May 13, 2021

Fiesta Restaurant Group, Inc. Reports First Quarter 2021 Results

Improvement in Pollo Tropical and Taco Cabana Comparable Restaurant Sales Compared to Fourth Quarter 2020
Winter Storm Uri had Negative Impact on Taco Cabana Sales and Adjusted EBITDA
Income from Operations was $1.3 Million for the First Quarter of 2021
Pollo Tropical Q1 Adjusted EBITDA % of Total Revenues Increased from 10.2% in Q1 2020 to 13.8% in 2021

DALLAS--(BUSINESS WIRE)-- 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, which ended on April 4, 2021, and provided a business update related to current operations. The Company uses a 52 or 53 week fiscal year ending on the Sunday nearest to December 31. Results for the year ended January 3, 2021 included 53 weeks.

Fiesta President and Chief Executive Officer Richard Stockinger said, “Overall we were pleased with our first quarter sales and profit after considering the impact of Winter Storm Uri on February sales, which negatively affected the entire state of Texas for multiple weeks. Both of our brands showed continued positive momentum in sales trends during the first quarter of 2021 compared to the fourth quarter of 2020, which continued in April. Pollo Tropical first quarter 2021 comparable restaurant sales improved to positive 4.3% compared to the first quarter of 2020 and were -3.3% vs. the first quarter of 2019. Taco Cabana first quarter 2021 comparable restaurant sales improved to -4.3% compared to the first quarter of 2020. We estimate that Winter Storm Uri negatively impacted Taco Cabana first quarter comparable restaurant sales by approximately 480 basis points.”

Stockinger added, “In the first quarter we continued optimizing our operating model to adjust to consumer preferences by making it easier for consumers to enjoy our brands across all channels. We made progress over the quarter improving our drive-thru infrastructure and are making ongoing investments in our digital platform such as enhancements to our geofencing capability to improve curbside speed of service and building an enhanced, digital drive thru experience. We expect these initiatives to drive accelerated sales growth as they reach full implementation.”

Stockinger continued, “We continue to maintain strong margins at both brands. First quarter 2021 income from operations was $1.3 million compared to a loss from operations in the first quarter of 2020. Consolidated Adjusted EBITDA, a non-GAAP measure(1), was $12.9 million or 8.9% of total revenues, which includes the estimated negative impact of Winter Storm Uri of approximately $1.9 million, and increased 63% compared to the first quarter of 2020. We estimate that Winter Storm Uri negatively impacted Consolidated Adjusted EBITDA as a percentage of total revenues by approximately 110 basis points. Both brands grew Restaurant-level Adjusted EBITDA, a non-GAAP measure(1), as a percentage of sales to above first quarter 2020 levels. Pollo Tropical grew restaurant-level margin from 18.0% in the first quarter of 2020 to 21.4% in the first quarter of 2021. Taco Cabana grew restaurant-level margin from 8.8% in the first quarter of 2020 to 11.3% in the first quarter of 2021, which includes the estimated negative impact of Winter Storm Uri of approximately 270 basis points.”

Stockinger concluded, “We will continue to concentrate on non-dine-in trade channels to match the evolving changes in customer behavior, and will focus on creating a great guest experience across all channels. Our investments in our digital platform will continue throughout 2021. We are optimistic about the remainder of 2021 and believe that our growth initiatives will continue to build momentum and accelerate sales growth over the balance of the year.”

(1)

See non-GAAP reconciliation table below.

