Press Release Details

Texas Roadhouse, Inc. Announces Second Quarter 2023 Results

July 27, 2023

LOUISVILLE, Ky., July 27, 2023 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 26 weeks ended June 27, 2023.

Financial Results

Financial results for the 13 and 26 weeks ended June 27, 2023 and June 28, 2022 were as follows:

  Second Quarter   Year to Date
 
($000's)                          
    2023     2022   % change     2023     2022   % change
 
Total revenue $ 1,171,203   $ 1,024,606   14.3 %   $ 2,345,559   $ 2,012,092   16.6 %  
Income from operations   95,412     85,918   11.1 %     196,357     176,056   11.5 %  
Net income   82,271     72,419   13.6 %     168,658     147,621   14.3 %  
Diluted earnings per share $ 1.22   $ 1.07   14.7 %   $ 2.51   $ 2.15   16.6 %  

Results for the second quarter, as compared to the prior year as applicable, included the following:

  • Comparable restaurant sales increased 9.1% at company restaurants and increased 9.2% at domestic franchise restaurants;
  • Average weekly sales at company restaurants were $146,727 of which $18,496 were to-go sales as compared to average weekly sales of $135,552 of which $17,794 were to-go sales in the prior year;
  • Restaurant margin dollars increased 8.3% to $182.8 million from $168.7 million in the prior year primarily due to higher sales. Restaurant margin, as a percentage of restaurant and other sales, decreased 88 basis points to 15.7% as commodity inflation of 6.0% and wage and other labor inflation of 7.0% were partially offset by higher sales;
  • Diluted earnings per share increased 14.7% primarily driven by higher restaurant margin dollars partially offset by higher depreciation and amortization and higher general and administrative expenses;
  • Three company restaurants and three franchise restaurants were opened; and,
  • The Company repurchased 213,975 shares of common stock for $23.4 million.

Results for the year-to-date period, as compared to the prior year as applicable, included the following:

  • Comparable restaurant sales increased 11.0% at company restaurants and increased 11.2% at domestic franchise restaurants;
  • Average weekly sales at company restaurants were $147,579 of which $18,762 were to-go sales as compared to average weekly sales of $133,917 of which $18,671 were to-go sales in the prior year;
  • Restaurant margin dollars increased 11.7% to $368.5 million from $329.9 million in the prior year primarily due to higher sales. Restaurant margin, as a percentage of restaurant and other sales, decreased 70 basis points to 15.8% as commodity inflation of 7.4% and wage and other labor inflation of 7.4% were partially offset by higher sales;
  • Diluted earnings per share increased 16.6% primarily driven by higher restaurant margin dollars partially offset by higher general and administrative expenses and higher depreciation and amortization expense;
  • Nine company restaurants and four franchise restaurants were opened; and,
  • The Company repurchased 306,726 shares of common stock for $33.1 million.

Jerry Morgan, Chief Executive Officer of Texas Roadhouse, Inc. commented, “Once again, our operators generated tremendous sales momentum, including higher guest counts.  This increase in quarterly sales helped offset rising costs and allowed us to further grow our bottom line.”

Morgan continued, “On the development front, we have a significant number of company and franchise locations that will open in the second half of the year.  This includes the first franchise location for Jaggers, our fast-casual concept, that opened in Jacksonville, North Carolina, last week.  We remain confident that our continued development of all three concepts, along with a strong balance sheet and disciplined capital allocation strategy will generate long-term shareholder value.”

2023 Outlook        

Comparable restaurant sales at company restaurants for the first four weeks of our third quarter of fiscal 2023 increased 10.7% compared to 2022.  

Management reiterated the following expectations for 2023:

  • Positive comparable restaurant sales growth including the benefit of menu pricing actions; and,
  • Commodity cost inflation of 5% to 6%.

Management updated the following expectations for 2023:

  • Store week growth of approximately 6% including the impact of franchise locations acquired;
  • As many as 28 Texas Roadhouse and Bubba’s 33 company restaurant openings;
  • Wage and other labor inflation of 6% to 7%;
  • An effective income tax rate of 13% to 14% excluding the impact of any legislative changes enacted; and,
  • Total capital expenditures of approximately $300 million.

