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Del Taco Restaurants, Inc. Announces Fiscal First Quarter 2016 Financial Results

LAKE FOREST, Calif., May 02, 2016 (BUSINESS WIRE) -- Del Taco Restaurants, Inc. (“Del Taco” or the “Company”), TACO, -0.11% TACOW, +2.78% the second largest Mexican-American QSR chain by units in the United States, operating restaurants under the name Del Taco, today announced fiscal first quarter 2016 financial results. The Company also reiterated its fiscal year 2016 guidance.

Del Taco became a public company when it completed a business combination with Levy Acquisition Corp. on June 30, 2015. This resulted in a fiscal first quarter financial statement presentation that includes a predecessor period for the twelve-weeks ended March 24, 2015 compared to a successor period for the twelve-weeks ended March 22, 2016.

Fiscal First Quarter 2016 Highlights

  • System-wide comparable restaurant sales growth of 3.2% and company-owned comparable restaurant sales growth of 2.8%, marking the tenth and fifteenth consecutive quarter of gains, respectively;
    • Company-owned comparable restaurant sales growth comprised check growth of 5.4%, including over 1% of menu mix growth, and a transaction decrease of (2.6%);
  • Total revenue of $97.4 million, representing 3.2% growth from the fiscal first quarter of 2015;
  • Restaurant sales of $93.6 million, representing 2.9% growth from the fiscal first quarter of 2015;
  • Restaurant contribution margin, a non-GAAP financial measure, of 18.7%, an improvement of approximately 10 basis points from the fiscal first quarter of 2015;
  • Net income increased to $3.1 million from a net loss of ($4.9) million in the fiscal first quarter of 2015, representing diluted earnings (loss) per share of $0.08 and ($1.21) in the fiscal first quarter of 2016 and 2015, respectively;
  • Adjusted EBITDA, a non-GAAP financial measure, of $13.1 million compared to $13.2 million in the fiscal first quarter of 2015; and
  • The opening of two restaurants system wide, including one company-owned and one franchised restaurant.

Paul J.B. Murphy, III, President and Chief Executive Officer of Del Taco, commented, “We achieved solid quarterly results and are on track to deliver on our fiscal year outlook. The Del Taco system extended its record of system-wide comparable restaurant sales growth to ten consecutive quarters with a 3.2% gain, in spite of significant competitive discounting and cycling over a 7.7% increase in the prior-year. At company restaurants, we also generated restaurant contribution margin expansion through favorable menu mix shifts and effective menu price increases which helped offset cost pressures, including the California minimum wage increase to $10/hour. Our ability to operate effectively in this environment is a testament to the strength and resiliency of our brand, our positioning, and our menu strategy.”

Murphy continued, “In June, we plan to launch our Fresh Combined Solutions strategy. This next iteration of Combined Solutions consists of a combination of operational and brand improvements to further embed our fresh paired with value positioning, improve speed and quality, expand our usage occasions, and differentiate Del Taco through new and delicious Mexican food platforms. Driving brand reappraisal by aligning improved guest experiences with an elevated brand promise will help drive higher quality and freshness perceptions and move us toward our average unit volume goal of $1.5 million by 2018.”

Review of Fiscal First Quarter 2016 Financial Results

Total revenue was $97.4 million, an increase of 3.2% compared to $94.4 million in the fiscal first quarter of 2015. The growth in revenue was driven by a 2.9% increase in Company restaurant sales and a 10.9% increase in franchise revenue.

Comparable restaurant sales increased 3.2% system-wide for the fiscal first quarter ended March 22, 2016 compared to the 7.7% gain in the prior year fiscal first quarter, for a two-year growth rate of 10.9%. The Del Taco system has now generated comparable restaurant sales growth for ten consecutive quarters. Company-owned comparable restaurant sales increased 2.8%, marking the fifteenth consecutive quarter of comparable restaurant sales growth. Franchise comparable restaurant sales increased 3.7%.

Restaurant contribution, a non-GAAP financial measure, increased 3.4% year-over-year to $17.5 million. As a percentage of Company restaurant sales, restaurant contribution increased approximately 10 basis points year-over-year to 18.7%. The increase was driven by an approximately 70 basis point improvement in food and paper costs and an approximately 50 basis point improvement in occupancy and other operating expenses, partially offset by an approximately 110 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, was $13.1 million compared to $13.2 million in the previous year’s fiscal first quarter. A reconciliation between adjusted EBITDA and the nearest GAAP financial measure is included in the accompanying financial data.

Net income was $3.1 million, compared to net loss of ($4.9) million in the fiscal first quarter of 2015. Earnings per diluted share were $0.08, compared to a loss per diluted share of ($1.21) in the first quarter of 2015.

Share Repurchase Program

Under the $25 million share repurchase authorization announced in March 2016, the Company repurchased 86,679 shares of common stock during the fiscal first quarter of 2016 at an average price of $10.79 per share for an aggregate cost of approximately $0.9 million. Approximately $24.1 million remains under this authorization. Del Taco remains committed to enhancing long-term shareholder returns through all the means at its...


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