Texas Roadhouse, Inc. Announces Third Quarter 2012 Results

LOUISVILLE, Ky. - (BUSINESS WIRE) - Nov. 1, 2012 - Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 39 week periods ended September 25, 2012.

    Third Quarter   Year to Date
($000's)     2012     2011   % Change     2012     2011   % Change
                         
Total revenue     308,656     269,253   15     953,800     832,610   15
Income from operations (1)     27,734     23,072   20     88,383     77,029   15
Net income (1)     18,067     15,798   14     57,246     51,667   11
Diluted EPS (1)   $ 0.25   $ 0.22   15   $ 0.80   $ 0.71   13
             
(1) 2012 YTD includes a charge related to a legal settlement discussed below.
             

Results for the third quarter included:

  • Comparable restaurant sales increased 3.6% at company restaurants and 4.9% at franchise restaurants;
  • Three company restaurants were opened;
  • Restaurant margins, as a percentage of restaurant sales, decreased 8 basis points to 17.9%; and
  • Diluted earnings per share increased 15% to $0.25 from $0.22 in the prior year.

Results year-to-date included:

  • Comparable restaurant sales increased 4.8% at company restaurants and 5.5% at franchise restaurants;
  • 18 company restaurants were opened;
  • Restaurant margins, as a percentage of restaurant sales, increased 24 basis points to 18.7%;
  • As previously disclosed, the Company recorded a one-time, pre-tax charge of $5.0 million ($3.1 million after-tax) in the first quarter of 2012 for a legal settlement, which had a $0.04 impact on diluted earnings per share; and
  • Before the previously disclosed first quarter charge, diluted earnings per share increased 18% to $0.84 from $0.71 in the prior year.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, commented, “We are pleased to report double-digit revenue and earnings per share growth in the third quarter, despite a challenging consumer environment and continued commodity cost pressures. Our success is a direct result of our operators’ dedication to delivering legendary food and legendary service to our guests. Development remains on track in 2012 with approximately 25 new company openings and we expect to increase that number to approximately 28 new company restaurants in 2013. We will continue to focus on our long-term growth potential and brand positioning, and we are pleased that our strong balance sheet and cash flow allow us to internally fund our new restaurant growth and return excess 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 fourth quarter of fiscal 2012 increased approximately 3.0% compared to the prior year period.

The Company updated its guidance to the high end of the previous range of $0.94 to $0.96 for GAAP diluted earnings per share for 2012, which includes the legal settlement charge discussed below. This compares to diluted earnings per share of $0.88 in 2011. This full year guidance is based, in part, on the following assumptions and other information:

  • Comparable restaurant sales growth of 4.0% to 4.5%;
  • Approximately 25 company restaurant openings;
  • Food cost inflation of 6.5% to 7.0% compared to our previous expectation of 7.0%;
  • A pre-tax charge of $5.0 million ($3.1 million after-tax) relating to a legal settlement. This charge was recorded in the first quarter of 2012 and is expected to negatively impact full year 2012 diluted earnings per share by approximately $0.04;
  • An income tax rate of 32.5% to 33.0%, which is 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; and
  • Total capital expenditures of approximately $90.0 million.

2013 Outlook

While the Company is still finalizing its plans related to 2013, management is providing the following preliminary expectations:

  • Positive comparable restaurant sales growth;
  • Approximately 28 company restaurant openings;
  • Food cost inflation of 5.0% to 8.0%;
  • An income tax rate of 32.5% to 33.0%;
  • Total capital expenditures of $100.0 to $110.0 million.

Conference Call

The Company is hosting a conference call today, November 1, 2012, at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (800) 401-3551 or (913) 312-0833 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 9444415 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 385 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, pending or future legal claims, 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 25, 2012     September 27, 2011     September 25, 2012     September 27, 2011
                       
Revenue:                      
Restaurant sales   $ 306,025     $ 266,874     $ 945,583     $ 825,283
Franchise royalties and fees     2,631       2,379       8,217       7,327
                       
Total revenue     308,656       269,253       953,800       832,610
                       
Costs and expenses:                      
Restaurant operating costs:                      
Cost of sales     102,930       88,944       319,445       274,751
Labor     91,507       78,919       278,089       244,551
Rent     6,489       5,796       19,120       17,153
Other operating     50,183       45,112       151,967       136,331
Pre-opening     2,458       3,327       8,823       7,413
Depreciation and amortization     11,828       10,571       34,721       31,724
Impairment and closure     24       13       63       59
General and administrative     15,503       13,499       53,189       43,599
                       
