Texas Roadhouse, Inc. Announces Third Quarter 2015 Results

LOUISVILLE, Ky. - (BUSINESS WIRE) - November 2, 2015 - Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 39 week periods ended September 29, 2015.

                                         
        Third Quarter       Year to Date
($000's)     2015     2014     % Change       2015     2014     % Change
                                         
Total revenue     $ 438,089     $ 385,218     14       $ 1,353,017     $ 1,177,723     15
Income from operations       30,556       28,821     6         110,852       103,406     7
Net income       20,482       18,881     8         73,912       68,427     8
Diluted EPS     $ 0.29     $ 0.27     8       $ 1.05     $ 0.97     8
                                               

Results for the third quarter included the following highlights:

  • Comparable restaurant sales increased 6.9% at company restaurants and 7.7% at franchise restaurants;
  • Restaurant margin, as a percentage of restaurant sales, decreased 22 basis points to 16.6%, primarily driven by higher labor costs. Wage rate inflation, along with higher healthcare costs, more than offset the impact of higher average unit volume;
  • Diluted earnings per share increased 8.0% to $0.29 from $0.27 in the prior year;
  • 10 company-owned restaurants were opened, including one Bubba's 33 restaurant; and,
  • The Company repurchased 44,000 shares of its common stock for $1.6 million.

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

  • Comparable restaurant sales increased 8.1% at company restaurants and 7.4% at franchise restaurants;
  • Restaurant margin, as a percentage of restaurant sales, decreased 78 basis points to 17.3%. Food cost inflation of approximately 6.0% driven by beef, more than offset the impact of higher average unit volume;
  • Diluted earnings per share increased 8.0% to $1.05 from $0.97 in the prior year;
  • 22 company-owned restaurants were opened, including four Bubba's 33 restaurants; and,
  • The Company repurchased 132,089 shares of its common stock for $4.7 million.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "We are pleased with our third quarter results, which included double digit revenue growth comprised of solid comparable restaurant sales growth of 6.9% and store week growth of 7.7% from new restaurant development. Our performance continues to be driven by our commitment to legendary food and legendary service."

Taylor continued, "Our new restaurant pipeline is strong and we remain on track with our development plans for 2015 and 2016. The consistency of our business and our healthy cash flow generation allows us to fund our new restaurant growth through internal cash flow, while also returning excess capital to our shareholders through dividends and share repurchases, driving further shareholder value."

2015 Outlook

The Company reported that comparable restaurant sales at company restaurants for the first four weeks of its fourth quarter of fiscal 2015 increased approximately 5.0% compared to the prior year period.

Management updated the following expectations for 2015:

  • Approximately 30 company restaurant openings, including four Bubba’s 33 restaurants (from as many as five Bubba’s 33 restaurants previously);
  • Food cost inflation of approximately 5.0% (from 4.0% to 4.5% previously);
  • An income tax rate of approximately 30.0% to 30.5%, depending on the reinstatement of certain federal tax credits (from 30.0% to 31.0% previously); and,
  • Total capital expenditures of approximately $160.0 million (from $145.0 million to $155.0 million previously).

Management reiterated the following expectation for 2015:

  • Mid-single digit comparable restaurant sales growth.

2016 Outlook

Management provided the following expectations for 2016:

  • Positive comparable restaurant sales growth;
  • 25 to 30 company restaurant openings, including at least five Bubba’s 33 restaurants;
  • Low-single digit food cost deflation;
  • An income tax rate of 30.0% to 31.0%, depending on the reinstatement of certain federal tax credits; and,
  • Total capital expenditures of $155.0 million to $165.0 million.

