|
|
|
16,655
|
|
|
|
16,604
|
|
|
|
48,725
|
|
|
|
47,091
|
|
|
Advertising expense
|
|
|
|
|
3,776
|
|
|
|
4,468
|
|
|
|
12,094
|
|
|
|
12,361
|
|
|
General and administrative expenses (b) (d) (e)
|
|
|
|
|
11,198
|
|
|
|
9,118
|
|
|
|
32,800
|
|
|
|
27,086
|
|
|
Depreciation and amortization (c)
|
|
|
|
|
4,486
|
|
|
|
4,837
|
|
|
|
13,703
|
|
|
|
14,583
|
|
|
Impairment and other lease charges
|
|
|
|
|
(45
|
)
|
|
|
(68
|
)
|
|
|
6,816
|
|
|
|
1,016
|
|
|
Other expense
|
|
|
|
|
-
|
|
|
|
107
|
|
|
|
-
|
|
|
|
107
|
|
|
Total costs and expenses
|
|
|
|
|
117,262
|
|
|
|
110,675
|
|
|
|
354,765
|
|
|
|
326,571
|
|
|
Income from operations
|
|
|
|
|
10,911
|
|
|
|
10,482
|
|
|
|
28,383
|
|
|
|
31,451
|
|
|
Interest expense (c)
|
|
|
|
|
5,036
|
|
|
|
6,651
|
|
|
|
19,334
|
|
|
|
16,338
|
|
|
Income before income taxes
|
|
|
|
|
5,875
|
|
|
|
3,831
|
|
|
|
9,049
|
|
|
|
15,113
|
|
|
Provision for income taxes
|
|
|
|
|
2,226
|
|
|
|
1,409
|
|
|
|
3,344
|
|
|
|
5,442
|
|
|
Net income
|
|
|
|
$
|
3,649
|
|
|
$
|
2,422
|
|
|
$
|
5,705
|
|
|
$
|
9,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net income per share
|
|
|
|
$
|
0.16
|
|
|
$
|
0.10
|
|
|
$
|
0.25
|
|
|
$
|
0.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average common shares outstanding
|
|
|
|
|
22,747
|
|
|
|
23,162
|
|
|
|
22,937
|
|
|
|
23,162
|
|
|
|
|
(a)
|
|
The Company uses a 52 or 53 week fiscal year that ends on the Sunday
closest to December 31. The three and nine month periods ended
September 30, 2012 and October 2, 2011 included 13 and 39 weeks,
respectively.
|
|
|
|
|
|
(b)
|
|
Restaurant wages and related expenses include stock-based
compensation expense of $1 and $3 for the three month period ended
September 30, 2012 and October 2, 2011, respectively, and $9 and $15
for the nine month period ended September 30, 2012 and October 2,
2011, respectively. General and administrative expenses include
stock-based compensation expense of $379 and $437 for the three
month period ended September 30, 2012 and October 2, 2011,
respectively, and $1,594 and $1,284 for the nine month period ended
September 30, 2012 and October 2, 2011, respectively.
|
|
|
|
|
|
(c)
|
|
Prior to the spin-off from Carrols, certain sale-leaseback
transactions were classified as lease financing transactions because
Carrols guaranteed the related lease payments. Effective with the
spin-off, the provisions that previously precluded sale-leaseback
accounting were cured or eliminated. As a result, these transactions
are now recorded as an operating lease. Because of this change in
accounting treatment, restaurant rent expense was $1.6 million
higher, depreciation expense was $0.5 million lower, and interest
expense was $2.7 million lower in the third quarter of 2012 as
compared to the third quarter of 2011. For the nine months ended
September 30, 2012, restaurant rent expense was $2.6 million higher,
depreciation expense was $0.9 million lower, and interest expense
was $4.3 million lower as compared to the nine months ended October
2, 2011.
|
|
|
|
|
|
(d)
|
|
General and administrative expenses include expenses related
directly to Fiesta and corporate expenses allocated from Carrols
Restaurant Group (parent company of Fiesta until May 7, 2012). Such
allocated expenses are for administrative support including
executive management, information systems and certain accounting,
legal and other administrative functions. Following the spin-off,
the Company performs these functions or purchases services from
either Carrols (under the Transition Services Agreement) or third
parties.
|
|
|
|
|
|
(e)
|
|
General and administrative expenses in the three and nine months
ended September 30, 2012 include a charge of $0.6 million associated
with announced retirements of the Executive Vice Presidents of both
the Pollo Tropical and Taco Cabana brands effective January 31, 2013.
|
|
|
|
|
|
|
|
|
|
Fiesta Restaurant Group, Inc.
