Texas Roadhouse, Inc. Announces Fourth Quarter 2012 Results and Increases Quarterly Dividend to $0.12 per Share

LOUISVILLE, Ky. - (BUSINESS WIRE) - Feb. 19, 2013 - Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 52 week periods ended December 25, 2012.

        Fourth Quarter       Year to Date
($000's)       2012     2011   % Change       2012     2011   % Change
                                     
Total revenue       309,531     276,616   12       1,263,331     1,109,226   14
Income from operations (1)       22,075     18,210   21       110,458     95,239   16
Net income (1)       13,924     12,297   13       71,170     63,964   11
Diluted EPS (1)       $0.19     $0.17   12       $1.00     $0.88   13
 
(1) 2012 YTD includes a charge related to a legal settlement discussed below.
 

Results for the fourth quarter included:

  • Comparable restaurant sales increased 4.4% at company restaurants and 4.5% at franchise restaurants;
  • Seven company and two franchise restaurants were opened;
  • Restaurant margins, as a percentage of restaurant sales, increased 74 basis points to 17.6%;
  • Diluted earnings per share increased 12% to $0.19 from $0.17 in the prior year; and
  • The Company repurchased 1,786,855 shares of its common stock for a total purchase price of $29.4 million.

Results year-to-date included:

  • Comparable restaurant sales increased 4.7% at company restaurants and 5.3% at franchise restaurants;
  • 25 company and two franchise restaurants were opened;
  • Restaurant margins, as a percentage of restaurant sales, increased 37 basis points to 18.4%;
  • 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;
  • Before the previously disclosed first quarter charge, diluted earnings per share increased 17% to $1.04 from $0.88 in the prior year; and
  • In the fourth quarter, the Company repurchased 1,786,855 shares of its common stock for a total purchase price of $29.4 million.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, commented, “We were very pleased to have finished 2012 on a strong note, with double-digit revenue and earnings per share growth. Despite the consumer and inflationary challenges, we achieved our third consecutive year of positive same-store sales growth and another year of increased store level profitability. In addition, our strong balance sheet and healthy cash flows enabled us to return $54 million of excess capital to shareholders through share repurchases and quarterly dividend payments. While we anticipate further commodity inflation in 2013, we believe our brand is well-positioned for future growth and feel confident about increasing our new restaurant growth for the third consecutive year.”

Franchise Acquisition

Effective December 25, 2012, the Company acquired two franchise restaurants in Illinois for an aggregate purchase price of $4.3 million. The purchase price was paid in cash. The acquisition did not have a net revenue or accretive impact in 2012 as it occurred on the last day of the Company’s 2012 fiscal year.

2013 Outlook

The Company reported that comparable restaurant sales at company restaurants for the first 55 days of its fiscal 2013 increased approximately 2.2% compared to the prior year period. Additionally, the Company announced that it implemented a menu price increase of approximately 2.0% across its restaurants in December 2012.

Management is providing the following expectations for 2013:

  • Positive comparable restaurant sales growth;
  • Approximately 28 company restaurant openings;
  • Food cost inflation of 6.0% to 7.0%;
  • An income tax rate of approximately 31.0%, which is lower than the prior year rate of 32.8% primarily as a result of the reinstatement of certain federal tax credits at the beginning of 2013; and
  • Total capital expenditures of $100.0 to $105.0 million.

Cash Dividend Payment

On February 14, 2013, the Company’s Board of Directors authorized the payment of a quarterly cash dividend of $0.12 per share of common stock. This payment, which will be distributed on March 29, 2013 to shareholders of record at the close of business on March 13, 2013, represents a 33% increase from the cash dividend of $0.09 per share of common stock declared during each quarter of 2012.

Conference Call

The Company is hosting a conference call today, February 19, 2013, at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (888) 710-4022 or (913) 312-1406 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 5918054 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 390 restaurants system-wide in 47 states and two foreign countries. 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; our ability to continue to generate the necessary cash flows to fund our new restaurant growth, continue our share repurchase program and pay a quarterly cash dividend; 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.


LOUISVILLE, Ky.--(BUSINESS WIRE)--Feb. 19, 2013-- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 52 week periods ended December 25, 2012.

        Fourth Quarter       Year to Date
($000's)       2012     2011   % Change       2012     2011   % Change
                                     
Total revenue       309,531     276,616   12       1,263,331     1,109,226   14
Income from operations (1)       22,075     18,210   21       110,458     95,239   16
Net income (1)       13,924     12,297   13       71,170     63,964   11
Diluted EPS (1)       $0.19     $0.17   12       $1.00     $0.88   13
 
(1) 2012 YTD includes a charge related to a legal settlement discussed below.
 

