Provides Business Update
Fiesta Restaurant Group, Inc. ("Fiesta" or the "Company")
(NASDAQ: FRGI), parent company of the Pollo Tropical® and Taco
Cabana® restaurant brands, today reported results for the 13-week
first quarter 2020, which ended on March 29, 2020 and provided a
business update related to current operations.
Fiesta President and Chief Executive Officer Richard Stockinger
said, "Our priorities in this time of crisis have been and will
continue to be as follows: Taking steps to ensure the safety and
well-being of our team members and customers, protecting the
reputation of our brands and the Company, doing right by our
employees, shareholders, vendor partners, service providers and
landlords, and continuing to be a leader in our communities. I am
proud of our team for their focus on those priorities, while
developing new and better ways to drive sales and maximize
results."
Mr. Stockinger continued, "Post COVID-19 comp sales declines
stabilized in late March and early April at both brands, and we
have realized sequential sales improvement weekly at both brands
since that time. Aided by strong drive thru and carry out sales,
recent weekly Taco Cabana comparable restaurant sales for the two
weeks ended May 3, 2020 have improved to down 18.6% compared to the
same weeks last year. Pollo Tropical comparable restaurant sales
trends have improved to down 37.8% compared to the same weeks last
year, supported by increased drive thru and delivery sales. At
those sales trends we estimate that we generate break-even
profitability, which we believe should be sustainable and provide
us a base from which to rebuild the bottom line as the economy
re-accelerates."
Mr. Stockinger added, "We are seizing the opportunity created by
changes in response to COVID-19 to create a better business model
designed to enable our customers to enjoy our brands safely
wherever and however they choose. We have expanded and will
continue to expand delivery options, we are creating more in-home
dining options including Pollo Pantry and TC Pantry and we are
rapidly improving our curbside and pick up capabilities to be
faster and safer for our customers. Additionally, we have completed
our re-opening plans in compliance with applicable state and local
guidelines for the return of safe dine-in activity in Texas and
Florida in markets that are allowing dine-in activity."
Mr. Stockinger concluded, "We have been working to maximize
efficiency and operating flexibility since this crisis began. Early
in the second quarter of 2020 we drew down all revolver capacity
under our senior credit facility and had a total cash balance of
approximately $91.6 million as of May 6. We have been successfully
working with our vendor partners, service providers and landlords
regarding more flexible payment terms and cost reductions. We cut
our 2020 capex plans in half and are focusing only on necessary
capital projects. We were in full compliance with our loan
financial covenants under our senior credit facility at the end of
the first quarter of 2020, and we are proactively working with our
lenders to amend our financial covenants under our senior credit
facility to avoid any potential issues in the future given the
economic uncertainty related to the pandemic. In conclusion, we are
confident that we will ultimately exit this crisis as a company
better positioned for future sales and profit growth."
First Quarter 2020 Financial Summary
- Total revenues decreased 11.5% to $146.7 million in the first
quarter of 2019 from $165.9 million in the first quarter of
2019;
- Comparable restaurant sales at Pollo Tropical decreased 7.3%;
comparable restaurant sales for Pollo Tropical increased 0.6%
during the first ten weeks of the first quarter of 2020 prior to
the impact of COVID-19 compared to the prior year period and
decreased 32.0% during the last three weeks of the first quarter of
2020 compared to the prior year period;
- Comparable restaurant sales at Taco Cabana decreased 13.5%;
comparable restaurant sales for Taco Cabana decreased 8.6% during
the first ten weeks of the first quarter of 2020 prior to the
impact of COVID-19 compared to the prior year period and decreased
28.3% during the last three weeks of the first quarter of 2020
compared to the prior year period;
- Net loss of $7.3 million, or $0.29 per diluted share, in the
