Texas Roadhouse, Inc. Announces Second Quarter 2016 Results

LOUISVILLE, Ky. - (BUSINESS WIRE) - Aug. 1, 2016 - Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 26 week periods ended June 28, 2016.

       
        Second Quarter     Year to Date
($000's)      

2016

   

2015

   

% Change

   

2016

 

2015

 

% Change

                                   
Total revenue     $ 508,808     $ 454,698     12 %     $ 1,024,367   $ 914,928   12 %
Income from operations       49,782       31,696     57 %       102,593     80,296   28 %
Net income       33,605       21,138     59 %       69,198     53,430   30 %
Diluted EPS     $ 0.47     $ 0.30     58 %     $ 0.98   $ 0.76   29 %
                                 

Results for the second quarter included the following highlights:

  • Comparable restaurant sales growth of 4.5% at company restaurants and 2.6% at franchise restaurants;
  • Restaurant margin, as a percentage of restaurant sales, increased 302 basis points to 19.2%, primarily driven by lower food costs;
  • Diluted earnings per share increased 58.5% to $0.47 from $0.30 in the prior year; and,
  • Seven company-owned restaurants were opened, including one Bubba’s 33 restaurant.

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

  • Comparable restaurant sales increased 4.5% at company restaurants and 2.8% at franchise restaurants;
  • Restaurant margin, as a percentage of restaurant sales, increased 208 basis points to 19.7% primarily driven by lower food costs;
  • Diluted earnings per share increased 29.1% to $0.98 from $0.76 in the prior year;
  • The Company recorded a pre-tax charge of $5.5 million ($3.4 million after-tax) related to a legal settlement which had a $0.05 impact on diluted earnings per share and a 6.3% impact on diluted earnings per share growth;
  • 14 company-owned restaurants were opened, including three Bubba’s 33 restaurants; and,
  • The Company repurchased 114,700 shares of its common stock for $4.1 million.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "Our operators continued to deliver strong operational and financial results with solid comparable restaurant sales growth and an increase in restaurant margin. Positive guest counts primarily drove the increase in comparable restaurant sales, marking our 26th consecutive quarter of growth, while lower commodity costs continued to pave the way for margin expansion. On the development front, we are on track to open approximately 30 company restaurants this year and we continue to fill our new restaurant pipeline for next year and beyond."

2016 Outlook

The Company reported that comparable restaurant sales at company restaurants for the first four weeks of its third quarter of fiscal 2016 increased approximately 3.7% compared to the prior year period.

Management updated the following expectation for 2016:

  • 2.5% to 3.0% food cost deflation compared to previous guidance of 1.0% to 2.0% food cost deflation.

Management reiterated the following expectations for 2016:

  • Positive comparable restaurant sales growth;
  • Approximately 30 company restaurant openings, including approximately seven Bubba’s 33 restaurants;
  • An income tax rate of approximately 30.0%; and,
  • Total capital expenditures of $165.0 million to $175.0 million.

Conference Call

The Company is hosting a conference call today, August 1, 2016 at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (888) 334-3004 or (719) 325-2410 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 8691041 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 500 restaurants system-wide in 49 states and five 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; food safety and food-borne illness concerns; 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 28, 2016     June 30, 2015     June 28, 2016     June 30, 2015
                           
Revenue:                        
  Restaurant sales     $ 504,630     $ 450,692     $ 1,015,914     $ 906,985
  Franchise royalties and fees       4,178       4,006       8,453       7,943
                           
Total revenue       508,808       454,698       1,024,367       914,928
                           
Costs and expenses:                        
  Restaurant operating costs (excluding depreciation and amortization shown separately below):                        
  Cost of sales       171,551       168,077       344,679       328,057
  Labor       150,014       132,084       297,560       263,488
  Rent       10,184       9,138       20,211       18,117
  Other operating       75,887       68,358       153,499       137,675
  Pre-opening       4,411       4,909       9,236       8,727
  Depreciation and amortization       20,238       16,816       39,777       33,151
  Impairment and closure       30       -       41       -
  General and administrative       26,711       23,620       56,771       45,417
                           
Total costs and expenses       459,026       423,002       921,774       834,632
                           
Income from operations       49,782       31,696       102,593       80,296
                           
Interest expense, net       309       495       614       1,010

Equity income from investments in unconsolidated affiliates

      475       467       827       839
                           
Income before taxes       49,948       31,668       102,806       80,125
Provision for income taxes       15,087       9,402       30,944       24,278
                           
Net income including noncontrolling interests     $ 34,861     $ 22,266     $ 71,862     $ 55,847
Less: Net income attributable to noncontrolling interests       1,256       1,128       2,664       2,417
Net income attributable to Texas Roadhouse, Inc. and subsidiaries     $ 33,605     $ 21,138     $ 69,198     $ 53,430
                           

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

                       
  Basic     $ 0.48     $ 0.30     $ 0.98     $ 0.76
  Diluted     $ 0.47     $ 0.30     $ 0.98     $ 0.76
                           
Weighted average shares outstanding:                        
  Basic       70,368       70,026       70,269       69,933
  Diluted       70,876       70,648       70,840       70,588
                           
Cash dividends declared per share     $ 0.19     $ 0.17     $ 0.38     $ 0.34
                         

 

 
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
             
      June 28, 2016     December 29, 2015
             
             
Cash and cash equivalents     $ 95,305     $ 59,334
Other current assets       50,655       74,479
Property and equipment, net       778,634       751,288
Goodwill       116,571       116,571
Intangible assets, net       4,150       4,827
Other assets       27,886       26,207
             
