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Texas Roadhouse, Inc. Announces Fourth Quarter 2020 Results and Provides Business Update

February 18, 2021

LOUISVILLE, Ky., Feb. 18, 2021 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 52 week periods ended December 29, 2020 and provided a business update in response to the continued COVID-19 pandemic.

    Fourth Quarter   Year to Date  
($000's)     2020     2019   % Change     2020     2019   % Change  
                           
Total revenue   $ 637,989   $ 725,238   (12.0 %)   $ 2,398,123   $ 2,756,163   (13.0 %)  
Income from operations     20,396     53,411   (61.8 %)     23,844     212,023   (88.8 %)  
Net income     19,549     42,686   (54.2 %)     31,255     174,452   (82.1 %)  
Diluted earnings per share   $ 0.28   $ 0.61   (54.3 %)   $ 0.45   $ 2.46   (81.8 %)  

Note: Fourth quarter and full year 2020 results include 13 and 52 weeks, respectively, compared to 14 and 53 weeks in the fourth quarter and full year of 2019, respectively.

Results for the fourth quarter included the following:

  • Total revenue was negatively impacted by lapping the $59.5 million benefit of the 14th week in 2019, which represented 7.9% of the decrease in total revenue for the quarter. Diluted earnings per share in the prior year quarter benefitted by $0.10 to $0.11 as a result of the 14th week;
  • For the October, November, and December periods, comparable restaurant sales at domestic company restaurants increased 0.8%, decreased 6.3%, and decreased 18.2%, respectively. Sales during the period were negatively impacted by dining room closures and capacity restrictions throughout the country. For the quarter, comparable restaurant sales decreased 8.9% at domestic company restaurants and decreased 11.2% at domestic franchise restaurants;
  • Nine company restaurants, including one Jaggers restaurant, our fast-casual concept, were opened and two franchise restaurants were opened;
  • Restaurant margin, as a percentage of restaurant and other sales, was 13.3% and restaurant margin dollars were $84.1 million. Restaurant margin was impacted by a decrease in comparable restaurant sales and higher costs related to the pandemic.   These costs included $0.5 million of costs incurred for relief pay and enhanced benefits for hourly restaurant employees, net of employee retention payroll tax credits of $2.5 million; and,
  • The Company ended the quarter with debt of $240.0 million and $363.2 million of cash on hand.

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

  • Comparable restaurant sales decreased 14.2% at domestic company restaurants and 15.5% at domestic franchise restaurants;
  • 22 company restaurants, including three Bubba’s 33 restaurants and one Jaggers restaurant, were opened and four franchise restaurants were opened. One company restaurant and two international franchise restaurants were closed;
  • Restaurant margin, as a percentage of restaurant and other sales, was 11.2% and restaurant margin dollars were $265.6 million. Restaurant margin was impacted by a decrease in comparable restaurant sales and higher costs related to the pandemic. These costs included $13.2 million of costs incurred for relief pay and enhanced benefits for hourly restaurant employees, net of employee retention payroll tax credits of $7.0 million; and,
  • The Company repurchased 252,409 shares of common stock for $12.6 million, the last of which occurred on March 17th. No proceeds from the revolving credit facility were utilized to repurchase shares.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, “This past year has been without question the most challenging I’ve ever experienced in the restaurant business.   Despite these challenges, our operators quickly adapted and found ways to continue to serve our guests, many times in ways they never had before. This sustained our cashflows at a level that allowed us to continue to grow by opening 22 restaurants during the year. While we expect continued headwinds in the first half of 2021, we remain well-positioned for future growth.”

Business Update

For the quarter, the Company continued to operate under various capacity restrictions in the dining rooms along with enhanced To-Go, which included a curbside and/or drive-up operating model, as permitted by local guidelines. Comparable restaurant sales during the fourth quarter were impacted by dining room closures at a number of company restaurants. At the beginning of the quarter, nearly all company restaurants had their dining rooms open under various limited capacity restrictions. At the end of the quarter, 82% of company restaurants had their dining rooms open. By period, the comparable restaurant sales, average weekly sales, and To-Go sales for all company restaurants were as follows:

                   
    October   November   December   Q4 2020  
All restaurants                  
Comparable restaurant sales     0.8 %     (6.3 %)     (18.2 %)     (8.9 %)  
Average weekly sales   $ 98,797     $ 93,946     $ 84,184     $ 91,644    
To-Go sales as a % of average weekly sales     20.0 %     22.4 %     26.5 %     23.1 %  
Number of restaurants - end of period     528       533       537       537    
                   
