Fiesta Restaurant Group, Inc. Reports Second Quarter 2022 Results
Fiesta Restaurant Group reported a second quarter 2022 revenue growth of 8.0%, reaching $98.5 million, with comparable restaurant sales increasing 8.4% year-over-year. However, a net loss of $6.5 million was recorded, contrasting with a gain from 2021, attributed to rising costs in labor and food. Despite challenges from inflation, the company expects improved margins in Q3, aiming for restaurant-level adjusted EBITDA margins of 18.0% to 20.0%. Significant advancements in digital platforms and refurbishment efforts are ongoing, contributing to positive sales momentum.
- Comparable restaurant sales growth accelerated to 8.4% from 7.1% in Q1 2022.
- June and July 2022 comparable sales reached or exceeded 10.0% year-over-year.
- Total revenues increased 8.0% to $98.5 million compared to Q2 2021.
- Recent traffic trends improved by 340 basis points compared to a -7.0% decline in Q1 2022.
- Digital channel sales saw 14.9% growth compared to 2021.
- Net loss increased to $6.5 million from a net income of $2.7 million in Q2 2021.
- Restaurant-level adjusted EBITDA margin decreased to 15.2% from 20.3% in Q2 2021.
- Higher operating costs due to inflation impacted margins and overall financial performance.
Second Quarter 2022 Comparable Restaurant Sales Growth Accelerated above First Quarter 2022 to
June and
Four Consecutive Quarters of Comparable Restaurant Sales Growth above 2019
Fiesta President and Chief Executive Officer
Stockinger continued, "Second quarter 2022 Restaurant-level Adjusted EBITDA margin, a non-GAAP financial measure(3), was
Stockinger added, "When compared to the second quarter of 2021, our Restaurant-level Adjusted EBITDA margins declined during the second quarter of 2022 primarily due to food cost, labor and other operating expense increases including utilities and insurance. Second quarter 2022 net loss from continuing operations was
Stockinger further commented, "We continued to make significant progress during the second quarter on the brand’s previously communicated key growth initiatives. We made great strides in enhancing our digital platform with the ongoing rollout of our digital drive thru technology with five units targeted for completion by the end of August and 8-10 units by year end. All dining rooms now allow access to the “Kiosk in Hand” QR code feature to enable customers to order online in the restaurant. We also made progress on improving kitchen and drive thru productivity in high volume units, with our first kitchen retrofit unit completed this week and additional retrofits being identified as part of our ongoing remodel plans. Our refresh/remodel program continues to exceed initial sales growth expectations. The refreshes completed to date have generated a sales lift(5) of approximately +
Stockinger concluded, "We are encouraged by our continued strong sales momentum thus far in 2022, and are intensely focused on driving ongoing traffic growth across all channels while also taking action to improve margins. In addition, G&A expense reduction plans are being implemented which we expect will result in a reduction in expense levels in the second half of this year, and an ultimate reduction in G&A to the targeted range of
_____________________________ |
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(1) | Comparable restaurant sales results are not adjusted for the impact of named storms. |
|
(2) |
Recent trends represent preliminary traffic results for the trailing 21-day period ended |
|
(3) | See non-GAAP discussion below. |
|
(4) | See discussion below on non-recurring costs from chicken supply issue and labor. |
|
(5)
|
Sales lift on refreshed units based on sales in the respective units for 4-weeks prior to the commencement of the project compared to the sales after reopening the unit for full operations, excluding units with non-recurring events impacting the comparability of the unit's respective results. |
Second Quarter 2022 Financial Summary
-
Total revenues from continuing operations increased
8.0% to in the second quarter of 2022 from$98.5 million in the second quarter of 2021;$91.2 million -
Comparable restaurant sales at Pollo Tropical increased
8.4% in the second quarter of 2022 compared to the second quarter of 2021; -
Net loss of
, or$(6.2) million per diluted share, in the second quarter of 2022, compared to net loss of$(0.25) , or$(0.1) million per diluted share, in the second quarter of 2021;$0.00 -
Net loss from continuing operations of
, or$(6.5) million per diluted share, in the second quarter of 2022, compared to net income from continuing operations of$(0.26) , or$2.7 million per diluted share, in the second quarter of 2021;$0.11 -
Adjusted net loss (a non-GAAP financial measure) of
, or$(2.1) million per diluted share, in the second quarter of 2022, compared to adjusted net income of$(0.09) , or$3.4 million per diluted share, in the second quarter of 2021 (see non-GAAP reconciliation table below);$0.13 -
Consolidated Adjusted EBITDA (a non-GAAP financial measure) of
in the second quarter of 2022 compared to$5.7 million in the second quarter of 2021 (see non-GAAP reconciliation table below); and$9.1 million -
Restaurant-level Adjusted EBITDA (a non-GAAP financial measure) of
, or$14.9 million 15.2% of Pollo Tropical restaurant sales, in the second quarter of 2022 compared to , or$18.4 million 20.3% of Pollo Tropical restaurant sales, in the second quarter of 2021 (see non-GAAP reconciliation table below).