First Quarter 2021 Financial Summary

  • Total revenues decreased 1.3% to $144.7 million in the first quarter of 2021 from $146.7 million in the first quarter of 2020;
  • Comparable restaurant sales at Pollo Tropical increased 4.3%. Compared to the same fiscal period in 2019, comparable restaurant sales for Pollo Tropical decreased 3.3%;
  • Comparable restaurant sales at Taco Cabana decreased 4.3%. Compared to the same fiscal period in 2019, comparable restaurant sales for Taco Cabana decreased 17.1%;
  • A net loss of $(2.1) million, or $(0.08) per diluted share, in the first quarter of 2021, compared to a net loss of $(7.3) million, or ($0.29) per diluted share, in the first quarter of 2020;
  • Adjusted net income (a non-GAAP financial measure) of $0.2 million, or $0.01 per diluted share, in the first quarter of 2021, compared to adjusted net loss of $(2.9) million, or $(0.11) per diluted share, in the first quarter of 2020 (see non-GAAP reconciliation table below);
  • Adjusted EBITDA for Pollo Tropical of $12.2 million in the first quarter of 2021 compared to $8.8 million in the first quarter of 2020;
  • Restaurant-level Adjusted EBITDA (a non-GAAP financial measure) for Pollo Tropical of $18.8 million, or 21.4% of Pollo Tropical restaurant sales, in the first quarter of 2021 compared to $15.4 million, or 18.0% of Pollo Tropical restaurant sales, in the first quarter of 2020 (see non-GAAP reconciliation table below);
  • Adjusted EBITDA for Taco Cabana of $0.7 million in the first quarter of 2021 compared to $(0.9) million in the first quarter of 2020;
  • Restaurant-level Adjusted EBITDA (a non-GAAP financial measure) for Taco Cabana of $6.4 million, or 11.3% of Taco Cabana restaurant sales, in the first quarter of 2021 compared to $5.3 million, or 8.8% of Taco Cabana restaurant sales, in the first quarter of 2020 (see non-GAAP reconciliation table below). The negative impact of Winter Storm Uri on Restaurant-level Adjusted EBITDA is estimated at approximately $1.9 million, or 2.7% of Taco Cabana restaurant sales;
  • Consolidated Adjusted EBITDA (a non-GAAP financial measure) of $12.9 million in the first quarter of 2021 compared to Consolidated Adjusted EBITDA of $7.9 million in the first quarter of 2020 (see non-GAAP reconciliation table below). First quarter 2021 results include the estimated negative impact of Winter Storm Uri of approximately $1.9 million, as well as COVID-related costs of $0.5 million including COVID testing and quarantine pay; and
  • Provision for income taxes in the first quarter of 2021 includes a one-time $1.5 million out-of-period adjustment related to tax depreciation on certain assets placed into service several years prior to the formation of Fiesta in 2011. The adjustment was made after performing a review to identify affected assets. The impact on the provision for income taxes is primarily related to the valuation allowance on our deferred income tax assets as well as the effect of the change in the federal corporate income tax rate in 2017 on our deferred tax assets and liabilities.

First Quarter 2021 Comparable Restaurant Sales

 

Fourth
Quarter 2020

Fiscal
January

Fiscal
February

Fiscal
March

First
Quarter 2021

Fiscal
April

Pollo Tropical

2021 vs. 2020

-8.2%

-3.9%

-5.7%

28.9%

4.3%

94.4%

2021 vs. 2019

 

-3.1%

-5.4%

-1.7%

-3.3%

-1.4%

Taco Cabana

2021 vs. 2020

-10.0%

-6.7%

-25.1%

22.0%

-4.3%

26.5%

2021 vs. 2019

 

-15.4%

-31.5%

-5.0%

-17.1%

-6.5%

  • The fourth quarter ended January 3, 2021, contained 14 weeks. Fourth quarter 2020 comparable restaurant sales exclude the extra week in fiscal fourth quarter 2020 and are reported on a 13-week basis.
  • As a result of the 53rd week in fiscal 2020, our 2021 fiscal year began one week later than our 2020 fiscal year. Changes in comparable restaurant sales are impacted by the shift in weeks as the thirteen weeks ended April 4, 2021, are not directly comparable on a calendar basis to the thirteen weeks ended March 29, 2020.
  • First quarter 2021 comparable restaurant sales at Taco Cabana were negatively impacted by Winter Storm Uri in 2021 by approximately 480 basis points. Taco Cabana Cinco de Mayo holiday sales per unit in May were at the second highest level in ten years and above both holiday sales levels in 2020 and 2019.

Cash and Liquidity

  • At the end of the first quarter of 2021, we had $59.0 million in cash, $3.8 million in restricted cash and $73.3 million in outstanding debt, which includes $71.5 million of term loan borrowings under our new senior credit facility and $1.8 million in finance lease obligations. Our outstanding term loan borrowings under our new senior credit facility are net of unamortized debt issuance costs and original issue discount totaling $3.3 million.
  • In the first quarter our cash balance grew from the fourth quarter balance of $50.0 million at January 3, 2021 to $59.0 million. Net debt, a non-GAAP financial measure(2), decreased from $23.3 million at the end of the fourth quarter on January 3, 2021 to $14.2 million at the end of the first quarter on April 4, 2021.
  • We sold two properties in sale-leaseback transactions for total proceeds of $3.1 million and net gains of $0.3 million in the first quarter of 2021.

