SYRACUSE N.Y. Multiconcept operator Carrols Restaurant Group Inc. on Monday cited cost control, lower interest expense and strong sales at its Burger King units as it reported a big jump in first-quarter net income.
For the quarter ended March 29, Carrols posted net income of $5.0 million, or 23 cents a share, which compares with net income of $1.4 million, or 7 cents a share, in the year-ago period. First-quarter revenue rose 2.9 percent to $201.3 million, the company said.
Carrols is the nation's largest Burger King franchisee with 316 units. The company also operates 153 Taco Cabana restaurants and 90 Pollo Tropical locations.
Contributing to its first-quarter results, Carrols said, were higher revenues from its franchised Burger King units and Taco Cabana division, favorable utility and commodities expenses and a $2.3 million decrease in interest expense associated with its shrinking debt load.
The Syracuse-based company said income from operations for the first quarter increased to $13.2 million from $9.7 million a year earlier.
Same-store sales rose 5.1 at the company's Burger King division, but fell 1.6 percent at Taco Cabana and 3.0 percent at Pollo Tropical, Carrols said.
On a divisional basis, Carrols reported that first-quarter revenue from its Burger King restaurants rose 3.6 percent year-over-year to $94.5 million. Taco Cabana revenue rose 4.1 percent to $62.7 million, primarily on the strength of new restaurant openings. Pollo Tropical revenue fell less than a percent to $44.1 million.
“Although top-line trends at our Hispanic brands continued to reflect the significant pressures on consumer spending, we were pleased by our overall performance and strong earnings growth,” said Alan Vituli, Carrols’ chairman and chief executive. “Guest counts at our Pollo Tropical restaurants, while still negative, did show improvement from the fourth quarter of 2008.”
Vituli said that his company lowered its outstanding debt balance by $6.4 million during the quarter, marking a decrease in debt of $53.1 million since the end of the first quarter of 2008. For the year ended Dec. 31, 2008, the company reported total debt of $316.2 million.
He said that Carrols' “focus on reducing outstanding debt will continue to be a near-term priority.”
Based on its first-quarter results and other factors, Carrols raised its guidance for fiscal 2009 and said it now expects earnings for the year to range between 90 cents and 95 cents a share. That forecast compares with an earlier estimate of full-year earnings that ranged between 75 cents and 80 cents a share. The company said its outlook includes the impact of a 53rd week in fiscal 2009, which is expected to benefit earnings by 7 cents a share. In 2008, the company earned 59 cents a share.
“Although our outlook on consumer spending remains cautious, we are raising our earnings guidance to better reflect the positive impact that cost trends, our continued focus on cost management and lower interest rates are having on profitability,” Vituli said.
Contact Alan J. Liddle at [email protected].