Fiesta Restaurant Group, Inc. Reports Second Quarter 2023 Results
Second Quarter 2023 Comparable Restaurant Sales Growth of
Second Quarter 2023 Positive Comparable Transaction Growth of
As announced separately today, the Company has entered into a definitive agreement to be acquired by affiliates of Garnett Station Partners for
Fiesta President and Chief Executive Officer Dirk Montgomery said, "Our focus on building traffic resulted in year-over-year comparable transaction growth of
_____________________________
- Formerly Restaurant-level Adjusted EBITDA. See non-GAAP reconciliation table below.
Second Quarter 2023 Financial Summary
-
Total revenues increased
8.5% to$106.8 million $98.5 million -
Comparable restaurant sales at Pollo Tropical increased
9.6% in the second quarter of 2023 compared to the second quarter of 2022; -
Net income of
$3.9 million $0.15 $(6.2) million $(0.25) -
Net income from continuing operations of
$3.8 million $0.15 $(6.5) million $(0.26) -
Adjusted net income (a non-GAAP financial measure) of
$4.9 million $0.19 $(3.3) million $(0.14) -
Consolidated Adjusted EBITDA (a non-GAAP financial measure) of
$11.1 million $5.7 million -
Income from Operations of
$4.1 million 3.9% of restaurant sales, in the second quarter of 2023 compared to a loss from operations of$(5.3) million -
Restaurant-level Operating Profit (formerly Restaurant-level Adjusted EBITDA, a non-GAAP financial measure) of
$20.6 million 19.3% of Pollo Tropical restaurant sales, in the second quarter of 2023 compared to$14.9 million 15.2% of Pollo Tropical restaurant sales, in the second quarter of 2022 (see non-GAAP reconciliation table below).
Second Quarter and July 2023 Comparable Restaurant Statistics to Second Quarter and July 2022
|
Fiscal
|
Fiscal
|
Fiscal
|
Second Quarter 2023 |
Fiscal July |
|||||
Sales |
7.3 |
% |
11.6 |
% |
9.7 |
% |
9.6 |
% |
9.3 |
% |
Transactions |
1.1 |
% |
5.1 |
% |
4.5 |
% |
3.6 |
% |
3.9 |
% |
Net impact of product
|
6.2 |
% |
6.5 |
% |
5.2 |
% |
6.0 |
% |
5.4 |
% |
-
April 2023 comparable restaurant sales vs. 2022 were negatively impacted by the effects of severe rainstorms and flooding in
South Florida . After adjusting for the impact of the severe weather event, we estimate that April 2023 comparable restaurant sales would have been higher by approximately 80 basis points.
Cash and Liquidity
Excluding
Second Quarter Pollo Tropical Results
Total Pollo Tropical restaurant sales increased
|
|
Comparable Restaurant Sales Mix by Channel - Pollo Tropical |
||||||||||
Channel |
|
Second Quarter
|
|
% of Total |
|
Second Quarter
|
|
% of Total |
||||
($ in thousands) |
|
|
|
|
|
|
|
|
||||
Counter |
|
$ |
33,904 |
|
32 |
% |
|
$ |
29,672 |
|
31 |
% |
Drive-thru |
|
|
53,894 |
|
52 |
% |
|
|
50,972 |
|
54 |
% |
Delivery |
|
|
12,456 |
|
12 |
% |
|
|
10,316 |
|
11 |
% |
Online |
|
|
3,106 |
|
3 |
% |
|
|
3,295 |
|
3 |
% |
Catering |
|
|
1,208 |
|
1 |
% |
|
|
1,121 |
|
1 |
% |
Total |
|
$ |
104,568 |
|
100 |
% |
|
$ |
95,376 |
|
100 |
% |
Net income increased to
Pricing action has been taken to offset labor, food and operating cost increases and regain margins. In order to minimize sales traffic risk, we have taken a phased approach to menu price increases and are also targeting lower pricing increases on menu items purchased by value-conscious customers, including our Pollo Time!TM promotional items. Price increases taken include a
Income from Operations of
General and Administrative expenses were
Refresh and Remodel Status and Results
Our refresh/remodel program is generating a sales lift in comparison to Pollo Tropical local market unit restaurant sales trends. Sales lift on refreshed units is based on sales in the respective units for the 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. Through the second quarter of 2023, 40 refreshes and remodels have been completed.
Restaurant Portfolio
As of July 2, 2023, there were 134 Company-owned Pollo Tropical restaurants, and 28 franchised Pollo Tropical restaurants in the
About Fiesta Restaurant Group, Inc.