First Quarter 2021 Brand Results

Total Pollo Tropical restaurant sales increased 2.5% to $87.8 million in the first quarter of 2021 compared to $85.7 million in the first quarter of 2020 primarily due to a comparable restaurant sales increase of 4.3%, partially offset by restaurant closures. Pollo Tropical dine-in and counter take out comparable restaurant sales decreased 39% from the first quarter of 2020 to the first quarter of 2021 due primarily to the negative impact of the pandemic on dine-in traffic and closures of our dining rooms during a portion of the first quarter of 2021. The decrease in dine in channel sales was offset by off-premise channel growth. First quarter drive-thru comparable restaurant sales increased 29% compared to the first quarter of 2020, while first quarter delivery comparable restaurant sales more than doubled compared to the first quarter of 2020. The increase in comparable restaurant sales resulted from a net impact of product/channel mix and pricing of 13.4%, which was partially offset by a decrease in comparable restaurant transactions of 9.1%. The increase in product/channel mix and pricing was driven primarily by increases in delivery, online and drive-thru average check and sales channel penetration, and menu price increases of 1.2%.

(2)

We define net debt as long-term debt, including current portion of long-term debt, as reported in our balance sheet less unrestricted cash as reported in our balance sheet, which were $73.3 million and $59.0 million, respectively, as of April 4, 2021 and $73.3 million and $50.0 million, respectively, as of January 3, 2021. Net debt is a non-GAAP measures which we believe assist investors in understanding of our management of our overall liquidity and financial flexibility.

 

 

Comparable Restaurant Sales Mix by Channel - Pollo Tropical

Channel

 

First Quarter
2021(1)

 

% of Total

 

First Quarter
2020

 

% of Total

 

First Quarter
2019

 

% of Total

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Counter(2)

 

$

22,742

 

 

26

%

 

$

37,460

 

 

45

%

 

$

44,044

 

 

49

%

Drive-thru

 

51,924

 

 

60

%

 

40,186

 

 

48

%

 

42,929

 

 

48

%

Delivery

 

8,818

 

 

10

%

 

3,263

 

 

4

%

 

786

 

 

1

%

Online

 

2,902

 

 

3

%

 

1,680

 

 

2

%

 

1,011

 

 

1

%

Catering

 

668

 

 

1

%

 

907

 

 

1

%

 

544

 

 

1

%

Total

 

$

87,054

 

 

100

%

 

$

83,496

 

 

100

%

 

$

89,314

 

 

100

%

(1) First quarter 2021 comparable restaurant sales based on the comparable first quarter 2020 restaurants.

(2) Counter sales include dine-in and counter take out sales.

Adjusted EBITDA for Pollo Tropical increased to $12.2 million in the first quarter of 2021 from $8.8 million in the first quarter of 2020, an increase of 38.9%. The increase was primarily due to the impact of higher restaurant sales, improved cost of sales margins, lower restaurant wages and related expenses as a percentage of restaurant sales, and lower advertising expenses, partially offset by higher delivery fee expense. Pollo Tropical incurred incremental costs related to COVID-19 of $0.3 million for the quarter including quarantine pay and costs related to COVID testing. Restaurant wages and related expenses decreased as a percentage of restaurant sales, primarily driven by efficiency initiatives and labor shortages. Driven by operating model optimization and cost management efforts, first quarter Adjusted EBITDA as a percentage of total revenues increased from 10.2% in 2020 to 13.8% in 2021. Restaurant-level Adjusted EBITDA as a percentage of restaurant sales continues to be strong, with first quarter Restaurant-level Adjusted EBITDA as a percentage of restaurant sales of 21.4% in 2021 compared to 18.0% in 2020 and 23.3% in 2019.

