Texas Roadhouse, Inc. Announces Third Quarter 2009 Results

LOUISVILLE, Ky.--(BUSINESS WIRE)-- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 39 week periods ended September 29, 2009.


                      Third Quarter               Year to Date
($000's) 2009 2008 % Change 2009 2008 % Change
Total revenue 226,467 217,735 4 714,963 646,259 11
Income from operations 17,281 13,421 29 61,058 51,161 19
Net income (1) 10,695 8,644 24 38,770 32,029 21
Diluted EPS $0.15 $0.12 27 $0.54 $0.43 28
(1) Net income refers to Net income attributable to Texas Roadhouse,
Inc. and subsidiaries.


Results for the quarter included:

  • Comparable restaurant sales decreased 4.6% at company-owned restaurants and decreased 3.6% at franchise restaurants;
  • One company restaurant and two franchise restaurants opened, while two company restaurants closed;
  • Restaurant margins increased 133 basis points;
  • Diluted earnings per share increased 27% to $0.15 from $0.12 in the prior year period.

Results year-to-date included:

  • Comparable restaurant sales decreased 3.0% at both company-owned restaurants and franchise restaurants;
  • Twelve company restaurants and three franchise restaurants opened, while two company restaurants and one franchise restaurant closed;
  • Restaurant margins increased 9 basis points;
  • Diluted earnings per share increased 28% to $0.54 from $0.43 in the prior year period.

G.J. Hart, President and Chief Executive Officer of Texas Roadhouse, commented, "Sales trends improved during the third quarter and into the start of the fourth, although they still remain negative. We have continued to experience positive earnings growth due to lower pre-opening costs, a favorable commodity cost environment and the ability of our operators to manage the business in a declining sales environment. Financially, we have continued generating positive free cash flow, thereby enabling us to strengthen an already conservative balance sheet. For the balance of 2009 and into 2010, we believe we are well-positioned from a value, operational and financial position."

Outlook for 2009

The Company reported that comparable restaurant sales for the first four weeks of the fourth quarter of fiscal 2009 decreased 2.3% compared to the same period of the prior year.

The Company announced it is now estimating that 2009 diluted earnings per share growth will be approximately 20% as compared to its 53 week 2008 year. The Company's target is based, in part, on the following assumptions for 2009:

  • 17 company and three franchise restaurant openings;
  • Total capital expenditures of $50-55 million; and
  • Food cost deflation of 2.5% to 3.0%.

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.

Outlook for 2010

Plans relating to fiscal 2010 have not yet been finalized. However, the Company announced that if comparable restaurant sales were negative 2% to flat for the year, 2010 diluted earnings per share growth would likely be flat to up 10% compared to 2009. This is based on the following assumptions:

  • Approximately 15 company restaurant openings;
  • Total capital expenditures of $50-55 million; and
  • Food cost deflation of 2.0-3.0%.

Conference Call

The Company is hosting a conference call today, November 2, 2009, at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (888) 637-7710 or (913) 312-0849 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 1604475 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.