first quarter of 2020 compared to a net income of $2.3 million, or
$0.08 per diluted share, in the first quarter of 2019;
- Adjusted net loss (a non-GAAP financial measure) of $2.9
million, or $0.11 per diluted share, in the first quarter of 2020,
compared to adjusted net income of $4.1 million, or $0.15 per
diluted share, in the first quarter of 2019 (see non-GAAP
reconciliation table below);
- Adjusted EBITDA for Pollo Tropical of $8.8 million in the first
quarter of 2020 compared to $14.3 million in the first quarter of
2019;
- Restaurant-level Adjusted EBITDA (a non-GAAP financial measure)
for Pollo Tropical of $15.4 million, or 18.0% of restaurant sales,
in the first quarter of 2020 compared to $21.2 million, or 23.3% of
restaurant sales, in the first quarter of 2019 (see non-GAAP
reconciliation table below);
- Adjusted EBITDA for Taco Cabana of $(0.9) million in the first
quarter of 2020 compared to $2.9 million in the first quarter of
2019;
- Restaurant-level Adjusted EBITDA (a non-GAAP financial measure)
for Taco Cabana of $5.3 million, or 8.8% of restaurant sales, in
the first quarter of 2020 compared to $9.5 million, or 12.8% of
restaurant sales, in the first quarter of 2019 (see non-GAAP
reconciliation table below); and
- Consolidated Adjusted EBITDA (a non-GAAP financial measure) of
$7.9 million in the first quarter of 2020 compared to Consolidated
Adjusted EBITDA of $17.2 million in the first quarter of 2019 (see
non-GAAP reconciliation table below).
Recent Results
- Comparable restaurant sales during fiscal April decreased 49.2%
for Pollo Tropical and 26.2% for Taco Cabana compared to the prior
year period. Comparable restaurant sales improved throughout April
and early May for both brands. Comparable restaurant sales for the
two weeks ended May 3 were negative 37.8% for Pollo Tropical and
negative 18.6% for Taco Cabana compared to the same weeks last
year. At those sales trends we estimate that the Company generates
break-even profitability, which we believe should be sustainable
and provide us a base from which to rebuild the bottom line as the
economy re-accelerates.
- With the States of Texas and Florida announcing that COVID-19
restrictions are being eased including allowing 25% occupancy in
identified geographies, we have re-opened dining rooms in select
restaurants in compliance with applicable state and local
guidelines. For the week of May 4, 143 of 146 Taco Cabana
restaurant dining rooms were opened in anticipation of strong
traffic for the Cinco de Mayo holiday. 16 of the 141 Pollo Tropical
restaurant dining rooms were opened the week of May 4, all in
Central and Northern Florida as those are the only geographies in
Florida with eased COVID-19 restrictions. We will be evaluating
dine-in sales trends week-to-week to determine the number of units
that should be open for dine-in business.
COVID-19 Business Update
On March 16, 2020, we announced in an SEC filing on Form 8-K
that we had closed all of our dining room seating areas in all
Pollo Tropical and Taco Cabana restaurants in Florida and Texas,
respectively, due to the COVID-19 pandemic. Since that time, we
have continued to make proactive changes designed to ensure our top
priority of the safety of our guests, team members and
franchisees.
We have taken the following health safety preventive
measures in response to the COVID-19 pandemic:
- Heightened our sanitation procedures regarding restaurant
cleanliness, with additional emphasis on high traffic areas in
restaurants;
- Stocked our restaurants with effective disinfectants and
sanitation products, including hand sanitizer in our dining room
and back of the house;
- Increased handwashing protocols for all restaurant team
members;
- Required all customer facing employees and vendors in the
restaurants to wear gloves and masks;
- Implemented a COVID-19 Employee Illness Protocol, consistent
with Center for Disease Control (CDC) and National Restaurant
Association (NRA) guidelines;
- Closed sauce and salsa self-serve stations and now providing
sauces and salsas in pre-packaged containers;
- Closed self-service soda stations in all restaurants;
- Added markings in restaurants for social distancing;
- All orders served are now enclosed in sealed carryout
packaging; and
- Reduced restaurant operating hours in accordance with any
federal, state and local mandates.
