Company-operated and System-wide comparable restaurant sales growth
of 7.1% and 6.7%, respectively; Operating income growth of 7.6%
Updates fiscal year 2016 guidance
Conference call and webcast will be held at 5:00 p.m. ET today
LAKE FOREST, Calif.--(BUSINESS WIRE)--
Del Taco Restaurants, Inc. (“Del Taco” or the “Company”), (NASDAQ:TACO),
the second largest Mexican-American QSR chain by units in the United
States, operating restaurants under the name Del Taco, today announced
fiscal third quarter 2016 financial results for the twelve weeks ended
September 6, 2016. The Company also updated its fiscal year 2016
guidance based upon its performance to-date and expectations for
continued momentum during its 17-week fiscal fourth quarter.
Del Taco became a public company when it completed a business
combination with Levy Acquisition Corp. on June 30, 2015 which resulted
in a fiscal third quarter 2015 financial statement presentation that
includes a predecessor period for the two-weeks ended June 30, 2015
followed by a successor period for the ten-weeks ended September 8,
2015. The financial results for the fiscal third quarter 2015 referenced
herein have been aggregated to reflect, on a pro forma basis, the
combined successor and predecessor periods for the twelve weeks ended
September 8, 2015.
Fiscal Third Quarter 2016 Highlights
-
System-wide comparable restaurant sales growth of 6.7% and
company-operated comparable restaurant sales growth of 7.1%, marking
the twelfth and seventeenth consecutive quarter of gains, respectively;
-
Company-operated comparable restaurant sales growth comprised
average check growth of 4.8%, including over 1% of menu mix
growth, and a transaction increase of 2.3%, representing a
sequential transaction improvement of 410 basis points compared to
the second fiscal quarter of 2016;
-
Total revenue of $104.4 million, representing 5.9% growth from the
fiscal third quarter of 2015;
-
Restaurant sales of $100.2 million, representing 5.7% growth from the
fiscal third quarter of 2015;
-
Net income increased to $4.9 million, representing diluted earnings
per share of $0.13, compared to $0.2 million in the fiscal third
quarter of 2015;
-
Restaurant contribution margin, a non-GAAP financial measure, of
20.9%, an improvement of approximately 120 basis points from the
fiscal third quarter of 2015;
-
Adjusted EBITDA, a non-GAAP financial measure, increased to $17.0
million from $15.3 million in the fiscal third quarter of 2015,
representing 11.0% growth; and
-
Completion of warrant exchange offer resulted in 1,533,542 shares
issued in exchange for 5,516,243 warrants that were properly tendered.
Paul J.B. Murphy, III, President and Chief Executive Officer of Del
Taco, commented, “Our strong fiscal third quarter performance is a
direct result of the success of our Fresh Combined Solutions strategy
and UnFreshing Believable 2.0 campaign which are inspiring positive
guest experiences and showcasing Del Taco as an innovator within the QSR
segment. Through the use of fresh ingredients and product innovation
served with the speed and convenience of a drive-thru, we are further
differentiating our iconic brand and broadening our appeal, generating
system-wide comparable restaurant sales growth of 6.7%, or 12.3% on a
two-year basis, that we believe is among the highest in the industry. We
are delighted that our top-line momentum led to substantial increases in
restaurant contribution margin, adjusted EBITDA and net income.”
Murphy continued, “In June we launched The Del Taco -- a bigger,
better-tasting crunchy beef taco worthy of our name – and it has since
broken all-time sales records for new product introductions. Later this
month we are following up this highly successful launch with a
system-wide rollout of our new Platos program, our first occasion based
expansion strategy. Platos start at $6.49 and consist of plated meals
including chips and salsa, rice and beans and an entrée. We are hopeful
that similar to our test markets, the Platos program will drive
incremental sales and margin dollars.”
Murphy concluded, “The success of our Fresh Combined Solutions strategy
and UnFreshing Believable 2.0 campaign bolsters our confidence to begin
accelerating development in 2017 and is expected to also help us attract
new, qualified franchise partners over time. This year, we are expanding
at a low-single digit growth rate with a now expected 14 system-wide
openings, and next year we expect to accelerate system growth to a
mid-single digit growth rate. Our long-term goal of 2,000+ Del Taco
restaurants reflects what we view as a considerable opportunity to
expand nationwide, which we are approaching in the near-term primarily
through lower risk, in-fill development.”
Review of Fiscal Third Quarter 2016 Financial Results
Total revenue was $104.4 million, an increase of 5.9% compared to $98.6
million in the fiscal third quarter of 2015. The growth in revenue was
driven by a 5.7% increase in Company restaurant sales and a 13.8%
increase in franchise revenue.
