August 12, 2021

Fiesta Restaurant Group, Inc. Reports Second Quarter 2021 Results

Taco Cabana Divestiture Expected to Close During Third Quarter of 2021

Sequential Improvement in Pollo Tropical Second Quarter 2021 Comparable Restaurant Sales from First Quarter 2021

Income from Continuing Operations was $2.7 Million for the Second Quarter of 2021 Compared to a Loss in the Prior Year

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 second quarter, which ended on July 4, 2021, and provided a business update related to current operations.

On July 1, 2021 the Company announced the entry into an agreement to sell the Taco Cabana business to an affiliate of Yadav Enterprises, Inc. Additional details regarding the transaction are referenced in the Company's Form 8-K filed on July 7, 2021. The divestiture transaction is expected to close in the third quarter of 2021, subject to the satisfactory completion of customary closing conditions.

Fiesta President and Chief Executive Officer Richard Stockinger said, "We were pleased with Pollo Tropical’s performance in the second quarter, characterized by comparable restaurant sales improving to near 2019 levels and strong margins, despite hourly staffing challenges over the quarter. We believe that workforce availability challenges had an increasingly negative impact on sales through the quarter. We took a number of steps to improve recruiting and retention of our hourly workforce, which resulted in improved staffing levels in July compared to the second quarter of 2021."

Stockinger added, "We delivered strong margin performance in the second quarter, which resulted in second quarter 2021 income from continuing operations of $2.7 million and income from continuing operations before income taxes of $1.8 million, compared to a loss for both measures in the second quarter of 2020. Continuing Operations Adjusted EBITDA, a non-GAAP measure(1), was $9.1 million or 10.0% of total revenues compared to $2.6 million and 4.2% of revenue in the second quarter of 2020. Pollo Tropical increased restaurant-level Adjusted EBITDA margin, a non-GAAP measure(1), from 16.3% in the second quarter of 2020 to 20.4% in the second quarter of 2021. In addition, our total cash balance continued to grow, reaching $69.9 million at the end of the second quarter."

Stockinger continued, "We made strong progress on Pollo Tropical’s strategic growth initiatives during the second quarter, including our ongoing brand positioning research that will inform our digital, brand expansion and existing unit remodel efforts. The design phase of our digital drive thru customer experience is advancing, and we intend to begin the pilot of this greatly enhanced drive thru platform in select units later this year. We are also testing key restaurant design elements and operating platform improvements in remodels during the balance of 2021, and initial consumer feedback on our first remodel completed in the second quarter has been very positive."

Stockinger concluded, "We expect that the Taco Cabana divestiture will allow us to create a more effective, efficient and focused organization, applying appropriate resources to accelerate the exciting growth potential we believe we have in our Pollo Tropical brand. This will include our ongoing efforts to drive an upgraded customer experience across all service channels, continuing to invest in expanding our growing digital platform and finalizing our new unit expansion plans targeted for 2022."

_____________________________

(1)

See non-GAAP reconciliation table below.

Second Quarter 2021 Financial Summary

  • Total revenues from continuing operations increased 43.7% to $91.2 million in the second quarter of 2021 from $63.4 million in the second quarter of 2020;
  • Comparable restaurant sales at Pollo Tropical increased 43.5%. Compared to the same fiscal period in 2019, comparable restaurant sales for Pollo Tropical decreased 1.8%;
  • Comparable restaurant sales at Taco Cabana increased 15.6%. Compared to the same fiscal period in 2019, comparable restaurant sales for Taco Cabana decreased 6.7%;
  • A net loss of $(0.1) million, or $0.00 per diluted share, in the second quarter of 2021, compared to a net loss of $(8.3) million, or $(0.33) per diluted share, in the second quarter of 2020;
  • Net income from continuing operations of $2.7 million, or $0.11 per diluted share, in the second quarter of 2021, compared to a net loss of $(6.6) million, or $(0.26) per diluted share, in the second quarter of 2020;
  • Adjusted net income (a non-GAAP financial measure) of $3.4 million, or $0.13 per diluted share, in the second quarter of 2021, compared to adjusted net loss of $(3.1) million, or $(0.12) per diluted share, in the second quarter of 2020 (see non-GAAP reconciliation table below);
  • Continuing Operations Consolidated Adjusted EBITDA (a non-GAAP financial measure) of $9.1 million in the second quarter of 2021 compared to $2.6 million in the second quarter of 2020 (see non-GAAP reconciliation table below);
  • Adjusted EBITDA for Pollo Tropical of $11.9 million in the second quarter of 2021 compared to $5.0 million in the second quarter of 2020;
  • Restaurant-level Adjusted EBITDA (a non-GAAP financial measure) for Pollo Tropical of $18.5 million, or 20.4% of Pollo Tropical restaurant sales, in the second quarter of 2021 compared to $10.3 million, or 16.3% of Pollo Tropical restaurant sales, in the second quarter of 2020 (see non-GAAP reconciliation table below);
  • Adjusted EBITDA for Taco Cabana of $3.0 million in the second quarter of 2021 compared to $2.7 million in the second quarter of 2020;
  • Restaurant-level Adjusted EBITDA (a non-GAAP financial measure) for Taco Cabana of $8.4 million, or 12.8% of Taco Cabana restaurant sales, in the second quarter of 2021 compared to $7.3 million, or 12.6% of Taco Cabana restaurant sales, in the second quarter of 2020 (see non-GAAP reconciliation table below); and

Second Quarter 2021 Comparable Restaurant Sales

 

First
Quarter 2021

Fiscal
April

Fiscal
May

Fiscal
June

Second
Quarter 2021

Pollo Tropical

 

 

 

 

2021 vs. 2020

4.3

%

94.4

%

36.9

%

18.2

%

43.5

%

2021 vs. 2019

-3.3

%

-1.3

%

-1.4

%

-2.9

%

-1.8

%

Taco Cabana

2021 vs. 2020

-4.3

%

26.5

%

9.2

%

14.0

%

15.6

%

2021 vs. 2019

-17.1

%

-6.9

%

-6.7

%

-6.5

%

-6.7

%

  • 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 July 4, 2021 are not directly comparable on a calendar basis to the thirteen weeks ended June 28, 2020.
  • For Pollo Tropical comparable restaurant sales comparisons in 2021 vs. 2019, the Fourth of July holiday timing had an impact on fiscal June. After adjusting for the holiday timing difference, June 2021 comparable restaurant sales vs. 2019 would have been 40 to 50 basis points higher.

