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| 8-K - 8-K - Del Frisco's Restaurant Group, Inc. | form8-kpressrelease.htm |
EXHIBIT 99.1
Investor Relations Contact: Raphael Gross 203-682-8253 investorrelations@dfrg.com Media Relations Contact: Alecia Pulman 203-682-8200 DFRGPR@icrinc.com |  |
Del Frisco’s Restaurant Group, Inc. Reports Second Quarter 2018 Results
Updates Fiscal Year 2018 Guidance; Issues Long-Term Growth Model
IRVING, Texas, July 27, 2018 - (GLOBE NEWSWIRE) - Del Frisco’s Restaurant Group, Inc. (“Del Frisco’s”) (NASDAQ: DFRG) today reported financial results for the second quarter ended June 26, 2018. We also updated our guidance for fiscal year 2018 to reflect the impact of expected contributions from our recent acquisition of Barteca Restaurant Group (“Barteca” or “Emerging Brands”) and issued our long-term growth model for the “new” Del Frisco’s.
Subsequent Event to the Second Quarter 2018
On June 27, 2018, Del Frisco’s completed its acquisition of Barteca, consisting of Barcelona Wine Bar (“Barcelona”) and bartaco, for $325 million in cash, subject to customary adjustments set forth in the purchase agreement for Barteca’s consolidated debt, cash and working capital. Barcelona and bartaco continue to be led by Jeff Carcara, who was named Chief Executive Officer of Emerging Brands, reporting to Norman Abdallah, Chief Executive Officer of Del Frisco’s. Mr. Carcara has been joined by certain members of his senior management team, including both Brand Presidents, who together will ensure continuity for these Brands and thereby limit execution risk.
Since the acquisition closed on the first day of Del Frisco’s third quarter 2018, Barteca’s operating performance is not included in Del Frisco’s financial results for the second quarter 2018. However, we have provided a short summary of Barteca’s operating results for Barteca’s second quarter 2018 to June 26, 2018 and year-to-date 2018 performance for reference purposes in this release.
Key Highlights from the 13-week Second Quarter 2018 Compared to the 12-week Second Quarter 2017 Include:
• | Consolidated revenues increased 9.4% to $90.0 million from $82.3 million primarily due to the additional calendar week in the second quarter of 2018 compared to the second quarter of 2017. |
• | Total comparable restaurant sales decreased 1.4%, consisting of a 1.2% decrease at Del Frisco’s Double Eagle Steakhouse, a 0.7% increase at Del Frisco’s Grille, and a 6.0% decrease at Sullivan’s Steakhouse. |
• | Cost of sales, as a percentage of consolidated revenues, increased to 28.8% from 28.5%. |
• | GAAP net loss of $(1.6) million, or $(0.08) per diluted share, compared to GAAP net income of $2.1 million, or $0.09 per diluted share. |
• | Adjusted net income* of $4.4 million, or $0.22 per diluted share, compared to Adjusted net income* of $3.4 million, or $0.15 per diluted share. |
• | Adjusted EBITDA* decreased 8.3% to $10.2 million from $11.1 million. As a percentage of consolidated revenues, adjusted EBITDA margin decreased 220 basis points to 11.3% from 13.5%. |
• | Restaurant-level EBITDA* increased 10.8% to $18.7 million from $16.9 million. As a percentage of consolidated revenues, restaurant-level EBITDA margin increased 20 basis points to 20.7% from 20.5%. |
* | Adjusted net income, adjusted EPS, adjusted EBITDA, and restaurant-level EBITDA are non-GAAP measures. For a reconciliation of adjusted net income, adjusted EPS, adjusted EBITDA, and restaurant-level EBITDA to GAAP net income and operating (loss)/income, respectively, and a discussion of why we consider them useful, see the reconciliation of non-GAAP measures accompanying this release. |
Norman Abdallah, Chief Executive Officer of Del Frisco's Restaurant Group, Inc., said, "Through our acquisition of Barcelona and bartaco, we have taken Del Frisco’s vision of celebrating life in restaurants to the next level with ‘best in class’ concepts that are not only highly complementary to each other but also provide competitive advantages to us in the marketplace. Our long-term model is predicated on creating shareholder value by growing comparable restaurant sales, disciplined expansion of our restaurant base by 10% to 12% each year, maintaining our high restaurant-level EBITDA margins, and leveraging G&A costs. Taken together, our goal is to increase revenues by at least 10% and adjusted EBITDA by at least 15% annually and generate more than $700
million in consolidated revenues and more than $100 million in adjusted EBITDA by fiscal year-end 2021, all while substantially lowering our indebtedness to between 2.5x and 3.0x adjusted EBITDA. We intend to reduce our leverage through free cash flow generation and have also filed a shelf registration to maximize our future flexibility.”
Abdallah continued, “The organizational structure that is already in place at Del Frisco’s will enable us to effectively integrate the Emerging Brands and realize synergies as a larger, more scalable entity. To help support these efforts, we have engaged with a leading consulting firm to assist us with the integration process that we would expect to be completed in approximately 12 to 18 months. In the meantime, our Emerging Brands’ team is capable of operating on a self-sufficient basis.”
Abdallah concluded, “Second quarter financial results met our expectations for adjusted net income, excluding the benefit from a change in tax rate, which contributed an additional $0.10 to our diluted EPS, resulting in reported adjusted diluted EPS of $0.22. Although comparable restaurant sales were slightly negative overall, the Double Eagle ended the second quarter with positive trends in its June fiscal period, Del Frisco’s Grille turned positive after negative trends in the first quarter, and Sullivan’s improved sequentially relative to the previous quarter.”
Review of Second Quarter 2018 Operating Results
Consolidated revenues increased $7.7 million, or 9.4%, to $90.0 million in the second quarter of 2018 from $82.3 million in the second quarter of 2017. The increase reflects 54 additional operating weeks to a total of 682, primarily due to the additional calendar week in the second quarter of 2018 compared to the second quarter of 2017 as a result of our change in fiscal quarter calendar. This was partially offset by the addition of one restaurant and the closure of four restaurants on a year-over-year basis.
Total comparable restaurant sales decreased 1.4%, consisting of a 7.5% decrease in customer counts, partially offset by a 6.1% increase in average check, primarily driven by mix resulting from menu initiatives. Comparable restaurant sales decreased 1.2% at Del Frisco’s Double Eagle Steakhouse, consisting of a 6.3% decrease in customer counts, partially offset by a 5.1% increase in average check. Comparable restaurant sales increased 0.7% at Del Frisco’s Grille, consisting of a 7.0% decrease in customer counts, offset by a 7.7% increase in average check. Comparable restaurant sales decreased 6.0% at Sullivan’s Steakhouse, consisting of an 11.1% decrease in customer counts, partially offset by a 5.1% increase in average check.
General and administrative costs increased to $8.5 million in the second quarter of 2018 from $5.8 million in the second quarter of 2017. As a percentage of consolidated revenues, general and administrative costs increased to 9.4% from 7.0%. This increase was due to the additional calendar week in the second quarter of 2018 compared to the second quarter of 2017 as a result of our change in fiscal quarter calendar, and investments in the restaurant support center and regional management to support future growth.
Acquisition and disposition costs were $4.4 million in the second quarter of 2018 while lease termination and closing costs rose to $1.0 million in the second quarter of 2018 from $0.5 million in the second quarter of 2017.
GAAP net loss was $(1.6) million, or $(0.08) per diluted share, in the second quarter of 2018, compared to GAAP net income of $2.1 million, or $0.09 per diluted share, in the second quarter of 2017.
Adjusted net income* was $4.4 million, or $0.22 per diluted share, in the second quarter of 2018 compared to Adjusted net income* of $3.4 million, or $0.15 per diluted share in the second quarter of 2017.