Fiesta Restaurant Group, Inc., owns, operates and franchises the Pollo Tropical® restaurant brand. The brand features fresh-made cooking, offering distinct and unique flavors with broad appeal at a compelling value through dine-in service, drive-thru service and catering. For more information about Fiesta Restaurant Group, Inc., visit the corporate website at www.frgi.com. For more information about Pollo Tropical, visit the restaurant brand website at www.pollotropical.com.
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, marketing and brand building, unit remodels and refreshes, and planned price increases on future sales, transaction growth, 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 Securities and Exchange Commission, including our Annual Report on Form 10-K and our quarterly reports on Form 10-Q. Additional factors that may cause actual results to differ materially from any forward-looking statements regarding the proposed transaction with Authentic Restaurant Brands include, but are not limited to: occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement or the failure to satisfy the closing conditions, the possibility that the consummation of the proposed transaction is delayed or does not occur, including the failure of the Company’s stockholders to approve the proposed transaction, uncertainty as to whether the parties will be able to complete the proposed transaction on the terms set forth in the merger agreement, uncertainty regarding the timing of the receipt of required regulatory approvals for the proposed transaction and the possibility that the parties may be required to accept conditions that could reduce or eliminate the anticipated benefits of the proposed transaction as a condition to obtaining regulatory approvals or that the required regulatory approvals might not be obtained at all, the outcome of any legal proceedings that have been or may be instituted against the parties or others following announcement of the transactions contemplated by the merger agreement, challenges, disruptions and costs of integrating and achieving anticipated synergies, or that such synergies will take longer to realize than expected, risks that the proposed transaction and other transactions contemplated by the merger agreement disrupt current plans and operations that may harm the Company’s businesses, the amount of any costs, fees, expenses, impairments and charges related to the proposed transaction, and uncertainty as to the effects of the announcement or pendency of the proposed transaction on the market price of the Company's common stock and/or on its financial performance. All forward-looking statements and the internal projections and beliefs upon which we base our expectations included in this release are made only as of the date of this release and may change. While we may elect to update forward-looking statements at some point in the future, we expressly disclaim any obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.
FIESTA RESTAURANT GROUP, INC. |
|||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||||||
THREE AND SIX MONTHS ENDED JULY 2, 2023 AND JULY 3, 2022 |
|||||||||||||||
(In thousands, except share and per share data) |
|||||||||||||||
(Unaudited) |
|||||||||||||||
|
Three Months Ended (a) |
|
Six Months Ended (a) |
||||||||||||
|
July 2, 2023 |
|
July 3, 2022 |
|
July 2, 2023 |
|
July 3, 2022 |
||||||||
Revenues: |
|
|
|
|
|
|
|
||||||||
Restaurant sales |
$ |
106,637 |
|
|
$ |
98,023 |
|
|
$ |
209,701 |
|
|
$ |
193,223 |
|
