STRATEGIC PARTNERS
August 9, 2016
The nation's largest Burger King franchisee, Carrols Restaurant Group, today reported its second quarter financial results and the news is good.
The franchise operator, which has 727 locations, raised its 2016 outlook after announcing results which included a 10.2 percent increase in sales to $241.4 million from the same quarter of last year, according to a release. That number includes $60.5 million in sales from 196 locations acquired in the last two years.
Comparable restaurant sales systemwide grew 0.7 percent, compared to a 10.3 percent increase in the prior year period. Adjusted EBITDA increased 19.9 percent to $27.9 million, from $23.3 million in the same period of 2015.
Net income was $9.4 million, or $0.21 per diluted share. That compares with a net loss of $5 million, or $0.14 a share for the same period last year. Adjusted net income grew greatly over the same period last year to $11.3 million, or $0.25 per diluted share. That is a 34.1 percent increase from adjusted net income of $8.4 million, or $0.19 per diluted share, in the previous year period.
"We delivered solid quarterly results that included an increase in comparable restaurant sales over a challenging double-digit increase from the prior year. We also posted robust improvements in restaurant-level EBITDA, adjusted EBITDA and adjusted net income," said CEO Daniel T. Accordino in a release.
"While the QSR industry remains highly competitive, Burger King continues to demonstrate the effectiveness of its brand strategy with differentiating products and compelling promotional initiatives. As a result, our two-year sales trends were strong throughout the first half of 2016 and we believe that we are well positioned for continued sales growth as our sales comparisons ease somewhat in the second half of this year.”
Accordino said the group renovated 43 restaurants in the first half of this year, and expects to finish as many as 90 total and relocate or rebuild 11 to 14 restaurants. He said in total they will have updated 525 restaurants to the brand's new image since 2012, which would mean the group would be in a position to free up some cash flow and capital in 2017 for continued expansion.
Other notable results include a 2.1 percent increase in average check totals, although customer traffic dropped 1.4 percent from the prior year period. Adjusted EBITDA was $27.9 million for the quarter compared to $23.3 million for the prior year period. Adjusted EBITDA margin improved 94 basis points to 11.6 percent of restaurant sales.
Second-quarter net income also included a $1.85 million accrual from an agreement to settle and resolve litigation with the group's former chair and CEO. Adjusted net income was $11.3 million, or $0.25 per diluted share, compared to adjusted net income of $8.4 million, or $0.19 per diluted share, in the prior year period.
In its guidance, the company updated total restaurant sales to $945 million to $960 million from the previous estimate of $935 million to $960 million, including a comparable restaurant sales increase of 2 to 4 percent.