Limited capacity restaurants (1)                  
Comparable restaurant sales     1.1 %     (3.4 %)     (9.1 %)     (4.0 %)  
Average weekly sales   $ 99,139     $ 96,841     $ 93,894     $ 96,568    
To-Go sales as a % of average weekly sales     19.9 %     21.1 %     21.4 %     20.8 %  
Number of restaurants - end of period     519       452       440       440    
                   
(1) Includes the full weekly sales for all restaurants with dining rooms re-opened at limited capacity as of the end of a week and excludes those restaurants that were operating as To-Go or outdoor dining only.  
                   

For the fourth quarter, the Company’s cash on hand position increased approximately $34.5 million due to operating cashflows and working capital inflows, partially offset by cash used for capital expenditures. In addition, the Company acquired two franchise locations for a total purchase price of $10.6 million. As of the end of the year, the Company had opened 22 company restaurants across all concepts and an additional ten company restaurants were under construction.
  
For the January period and the first seven weeks of the first quarter of fiscal 2021, the comparable restaurant sales, average weekly sales, and To-Go sales for all company restaurants were as follows:

           
          First 7 weeks
    January     Q1 2021
All restaurants          
Comparable restaurant sales     (0.3 %)       (2.0 %)
Average weekly sales   $ 105,595       $ 105,505  
To-Go sales as a % of average weekly sales     25.9 %       24.8 %
Number of restaurants - end of period     537         538  
           
Limited capacity restaurants (1)          
Comparable restaurant sales     3.8 %       0.3 %
Average weekly sales   $ 110,587       $ 108,374  
To-Go sales as a % of average weekly sales     23.7 %       23.4 %
Number of restaurants - end of period     504         530  
           
(1) Includes the full weekly sales for all restaurants with dining rooms re-opened at limited capacity as of the end of a week and excludes those restaurants that were operating as To-Go or outdoor dining only.
           

2021 Outlook

As previously announced, due to the uncertainty surrounding the pandemic, the Company had not yet provided a financial outlook for the fiscal year ending December 28, 2021. However, based on improved cashflow and stabilizing operations at company restaurants, the Company is providing the following expectations for 2021:

  • 25 to 30 company restaurant openings across all concepts;
  • Store week growth of 4.0% to 5.0%;
  • Commodity cost inflation of approximately 3.0%; and
  • Total capital expenditures of $210 million to $220 million.

To the extent that state and local guidelines begin to significantly reduce capacity and/or re-close dining rooms, the Company could pull back on development and reduce capital spend accordingly.

Non-GAAP Measures

The Company prepares the consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”). Within the press release, the Company makes reference to restaurant margin (in dollars and as a percentage of restaurant and other sales). Restaurant margin represents restaurant and other sales less restaurant-level operating costs, including food and beverage costs, labor, rent and other operating costs. Restaurant margin should not be considered in isolation, or as an alternative, to income from operations. This non-GAAP measure is not indicative of overall company performance and profitability in that this measure does not accrue directly to the benefit of shareholders due to the nature of the costs excluded. Restaurant margin is widely regarded as a useful metric by which to evaluate restaurant-level operating efficiency and performance. In calculating restaurant margin, the Company excludes certain non-restaurant-level costs that support operations, including pre-opening and general and administrative expenses, but do not have a direct impact on restaurant-level operational efficiency and performance. The Company also excludes depreciation and amortization expense, substantially all of which relates to restaurant-level assets, as it represents a non-cash charge for the investment in restaurants. The Company also excludes impairment and closure expense as it believes this provides a clearer perspective of ongoing operating performance and a more useful comparison to prior period results. Restaurant margin as presented may not be comparable to other similarly titled measures of other companies in the industry. A reconciliation of income from operations to restaurant margin is included in the accompanying financial tables.

Conference Call

Texas Roadhouse is hosting a conference call today, February 18, 2021 at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (877) 699-0953 or (647) 689-5456 for international calls.   A replay of the call will be available for one week following the conference call. To access the replay, please dial (800) 585-8367 or (416) 621-4642 for international calls, and use 6659886 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 630 restaurants system-wide in 49 states and ten foreign countries. For more information, please visit the Company’s Web site at www.texasroadhouse.com.

