Texas Roadhouse, Inc. Announces Second Quarter 2013 Results

LOUISVILLE, Ky. - (BUSINESS WIRE) - Jul. 29, 2013 - Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 26 week periods ended June 25, 2013.

        Second Quarter       Year to Date
($000's)     2013     2012     % Change       2013     2012     % Change
                                         
Total revenue     352,119     320,275     10       711,795     645,144     10
Income from operations (a)     29,797     31,247     (5)       67,965     60,649     12
Net income (a)     19,963     20,310     (2)       46,134     39,179     18
Diluted EPS (a)     $0.28     $0.28     (1)       $0.65     $0.55     18
 
(a) 2012 YTD includes a charge related to a legal settlement discussed below.
 

Results for the second quarter included:

  • Diluted earnings per share remained relatively flat at $0.28 compared to the prior year period;
  • Comparable restaurant sales increased 4.5% at company restaurants and 5.3% at franchise restaurants;
  • Seven company restaurants and one franchise restaurant were opened;
  • Restaurant margin, as a percentage of restaurant sales, decreased 47 basis points to 18.6% primarily due to higher commodity costs; and
  • Higher than average spending on the Company’s annual managing partner conference, which marked its 20th anniversary, impacted year-over-year operating results for the quarter as costs were $2.3 million higher compared to the prior year period.

Results for the year-to-date included:

  • Excluding the impact of a prior year charge, diluted earnings per share increased 9.7% to $0.65 from $0.59 in the prior year. The year-to-date 2012 results included a pre-tax charge of $5.0 million ($3.1 million after-tax) which had a negative $0.04 impact on diluted earnings per share;
  • Comparable restaurant sales increased 4.1% at company restaurants and 4.5 % at franchise restaurants;
  • 10 company and three franchise restaurants were opened;
  • Restaurant margin, as a percentage of restaurant sales, decreased 32 basis points to 18.8%; and
  • Costs associated with the Company’s annual managing partner conference were $2.4 million higher compared to the prior year period.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, “We are pleased with our top-line momentum, which resulted in another quarter of solid revenue growth led by positive comparable restaurant sales. Our new restaurants continue to generate solid returns, and we are still generating sufficient cash flows to not only fund our restaurant growth, but also enhance our existing assets and return capital to shareholders. We are confident that our relentless focus on legendary food and service is the best way to continue driving market share gains in this economic environment.”

2013 Outlook

The Company reported that comparable restaurant sales at company restaurants for the first four weeks of its third quarter of fiscal 2013 increased 1.9% compared to the prior year period.

Management provided the following expectations for 2013:

  • Positive comparable restaurant sales growth;
  • Approximately 28 company restaurant openings;
  • Food cost inflation of 6.5% to 7.0%, which is updated from the previous expectation of 6.0% to 7.0%;
  • An income tax rate of 30.0% to 30.5% which is lower than the previous expectation of approximately 31.0%; and
  • Total capital expenditures of $100.0 to $105.0 million.

Conference Call

The Company is hosting a conference call today, July 29, 2013, at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (888) 277-7114 or (913) 312-6667 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 6656022 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 400 restaurants system-wide in 48 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, our ability to continue our share repurchase program and pay a quarterly cash dividend; strength of consumer spending; pending or future legal claims; conditions beyond our control such as weather, natural disasters, disease outbreaks, epidemics or pandemics impacting our customers or food supplies; acts of war or terrorism and other factors disclosed from time to time in our filings with the U.S. Securities and Exchange Commission. Investors should take such risks into account when making investment decisions. Shareholders 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. We undertake no obligation to update any forward-looking statements.

(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.

                         
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
                         
      13 Weeks Ended     26 Weeks Ended
      June 25, 2013     June 26, 2012     June 25, 2013     June 26, 2012
                         
Revenue:                        
Restaurant sales     $ 348,929     $ 317,546     $ 705,493     $ 639,558
Franchise royalties and fees       3,190       2,729       6,302       5,586
                         
Total revenue       352,119       320,275       711,795       645,144
                         
Costs and expenses:                        
Restaurant operating costs (excluding depreciation and amortization shown separately below):                      
                         
Cost of sales       120,212       106,860       244,764       216,515
Labor       101,723       93,235       203,384       186,582
Rent       7,152       6,379       14,209       12,631
Other operating       54,989       50,555       110,767       101,784
Pre-opening       4,240       2,780       7,064       6,365
Depreciation and amortization       12,190       11,546       24,402       22,893
Impairment and closure       27       20       84       39
General and administrative (1)       21,789       17,653       39,156       37,686
                         
