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Texas Roadhouse, Inc. Announces Fourth Quarter 2010 Results, Stock Repurchase Authorization and Quarterly Dividend

February 22, 2011

LOUISVILLE, Ky.--(BUSINESS WIRE)-- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 52 week periods ended December 28, 2010.

  Fourth Quarter       Year to Date
($000's) 2010     2009     % Change 2010     2009     % Change
 
Total revenue 244,594 227,368 8 1,004,993 942,331 7
Income from operations 15,734 14,803 6 90,617 75,861 19
Net income 10,060 8,709 16 58,289 47,479 23
Diluted EPS $0.14 $0.12 13 $0.80 $0.67 20
 

Results for the quarter included:

  • Comparable restaurant sales increased 3.1% at company restaurants and 2.9% at franchise restaurants;
  • Seven company restaurants opened;
  • Restaurant margins decreased 35 basis points to 17.1%;
  • Diluted earnings per share increased 13% to $0.14 from $0.12 in the prior year period.

Results for the full year included:

  • Comparable restaurant sales increased 2.4% at company restaurants and 2.5% at franchise restaurants;
  • Fourteen company restaurants and one franchise restaurant opened, while one company restaurant closed;
  • Restaurant margins increased 78 basis points to 18.5%;
  • Diluted earnings per share increased 20% to $0.80 from $0.67 in the prior year-to-date period.

G.J. Hart, President and Chief Executive Officer of Texas Roadhouse, commented, "2010 ended on a very strong note with sales growth continuing through the fourth quarter. And despite severe weather in early 2011, our momentum has continued and we are pleased to have seen continued traffic growth. While we do anticipate inflation this year, we believe we are in a good position to manage through this pressure with limited pricing actions. Consequently, we expect solid profitability in 2011." Hart continued, "Our balance sheet remains strong and due to a proven economic model, we are excited to be adding more restaurants this year. We are also very pleased to announce that we will be returning excess capital to shareholders through share repurchases and dividends, thus enhancing total shareholder returns."

Stock Repurchase Authorization

The Company announced today that on February 17, 2011 its Board of Directors approved a stock repurchase program under which it authorized the Company to repurchase up to $50 million of its common stock. Any repurchases will be made through open market transactions. The previous stock repurchase program, which had been extended by the Board of Directors in November 2009, expired on February 14, 2011.

The timing and the amount of any repurchases will be determined by the Company's management under parameters established by its Board of Directors, based on its evaluation of the Company's stock price, market conditions and other corporate considerations.

Cash Dividend Payment

Also on February 17, 2011, the Company's Board of Directors authorized the payment of a cash dividend of $0.08 per share of common stock. This payment will be distributed on April 1, 2011, to shareholders of record at the close of business on March 16, 2011. While no assurance can be made regarding the declaration of and/or payment of future cash dividends, the Company is optimistic that similar payments will be authorized in subsequent quarters and that the dividend amount might increase annually as cash flow increases.

Outlook for 2011

The Company reported that comparable restaurant sales for the first seven weeks of fiscal 2011 increased approximately 3.8% compared to the prior year period. Additionally, the Company announced that it is implementing a menu price increase averaging approximately 1.0% across its restaurants.

The Company's goal for 2011 diluted earnings per share growth is approximately 10% compared to 2010. This estimate is based, in part, on the following assumptions:

  • Comparable restaurant sales growth of approximately 3.5%;
  • Approximately 20 company restaurant openings;
  • Food cost inflation of approximately 3.0%; and
  • Total capital expenditures of $65 to $70 million.

Conference Call and Investor Day

The Company is hosting a conference call today, February 22, 2011, at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (877) 795-3647 or (719) 325-4817 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 9475733 as the pass code. There will be a simultaneous Web cast conducted at www.texasroadhouse.com.

The Company will host an investor day on Wednesday, February 23, 2011 in New York, New York. The Company will discuss its business strategy and future expectations. Interested parties can access a live Web cast of this event from the investor relations section of the Company's website at www.texasroadhouse.com. The presentation will begin at 8:00 am Eastern Time.

