November 2, 2015

Texas Roadhouse, Inc. Announces Third Quarter 2015 Results

LOUISVILLE, Ky.--(BUSINESS WIRE)-- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 39 week periods ended September 29, 2015.

                           
Third Quarter Year to Date
($000's) 2015 2014 % Change 2015 2014 % Change
 
Total revenue $ 438,089 $ 385,218 14 $ 1,353,017 $ 1,177,723 15
Income from operations 30,556 28,821 6 110,852 103,406 7
Net income 20,482 18,881 8 73,912 68,427 8
Diluted EPS $ 0.29 $ 0.27 8 $ 1.05 $ 0.97 8
 

Results for the third quarter included the following highlights:

  • Comparable restaurant sales increased 6.9% at company restaurants and 7.7% at franchise restaurants;
  • Restaurant margin, as a percentage of restaurant sales, decreased 22 basis points to 16.6%, primarily driven by higher labor costs. Wage rate inflation, along with higher healthcare costs, more than offset the impact of higher average unit volume;
  • Diluted earnings per share increased 8.0% to $0.29 from $0.27 in the prior year;
  • 10 company-owned restaurants were opened, including one Bubba's 33 restaurant; and,
  • The Company repurchased 44,000 shares of its common stock for $1.6 million.

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

  • Comparable restaurant sales increased 8.1% at company restaurants and 7.4% at franchise restaurants;
  • Restaurant margin, as a percentage of restaurant sales, decreased 78 basis points to 17.3%. Food cost inflation of approximately 6.0% driven by beef, more than offset the impact of higher average unit volume;
  • Diluted earnings per share increased 8.0% to $1.05 from $0.97 in the prior year;
  • 22 company-owned restaurants were opened, including four Bubba's 33 restaurants; and,
  • The Company repurchased 132,089 shares of its common stock for $4.7 million.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "We are pleased with our third quarter results, which included double digit revenue growth comprised of solid comparable restaurant sales growth of 6.9% and store week growth of 7.7% from new restaurant development. Our performance continues to be driven by our commitment to legendary food and legendary service."

Taylor continued, "Our new restaurant pipeline is strong and we remain on track with our development plans for 2015 and 2016. The consistency of our business and our healthy cash flow generation allows us to fund our new restaurant growth through internal cash flow, while also returning excess capital to our shareholders through dividends and share repurchases, driving further shareholder value."

2015 Outlook

The Company reported that comparable restaurant sales at company restaurants for the first four weeks of its fourth quarter of fiscal 2015 increased approximately 5.0% compared to the prior year period.

Management updated the following expectations for 2015:

  • Approximately 30 company restaurant openings, including four Bubba's 33 restaurants (from as many as five Bubba's 33 restaurants previously);
  • Food cost inflation of approximately 5.0% (from 4.0% to 4.5% previously);
  • An income tax rate of approximately 30.0% to 30.5%, depending on the reinstatement of certain federal tax credits (from 30.0% to 31.0% previously); and,
  • Total capital expenditures of approximately $160.0 million (from $145.0 million to $155.0 million previously).

Management reiterated the following expectation for 2015:

  • Mid-single digit comparable restaurant sales growth.

2016 Outlook

Management provided the following expectations for 2016:

  • Positive comparable restaurant sales growth;
  • 25 to 30 company restaurant openings, including at least five Bubba's 33 restaurants;
  • Low-single digit food cost deflation;
  • An income tax rate of 30.0% to 31.0%, depending on the reinstatement of certain federal tax credits; and,
  • Total capital expenditures of $155.0 million to $165.0 million.

Conference Call

The Company is hosting a conference call today, November 2, 2015 at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (877) 604-9668 or (719) 325-4794 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 2485478 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 480 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 39 Weeks Ended

September 29,
2015

   

September 30,
2014

 

September 29,
2015

 

September 30,
2014

 
Revenue:
Restaurant sales $ 433,932 $ 381,991 $ 1,340,917 $ 1,167,766
Franchise royalties and fees   4,157   3,227     12,100   9,957
 
Total revenue   438,089   385,218     1,353,017   1,177,723
 
Costs and expenses:
Restaurant operating costs (excluding depreciation and amortization shown separately below):
 
Cost of sales 156,643 137,658 484,700 409,552
Labor 129,198 112,521 392,686 342,375
Rent 9,325 8,380 27,442 24,550
Other operating 66,848 59,276 204,523 180,491
Pre-opening 5,749 3,945 14,476 12,677
Depreciation and amortization 17,843 15,164 50,994 43,682
Impairment and closure - (16 ) - 10
General and administrative   21,927   19,469     67,344   60,980
 
Total costs and expenses   407,533   356,397     1,242,165   1,074,317
 
Income from operations 30,556 28,821 110,852 103,406
 
Interest expense, net 470 492 1,480 1,564

Equity income from investments in unconsolidated affiliates

  449   410     1,288   975
 
Income before taxes 30,535 28,739 110,660 102,817
Provision for income taxes   9,141   9,017     33,419   31,462
 
Net income including noncontrolling interests $ 21,394 $ 19,722 $ 77,241 $ 71,355
Less: Net income attributable to noncontrolling interests   912   841     3,329   2,928
Net income attributable to Texas Roadhouse, Inc. and subsidiaries $ 20,482 $ 18,881   $ 73,912 $ 68,427
 

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

Basic $ 0.29 $ 0.27   $ 1.06 $ 0.98
Diluted $ 0.29 $ 0.27   $ 1.05 $ 0.97
 
Weighted average shares outstanding:
Basic   70,117   69,544     69,995   69,793
Diluted   70,735   70,395     70,639   70,639
 
