July 31, 2017

Texas Roadhouse, Inc. Announces Second Quarter 2017 Results

LOUISVILLE, Ky., July 31, 2017 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (Nasdaq:TXRH) today announced financial results for the 13 and 26 week periods ended June 27, 2017

  Second Quarter Year to Date
($000's)  2017 2016% Change  2017 2016% Change
          
Total revenue$  566,262$  508,80811% $  1,133,948$  1,024,36711%
Income from operations 54,214 49,7829%  103,236 102,5931%
Net income 37,581 33,60512%  71,894 69,1984%
Diluted EPS$  0.53$  0.4711% $  1.01$  0.983%
         

Results for the second quarter included the following highlights:  

  • Comparable restaurant sales increased 4.0% at company restaurants and 3.6% at 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;
  • Diluted earnings per share increased 11.0% to $0.53 from $0.47 in the prior year; and
  • Seven company-owned restaurants were opened, including two Bubba's 33 restaurants.

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

  • Comparable restaurant sales increased 3.6% at company restaurants and 3.8% at domestic franchise restaurants;
  • Restaurant margin, as a percentage of restaurant sales, decreased 25 basis points to 19.4%, 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 previously disclosed legal matter.  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;
  • Diluted earnings per share increased 3.1% to $1.01 from $0.98 in the prior year; and
  • 13 company-owned restaurants were opened, including two Bubba's 33 restaurants.             

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "We are pleased with our results for the second quarter highlighted by double-digit growth in both revenue and diluted earnings per share.  In addition, our comparable restaurant sales growth, driven by traffic gains, continues to be solid with an increase of 4.6% for the first four weeks of the third quarter.  We are on track to open 27 to 29 company restaurants this year.  Looking ahead, we remain focused on our long-term growth potential as we continue to fill our new restaurant pipeline for next year and beyond.  Finally, the strength of our balance sheet and cash flow allow us to internally fund our new restaurant growth and return excess capital to shareholders through dividends and share repurchases."

2017 Outlook

Comparable restaurant sales at company restaurants for the first four weeks of our third quarter of fiscal 2017 increased approximately 4.6% compared to the prior year period.

Management updated the following expectations for 2017:

  • 27 to 29 company restaurant openings, including approximately four Bubba's 33 restaurants compared to previous guidance of approximately 30 company restaurants, including approximately six Bubba's 33 restaurants; and,
  • An income tax rate of approximately 28.0% compared to previous guidance of 29.0% to 30.0%.

Management reiterated the following expectations for 2017:

  • Positive comparable restaurant sales growth;
  • Food cost deflation of approximately 1.0% to 2.0%;
  • Mid-single digit labor inflation; 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, July 31, 2017 at 5:00 p.m. Eastern Time to discuss these results.  The dial-in number is (888) 334-3032 or (719) 457-2619 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 3626432 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 535 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 26 Weeks Ended
   June 27, 2017 June 28, 2016 June 27, 2017 June 28, 2016
            
Revenue:         
 Restaurant sales$  562,160   $  504,630  $  1,125,480   $  1,015,914 
 Franchise royalties and fees   4,102      4,178     8,468      8,453 
            
Total revenue  566,262     508,808    1,133,948     1,024,367 
             
Costs and expenses:         
 Restaurant operating costs (excluding depreciation and amortization shown separately below):         
          
  Cost of sales  185,171     171,551     369,364      344,679 
  Labor  174,585     150,014     344,932      297,560 
  Rent   11,112      10,184     21,981      20,211 
  Other operating   84,837      75,887     170,497      153,499 
 Pre-opening   5,014      4,411     9,754      9,236 
 Depreciation and amortization    23,106      20,238     45,702      39,777 
 Impairment and closure   -       30     11      41 
 General and administrative   28,223      26,711     68,471      56,771 
            
Total costs and expenses   512,048      459,026     1,030,712      921,774 
            
Income from operations   54,214      49,782     103,236      102,593 
            
Interest expense, net   379      309     711      614 
Equity income from investments in         
 unconsolidated affiliates   (470)     (475)    (790)     (827)
            
Income before taxes   54,305      49,948     103,315      102,806 
Provision for income taxes   15,126      15,087     28,113      30,944 
            
Net income including noncontrolling interests$  39,179   $  34,861  $  75,202   $  71,862 
Less: Net income attributable to noncontrolling interests   1,598      1,256     3,308      2,664 
Net income attributable to Texas Roadhouse, Inc. and subsidiaries$  37,581   $  33,605  $  71,894   $  69,198 
            
Net income per common share attributable to Texas Roadhouse, Inc.          
  and subsidiaries:         
 Basic$  0.53   $  0.48  $  1.01   $  0.98 
 Diluted$  0.53   $  0.47   $  1.01   $  0.98 
            
Weighted average shares outstanding:         
 Basic   70,973      70,368     70,876      70,269 
 Diluted   71,437      70,876     71,398       70,840 
             
Cash dividends declared per share$  0.21   $  0.19  $  0.42   $  0.38 
     

 

Texas Roadhouse, Inc. and Subsidiaries 
Condensed Consolidated Balance Sheets 
(in thousands) 
(unaudited) 
           
           
            
    June 27, 2017 December 27, 2016  
           
     
 Cash and cash equivalents $  116,508  $  112,944   
 Other current assets    55,904     87,315   
 Property and equipment, net    868,668     830,054   
 Goodwill    121,040     116,571    
 Intangible assets, net    3,161     3,622   
 Other assets    34,000     29,465   
        