Second Quarter 2022 Comparable Restaurant Sales
|
Fiscal
|
Fiscal
|
Fiscal
|
Second
|
Fiscal
|
2022 vs. 2021 |
|
|
|
|
|
- Second quarter 2022 comparable restaurant sales vs 2021 were negatively impacted by remodels and refreshes that temporarily closed dine-in and counter take-out operations. We estimate that these temporary dine-in closures negatively impacted comparable restaurant sales by approximately 40 basis points in the second quarter of 2022.
- Second quarter 2022 comparable restaurant sales were negatively impacted by the timing of the Easter holiday. After adjusting for the impact of the holiday timing, second quarter 2022 comparable restaurant sales would have been approximately 30 basis points higher.
-
Second quarter 2022 comparable restaurant sales benefited from the timing of the
Fourth of July holiday. After adjusting for the impact of the holiday timing, second quarter 2022 comparable restaurant sales would have been approximately 15 basis points lower.
Cash and Liquidity
Excluding
Second Quarter and
Total Pollo Tropical restaurant sales increased
Staffing improvement and value-focused promotions and menu innovation are driving accelerating traffic improvement, with recent comparable transactions trends in late July/early August of approximately -
|
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Comparable Restaurant Sales Mix by Channel - Pollo Tropical |
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Channel |
|
Second Quarter
|
|
% of Total |
|
Second Quarter
|
|
% of Total |
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($ in thousands) |
|
|
|
|
|
|
|
|
||||
Counter(1) |
|
$ |
30,201 |
|
31 |
% |
|
$ |
24,133 |
|
27 |
% |
Drive-thru |
|
|
52,018 |
|
54 |
% |
|
|
52,431 |
|
59 |
% |
Delivery |
|
|
10,516 |
|
11 |
% |
|
|
8,975 |
|
10 |
% |
Online |
|
|
3,340 |
|
3 |
% |
|
|
3,080 |
|
3 |
% |
Catering |
|
|
1,127 |
|
1 |
% |
|
|
1,052 |
|
1 |
% |
Total |
|
$ |
97,202 |
|
100 |
% |
|
$ |
89,671 |
|
100 |
% |
(1) Counter sales include dine-in and counter take-out sales, which represented |
||||||||||||
Consolidated Adjusted EBITDA (a non-GAAP financial measure) decreased to
Pricing action has been taken to offset labor, food and operating cost increases. In order to minimize sales traffic risk, we have taken a phased approach to menu price increases, and also targeting lower pricing increases on menu items purchased by value-conscious customers including our "
Restaurant-level Adjusted EBITDA (a non-GAAP financial measure) as a percentage of restaurant sales decreased, with second quarter Restaurant-level Adjusted EBITDA as a percentage of restaurant sales of
General and Administrative expenses were
Comparable Restaurant Average Weekly Sales - Pollo Tropical |
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|
|
|
|
Period |
April |
May |
June |
2022 |
|
|
|
2021 |
|
|
|
Refresh and Remodel Status and Results
We are taking a disciplined approach to testing upgraded/updated restaurant design elements and operating platform improvements as we refurbish existing units. We developed the new unit design and operational improvements based on consumer research and engineering studies from a leading restaurant engineering firm, and we have received very positive customer feedback on the first remodeled unit. We are targeting completion of 20 to 30 refresh/remodels in 2022. Through the second quarter of 2022, 17 refreshes and 5 remodels have been completed.
For refurbishments of existing units, we are implementing two levels of investment and scope:
-
Refreshes include updated exterior colors and attractive design elements and interior upgrades including more attractive and updated colors, new dining room furniture, bathrooms, limited patio upgrades and other customer facing upgrades. Targeted average investment for refreshes is expected to average approximately
, and the majority of our refurbishments will be refreshes. Average investment per refresh completed to date has been in line with targeted levels.$275,000 -
Remodels include updated exterior colors and attractive design elements and interior upgrades including updated colors, more comprehensive interior updates including new dining room furniture, kitchen retrofits, more extensive consumer facing dining room updates, and more extensive patio upgrades. Targeted average investment for remodels is expected to average approximately
