Texas Roadhouse, Inc. Announces Second Quarter 2014 Results

By: Texas Roadhouse | 0 Shares 88 Reads

LOUISVILLE, Ky. - (BUSINESS WIRE) - August 4, 2014 - Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 26 week periods ended July 1, 2014.


	Second Quarter					Year to Date
($000's)	2014		2013		% Change	2014		2013		% Change

Total revenue	$	395,363	$	352,119	12	$	792,505	$	711,795	11
Income from operations		34,401		29,797	15		74,585		67,965	10
Net income		23,081		19,963	16		49,546		46,134	7
Diluted EPS	$	0.33	$	0.28	17	$	0.70	$	0.65	8

Results for the second quarter included:

Diluted earnings per share increased 16.7% to $0.33 from $0.28 in the prior year;
Lower costs associated with the Company's annual managing partner conference positively impacted year-over-year operating results for the quarter as costs were $2.4 million lower compared to the prior year period;
Comparable restaurant sales increased 2.9% at company restaurants and 3.5% at franchise restaurants;
Six company restaurants were opened;
Restaurant margin, as a percentage of restaurant sales, decreased 45 basis points to 18.1%; and
The Company repurchased 300,000 shares of its common stock for $7.6 million.

Results for the year-to-date included:

Diluted earnings per share increased 7.6% to $0.70 from $0.65 in the prior year;
As previously stated, costs associated with the Company's annual managing partner conference were $2.4 million lower compared to the prior year period;
Comparable restaurant sales increased 2.9% at company restaurants and 3.6% at franchise restaurants;
12 company restaurants and one franchise restaurant were opened;
Restaurant margin, as a percentage of restaurant sales, decreased 10 basis points to 18.7%;
Income tax rate increased 185 basis points to 30.3%, primarily due to the expiration of certain federal tax credits at the end of 2013; and
The Company repurchased 1,260,000 shares of its common stock for $31.8 million.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "We are pleased to report another quarter of double-digit revenue growth led by strong operating week growth and positive comparable restaurant sales, including solid traffic growth. Our restaurant development included six new restaurants during the quarter, including our first restaurant in Alaska and we now operate in 49 states and three foreign countries. Looking forward, we will continue to focus on opening restaurants in new and existing markets and driving traffic growth and market share gains through our ongoing commitment to legendary food and service. This philosophy, along with our ongoing dividend and share repurchase programs, will continue to drive shareholder value."

2014 Outlook

The Company reported that comparable restaurant sales at company restaurants for the first four weeks of its third quarter of fiscal 2014 increased approximately 4.0% compared to the prior year period.

Management reiterated the following expectations for 2014:

Positive comparable restaurant sales growth;
Low single digit food cost inflation;
Total capital expenditures of $100.0 to $110.0 million; and
An income tax rate of approximately 30.0% to 31.0% which is higher than the 2013 income tax rate primarily as a result of the expiration of certain federal tax credits at the end of 2013.

Management updated the following expectation for 2014:

Approximately 25 company restaurant openings.

Conference Call

The Company is hosting a conference call today, August 4, 2014 at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (877) 627-6582 or (719) 325-4820 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 9936831 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 430 restaurants system-wide in 49 states and three 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 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.

Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)


		13 Weeks Ended				26 Weeks Ended
		July 1, 2014		June 25, 2013		July 1, 2014		June 25, 2013

Revenue:
	Restaurant sales	$	391,819	$	348,929	$	785,775	$	705,493
	Franchise royalties and fees		3,544		3,190		6,730		6,302

Total revenue			395,363		352,119		792,505		711,795

Costs and expenses:
	Restaurant operating costs (excluding depreciation and amortization shown separately below):

	Cost of sales		137,082		120,212		271,894		244,764
	Labor		115,182		101,723		229,854		203,384
	Rent		8,128		7,152		16,170		14,209
	Other operating		60,362		54,989		121,215		110,767
	Pre-opening		4,455		4,240		8,732		7,064
	Depreciation and amortization		14,433		12,190		28,518		24,402
	Impairment and closure		9		27		26		84
	General and administrative		21,311		21,789		41,511		39,156

Total costs and expenses			360,962		322,322		717,920		643,830

Income from operations			34,401		29,797		74,585		67,965

Interest expense, net			514		567		1,072		1,162
Equity income from investments in unconsolidated affiliates			353		218		565		398

Income before taxes			34,240		29,448		74,078		67,201
Provision for income taxes			10,215		8,583		22,445		19,117

Net income including noncontrolling interests		$	24,025	$	20,865	$	51,633	$	48,084
Less: Net income attributable to noncontrolling interests			944		902		2,087		1,950
Net income attributable to Texas Roadhouse, Inc. and subsidiaries		$	23,081	$	19,963	$	49,546	$	46,134

Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:
	Basic	$	0.33	$	0.29	$	0.71	$	0.66
	Diluted	$	0.33	$	0.28	$	0.70	$	0.65

Weighted average shares outstanding:
	Basic		69,705		70,030		69,918		69,693
	Diluted		70,577		71,267		70,822		70,924


Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)


				(As Adjusted) (1)
		July 1, 2014		December 31, 2013


	Cash and cash equivalents	$	77,461	$	94,874
	Other current assets		41,222		50,869
	Property and equipment, net		612,528		586,212
	Goodwill		117,197		117,197
	Intangible assets, net		6,989		7,876
	Other assets		21,157		20,616

	Total assets	$	876,554	$	877,644


	Current maturities of long-term debt		113		243
	Other current liabilities		170,370		174,937
	Long-term debt, excluding current maturities		50,760		50,990
	Other liabilities		57,269		57,614
	Texas Roadhouse, Inc. and subsidiaries stockholders' equity		591,210		587,659
	Noncontrolling interests		6,832		6,201

	Total liabilities and equity	$	876,554	$	877,644

(1)	December 31, 2013 revised to reflect the impact of adjustments to purchase price accounting related to 2013 acquisitions in accordance with generally accepted accounting principles ("GAAP").


Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)


			26 Weeks Ended
			July 1, 2014			June 25, 2013


Cash flows from operating activities:
Net income including noncontrolling interests			$	51,633		$	48,084
Adjustments to reconcile net income to net cash provided by operating activities
	Depreciation and amortization			28,518			24,402
	Share-based compensation expense			7,399			6,971
	Other noncash adjustments			(1,044	)		552
Change in working capital				(5,813	)		(11,412	)
		Net cash provided by operating activities		80,693			68,597

Cash flows from investing activities:
Capital expenditures - property and equipment				(53,971	)		(35,159	)
Proceeds from sale of property and equipment, including insurance proceeds				1,193			4
		Net cash used in investing activities		(52,778	)		(35,155	)

Cash flows from financing activities:
Repurchase shares of common stock				(31,760	)		-
Dividends paid				(10,473	)		(21,512	)
Other financing activities				(3,095	)		6,441
		Net cash used in financing activities		(45,328	)		(15,071	)

		Net (decrease) increase in cash and cash equivalents		(17,413	)		18,371
Cash and cash equivalents - beginning of year				94,874			81,746
Cash and cash equivalents - end of period			$	77,461		$	100,117


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
			2014			2013			vs LY		2014			2013			vs LY

Restaurant openings
	Company - Texas Roadhouse			6			6		0			12			9		3
	Company - Other			0			1		(1	)		0			1		(1	)
	Franchise - Texas Roadhouse			0			1		(1	)		1			3		(2	)
	Total			6			8		(2	)		13			13		0


Restaurants open at the end of the quarter
	Company - Texas Roadhouse			357			327		30
	Company - Other			1			3		(2	)
	Franchise - Texas Roadhouse			75			75		0
	Total			433			405		28

Company-owned restaurants
	Restaurant sales		$	391,819		$	348,929		12.3	%	$	785,775		$	705,493		11.4	%
	Store weeks			4,593			4,214		9.0	%		9,117			8,388		8.7	%
	Comparable restaurant sales growth (1)			2.9	%		4.5	%				2.9	%		4.1	%
	Texas Roadhouse restaurants only:
		Comparable restaurant sales growth (1)		2.9	%		4.5	%				2.9	%		4.1	%
		Average unit volume (2)	$	1,099		$	1,073		2.4	%	$	2,220		$	2,170		2.3	%
		Weekly sales by group:
		Comparable restaurants (313 units)	$	84,964
		Average unit volume restaurants (20 units) (3)	$	77,873
		Restaurants less than 6 months old (24 units)	$	97,734

Restaurant operating costs (as a % of restaurant sales)
Cost of sales				35.0	%		34.5	%	53	bps		34.6	%		34.7	%	(9)	bps
Labor				29.4	%		29.2	%	24	bps		29.3	%		28.8	%	42	bps
Rent				2.1	%		2.0	%	2	bps		2.1	%		2.0	%	4	bps
Other operating				15.4	%		15.8	%	(35)	bps		15.4	%		15.7	%	(27)	bps
Total				81.9	%		81.4	%	45	bps		81.3	%		81.2	%	10	bps

	Restaurant margin (4)			18.1	%		18.6	%	(45)	bps		18.7	%		18.8	%	(10)	bps
	Restaurant margin $/Store week		$	15,472		$	15,390				$	16,084		$	15,781

Franchise-owned restaurants
	Franchise royalties and fees		$	3,544		$	3,190		11.1	%	$	6,730		$	6,302		6.8	%
	Store weeks			975			966		0.9	%		1,937			1,332		45.4	%
	Comparable restaurant sales growth (1)			3.5	%		5.3	%				3.6	%		4.5	%
	Average unit volume (2)		$	1,171		$	1,112		5.3	%	$	2,361		$	2,236		5.6	%

Pre-opening expense			$	4,455		$	4,240		5.1	%	$	8,732		$	7,064		23.6	%

Depreciation and amortization			$	14,433		$	12,190		18.4	%	$	28,518		$	24,402		16.9	%
	As a % of revenue			3.7	%		3.5	%	19	bps		3.6	%		3.4	%	17	bps

General and administrative expenses			$	21,311		$	21,789		(2.2	)%	$	41,511		$	39,156		6.0	%
	As a % of revenue			5.4	%		6.2	%	(80)	bps		5.2	%		5.5	%	(26)	bps

(1) Comparable restaurant sales growth reflects the change in year-over-year sales for restaurants open a full 18 months before the beginning of the period measured, excluding sales from restaurants closed during the period.

(2) Average unit volume includes sales from Texas Roadhouse restaurants open for a full six months before the beginning of the period measured, excluding any sales at restaurants closed during the period.

(3) Average unit volume restaurants include restaurants open a full six to 18 months before the beginning of the period measured.

(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 GAAP and should not be considered in isolation, or as an alternative, to income from operations or other similarly titled measures of other companies.

Amounts may not foot due to rounding.

SOURCE Texas Roadhouse, Inc.

Contacts:

Tonya Robinson
Texas Roadhouse, Inc.
Investor Relations
502-515-7269

Travis Doster
Texas Roadhouse, Inc.
Media Relations
502-638-5457

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Texas Roadhouse, Inc. Announces Second Quarter 2014 Results

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Conference Call

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Forward-looking Statements

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Texas Roadhouse, Inc. Announces Second Quarter 2014 Results

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Conference Call

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Forward-looking Statements

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