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Apr 30, 2018
Texas Roadhouse, Inc. Announces First Quarter 2018 Results

LOUISVILLE, Ky., April 30, 2018 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (Nasdaq:TXRH), today announced financial results for the 13 week period ended March 27, 2018. 

     
    First Quarter
($000's)     2018     2017   % Change
             
Total revenue   $   627,705   $   567,686   10.6 %
Income from operations     64,871     49,022   32.3 %
Net income     54,541     34,313   59.0 %
Diluted EPS   $   0.76   $   0.48   57.9 %
             

Results for the first quarter included the following highlights:  

  • Comparable restaurant sales increased 4.9% at company restaurants and 3.9% at domestic franchise restaurants;
  • Diluted earnings per share increased 57.9% to $0.76 from $0.48 in the prior year primarily due to lower general and administrative expenses and the benefit of a lower income tax rate.  General and administrative expenses included a pre-tax charge recorded in the prior year period of $14.9 million ($9.2 million after-tax), or $0.13 per diluted share, related to the settlement of a legal matter;
  • Restaurant margin dollars increased 6.3% to $119.4 million from $112.3 million in the prior year and restaurant margin, as a percentage of restaurant and other sales, decreased 75 basis points to 19.2%;
  • Our income tax rate decreased to 13.0% from 26.5% in the prior year period primarily due to the impact of new tax legislation; and
  • Seven company restaurants, including one Bubba’s 33 restaurant, and two international franchise restaurants were opened.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "We are pleased to report another solid quarter highlighted by double-digit revenue growth and comparable restaurant sales growth of 4.9%.  This sales growth was largely driven by traffic gains which have continued into the second quarter.  While restaurant margins remain challenged by ongoing labor inflation, our operators have remained focused on providing our guests with a legendary experience.  On the development front, our new restaurant pipeline is in good shape with 11 company restaurants and two international franchise restaurants, including our first in Mexico, open so far this year."

2018 Outlook

Comparable restaurant sales at company restaurants for the first four weeks of our second quarter of fiscal 2018 increased approximately 8.5% compared to the prior year period.

Management updated the following expectation for 2018:

  • Commodity cost inflation of approximately 1.0% compared to previous guidance of relatively flat food costs.

Management reiterated the following expectations for 2018:

  • Positive comparable restaurant sales growth;
  • Approximately 30 company restaurant openings, including up to seven Bubba’s 33 restaurants;
  • Mid-single digit growth in labor dollars per store week, excluding the impact of higher guest counts;
  • An income tax rate of 15.0% to 16.0%; and
  • Total capital expenditures of approximately $165.0 million to $175.0 million.

Non-GAAP Measures

We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”).  Within our press release, we make reference to restaurant margin (in dollars and as a percentage of sales).  Restaurant margin represents restaurant and other sales less restaurant-level operating costs, including cost of sales, labor, rent and other operating costs.  Restaurant margin should not be considered in isolation, or as an alternative, to income from operations.  This non-GAAP measure is not indicative of overall company performance and profitability in that this measure does not accrue directly to the benefit of shareholders due to the nature of the costs excluded.  Restaurant margin is widely regarded as a useful metric by which to evaluate restaurant-level operating efficiency and performance.  In calculating restaurant margin, we exclude certain non-restaurant-level costs that support operations, including pre-opening and general and administrative expenses, but do not have a direct impact on restaurant-level operational efficiency and performance.  We also exclude depreciation and amortization expense, substantially all of which relates to restaurant-level assets, as it represents a non-cash charge for the investment in our restaurants.  We also exclude impairment and closure expense as we believe this provides a clearer perspective of ongoing operating performance and a more useful comparison to prior period results.  Restaurant margin as presented may not be comparable to other similarly titled measures of other companies in our industry.  A reconciliation of income from operations to restaurant margin is included in the accompanying financial tables.

Conference Call

Texas Roadhouse is hosting a conference call today, April 30, 2018 at 5:00 p.m. Eastern Time to discuss these results.  The dial-in number is (800) 281-7973 or (323) 794-2093 for international calls.  A replay of the call will be available for one week following the conference call.  To access the replay, please dial (844) 512-2921 or (412) 317-6671 for international calls, and use 4129643 as the pass code.  There will be a simultaneous Web cast conducted at www.texasroadhouse.com.

About the Company

Texas Roadhouse is a casual dining concept that first opened in 1993 and today has grown to over 560 restaurants system-wide in 49 states and eight foreign countries.  For more information, please visit the Company’s Web site at www.texasroadhouse.com.