Supplemental
Information
The following table sets forth certain
unaudited supplemental financial and other data for the periods
indicated
(in thousands, except percentages and number of
restaurants):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
Three Months Ended
|
|
(unaudited)
Nine Months Ended
|
|
|
|
Sept 30, 2012
|
|
Oct 2, 2011
|
|
Sept 30, 2012
|
|
Oct 2, 2011
|
|
Segment Revenues:
|
|
|
|
|
|
|
|
|
|
Pollo Tropical
|
|
$
|
57,784
|
|
|
$
|
52,675
|
|
|
$
|
172,808
|
|
|
$
|
157,552
|
|
|
Taco Cabana
|
|
|
70,389
|
|
|
|
68,482
|
|
|
|
210,340
|
|
|
|
200,470
|
|
|
Total revenues
|
|
$
|
128,173
|
|
|
$
|
121,157
|
|
|
$
|
383,148
|
|
|
$
|
358,022
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Comparable Restaurant Sales: (a)
|
|
|
|
|
|
|
|
|
|
Pollo Tropical
|
|
|
7.0
|
%
|
|
|
7.9
|
%
|
|
|
8.1
|
%
|
|
|
10.6
|
%
|
|
Taco Cabana
|
|
|
1.8
|
%
|
|
|
5.3
|
%
|
|
|
4.1
|
%
|
|
|
4.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Segment EBITDA: (b)
|
|
|
|
|
|
|
|
|
|
Pollo Tropical
|
|
$
|
9,079
|
|
|
$
|
8,472
|
|
|
$
|
30,743
|
|
|
$
|
27,809
|
|
|
Taco Cabana
|
|
|
6,653
|
|
|
|
7,326
|
|
|
|
19,762
|
|
|
|
20,647
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Sales per Restaurant: (c)
|
|
|
|
|
|
|
|
|
|
Pollo Tropical
|
|
$
|
638
|
|
|
$
|
583
|
|
|
$
|
1,916
|
|
|
$
|
1,739
|
|
|
Taco Cabana
|
|
|
442
|
|
|
|
440
|
|
|
|
1,330
|
|
|
|
1,279
|
|
|
Number of Company-owned Restaurants:
|
|
|
|
|
|
|
|
|
|
Pollo Tropical
|
|
|
90
|
|
|
|
91
|
|
|
|
90
|
|
|
|
91
|
|
|
Taco Cabana
|
|
|
160
|
|
|
|
158
|
|
|
|
160
|
|
|
|
158
|
|
|
Total company-owned restaurants
|
|
|
250
|
|
|
|
249
|
|
|
|
250
|
|
|
|
249
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-owned Restaurant Openings:
|
|
|
|
|
|
|
|
|
|
Pollo Tropical
|
|
|
1
|
|
|
|
2
|
|
|
|
4
|
|
|
|
2
|
|
|
Taco Cabana
|
|
|
2
|
|
|
|
1
|
|
|
|
3
|
|
|
|
4
|
|
|
Total new restaurant openings
|
|
|
3
|
|
|
|
3
|
|
|
|
7
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-owned Restaurant Closings:
|
|
|
|
|
|
|
|
|
|
Pollo Tropical
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
(5
|
)
|
|
|
(2
|
)
|
|
Taco Cabana
|
|
|
-
|
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
Net change in restaurants
|
|
|
3
|
|
|
|
2
|
|
|
|
1
|
|
|
|
3
|
|
|
|
|
(a)
|
|
Restaurants are included in comparable restaurant sales after they
have been open for 18 months.
|
|
|
|
|
|
(b)
|
|
Adjusted Segment EBITDA is defined as earnings attributable to the
applicable segment before interest, income taxes, depreciation and
amortization, impairment and other lease charges, stock-based
compensation expense, and other income and expense. Adjusted Segment
EBITDA is used because it is the measure of segment profit or loss
reported to our chief operating decision maker for purposes of
allocating resources to the segments and assessing each segment's
performance. This may not be necessarily comparable to other
similarly titled captions of other companies due to differences in
methods of calculation.
|
|
|
|
|
|
(c)
|
|
Average sales for company-owned or operated restaurants are derived
by dividing restaurant sales for such period for the applicable
segment by the average number of restaurants for the applicable
segment for such period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiesta Restaurant Group, Inc.
Condensed Consolidated
Balance Sheet
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
Sep 30, 2012
|
|
|
(unaudited)
Jan 1, 2012
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
$
|
3,098
|
|
|
$
|
13,670
|
|
|
Other current assets
|
|
|
|
|
15,766
|
|
|
|
13,939
|
|
|
Property and equipment, net
|
|
|
|
|
124,892
|
|
|
|
195,122
|
|
|
Goodwill
|
|
|
|
|
123,484
|
|
|
|
123,484
|
|
|
Intangible assets, net
|
|
|
|
|
222
|
|
|
|
301
|
|
|
Deferred income taxes
|
|
|
|
|
12,914
|
|
|
|
11,659
|
|
|
Deferred financing costs, net
|
|
|
|
|
6,027
|
|
|
|
6,908
|
|
|
Other assets
|
|
|
|
|
3,270
|
|
|
|
5,083
|
|
|
Total assets
|
|
|
|
$
|
289,673
|
|
|
$
|
370,166
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
$
|
31,973
|
|
|
$
|
36,673
|
|
|
Long-term debt, net of current portion
|
|
|
|
|
200,902
|
|
|
|
200,949
|
|
|
Lease financing obligations
|
|
|
|
|
3,027
|
|
|
|
123,019
|
|
|
Deferred-income sale-leaseback of real estate
|
|
|
|
|
35,107
|
|
|
|
4,055
|
|
|
Other liabilities
|
|
|
|
|
12,077
|
|
|
|
10,142
|
|
|
Total liabilities
|
|
|
|
|
283,086
|
|
|
|
374,838
|
|
|
Stockholders' equity (deficit)
|
|
|
|
|
6,587
|
|
|
|
(4,672
|
)
|
|
Total liabilities and stockholders' equity (deficit)
|
|
|
|
$
|
289,673
|
|
|
$
|
370,166
|
|
Fiesta Restaurant Group, Inc.
Investor Relations Contact:
Raphael
Gross, 203-682-8253
investors@frgi.com
Source: Fiesta Restaurant Group, Inc.
News Provided by Acquire Media
Close window | Back to top
Delicious
Digg
Facebook
LinkedIn
Twitter
Yahoo! Buzz