UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
____________________________________________________________________

FORM 8-K
 ____________________________________________________________________

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 17, 2016
 
____________________________________________________________________ 
Del Taco Restaurants, Inc.
(Exact name of registrant as specified in its charter)
 
____________________________________________________________________

	
					
Delaware	 	001-36197	 	46-3340980	
(State or other jurisdiction
of incorporation)	 	(Commission
File Number)	 	(IRS Employer
Identification No.)	
25521 Commercentre Drive
Lake Forest, CA 92630
(Address of Principal executive offices, including Zip Code)

(949) 462-9300
(Registrant’s telephone number, including area code)  
____________________________________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

	
		
¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	

		
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	

		
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	

		
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

Item 2.02    Results of Operations and Financial Condition

On October 17, 2016, Del Taco Restaurants, Inc. issued a press release announcing results for the fiscal quarter ended September 6, 2016.

The information in this Current Report on Form 8-K and Exhibit 99.1 attached hereto is being furnished pursuant to Item 2.02 and shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise be subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 9.01    Financial Statements and Exhibits

(d) Exhibits

	
		
Exhibit No.	Description of Exhibit	
Exhibit 99.1	Press Release issued on October 17, 2016 announcing third fiscal quarter ended September 6, 2016 financial results	

SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	
		
DEL TACO RESTAURANTS, INC.	
 	 	
By:	/s/ Steven L. Brake	
Name:	Steven L. Brake	
Title:	Executive Vice President and Chief Financial Officer	

Date: October 17, 2016

Exhibit 99.1

For Immediate Release

Del Taco Restaurants, Inc. Announces Fiscal Third Quarter 2016 Financial Results
Company-operated and System-wide comparable restaurant sales growth of 7.1% and 6.7%, respectively; Operating income growth of 7.6%
Updates fiscal year 2016 guidance
Conference call and webcast will be held at 5:00 p.m. ET today

Lake Forest, CA. October 17, 2016 - Del Taco Restaurants, Inc. (“Del Taco” or the “Company”), (NASDAQ: TACO), the second largest Mexican-American QSR chain by units in the United States, operating restaurants under the name Del Taco, today announced fiscal third quarter 2016 financial results for the twelve weeks ended September 6, 2016. The Company also updated its fiscal year 2016 guidance based upon its performance to-date and expectations for continued momentum during its 17-week fiscal fourth quarter.

Del Taco became a public company when it completed a business combination with Levy Acquisition Corp. on June 30, 2015 which resulted in a fiscal third quarter 2015 financial statement presentation that includes a predecessor period for the two-weeks ended June 30, 2015 followed by a successor period for the ten-weeks ended September 8, 2015. The financial results for the fiscal third quarter 2015 referenced herein have been aggregated to reflect, on a pro forma basis, the combined successor and predecessor periods for the twelve weeks ended September 8, 2015.

Fiscal Third Quarter 2016 Highlights
		
•	System-wide comparable restaurant sales growth of 6.7% and company-operated comparable restaurant sales growth of 7.1%, marking the twelfth and seventeenth consecutive quarter of gains, respectively;	
		
◦	Company-operated comparable restaurant sales growth comprised average check growth of 4.8%, including over 1% of menu mix growth, and a transaction increase of 2.3%, representing a sequential transaction improvement of 410 basis points compared to the second fiscal quarter of 2016;	
		
•	Total revenue of $104.4 million, representing 5.9% growth from the fiscal third quarter of 2015;	
		
•	Restaurant sales of $100.2 million, representing 5.7% growth from the fiscal third quarter of 2015;	
		
•	Net income increased to $4.9 million, representing diluted earnings per share of $0.13, compared to $0.2 million in the fiscal third quarter of 2015;	
		
•	Restaurant contribution margin, a non-GAAP financial measure, of 20.9%, an improvement of approximately 120 basis points from the fiscal third quarter of 2015;	
		
•	Adjusted EBITDA, a non-GAAP financial measure, increased to $17.0 million from $15.3 million in the fiscal third quarter of 2015, representing 11.0% growth; and	
		
•	Completion of warrant exchange offer resulted in 1,533,542 shares issued in exchange for 5,516,243 warrants that were properly tendered.	

