Texas Roadhouse, Inc. Announces Second Quarter 2010 Results

LOUISVILLE, Ky., (BUSINESS WIRE) -- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 26 week periods ended June 29, 2010.

                                  Second Quarter                 Year to Date
    ($000's)                  2010     2009   % Change      2010     2009   % Change
                            -------  -------  --------    -------  -------  --------
    Total revenue           255,162  242,423         5    514,786  488,496         5
    Income from operations   23,329   21,494         9     53,435   43,777        22
    Net income               15,036   13,741         9     34,277   28,075        22
    Diluted EPS               $0.21    $0.19         7      $0.47    $0.40

Results for the quarter included:

  • Comparable restaurant sales increased 1.4% at company restaurants and 2.0% at franchise restaurants;
  • One company restaurant and one franchise restaurant opened while one company restaurant closed;
  • Restaurant margins increased 45 basis points to 18.8%;
  • Diluted earnings per share increased 7% to $0.21 from $0.19 in the prior year period.

Results year-to-date included:

  • Comparable restaurant sales increased 0.9% at company restaurants and 1.4% at franchise restaurants;
  • Four company restaurants and one franchise restaurant opened while one company restaurant closed;
  • Restaurant margins increased 132 basis points to 19.5%;
  • Diluted earnings per share increased 19% to $0.47 from $0.40 in the prior period.

G.J. Hart, President and Chief Executive Officer of Texas Roadhouse, commented, "We are pleased to report another quarter of diluted earnings per share growth led by both positive comparable restaurant sales and continued restaurant-level margin expansion. Positive guest counts drove the increase in comparable restaurant sales, while lower commodity costs continued to pave the way for margin expansion. In addition, sales at our newer restaurants continue to perform at or above our expectations and we are experiencing lower new unit investment costs. Our goal is to continue driving positive traffic growth through our continued commitment to legendary food and service."

Outlook for 2010

The Company reported that comparable restaurant sales for the first four weeks of the third quarter of fiscal 2010 increased 3.0% compared to the same period a year ago.

The Company estimates 2010 diluted earnings per share growth will be approximately 16% to 20% compared to 2009. This estimate is based, in part, on the following assumptions:

  • Comparable restaurant sales growth of approximately 1.0%;
  • 14 to 15 company restaurant openings;
  • Food cost deflation of approximately 2.5% to 3.0%; and
  • Total capital expenditures of approximately $50 million.