       
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 
 
 
September 29, 2015 December 30, 2014
 
 
Cash and cash equivalents $ 72,616 $ 86,122
Other current assets 48,972 61,604
Property and equipment, net 723,294 649,637
Goodwill 116,571 116,571
Intangible assets, net 5,171 6,203
Other assets 25,847 23,005
   
Total assets $ 992,471 $ 943,142
 
 
Current maturities of long-term debt 20,140 129
Other current liabilities 195,122 215,842
Long-term debt, excluding current maturities 50,587 50,693
Other liabilities 61,112 61,522
Texas Roadhouse, Inc. and subsidiaries stockholders' equity 658,309 607,892
Noncontrolling interests 7,201 7,064
   
Total liabilities and equity $ 992,471 $ 943,142
 
       
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
   
 
39 Weeks Ended
September 29, 2015 September 30, 2014
 
 
Cash flows from operating activities:
Net income including noncontrolling interests $ 77,241 $ 71,355
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 50,994 43,682
Share-based compensation expense 15,649 10,937
Other noncash adjustments (5,066 ) (1,392 )
Change in working capital   (8,939 )   (7,277 )
Net cash provided by operating activities   129,879     117,305  
 
Cash flows from investing activities:
Capital expenditures - property and equipment (123,471 ) (89,645 )
Proceeds from sale of property and equipment, including insurance proceeds   272     1,197  
Net cash used in investing activities   (123,199 )   (88,448 )
 
Cash flows from financing activities:
Proceeds from revolving credit facility 20,000 -
Repurchase shares of common stock (4,741 ) (39,966 )
Dividends paid (34,247 ) (20,923 )
Other financing activities   (1,198 )   (3,535 )
Net cash used in financing activities   (20,186 )   (64,424 )
 
Net decrease in cash and cash equivalents (13,506 ) (35,567 )
Cash and cash equivalents - beginning of period   86,122     94,874  
Cash and cash equivalents - end of period $ 72,616   $ 59,307  
 
                                   
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
2015 2014 vs LY 2015 2014 vs LY
 
Restaurant openings
Company - Texas Roadhouse 9 3 6 17 15 2
Company - Bubba's 33 1 0 1 4 0 4
Company - Jaggers 0 0 0 1 0 1
Franchise - Texas Roadhouse 1 0 1 2 1 1
Total 11 3 8 24 16 8
 
Restaurants open at the end of the quarter
Company - Texas Roadhouse 385 360 25
Company - Bubba's 33 7 1 6
Company - Jaggers 2 0 2
Franchise - Texas Roadhouse 81 75 6
Total 475 436 39
 
Company-owned restaurants
Restaurant sales $ 433,932 $ 381,991 13.6 % $ 1,340,917 $ 1,167,766 14.8 %
Store weeks 5,044 4,682 7.7 % 14,834 13,799 7.5 %
Comparable restaurant sales growth (1) 6.9 % 5.9 % 8.1 % 3.9 %
Texas Roadhouse restaurants only:
Comparable restaurant sales growth (1) 6.9 % 5.9 % 8.1 % 3.9 %
Average unit volume (2) $ 1,119 $ 1,050 6.6 % $ 3,531 $ 3,267 8.1 %
Weekly sales by group:
Comparable restaurants (346 units) $ 86,331
Average unit volume restaurants (22 units) (3) $ 82,555
Restaurants less than 6 months old (17 units) $ 92,082
 
Restaurant operating costs (as a % of restaurant sales)
Cost of sales 36.1 % 36.0 % 6 bps 36.1 % 35.1 % 108 bps
Labor 29.8 % 29.5 % 32 bps 29.3 % 29.3 % (3) bps
Rent 2.1 % 2.2 % (4) bps 2.0 % 2.1 % (6) bps
Other operating 15.4 % 15.5 % (11) bps 15.3 % 15.5 % (20) bps
Total 83.4 % 83.2 % 22 bps 82.7 % 81.9 % 78 bps
 
Restaurant margin (4) 16.6 % 16.8 % (22) bps 17.3 % 18.1 % (78) bps
 
Restaurant margin ($ in thousands) $ 71,917 $ 64,156 12.1 % $ 231,566 $ 210,798 9.9 %
Restaurant margin $/Store week $ 14,258 $ 13,703 4.1 % $ 15,610 $ 15,276 2.2 %
 
Franchise-owned restaurants
Franchise royalties and fees $ 4,157 $ 3,227 28.8 % $ 12,100 $ 9,957 21.5 %
Store weeks 1,052 975 7.9 % 3,112 2,912 6.9 %
Comparable restaurant sales growth (1) 7.7 % 5.2 % 7.4 % 4.4 %
Average unit volume (2) $ 1,205 $ 1,134 6.2 % $ 3,808 $ 3,473 9.6 %
 
Pre-opening expense $ 5,749 $ 3,945 45.7 % $ 14,476 $ 12,677 14.2 %
 
Depreciation and amortization $ 17,843 $ 15,164 17.7 % $ 50,994 $ 43,682 16.7 %
As a % of revenue 4.1 % 3.9 % 14 bps 3.8 % 3.7 % 6 bps
 
General and administrative expenses $ 21,927 $ 19,469 12.6 % $ 67,344 $ 60,980 10.4 %
As a % of revenue 5.0 % 5.1 % (5) bps 5.0 % 5.2 % (20) 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 sales from restaurants closed during the period.
(3) Average unit volume restaurants include Texas Roadhouse 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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