, and the majority of remodels will be targeted at units with above average annual sales. Average investment per remodel to date is in line with the targeted investment level.$560,000
Our refresh/remodel program continues to exceed initial sales growth expectations. The refreshes completed to date have generated a sales lift of +
Restaurant Portfolio
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Forward Looking Statements
Certain statements contained in this news release and in our public disclosures, whether written, oral or otherwise made, relating to future events or future performance, including any discussion, express or implied regarding our anticipated growth, plans, objectives and the impact of our initiatives, including our efforts to reduce general and administrative expenses, our investments in strategic and sales building initiatives, including those relating to operations improvements, unit remodels and refreshes, digital initiatives, planned price increases, and drive thru improvements on future sales, margins, earnings and liquidity, contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are often identified by the words "may," "might," "believes," "thinks," "anticipates," "plans," "positioned," "target," "continue," "expects," "look to," "intends" and other similar expressions, whether in the negative or the affirmative, that are not statements of historical fact. These forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict, and you should not place undue reliance on our forward-looking statements. Our actual results and timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those discussed from time to time in our reports filed with the
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|
Three Months Ended (a) |
|
Six Months Ended (a) |
||||||||||||
|
|
|
|
|
|
|
|
||||||||
Revenues: |
|
|
|
|
|
|
|
||||||||
Restaurant sales |
$ |
98,023 |
|
|
$ |
90,764 |
|
|
$ |
193,223 |
|
|
$ |
178,604 |
|
Franchise royalty revenues and fees |
|
464 |
|
|
|
391 |
|
|
|
873 |
|
|
|
766 |
|
Total revenues |
|
98,487 |
|
|
|
91,155 |
|
|
|
194,096 |
|
|
|
179,370 |
|
Costs and expenses: |
|
|
|
|
|
|
|
||||||||
Cost of sales |
|
32,580 |
|
|
|
27,558 |
|
|
|
63,327 |
|
|
|
54,859 |
|
Restaurant wages and related expenses (b) |
|
24,583 |
|
|
|
21,901 |
|
|
|
48,157 |
|
|
|
42,240 |
|
Restaurant rent expense |
|
5,976 |
|
|
|
5,824 |
|
|
|
12,003 |
|
|
|
11,701 |
|
Other restaurant operating expenses |
|
16,755 |
|
|
|
14,215 |
|
|
|
33,405 |
|
|
|
27,520 |
|
Advertising expense |
|
3,245 |
|
|
|
2,898 |
|
|
|
6,109 |
|
|
|
5,273 |
|
General and administrative expenses (b)(c) |
|
12,791 |
|
|
|
11,050 |
|
|
|
25,133 |
|
|
|
21,716 |
|
Depreciation and amortization |
|
5,232 |
|
|
|
4,875 |
|
|
|
10,346 |
|
|
|
9,963 |
|
Impairment and other lease charges (recoveries) (d) |
|
2,110 |
|
|
|
(202 |
) |
|
|
1,408 |
|
|
|
(254 |
) |
Closed restaurant rent, net of sublease income (e) |
|
401 |
|
|
|
966 |
|
|
|
781 |
|
|
|
1,716 |
|
Other expense (income), net (f) |
|
83 |
|
|
|
170 |
|
|
|
134 |
|
|
|
293 |
|
Total operating expenses |
|
103,756 |
|
|
|
89,255 |
|
|
|
200,803 |
|
|
|
175,027 |
|
Income (loss) from operations |
|
(5,269 |
) |
|
|
1,900 |
|
|
|
(6,707 |
) |
|
|
4,343 |
|
Interest expense |
|
85 |
|
|
|
61 |
|
|
|
170 |
|
|
|
122 |
|
Income (loss) from continuing operations before income taxes |
|
(5,354 |
) |
|
|
1,839 |
|
|
|
(6,877 |
) |
|
|
4,221 |
|
Provision for (benefit from) income taxes (g) |
|
1,134 |
|
|
|
(841 |
) |
|
|
912 |
|
|
|
2,236 |
|
Income (loss) from continuing operations |
|
(6,488 |
) |
|
|
2,680 |
|
|
|
(7,789 |
) |
|
|
1,985 |
|
Income (loss) from discontinued operations, net of tax |
|
267 |
|
|
|
(2,763 |
) |
|
|
212 |
|
|
|
(4,157 |
) |
Net loss |
$ |
(6,221 |
) |
|
$ |
(83 |
) |
|
$ |
(7,577 |
) |
|
$ |
(2,172 |
) |
Earnings (loss) per common share: |
|
|
|
|
|
|
|
||||||||
Continuing operations – basic |
$ |
(0.26 |
) |
|
$ |
0.11 |
|
|
$ |
(0.31 |
) |
|
$ |
0.07 |
|
Discontinued operations – basic |
|
0.01 |
|
|
|
(0.11 |
) |
|
|
0.01 |
|
|
|
(0.16 |
) |
Basic |
$ |
(0.25 |
) |
|
$ |
— |
|
|
$ |
(0.30 |
) |
|
$ |
(0.09 |
) |
|
|
|
|
|
|
|
|
||||||||
Continuing operations – diluted |
$ |
(0.26 |
) |
|
$ |
0.11 |
|
|
$ |
(0.31 |
) |
|
$ |
0.07 |
|
Discontinued operations – diluted |