Cash and Liquidity

  • At the end of the second quarter of 2021, we had $65.8 million in cash, $3.8 million in restricted cash and $72.4 million in outstanding debt, which includes $71.5 million of term loan borrowings under our new senior credit facility and $0.9 million in finance lease obligations. In addition, we had $0.3 million in cash and $0.8 million in finance lease obligations within discontinued operations. Our outstanding term loan borrowings under our senior credit facility are net of unamortized debt issuance costs and original issue discount totaling $3.2 million.
  • Our cash balance grew from the first quarter balance of $58.8 million at April 4, 2021 to a second quarter balance of $65.8 million at July 4, 2021. Net debt, a non-GAAP financial measure(2), decreased from $13.5 million at the end of the first quarter on April 4, 2021 to $6.6 million at the end of the second quarter on July 4, 2021.
  • Proceeds from the sale of Taco Cabana will be used to fully repay our outstanding term loan borrowings under our senior credit facility, and to pay a loan prepayment premium of 3.0% of the principal repaid ($2.2 million).

Second Quarter 2021 Brand Results

Total Pollo Tropical restaurant sales increased 43.4% to $90.8 million in the second quarter of 2021 compared to $63.3 million in the second quarter of 2020 primarily due to a comparable restaurant sales increase of 43.5%. Pollo Tropical dine-in and counter take-out comparable restaurant sales increased 117% from the second quarter of 2020 to the second 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 second quarter of 2020. The increase in dine in channel sales was supplemented by off-premise channel growth. Second quarter 2021 drive-thru comparable restaurant sales increased 18% compared to the second quarter of 2020, while second quarter 2021 delivery comparable restaurant sales nearly doubled compared to the second quarter of 2020. The increase in comparable restaurant sales resulted from a net impact of product/channel mix and pricing of 14.3% and an increase in comparable restaurant transactions of 29.2%. The increase in product/channel mix and pricing was driven primarily by increases in delivery and drive-thru average check and sales channel penetration, and menu price increases of 4.0%. Beginning in April, Pollo Tropical began to experience increased hourly staffing challenges due to workforce availability which we believe had an increasingly negative impact on sales through the remainder of the quarter, driven in part by reduced operating hours.

_____________________________

(2)

We define net debt as long-term debt, including current portion of long-term debt, as reported in our (continuing operations) balance sheet less unrestricted cash as reported in our (continuing operations) balance sheet, which were $72.4 million and $65.8 million, respectively, as of July 4, 2021 and $72.4 million and $58.8 million, respectively, as of April 4, 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

 

Second Quarter
2021(1)

 

% of Total

 

Second Quarter
2020

 

% of Total

 

Second Quarter
2019

 

% of Total

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Counter(2)

 

$

24,389

 

 

27

%

 

$

11,262

 

 

18

%

 

$

44,038

 

 

49

%

Drive-thru

 

52,245

 

 

58

%

 

44,165

 

 

70

%

 

42,970

 

 

47

%

Delivery

 

9,012

 

 

10

%

 

4,954

 

 

8

%

 

1,666

 

 

2

%

Online

 

3,100

 

 

4

%

 

1,722

 

 

3

%

 

1,293

 

 

1

%

Catering

 

1,062

 

 

1

%

 

477

 

 

1

%

 

653

 

 

1

%

Total

 

$

89,808

 

 

100

%

 

$

62,580

 

 

100

%

 

$

90,620

 

 

100

%

(1) Second quarter 2021 comparable restaurant sales based on the comparable second quarter 2020 restaurants.

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

Adjusted EBITDA for Pollo Tropical increased to $11.9 million in the second quarter of 2021 from $5.0 million in the second quarter of 2020, an increase of 139.3%. The increase was primarily due to the impact of higher restaurant sales, and improved cost of sales margins, partially offset by higher advertising expenses and repair and maintenance costs. Restaurant-level Adjusted EBITDA for Pollo Tropical as a percentage of restaurant sales continues to be strong, with second quarter Restaurant-level Adjusted EBITDA as a percentage of restaurant sales of 20.4% in 2021 compared to 16.3% in 2020 and 23.1% in 2019. Continuing Operations Adjusted EBITDA increased to $9.1 million compared to $2.6 million in 2020.

Comparable Restaurant Average Weekly Sales - Pollo Tropical

Period

April

May

June

2021

$52,594

$50,908

$49,351

2020

$27,055

$37,177

$41,744

2019

$53,303

$51,646

$50,827

Pollo Tropical average weekly sales trends from April/May to June/July have historically declined due to reductions in visitors to Florida during summer months and the negative traffic impact of school closures.

Taco Cabana restaurant sales increased 13.5% to $66.1 million in the second quarter of 2021 from $58.3 million in the second quarter of 2020 due primarily to a comparable restaurant sales increase of 15.6%. Taco Cabana comparable restaurant sales increased across all sales channels from the second quarter of 2020 to the second 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 second quarter of 2020. The increase in comparable restaurant sales resulted from an increase in comparable restaurant transactions of 13.0% and an increase in the net impact of product/channel mix and pricing of 2.6%. The increase in product/channel mix and pricing was driven primarily by menu price increases of 4.3%.

 

 

Comparable Restaurant Sales Mix by Channel - Taco Cabana

Channel

 

Second Quarter
2021(1)

 

% of Total

 

Second Quarter
2020

 

% of Total

 

Second Quarter
2019

 

% of Total

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Counter(2)

 

$

11,595

 

 

18

%

 

$

6,339

 

 

11

%

 

$

29,410

 

 

42

%

Drive-thru

 

46,977

 

 

71

%

 

45,982

 

 

81

%

 

37,979

 

 

54

%

Delivery

 

4,525

 

 

7

%

 

2,727

 

 

5

%

 

981

 

 

1

%

Online

 

1,698

 

 

3

%

 

1,624

 

 

3

%

 

1,232

 

 

2

%

Catering

 

951

 

 

1

%

 

207

 

 

%

 

350

 

 

1

%

Total

 

$

65,746

 

 

100

%

 

$

56,879

 

 

100

%

 

$

69,952

 

 

100

%

(1) Second quarter 2021 comparable restaurant sales based on the comparable second quarter 2020 restaurants.