Forward-looking Statements

Certain statements in this release are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, statements related to the potential impact of the COVID-19/Coronavirus outbreak and other non-historical statements. Such statements are based upon the current beliefs and expectations of the management of Texas Roadhouse. Actual results may vary materially from those contained in forward-looking statements based on a number of factors including, without limitation, conditions beyond its control such as weather, natural disasters, disease outbreaks, epidemics or pandemics impacting customers or food supplies; food safety and food-borne illness concerns; and other factors disclosed from time to time in its filings with the U.S. Securities and Exchange Commission. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors include but are not limited to those described under “Part I—Item 1A. Risk Factors” of the Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and in the Current Report on Form 8-K filed on February 18, 2021. These factors should not be construed as exhaustive and should be read in conjunction with other filings with the 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. The Company undertakes no obligation to update any forward-looking statements, except as required by applicable law.

Contacts:

Investor Relations                                                                
Michael Bailen
(502) 515-7298

Media
Travis Doster
(502) 638-5457


Texas Roadhouse, Inc. and Subsidiaries  
Condensed Consolidated Statements of Income  
(in thousands, except per share data)  
(unaudited)  
                         
             
      13 and 14 Weeks Ended   52 and 53 Weeks Ended  
      December 29,
2020
  December 31,
2019
  December 29,
2020
  December 31,
2019
 
                         
Revenue:                    
  Restaurant and other sales $ 633,032     $ 719,457   $ 2,380,177     $ 2,734,177  
  Franchise royalties and fees 4,957     5,781   17,946     21,986  
                         
Total revenue 637,989     725,238   2,398,123     2,756,163  
                         
Costs and expenses:                    
  Restaurant operating costs (excluding depreciation and amortization shown separately below):                    
                     
    Food and beverage 205,117     233,221   780,646     883,357  
    Labor 222,788     237,902   875,764     905,614  
    Rent 13,956     13,358   54,401     52,531  
    Other operating 107,111     112,093   403,726     418,448  
  Pre-opening 5,803     7,355   20,099     20,156  
  Depreciation and amortization 30,443     30,970   117,877     115,544  
  Impairment and closure, net 1,392     (1,293)   2,263     (899)  
  General and administrative 30,983     38,221   119,503     149,389  
                         
Total costs and expenses 617,593     671,827   2,374,279     2,544,140  
                         
Income from operations 20,396     53,411   23,844     212,023  
                         
Interest expense (income), net 1,490     12   4,091     (1,514)  
Equity income (loss) from investments in                    
  unconsolidated affiliates 97     278   (500)     378  
                         
Income before taxes 19,003     53,677   19,253     213,915  
Income tax (benefit) expense (1,673)     9,066   (15,672)     32,397  
                         
Net income including noncontrolling interests 20,676     44,611   34,925     181,518  
Less: Net income attributable to noncontrolling interests 1,127     1,925   3,670     7,066  
Net income attributable to Texas Roadhouse, Inc. and subsidiaries $ 19,549     $ 42,686   $ 31,255     $ 174,452  
                         
Net income per common share attributable to Texas Roadhouse, Inc.                    
  and subsidiaries:                    
  Basic $ 0.28     $ 0.61   $ 0.45     $ 2.47  
  Diluted $ 0.28     $ 0.61   $ 0.45     $ 2.46  
                         
Weighted average shares outstanding:                    
  Basic 69,525     69,431   69,438     70,509  
  Diluted 70,052     69,888   69,893     70,916  
                         
Cash dividends declared per share $ -     $ 0.30   $ 0.36     $ 1.20  
           


Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
                 
                 
                 
        December 29, 2020   December 31, 2019
                 
                 
  Cash and cash equivalents   $ 363,155     $ 107,879  
  Other current assets, net   147,496     140,020  
  Property and equipment, net   1,088,623     1,056,563  
  Operating lease right-of-use assets, net   530,625     499,801  
  Goodwill   127,001     124,748  
  Intangible assets, net   2,271     1,234  
  Other assets   65,990     53,320  
                 
  Total assets   $ 2,325,161     $ 1,983,565  
                 
                 
  Current maturities of long-term debt   50,000     -  
  Other current liabilities   456,318     417,220  
  Operating lease liabilities, net of current portion   572,171     538,710  
  Long-term debt, excluding current maturities   190,000     -  
  Other liabilities   113,621     96,466  
  Texas Roadhouse, Inc. and subsidiaries stockholders' equity   927,505     915,994  
  Noncontrolling interests   15,546     15,175  
                 
