Second Quarter 2023 Comparable Restaurant Sales
Growth of 9.6% vs. Second Quarter 2022
Second Quarter 2023 Positive Comparable
Transaction Growth of 3.6% vs. Second Quarter 2022
Fiesta Restaurant Group, Inc. ("Fiesta" or the "Company")
(NASDAQ: FRGI), parent company of the Pollo Tropical® restaurant
brand, today reported results for the 13-week second quarter, which
ended on July 2, 2023 and provided a business update related to
current operations.
As announced separately today, the Company has entered into a
definitive agreement to be acquired by affiliates of Garnett
Station Partners for $8.50 per share in cash. Please see our press
release and 8-K filed today for additional details.
Fiesta President and Chief Executive Officer Dirk Montgomery
said, "Our focus on building traffic resulted in year-over-year
comparable transaction growth of 3.6% and comparable sales growth
of 9.6%. The growth initiatives we shared previously have improved
our traffic growth, which continued into July with comparable
transaction growth of 3.9%.”
Montgomery added, “We delivered across all four of our
previously identified key initiatives – all of which are aimed at
creating growth across our business by increasing traffic and
driving margin expansion. As a reminder, the initiatives are: 1)
Building operations excellence; 2) Creating a great guest
experience across all channels; 3) Enhancing the Pollo Tropical
brand; and 4) Developing great teams. As a result of those
initiatives, we made progress compared to the first quarter in key
metrics including improved speed of service, higher guest
satisfaction and reduced hourly and management turnover. We have
also seen the impact of G&A expense efficiency initiatives,
which resulted in our second quarter G&A expense coming in well
below the second quarter of 2022 and the first quarter of 2023. We
are making real progress toward our targeted G&A expense run
rate of 8.5% to 9.0% of restaurant sales and expect that progress
to continue over the remainder of 2023.”
Montgomery continued, "Second quarter 2023 income from
operations was $4.1 million and 3.9% of restaurant sales compared
to a loss from operations in the second quarter 2022 of $(5.3)
million and (5.4%) of restaurant sales. The increase in income from
operations was primarily driven by increased restaurant sales and
higher Restaurant-level Operating Profit compared to the second
quarter 2022. Second quarter Restaurant-level Operating Profit(1),
a non-GAAP financial measure, increased 20% from the first quarter
of 2022 and was well above the second quarter of 2022, driven by
our comparable restaurant sales growth and margin improvement
actions.”
Montgomery further commented, “Second quarter Restaurant-level
Operating Profit Margins improved to 19.3%, reflecting our strong
comparable transaction growth and phased pricing actions in 2022
and March 2023. Second quarter 2023 margins benefitted from lower
than expected advertising expense due to timing shifts. We expect
second half 2023 advertising expense to be above the second quarter
2023 levels with full year 2023 advertising expense as a percentage
of sales of 3.5%. In addition, second quarter workers compensation
expense was below historic run rates and is expected to trend back
to historic levels. After taking into account those favorable items
in the second quarter, we are pleased that our Restaurant-level
Operating Margin exceeded our targeted level of 18% or more, and we
will continue to target Restaurant-level Operating Profit Margins
of 18.0% or greater through ongoing transaction growth and margin
improvement initiatives."
Montgomery concluded, "We are proud of our progress in the
second quarter, and will continue to focus on driving traffic and
margins during the remainder of 2023."