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

Adjusted EBITDA for Taco Cabana increased to $3.0 million in the second quarter of 2021 from $2.7 million in the second quarter of 2020. The increase was primarily due to higher restaurant sales, partially offset by higher repair and maintenance costs including winter storm costs such as repairs and landscaping debris removal costs, increased advertising and higher delivery fee expense. Second quarter Adjusted EBITDA for Taco Cabana as a percentage of total revenues was 4.6% in 2020 and in 2021, and Restaurant-level Adjusted EBITDA for Taco Cabana as a percentage of restaurant sales increased from 12.6% in 2020 to 12.8% in 2021. Second quarter Adjusted EBITDA as a percentage of total revenues decreased compared to 5.3% in 2019 and Restaurant-level Adjusted EBITDA for Taco Cabana as a percentage of restaurant sales increased compared to 12.1% in 2019.

Restaurant Portfolio

As of July 4, 2021, there were 138 Company-owned Pollo Tropical restaurants, 142 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- 412-317-6026. A replay will be available after the call until Thursday, August 19, 2021 and can be accessed by dialing 1-412-317-6671. The passcode is 10158958. 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 the anticipated closing of the Taco Cabana divestiture transaction and its impact on our future business, 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 AND SIX MONTHS ENDED JULY 4, 2021 AND JUNE 28, 2020

(In thousands, except share and per share data)

(Unaudited)

 

 

Three Months Ended (a)

 

Six Months Ended (a)

 

July 4, 2021

 

June 28, 2020

 

July 4, 2021

 

June 28, 2020

Revenues:

 

 

 

 

 

 

 

Restaurant sales

$

90,764

 

 

 

$

63,292

 

 

 

$

178,604

 

 

 

$

149,013

 

 

Franchise royalty revenues and fees

391

 

 

 

146

 

 

 

766

 

 

 

550

 

 

Total revenues

91,155

 

 

 

63,438

 

 

 

179,370

 

 

 

149,563

 

 

Costs and expenses:

 

 

 

 

 

 

 

Cost of sales

27,558

 

 

 

20,321

 

 

 

54,859

 

 

 

48,052

 

 

Restaurant wages and related expenses (b)

21,901

 

 

 

15,108

 

 

 

42,240

 

 

 

36,145

 

 

Restaurant rent expense

5,824

 

 

 

5,660

 

 

 

11,701

 

 

 

11,300

 

 

Other restaurant operating expenses

14,215

 

 

 

10,823

 

 

 

27,520

 

 

 

23,347

 

 

Advertising expense

2,898

 

 

 

1,174

 

 

 

5,273

 

 

 

4,678

 

 

General and administrative expenses (b)(c)

11,050

 

 

 

9,240

 

 

 

21,716

 

 

 

19,458

 

 

Depreciation and amortization

4,875

 

 

 

5,455

 

 

 

9,963

 

 

 

10,948

 

 

Impairment and other lease charges (d)

(202

)

 

 

1,932

 

 

 

(254

)

 

 

5,628

 

 

Closed restaurant rent, net of sublease income (e)

966

 

 

 

1,258

 

 

 

1,716

 

 

 

2,381

 

 

Other expense (income), net (f)

170

 

 

 

698

 

 

 

293

 

 

 

927

 

 

Total operating expenses

89,255

 

 

 

71,669

 

 

 

175,027

 

 

 

162,864

 

 

Income (loss) from operations

1,900

 

 

 

(8,231

)

 

 

4,343

 

 

 

(13,301

)

 

Interest expense

61

 

 

 

63

 

 

 

122

 

 

 

126

 

 

Income (loss) from continuing operations before income taxes

1,839

 

 

 

(8,294

)

 

 

4,221

 

 

 

(13,427

)

 

Provision for (benefit from) income taxes (g)

(841

)

 

 

(1,687

)

 

 

2,236

 

 

 

(3,112

)

 

Income (loss) from continuing operations

2,680

 

 

 

(6,607

)

 

 

1,985

 

 

 

(10,315

)

 

Income (loss) from discontinued operations, net of tax

(2,763

)

 

 

(1,736

)

 

 

(4,157

)

 

 

(5,345

)

 

Net loss

(83

)

 

 

(8,343

)

 

 

(2,172

)

 

 

(15,660

)

 

Earnings (loss) per common share:

 

 

 

 

 

 

 

Continuing operations – basic

$

0.11

 

 

 

$

(0.26

)

 

 

$

0.07

 

 

 

$

(0.41

)

 

Discontinued operations – basic

(0.11

)

 

 

(0.07

)

 

 

(0.16

)

 

 

(0.21

)

 

Basic

 

 

 

(0.33

)

 

 

(0.09

)

 

 

(0.62

)

 

 

 

 

 

 

 

 

 

Continuing operations – diluted

0.11

 

 

 

(0.26

)

 

 

0.07

 

 

 

(0.41

)

 

Discontinued operations – diluted

(0.11

)

 

 

(0.07

)

 

 

(0.16

)

 

 

(0.21

)

 

Diluted

 

 

 

(0.33

)

 

 

(0.09

)

 

 

(0.62

)

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

25,496,038

 

 

 

25,267,404

 

 

 

25,410,123

 

 

 

25,393,325

 

 

Diluted

25,496,038

 

 

 

25,267,404

 

 

 

25,410,783

 

 

 

25,393,325

 

 

(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 4, 2021 and June 28, 2020 each included 13 and 26 weeks, respectively.

(b)

Restaurant wages and related expenses include stock-based compensation of $15 and $27 for the three months ended July 4, 2021 and June 28, 2020, respectively, and $31 and $38 for the six months ended July 4, 2021 and June 28, 2020, respectively. General and administrative expenses include stock-based compensation expense of $1,046 and $850 for the three months ended July 4, 2021 and June 28, 2020, respectively, and $2,040 and $1,348 for the six months ended July 4, 2021 and June 28, 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)

 

 

July 4, 2021

 

January 3, 2021

 

 

 

 

Assets

 

 

 

Cash

$

65,830

 

 

$

49,778

 

Current assets held for sale

159,564

 

 

8,478

 

Other current assets

19,825

 

 

25,770

 

Property and equipment, net

94,773

 

 

97,867

 

Operating lease right-of-use assets

157,533

 

 

164,665

 

Goodwill

56,307

 

 

56,307

 

Non-current assets held for sale

 

 

160,023

 

Other assets

6,557

 

 

5,855

 

Total assets

$

560,389

 

 

$

568,743

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

Current portion of long-term debt

$

71,541

 

 

$

816

 

Current liabilities held for sale

120,956

 

 

27,225

 

Other current liabilities

39,942

 

 

36,868

 

Long-term debt, net of current portion

810

 

 

71,588

 

Operating lease liabilities

166,793

 

 

174,116

 

Deferred tax liabilities

2,353

 

 

2,269

 

Non-current liabilities held for sale

 

 

98,323

 

Other non-current liabilities

9,981

 