Total assets     $ 1,073,201     $ 1,032,706
             
             
Current maturities of long-term debt       151       144
Other current liabilities       218,725       256,498
Long-term debt, excluding current maturities       50,472       25,550
Other liabilities       78,731       73,332
Texas Roadhouse, Inc. and subsidiaries stockholders' equity       717,425       669,662
Noncontrolling interests       7,697       7,520
             
Total liabilities and equity     $ 1,073,201     $ 1,032,706
             

 

 
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
                 
          26 Weeks Ended
          June 28, 2016     June 30, 2015
                 
                 
Cash flows from operating activities:            
Net income including noncontrolling interests     $ 71,862       $ 55,847  
Adjustments to reconcile net income to net cash provided by operating activities            
  Depreciation and amortization       39,777         33,151  
  Share-based compensation expense       11,703         10,215  
  Other noncash adjustments       (493 )       (2,992 )
Change in working capital       (8,781 )       (1,398 )
    Net cash provided by operating activities       114,068         94,823  
                 
Cash flows from investing activities:            
Capital expenditures - property and equipment       (69,159 )       (70,933 )
Proceeds from sale of property and equipment, including insurance proceeds       -         9  
    Net cash used in investing activities       (69,159 )       (70,924 )
                 
Cash flows from financing activities:            
Proceeds from revolving credit facility       25,000         -  
Repurchase shares of common stock       (4,110 )       (3,138 )
Dividends paid       (25,277 )       (34,247 )
Other financing activities       (4,551 )       (1,671 )
    Net cash used in financing activities       (8,938 )       (39,056 )
                 
    Net increase (decrease) in cash and cash equivalents       35,971         (15,157 )
Cash and cash equivalents - beginning of period       59,334         86,122  
Cash and cash equivalents - end of period     $ 95,305       $ 70,965  
             

 

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
         

2016

   

2015

   

vs LY

   

2016

   

2015

   

vs LY

                                                                 
Restaurant openings                                                            
  Company - Texas Roadhouse       6           6         0             11           8         3      
  Company - Bubba's 33       1           2         (1 )           3           3         0      
  Company - Other       0           1         (1 )           0           1         (1 )    
  Franchise - Texas Roadhouse       1           1         0             2           1         1      
  Total       8           10         (2 )           16           13         3      
                                                                 
Restaurants open at the end of the quarter                                                            
  Company - Texas Roadhouse       403           376         27                                    
  Company - Bubba's 33       10           6         4                                    
  Company - Other       2           2         0                                    
  Franchise - Texas Roadhouse       84           80         4                                    
  Total       499           464         35                                    
                                                                 
Company-owned restaurants                                                            
  Restaurant sales     $ 504,630         $ 450,692         12.0     %     $ 1,015,914         $ 906,985         12.0     %
  Store weeks       5,350           4,934         8.4     %       10,612           9,790         8.4     %
  Comparable restaurant sales growth (1)       4.5   %       8.2   %                 4.5   %       8.5   %          
  Texas Roadhouse restaurants only:                                                            
    Comparable restaurant sales growth (1)       4.5   %       8.2   %                 4.5   %       8.5   %          
    Average unit volume (2)     $ 1,232         $ 1,188         3.7     %     $ 2,505         $ 2,409         4.0     %
    Weekly sales by group:                                                            
    Comparable restaurants (361 units)     $ 95,434                                                      
    Average unit volume restaurants (24 units) (3)     $ 84,272                                                      
    Restaurants less than 6 months old (18 units)     $ 98,319                                                      
                                                                 
Restaurant operating costs (as a % of restaurant sales)                                                            
Cost of sales       34.0   %       37.3   %     (330 )   bps       33.9   %       36.2   %     (224 )   bps
Labor       29.7   %       29.3   %     42     bps       29.3   %       29.1   %     24     bps
Rent         2.0   %       2.0   %     (1 )   bps       2.0   %       2.0   %     (1 )   bps
Other operating       15.0   %       15.2   %     (13 )   bps       15.1   %       15.2   %     (7 )   bps
Total       80.8   %       83.8   %     (302 )   bps       80.3   %       82.4   %     (208 )   bps
                                                                 
  Restaurant margin (4)       19.2   %       16.2   %     302     bps       19.7   %       17.6   %     208     bps
  Restaurant margin ($ in thousands)     $ 96,994         $ 73,035         32.8     %     $ 199,965         $ 159,648         25.3     %
  Restaurant margin $/Store week     $ 18,130         $ 14,804         22.5     %     $ 18,843         $ 16,307         15.6     %
                                                                 
Franchise-owned restaurants                                                            
  Franchise royalties and fees     $ 4,178         $ 4,006         4.3     %     $ 8,453         $ 7,943         6.4     %
  Store weeks       1,088           1,032         5.4     %       2,157           2,059         4.8     %
  Comparable restaurant sales growth (1)       2.6   %       6.9   %                 2.8   %       7.5   %          
  Average unit volume (2)     $ 1,273         $ 1,274         (0.1 )   %     $ 2,590         $ 2,580         0.4     %
                                                                 
Pre-opening expense     $ 4,411         $ 4,909         (10.1 )   %     $ 9,236         $ 8,727         5.8     %
                                                                 
Depreciation and amortization     $ 20,238         $ 16,816         20.3     %     $ 39,777         $ 33,151         20.0     %
  As a % of revenue       4.0   %       3.7   %     28     bps       3.9   %       3.6   %     26     bps
                                                                 
General and administrative expenses     $ 26,711         $ 23,620         13.1     %     $ 56,771         $ 45,417         25.0     %
  As a % of revenue       5.2   %       5.2   %     6     bps       5.5   %       5.0   %     58     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 restaurant operating costs, including cost of sales, labor, rent and other operating costs (as a percentage of restaurant sales). Depreciation and amortization expense, substantially all of which relates to restaurant-level asset, is excluded from restaurant operating costs. 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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