_____________________________
- 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 in the second
quarter of 2023 from $98.5 million in the second quarter of
2022;
- 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, or $0.15 per diluted share, in the
second quarter of 2023, compared to net loss of $(6.2) million, or
$(0.25) per diluted share, in the second quarter of 2022;
- Net income from continuing operations of $3.8 million, or $0.15
per diluted share, in the second quarter of 2023, compared to net
loss from continuing operations of $(6.5) million, or $(0.26) per
diluted share, in the second quarter of 2022;
- Adjusted net income (a non-GAAP financial measure) of $4.9
million, or $0.19 per diluted share, in the second quarter of 2023,
compared to adjusted net loss of $(3.3) million, or $(0.14) per
diluted share, in the second quarter of 2022 (see non-GAAP
reconciliation table below);
- Consolidated Adjusted EBITDA (a non-GAAP financial measure) of
$11.1 million in the second quarter of 2023 compared to $5.7
million in the second quarter of 2022 (see non-GAAP reconciliation
table below);
- Income from Operations of $4.1 million, or 3.9% of restaurant
sales, in the second quarter of 2023 compared to a loss from
operations of $(5.3) million, or (5.4)% of restaurant sales, in the
second quarter of 2022; and
- Restaurant-level Operating Profit (formerly Restaurant-level
Adjusted EBITDA, a non-GAAP financial measure) of $20.6 million, or
19.3% of Pollo Tropical restaurant sales, in the second quarter of
2023 compared to $14.9 million, or 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 April
Fiscal May
Fiscal June
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 channel mix and
pricing
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 $3.6 million in restricted cash, our cash balance
increased from $30.1 million at April 2, 2023 to $34.7 million at
July 2, 2023 primarily due to an increase in Consolidated Adjusted
EBITDA and the receipt of insurance proceeds related to the Texas
winter storm in 2021 for Taco Cabana. We expect to continue to
generate positive operating cash flows and increase our cash
balance through the balance of the year through traffic growth and
margin improvement.
Second Quarter Pollo Tropical Results
Total Pollo Tropical restaurant sales increased 8.8% to $106.6
million in the second quarter of 2023 compared to $98.0 million in
the second quarter of 2022 primarily due to a comparable restaurant
sales increase of 9.6%. The increase in comparable restaurant sales
resulted from a net impact of pricing and product/channel mix of
6.0% and an increase in comparable restaurant transactions of 3.6%.
The increase in pricing and product/channel mix was driven
primarily by menu price increases of 9.9% and increases in dine-in
and delivery average check. Pollo Tropical dine-in and counter
take-out comparable restaurant sales increased from the second
quarter of 2022 to the second quarter of 2023 driven primarily by
increased transactions as more customers continue to move back to
dine-in. Delivery growth continued to be strong in the second
quarter of 2023, with 20.7% comparable restaurant sales growth vs.
the second quarter of 2022 and average check growth of 5.3% vs. the
second quarter of 2022.
Comparable Restaurant Sales
Mix by Channel - Pollo Tropical
Channel
Second Quarter 2023
% of Total
Second Quarter
2022
% of Total
($ 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 $3.9 million in the second quarter of
2023 from net loss of $(6.2) million in the second quarter of 2022.
This was primarily due to higher restaurant sales, timing in
advertising expense, and higher Restaurant-level Operating Profit.
Full year 2023 advertising expense is targeted to be approximately
3.5% of restaurant sales. In addition, second quarter 2023 workers
compensation expense as a percentage of sales was approximately 40
basis points below 2022 and first quarter 2023 historical run
rates. We expect future claims to trend toward historical levels.
Consolidated Adjusted EBITDA (a non-GAAP financial measure)
increased to $11.1 million in the second quarter of 2023 from $5.7
million in the second quarter of 2022. The increase was primarily
due to the impact of higher restaurant sales partially offset by
higher insurance costs, as well as higher commodity costs within
cost of sales.
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 5.0%
increase in March 2022, a 1.4% increase in June 2022, a 4.0%
increase in September 2022, and a 5.0% increase in March 2023. As a
result of the phased approach to menu price increases, margin
improvement has been trailing the impact of cost increases, with
improved year over year margin improvement expected to continue
compared to 2022, barring unforeseen changes in our cost structure
and operating environment. Cost of sales margins improved year over
year due to menu price increases, the impact of higher restaurant
sales, and reduced commodity costs as a result of non-recurring
additional chicken costs in 2022 related to utilizing a back-up
supplier from May 2022 to early July 2022 due to a short-term
capacity disruption experienced by our primary chicken
supplier.