Results for the fourth quarter included:

  • Comparable restaurant sales increased 4.4% at company restaurants and 4.5% at franchise restaurants;
  • Seven company and two franchise restaurants were opened;
  • Restaurant margins, as a percentage of restaurant sales, increased 74 basis points to 17.6%;
  • Diluted earnings per share increased 12% to $0.19 from $0.17 in the prior year; and
  • The Company repurchased 1,786,855 shares of its common stock for a total purchase price of $29.4 million.

Results year-to-date included:

  • Comparable restaurant sales increased 4.7% at company restaurants and 5.3% at franchise restaurants;
  • 25 company and two franchise restaurants were opened;
  • Restaurant margins, as a percentage of restaurant sales, increased 37 basis points to 18.4%;
  • 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;
  • Before the previously disclosed first quarter charge, diluted earnings per share increased 17% to $1.04 from $0.88 in the prior year; and
  • In the fourth quarter, the Company repurchased 1,786,855 shares of its common stock for a total purchase price of $29.4 million.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, commented, “We were very pleased to have finished 2012 on a strong note, with double-digit revenue and earnings per share growth. Despite the consumer and inflationary challenges, we achieved our third consecutive year of positive same-store sales growth and another year of increased store level profitability. In addition, our strong balance sheet and healthy cash flows enabled us to return $54 million of excess capital to shareholders through share repurchases and quarterly dividend payments. While we anticipate further commodity inflation in 2013, we believe our brand is well-positioned for future growth and feel confident about increasing our new restaurant growth for the third consecutive year.”

Franchise Acquisition

Effective December 25, 2012, the Company acquired two franchise restaurants in Illinois for an aggregate purchase price of $4.3 million. The purchase price was paid in cash. The acquisition did not have a net revenue or accretive impact in 2012 as it occurred on the last day of the Company’s 2012 fiscal year.

2013 Outlook

The Company reported that comparable restaurant sales at company restaurants for the first 55 days of its fiscal 2013 increased approximately 2.2% compared to the prior year period. Additionally, the Company announced that it implemented a menu price increase of approximately 2.0% across its restaurants in December 2012.

Management is providing the following expectations for 2013:

  • Positive comparable restaurant sales growth;
  • Approximately 28 company restaurant openings;
  • Food cost inflation of 6.0% to 7.0%;
  • An income tax rate of approximately 31.0%, which is lower than the prior year rate of 32.8% primarily as a result of the reinstatement of certain federal tax credits at the beginning of 2013; and
  • Total capital expenditures of $100.0 to $105.0 million.

Cash Dividend Payment

On February 14, 2013, the Company’s Board of Directors authorized the payment of a quarterly cash dividend of $0.12 per share of common stock. This payment, which will be distributed on March 29, 2013 to shareholders of record at the close of business on March 13, 2013, represents a 33% increase from the cash dividend of $0.09 per share of common stock declared during each quarter of 2012.

Conference Call

The Company is hosting a conference call today, February 19, 2013, at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (888) 710-4022 or (913) 312-1406 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 5918054 as the pass code. There will be a simultaneous Web cast conducted atwww.texasroadhouse.com.

About the Company

Texas Roadhouse is a casual dining concept that first opened in 1993 and today operates over 390 restaurants system-wide in 47 states and two foreign countries. 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; our ability to continue to generate the necessary cash flows to fund our new restaurant growth, continue our share repurchase program and pay a quarterly cash dividend; 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     52 Weeks Ended
       

December 25,

2012

   

December 27,

2011

   

December 25,

2012

   

December 27,

2011

                           
Revenue:                      
  Restaurant sales   $ 306,775     $ 274,192     $ 1,252,358     $ 1,099,475
  Franchise royalties and fees     2,756       2,424       10,973       9,751
                           
Total revenue     309,531       276,616       1,263,331       1,109,226
                           
Costs and expenses:                      
 

Restaurant operating costs (excluding depreciation and

amortization shown separately below):

                     
                           
    Cost of sales     104,170       92,634       423,615       367,385
    Labor     89,674       81,682       367,763       326,233
    Rent     6,677       5,997       25,797       23,150
    Other operating     52,351       47,742       204,318       184,073
  Pre-opening     3,576       4,121       12,399       11,534
  Depreciation and amortization     11,996       10,985       46,717       42,709
  Impairment and closure     1,561       1,142       1,624       1,201
  General and administrative     17,451       14,103       70,640       57,702
                           