Franchise royalty revenues and fees |
|
206 |
|
|
|
464 |
|
|
|
513 |
|
|
|
873 |
|
Total revenues |
|
106,843 |
|
|
|
98,487 |
|
|
|
210,214 |
|
|
|
194,096 |
|
Costs and expenses: |
|
|
|
|
|
|
|
||||||||
Cost of sales |
|
32,568 |
|
|
|
32,580 |
|
|
|
65,180 |
|
|
|
63,327 |
|
Restaurant wages and related expenses (b) |
|
25,878 |
|
|
|
24,583 |
|
|
|
52,268 |
|
|
|
48,157 |
|
Restaurant rent expense |
|
6,110 |
|
|
|
5,976 |
|
|
|
12,191 |
|
|
|
12,003 |
|
Other restaurant operating expenses |
|
18,410 |
|
|
|
16,755 |
|
|
|
36,034 |
|
|
|
33,405 |
|
Advertising expense |
|
3,116 |
|
|
|
3,245 |
|
|
|
6,312 |
|
|
|
6,109 |
|
General and administrative expenses (b)(c) |
|
10,729 |
|
|
|
12,791 |
|
|
|
23,912 |
|
|
|
25,133 |
|
Depreciation and amortization |
|
4,822 |
|
|
|
5,232 |
|
|
|
9,214 |
|
|
|
10,346 |
|
Impairment and other lease charges (recoveries) (d) |
|
685 |
|
|
|
2,110 |
|
|
|
2,941 |
|
|
|
1,408 |
|
Closed restaurant rent, net of sublease income (e) |
|
238 |
|
|
|
401 |
|
|
|
(46 |
) |
|
|
781 |
|
Other expense (income), net (f) |
|
157 |
|
|
|
83 |
|
|
|
172 |
|
|
|
134 |
|
Total operating expenses |
|
102,713 |
|
|
|
103,756 |
|
|
|
208,178 |
|
|
|
200,803 |
|
Income (loss) from operations |
|
4,130 |
|
|
|
(5,269 |
) |
|
|
2,036 |
|
|
|
(6,707 |
) |
Interest expense (income), net |
|
(81 |
) |
|
|
85 |
|
|
|
2 |
|
|
|
170 |
|
Income (loss) from continuing operations before taxes |
|
4,211 |
|
|
|
(5,354 |
) |
|
|
2,034 |
|
|
|
(6,877 |
) |
Provision for income taxes |
|
382 |
|
|
|
1,134 |
|
|
|
349 |
|
|
|
912 |
|
Income (loss) from continuing operations |
|
3,829 |
|
|
|
(6,488 |
) |
|
|
1,685 |
|
|
|
(7,789 |
) |
Income from discontinued operations, net of tax |
|
30 |
|
|
|
267 |
|
|
|
265 |
|
|
|
212 |
|
Net income (loss) |
$ |
3,859 |
|
|
$ |
(6,221 |
) |
|
$ |
1,950 |
|
|
$ |
(7,577 |
) |
Earnings (loss) per common share: |
|
|
|
|
|
|
|
||||||||
Continuing operations – basic |
$ |
0.15 |
|
|
$ |
(0.26 |
) |
|
$ |
0.06 |
|
|
$ |
(0.31 |
) |
Discontinued operations – basic |
|
— |
|
|
|
0.01 |
|
|
|
0.01 |
|
|
|
0.01 |
|
Basic |
$ |
0.15 |
|
|
$ |
(0.25 |
) |
|
$ |
0.07 |
|
|
$ |
(0.30 |
) |
|
|
|
|
|
|
|
|
||||||||
Continuing operations – diluted |
$ |
0.15 |
|
|
$ |
(0.26 |
) |
|
$ |
0.06 |
|
|
$ |
(0.31 |
) |
Discontinued operations – diluted |
|
— |
|
|
|
0.01 |
|
|
|
0.01 |
|
|
|
0.01 |
|
Diluted |
$ |
0.15 |
|
|
$ |
(0.25 |
) |
|
$ |
0.07 |
|
|
$ |
(0.30 |
) |
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
||||||||
Basic |
|
25,566,740 |
|
|
|
24,946,674 |
|
|
|
25,493,415 |
|
|
|
24,889,650 |
|
Diluted |
|
25,566,740 |
|
|
|
24,946,674 |
|
|
|
25,493,415 |
|
|
|
24,889,650 |
|
(a) The Company uses a 52- or 53-week fiscal year that ends on the Sunday closest to December 31. The three- and six-month periods ended July 2, 2023 and July 3, 2022 each included 13 and 26 weeks, respectively.
(b) Restaurant wages and related expenses include stock-based compensation of
(c) See notes (e), (f), (g) and (h) to the reconciliation of net income (loss) to adjusted net income (loss) in the tables titled "Supplemental Non-GAAP Information."
(d) See note (b) to the reconciliation of net income (loss) to adjusted net income (loss) in the tables titled "Supplemental Non-GAAP Information."
(e) See note (c) to the reconciliation of net income (loss) to adjusted net income (loss) in the tables titled "Supplemental Non-GAAP Information."
(f) See note (d) to the reconciliation of net income (loss) to adjusted net income (loss) in the tables titled "Supplemental Non-GAAP Information."