Forward-looking Statements
Certain statements in this release that are not historical facts, including, without limitation, those relating to our anticipated financial performance, are forward-looking statements that involve risks and uncertainties.  Such statements are based upon the current beliefs and expectations of the management of Texas Roadhouse.  Actual results may vary materially from those contained in forward-looking statements based on a number of factors including, without limitation, the actual number of restaurants opening; the sales at these and our other company and franchise restaurants; changes in restaurant development or operating costs, such as food and labor; our ability to acquire franchise restaurants; our ability to integrate the franchise restaurants we acquire or other concepts we develop; our ability to continue to generate the necessary cash flows to fund our new restaurant growth, continue our share repurchase program and pay a quarterly cash dividend; strength of consumer spending; pending or future legal claims; breaches of security; conditions beyond our control such as weather, natural disasters, disease outbreaks, epidemics or pandemics impacting our customers or food supplies; food safety and food-borne illness concerns; acts of war or terrorism and other factors disclosed from time to time in our filings with the U.S. Securities and Exchange Commission.  Investors should take such risks into account when making investment decisions.  Shareholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made.  We undertake no obligation to update any forward-looking statements.

Contacts:

Investor Relations                                                                                          
Tonya Robinson
(502) 515-7269

Media
Travis Doster
(502) 638-5457

   
Texas Roadhouse, Inc. and Subsidiaries  
Condensed Consolidated Statements of Income  
(in thousands, except per share data)  
(unaudited)  
                 
           
      13 Weeks Ended    
      March 27, 2018   March 28, 2017    
                 
Revenue:            
  Restaurant and other sales $ 622,402       $ 563,320      
  Franchise royalties and fees   5,303         4,366      
                 
Total revenue   627,705         567,686      
                 
Costs and expenses:            
  Restaurant operating costs (excluding depreciation and amortization shown separately below):            
    Cost of sales   202,786         184,193      
    Labor   196,030         170,347      
    Rent   11,851         10,869      
    Other operating   92,378         85,660      
  Pre-opening   5,044         4,740      
  Depreciation and amortization   24,484         22,596      
  Impairment and closure   86         11      
  General and administrative   30,175         40,248      
                 
Total costs and expenses   562,834         518,664      
                 
Income from operations   64,871         49,022      
                 
Interest expense, net   359         332      
Equity income from investments in            
  unconsolidated affiliates   (324 )       (320 )    
                 
Income before taxes   64,836         49,010      
Provision for income taxes   8,457         12,987      
                 
Net income including noncontrolling interests   56,379         36,023      
Less: Net income attributable to noncontrolling interests   1,838         1,710      
Net income attributable to Texas Roadhouse, Inc. and subsidiaries $ 54,541       $ 34,313      
                 
Net income per common share attributable to Texas Roadhouse, Inc.            
and subsidiaries:            
  Basic $ 0.76       $ 0.48      
  Diluted $ 0.76       $ 0.48      
                 
Weighted average shares outstanding:            
  Basic   71,333         70,779      
  Diluted   71,805         71,334      
                 
Cash dividends declared per share $ 0.25       $ 0.21      
   

 

   
Texas Roadhouse, Inc. and Subsidiaries  
Condensed Consolidated Balance Sheets  
(in thousands)  
(unaudited)  
                     
                     
                     
        March 27, 2018   December 26, 2017    
                     
         
  Cash and cash equivalents   $ 197,829     $ 150,918      
  Other current assets, net     58,139       106,163      
  Property and equipment, net     922,891       912,147      
  Goodwill     121,040       121,040      
  Intangible assets, net     2,514       2,700      
  Other assets     40,729       37,655      
               
  Total assets   $ 1,343,142     $ 1,330,623      
               
               
  Current maturities of long-term debt and obligation under capital lease     9       9      
  Other current liabilities     299,917       329,989      
  Long-term debt and obligation under capital lease, excluding current maturities   51,979       51,981      
  Other liabilities, net     104,372       97,253      
  Texas Roadhouse, Inc. and subsidiaries stockholders' equity     874,222       839,079      
  Noncontrolling interests     12,643       12,312      
               
  Total liabilities and equity   $ 1,343,142     $ 1,330,623      
               

 

   
Texas Roadhouse, Inc. and Subsidiaries  
Condensed Consolidated Statements of Cash Flows  
(in thousands)  
(unaudited)  
                 
                 
        13 Weeks Ended  
        March 27, 2018   March 28, 2017  
                 
   
Cash flows from operating activities:    
Net income including noncontrolling interests   $ 56,379       $ 36,023    
Adjustments to reconcile net income to net cash provided by operating activities      
  Depreciation and amortization     24,484         22,596    
  Share-based compensation expense     7,475         6,218    
  Other noncash adjustments, net     4,661         (3,973 )  
Change in working capital     13,808         33,473    
  Net cash provided by operating activities     106,807         94,337    
           
Cash flows from investing activities:            
Capital expenditures - property and equipment     (35,307 )       (36,063 )  
Acquisition of franchise restaurants, net of cash acquired     -         (16,528 )  
  Net cash used in investing activities     (35,307 )       (52,591 )  
           
Cash flows from financing activities:            
Dividends paid     (14,945 )       (13,418 )  
Other financing activities, net     (9,644 )       (3,760 )  
  Net cash used in financing activities     (24,589 )       (17,178 )  
           
