MIAMI--(BUSINESS WIRE)--Fiesta Restaurant Group, Inc. ("Fiesta" or the "Company") (NASDAQ: FRGI), the owner, operator, and franchisor of the Pollo Tropical® and Taco Cabana® fast-casual restaurant brands, today reported results for the second quarter of 2012 which ended on July 1, 2012.
Highlights of Second Quarter 2012 Results Include:
Tim Taft, President and Chief Executive Officer of Fiesta Restaurant Group, Inc., commented, "Our second quarter marked strong top-line performance from both of our brands against strong prior year sales comparisons, coupled with effective cost management that positively impacted our restaurant-level profitability. Despite the sluggish economy and general softness in discretionary spending, our guests are responding favorably to our quality menu offerings and value proposition complemented by our enhanced service model and facilities. We view our brands as well-positioned and differentiated in the competitive landscape and believe that through continued execution of our strategies, we can continue to build long-term value for our shareholders."
Taft concluded, "Our development plans are on track and we are encouraged by the preliminary results from our recent restaurant openings in expansion markets along with the quality of sites in our pipeline that will open in the second half of the year and beyond. We are also pleased to be expanding our international presence by signing new agreements with franchisees to develop restaurants in Panama and Guatemala as well as the recently announced development agreement with our new franchisee in India."
Revenues
Total revenues increased 6.3% in the second quarter of 2012 to $128.8 million from $121.2 million in the second quarter of 2011. Restaurant sales in the second quarter of 2012 increased 6.2% to $128.2 million from $120.7 million in the second quarter of 2011, primarily due to comparable restaurant sales growth at both Pollo Tropical and Taco Cabana. Franchise revenues in the second quarter of 2012 increased to $0.6 million from $0.5 million in the second quarter of 2011.
Costs and Expenses
Restaurant operating margins, as a percentage of restaurant sales, improved in the second quarter of 2012 compared to the second quarter of 2011, and were favorably impacted by lower cost of sales, restaurant wages, and utility expenses.
General and administrative expenses increased $1.5 million to $10.5 million in the second quarter of 2012 from $9.1 million in the second quarter of 2011 due to the hiring of certain Fiesta management team members as well as legal and other costs incurred in connection with the spin-off.
Depreciation and amortization decreased $0.6 million to $4.4 million in the second quarter of 2012 from $4.9 million in the second quarter of 2011, primarily due to the elimination of depreciation expense of $0.3 million as a result of the qualification for sale treatment of sale-leaseback transactions, as discussed above.
Income from operations increased $2.6 million, or 25.6%, to $12.9 million in the second quarter of 2012 from $10.2 million in the second quarter of 2011.
Interest expense increased $1.5 million to $6.3 million in the second quarter of 2012 from $4.8 million in the second quarter 2011, primarily due to our refinancing activities in the third quarter of 2011 partially offset by the elimination of interest expense of $1.6 million as a result of the qualification for sale treatment of sale-leaseback transactions and the prospective treatment of these payments as rent, as discussed above.
Net Income increased $0.3 million to $3.9 million in the second quarter of 2012, or $0.17 per diluted share, compared to net income of $3.6 million, or $0.16 per diluted share, in the second quarter of 2011.
Brand Results
Pollo Tropical restaurant sales increased 8.5% to $56.6 million in the second quarter of 2012 from $52.2 million in the second quarter of 2011, primarily due to a comparable restaurant sales increase of 7.8%. The growth in comparable restaurant sales resulted from a 6.9% increase in guest traffic along with a 0.8% increase in average check. Franchise revenues increased to $0.6 million in the second quarter of 2012 from $0.4 million in the second quarter of 2011. Adjusted Segment EBITDA for Pollo Tropical increased to $10.5 million in the second quarter of 2012 from $9.5 million in the second quarter of 2011. Adjusted Segment EBITDA was negatively impacted by an increase in rent expense of $0.4 million in the second quarter of 2012 compared to the second quarter of 2011 due to the qualification for sale treatment of sale-leaseback transactions, as discussed above.
Taco Cabana restaurant sales increased 4.4% to $71.6 million in the second quarter of 2012 from $68.5 million in the second quarter of 2011, primarily due to a comparable restaurant sales increase of 4.5%. The growth in comparable restaurant sales resulted from a 3.8% increase in average check along with a 0.6% increase in guest traffic. Franchise revenues of $0.1 million in the second quarter of 2012 were consistent with the second quarter of 2011. Adjusted Segment EBITDA for Taco Cabana decreased to $6.9 million in the second quarter of 2012 from $7.0 million in the second quarter of 2011. Adjusted Segment EBITDA was negatively impacted by an increase in rent expense of $0.7 million in the second quarter 2012 compared to the second quarter of 2011 due to the qualification for sale treatment of sale-leaseback transactions, as discussed above.
Fiesta opened four company-owned restaurants during the second quarter of 2012 including three Pollo Tropical restaurants in Green Acres, FL, Jacksonville, FL, and Atlanta, GA, respectively, and one Taco Cabana restaurant in San Antonio, TX. There were no restaurant closures during the quarter.
In addition, Pollo Tropical franchisees opened one restaurant in Panama and one restaurant in Venezuela in the second quarter of 2012.
As of July 1, 2012, the Company owned 89 Pollo Tropical restaurants and 158 Taco Cabana restaurants and franchised 35 Pollo Tropical restaurants in the U.S., Puerto Rico, the Bahamas, Costa Rica, Ecuador, Honduras, Panama, Trinidad, and Venezuela and five Taco Cabana restaurants in the U.S.
Fiesta will host a conference call and webcast to review second quarter 2012 results today at 8:30 AM EDT. Hosting the call will be Tim Taft, President and Chief Executive Officer, and Lynn Schweinfurth, Vice President and Chief Financial Officer.
The conference call can be accessed live over the phone by dialing 888-461-2014 or for international callers by dialing 719-457-2694. A replay will be available after the call and can be accessed by dialing 877-870-5176 or for international callers by dialing 858-384-5517; the passcode is 6143045. The replay will be available until Wednesday, August 15, 2012.
The conference call will also be webcast live from 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.
Fiesta Restaurant Group, Inc. owns, operates and franchises the Pollo Tropical® and Taco Cabana® restaurant brands with 247 company-owned and operated restaurants and 40 franchised restaurants in the U.S., Puerto Rico, the Bahamas, Costa Rica, Ecuador, Honduras, Panama, Trinidad, and Venezuela as of July 1, 2012. The brands specialize in the operation of fast-casual, ethnic restaurants that offer distinct and unique flavors with a broad appeal at a compelling value. Both brands feature made-from-scratch cooking, fresh salsa bars, and drive-thru service and catering. For more information about Fiesta Restaurant Group, Inc. visit our corporate website at www.FRGI.com.
Except for the historical information contained in this news release, the matters addressed are forward-looking statements. Forward-looking statements, written, oral or otherwise made, represent our expectation or belief concerning future events. Without limiting the foregoing, these statements are often identified by the words "may," "might," "believes," "thinks," "anticipates," "plans," "expects", "intends" or similar expressions. In addition, expressions of our strategies, intentions or plans, are also forward-looking statements. Such statements reflect management's current views with respect to future events and are subject to risks and uncertainties, both known and unknown. You are cautioned not to place undue reliance on these forward-looking statements as there are important factors that could cause actual results to differ materially from those in forward-looking statements, many of which are beyond our control. Investors are referred to the full discussion of risks and uncertainties as included in our filings with the Securities and Exchange Commission.
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Fiesta Restaurant Group, Inc. owns, operates and franchises the Pollo Tropical® and Taco Cabana® restaurant brands