Texas Roadhouse, Inc. Announces Second Quarter 2015 Results

By: Texas Roadhouse | 0 Shares 72 Reads

LOUISVILLE, Ky. - (BUSINESS WIRE) - Aug. 3, 2015 - Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 26 week periods ended June 30, 2015.


	Second Quarter						Year to Date
($000's)	2015		2014		% Change		2015		2014		% Change

Total revenue	$	454,698	$	395,363	15		$	914,928	$	792,505	15
Income from operations		31,696		34,401	(8	)		80,296		74,585	8
Net income		21,138		23,081	(8	)		53,430		49,546	8
Diluted EPS	$	0.30	$	0.33	(9	)	$	0.76	$	0.70	8

Results for the second quarter included the following highlights:

Comparable restaurant sales increased 8.2% at company restaurants and 6.9% at franchise restaurants;
Restaurant margin, as a percentage of restaurant sales, decreased 193 basis points to 16.2%. Food cost inflation of approximately 9.4%, mostly driven by beef, more than offset the impact of higher average unit volume;
Diluted earnings per share decreased 8.5% to $0.30 from $0.33 in the prior year;
Nine company-owned restaurants were opened, including two Bubba's 33 restaurants; and,
The Company repurchased 88,089 shares of its common stock for $3.1 million.

Results for year-to-date included the following highlights:

Comparable restaurant sales increased 8.5% at company restaurants and 7.5% at franchise restaurants;
Restaurant margin, as a percentage of restaurant sales, decreased 106 basis points to 17.6%. Food cost inflation of approximately 7.4%, mostly driven by beef, more than offset the impact of higher average unit volume;
Diluted earnings per share increased 8.2% to $0.76 from $0.70 in the prior year;
12 company-owned restaurants were opened, including three Bubba's 33 restaurants; and,
The Company repurchased 88,089 shares of its common stock for $3.1 million.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "We are pleased to report strong sales momentum through the second quarter, as we generated double digit revenue gains driven by increasing guest counts and strong operating week growth. In spite of this solid top-line performance, commodity inflation of 9.4% resulted in earnings per share that were lower than the prior year period as it more than offset modest price increases taken in late 2014."

Taylor continued, "On the development front, our new restaurants continue to open with strong sales and we now expect to open approximately 30 company-owned restaurants in 2015. We remain focused on providing legendary food and legendary service, as well as a great value proposition to each and every guest, and as a result, we believe we are well-positioned for growth over the long-term."

2015 Outlook

The Company reported that comparable restaurant sales at company restaurants for the first four weeks of its third quarter of fiscal 2015 increased approximately 7.6% compared to the prior year period.

Management updated the following expectations for 2015:

Mid-single digit comparable restaurant sales growth;
Approximately 30 company restaurant openings, including as many as five Bubba's 33 restaurants;
Food cost inflation of 4.0% to 4.5% which implies 1.0% to 2.0% inflation for the second half of the year; and,
Total capital expenditures of $145 million to $155 million.

Management reiterated the following expectation for 2015:

An income tax rate of approximately 30.0% to 31.0% depending on the reinstatement of certain federal tax credits.

Conference Call

The Company is hosting a conference call today, August 3, 2015 at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (888) 438-5449 or (719) 325-2443 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 5777050 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 465 restaurants system-wide in 49 states and four 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; breaches of security; 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
	June 30, 2015		July 1, 2014		June 30, 2015		July 1, 2014

Revenue:
Restaurant sales	$	450,692	$	391,819	$	906,985	$	785,775
Franchise royalties and fees		4,006		3,544		7,943		6,730

Total revenue		454,698		395,363		914,928		792,505

Costs and expenses:
Restaurant operating costs (excluding depreciation and amortization shown separately below):
Cost of sales		168,077		137,082		328,057		271,894
Labor		132,084		115,182		263,488		229,854
Rent		9,138		8,128		18,117		16,170
Other operating		68,358		60,362		137,675		121,215
Pre-opening		4,909		4,455		8,727		8,732
Depreciation and amortization		16,816		14,433		33,151		28,518
Impairment and closure		-		9		-		26
General and administrative		23,620		21,311		45,417		41,511

Total costs and expenses		423,002		360,962		834,632		717,920

Income from operations		31,696		34,401		80,296		74,585

Interest expense, net		495		514		1,010		1,072
Equity income from investments in unconsolidated affiliates		467		353		839		565

Income before taxes		31,668		34,240		80,125		74,078
Provision for income taxes		9,402		10,215		24,278		22,445

Net income including noncontrolling interests	$	22,266	$	24,025	$	55,847	$	51,633
Less: Net income attributable to noncontrolling interests		1,128		944		2,417		2,087
Net income attributable to Texas Roadhouse, Inc. and subsidiaries	$	21,138	$	23,081	$	53,430	$	49,546

Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:
Basic	$	0.30	$	0.33	$	0.76	$	0.71
Diluted	$	0.30	$	0.33	$	0.76	$	0.70

Weighted average shares outstanding:
Basic		70,026		69,705		69,933		69,918
Diluted		70,648		70,577		70,588		70,822


