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Texas Roadhouse, Inc. Announces Second Quarter 2016 Results

By: Texas Roadhouse |  0 Shares     112 Reads

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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