 

9,757

 

Total liabilities

412,376

 

 

420,962

 

Stockholders' equity

148,013

 

 

147,781

 

Total liabilities and stockholders' equity

$

560,389

 

 

$

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)

 

(Unaudited)

 

Three Months Ended

 

Six Months Ended

 

July 4, 2021

 

June 28, 2020

 

July 4, 2021

 

June 28, 2020

Segment revenues:

 

 

 

 

 

 

 

Pollo Tropical

$

91,155

 

 

 

$

63,438

 

 

 

$

179,370

 

 

 

$

149,563

 

 

Taco Cabana (a)

66,352

 

 

 

58,430

 

 

 

122,876

 

 

 

119,004

 

 

Total revenues

$

157,507

 

 

 

$

121,868

 

 

 

$

302,246

 

 

 

$

268,567

 

 

 

 

 

 

 

 

 

 

Change in comparable restaurant sales (b):

 

 

 

 

 

 

 

Pollo Tropical

43.5

 

%

 

(31.6

)

%

 

21.1

 

%

 

(19.5

)

%

Taco Cabana

15.6

 

%

 

(19.2

)

%

 

5.5

 

%

 

(16.4

)

%

 

 

 

 

 

 

 

 

Average sales per Company-owned restaurant:

 

 

 

 

 

 

 

Pollo Tropical

 

 

 

 

 

 

 

Comparable restaurants (c)

$

662

 

 

 

$

461

 

 

 

$

1,304

 

 

 

$

1,076

 

 

Non-comparable restaurants (d)

418

 

 

 

369

 

 

 

760

 

 

 

857

 

 

Total Company-owned (e)

658

 

 

 

458

 

 

 

1,294

 

 

 

1,067

 

 

Taco Cabana

 

 

 

 

 

 

 

Comparable restaurants (c)

$

465

 

 

 

$

399

 

 

 

$

859

 

 

 

$

809

 

 

Non-comparable restaurants (d)

347

 

 

 

435

 

 

 

767

 

 

 

740

 

 

Total Company-owned (e)

464

 

 

 

399

 

 

 

858

 

 

 

806

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes:

 

 

 

 

 

 

 

Pollo Tropical

$

4,336

 

 

 

$

(5,186

)

 

 

$

9,271

 

 

 

$

(7,013

)

 

Taco Cabana (a)

(4,338

)

 

 

(4,900

)

 

 

(10,029

)

 

 

(13,395

)

 

 

 

 

 

 

 

 

 

Adjusted EBITDA:

 

 

 

 

 

 

 

Pollo Tropical

$

11,949

 

 

 

$

4,993

 

 

 

$

24,296

 

 

 

$

13,773

 

 

Taco Cabana

3,039

 

 

 

2,672

 

 

 

3,836

 

 

 

1,765

 

 

 

 

 

 

 

 

 

 

Restaurant-level Adjusted EBITDA (f):

 

 

 

 

 

 

 

Pollo Tropical

$

18,498

 

 

 

$

10,338

 

 

 

$

37,278

 

 

 

$

25,772

 

 

Taco Cabana

8,445

 

 

 

7,313

 

 

 

14,824

 

 

 

12,597

 

 

(a)

Results of Taco Cabana are included in discontinued operations. Adjusted EBITDA and Restaurant-level Adjusted EBITDA include corporate allocations that were not included in discontinued operations.

(b)

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.

(c)

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.

(d)

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 for the applicable segment by the average number of new restaurants for the applicable segment for such period.

(e)

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.

(f)

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

 

Six Months Ended

 

July 4, 2021

 

June 28, 2020

 

July 4, 2021

 

June 28, 2020

 

 

 

 

 

 

 

 

Company-owned restaurant openings:

 

 

 

 

 

 

 

Pollo Tropical

 

 

 

 

 

 

 

 

 

 

Taco Cabana

 

 

 

 

 

 

 

 

1

 

 

Total new restaurant openings

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

 

Company-owned restaurant closings:

 

 

 

 

 

 

 

Pollo Tropical

 

 

 

 

 

 

 

 

(1

)

 

Taco Cabana

(1

)

 

 

 

 

(1

)

 

 

(19

)

 

Net change in restaurants

(1

)

 

 

 

 

(1

)

 

 

(19

)

 

 

 

 

 

 

 

 

 

Number of Company-owned restaurants:

 

 

 

 

 

 

 

Pollo Tropical

138

 

 

 

141

 

 

138

 

 

 

141

 

 

Taco Cabana

142

 

 

 

146

 

 

142

 

 

 

146

 

 

Total Company-owned restaurants

280

 

 

 

287

 

 

280

 

 

 

287

 

 

 

 

 

 

 

 

 

 

Number of franchised restaurants:

 

 

 

 

 

 

 

Pollo Tropical

29

 

 

 

33

 

 

29

 

 

 

33

 

 

Taco Cabana

6

 

 

 

7

 

 

6

 

 

 

7

 

 

Total franchised restaurants

35

 

 

 

40

 

 

35

 

 

 

40

 

 

 

 

 

 

 

 

 

 

Total number of restaurants:

 

 

 

 

 

 

 

Pollo Tropical

167

 

 

 

174

 

 

167

 

 

 

174

 

 

Taco Cabana

148

 

 

 

153

 

 

148

 

 

 

153

 

 

Total restaurants

315

 

 

 

327

 

 

315

 

 

 

327

 

 

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 4, 2021

 

June 28, 2020

Pollo Tropical:

 

(a)

 

 

(a)

Restaurant sales

$

90,764

 

 

 

 

$

63,292

 

 

Cost of sales

27,558

 

 

30.4

 

%

 

20,321

 

32.1

%

Restaurant wages and related expenses

21,901

 

 

24.1

 

%

 

15,108

 

23.9

%

Restaurant rent expense

5,824

 

 

6.4

 

%

 

5,660

 

8.9

%

Other restaurant operating expenses

14,100

 

 

15.5

 

%

 

10,714

 

16.9

%

Advertising expense

2,898

 

 

3.2

 

%

 

1,178

 

1.9

%

Depreciation and amortization

4,844

 

 

5.3

 

%

 

5,233

 

8.3

%

Impairment and other lease charges

(332

)

 

(0.4

)

%

 

1,932

 

3.1

%

Closed restaurant rent expense, net of sublease income

567

 

 

0.6

 

%

 

671

 

1.1

%

 

 

 

 

 

 

Taco Cabana (b):

 

 

 

 

 

Restaurant sales

$

66,132

 

 

 

 

$

58,255

 