Total costs and expenses     287,456       258,406       1,152,873       1,013,987
                           
Income from operations     22,075       18,210       110,458       95,239
                           
Interest expense, net     571       637       2,347       2,413

Equity income from investments in unconsolidated affiliates

    125       95       428       366
                           
Income before taxes     21,629       17,668       108,539       93,192
Provision for income taxes     6,923       4,831       34,738       26,765
                           
Net income including noncontrolling interests (1)   $ 14,706     $ 12,837     $ 73,801     $ 66,427
Less: Net income attributable to noncontrolling interests     782       540       2,631       2,463
Net income attributable to Texas Roadhouse, Inc. and subsidiaries   $ 13,924     $ 12,297     $ 71,170     $ 63,964
                           
Net income per common share attributable to Texas Roadhouse, Inc.                      
and subsidiaries:                      
  Basic   $ 0.20     $ 0.18     $ 1.02     $ 0.90
  Diluted   $ 0.19     $ 0.17     $ 1.00     $ 0.88
                           
Weighted average shares outstanding:                      
  Basic     70,097       69,214       70,026       70,829
  Diluted     71,509       70,463       71,485       72,278
                         
(1) Results for the 52 weeks ended December 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)

               
       

December 25,

2012

   

December 27,

2011

               
               
Cash and cash equivalents     $ 81,746     $ 78,777
Other current assets       40,726       33,197
Property and equipment, net       531,654       497,217
Goodwill       113,435       110,946
Intangible assets, net       9,264       9,042
Other assets       14,429       11,491
               
Total assets     $ 791,254     $ 740,670
               
               
Current maturities of long-term debt            
  and obligations under capital leases       338       304
Other current liabilities       158,324       136,068
Long-term debt and obligations under            
  capital leases, excluding current maturities       51,264       61,601
Other liabilities       50,591       46,875
Texas Roadhouse, Inc. and subsidiaries stockholders' equity       525,084       491,904
Noncontrolling interests       5,653       3,918
               
Total liabilities and equity     $ 791,254     $ 740,670
                 
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
               
               
        52 Weeks Ended
       

December 25,

2012

   

December 27,

2011

               
               
Cash flows from operating activities:          
Net income including noncontrolling interests   $ 73,801       $ 66,427  
Adjustments to reconcile net income to net cash provided by operating activities          
  Depreciation and amortization     46,717         42,709  
  Share-based compensation expense     13,193         10,525  
  Other noncash adjustments     2,116         3,728  
Change in working capital     10,113         15,125  
    Net cash provided by operating activities     145,940         138,514  
               
Cash flows from investing activities:          
Capital expenditures - property and equipment     (84,879 )       (81,758 )
Acquisitions of franchise restaurants, net of cash acquired     (4,297 )       -  
Proceeds from sale of property and equipment, including insurance proceeds     1,128         188  
    Net cash used in investing activities     (88,048 )       (81,570 )
               
Cash flows from financing activities:          
(Repayments) of revolving credit facility, net     (10,000 )       10,000  
Repurchase shares of common stock     (29,421 )       (59,147 )
Dividends paid     (24,486 )       (17,012 )
Other financing activities     8,984         1,738  
    Net cash used in financing activities     (54,923 )       (64,421 )
               
    Net increase (decrease) in cash and cash equivalents     2,969         (7,477 )
Cash and cash equivalents - beginning of year     78,777         86,254  
Cash and cash equivalents - end of year   $ 81,746       $ 78,777  
           
Texas Roadhouse, Inc. and Subsidiaries
Supplemental Financial and Operating Information
($ amounts in thousands, except weekly sales by group)
(unaudited)
                                                     
                                                     
        Fourth Quarter       Change         Year to Date       Change    
        2012     2011       vs LY         2012       2011       vs LY    
                                                     
Restaurant openings                                                
  Company - Texas Roadhouse     7         10       (3 )           25           20       5      
  Company - Aspen Creek     0         0       0             0           0       0      
  Franchise - Texas Roadhouse     2         0       2             2           1       1      
  Total     9         10       (1 )           27           21       6      
                                                     
Restaurant acquisitions                                                
    Company     2         0       2             2           0       2      
    Franchise     (2 )       0       (2 )           (2 )         0       (2 )    
    Total     0         0       0             0           0       0      
                                                     
Restaurant closures                                                
  Company - Texas Roadhouse     0         0       0             0           0       0      
  Company - Aspen Creek     (1 )       0       (1 )           (1 )         0       (1 )    
  Franchise - Texas Roadhouse     0         0       0             0           0       0      
  Total     (1 )       0       (1 )           (1 )         0       (1 )    
                                                     