Adjusted EBITDA* decreased 8.3% to $10.2 million from $11.1 million. As a percentage of consolidated revenues, restaurant-level EBITDA margin decreased 220 basis points to 11.3% from 13.5%.
Restaurant-level EBITDA* increased $1.8 million, or 10.8%, to $18.7 million in the second quarter of 2018. As a percentage of consolidated revenues, restaurant-level EBITDA* increased to 20.7% from 20.5%.
Strategic Alternatives Process for Sullivan’s Steakhouse
As part of our strategic alternatives process for Sullivan’s Steakhouse, we have received several bids from interested parties to purchase the concept and continue to engage in discussions. There can be no assurance if or when we will consummate a transaction or the terms of any transaction.
Fiscal Year 2018 Guidance & Long-Term Growth Outlook
The following statements are not guarantees of future performance, and therefore, undue reliance should not be placed upon them. We refer you to the statement below regarding Forward-Looking Statements and our recent filings with the SEC for a more detailed discussion of the risks that could impact our future operating results and financial condition.
Based upon current information, except as otherwise noted below, we are updating our guidance for the 52-week fiscal year 2018, which ends on December 25, 2018, to reflect our recent acquisition. This guidance makes no assumptions regarding the potential sale of Sullivan’s Steakhouse.
• | Total comparable restaurant sales of (1.5)% to 0.5%. |
• | Eleven to thirteen restaurant openings consisting of up to four Del Frisco’s Double Eagle Steakhouses, three Del Frisco’s Grilles, and post-acquisition two Barcelonas and up to four bartacos. |
• | Four to seven restaurant closures consisting of up to four Del Frisco’s Grilles, two Sullivan’s Steakhouses, and one legacy bartaco. Two Del Frisco’s Grilles and two Sullivan’s Steakhouses have already closed. |
• | Restaurant-level EBITDA** of 20.5% to 21.5% of consolidated revenues. |
• | General and administrative costs of approximately $39 million to $42 million, which excludes items we consider non-recurring in nature. |
• | Pre-opening expenses of $8 million to $9 million. |
• | Gross capital expenditures (before tenant allowances) of $70 million to $75 million. |
• | Adjusted EBITDA** of $55 million to $59 million. |
By the end of fiscal year 2021, we are targeting generation of at least $700 million in consolidated revenues and at least $100 million in adjusted EBITDA**. To achieve these long term targets, amongst the assumptions that would need to be satisfied, we would need to sell Sullivan’s Steakhouse and satisfy the following annual goals over the next three years:
• | Consolidated revenue growth of at least 10%. |
• | Total comparable restaurant sales growth of 0% to 2%. |
• | Total net restaurant growth of 10% to 12% annually. |
• | Maintaining strong restaurant-level EBITDA** margins. |
• | General and administrative cost leverage. |
• | Adjusted EBITDA** growth of at least 15%. |
We are also targeting net debt to Adjusted EBITDA** of 2.5x to 3.0x by the end of fiscal year 2021.
**A reconciliation of the differences between the non-GAAP expectations and GAAP measures for adjusted net income, adjusted EPS, adjusted EBITDA, and restaurant-level EBITDA generally is not available without unreasonable effort due to the potentially high variability, complexity and low visibility as to the items that would be excluded from the GAAP measure in the relevant future period, such as unusual gains and losses, the ultimate outcome of pending litigation, the impact and timing of potential acquisitions and divestitures and other structural changes or their probable significance. The variability of the excluded items may have a significant, and potentially unpredictable, impact on our future GAAP results.
Development
Del Frisco’s Double Eagle Steak House
We opened a location in Boston, MA during the third quarter and we expect to open a location in Atlanta, GA during the third quarter and a location in each of San Diego and Century City, CA during the fourth quarter. We have also signed leases for locations in each of Pittsburgh, PA and Santa Clara, CA with projected openings next year.
Barcelona Wine Bar
We expect to open a location in each of Charlotte and Raleigh, NC during the fourth quarter.
bartaco
Prior to the acquisition, bartaco opened a location in Fort Worth, TX during the second quarter. We opened a location in North Hills, NC during the third quarter and expect to open locations in each of Fort Point, MA, Madison, WI and Dallas, TX during the fourth quarter.
Del Frisco’s Grille
We expect to open a location in each of Philadelphia, PA and Fort Lauderdale, FL during the fourth quarter.
Barteca Second Quarter and Year-to-Date 2018 Operating Results
Operating results for Barteca are not included in Del Frisco’s financial results for the second quarter ended June 26, 2018. Barteca’s second quarter was scheduled to end on July 3, 2018 and was not completed due to the closing of the acquisition. Therefore, the operating results for Barteca are from April 3, 2018 to June 26, 2018, the portion of the second quarter 2018 that occurred prior
to the acquisition and have been presented based on historical data provided by Barteca, In future filings, we may conform the Emerging Breands segment to the presentation of Del Frisco's.
• | Net restaurant sales were $36.9 million during the second quarter of 2018 and $68.2 million for the first two quarters of 2018. |
• | Net restaurant sales at Barcelona were $16.7 million during the second quarter of 2018 and $31.6 million for the first two quarters of 2018. |
• | Net restaurant sales at bartaco were $20.1 million during the second quarter of 2018 and $36.2 million for the first two quarters of 2018. |
• | Total comparable restaurant sales decreased 1.2% during the second quarter of 2018 and increased 0.5% on a year-to-date basis. |
• | Comparable restaurant sales increased 1.8% at Barcelona Wine Bar during the second quarter of 2018 and increased 2.0% on a year-to-date basis. |
• | Comparable restaurant sales decreased 4.0% at bartaco during the second quarter of 2018 and decreased 1.1% on a year-to-date basis. Excluding one underperforming location, comparable restaurant sales would have been positive during the second quarter of 2018 and on a year-to-date basis. |
• | Restaurant-level EBITDA* at Barcelona Wine Bar was $4.4 million, or 26.7%, as a percentage of net restaurant sales during the second quarter of 2018 and $7.9 million, or 25.0%, as a percentage of net restaurant sales on a year-to-date basis. |
• | Restaurant-level EBITDA* at bartaco was $6.0 million, or 30.1%, as a percentage of net restaurant sales, during the second quarter of 2018 and $10.4 million, or 28.6%, as a percentage of net restaurant sales on a year-to-date basis. |
Conference Call
We will host a conference call this morning at 7:30 AM Central Time to discuss our second quarter 2018 financial results, our updated guidance for fiscal year 2018, and our long-term growth outlook. Hosting the conference call will be Norman Abdallah, Chief Executive Officer and Neil Thomson, Chief Financial Officer.
The conference call can be accessed live over the phone by dialing 323-794-2423. A replay will be available afterwards and can be accessed by dialing 412-317-6671; the passcode is 3041445. The replay will be available until August 3, 2018.
The conference call will also be webcast live from our corporate website at www.DFRG.com under the investor relations section. An archive of the webcast will also be available through the corporate website shortly after the conference call has concluded.
About Del Frisco’s Restaurant Group, Inc.
Based in Irving, Texas, near Dallas, Del Frisco's Restaurant Group, Inc. is a collection of 84 restaurants across 24 states and Washington, D.C., including Del Frisco's Double Eagle Steakhouse, Barcelona Wine Bar, bartaco, Del Frisco's Grille, and Sullivan's Steakhouse.
