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Texas Roadhouse, Inc. Announces Fourth Quarter 2014 Results

By: Texas Roadhouse |  6 Shares     64 Reads

Increases Quarterly Dividend 13% to $0.17 per Share

LOUISVILLE, Ky. - (BUSINESS WIRE) - Feb. 23, 2015 - Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 52 week periods ended December 30, 2014.

				Fourth Quarter							Year to Date
($000's)				2014		2013		% Change			2014		2013		% Change
Total revenue				$ 404,425		$ 376,020		8			$ 1,582,148		$ 1,422,585		11
Income from operations				27,043		26,054		4			130,449		119,715		9
Net income				18,595		17,119		9			87,022		80,423		8
Diluted EPS				$0.26		$0.24		11			$1.23		$1.13		9

NOTE: Fourth quarter and full year 2014 results include 13 and 52 weeks, respectively, compared to 14 and 53 weeks in the fourth quarter and full year of 2013.

Results for the fourth quarter included the following highlights:

• Diluted earnings per share increased 10.9% to $0.26 from $0.24 in the prior year. Diluted earnings per share in the prior year period was positively impacted by an estimated $0.03 to $0.04 as a result of the 14th week;
• Comparable restaurant sales increased 7.0% at company restaurants and 5.7% at franchise restaurants on a comparable 13-week basis;
• Seven Texas Roadhouse and two Bubba’s 33 company-owned restaurants were opened, along with five Texas Roadhouse franchise-owned restaurants;
• Restaurant margin, as a percentage of restaurant sales, decreased 47 basis points to 16.5%, primarily due to food cost inflation of approximately 4.5%;
• Income tax rate decreased 156 basis points to 27.7%, primarily due to the retroactive reinstatement of certain federal tax credits during the current year quarter; and
• The Company repurchased 100,000 shares of its common stock for $2.8 million.

Results for the full year included the following highlights:

• Diluted earnings per share increased 9.4% to $1.23 from $1.13 in the prior year. Diluted earnings per share in the prior year was positively impacted by an estimated $0.03 to $0.04 as a result of the 53^rd week;
• Comparable restaurant sales increased 4.7% at company restaurants and 4.9% at franchise restaurants on a comparable 52-week basis;
• 22 Texas Roadhouse and two Bubba’s 33 company-owned restaurants were opened along with six franchise-owned restaurants;
• Restaurant margin, as a percentage of restaurant sales, decreased 26 basis points to 17.6%;
• Income tax rate increased 112 basis points to 30.0%, primarily due to the retroactive reinstatement of certain federal tax credits in 2013; and
• The Company repurchased 1,675,000 shares of its common stock for $42.7 million.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "We are very pleased with our 2014 results and the fact that we achieved our fifth consecutive year of positive comparable restaurant sales growth. We reported double digit revenue growth and strong diluted earnings per share growth for the year, despite continued commodity cost pressures and the impact of lapping an extra week last year. At the same time, our healthy balance sheet and cash flow enabled us to return $74.1 million of capital to shareholders through share repurchases and quarterly dividend payments."

Taylor continued, "Looking ahead to 2015, our development pipeline is in great shape and we expect to open 25 to 30 company restaurants, as well as four to six franchise restaurants. Although we expect to face continued cost pressures in the near term, we remain excited by the ongoing momentum in our top-line and will continue to focus on our long-term brand positioning and growth potential."

2015 Outlook

The Company reported that comparable restaurant sales at company restaurants for the first seven weeks of fiscal 2015 increased approximately 12% compared to the prior year period.

Management reiterated the following expectations for 2015:

• Positive comparable restaurant sales growth; and
• 25 to 30 company restaurant openings, including as many as five Bubba's 33 restaurants.

Management updated the following expectations for 2015:

• Food cost inflation of 3% to 4%;
• An income tax rate of approximately 30.0% to 31.0% depending on the reinstatement of certain federal tax credits; and
• Total capital expenditures of $135 million to $145 million.

Cash Dividend Payment

On February 18, 2015, the Company’s Board of Directors authorized the payment of a quarterly cash dividend of $0.17 per share of common stock. This payment, which will be distributed on April 3, 2015 to shareholders of record at the close of business on March 18, 2015, represents a 13% increase from the cash dividend of $0.15 per share of common stock declared during each quarter of 2014.

