taco-20210323

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 23, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-36197

DEL TACO RESTAURANTS, INC.

(Exact name of registrant as specified in its charter)


Delaware			46-3340980
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

25521 Commercentre Drive	Lake Forest,	California	92630
(Address of principal executive offices)			(Zip Code)

(949)			462-9300
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 Par Value

TACO

The Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated Filer

Non-Accelerated Filer

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 28, 2021, there were 36,757,296 shares of the registrant’s common stock issued and outstanding.

Table of Contents

Del Taco Restaurants, Inc.

Index


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets as of March 23, 2021 (Unaudited) and December 29, 2020			1
Unaudited Consolidated Statements of Comprehensive Income (Loss) for the Twelve Weeks Ended March 23, 2021 and the Twelve Weeks Ended March 24, 2020			2
Unaudited Consolidated Statements of Stockholders' Equity for the Twelve Weeks Ended March 23, 2021 and the Twelve Weeks Ended March 24, 2020			3
Unaudited Consolidated Statements of Cash Flows for the Twelve Weeks Ended March 23, 2021 and the Twelve Weeks Ended March 24, 2020			4
Notes to Consolidated Financial Statements (Unaudited)			4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			19
Item 3. Quantitative and Qualitative Disclosures about Market Risk			34
Item 4. Control and Procedures			36

PART II. OTHER INFORMATION

Item 1. Legal Proceedings			37
Item 1A. Risk Factors			37
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			37
Item 6. Exhibits			38

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements


Del Taco Restaurants, Inc.
Consolidated Balance Sheets
(In thousands, except share and per share data)

	March 23, 2021		December 29, 2020
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	7,310	$	7,912
Accounts and other receivables, net	4,769		5,463
Inventories	2,574		2,799
Prepaid expenses and other current assets	3,112		2,078
Assets held for sale	1,495		1,495
Total current assets	19,260		19,747
Property and equipment, net	144,923		146,706
Operating lease right-of-use assets	248,655		249,071
Goodwill	108,979		108,979
Trademarks	208,400		208,400
Intangible assets, net	9,435		9,754
Other assets, net	5,204		4,652
Total assets	$	744,856	$	747,309
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	16,405	$	18,683
Other accrued liabilities	44,507		45,413
Current portion of finance lease obligations and other debt	116		190
Current portion of operating lease liabilities	22,005		22,648
Total current liabilities	83,033		86,934
Long-term debt, finance lease obligations and other debt, excluding current portion, net	114,472		114,418
Operating lease liabilities, excluding current portion	251,714		251,958
Deferred income taxes	61,698		61,485
Other non-current liabilities	19,790		19,760
Total liabilities	530,707		534,555
Commitments and contingencies (Note 15)
Shareholders’ equity:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; no shares issued and outstanding	—		—
Common stock, $0.0001 par value; 400,000,000 shares authorized; 36,757,296 shares issued and outstanding at March 23, 2021; 36,828,237 shares issued and outstanding at December 29, 2020	4		4
Additional paid-in capital	332,476		333,712
Accumulated other comprehensive loss	—		—
Accumulated deficit	(118,331)		(120,962)
Total shareholders’ equity	214,149		212,754
Total liabilities and shareholders’ equity	$	744,856	$	747,309

See accompanying notes to consolidated financial statements.

Table of Contents


Del Taco Restaurants, Inc.
Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
(In thousands, except share and per share data)

	12 Weeks Ended
	March 23, 2021		March 24, 2020
Revenue:
Company restaurant sales	$	103,578	$	100,333
Franchise revenue	5,205		4,391
Franchise advertising contributions	3,825		3,211
Franchise sublease and other income	2,923		1,875
Total revenue	115,531		109,810
Operating expenses:
Restaurant operating expenses:
Food and paper costs	26,652		28,295
Labor and related expenses	35,508		34,936
Occupancy and other operating expenses	24,842		24,408
General and administrative	11,261		9,866
Franchise advertising expenses	3,825		3,211
Depreciation and amortization	5,947		6,137
Occupancy and other - franchise subleases and other	2,878		1,595
Pre-opening costs	196		233
Impairment of goodwill	—		87,277
Impairment of trademarks	—		11,900
Impairment of long-lived assets	—		8,287
Restaurant closure charges, net	412		494
Loss on disposal of assets and adjustments to assets held for sale, net	2		122
Total operating expenses	111,523		216,761
Income (loss) from operations	4,008		(106,951)
Other expense (income), net
Interest expense	721		1,508
Other income	(373)		—
Total other expense, net	348		1,508
Income (loss) from operations before provision (benefit) for income taxes	3,660		(108,459)
Provision (benefit) for income taxes	1,029		(5,991)
Net income (loss)	2,631		(102,468)
Other comprehensive income:

Reclassification of interest rate cap amortization included in net income (loss), net of tax	—		45
Total other comprehensive income, net	—		45
Comprehensive income (loss)	$	2,631	$	(102,423)
Earnings (loss) per share:
Basic	$	0.07

SEC Form 10-Q filed by Del Taco Restaurants, Inc.