Del Frisco's Double Eagle Steakhouse serves flawless cuisine that's bold and delicious, and offers an extensive award-winning wine list and a level of service that reminds guests that they're the boss. Barcelona serves tapas both simple and elegant, using the best seasonal picks from local markets and unusual specialties from Spain and the Mediterranean, and offers an extensive selection of wines from Spain and South America featuring over 40 wines by the glass. bartaco combines fresh, upscale street food and award-winning cocktails made with artisanal spirits and freshly-squeezed juices with a coastal vibe in a relaxed environment. Del Frisco's Grille is modern, inviting, stylish and fun, taking the classic bar and grill to new heights, and drawing inspiration from bold flavors and market-fresh ingredients. Sullivan's Steakhouse is a great neighborhood place for a big night out on the town - with outstanding food, hand-shaken martinis, an award winning wine list, and live entertainment all under one roof.
For further information about our restaurants, to make reservations, or to purchase gift cards, please visit: www.DelFriscos.com, www.BarcelonaWineBar.com, www.bartaco.com, www.DelFriscosGrille.com, and www.SullivansSteakhouse.com. For more information about Del Frisco's Restaurant Group, Inc., please visit www.DFRG.com.
Forward-Looking Statements
Certain statements in this communication, including the Company’s guidance and long term goals, are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. We use words such as “anticipate”, “believe”, “could”, “should”, “estimate”, “expect”, “intend”, “may”, “predict”, “project”, “target”, “goal” and similar terms and phrases, including references to assumptions, to identify forward-looking statements. All statements other than statements of historical facts contained in this communication, including references to assumptions or statements regarding our updated outlook for 2018, the Company’s long
term goals, the anticipated impact of our acquisition of Barteca (the “Barteca Acquisition”) on our financial results and the future results of our operations and financial position, are forward-looking statements. The forward-looking statements in this communication are based upon a number of estimates and assumptions and are based on information available to us as of the date any such statements are made. We assume no obligation to update these forward-looking statements, including our long term goals. Our long term goals are not projections or guarantees of future performance.
The forward-looking statements in this communication are inherently subject to significant business, economic, regulatory and competitive risks and uncertainties, many of which are beyond the Company’s control and are based upon assumptions with respect to future business strategies and decisions which are subject to change. Actual results could differ materially from those described in the statements. These risks and uncertainties include, but are not limited to the following: (i) access to financing for the combined companies on a timely basis and on reasonable terms; (ii) the impact of the combined companies’ debt levels on the ability to operate following the Barteca Acquisition; (iii) risks relating to the integration of operations, products and employees into the combined company and the possibility that the anticipated synergies and other benefits of the Barteca Acquisition will not be realized in whole or in part within expected timeframes, if at all; and (iv) the impact of the Barteca Acquisition on the combined companies’ business Additional factors relating to our business that could cause actual results to differ materially from our forward-looking statements include (i) our ability to achieve and manage our planned expansion, such as the availability of a sufficient number of suitable new restaurant sites and the availability of qualified employees, (ii) our ability to achieve expected levels of comparable restaurant sales increases, (iii) the performance of new restaurants and their impact on existing restaurant sales, (iv) increases in the cost of food ingredients and other key supplies, (v) the risk of food-borne illnesses and other health concerns about our food, (vi) the potential for increased labor costs or difficulty retaining qualified employees, including as a result of immigration enforcement activities, (vii) risks relating to our expansion into new markets, (viii) the impact of federal, state or local government regulations relating to our employees and the sale of food or alcoholic beverages, (ix) our ability to effectuate our planned divestiture of Sullivan’s Steakhouse on our intended timeline, uncertainty regarding the terms of any such divestiture and our ability to generate a return on such divestiture consistent with our strategy and (x) the risks set forth in our reports filed with the Securities and Exchange Commission.
DEL FRISCO'S RESTAURANT GROUP, INC.
Condensed Consolidated Statements of Operations - Unaudited
13 Weeks Ended(1) | 12 Weeks Ended(1) | 26 Weeks Ended(1) | 24 Weeks Ended(1) | |||||||||||||||||||||||||
(Amounts in thousands, except per share data) | June 26, 2018 | June 13, 2017 | June 26, 2018 | June 13, 2017 | ||||||||||||||||||||||||
Revenues | $ | 90,040 | 100.0 | % | $ | 82,301 | 100.0 | % | $ | 179,343 | 100.0 | % | $ | 166,191 | 100.0 | % | ||||||||||||
Costs and expenses: | ||||||||||||||||||||||||||||
Costs of sales | 25,956 | 28.8 | 23,433 | 28.5 | 52,110 | 29.1 | 47,214 | 28.4 | ||||||||||||||||||||
Restaurant operating expenses (excluding depreciation and amortization shown separately below) | 43,407 | 48.2 | 40,388 | 49.1 | 87,622 | 48.9 | 81,280 | 48.9 | ||||||||||||||||||||
Marketing and advertising costs | 1,997 | 2.2 | 1,618 | 2.0 | 4,016 | 2.2 | 2,918 | 1.8 | ||||||||||||||||||||
Pre-opening costs | 1,403 | 1.6 | 1,619 | 2.0 | 2,549 | 1.4 | 2,008 | 1.2 | ||||||||||||||||||||
General and administrative costs | 8,502 | 9.4 | 5,765 | 7.0 | 16,834 | 9.4 | 12,076 | 7.3 | ||||||||||||||||||||
Donations | 16 | — | — | — | 58 | — | — | — | ||||||||||||||||||||
Consulting project costs | 622 | 0.7 | 597 | 0.7 | 854 | 0.5 | 2,633 | 1.6 | ||||||||||||||||||||
Acquisition and disposition costs | 4,358 | 4.8 | — | — | 5,015 | 2.8 | — | — | ||||||||||||||||||||
Reorganization severance | — | — | 719 | 0.9 | 113 | 0.1 | 719 | 0.4 | ||||||||||||||||||||
Lease termination and closing costs | 1,023 | 1.1 | 540 | 0.7 | 1,389 | 0.8 | 538 | 0.3 | ||||||||||||||||||||
Impairment charges | — | — | — | — | 84 | — | — | — | ||||||||||||||||||||
Depreciation and amortization | 5,293 | 5.9 | 4,997 | 6.1 | 10,475 | 5.8 | 9,813 | 5.9 | ||||||||||||||||||||
Total costs and expenses | 92,577 | 102.8 | 79,676 | 96.8 | 181,119 | 101.0 | 159,199 | 95.8 | ||||||||||||||||||||
Insurance settlement | — | — | 308 | 0.4 | — | — | 348 | 0.2 | ||||||||||||||||||||
Operating income (loss) | (2,537 | ) | (2.8 | ) | 2,933 | 3.6 | (1,776 | ) | (1.0 | ) | 7,340 | 4.4 | ||||||||||||||||
Other income expense, net: | ||||||||||||||||||||||||||||
Interest expense | (510 | ) | (0.6 | ) | (9 | ) | — | (813 | ) | (0.5 | ) | (19 | ) | — | ||||||||||||||
Other | (50 | ) | (0.1 | ) | (10 | ) | — | (49 | ) | — | (11 | ) | — | |||||||||||||||
Income (loss)before income taxes | (3,097 | ) | (3.4 | ) | 2,914 | 3.5 | (2,638 | ) | (1.5 | ) | 7,310 | 4.4 | ||||||||||||||||
Income tax expense (benefit) | (1,535 | ) | (1.7 | ) | 824 | 1.0 | (1,476 | ) | (0.8 | ) | 1,910 | 1.1 | ||||||||||||||||
Net income (loss) | $ | (1,562 | ) | (1.7 | )% | $ | 2,090 | 2.5 | % | $ | (1,162 | ) | (0.6 | )% | $ | 5,400 | 3.2 | % | ||||||||||
Net income (loss) per average common share: | ||||||||||||||||||||||||||||
Basic: | $ | (0.08 | ) | $ | 0.10 | $ | (0.06 | ) | $ | 0.24 | ||||||||||||||||||
Diluted: | $ | (0.08 | ) | $ | 0.09 | $ | (0.06 | ) | $ | 0.24 | ||||||||||||||||||
Weighted-average number of common shares outstanding: | ||||||||||||||||||||||||||||
Basic: | 20,377 | 21,722 | 20,347 | 22,391 | ||||||||||||||||||||||||
Diluted: | 20,377 | 22,061 | 20,347 | 22,720 | ||||||||||||||||||||||||
1. | Beginning in fiscal 2018, we changed to a fiscal quarter calendar where each quarter contains 13 weeks, other than in a 53-week year where the last quarter of the year will contain 14 weeks. Previously, the first three quarters of our fiscal year consisted of 12 weeks each and the fourth quarter consisted of 16 weeks or 17 weeks in a 53-week year. The second quarter ended June 26, 2018 contained 13 weeks, the quarter ended June 13, 2017 contained 12 weeks, the first two quarters ended June 26, 2018 contained 26 weeks and the first two quarters ended June 13, 2017 contained 24 weeks. See Note 1, Business and Basis of Presentation in the notes to our consolidated financial statements included in our quarterly report on Form 10-Q for the quarter ended June 26, 2018. |
DEL FRISCO'S RESTAURANT GROUP, INC.