Conference Call

The Company is hosting a conference call today, February 23, 2015 at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (877) 719-9791 or (719) 325-4765 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 7805752 as the pass code. There will be a simultaneous Web cast conducted at www.texasroadhouse.com.

About Texas Roadhouse

Texas Roadhouse is a casual dining concept that first opened in 1993 and today operates over 450 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; 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 and 14 Weeks Ended								52 and 53 Weeks Ended
			December 30, 2014				December 31, 2013				December 30, 2014				December 31, 2013
Revenue:
Restaurant sales			$	400,790			$	372,879			$	1,568,556			$	1,410,118
Franchise royalties and fees				3,635				3,141				13,592				12,467
Total revenue				404,425				376,020				1,582,148				1,422,585
Costs and expenses:
Restaurant operating costs (excluding depreciation and amortization shown separately below):
Cost of sales				143,592				130,972				553,144				492,306
Labor				116,744				109,007				459,119				411,394
Rent				8,624				7,588				33,174				28,978
Other operating				65,848				62,166				246,339				224,882
Pre-opening				5,775				6,081				18,452				17,891
Depreciation and amortization				15,497				14,698				59,179				51,562
Impairment and closure				626				212				636				399
Gain on sale of other concept				-				(1,800	)							(1,800	)
General and administrative				20,676				21,042				81,656				77,258
Total costs and expenses				377,382				349,966				1,451,699				1,302,870
Income from operations				27,043				26,054				130,449				119,715
Interest expense, net				520				514				2,084				2,201
Equity income from investments in unconsolidated affiliates				627				142				1,602				713
Income before taxes				27,150				25,682				129,967				118,227
Provision for income taxes				7,528				7,523				38,990				34,140
Net income including noncontrolling interests			$	19,622			$	18,159			$	90,977			$	84,087
Less: Net income attributable to noncontrolling interests				1,027				1,040				3,955				3,664
Net income attributable to Texas Roadhouse, Inc. and subsidiaries			$	18,595			$	17,119			$	87,022			$	80,423
Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:
Basic			$	0.27			$	0.24			$	1.25			$	1.15
Diluted			$	0.26			$	0.24			$	1.23			$	1.13
Weighted average shares outstanding:
Basic				69,500				70,581				69,719				70,089
Diluted				70,359				71,813				70,608				71,362

 

Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
								(As Adjusted) (1)
				December 30, 2014				December 31, 2013
	Cash and cash equivalents			$	86,122			$	94,874
	Other current assets				61,604				50,869
	Property and equipment, net				649,637				586,212
	Goodwill				116,571				117,197
	Intangible assets, net				6,203				7,876
	Other assets				23,005				20,616
	Total assets			$	943,142			$	877,644
	Current maturities of long-term debt				129				243
	Other current liabilities				215,842				175,609
	Long-term debt, excluding current maturities				50,693				50,990
	Other liabilities				61,522				56,942
	Texas Roadhouse, Inc. and subsidiaries stockholders' equity				607,892				587,659
	Noncontrolling interests				7,064				6,201
	Total liabilities and equity			$	943,142			$	877,644
(1)	December 31, 2013 revised to reflect the impact of adjustments to purchase price accounting related to 2013 acquisitions in accordance with generally accepted accounting principles ("GAAP").

 

Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
			52 and 53 Weeks Ended
			December 30, 2014					December 31, 2013
Cash flows from operating activities:
Net income including noncontrolling interests			$	90,977				$	84,087
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization				59,179					51,562
Share-based compensation expense				14,883					14,740
Other noncash adjustments				4,078					1,142
Change in working capital				22,596					22,305
Net cash provided by operating activities				191,713					173,836
Cash flows from investing activities:
Capital expenditures - property and equipment				(125,445	)				(111,478	)
Investment in unconsolidated affiliates				-					(1,180	)
Proceeds from sale of other concept, net				-					1,387
Proceeds from sale of property and equipment, including insurance proceeds				1,205					23
Net cash used in investing activities				(124,240	)				(111,248	)
Cash flows from financing activities:
Repurchase shares of common stock				(42,744	)				(12,761	)
Dividends paid				(31,333	)				(46,877	)
Other financing activities				(2,148	)				10,178
Net cash used in financing activities				(76,225	)				(49,460	)
Net (decrease) increase in cash and cash equivalents				(8,752	)				13,128
Cash and cash equivalents - beginning of period				94,874					81,746
Cash and cash equivalents - end of period			$	86,122				$	94,874

