Carrols Restaurant Group, Inc. Reports Preliminary Sales Results for the Fourth Quarter and Full Year 2023

Rhea-AI Summary

Carrols Restaurant Group, Inc. (TAST) reports positive preliminary sales results for the fourth quarter and full year 2023. Total restaurant sales increased 5.7% to $470.4 million in Q4 2023, with Burger King® and Popeyes® restaurants showing 7.2% and 7.6% comparable sales growth, respectively. Full year 2023 saw a total sales increase of 8.4% to $1.88 billion, with Burger King® and Popeyes® restaurants showing 9.3% and 10.1% comparable sales growth, respectively. Adjusted EBITDA for Q4 2023 is expected to be at the high end of the range, and the company has made significant repayments towards its outstanding borrowings.

Insights

Market Research Analyst

The reported increase in total restaurant sales by 5.7% for the fourth quarter and 8.4% for the full year by Carrols Restaurant Group indicates a positive trajectory in the company's revenue stream. This growth is particularly noteworthy against the backdrop of the fast-food industry, which has faced challenges from changing consumer preferences and competition. The reported comparable restaurant sales growth for Burger King and Popeyes franchises outpaces industry averages, suggesting that Carrols' strategic initiatives and operational improvements are resonating with consumers.

The 'Reclaim the Flame' initiative by Burger King appears to have been effective in driving both average check growth and traffic, which are critical metrics for assessing consumer demand and brand strength. The increase in traffic by 2.9% is a clear indicator of growing customer base and retention. Additionally, the timing of the holidays can have a significant impact on quarterly revenue and Carrols' management has attributed part of the sales growth to this factor.

Financial Analyst

The upward revision of the Adjusted EBITDA forecast to the higher end of the $28 million to $32 million range for the fourth quarter and similarly for the full year, suggests operational efficiency and cost control measures are yielding financial benefits. Lower than expected beef costs have contributed to this favorable outcome, which could reflect well on management's supply chain and procurement strategies. Moreover, the proactive debt reduction through the repayment of $30 million of Term Loan B borrowings and the repurchase of Senior Notes is indicative of a robust balance sheet management. This could improve the company's debt profile and potentially lower interest expenses, thereby enhancing future profitability and cash flows.

Economist

The performance of Carrols Restaurant Group can be seen as a microcosm of the broader economic environment. The increase in customer traffic and sales, despite broader economic uncertainties, may signal consumer confidence and discretionary spending resilience in the fast-food sector. However, it is important to monitor whether these trends are sustainable in the face of potential economic headwinds such as inflation or shifts in consumer spending patterns. The company's ability to manage costs effectively, as evidenced by the lower than expected beef costs, will be crucial in maintaining profitability in a volatile commodity price environment.

Company To Host Meetings at 26th Annual ICR Conference

SYRACUSE, N.Y., Jan. 08, 2024 (GLOBE NEWSWIRE) -- Carrols Restaurant Group, Inc. (“Carrols” or the “Company”) (Nasdaq: TAST), the largest BURGER KING^® franchisee in the United States, today reported its preliminary sales results for the fourth quarter and full year 2023.

Preliminary sales results for the Fourth Quarter of 2023 versus the Fourth Quarter of 2022 include:

• Total restaurant sales increased 5.7% to $470.4 million compared to $445.1 million in the fourth quarter of 2022;
• Comparable restaurant sales for the Company’s Burger King® restaurants increased 7.2%; and
• Comparable restaurant sales for the Company’s Popeyes® restaurants increased 7.6%.
  

Preliminary sales results for the Full Year 2023 versus the Full Year 2022 include:

• Total restaurant sales increased 8.4% to $1.88 billion compared to $1.73 billion in the full year of 2022;
• Comparable restaurant sales for the Company’s Burger King® restaurants increased 9.3%; and
• Comparable restaurant sales for the Company’s Popeyes® restaurants increased 10.1%.
  