  Total liabilities and equity   $ 2,325,161     $ 1,983,565  
                 
                 


Texas Roadhouse, Inc. and Subsidiaries  
Condensed Consolidated Statements of Cash Flows  
(in thousands)  
(unaudited)  
                 
                 
        52 and 53 Weeks Ended  
        December 29, 2020   December 31, 2019  
                 
                 
Cash flows from operating activities:            
Net income including noncontrolling interests   $ 34,925     $ 181,518  
Adjustments to reconcile net income to net cash provided by operating activities            
  Depreciation and amortization   117,877     115,544  
  Share-based compensation expense   29,431     35,500  
  Deferred income taxes   (19,932)     6,335  
  Other noncash adjustments, net   6,262     6,039  
Change in working capital   61,875     29,362  
    Net cash provided by operating activities   230,438     374,298  
                 
Cash flows from investing activities:            
Capital expenditures - property and equipment   (154,401)     (214,340)  
Acquisition of franchise restaurants, net of cash acquired   (10,580)     (1,536)  
Proceeds from sale of property and equipment   1,709     1,056  
Proceeds from sale leaseback transaction   2,167     -  
    Net cash used in investing activities   (161,105)     (214,820)  
                 
Cash flows from financing activities:            
Proceeds from revolving credit facility   240,000     -  
Repurchase of shares of common stock   (12,621)     (139,849)  
Dividends paid   (24,989)     (102,366)  
Other financing activities, net   (16,447)     (19,509)  
    Net cash provided by (used in) financing activities   185,943     (261,724)  
                 
    Net increase (decrease) in cash and cash equivalents   255,276     (102,246)  
Cash and cash equivalents - beginning of period   107,879     210,125  
Cash and cash equivalents - end of period   $ 363,155     $ 107,879  
                 


Texas Roadhouse, Inc. and Subsidiaries
Reconciliation of Income from Operations to Restaurant Margin
(in thousands)
(unaudited)
                 
    13 and 14 Weeks Ended   52 and 53 Weeks Ended
    December 29, 2020   December 31, 2019   December 29, 2020   December 31, 2019
                 
Income from operations   $ 20,396     $ 53,411     $ 23,844     $ 212,023  
                 
Less:                
Franchise royalties and fees     4,957       5,781       17,946       21,986  
                 
Add:                
Pre-opening     5,803       7,355       20,099       20,156  
Depreciation and amortization     30,443       30,970       117,877       115,544  
Impairment and closure, net     1,392       (1,293 )     2,263       (899 )
General and administrative     30,983       38,221       119,503       149,389  
                 
Restaurant margin   $ 84,060     $ 122,883     $ 265,640     $ 474,227  
                 
Restaurant margin (as a percentage of restaurant and other sales)     13.3 %     17.1 %     11.2 %     17.3 %
                 


Texas Roadhouse, Inc. and Subsidiaries        
Supplemental Financial and Operating Information        
($ amounts in thousands, except weekly sales by group)        
(unaudited)        
                                       
      Fourth Quarter   Change     Year to Date   Change        
        2020       2019     vs LY       2020       2019     vs LY          
                                       
Restaurant openings                                  
  Company - Texas Roadhouse   8       9     (1 )       18       19     (1 )          
  Company - Bubba's 33   0       2     (2 )       3       3     0            
  Company - Jaggers   1       0     1         1       0     1            
  Franchise - Texas Roadhouse - U.S.   1       0     1         2       1     1            
  Franchise - Texas Roadhouse - International   1       3     (2 )       2       8     (6 )          
  Total   11       14     (3 )       26       31     (5 )          
                                       
Restaurant acquisitions/dispositions                                  
    Company   2       1     1         2       1     1            
    Franchise   (2 )     (1 )   (1 )       (2 )     (1 )   (1 )          
    Total   0       0     0         0       0     0            
                                       
Restaurant closures                                  
  Company - Texas Roadhouse   0       0     0         (1 )     0     (1 )          
  Company - Bubba's 33   0       0     0         0       0     0            
  Company - Jaggers   0       0     0         0       0     0            
  Franchise - Texas Roadhouse - International   0       0     0         (2 )     (2 )   0            
  Total   0       0     0         (3 )     (2 )   (1 )          
                                       
Restaurants open at the end of the quarter                                  
  Company - Texas Roadhouse   503       484     19                          
  Company - Bubba's 33   31       28     3                          
  Company - Jaggers   3       2     1                          
  Franchise - Texas Roadhouse - U.S.   69       69     0                          
  Franchise - Texas Roadhouse - International   28       28     0                          
  Total   634       611     23                          
                                       