Conference Call

The Company is hosting a conference call today, November 2, 2015 at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (877) 604-9668 or (719) 325-4794 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 2485478 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 480 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     39 Weeks Ended
         

September 29,
2015

   

September 30,
2014

   

September 29,
2015

   

September 30,
2014

                             
Revenue:                        
  Restaurant sales     $ 433,932     $ 381,991       $ 1,340,917     $ 1,167,766
  Franchise royalties and fees       4,157       3,227         12,100       9,957
                             
Total revenue       438,089       385,218         1,353,017       1,177,723
                             
Costs and expenses:                        
  Restaurant operating costs (excluding depreciation and amortization shown separately below):                      
                             
    Cost of sales       156,643       137,658         484,700       409,552
    Labor       129,198       112,521         392,686       342,375
    Rent       9,325       8,380         27,442       24,550
    Other operating       66,848       59,276         204,523       180,491
  Pre-opening       5,749       3,945         14,476       12,677
  Depreciation and amortization       17,843       15,164         50,994       43,682
  Impairment and closure       -       (16 )       -       10
  General and administrative       21,927       19,469         67,344       60,980
                             
Total costs and expenses       407,533       356,397         1,242,165       1,074,317
                             
Income from operations       30,556       28,821         110,852       103,406
                             
Interest expense, net       470       492         1,480       1,564

Equity income from investments in unconsolidated affiliates

      449       410         1,288       975
                             
Income before taxes       30,535       28,739         110,660       102,817
Provision for income taxes       9,141       9,017         33,419       31,462
                             
Net income including noncontrolling interests     $ 21,394     $ 19,722       $ 77,241     $ 71,355
Less: Net income attributable to noncontrolling interests       912       841         3,329       2,928
Net income attributable to Texas Roadhouse, Inc. and subsidiaries     $ 20,482     $ 18,881       $ 73,912     $ 68,427
                             

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

                       
  Basic     $ 0.29     $ 0.27       $ 1.06     $ 0.98
  Diluted     $ 0.29     $ 0.27       $ 1.05     $ 0.97
                             
Weighted average shares outstanding:                        
  Basic       70,117       69,544         69,995       69,793
  Diluted       70,735       70,395         70,639       70,639
                           

 

               
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
               
               
               
      September 29, 2015       December 30, 2014
               
               
Cash and cash equivalents     $ 72,616       $ 86,122
Other current assets       48,972         61,604
Property and equipment, net       723,294         649,637
Goodwill       116,571         116,571
Intangible assets, net       5,171         6,203
Other assets       25,847         23,005
               
Total assets     $ 992,471       $ 943,142
               
               
Current maturities of long-term debt       20,140         129
Other current liabilities       195,122         215,842
Long-term debt, excluding current maturities       50,587         50,693
Other liabilities       61,112         61,522
Texas Roadhouse, Inc. and subsidiaries stockholders' equity     658,309         607,892
Noncontrolling interests       7,201         7,064
               
Total liabilities and equity     $ 992,471       $ 943,142
               

 

             
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
                 
                 
          39 Weeks Ended
          September 29, 2015     September 30, 2014
                 
                 
Cash flows from operating activities:            
Net income including noncontrolling interests     $ 77,241       $ 71,355  
Adjustments to reconcile net income to net cash provided by operating activities            
  Depreciation and amortization       50,994         43,682  
  Share-based compensation expense       15,649         10,937  
  Other noncash adjustments       (5,066 )       (1,392 )
Change in working capital       (8,939 )       (7,277 )
    Net cash provided by operating activities       129,879         117,305  
                 
Cash flows from investing activities:            
Capital expenditures - property and equipment       (123,471 )       (89,645 )
Proceeds from sale of property and equipment, including insurance proceeds       272         1,197  
    Net cash used in investing activities       (123,199 )       (88,448 )
                 
Cash flows from financing activities:            
Proceeds from revolving credit facility       20,000         -  
Repurchase shares of common stock       (4,741 )       (39,966 )
Dividends paid       (34,247 )       (20,923 )
Other financing activities       (1,198 )       (3,535 )
    Net cash used in financing activities       (20,186 )       (64,424 )
                 
    Net decrease in cash and cash equivalents       (13,506 )       (35,567 )
Cash and cash equivalents - beginning of period       86,122         94,874  
Cash and cash equivalents - end of period     $ 72,616       $ 59,307  
             