Paul J.B. Murphy, III, President and Chief Executive Officer of Del Taco, commented, “Our strong fiscal third quarter performance is a direct result of the success of our Fresh Combined Solutions strategy and UnFreshing Believable 2.0 campaign which are inspiring positive guest experiences and showcasing Del Taco as an innovator within the QSR segment. Through the use of fresh ingredients and product innovation served with the speed and convenience of a drive-thru, we are further differentiating our iconic brand and broadening our appeal, generating system-wide comparable restaurant sales growth of 6.7%, or 12.3% on a two-year basis, that we believe is among the highest in the industry. We are delighted that our top-line momentum led to substantial increases in restaurant contribution margin, adjusted EBITDA and net income.”

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Murphy continued, “In June we launched The Del Taco -- a bigger, better-tasting crunchy beef taco worthy of our name - and it has since broken all-time sales records for new product introductions. Later this month we are following up this highly successful launch with a system-wide rollout of our new Platos program, our first occasion based expansion strategy. Platos start at $6.49 and consist of plated meals including chips and salsa, rice and beans and an entrée. We are hopeful that similar to our test markets, the Platos program will drive incremental sales and margin dollars.”

Murphy concluded, “The success of our Fresh Combined Solutions strategy and UnFreshing Believable 2.0 campaign bolsters our confidence to begin accelerating development in 2017 and is expected to also help us attract new, qualified franchise partners over time. This year, we are expanding at a low-single digit growth rate with a now expected 14 system-wide openings, and next year we expect to accelerate system growth to a mid-single digit growth rate. Our long-term goal of 2,000+ Del Taco restaurants reflects what we view as a considerable opportunity to expand nationwide, which we are approaching in the near-term primarily through lower risk, in-fill development.”

Review of Fiscal Third Quarter 2016 Financial Results

Total revenue was $104.4 million, an increase of 5.9% compared to $98.6 million in the fiscal third quarter of 2015. The growth in revenue was driven by a 5.7% increase in Company restaurant sales and a 13.8% increase in franchise revenue.

Comparable restaurant sales increased 6.7% system-wide for the fiscal third quarter ended September 6, 2016, resulting in an impressive 12.3% increase on a two-year basis. Both of these results represent the highest performances year-to-date. The Del Taco system has now generated comparable restaurant sales growth for twelve consecutive quarters. Company-operated comparable restaurant sales increased 7.1%, marking the seventeenth consecutive quarter of comparable restaurant sales growth. Franchise comparable restaurant sales increased 6.2%.

Net income was $4.9 million, representing $0.13 per diluted share, compared to $0.2 million in the fiscal third quarter of 2015, which included net income of $2.4 million during the two weeks ended June 30, 2015 (predecessor) and a net loss of $2.2 million during the ten weeks ended September 8, 2015 (successor), as well as $12.0 million in transaction-related costs in connection with our business combination.

Restaurant contribution, a non-GAAP financial measure, increased 12.0% year-over-year to $20.9 million. As a percentage of Company restaurant sales, restaurant contribution increased approximately 120 basis points year-over-year to 20.9%. The increase was driven by an approximately 120 basis point improvement in food and paper costs and an approximately 90 basis point improvement in occupancy and other operating expenses, partially offset by an approximately 90 basis point increase in labor and related expenses. A reconciliation between restaurant contribution and the nearest GAAP financial measure is included in the accompanying financial data .

Adjusted EBITDA, a non-GAAP financial measure, increased 11.0% to $17.0 million compared to $15.3 million in the previous year’s fiscal third quarter. A reconciliation between adjusted EBITDA and the nearest GAAP financial measure is included in the accompanying financial data .

Restaurant Portfolio Activity and Fiscal Year 2017 Development Outlook

During the fiscal third quarter, Del Taco opened one company-operated and two franchised restaurants, and also acquired one franchised restaurant in Ontario, CA. Year to date, Del Taco has opened six system-wide restaurants and eight system-wide restaurant openings are expected in the fiscal fourth quarter.

On October 12, 2016 Del Taco opportunistically acquired five franchised restaurants in and around Bakersfield, CA from a single franchisee and intends to open additional company-operated restaurants in this market over time.

For fiscal year 2017, system-wide development is expected at a mid-single digit growth rate, consistent with the Company’s plans to begin accelerating restaurant openings.

