Texas Roadhouse, Inc. Announces Third Quarter 2016 Results

By: Texas Roadhouse | 0 Shares 84 Reads

LOUISVILLE, Ky. - (BUSINESS WIRE) - Nov. 1, 2016 - Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 39 week periods ended September 27, 2016.


	Third Quarter					Year to Date
($000's)	2016		2015		% Change	2016		2015		% Change

Total revenue	$	481,637	$	438,089	10%	$	1,506,004	$	1,353,017	11%
Income from operations		38,468		30,556	26%		141,061		110,852	27%
Net income		25,675		20,482	25%		94,873		73,912	28%
Diluted EPS	$	0.36	$	0.29	25%	$	1.34	$	1.05	28%

Results for the third quarter included the following highlights:

Comparable restaurant sales growth of 3.4% at company restaurants and 3.3% at domestic franchise restaurants;
Restaurant margin, as a percentage of restaurant sales, increased 155 basis points to 18.1%, primarily driven by lower food costs, partially offset by higher labor costs;
Diluted earnings per share increased 24.9% to $0.36 from $0.29 in the prior year;
The Company recorded a pre-tax charge of $1.2 million ($0.8 million after-tax) related to a legal settlement; and
Seven company-owned restaurants were opened, including two Bubba's 33 restaurants.
Results for year-to-date included the following highlights:
Comparable restaurant sales growth of 4.2% at company restaurants and 3.9% at domestic franchise restaurants;
Restaurant margin, as a percentage of restaurant sales, increased 192 basis points to 19.2%;
Diluted earnings per share increased 27.9% to $1.34 from $1.05 in the prior year;
The Company recorded a pre-tax charge of $6.7 million ($4.1 million after-tax) related to a legal settlement which had a $0.06 impact on diluted earnings per share and a 5.6% impact on diluted earnings per share growth;
21 company-owned restaurants were opened, including five 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, "We are pleased to report another quarter of restaurant margin expansion and double-digit diluted earnings per share growth. Our results were driven by the opening of new restaurants, positive comparable restaurant sales and continued commodity deflation. As we move into the fourth quarter, our sales momentum continues with October comparable restaurant sales up 3.8%, including positive traffic growth."

Taylor continued, "Looking ahead to 2017, we will stay focused on protecting our long-term brand position by enhancing our ongoing commitment to our value proposition with consumers and to legendary food and legendary service. This commitment has served us well with 26 consecutive quarters of positive traffic growth. In addition, our strong balance sheet and healthy cash flow allow us to continue to internally fund our growth, while returning excess capital to our shareholders through dividend payments and ongoing share repurchases."

2016 Outlook

The Company reported that comparable restaurant sales at company restaurants for the first four weeks of its fourth quarter of fiscal 2016 increased approximately 3.8% compared to the prior year period.

Management updated the following expectations for 2016:

Approximately 30 company restaurant openings, including as many as nine Bubba's 33 restaurants; and,
Food cost deflation of approximately 3.5% compared to previous guidance of 2.5% to 3.0%.

Management reiterated the following expectations for 2016:

Positive comparable restaurant sales growth;
An income tax rate of approximately 30.0%; and
Total capital expenditures of $165.0 million to $175.0 million.

2017 Outlook

Management provided the following initial expectations for 2017:

Positive comparable restaurant sales growth;
Approximately 30 company restaurant openings, including at approximately seven to eight Bubba's restaurants;
Low-single digit food cost deflation;
Mid-single digit labor inflation, including increases from wage rates, as well as regulatory changes;
An income tax rate of 30.0% to 31.0%; and
Total capital expenditures of $170.0 million.

Conference Call

The Company is hosting a conference call today, November 1, 2016 at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (877) 419-6590 or (719) 325-4798 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 6678390 as the pass code. There will be a simultaneous Web cast conducted at www.texasroadhouse.com.

About the Company

Texas Roadhouse is a casual dining concept that first opened in 1993 and today operates over 510 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 restaurant openings; 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				39 Weeks Ended
			September 27, 2016		September 29, 2015		September 27, 2016		September 29, 2015

Revenue:
	Restaurant sales		$	477,617	$	433,932	$	1,493,531	$	1,340,917
	Franchise royalties and fees			4,020		4,157		12,473		12,100

Total revenue				481,637		438,089		1,506,004		1,353,017

Costs and expenses:
	Restaurant operating costs (excluding depreciation and amortization shown separately below):
		Cost of sales		161,886		156,643		506,565		484,700
		Labor		145,301		129,198		442,861		392,686
		Rent		10,266		9,325		30,477		27,442
		Other operating		73,583		66,848		227,082		204,523
	Pre-opening			5,017		5,749		14,253		14,476
	Depreciation and amortization			20,941		17,843		60,718		50,994
	Impairment and closure			13		-		54		-
	General and administrative			26,162		21,927		82,933		67,344

