October 30, 2017

Texas Roadhouse, Inc. Announces Third Quarter 2017 Results

LOUISVILLE, Ky., Oct. 30, 2017 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (Nasdaq:TXRH), today announced financial results for the 13 and 39 week periods ended September 26, 2017

  Third Quarter Year to Date
($000's)  2017 2016% Change  2017 2016% Change
         
Total revenue$  540,507$  481,63712.2% $  1,674,455$  1,506,00411.2%
Income from operations 45,511 38,46818.3%  148,747 141,0615.4%
Net income 31,014 25,67520.8%  102,908 94,8738.5%
Diluted EPS$  0.43$  0.3619.9% $  1.44$  1.347.6%
         

Results for the third quarter included the following highlights:  

  • Comparable restaurant sales increased 4.5% at company restaurants and 4.7% at domestic franchise restaurants;
  • Restaurant margin, as a percentage of restaurant sales, decreased 31 basis points to 17.8%, primarily driven by wage rate inflation, partially offset by the benefit of lower food costs;
  • Diluted earnings per share increased 19.9% to $0.43 from $0.36 in the prior year. This includes overlapping a pre-tax charge recorded in the prior year quarter of $1.2 million ($0.8 million after-tax) related to the settlement of a legal matter; and
  • Seven company-owned restaurants, including two Bubba's 33 restaurants, and one franchise restaurant were opened.

Results for the year-to-date period included the following highlights:

  • Comparable restaurant sales increased 4.0% at both company restaurants and domestic franchise restaurants;
  • Restaurant margin, as a percentage of restaurant sales, decreased 28 basis points to 18.9%, primarily driven by wage rate inflation, partially offset by the benefit of lower food costs;
  • A pre-tax charge of $14.9 million ($9.2 million after-tax), or $0.13 per diluted share, was recorded in the first quarter of 2017, related to the settlement of a legal matter.  The impact of the legal charge was partially offset by a pre-tax charge recorded in 2016 of $6.7 million ($4.1 million after-tax) related to a separate legal matter which had an impact of $0.06 on diluted earnings per share;
  • Diluted earnings per share increased 7.6% to $1.44 from $1.34 in the prior year; and
  • 20 company-owned restaurants, including four Bubba's 33 restaurants, and three franchise restaurants were opened.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "We are pleased to deliver another solid quarter of results including a 19.9% increase in diluted earnings per share driven by double-digit revenue growth.  Comparable restaurant sales grew 4.5%, driven primarily by traffic gains of 3.5%.  In addition, our positive sales momentum has continued into the fourth quarter.  None of this growth would be possible without the commitment from our operators and everyone associated with our legendary brand."

Taylor continued, "As we look to 2018, our balance sheet and strong cashflow have us well positioned for continued growth including approximately 30 planned restaurant openings. In addition, our allocation strategy will continue to be focused on returning capital to shareholders, primarily through our dividend program."

2017 Outlook

Comparable restaurant sales at company restaurants for the first four weeks of our fourth quarter of fiscal 2017 increased approximately 5.3% compared to the prior year period.

Management updated the following expectations for 2017:

  • 26 or 27 company restaurant openings (compared to previous guidance of 27 to 29 company restaurant openings), including four Bubba's 33 restaurants;
  • Food cost deflation of approximately 2.0%, compared to previous guidance of approximately 1.0% to 2.0%; and
  • Labor inflation of approximately 7.0% to 8.0%, compared to previous guidance of mid-single digit inflation.

Management reiterated the following expectations for 2017:

  • Positive comparable restaurant sales growth;
  • An income tax rate of approximately 28.0%; and
  • Total capital expenditures of approximately $170.0 million, excluding any cash used for franchise acquisitions.

2018 Outlook

Management provided the following initial expectations for 2018:

  • Positive comparable restaurant sales growth;
  • Approximately 30 company restaurant openings, including up to seven Bubba's 33 restaurants;
  • Relatively flat food costs;
  • Mid-single digit labor inflation;
  • An income tax rate of between 28.0% and 29.0%; and
  • Total capital expenditures of approximately $175.0 million, excluding any cash used for franchise acquisitions.

Conference Call

The Company is hosting a conference call today, October 30, 2017 at 5:00 p.m. Eastern Time to discuss these results.  The dial-in number is (888) 297-0358 or (719) 325-2396 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 1901754 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 540 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.

