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Texas Roadhouse, Inc. Announces Second Quarter 2008 Results

By: Texas Roadhouse |  0 Shares     98 Reads

LOUISVILLE, Ky--(BUSINESS WIRE)--Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 26 week periods ended June 24, 2008.

                       Second Quarter              Year to Date

($000's)             2008    2007 % Change      2008    2007 % Change

                  ------- ------- --------   ------- ------- --------



Total revenue     217,311 180,986       20   428,524 359,323       19

Income from

 operations        17,040  14,902       14    37,740  34,602        9

Net income         10,472   9,257       13    23,385  21,553        8

Diluted EPS         $0.14   $0.12       14     $0.31   $0.28        9

Results for the quarter:

• Comparable restaurant sales decreased 0.3% at company restaurants and 2.3% at franchise restaurants;
• 10 company restaurants opened;
• Three restaurants were acquired from franchisees;
• The Company repurchased 1,094,300 shares of its Class A common stock for a total purchase price of $10.2 million; and
• Diluted earnings per share increased 14.0% to $0.14 from $0.12 in the prior year period.

Results year-to-date:

• Comparable restaurant sales decreased 0.7% at company restaurants and 2.5% at franchise restaurants;
• 16 company restaurants opened while one company restaurant closed;
• Three restaurants were acquired from franchisees;
• The Company repurchased 1,624,200 shares of its Class A common stock for a total purchase price of $15.1 million; and
• Diluted earnings per share increased 9.0% to $0.31 from $0.28 in the prior year period.

G.J. Hart, President and Chief Executive Officer of Texas Roadhouse, commented, "Our second quarter results were respectable, and while the overall consumer and inflationary environments have remained challenging, our operators continue to be focused on doing the right things for the long-term success of the business. In addition, we continue to allocate our capital in a way that we believe creates long-term value for our stockholders through a combination of new restaurant development, share repurchases and franchise acquisitions."

Stock Repurchase Authorization

On July 8, 2008, the Board of Directors approved a $50.0 million increase in the Company's stock repurchase program. The Company's total stock repurchase authorization is now $75.0 million. Under the stock repurchase program, the Company may repurchase outstanding shares from time to time in open market transactions until February 14, 2010, in accordance with applicable laws, rules and regulations. The timing and the amount of any repurchases will be determined by the Company's management under parameters established by the Board of Directors, based on its evaluation of the Company's stock price, market conditions and other corporate considerations. The Company intends to use cash on hand and funds available under its credit facility to repurchase shares under the program.

Franchise Acquisitions

As previously announced, effective as of the first day of the Company's second quarter of fiscal 2008, the Company acquired three franchise restaurants. The aggregate purchase price for the restaurants, which included two in Missouri and one in Kentucky, was approximately $8.7 million. The purchase price was paid in cash, funded through borrowings under the Company's credit facility. On a 12-month basis, the acquisitions are expected to add approximately $13.0 million of net revenue and approximately $0.005 per diluted share to earnings, excluding an estimated $35,000 after-tax, acquisition-related charge recorded during the second quarter of fiscal 2008.

On July 23, 2008, the Company acquired eight franchise restaurants. The aggregate purchase price for the restaurants, all in Tennessee, was approximately $9.3 million. The purchase price was paid in cash, funded through borrowings under the Company's credit facility. On a 12-month basis, the acquisitions are expected to add approximately $28.5 million of net revenue and to have no significant accretive impact, excluding an estimated $0.1 million after-tax, acquisition-related charge to be recorded during the third quarter of fiscal 2008.

Outlook for 2008

The Company reported that comparable restaurant sales for the first four weeks of the third quarter of fiscal 2008 decreased approximately 3.0% compared to the same period of the prior year.

The Company is currently estimating diluted earnings per share growth of 5 to 15% for fiscal 2008. This includes an estimated $0.01 to $0.02 positive per share impact, or 2 to 4% of diluted earnings per share, resulting from the addition of the 53rd week in the fiscal year. As such, the fourth quarter of fiscal 2008 will contain 14 weeks versus 13 weeks in fiscal 2007.

This estimate is based, in part, on the following assumptions:

• New company-owned restaurant openings of approximately 30;
• Comparable restaurant sales growth of negative 1.0% to flat; and
• Restaurant operating costs increasing 80 to 120 basis points as compared to full year 2007.

Conference Call

The Company is hosting a conference call today, July 28, 2008, at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (888) 668-1645. A replay of the call will be available for one week following the conference call. To access the replay, please dial (888) 203-1112, and use 2427920 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 over 300 restaurants system-wide in 44 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 for the full year 2008, 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 during full year 2008, the sales at these and our other company-owned and franchise restaurants, our ability to control restaurant operating costs, our ability to integrate the franchise restaurants which we have acquired, strength of consumer spending 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 26 Weeks Ended
------------------- ------------------
June 24, June 26, June 24, June 26,
2008 2007 2008 2007
--------- --------- --------- --------

Revenue:
Restaurant sales $214,787 $178,129 $423,388 $353,573
Franchise royalties and fees 2,524 2,857 5,136 5,750
-------- -------- -------- --------

Total revenue 217,311 180,986 428,524 359,323
-------- -------- -------- --------

Costs and expenses:
Restaurant operating costs:
Cost of sales 74,774 62,250 148,360 123,347
Labor 61,804 50,282 120,246 98,579
Rent 3,601 2,846 6,890 5,631
Other operating 35,346 28,774 68,596 56,667
Pre-opening 3,212 3,102 6,038 6,685
Depreciation and amortization 9,066 7,230 17,612 13,875
Impairment and closure 31 - 734 -
General and administrative 12,437 11,600 22,308 19,937
-------- -------- -------- --------