Total costs and expenses       322,322       289,028       643,830       584,495
                         
Income from operations (1)       29,797       31,247       67,965       60,649
                         
Interest expense, net       567       568       1,162       1,173
Equity income from investments in                        
unconsolidated affiliates       218       121       398       162
                         
Income before taxes (1)       29,448       30,800       67,201       59,638
Provision for income taxes       8,583       9,952       19,117       19,037
                         
Net income including noncontrolling interests (1)     $ 20,865     $ 20,848     $ 48,084     $ 40,601
Less: Net income attributable to noncontrolling interests       902       538       1,950       1,422
Net income attributable to Texas Roadhouse, Inc. and subsidiaries (1)     $ 19,963     $ 20,310     $ 46,134     $ 39,179
                         
Net income per common share attributable to Texas Roadhouse, Inc.                        
and subsidiaries:                        
Basic     $ 0.29     $ 0.29     $ 0.66     $ 0.56
Diluted     $ 0.28     $ 0.28     $ 0.65     $ 0.55
                         
Weighted average shares outstanding:                        
Basic       70,030       70,129       69,693       69,763
Diluted       71,267       71,587       70,924       71,247
                         

(1) Results for the 26 weeks ended June 26, 2012 include a $5.0 million charge ($3.1 million after-tax) relating to the settlement of a legal matter. The settlement charge is included in general and administrative costs.

             
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
             
      June 25, 2013     December 25, 2012
             
             
Cash and cash equivalents     $ 100,117     $ 81,746
Other current assets       33,353       40,726
Property and equipment, net       542,211       531,654
Goodwill       113,454       113,435
Intangible assets, net       8,283       9,264
Other assets       15,983       14,429
             
Total assets     $ 813,401     $ 791,254
             
             
Current maturities of long-term debt            
and obligations under capital leases       317       338
Other current liabilities       132,987       158,324
Long-term debt and obligations under            
capital leases, excluding current maturities       51,120       51,264
Other liabilities       52,800       50,591
Texas Roadhouse, Inc. and subsidiaries stockholders' equity       570,380       525,084
Noncontrolling interests       5,797       5,653
             
Total liabilities and equity     $ 813,401     $ 791,254
                 
 
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
             
      26 Weeks Ended
      June 25, 2013     June 26, 2012
             
             
Cash flows from operating activities:            
Net income including noncontrolling interests     $ 48,084       $ 40,601  
Adjustments to reconcile net income to net cash provided by operating activities            
Depreciation and amortization       24,402         22,893  
Share-based compensation expense       6,971         6,324  
Other noncash adjustments       552         (2,991 )
Change in working capital       (10,656 )       (7,289 )
Net cash provided by operating activities       69,353         59,538  
             
Cash flows from investing activities:            
Capital expenditures - property and equipment       (35,915 )       (42,547 )
Proceeds from sale of property and equipment, including insurance proceeds       4         106  
Net cash used in investing activities       (35,911 )       (42,441 )
             
Cash flows from financing activities:            
Repayments of revolving credit facility, net       -         (10,000 )
Dividends paid       (21,512 )       (11,806 )
Other financing activities       6,441         7,490  
Net cash used in financing activities       (15,071 )       (14,316 )
             
Net increase in cash and cash equivalents       18,371         2,781  
Cash and cash equivalents - beginning of year       81,746         78,777  
Cash and cash equivalents - end of period     $ 100,117       $ 81,558  
                     
                                                 
Texas Roadhouse, Inc. and Subsidiaries
Supplemental Financial and Operating Information
($ amounts in thousands, except weekly sales by group)
(unaudited)
                                                   
        Second Quarter     Change     Year to Date     Change
        2013     2012     vs LY     2013     2012     vs LY
                                                   
Restaurant openings                                                
Company - Texas Roadhouse       6         7       (1 )         9         15       (6 )  
Company - Other       1         0       1           1         0       1    
Franchise - Texas Roadhouse       1         0       1           3         0       3    
Total       8         7       1           13         15       (2 )  
                                                   
                                                   
Restaurants open at the end of the quarter                                                
Company - Texas Roadhouse       327         306       21                            
Company - Other       3         3       0                            
Franchise - Texas Roadhouse       75         72       3                            
Total       405         381       24                            
                                                   
