Texas Roadhouse, Inc. Announces Second Quarter 2009 Results

LOUISVILLE, Ky.--(BUSINESS WIRE)-- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 26 week periods ended June 30, 2009.


                       Second Quarter              Year to Date
($000's) 2009 2008 % Change 2009 2008 % Change
Total revenue 242,423 217,311 12 488,496 428,524 14
Income from operations 21,494 17,040 26 43,777 37,740 16
Net income (1) 13,741 10,472 31 28,075 23,385 20
Diluted EPS $0.19 $0.14 40 $0.40 $0.31 29
(1) Net income refers to Net income attributable to Texas Roadhouse,
Inc. and subsidiaries.


Results for the quarter included:

  • Comparable restaurant sales decreased 3.7% at company-owned restaurants and decreased 3.5% at franchise restaurants;
  • Two company restaurants and one franchise restaurant opened, while one franchise restaurant closed;
  • Restaurant margins increased 10 basis points;
  • Diluted earnings per share increased 40% to $0.19 from $0.14 in the prior year period.


Results year-to-date included:

  • Comparable restaurant sales decreased 2.4% at company-owned restaurants and decreased 2.7% at franchise restaurants;
  • Eleven company restaurants and one franchise restaurant opened, while one franchise restaurant closed;
  • Restaurant margins decreased 57 basis points;
  • Diluted earnings per share increased 29% to $0.40 from $0.31 in the prior year period.

G.J. Hart, President and Chief Executive Officer of Texas Roadhouse, commented, "We are pleased with our financial performance for the period, and while the consumer environment remained challenging from a sales perspective, we continue to benefit from a favorable commodities market. This allowed us to generate slightly better year-over-year restaurant margins after seven consecutive quarters of decline. Looking to the remainder of 2009 and into next year, we remain optimistic about our market position and believe that a focus on legendary food and service is the best path to market share gains and brand integrity. Underlying these efforts is an ongoing commitment to operational intensity and prudent capital allocation policies."

Outlook for 2009

The Company reported that comparable restaurant sales for the first four weeks of the third quarter of fiscal 2009 decreased approximately 5.5% to 6.0% compared to the same period of the prior year.

While the economic outlook for 2009 remains uncertain, the Company announced it is now estimating 2009 diluted earnings per share to be up 5% to 10% as compared to its 53 week 2008 year. The Company's target is based, in part, on the following assumptions for 2009:

  • Approximately 15 company and two franchise restaurant openings;
  • Total capital expenditures of $50-60 million; and
  • Food cost deflation of 2.0% to 3.0%.


In addition, the Company noted that, as a result of the timing of prior year share repurchases, both second quarter and year-to-date fiscal 2009 diluted earnings per share growth benefitted from a much lower year-over-year share count. The Company anticipates this benefit will be substantially diminished for the remainder of the 2009 fiscal year. Also, the Company reminds investors that its fourth quarter of fiscal 2008 was a 14 week quarter as compared to a 13 week quarter in fiscal 2009 due to fiscal 2008 being a 53 week year. The Company estimates the extra week in the fourth quarter of 2008 accounted for $0.03 in diluted earnings per share.

Conference Call

The Company is hosting a conference call today, August 3, 2009, at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (888) 600-4862 or (913) 312-1397 for international calls. A replay of the call will be available for one week following the conference call. To access the replay, please dial (888) 203-1112 or (719) 457-0820 for international calls, and use 5414435 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 325 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 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 26 Weeks Ended
June 30, 2009 June 24, 2008 June 30, 2009 June 24, 2008
Revenue:
Restaurant sales $ 240,301 $ 214,787 $ 484,391 $ 423,388
Franchise royalties and fees 2,122 2,524 4,105 5,136
Total revenue 242,423 217,311 488,496 428,524
Costs and expenses:
Restaurant operating costs:
Cost of sales 80,314 74,774 163,355 148,360
Labor 71,074 61,804 142,573 120,246
Rent 4,929 3,601 9,841 6,890
Other operating 39,812 35,346 80,672 68,596
Pre-opening 933 3,212 3,217 6,038
Depreciation and amortization 10,616 9,066 21,087 17,612
Impairment and closure 14 31 (72) 734
General and administrative 13,237 12,437 24,046 22,308
Total costs and expenses 220,929 200,271 444,719 390,784
Income from operations 21,494 17,040 43,777 37,740
Interest expense, net 876 720 1,733 1,362
Equity income from investments in unconsolidated affiliates 64 70 149 139
Income before taxes 20,682 16,390 42,193 36,517
Provision for income taxes 6,436 5,639 13,151 12,592
Net income $ 14,246 $ 10,751 $ 29,042 $ 23,925
Less: Net income attributable to non controlling interests 505 279 967 540
Net income attributable to Texas Roadhouse, Inc. and subsidiaries $ 13,741 $ 10,472 $ 28,075 $ 23,385
Net income per common share attributable to Texas Roadhouse, Inc.
and subsidiaries:
Basic $ 0.20 $ 0.14 $ 0.40 $ 0.31
Diluted $ 0.19 $ 0.14 $ 0.40 $ 0.31
Weighted average shares outstanding:
Basic 69,909 74,252 69,666 74,498
Diluted 71,361 75,996 70,948 76,220

Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
(in thousands)
(unaudited)
June 30, 2009 December 30, 2008
Cash and cash equivalents $ 24,979 $ 5,258
Other current assets 22,308 29,550
Property and equipment, net 457,574 456,132
Goodwill 114,857 114,807
Intangible asset, net 12,241 12,807
Other assets 5,101 4,109
Total assets $ 637,060 $ 622,663
Current maturities of long-term debt and obligations under capital 234 228
leases
Other current liabilities 82,011 99,415
Long-term debt and obligations under capital leases, excluding 126,305 132,482
current maturities
Other liabilities 28,992 27,741
Texas Roadhouse, Inc. and subsidiaries stockholders' equity 396,881 359,990
Noncontrolling interests 2,637 2,807
Total liabilities and equity $ 637,060 $ 622,663

Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands, except per share data)
(unaudited)
26 Weeks Ended
June 30, 2009 June 24, 2008
Cash flows from operating activities:
Net income $ 28,075 $ 23,385
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and amortization 21,087 17,612
Share-based compensation expense 3,814 3,582
Other noncash adjustments 4,208 (1,130 )
Change in working capital (10,658 ) (717 )
Net cash provided by operating activities 46,526 42,732
Cash flows from investing activities:
Capital expenditures - property and equipment (22,526 ) (52,573 )
Acquisition of franchise restaurants, net of cash acquired 50 (8,173 )
Proceeds from sale of property and equipment, including insurance 120 197
proceeds
Net cash used in investing activities (22,356 ) (60,549 )
Cash flows from financing activities:
(Repayments)/proceeds from revolving credit facility, net (6,000 ) 28,000
Repurchase of shares of common stock - (15,095 )
Other financing activities 1,551 419
Net cash (used in)/provided by financing activities (4,449 ) 13,324
Net increase in cash 19,721 (4,493 )
Cash and cash equivalents - beginning of year 5,258 11,564
Cash and cash equivalents - end of year 24,979 7,071

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

Second Quarter Change Year to Date Change
2009 2008 vs LY 2009 2008 vs LY
Restaurant openings
Company 2 10 (8) 11 16 (5)
Franchise 1 0 1 1 0 1
Total 3 10 (7) 12 16 (4)

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

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

Restaurants open at the end of the quarter
Company 256 222 34
Franchise 69 78 (9)
Total 325 300 25

Company-owned restaurants
Restaurant sales $240,301 $214,787 11.9% $484,391 $423,388 14.4%
Store weeks 3,313 2,805 18.1% 6,562 5,472 19.9%
Comparable restaurant
sales growth (1) (3.7)% (0.3)% (2.4)% (0.7)%
Average unit volume (2) $935 $985 (5.1)% $1,906 $1,984 (3.9)%

Restaurant operating costs (as a % of restaurant sales)
Cost of sales 33.4% 34.8% (139) bps 33.7% 35.0% (132) bps
Labor 29.6% 28.8% 80 bps 29.4% 28.4% 103 bps
Rent 2.1% 1.7% 37 bps 2.0% 1.6% 40 bps
Other operating 16.6% 16.5% 11 bps 16.7% 16.2% 45 bps
Total 81.6% 81.7% (10) bps 81.8% 81.3% 57 bps

Restaurant margins (3) 18.4% 18.3% 10 bps 18.2% 18.7% (57) bps

Franchise-owned restaurants
Franchise royalties
and fees $2,122 $2,524 (15.9)% $4,105 $5,136 (20.1)%
Store weeks 897 1,014 (11.5)% 1,794 2,067 (13.2)%
Comparable restaurant
sales growth (1) (3.5)% (2.3)% (2.7)% (2.5)%
Average unit volume (2) $922 $956 (3.6)% $1,866 $1,917 (2.7)%

Pre-opening expense $933 $3,212 (71.0)% $3,217 $6,038 (46.7)%

Depreciation and
amortization $10,616 $9,066 17.1% $21,087 $17,612 19.7%
As a % of revenue 4.4% 4.2% 21 bps 4.3% 4.1% 21 bps

General and
administrative expenses $13,237 $12,437 6.4% $24,046 $22,308 7.8%
As a % of revenue 5.5% 5.7% (26) bps 4.9% 5.2% (28) 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 Q2 2008 and 2008 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.


SOURCE: Texas Roadhouse, Inc.

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