As government authorities move toward reducing COVID-19
restrictions, we are in the process of implementing the following
additional measures:
- Adding dedicated dining area sanitation team member in all
restaurants to frequently sanitize during open hours;
- Measuring the temperature of all restaurant employees and any
service providers daily at the time they enter restaurants;
- Installing plexiglass shields at restaurant counter and
drive-thru sections of restaurants;
- Creating separate entrance and exit access points to ensure
guest distancing; and
- Modifying seating arrangements to ensure required guest
distancing.
Since the efforts to respond to the COVID-19 crisis are
constantly changing, we will continue to monitor the situation
closely and implement additional measures as needed to ensure the
safety of our team members and guests.
We also implemented a number of operational changes to maximize
sales, maintain service, improve liquidity and help our communities
in response to the COVID-19 crisis:
- Supporting our communities and showing our appreciation for
service providers on the front lines of the crisis has been and
will continue to be a priority through the following actions:
- Both brands have been donating delivered food weekly to local
hospitals, first responder units and testing centers as a way of
thanking those that are working on the front lines of the COVID-19
crisis in all of the markets in which we operate.
- Both brands increased discounts to 50% for all medical
personnel, first responders, delivery and logistics providers and
military.
- To provide needed meals for school-age children, both brands
are offering free kids meals until the end of the school year.
- We have adjusted our operating model to better meet our
customers' needs during the crisis. To improve speed of service and
improve efficiency, we eliminated certain low sales menu options
and reduced restaurant hours during periods of low sales and/or in
response to government mandated restrictions. We have also adjusted
staffing models to match shifting traffic and channel patterns of
our guests and to improve efficiency.
- We continue to improve our off-premise capabilities:
- During the first quarter we significantly grew the number of
delivery service providers (DSP's) that offer our brands including
the addition of Uber Eats, Postmates and Favor to supplement our
previous and ongoing partnership with Door Dash. With the addition
of Grubhub in May, we now have partnerships with all major
DSP's.
- We are continuing our work with Bottle Rocket, a leading
digital strategy, design and development company, to significantly
improve our online and digital apps for both brands. Those
enhancements will include curbside pickup features with launch
dates of June 2020 for Pollo Tropical and September 2020 for Taco
Cabana.
- To better meet consumer dine-at-home preferences, in April we
launched the Pollo Pantry and TC Pantry menu items that include
fresh menu favorites such as marinated chicken and large party
sides that can be purchased at the drive thru and prepared at
home.
- We have implemented the following actions to better support our
restaurant team members:
- Offered additional bonus incentives during the crisis of $1 per
hour for all hourly employees and a special incentive for store
supervisors and management who are taking risks to serve our
customers.
- Additional, enhanced hourly employee health benefit programs
were announced in May.
- We made a significant donation to our employee assistance
foundation, The Fiesta Family Foundation, which is dedicated to
assisting employees in need. Those donations were in part made
possible by our Board of Directors foregoing their second quarter
2020 director fees.
- To improve efficiency and liquidity, we implemented the
following measures:
- Aggressively cut our capital expenditure budget for 2020 to
only necessary investments. 2020 capital expenditures are currently
expected to total $20 million to $25 million compared to previous
estimates for 2020 of less than $40 million.
- Working capital efficiency has been significantly improved as a
result of vendor and landlord payment term and pricing
renegotiations, which are expected to improve cash flow in 2020 by
$10 million to $15 million.
- In early April, a total of 168 office and field personnel were
terminated or furloughed, representing total annualized salary
savings of approximately $9.3 million, of which approximately $5.5
million is related to terminated employees. In addition, the
salaries for all vice-presidents and executives were reduced by 10%
to 35% for at least one quarter.
- We intend to market 15 owned properties for sale or
sale-leaseback, three of which are either in the Letter of Intent
stage or have contracts signed for sale, although there can be no
assurance that any such sales or sale-leaseback transactions will
be consummated.
The COVID-19 pandemic has not had a significant negative
disruptive impact on our supply chain or access to labor, although
there can be no assurance that there will not be a significant
impact on our supply chain or access to labor in the future. We are
actively monitoring our food suppliers to determine how they are
managing their operations to mitigate supply flow and food safety
risks. To ensure we mitigate potential supply availability risk, we
are building additional inventory backstock levels when appropriate
and we have also identified alternative supply sources in key
product categories including but not limited to proteins and
sanitation and safety supplies.