Selected Condensed Consolidated Balance Sheet Data - Unaudited
As of | ||||||||
(Amounts in thousands) | June 26, 2018 | December 26, 2017 | ||||||
Cash and cash equivalents | $ | 897 | $ | 4,594 | ||||
Total assets | 353,122 | 326,787 | ||||||
Long-term debt | 40,476 | 24,477 | ||||||
Total stockholders' equity | 190,199 | 189,087 | ||||||
DEL FRISCO'S RESTAURANT GROUP, INC.
Segment Information - Unaudited
13 Weeks Ended June 26, 2018 | |||||||||||||||||||||
(Amounts in thousands) | Double Eagle | Grille | Sullivan's | ||||||||||||||||||
Revenues | $ | 43,471 | 100.0 | % | $ | 32,247 | 100.0 | % | $ | 14,322 | 100.0 | % | |||||||||
Costs and expenses: | |||||||||||||||||||||
Cost of sales | 12,780 | 29.4 | % | 8,757 | 27.2 | % | 4,419 | 30.9 | % | ||||||||||||
Restaurant operating expenses: | |||||||||||||||||||||
Labor | 9,986 | 23.0 | % | 10,199 | 31.6 | % | 4,144 | 28.9 | % | ||||||||||||
Operating expenses | 5,011 | 11.5 | % | 4,395 | 13.6 | % | 2,218 | 15.5 | % | ||||||||||||
Occupancy | 3,545 | 8.2 | % | 3,201 | 9.9 | % | 708 | 4.9 | % | ||||||||||||
Restaurant operating expenses | 18,542 | 42.7 | % | 17,795 | 55.2 | % | 7,070 | 49.4 | % | ||||||||||||
Marketing and advertising costs | 1,019 | 2.3 | % | 647 | 2.0 | % | 331 | 2.3 | % | ||||||||||||
Restaurant-level EBITDA | 11,130 | 25.6 | % | 5,048 | 15.7 | % | 2,502 | 17.5 | % | ||||||||||||
Restaurant operating weeks | 169 | 316 | 197 | ||||||||||||||||||
Average weekly volume | $ | 257.2 | $ | 102.0 | $ | 72.7 | |||||||||||||||
12 Weeks Ended June 13, 2017(1) | |||||||||||||||||||||
(Amounts in thousands) | Double Eagle | Grille | Sullivan's | ||||||||||||||||||
Revenues | $ | 40,194 | 100.0 | % | $ | 26,487 | 100.0 | % | $ | 15,620 | 100.0 | % | |||||||||
Costs and expenses: | |||||||||||||||||||||
Cost of sales | 11,912 | 29.6 | % | 6,750 | 25.5 | % | 4,771 | 30.5 | % | ||||||||||||
Restaurant operating expenses: | |||||||||||||||||||||
Labor | 9,611 | 23.9 | % | 8,889 | 33.6 | % | 4,676 | 29.9 | % | ||||||||||||
Operating expenses | 4,234 | 10.5 | % | 3,534 | 13.3 | % | 2,274 | 14.6 | % | ||||||||||||
Occupancy | 2,808 | 7.0 | % | 3,002 | 11.3 | % | 1,360 | 8.7 | % | ||||||||||||
Restaurant operating expenses | 16,653 | 41.4 | % | 15,425 | 58.2 | % | 8,310 | 53.2 | % | ||||||||||||
Marketing and advertising costs | 720 | 1.8 | % | 461 | 1.7 | % | 437 | 2.8 | % | ||||||||||||
Restaurant-level EBITDA | 10,909 | 27.1 | % | 3,851 | 14.5 | % | 2,102 | 13.5 | % | ||||||||||||
Restaurant operating weeks | 150 | 276 | 202 | ||||||||||||||||||
Average weekly volume | $ | 268.0 | $ | 96.0 | $ | 77.3 | |||||||||||||||
(1) | See footnote 1 to the Condensed Consolidated Statement of Income above. |
26 Weeks Ended June 26, 2018 | |||||||||||||||||||||
(Amounts in thousands) | Double Eagle | Grille | Sullivan's | ||||||||||||||||||
Revenues | $ | 87,425 | 100.0 | % | $ | 61,639 | 100.0 | % | $ | 30,279 | 100.0 | % | |||||||||
Costs and expenses: | |||||||||||||||||||||
Cost of sales | 25,948 | 29.7 | % | 16,806 | 27.3 | % | 9,356 | 30.9 | % | ||||||||||||
Restaurant operating expenses: | |||||||||||||||||||||
Labor | 20,353 | 23.3 | % | 20,012 | 32.5 | % | 8,637 | 28.5 | % | ||||||||||||
Operating expenses | 9,881 | 11.3 | % | 8,566 | 13.9 | % | 4,607 | 15.2 | % | ||||||||||||
Occupancy | 7,153 | 8.2 | % | 6,593 | 10.7 | % | 1,820 | 6.0 | % | ||||||||||||
Restaurant operating expenses | 37,387 | 42.8 | % | 35,171 | 57.1 | % | 15,064 | 49.8 | % | ||||||||||||
Marketing and advertising costs | 1,914 | 2.2 | % | 1,282 | 2.1 | % | 820 | 2.7 | % | ||||||||||||
Restaurant-level EBITDA | 22,176 | 25.4 | % | 8,380 | 13.6 | % | 5,039 | 16.6 | % | ||||||||||||
Restaurant operating weeks | 338 | 638 | 391 | ||||||||||||||||||
Average weekly volume | $ | 258.7 | $ | 96.6 | $ | 77.4 | |||||||||||||||
24 Weeks Ended June 13, 2017(1) | |||||||||||||||||||||
(Amounts in thousands) | Double Eagle | Grille | Sullivan's | ||||||||||||||||||
Revenues | $ | 79,955 | 100.0 | % | $ | 52,834 | 100.0 | % | $ | 33,402 | 100.0 | % | |||||||||
Costs and expenses: | |||||||||||||||||||||
Cost of sales | 23,682 | 29.6 | % | 13,507 | 25.6 | % | 10,025 | 30.0 | % | ||||||||||||
Restaurant operating expenses: | |||||||||||||||||||||
Labor | 19,299 | 24.1 | % | 17,896 | 33.9 | % | 10,080 | 30.2 | % | ||||||||||||
Operating expenses | 8,371 | 10.5 | % | 7,111 | 13.5 | % | 4,860 | 14.6 | % | ||||||||||||
Occupancy | 5,680 | 7.1 | % | 5,857 | 11.1 | % | 2,126 | 6.4 | % | ||||||||||||
Restaurant operating expenses | 33,350 | 41.7 | % | 30,864 | 58.4 | % | 17,066 | 51.1 | % | ||||||||||||
Marketing and advertising costs | 1,316 | 1.6 | % | 850 | 1.6 | % | 752 | 2.3 | % | ||||||||||||
Restaurant-level EBITDA | 21,607 | 27.0 | % | 7,613 | 14.4 | % | 5,559 | 16.6 | % | ||||||||||||
Restaurant operating weeks | 294 | 552 | 410 | ||||||||||||||||||
Average weekly volume | $ | 272.0 | $ | 95.7 | $ | 81.5 | |||||||||||||||
(1) | See footnote 1 to the Condensed Consolidated Statement of Income above. |
Non-GAAP Measures
We prepare our consolidated financial statements in accordance with generally accepted accounting principles (GAAP). Within our press release, we make reference to non-GAAP adjusted net income, adjusted EPS, adjusted EBIDTA and restaurant-level EBITDA. Adjusted net income represents GAAP net income (loss) plus the sum of GAAP income tax expense (benefit), lease termination and closing costs, consulting project costs, acquisition and disposition costs, reorganization severance, non-recurring legal expenses, donations, non-recurring corporate expenses, and impairment charges minus income tax expense at an effective tax rate of (52%) during 2018, and 29% during 2017. We believe that this non-GAAP operating measure represents a useful measure of performance internally and for investors as it excludes certain non-operating related expenditures. Adjusted EBIDTA is calculated by adding back to operating income, pre-opening