|
0.01 |
|
|
|
(0.11 |
) |
|
|
0.01 |
|
|
|
(0.16 |
) |
Diluted |
$ |
(0.25 |
) |
|
$ |
— |
|
|
$ |
(0.30 |
) |
|
$ |
(0.09 |
) |
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
||||||||
Basic |
|
24,946,674 |
|
|
|
25,496,038 |
|
|
|
24,889,650 |
|
|
|
25,410,123 |
|
Diluted |
|
24,946,674 |
|
|
|
25,496,038 |
|
|
|
24,889,650 |
|
|
|
25,410,783 |
|
(a) |
The Company uses a 52- or 53-week fiscal year that ends on the Sunday closest to |
|
(b) |
Restaurant wages and related expenses include stock-based compensation of |
|
(c) |
See notes (f), (g), (h) and (i) to the reconciliation of net income (loss) to adjusted net income (loss) in the tables titled "Supplemental Non-GAAP Information." |
|
(d) |
See note (c) to the reconciliation of net income (loss) to adjusted net income (loss) in the tables titled "Supplemental Non-GAAP Information." |
|
(e) |
See note (d) to the reconciliation of net income (loss) to adjusted net income (loss) in the tables titled "Supplemental Non-GAAP Information." |
|
(f) |
See note (e) to the reconciliation of net income (loss) to adjusted net income (loss) in the tables titled "Supplemental Non-GAAP Information." |
|
(g) |
See notes (a) and (b) to the reconciliation of net income (loss) to adjusted net income (loss) in the tables titled "Supplemental Non-GAAP Information." |
|
|
|||||
|
|
|
|
||
|
|
|
|
||
Assets |
|
|
|
||
Cash |
$ |
39,262 |
|
$ |
36,797 |
Other current assets |
|
22,633 |
|
|
22,245 |
Property and equipment, net |
|
85,506 |
|
|
89,884 |
Operating lease right-of-use assets |
|
150,423 |
|
|
154,127 |
|
|
56,307 |
|
|
56,307 |
Deferred income taxes |
|
175 |
|
|
— |
Other assets |
|
6,385 |
|
|
7,753 |
Total assets |
$ |
360,691 |
|
$ |
367,113 |
|
|
|
|
||
Liabilities and Stockholders' Equity |
|
|
|
||
Current portion of long-term debt |
$ |
69 |
|
$ |
63 |
Other current liabilities |
|
44,607 |
|
|
40,479 |
Long-term debt, net of current portion |
|
397 |
|
|
438 |
Operating lease liabilities |
|
158,876 |
|
|
163,270 |
Deferred tax liabilities |
|
— |
|
|
229 |
Other non-current liabilities |
|
7,669 |
|
|
7,763 |
Total liabilities |
|
211,618 |
|
|
212,242 |
Stockholders' equity |
|
149,073 |
|
|
154,871 |
Total liabilities and stockholders' equity |
$ |
360,691 |
|
$ |
367,113 |
|
|||||||||||||||
|
(Unaudited) |
|
(Unaudited) |
||||||||||||
|
Three Months Ended |
|
Six Months Ended |
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|
|
|
|
|
|
|
|
||||||||
Revenues: |
|
|
|
|
|
|
|
||||||||
Pollo Tropical |
$ |
98,487 |
|
|
$ |
91,155 |
|
|
$ |
194,096 |
|
|
$ |
179,370 |
|
|
|
|
|
|
|
|
|
||||||||
Change in comparable restaurant sales (a): |
|
|
|
|
|
|
|
||||||||
Pollo Tropical |
|
8.4 |
% |
|
|
43.5 |
% |
|
|
8.2 |
% |
|
|
21.1 |
% |
|
|
|
|
|
|
|
|
||||||||
Average sales per Company-owned restaurant: |
|
|
|
|
|
|
|
||||||||
Pollo Tropical |
|
|
|
|
|
|
|
||||||||
Comparable restaurants (b) |
$ |
715 |
|
|
$ |
662 |
|
|
$ |
1,408 |
|
|
$ |
1,304 |
|
Non-comparable restaurants (c) |
|
439 |
|
|
|
418 |
|
|
|
932 |
|
|
|
760 |
|
|
|
710 |
|
|
|
658 |
|
|
|
1,400 |
|
|
|
1,294 |
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations before income taxes |
$ |
(5,354 |
) |
|
$ |
1,839 |
|
|
$ |
(6,877 |
) |
|
$ |
4,221 |
|
|
|
|
|
|
|
|
|
||||||||
Consolidated Adjusted EBITDA (e) |
$ |
5,656 |
|
|
$ |
9,123 |
|
|
$ |
10,948 |
|
|
$ |
18,801 |
|
|
|
|
|
|
|
|
|
||||||||
Restaurant-level Adjusted EBITDA (e): |
$ |
14,890 |
|
|
$ |
18,383 |
|
|
$ |
30,235 |
|
|
$ |
37,042 |
|
(a) |
Restaurants are included in comparable restaurant sales after they have been open for 18 months or longer. Restaurants are excluded from comparable restaurant sales for any fiscal month in which the restaurant was closed for more than five days. Comparable restaurant sales are compared to the same period in the prior year. |
|
(b) |
Comparable restaurants are restaurants that have been open for 18 months or longer. Average sales for comparable Company-owned restaurants are derived by dividing comparable restaurant sales for such period by the average number of comparable restaurants for such period. |
|
(c) |
Non-comparable restaurants are restaurants that have been open for less than 18 months, or that were temporarily closed during the period. Average sales for new Company-owned restaurants are derived by dividing new restaurant sales for such period by the average number of new restaurants for such period. |