First Quarter 2020 Brand Results
Total Pollo Tropical restaurant sales decreased 5.8% to $85.7
million in the first quarter of 2020 compared to $91.0 million in
the first quarter of 2019 primarily due to a comparable restaurant
sales decrease of 7.3% that was partially offset by incremental
sales related to new restaurants, net of closed restaurants.
Comparable restaurant sales for Pollo Tropical increased 0.6%
during the first ten weeks of the first quarter of 2020 prior to
the impact of COVID-19 and decreased 32.0% during the last three
weeks of the first quarter of 2020. Off premise sales consisting of
online, catering, and delivery orders comprised 7.1% of total
restaurant sales in the first quarter of 2020 compared to 2.6% of
total restaurant sales in the first quarter of 2019.
Sales cannibalization from new restaurants on existing
restaurants negatively impacted comparable restaurant sales by
approximately 40 basis points. The decrease in comparable
restaurant sales resulted from an 8.3% decrease in comparable
restaurant transactions and a 1.0% increase in average check. The
increase in average check was driven primarily by menu price
increases of 0.2%, an increase in delivery orders and higher priced
promotions.
Adjusted EBITDA for Pollo Tropical decreased to $8.8 million in
the first quarter of 2020 from $14.3 million in the first quarter
of 2019. The decrease was primarily due to the impact of lower
comparable restaurant sales, including higher cost of sales,
restaurant wages, rent expense, and other restaurant operating
expenses, as a percentage of restaurant sales, and higher delivery
fees and advertising expenses, partially offset by lower repair and
maintenance costs and general and administrative expenses.
Taco Cabana restaurant sales decreased 18.6% to $60.4 million in
the first quarter of 2020 from $74.2 million in the first quarter
of 2019 due primarily to a comparable restaurant sales decrease of
13.5% along with a decrease in sales related to closed restaurants,
net of new restaurants. Comparable restaurant sales for Taco Cabana
decreased 8.6% during the first ten weeks of the first quarter of
2020 prior to the impact of COVID-19 compared to the prior year
period and decreased 28.3% during the last three weeks of the first
quarter of 2020 compared to the prior year period. Off premise
sales consisting of online, catering, and delivery orders comprised
5.6% of total restaurant sales in the first quarter of 2020
compared to 2.5% of total restaurant sales in the first quarter of
2019. The decrease in comparable restaurant sales resulted from a
14.9% decrease in comparable restaurant transactions and a 1.4%
increase in average check. The increase in average check was driven
primarily by higher priced limited time offers compared to prior
year promotions and an increase in transactions that include
alcohol.
Adjusted EBITDA for Taco Cabana decreased to $(0.9) million from
$2.9 million in the first quarter of 2019. The decrease was
primarily due to the impact of lower comparable restaurant sales,
including higher cost of sales, rent expense, advertising expense,
and other operating expenses as a percent of restaurant sales and
higher delivery fees, partially offset by lower medical benefit
costs and general and administrative expenses.
Restaurant Portfolio
During the first quarter of 2020, there was one Company-owned
Pollo Tropical restaurant closing, one Pollo Tropical franchised
restaurant opening, one Company-owned Taco Cabana restaurant
opening, and 19 Company-owned Taco Cabana restaurant closings. As
of March 29, 2020, there were 141 Company-owned Pollo Tropical
restaurants, 146 Company-owned Taco Cabana restaurants, 33
franchised Pollo Tropical restaurants in the U.S., Puerto Rico,
Panama, Guyana, Ecuador and the Bahamas, and eight franchised Taco
Cabana restaurants in the U.S.
Share Repurchase Activity
We repurchased 500,000 shares of common stock valued at
approximately $3.7 million during the three months ended March 29,
2020. The shares repurchased in 2020 were purchased on or before
March 12, 2020.