Comparable restaurant sales increased 6.7% system-wide for the fiscal
third quarter ended September 6, 2016, resulting in an impressive 12.3%
increase on a two-year basis. Both of these results represent the
highest performances year-to-date. The Del Taco system has now generated
comparable restaurant sales growth for twelve consecutive quarters.
Company-operated comparable restaurant sales increased 7.1%, marking the
seventeenth consecutive quarter of comparable restaurant sales growth.
Franchise comparable restaurant sales increased 6.2%.
Net income was $4.9 million, representing $0.13 per diluted share,
compared to $0.2 million in the fiscal third quarter of 2015, which
included net income of $2.4 million during the two weeks ended June 30,
2015 (predecessor) and a net loss of $2.2 million during the ten weeks
ended September 8, 2015 (successor), as well as $12.0 million in
transaction-related costs in connection with our business combination.
Restaurant contribution, a non-GAAP financial measure, increased 12.0%
year-over-year to $20.9 million. As a percentage of Company restaurant
sales, restaurant contribution increased approximately 120 basis points
year-over-year to 20.9%. The increase was driven by an approximately 120
basis point improvement in food and paper costs and an approximately 90
basis point improvement in occupancy and other operating expenses,
partially offset by an approximately 90 basis point increase in labor
and related expenses. A reconciliation between restaurant
contribution and the nearest GAAP financial measure is included in the
accompanying financial data.
Adjusted EBITDA, a non-GAAP financial measure, increased 11.0% to $17.0
million compared to $15.3 million in the previous year’s fiscal third
quarter. A reconciliation between adjusted EBITDA and the nearest
GAAP financial measure is included in the accompanying financial data.
Restaurant Portfolio Activity and Fiscal Year 2017 Development Outlook
During the fiscal third quarter, Del Taco opened one company-operated
and two franchised restaurants, and also acquired one franchised
restaurant in Ontario, CA. Year to date, Del Taco has opened six
system-wide restaurants and eight system-wide restaurant openings are
expected in the fiscal fourth quarter.
On October 12, 2016 Del Taco opportunistically acquired five franchised
restaurants in and around Bakersfield, CA from a single franchisee and
intends to open additional company-operated restaurants in this market
over time.
For fiscal year 2017, system-wide development is expected at a
mid-single digit growth rate, consistent with the Company’s plans to
begin accelerating restaurant openings.
Results of Offer to Exchange Common Stock for Outstanding Warrants
On August 9, 2016, Del Taco announced the results of its offer to
exchange (“Offer to Exchange”) 0.2780 shares of the Company’s common
stock (“shares”) for each outstanding Company warrant exercisable for
shares at an exercise price of $11.50 per share (the “warrants”)
(approximately one share for every 3.6 warrants tendered).
A total of 5,516,243 warrants were tendered in the exchange offer. The
Company accepted for exchange all such warrants and issued an aggregate
of 1,533,542 shares in exchange for the warrants tendered, representing
approximately 4% of the shares outstanding after such issuance.
After completion of the Offer to Exchange, 6,646,574 warrants remained
outstanding. The warrants will expire on June 30, 2020, unless sooner
exercised or redeemed by the Company in accordance with the terms of the
warrants.
Repurchase Program for Common Stock and Warrants
On August 23, 2016, the Board of Directors increased the repurchase
program for Del Taco’s common stock and warrants to $50 million (raised
from $25 million). The increased authorization will expire upon
completion of the repurchase program unless terminated earlier by the
Board of Directors.
During the fiscal third quarter, the Company repurchased 505,808 shares
at an average price per share of $9.45 and 235,000 warrants at an
average price per warrant of $1.85 for an aggregate of $5.2 million.
Subsequent to the fiscal third quarter, Del Taco repurchased 212,510
shares at an average price per share of $11.16 and 222,201 warrants at
an average price per warrant of $3.45 for an aggregate of $3.1 million.
There are currently 39,153,003 common shares and 6,424,373 warrants
outstanding and approximately $34.8 million remains under the $50
million authorization.
Fiscal Year 2016 Guidance
The Company is updating its guidance for fiscal year 2016, the 53-week
period ending January 3, 2017:
-
System-wide same store sales growth at the high end of the previous
2.5% to 4.5% range;
-
Total revenue between $446 million and $449 million (previously $439
million and $449 million);
-
Total company-operated restaurant sales between $429 million and $432
million (previously $422 million and $432 million);
-
Restaurant contribution margin between 20.2% and 20.3% (previously
19.8% and 20.3%);
-
California minimum wage impact estimated to increase labor and related
expenses by approximately $7.2 million, including preservation of
appropriate wage differentials and incremental payroll taxes;
-
General and administrative expenses between approximately 8.2% and
8.3% of total revenue, including incremental public company costs and
non-cash stock-based compensation (previously 7.9% and 8.3%);
-
Adjusted EBITDA between $69 million and $70 million (previously $67.5
million and $70.0 million);
-
Effective tax rate of approximately 42.3% (previously 40%);
-
Diluted earnings per share of approximately $0.53 to $0.56;
-
Fourteen new system-wide restaurant openings (previously fifteen to
eighteen); and
-
Net capital expenditures totaling approximately $36.0 million to $41.0
million.
