LAKE FOREST, Calif. - July 28, 2015 - (BUSINESS WIRE) - Del Taco Restaurants, Inc. (NASDAQ: TACO, TACOW), today announced fiscal second quarter financial results for its wholly-owned subsidiary Del Taco Holdings, Inc. (“Del Taco” or the “Company”), the second largest Mexican-American QSR chain by units in the United States, operating restaurants under the name Del Taco.
Fiscal second quarter 2015 financial results for Del Taco reflect the twelve weeks ended June 16, 2015, prior to the closing of the recent business combination (the “Business Combination”) between Del Taco and Levy Acquisition Corp. which occurred on June 30, 2015. In connection with the closing of the Business Combination, Levy Acquisition Corp. changed its name to Del Taco Restaurants, Inc. and Del Taco Holdings, Inc. became a wholly-owned subsidiary of Del Taco Restaurants, Inc.
Fiscal Second Quarter 2015 Highlights
Paul J.B. Murphy, III, President and Chief Executive Officer of Del Taco, commented, “We are delighted with our second quarter financial results which demonstrate continued strong and accelerating brand momentum. Our successful execution of our Combined Solutions strategy is gaining further traction and enabling us to deliver an elevated brand experience and improve our freshness perceptions. These efforts are in turn driving meaningful improvements in our key performance indicators and solidifying our QSR+ positioning.”
Murphy continued, “The closing of the merger with Levy Acquisition Corp. on June 30th marked the end of one chapter for Del Taco and the beginning of an exciting new one in our company’s history. The invaluable guidance from our talented Board, along with our newly strengthened balance sheet, positions us well to embark on this next phase of our growth. We look forward to showcasing delicious, fresh, made-to-order Mexican and American classics at a great value to guests across the country.”
Total revenue was $97.6 million, an increase of 7.0% compared to $91.2 million in the fiscal second quarter of 2014. The growth in revenue was driven by a 7.1% increase in company restaurant sales and a 4.4% increase in franchise revenue.
Comparable restaurant sales increased 6.0% system-wide for the fiscal quarter ended June 16, 2015 compared to the 4.8% gain in the prior year fiscal second quarter, for a two-year growth rate of 10.8%. The Del Taco system has now generated comparable restaurant sales growth for seven consecutive quarters. Company-owned comparable restaurant sales increased 5.9% and included a 2.0% gain in traffic, marking the twelfth consecutive quarter of comparable restaurant sales growth. Franchise comparable restaurant sales increased 6.2%.
Restaurant contribution increased 15.9% year-over-year to $18.6 million. As a percentage of company restaurant sales, restaurant contribution increased approximately 150 basis points year-over-year to 19.8%. The increase was driven by an approximate 90 basis point improvement in food and paper costs, and approximately 30 basis point improvements in both labor and related expenses and occupancy and other operating expenses.
Adjusted EBITDA, a non-GAAP financial measure, was $15.3 million, an increase of 12.2% from $13.6 million in the previous year’s fiscal second quarter. A reconciliation between adjusted EBITDA and the nearest GAAP financial measure is included in the accompanying financial data.
Income from operations increased 30.2% to $11.3 million compared to $8.6 million in the prior year fiscal second quarter.
Net income was $4.6 million compared to net loss of $0.1 million in the fiscal second quarter of 2014, and included $0.9 million of transaction-related costs that consist of direct costs incurred in connection with our two-step transaction.
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.
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.
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. Adjusted EBITDA is a financial measure that was not calculated in accordance with GAAP. A reconciliation between adjusted EBITDA and the nearest GAAP financial measure is included in the accompanying financial data.
Del Taco will host a conference call and webcast to discuss financial results for the fiscal second quarter 2015 today at 5:00 PM EDT.
Hosting the conference call and webcast will be Larry Levy, Chairman of the Board; 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 1-877-407-0789, or for international callers, 1-201-689-8562. A telephone replay will be available shortly after the call has concluded and can be accessed by dialing 1-877-870-5176, or for international callers, 1-858-384-5517. The passcode is 13613715.
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.
At Del Taco (NASDAQ: TACO) all menu items taste better because they are made to order with fresh ingredients including cheddar cheese grated from 40-pound blocks, handmade pico de gallo salsa, lard-free beans slow-cooked from scratch, fresh sliced avocado and marinated chicken grilled in the restaurant. The menu, which includes a full line of breakfast, includes classic Mexican dishes such as tacos, burritos, quesadillas and nachos as well as American favorites including hamburgers, crinkle-cut fries and shakes. Del Taco’s UnFreshing Believable campaign communicates the lengths the company goes to in order to deliver quality, made-to-order menu items created with freshly-prepared ingredients at unbelievable prices. With nearly 550 restaurants in 16 states, Del Taco serves more than three million guests each week. In June 2015, Del Taco changed its name to Del Taco Restaurants, Inc. following the completion of its transition to a public company.
For more information, please visit www.deltaco.com.
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,” “may,” “will,” “should,” “future,” “propose” 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, 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 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.
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SOURCE Del Taco Restaurants, Inc.
Julia Young
Media Relations
646-277-1280
julia.young@icrinc.com
Raphael Gross
Investor Relations
203-682-8253
investor@deltaco.com
At Del Taco, all menu items taste better because they are made to order with fresh ingredients.