Full Year 2020 Outlook Withdrawn
On March 19, 2020 we withdrew our full year 2020 outlook for the
53-week period as communicated in our February 26, 2020 earnings
release as we cannot reasonably estimate the impact of COVID-19 on
our business at this time.
Investor Conference Call Today
We will host a conference call at 4:30 p.m. ET today. The
conference call can be accessed live over the phone by dialing
323-794-2423. A replay will be available after the call until
Thursday, May 14 and can be accessed by dialing 412-317-6671. The
passcode is 9821789. 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. The brands
specialize in the operation of fast casual/quick service
restaurants that offer distinct and unique flavors with broad
appeal at a compelling value. The brands feature fresh-made
cooking, drive-thru service and catering. For more information
about Fiesta Restaurant Group, Inc., visit the corporate website at
www.frgi.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 investments in strategic
and sales building initiatives, including those relating to
advertising and marketing, operations improvements, menu
development and simplification, digital ordering and online sales,
catering and third-party delivery and the impact of the recent
COVID-19 outbreak (including without limitation, any potential
non-compliance with our covenants which results in a default under
our senior credit facility and, in such instance, our inability to
procure an amendment or waiver from our lenders or access
alternative financing) 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 Securities and Exchange Commission,
including our Annual Report on Form 10-K for the fiscal year ended
December 29, 2019 and our quarterly reports on Form 10-Q. 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 MONTHS ENDED MARCH 29,
2020 AND MARCH 31, 2019
(In thousands, except share
and per share data)
(Unaudited)
Three Months Ended (a)
March 29, 2020
March 31, 2019
Revenues:
Restaurant sales
$
146,086
$
165,181
Franchise royalty revenues and fees
613
671
Total revenues
146,699
165,852
Costs and expenses:
Cost of sales
46,276
50,510
Restaurant wages and related expenses
(b)
40,495
45,036
Restaurant rent expense
11,339
11,745
Other restaurant operating expenses
21,511
21,763
Advertising expense
5,783
5,521
General and administrative expenses
(b)(c)
14,384
15,071
Depreciation and amortization
9,430
9,548
Pre-opening costs
69
401
Impairment and other lease charges (d)
4,233
(338
)
Closed restaurant rent, net of sublease
income (e)
1,632
1,424
Other expense (income), net (f)
908
702
Total operating expenses
156,060
161,383
Income (loss) from operations
(9,361
)
4,469
Interest expense
961
1,234
Income (loss) before income taxes
(10,322
)
3,235
Provision for income taxes (g)
(3,005
)
946
Net income (loss)
$
(7,317
)
$
2,289
Earnings (loss) per common share:
Basic
$
(0.29
)
$
0.08
Diluted
(0.29
)
0.08
Weighted average common shares
outstanding:
Basic
25,519,247
26,842,704
Diluted
25,519,247
26,845,077
(a)
The Company uses a 52- or 53-week fiscal
year that ends on the Sunday closest to December 31. The
three-month periods ended March 29, 2020 and March 31, 2019 each
included 13 weeks.
(b)
Restaurant wages and related expenses
include stock-based compensation of $36 and $27 for the three
months ended March 29, 2020 and March 31, 2019, respectively.
General and administrative expenses include stock-based
compensation expense of $776 and $765 for the three months ended
March 29, 2020 and March 31, 2019, respectively.
(c)
See notes (f) and (g) 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."