Conference Call
A conference call and webcast to discuss Del Taco’s financial results is
scheduled for 5:00 p.m. ET today. Hosting the conference call and
webcast will be Paul J.B. Murphy, III, President and Chief Executive
Officer; John D. Cappasola, Jr., Executive Vice President and Chief
Brand Officer; and Steven L. Brake, Executive Vice President and Chief
Financial Officer.
Interested parties may listen to the conference call via telephone by
dialing 1-201-689-8562. A telephone replay will be available shortly
after the call has concluded and can be accessed by dialing
1-858-384-5517, the passcode is 13644396.
The webcast will be available at www.deltaco.com
under the investors section and will be archived on the site shortly
after the call has concluded.
Key Financial Definitions
Comparable restaurant sales growth reflects the change in
year-over-year sales for the comparable company, franchise and total
system restaurant base. Restaurants are included in the comparable store
base in the accounting period following its 18th full month
of operations and excludes restaurant closures.
Restaurant contribution is defined as company restaurant sales
less restaurant operating expenses, which are food and paper costs,
labor and related expenses and occupancy and other operating expenses. Restaurant
contribution margin is defined as restaurant contribution as a
percentage of company restaurant sales. Restaurant contribution and
restaurant contribution margin are neither required by, nor
presented in accordance with, GAAP. Restaurant contribution and
restaurant contribution margin are supplemental measures of operating
performance of restaurants and the calculations thereof may not be
comparable to those reported by other companies. Restaurant contribution
and restaurant contribution margin have limitations as analytical tools,
and you should not consider them in isolation or as substitutes for
analysis of results as reported under U.S. GAAP. Management believes
that restaurant contribution and restaurant contribution margin are
important tools for investors because they are widely-used metrics
within the restaurant industry to evaluate restaurant-level
productivity, efficiency and performance. Management uses restaurant
contribution and restaurant contribution margin as key performance
indicators to evaluate the profitability of incremental sales at Del
Taco restaurants, to evaluate restaurant performance across periods and
to evaluate restaurant financial performance compared with competitors. A
reconciliation between restaurant contribution and the nearest GAAP
financial measure is included in the accompanying financial data.
Adjusted EBITDA is defined as net income/loss prior to interest
expense, income taxes, and depreciation and amortization, as adjusted to
add back certain charges, such as stock-based compensation expense and
transaction-related costs, as these expenses are not considered an
indicator of ongoing company performance. Adjusted EBITDA is a
non-GAAP financial measure and should not be considered as an
alternative to operating income or net income/loss as a measure of
operating performance or cash flows or as measures of liquidity.
Non-GAAP financial measures are not necessarily calculated the same way
by different companies and should not be considered a substitute for or
superior to GAAP results. We believe Adjusted EBITDA facilitates
operating performance comparisons from period to period by isolating the
effects of some items that vary from period to period without any
correlation to core operating performance or that vary widely among
similar companies. These potential differences may be caused by
variations in capital structures (affecting interest expense), tax
positions (such as the impact on periods or changes in effective tax
rates or net operating losses) and the age and book depreciation of
facilities and equipment (affecting relative depreciation expense). We
also present Adjusted EBITDA because (i) we believe this measure is
frequently used by securities analysts, investors and other interested
parties to evaluate companies in our industry, (ii) we believe investors
will find this measure useful in assessing our ability to service or
incur indebtedness, and (iii) we use Adjusted EBITDA internally as a
benchmark to compare performance to that of competitors. A
reconciliation between Adjusted EBITDA and the nearest GAAP financial
measure is included in the accompanying financial data.
About Del Taco Restaurants, Inc.
Del Taco (NASDAQ:TACO) offers a unique variety of both Mexican and
American favorites such as burritos and fries, prepared fresh in every
restaurant’s working kitchen with the value and convenience of a drive
thru. All menu items taste better because they are made with quality
ingredients like freshly grated cheddar, hand-chopped pico de gallo,
sliced avocado, slow-cooked beans made from scratch, and fresh-grilled
marinated chicken and steak. The brand’s UnFreshing Believable® campaign
further communicates Del Taco’s commitment to provide guests with the
best quality and value for their money. Founded in 1964, today Del Taco
serves more than three million guests each week at its nearly 550
restaurants across 16 states. For more information, visit www.deltaco.com.
