August 3, 2015

Texas Roadhouse, Inc. Announces Second Quarter 2015 Results

LOUISVILLE, Ky.--(BUSINESS WIRE)--

Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 26 week periods ended June 30, 2015.

                       
Second Quarter Year to Date
($000's) 2015 2014 % Change 2015 2014 % Change
 
Total revenue $ 454,698 $ 395,363 15 $ 914,928 $ 792,505 15
Income from operations 31,696 34,401 (8 ) 80,296 74,585 8
Net income 21,138 23,081 (8 ) 53,430 49,546 8
Diluted EPS $ 0.30 $ 0.33 (9 ) $ 0.76 $ 0.70 8
 

Results for the second quarter included the following highlights:

  • Comparable restaurant sales increased 8.2% at company restaurants and 6.9% at franchise restaurants;
  • Restaurant margin, as a percentage of restaurant sales, decreased 193 basis points to 16.2%. Food cost inflation of approximately 9.4%, mostly driven by beef, more than offset the impact of higher average unit volume;
  • Diluted earnings per share decreased 8.5% to $0.30 from $0.33 in the prior year;
  • Nine company-owned restaurants were opened, including two Bubba's 33 restaurants; and,
  • The Company repurchased 88,089 shares of its common stock for $3.1 million.

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

  • Comparable restaurant sales increased 8.5% at company restaurants and 7.5% at franchise restaurants;
  • Restaurant margin, as a percentage of restaurant sales, decreased 106 basis points to 17.6%. Food cost inflation of approximately 7.4%, mostly driven by beef, more than offset the impact of higher average unit volume;
  • Diluted earnings per share increased 8.2% to $0.76 from $0.70 in the prior year;
  • 12 company-owned restaurants were opened, including three Bubba's 33 restaurants; and,
  • The Company repurchased 88,089 shares of its common stock for $3.1 million.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "We are pleased to report strong sales momentum through the second quarter, as we generated double digit revenue gains driven by increasing guest counts and strong operating week growth. In spite of this solid top-line performance, commodity inflation of 9.4% resulted in earnings per share that were lower than the prior year period as it more than offset modest price increases taken in late 2014."

Taylor continued, "On the development front, our new restaurants continue to open with strong sales and we now expect to open approximately 30 company-owned restaurants in 2015. We remain focused on providing legendary food and legendary service, as well as a great value proposition to each and every guest, and as a result, we believe we are well-positioned for growth over the long-term."

2015 Outlook

The Company reported that comparable restaurant sales at company restaurants for the first four weeks of its third quarter of fiscal 2015 increased approximately 7.6% compared to the prior year period.

Management updated the following expectations for 2015:

  • Mid-single digit comparable restaurant sales growth;
  • Approximately 30 company restaurant openings, including as many as five Bubba's 33 restaurants;
  • Food cost inflation of 4.0% to 4.5% which implies 1.0% to 2.0% inflation for the second half of the year; and,
  • Total capital expenditures of $145 million to $155 million.

Management reiterated the following expectation for 2015:

  • An income tax rate of approximately 30.0% to 31.0% depending on the reinstatement of certain federal tax credits.

Conference Call

The Company is hosting a conference call today, August 3, 2015 at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (888) 438-5449 or (719) 325-2443 for international calls. A replay of the call will be available for one week following the conference call. To access the replay, please dial (877) 870-5176 or (858) 384-5517 for international calls, and use 5777050 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 465 restaurants system-wide in 49 states and four 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; 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 26 Weeks Ended
June 30, 2015 July 1, 2014 June 30, 2015 July 1, 2014
 
Revenue:
Restaurant sales $ 450,692 $ 391,819 $ 906,985 $ 785,775
Franchise royalties and fees   4,006   3,544   7,943   6,730
 
Total revenue   454,698   395,363   914,928   792,505
 
Costs and expenses:
Restaurant operating costs (excluding depreciation and amortization shown separately below):
Cost of sales 168,077 137,082 328,057 271,894
Labor 132,084 115,182 263,488 229,854
Rent 9,138 8,128 18,117 16,170
Other operating 68,358 60,362 137,675 121,215
Pre-opening 4,909 4,455 8,727 8,732
Depreciation and amortization 16,816 14,433 33,151 28,518
Impairment and closure - 9 - 26
General and administrative   23,620   21,311   45,417   41,511
 
Total costs and expenses   423,002   360,962   834,632   717,920
 
Income from operations 31,696 34,401 80,296 74,585
 
Interest expense, net 495 514 1,010 1,072

Equity income from investments in unconsolidated affiliates

  467   353   839   565
 
Income before taxes 31,668 34,240 80,125 74,078
Provision for income taxes   9,402   10,215   24,278   22,445
 
Net income including noncontrolling interests $ 22,266 $ 24,025 $ 55,847 $ 51,633
Less: Net income attributable to noncontrolling interests   1,128   944   2,417   2,087
Net income attributable to Texas Roadhouse, Inc. and subsidiaries $ 21,138 $ 23,081 $ 53,430 $ 49,546
 

Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:

Basic $ 0.30 $ 0.33 $ 0.76 $ 0.71
Diluted $ 0.30 $ 0.33 $ 0.76 $ 0.70
 
Weighted average shares outstanding:
Basic   70,026   69,705   69,933   69,918
Diluted   70,648   70,577   70,588   70,822
 
       
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 
June 30, 2015 December 30, 2014
 
 
Cash and cash equivalents $ 70,965 $ 86,122
Other current assets 57,953 61,604
Property and equipment, net 689,204 649,637
Goodwill 116,571 116,571
Intangible assets, net 5,515 6,203
Other assets 25,416 23,005
   