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 also includes sales and operating costs related to the Company’s non-royalty based retail initiatives. 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 core restaurant-level operating efficiency and performance over various reporting periods on a consistent basis. In calculating restaurant margin, the Company excludes certain non-restaurant-level costs that support operations, including general and administrative expenses, but do not have a direct impact on restaurant-level operational efficiency and performance. The Company excludes pre-opening expense as it occurs at irregular intervals and would impact comparability to prior period results. The Company 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 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, Inc. is hosting a conference call today, July 27, 2023, at 5:00 p.m. Eastern Time to discuss these results. The call will be webcast live from the investor relations portion of the Company's website at www.texasroadhouse.com. Listeners may also access the call by dialing (888) 440-5667 or (646) 960-0476 for international calls and referencing the Texas Roadhouse, Inc. Second Quarter 2023 Earnings. A replay of the call will be available until August 3, 2023, by dialing (800) 770-2030 or (647) 362-9199 for international calls.

About the Company

Texas Roadhouse, Inc. is a growing restaurant company operating predominantly in the casual dining segment that first opened in 1993 and today has grown to over 710 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. 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; labor or supply chain shortages or limited availability of staff or product needed to meet our business standards; changes in consumer discretionary spending and macroeconomic conditions, including inflationary pressures; 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 27, 2022. 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 Media
Michael Bailen Travis Doster
(502) 515-7298 (502) 638-5457

 

Texas Roadhouse, Inc. and Subsidiaries
Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
             
      13 Weeks Ended     26 Weeks Ended  
      June 27, 2023     June 28, 2022     June 27, 2023     June 28, 2022  
                         
Revenue:                    
  Restaurant and other sales $ 1,164,385     $ 1,018,057       $ 2,331,968     $ 1,999,029    
  Franchise royalties and fees   6,818       6,549         13,591       13,063    
                         
Total revenue   1,171,203       1,024,606         2,345,559       2,012,092    
                         
Costs and expenses:                    
  Restaurant operating costs (excluding depreciation and amortization shown separately below):
                     
  Food and beverage   401,204       347,041         811,915       684,437    
  Labor   391,337       333,042         777,156       654,913    
  Rent   17,996       16,714         35,824       33,082    
  Other operating   171,092       152,524         338,621       296,678    
  Pre-opening   5,671       5,323         11,048       9,614    
  Depreciation and amortization   37,413       34,420         73,640       68,040    
  Impairment and closure, net   78       411         133       (235 )  
  General and administrative   51,000       49,213         100,865       89,507    
                         
Total costs and expenses   1,075,791       938,688         2,149,202       1,836,036    
                         
Income from operations   95,412       85,918         196,357       176,056    
                         
Interest income (expense), net   996       (395 )       2,234       (792 )  
Equity income from investments in unconsolidated affiliates   287       545         1,042       879    
                         
Income before taxes   96,695       86,068         199,633       176,143    
Income tax expense   12,270       11,531         26,604       24,278    
                         
Net income including noncontrolling interests   84,425       74,537         173,029       151,865    
Less: Net income attributable to noncontrolling interests   2,154       2,118         4,371       4,244    
Net income attributable to Texas Roadhouse, Inc. and subsidiaries $ 82,271     $ 72,419       $ 168,658     $ 147,621    
                         
Net income per common share attributable to Texas Roadhouse, Inc.                    
and subsidiaries:                    
  Basic $ 1.23     $ 1.07       $ 2.52     $ 2.16    
  Diluted $ 1.22     $ 1.07       $ 2.51     $ 2.15    
                         
Weighted average shares outstanding:                    
  Basic   66,974       67,654         66,995       68,370    
  Diluted   67,229       67,890         67,261       68,631    
                         
Cash dividends declared per share $ 0.55     $ 0.46       $ 1.10     $ 0.92    
                               

 

Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
               
        June 27, 2023   December 27, 2022  
               
               
  Cash and cash equivalents   $ 107,324   $ 173,861  
  Other current assets, net     125,961     222,980  
  Property and equipment, net     1,360,132     1,270,349  
  Operating lease right-of-use assets, net     662,730     630,258  
  Goodwill     169,684     148,732  
  Intangible assets, net     4,986     5,607  
  Other assets     84,174     73,878  
               
  Total assets   $ 2,514,991   $ 2,525,665  
               
               
  Other current liabilities     571,983     652,010  
  Operating lease liabilities, net of current portion     712,800     677,874  
  Long-term debt     -     50,000  
  Other liabilities     131,958     118,119  
  Texas Roadhouse, Inc. and subsidiaries stockholders' equity     1,082,982     1,012,638  
  Noncontrolling interests     15,268     15,024  
               
  Total liabilities and equity   $ 2,514,991   $ 2,525,665  
               

 

Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
             
        26 Weeks Ended  
        June 27, 2023   June 28, 2022  
                   
             
Cash flows from operating activities:        
Net income including noncontrolling interests   $ 173,029     $ 151,865    
Adjustments to reconcile net income to net cash provided by operating activities        
  Depreciation and amortization     73,640       68,040    
  Share-based compensation expense     16,744       18,612    
  Deferred income taxes     1,767       3,906    
  Other noncash adjustments, net     2,831       2,144    
Change in working capital, net of acquisitions     20,222       54,136    
    Net cash provided by operating activities     288,233       298,703    
                   
Cash flows from investing activities:              
Capital expenditures - property and equipment     (154,580 )     (108,567 )  
Acquisition of franchise restaurants, net of cash acquired     (39,153 )     (33,069 )  
Proceeds from sale of investments in unconsolidated affiliates     632       316    
Proceeds from the sale of property and equipment     -       2,188    
Proceeds from sale leaseback transactions     7,097       -    
    Net cash used in investing activities     (186,004 )     (139,132 )  
                   
Cash flows from financing activities:              
Payments on revolving credit facility     (50,000 )     (25,000 )  
Repurchase of shares of common stock     (33,058 )     (212,859 )  
Dividends paid     (73,698 )     (62,547 )  
Other financing activities, net     (12,010 )     (14,399 )  
    Net cash used in financing activities     (168,766 )     (314,805 )  
                   
    Net decrease in cash and cash equivalents     (66,537 )     (155,234 )  
Cash and cash equivalents - beginning of period     173,861       335,645    
Cash and cash equivalents - end of period   $ 107,324     $ 180,411    
                   

 

Texas Roadhouse, Inc. and Subsidiaries
Reconciliation of Income from Operations to Restaurant Margin
(in thousands)
(unaudited)
                 
    13 Weeks Ended   26 Weeks Ended  
    June 27, 2023   June 28, 2022   June 27, 2023   June 28, 2022  
                 
Income from operations   $ 95,412     $ 85,918     $ 196,357     $ 176,056    
                 
Less:                
Franchise royalties and fees     6,818       6,549       13,591       13,063    
                 
Add:                
Pre-opening     5,671       5,323       11,048       9,614    
Depreciation and amortization     37,413       34,420       73,640       68,040    
Impairment and closure, net     78       411       133       (235 )  
General and administrative     51,000       49,213       100,865       89,507    
                 
Restaurant margin   $ 182,756     $ 168,736     $ 368,452     $ 329,919    
                 
Restaurant margin(as a percentage of restaurant and other sales)     15.7 %     16.6 %     15.8 %     16.5 %  
                 

 

Texas Roadhouse, Inc. and Subsidiaries  
Supplemental Financial and Operating Information  
($ amounts in thousands, except weekly sales by group)  
(unaudited)  
                             
      Second Quarter       Year to Date      
        2023       2022     Change   2023     2022     Change  
Restaurant openings                        
  Company - Texas Roadhouse   2       4     (2)     6     7     (1)    
  Company - Bubba's 33   1       1     0     1     1     0    
  Company - Jaggers   0       0     0     2     0     2    
  Franchise - Texas Roadhouse - U.S.   1       0     1     1     0     1    
  Franchise - Texas Roadhouse - International   2       1     1     3     3     0    
  Total   6       6     0     13     11     2    
                             
