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TheStreet Open House

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

Conference Call

We will host a conference call to discuss the financial results for the fourth quarter ended December 31, 2013 today at 7:30 AM Central Time. Hosting the conference call will be Mark S. Mednansky, Chief Executive Officer; Tom Pennison, Chief Financial Officer; and Jeff Carcara, Chief Operating Officer.

The conference call can be accessed live over the phone by dialing 888-437-9481 or for international callers by dialing 719-325-2461. A replay will be available afterwards and can be accessed by dialing 877-870-5176 or for international callers by dialing 858-384-5517; the passcode is 2661880. The replay will be available until Wednesday, March 5, 2014.

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 call has concluded.

About Del Frisco's Restaurant Group, Inc.

Based in Southlake, Texas, near Dallas, Del Frisco's Restaurant Group, Inc. is a collection of 40 restaurants across 20 states and Washington, D.C., including Del Frisco's Double Eagle Steak House, Sullivan's Steakhouse, and Del Frisco's Grille. Del Frisco's Double Eagle Steak House serves up flawless cuisine that's bold and delicious, an extensive award-winning wine list and a level of service that reminds guests that they're the boss. 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. 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. 

For further information about our restaurants, to make reservations, or to purchase gift cards, please visit: www.DelFriscos.com , www.SullivansSteakhouse.com , and www.DelFriscosGrille.com . For more information about Del Frisco's Restaurant Group, Inc., please visit www.DFRG.com .

Forward-Looking Statements

Certain statements in this press release, including statements under the heading "Outlook" 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", and similar terms and phrases, including references to assumptions, to identify forward-looking statements. The forward-looking statements in this press release are based on information available to us as of the date any such statements are made and we assume no obligation to update these forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include, but are not limited to, the following: factors that could affect 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; the uncertainty of our ability to achieve expected levels of comparable restaurant sales increases; the performance of new restaurants and their impact on existing restaurant sales; increases in the cost of food ingredients and other key supplies; the risk of food-borne illnesses and other health concerns about our food; the potential for increased labor costs or difficulty retaining qualified employees, including as a result of immigration enforcement activities; risks relating to our expansion into new markets; the impact of federal, state or local government regulations relating to our employees and the sale of food or alcoholic beverages.  Additional factors that could cause actual results to differ materially from our forward-looking statements are set forth in our reports filed with the Securities and Exchange Commission.

DEL FRISCO'S RESTAURANT GROUP, INC.
Condensed Consolidated Income Statements - Unaudited
(dollar amounts in thousands, except share and per share data)
         
  17 Weeks Ending 16 Weeks Ending 53 Weeks Ending 52 Weeks Ending
  December 31, December 25, December 31, December 25,
  2013 2012 2013 2012
         
Revenues  $ 97,462  $ 80,869  $ 271,806  $ 232,435
         
Costs and expenses:        
Costs of sales  29,489  24,603  82,209  71,093
Restaurant operating expenses  42,678  34,198  121,825  100,143
Marketing and advertising costs  2,072  1,550  5,663  4,682
Pre-opening costs  2,004  2,027  3,758  4,058
General and administrative costs  5,309  4,757  17,421  13,449
Management and accounting fees paid to related party  --  --  --  1,252
Asset advisory agreement termination fee  --  --  --  3,000
Secondary public offering costs  231  --  1,024  --
Public offering transaction bonuses  2,845  --  8,355  1,462
Non-cash impairment charges  2,360  --  2,360  --
Depreciation and amortization  3,663  3,054  11,300  8,675
         
Operating income  6,811  10,680  17,891  24,621
         
Other income (expense), net:        
Interest expense  (15)  (73)  (72)  (2,920)
Write-off of debt issuance costs  --  --  --  (1,649)
Other  4  62  (51)  113
         
Income from continuing operations before income taxes  6,800  10,669  17,768  20,165
         
Income tax expense  2,208  2,829  5,556  5,592
         
Income from continuing operations  $ 4,592  $ 7,840  $ 12,212  $ 14,573
         
Discontinued operations, net of income tax  --  (276)  --  (819)
         
Net income  $ 4,592  $ 7,564  $ 12,212  $ 13,754
         
Basic income (loss) per common share:        
Continuing operations  $ 0.19  $ 0.33  $ 0.51  $ 0.71
Discontinued operations  --  (0.01)  --  (0.04)
Basic income per share  $ 0.19  $ 0.32  $ 0.51  $ 0.67
         
Diluted income (loss) per common share:        
Continuing operations  $ 0.19  $ 0.33  $ 0.51  $ 0.71
Discontinued operations  --  (0.01)  --  (0.04)
Diluted income per share  $ 0.19  $ 0.32  $ 0.51  $ 0.67
         
Shares used in computing net income per common share:        
Basic  23,743,568  23,794,667  23,779,782  20,432,579
Diluted  23,858,747  23,794,667  23,852,200  20,432,579
 
DEL FRISCO'S RESTAURANT GROUP, INC.
Selected Balance Sheet Data
(dollar amounts in thousands)
     
  December 31, December 31,
  2013 2012
  (unaudited)  
     
