Texas Roadhouse, Inc. Announces First Quarter 2012 Results

LOUISVILLE, Ky., Apr 30, 2012 (BUSINESS WIRE) --Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 week period ended March 27, 2012.

    First Quarter
($000's)   2012     2011   % Change  
             
Total revenue   324,869     283,785   14  
Income from operations (1)   29,402     30,209   (3)  
Net income (1)   18,869     19,793   (5)  
Diluted EPS (1) $    0.27      0.27   (1)  

(1) includes a charge related to a legal settlement discussed below

Results for the first quarter included:

  • Before a one-time charge, diluted earnings per share increased 15.3% to $0.31 from $0.27 in the prior year period;
  • The Company recorded a one-time, pre-tax charge of $5.0 million ($3.1 million after-tax) for a legal settlement, which had a $0.04 impact on diluted earnings per share;
  • Comparable restaurant sales increased 6.0% at company restaurants and 6.9% at franchise restaurants;
  • Eight company restaurants were opened;
  • Restaurant margins, as a percentage of restaurant sales, decreased 13 basis points to 19.1%.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, commented, "We were pleased with our performance during the period and believe that Texas Roadhouse remains very well poised for continued growth. Our sales momentum continued throughout the quarter for both existing and new restaurants, and we remain on track to open 25 restaurants in 2012. Additionally, we continue to work toward at least 25 new restaurant openings in 2013. Finally, our balance sheet remains strong and we will continue to evaluate ways to return capital to shareholders through dividends and share repurchases."

2012 Outlook

The Company reported that comparable restaurant sales at company restaurants for the first four weeks of its second quarter of fiscal 2012 increased approximately 4.8% compared to the prior year period.

The Company currently anticipates that GAAP diluted earnings per share for 2012, which includes the legal settlement charge discussed below, will be $0.91 to $0.93. This compares to diluted earnings per share of $0.88 in 2011. The updated guidance is based, in part, on the following assumptions:

  • Comparable restaurant sales growth of 4.0% to 5.0%;
  • 25 company restaurant openings;
  • Food cost inflation of 7.0% to 7.5%, slightly lower than previously expected;
  • A pre-tax charge of $5.0 million ($3.1 million after-tax) for a legal settlement. This charge is expected to negatively impact 2012 diluted earnings per share by approximately $0.04;
  • An income tax rate of 32.5% to 33.0%, which is much higher than the prior year rate of 29.5% as a result of the expiration of certain federal tax credits at the end of 2011. The increased tax rate is expected to negatively impact 2012 diluted earnings per share by approximately $0.04; and
  • Total capital expenditures of $80.0 to $85.0 million.

Settlement of a Legal Matter

The Company reached a settlement agreement, subject to court approval, of a previously disclosed legal matter relating to Massachusetts wage law. Accordingly, a pre-tax charge of $5.0 million, or $0.04 per diluted earnings per share, is included in the Company's financial results for the first quarter. A reconciliation of GAAP and non-GAAP information for the first quarter of fiscal 2012 is included with this release.

Conference Call

The Company is hosting a conference call today, April 30, 2012, at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (888) 811-5436 or (913) 312-0947 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 8483988 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 370 restaurants system-wide in 47 states and one foreign country. 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, 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
      March 27, 2012   March 29, 2011
             
Revenue:        
  Restaurant sales $ 322,012     $ 281,320
  Franchise royalties and fees      2,857          2,465
             
Total revenue   324,869       283,785
             
Costs and expenses:        
  Restaurant operating costs:        
    Cost of sales   109,655        93,541
    Labor     93,347        82,720
    Rent      6,252         5,657
    Other operating    51,229        45,281
  Pre-opening     3,585         1,890
  Depreciation and amortization    11,347        10,600
  Impairment and closure          19              26
  General and administrative (1)    20,033        13,861
             
Total costs and expenses   295,467       253,576
             
Income from operations    29,402        30,209
             
Interest expense, net         605             565
Equity income from investments in        
  unconsolidated affiliates           41             103
             
Income before taxes    28,838        29,747
Provision for income taxes     9,085         9,272
             
