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Texas Roadhouse, Inc. Announces Third Quarter 2015 Results

By: Texas Roadhouse |  0 Shares     58 Reads

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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