 

                                                             
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
          2015     2014     vs LY     2015     2014     vs LY
                                                                 
Restaurant openings                                                            
  Company - Texas Roadhouse       9           3         6           17           15         2    
  Company - Bubba's 33       1           0         1           4           0         4    
  Company - Jaggers       0           0         0           1           0         1    
  Franchise - Texas Roadhouse       1           0         1           2           1         1    
  Total       11           3         8           24           16         8    
                                                                 
Restaurants open at the end of the quarter                                                            
  Company - Texas Roadhouse       385           360         25                                  
  Company - Bubba's 33       7           1         6                                  
  Company - Jaggers       2           0         2                                  
  Franchise - Texas Roadhouse       81           75         6                                  
  Total       475           436         39                                  
                                                                 
Company-owned restaurants                                                            
  Restaurant sales     $ 433,932         $ 381,991         13.6   %     $ 1,340,917         $ 1,167,766         14.8   %
  Store weeks       5,044           4,682         7.7   %       14,834           13,799         7.5   %
  Comparable restaurant sales growth (1)       6.9   %       5.9   %                 8.1   %       3.9   %          
  Texas Roadhouse restaurants only:                                                            
    Comparable restaurant sales growth (1)       6.9   %       5.9   %                 8.1   %       3.9   %          
    Average unit volume (2)     $ 1,119         $ 1,050         6.6   %     $ 3,531         $ 3,267         8.1   %
    Weekly sales by group:                                                            
    Comparable restaurants (346 units)     $ 86,331                                                      
    Average unit volume restaurants (22 units) (3)     $ 82,555                                                      
    Restaurants less than 6 months old (17 units)     $ 92,082                                                      
                                                                 
Restaurant operating costs (as a % of restaurant sales)                                                            
Cost of sales       36.1   %       36.0   %     6   bps       36.1   %       35.1   %     108   bps
Labor       29.8   %       29.5   %     32   bps       29.3   %       29.3   %     (3)   bps
Rent         2.1   %       2.2   %     (4)   bps       2.0   %       2.1   %     (6)   bps
Other operating       15.4   %       15.5   %     (11)   bps       15.3   %       15.5   %     (20)   bps
Total       83.4   %       83.2   %     22   bps       82.7   %       81.9   %     78   bps
                                                                 
  Restaurant margin (4)       16.6   %       16.8   %     (22)   bps       17.3   %       18.1   %     (78)   bps
                                                                 
  Restaurant margin ($ in thousands)     $ 71,917         $ 64,156         12.1   %     $ 231,566         $ 210,798         9.9   %
  Restaurant margin $/Store week     $ 14,258         $ 13,703         4.1   %     $ 15,610         $ 15,276         2.2   %
                                                                 
Franchise-owned restaurants                                                            
  Franchise royalties and fees     $ 4,157         $ 3,227         28.8   %     $ 12,100         $ 9,957         21.5   %
  Store weeks       1,052           975         7.9   %       3,112           2,912         6.9   %
  Comparable restaurant sales growth (1)       7.7   %       5.2   %                 7.4   %       4.4   %          
  Average unit volume (2)     $ 1,205         $ 1,134         6.2   %     $ 3,808         $ 3,473         9.6   %
                                                                 
Pre-opening expense     $ 5,749         $ 3,945         45.7   %     $ 14,476         $ 12,677         14.2   %
                                                                 
Depreciation and amortization     $ 17,843         $ 15,164         17.7   %     $ 50,994         $ 43,682         16.7   %
  As a % of revenue       4.1   %       3.9   %     14   bps       3.8   %       3.7   %     6   bps
                                                                 
General and administrative expenses     $ 21,927         $ 19,469         12.6   %     $ 67,344         $ 60,980         10.4   %
  As a % of revenue       5.0   %       5.1   %     (5)   bps       5.0   %       5.2   %     (20)   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 sales from restaurants closed during the period.
(3) Average unit volume restaurants include Texas Roadhouse 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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