FIESTA RESTAURANT GROUP, INC. |
|||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||
(In thousands) |
|||||
(Unaudited) |
|||||
|
July 2, 2023 |
|
January 1, 2023 |
||
Assets |
|
|
|
||
Cash |
$ |
34,747 |
|
$ |
32,167 |
Other current assets |
|
21,745 |
|
|
20,524 |
Property and equipment, net |
|
87,018 |
|
|
87,106 |
Operating lease right-of-use assets |
|
143,861 |
|
|
146,681 |
Goodwill |
|
56,307 |
|
|
56,307 |
Other assets |
|
5,186 |
|
|
5,906 |
Total assets |
$ |
348,864 |
|
$ |
348,691 |
|
|
|
|
||
Liabilities and Stockholders' Equity |
|
|
|
||
Current portion of long-term debt |
$ |
40 |
|
$ |
62 |
Other current liabilities |
|
40,912 |
|
|
40,240 |
Long-term debt, net of current portion |
|
347 |
|
|
367 |
Operating lease liabilities |
|
152,613 |
|
|
155,355 |
Deferred tax liabilities |
|
16 |
|
|
202 |
Other non-current liabilities |
|
7,072 |
|
|
7,208 |
Total liabilities |
|
201,000 |
|
|
203,434 |
Stockholders' equity |
|
147,864 |
|
|
145,257 |
Total liabilities and stockholders' equity |
$ |
348,864 |
|
$ |
348,691 |
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): |
|||||||||||||||
|
(Unaudited) |
|
(Unaudited) |
||||||||||||
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
July 2, 2023 |
|
July 3, 2022 |
|
July 2, 2023 |
|
July 3, 2022 |
||||||||
Revenues: |
|
|
|
|
|
|
|
||||||||
Pollo Tropical |
$ |
106,843 |
|
|
$ |
98,487 |
|
|
$ |
210,214 |
|
|
$ |
194,096 |
|
|
|
|
|
|
|
|
|
||||||||
Change in comparable restaurant sales (a): |
|
|
|
|
|
|
|
||||||||
Pollo Tropical |
|
9.6 |
% |
|
|
8.4 |
% |
|
|
9.7 |
% |
|
|
8.2 |
% |
|
|
|
|
|
|
|
|
||||||||
Average sales per Company-owned restaurant: |
|
|
|
|
|
|
|
||||||||
Pollo Tropical |
|
|
|
|
|
|
|
||||||||
Comparable restaurants (b) |
$ |
797 |
|
|
$ |
715 |
|
|
$ |
1,557 |
|
|
$ |
1,408 |
|
Non-comparable restaurants (c) |
|
749 |
|
|
|
439 |
|
|
|
1,114 |
|
|
|
932 |
|
Total Company-owned (d) |
|
796 |
|
|
|
710 |
|
|
|
1,548 |
|
|
|
1,400 |
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations before taxes |
$ |
4,211 |
|
|
$ |
(5,354 |
) |
|
$ |
2,034 |
|
|
$ |
(6,877 |
) |
|
|
|
|
|
|
|
|
||||||||
Consolidated Adjusted EBITDA (e) |
$ |
11,081 |
|
|
$ |
5,656 |
|
|
$ |
17,607 |
|
|
$ |
10,948 |
|
|
|
|
|
|
|
|
|
||||||||
Restaurant-level Operating Profit (e): |
$ |
20,555 |
|
|
$ |
14,890 |
|
|
$ |
37,720 |
|
|
$ |
30,235 |
|
(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 Operating Profit (formerly Restaurant-level Adjusted EBITDA), are non-GAAP financial measures. Please see the reconciliation from net income (loss) to Consolidated Adjusted EBITDA and Restaurant-level Operating Profit in the table titled "Supplemental Non-GAAP Information."
FIESTA RESTAURANT GROUP, INC. |
|||||||||
Supplemental Information |
|||||||||
The following table sets forth certain unaudited supplemental data for the periods indicated: |
|||||||||
|
Three Months Ended |
|
Six Months Ended |
||||||
|
July 2, 2023 |
|
July 3, 2022 |
|
July 2, 2023 |
|
July 3, 2022 |
||
Company-owned restaurant openings: |
|
|
|
|
|
|
|
||
Pollo Tropical |
— |
|
|
— |
|
— |
|
|
— |
|
|
|
|
|
|
|
|
||
Company-owned restaurant closings: |
|
|
|
|
|
|
|
||
Pollo Tropical |
(3 |
) |
|
— |
|
(3 |
) |
|
— |
|
|
|
|
|
|
|
|
||
Number of Company-owned restaurants: |
|
|
|
|
|
|
|
||
Pollo Tropical |
134 |
|
|
138 |
|
134 |
|
|
138 |
|
|
|
|
|
|
|
|
||
Number of franchised restaurants: |
|
|
|
|
|
|
|
||
Pollo Tropical |
28 |
|
|
29 |
|
28 |
|
|
29 |
|
|
|
|
|
|
|
|
||
Total number of restaurants: |
|
|
|
|
|
|
|
||
Pollo Tropical |
162 |
|
|
167 |
|
162 |
|
|
167 |
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): |
||||||||||