 

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
		2014					2013					vs LY					2014					2013					vs LY
Restaurant openings
Company - Texas Roadhouse			7					12				(5	)					22					25				(3	)
Company - Bubba's 33			2					0				2						2					1				1
Company - Other			1					0				1						1					0				1
Franchise - Texas Roadhouse			5					1				4						6					4				2
Total			15					13				2						31					30				1
Restaurant acquisitions/dispositions
Company - Texas Roadhouse			1					2				(1	)					1					2				(1	)
Company - Bubba's 33			0					0				0						0					0				0
Company - Other			0					(2	)			2						0					(2	)			2
Franchise - Texas Roadhouse			(1	)				(2	)			1						(1	)				(2	)			1
Total			0					(2	)			2						0					(2	)			2
Restaurants open at the end of the quarter
Company - Texas Roadhouse			368					345				23
Company - Bubba's 33			3					1				2
Company - Other			1					0				1
Franchise - Texas Roadhouse			79					74				5
Total			451					420				31
Company-owned restaurants
Restaurant sales		$	400,790				$	372,879				7.5		%			$	1,568,556				$	1,410,118				11.2			%
Store weeks			4,766					4,744				0.5		%				18,565					17,426				6.5			%
Comparable restaurant sales growth (1)			7.0		%			2.1		%								4.7		%			3.4		%
Texas Roadhouse restaurants only:
Comparable restaurant sales growth (1)			7.0					2.1										4.7					3.4		%
Average unit volume (2)		$	1,083				$	1,015				6.7		%			$	4,355				$	4,186				4.0			%
Weekly sales by group:
Comparable restaurants (324 units)		$	83,563
Average unit volume restaurants (28 units) (3)		$	80,659
Restaurants less than 6 months old (16 units)		$	102,811
Restaurant operating costs (as a % of restaurant sales)
Cost of sales			35.8		%			35.1		%		70		bps				35.3		%			34.9		%		35			bps
Labor			29.1		%			29.2		%		(11	)	bps				29.3		%			29.2		%		10			bps
Rent			2.2		%			2.0		%		12		bps				2.1		%			2.1		%		6			bps
Other operating			16.4		%			16.7		%		(24	)	bps				15.7		%			15.9		%		(24	)		bps
Total			83.5		%			83.1		%		47		bps				82.4		%			82.1		%		26			bps
Restaurant margin (4)			16.5		%			16.9		%		(47	)	bps				17.6		%			17.9		%		(26	)		bps
Restaurant margin ($ in thousands)		$	65,982				$	63,148				4.5		%			$	276,782				$	252,559				9.6			%
Restaurant margin $/Store week		$	13,844				$	13,311				4.0		%			$	14,909				$	14,493				2.9			%
Franchise-owned restaurants
Franchise royalties and fees		$	3,635				$	3,141				15.7		%			$	13,592				$	12,467				9.0			%
Store weeks			998					1,051				(5.0	)	%				3,910					3,937				(0.7	)		%
Comparable restaurant sales growth (1)			5.7		%			4.5		%								4.9		%			4.3		%
Average unit volume (2)		$	1,171				$	1,094				7.0		%			$	4,627				$	4,346				6.5			%
Pre-opening expense		$	5,775				$	6,081				(5.0	)	%			$	18,452				$	17,891				3.1			%
Depreciation and amortization		$	15,497				$	14,698				5.4		%			$	59,179				$	51,562				14.8			%
As a % of revenue			3.8		%			3.9		%		(8	)	bps				3.7		%			3.6		%		12			bps
General and administrative expenses		$	20,676				$	21,042				(1.7	)	%			$	81,656				$	77,258				5.7			%
As a % of revenue			5.1		%			5.6		%		(48	)	bps				5.2		%			5.4		%		(27	)		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. Q4 2013 and 2013 YTD were adjusted to include 13 and 52 weeks, respectively.
(3) Average unit volume restaurants include 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.

SOURCE Texas Roadhouse, Inc.

Contacts:

Tonya Robinson
Texas Roadhouse, Inc.
Investor Relations
502-515-7269

Travis Doster
Media Relations
502-638-5457

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