Forward-Looking Statements
In addition to historical information, this release may contain a number
of “forward-looking statements” as defined in the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include,
without limitation, information concerning Del Taco’s possible or
assumed future results of operations, business strategies, competitive
position, industry environment, potential growth opportunities and the
effects of regulation. These statements are based Del Taco’s
management’s current expectations and beliefs, as well as a number of
assumptions concerning future events. When used in this press release,
the words “estimates,” “projected,” “expects,” “anticipates,”
“forecasts,” “plans,” “intends,” “believes,” “seeks,” “target,” “may,”
“will,” “should,” “future,” “propose,” “preliminary,” “guidance,” “on
track” and variations of these words or similar expressions (or the
negative versions of such words or expressions) are intended to identify
forward-looking statements. Such forward-looking statements are subject
to known and unknown risks, uncertainties, assumptions and other
important factors, many of which are outside Del Taco’s management’s
control that could cause actual results to differ materially from the
results discussed in the forward-looking statements. These risks
included, without limitation, consumer demand, our inability to
successfully open company-operated or franchised restaurants or
establish new markets, competition in our markets, our inability to grow
and manage growth profitably, adverse changes in food and supply costs,
our inability to access additional capital, changes in applicable laws
or regulations, food safety and foodborne illness concerns, our
inability to manage existing and to obtain additional franchisees, our
inability to attract and retain qualified personnel, our inability to
profitably expand into new markets, changes in, or the discontinuation
of, the Company’s repurchase program, and the possibility that we may be
adversely affected by other economic, business, and/or competitive
factors. Additional risks and uncertainties are identified and discussed
in Del Taco’s reports filed with the SEC, including under Item 1A. Risk
Factors in our Annual Report on Form 10-K for the year ended December
29, 2015, and available at the SEC’s website at www.sec.gov
and the Company’s website at www.deltaco.com.
Forward-looking statements included in this release speak only as of the
date of this release. Del Taco undertakes no obligation to update its
forward-looking statements to reflect events or circumstances after the
date of this release or otherwise.
|
|
|
Del Taco Restaurants, Inc.
|
|
Consolidated Balance Sheets
|
|
(In thousands, except share and per share data)
|
|
|
|
|
|
Successor
|
|
|
|
September 6, 2016
|
|
December 29, 2015
|
|
Assets
|
|
(Unaudited)
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
11,603
|
|
|
$
|
10,194
|
|
|
Accounts and other receivables, net
|
|
|
3,194
|
|
|
|
3,220
|
|
|
Inventories
|
|
|
2,510
|
|
|
|
2,806
|
|
|
Prepaid expenses and other current assets
|
|
|
5,244
|
|
|
|
3,545
|
|
|
Total current assets
|
|
|
22,551
|
|
|
|
19,765
|
|
|
Property and equipment, net
|
|
|
122,982
|
|
|
|
114,030
|
|
|
Goodwill
|
|
|
319,526
|
|
|
|
318,275
|
|
|
Trademarks
|
|
|
220,300
|
|
|
|
220,300
|
|
|
Intangible assets, net
|
|
|
25,903
|
|
|
|
28,373
|
|
|
Other assets, net
|
|
|
3,308
|
|
|
|
2,829
|
|
|
Total assets
|
|
$
|
714,570
|
|
|
$
|
703,572
|
|
|
|
|
|
|
|
|
Liabilities and shareholders' equity
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
17,133
|
|
|
$
|
16,831
|
|
|
Other accrued liabilities
|
|
|
36,294
|
|
|
|
32,897
|
|
|
Current portion of capital lease obligations and deemed landlord
financing liabilities
|
|
|
1,639
|
|
|
|
1,725
|
|
|
Total current liabilities
|
|
|
55,066
|
|
|
|
51,453
|
|
|
Long-term debt, capital lease obligations and deemed landlord
financing liabilities, excluding current
portion, net
|
|
|
169,107
|
|
|
|
167,968
|
|
|
Deferred income taxes
|
|
|
86,323
|
|
|
|
79,523
|
|
|
Other non-current liabilities
|
|
|
33,400
|
|
|
|
36,251
|
|
|
Total liabilities
|
|
|
343,896
|
|
|
|
335,195
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; no
shares issued and outstanding
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
Common stock, $0.0001 par value; 400,000,000 shares authorized;
39,365,513 shares issued and
outstanding at September 6,
2016; 38,802,425 shares issued and outstanding at December 29, 2015
|
|
|
4
|
|
|
|
4
|
|
|
Additional paid-in capital
|
|
|
361,805
|
|
|
|
372,260
|
|
|
Accumulated other comprehensive loss
|
|
|
(122
|
)
|
|
|
—
|
|
|
Retained earnings (accumulated deficit)
|
|
|
8,987
|
|
|
|
(3,887
|
)
|
|
Total shareholders' equity
|
|
|
370,674
|
|
|
|
368,377
|
|
|
Total liabilities and shareholders' equity
|
|
$
|
714,570
|
|
|
$
|
703,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Del Taco Restaurants, Inc.