|
Three Months Ended |
|||||||||
|
July 2, 2023 |
|
July 3, 2022 |
|||||||
|
|
(a) |
|
|
(a) |
|||||
Restaurant sales |
$ |
106,637 |
|
|
|
$ |
98,023 |
|
||
Cost of sales |
|
32,568 |
|
30.5 |
% |
|
|
32,580 |
33.2 |
% |
Restaurant wages and related expenses |
|
25,878 |
|
24.3 |
% |
|
|
24,583 |
25.1 |
% |
Restaurant rent expense |
|
6,110 |
|
5.7 |
% |
|
|
5,976 |
6.1 |
% |
Other restaurant operating expenses |
|
18,410 |
|
17.3 |
% |
|
|
16,755 |
17.1 |
% |
Advertising expense |
|
3,116 |
|
2.9 |
% |
|
|
3,245 |
3.3 |
% |
Depreciation and amortization |
|
4,822 |
|
4.5 |
% |
|
|
5,232 |
5.3 |
% |
Impairment and other lease charges (recoveries) |
|
685 |
|
0.6 |
% |
|
|
2,110 |
2.2 |
% |
Closed restaurant rent expense, net of sublease income |
|
238 |
|
0.2 |
% |
|
|
401 |
0.4 |
% |
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|||||
|
Six Months Ended |
|||||||||
|
July 2, 2023 |
|
July 3, 2022 |
|||||||
|
|
(a) |
|
|
(a) |
|||||
Restaurant sales |
$ |
209,701 |
|
|
|
$ |
193,223 |
|
||
Cost of sales |
|
65,180 |
|
31.1 |
% |
|
|
63,327 |
32.8 |
% |
Restaurant wages and related expenses |
|
52,268 |
|
24.9 |
% |
|
|
48,157 |
24.9 |
% |
Restaurant rent expense |
|
12,191 |
|
5.8 |
% |
|
|
12,003 |
6.2 |
% |
Other restaurant operating expenses |
|
36,034 |
|
17.2 |
% |
|
|
33,405 |
17.3 |
% |
Advertising expense |
|
6,312 |
|
3.0 |
% |
|
|
6,109 |
3.2 |
% |
Depreciation and amortization |
|
9,214 |
|
4.4 |
% |
|
|
10,346 |
5.4 |
% |
Impairment and other lease charges (recoveries) |
|
2,941 |
|
1.4 |
% |
|
|
1,408 |
0.7 |
% |
Closed restaurant rent expense, net of sublease income |
|
(46 |
) |
— |
% |
|
|
781 |
0.4 |
% |
(a) Percent of restaurant sales.
FIESTA RESTAURANT GROUP, INC.
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 Operating Profit (formerly Restaurant-level Adjusted EBITDA), and margin are non-GAAP financial measures. Consolidated Adjusted EBITDA is defined as earnings (loss) before interest expense (income), net, 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 Operating Profit 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 Operating Profit, 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 Operating Profit (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 |
||||||||||||
|
July 2, 2023 |
|
July 3, 2022 |
|
July 2, 2023 |
|
July 3, 2022 |
||||||||
Net income (loss) |
$ |
3,859 |
|
|
$ |
(6,221 |
) |
|
$ |
1,950 |
|
|
$ |
(7,577 |
) |
Income from discontinued operations, net of tax |
|
(30 |
) |
|
|
(267 |
) |
|
|
(265 |
) |
|
|
(212 |
) |
Provision for income taxes |
|
382 |
|
|
|
1,134 |
|
|
|
349 |
|
|
|
912 |
|
Income (loss) from continuing operations before taxes |
|
4,211 |
|
|
|
(5,354 |
) |
|
|
2,034 |
|
|
|
(6,877 |
) |
Add: |
|
|
|
|
|
|
|
||||||||
Non-general and administrative adjustments: |
|
|
|
|
|
|
|
||||||||
Depreciation and amortization |
|
4,822 |
|
|
|
5,232 |
|
|
|
9,214 |
|
|
|
10,346 |
|
Impairment and other lease charges (recoveries) |
|
685 |
|
|
|
2,110 |
|
|
|
2,941 |
|
|
|
1,408 |
|
Interest expense (income), net |
|
(81 |
) |
|
|
85 |
|
|
|
2 |
|
|
|
170 |
|
Closed restaurant rent expense, net of sublease income |
|
238 |
|
|
|
401 |
|
|
|
(46 |
) |
|
|
781 |
|
Other expense (income), net |
|
157 |
|
|
|
83 |
|
|
|
172 |
|
|
|
134 |
|
Stock-based compensation expense |
|
— |
|
|
|
6 |
|
|
|
4 |
|
|
|
13 |
|
Total non-general and administrative adjustments |
|
5,821 |
|
|
|
7,917 |
|
|
|
12,287 |
|
|
|
12,852 |
|
General and administrative adjustments: |
|
|
|
|
|
|
|
||||||||
Stock-based compensation expense |
|
638 |
|
|
|
1,388 |
|
|
|
1,233 |
|
|
|
2,011 |
|
Non-recurring professional fees(a) |
|
255 |
|
|
|