Taco Cabana restaurant sales decreased 6.7% to $56.3 million in the first quarter of 2021 from $60.4 million in the first quarter of 2020 due primarily to a comparable restaurant sales decrease of 4.3%, including the estimated negative impact of Winter Storm Uri of approximately 4.8%, and a decrease in sales related to closed restaurants. Taco Cabana dine-in and counter take out comparable restaurant sales decreased 64% from the first quarter of 2020 to the first quarter of 2021 due to the negative impact of the pandemic on dine-in traffic and closures of our dining rooms during a portion of the first quarter. The decrease in dine-in channel sales was partially offset by significant off-premise channel growth. First quarter drive-thru comparable restaurant sales increased 22% compared to the first quarter of 2020, while first quarter delivery comparable restaurant sales more than doubled compared to the first quarter of 2020. The decrease in comparable restaurant sales resulted from a decrease in comparable restaurant transactions of 15.9% and an increase in the net impact of product/channel mix and pricing of 11.6%. The increase in product/channel mix and pricing was driven primarily by increases in drive-thru and delivery sales channel penetration, growth in average check for drive-thru versus last year due in part to an increase in transactions that include alcohol, and menu price increases of 2.1%.

 

 

Comparable Restaurant Sales Mix by Channel - Taco Cabana

Channel

 

First Quarter
2021(1)

 

% of Total

 

First Quarter
2020

 

% of Total

 

First Quarter
2019

 

% of Total

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Counter(2)

 

$

7,234

 

 

13

%

 

$

20,134

 

 

34

%

 

$

27,527

 

 

41

%

Drive-thru

 

42,800

 

 

77

%

 

35,100

 

 

60

%

 

37,765

 

 

57

%

Delivery

 

4,087

 

 

7

%

 

1,604

 

 

3

%

 

346

 

 

1

%

Online

 

1,347

 

 

2

%

 

1,259

 

 

2

%

 

1,086

 

 

1

%

Catering

 

506

 

 

1

%

 

409

 

 

1

%

 

 

 

%

Total

 

$

55,974

 

 

100

%

 

$

58,506

 

 

100

%

 

$

66,724

 

 

100

%

(1) First quarter 2021 comparable restaurant sales based on the comparable first quarter 2020 restaurants.

(2) Counter sales include dine-in and counter take out sales.

Adjusted EBITDA for Taco Cabana increased to $0.7 million in the first quarter of 2021 from $(0.9) million in the first quarter of 2020. The increase was primarily due to lower cost of sales and labor costs as a percentage of restaurant sales, lower advertising costs and general and administrative expenses, and the impact of the closure of unprofitable restaurants in the first quarter of 2020, partially offset by lower restaurant sales, including the impact of Winter Storm Uri, and higher delivery fee expense. We estimate that Winter Storm Uri negatively impacted Adjusted EBITDA for Taco Cabana by approximately $1.9 million. Taco Cabana incurred incremental costs related to COVID-19 of $0.2 million for the quarter including quarantine pay and costs related to COVID testing. Restaurant wages and related expenses decreased as a percentage of restaurant sales, primarily driven by efficiency initiatives and labor shortages. Driven by operating model optimization and cost management efforts, first quarter Adjusted EBITDA as a percentage of total revenues increased from (1.5)% in 2020 to 1.2% in 2021 and Restaurant-level Adjusted EBITDA as a percentage of restaurant sales increased from 8.8% in 2020 to 11.3%, which includes the estimated negative impact of Winter Storm Uri of approximately 2.7%, in 2021. First quarter Adjusted EBITDA as a percentage of total revenues decreased compared to 3.9% in 2019 and Restaurant-level Adjusted EBITDA as a percentage of restaurant sales decreased compared to 12.8% in 2019 for Taco Cabana.

Winter Storm Uri

Due to the severe winter storm that impacted Texas from February 14, 2021 through February 21, 2021, Taco Cabana February revenue and profit were negatively impacted compared to 2020 results. All units were closed for a number of days during that period, with significant reductions in traffic due to poor road conditions. We estimate Winter Storm Uri negatively impacted first quarter 2021 Taco Cabana comparable restaurant sales by approximately 4.8% and Adjusted EBITDA by $1.9 million. Approximately 125 units were impacted at some level by the storm including issues ranging from minor repairs to pipe, water and equipment damages. Taco Cabana is in the process of filing insurance claims for costs related to the winter storm.