 

Cost of sales

18,823

 

 

28.5

 

%

 

17,486

 

30.0

%

Restaurant wages and related expenses

20,640

 

 

31.2

 

%

 

18,639

 

32.0

%

Restaurant rent expense

5,657

 

 

8.6

 

%

 

5,619

 

9.6

%

Other restaurant operating expenses (c)

10,574

 

 

16.0

 

%

 

8,275

 

14.2

%

Advertising expense (c)

2,017

 

 

3.0

 

%

 

965

 

1.7

%

Depreciation and amortization (c)

3,992

 

 

6.0

 

%

 

4,332

 

7.4

%

Impairment and other lease charges (c)

494

 

 

0.7

 

%

 

353

 

0.6

%

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

640

 

 

1.0

 

%

 

1,159

 

2.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

July 4, 2021

 

June 28, 2020

Pollo Tropical:

 

(a)

 

 

(a)

Restaurant sales

$

178,604

 

 

 

 

$

149,013

 

 

Cost of sales

54,859

 

 

30.7

 

%

 

48,052

 

32.2

%

Restaurant wages and related expenses

42,240

 

 

23.7

 

%

 

36,145

 

24.3

%

Restaurant rent expense

11,701

 

 

6.6

 

%

 

11,300

 

7.6

%

Other restaurant operating expenses

27,284

 

 

15.3

 

%

 

23,100

 

15.5

%

Advertising expense

5,273

 

 

3.0

 

%

 

4,682

 

3.1

%

Depreciation and amortization

9,782

 

 

5.5

 

%

 

10,511

 

7.1

%

Impairment and other lease charges

(222

)

 

(0.1

)

%

 

5,628

 

3.8

%

Closed restaurant rent expense, net of sublease income

807

 

 

0.5

 

%

 

1,273

 

0.9

%

 

 

 

 

 

 

Taco Cabana (b):

 

 

 

 

 

Restaurant sales

$

122,456

 

 

 

 

$

118,620

 

 

Cost of sales

34,608

 

 

28.3

 

%

 

36,031

 

30.4

%

Restaurant wages and related expenses

38,345

 

 

31.3

 

%

 

38,097

 

32.1

%

Restaurant rent expense

11,413

 

 

9.3

 

%

 

11,318

 

9.5

%

Other restaurant operating expenses (c)

19,686

 

 

16.1

 

%

 

17,400

 

14.7

%

Advertising expense (c)

3,630

 

 

3.0

 

%

 

3,244

 

2.7

%

Depreciation and amortization (c)

7,980

 

 

6.5

 

%

 

8,484

 

7.2

%

Pre-opening costs

 

 

 

%

 

69

 

0.1

%

Impairment and other lease charges (c)

262

 

 

0.2

 

%

 

890

 

0.8

%

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

1,491

 

 

1.2

 

%

 

2,189

 

1.8

%

(a)

Percent of restaurant sales for the applicable segment.

(b)

Results of Taco Cabana are included in discontinued operations.

(c)

Includes corporate allocations not included in discontinued operations.

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 (including Continuing Operations Adjusted EBITDA and Discontinued Operations 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). The "Other" column includes corporate costs that were allocated to Taco Cabana and are not included in discontinued operations.

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

 

Other

 

Continuing
Operations

 

Taco Cabana

 

Other

 

Discontinued
Operations

July 4, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

$

(83

)

 

 

 

 

 

 

$

(2,763

)

 

Loss from discontinued operations, net of tax

 

 

 

 

 

2,763

 

 

 

 

 

 

 

 

 

Provision for (benefit from) income taxes

 

 

 

 

 

(841

)

 

 

 

 

 

 

922

 

 

Income (loss) before taxes

 

$

4,336

 

 

 

$

(2,497

)

 

 

$

1,839

 

 

 

$

(4,338

)

 

 

$

2,497

 

 

 

$

(1,841

)

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

Non-general and administrative adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

4,844

 

 

 

31

 

 

 

4,875

 

 

 

3,992

 

 

 

(31

)

 

 

3,961

 

 

Impairment and other lease charges

 

(332

)

 

 

130

 

 

 

(202

)

 

 

494

 

 

 

(130

)

 

 

364

 

 

Interest expense

 

994

 

 

 

(933

)

 

 

61

 

 

 

973

 

 

 

933

 

 

 

1,906

 

 

Closed restaurant rent expense, net of sublease income

 

567

 

 

 

399

 

 

 

966

 

 

 

640

 

 

 

(399

)

 

 

241

 

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expense (income), net

 

130

 

 

 

40

 

 

 

170

 

 

 

76

 

 

 

(40

)

 

 

36

 

 

Stock-based compensation expense

 

15

 

 

 

 

 

 

15

 

 

 

24

 

 

 

 

 

 

24

 

 

Total non-general and administrative adjustments

 

6,218

 

 

 

(333

)

 

 

5,885

 

 

 

6,199

 

 

 

333

 

 

 

6,532

 

 

General and administrative adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

641

 

 

 

405

 

 

 

1,046

 

 

 

561

 

 

 

(405

)

 

 

156

 

 

Restructuring costs and retention bonuses

 

18

 

 

 

 

 

 

18

 

 

 

14

 

 

 

 

 

 

14

 

 

Digital and brand repositioning costs

 

335

 

 

 

 

 

 

335

 

 

 

275

 

 

 

 

 

 

275

 

 

Transaction costs

 

401

 

 

 

(401

)

 

 

 

 

 

328

 

 

 

401

 

 

 

729

 

 

Total general and administrative adjustments

 

1,395

 

 

 

4

 

 

 

1,399

 

 

 

1,178

 

 

 

(4

)

 

 

1,174

 

 

Adjusted EBITDA(1)

 

$

11,949

 

 

 

$

(2,826

)

 

 

$

9,123

 

 

 

$

3,039

 

 

 

$

2,826

 

 

 

$

5,865

 

 

Adjusted EBITDA as a percentage of total revenues

 

13.1

 

%

 

 

 

10.0

 

%

 

4.6

 

%

 

 

 

8.8

 

%

Restaurant-level adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Add: Other general and administrative expense(a)

 

6,940

 

 

 

2,711

 

 

 

9,651

 

 

 

5,626

 

 

 

(2,711

)

 

 

2,915

 

 

Less: Franchise royalty revenue and fees

 

391

 

 

 

 

 

 

391

 

 

 

220

 

 

 

 

 

 

220

 

 

Restaurant-level Adjusted EBITDA(1)

 

$

18,498

 

 

 

$

(115

)