Management Commentary
Deborah M. Derby, President and Chief Executive Officer of Carrols, commented “Our strong Burger King comparable restaurant sales growth of 7.2% in the fourth quarter of 2023 was driven by average check growth of 4.2%, along with a 2.9% increase in traffic. This result was primarily due to the combination of the continued operational improvement efforts by the Carrols' team and the positive impact of our franchisor's Reclaim the Flame initiative, as well as a benefit from the timing of the holidays as compared to last year. Our Popeye's restaurants also continued to perform well as comparable restaurant sales grew 7.6% in the fourth quarter. We expect to see continued momentum at both of our brands in 2024.”

Guidance Update
The Company now believes that fourth quarter Adjusted EBITDA⁽¹⁾ will be at the high end or slightly above the high end of the previously provided range of $28 million to $32 million, with lower than expected beef costs contributing, in part, to the favorable results. This equates to 2023 Adjusted EBITDA⁽¹⁾ being at the high end or slightly above the high end of the previously provided range of $145 to $149 million.

Balance Sheet Update
During the fourth quarter of 2023, the Company used its cash balances to repay $30 million of the outstanding principal amount of its Term Loan B borrowings under its senior credit facility. As of year-end 2023, the outstanding amount of Term Loan B borrowings under the Company's senior credit facility was $133.4 million. The Company also used its cash balances during the fourth quarter of 2023 to reduce the outstanding amount of its Senior Notes due in 2029 by $9.9 million to $290.1 million through open market repurchases.

ICR Conference Participation
Carrols will host investor meetings at the 26^th Annual ICR Conference on January 8, 2024 and January 9, 2024 in Orlando, FL.

About the Company
Carrols is one of the largest restaurant franchisees in North America. It is the largest BURGER KING® franchisee in the United States, currently operating 1,022 BURGER KING® restaurants in 23 states as well as 60 POPEYES® restaurants in six states. Carrols has operated BURGER KING® restaurants since 1976 and POPEYES® restaurants since 2019. For more information, please visit the Company's website at www.carrols.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 Carrols' 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 our strategies, intentions, plans or guidance 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 our control. Investors are referred to the full discussion of risks and uncertainties, as included in Carrols’ filings with the Securities and Exchange Commission.

Footnotes
⁽¹⁾ Adjusted EBITDA is a non-GAAP financial measure the Company uses to measure performance. The reconciliation of Adjusted EBITDA to net income (loss) is not available as the Company cannot estimate net income (loss) at this time.

Investor Relations:
Jeff Priester
332-242-4370
investorrelations@carrols.com

FAQ

What are Carrols Restaurant Group, Inc.'s preliminary sales results for the fourth quarter and full year 2023?

Total restaurant sales increased 5.7% to $470.4 million in Q4 2023, with Burger King® and Popeyes® restaurants showing 7.2% and 7.6% comparable sales growth, respectively. Full year 2023 saw a total sales increase of 8.4% to $1.88 billion, with Burger King® and Popeyes® restaurants showing 9.3% and 10.1% comparable sales growth, respectively.

What is Carrols Restaurant Group, Inc.'s Adjusted EBITDA guidance for Q4 2023 and full year 2023?

The company expects Q4 2023 Adjusted EBITDA to be at the high end or slightly above the high end of the previously provided range of $28 million to $32 million, with 2023 Adjusted EBITDA being at the high end or slightly above the high end of the previously provided range of $145 to $149 million.

What is the outstanding amount of Term Loan B borrowings under Carrols Restaurant Group, Inc.'s senior credit facility as of year-end 2023?

As of year-end 2023, the outstanding amount of Term Loan B borrowings under the company's senior credit facility was $133.4 million.

Where will Carrols Restaurant Group, Inc. host investor meetings in January 2024?

Carrols will host investor meetings at the 26th Annual ICR Conference on January 8, 2024 and January 9, 2024 in Orlando, FL.