Restaurant Portfolio

As of April 4, 2021, there were 138 Company-owned Pollo Tropical restaurants, 143 Company-owned Taco Cabana restaurants, 29 franchised Pollo Tropical restaurants in the U.S., Puerto Rico, Panama, Guyana, Ecuador and the Bahamas, and six franchised Taco Cabana restaurants in the U.S.

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 1-631-891-4304. A replay will be available after the call until Thursday, May 20, 2021 and can be accessed by dialing 1-412-317-6671. The passcode is 10014361. The conference call will also be webcast live and archived on 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 initiatives, our investments in strategic and sales building initiatives, including those relating to operations improvements, digital infrastructure supporting ordering and online sales, catering and third-party delivery and drive thru improvements and the impact of the COVID-19 pandemic and our initiatives designed to respond to the COVID-19 pandemic 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 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 APRIL 4, 2021 AND MARCH 29, 2020

(In thousands, except share and per share data)

(Unaudited)

 

 

Three Months Ended (a)

 

April 4, 2021

 

March 29, 2020

Revenues:

 

 

 

Restaurant sales

$

144,164

 

 

$

146,086

 

Franchise royalty revenues and fees

575

 

 

613

 

Total revenues

144,739

 

 

146,699

 

Costs and expenses:

 

 

 

Cost of sales

43,086

 

 

46,276

 

Restaurant wages and related expenses (b)

38,044

 

 

40,495

 

Restaurant rent expense

11,633

 

 

11,339

 

Other restaurant operating expenses

22,296

 

 

21,511

 

Advertising expense

3,988

 

 

5,783

 

General and administrative expenses (b)(c)

14,568

 

 

14,384

 

Depreciation and amortization

8,926

 

 

9,430

 

Pre-opening costs

 

 

69

 

Impairment and other lease charges (d)

(122

)

 

4,233

 

Closed restaurant rent, net of sublease income (e)

1,091

 

 

1,632

 

Other expense (income), net (f)

(38

)

 

908

 

Total operating expenses

143,472

 

 

156,060

 

Income (loss) from operations

1,267

 

 

(9,361

)

Interest expense

2,023

 

 

961

 

Income (loss) before income taxes

(756

)

 

(10,322

)

Provision for (benefit from) income taxes (g)

1,333

 

 

(3,005

)

Net income (loss)

$

(2,089

)

 

$

(7,317

)

Earnings (loss) per common share:

 

 

 

Basic

$

(0.08

)

 

$

(0.29

)

Diluted

(0.08

)

 

(0.29

)

Weighted average common shares outstanding:

 

 

 

Basic

25,324,213

 

 

25,519,247

 

Diluted

25,324,213

 

 

25,519,247

 

(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 April 4, 2021 and March 29, 2020 each included 13 weeks.

(b)

Restaurant wages and related expenses include stock-based compensation of $42 and $36 for the three months ended April 4, 2021 and March 29, 2020, respectively. General and administrative expenses include stock-based compensation expense of $1,121 and $776 for the three months ended April 4, 2021 and March 29, 2020, respectively.

(c)

See note (f) 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)

 

 

April 4, 2021

 

January 3, 2021

 

 

 

 

Assets

 

 

 

Cash

$

59,016

 

 

$

50,035

 

Other current assets

26,823

 

 

33,991

 

Property and equipment, net

153,066

 

 

161,081

 

Operating lease right-of-use assets

257,964

 

 

261,304

 

Goodwill

56,307

 

 

56,307

 

Other assets

7,787

 

 

6,025

 

Total assets

$

560,963

 

 

$

568,743

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

Current liabilities

$

62,198

 

 

$

64,909

 

Long-term debt, net of current portion

72,238

 

 

72,328

 

Operating lease liabilities

264,487

 

 

268,086

 

Deferred tax liabilities

3,744

 

 

4,109

 

Other non-current liabilities

11,441

 

 

11,530

 

Total liabilities

414,108

 

 

420,962

 

Stockholders' equity

146,855

 

 

147,781

 

Total liabilities and stockholders' equity

$

560,963

 

 

$

568,743

 

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

 

April 4, 2021

 

March 29, 2020

Segment revenues:

 

 

 

Pollo Tropical

$

88,215

 

 

$

86,125

 

Taco Cabana

56,524

 

 

