Positive Company-operated and Franchised
Fiscal Fourth Quarter Comparable Restaurant Sales
Aggregate Fiscal Year 2020 Debt Reduction
and Share Repurchases Exceed $34 Million
Board of Directors Initiates Quarterly Cash
Dividend of $0.04 per Share
Del Taco Restaurants, Inc. (“Del Taco” or the “Company”),
(NASDAQ: TACO), the second largest Mexican-American quick service
restaurant chain by units in the United States, today reported
preliminary unaudited fiscal fourth quarter and fiscal year 2020
sales results for the 16 and 52 week periods ending December 29,
2020. The Company also provided a liquidity and share repurchase
update and announced that its Board of Directors has authorized the
initiation of a quarterly cash dividend.
Management Commentary
John D. Cappasola, Jr., President and Chief Executive Officer of
Del Taco, commented, “We are very pleased to report a system-wide
comparable restaurant sales increase of 3.8% during the fourth
quarter consisting of positive results at both company-operated and
franchised restaurants. We are proud of our restaurant teams,
franchisees and support center staff for providing our guests great
food, great value, and great experiences that drove fiscal 2020
overall satisfaction scores to record levels while navigating a
challenging pandemic related operating environment.”
Cappasola continued, “Looking ahead to 2021, along with our five
drivers of sales acceleration, we are excited by the recent debut
of our Fresh Flex prototype. This bold new prototype has been very
well received and we believe it will help attract new franchisees
to better position us for accelerated long term system growth. It
will also play an integral role in our multiple year remodeling
program designed to contemporize the fleet and drive returns.”
Cappasola concluded, “The decision by our Board to initiate a
quarterly cash dividend reflects Del Taco’s ongoing commitment to
deliver value to our shareholders and is consistent with our
strategy to drive system-wide new unit growth led by franchising.
Our strong operating cash flow enabled over $34 million of
aggregate debt reduction plus share repurchases in 2020. At this
time, we believe our balance sheet is healthy and our core business
is well positioned for average unit volume growth, strong margin
performance and continued cash flow generation. These factors
support an expanded return of capital to shareholders, a
disciplined investment strategy to grow the Del Taco brand
primarily through accelerated franchise growth while furthering our
remodeling program and capital allocation to other sales,
productivity and technology initiatives.”
Fiscal Fourth Quarter 2020 Sales Highlights
- System-wide comparable restaurant sales increased 3.8%;
- Company-operated comparable restaurant sales increased
0.6%;
- Franchised comparable restaurant sales increased 7.5%;
- Total revenue of $156.1 million, representing a 0.6% decline
from the fiscal fourth quarter 2019;
- Company-operated restaurant sales of $141.7 million,
representing a 2.2% decline from the fiscal fourth quarter 2019
primarily due to fewer company-operated restaurants open during
2020 compared to 2019 due to our refranchising activity; and
- Company-operated comparable restaurant sales within Los
Angeles, Orange and Clark (Las Vegas) counties representing
approximately half of company-operated restaurants were notably
negative, while all other company-operated counties had positive
comparable restaurant sales.
Fiscal Year 2020 Sales Highlights
- System-wide comparable restaurant sales decreased 0.9%;
- Company-operated comparable restaurant sales decreased
2.9%;
- Franchised comparable restaurant sales increased 1.4%;
- Total revenue of $491.3 million, representing a 4.2% decrease
from the fiscal year 2019; and
- Company-operated restaurant sales of $446.8 million,
representing a 5.7% decline from the fiscal year 2019 in part due
to fewer company-operated restaurants open during 2020 compared to
2019 due to our refranchising activity.
The expected sales results are preliminary and unaudited, have
not been reviewed by the Company’s independent registered public
accountants, and remain subject to the completion of normal
quarter-end accounting procedures and adjustments and are subject
to change. The Company expects to release financial and operating
results for its fiscal fourth quarter and fiscal year ended
December 29, 2020 during March 2021.
New “Fresh Flex” Prototype
Last week, the Company debuted its highly anticipated store
prototype that reconceptualizes the restaurant inside and out
through striking exteriors and distinctive interiors to evoke the
brand’s contemporized feel. In addition, the flexible new design
expands real estate opportunities to help lower net investment
costs, provides ultimate convenience for guests and optimizes
operational efficiencies. For a 360-degree, animated fly-through of
the “Fresh Flex” design, click here:
http://www.deltacofranchise.com/freshflex
Liquidity
The Company reduced its outstanding revolving credit facility
borrowing by $9 million during the fiscal fourth quarter 2020 to
$115 million from $124 million at the end of the fiscal third
quarter 2020. At the end of fiscal year 2020 the Company’s debt,
net of cash, totaled $106.7 million compared to $143.4 million at
the end of fiscal year 2019, representing a reduction of
approximately $36.7 million. At the end of fiscal year 2020, the
Company had $117.7 million of remaining availability under its
revolving credit facility.
Common Stock Repurchase Program
The Company repurchased 496,356 shares of common stock at
average price of $8.49 per share for a total of $4.2 million during
the fiscal fourth quarter 2020. At the end of fiscal year 2020,
approximately $18.1 million remains under the $75 million
repurchase authorization.
Dividend Program Initiation
The Board of Directors has authorized the initiation of a
quarterly cash dividend program. The Company’s first quarterly
dividend of $0.04 per share of common stock is payable on February
23, 2021, to shareholders of record at the close of business on
February 2, 2021. While the Company intends to pay quarterly cash
dividends for the foreseeable future, all subsequent dividend
payments will be reviewed quarterly and declared by the Board of
Directors at its discretion.
Restaurant Development
Two franchised restaurants opened and two franchised restaurants
closed during the fiscal fourth quarter 2020. Del Taco ended fiscal
year 2020 with 295 company-operated and 301 franchised restaurants,
for a system-wide total of 596 restaurants.
ICR Conference Participation
John D. Cappasola, Jr., President and Chief Executive Officer
and Steven L. Brake, Executive Vice President and Chief Financial
Officer, will present at the ICR Conference on Tuesday, January 12,
2021. The presentation will begin at 12:30 PM Eastern Time and will
be webcast live and later archived.
The presentation has been posted to the Del Taco website at
investor.deltaco.com under the “News & Events” tab, where the
webcast will be viewable.
The Company will also be hosting meetings with institutional
investors on Tuesday and Wednesday, January 12 and 13, 2021.
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 their 18th
full month of operations and excludes restaurant closures.
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. Del Taco's menu items taste better
because they are made with quality ingredients like fresh grilled
chicken and carne asada steak, sliced avocado, freshly grated
cheddar cheese, slow-cooked beans made from scratch, and creamy
Queso Blanco.
Founded in 1964, today Del Taco serves more than three million
guests each week at its approximately 600 restaurants across 16
states. Del Taco’s commitment to providing guests with the best
quality and value for their money originates from cooking,
chopping, shredding and grilling menu items from scratch. 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 on 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 include, without
limitation, the impact of the COVID-19 pandemic, 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 (including
minimum wage regulations), food safety and foodborne illness
concerns, our inability to manage existing and to obtain additional
franchisees, our inability to successfully execute our portfolio
optimization strategy, 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 Part I. Item
1A. Risk Factors in our Annual Report on Form 10-K for the year
ended December 31, 2019 and Part II., Item 1A. Risk Factors in our
Quarterly Report on Form 10-Q for the period ended September 8,
2020, 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210112005343/en/
Investor Relations Contact: Raphael Gross (203) 682-8253
investor@deltaco.com
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