 

 

$

18,383

 

 

 

$

8,445

 

 

 

$

115

 

 

 

$

8,560

 

 

Restaurant-level Adjusted EBITDA as a percentage of restaurant sales

 

20.4

 

%

 

 

 

20.3

 

%

 

12.8

 

%

 

 

 

12.9

 

%

 

Three Months Ended:

 

Pollo Tropical

 

Other

 

Continuing
Operations

 

Taco Cabana

 

Other

 

Discontinued
Operations

June 28, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

$

(8,343

)

 

 

 

 

 

 

$

(1,736

)

 

Loss from discontinued operations, net of tax

 

 

 

 

 

1,736

 

 

 

 

 

 

 

 

 

Benefit from income taxes

 

 

 

 

 

(1,687

)

 

 

 

 

 

 

(56

)

 

Income (loss) before taxes

 

$

(5,186

)

 

 

$

(3,108

)

 

 

$

(8,294

)

 

 

$

(4,900

)

 

 

$

3,108

 

 

 

$

(1,792

)

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

Non-general and administrative adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

5,233

 

 

 

222

 

 

 

5,455

 

 

 

4,332

 

 

 

(222

)

 

 

4,110

 

 

Impairment and other lease charges

 

1,932

 

 

 

 

 

 

1,932

 

 

 

353

 

 

 

 

 

 

353

 

 

Interest expense

 

625

 

 

 

(562

)

 

 

63

 

 

 

612

 

 

 

562

 

 

 

1,174

 

 

Closed restaurant rent expense, net of sublease income

 

671

 

 

 

587

 

 

 

1,258

 

 

 

1,159

 

 

 

(587

)

 

 

572

 

 

Other expense (income), net

 

644

 

 

 

54

 

 

 

698

 

 

 

140

 

 

 

(54

)

 

 

86

 

 

Stock-based compensation expense

 

27

 

 

 

 

 

 

27

 

 

 

42

 

 

 

 

 

 

42

 

 

Total non-general and administrative adjustments

 

9,132

 

 

 

301

 

 

 

9,433

 

 

 

6,638

 

 

 

(301

)

 

 

6,337

 

 

General and administrative adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

523

 

 

 

327

 

 

 

850

 

 

 

436

 

 

 

(327

)

 

 

109

 

 

Restructuring costs and retention bonuses

 

452

 

 

 

133

 

 

 

585

 

 

 

439

 

 

 

(133

)

 

 

306

 

 

Digital and brand repositioning costs

 

72

 

 

 

 

 

 

72

 

 

 

59

 

 

 

 

 

 

59

 

 

Total general and administrative adjustments

 

1,047

 

 

 

460

 

 

 

1,507

 

 

 

934

 

 

 

(460

)

 

 

474

 

 

Adjusted EBITDA(1)

 

$

4,993

 

 

 

$

(2,347

)

 

 

$

2,646

 

 

 

$

2,672

 

 

 

$

2,347

 

 

 

$

5,019

 

 

Adjusted EBITDA as a percentage of total revenues

 

7.9

 

%

 

 

 

4.2

 

%

 

4.6

 

%

 

 

 

8.6

 

%

Restaurant-level adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Add: Other general and administrative expense(a)

 

5,491

 

 

 

2,242

 

 

 

7,733

 

 

 

4,816

 

 

 

(2,242

)

 

 

2,574

 

 

Less: Franchise royalty revenue and fees

 

146

 

 

 

 

 

 

146

 

 

 

175

 

 

 

 

 

 

175

 

 

Restaurant-level Adjusted EBITDA(1)

 

$

10,338

 

 

 

$

(105

)

 

 

$

10,233

 

 

 

$

7,313

 

 

 

$

105

 

 

 

$

7,418

 

 

Restaurant-level Adjusted EBITDA as a percentage of restaurant sales

 

16.3

 

%

 

 

 

16.2

 

%

 

12.6

 

%

 

 

 

12.7

 

%

Six Months Ended

 

Pollo Tropical

 

Other

 

Continuing
Operations

 

Taco Cabana

 

Other

 

Discontinued
Operations

July 4, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

$

(2,172

)

 

 

 

 

 

 

$

(4,157

)

 

Loss from discontinued operations, net of tax

 

 

 

 

 

4,157

 

 

 

 

 

 

 

 

 

Provision for (benefit from) income taxes

 

 

 

 

 

2,236

 

 

 

 

 

 

 

(822

)

 

Income (loss) before taxes

 

$

9,271

 

 

 

$

(5,050

)

 

 

$

4,221

 

 

 

$

(10,029

)

 

 

$

5,050

 

 

 

$

(4,979

)

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

Non-general and administrative adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

9,782

 

 

 

181

 

 

 

9,963

 

 

 

7,980

 

 

 

(181

)

 

 

7,799

 

 

Impairment and other lease charges

 

(222

)

 

 

(32

)

 

 

(254

)

 

 

262

 

 

 

32

 

 

 

294

 

 

Interest expense

 

1,964

 

 

 

(1,842

)

 

 

122

 

 

 

2,026

 

 

 

1,842

 

 

 

3,868

 

 

Closed restaurant rent expense, net of sublease income

 

807

 

 

 

909

 

 

 

1,716

 

 

 

1,491

 

 

 

(909

)

 

 

582

 

 

Other expense (income), net

 

196

 

 

 

97

 

 

 

293

 

 

 

(28

)

 

 

(97

)

 

 

(125

)

 

Stock-based compensation expense

 

31

 

 

 

 

 

 

31

 

 

 

50

 

 

 

 

 

 

50

 

 

Total non-general and administrative adjustments

 

12,558

 

 

 

(687

)

 

 

11,871

 

 

 

11,781

 

 

 

687

 

 

 

12,468

 

 

General and administrative adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

1,242

 

 

 

798

 

 

 

2,040

 

 

 

1,081

 

 

 

(798

)

 

 

283

 

 

Restructuring costs and retention bonuses

 

18

 

 

 

 

 

 

18

 

 

 

14

 

 

 

 

 

 

14

 

 

Digital and brand repositioning costs

 

651

 

 

 

 

 

 

651

 

 

 

534

 

 

 

 

 

 

534

 

 

Transaction costs

 

556

 

 

 

(556

)

 

 

 

 

 

455

 

 

 

556

 

 

 

1,011

 

 

Total general and administrative adjustments

 

2,467

 

 

 

242

 

 

 

2,709

 

 

 

2,084

 

 

 

(242

)

 

 

1,842

 

 

Adjusted EBITDA(a)