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 39 Weeks Ended
   September 26,
2017
 September 27,
2016
 September 26,
2017
 September 27,
2016
            
Revenue:         
 Restaurant sales$  536,341   $  477,617  $  1,661,821   $  1,493,531 
 Franchise royalties and fees   4,166       4,020     12,634      12,473 
            
Total revenue   540,507      481,637     1,674,455      1,506,004 
            
Costs and expenses:         
 Restaurant operating costs (excluding depreciation and
amortization shown separately below):
         
          
  Cost of sales   176,498      161,886     545,862      506,565 
  Labor   169,355      145,301     514,287      442,861 
  Rent   11,257      10,266     33,238      30,477 
  Other operating   83,679       73,583     254,176      227,082 
 Pre-opening   4,548      5,017     14,302      14,253 
 Depreciation and amortization    23,534      20,941      69,236      60,718 
 Impairment and closure   2      13     13      54 
 General and administrative   26,123      26,162     94,594      82,933 
            
Total costs and expenses   494,996      443,169     1,525,708      1,364,943 
            
Income from operations   45,511      38,468      148,747      141,061 
             
Interest expense, net   500      288     1,211      902 
Equity income from investments in         
  unconsolidated affiliates   (359)     (4)    (1,149)     (831)
            
Income before taxes   45,370      38,184     148,685      140,990 
Provision for income taxes   13,046       11,381     41,159      42,325 
             
Net income including noncontrolling interests   32,324      26,803     107,526      98,665 
Less: Net income attributable to noncontrolling interests   1,310      1,128     4,618      3,792 
Net income attributable to Texas Roadhouse, Inc. and subsidiaries$  31,014   $  25,675  $  102,908   $  94,873 
            
Net income per common share attributable to Texas Roadhouse, Inc.         
  and subsidiaries:         
 Basic$  0.44   $  0.36  $  1.45   $  1.35 
 Diluted$  0.43   $  0.36  $  1.44   $  1.34 
            
Weighted average shares outstanding:         
  Basic   71,067      70,477      70,939      70,338 
 Diluted   71,532      70,981      71,449      70,898 
            
Cash dividends declared per share$  0.21   $  0.19  $  0.63   $  0.57 
     


Texas Roadhouse, Inc. and Subsidiaries 
Condensed Consolidated Balance Sheets 
(in thousands) 
(unaudited) 
           
           
           
    September 26, 2017 December 27, 2016  
           
      
 Cash and cash equivalents $  114,436  $  112,944   
 Other current assets    50,893     87,315   
 Property and equipment, net    886,972     830,054   
  Goodwill    121,040     116,571   
 Intangible assets, net    2,930     3,622   
 Other assets    36,448     29,465   
        
 Total assets $  1,212,719  $  1,179,971   
        
        
 Current maturities of long-term debt and obligation under capital lease    9     167   
 Other current liabilities    238,260     279,360   
 Long-term debt and obligation under capital lease, excluding current maturities    51,984     52,381   
 Other liabilities    91,674     89,821   
 Texas Roadhouse, Inc. and subsidiaries stockholders' equity    818,743     750,226   
  Noncontrolling interests     12,049     8,016   
        
 Total liabilities and equity $  1,212,719  $  1,179,971   
        

 

 

Texas Roadhouse, Inc. and Subsidiaries 
Condensed Consolidated Statements of Cash Flows 
(in thousands) 
(unaudited)  
         
         
    39 Weeks Ended 
    September 26, 2017 September 27, 2016 
         
  
Cash flows from operating activities:  
Net income including noncontrolling interests $  107,526   $  98,665  
Adjustments to reconcile net income to net cash provided by operating activities   
 Depreciation and amortization    69,236      60,718  
 Share-based compensation expense    18,826      18,347  
 Other noncash adjustments    (2,702)     1,321  
Change in working capital    (4,816)     (19,269) 
 Net cash provided by operating activities    188,070      159,782  
      
Cash flows from investing activities:      
Capital expenditures - property and equipment    (117,037)     (113,219) 
Acquisition of franchise restaurants, net of cash acquired    (16,528)   -  
 Net cash used in investing activities    (133,565)      (113,219) 
      
Cash flows from financing activities:      
Proceeds from revolving credit facility, net  -      25,000  
Repurchase shares of common stock  -      (4,110) 
Dividends paid    (43,223)     (38,656) 
Other financing activities    (9,790)     (6,418) 
 Net cash used in financing activities    (53,013)     (24,184) 
      
 Net increase in cash and cash equivalents    1,492       22,379  
Cash and cash equivalents - beginning of period    112,944       59,334  
Cash and cash equivalents - end of period $  114,436    $  81,713  
      

 

