Del Taco Restaurants (TACO) Tops Q1 EPS by 2c

Del Taco Restaurants (NASDAQ: TACO) reported Q1 EPS of $0.07, $0.02 better than the analyst estimate of $0.05. Revenue for the quarter came in at $115.5 million versus the consensus estimate of $115.06 million.

Fiscal First Quarter 2021 Highlights

• Comparable restaurant sales results compared to the fiscal first quarter 2020:
  • System-wide comparable restaurant sales increased 9.1%;
  • Company-operated comparable restaurant sales increased 4.9%;
  • Franchise comparable restaurant sales increased 14.0%;
• Total revenue of $115.5 million, representing 5.2% growth from the fiscal first quarter 2020;
• Company-operated restaurant sales of $103.6 million, representing 3.2% growth from the fiscal first quarter 2020;
• Net income of $2.6 million, or $0.07 per diluted share, compared to net loss of $102.5 million, or $2.76 per diluted share, in the fiscal first quarter 2020;
• Adjusted net income* of $2.5 million, or $0.07 per diluted share, compared to adjusted net loss* of $0.3 million, or $0.01 per diluted share, in the fiscal first quarter 2020;
• Restaurant contribution* margin of 16.0% compared to 12.7% in the fiscal first quarter 2020;
• Adjusted EBITDA* of $11.6 million compared to $8.7 million in the fiscal first quarter 2020; and
• Two company-operated restaurants and three franchised restaurant openings, and two franchised restaurant closures.

Management Commentary

John D. Cappasola, Jr., President and Chief Executive Officer of Del Taco, commented, “We are pleased to have delivered a very strong first quarter that sets us up for a great year at Del Taco. Although the operating environment remains very difficult due to continued COVID related impacts and very challenging labor availability, our team is doing an outstanding job growing sales by serving guests through our drive-thru, take-out, and delivery channels while managing costs effectively. This resulted in significant first quarter restaurant contribution and adjusted EBITDA growth and margin expansion.”

Cappasola continued, “Our marketing strategy is centered on innovation and value while accentuating the convenience we offer guests through our drive-thru, take-out, and delivery channels. In the first quarter, we launched Honey Mango Crispy Chicken followed by our seasonal Lent promotion that featured Crispy Jumbo Shrimp. In the second quarter, we have since introduced a new Honey Chipotle BBQ Crispy Chicken and re-launched our Crunchtada platform with a $1, $2 and $3 line up.”

Cappasola concluded, “On the development front, we opened five system-wide Del Taco restaurants during the first quarter and plan to open a dozen system-wide restaurants this year. We are encouraged by the recent signing of two new development agreements totaling 18 restaurants in the Southeast with two experienced multi-concept QSR franchise groups. One agreement includes commitments in South Carolina and Georgia, and the other agreement includes a commitment for Florida’s west coast. We view these signings and other active discussions as indicative of our brand relevance across a broad geographic footprint as we aim to accelerate franchise growth.”

Reiterated Fiscal Year 2021 Guidelines

Due to the continued uncertainty surrounding COVID-19 and its impact on the business, the Company is not able to provide a full outlook with respect to the 2021 fiscal year. However, the Company is able to reiterate the following guidelines for fiscal 2021 issued on March 8, 2021:

• Commodity inflation of approximately 1%, excluding any adverse impacts from COVID-19 on the supply chain;
• Labor and related inflation of approximately 6%;
• Menu price increase of approximately 4%;
• Modest restaurant contribution margin* expansion compared to the 16.1% achieved during fiscal 2020;
• General and administrative expenses, inclusive of stock-based compensation, at approximately 9.0% of total revenue;
• Effective tax rate of approximately 27%;
• Capital expenditures in the low $30 million range, including expenditures to maintain or enhance existing restaurants, company-operated restaurant openings, the test remodel program, and various discretionary technology and restaurant level investments;
• Four company-operated restaurant openings, of which two have already opened; and
• Eight franchised restaurant openings, of which four have already opened, for a dozen system-wide openings.

For earnings history and earnings-related data on Del Taco Restaurants (TACO) click here.

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