Net income including noncontrolling interests $  19,753     $  20,475
Less: Net income attributable to noncontrolling interests         884             682
Net income attributable to Texas Roadhouse, Inc. and subsidiaries $  18,869     $  19,793
             
Net income per common share attributable to Texas Roadhouse, Inc.    
and subsidiaries:        
  Basic $ 0.27     $ 0.27
  Diluted $ 0.27     $ 0.27
             
Weighted average shares outstanding:        
  Basic   69,405       72,052
  Diluted   70,830       73,727
             
             

(1) Results for the 13 weeks ended March 27, 2012 include a $5.0 million pre-tax charge relating to the settlement of a legal matter.

Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
               
        (unaudited)      
        March 27, 2012     December 27, 2011
               
               
  Cash and cash equivalents   $  77,322     $  73,731
  Other current assets      35,497        38,243
  Property and equipment, net     507,873       497,217
  Goodwill     110,946       110,946
  Intangible assets, net         8,773           9,042
  Other assets      12,329        11,491
               
  Total assets   $ 752,740     $ 740,670
               
               
  Current maturities of long-term debt          
    and obligations under capital leases           312             304
  Other current liabilities     137,333       136,068
  Long-term debt and obligations under          
    capital leases, excluding current maturities      51,520        61,601
  Other liabilities      47,959        46,875
  Texas Roadhouse, Inc. and subsidiaries stockholders' equity   510,568       491,904
  Noncontrolling interests        5,048          3,918
               
  Total liabilities and equity   $ 752,740     $ 740,670
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
               
               
        13 Weeks Ended
        March 27, 2012     March 29, 2011
               
               
Cash flows from operating activities:          
Net income including noncontrolling interests   $ 19,753       $ 20,475  
Adjustments to reconcile net income to net cash provided by operating activities          
  Depreciation and amortization     11,347         10,600  
  Share-based compensation expense      3,053          2,960  
  Other noncash adjustments     (1,781)             172  
Change in working capital      6,388         (2,071)  
    Net cash provided by operating activities     38,760         32,136  
               
Cash flows from investing activities:          
Capital expenditures - property and equipment     (22,839)         (12,458)  
Proceeds from sale of property and equipment, including insurance proceeds            98                 49  
    Net cash used in investing activities     (22,741)         (12,409)  
               
Cash flows from financing activities:          
Proceeds (repayments) of revolving credit facility, net     (10,000)         -  
Repurchase shares of common stock     -         (25,269)  
Dividends paid      (5,535)         -  
Other financing activities        3,107               747  
    Net cash used in financing activities     (12,428)         (24,522)  
               
    Net (decrease) increase in cash and cash equivalents       3,591          (4,795)  
Cash and cash equivalents - beginning of year      73,731          82,215  
Cash and cash equivalents - end of year   $  77,322       $  77,420  

Texas Roadhouse, Inc. and Subsidiaries

Supplemental Financial and Operating Information

($ amounts in thousands, except weekly sales by group)

(unaudited)

                 
      First Quarter   Change  
        2012     2011   vs LY  
                 
Restaurant openings            
  Company - Texas Roadhouse   8     2   6    
  Company - Aspen Creek   0     0   0    
  Franchise - Texas Roadhouse   0     0   0    
  Total   8     2   6    
                 
Restaurants open at the end of the quarter            
  Company - Texas Roadhouse   299     273   26    
  Company - Aspen Creek   3     3   0    
  Franchise - Texas Roadhouse   72     71   1    
  Total   374     347   27    
                 
Company-owned restaurants            
  Restaurant sales $ 322,012   $ 281,320   14.5   %
  Store weeks   3,851     3,568   7.9   %
  Comparable restaurant sales growth (1)   6.0 %   4.6 %    
  Texas Roadhouse restaurants only:            
    Comparable restaurant sales growth (1)   6.0 %   4.6 %    
    Average unit volume (2)

$

1,081

  $ 1,022   5.7   %
    Weekly sales by group (3):            
    Comparable restaurants (263 units) $ 83,395          
    Average unit volume restaurants (13 units) $ 77,678          
    Restaurants less than 6 months old (23 units) $ 95,927          
                 