|
(d) |
Average sales for total Company-owned restaurants are derived by dividing restaurant sales for such period by the average number of open restaurants for such period. |
|
(e) |
Consolidated Adjusted EBITDA and Restaurant-level Adjusted EBITDA are non-GAAP financial measures. Please see the reconciliation from net income (loss) to Consolidated Adjusted EBITDA and Restaurant-level Adjusted EBITDA in the table titled "Supplemental Non-GAAP Information." |
|
|
|||||||
|
Three Months Ended |
|
Six Months Ended |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-owned restaurant openings: |
|
|
|
|
|
|
|
Pollo Tropical |
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
Company-owned restaurant closings: |
|
|
|
|
|
|
|
Pollo Tropical |
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
Number of Company-owned restaurants: |
|
|
|
|
|
|
|
Pollo Tropical |
138 |
|
138 |
|
138 |
|
138 |
|
— |
|
142 |
|
— |
|
142 |
|
138 |
|
280 |
|
138 |
|
280 |
|
|
|
|
|
|
|
|
Number of franchised restaurants: |
|
|
|
|
|
|
|
Pollo Tropical |
29 |
|
29 |
|
29 |
|
29 |
|
— |
|
6 |
|
— |
|
6 |
Total franchised restaurants |
29 |
|
35 |
|
29 |
|
35 |
|
|
|
|
|
|
|
|
Total number of restaurants: |
|
|
|
|
|
|
|
Pollo Tropical |
167 |
|
167 |
|
167 |
|
167 |
|
— |
|
148 |
|
— |
|
148 |
Total restaurants |
167 |
|
315 |
|
167 |
|
315 |
|
|||||||||||||||||
|
Three Months Ended |
||||||||||||||||
|
|
|
|
||||||||||||||
|
|
(a) |
|
|
(a) |
||||||||||||
Restaurant sales |
$ |
98,023 |
|
|
$ |
90,764 |
|
|
|||||||||
Cost of sales |
|
32,580 |
33.2 |
% |
|
|
27,558 |
|
30.4 |
% |
|||||||
Restaurant wages and related expenses |
|
24,583 |
25.1 |
% |
|
|
21,901 |
|
24.1 |
% |
|||||||
Restaurant rent expense |
|
5,976 |
6.1 |
% |
|
|
5,824 |
|
6.4 |
% |
|||||||
Other restaurant operating expenses |
|
16,755 |
17.1 |
% |
|
|
14,215 |
|
15.7 |
% |
|||||||
Advertising expense |
|
3,245 |
3.3 |
% |
|
|
2,898 |
|
3.2 |
% |
|||||||
Depreciation and amortization |
|
5,232 |
5.3 |
% |
|
|
4,875 |
|
5.4 |
% |
|||||||
Impairment and other lease charges (recoveries) |
|
2,110 |
2.2 |
% |
|
|
(202 |
) |
(0.2 |
) % |
|||||||
Closed restaurant rent expense, net of sublease income |
|
401 |
0.4 |
% |
|
|
966 |
|
1.1 |
% |
|||||||
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
||||||||||||
|
Six Months Ended |
||||||||||||||||
|
|
|
|
||||||||||||||
|
|
(a) |
|
|
(a) |
||||||||||||
Restaurant sales |
$ |
193,223 |
|
|
$ |
178,604 |
|
|
|||||||||
Cost of sales |
|
63,327 |
32.8 |
% |
|
|
54,859 |
|
30.7 |
% |
|||||||
Restaurant wages and related expenses |
|
48,157 |
24.9 |
% |
|
|
42,240 |
|
23.7 |
% |
|||||||
Restaurant rent expense |
|
12,003 |
6.2 |
% |
|
|
11,701 |
|
6.6 |
% |
|||||||
Other restaurant operating expenses |
|
33,405 |
17.3 |
% |
|
|
27,520 |
|
15.4 |
% |
|||||||
Advertising expense |
|
6,109 |
3.2 |
% |
|
|
5,273 |
|
3.0 |
% |
|||||||
Depreciation and amortization |
|
10,346 |
5.4 |
% |
|
|
9,963 |
|
5.6 |
% |
|||||||
Impairment and other lease charges |
|
1,408 |
0.7 |
% |
|
|
(254 |
) |
(0.1 |
) % |
|||||||
Closed restaurant rent expense, net of sublease income |
|
781 |
0.4 |
% |
|
|
1,716 |
|
1.0 |
% |
|||||||
|
|
|
|
|
|
||||||||||||
(a) Percent of restaurant sales. |
|||||||||||||||||
Supplemental Non-GAAP Information
The following table sets forth certain unaudited supplemental financial data for the periods indicated
(In thousands):
Consolidated Adjusted EBITDA and margin and Restaurant-level Adjusted EBITDA and margin are non-GAAP financial measures. Consolidated Adjusted EBITDA is defined as earnings (loss) before interest expense, income taxes, depreciation and amortization, impairment and other lease charges (recoveries), goodwill impairment, closed restaurant rent expense, net of sublease income, stock-based compensation expense, other expense (income), net, and certain significant items that are related to strategic changes and/or are not related to the ongoing operation of our restaurants as set forth in the reconciliation table below. Restaurant-level Adjusted EBITDA is defined as Consolidated Adjusted EBITDA excluding franchise royalty revenues and fees, pre-opening costs and general and administrative expenses (including corporate-level general and administrative expenses).