 

$

24,296

 

 

 

$

(5,495

)

 

 

$

18,801

 

 

 

$

3,836

 

 

 

$

5,495

 

 

 

$

9,331

 

 

Adjusted EBITDA as a percentage of total revenues(a)

 

13.5

 

%

 

 

 

10.5

 

%

 

3.1

 

%

 

 

 

7.6

 

%

Restaurant-level adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Add: Other general and administrative expense(b)

 

13,748

 

 

 

5,259

 

 

 

19,007

 

 

 

11,408

 

 

 

(5,259

)

 

 

6,149

 

 

Less: Franchise royalty revenue and fees

 

766

 

 

 

 

 

 

766

 

 

 

420

 

 

 

 

 

 

420

 

 

Restaurant-level Adjusted EBITDA(a)

 

$

37,278

 

 

 

$

(236

)

 

 

$

37,042

 

 

 

$

14,824

 

 

 

$

236

 

 

 

$

15,060

 

 

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

 

20.9

 

%

 

 

 

20.7

 

%

 

12.1

 

%

 

 

 

12.3

 

%

 

Six Months Ended

 

Pollo Tropical

 

Other

 

Continuing
Operations

 

Taco Cabana

 

Other

 

Discontinued
Operations

June 28, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

$

(15,660

)

 

 

 

 

 

 

$

(5,345

)

 

Loss from discontinued operations, net of tax

 

 

 

 

 

5,345

 

 

 

 

 

 

 

 

 

Benefit from income taxes

 

 

 

 

 

(3,112

)

 

 

 

 

 

 

(1,636

)

 

Income (loss) before taxes

 

$

(7,013

)

 

 

$

(6,414

)

 

 

$

(13,427

)

 

 

$

(13,395

)

 

 

$

6,414

 

 

 

$

(6,981

)

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

Non-general and administrative adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

10,511

 

 

 

437

 

 

 

10,948

 

 

 

8,484

 

 

 

(437

)

 

 

8,047

 

 

Impairment and other lease charges

 

5,628

 

 

 

 

 

 

5,628

 

 

 

890

 

 

 

 

 

 

890

 

 

Interest expense

 

1,108

 

 

 

(982

)

 

 

126

 

 

 

1,090

 

 

 

982

 

 

 

2,072

 

 

Closed restaurant rent expense, net of sublease income

 

1,273

 

 

 

1,108

 

 

 

2,381

 

 

 

2,189

 

 

 

(1,108

)

 

 

1,081

 

 

Other expense (income), net

 

751

 

 

 

176

 

 

 

927

 

 

 

941

 

 

 

(176

)

 

 

765

 

 

Stock-based compensation expense in restaurant wages

 

38

 

 

 

 

 

 

38

 

 

 

67

 

 

 

 

 

 

67

 

 

Total non-general and administrative adjustments

 

19,309

 

 

 

739

 

 

 

20,048

 

 

 

13,661

 

 

 

(739

)

 

 

12,922

 

 

General and administrative adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

833

 

 

 

515

 

 

 

1,348

 

 

 

902

 

 

 

(515

)

 

 

387

 

 

Restructuring and costs and retention bonuses

 

452

 

 

 

133

 

 

 

585

 

 

 

439

 

 

 

(133

)

 

 

306

 

 

Digital and brand repositioning costs

 

192

 

 

 

 

 

 

192

 

 

 

158

 

 

 

 

 

 

158

 

 

Total general and administrative adjustments

 

1,477

 

 

 

648

 

 

 

2,125

 

 

 

1,499

 

 

 

(648

)

 

 

851

 

 

Adjusted EBITDA

 

$

13,773

 

 

 

$

(5,027

)

 

 

$

8,746

 

 

 

$

1,765

 

 

 

$

5,027

 

 

 

$

6,792

 

 

Adjusted EBITDA as a percentage of total revenues

 

9.2

 

%

 

 

 

5.8

 

%

 

1.5

 

%

 

 

 

5.7

 

%

Restaurant-level adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Add: Pre-opening costs

 

 

 

 

 

 

 

 

 

 

69

 

 

 

 

 

 

69

 

 

Add: Other general and administrative expense(b)

 

12,549

 

 

 

4,784

 

 

 

17,333

 

 

 

11,147

 

 

 

(4,784

)

 

 

6,363

 

 

Less: Franchise royalty revenue and fees

 

550

 

 

 

 

 

 

550

 

 

 

384

 

 

 

 

 

 

384

 

 

Restaurant-level Adjusted EBITDA

 

$

25,772

 

 

 

$

(243

)

 

 

$

25,529

 

 

 

$

12,597

 

 

 

$

243

 

 

 

$

12,840

 

 

Restaurant-level Adjusted EBITDA as a percentage of restaurant sales

 

17.3

 

%

 

 

 

17.1

 

%

 

10.6

 

%

 

 

 

10.8

 

%

(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 $3.1 million in the six months ended July 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 2.4% and 2.2%, respectively.

(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 discontinued operations, 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

 

 

July 4, 2021

 

June 28, 2020

 

 

Income
(Loss)
Before
Income
Taxes

 

Benefit
From
Income
Taxes (a)

 

Net
Income
(Loss)

 

Diluted
EPS

 

Loss
Before
Income
Taxes

 

Benefit
From
Income
Taxes (a)

 

Net
Income
(Loss)

 

Diluted
EPS

Reported - GAAP Net Income

 

 

 

 

 

$

(83

)

 

 

$

 

 

 

 

 

 

 

$

(8,343

)

 

 

$

(0.33

)

 

Loss from discontinued operations, net of tax

 

 

 

 

 

2,763

 

 

 

0.11

 

 

 

 

 

 

 

1,736

 

 

 

0.07

 

 

Income (loss) from continuing operations

 

$

1,839

 

 

 

$

(841

)

 

 

$

2,680

 

 

 

$

0.11

 

 

 

$

(8,294

)

 

 

$

(1,687

)

 

 

$

(6,607

)

 

 

$

(0.26

)

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-general and administrative expense adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax due to tax law change (a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

662

 

 

 

(662

)

 

 

(0.03

)

 

Deferred tax asset valuation allowance (b)

 

 

 

 

255

 

 

 

(255

)

 

 

(0.01

)

 

 

 

 

 

(734

)

 

 

734

 

 

 

0.03

 

 

Impairment and other lease charges (c)

 

(202

)

 

 

(50

)

 

 

(152

)

 

 

(0.01

)

 

 

1,932

 

 

 

482

 

 

 

1,450

 

 