1,197 |
|
|
|
420 |
|
|
|
1,902 |
|
G&A efficiency initiatives(b) |
|
156 |
|
|
|
193 |
|
|
|
825 |
|
|
|
454 |
|
Restructuring costs(c) |
|
— |
|
|
|
— |
|
|
|
717 |
|
|
|
— |
|
Digital costs(d) |
|
— |
|
|
|
315 |
|
|
|
91 |
|
|
|
606 |
|
Total general and administrative adjustments |
|
1,049 |
|
|
|
3,093 |
|
|
|
3,286 |
|
|
|
4,973 |
|
Consolidated Adjusted EBITDA |
$ |
11,081 |
|
|
$ |
5,656 |
|
|
$ |
17,607 |
|
|
$ |
10,948 |
|
Total revenues |
$ |
106,843 |
|
|
$ |
98,487 |
|
|
$ |
210,214 |
|
|
$ |
194,096 |
|
Net income (loss) as a percentage of total revenues |
|
3.6 |
% |
|
|
(6.3 |
)% |
|
|
0.9 |
% |
|
|
(3.9 |
)% |
Consolidated Adjusted EBITDA as a percentage of total
|
|
10.4 |
% |
|
|
5.7 |
% |
|
|
8.4 |
% |
|
|
5.6 |
% |
(a) Non-recurring professional fees consist of costs related to growth initiatives.
(b) G&A efficiency initiatives consist of non-recurring retention bonus costs and costs related to the acceleration and write-off of costs related to accounting system implementation.
(c) Restructuring costs for the six months ended July 2, 2023 include severance costs related to the departure of a former executive, CEO search firm fees, and eliminated positions related to the accounting outsourcing.
(d) Digital costs for the six months ended July 2, 2023 and the three and six months ended July 3, 2022 include costs related to enhancing the digital experience for our customers.
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
July 2, 2023 |
|
July 3, 2022 |
|
July 2, 2023 |
|
July 3, 2022 |
||||||||
Income (loss) from operations |
$ |
4,130 |
|
|
$ |
(5,269 |
) |
|
$ |
2,036 |
|
|
$ |
(6,707 |
) |
Add: |
|
|
|
|
|
|
|
||||||||
Non-general and administrative adjustments: |
|
|
|
|
|
|
|
||||||||
Depreciation and amortization |
|
4,822 |
|
|
|
5,232 |
|
|
|
9,214 |
|
|
|
10,346 |
|
Impairment and other lease charges (recoveries) |
|
685 |
|
|
|
2,110 |
|
|
|
2,941 |
|
|
|
1,408 |
|
Closed restaurant rent expense, net of sublease income |
|
238 |
|
|
|
401 |
|
|
|
(46 |
) |
|
|
781 |
|
Other expense (income), net |
|
157 |
|
|
|
83 |
|
|
|
172 |
|
|
|
134 |
|
Stock-based compensation expense |
|
— |
|
|
|
6 |
|
|
|
4 |
|
|
|
13 |
|
Total non-general and administrative adjustments |
|
5,902 |
|
|
|
7,832 |
|
|
|
12,285 |
|
|
|
12,682 |
|
General and administrative adjustments: |
|
|
|
|
|
|
|
||||||||
Stock-based compensation expense |
|
638 |
|
|
|
1,388 |
|
|
|
1,233 |
|
|
|
2,011 |
|
Non-recurring professional fees |
|
255 |
|
|
|
1,197 |
|
|
|
420 |
|
|
|
1,902 |
|
G&A efficiency initiatives |
|
156 |
|
|
|
193 |
|
|
|
825 |
|
|
|
454 |
|
Restructuring costs |
|
— |
|
|
|
— |
|
|
|
717 |
|
|
|
— |
|
Digital costs |
|
— |
|
|
|
315 |
|
|
|
91 |
|
|
|
606 |
|
Total general and administrative adjustments |
|
1,049 |
|
|
|
3,093 |
|
|
|
3,286 |
|
|
|
4,973 |
|
Consolidated Adjusted EBITDA |
$ |
11,081 |
|
|
$ |
5,656 |
|
|
$ |
17,607 |
|
|
$ |
10,948 |
|
Restaurant-level adjustments: |
|
|
|
|
|
|
|
||||||||
Add: Other general and administrative expense(a) |
|
9,680 |
|
|
|
9,698 |
|
|
|
20,626 |
|
|
|
20,160 |
|
Less: Franchise royalty revenue and fees |
|
206 |
|
|
|
464 |
|
|
|
513 |
|
|
|
873 |
|
Restaurant-level Operating Profit |
$ |
20,555 |
|
|
$ |
14,890 |
|
|
$ |
37,720 |
|
|
$ |
30,235 |
|
Restaurant sales |
$ |
106,637 |
|
|
$ |
98,023 |
|
|
$ |
209,701 |
|
|
$ |
193,223 |
|
Income (loss) from operations as a percentage of restaurant
|
|
3.9 |
% |
|
|
(5.4 |
)% |
|
|
1.0 |
% |
|
|
(3.5 |
)% |
Restaurant-level Operating Profit as a percentage of
|
|
19.3 |
% |
|
|
15.2 |
% |
|
|
18.0 |
% |
|
|
15.6 |
% |
(a) Excludes general and administrative adjustments above.