Results of Offer to Exchange Common Stock for Outstanding Warrants

On August 9, 2016, Del Taco announced the results of its offer to exchange (“Offer to Exchange”) 0.2780 shares of the Company’s common stock (“shares”) for each outstanding Company warrant exercisable for shares at an exercise price of $11.50 per share (the “warrants”) (approximately one share for every 3.6 warrants tendered).

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A total of 5,516,243 warrants were tendered in the exchange offer. The Company accepted for exchange all such warrants and issued an aggregate of 1,533,542 shares in exchange for the warrants tendered, representing approximately 4% of the shares outstanding after such issuance.

After completion of the Offer to Exchange, 6,646,574 warrants remained outstanding. The warrants will expire on June 30, 2020, unless sooner exercised or redeemed by the Company in accordance with the terms of the warrants.

Repurchase Program for Common Stock and Warrants

On August 23, 2016, the Board of Directors increased the repurchase program for Del Taco’s common stock and warrants to $50 million (raised from $25 million). The increased authorization will expire upon completion of the repurchase program unless terminated earlier by the Board of Directors.

During the fiscal third quarter, the Company repurchased 505,808 shares at an average price per share of $9.45 and 235,000 warrants at an average price per warrant of $1.85 for an aggregate of $5.2 million.

Subsequent to the fiscal third quarter, Del Taco repurchased 212,510 shares at an average price per share of $11.16 and 222,201 warrants at an average price per warrant of $3.45 for an aggregate of $3.1 million.

There are currently 39,153,003 common shares and 6,424,373 warrants outstanding and approximately $34.8 million remains under the $50 million authorization.    

Fiscal Year 2016 Guidance

The Company is updating its guidance for fiscal year 2016, the 53-week period ending January 3, 2017:

•	System-wide same store sales growth at the high end of the previous 2.5% to 4.5% range;	
		
•	Total revenue between $446 million and $449 million (previously $439 million and $449 million);	
		
•	Total company-operated restaurant sales between $429 million and $432 million (previously $422 million and $432 million);	
		
•	Restaurant contribution margin between 20.2% and 20.3% (previously 19.8% and 20.3%);	
		
•	California minimum wage impact estimated to increase labor and related expenses by approximately $7.2 million, including preservation of appropriate wage differentials and incremental payroll taxes;	
		
•	General and administrative expenses between approximately 8.2% and 8.3% of total revenue, including incremental public company costs and non-cash stock-based compensation (previously 7.9% and 8.3%);	
		
•	Adjusted EBITDA between $69 million and $70 million (previously $67.5 million and $70.0 million);	
		
•	Effective tax rate of approximately 42.3% (previously 40%);	
		
•	Diluted earnings per share of approximately $0.53 to $0.56;	
		
•	Fourteen new system-wide restaurant openings (previously fifteen to eighteen); and	
		
•	Net capital expenditures totaling approximately $36.0 million to $41.0 million.	

Conference Call

A conference call and webcast to discuss Del Taco’s financial results is scheduled for 5:00 p.m. ET today. Hosting the conference call and webcast will be Paul J.B. Murphy, III, President and Chief Executive Officer; John D. Cappasola, Jr., Executive Vice President and Chief Brand Officer; and Steven L. Brake, Executive Vice President and Chief Financial Officer.

Interested parties may listen to the conference call via telephone by dialing 1-201-689-8562. A telephone replay will be available shortly after the call has concluded and can be accessed by dialing 1-858-384-5517, the passcode is 13644396.

The webcast will be available at www.deltaco.com under the investors section and will be archived on the site shortly after the call has concluded.

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 18 th full month of operations and excludes restaurant closures.

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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. Restaurant contribution and restaurant contribution margin are supplemental measures of operating performance of restaurants and the calculations thereof may not be comparable to those reported by other companies. Restaurant contribution and restaurant contribution margin have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of results as reported under U.S. GAAP. Management believes that restaurant contribution and restaurant contribution margin are important tools for investors because they are widely-used metrics within the restaurant industry to evaluate restaurant-level productivity, efficiency and performance. Management uses restaurant contribution and restaurant contribution margin as key performance indicators to evaluate the profitability of incremental sales at Del Taco restaurants, to evaluate restaurant performance across periods and to evaluate restaurant financial performance compared with competitors. A reconciliation between restaurant contribution and the nearest GAAP financial measure is included in the accompanying financial data .