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 39 Weeks Ended
September 29, 2009 September 23, 2008 September 29, 2009 September 23, 2008
Revenue:
Restaurant sales $ 224,417 $ 215,739 $ 708,808 $ 639,127
Franchise royalties and fees 2,050 1,996 6,155 7,132
Total revenue 226,467 217,735 714,963 646,259
Costs and expenses:
Restaurant operating costs:
Cost of sales 74,489 76,845 237,844 225,205
Labor 67,630 63,750 210,203 183,996
Rent 5,029 4,248 14,870 11,138
Other operating 38,778 36,772 119,450 105,368
Pre-opening 1,194 2,935 4,411 8,973
Depreciation and amortization 10,395 9,444 31,482 27,056
Impairment and closure (201 ) 43 (273 ) 777
General and administrative 11,872 10,277 35,918 32,585
Total costs and expenses 209,186 204,314 653,905 595,098
Income from operations 17,281 13,421 61,058 51,161
Interest expense, net 784 974 2,517 2,336
Equity income from investments in
unconsolidated affiliates 36 45 185 184
Income before taxes 16,533 12,492 58,726 49,009
Provision for income taxes 5,431 3,906 18,582 16,498
Net income including noncontrolling interests $ 11,102 $ 8,586 $ 40,144 $ 32,511
Less: Net income attributable to noncontrolling interests 407 (58 ) 1,374 482
Net income attributable to Texas Roadhouse, Inc. and subsidiaries $ 10,695 $ 8,644 $ 38,770 $ 32,029
Net income per common share attributable to Texas Roadhouse, Inc.
and subsidiaries:
Basic $ 0.15 $ 0.12 $ 0.56 $ 0.43
Diluted $ 0.15 $ 0.12 $ 0.54 $ 0.43
Weighted average shares outstanding:
Basic 70,204 71,947 69,847 73,649
Diluted 71,550 73,303 71,151 75,242
Texas Roadhouse, Inc. and Subsidiaries
Condensed
Consolidated Balance Sheet
(in thousands)
(unaudited)
September 29, 2009 December 30, 2008
Cash and cash equivalents $ 35,833 $ 5,258
Other current assets 20,814 29,550
Property and equipment, net 457,267 456,132
Goodwill 114,859 114,807
Intangible asset, net 11,958 12,807
Other assets 5,901 4,109
Total assets $ 646,632 $ 622,663
Current maturities of long-term debt
and obligations under capital leases 240 228
Other current liabilities 76,179 99,415
Long-term debt and obligations under
capital leases, excluding current maturities 126,243 132,482
Other liabilities 32,377 27,741
Texas Roadhouse, Inc. and subsidiaries stockholders' equity 409,068 359,990
Noncontrolling interests 2,525 2,807
Total liabilities and equity $ 646,632 $ 622,663
Texas Roadhouse, Inc. and Subsidiaries
Condensed
Consolidated Statements of Cash Flows
(in thousands,
except per share data)
(unaudited)
39 Weeks Ended
September 29, September 23,
2009 2008
Cash flows from operating activities:
Net income including noncontrolling interests $ 40,144 $ 32,511
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and amortization 31,482 27,056
Share-based compensation expense 5,642 5,578
Other noncash adjustments 4,501 (1,152 )
Change in working capital (13,473 ) (5,743 )
Net cash provided by operating activities 68,296 58,250
Cash flows from investing activities:
Capital expenditures - property and equipment (34,814 ) (75,413 )
Acquisition of franchise restaurants, net of cash acquired 25 (18,405 )
Proceeds from sale of property and equipment, including insurance 2,329 289
proceeds
Net cash used in investing activities (32,460 ) (93,529 )
Cash flows from financing activities:
(Repayments)/proceeds from revolving credit facility, net (6,000 ) 86,000
Repurchase of shares of common stock - (52,578 )
Other financing activities 739 4,012
Net cash (used in)/provided by financing activities (5,261 ) 37,434
Net increase in cash 30,575 2,155
Cash and cash equivalents - beginning of year 5,258 11,564
Cash and cash equivalents - end of year 35,833 13,719
Supplemental Financial and Operating Information
($
amounts in thousands)
(unaudited)
Third Quarter Change Year to Date Change
2009 2008 vs LY 2009 2008 vs LY
Restaurant openings
Company 1 7 (6 ) 12 23 (11 )
Franchise 2 1 1 3 1 2
Total 3 8 (5 ) 15 24 (9 )
Restaurant acquisitions
Company 0 9 (9 ) 0 12 (12 )
Franchise 0 (9 ) 9 0 (12 ) 12
Total 0 0 0 0 0 0
Restaurant closures
Company (2 ) 0 (2 ) (2 ) (1 ) (1 )
Franchise 0 0 0 (1 ) 0 (1 )
Total (2 ) 0 (2 ) (3 ) (1 ) (2 )
Restaurants open at the end of the quarter
Company 255 238 17
Franchise 71 70 1
Total 326 308 18
Company-owned restaurants
Restaurant sales $ 224,417 $ 215,739 4.0 % $ 708,808 $ 639,127 10.9 %
Store weeks 3,331 3,000 11.0 % 9,893 8,472 16.8 %
Comparable restaurant sales growth (1) (4.6 ) % (3.2 ) % (3.0 ) % (1.5 ) %
Average unit volume (2) $ 874 $ 927 (5.7 ) % $ 2,792 $ 2,920 (4.4 ) %
Restaurant operating costs (as a % of restaurant sales)
Cost of sales 33.2 % 35.6 % (243 ) bps 33.6 % 35.2 % (168 ) bps
Labor 30.1 % 29.5 % 59 bps 29.7 % 28.8 % 87 bps
Rent 2.2 % 2.0 % 27 bps 2.1 % 1.7 % 36 bps
Other operating 17.3 % 17.0 % 23 bps 16.9 % 16.5 % 37 bps
Total 82.8 % 84.2 % (133 ) bps 82.2 % 82.3 % (9 ) bps
Restaurant margins (3) 17.2 % 15.8 % 133 bps 17.8 % 17.7 % 9 bps
Franchise-owned restaurants
Franchise royalties and fees $ 2,050 $ 1,996 2.7 % $ 6,155 $ 7,132 (13.7 ) %
Store weeks 900 974 (7.6 ) % 2,694 3,041 (11.4 ) %
Comparable restaurant sales growth (1) (3.6 ) % (4.5 ) % (3.0 ) % (3.1 ) %
Average unit volume (2) $ 856 $ 887 (3.5 ) % $ 2,721 $ 2,804 (3.0 ) %
Pre-opening expense $ 1,194 $ 2,935 (59.3 ) % $ 4,411 $ 8,973 (50.8 ) %
Depreciation and amortization $ 10,395 $ 9,444 10.1 % $ 31,482 $ 27,056 16.4 %
As a % of revenue 4.6 % 4.3 % 25 bps 4.4 % 4.2 % 22 bps
General and administrative expenses $ 11,872 $ 10,277 15.5 % $ 35,918 $ 32,585 10.2 %
As a % of revenue 5.2 % 4.7 % 52 bps 5.0 % 5.0 % (2 ) 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 Q3 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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