Conference Call and Webcast at 8:30 AM EDT
Today
Del Taco Holdings, Inc., (the “Company”) the second largest
Mexican-American QSR chain by units in the United States, operating
restaurants under the name Del Taco® (“Del Taco”) today announced
financial results for its 12-week fiscal first quarter ended March
24, 2015.
As a reminder, Del Taco Holdings, Inc. is anticipated to become
the sole direct subsidiary of Levy Acquisition Corp. (“LAC”)
(NASDAQ CM: TACO, TACOW, TACOU) upon completion of the proposed
merger of the Company and subsidiary of LAC, which is expected to
occur in late June or early July.
Fiscal First Quarter 2015 Highlights
- Total revenue of $94.4 million,
representing 8.9% growth from the fiscal first quarter of
2014;
- System-wide comparable restaurant sales
growth of 7.7% and company-owned comparable restaurant sales growth
of 7.9%, marking the sixth and eleventh consecutive quarter of
gains, respectively;
- Restaurant contribution margin of
18.6%, an improvement of approximately 140 basis points from the
prior year’s fiscal first quarter;
- Adjusted EBITDA, a non-GAAP financial
measure, of $13.2 million, representing 12.7% growth from the
previous year’s fiscal first quarter; and
- Income from operations of $8.7 million,
representing 33.6% growth from the same fiscal quarter last
year.
Paul J.B. Murphy, III, President and Chief Executive Officer of
Del Taco, commented, “We are very pleased with our first quarter
performance, characterized by strong comparable restaurant sales
gains, higher revenue and restaurant contribution, and a
substantial improvement in income from operations. These results
demonstrate our brand strength and momentum.”
Murphy continued, “We attribute our success to our Combined
Solutions strategy, the brand elevation strategy that we put into
place in 2013 which is designed to highlight our QSR+ positioning
and achieve reappraisal of the brand at every touch point. We
believe that we are in the early innings of this transformation as
Combined Solutions continues to gain traction and drive
results.”
Murphy concluded, “As we look ahead to the balance of 2015 and
beyond, we are excited about the pending merger with LAC which is
expected to close in late June or early July. We signed our
transaction documents in the first quarter and immediately began
working with Larry Levy and his team on strategy issues and
priorities for the future. There are no better partners to help
guide Del Taco through the next phase of growth.”
Review of Fiscal First Quarter 2015 Financial Results
Total revenue was $94.4 million, an increase of 8.9% compared to
$86.7 million in the fiscal first quarter of 2014. The growth in
revenue was primarily driven by a 9.0% increase in company
restaurant sales and an 8.4% increase in franchise revenue.
Comparable restaurant sales increased 7.7% system-wide for the
fiscal quarter ended March 24, 2015 compared to the 4.3% gain in
the prior year fiscal first quarter, for an impressive two-year
growth rate of 12.0%. The Del Taco system has now generated
comparable restaurant sales growth for six consecutive quarters.
Company-owned comparable restaurant sales increased 7.9%, driven by
a strong 3.9% gain in traffic, and marking the eleventh consecutive
quarter of comparable restaurant sales growth. Franchise comparable
restaurant sales increased 7.5%.
Restaurant contribution increased 18.3% year-over-year to $16.9
million. As a percentage of company restaurant sales, restaurant
contribution increased approximately 140 basis points
year-over-year to 18.6%. The increase was driven by an approximate
110 basis point improvement in food and paper costs, an approximate
20 basis point improvement in labor and related expenses, and an
approximate 20 basis point improvement in occupancy and other
operating expenses.
Adjusted EBITDA, a non-GAAP financial measure, was $13.2
million, an increase of 12.7% from $11.7 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.
Income from operations increased 33.6% to $8.7 million compared
to $6.5 million in the prior year fiscal first quarter.
Net loss was $4.9 million compared to net loss of $1.9 million
in the fiscal first quarter of 2014, and included $6.3 million of
transaction-related costs that consist of direct costs incurred in
connection with our two-step transaction.
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.
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 prospective 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.