About the Company

Texas Roadhouse is a casual dining concept that first opened in 1993 and today operates over 345 restaurants system-wide in 46 states. 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, our ability to acquire franchise restaurants, our ability to integrate the franchise restaurants we acquire or other concepts we develop, strength of consumer spending, conditions beyond the Company's control such as weather, natural disasters, disease outbreaks, epidemics or pandemics impacting the Company's customers or food supplies, acts of war or terrorism and other factors disclosed from time to time in the Company's filings with the U.S. Securities and Exchange Commission. Investors should take such risks into account when making investment decisions. Stockholders 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. The Company undertakes 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 52 Weeks Ended
December 28, December 29, December 28, December 29,
2010 2009 2010 2009
 
Revenue:
Restaurant sales $ 242,406 $ 225,292 $ 995,988 $ 934,100
Franchise royalties and fees   2,188   2,076   9,005   8,231
 
Total revenue   244,594   227,368   1,004,993   942,331
 
Costs and expenses:
Restaurant operating costs:
Cost of sales 79,707 74,956 324,267 312,800
Labor 71,781 66,423 293,022 276,626
Rent 5,475 5,148 21,361 20,018
Other operating 44,052 39,511 172,893 158,961
Pre-opening 2,489 1,402 7,051 5,813
Depreciation and amortization 10,422 10,340 41,283 41,822
Impairment and closure 1,703 3,273 2,005 3,000
General and administrative   13,231   11,512   52,494   47,430
 
Total costs and expenses   228,860   212,565   914,376   866,470
 
Income from operations 15,734 14,803 90,617 75,861
 
Interest expense, net 595 756 2,673 3,273
Equity income from investments in
unconsolidated affiliates   73   36   428   221
 
Income before taxes 15,212 14,083 88,372 72,809
Provision for income taxes   4,550   4,909   27,683   23,491
 
Net income including noncontrolling interests $ 10,662 $ 9,174 $ 60,689 $ 49,318
Less: Net income attributable to noncontrolling interests   602   465   2,400   1,839
Net income attributable to Texas Roadhouse, Inc. and subsidiaries $ 10,060 $ 8,709 $ 58,289 $ 47,479
 
Net income per common share attributable to Texas Roadhouse, Inc.
and subsidiaries:
Basic $ 0.14 $ 0.12 $ 0.82 $ 0.68
Diluted $ 0.14 $ 0.12 $ 0.80 $ 0.67
 
Weighted average shares outstanding:
Basic   71,918   70,341   71,432   69,967
Diluted   73,610   71,709   72,929   71,298
 
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
(in thousands)
           
 
(unaudited)

December 28, 2010

December 29, 2009

 
 
Cash and cash equivalents $ 82,215 $ 46,858
Other current assets 31,707 27,458
Property and equipment, net 458,983 456,281
Goodwill 111,785 113,465
Intangible asset, net 10,118 11,194
Other assets 7,993 6,817
   
Total assets $ 702,801 $ 662,073
 
 
Current maturities of long-term debt
and obligations under capital leases 274 247
Other current liabilities 111,784 107,956
Long-term debt and obligations under
capital leases, excluding current maturities 51,906 101,179
Other liabilities 39,455 29,741
Texas Roadhouse, Inc. and subsidiaries stockholders' equity 496,616 420,372
Noncontrolling interests 2,766 2,578
   
Total liabilities and equity $ 702,801 $ 662,073
 
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands, except per share data)

(unaudited)

           

 

52 Weeks Ended
December 28, December 29,
2010 2009
 
 
Cash flows from operating activities:
Net income including noncontrolling interests $ 60,689 $ 49,318
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 41,283 41,822
Share-based compensation expense 7,686 7,493
Other noncash adjustments 5,298 4,453
Change in working capital   4,952     12,043  
Net cash provided by operating activities   119,908     115,129  
 
Cash flows from investing activities:
Capital expenditures - property and equipment (45,051 ) (45,516 )
Acquisition of franchise restaurants, net of cash acquired - 25
Proceeds from sale of property and equipment, including insurance proceeds   235     2,357  
Net cash used in investing activities   (44,816 )   (43,134 )
 
Cash flows from financing activities:
Repayments of revolving credit facility, net (49,000 ) (31,000 )
Other financing activities   9,265     605  
Net cash used in financing activities   (39,735 )   (30,395 )
 
Net increase in cash and cash equivalents 35,357 41,600
Cash and cash equivalents - beginning of year   46,858     5,258  
Cash and cash equivalents - end of year $ 82,215   $ 46,858  
 