Consolidated Adjusted EBITDA is the primary measure of profit or loss used by our chief operating decision maker for purposes of assessing performance. In addition, management believes that Consolidated Adjusted EBITDA and Restaurant-level Adjusted EBITDA, when viewed with our results of operations calculated in accordance with GAAP and our reconciliation of net income (loss) to Consolidated Adjusted EBITDA and Restaurant-level Adjusted EBITDA (i) provide useful information about our operating performance and period-over-period changes, (ii) provide additional information that is useful for evaluating the operating performance of our business, and (iii) permit investors to gain an understanding of the factors and trends affecting our ongoing earnings, from which capital investments are made and debt is serviced. However, such measures are not measures of financial performance or liquidity under GAAP and, accordingly, should not be considered as alternatives to net income or cash flow from operating activities as indicators of operating performance or liquidity. Also, these measures may not be comparable to similarly titled captions of other companies.
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net loss |
|
$ |
(6,221 |
) |
|
$ |
(83 |
) |
|
$ |
(7,577 |
) |
|
$ |
(2,172 |
) |
Loss (income) from discontinued operations, net of tax |
|
|
(267 |
) |
|
|
2,763 |
|
|
|
(212 |
) |
|
|
4,157 |
|
Provision for (benefit from) income taxes |
|
|
1,134 |
|
|
|
(841 |
) |
|
|
912 |
|
|
|
2,236 |
|
Income (loss) from continuing operations before taxes |
|
|
(5,354 |
) |
|
|
1,839 |
|
|
|
(6,877 |
) |
|
|
4,221 |
|
Add: |
|
|
|
|
|
|
|
|
||||||||
Non-general and administrative adjustments: |
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization |
|
|
5,232 |
|
|
|
4,875 |
|
|
|
10,346 |
|
|
|
9,963 |
|
Impairment and other lease charges (recoveries) |
|
|
2,110 |
|
|
|
(202 |
) |
|
|
1,408 |
|
|
|
(254 |
) |
Interest expense |
|
|
85 |
|
|
|
61 |
|
|
|
170 |
|
|
|
122 |
|
Closed restaurant rent expense, net of sublease income |
|
|
401 |
|
|
|
966 |
|
|
|
781 |
|
|
|
1,716 |
|
Other expense (income), net |
|
|
83 |
|
|
|
170 |
|
|
|
134 |
|
|
|
293 |
|
Stock-based compensation expense |
|
|
6 |
|
|
|
15 |
|
|
|
13 |
|
|
|
31 |
|
Total non-general and administrative adjustments |
|
|
7,917 |
|
|
|
5,885 |
|
|
|
12,852 |
|
|
|
11,871 |
|
General and administrative adjustments: |
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation expense |
|
|
1,388 |
|
|
|
1,046 |
|
|
|
2,011 |
|
|
|
2,040 |
|
Non-recurring professional fees |
|
|
1,197 |
|
|
|
— |
|
|
|
1,902 |
|
|
|
— |
|
G&A efficiency initiatives |
|
|
193 |
|
|
|
— |
|
|
|
454 |
|
|
|
— |
|
Digital costs |
|
|
315 |
|
|
|
335 |
|
|
|
606 |
|
|
|
651 |
|
Total general and administrative adjustments |
|
|
3,093 |
|
|
|
1,399 |
|
|
|
4,973 |
|
|
|
2,709 |
|
Consolidated Adjusted EBITDA |
|
$ |
5,656 |
|
|
$ |
9,123 |
|
|
$ |
10,948 |
|
|
$ |
18,801 |
|
Consolidated Adjusted EBITDA as a percentage of total revenues |
|
|
5.7 |
% |
|
|
10.0 |
% |
|
|
5.6 |
% |
|
|
10.5 |
% |
Restaurant-level adjustments: |
|
|
|
|
|
|
|
|
||||||||
Add: Other general and administrative expense(a) |
|
$ |
9,698 |
|
|
$ |
9,651 |
|
|
|
20,160 |
|
|
|
19,007 |
|
Less: Franchise royalty revenue and fees |
|
|
464 |
|
|
|
391 |
|
|
|
873 |
|
|
|
766 |
|
Restaurant-level Adjusted EBITDA |
|
$ |
14,890 |
|
|
$ |
18,383 |
|
|
$ |
30,235 |
|
|
$ |
37,042 |
|
Restaurant-level Adjusted EBITDA as a percentage of restaurant sales |
|
|
15.2 |
% |
|
|
20.3 |
% |
|
|
15.6 |
% |
|
|
20.7 |
% |
(a) Excludes general and administrative adjustments above. |
||||||||||||||||
Supplemental Non-GAAP Information
The following table sets forth certain unaudited supplemental financial data for the periods indicated
(In thousands of dollars, except per share amounts):
Adjusted net income and related adjusted diluted earnings per share are non-GAAP financial measures. Adjusted net income is defined as net income (loss) before discontinued operations, impairment and other lease charges (recoveries), goodwill impairment, closed restaurant rent expense, net of sublease income, other expense (income), net, and other significant items that are related to strategic changes and/or are not related to the ongoing operation of our restaurants. Management believes that adjusted net income and related adjusted earnings per diluted share, when viewed with our results of operations calculated in accordance with GAAP (i) provide useful information about our operating performance and period-over-period growth, (ii) provide additional information that is useful for evaluating the operating performance of our business, and (iii) permit investors to gain an understanding of the factors and trends affecting our ongoing earnings, from which capital investments are made and debt is serviced. However, such measures are not measures of financial performance or liquidity under GAAP and, accordingly should not be considered as alternatives to net income or net income per share as indicators of operating performance or liquidity. Also, these measures may not be comparable to similarly titled captions of other companies.