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. We believe Adjusted EBITDA facilitates operating performance comparisons from period to period by isolating the effects of some items that vary from period to period without any correlation to core operating performance or that vary widely among similar companies. These potential differences may be caused by variations in capital structures (affecting interest expense), tax positions (such as the impact on periods or changes in effective tax rates or net operating losses) and the age and book depreciation of facilities and equipment (affecting relative depreciation expense). We also present Adjusted EBITDA because (i) we believe this measure is frequently used by securities analysts, investors and other interested parties to evaluate companies in our industry, (ii) we believe investors will find this measure useful in assessing our ability to service or incur indebtedness, and (iii) we use Adjusted EBITDA internally as a benchmark to compare performance to that of competitors. A reconciliation between Adjusted EBITDA and the nearest GAAP financial measure is included in the accompanying financial data .

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.  All menu items taste better because they are made with quality ingredients like freshly grated cheddar, hand-chopped pico de gallo, sliced avocado, slow-cooked beans made from scratch, and fresh-grilled marinated chicken and steak.  The brand’s UnFreshing Believable® campaign further communicates Del Taco’s commitment to provide guests with the best quality and value for their money. Founded in 1964, today Del Taco serves more than three million guests each week at its nearly 550 restaurants across 16 states. 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 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 included, without limitation, 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, food safety and foodborne illness concerns, our inability to manage existing and to obtain additional franchisees, our inability to attract and retain qualified personnel, our inability to profitably expand into new markets, changes in, or the discontinuation

4

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 Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 29, 2015, 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.

### #### ###

Media Contact:
Julia Young
(646) 277-1280
julia.young@icrinc.com

Investor Relations Contact:
Raphael Gross
(203) 682-8253
investor@deltaco.com

5

	
									
Del Taco Restaurants, Inc.	
Consolidated Balance Sheets	
(In thousands, except share and per share data)	
 	
 	 	Successor	
 	 	September 6, 2016	 	December 29, 2015	
Assets	 	(Unaudited)	 	 	
Current assets:	 	 	 	 	
Cash and cash equivalents	 	$	11,603		 	$	10,194		
Accounts and other receivables, net	 	3,194		 	3,220		
Inventories	 	2,510		 	2,806		
Prepaid expenses and other current assets	 	5,244		 	3,545		
Total current assets	 	22,551		 	19,765		
Property and equipment, net	 	122,982		 	114,030		
Goodwill	 	319,526		 	318,275		
Trademarks	 	220,300		 	220,300		
Intangible assets, net	 	25,903		 	28,373		
Other assets, net	 	3,308		 	2,829		
Total assets	 	$	714,570		 	$	703,572		
Liabilities and shareholders' equity	 	 	 	 	
Current liabilities:	 	 	 	 	
Accounts payable	 	$	17,133		 	$	16,831		
Other accrued liabilities	 	36,294		 	32,897		
Current portion of capital lease obligations and deemed landlord financing liabilities	 	1,639		 	1,725		
Total current liabilities	 	55,066		 	51,453		
Long-term debt, capital lease obligations and deemed landlord financing liabilities, excluding current portion, net	 	169,107		 	167,968		
Deferred income taxes	 	86,323		 	79,523		
Other non-current liabilities	 	33,400		 	36,251		
Total liabilities	 	343,896		 	335,195		
Commitments and contingencies	 	 	 	 	
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; 39,365,513 shares issued and outstanding at September 6, 2016; 38,802,425 shares issued and outstanding at December 29, 2015	 	4		 	4		
Additional paid-in capital	 	361,805		 	372,260		
Accumulated other comprehensive loss	 	(122	)	 	—		
Retained earnings (accumulated deficit)	 	8,987		 	(3,887	)	
  Total shareholders' equity	 	370,674		 	368,377		
Total liabilities and shareholders' equity	 	$	714,570		 	$	703,572		

6

	
														
Del Taco Restaurants, Inc.	
Consolidated Statements of Comprehensive Income (Loss)	
(Unaudited)	
(In thousands, except share and per share data)	
 	 	 	 	 	 	 	 	