|
|
Consolidated Statements of Comprehensive Income (Loss)
|
|
(Unaudited)
|
|
(In thousands, except share and per share data)
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
|
|
|
12 Weeks Ended
September 6, 2016
|
|
10 Weeks Ended
September 8, 2015
|
|
|
2 Weeks Ended
June 30, 2015
|
|
Revenue:
|
|
|
|
|
|
|
|
|
Company restaurant sales
|
|
$
|
100,173
|
|
|
$
|
78,874
|
|
|
|
$
|
15,891
|
|
|
Franchise revenue
|
|
|
3,686
|
|
|
|
2,694
|
|
|
|
|
546
|
|
|
Franchise sublease income
|
|
|
560
|
|
|
|
467
|
|
|
|
|
95
|
|
|
Total revenue
|
|
|
104,419
|
|
|
|
82,035
|
|
|
|
|
16,532
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Restaurant operating expenses:
|
|
|
|
|
|
|
|
|
Food and paper costs
|
|
|
27,574
|
|
|
|
22,567
|
|
|
|
|
4,607
|
|
|
Labor and related expenses
|
|
|
30,748
|
|
|
|
23,512
|
|
|
|
|
4,712
|
|
|
Occupancy and other operating expenses
|
|
|
20,911
|
|
|
|
17,024
|
|
|
|
|
3,653
|
|
|
General and administrative
|
|
|
8,566
|
|
|
|
5,824
|
|
|
|
|
1,004
|
|
|
Depreciation and amortization
|
|
|
5,157
|
|
|
|
4,147
|
|
|
|
|
664
|
|
|
Occupancy and other - franchise subleases
|
|
|
521
|
|
|
|
437
|
|
|
|
|
87
|
|
|
Pre-opening costs
|
|
|
94
|
|
|
|
41
|
|
|
|
|
28
|
|
|
Restaurant closure charges, net
|
|
|
(133
|
)
|
|
|
19
|
|
|
|
|
—
|
|
|
Loss on disposal of assets
|
|
|
54
|
|
|
|
1
|
|
|
|
|
84
|
|
|
Total operating expenses
|
|
|
93,492
|
|
|
|
73,572
|
|
|
|
|
14,839
|
|
|
Income from operations
|
|
|
10,927
|
|
|
|
8,463
|
|
|
|
|
1,693
|
|
|
Other expenses:
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
1,412
|
|
|
|
1,725
|
|
|
|
|
664
|
|
|
Transaction-related costs
|
|
|
490
|
|
|
|
11,978
|
|
|
|
|
61
|
|
|
Debt modification costs
|
|
|
—
|
|
|
|
78
|
|
|
|
|
1
|
|
|
Total other expenses
|
|
|
1,902
|
|
|
|
13,781
|
|
|
|
|
726
|
|
|
Income (loss) from operations before provision (benefit) for income
taxes
|
|
|
9,025
|
|
|
|
(5,318
|
)
|
|
|
|
967
|
|
|
Provision (benefit) for income taxes
|
|
|
4,076
|
|
|
|
(3,132
|
)
|
|
|
|
(1,449
|
)
|
|
Net income (loss)
|
|
|
4,949
|
|
|
|
(2,186
|
)
|
|
|
|
2,416
|
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
Change in fair value of interest rate cap
|
|
|
(122
|
)
|
|
|
—
|
|
|
|
|
(1
|
)
|
|
Total other comprehensive loss
|
|
|
(122
|
)
|
|
|
—
|
|
|
|
|
(1
|
)
|
|
Comprehensive income (loss)
|
|
$
|
4,827
|
|
|
$
|
(2,186
|
)
|
|
|
$
|
2,415
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.13
|
|
|
$
|
(0.06
|
)
|
|
|
$
|
0.36
|
|
|
Diluted
|
|
$
|
0.13
|
|
|
$
|
(0.06
|
)
|
|
|
$
|
0.36
|
|
|
Weighted-average shares outstanding
|
|
|
|
|
|
|
|
|
Basic
|
|
|
38,465,064
|
|
|
|
38,802,425
|
|
|
|
|
6,707,776
|
|
|
Diluted
|
|
|
38,688,961
|
|
|
|
38,802,425
|
|
|
|
|
6,707,776
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Del Taco Restaurants, Inc.
