Operations

Fiesta reports Q2 loss, still beats estimates

August 6, 2020

Fiesta Restaurant Group Inc., parent company of Pollo Tropical and Taco Cabana, reported Thursday that its total revenues, as well as comparable sales, were down at both brands for the 13-week second quarter 2020, ending June 28.

Fiesta President and CEO Richard Stockinger, however, was pleased with sales increases in June and July. And although the quarter showed a loss of 11 cents per share, it was much lower than the 30-cent loss predicted by Zacks Consensus Estimate, according to a press release.

"Comp-sales run rates at both brands improved from June to July by 350 basis points or more," Stockinger said in the release. "These encouraging trends have been achieved despite the fact that we operate in Florida and Texas, two of the more challenged states in terms of COVID outbreaks, which drove our decision to again close our dining rooms as of July 12, 2020."

Since the outbreak, Fiesta has adjusted its business model to expand delivery options, curbside and pick-up capabilities and added online ordering. Its new app, developed by BottleRocket, launched for Pollo Tropical in late July and will go live for Taco Cabana in September.

In the second half of the year, Stockinger expects to see the effects of those off-premise initiatives.

"We are optimistic about our future and our ability to continue evolving our business model to meet changing market conditions and consumer needs in order to allow our customers to enjoy our brands safely and conveniently across all channels, however the guest chooses," he said.

Another highlight, according to Stockinger, was the brand's improvement on its financial position and liquidity during the quarter.

"In addition to securing an amendment to our senior credit facility that we believe provides us adequate covenant cushion and liquidity, we generated positive Adjusted EBITDA at both brands for the quarter and also generated net cash provided by operating activities of $24.5 million through better working capital management and positive Adjusted EBITDA from both brands," he said. "Since the beginning of the COVID crisis, we have significantly reduced our revolving credit facility(1) and net revolver debt balances(2). At current sales trends, we believe we will continue to improve liquidity."

Second Quarter 2020 Financial Summary

• Total revenues decreased 28.9% to $121.9 million in the second quarter of 2020 from $171.4 million in the second quarter of 2019.
• Comparable restaurant sales at Pollo Tropical decreased 31.6%.
• Comparable restaurant sales at Taco Cabana decreased 19.2%.
• Net loss of $8.3 million, or $0.33 per diluted share, in the second quarter of 2020 compared to net loss of $43.4 million, or $1.62 per diluted share, in the second quarter of 2019, which included the unfavorable impact of $46.5 million, or $1.73 per diluted share, related to a non-cash impairment of goodwill;
• Adjusted net loss (a non-GAAP financial measure) of $2.9 million, or $0.11 per diluted share, in the second quarter of 2020, compared to adjusted net income of $5.7 million, or $0.21 per diluted share, in the second quarter of 2019 (see non-GAAP reconciliation table below);
• Adjusted EBITDA for Pollo Tropical of $5.0 million in the second quarter of 2020 compared to $14.6 million in the second quarter of 2019;
• Restaurant-level Adjusted EBITDA (a non-GAAP financial measure) for Pollo Tropical of $10.3 million, or 16.3% of Pollo Tropical restaurant sales, in the second quarter of 2020 compared to $21.4 million, or 23.1% of Pollo Tropical restaurant sales, in the second quarter of 2019 (see non-GAAP reconciliation table below);
• Adjusted EBITDA for Taco Cabana of $2.7 million in the second quarter of 2020 compared to $4.1 million in the second quarter of 2019;
• Restaurant-level Adjusted EBITDA (a non-GAAP financial measure) for Taco Cabana of $7.3 million, or 12.6% of Taco Cabana restaurant sales, in the second quarter of 2020 compared to $9.5 million, or 12.1% of Taco Cabana restaurant sales, in the second quarter of 2019 (see non-GAAP reconciliation table below); and
• Consolidated Adjusted EBITDA (a non-GAAP financial measure) of $7.7 million in the second quarter of 2020 compared to Consolidated Adjusted EBITDA of $18.8 million in the second quarter of 2019 (see non-GAAP reconciliation table below

"We are proud of our operations team that has continued to keep our restaurants operating safely during this crisis while improving operations efficiency," Stockinger said.