Restaurant acquisitions/dispositions                        
  Company - Texas Roadhouse   0       1     (1)     8     8     0    
  Franchise - Texas Roadhouse - U.S.   0       (1)     1     (8)     (8)     0    
                             
Restaurant closures                        
  Company - Texas Roadhouse   0       0     0     0     0     0    
  Franchise - Texas Roadhouse - U.S.   (1)       0     (1)     (1)     0     (1)    
  Total   (1)       0     (1)     (1)     0     (1)    
                             
Restaurants open at the end of the quarter                        
  Company - Texas Roadhouse   566       541     25                
  Company - Bubba's 33   41       37     4                
  Company - Jaggers   7       4     3                
  Franchise - Texas Roadhouse - U.S.   54       62     (8)                
  Franchise - Texas Roadhouse - International   41       34     7                
  Total   709       678     31                
                             
      Second Quarter      
        2023       2022     Change              
Company restaurants (all concepts)                        
  Restaurant and other sales $ 1,164,385     $ 1,018,057     14.4   %            
  Store weeks   7,960       7,536     5.6   %            
  Comparable restaurant sales (1)   9.1   %   7.6   %                
                             
  Restaurant operating costs (as a % of restaurant and other sales)                        
  Food and beverage costs   34.5   %   34.1   % 37   bps            
  Labor   33.6   %   32.7   % 90   bps            
  Rent   1.5   %   1.6   % (10 ) bps            
  Other operating   14.7   %   15.0   % (29 ) bps            
  Total   84.3   %   83.4   % 88   bps            
                             
    Restaurant margin   15.7   %   16.6   % (88 ) bps            
                             
    Restaurant margin ($ in thousands) $ 182,756     $ 168,736     8.3   %            
    Restaurant margin $/Store week $ 22,961     $ 22,390     2.5   %            
                             
  Texas Roadhouse restaurants only:                        
    Store weeks   7,343       7,006     4.8   %            
    Comparable restaurant sales (1)   9.4   %   7.6   %                
    Average unit volume (2) $ 1,946     $ 1,781     9.2   %            
    Weekly sales by group:                
    Comparable restaurants (533 and 503 units) $ 149,847     $ 137,599                    
    Average unit volume restaurants (20 and 22 units) $ 144,554     $ 132,222                    
    Restaurants less than 6 months old (13 and 16 units) $ 158,608     $ 145,756                    
                             
  Bubba's 33 restaurants only:                        
    Store weeks   526       478     10.0   %            
    Comparable restaurant sales (1)   3.9   %   8.1   %                
    Average unit volume (2) $ 1,514     $ 1,475     2.6   %            
    Weekly sales by group:                
    Comparable restaurants (35 and 31 units) $ 117,906     $ 110,740                    
    Average unit volume restaurants (3 and 4 units) $ 99,324     $ 134,386                    
    Restaurants less than 6 months old (3 and 2 units) $ 123,594     $ 128,134                    
                             
Franchise restaurants                        
  Franchise royalties and fees $ 6,818     $ 6,549     4.1   %            
  Store weeks   1,220       1,238     (1.5 ) %            
  Comparable restaurant sales   10.8   %   8.7   %                
  U.S. franchise restaurants only:                        
    Comparable restaurant sales   9.2   %   6.2   %                
    Average unit volume $ 2,129     $ 1,932     10.2   %            
                             
(1) Comparable restaurant sales reflect the change in year-over-year sales for restaurants open a full 18 months before the beginning of the period, excluding sales from restaurants permanently closed during the period.
 
                                             
(2) Average unit volume includes sales from restaurants open for a full six months before the beginning of the period, excluding sales from restaurants permanently closed during the period.  
Amounts may not foot due to rounding.
 
                                             

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Source: Texas Roadhouse, Inc