May 1, 2017

Texas Roadhouse, Inc. Announces First Quarter 2017 Results

LOUISVILLE, Ky., May 01, 2017 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (Nasdaq:TXRH), today announced financial results for the 13-week period ended March 28, 2017

  First Quarter
($000's) 2017 2016  % Change 
      
Total revenue$  567,686 $  515,559 10%
Income from operations  49,02252,811 (7%)
Net income34,31335,593 (4%)
Diluted EPS$  0.48 $  0.50 (4%)
      

Results for the first quarter included the following highlights:  

  • Comparable restaurant sales increased 3.1% at company restaurants and 3.8% at domestic franchise restaurants;
  • Restaurant margin, as a percentage of restaurant sales, decreased 21 basis points to 19.9%, primarily driven by wage rate inflation, partially offset by the benefit of lower food costs;
  • Results for the quarter included a pre-tax charge of $14.9 million ($9.2 million after-tax), or $0.13 per diluted share, related to a previously disclosed legal matter which was settled during March 2017.  The impact of the legal charge was partially offset by a pre-tax charge recorded in the first quarter of 2016 of $5.5 million ($3.4 million after-tax) related to a separate legal matter which had an impact of $0.05 on diluted earnings per share in that quarter;
  • Diluted earnings per share decreased 4.4% to $0.48 from $0.50 in the prior year; and,
  • Six company-owned restaurants and two franchise restaurants were opened.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "We are pleased with our top-line momentum and operating performance in the first quarter of 2017 with positive comparable restaurant sales and traffic growth, which continued through the first four weeks of the second quarter.  We credit our success to our operators' ability to execute on our mission of Legendary Food and Legendary Service every single shift.  In addition, we remain committed to investing in new restaurant growth that generates solid returns and allows us to maintain a conservative capital structure."

Franchise Acquisition

Effective December 28, 2016, we acquired four franchise restaurants in Florida and Georgia for an aggregate purchase price of $16.5 million.  The purchase price was paid in cash.  Going forward, two of the restaurants are wholly-owned, while two are majority-owned.  The acquisitions are expected to have an accretive impact in 2017.

2017 Outlook

Comparable restaurant sales at company restaurants for the first four weeks of our second quarter of fiscal 2017 increased approximately 2.6% compared to the prior year period.

Management reiterated the following expectations for 2017:

  • Positive comparable restaurant sales growth;
  • Approximately 30 company restaurant openings, including approximately six Bubba's 33 restaurants;
  • Food cost deflation of approximately 1.0% to 2.0%;
  • Mid-single digit labor inflation;
  • An income tax rate of 29.0% to 30.0%; and
  • Total capital expenditures of approximately $170.0 million, excluding any cash used for franchise acquisitions.

Conference Call

The Company is hosting a conference call today, May 1, 2017 at 5:00 p.m. Eastern Time to discuss these results.  The dial-in number is (888) 300-2343 or (719) 325-2323 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 8307466 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 operates over 525 restaurants system-wide in 49 states and six 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 the Company.  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. 

  
Texas Roadhouse, Inc. and Subsidiaries 
Condensed Consolidated Statements of Income 
(in thousands, except per share data) 
(unaudited) 
  
   13 Weeks Ended 
   March 28, 2017 March 29, 2016 
        
Revenue:     
       Restaurant sales$  563,320  $  511,284 
 Franchise royalties and fees  4,366    4,275 
        
Total revenue  567,686    515,559 
        
Costs and expenses:     
 Restaurant operating costs (excluding depreciation and amortization shown separately below):       
      
  Cost of sales  184,193    173,128 
  Labor  170,347    147,546 
  Rent  10,869    10,027 
  Other operating  85,660    77,612 
 Pre-opening  4,740    4,825 
 Depreciation and amortization   22,596    19,539 
 Impairment and closure  11    11 
 General and administrative  40,248    30,060 
        
Total costs and expenses  518,664    462,748 
        
Income from operations  49,022    52,811 
        
Interest expense, net  332    305 
Equity income from investments in      
  unconsolidated affiliates  320    352 
         
Income before taxes  49,010    52,858 
Provision for income taxes  12,987    15,857 
        
Net income including noncontrolling interests  36,023    37,001 
Less: Net income attributable to noncontrolling interests  1,710    1,408 
Net income attributable to Texas Roadhouse, Inc. and subsidiaries $  34,313  $  35,593 
        
Net income per common share attributable to Texas Roadhouse, Inc.     
  and subsidiaries:     
 Basic$  0.48  $  0.51 
 Diluted$  0.48  $  0.50 
        
Weighted average shares outstanding:     
 Basic  70,779    70,169 
 Diluted  71,334    70,764 
        
Cash dividends declared per share$  0.21  $  0.19 
 


 
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
          
           
          
     March 28, 2017 December 27, 2016 
          
          
 Cash and cash equivalents $  137,512   $  112,944  
 Other current assets   49,192    87,315  
 Property and equipment, net   855,027    830,054  
 Goodwill   121,040    116,571  
 Intangible assets, net   3,392    3,622  
  Other assets   31,725    29,465  
           
 Total assets $  1,197,888  $  1,179,971  
          
          
 Current maturities of long-term debt and obligation under capital lease   172    167  
 Other current liabilities   276,986    279,360  
 Long-term debt and obligation under capital lease, excluding current maturities    52,336    52,381  
 Other liabilities   86,772    89,821  
 Texas Roadhouse, Inc. and subsidiaries stockholders' equity   769,463    750,226  
 Noncontrolling interests    12,159    8,016  
           