|
|
Consolidated Statements of Comprehensive Income (Loss)
|
|
(Unaudited)
|
|
(In thousands, except share and per share data)
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
|
|
|
36 Weeks Ended
September 6, 2016
|
|
10 Weeks Ended
September 8, 2015
|
|
|
26 Weeks Ended
June 30, 2015
|
|
Revenue:
|
|
|
|
|
|
|
|
|
Company restaurant sales
|
|
$
|
289,640
|
|
|
$
|
78,874
|
|
|
|
$
|
200,676
|
|
|
Franchise revenue
|
|
|
10,591
|
|
|
|
2,694
|
|
|
|
|
6,693
|
|
|
Franchise sublease income
|
|
|
1,617
|
|
|
|
467
|
|
|
|
|
1,183
|
|
|
Total revenue
|
|
|
301,848
|
|
|
|
82,035
|
|
|
|
|
208,552
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Restaurant operating expenses:
|
|
|
|
|
|
|
|
|
Food and paper costs
|
|
|
80,061
|
|
|
|
22,567
|
|
|
|
|
57,447
|
|
|
Labor and related expenses
|
|
|
90,781
|
|
|
|
23,512
|
|
|
|
|
61,120
|
|
|
Occupancy and other operating expenses
|
|
|
60,560
|
|
|
|
17,024
|
|
|
|
|
43,611
|
|
|
General and administrative
|
|
|
25,072
|
|
|
|
5,824
|
|
|
|
|
14,850
|
|
|
Depreciation and amortization
|
|
|
16,175
|
|
|
|
4,147
|
|
|
|
|
8,252
|
|
|
Occupancy and other - franchise subleases
|
|
|
1,534
|
|
|
|
437
|
|
|
|
|
1,109
|
|
|
Pre-opening costs
|
|
|
222
|
|
|
|
41
|
|
|
|
|
276
|
|
|
Restaurant closure charges, net
|
|
|
(121
|
)
|
|
|
19
|
|
|
|
|
94
|
|
|
Loss on disposal of assets
|
|
|
191
|
|
|
|
1
|
|
|
|
|
99
|
|
|
Total operating expenses
|
|
|
274,475
|
|
|
|
73,572
|
|
|
|
|
186,858
|
|
|
Income from operations
|
|
|
27,373
|
|
|
|
8,463
|
|
|
|
|
21,694
|
|
|
Other expenses:
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
4,289
|
|
|
|
1,725
|
|
|
|
|
11,491
|
|
|
Transaction-related costs
|
|
|
681
|
|
|
|
11,978
|
|
|
|
|
7,255
|
|
|
Debt modification costs
|
|
|
—
|
|
|
|
78
|
|
|
|
|
139
|
|
|
Change in fair value of warrant liability
|
|
|
—
|
|
|
|
—
|
|
|
|
|
(35
|
)
|
|
Total other expenses
|
|
|
4,970
|
|
|
|
13,781
|
|
|
|
|
18,850
|
|
|
Income (loss) from operations before provision (benefit) for income
taxes
|
|
|
22,403
|
|
|
|
(5,318
|
)
|
|
|
|
2,844
|
|
|
Provision (benefit) for income taxes
|
|
|
9,529
|
|
|
|
(3,132
|
)
|
|
|
|
740
|
|
|
Net income (loss)
|
|
|
12,874
|
|
|
|
(2,186
|
)
|
|
|
|
2,104
|
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
Change in fair value of interest rate cap
|
|
|
(122
|
)
|
|
|
—
|
|
|
|
|
(24
|
)
|
|
Reclassification of interest rate cap amortization included in net
income
(loss)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
58
|
|
|
Total other comprehensive income (loss), net
|
|
|
(122
|
)
|
|
|
—
|
|
|
|
|
34
|
|
|
Comprehensive income (loss)
|
|
$
|
12,752
|
|
|
$
|
(2,186
|
)
|
|
|
$
|
2,138
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.33
|
|
|
$
|
(0.06
|
)
|
|
|
$
|
0.38
|
|
|
Diluted
|
|
$
|
0.33
|
|
|
$
|
(0.06
|
)
|
|
|
$
|
0.37
|
|
|
Weighted-average shares outstanding
|
|
|
|
|
|
|
|
|
Basic
|
|
|
38,518,431
|
|
|
|
38,802,425
|
|
|
|
|
5,492,417
|
|
|
Diluted
|
|
|
38,682,273
|
|
|
|
38,802,425
|
|
|
|
|
5,610,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Del Taco Restaurants, Inc.
