Carrols Restaurant Group, Inc. (
Q4 2011 Earnings Call
February 28, 2012, 8:30 a.m. ET
Paul Flanders – VP and CFO
Dan Accordino – President and COO
Tim Taft – CEO, Fiesta Restaurant Group, Inc.
(Resava Habada) – Barclays Capital
Kevin Mcclure – Wells Fargo Securities
Karen Eldridge – Goldman Sachs
Brian Porcaro – Raymond James
Ken Bann – Jefferies & Co
Clive Rowe – Oskie Capital
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Good morning, ladies and gentlemen, and thank you for standing by, and welcome to the Carrols’ Restaurant Group Incorporated fourth quarter 2011 earnings conference call. At this time, all participants are in a listen-only mode. Following the presentation, there will be a question and answer session and instructions will be given at that time. (Operator instructions).
And as a reminder, this call is being recorded today, February 28, 2012.
I would now like to turn the call over to the company’s Chief Financial Officer, Paul Flanders. Please go ahead, sir.
Good morning, everyone. By now you should have access to the announcement that we released earlier this morning, which can also be found on our website at
under the Investor Relations section.
Before I begin our formal remarks, I want to remind everyone that our discussion today may include forward-looking statements. These forward-looking statements may include comments regarding our strategies, intentions or plans, including, without limitation, our spin-off transaction of Fiesta Restaurant Group.
These statements do not guarantee the future performance and therefore, undue reliance should not be placed on them. We also refer you to our filings with the SEC for a more detailed discussion of risks that could impact our business and financial results.
On the call with me today is Dan Accordino, CEO of Carrols Restaurant Group and Tim Taft, CEO of Fiesta Restaurant Group. I’ll now turn the call over to Dan.
Good morning. I wanted to start by making a comment regarding the Form 8-K that was filed this morning. As you are aware, Alan Vituli retired and resigned as CEO of Carrols Restaurant Group on December 31, 2011. And on January 16, 2012, retired and resigned as a Director and as Chairman of the Carrols Board of Directors.
Yesterday, February 27, the Board appointed Jack Smith to replace Alan Vituli as the Non-Executive Chairman of Fiesta Board of Directors. Jack is currently a member of the Carrols’ Board of Directors and is the Chairman of it’s audio committee and is also a member of the Fiesta Board of Directors.
Jack founded The Sports Authority, a national sporting goods chain, in 1987 and served as it’s CEO until September of 1998 and as it’s Chairman until April, 1999. Prior to that, he was Chief Operating Officer for Herman’s Sporting Goods and also held executive positions with a number of other major retailers over his career.
In addition, Jack served on the Board of Directors for Darden Restaurants and as the Chairman of the Darden Audio Committee from 1995 to 2009.
In appointing Jack Smith, the Carrols Board of Director concluded that with the spin off nearly complete, that this leadership change at the Board level was consistent with its continuing succession planning and would facilitate Tim Taft’s ability to lead Fiesta as it starts it’s journey as an independent public company.
I know want to give you an update on the pending spin off of Fiesta Restaurant Group, the parent company of Pollo Tropical and Taco Cabana. Unfortunately, from a timing perspective, we weren’t able to get the Fiesta registration effective before our third quarter financials went stale in mid-February. However, we have cleared most of the SEC comments received thus far and will proceed to refile the Fiesta Form 10 with the year-end financial statements as quickly as possible after filing our Form 10-K with the SEC next week.
In early February, we received the favorable private letter ruling from the IRS, so as soon as we can get the registration effective, we’ll proceed to set the record date for the distribution and effect the spin off. We believe that it will likely be early to mid-April when this is completed. AT this point, the spin off primarily remains subject only to final Board approval, effectiveness of the Fiesta stock registration and the SEC and final listing approval from NASDAQ.
In terms of our financial results for 2011, total revenues increased 3.3% to 822.5 million in 2011 with revenues for Fiesta increasing 8.2% to 475 million, while our Burger King revenues decreased 2.7% to 347 million.
Net income for the full year was 11.2 million in 2011, or $0.51 per diluted share compared to 11.9 million in 2010 or $0.55 per diluted share. Both years included certain charges in non-recurring items that in the aggregated reduced earnings by $0.25 per share in 2011 and $0.21 per share in 2010. These are detailed in the press release.
Turning to the fourth quarter, I’ll begin by discussing our Burger King business and then turn it over to Tim to cover the Fiesta business.
We continue to be encouraged by the revenue growth at our Burger King restaurants; albeit, still at a somewhat moderate rate. Comparable restaurant sales increased 1.5%, marking the second consecutive quarter of positive same-store sales.
This improvement was driven by favorable mix shifts, including a continuation of better balancing of our value products and promotions and to some degree, higher pricing. Although customer traffic remains slightly negative for the quarter, we have experienced sequential improvement in these trends throughout the year.