 Total assets $  1,199,281  $  1,179,971   
        
        
 Current maturities of long-term debt and obligation under capital lease    176     167   
 Other current liabilities    246,032      279,360   
 Long-term debt and obligation under capital lease, excluding current maturities    52,291     52,381   
 Other liabilities    91,361     89,821   
 Texas Roadhouse, Inc. and subsidiaries stockholders' equity    797,388     750,226   
 Noncontrolling interests     12,033     8,016   
        
 Total liabilities and equity $  1,199,281  $  1,179,971   
        

 

Texas Roadhouse, Inc. and Subsidiaries 
Condensed Consolidated Statements of Cash Flows 
(in thousands) 
(unaudited) 
         
         
    26 Weeks Ended 
    June 27, 2017 June 28, 2016 
         
  
Cash flows from operating activities:  
Net income including noncontrolling interests $  75,202   $  71,862  
Adjustments to reconcile net income to net cash provided by operating activities   
 Depreciation and amortization    45,702      39,777  
 Share-based compensation expense    12,365      11,703  
 Other noncash adjustments    (1,842)     (493) 
Change in working capital    (3,119)     (8,781) 
 Net cash provided by operating activities    128,308      114,068  
      
Cash flows from investing activities:      
Capital expenditures - property and equipment    (73,637)     (69,159) 
Acquisition of franchise restaurants, net of cash acquired    (16,528)     -   
 Net cash used in investing activities    (90,165)     (69,159) 
      
Cash flows from financing activities:      
Proceeds from revolving credit facility, net    -       25,000  
Repurchase shares of common stock    -       (4,110) 
Dividends paid    (28,308)     (25,277) 
Other financing activities    (6,271)     (4,551) 
 Net cash used in financing activities    (34,579)     (8,938) 
      
 Net increase (decrease) in cash and cash equivalents     3,564      35,971  
Cash and cash equivalents - beginning of period     112,944      59,334  
Cash and cash equivalents - end of period $  116,508   $  95,305  
      

 

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  
    2017  2016 vs LY   2017   2016 vs LY  
                 
Restaurant openings              
 Company - Texas Roadhouse 5  6 (1)   11   11 0   
 Company - Bubba's 33 2  1 1    2   3 (1)  
 Company - Other 0  0 0    0   0 0   
 Franchise - Texas Roadhouse - U.S. 0  0 0    1   0 1   
 Franchise - Texas Roadhouse - International 0  1  (1)   1   2 (1)  
 Total 7  8 (1 )   15   16 (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 428  403 25          
 Company - Bubba's 33 18  10 8           
 Company - Other 2  2 0          
 Franchise - Texas Roadhouse - U.S. 70  72 (2)         
 Franchise - Texas Roadhouse - International 14  12 2          
 Total 532  499 33          
                 
Company-owned restaurants              
 Restaurant sales$  562,160 $  504,630   11.4 % $  1,125,480  $  1,015,914   10.8 % 
 Store weeks 5,775  5,350    7.9 %  11,456   10,612   8.0 % 
 Comparable restaurant sales growth (1) 4.0% 4.5%   3.6 % 4.5%  
 Texas Roadhouse restaurants only:              
  Comparable restaurant sales growth (1) 4.1% 4.5%   3.7 % 4.5%  
  Average unit volume (2)$  1,274 $  1,233   3.3 % $  2,575  $  2,506   2.7 % 
  Weekly sales by group:          
    Comparable restaurants (389 units)$  98,689              
    Average unit volume restaurants (23 units) (3)$  85,958             
    Restaurants less than 6 months old (16 units)$  105,972             
                 
Restaurant operating costs (as a % of restaurant sales)             
Cost of sales 32.9% 34.0%  (106)bps 32.8 % 33.9%  (111)bps
Labor 31.1%  29.7%  133 bps 30.6 % 29.3%  136 bps
Rent  2.0% 2.0%  (4)bps 2.0 % 2.0%  (4)bps
Other operating  15.1% 15.0%  5 bps 15.1 % 15.1%  4 bps
Total  81.1% 80.8%  28 bps 80.6 % 80.3%  25 bps
                 
 Restaurant margin (4) 18.9% 19.2%  (28)bps 19.4 % 19.7%  (25)bps
                 
 Restaurant margin ($ in thousands) (4)$  106,455 $  96,994    9.8 % $  218,706  $  199,965   9.4 % 
 Restaurant margin $ (4)/Store week$  18,434 $  18,130   1.7 % $  19,091  $  18,843   1.3 % 
                 
Franchise-owned restaurants              
 Franchise royalties and fees$  4,102 $  4,178   (1.8)% $  8,468  $  8,453   0.2 % 
 Store weeks 1,092  1,088   0.4 %  2,172   2,157   0.7 % 
 Comparable restaurant sales growth (1) 2.9% 2.6%   3.0 % 2.8%  
 U.S. franchise restaurants only:               
  Comparable restaurant sales growth (1) 3.6% 4.3%   3.8 % 4.2%  
  Average unit volume (2)$  1,321 $  1,265   4.4 % $  2,644  $  2,552   3.6 % 
                  
Pre-opening expense$  5,014 $  4,411    13.7 % $  9,754  $  9,236   5.6 % 
                 
Depreciation and amortization $  23,106 $  20,238    14.2 % $  45,702  $  39,777   14.9 % 
 As a % of revenue  4.1% 4.0 %  10 bps 4.0 % 3.9%  15 bps
                 
General and administrative expenses $  28,223 $  26,711   5.7 % $  68,471  $  56,771   20.6 % 
 As a % of revenue 5.0% 5.2 %  (27)bps 6.0 % 5.5%  50 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 (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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