Carrols Restaurant Group Inc (TAST) Reports Strong Q3 2023 Results with Significant Growth in ...
Carrols Restaurant Group Inc (NASDAQ:TAST) sees a 7.2% increase in total restaurant sales reaching $475.8 million in Q3 2023.
Comparable restaurant sales growth of 8.2% with Burger King and Popeyes restaurants showing robust performance.
Net Income turns positive to $12.6 million, a significant improvement from a Net Loss of $8.7 million in the same quarter last year.
Adjusted EBITDA more than doubles to $41.9 million, compared to $17.7 million in Q3 2022.
On November 9, 2023, Carrols Restaurant Group Inc (NASDAQ:TAST), the largest BURGER KING franchisee in the United States, released its financial results for the third quarter ended October 1, 2023. The company reported a robust increase in total restaurant sales, which rose by 7.2% to $475.8 million, compared to $444.0 million in the third quarter of 2022. This top-line growth was driven by a notable increase in comparable restaurant sales, with Burger King restaurants seeing an 8.1% rise and Popeyes restaurants experiencing an 11.7% surge.
Financial Highlights and Management Commentary
Carrols' financial performance in Q3 2023 was marked by significant improvements across key metrics. Adjusted EBITDA soared to $41.9 million, a substantial increase from $17.7 million in the prior year's quarter. The company also reported a positive Net Income of $12.6 million, or $0.20 per diluted share, a stark contrast to the Net Loss of $8.7 million, or $0.17 per diluted share, in Q3 2022. Adjusted Net Income stood at $10.0 million, or $0.16 per diluted share, compared to an Adjusted Net Loss of $7.3 million, or $0.14 per diluted share, in the same quarter of the previous year.
Deborah Derby, President and CEO of Carrols, expressed satisfaction with the quarter's exceptional performance, highlighting the positive traffic growth at Burger King restaurants and the success of new product launches. "We were thrilled to achieve positive traffic growth at our Burger King restaurants earlier than anticipated," Derby stated. She also emphasized the company's focus on maintaining momentum and positive traffic growth into 2024.
Operational and Balance Sheet Strength
Carrols' operational efficiency was evident in the improved Adjusted Restaurant-Level EBITDA, which totaled $65.8 million, up from $37.9 million in the prior year quarter. The company also generated Free Cash Flow of $33.9 million, more than doubling the $14.0 million from the same period last year. This financial strength enabled Carrols to reduce its total net leverage ratio to 2.8 times.
The balance sheet update revealed that Carrols ended Q3 2023 with $73.0 million in cash and cash equivalents and long-term debt and finance lease liabilities of $475.0 million. The company had no revolving credit borrowings outstanding and a borrowing availability of $204.5 million under its revolving credit facility, leading to a total available liquidity of $277.5 million at the end of the quarter.
Outlook and Dividend Announcement
Looking ahead, Carrols anticipates a strong finish to the year with continued comparable restaurant sales growth and expects Adjusted EBITDA to reach approximately $145 million to $149 million for 2023. The company also plans to remodel approximately 45 Burger King restaurants in 2024, leveraging contributions from its franchisor through the Reclaim the Flame program.
In a move reflecting confidence in its financial stability and commitment to shareholder returns, Carrols' Board of Directors authorized an initial regular quarterly dividend of $0.02 per share of common stock, to be paid on December 15, 2023, to shareholders of record as of November 21, 2023.
Investors and interested parties can access a webcast of the conference call discussing the Q3 2023 financial results on the Investor Relations page of Carrols' website at www.carrols.com.
Carrols Restaurant Group Inc (NASDAQ:TAST) has demonstrated a strong performance in the third quarter of 2023, with significant improvements in sales, profitability, and cash flow. The company's strategic initiatives and operational efficiency have positioned it well for continued growth and shareholder value creation.
Explore the complete 8-K earnings release (here) from Carrols Restaurant Group Inc for further details.
This article first appeared on GuruFocus.