 

0.06

 

 

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

 

966

 

 

 

241

 

 

 

725

 

 

 

0.03

 

 

 

1,258

 

 

 

314

 

 

 

944

 

 

 

0.04

 

 

Other expense (income), net (e)

 

170

 

 

 

42

 

 

 

128

 

 

 

0.01

 

 

 

698

 

 

 

174

 

 

 

524

 

 

 

0.02

 

 

Total non-general and administrative expense

 

934

 

 

 

488

 

 

 

446

 

 

 

0.02

 

 

 

3,888

 

 

 

898

 

 

 

2,990

 

 

 

0.12

 

 

General and administrative expense adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring costs and retention bonuses (f)

 

18

 

 

 

4

 

 

 

14

 

 

 

 

 

 

585

 

 

 

146

 

 

 

439

 

 

 

0.02

 

 

Digital and brand repositioning costs (g)

 

335

 

 

 

84

 

 

 

251

 

 

 

0.01

 

 

 

72

 

 

 

18

 

 

 

54

 

 

 

 

 

Total general and administrative expense

 

353

 

 

 

88

 

 

 

265

 

 

 

0.01

 

 

 

657

 

 

 

164

 

 

 

493

 

 

 

0.02

 

 

Adjusted - Non-GAAP

 

$

3,126

 

 

 

$

(265

)

 

 

$

3,391

 

 

 

$

0.13

 

 

 

$

(3,749

)

 

 

$

(625

)

 

 

$

(3,124

)

 

 

$

(0.12

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

Six Months Ended

 

 

July 4, 2021

 

June 28, 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 Net Income

 

 

 

 

 

$

(2,172

)

 

 

$

(0.09

)

 

 

 

 

 

 

$

(15,660

)

 

 

$

(0.62

)

 

Loss (income) from discontinued operations, net of tax

 

 

 

 

 

4,157

 

 

 

0.16

 

 

 

 

 

 

 

5,345

 

 

 

0.21

 

 

Income (loss) from continuing operations

 

$

4,221

 

 

 

$

2,236

 

 

 

$

1,985

 

 

 

$

0.07

 

 

 

$

(13,427

)

 

 

$

(3,112

)

 

 

$

(10,315

)

 

 

$

(0.41

)

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-general and administrative expense adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax due to tax law change (a)

 

 

 

 

(563

)

 

 

563

 

 

 

0.02

 

 

 

 

 

 

2,234

 

 

 

(2,234

)

 

 

(0.09

)

 

Deferred tax asset valuation allowance (b)

 

 

 

 

(376

)

 

 

376

 

 

 

0.01

 

 

 

 

 

 

(2,032

)

 

 

2,032

 

 

 

0.08

 

 

Impairment and other lease charges (c)

 

(254

)

 

 

(63

)

 

 

(191

)

 

 

(0.01

)

 

 

5,628

 

 

 

1,404

 

 

 

4,224

 

 

 

0.17

 

 

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

 

1,716

 

 

 

428

 

 

 

1,288

 

 

 

0.05

 

 

 

2,381

 

 

 

594

 

 

 

1,787

 

 

 

0.07

 

 

Other expense (income), net (e)

 

293

 

 

 

73

 

 

 

220

 

 

 

0.01

 

 

 

927

 

 

 

231

 

 

 

696

 

 

 

0.03

 

 

Total non-general and administrative expense

 

1,755

 

 

 

(501

)

 

 

2,256

 

 

 

0.09

 

 

 

8,936

 

 

 

2,431

 

 

 

6,505

 

 

 

0.26

 

 

General and administrative expense adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring costs and retention bonuses (f)

 

18

 

 

 

4

 

 

 

14

 

 

 

 

 

 

585

 

 

 

146

 

 

 

439

 

 

 

0.02

 

 

Digital and brand repositioning costs (g)

 

651

 

 

 

162

 

 

 

489

 

 

 

0.02

 

 

 

192

 

 

 

48

 

 

 

144

 

 

 

0.01

 

 

Total general and administrative expense

 

669

 

 

 

166

 

 

 

503

 

 

 

0.02

 

 

 

777

 

 

 

194

 

 

 

583

 

 

 

0.02

 

 

Adjusted - Non-GAAP

 

$

6,645

 

 

 

$

1,901

 

 

 

$

4,744

 

 

 

$

0.19

 

 

 

$

(3,714

)

 

 

$

(487

)

 

 

$

(3,227

)

 

 

$

(0.13

)

 

(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 25.0% for the periods ending July 4, 2021 and June 28, 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)   

We recorded adjustments totaling $(0.3) million and $0.4 million for the three and six months ended July 4, 2021, respectively, 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 in the first quarter of 2021. We recorded an additional $0.7 million and $2.0 million valuation allowance for the three and six months ended June 28, 2020, respectively, 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 and six months ended July 4, 2021, primarily relate to gains from lease terminations.

   

Impairment and other lease charges for the three and six months ended June 28, 2020, consist of impairment charges of $1.1 million and $4.8 million, respectively, and other lease charges of $0.9 million. The impairment charges primarily relate to the write-down of assets held for sale to their fair value less costs to sell for the three and six months ended June 28, 2020 and assets for three underperforming Pollo Tropical restaurants, two of which we closed in the third quarter of 2020, for the six months ended June 28, 2020. The other lease charges primarily relate to lease termination charges of $0.9 million for restaurant locations we decided not to develop.

(d)   

Closed restaurant rent expense, net of sublease income for the three and six months ended July 4, 2021, primarily consists of closed restaurant lease costs of $2.3 million and $4.6 million, respectively, partially offset by sublease income of $(1.3) million and $(2.9) million, respectively. Closed restaurant rent expense, net of sublease income for the three and six months ended June 28, 2020, primarily consists of closed restaurant lease costs of $2.3 million and $4.6 million, respectively, partially offset by sublease income of $(1.1) million and $(2.2) million, respectively.

(e)   

Other expense (income), net for the three and six months ended July 4, 2021, primarily consists of costs for the removal, transfer, and storage of equipment from closed restaurants and other closed restaurant related costs. Other expense, net for the three and six months ended June 28, 2020, primarily consists of the write-off of site development costs of $0.6 million and costs for the removal, transfer, and storage of equipment from closed restaurants and other closure related costs.

(f)   

Restructuring costs and retention bonuses for the three and six months ended June 28, 2020 include severance costs related to terminations in response to the COVID-19 pandemic.

(g)   

Digital and brand repositioning costs for the three and six months ended July 4, 2021 and June 28, 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

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