costs, donations, consulting project costs, acquisition and disposition costs, reorganization severance, lease termination and closing costs, depreciation and amortization, impairment charges and insurance settlements. Restaurant-level EBITDA is calculated by adding back to adjusted EBIDTA general and administrative expenses. We believe that these operating measures also represent useful internal measures of performance. Restaurant-level EBITDA margin represents restaurant-level EBITDA as a percentage of our revenues. Accordingly, we include these non-GAAP measures so that investors have the same financial data that management uses in evaluating performance, and we believe that it will assist the investment community in assessing our underlying performance on a quarter-over-quarter basis. However, because these measures are not determined in accordance with GAAP, such measures are susceptible to varying calculations and not all companies calculate these measures in the same manner. As a result, these measures as presented may not be directly comparable to similarly titled measures presented by other companies. These non-GAAP measures are presented as supplemental information and not as alternatives to any GAAP measurements. The following tables include a reconciliation of net income to adjusted net income and operating income to restaurant-level EBITDA.
DEL FRISCO'S RESTAURANT GROUP, INC.
Adjusted Net Income Reconciliation - Unaudited
13 Weeks Ended | 12 Weeks Ended | 26 Weeks Ended | 24 Weeks Ended | |||||||||||||
(Amounts in thousands, except per share data) | June 26, 2018 | June 13, 2017 | June 26, 2018 | June 13, 2017 | ||||||||||||
Adjusted Net Income: | ||||||||||||||||
GAAP Net income (loss) | $ | (1,562 | ) | $ | 2,090 | $ | (1,162 | ) | $ | 5,400 | ||||||
GAAP Income tax (benefit) expense | (1,535 | ) | 824 | (1,476 | ) | 1,910 | ||||||||||
Lease termination and closing costs | 1,023 | 540 | 1,389 | — | ||||||||||||
Consulting project costs | 441 | 597 | 506 | 2,633 | ||||||||||||
Acquisition and disposition costs | 4,358 | — | 5,015 | — | ||||||||||||
Reorganization severance | — | 719 | 113 | 719 | ||||||||||||
Non-recurring legal expenses | 179 | — | 338 | — | ||||||||||||
Donations | 16 | — | 58 | — | ||||||||||||
Non-recurring corporate expenses | 2 | — | 10 | — | ||||||||||||
Impairment charges | — | — | 84 | — | ||||||||||||
Adjusted Pre-tax Income | 2,922 | 4,770 | 4,875 | 10,662 | ||||||||||||
Income tax expense (benefit) | (1,519 | ) | 1,383 | (2,535 | ) | 3,092 | ||||||||||
Adjusted Net Income | $ | 4,441 | $ | 3,387 | $ | 7,410 | $ | 7,570 | ||||||||
Adjusted Net Income per basic share | $ | 0.22 | $ | 0.16 | $ | 0.36 | $ | 0.34 | ||||||||
Adjusted Net Income per diluted share | $ | 0.22 | $ | 0.15 | $ | 0.36 | $ | 0.33 | ||||||||
DEL FRISCO'S RESTAURANT GROUP, INC.
Adjusted EBITDA Reconciliation - Unaudited
13 Weeks Ended | 12 Weeks Ended | 26 Weeks Ended | 24 Weeks Ended | |||||||||||||
(Amounts in thousands) | June 26, 2018 | June 13, 2017 | June 26, 2018 | June 13, 2017 | ||||||||||||
Operating income (loss) | $ | (2,537 | ) | $ | 2,933 | $ | (1,776 | ) | $ | 7,340 | ||||||
Add: | ||||||||||||||||
Pre-opening costs | 1,403 | 1,619 | 2,549 | 2,008 | ||||||||||||
Donations | 16 | — | 58 | — | ||||||||||||
Lease termination and closing costs | 1,023 | 540 | 1,389 | 538 | ||||||||||||
Depreciation and amortization | 5,293 | 4,997 | 10,475 | 9,813 | ||||||||||||
Acquisition and disposition costs | 4,358 | — | 5,015 | — | ||||||||||||
Consulting project costs | 622 | 597 | 854 | 2,633 | ||||||||||||
Reorganization severance | — | 719 | 113 | 719 | ||||||||||||
Impairment charges | — | — | 84 | — | ||||||||||||
Insurance settlement | — | (308 | ) | — | (348 | ) | ||||||||||
Adjusted EBITDA | $ | 10,178 | $ | 11,097 | $ | 18,761 | $ | 22,703 | ||||||||
Adjusted EBITDA margin | 11.3 | % | 13.5 | % | 10.5 | % | 13.7 | % | ||||||||
DEL FRISCO'S RESTAURANT GROUP, INC.
Restaurant-Level EBITDA Reconciliation - Unaudited
13 Weeks Ended | 12 Weeks Ended | 26 Weeks Ended | 24 Weeks Ended | |||||||||||||
(Amounts in thousands) | June 26, 2018 | June 13, 2017 | June 26, 2018 | June 13, 2017 | ||||||||||||
Operating income (loss) | $ | (2,537 | ) | $ | 2,933 | $ | (1,776 | ) | $ | 7,340 | ||||||
Add: | ||||||||||||||||
Pre-opening costs | 1,403 | 1,619 | 2,549 | 2,008 | ||||||||||||
General and administrative costs | 8,502 | 5,765 | 16,834 | 12,076 | ||||||||||||
Donations | 16 | — | 58 | — | ||||||||||||
Consulting project costs | 622 | 597 | 854 | 2,633 | ||||||||||||
Acquisition and disposition costs | 4,358 | — | 5,015 | — | ||||||||||||
Reorganization severance | — | 719 | 113 | 719 | ||||||||||||
Lease termination and closing costs | 1,023 | 540 | 1,389 | 538 | ||||||||||||
Depreciation and amortization | 5,293 | 4,997 | 10,475 | 9,813 | ||||||||||||
Non-cash impairment charges | — | — | 84 | — | ||||||||||||
Insurance settlement | — | (308 | ) | — | (348 | ) | ||||||||||
Restaurant-level EBITDA | $ | 18,680 | $ | 16,862 | $ | 35,595 | $ | 34,779 | ||||||||
Recast 2017 Financial Information
Beginning in fiscal 2018, we changed to a fiscal quarter calendar where each quarter contains 13 weeks, other than in a 53-week year where the last quarter of the year will contain 14 weeks. Previously, the first three quarters of our fiscal year consisted of 12 weeks each and the fourth quarter consisted of 16 weeks or 17 weeks in a 53-week year. The overall fiscal year remains the same with a 52- or 53-week year ending on the last Tuesday in December. We have not restated and do not plan to restate historical quarterly financial statements prepared in accordance with GAAP. See Note 1, Business and Basis of Presentation, in our condensed consolidated financial statements included in our Quarterly Report on Form 10-Q for the fiscal quarter ended June 26, 2018 (“First Quarter 10-Q”) for additional information regarding the change in our fiscal quarters.