Texas Roadhouse, Inc. and Subsidiaries 
Supplemental Financial and Operating Information 
($ amounts in thousands, except weekly sales by group) 
(unaudited) 
                    
                    
   Third Quarter  Change  Year to Date  Change  
     2017   2016  vs LY   2017   2016  vs LY  
                     
Restaurant openings                 
 Company - Texas Roadhouse 5   5  0     16   16  0   
 Company - Bubba's 33 2   2  0    4   5   (1)  
 Company - Other 0   0  0    0   0  0   
 Franchise - Texas Roadhouse - U.S. 0   1  (1)    1   1  0   
 Franchise - Texas Roadhouse - International 1   0  1    2   2  0   
 Total 8   8  0    23   24   (1)  
                    
Restaurant acquisitions/dispositions                 
 Company - Texas Roadhouse 0   0  0    4   0  4   
 Company - Bubba's 33 0   0  0    0   0  0   
 Company - Other 0   0  0    0   0  0   
 Franchise - Texas Roadhouse 0   0  0    (4)  0  (4)  
 Total 0   0  0    0    0  0   
                    
Restaurants open at the end of the quarter                 
 Company - Texas Roadhouse 433    408  25           
 Company - Bubba's 33 20   12  8            
 Company - Other 2   2  0            
 Franchise - Texas Roadhouse - U.S. 70   73  (3)          
  Franchise - Texas Roadhouse - International 15   12  3           
 Total 540   507  33           
                    
Company-owned restaurants                 
 Restaurant sales$  536,341  $  477,617    12.3 % $  1,661,821  $  1,493,531    11.3 % 
 Store weeks 5,868    5,427    8.1 %  17,324   16,039    8.0 % 
 Comparable restaurant sales growth (1)  4.5 % 3.4 %     4.0 % 4.2 %    
 Texas Roadhouse restaurants only:                 
  Comparable restaurant sales growth (1) 4.6 %  3.5 %     4.0 % 4.2  %    
  Average unit volume (2)$  1,197  $  1,152    3.9 % $  3,776  $  3,663    3.1 % 
  Weekly sales by group:            
    Comparable restaurants (396 units)$  92,712                
    Average unit volume restaurants (21 units) (3)$  79,891                
    Restaurants less than 6 months old (16 units)$  93,419                
                    
Restaurant operating costs (as a % of restaurant sales)                
Cost of sales 32.9  % 33.9 %  (99)bps 32.8 %  33.9 %  (107)bps
Labor 31.6 % 30.4 %  115 bps 30.9 % 29.7 %  130 bps
Rent  2.1 % 2.1 %  (5)bps 2.0 % 2.0 %  (4)bps
Other operating  15.6 % 15.4 %  20 bps  15.3 % 15.2 %  9 bps
Total   82.2 % 81.9 %  31 bps 81.1 % 80.8 %  28 bps
                    
 Restaurant margin (4) 17.8 % 18.1 %  (31)bps 18.9 % 19.2 %  (28)bps
                    
 Restaurant margin ($ in thousands) (4)$  95,552  $  86,581    10.4 %  $  314,258  $  286,546    9.7 % 
 Restaurant margin $ (4)/Store week$  16,284  $  15,953    2.1 % $  18,140  $  17,866    1.5 % 
                    
Franchise-owned restaurants                 
 Franchise royalties and fees$  4,166  $  4,020    3.6 % $  12,634  $  12,473    1.3 % 
 Store weeks 1,092   1,095     (0.3)%  3,264   3,253    0.3 % 
 Comparable restaurant sales growth (1) 2.8 % 1.9 %     2.9 % 2.5 %    
 U.S. franchise restaurants only:                  
  Comparable restaurant sales growth (1) 4.7 % 3.3 %     4.0 % 3.9 %    
  Average unit volume (2)$  1,227  $  1,163    5.5 % $  3,862  $  3,717    3.9 % 
                    
Pre-opening expense$  4,548  $  5,017    (9.3)% $  14,302  $  14,253    0.3 % 
                     
Depreciation and amortization $  23,534  $  20,941    12.4 % $  69,236  $  60,718    14.0 % 
 As a % of revenue  4.4 % 4.3 %  1 bp  4.1 % 4.0 %  10 bps
                    
General and administrative expenses $  26,123  $  26,162    (0.1 )% $  94,594  $  82,933    14.1 % 
 As a % of revenue 4.8 % 5.4 %  (60)bps 5.6 % 5.5 %  14 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.   
(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.                 
                    


Source: Texas Roadhouse, Inc

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