 	 	Successor	 	 	Predecessor	
 	 	12 Weeks Ended
September 6, 2016	 	10 Weeks Ended
September 8, 2015	 	 	2 Weeks Ended
June 30, 2015	
Revenue:	 	 	 	 	 	 	 	
Company restaurant sales	 	$	100,173		 	$	78,874		 	 	$	15,891		
Franchise revenue	 	3,686		 	2,694		 	 	546		
Franchise sublease income	 	560		 	467		 	 	95		
   Total revenue	 	104,419		 	82,035		 	 	16,532		
Operating expenses:	 	 	 	 	 	 	 	
Restaurant operating expenses:	 	 	 	 	 	 	 	
Food and paper costs	 	27,574		 	22,567		 	 	4,607		
Labor and related expenses	 	30,748		 	23,512		 	 	4,712		
Occupancy and other operating expenses	 	20,911		 	17,024		 	 	3,653		
General and administrative	 	8,566		 	5,824		 	 	1,004		
Depreciation and amortization	 	5,157		 	4,147		 	 	664		
Occupancy and other - franchise subleases	 	521		 	437		 	 	87		
Pre-opening costs	 	94		 	41		 	 	28		
Restaurant closure charges, net	 	(133	)	 	19		 	 	—		
Loss on disposal of assets	 	54		 	1		 	 	84		
   Total operating expenses	 	93,492		 	73,572		 	 	14,839		
Income from operations	 	10,927		 	8,463		 	 	1,693		
Other expenses:	 	 	 	 	 	 	 	
Interest expense	 	1,412		 	1,725		 	 	664		
Transaction-related costs	 	490		 	11,978		 	 	61		
Debt modification costs	 	—		 	78		 	 	1		
   Total other expenses	 	1,902		 	13,781		 	 	726		
Income (loss) from operations before provision (benefit) for income taxes	 	9,025		 	(5,318	)	 	 	967		
Provision (benefit) for income taxes	 	4,076		 	(3,132	)	 	 	(1,449	)	
Net income (loss)	 	4,949		 	(2,186	)	 	 	2,416		
Other comprehensive loss:	 	 	 	 	 	 	 	
Change in fair value of interest rate cap	 	(122	)	 	—		 	 	(1	)	
Total other comprehensive loss	 	(122	)	 	—		 	 	(1	)	
Comprehensive income (loss)	 	$	4,827		 	$	(2,186	)	 	 	$	2,415		
Earnings (loss) per share:	 	 	 	 	 	 	 	
    Basic	 	$	0.13		 	$	(0.06	)	 	 	$	0.36		
    Diluted	 	$	0.13		 	$	(0.06	)	 	 	$	0.36		
Weighted-average shares outstanding	 	 	 	 	 	 	 	
    Basic	 	38,465,064		 	38,802,425		 	 	6,707,776		
    Diluted	 	38,688,961		 	38,802,425		 	 	6,707,776		

7

	
														
Del Taco Restaurants, Inc.	
Consolidated Statements of Comprehensive Income (Loss)	
(Unaudited)	
(In thousands, except share and per share data)	
 	 	 	 	 	 	 	 	