FIESTA RESTAURANT GROUP, INC.
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 (loss) and related adjusted diluted earnings (loss) per share are non-GAAP financial measures. Adjusted net income (loss) 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 (loss) and related adjusted earnings (loss) 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 |
|||||||||||||||||||||||||||||
|
|
July 2, 2023 |
|
July 3, 2022 |
|||||||||||||||||||||||||||
|
|
Income
|
|
Provision
|
|
Net
|
|
Diluted
|
|
Loss
|
|
Provision
|
|
Net
|
|
Diluted
|
|||||||||||||||
Reported - GAAP Net income (loss) |
|
|
|
|
|
$ |
3,859 |
|
|
$ |
0.15 |
|
|
|
|
|
|
$ |
(6,221 |
) |
|
$ |
(0.25 |
) |
|||||||
Income from discontinued operations, net of tax |
|
|
|
|
|
|
(30 |
) |
|
|
— |
|
|
|
|
|
|
|
(267 |
) |
|
|
(0.01 |
) |
|||||||
Income (loss) from continuing operations |
|
$ |
4,211 |
|
|
$ |
382 |
|
|
$ |
3,829 |
|
|
$ |
0.15 |
|
|
$ |
(5,354 |
) |
|
$ |
1,134 |
|
$ |
(6,488 |
) |
|
$ |
(0.26 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Non-general and administrative expense adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Impairment and other lease charges (recoveries) (b) |
|
|
685 |
|
|
|
171 |
|
|
|
514 |
|
|
|
0.02 |
|
|
|
2,110 |
|
|
|
526 |
|
|
1,584 |
|
|
|
0.06 |
|
Closed restaurant rent expense, net of sublease income (c) |
|
|
238 |
|
|
|
59 |
|
|
|
179 |
|
|
|
0.01 |
|
|
|
401 |
|
|
|
100 |
|
|
301 |
|
|
|
0.01 |
|
Other expense (income), net (d) |
|
|
157 |
|
|
|
39 |
|
|
|
118 |
|
|
|
— |
|
|
|
83 |
|
|
|
21 |
|
|
62 |
|
|
|
— |
|
Total non-general and administrative expense |
|
|
1,080 |
|
|
|
269 |
|
|
|
811 |
|
|
|
0.03 |
|
|
|
2,594 |
|
|
|
647 |
|
|
1,947 |
|
|
|
0.07 |
|
General and administrative expense adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Non-recurring professional fees (e) |
|
|
255 |
|
|
|
64 |
|
|
|
191 |
|
|
|
0.01 |
|
|
|
1,197 |
|
|
|
298 |
|
|
899 |
|
|
|
0.04 |
|
G&A efficiency initiatives (f) |
|
|
156 |
|
|
|
39 |
|
|
|
117 |
|
|
|
— |
|
|
|
193 |
|
|
|
48 |
|
|
145 |
|
|
|
— |
|
Digital costs (h) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
315 |
|
|
|
79 |
|
|
236 |
|
|
|
0.01 |
|
Total general and administrative expense |
|
|
411 |
|
|
|
103 |
|
|
|
308 |
|
|
|
0.01 |
|
|
|
1,705 |
|
|
|
425 |
|
|
1,280 |
|
|
|
0.05 |
|
Adjusted - Non-GAAP |
|
$ |
5,702 |
|
|
$ |
754 |
|
|
$ |
4,948 |
|
|
$ |
0.19 |
|
|
$ |
(1,055 |
) |
|
$ |
2,206 |
|
$ |
(3,261 |
) |
|
$ |
(0.14 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
(Unaudited) |
|||||||||||||||||||||||||||||
|
|
Six months ended |
|||||||||||||||||||||||||||||
|
|
July 2, 2023 |
|
July 3, 2022 |
|||||||||||||||||||||||||||
|
|
Income
|
|
Provision
|
|
Net
|
|
Diluted
|
|
Loss
|
|
Provision
|
|
Net
|
|
Diluted
|
|||||||||||||||
Reported - GAAP Net income (loss) |
|
|
|
|
|
$ |
1,950 |
|
|
$ |
0.07 |
|
|
|
|
|
|
$ |
(7,577 |
) |
|
$ |
(0.30 |
) |
|||||||
Income from discontinued operations, net of tax |
|
|
|
|
|
|
(265 |
) |
|
|
(0.01 |
) |
|
|
|
|
|
|
(212 |
) |
|
|
(0.01 |
) |
|||||||
Income (loss) from continuing operations |
