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Del Frisco's Restaurant Group, Inc. Announces Fourth Quarter & Fiscal Year 2013 Results

Stocks in this article: DFRG

Net income in the fourth quarter of 2013 was $4.6 million, or $0.19 per diluted share, compared to net income of $7.6 million, or $0.32 per diluted share, in the fourth quarter of 2012. Adjusted net income*, a non-GAAP measure, was $8.6 million, or $0.36 per diluted share, in the fourth quarter of 2013, compared to $7.5 million, or $0.31 per diluted share, in the fourth quarter of the previous year. The share base was 23.9 million in the fourth quarter of 2013 compared to 23.8 million in the fourth quarter of 2012. 

Segment Results

We operate the Del Frisco's Double Eagle Steak House, Sullivan's Steakhouse, and Del Frisco's Grille brands as operating segments. 

Del Frisco's Double Eagle Steak House

  • Revenues increased $7.5 million, or 17.4%, to $51.0 million in the fourth quarter of 2013 from $43.4 million in the fourth quarter of 2012. This increase was primarily due to an additional 22 operating weeks during the quarter (to 170 from 148) inclusive of the 17 th operating week in the recent fiscal period, along with a 5.2% increase in comparable restaurant sales (on a comparable 16-week basis). The growth in comparable restaurant sales was comprised of a 4.5% increase in entrée counts and a 0.7% increase in average check and marked the 16 th consecutive quarter of positive comparable restaurant sales. In the fourth quarter of the previous year, comparable restaurant sales increased 5.9%.   
  • Restaurant-level EBITDA** increased 15.7%, or $2.1 million, to $15.3 million in the fourth quarter of 2013 from $13.2 million in the fourth quarter of 2012 as the brand experienced higher cost of sales and restaurant operating expenses as a percentage of revenues.   
  • For the full year, revenues increased $19.9 million, or 16.0%, to $144.6 million from $124.7 million in 2012. The improvement was primarily due to a 4.4% increase in comparable restaurant sales, comprised of a 3.9% increase in entrée counts and a 0.5% increase in average check. This increase follows a comparable restaurant sales increase of 6.6% in the previous year. Operating weeks for the year increased to 530 from 472. For the full fiscal year, the average unit volume of Del Frisco's Double Eagle Steak House increased 5.3% to $14.5 million.

Sullivan's Steakhouse

  • Revenues increased $1.6 million, or 5.8%, to $28.9 million in the fourth quarter of 2013 from $27.3 million in the fourth quarter of 2012.  The increase was entirely due to an additional 19 operating weeks during the quarter (to 323 from 304) resulting from the 17 th operating week that were partially offset by a 0.7% decline in comparable restaurant sales (on a comparable 16-week basis). The decrease in comparable restaurants sales was comprised of a 3.0% decrease in entrée counts, coupled with a 2.3% increase in average check. In the fourth quarter of the previous year, comparable restaurant sales decreased 1.5%.    
  • Restaurant-level EBITDA** decreased 7.1%, or $0.4 million to $5.1 million in the fourth quarter of 2013 from $5.5 million in the fourth quarter of 2012, as the concept experienced higher restaurant operating expenses as well as marketing and advertising costs as a percentage of revenues.  
  • For the full year, revenues were $83.0 million compared to $83.8 million in 2012. Comparable restaurant sales decreased 3.0% and were comprised of a 0.7% decrease in average check and a 2.3% decrease in entrée counts. This decrease follows a comparable restaurant sales increase of 1.2% in the previous year. Operating weeks for the year increased to 1,007 from 988. For the full fiscal year, the average unit volume held steady at $4.4 million.

Del Frisco's Grille

  • Revenues increased 73.3%, or $7.5 million, to $17.6 million in the fourth quarter of 2013 from $10.2 million in the fourth quarter of 2012. The increase was primarily due to 72 additional operating weeks (to 147 from 75) stemming from seven openings subsequent to the third quarter of 2012 and the 17 th operating week in the recent fiscal period, as well as positive comparable restaurant sales.  
  • Restaurant-level EBITDA** increased 55.8%, or $1.0 million, to $2.8 million in the fourth quarter of 2013 from $1.8 million in the fourth quarter of 2012. The increase was primarily due to operating week growth as the concept experienced higher restaurant operating expenses as a percentage of revenues due to new restaurant inefficiencies.  
  • For the full year, revenues increased $20.2 million, or 84.1%, to $44.1 million compared to $24.0 million in 2012. Operating weeks for the year increased to 359 from 168. 

Restaurant Portfolio

As of December 31, 2013, Del Frisco's Restaurant Group, Inc. owned and operated 40 restaurants across 20 states and Washington, DC, including ten Del Frisco's, 19 Sullivan's, and eleven Del Frisco's Grille locations. During the fourth quarter of 2013, the Company opened Del Frisco's Grille locations in Palm Beach, FL; Fort Worth and Southlake, TX; and Chestnut Hill, MA.

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