|
|
(Unaudited) |
||||||||||||||||||||||||||||||
|
|
Three Months Ended |
||||||||||||||||||||||||||||||
|
|
|
|
|
||||||||||||||||||||||||||||
|
|
Loss Before
|
|
Provision
|
|
Net
|
|
Diluted
|
|
Income
|
|
Benefit
|
|
Net
|
|
Diluted
|
||||||||||||||||
Reported - GAAP Net income (loss) |
|
|
|
|
|
$ |
(6,221 |
) |
|
$ |
(0.25 |
) |
|
|
|
|
|
$ |
(83 |
) |
|
$ |
— |
|
||||||||
Loss (income) from discontinued operations, net of tax |
|
|
|
|
|
|
(267 |
) |
|
|
(0.01 |
) |
|
|
|
|
|
|
2,763 |
|
|
|
0.11 |
|
||||||||
Income (loss) from continuing operations |
|
$ |
(5,354 |
) |
|
$ |
1,134 |
|
|
$ |
(6,488 |
) |
|
$ |
(0.26 |
) |
|
$ |
1,839 |
|
|
$ |
(841 |
) |
|
$ |
2,680 |
|
|
$ |
0.11 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Non-general and administrative expense adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Deferred tax asset valuation allowance (b) |
|
|
— |
|
|
|
(1,132 |
) |
|
|
1,132 |
|
|
|
0.05 |
|
|
|
— |
|
|
|
255 |
|
|
|
(255 |
) |
|
|
(0.01 |
) |
Impairment and other lease charges (recoveries) (c) |
|
|
2,110 |
|
|
|
526 |
|
|
|
1,584 |
|
|
|
0.06 |
|
|
|
(202 |
) |
|
|
(50 |
) |
|
|
(152 |
) |
|
|
(0.01 |
) |
Closed restaurant rent expense, net of sublease income (d) |
|
|
401 |
|
|
|
100 |
|
|
|
301 |
|
|
|
0.01 |
|
|
|
966 |
|
|
|
241 |
|
|
|
725 |
|
|
|
0.03 |
|
Other expense (income), net (e) |
|
|
83 |
|
|
|
21 |
|
|
|
62 |
|
|
|
— |
|
|
|
170 |
|
|
|
42 |
|
|
|
128 |
|
|
|
0.01 |
|
Total non-general and administrative expense |
|
|
2,594 |
|
|
|
(485 |
) |
|
|
3,079 |
|
|
|
0.12 |
|
|
|
934 |
|
|
|
488 |
|
|
|
446 |
|
|
|
0.02 |
|
General and administrative expense adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Non-recurring professional fees (f) |
|
|
1,197 |
|
|
|
298 |
|
|
|
899 |
|
|
|
0.04 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
G&A efficiency initiatives (g) |
|
|
193 |
|
|
|
48 |
|
|
|
145 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Restructuring costs and retention bonuses (h) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
18 |
|
|
|
4 |
|
|
|
14 |
|
|
|
— |
|
Digital costs (i) |
|
|
315 |
|
|
|
79 |
|
|
|
236 |
|
|
|
0.01 |
|
|
|
335 |
|
|
|
84 |
|
|
|
251 |
|
|
|
0.01 |
|
Total general and administrative expense |
|
|
1,705 |
|
|
|
425 |
|
|
|
1,280 |
|
|
|
0.05 |
|
|
|
353 |
|
|
|
88 |
|
|
|
265 |
|
|
|
0.01 |
|
Adjusted - Non-GAAP |
|
$ |
(1,055 |
) |
|
$ |
1,074 |
|
|
$ |
(2,129 |
) |
|
$ |
(0.09 |
) |
|
$ |
3,126 |
|
|
$ |
(265 |
) |
|
$ |
3,391 |
|
|
$ |
0.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
(Unaudited) |
||||||||||||||||||||||||||||||
|
|
Six Months Ended |
||||||||||||||||||||||||||||||
|
|
|
|
|
||||||||||||||||||||||||||||
|
|
Loss Before
|
|
Provision
|
|
Net
|
|
Diluted
|
|
Income
|
|
Provision
|
|
Net
|
|
Diluted
|
||||||||||||||||
Reported - GAAP Net income (loss) |
|
|
|
|
|
$ |
(7,577 |
) |
|
$ |
(0.30 |
) |
|
|
|
|
|
$ |
(2,172 |
) |
|
$ |
(0.09 |
) |
||||||||
Loss (income) from discontinued operations, net of tax |
|
|
|
|
|
|
(212 |
) |
|
|
(0.01 |
) |
|
|
|
|
|
|
4,157 |
|
|
|
0.16 |
|
||||||||