Texas Roadhouse, Inc. and Subsidiaries
Supplemental Financial and Operating Information
($ amounts in thousands)
(unaudited)
             
 
Fourth Quarter Change Year to Date Change
2010 2009 vs LY 2010 2009 vs LY
 
Restaurant openings
Company 7 5 2 14 17

(3)

 

Franchise 0 0 0 1 3

(2)

 

Total 7 5 2 15 20

(5)

 

 
Restaurant acquisitions
Company 0 1

(1)

 

0 1

(1)

 

Franchise 0

(1)

 

1 0

(1)

 

1
Total 0 0 0 0 0 0
 
Restaurant closures
Company 0 0 0

(1)

 

(2)

 

1
Franchise 0 0 0 0

(1)

 

1
Total 0 0 0

(1)

 

(3)

 

2
 
Restaurants open at the end of the quarter
Company 274 261 13
Franchise 71 70 1
Total 345 331 14
 
Company-owned restaurants
Restaurant sales $ 242,406 $ 225,292 7.6 % $ 995,988 $ 934,100 6.6 %
Store weeks 3,509 3,362 4.4 % 13,803 13,255 4.1 %
Comparable restaurant sales growth (1) 3.1 % (2.6 ) % 2.4 % (2.8 ) %
Average unit volume (2) $ 894 $ 864 3.5 % $ 3,728 $ 3,660 1.9 %
 
Restaurant operating costs (as a % of restaurant sales)
Cost of sales 32.9 % 33.3 % (39 ) bps 32.6 % 33.5 % (93 ) bps
Labor 29.6 % 29.5 % 13 bps 29.4 % 29.6 % (19 ) bps
Rent 2.3 % 2.3 % (3 ) bps 2.1 % 2.1 % 0 bps
Other operating 18.2 % 17.5 % 64 bps 17.4 % 17.0 % 34 bps
Total 82.9 % 82.6 % 35 bps 81.5 % 82.3 % (78 ) bps
 
Restaurant margins (3) 17.1 % 17.4 % (35 ) bps 18.5 % 17.7 % 78 bps
 
Franchise-owned restaurants
Franchise royalties and fees $ 2,188 $ 2,076 5.4 % $ 9,005 $ 8,231 9.4 %
Store weeks 923 919 0.4 % 3,630 3,613 0.5 %
Comparable restaurant sales growth (1) 2.9 % (1.2 ) % 2.5 % (2.5 ) %
Average unit volume (2) $ 881 $ 853 3.3 % $ 3,715 $ 3,589 3.5 %
 
Pre-opening expense $ 2,489 $ 1,402 77.5 % $ 7,051 $ 5,813 21.3 %
 
Depreciation and amortization $ 10,422 $ 10,340 0.8 % $ 41,283 $ 41,822 (1.3 ) %
As a % of revenue 4.3 % 4.5 % (29 ) bps 4.1 % 4.4 % (33 ) bps
 
Impairment and closure $ 1,703 $ 3,273 NM $ 2,005 $ 3,000 NM
As a % of revenue 0.7 % 1.4 % (74 ) bps 0.2 % 0.3 % (12 ) bps
 
General and administrative expenses $ 13,231 $ 11,512 14.9 % $ 52,494 $ 47,430 10.7 %
As a % of revenue 5.4 % 5.1 % 35 bps 5.2 % 5.0 % 19 bps
 
(1) Comparable restaurant sales growth includes sales from restaurants open 18 months as of the beginning of the measurement period.
 
(2) Average unit volume includes sales from restaurants open six months as of the beginning of the measurement period. For comparative purposes, average unit volumes for Q4 2009 and 2009 YTD were adjusted to reflect restaurant sales of any acquired franchise restaurants as part of Company-owned restaurants average unit volume and were excluded from franchise-owned restaurants average unit volume.
 
(3) Restaurant margins represent restaurant sales less restaurant operating costs (as a percentage of restaurant sales).
 
NM - Not meaningful
Amounts may not foot due to rounding.

Texas Roadhouse, Inc.
Investor Relations
Price Cooper, 502-515-7300
or
Media
Travis Doster, 502-638-5457

Source: Texas Roadhouse, Inc.

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