60,574

 

Total revenues

$

144,739

 

 

$

146,699

 

 

 

 

 

Change in comparable restaurant sales (a):

 

 

 

Pollo Tropical

4.3

%

 

(7.3

)%

Taco Cabana

(4.3

)%

 

(13.5

)%

 

 

 

 

Average sales per Company-owned restaurant:

 

 

 

Pollo Tropical

 

 

 

Comparable restaurants (b)

$

642

 

 

$

614

 

New restaurants (c)

342

 

 

469

 

Total Company-owned (d)

637

 

 

607

 

Taco Cabana

 

 

 

Comparable restaurants (b)

$

394

 

 

$

410

 

New restaurants (c)

351

 

 

333

 

Total Company-owned (d)

394

 

 

406

 

 

 

 

 

Income (loss) before income taxes:

 

 

 

Pollo Tropical

$

4,935

 

 

$

(1,827

)

Taco Cabana

(5,691

)

 

(8,495

)

 

 

 

 

Adjusted EBITDA:

 

 

 

Pollo Tropical

$

12,192

 

 

$

8,780

 

Taco Cabana

670

 

 

(907

)

 

 

 

 

Restaurant-level Adjusted EBITDA (e):

 

 

 

Pollo Tropical

$

18,780

 

 

$

15,434

 

Taco Cabana

6,379

 

 

5,284

 

(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 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

 

April 4, 2021

 

March 29, 2020

 

 

 

 

Company-owned restaurant openings:

 

 

 

Pollo Tropical

 

 

 

Taco Cabana

 

 

1

 

Total new restaurant openings

 

 

1

 

 

 

 

 

Company-owned restaurant closings:

 

 

 

Pollo Tropical

 

 

(1

)

Taco Cabana

 

 

(19

)

Net change in restaurants

 

 

(19

)

 

 

 

 

Number of Company-owned restaurants:

 

 

 

Pollo Tropical

138

 

 

141

 

Taco Cabana

143

 

 

146

 

Total Company-owned restaurants

281

 

 

287

 

 

 

 

 

Number of franchised restaurants:

 

 

 

Pollo Tropical

29

 

 

33

 

Taco Cabana

6

 

 

8

 

Total franchised restaurants

35

 

 

41

 

 

 

 

 

Total number of restaurants:

 

 

 

Pollo Tropical

167

 

 

174

 

Taco Cabana

149

 

 

154

 

Total restaurants

316

 

 

328

 

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

 

April 4, 2021

 

March 29, 2020

Pollo Tropical:

 

(a)

 

 

(a)

Restaurant sales

$

87,840

 

 

 

$

85,721

 

 

Cost of sales

27,301

 

31.1

%

 

27,731

 

32.4

%

Restaurant wages and related expenses

20,339

 

23.2

%

 

21,037

 

24.5

%

Restaurant rent expense

5,877

 

6.7

%

 

5,640

 

6.6

%

Other restaurant operating expenses

13,184

 

15.0

%

 

12,386

 

14.4

%

Advertising expense

2,375

 

2.7

%

 

3,504

 

4.1

%

Depreciation and amortization

4,938

 

5.6

%

 

5,278

 

6.2

%

Impairment and other lease charges

110

 

0.1

%

 

3,696

 

4.3

%

Closed restaurant rent expense, net of sublease income

240

 

0.3

%

 

602

 

0.7

%

 

 

 

 

 

 

Taco Cabana:

 

 

 

 

 

Restaurant sales

$

56,324

 

 

 

$

60,365

 

 

Cost of sales

15,785

 

28.0

%

 

18,545

 

30.7

%

Restaurant wages and related expenses

17,705

 

31.4

%

 

19,458

 

32.2

%

Restaurant rent expense

5,756

 

10.2

%

 

5,699

 

9.4

%

Other restaurant operating expenses

9,112

 

16.2

%

 

9,125

 

15.1

%

Advertising expense

1,613

 

2.9

%

 

2,279

 

3.8

%

Depreciation and amortization

3,988

 

7.1

%

 

4,152

 

6.9

%

Pre-opening costs

 

%

 

69

 

0.1

%

Impairment and other lease charges

(232

)

(0.4

)%

 

537

 

0.9

%

Closed restaurant rent expense, net of sublease income

851

 