Total costs and expenses     280,922       246,181       865,417       755,581
                       
Income from operations     27,734       23,072       88,383       77,029
                       
Interest expense, net     603       669       1,776       1,776

Equity income from investments in unconsolidated affiliates

    141       71       303       271
                       
Income before taxes     27,272       22,474       86,910       75,524
Provision for income taxes     8,778       6,058       27,815       21,934
                       
Net income including noncontrolling interests (1)   $ 18,494     $ 16,416     $ 59,095     $ 53,590
Less: Net income attributable to noncontrolling interests     427       618       1,849       1,923
Net income attributable to Texas Roadhouse, Inc. and subsidiaries   $ 18,067     $ 15,798     $ 57,246     $ 51,667
                       

Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:

                     
Basic   $ 0.26     $ 0.22     $ 0.82     $ 0.72
Diluted   $ 0.25     $ 0.22     $ 0.80     $ 0.71
                       
Weighted average shares outstanding:                      
Basic     70,482       70,800       70,004       71,370
Diluted     71,928       72,186       71,480       72,903
                               

(1) Results for the 39 weeks ended September 25, 2012 include a $5.0 million charge, before the statutory income tax rate, relating to the settlement of a legal matter. The settlement is included in general and administrative costs.

Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
           
           
           
    (unaudited)      
    September 25, 2012     December 27, 2011
           
           
Cash and cash equivalents   $ 84,320     $ 73,731
Other current assets     34,050       38,243
Property and equipment, net     523,482       497,217
Goodwill     110,946       110,946
Intangible assets, net     8,235       9,042
Other assets     13,464       11,491
           
Total assets   $ 774,497     $ 740,670
           
           

Current maturities of long-term debt and obligations under capital leases

    329       304
Other current liabilities     120,324       136,068

Long-term debt and obligations under capital leases, excluding current maturities

    51,352       61,601
Other liabilities     47,176       46,875
Texas Roadhouse, Inc. and subsidiaries stockholders' equity     549,916       491,904
Noncontrolling interests     5,400       3,918
           
Total liabilities and equity   $ 774,497     $ 740,670
           
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
           
           
    39 Weeks Ended
    September 25, 2012     September 25, 2011
           
           
Cash flows from operating activities:          
Net income including noncontrolling interests   $ 59,095       $ 53,590  
Adjustments to reconcile net income to net cash provided by operating activities          
Depreciation and amortization     34,721         31,724  
Share-based compensation expense     9,754         8,151  
Other noncash adjustments     (3,630 )       1,145  
Change in working capital     (7,675 )       (13,601 )
Net cash provided by operating activities     92,265         81,009  
           
Cash flows from investing activities:          
Capital expenditures - property and equipment     (63,146 )       (51,839 )
Proceeds from sale of property and equipment, including insurance proceeds     255         171  
Net cash used in investing activities     (62,891 )       (51,668 )
           
Cash flows from financing activities:          
(Repayments) of revolving credit facility, net     (10,000 )       -  
Repurchase shares of common stock     -         (46,445 )
Dividends paid     (18,134 )       (11,399 )
Other financing activities     9,349         1,961  
Net cash used in financing activities     (18,785 )       (55,883 )
           
Net increase (decrease) in cash and cash equivalents     10,589         (26,542 )
Cash and cash equivalents - beginning of year     73,731         82,215  
Cash and cash equivalents - end of year   $ 84,320       $ 55,673  
                   
Texas Roadhouse, Inc. and Subsidiaries
Supplemental Financial and Operating Information
($ amounts in thousands, except weekly sales by group)
(unaudited)
                                               
                                               
    Third Quarter       Change       Year to Date       Change  
      2012         2011       vs LY         2012         2011       vs LY  
                                               
Restaurant openings                                              
Company - Texas Roadhouse     3         5       (2 )         18         10       8    
Company - Aspen Creek     0         0       0           0         0       0    
Franchise - Texas Roadhouse     0         1       (1 )         0         1       (1 )  
Total     3         6       (3 )         18         11       7    
                                               
Restaurants open at the end of the quarter                                              
Company - Texas Roadhouse     309         281       28                            
Company - Aspen Creek     3         3       0                            
Franchise - Texas Roadhouse     72         72       0                            
Total     384         356       28                            
                                               
Company-owned restaurants                                              
Restaurant sales   $ 306,025       $ 266,874       14.7     %   $ 945,583       $ 825,283       14.6   %
Store weeks     4,041         3,643       10.9     %     11,854         10,818       9.6   %
Comparable restaurant sales growth (1)     3.6   %     4.0   %             4.8   %     4.4   %      
Texas Roadhouse restaurants only:                                              
Comparable restaurant sales growth (1)     3.6   %     4.1   %             4.8   %     4.4   %      
Average unit volume (2)   $ 983       $ 952       3.3     %   $ 3,102       $ 2,972       4.4   %
Weekly sales by group:                                              
Comparable restaurants (271 units)   $ 75,846                                          
Average unit volume restaurants (20 units)   $ 72,928                                          
Restaurants less than 6 months old (18 units)   $ 81,117                                          
                                               