Due to the difference in the reporting period between the first quarter of 2018, which contained 13 weeks, and the first quarter of 2017, which contained 12 weeks, and in the reporting period between the first two quarters of 2018, which contained 26 weeks, and the first two quarters of 2017, which contained 24 weeks our 2018 results of operations as presented in accordance with GAAP are not comparable to the prior year. Therefore, we are presenting recast quarterly financial results for the fiscal 2017 period because management uses this information in evaluating performance and believes it provides investors with additional information to consider along with our results prepared in accordance with GAAP and the discussion thereof included in the First Quarter 10-Q. However, the presentation of this recast financial information does not comply with GAAP and should not be considered independent of our unaudited combined financial statements and the related notes included in the First Quarter 10-Q.
The consolidated and segment revenues reflected in the recast 2017 financial information are derived from our historical books and records and no adjustments were made thereto other than to account for the additional operating week. The amount of certain recurring expense items on a consolidated basis and at the segment level, including costs of sales, restaurant operating expenses and the other items identified as such below, were calculated based on a presumed proportionate increase over the reported 2017 amount reflecting the additional week in recast 2017 consolidated or segment revenues, as applicable, over reported 2017 consolidated or segment revenues, as applicable, because such items are typically a function of and move in correlation to revenues during a given period. No changes were made to the reported 2017 results for certain other expense items such as consulting project costs and the other items identified as such below because they are generally not recurring, but incurred at distinct moments within a period as a result of their more unique nature.
Adjusted net income, adjusted EPS, adjusted pre-tax income and restaurant-level EBITDA are non-GAAP measures. See the discussion above under Non-GAAP Information regarding how we define these measures and why we believe they are useful for investors.
DEL FRISCO'S RESTAURANT GROUP, INC.
Statements of Income Information - Unaudited
13 Weeks Ended | 13 Weeks Ended (recast) | 26 Weeks Ended | 26 Weeks Ended (recast) | |||||||||||||||||||||||||
(Amounts in thousands, except per share data) | June 26, 2018 | June 27, 2017 | June 26, 2018 | June 27, 2017 | ||||||||||||||||||||||||
Revenues | $ | 90,040 | 100.0 | % | $ | 89,598 | 100.0 | % | $ | 179,343 | 100.0 | % | $ | 180,063 | 100.0 | % | ||||||||||||
Costs and expenses: | ||||||||||||||||||||||||||||
Costs of sales | 25,956 | 28.8 | % | 25,511 | (1) | 28.5 | % | 52,110 | 29.1 | % | 51,155 | (2) | 28.4 | % | ||||||||||||||
Restaurant operating expenses (excluding depreciation and amortization shown separately below) | 43,407 | 48.2 | % | 43,969 | (1) | 49.1 | % | 87,622 | 48.9 | % | 88,022 | (2) | 48.9 | % | ||||||||||||||
Marketing and advertising costs | 1,997 | 2.2 | % | 1,761 | (1) | 2.0 | % | 4,016 | 2.2 | % | 3,163 | (2) | 1.8 | % | ||||||||||||||
Pre-opening costs | 1,403 | 1.6 | % | 1,763 | (1) | 2.0 | % | 2,549 | 1.4 | % | 2,182 | (2) | 1.2 | % | ||||||||||||||
General and administrative costs | 8,502 | 9.4 | % | 6,446 | (1) | 7.2 | % | 16,834 | 9.4 | % | 13,252 | (2) | 7.4 | % | ||||||||||||||
Donations | 16 | — | % | — | —% | 58 | — | % | — | —% | ||||||||||||||||||
Consulting project costs | 622 | 0.7 | % | 597 | (3) | 0.7 | % | 854 | 0.5 | % | 2,633 | (3) | 1.5 | % | ||||||||||||||
Acquisition and disposition costs | 4,358 | 4.8 | % | — | —% | 5,015 | 2.8 | % | — | —% | ||||||||||||||||||
Reorganization severance | — | — | % | 563 | 0.6 | % | 113 | 0.1 | % | 563 | 0.3 | % | ||||||||||||||||
Lease termination and closing costs | 1,023 | 1.1 | % | 540 | (3) | 0.6 | % | 1,389 | 0.8 | % | 538 | (3) | 0.3 | % | ||||||||||||||
Impairment charges | — | — | % | — | —% | 84 | — | % | — | —% | ||||||||||||||||||
Depreciation and amortization | 5,293 | 5.9 | % | 5,440 | (1) | 6.1 | % | 10,475 | 5.8 | % | 10,634 | (2) | 5.9 | % | ||||||||||||||
Total costs and expenses | 92,577 | 102.8 | % | 86,590 | 96.6 | % | 181,119 | 101.0 | % | 172,142 | 95.6 | % | ||||||||||||||||
Insurance settlement | — | — | % | 308 | — | % | — | — | % | 308 | — | % | ||||||||||||||||
Operating income (loss) | (2,537 | ) | (2.8 | )% | 3,316 | 3.7 | % | (1,776 | ) | (1.0 | )% | 8,229 | 4.6 | % | ||||||||||||||
Other income expense, net: | ||||||||||||||||||||||||||||
Interest expense | (510 | ) | (0.6 | )% | (9 | ) | (3) | — | % | (813 | ) | (0.5 | )% | (19 | ) | (3) | — | % | ||||||||||
Other | (50 | ) | (0.1 | )% | (10 | ) | (3) | — | % | (49 | ) | — | % | (12 | ) | (3) | — | % | ||||||||||
Income (loss)before income taxes | (3,097 | ) | (3.4 | )% | 3,297 | 3.7 | % | (2,638 | ) | (1.5 | )% | 8,198 | 4.6 | % | ||||||||||||||
Income tax expense (benefit) | (1,535 | ) | (1.7 | )% | 932 | (4) | 1.0 | % | (1,476 | ) | (0.8 | )% | 2,142 | (4) | 1.2 | % | ||||||||||||
Net income (loss) | $ | (1,562 | ) | (1.7 | )% | $ | 2,365 | 2.6 | % | $ | (1,162 | ) | (0.6 | )% | $ | 6,056 | 3.4 | % | ||||||||||
Net income (loss) per average common share: | ||||||||||||||||||||||||||||
Basic: | $ | (0.08 | ) | $ | 0.11 | $ | (0.06 | ) | $ | 0.27 | ||||||||||||||||||
Weighted-average number of common shares outstanding: | ||||||||||||||||||||||||||||
Basic: | 20,377 | 21,422 | 20,347 | 22,347 | ||||||||||||||||||||||||
(1) | Recast 2017 amount reflects a presumed proportionate increase over the reported 2017 amount reflecting the additional week in recast 2017 revenues over reported 2017 revenues, which was determined based on the revenues recorded in the company’s historical books and records for the additional operating week included in the recast 2017 period. |
(2) | Recast 2017 amount reflects a presumed proportionate increase over the reported 2017 amount reflecting the additional two weeks in recast 2017 revenues over reported 2017 revenues, which was determined based on the revenues recorded in the company’s historical books and records for the additional operating weeks included in the recast 2017 period. |
(3) | Recast 2017 amount equals the reported 2017 amount. |
(4) | Based on the same tax rate used for the reported 2017 results. |
DEL FRISCO'S RESTAURANT GROUP, INC.