Conference Call and Webcast
Del Taco will host a conference call to discuss financial
results for the fiscal first quarter 2015 today at 8:30 AM EDT.
Hosting the conference call and webcast will be Larry Levy,
Chairman of the Del Taco and LAC boards; Ari Levy, Del Taco
Director and LAC President and Chief Investment Officer; Paul J.B.
Murphy, III, President and Chief Executive Officer of Del Taco;
Steven L. Brake, Executive Vice President and Chief Financial
Officer of Del Taco; and John D. Cappasola, Jr., Executive Vice
President and Chief Brand Officer of Del Taco.
Interested parties may listen to the 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 13607918.
The webcast will be available at www.levyacquisitioncorp.com and
will be archived on the site shortly after the call has
concluded.
About Del Taco Holdings, Inc.
The Del Taco brand was founded in Southern California in 1964.
Today, Del Taco and its franchisees operate close to 550
restaurants in 16 states, serving more than three million guests
each week. Del Taco owns just over 300 of the stores in its system
with the balance owned and operated by franchisees.
At Del Taco, menu items 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, and marinated chicken grilled in-restaurant. The menu
includes classic Mexican dishes such as tacos, burritos,
quesadillas and nachos as well as American favorites including
hamburgers, crinkle-cut fries and shakes. Ahead of the 2014
celebration of Del Taco’s 50th anniversary, Del Taco launched the
UnFreshing Believable® campaign to communicate the lengths the
company goes to in order to deliver quality, made-to-order menu
items created with freshly-prepared ingredients.
For more information, please visit www.deltaco.com.
About Levy Acquisition Corp.
Levy Acquisition Corp. is a blank check company formed in
October 2013 for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or
similar business combination. In November 2013, LAC consummated its
initial public offering of 15 million units, each unit consisting
of one share of common stock and one-half of one warrant. Each
whole warrant entitles the holder thereof to purchase one share of
common stock at a price of $11.50 per share. Aggregate proceeds of
$150,000,000 from the IPO were placed in trust pending completion
of LAC’s initial business combination. On March 12, 2015, LAC
announced it had entered into a definitive merger agreement through
which it would acquire Del Taco following a shareholder vote likely
to take place in June.
For more information, please visit
www.levyacquisitioncorp.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 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 on LAC’s or 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
LAC’s or 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, uncertainties, assumptions
and other important factors include, but are not limited to, (1)
the occurrence of any event, change or other circumstances that
could give rise to the termination of the Agreement and Plan of
Merger for the proposed business combination (the "Business
Combination Agreement"); (2) the inability to complete the
transactions contemplated by the Business Combination Agreement due
to the failure to obtain approval of the stockholders of LAC or
other conditions to closing in the Business Combination Agreement;
(3) the ability to meet NASDAQ’s listing standards following the
Merger; (4) the risk that the proposed transaction disrupts current
plans and operations of Del Taco as a result of the announcement
and consummation of the transactions described herein; (5) the
ability to recognize the anticipated benefits of the proposed
business combination, which may be affected by, among other things,
competition, the ability of the combined company to grow and manage
growth profitably, maintain relationships with suppliers and retain
its management and key employees; (6) costs related to the proposed
business combination; (7) changes in applicable laws or
regulations; and (8) the possibility that Del Taco may be adversely
affected by other economic, business, and/or competitive
factors.
Forward-looking statements included in this release speak only
as of the date of this release. Neither LAC nor Del Taco undertakes
any obligation to update its forward-looking statements to reflect
events or circumstances after the date of this release. Additional
risks and uncertainties are identified and discussed in LAC’s
reports filed with the SEC and available at the SEC’s website at
www.sec.gov and the Company’s website at
www.levyacquisitioncorp.com.
Additional Information about the Merger and Where to Find
It
LAC filed with the Securities and Exchange Commission (SEC) a
preliminary proxy statement of Levy Acquisition Corp. in connection
with the proposed business combination and will mail a definitive
proxy statement and other relevant documents to its stockholders.