|
|
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
|
|
(Unaudited)
|
|
(In thousands)
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
|
|
|
12 Weeks Ended
September 6, 2016
|
|
10 Weeks Ended
September 8, 2015
|
|
|
2 Weeks Ended
June 30, 2015
|
|
Net income (loss)
|
|
$
|
4,949
|
|
|
$
|
(2,186
|
)
|
|
|
$
|
2,416
|
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
Provision (benefit) for income taxes
|
|
|
4,076
|
|
|
|
(3,132
|
)
|
|
|
|
(1,449
|
)
|
|
Interest expense
|
|
|
1,412
|
|
|
|
1,725
|
|
|
|
|
664
|
|
|
Depreciation and amortization
|
|
|
5,157
|
|
|
|
4,289
|
|
|
|
|
659
|
|
|
EBITDA
|
|
|
15,594
|
|
|
|
696
|
|
|
|
|
2,290
|
|
|
Stock-based compensation expense (a)
|
|
|
1,001
|
|
|
|
146
|
|
|
|
|
—
|
|
|
Loss on disposal of assets (b)
|
|
|
54
|
|
|
|
1
|
|
|
|
|
84
|
|
|
Restaurant closure charges, net (c)
|
|
|
(133
|
)
|
|
|
19
|
|
|
|
|
—
|
|
|
Amortization of favorable and unfavorable lease assets and
liabilities,
net (d)
|
|
|
(140
|
)
|
|
|
(142
|
)
|
|
|
|
5
|
|
|
Debt modification costs (e)
|
|
|
—
|
|
|
|
78
|
|
|
|
|
1
|
|
|
Transaction-related costs (f)
|
|
|
490
|
|
|
|
11,978
|
|
|
|
|
61
|
|
|
Pre-opening costs (h)
|
|
|
94
|
|
|
|
41
|
|
|
|
|
28
|
|
|
Adjusted EBITDA
|
|
$
|
16,960
|
|
|
$
|
12,817
|
|
|
|
$
|
2,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Includes non-cash, stock-based compensation.
|
|
(b) Loss on disposal of assets includes the loss on disposal of
assets related to retirements and replacement or write-off of
leasehold improvements or equipment.
|
|
(c) Includes costs related to future obligations associated with the
closure or net sublease shortfall of a restaurant.
|
|
(d) Includes amortization of favorable lease assets and unfavorable
lease liabilities.
|
|
(e) Includes costs associated with debt refinancing transaction in
August 2015 and March 2015.
|
|
(f) Includes costs related to the offer to exchange the Company's
common stock for each outstanding Company warrant and the strategic
sale process which commenced during 2014 and resulted in the Stock
Purchase Agreement with the Levy Newco Parties and the Business
Combination consummated pursuant to the Merger Agreement.
|
|
(h) Pre-opening costs consist of costs directly associated with the
opening of new restaurants and incurred prior to opening, including
restaurant labor, supplies, rent expense and other related
pre-opening costs. These are generally incurred over the three to
five months prior to opening.
|
|
|
|
|
|
Del Taco Restaurants, Inc.
|
|
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
|
|
(Unaudited)
|
|
(In thousands)
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
|
|
|
36 Weeks Ended
September 6, 2016
|
|
10 Weeks Ended
September 8, 2015
|
|
|
26 Weeks Ended
June 30, 2015
|
|
Net income (loss)
|
|
$
|
12,874
|
|
|
$
|
(2,186
|
)
|
|
|
$
|
2,104
|
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
Provision (benefit) for income taxes
|
|
|
9,529
|
|
|
|
(3,132
|
)
|
|
|
|
740
|
|
|
Interest expense
|
|
|
4,289
|
|
|
|
1,725
|
|
|
|
|
11,491
|
|
|
Depreciation and amortization
|
|
|
16,175
|
|
|
|
4,289
|
|
|
|
|
8,249
|
|
|
EBITDA
|
|
|
42,867
|
|
|
|
696
|
|
|
|
|
22,584
|
|
|
Stock-based compensation expense (a)
|
|
|
2,630
|
|
|
|
146
|
|
|
|
|
532
|
|
|
Loss on disposal of assets (b)
|
|
|
191
|
|
|
|
1
|
|
|
|
|
99
|
|
|
Restaurant closure charges, net (c)
|
|
|
(121
|
)
|
|
|
19
|
|
|
|
|
94
|
|
|
Amortization of favorable and unfavorable lease assets and
liabilities, net (d)
|
|
|
(420
|
)
|
|
|
(142
|
)
|
|
|
|
3
|
|
|
Debt modification costs (e)
|
|
|
—
|
|
|
|
78
|
|
|
|
|
139
|
|
|
Transaction-related costs (f)
|
|
|
681
|
|
|
|
11,978
|
|
|
|
|
7,255
|
|
|
Change in fair value of warrant liability (g)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
(35
|
)
|
|
Pre-opening costs (h)
|
|
|
222
|
|
|
|
41
|
|
|
|
|
276
|
|
|
Adjusted EBITDA
|
|
$
|
46,050
|
|
|
$
|
12,817
|
|
|
|
$
|
30,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Includes non-cash, stock-based compensation.