Cash and cash equivalents  $ 13,674  $ 10,763
Total assets  288,651 258,385
Long-term debt  --  --
Total stockholders' equity  196,783  177,901

Reconciliation of Non-GAAP Measures and Segment Information

We prepare our financial statements in accordance with generally accepted accounting principles (GAAP). Within our press release, we make reference to non-GAAP Adjusted Net Income and Restaurant-level EBITDA. Adjusted Net Income represents pre-tax income from continuing operations plus the sum of the related party management fees and expenses, non-cash impairment charges, secondary public offering costs, and the public offering transaction bonuses, minus income tax expense at an effective tax rate of 30%. We believe that this measure represents a useful internal measure of performance as it excludes certain one-time expenditures associated with our public offerings as well as the discontinuation of the asset advisory agreement. Restaurant-level EBITDA is calculated by adding back to operating income depreciation and amortization plus the sum of certain non-operating expenses, including pre-opening costs, management fees and expenses, public offering expenses, public offering transaction bonuses, non-cash impairment charges, and general and administrative expenses. We believe that this measure also represents a useful internal measure of performance. 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 a similarly titled measure 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 pre-tax income from continuing operations to adjusted net income and a reconciliation of restaurant-level EBITDA to operating income:

  17 Weeks Ending 16 Weeks Ending 53 Weeks Ending 52 Weeks Ending
  December 31, December 25, December 31, December 25,
  2013 2012 2013 2012
Adjusted Net Income:        
Pre-tax income from continuing operations  $ 6,800  $ 10,669  $ 17,768  $ 20,165
Asset advisory agreement termination fee  --  --  --  3,000
Management and accounting fees paid to related party  --  --  --  1,252
Write-off of debt issuance costs  --  --  --  1,649
Secondary public offering costs  231  --  1,024  --
Public offering transaction bonuses  2,845  --  8,355  1,462
Non-cash impairment charges  2,360  --  2,360  --
Proforma Adjustments  5,436  --  11,739  7,363
Adjusted Pre-tax Income  12,236  10,669  29,507  27,528
Income Tax (@ 30%)  3,671  3,201  8,852  8,258
Adjusted Net Income  $ 8,565  $ 7,468  $ 20,655  $ 19,270
Basic EPS (Adjusted)  $ 0.36  $ 0.31  $ 0.87  $ 0.94
Diluted EPS (Adjusted)  $ 0.36  $ 0.31  $ 0.87  $ 0.94
 
Segment Information and Restaurant-Level EBITDA Reconciliation
   
  17 Weeks Ending December 31, 2013 (unaudited)
  Del Frisco's Sullivan's Del Frisco's Grille Consolidated
                 
Revenues  $ 50,950 100.0%  $ 28,893 100.0%  $ 17,619 100.0%  $ 97,462 100.0%
Costs and expenses:                
Cost of sales  15,835 31.1%  8,686 30.1%  4,968 28.2%  29,489 30.3%
Restaurant operating expenses  19,049 37.4%  14,137 48.9%  9,492 53.9%  42,678 43.8%
Marketing and advertising costs  749 1.4%  1,008 3.5%  315 1.8%  2,072 2.1%
Restaurant-level EBITDA  15,317 30.1%  5,062 17.5%  2,844 16.1%  23,223 23.8%
                 
Pre-opening costs              2,004 2.1%
General and administrative              5,309 5.4%
Secondary public offering costs              231 0.2%
Public offering transaction bonuses              2,845 2.9%
Non-cash impairment charges              2,360 2.4%
Depreciation and amortization              3,663 3.8%
                 
Operating income              $ 6,811 7.0%
                 
Restaurant operating weeks  170    323    147    640  
Average unit volume  $ 5,095    $ 1,521    $ 2,038    $ 2,589  
                 
                 
  16 Weeks Ending December 25, 2012 (unaudited)
  Del Frisco's Sullivan's Del Frisco's Grille Consolidated
                 
Revenues  $ 43,404 100.0%  $ 27,298 100.0%  $ 10,167 100.0%  $ 80,869 100.0%
Costs and expenses:                
Cost of sales  13,370 30.8%  8,333 30.5%  2,900 28.5%  24,603 30.4%
Restaurant operating expenses  16,117 37.1%  12,836 47.0%  5,245 51.6%  34,198 42.3%
Marketing and advertising costs  675 1.6%  678 2.5%  197 1.9%  1,550 1.9%
Restaurant-level EBITDA  13,242 30.5%  5,451 20.0%  1,825 18.0%  20,518 25.4%
                 
Pre-opening costs              2,027 2.5%
General and administrative              4,757 5.9%
Depreciation and amortization              3,054 3.8%
                 
Operating income              $ 10,680 13.2%
                 
Restaurant operating weeks  148    304    75    527  
Average unit volume  $ 4,692    $ 1,437    $ 2,169    $ 2,455  
CONTACT: Investor Relations Contact:
         Raphael Gross
         203-682-8253
         investorrelations@dfrg.com
         
         Media Relations Contact:
         Janet Reinhardt
         646-277-1225
         janet.reinhardt@icrinc.com

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