FIESTA RESTAURANT GROUP,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
March 29, 2020
December 29, 2019
Assets
Cash
$
4,009
$
13,413
Other current assets
30,846
25,870
Property and equipment, net
203,042
211,944
Operating lease right-of-use assets
255,810
251,272
Goodwill
56,307
56,307
Other assets
9,016
9,835
Total assets
$
559,030
$
568,641
Liabilities and Stockholders'
Equity
Current liabilities
$
58,772
$
63,620
Long-term debt, net of current portion
72,783
76,823
Operating lease liabilities
262,117
256,798
Deferred tax liabilities
8,971
4,759
Other non-current liabilities
8,384
8,405
Total liabilities
411,027
410,405
Stockholders' equity
148,003
158,236
Total liabilities and stockholders'
equity
$
559,030
$
568,641
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)
Three Months Ended
March 29, 2020
March 31, 2019
Segment revenues:
Pollo Tropical
$
86,125
$
91,481
Taco Cabana
60,574
74,371
Total revenues
$
146,699
$
165,852
Change in comparable restaurant sales
(a):
Pollo Tropical
(7.3
)%
(2.6
)%
Taco Cabana
(13.5
)%
(0.5
)%
Average sales per Company-owned
restaurant:
Pollo Tropical
Comparable restaurants (b)
$
614
$
670
New restaurants (c)
469
439
Total Company-owned (d)
607
655
Taco Cabana
Comparable restaurants (b)
$
410
$
459
New restaurants (c)
333
435
Total Company-owned (d)
406
457
Income (loss) before income taxes:
Pollo Tropical
$
(1,827
)
$
5,956
Taco Cabana
(8,495
)
(2,721
)
Adjusted EBITDA:
Pollo Tropical
$
8,780
$
14,317
Taco Cabana
(907
)
2,895
Restaurant-level Adjusted EBITDA (e):
Pollo Tropical
$
15,434
$
21,169
Taco Cabana
5,284
9,464
(a)
Restaurants are included in comparable
restaurant sales after they have been open for 18 months or
longer.
(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 for the applicable
segment by the average number of comparable restaurants for the
applicable segment for such period.
(c)
New restaurants are restaurants that have
been open for less than 18 months. Average sales for new
Company-owned restaurants are derived by dividing new restaurant
sales for such period for the applicable segment by the average
number of new restaurants for the applicable segment for such
period.
(d)
Average sales for total Company-owned
restaurants are derived by dividing restaurant sales for such
period for the applicable segment by the average number of open
restaurants for the applicable segment for such period.
(e)
Restaurant-level Adjusted EBITDA is a
non-GAAP financial measure. Please see the reconciliation from net
income (loss) to Restaurant-level Adjusted EBITDA 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
March 29, 2020
March 31, 2019
Company-owned restaurant openings:
Pollo Tropical
—
—
Taco Cabana
1
2
Total new restaurant openings
1
2
Company-owned restaurant closings:
Pollo Tropical
(1
)
—
Taco Cabana
(19
)
—
Net change in restaurants
(19
)
2
Number of Company-owned restaurants:
Pollo Tropical
141
139
Taco Cabana
146
164
Total Company-owned restaurants
287
303
Number of franchised restaurants:
Pollo Tropical
33
31
Taco Cabana
8
8
Total franchised restaurants
41
39
Total number of restaurants:
Pollo Tropical
174
170
Taco Cabana
154
172
Total restaurants
328
342
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
March 29, 2020
March 31, 2019
Pollo Tropical:
(a)
(a)
Restaurant sales
$
85,721
$
91,026
Cost of sales
27,731
32.4
%
28,298
31.1
%
Restaurant wages and related expenses
21,037
24.5
%
21,153
23.2
%
Restaurant rent expense
5,640
6.6
%
5,421
6.0
%
Other restaurant operating expenses
12,386
14.4
%
11,958
13.1
%
Advertising expense
3,504
4.1
%
3,032
3.3
%
Depreciation and amortization
5,278
6.2
%
5,213
5.7
%
Pre-opening costs
—
—
%
86
0.1
%
Impairment and other lease charges
3,696
4.3
%
(379
)
(0.4
)%
Closed restaurant rent expense, net of
sublease income
602
0.7
%
1,144
1.3
%
Taco Cabana:
Restaurant sales
$
60,365
$
74,155
Cost of sales
18,545
30.7
%
22,212
30.0
%
Restaurant wages and related expenses
19,458
32.2
%
23,883
32.2
%
Restaurant rent expense
5,699
9.4
%
6,324
8.5
%
Other restaurant operating expenses
9,125
15.1
%
9,805
13.2
%
Advertising expense
2,279
3.8
%
2,489
3.4
%
Depreciation and amortization
4,152
6.9
%
4,335
5.8
%
Pre-opening costs
69
0.1
%
315
0.4
%
Impairment and other lease charges
537
0.9
%
41
0.1
%
Closed restaurant rent expense, net of
sublease income
1,030
1.7
%
280
0.4
%
(a)
Percent of restaurant sales for the
applicable segment.