Total costs and expenses 200,271 166,084 390,784 324,721
-------- -------- -------- --------

Income from operations 17,040 14,902 37,740 34,602

Interest expense, net 720 361 1,362 597
Minority interest 279 230 540 519
Equity income from investments
in
unconsolidated affiliates 70 93 139 190
-------- -------- -------- --------

Income before taxes 16,111 14,404 35,977 33,676
Provision for income taxes 5,639 5,147 12,592 12,123
-------- -------- -------- --------

Net income $ 10,472 $ 9,257 $ 23,385 $ 21,553
======== ======== ======== ========

Net income per common share:
Basic $ 0.14 $ 0.12 $ 0.31 $ 0.29
======== ======== ======== ========
Diluted $ 0.14 $ 0.12 $ 0.31 $ 0.28
======== ======== ======== ========

Weighted average shares
outstanding:
Basic 74,252 74,613 74,498 74,500
======== ======== ======== ========
Diluted 75,996 76,912 76,220 76,879
======== ======== ======== ========

Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
(in thousands)
(unaudited)



June 24, 2008 June 26, 2007
-------------- -------------


Cash $ 7,071 $ 57,791
Other current assets 21,952 17,549
Property and equipment, net 425,997 340,353
Goodwill 108,153 86,649
Intangible asset, net 9,610 4,702
Other assets 4,012 3,105

------------- -------------
Total assets $576,795 $510,149
============= =============


Current maturities of long-term debt $ 236 $ 288
and obligations under capital leases
Other current liabilities 77,267 61,935
Long-term debt and obligations under 93,592 79,637
capital leases, excluding current
maturities
Other liabilities 22,433 20,393
Minority interest 3,144 1,612
Stockholders' equity 380,123 346,284

------------- -------------
Total liabilities and stockholders'
equity $576,795 $510,149
============= =============

Supplemental Financial and Operating Information
($ amounts in thousands)
(unaudited)



Second Quarter Change
2008 2007 vs LY
--------- -------- ------

Restaurant openings
Company 10 7 3
Franchise 0 2 (2)
Total 10 9 1

Restaurant acquisitions
Company 3 0 3
Franchise (3) 0 (3)
Total 0 0 0

Restaurant closures
Company 0 0 0
Franchise 0 0 0
Total 0 0 0

Restaurants open at the end of the quarter
Company 222 180 42
Franchise 78 90 (12)
Total 300 270 30

Company-owned restaurants
Restaurant sales $214,787 $178,129 20.6 %
Store weeks 2,805 2,278 23.1 %
Comparable restaurant
sales growth (1) (0.3)% 1.9%
Average unit
volume (2) $ 995 $ 1,012 (1.7)%

Restaurant costs
(as a % of restaurant sales)
Cost of sales 34.8 % 34.9% (13)bps
Labor 28.8 % 28.2% 55 bps
Rent 1.7 % 1.6% 8 bps
Other operating 16.5 % 16.2% 30 bps
Total 81.7 % 80.9% 79 bps

Franchise-owned restaurants
Franchise royalties and fees $ 2,524 $ 2,857 (11.7)%
Store weeks 1,014 1,151 (11.9)%
Comparable restaurant sales growth (1) (2.3)% 1.8%
Average unit volume (2) $ 944 $ 968 (2.5)%

Pre-opening expense $ 3,212 $ 3,102 3.5 %

Depreciation and amortization $ 9,066 $ 7,230 25.4 %
As a % of revenue 4.2 % 4.0% 18 bps

General and administrative expenses $ 12,437 $ 11,600 7.2 %
As a % of revenue 5.7 % 6.4% (69)bps





Year to Date Change
2008 2007 vs LY
--------- -------- ------

Restaurant openings
Company 16 17 (1)
Franchise 0 2 (2)
Total 16 19 (3)

Restaurant acquisitions
Company 3 0 3
Franchise (3) 0 (3)
Total 0 0 0

Restaurant closures
Company (1) 0 (1)
Franchise 0 0 0
Total (1) 0 (1)

Restaurants open at the end of the
quarter
Company
Franchise
Total

Company-owned restaurants
Restaurant sales $423,388 $353,573 19.7 %
Store weeks 5,472 4,439 23.3 %
Comparable restaurant
sales growth (1) (0.7)% 1.5%
Average unit
volume (2) $ 2,017 $ 2,063 (2.2)%

Restaurant costs
(as a % of restaurant sales)
Cost of sales 35.0 % 34.9% 16 bps
Labor 28.4 % 27.9% 52 bps
Rent 1.6 % 1.6% 3 bps
Other operating 16.2 % 16.0% 17 bps
Total 81.3 % 80.4% 88 bps

Franchise-owned restaurants
Franchise royalties and fees $ 5,136 $ 5,750 (10.7)%
Store weeks 2,067 2,295 (9.9)%
Comparable restaurant sales growth
(1) (2.5)% 1.1%
Average unit volume (2) $ 1,904 $ 1,950 (2.4)%

Pre-opening expense $ 6,038 $ 6,685 (9.7)%

Depreciation and amortization $ 17,612 $ 13,875 26.9 %
As a % of revenue 4.1 % 3.9% 25 bps

General and administrative expenses $ 22,308 $ 19,937 11.9 %
As a % of revenue 5.2 % 5.5% (34)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 volume for Q2 2007 and 2007 YTD
were adjusted to reflect restaurant sales of the 12 acquired
franchise stores as part of Company-owned restaurants average unit
volume and were excluded from franchise-owned restaurants average
unit volume.

NM - not meaningful

Amounts may not foot due to rounding.

SOURCE: Texas Roadhouse, Inc.

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