Total assets $ 965,624 $ 943,142
 
 
Current maturities of long-term debt 136 129
Other current liabilities 201,598 215,842
Long-term debt, excluding current maturities 50,623 50,693
Other liabilities 61,437 61,522
Texas Roadhouse, Inc. and subsidiaries stockholders' equity 644,644 607,892
Noncontrolling interests 7,186 7,064
   
Total liabilities and equity $ 965,624 $ 943,142
 
 
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
       
26 Weeks Ended
June 30, 2015 July 1, 2014
 
 
Cash flows from operating activities:
Net income including noncontrolling interests $ 55,847 $ 51,633
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 33,151 28,518
Share-based compensation expense 10,215 7,399
Other noncash adjustments (2,992 ) (1,044 )
Change in working capital   (1,398 )   (4,769 )
Net cash provided by operating activities   94,823     81,737  
 
Cash flows from investing activities:
Capital expenditures - property and equipment (70,933 ) (53,971 )
Proceeds from sale of property and equipment, including insurance proceeds   9     1,193  
Net cash used in investing activities   (70,924 )   (52,778 )
 
Cash flows from financing activities:
Repurchase shares of common stock (3,138 ) (31,760 )
Dividends paid (34,247 ) (10,473 )
Other financing activities   (1,671 )   (4,139 )
Net cash used in financing activities   (39,056 )   (46,372 )
 
Net decrease in cash and cash equivalents (15,157 ) (17,413 )
Cash and cash equivalents - beginning of period   86,122     94,874  
Cash and cash equivalents - end of period $ 70,965   $ 77,461  
 
Texas Roadhouse, Inc. and Subsidiaries
Supplemental Financial and Operating Information
($ amounts in thousands, except weekly sales by group)
(unaudited)
                       
Second Quarter Change Year to Date Change
2015 2014 vs LY 2015 2014 vs LY
 
Restaurant openings
Company - Texas Roadhouse 6 6 0 8 12 (4 )
Company - Bubba's 33 2 0 2 3 0 3
Company - Other 1 0 1 1 0 1
Franchise - Texas Roadhouse 1 0 1 1 1 0
Total 10 6 4 13 13 0
 
Restaurants open at the end of the quarter
Company - Texas Roadhouse 376 357 19
Company - Bubba's 33 6 1 5
Company - Other 2 0 2
Franchise - Texas Roadhouse 80 75 5
Total 464 433 31
 
Company-owned restaurants
Restaurant sales $ 450,692 $ 391,819 15.0 % $ 906,985 $ 785,775 15.4 %
Store weeks 4,934 4,593 7.4 % 9,790 9,117 7.4 %
Comparable restaurant sales growth (1) 8.2 % 2.9 % 8.5 % 2.9 %
Texas Roadhouse restaurants only:
Comparable restaurant sales growth (1) 8.2 % 2.9 % 8.5 % 2.9 %
Average unit volume (2) $ 1,188 $ 1,098 8.2 % $ 2,409 $ 2,218 8.6 %
Weekly sales by group:
Comparable restaurants (334 units) $ 91,346
Average unit volume restaurants (27 units) (3) $ 91,468
Restaurants less than 6 months old (15 units) $ 95,979
 
Restaurant operating costs (as a % of restaurant sales)
Cost of sales 37.3 % 35.0 % 231

 bps

36.2 % 34.6 % 157

 bps

Labor 29.3 % 29.4 % (9 )

 bps

29.1 % 29.3 % (20 )

 bps

Rent 2.0 % 2.1 % (5 )

 bps

2.0 % 2.1 % (6 )

 bps

Other operating 15.2 % 15.4 % (24 )

 bps

15.2 % 15.4 % (25 )

 bps

Total 83.8 % 81.9 % 193

 bps

82.4 % 81.3 % 106

 bps

 
Restaurant margin (4) 16.2 % 18.1 % (193 )

 bps

17.6 % 18.7 % (106 )

 bps

Restaurant margin ($ in thousands) $ 73,035 $ 71,065 2.8 % $ 159,648 $ 146,642 8.9 %
Restaurant margin $/Store week $ 14,804 $ 15,472 (4.3 ) % $ 16,307 $ 16,084 1.4 %
 
Franchise-owned restaurants
Franchise royalties and fees $ 4,006 $ 3,544 13.0 % $ 7,943 $ 6,730 18.0 %
Store weeks 1,032 975 5.8 % 2,059 1,937 6.3 %
Comparable restaurant sales growth (1) 6.9 % 3.5 % 7.5 % 3.6 %
Average unit volume (2) $ 1,274 $ 1,174 8.5 % $ 2,580 $ 2,364 9.1 %
 
Pre-opening expense $ 4,909 $ 4,455 10.2 % $ 8,727 $ 8,732 (0.1 ) %
 
Depreciation and amortization $ 16,816 $ 14,433 16.5 % $ 33,151 $ 28,518 16.2 %
As a % of revenue 3.7 % 3.7 % 5

 bps

3.6 % 3.6 % 2

 bps

 
General and administrative expenses $ 23,620 $ 21,311 10.8 % $ 45,417 $ 41,511 9.4 %
As a % of revenue 5.2 % 5.4 % (20 )

 bps

5.0 % 5.2 % (27 )

 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 to 18 months before the beginning of the period measured.
(4) Restaurant margin represents restaurant sales less cost of sales, labor, rent and other operating costs (as a percentage of restaurant sales). 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.
 

Texas Roadhouse, Inc.
Investor Relations:
Tonya Robinson, 502-515-7269
or
Media:
Travis Doster, 502-638-5457

Source: Texas Roadhouse, Inc.

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