Conference Call

The Company is hosting a conference call today, August 2, 2010, at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (877) 723-9517 or (719) 325-4819 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 8534928 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 330 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 development or 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 29, 2010   June 30, 2009    June 29, 2010     June 30, 2009
                                                                   --------------- ---------------  --------------- ------------------
Revenue:
    Restaurant sales                                                    $ 252,835       $ 240,301        $ 510,177     $ 484,391
    Franchise royalties and fees                                            2,327           2,122            4,609         4,105
                                                                          -------         -------          -------       -------
Total revenue                                                             255,162         242,423          514,786       488,496
                                                                          -------         -------          -------       -------
Costs and expenses:
    Restaurant operating costs:
        Cost of sales                                                      82,660          80,314          165,459       163,355
        Labor                                                              74,497          71,074          149,406       142,573
        Rent                                                                5,287           4,929           10,557         9,841
        Other operating                                                    42,767          39,812           85,365        80,672
    Pre-opening                                                             1,307             933            2,412         3,217
    Depreciation and amortization                                          10,262          10,616           20,599        21,087
    Impairment and closure                                                    100              14              258           (72 )
    General and administrative                                             14,953          13,237           27,295        24,046
                                                                          -------         -------          -------       -------
Total costs and expenses                                                  231,833         220,929          461,351       444,719
                                                                          -------         -------          -------       -------
Income from operations                                                     23,329          21,494           53,435        43,777
Interest expense, net                                                         704             876            1,434         1,733
Equity income from investments in unconsolidated affiliates                    92              64              200           149
                                                                          -------         -------          -------       -------
Income before taxes                                                        22,717          20,682           52,201        42,193
Provision for income taxes                                                  7,049           6,436           16,655        13,151
                                                                          -------         -------          -------       -------
Net income including noncontrolling interests                           $  15,668       $  14,246        $  35,546     $  29,042
Less: Net income attributable to noncontrolling interests                     632             505            1,269           967
                                                                          -------         -------          -------       -------
Net income attributable to Texas Roadhouse, Inc. and subsidiaries       $  15,036       $  13,741        $  34,277     $  28,075
                                                                   ====== =======  ====== =======   ====== =======  ==== =======
Net income per common share attributable to Texas Roadhouse, Inc.
and subsidiaries:
    Basic                                                               $    0.21       $    0.20        $    0.48     $    0.40
                                                                   ====== =======  ====== =======   ====== =======  ==== =======
    Diluted                                                             $    0.21       $    0.19        $    0.47     $    0.40
                                                                   ====== =======  ====== =======   ====== =======  ==== =======
Weighted average shares outstanding:
    Basic                                                                  71,471          69,909           71,076        69,666
                                                                          =======         =======          =======       =======
    Diluted                                                                72,961          71,361           72,587        70,948
                                                                          =======         =======          =======       =======
                                 Texas Roadhouse, Inc. and Subsidiaries
                                  Condensed Consolidated Balance Sheet
                                             (in thousands)
                                                                      June 29, 2010    December 29, 2009
                                                                     ---------------  ------------------
Cash and cash equivalents                                                 $  60,235          $   46,858
Other current assets                                                         27,763              27,458
Property and equipment, net                                                 453,365             456,281
Goodwill                                                                    113,465             113,465
Intangible asset, net                                                        10,656              11,194
Other assets                                                                  7,103               6,817
Total assets                                                              $ 672,587          $  662,073
                                                                     ====== =======   ======== ========
Current maturities of long-term debt and obligations under capital              260                 247
leases
Other current liabilities                                                    91,416             107,956
Long-term debt and obligations under capital leases, excluding               79,046             101,179
current maturities
Other liabilities                                                            36,342              29,741
Texas Roadhouse, Inc. and subsidiaries stockholders' equity                 462,835             420,372
Noncontrolling interests                                                      2,688               2,578
Total liabilities and equity                                              $ 672,587          $  662,073
                                                                     ====== =======   ======== ========
                                 Texas Roadhouse, Inc. and Subsidiaries
                             Condensed Consolidated Statements of Cash Flows
                                  (in thousands, except per share data)
                                               (unaudited)
                                                                               26 Weeks Ended
                                                                    -------------------------------------
                                                                       June 29, 2010      June 30, 2009
                                                                    ------------------ ------------------
Cash flows from operating activities:
Net income including noncontrolling interests                          $  35,546          $  29,042
Adjustments to reconcile net income to net cash provided by
operating activities
    Depreciation and amortization                                         20,599             21,087
    Share-based compensation expense                                       3,736              3,814
    Other noncash adjustments                                                300              1,497
Change in working capital                                                (11,853 )           (8,914 )
                                                                         ------- ----       ------- ----
    Net cash provided by operating activities                             48,328             46,526
                                                                         -------            -------
Cash flows from investing activities:
Capital expenditures - property and equipment                            (17,967 )          (22,526 )
Acquisition of franchise restaurants, net of cash acquired                     -                 50
Proceeds from sale of property and equipment, including insurance             51                120
proceeds
                                                                         -------            -------
    Net cash used in investing activities                                (17,916 )          (22,356 )
                                                                         ------- ----       ------- ----
Cash flows from financing activities:
Repayments of revolving credit facility, net                             (22,000 )           (6,000 )
Other financing activities                                                 4,965              1,551
                                                                         -------            -------
    Net cash used in financing activities                                (17,035 )           (4,449 )
                                                                         ------- ----       ------- ----
    Net increase in cash and cash equivalents                             13,377             19,721
Cash and cash equivalents - beginning of year                             46,858              5,258
                                                                         -------            -------
Cash and cash equivalents - end of year                                $  60,235          $  24,979
                                                                    ==== =======       ==== =======
                                               Supplemental Financial and Operating Information
                                                           ($ amounts in thousands)
                                                                  (unaudited)
                                                     Second Quarter             Change                 Year to Date               Change
                                                  2010             2009          vs LY             2010             2009           vs LY
                                             --------------   --------------   ---------      --------------   --------------   ----------
Restaurant openings
    Company                                           1                2         (1 )                  4               11          (7 )
    Franchise                                         1                1          0                    1                1           0
    Total                                             2                3         (1 )                  5               12          (7 )
Restaurant closures
    Company                                          (1 )              0         (1 )                 (1 )              0          (1 )
    Franchise                                         0               (1 )        1                    0               (1 )         1
    Total                                            (1 )             (1 )        0                   (1 )             (1 )         0
Restaurants open at the end of the quarter
    Company                                         264              256          8
    Franchise                                        71               69          2
    Total                                           335              325         10
Company-owned restaurants
    Restaurant sales                          $ 252,835        $ 240,301        5.2     %      $ 510,177        $ 484,391         5.3     %
    Store weeks                                   3,432            3,313        3.6     %          6,844            6,562         4.3     %
    Comparable restaurant sales growth (1)          1.4    %        (3.7 )  %                        0.9    %        (2.4 )  %
    Average unit volume (2)                   $     952        $     939        1.4     %      $   1,925        $   1,914         0.6     %
    Restaurant operating costs (as a % of restaurant sales)
    Cost of sales                                  32.7    %        33.4    %   (73 )   bps         32.4    %        33.7    %   (129 )   bps
    Labor                                          29.5    %        29.6    %   (11 )   bps         29.3    %        29.4    %    (15 )   bps
    Rent                                            2.1    %         2.1    %     4     bps          2.1    %         2.0    %      4     bps
    Other operating                                16.9    %        16.6    %    35     bps         16.7    %        16.7    %      8     bps
    Total                                          81.2    %        81.6    %   (45 )   bps         80.5    %        81.8    %   (132 )   bps
    Restaurant margins (3)                         18.8    %        18.4    %    45     bps         19.5    %        18.2    %    132     bps
Franchise-owned restaurants
    Franchise royalties and fees              $   2,327        $   2,122        9.7     %      $   4,609        $   4,105        12.3     %
    Store weeks                                     911              897        1.6     %          1,821            1,794         1.5     %
    Comparable restaurant sales growth (1)          2.0    %        (3.5 )  %                        1.4    %        (2.7 )  %
    Average unit volume (2)                   $     951        $     927        2.6     %      $   1,900        $   1,873         1.4     %
Pre-opening expense                           $   1,307        $     933       40.1     %      $   2,412        $   3,217       (25.0 )   %
Depreciation and amortization                 $  10,262        $  10,616       (3.3 )   %      $  20,599        $  21,087        (2.3 )   %
    As a % of revenue                               4.0    %         4.4    %   (36 )   bps          4.0    %         4.3    %    (32 )   bps
Impairment and closure                        $     100        $      14         NM            $     258        $     (72 )        NM
    As a % of revenue                               0.0    %         0.0    %     3     bps          0.1    %        (0.0 )  %      6     bps
General and administrative expenses           $  14,953        $  13,237       13.0     %      $  27,295        $  24,046        13.5     %
    As a % of revenue                               5.9    %         5.5    %    40     bps          5.3    %         4.9    %     38     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 2009 and 2009
              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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