|
|
(b) Loss on disposal of assets includes the loss on disposal of
assets related to retirements and replacement or write-off of
leasehold improvements or equipment.
|
|
(c) Includes costs related to future obligations associated with the
closure or net sublease shortfall of a restaurant.
|
|
(d) Includes amortization of favorable lease assets and unfavorable
lease liabilities.
|
|
(e) Includes costs associated with debt refinancing transaction in
August 2015 and March 2015.
|
|
(f) Includes costs related to the offer to exchange the Company's
common stock for each outstanding Company warrant and the strategic
sale process which commenced during 2014 and resulted in the Stock
Purchase Agreement with the Levy Newco Parties and the Business
Combination consummated pursuant to the Merger Agreement.
|
|
(g) Relates to fair value adjustments to the warrants to purchase
shares of common stock of DTH that had been issued to certain of
DTH’s equity shareholders, all of which were exchanged for shares of
common stock of DTH on March 20, 2015.
|
|
(h) Pre-opening costs consist of costs directly associated with the
opening of new restaurants and incurred prior to opening, including
restaurant labor, supplies, rent expense and other related
pre-opening costs. These are generally incurred over the three to
five months prior to opening.
|
|
|
|
|
|
Del Taco Restaurants, Inc.
|
|
Reconciliation of Company Restaurant Sales to Restaurant
Contribution
|
|
(Unaudited)
|
|
(In thousands)
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
|
|
|
12 Weeks Ended
September 6, 2016
|
|
10 Weeks Ended
September 8, 2015
|
|
|
2 Weeks Ended
June 30, 2015
|
|
Company restaurant sales
|
|
$
|
100,173
|
|
$
|
78,874
|
|
|
$
|
15,891
|
|
Restaurant operating expenses
|
|
|
79,233
|
|
|
63,103
|
|
|
|
12,972
|
|
Restaurant contribution
|
|
$
|
20,940
|
|
$
|
15,771
|
|
|
$
|
2,919
|
|
Restaurant contribution margin
|
|
|
20.9 %
|
|
|
20.0 %
|
|
|
|
18.4 %
|
|
|
|
|
|
Del Taco Restaurants, Inc.
|
|
Reconciliation of Company Restaurant Sales to Restaurant
Contribution
|
|
(Unaudited)
|
|
(In thousands)
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
|
|
|
36 Weeks Ended
September 6, 2016
|
|
10 Weeks Ended
September 8, 2015
|
|
|
26 Weeks Ended
June 30, 2015
|
|
Company restaurant sales
|
|
$
|
289,640
|
|
$
|
78,874
|
|
|
$
|
200,676
|
|
Restaurant operating expenses
|
|
|
231,402
|
|
|
63,103
|
|
|
|
162,178
|
|
Restaurant contribution
|
|
$
|
58,238
|
|
$
|
15,771
|
|
|
$
|
38,498
|
|
Restaurant contribution margin
|
|
|
20.1 %
|
|
|
20.0 %
|
|
|
|
19.2 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks Ended
|
|
36 Weeks Ended
|
|
|
|
September 6, 2016
|
|
September 8, 2015
|
|
September 6, 2016
|
|
September 8, 2015
|
|
Company-operated restaurant activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
298
|
|
|
306
|
|
|
297
|
|
|
304
|
|
|
Openings
|
|
1
|
|
|
1
|
|
|
3
|
|
|
3
|
|
|
Closures
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
Purchased from franchisee
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
Restaurants at end of period
|
|
300
|
|
|
306
|
|
|
300
|
|
|
306
|
|
|
Franchised restaurant activity:
|
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
245
|
|
|
241
|
|
|
247
|
|
|
243
|
|
|
Openings
|
|
2
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
Closures
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(2
|
)
|
|
Restaurants sold to Company
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
Restaurants at end of period
|
|
246
|
|
|
241
|
|
|
246
|
|
|
241
|
|
|
Total restaurant activity:
|
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
543
|
|
|
547
|
|
|
544
|
|
|
547
|
|
|
Openings
|
|
3
|
|
|
1
|
|
|
6
|
|
|
3
|
|
|
Closures
|
|
—
|
|
|
(1
|
)
|
|
(4
|
)
|
|
(3
|
)
|
|
Restaurants at end of period
|
|
546
|
|
|
547
|
|
|
546
|
|
|
547
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20161017006352/en/
Source: Del Taco Restaurants, Inc.