 Total liabilities and equity $  1,197,888   $  1,179,971  
          


 
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
        
        
    13 Weeks Ended
    March 28, 2017 March 29, 2016
        
         
Cash flows from operating activities:     
Net income including noncontrolling interests $  36,023  $  37,001
Adjustments to reconcile net income to net cash provided by operating activities       
   Depreciation and amortization   22,596    19,539
 Share-based compensation expense   6,218    5,788
 Other noncash adjustments   (3,973)    802
Change in working capital   33,473    1,758
    Net cash provided by operating activities   94,337    64,888
        
Cash flows from investing activities:     
Capital expenditures - property and equipment   (36,063)    (34,179)
Acquisition of franchise restaurants, net of cash acquired   (16,528)    - 
  Net cash used in investing activities   (52,591)    (34,179)
        
Cash flows from financing activities:     
Proceeds from revolving credit facility, net   -     25,000
Repurchase shares of common stock   -     (4,110)
Dividends paid   (13,418)    (11,919)
Other financing activities   (3,760)    (3,022)
  Net cash (used in) provided by financing activities   (17,178)    5,949
        
  Net increase in cash and cash equivalents   24,568    36,658
Cash and cash equivalents - beginning of period   112,944     59,334
Cash and cash equivalents - end of period $  137,512  $  95,992
        

   

 

Texas Roadhouse, Inc. and Subsidiaries
Supplemental Financial and Operating Information
($ amounts in thousands, except weekly sales by group)
(unaudited)
          
          
   First Quarter Change   
   2017 2016 vs LY  
          
Restaurant openings       
 Company - Texas Roadhouse6 5 1  
 Company - Bubba's 330 2 (2)  
 Company - Other0 0 0   
 Franchise - Texas Roadhouse - U.S.1 0 1  
 Franchise - Texas Roadhouse - International1 1 0  
 Total8 8 0  
          
Restaurant acquisitions/dispositions        
 Company - Texas Roadhouse4 0 4  
 Company - Bubba's 330 0 0  
 Company - Other0 0 0  
 Franchise - Texas Roadhouse(4) 0 (4)  
 Total0 0 0  
          
Restaurants open at the end of the quarter       
 Company - Texas Roadhouse423 397 26  
 Company - Bubba's 3316 9 7  
 Company - Other2 2 0  
 Franchise - Texas Roadhouse - U.S.70 72 (2)  
 Franchise - Texas Roadhouse - International14 11 3  
 Total525  491 34  
          
Company-owned restaurants       
 Restaurant sales$  563,320 $  511,284   10.2% 
 Store weeks5,681 5,262   8.0% 
 Comparable restaurant sales growth (1)3.1%4.6%  
 Texas Roadhouse restaurants only:       
  Comparable restaurant sales growth (1)3.2%4.6%  
  Average unit volume (2)$  1,299 $  1,271   2.3% 
  Weekly sales by group:      
  Comparable restaurants (380 units)$  100,840      
  Average unit volume restaurants (27 units) (3)$  87,331      
  Restaurants less than 6 months old (16 units)$  103,316      
           
Restaurant operating costs (as a % of restaurant sales)       
Cost of sales32.7%33.9%  (116)bps
Labor30.2%28.9%  138bps
Rent 1.9 %2.0%  (3)bps
Other operating 15.2%15.2%  3bps
Total 80.1%79.9%  21bps
           
 Restaurant margin (4)19.9%20.1%  (21)bps
 Restaurant margin $  ($ in thousands) (4)$  112,251 $  102,970   9.0% 
 Restaurant margin $ (4)/Store week$  19,760 $  19,569   1.0% 
          
Franchise-owned restaurants       
 Franchise royalties and fees$  4,366 $  4,275   2.1% 
 Store weeks1,080 1,070   0.9% 
 Comparable restaurant sales growth (1)3.0%3.1%  
 U.S. franchise restaurants only:       
  Comparable restaurant sales growth (1)3.8%4.1%  
  Average unit volume (2)$  1,333 $  1,287   3.6% 
          
Pre-opening expense$  4,740 $  4,825   (1.8)% 
          
Depreciation and amortization $  22,596 $  19,539   15.6% 
 As a % of revenue 4.0%3.8%  19bps
          
General and administrative expenses $  40,248 $  30,060   33.9% 
 As a % of revenue 7.1%5.8%  126bps
          
(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 to 18 months before the beginning of the period measured.
(4)  Restaurant margin (in dollars and as a percentage of restaurant sales) represents restaurant sales less restaurant operating costs, including cost of sales, labor, rent and other operating costs.  Depreciation and amortization expense, substantially all of which relates to restaurant-level assets, is excluded from restaurant operating costs.  Restaurant margin is widely regarded in the restaurant industry as a useful metric by which to evaluate restaurant-level operating efficiency and performance.  Restaurant margin is not a measurement determined in accordance with GAAP and should not be considered in isolation, or as an alternative, to income from operations or other similarly titled measures of other companies.

Amounts may not foot due to rounding.
 
        
          
Contacts:



Investor Relations                                                                                          

Tonya Robinson

(502) 515-7269



Media

Travis Doster

(502) 638-5457

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Source: Texas Roadhouse, Inc

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