 	 	Successor	 	 	Predecessor	
 	 	36 Weeks Ended
September 6, 2016	 	10 Weeks Ended
September 8, 2015	 	 	26 Weeks Ended
June 30, 2015	
Revenue:	 	 	 	 	 	 	 	
Company restaurant sales	 	$	289,640		 	$	78,874		 	 	$	200,676		
Franchise revenue	 	10,591		 	2,694		 	 	6,693		
Franchise sublease income	 	1,617		 	467		 	 	1,183		
   Total revenue	 	301,848		 	82,035		 	 	208,552		
Operating expenses:	 	 	 	 	 	 	 	
Restaurant operating expenses:	 	 	 	 	 	 	 	
Food and paper costs	 	80,061		 	22,567		 	 	57,447		
Labor and related expenses	 	90,781		 	23,512		 	 	61,120		
Occupancy and other operating expenses	 	60,560		 	17,024		 	 	43,611		
General and administrative	 	25,072		 	5,824		 	 	14,850		
Depreciation and amortization	 	16,175		 	4,147		 	 	8,252		
Occupancy and other - franchise subleases	 	1,534		 	437		 	 	1,109		
Pre-opening costs	 	222		 	41		 	 	276		
Restaurant closure charges, net	 	(121	)	 	19		 	 	94		
Loss on disposal of assets	 	191		 	1		 	 	99		
   Total operating expenses	 	274,475		 	73,572		 	 	186,858		
Income from operations	 	27,373		 	8,463		 	 	21,694		
Other expenses:	 	 	 	 	 	 	 	
Interest expense	 	4,289		 	1,725		 	 	11,491		
Transaction-related costs	 	681		 	11,978		 	 	7,255		
Debt modification costs	 	—		 	78		 	 	139		
Change in fair value of warrant liability	 	—		 	—		 	 	(35	)	
   Total other expenses	 	4,970		 	13,781		 	 	18,850		
Income (loss) from operations before provision (benefit) for income taxes	 	22,403		 	(5,318	)	 	 	2,844		
Provision (benefit) for income taxes	 	9,529		 	(3,132	)	 	 	740		
Net income (loss)	 	12,874		 	(2,186	)	 	 	2,104		
Other comprehensive income (loss):	 	 	 	 	 	 	 	
Change in fair value of interest rate cap	 	(122	)	 	—		 	 	(24	)	
Reclassification of interest rate cap amortization included in net income (loss)	 	—		 	—		 	 	58		
Total other comprehensive income (loss), net	 	(122	)	 	—		 	 	34		
Comprehensive income (loss)	 	$	12,752		 	$	(2,186	)	 	 	$	2,138		
Earnings (loss) per share:	 	 	 	 	 	 	 	
    Basic	 	$	0.33		 	$	(0.06	)	 	 	$	0.38		
    Diluted	 	$	0.33		 	$	(0.06	)	 	 	$	0.37		
Weighted-average shares outstanding	 	 	 	 	 	 	 	
    Basic	 	38,518,431		 	38,802,425		 	 	5,492,417		
    Diluted	 	38,682,273		 	38,802,425		 	 	5,610,859		

8

	
														
Del Taco Restaurants, Inc.	
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA	
(Unaudited)	
(In thousands)	
 	 	 	 	 	 	 	 	
 	 	Successor	 	 	Predecessor	
 	 	12 Weeks Ended
September 6, 2016	 	10 Weeks Ended
September 8, 2015	 	 	2 Weeks Ended
June 30, 2015	
Net income (loss)	 	$	4,949		 	$	(2,186	)	 	 	$	2,416		
Non-GAAP adjustments:	 	 	 	 	 	 	 	
Provision (benefit) for income taxes	 	4,076		 	(3,132	)	 	 	(1,449	)	
Interest expense	 	1,412		 	1,725		 	 	664		
Depreciation and amortization	 	5,157		 	4,289		 	 	659		
EBITDA	 	15,594		 	696		 	 	2,290		
Stock-based compensation expense (a)	 	1,001		 	146		 	 	—		
Loss on disposal of assets (b)	 	54		 	1		 	 	84		
Restaurant closure charges, net (c)	 	(133	)	 	19		 	 	—		
Amortization of favorable and unfavorable lease assets and liabilities, net (d)	 	(140	)	 	(142	)	 	 	5		
Debt modification costs (e)	 	—		 	78		 	 	1		
Transaction-related costs (f)	 	490		 	11,978		 	 	61		
Pre-opening costs (h)	 	94		 	41		 	 	28		
Adjusted EBITDA	 	$	16,960		 	$	12,817		 	 	$	2,469		

														
 	 	Successor	 	 	Predecessor	
 	 	36 Weeks Ended
September 6, 2016	 	10 Weeks Ended
September 8, 2015	 	 	26 Weeks Ended
June 30, 2015	
Net income (loss)	 	$	12,874		 	$	(2,186	)	 	 	$	2,104		
Non-GAAP adjustments:	 	 	 	 	 	 	 	
Provision (benefit) for income taxes	 	9,529		 	(3,132	)	 	 	740		
Interest expense	 	4,289		 	1,725		 	 	11,491		
Depreciation and amortization	 	16,175		 	4,289		 	 	8,249		
EBITDA	 	42,867		 	696		 	 	22,584		
Stock-based compensation expense (a)	 	2,630		 	146		 	 	532		
Loss on disposal of assets (b)	 	191		 	1		 	 	99		
Restaurant closure charges, net (c)	 	(121	)	 	19		 	 	94		
Amortization of favorable and unfavorable lease assets and liabilities, net (d)	 	(420	)	 	(142	)	 	 	3		
Debt modification costs (e)	 	—		 	78		 	 	139		
Transaction-related costs (f)	 	681		 	11,978		 	 	7,255		
Change in fair value of warrant liability (g)	 	—		 	—		 	 	(35	)	
Pre-opening costs (h)	 	222		 	41		 	 	276		
Adjusted EBITDA	 	$	46,050		 	$	12,817		 	 	$	30,947		

(a)	Includes non-cash, stock-based compensation.	
		