Restaurant operating costs (as a % of restaurant sales)          
Cost of sales   34.1 %   33.3 %  80   bps
Labor     29.0 %   29.4 % (42)   bps
Rent      1.9 %    2.0 %  (7)   bps
Other operating   15.9 %   16.1 % (19)   bps
Total     80.9 %   80.8 %  13   bps
                 
  Restaurant margins (4)   19.1 %   19.2 % (13)   bps
                 
Franchise-owned restaurants            
  Franchise royalties and fees $ 2,857   $ 2,465   15.9   %
  Store weeks     936        923    1.4   %
  Comparable restaurant sales growth (1)   6.9 %   3.8 %    
  Average unit volume (2) $ 1,062   $    994   6.8   %
                 
Pre-opening expense $ 3,585   $ 1,890   89.7   %
                 
Depreciation and amortization $ 11,347   $ 10,600     7.0   %
  As a % of revenue   3.5 %   3.7 % (24)   bps
                 
General and administrative expenses (5) $ 20,033   $ 13,861   44.5   %
  As a % of revenue   6.2 %   4.9 % 128   bps
(1) Comparable restaurant sales growth includes sales from restaurants open 18 months as of the beginning of the measurement period, excluding sales from restaurants closed during the period.
(2) Average unit volume includes sales from Texas Roadhouse restaurants open six months as of the beginning of the measurement period, excluding sales from restaurants closed during the period.
(3) Weekly sales by group (Texas Roadhouse restaurants only) includes sales from comparable restaurants, sales from average unit restaurants and sales from restaurants which were open less than six months as of the beginning of the measurement period. Average unit volume restaurants includes sales from restaurants open less than 18 months, but more than six months, as of the beginning of the measurement period, excluding sales from restaurants closed during the period.
(4) Restaurant margins represent restaurant sales less restaurant operating costs (as a percentage of restaurant sales).

(5) Results for the 13 weeks ended March 27, 2012 include a $5.0 million pre-tax charge for the settlement of a legal matter.

 

Amounts may not foot due to rounding.

Texas Roadhouse, Inc. and Subsidiaries

Reconciliation of GAAP and Non-GAAP Information
(in thousands, except per share data)
(unaudited)
       

In addition to the results provided in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") throughout this document, the Company has provided non-GAAP measurements which present operating results on a basis before the impact of a settlement of a legal matter. This item is described in detail throughout this document.

       

The Company used earnings before the impact of the proposed legal settlement as a key performance measure of results of operations for purposes of evaluating performance internally. This non-GAAP measurement is not intended to replace the presentation of our financial results in accordance with GAAP. Rather, the Company believes that the presentation of results before the legal settlement provides additional information to facilitate the comparison of past and present operations, excluding items that the Company does not believe are indicative of our ongoing operations in the quarter ended March 27, 2012.

       
  For the 13 weeks Ended
  March 27, 2012   March 29, 2011
Net income attributable to Texas Roadhouse, Inc. and subsidiaries, excluding settlement charge $ 21,931     $ 19,793

Amount reserved for settlement of a legal matter, net of tax (1)

$ (3,062)     $ -
Net income attributable to Texas Roadhouse, Inc. and subsidiaries $ 18,869     $ 19,793
       
Weighted average diluted shares outstanding   70,830       73,727
       
Diluted earnings per share, excluding settlement charge $ 0.31     $ 0.27
Impact of settlement charge on diluted earnings per share $ (0.04)     $ -
Diluted earnings per share $ 0.27     $ 0.27
       

(1) Amount reserved in the first quarter of fiscal 2012 for the settlement of a legal matter was $5.0 million before the statutory income tax rate. The settlement amount was included in general and administrative costs on the Company's Condensed Consolidated Statements of Income and Comprehensive Income.

SOURCE: Texas Roadhouse, Inc.

Contacts:

Texas Roadhouse, Inc.

Investor Relations
Tonya Robinson, 502-515-7300

Media
Travis Doster, 502-638-5457

###

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