Restaurant operating costs (as a % of restaurant sales)                                              
Cost of sales     33.6   %     33.3   %   31     bps     33.8   %     33.3   %   49   bps
Labor     29.9   %     29.6   %   33     bps     29.4   %     29.6   %   (22 ) bps
Rent     2.1   %     2.2   %   (5 )   bps     2.0   %     2.1   %   (6 ) bps
Other operating     16.4   %     16.9   %   (51 )   bps     16.1   %     16.5   %   (45 ) bps
Total     82.1   %     82.0   %   8     bps     81.3   %     81.5   %   (24 ) bps
                                               
Restaurant margins (3)     17.9   %     18.0   %   (8 )   bps     18.7   %     18.5   %   24   bps
                                               
Franchise-owned restaurants                                              
Franchise royalties and fees   $ 2,631       $ 2,379       10.6     %   $ 8,217       $ 7,327       12.1   %
Store weeks     936         927       1.0     %     2,808         2,773       1.3   %
Comparable restaurant sales growth (1)     4.9   %     3.7   %             5.5   %     3.9   %      
Average unit volume (2)   $ 998       $ 935       6.7     %   $ 3,073       $ 2,906       5.7   %
                                               
Pre-opening expense   $ 2,458       $ 3,327       (26.1 )   %   $ 8,823       $ 7,413       19.0   %
                                               
Depreciation and amortization   $ 11,828       $ 10,571       11.9     %   $ 34,721       $ 31,724       9.4   %
As a % of revenue     3.8   %     3.9   %   (9 )   bps     3.6   %     3.8   %   (17 ) bps
                                               
General and administrative expenses (4)   $ 15,503       $ 13,499       14.8     %   $ 53,189       $ 43,599       22.0   %
As a % of revenue     5.0   %     5.0   %   1     bps     5.6   %     5.2   %   34   bps
                                                           
(1) Comparable restaurant sales growth includes sales from domestic 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 domestic Texas Roadhouse restaurants open six months as of the beginning of the measurement period, excluding sales from restaurants closed during the period.
(3) Restaurant margins represent restaurant sales less restaurant operating costs (as a percentage of restaurant sales).
(4) Results for the 39 weeks ended September 25, 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 further detail throughout this document.

The Company used earnings before the impact of the 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 impact of 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 39 weeks ended September 25, 2012.

    For the 39 weeks ended
    September 25, 2012   September 27, 2011
         
Net income attributable to Texas Roadhouse, Inc. and subsidiaries, excluding settlement charge   $ 60,308   $ 51,667
Amount reserved for settlement of a legal matter, net of tax (1)   $ (3,062 ) $
Net income attributable to Texas Roadhouse, Inc. and subsidiaries   $ 57,246   $ 51,667
         
Weighted average diluted shares outstanding   71,480   72,903
         
Diluted earnings per share, excluding settlement charge   $ 0.84   $ 0.71
Impact of settlement charge on diluted earnings per share   $ (0.04 ) $
    $ 0.80   $ 0.71

 

(1) Amount reserved in the first quarter of 2012 for the settlement of a legal matter was $5.0 million before the statutory income tax rate. The settlement is included in general administrative costs in our condensed consolidated statements of income and comprehensive income.

Source: Texas Roadhouse, Inc.

Contacts:

Investor Relations
Tonya Robinson
502-515-7300

Media
Travis Doster
502-638-5457

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Texas Roadhouse Inc.'s business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.

###

Share this Story:

Comments:

comments powered by Disqus

Franchise News Room »


News By Industry »


Featured Opportunities

the inside coup
the inside coup™ is a unique franchise opportunity in a multi billion dollar industry, Direct Mail.
RetroFitness
Retro Fitness is well positioned for today's economy and to dominate the low cost segment by offering a high quality and value add product in...
American Family Care
The demand for health care services increases every year. People want and need access to health care on their terms - which usually means immediately!
Image360
As owner of an Image360 Center offering signage and graphic solutions, you’ll enjoy the work/life balance of a business-to-business enterprise...
Liberty Burger
Seriously Good Burgers. Awarding Multi-Unit Territories in Texas and surrounding states. (DFW Sold-out) Excellent food, drinks & ROI. We taste...

Subscribe to Franchising.com Express

A Franchise Update Media Production
Franchise Update Media | P.O. Box 20547 // San Jose, CA 95160 // PH. (408) 402-5681
Copyright © 2001 - 2017. All Rights Reserved.

In Loving Memory Of Timothy Gardner (1987-2014)