(b)	Loss on disposal of assets includes the loss on disposal of assets related to retirements and replacement or write-off of leasehold improvements or equipment.	
		
(c)	Includes costs related to future obligations associated with the closure or net sublease shortfall of a restaurant.	
		
(d)	Includes amortization of favorable lease assets and unfavorable lease liabilities.	
		
(e)	Includes costs associated with debt refinancing transaction in August 2015 and March 2015.	

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(f)	Includes costs related to the offer to exchange the Company's common stock for each outstanding Company warrant and the strategic sale process which commenced during 2014 and resulted in the Stock Purchase Agreement with the Levy Newco Parties and the Business Combination consummated pursuant to the Merger Agreement.	
		
(g)	Relates to fair value adjustments to the warrants to purchase shares of common stock of DTH that had been issued to certain of DTH’s equity shareholders, all of which were exchanged for shares of common stock of DTH on March 20, 2015.	
		
(h)	Pre-opening costs consist of costs directly associated with the opening of new restaurants and incurred prior to opening, including restaurant labor, supplies, rent expense and other related pre-opening costs. These are generally incurred over the three to five months prior to opening.	

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Del Taco Restaurants, Inc.	
Reconciliation of Company Restaurant Sales to Restaurant Contribution	
(Unaudited)	
(In thousands)	
 	 	 	 	 	 	 	 	
 	 	Successor	 	 	Predecessor	
 	 	12 Weeks Ended
September 6, 2016	 	10 Weeks Ended
September 8, 2015	 	 	2 Weeks Ended
June 30, 2015	
Company restaurant sales	 	$	100,173		 	$	78,874		 	 	$	15,891		
Restaurant operating expenses	 	79,233		 	63,103		 	 	12,972		
Restaurant contribution	 	$	20,940		 	$	15,771		 	 	$	2,919		
Restaurant contribution margin	 	20.9	%	 	20.0	%	 	 	18.4	%	

	
														
Del Taco Restaurants, Inc.	
Reconciliation of Company Restaurant Sales to Restaurant Contribution	
(Unaudited)	
(In thousands)	
 	 	 	 	 	 	 	 	
 	 	Successor	 	 	Predecessor	
 	 	36 Weeks Ended
September 6, 2016	 	10 Weeks Ended
September 8, 2015	 	 	26 Weeks Ended
June 30, 2015	
Company restaurant sales	 	$	289,640		 	$	78,874		 	 	$	200,676		
Restaurant operating expenses	 	231,402		 	63,103		 	 	162,178		
Restaurant contribution	 	$	58,238		 	$	15,771		 	 	$	38,498		
Restaurant contribution margin	 	20.1	%	 	20.0	%	 	 	19.2	%	

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Del Taco Restaurants, Inc.	
Restaurant Development	
 	 	12 Weeks Ended	 	36 Weeks Ended	
 	 	September 6, 2016	 	September 8, 2015	 	September 6, 2016	 	September 8, 2015	
Company-operated restaurant activity:	 	 	 	 	 	 	 	 	
Beginning of period	 	298		 	306		 	297		 	304		
Openings	 	1		 	1		 	3		 	3		
Closures	 	—		 	(1	)	 	(1	)	 	(1	)	
Purchased from franchisee	 	1		 	—		 	1		 	—		
Restaurants at end of period	 	300		 	306		 	300		 	306		
Franchised restaurant activity:	 	 	 	 	 	 	 	 	
Beginning of period	 	245		 	241		 	247		 	243		
Openings	 	2		 	—		 	3		 	—		
Closures	 	—		 	—		 	(3	)	 	(2	)	
Restaurants sold to Company	 	(1	)	 	—		 	(1	)	 	—		
Restaurants at end of period	 	246		 	241		 	246		 	241		
Total restaurant activity:	 	 	 	 	 	 	 	 	
Beginning of period	 	543		 	547		 	544		 	547		
Openings	 	3		 	1		 	6		 	3		
Closures	 	—		 	(1	)	 	(4	)	 	(3	)	
Restaurants at end of period	 	546		 	547		 	546		 	547		

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