Segment Information - Unaudited
13 Weeks Ended June 26, 2018 | |||||||||||||||||||||
(Amounts in thousands) | Double Eagle | Grille | Sullivan's | ||||||||||||||||||
Revenues | $ | 43,471 | 100.0 | % | $ | 32,247 | 100.0 | % | $ | 14,322 | 100.0 | % | |||||||||
Costs and expenses: | |||||||||||||||||||||
Cost of sales | 12,780 | 29.4 | % | 8,757 | 27.2 | % | 4,419 | 30.9 | % | ||||||||||||
Restaurant operating expenses: | |||||||||||||||||||||
Labor | 9,986 | 23.0 | % | 10,199 | 31.6 | % | 4,144 | 28.9 | % | ||||||||||||
Operating expenses | 5,011 | 11.5 | % | 4,395 | 13.6 | % | 2,218 | 15.5 | % | ||||||||||||
Occupancy | 3,545 | 8.2 | % | 3,201 | 9.9 | % | 708 | 4.9 | % | ||||||||||||
Restaurant operating expenses | 18,542 | 42.7 | % | 17,795 | 55.2 | % | 7,070 | 49.4 | % | ||||||||||||
Marketing and advertising costs | 1,019 | 2.3 | % | 647 | 2.0 | % | 331 | 2.3 | % | ||||||||||||
Restaurant-level EBITDA | 11,130 | 25.6 | % | 5,048 | 15.7 | % | 2,502 | 17.5 | % | ||||||||||||
Restaurant operating weeks | 169 | 316 | 197 | ||||||||||||||||||
Average weekly volume | $ | 257.2 | $ | 102.0 | $ | 72.7 | |||||||||||||||
13 Weeks Ended June 27, 2017 (recast) | |||||||||||||||||||||
(Amounts in thousands) | Double Eagle | Grille | Sullivan's | ||||||||||||||||||
Revenues | $ | 43,701 | 100.0 | % | $ | 29,134 | 100.0 | % | $ | 16,763 | 100.0 | % | |||||||||
Costs and expenses: | |||||||||||||||||||||
Cost of sales(1) | 12,956 | 29.6 | % | 7,430 | 25.5 | % | 5,125 | 30.6 | % | ||||||||||||
Restaurant operating expenses: | |||||||||||||||||||||
Labor(1) | 10,445 | 23.9 | % | 9,772 | 33.5 | % | 5,013 | 29.9 | % | ||||||||||||
Operating expenses(1) | 4,600 | 10.5 | % | 3,885 | 13.3 | % | 2,438 | 14.5 | % | ||||||||||||
Occupancy(1) | 3,053 | 7.0 | % | 3,302 | 11.3 | % | 1,460 | 8.7 | % | ||||||||||||
Restaurant operating expenses | 18,098 | 41.4 | % | 16,960 | 58.2 | % | 8,911 | 53.2 | % | ||||||||||||
Marketing and advertising costs(1) | 784 | 1.8 | % | 508 | 1.7 | % | 469 | 2.8 | % | ||||||||||||
Restaurant-level EBITDA | 11,863 | 27.1 | % | 4,237 | 14.5 | % | 2,258 | 13.5 | % | ||||||||||||
Restaurant operating weeks | 163 | 299 | 216 | ||||||||||||||||||
Average weekly volume | $ | 268.1 | $ | 97.4 | $ | 77.6 | |||||||||||||||
(1) | Recast 2017 amount reflects a presumed proportionate increase over the reported 2017 amount reflecting the additional week in recast 2017 segment revenues over reported 2017 segment revenues, which was determined based on the segment revenues recorded in the company’s historical books and records for the additional operating week included in the recast 2017 period |
26 Weeks Ended June 26, 2018 | |||||||||||||||||||||
(Amounts in thousands) | Double Eagle | Grille | Sullivan's | ||||||||||||||||||
Revenues | $ | 87,425 | 100.0 | % | $ | 61,639 | 100.0 | % | $ | 30,279 | 100.0 | % | |||||||||
Costs and expenses: | |||||||||||||||||||||
Cost of sales | 25,948 | 29.7 | % | 16,806 | 27.3 | % | 9,356 | 30.9 | % | ||||||||||||
Restaurant operating expenses: | |||||||||||||||||||||
Labor | 20,353 | 23.3 | % | 20,012 | 32.5 | % | 8,637 | 28.5 | % | ||||||||||||
Operating expenses | 9,881 | 11.3 | % | 8,566 | 13.9 | % | 4,607 | 15.2 | % | ||||||||||||
Occupancy | 7,153 | 8.2 | % | 6,593 | 10.7 | % | 1,820 | 6.0 | % | ||||||||||||
Restaurant operating expenses | 37,387 | 42.8 | % | 35,171 | 57.1 | % | 15,064 | 49.8 | % | ||||||||||||
Marketing and advertising costs | 1,914 | 2.2 | % | 1,282 | 2.1 | % | 820 | 2.7 | % | ||||||||||||
Restaurant-level EBITDA | 22,176 | 25.4 | % | 8,380 | 13.6 | % | 5,039 | 16.6 | % | ||||||||||||
Restaurant operating weeks | 338 | 638 | 391 | ||||||||||||||||||
Average weekly volume | $ | 258.7 | $ | 96.6 | $ | 77.4 | |||||||||||||||
26 Weeks Ended June 27, 2017 (recast) | |||||||||||||||||||||
(Amounts in thousands) | Double Eagle | Grille | Sullivan's | ||||||||||||||||||
Revenues | $ | 86,586 | 100.0 | % | $ | 57,613 | 100.0 | % | $ | 35,864 | 100.0 | % | |||||||||
Costs and expenses: | |||||||||||||||||||||
Cost of sales(1) | 25,651 | 29.6 | % | 14,733 | 25.6 | % | 10,769 | 30.0 | % | ||||||||||||
Restaurant operating expenses: | |||||||||||||||||||||
Labor(1) | 20,893 | 24.1 | % | 19,505 | 33.9 | % | 10,819 | 30.2 | % | ||||||||||||
Operating expenses(1) | 9,060 | 10.5 | % | 7,753 | 13.5 | % | 5,172 | 14.4 | % | ||||||||||||
Occupancy(1) | 6,150 | 7.1 | % | 6,389 | 11.1 | % | 2,281 | 6.4 | % | ||||||||||||
Restaurant operating expenses | 36,103 | 41.7 | % | 33,646 | 58.4 | % | 18,273 | 50.9 | % | ||||||||||||
Marketing and advertising costs(1) | 1,427 | 1.6 | % | 929 | 1.6 | % | 807 | 2.3 | % | ||||||||||||
Restaurant-level EBITDA | 23,405 | 27.0 | % | 8,305 | 14.4 | % | 6,015 | 16.8 | % | ||||||||||||
Restaurant operating weeks | 319 | 598 | 442 | ||||||||||||||||||
Average weekly volume | $ | 271.4 | $ | 96.3 | $ | 81.1 | |||||||||||||||
(1) | Recast 2017 amount reflects a presumed proportionate increase over the reported 2017 amount reflecting the additional two weeks in recast 2017 segment revenues over reported 2017 segment revenues, which was determined based on the segment revenues recorded in the company’s historical books and records for the additional operating week included in the recast 2017 period |
DEL FRISCO'S RESTAURANT GROUP, INC.