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

	June 30, 2015		December 30, 2014


Cash and cash equivalents	$	70,965	$	86,122
Other current assets		57,953		61,604
Property and equipment, net		689,204		649,637
Goodwill		116,571		116,571
Intangible assets, net		5,515		6,203
Other assets		25,416		23,005

Total assets	$	965,624	$	943,142


Current maturities of long-term debt		136		129
Other current liabilities		201,598		215,842
Long-term debt, excluding current maturities		50,623		50,693
Other liabilities		61,437		61,522
Texas Roadhouse, Inc. and subsidiaries stockholders' equity		644,644		607,892
Noncontrolling interests		7,186		7,064

Total liabilities and equity	$	965,624	$	943,142


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

	26 Weeks Ended
	June 30, 2015			July 1, 2014


Cash flows from operating activities:
Net income including noncontrolling interests	$	55,847		$	51,633
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		33,151			28,518
Share-based compensation expense		10,215			7,399
Other noncash adjustments		(2,992	)		(1,044	)
Change in working capital		(1,398	)		(4,769	)
Net cash provided by operating activities		94,823			81,737

Cash flows from investing activities:
Capital expenditures - property and equipment		(70,933	)		(53,971	)
Proceeds from sale of property and equipment, including insurance proceeds		9			1,193
Net cash used in investing activities		(70,924	)		(52,778	)

Cash flows from financing activities:
Repurchase shares of common stock		(3,138	)		(31,760	)
Dividends paid		(34,247	)		(10,473	)
Other financing activities		(1,671	)		(4,139	)
Net cash used in financing activities		(39,056	)		(46,372	)

Net decrease in cash and cash equivalents		(15,157	)		(17,413	)
Cash and cash equivalents - beginning of period		86,122			94,874
Cash and cash equivalents - end of period	$	70,965		$	77,461


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
	2015			2014			vs LY			2015			2014			vs LY

Restaurant openings
Company - Texas Roadhouse		6			6		0				8			12		(4	)
Company - Bubba's 33		2			0		2				3			0		3
Company - Other		1			0		1				1			0		1
Franchise - Texas Roadhouse		1			0		1				1			1		0
Total		10			6		4				13			13		0

Restaurants open at the end of the quarter
Company - Texas Roadhouse		376			357		19
Company - Bubba's 33		6			1		5
Company - Other		2			0		2
Franchise - Texas Roadhouse		80			75		5
Total		464			433		31

Company-owned restaurants
Restaurant sales	$	450,692		$	391,819		15.0		%	$	906,985		$	785,775		15.4		%
Store weeks		4,934			4,593		7.4		%		9,790			9,117		7.4		%
Comparable restaurant sales growth (1)		8.2	%		2.9	%					8.5	%		2.9	%
Texas Roadhouse restaurants only:
Comparable restaurant sales growth (1)		8.2	%		2.9	%					8.5	%		2.9	%
Average unit volume (2)	$	1,188		$	1,098		8.2		%	$	2,409		$	2,218		8.6		%
Weekly sales by group:
Comparable restaurants (334 units)	$	91,346
Average unit volume restaurants (27 units) (3)	$	91,468
Restaurants less than 6 months old (15 units)	$	95,979

Restaurant operating costs (as a % of restaurant sales)
Cost of sales		37.3	%		35.0	%	231		bps		36.2	%		34.6	%	157		bps
Labor		29.3	%		29.4	%	(9	)	bps		29.1	%		29.3	%	(20	)	bps
Rent		2.0	%		2.1	%	(5	)	bps		2.0	%		2.1	%	(6	)	bps
Other operating		15.2	%		15.4	%	(24	)	bps		15.2	%		15.4	%	(25	)	bps
Total		83.8	%		81.9	%	193		bps		82.4	%		81.3	%	106		bps

Restaurant margin (4)		16.2	%		18.1	%	(193	)	bps		17.6	%		18.7	%	(106	)	bps
Restaurant margin ($ in thousands)	$	73,035		$	71,065		2.8		%	$	159,648		$	146,642		8.9		%
Restaurant margin $/Store week	$	14,804		$	15,472		(4.3	)	%	$	16,307		$	16,084		1.4		%

Franchise-owned restaurants
Franchise royalties and fees	$	4,006		$	3,544		13.0		%	$	7,943		$	6,730		18.0		%
Store weeks		1,032			975		5.8		%		2,059			1,937		6.3		%
Comparable restaurant sales growth (1)		6.9	%		3.5	%					7.5	%		3.6	%
Average unit volume (2)	$	1,274		$	1,174		8.5		%	$	2,580		$	2,364		9.1		%

Pre-opening expense	$	4,909		$	4,455		10.2		%	$	8,727		$	8,732		(0.1	)	%

Depreciation and amortization	$	16,816		$	14,433		16.5		%	$	33,151		$	28,518		16.2		%
As a % of revenue		3.7	%		3.7	%	5		bps		3.6	%		3.6	%	2		bps

General and administrative expenses	$	23,620		$	21,311		10.8		%	$	45,417		$	41,511		9.4		%
As a % of revenue		5.2	%		5.4	%	(20	)	bps		5.0	%		5.2	%	(27	)	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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150803006175/en/.

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 2015 Results

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Conference Call

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Forward-looking Statements

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Texas Roadhouse, Inc. Announces Second Quarter 2015 Results

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Conference Call

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Forward-looking Statements

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