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 Restaurant-level Adjusted
EBITDA are non-GAAP financial measures. Adjusted EBITDA is defined
as earnings (loss) attributable to the applicable operating
segments before interest expense, income taxes, depreciation and
amortization, impairment and other lease charges, goodwill
impairment, closed restaurant rent expense, net of sublease income,
stock-based compensation expense, other expense (income), net, and
certain significant items for each segment 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.
Adjusted EBITDA for each of our segments includes an allocation of
general and administrative expenses associated with administrative
support for executive management, information systems and certain
finance, legal, supply chain, human resources, construction and
other administrative functions. Restaurant-level Adjusted EBITDA is
defined as Adjusted EBITDA excluding franchise royalty revenues and
fees, pre-opening costs and general and administrative expenses
(including corporate-level general and administrative
expenses).
Adjusted EBITDA for each of our segments is the primary measure
of segment profit or loss used by our chief operating decision
maker for purposes of allocating resources to our segments and
assessing their 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
Pollo Tropical
Taco Cabana
Consolidated
March 29, 2020:
Net loss
$
(7,317
)
Benefit from income taxes
(3,005
)
Loss before taxes
$
(1,827
)
$
(8,495
)
$
(10,322
)
Add:
Non-general and administrative expense
adjustments:
Depreciation and amortization
5,278
4,152
9,430
Impairment and other lease charges
3,696
537
4,233
Interest expense
483
478
961
Closed restaurant rent expense, net of
sublease income
602
1,030
1,632
Other expense (income), net
107
801
908
Stock-based compensation expense in
restaurant wages
11
25
36
Total non-general and administrative
expense adjustments
10,177
7,023
17,200
General and administrative expense
adjustments:
Stock-based compensation expense
310
466
776
Digital and brand repositioning costs
120
99
219
Total general and administrative expense
adjustments
430
565
995
Adjusted EBITDA
$
8,780
$
(907
)
$
7,873
Restaurant-level adjustments:
Add: Pre-opening costs
—
69
69
Add: Other general and administrative
expense(1)
7,058
6,331
13,389
Less: Franchise royalty revenue and
fees
404
209
613
Restaurant-level Adjusted EBITDA
$
15,434
$
5,284
$
20,718
March 31, 2019:
Net income
$
2,289
Provision for income taxes
946
Income (loss) before taxes
$
5,956
$
(2,721
)
$
3,235
Add:
Non-general and administrative expense
adjustments:
Depreciation and amortization
5,213
4,335
9,548
Impairment and other lease charges
(379
)
41
(338
)
Interest expense
656
578
1,234
Closed restaurant rent expense, net of
sublease income
1,144
280
1,424
Other expense (income), net
596
106
702
Stock-based compensation expense in
restaurant wages
5
22
27
Total non-general and administrative
expense adjustments
7,235
5,362
12,597
General and administrative expense
adjustments:
Stock-based compensation expense
577
188
765
Restructuring costs and retention
bonuses
549
66
615
Total general and administrative expense
adjustments
1,126
254
1,380
Adjusted EBITDA
$
14,317
$
2,895
$
17,212
Restaurant-level adjustments:
Add: Pre-opening costs
86
315
401
Add: Other general and administrative
expense(1)
7,221
6,470
13,691
Less: Franchise royalty revenue and
fees
455
216
671
Restaurant-level Adjusted EBITDA
$
21,169
$
9,464
$
30,633
(1)
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 and related adjusted diluted earnings per
share are non-GAAP financial measures. Adjusted net income is
defined as net income (loss) before impairment and other lease
charges, goodwill impairment, closed restaurant rent expense, net
of sublease income, other expense (income), net, board and
shareholder matter costs, restructuring costs and retention
bonuses, certain legal settlements and related costs 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