Adjusted Net Income Reconciliation - Unaudited
13 Weeks Ended | 13 Weeks Ended (recast) | 26 Weeks Ended | 26 Weeks Ended (recast) | ||||||||||||||
(Amounts in thousands, except per share data) | June 26, 2018 | June 27, 2017 | June 26, 2018 | June 27, 2017 | |||||||||||||
Adjusted Net Income: | |||||||||||||||||
Net Income | $ | (1,562 | ) | $ | 2,365 | $ | (1,162 | ) | $ | 6,055 | |||||||
Income tax (benefit) expense | (1,535 | ) | 932 | (1) | (1,476 | ) | 2,143 | (1) | |||||||||
Lease termination and closing costs | 1,023 | 540 | 1,389 | 540 | |||||||||||||
Consulting project costs | 441 | 597 | (2) | 506 | 2,633 | (2) | |||||||||||
Acquisition and disposition costs | 4,358 | 5,015 | — | ||||||||||||||
Reorganization severance | — | 563 | 113 | 563 | |||||||||||||
Non-recurring legal expenses | 179 | — | 338 | — | |||||||||||||
Donations | 16 | — | 58 | — | |||||||||||||
Non-recurring corporate expenses | 2 | 10 | — | ||||||||||||||
Impairment charges | — | — | 84 | — | |||||||||||||
Adjusted Pre-tax Income | 2,922 | 4,997 | 4,875 | 11,934 | |||||||||||||
Income tax expense (benefit)(3) | (1,519 | ) | 1,449 | (2,535 | ) | 3,461 | |||||||||||
Adjusted Net Income | $ | 4,441 | $ | 3,548 | $ | 7,410 | $ | 8,473 | |||||||||
Adjusted net income per basic share | $ | 0.22 | $ | 0.17 | $ | 0.36 | $ | 0.38 | |||||||||
DEL FRISCO'S RESTAURANT GROUP, INC.
Restaurant-Level EBITDA Reconciliation - Unaudited
13 Weeks Ended | 13 Weeks Ended (recast) | 26 Weeks Ended | 26 Weeks Ended (recast) | ||||||||||||||
(Amounts in thousands) | June 26, 2018 | June 27, 2017 | June 26, 2018 | June 27, 2017 | |||||||||||||
Operating income | $ | (2,537 | ) | $ | 3,316 | $ | (1,776 | ) | $ | 8,229 | |||||||
Add: | |||||||||||||||||
Pre-opening costs | 1,403 | 1,763 | (4) | 2,549 | 2,182 | (5) | |||||||||||
General and administrative costs | 8,502 | 6,446 | (4) | 16,834 | 13,252 | (5) | |||||||||||
Donations | 16 | — | 58 | — | |||||||||||||
Consulting project costs | 622 | 597 | (2) | 854 | 2,633 | (2) | |||||||||||
Acquisition and disposition costs | 4,358 | — | 5,015 | — | |||||||||||||
Reorganization severance | — | 563 | 113 | 563 | |||||||||||||
Lease termination and closing costs | 1,023 | 540 | (2) | 1,389 | 538 | (2) | |||||||||||
Depreciation and amortization | 5,293 | 5,440 | (4) | 10,475 | 10,634 | (5) | |||||||||||
Non-cash impairment charges | — | — | 84 | — | |||||||||||||
Insurance settlement | — | (308 | ) | — | (308 | ) | |||||||||||
Restaurant-level EBITDA | $ | 18,680 | $ | 18,357 | $ | 35,595 | $ | 37,723 | |||||||||
(1) | Based on the same tax rate used for the reported 2017 results. |
(2) | Recast 2017 amount equals the reported 2017 amount. |
(3) | Income tax expense at an effective tax rate of (52%) for the 2018 period and 29% for the 2017 period. |
(4) | Recast 2017 amount reflects a presumed proportionate increase over the reported 2017 amount reflecting the additional week in recast 2017 revenues over reported 2017 revenues, which was determined based on the revenues recorded in the company’s historical books and records for the additional operating week included in the recast 2017 period. |
(5) | Recast 2017 amount reflects a presumed proportionate increase over the reported 2017 amount reflecting the additional two weeks in recast 2017 revenues over reported 2017 revenues, which was determined based on the revenues recorded in the company’s historical books and records for the additional operating week included in the recast 2017 period. |
Barteca Historical Information pre Transaction
Segment Information - Unaudited
12 Weeks Ended June 26, 2018 | |||||||||||||||||||||
(Amounts in thousands) | Barcelona | Bartaco | Vinoteca & Other | ||||||||||||||||||
Revenues | $ | 16,670 | 100.0 | % | $ | 20,060 | 100.0 | % | $ | 208 | 100.0 | % | |||||||||
Costs and expenses: | |||||||||||||||||||||
Cost of sales | 4,307 | 25.8 | % | 4,553 | 22.7 | % | 97 | 46.3 | % | ||||||||||||
Restaurant operating expenses: | |||||||||||||||||||||
Labor | 4,857 | 29.1 | % | 6,298 | 31.4 | % | 35 | 16.8 | % | ||||||||||||
Operating expenses | 2,119 | 12.7 | % | 2,132 | 10.6 | % | 12 | 5.8 | % | ||||||||||||
Occupancy | 853 | 5.1 | % | 867 | 4.3 | % | 13 | 6.4 | % | ||||||||||||
Restaurant operating expenses | 7,829 | 47.0 | % | 9,297 | 46.3 | % | 60 | 29.0 | % | ||||||||||||
Marketing and advertising costs | 86 | 0.5 | % | 170 | 0.8 | % | — | 1.0 | % | ||||||||||||
Restaurant-level EBITDA | 4,448 | 26.7 | % | 6,039 | 30.1 | % | 51 | 2.5 | % | ||||||||||||
25 Weeks Ended June 26,2018 | |||||||||||||||||||||
(Amounts in thousands) | Barcelona | Bartaco | Vinoteca & Other | ||||||||||||||||||
Revenues | $ | 31,570 | 100.0 | % | $ | 36,220 | 100.0 | % | $ | 428 | 100.0 | % | |||||||||
Costs and expenses: | |||||||||||||||||||||
Cost of sales | 8,282 | 26.2 | % | 8,196 | 22.6 | % | 212 | 49.5 | % | ||||||||||||
Restaurant operating expenses: | |||||||||||||||||||||
Labor | 9,566 | 30.3 | % | 11,595 | 32.0 | % | 74 | 17.4 | % | ||||||||||||
Operating expenses | 4,121 | 13.1 | % | 4,212 | 11.6 | % | 26 | 6.2 | % | ||||||||||||
Occupancy | 1,525 | 4.8 | % | 1,572 | 4.3 | % | 29 | 6.8 | % | ||||||||||||
Restaurant operating expenses | 15,213 | 48.2 | % | 17,379 | 48.0 | % | 130 | 30.3 | % | ||||||||||||
Marketing and advertising costs | 176 | 0.6 | % | 280 | 0.8 | % | — | — | % | ||||||||||||
Restaurant-level EBITDA | 7,900 | 25.0 | % | 10,366 | 28.6 | % | 87 | 20.2 | % | ||||||||||||
Barteca Historical Information pre Transaction
Restaurant-Level EBITDA Reconciliation - Unaudited
12 Weeks Ended | 25 Weeks Ended | |||||||
(Amounts in thousands) | April 3, 2018 | June 26, 2018 | ||||||
Operating income (loss) | $ | (5,319 | ) | $ | (3,139 | ) | ||
Add: | ||||||||
Pre-opening costs | 353 | 749 | ||||||
General and administrative costs | 12,411 | 15,960 | ||||||
Acquisition and disposition costs | 1,124 | 1,124 | ||||||
Depreciation and amortization | 1,969 | 3,658 | ||||||
Restaurant-level EBITDA | $ | 10,538 | $ | 18,352 | ||||