Company-owned restaurants                                                
Restaurant sales     $ 348,929       $ 317,546       9.9   %     $ 705,493       $ 639,558       10.3   %
Store weeks       4,214         3,962       6.4   %       8,388         7,813       7.4   %
Comparable restaurant sales growth (1)       4.5 %       4.5 %               4.1 %       5.3 %        
Texas Roadhouse restaurants only:                                                
Comparable restaurant sales growth (1)       4.5 %       4.5 %               4.1 %       5.3 %        
Average unit volume (2)     $ 1,077       $ 1,038       3.7   %     $ 2,188       $ 2,118       3.3   %
Weekly sales by group:                                                
Comparable restaurants (283 units)     $ 83,433                                          
Average unit volume restaurants (28 units)     $ 76,603                                          
Restaurants less than 6 months old (16 units)     $ 85,810                                          
                                                   
Restaurant operating costs (as a % of restaurant sales) (3)                                                
Cost of sales       34.5 %       33.7 %     80   bps       34.7 %       33.9 %     84   bps
Labor       29.2 %       29.4 %     (21 ) bps       28.8 %       29.2 %     (34 ) bps
Rent         2.0 %       2.0 %     4   bps       2.0 %       2.0 %     4   bps
Other operating       15.8 %       15.9 %     (16 ) bps       15.7 %       15.9 %     (21 ) bps
Total       81.4 %       80.9 %     47   bps       81.2 %       80.9 %     32   bps
                                                   
Restaurant margin (4)       18.6 %       19.1 %     (47 ) bps       18.8 %       19.1 %     (32 ) bps
                                                   
Franchise-owned restaurants                                                
Franchise royalties and fees     $ 3,190       $ 2,729       16.9   %     $ 6,302       $ 5,586       12.8   %
Store weeks       966         936       3.2   %       1,332         1,872       (28.8 ) %
Comparable restaurant sales growth (1)       5.3 %       4.8 %               4.5 %       5.9 %        
Average unit volume (2)     $ 1,112       $ 1,052       5.7   %     $ 1,123       $ 1,068       5.1   %
                                                   
Pre-opening expense     $ 4,240       $ 2,780       52.5   %     $ 7,064       $ 6,365       11.0   %
                                                   
Depreciation and amortization     $ 12,190       $ 11,546       5.6   %     $ 24,402       $ 22,893       6.6   %
As a % of revenue       3.5 %       3.6 %     (14 ) bps       3.4 %       3.5 %     (12 ) bps
                                                   
General and administrative expenses (5)     $ 21,789       $ 17,653       23.4   %     $ 39,156       $ 37,686       3.9   %
As a % of revenue       6.2 %       5.5 %     68   bps       5.5 %       5.8 %     (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) 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 margin represents 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 26 weeks ended June 26, 2012 included 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 were indicative of our ongoing operations in the 26 weeks ended June 26, 2012.

       
      For the 26 weeks Ended
      June 25, 2013     June 26, 2012
Net income attributable to Texas Roadhouse, Inc. and subsidiaries, excluding settlement charge     $ 46,134     $ 42,240  
Amount reserved for settlement of a legal matter, net of tax (1)     $ -     $ (3,062 )
Net income attributable to Texas Roadhouse, Inc. and subsidiaries     $ 46,134     $ 39,179  
             
Weighted average diluted shares outstanding       70,924       71,247  
             
Diluted earnings per share, excluding settlement charge     $ 0.65     $ 0.59  
Impact of settlement charge on diluted earnings per share     $ -     $ (0.04 )
Diluted earnings per share     $ 0.65     $ 0.55  
 

Source: Texas Roadhouse, Inc.

Contacts:

Texas Roadhouse

Investor Relations
Tonya Robinson
502-515-7300

Media
Travis Doster
502-638-5457

###

Share this Story:

Comments:

comments powered by Disqus

Franchise News Room »


News By Industry »


Featured Opportunities

Fantastic Sams
Fantastic SamsĀ® is one of the most recognized brands in the hair care industry with nearly 1,200 full-service salons in North America and 40 years...
Big O Tires, LLC
With more than 50 years in the tire and automotive maintenance industry, Big O TiresĀ® is proud to be a world-class leader.
Papa Murphy's Take 'N' Bake Pizza
The world's largest, fastest growing Take 'N' Bake pizza franchise is offering you something fresh.
Bacon Bros. Public House
Bacon Bros. Public House prides itself on quality, locally sourced ingredients in addition to our award winning entrees, in-house smoked meats and...
SpeedPro Imaging
SpeedPro Imaging is the ONLY franchise available exclusively focusing on wide format printing, the highest margin and fastest growing niche in the...

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)