  Net increase in cash and cash equivalents     46,911         24,568    
Cash and cash equivalents - beginning of period     150,918         112,944    
Cash and cash equivalents - end of period   $ 197,829       $ 137,512    
           

 

 
Texas Roadhouse, Inc. and Subsidiaries
Reconciliation of Income from Operations to Restaurant Margin
(in thousands)
(unaudited)
           
    13 Weeks Ended  
    March 27, 2018   March 28, 2017  
           
Income from operations   $ 64,871     $ 49,022    
           
Less:          
Franchise royalties and fees     5,303       4,366    
           
Add:          
Pre-opening     5,044       4,740    
Depreciation and amortization     24,484       22,596    
Impairment and closure     86       11    
General and administrative     30,175       40,248    
           
Restaurant margin   $ 119,357     $ 112,251    
           
Restaurant margin (as a percentage of restaurant and other sales)     19.2 %     19.9 %  
           

 

   
Texas Roadhouse, Inc. and Subsidiaries  
Supplemental Financial and Operating Information  
($ amounts in thousands, except weekly sales by group)  
(unaudited)  
                     
      First Quarter   Change      
        2018     2017     vs LY      
                     
Restaurant openings                
  Company - Texas Roadhouse   6     6     0        
  Company - Bubba's 33   1     0     1        
  Company - Other   0     0     0        
  Franchise - Texas Roadhouse - U.S.   0     1     (1 )      
  Franchise - Texas Roadhouse - International   2     1     1        
  Total   9     8     1        
                     
Restaurant acquisitions/dispositions                
  Company - Texas Roadhouse   0     4     (4 )      
  Franchise - Texas Roadhouse   0     (4 )   4        
  Total   0     0     0        
                     
Restaurants open at the end of the quarter                
  Company - Texas Roadhouse   446     423     23        
  Company - Bubba's 33   21     16     5        
  Company - Other   2     2     0        
  Franchise - Texas Roadhouse - U.S.   70     70     0        
  Franchise - Texas Roadhouse - International   19     14     5        
  Total   558     525     33        
                     
Company restaurants                
  Restaurant and other sales $ 622,402   $ 563,320     10.5 %      
  Store weeks   6,048     5,681     6.5 %      
  Comparable restaurant sales growth (1)   4.9 %   3.1 %        
  Texas Roadhouse restaurants only:                
    Comparable restaurant sales growth (1)   4.9 %   3.2 %        
    Average unit volume (2) $ 1,356   $ 1,299     4.4 %      
    Weekly sales by group:            
    Comparable restaurants (407 units) $ 104,849              
    Average unit volume restaurants (21 units) (3) $ 93,684              
    Restaurants less than 6 months old (18 units) $ 106,627              
                     
Restaurant operating costs (as a % of restaurant and other sales)                
Cost of sales   32.6 %   32.7 %   (12 ) bps    
Labor   31.5 %   30.2 %   126  bps    
Rent     1.9 %   1.9 %   (3 ) bps    
Other operating   14.8 %   15.2 %   (36 ) bps    
Total   80.8 %   80.1 %   75  bps    
                     
  Restaurant margin   19.2 %   19.9 %   (75 ) bps    
                     
  Restaurant margin ($ in thousands) $ 119,357   $ 112,251     6.3 %      
  Restaurant margin $/Store week $ 19,735   $ 19,760     (0.1 )%      
                     
Franchise restaurants                
  Franchise royalties and fees $ 5,303   $ 4,366     21.5 %      
  Store weeks   1,139     1,080     5.5 %      
  Comparable restaurant sales growth (1)   1.8 %   3.0 %        
  U.S. franchise restaurants only:                
    Comparable restaurant sales growth (1)   3.9 %   3.8 %        
    Average unit volume (2) $ 1,398   $ 1,333     4.9 %      
                     
Pre-opening expense $ 5,044   $ 4,740     6.4 %      
                     
Depreciation and amortization  $ 24,484   $ 22,596     8.4 %      
  As a % of revenue   3.9 %   4.0 %   (7 ) bps      
                     
General and administrative expenses $ 30,175   $ 40,248     (25.0 )%      
  As a % of revenue   4.8 %   7.1 %   (227 ) bps    
                     
(1)  Comparable restaurant sales growth reflects the change in year-over-year sales for restaurants open a full 18 months before the beginning of the period measured, excluding sales from restaurants closed during the period.
(2)  Average unit volume includes sales from Texas Roadhouse restaurants open for a full six months before the beginning of the period measured, excluding any sales at restaurants closed during the period.
(3)  Average unit volume restaurants include restaurants open a full six and up to 18 months before the beginning of the period measured.
Amounts may not foot due to rounding.
                     

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Source: Texas Roadhouse, Inc

INVESTOR RELATIONS

Tonya Robinson
VP, Finance & Investor Relations
Texas Roadhouse, Inc.
Phone: (502) 426-9984