This press release does not contain all the information that should
be considered concerning the business combination. It is not
intended to provide the basis for any investment decision or any
other decision in respect to the proposed business combination. LAC
stockholders and other interested persons are advised to read the
preliminary proxy statement, the amendments thereto, and the
definitive proxy statement in connection with LAC’s solicitation of
proxies for the special meeting to be held to approve the business
combination, as these materials will contain important information
about Del Taco Holdings, Inc. and Levy Acquisition Corp. and the
proposed business combination. The definitive proxy statement will
be mailed to stockholders of Levy Acquisition Corp. as of a record
date to be established for voting on the business combination.
Stockholders will also be able to obtain copies of the proxy
statement, without charge, once available, at the SEC's Internet
site at http://www.sec.gov, or by directing a request to: Levy
Acquisition Corp., 444 North Michigan Avenue, Suite 3500, Chicago,
IL 60611, attention: Sophia Stratton.
Participants in the Solicitation
Levy Acquisition Corp. and its directors and officers may be
deemed participants in the solicitation of proxies to LAC’s
stockholders with respect to the transaction. A list of the names
of those directors and officers and a description of their
interests in LAC is contained in LAC’s preliminary proxy statement
for the proposed business combination.
Del Taco Holdings Inc. Condensed Consolidated Balance Sheets
(In thousands, except per share data) March
24, December 30, 2015 2014
Assets (unaudited) Current
assets: Cash and cash equivalents $ 10,531 $ 8,553 Accounts and
other receivables, net 2,775 3,383 Inventories 2,590 2,687 Prepaid
expenses and other current assets 2,652
3,816 Total current assets 18,548 18,439 Property and
equipment, net 87,213 85,164 Goodwill 281,200 281,200 Trademarks
144,000 144,000 Intangible assets, net 17,176 17,683 Other assets,
net 3,527 3,548 Total assets $
551,664 $ 550,034
Liabilities and
shareholders' equity Current liabilities: Accounts payable $
16,759 $ 14,645 Other accrued liabilities 28,565 32,088 Current
portion of long-term debt, capital lease obligations and deemed
landlord financing liabilities 1,610
1,634 Total current liabilities 46,934 48,367
Long-term debt, capital lease obligations and deemed landlord
financing liabilities, excluding current installments, net 247,283
321,764 Deferred income taxes 64,736 64,736 Warrant
liability – 8,309 Other non-current liabilities 23,737
25,454 Total liabilities 382,690
468,630 Commitments and contingencies Shareholders'
equity: Preferred stock $0.01 par value; 200,000 shares authorized;
none issued – – Common Stock $0.01 par value; authorized 5,800,000
shares; issued and outstanding 6,707,776 and 3,907,835 shares at
March 24, 2015 and December 30, 2014, respectively 67 39 Additional
paid-in capital 203,422 110,941 Accumulated other comprehensive
loss (408 ) (409 ) Retained earnings (34,107 )
(29,167 ) Total shareholders' equity 168,974
81,404 Total liabilities and shareholders' equity $
551,664 $ 550,034 Del Taco
Holdings Inc. Consolidated Statements of Comprehensive Loss
(Unaudited) (In thousands) 12 Weeks Ended 12
Weeks Ended March 24, March 25, 2015 2014 Revenues: Company
restaurant sales $ 90,883 $ 83,415 Franchise revenue 3,001 2,768
Franchise sublease income 534 487
Total revenue 94,418 86,670 Operating expenses:
Restaurant operating expenses: Food and paper costs 25,982 24,739
Labor and related expenses 27,923 25,805 Occupancy and other
operating expenses 20,034 18,544 General and administrative 7,296
6,049 Depreciation and amortization 3,792 4,588 Occupancy and other
- franchise subleases 505 465 Pre-opening costs 119 105 Impairment
of long-lived assets – – Restaurant closure charges, net 22 28 Gain