Restaurants open at the end of the quarter                                                
  Company - Texas Roadhouse     318         291       27                                
  Company - Aspen Creek     2         3       (1 )                              
  Franchise - Texas Roadhouse     72         72       0                                
  Total     392         366       26                                
                                                     
Company-owned restaurants                                                
  Restaurant sales   $ 306,775       $ 274,192       11.9     %     $ 1,252,358         $ 1,099,475       13.9     %
  Store weeks     4,082         3,755       8.7     %       15,936           14,573       9.4     %
  Comparable restaurant sales growth (1)     4.4   %     5.6   %               4.7     %     4.7   %        
  Texas Roadhouse restaurants only:                                                
    Comparable restaurant sales growth (1)     4.3   %     5.6   %               4.7     %     4.8   %        
    Average unit volume (2)   $ 978       $ 945       3.5     %     $ 4,085         $ 3,917       4.3     %
    Weekly sales by group:                                                
    Comparable restaurants (273 units)   $ 75,809                                              
    Average unit volume restaurants (26 units)   $ 68,944                                              
    Restaurants less than 6 months old (17 units)   $ 77,943                                              
                                                     
Restaurant operating costs (as a % of restaurant sales) (3)                                              
Cost of sales     34.0   %     33.8   %   17     bps       33.8     %     33.4   %   41     bps
Labor     29.2   %     29.8   %   (56 )   bps       29.4     %     29.7   %   (31 )   bps
Rent     2.2   %     2.2   %   (1 )   bps       2.1     %     2.1   %   (5 )   bps
Other operating     17.1   %     17.4   %   (35 )   bps       16.3     %     16.7   %   (43 )   bps
Total     82.4   %     83.2   %   (74 )   bps       81.6     %     81.9   %   (37 )   bps
                                                     
  Restaurant margins (4)     17.6   %     16.8   %   74     bps       18.4     %     18.1   %   37     bps
                                                     
Franchise-owned restaurants                                                
  Franchise royalties and fees   $ 2,756       $ 2,424       13.7     %     $ 10,973         $ 9,751       12.5     %
  Store weeks     954         936       1.9     %       3,762           3,709       1.4     %
  Comparable restaurant sales growth (1)     4.5   %     5.7   %               5.3     %     4.3   %        
  Average unit volume (2)   $ 1,000       $ 927       7.9     %     $ 4,042         $ 3,831       5.5     %
                                                     
Pre-opening expense   $ 3,576       $ 4,121       (13.2 )   %     $ 12,399         $ 11,534       7.5     %
                                                     
Depreciation and amortization   $ 11,996       $ 10,985       9.2     %     $ 46,717         $ 42,709       9.4     %
  As a % of revenue     3.9   %     4.0   %   (10 )   bps       3.7     %     3.9   %   (15 )   bps
                                                     
General and administrative expenses (5)   $ 17,451       $ 14,103       23.7     %     $ 70,640         $ 57,702       22.4     %
  As a % of revenue     5.6   %     5.1   %   54     bps       5.6     %     5.2   %   39     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) Depreciation and amortization expense, substantially all of which relates to restaurant-level assets, is excluded from restaurant operating costs and is shown separately as it represents a non-cash charge for the investment in our restaurants.
(4) Restaurant margins represent restaurant sales less cost of sales, labor, rent and other operating costs (as a percentage of restaurant sales). Restaurant margin is widely regarded in the restaurant industry as a useful metric by which to evaluate restaurant-level operating efficiency and performance. Restaurant margin is not a measurement determined in accordance with generally accepted accounting principles ("GAAP") and should not be considered in isolation, or as an alternative, to income from operations or other similarly titled measures of other companies.
(5) Results for the 52 weeks ended December 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 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 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 52 weeks ended December 25, 2012.

 

         
           
    For the 52 weeks Ended
    December 25, 2012   December 27, 2011
Net income attributable to Texas Roadhouse, Inc. and subsidiaries, excluding settlement charge   $ 74,232     $ 63,964  
Amount reserved for settlement of a legal matter, net of tax (1)   $ (3,062 )   $ -  
Net income attributable to Texas Roadhouse, Inc. and subsidiaries   $ 71,170     $ 63,964  
           
Weighted average diluted shares outstanding     71,485       72,278  
           
Diluted earnings per share, excluding settlement charge   $ 1.04     $ 0.88  
Impact of settlement charge on diluted earnings per share   $ (0.04 )   $ -  
Diluted earnings per share   $ 1.00     $ 0.88  
           

(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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