1.5

%

 

1,030

 

1.7

%

(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

April 4, 2021:

 

 

 

 

 

 

Net loss

 

 

 

 

 

$

(2,089

)

Provision for income taxes

 

 

 

 

 

1,333

 

Income (loss) before taxes

 

$

4,935

 

 

$

(5,691

)

 

$

(756

)

Add:

 

 

 

 

 

 

Non-general and administrative expense adjustments:

 

 

 

 

 

 

Depreciation and amortization

 

4,938

 

 

3,988

 

 

8,926

 

Impairment and other lease charges

 

110

 

 

(232

)

 

(122

)

Interest expense

 

970

 

 

1,053

 

 

2,023

 

Closed restaurant rent expense, net of sublease income

 

240

 

 

851

 

 

1,091

 

Other expense (income), net

 

66

 

 

(104

)

 

(38

)

Stock-based compensation expense in restaurant wages

 

16

 

 

26

 

 

42

 

Total non-general and administrative expense adjustments

 

6,340

 

 

5,582

 

 

11,922

 

General and administrative expense adjustments:

 

 

 

 

 

 

Stock-based compensation expense

 

601

 

 

520

 

 

1,121

 

Digital and brand repositioning costs

 

316

 

 

259

 

 

575

 

Total general and administrative expense adjustments

 

917

 

 

779

 

 

1,696

 

Adjusted EBITDA(a)

 

$

12,192

 

 

$

670

 

 

$

12,862

 

Adjusted EBITDA as a percentage of total revenues(a)

 

13.8

%

 

1.2

%

 

8.9

%

Restaurant-level adjustments:

 

 

 

 

 

 

Add: Other general and administrative expense(b)

 

6,963

 

 

5,909

 

 

12,872

 

Less: Franchise royalty revenue and fees

 

375

 

 

200

 

 

575

 

Restaurant-level Adjusted EBITDA(a)

 

$

18,780

 

 

$

6,379

 

 

$

25,159

 

Restaurant-level Adjusted EBITDA as a percentage of restaurant sales(a)

 

21.4

%

 

11.3

%

 

17.5

%

 

 

 

 

 

 

 

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

 

Adjusted EBITDA as a percentage of total revenues

 

10.2

%

 

(1.5

)%

 

5.4

%

Restaurant-level adjustments:

 

 

 

 

 

 

Add: Pre-opening costs

 

 

 

69

 

 

69

 

Add: Other general and administrative expense(b)

 

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

 

Restaurant-level Adjusted EBITDA as a percentage of restaurant sales

 

18.0

%

 

8.8

%

 

14.2

%

(a)

We estimate that Winter Storm Uri negatively impacted Taco Cabana and Consolidated Adjusted EBITDA and Taco Cabana and Consolidated Restaurant-level Adjusted EBITDA by approximately $1.9 million in the three months ended April 4, 2021. We estimate that Winter Storm Uri negatively impacted Taco Cabana Adjusted EBITDA as a percentage of total revenues and Taco Cabana Restaurant-level Adjusted EBITDA as a percentage of restaurant sales by approximately 3.2% and 2.7%, respectively, and Consolidated Adjusted EBITDA as a percentage of total revenues and Consolidated Restaurant-level Adjusted EBITDA as a percentage of restaurant sales by approximately 1.1% and 1.0%, respectively, in the three months ended April 4, 2021.

(b)

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

 

 

April 4, 2021

 

March 29, 2020

 

 

Income
(Loss)
Before
Income
Taxes

 

Provision
For Income
Taxes (a)

 

Net
Income
(Loss)

 

Diluted
EPS

 

Loss
Before
Income
Taxes

 

Benefit
From
Income
Taxes (a)

 

Net Loss

 

Diluted
EPS

Reported - GAAP

 

$

(756

)

 

$

1,333

 

 

$

(2,089

)

 

$

(0.08

)

 

$

(10,322

)

 

$

(3,005

)

 

$

(7,317

)

 

$

(0.29

)

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-general and administrative expense adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax due to tax law change (a)

 

 

 

(563

)

 

563

 

 

0.02

 

 

 

 

1,603

 

 

(1,603

)

 

(0.06

)

Deferred tax asset valuation allowance (b)

 

 

 

(555

)