Income (loss) from continuing operations |
|
$ |
(6,877 |
) |
|
$ |
912 |
|
|
$ |
(7,789 |
) |
|
$ |
(0.31 |
) |
|
$ |
4,221 |
|
|
$ |
2,236 |
|
|
$ |
1,985 |
|
|
$ |
0.07 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Non-general and administrative expense adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Income tax due to tax law change (a) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(563 |
) |
|
|
563 |
|
|
|
0.02 |
|
Deferred tax asset valuation allowance (b) |
|
|
— |
|
|
|
(1,252 |
) |
|
|
1,252 |
|
|
|
0.05 |
|
|
|
— |
|
|
|
(376 |
) |
|
|
376 |
|
|
|
0.01 |
|
Impairment and other lease charges (c) |
|
|
1,408 |
|
|
|
351 |
|
|
|
1,057 |
|
|
|
0.04 |
|
|
|
(254 |
) |
|
|
(63 |
) |
|
|
(191 |
) |
|
|
(0.01 |
) |
Closed restaurant rent expense, net of sublease income (d) |
|
|
781 |
|
|
|
195 |
|
|
|
586 |
|
|
|
0.02 |
|
|
|
1,716 |
|
|
|
428 |
|
|
|
1,288 |
|
|
|
0.05 |
|
Other expense (income), net (e) |
|
|
134 |
|
|
|
33 |
|
|
|
101 |
|
|
|
0.01 |
|
|
|
293 |
|
|
|
73 |
|
|
|
220 |
|
|
|
0.01 |
|
Total non-general and administrative expense |
|
|
2,323 |
|
|
|
(673 |
) |
|
|
2,996 |
|
|
|
0.12 |
|
|
|
1,755 |
|
|
|
(501 |
) |
|
|
2,256 |
|
|
|
0.09 |
|
General and administrative expense adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Non-recurring professional fees (f) |
|
|
1,902 |
|
|
|
474 |
|
|
|
1,428 |
|
|
|
0.06 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
G&A efficiency initiatives (g) |
|
|
454 |
|
|
|
113 |
|
|
|
341 |
|
|
|
0.01 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Restructuring costs and retention bonuses (h) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
18 |
|
|
|
4 |
|
|
|
14 |
|
|
|
— |
|
Digital costs (i) |
|
|
606 |
|
|
|
151 |
|
|
|
455 |
|
|
|
0.02 |
|
|
|
651 |
|
|
|
162 |
|
|
|
489 |
|
|
|
0.02 |
|
Total general and administrative expense |
|
|
2,962 |
|
|
|
738 |
|
|
|
2,224 |
|
|
|
0.09 |
|
|
|
669 |
|
|
|
166 |
|
|
|
503 |
|
|
|
0.02 |
|
Adjusted - Non-GAAP |
|
$ |
(1,592 |
) |
|
$ |
977 |
|
|
$ |
(2,569 |
) |
|
$ |
(0.10 |
) |
|
$ |
6,645 |
|
|
$ |
1,901 |
|
|
$ |
4,744 |
|
|
$ |
0.19 |
|
(a) |
The provision for (benefit from) income taxes related to the adjustments was calculated using the Company's combined federal statutory and estimated state rate of |
|
(b) |
We recorded adjustments totaling |
|
(c) |
Impairment and other lease charges (recoveries) for the three and six months ended |
|
(d) |
Closed restaurant rent expense, net of sublease income, for the three and six months ended |
|
(e) |
Other expense (income), net, for the three and six months ended |
|
(f) |
Non-recurring professional fees consist of costs related to growth initiatives. |
|
(g) |
G&A efficiency initiatives consist of non-recurring retention bonus costs. |
|
(h) |
Restructuring costs and retention bonuses for the three and six months ended |
|
(i) |
Digital costs for the three and six months ended |
View source version on businesswire.com: https://www.businesswire.com/news/home/20220811005669/en/
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