Company restaurants                                  
  Restaurant and other sales $ 633,032     $ 719,457     (12.0 ) %   $ 2,380,177     $ 2,734,177     (12.9 ) %        
  Store weeks   6,908       7,118     (3.0 ) %     27,181       26,473     2.7   %        
  Comparable restaurant sales (1)   (8.9 ) %   4.4   %         (14.2 ) %   4.7   %            
  Texas Roadhouse restaurants only:                                  
    Comparable restaurant sales (1)   (9.0 ) %   4.3   %         (14.1 ) %   4.6   %            
    Average unit volume (2) $ 1,208     $ 1,435     (15.8 ) %   $ 4,649     $ 5,555     (16.3 ) %        
    Average unit volume, as adjusted (3) $ 1,208     $ 1,336     (9.5 ) %   $ 4,649     $ 5,427     (14.3 ) %        
    Weekly sales by group:                          
     Comparable restaurants (470 units) $ 93,530                                  
     Average unit volume restaurants (19 units) (4) $ 78,402                                  
     Restaurants less than 6 months old (14 units) $ 90,994                                  
                                       
Restaurant operating costs (as a % of restaurant and other sales)                                
Food and beverage costs   32.4   %   32.4   % (1 ) bps   32.8   %   32.3   % 49   bps      
Labor   35.2   %   33.1   % 213   bps   36.8   %   33.1   % 367   bps      
Rent   2.2   %   1.9   % 35   bps   2.3   %   1.9   % 36   bps      
Other operating   16.9   %   15.6   % 134   bps   17.0   %   15.3   % 166   bps      
Total   86.7   %   82.9   % 380   bps   88.8   %   82.7   % 618   bps      
                                       
  Restaurant margin   13.3   %   17.1   % (380 ) bps   11.2   %   17.3   % (618 ) bps      
                                       
  Restaurant margin ($ in thousands) $ 84,060     $ 122,883     (31.6 ) %   $ 265,640     $ 474,227     (44.0 ) %        
  Restaurant margin $/Store week $ 12,169     $ 17,264     (29.5 ) %   $ 9,773     $ 17,914     (45.4 ) %        
                                       
Franchise restaurants                                  
  Franchise royalties and fees $ 4,957     $ 5,781     (14.3 ) %   $ 17,946     $ 21,986     (18.4 ) %        
  Store weeks   1,260       1,330     (5.2 ) %     5,048       4,953     1.9   %        
  Comparable restaurant sales (1)   (10.7 ) %   3.0   %         (17.3 ) %   3.0   %            
  U.S. franchise restaurants only:                                  
    Comparable restaurant sales (1)   (11.2 ) %   3.4   %         (15.5 ) %   3.8   %            
    Average unit volume (2) $ 1,242     $ 1,491     (16.7 ) %   $ 4,779     $ 5,749     (16.9 ) %        
    Average unit volume, as adjusted (3) $ 1,242     $ 1,387     (10.5 ) %   $ 4,779     $ 5,617     (14.9 ) %        
                                       
Pre-opening expense $ 5,803     $ 7,355     (21.1 ) %   $ 20,099     $ 20,156     (0.3 ) %        
                                       
Depreciation and amortization $ 30,443     $ 30,970     (1.7 ) %   $ 117,877     $ 115,544     2.0   %        
  As a % of revenue   4.8   %   4.3   % 50   bps   4.9   %   4.2   % 72   bps      
                                       
General and administrative expenses $ 30,983     $ 38,221     (18.9 ) %   $ 119,503     $ 149,389     (20.0 ) %        
  As a % of revenue   4.9   %   5.3   % (41 ) bps   5.0   %   5.4   % (44 ) bps      
                                       
(1) Comparable restaurant sales 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 permanently 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 permanently closed during the period. Q4 2020 and 2020 YTD include 13 and 52 weeks, respectively, while Q4 2019 and 2019 YTD include 14 and 53 weeks, respectively.       
(3) For comparative purposes, Q4 2019 and 2019 YTD were adjusted to include 13 and 52 weeks, respectively.        
(4) Average unit volume restaurants include restaurants open a full six and up to 18 months before the beginning of the period measured.        
           
Amounts may not foot due to rounding.          


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Source: Texas Roadhouse, Inc
Categories: Press Releases
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