 

555

 

 

0.02

 

 

 

 

(703

)

 

703

 

 

0.03

 

Impairment and other lease charges (c)

 

(122

)

 

(29

)

 

(93

)

 

 

 

4,233

 

 

1,012

 

 

3,221

 

 

0.13

 

Closed restaurant rent expense, net of sublease income (d)

 

1,091

 

 

261

 

 

830

 

 

0.03

 

 

1,632

 

 

390

 

 

1,242

 

 

0.05

 

Other expense (income), net (e)

 

(38

)

 

(9

)

 

(29

)

 

 

 

908

 

 

217

 

 

691

 

 

0.03

 

Total non-general and administrative expense

 

931

 

 

(895

)

 

1,826

 

 

0.07

 

 

6,773

 

 

2,519

 

 

4,254

 

 

0.17

 

General and administrative expense adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Digital and brand repositioning costs (f)

 

575

 

 

137

 

 

438

 

 

0.02

 

 

219

 

 

52

 

 

167

 

 

0.01

 

Total general and administrative expense

 

575

 

 

137

 

 

438

 

 

0.02

 

 

219

 

 

52

 

 

167

 

 

0.01

 

Adjusted - Non-GAAP

 

$

750

 

 

$

575

 

 

$

175

 

 

$

0.01

 

 

$

(3,330

)

 

$

(434

)

 

$

(2,896

)

 

$

(0.11

)

(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% for the periods ending April 4, 2021 and March 29, 2020. In the three months ended April 4, 2021, we recorded an out-of-period adjustment totaling $1.5 million related to tax depreciation on certain assets placed into service several years prior to the formation of Fiesta in 2011, of which $0.6 million is attributable to a change in tax rates as a result of the Tax Cuts and Jobs Act of 2017. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was signed into law. The CARES Act includes provisions that allow net operating losses in 2018, 2019, and 2020 to be carried back for up to five years and eliminates the 80% taxable income limitation on net operating loss deductions for 2018 through 2020. The CARES Act also includes technical amendments that are retroactive to 2018 which permit certain assets to be classified as qualified improvement property and expensed immediately. These changes allowed us to record an incremental benefit of $1.8 million in the three months ended March 29, 2020, which represents the impact of carrying net operating losses from 2018 and 2019 back to years with a higher federal corporate income tax rate.

 

(b)

For the three months ended April 4, 2021, we recorded adjustments totaling $0.6 million to our valuation allowance against deferred income tax assets primarily related to changes in our deferred income tax assets and the expected timing of the reversal of these temporary differences, which included a $0.9 million increase in our valuation allowance as a result of changes in our net deferred tax liabilities related to the out-of-period adjustment. 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 April 4, 2021, consist of impairment charges of $0.1 million and other lease charges, net, of $(0.2) million. For the three months ended April 4, 2021, impairment charges related primarily to equipment from previously impaired and closed restaurants. For the three months ended April 4, 2021, other lease charges relate to gains from lease terminations.

 

Impairment and other lease charges for the three months ended March 29, 2020, consist of impairment charges of $4.2 million and primarily relate to assets for two underperforming Taco Cabana restaurants that we continued to operate and three underperforming Pollo Tropical restaurants, two of which we closed in the third quarter of 2020.

 

(d)

Closed restaurant rent expense, net of sublease income for the three months ended April 4, 2021, primarily consists of closed restaurant lease costs of $2.8 million partially offset by sublease income of $(1.7) million. 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.

 

(e)

Other expense (income), net for the three months ended April 4, 2021, primarily consists of total gains of $(0.3) million on the sale-leaseback of two restaurant properties, partially offset by costs for the removal, transfer, and storage of equipment from closed restaurants and other closed restaurant related costs of $0.2 million. Other expense, 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.

 

(f)

Digital and brand repositioning costs for the three months ended April 4, 2021 and March 29, 2020, include consulting costs related to repositioning the digital experience for our customers.

 

Investor Relations Contact:
Raphael Gross
203-682-8253
investors@frgi.com

Source: Fiesta Restaurant Group, Inc.

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Fiesta Restaurant Group, Inc.
14800 Landmark Blvd.
Suite 500
Addison, TX 75254
(800) 819-FRGI

Fiesta Restaurant Group, inc:

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