Income from Operations of $4.1 million, or 3.9% of restaurant
sales, in the second quarter of 2023 increased compared to loss
from operations of $(5.3) million, or (5.4)% of restaurant sales,
in the second quarter of 2022. Restaurant-level Operating Profit (a
non-GAAP financial measure) as a percentage of restaurant sales
increased, with second quarter Restaurant-level Operating Profit as
a percentage of restaurant sales of 19.3% in the second quarter of
2023 compared to 15.2% in the second quarter of 2022 (see non-GAAP
reconciliation table below).
General and Administrative expenses were $10.7 million for the
second quarter of 2023 and $12.8 million for the second quarter of
2022 and, as a percentage of total revenues decreased to 10.0% in
the second quarter of 2023 from 13.0% in the second quarter of 2022
due primarily to lower employee and other support costs, as well as
lower professional fees and legal costs, coupled with higher total
revenue. General and administrative expenses for the second quarter
of 2023 included $0.4 million in non-recurring expenses comprised
of $0.3 million of professional fees and $0.2 million of general
and administrative efficiency initiative costs. General and
administrative expenses for the second quarter of 2022 included
$1.7 million in non-recurring expenses comprised of $1.2 million of
professional fees, $0.3 million of digital platform costs, and $0.2
million of general and administrative efficiency initiative
costs.
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
U.S., Puerto Rico, Panama, Guyana, and the Bahamas.
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 $0 and $6 for the three months ended July 2, 2023
and July 3, 2022, respectively, and $4 and $13 for the six months
ended July 2, 2023 and July 3, 2022, respectively. General and
administrative expenses include stock-based compensation expense of
$638 and $1,388 for the three months ended July 2, 2023 and July 3,
2022, respectively, and $1,233 and $2,011 for the six months ended
July 2, 2023 and July 3, 2022, respectively.
(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 revenues
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 sales
3.9
%
(5.4
)%
1.0
%
(3.5
)%
Restaurant-level Operating Profit as a
percentage of restaurant sales
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 Before Income
Taxes
Provision For Income Taxes
(a)
Net Income
Diluted EPS
Loss Before Income
Taxes
Provision For Income Taxes
(a)
Net Loss
Diluted EPS
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 Before Income
Taxes
Provision For Income Taxes
(a)
Net Income
Diluted EPS
Loss Before Income
Taxes
Provision For Income Taxes
(a)
Net Loss
Diluted EPS
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 24.9% for both periods ending
July 2, 2023 and July 3, 2022.
(b) Impairment and other lease charges (recoveries) for the
three and six months ended July 2, 2023 consist of impairment
charges of $1.4 million and other lease charges from lease
terminations of $1.5 million. The impairment charges for the three
and six months ended July 2, 2023 relate to the impairment of
assets from four Pollo Tropical restaurants. Impairment and other
lease charges (recoveries) for the three and six months ended July
3, 2022 consist of impairment charges of $2.2 million and, for the
six months ended July 3, 2022, gains from lease terminations of
$(0.7) million.
(c) Closed restaurant rent expense, net of sublease income, for
the three months ended July 2, 2023 consists of closed restaurant
lease costs of $2.0 million, net of sublease income of $(1.8)
million. Closed restaurant rent expense, net of sublease income,
for the three months ended July 3, 2022 consists of closed
restaurant lease costs of $2.1 million, net of sublease income of
$(1.7) million. Closed restaurant rent expense, net of sublease
income, for the six months ended July 2, 2023 consists of closed
restaurant lease costs of $4.1 million, net of sublease income of
$(4.1) million. Closed restaurant rent expense, net of sublease
income, for the six months ended July 3, 2022 consists of closed
restaurant lease costs of $4.3 million, net of sublease income of
$(3.6) million.
(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
Fiesta Restaurant (NASDAQ:FRGI)
Historical Stock Chart
From Dec 2024 to Jan 2025
Fiesta Restaurant (NASDAQ:FRGI)
Historical Stock Chart
From Jan 2024 to Jan 2025