|
$ |
2,034 |
|
M |
$ |
349 |
|
|
$ |
1,685 |
|
|
$ |
0.06 |
|
|
$ |
(6,877 |
) |
|
$ |
912 |
|
$ |
(7,789 |
) |
|
$ |
(0.31 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Non-general and administrative expense adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Impairment and other lease charges (recoveries) (b) |
|
|
2,941 |
|
|
|
733 |
|
|
|
2,208 |
|
|
|
0.08 |
|
|
|
1,408 |
|
|
|
351 |
|
|
1,057 |
|
|
|
0.04 |
|
Closed restaurant rent expense, net of sublease income (c) |
|
|
(46 |
) |
|
|
(11 |
) |
|
|
(35 |
) |
|
|
— |
|
|
|
781 |
|
|
|
195 |
|
|
586 |
|
|
|
0.02 |
|
Other expense (income), net (d) |
|
|
172 |
|
|
|
43 |
|
|
|
129 |
|
|
|
0.01 |
|
|
|
134 |
|
|
|
33 |
|
|
101 |
|
|
|
0.01 |
|
Total non-general and administrative expense |
|
|
3,067 |
|
|
|
765 |
|
|
|
2,302 |
|
|
|
0.09 |
|
0 |
|
2,323 |
|
|
|
579 |
|
|
1,744 |
|
|
|
0.07 |
|
General and administrative expense adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Non-recurring professional fees (e) |
|
|
420 |
|
|
|
105 |
|
|
|
315 |
|
|
|
0.02 |
|
|
|
1,902 |
|
|
|
474 |
|
|
1,428 |
|
|
|
0.06 |
|
G&A efficiency initiatives (f) |
|
|
825 |
|
|
|
206 |
|
|
|
619 |
|
|
|
0.02 |
|
|
|
454 |
|
|
|
113 |
|
|
341 |
|
|
|
0.01 |
|
Restructuring costs (g) |
|
|
717 |
|
|
|
179 |
|
|
|
538 |
|
|
|
0.02 |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
Digital costs (h) |
|
|
91 |
|
|
|
23 |
|
|
|
68 |
|
|
|
— |
|
|
|
606 |
|
|
|
151 |
|
|
455 |
|
|
|
0.02 |
|
Total general and administrative expense |
|
|
2,053 |
|
|
|
513 |
|
|
|
1,540 |
|
|
|
0.06 |
|
|
|
2,962 |
|
|
|
738 |
|
|
2,224 |
|
|
|
0.09 |
|
Adjusted - Non-GAAP |
|
|
7,154 |
|
|
|
1,627 |
|
|
|
5,527 |
|
|
|
0.21 |
|
|
|
(1,592 |
) |
|
|
2,229 |
|
|
(3,821 |
) |
|
|
(0.15 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(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) Impairment and other lease charges (recoveries) for the three and six months ended July 2, 2023 consist of impairment charges of
(c) Closed restaurant rent expense, net of sublease income, for the three months ended July 2, 2023 consists of closed restaurant lease costs of
(d) Other expense (income), net, for the three and six months ended July 2, 2023 and July 3, 2022 primarily consists of closed restaurant related costs.
(e) Non-recurring professional fees consist of costs related to growth initiatives.
(f) G&A efficiency initiatives consist of non-recurring retention bonus costs and costs related to the acceleration and write-off of costs related to accounting system implementation.
(g) Restructuring costs for the six months ended July 2, 2023 include severance costs related to the departure of a former executive, CEO search firm fees, and the eliminated positions related to the accounting outsourcing.
(h) Digital costs for the three and six months ended July 2, 2023 and July 3, 2022, include costs related to enhancing the digital experience for our customers.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230806064795/en/
Raphael Gross
203 682 8253
investors@frgi.com
Source: Fiesta Restaurant Group, Inc.