March 29, 2020
March 31, 2019
Loss Before Income
Taxes
Benefit From Income Taxes
(a)
Net Loss
Diluted EPS
Income Before Income
Taxes
Provision For Income Taxes
(a)
Net Income
Diluted EPS
Reported - GAAP
$
(10,322
)
$
(3,005
)
$
(7,317
)
$
(0.29
)
$
3,235
$
946
$
2,289
$
0.08
Adjustments:
Non-general and administrative expense
adjustments:
Income tax due to tax law change (a)
—
1,603
(1,603
)
(0.06
)
—
—
—
—
Deferred tax asset valuation allowance
(b)
—
(703
)
703
0.03
—
—
—
—
Impairment and other lease charges (c)
4,233
1,012
3,221
0.13
(338
)
(83
)
(255
)
(0.01
)
Closed restaurant rent expense, net of
sublease income (d)
1,632
390
1,242
0.05
1,424
349
1,075
0.04
Other expense (income), net (e)
908
217
691
0.03
702
172
530
0.02
Total non-general and administrative
expense
6,773
2,519
4,254
0.17
1,788
438
1,350
0.05
General and administrative expense
adjustments:
Restructuring costs and retention bonuses
(f)
—
—
—
—
615
151
464
0.02
Digital and brand repositioning costs
(g)
219
52
167
0.01
—
—
—
—
Total general and administrative
expense
219
52
167
0.01
615
151
464
0.02
Adjusted - Non-GAAP
$
(3,330
)
$
(434
)
$
(2,896
)
$
(0.11
)
$
5,638
$
1,535
$
4,103
$
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 23.9% and
24.5% for the periods ending March 29, 2020, and March 31, 2019,
respectively. For fiscal years beginning January 1, 2018, our
federal statutory tax rate is 21% as a result of the enactment of
the Tax Cuts and Jobs Act (the "Act") in December 2017. We recorded
a $1.8 million tax benefit related to prior year net operating
losses as a result of a provision in the CARES Act that allows net
operating losses from 2018–2020 to be carried back for five
years.
(b)
We recorded an additional $0.7 million
valuation allowance for the three months ended March 29, 2020,
against deferred income tax assets where it was determined to be
more likely than not that the deferred income tax assets will not
be realized through the reversal of existing deferred tax
liabilities.
(c)
Impairment and other lease charges for the
three months ended March 29, 2020, consist of impairment charges of
$4.2 million. The impairment charges primarily relate to two
underperforming Taco Cabana restaurants and three underperforming
Pollo Tropical restaurants that we continue to operate.
Impairment and other lease charges for the
three months ended March 31, 2019, primarily consist of impairment
charges of $0.4 million and a lease charge recoveries benefit
related to closed restaurant lease terminations of $(0.7) million.
The impairment charges primarily related to equipment from
previously impaired restaurants.
(d)
Closed restaurant rent expense, net of
sublease income for the three months ended March 29, 2020,
primarily consists of closed restaurant lease costs of $2.9 million
partially offset by sublease income of $(1.2) million. Closed
restaurant rent expense, net of sublease income for the three
months ended March 31, 2019, primarily consists of closed
restaurant lease costs of $2.2 million partially offset by sublease
income of $(0.7) million.
(e)
Other expense (income), net for the three
months ended March 29, 2020, primarily consists of costs for the
removal, transfer, and storage of equipment from closed restaurants
and other closure related costs of $0.9 million. Other expense
(income), net for the three months ended March 31, 2019, primarily
consists of costs for the removal, transfer, and storage of
equipment from closed restaurants of $0.5 million.
(f)
Restructuring costs and retention bonuses
for the three months ended March 31, 2019, include severance costs
related to eliminated positions.
(g)
Digital and brand repositioning costs for
the three months ended March 29, 2020, include consulting costs
related to repositioning the digital experience for our
customers.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200507005998/en/
Investor Relations Contact: Raphael Gross 203-682-8253
investors@frgi.com
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