on disposal of assets – (199 ) Total
operating expenses 85,673 80,124
Income from operations 8,745 6,546 Interest expense
6,811 7,993 Transaction-related costs 6,316 – Debt modification
costs 135 – Change in fair value of warrant liability (35 )
– Total other expense 13,227
7,993 Loss from operations before
provision for income taxes (4,482 ) (1,447 ) Provision for
income taxes 458 440 Net loss $
(4,940 ) $ (1,887 ) Other comprehensive (loss) income:
Change in fair value of interest rate cap (21 ) (28 )
Reclassification of interest rate cap amortization included in net
loss (includes provision for income taxes of $0 for both 12 week
periods ended March 24, 2015 and March 25, 2014, respectively,
22 – Total other comprehensive
income (loss), net 1 (28 )
Comprehensive loss $ (4,939 ) $ (1,915 ) Del
Taco Holdings Inc. Consolidated Statements of Cash Flows
(Unaudited) (In thousands) 12 Weeks Ended 12
Weeks Ended March 24, March 25, 2015 2014
Operating
activities Net loss $ (4,940 ) $ (1,887 ) Adjustments to
reconcile net loss to net cash (used in) provided by operating
activities: Depreciation and amortization 3,793 4,555 Amortization
and write-off of leasehold interests (1 ) 33 Amortization of
deferred financing costs 371 281 Subordinated note interest
paid-in-kind 37 4,707 Debt modification costs 135 – Stock-based
compensation 532 287 Change in fair value of warrant liability (35
) – Gain on disposal of assets - (199 ) Changes in operating assets
and liabilities: Accounts receivable 608 349 Inventories 97 30
Prepaid expenses and other current assets 1,161 1,465 Accounts
payable 2,114 770 Other accrued liabilities (3,069 ) 2,261 Deferred
income and other non-current liabilities (1,554 )
(151 ) Net cash (used in) provided by operating activities
(751 ) 12,501
Investing activities
Purchases of property and equipment (5,333 ) (3,201 ) Proceeds from
disposal of property and equipment - 194 Purchases of other assets
(209 ) (172 ) Net cash used in investing activities
(5,542 ) (3,179 )
Financing activities
Proceeds from term loan, net of original issue discount of $1,446
23,654 – Proceeds from minority equity investment 91,236 Payment of
tax withholding related to option exercises and distribution of
restricted stock units (7,533 ) – Payments on term loans - (4,500 )
Payments on capital leases and deemed landlord financing (384 )
(384 ) Payment on subordinated notes (108,113 ) – Proceeds from
revolving credit facility 10,000 – Payments for debt issue costs
(589 ) – Settlement of vested restricted stock units -
(87 ) Net cash provided by (used in) financing
activities 8,271 (4,971 ) Increase in
cash and cash equivalents 1,978 4,351 Cash and cash equivalents at
beginning of period 8,553 6,071 Cash
and cash equivalents at end of period $ 10,531 $ 10,422
Supplemental schedule of non-cash activities:
Accrued property and equipment purchases $ 1,439 $ 600 Amortization
of interest rate cap into net loss, net of tax 22 – Change in other
asset for fair value of interest rate cap recorded to other
comprehensive loss, net (21 ) (28 ) Warrant liability reclassified
to equity upon exercise of warrants 8,274 – Del Taco
Holdings Inc. Reconciliation of Net Loss to EBITDA and Adjusted
EBITDA (Unaudited) (In thousands)
Twelve Weeks Ended March 24, 2015 March 25,
2014 Net loss $ (4,940 ) $ (1,887 ) Non-GAAP adjustments
Provision for income taxes 458 440 Interest expense, net 6,811
7,993 Depreciation and amortization 3,792 4,588
EBITDA $ 6,121 $ 11,134
Stock-based compensation expense 532 287 Gain on disposal of assets
- (199 ) Restaurant closure charges, net 22 28 Debt modification
costs 135 - Transaction-related costs 6,316 - Change in fair value
of warrant liability (35 ) - Pre-opening costs 119 105 Insurance
reserves adjustment - 362 Adjusted EBITDA $
13,210 $ 11,717
ICRMedia:Julia Young(646) 277-1280orInvestor Relations:Raphael
Gross(203) 682-8253
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