Total costs and expenses				443,169		407,533		1,364,943		1,242,165

Income from operations				38,468		30,556		141,061		110,852

Interest expense, net				288		470		902		1,480
Equity income from investments in unconsolidated affiliates				4		449		831		1,288

Income before taxes				38,184		30,535		140,990		110,660
Provision for income taxes				11,381		9,141		42,325		33,419

Net income including noncontrolling interests			$	26,803	$	21,394	$	98,665	$	77,241
Less: Net income attributable to noncontrolling interests				1,128		912		3,792		3,329
Net income attributable to Texas Roadhouse, Inc. and subsidiaries			$	25,675	$	20,482	$	94,873	$	73,912

Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:
	Basic		$	0.36	$	0.29	$	1.35	$	1.06
	Diluted		$	0.36	$	0.29	$	1.34	$	1.05

Weighted average shares outstanding:
	Basic			70,477		70,117		70,338		69,995
	Diluted			70,981		70,735		70,898		70,639

Cash dividends declared per share			$	0.19	$	0.17	$	0.57	$	0.51


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

		September 27, 2016		December 29, 2015


	Cash and cash equivalents	$	81,713	$	59,334
	Other current assets		51,552		74,479
	Property and equipment, net		802,555		751,288
	Goodwill		116,571		116,571
	Intangible assets, net		3,873		4,827
	Other assets		28,258		26,207

	Total assets	$	1,084,522	$	1,032,706


	Current maturities of long-term debt and obligation under capital lease		163		144
	Other current liabilities		207,775		256,498
	Long-term debt and obligation under capital lease, excluding current maturities		52,424		25,550
	Other liabilities		80,796		73,332
	Texas Roadhouse, Inc. and subsidiaries stockholders' equity		735,590		669,662
	Noncontrolling interests		7,774		7,520

	Total liabilities and equity	$	1,084,522	$	1,032,706


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

			39 Weeks Ended
			September 27, 2016			September 29, 2015


Cash flows from operating activities:
Net income including noncontrolling interests			$	98,665		$	77,241
Adjustments to reconcile net income to net cash provided by operating activities
	Depreciation and amortization			60,718			50,994
	Share-based compensation expense			18,347			15,649
	Other noncash adjustments			1,321			(5,066	)
Change in working capital				(19,269	)		(7,310	)
		Net cash provided by operating activities		159,782			131,508

Cash flows from investing activities:
Capital expenditures - property and equipment				(113,219	)		(125,100	)
Proceeds from sale of property and equipment, including insurance proceeds				-			272
		Net cash used in investing activities		(113,219	)		(124,828	)

Cash flows from financing activities:
Proceeds from revolving credit facility				25,000			20,000
Repurchase shares of common stock				(4,110	)		(4,741	)
Dividends paid				(38,656	)		(34,247	)
Other financing activities				(6,418	)		(1,198	)
		Net cash used in financing activities		(24,184	)		(20,186	)

		Net increase (decrease) in cash and cash equivalents		22,379			(13,506	)
Cash and cash equivalents - beginning of period				59,334			86,122
Cash and cash equivalents - end of period			$	81,713		$	72,616


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
			2016			2015			vs LY		2016			2015			vs LY

Restaurant openings
	Company - Texas Roadhouse			5			9		(4)			16			17		(1)
	Company - Bubba's 33			2			1		1			5			4		1
	Company - Other			0			0		0			0			1		(1)
	Franchise - Texas Roadhouse - U.S.			1			1		0			1			2		(1)
	Franchise - Texas Roadhouse - International			0			0		0			2			0		2
	Total			8			11		(3)			24			24		0

Restaurants open at the end of the quarter
	Company - Texas Roadhouse			408			385		23
	Company - Bubba's 33			12			7		5
	Company - Other			2			2		0
	Franchise - Texas Roadhouse - U.S.			73			72		1
	Franchise - Texas Roadhouse - International			12			9		3
	Total			507			475		32

Company-owned restaurants
	Restaurant sales		$	477,617		$	433,932		10.1	%	$	1,493,531		$	1,340,917		11.4	%
	Store weeks			5,427			5,044		7.6	%		16,039			14,834		8.1	%
	Comparable restaurant sales growth (1)			3.4	%		6.9	%				4.2	%		8.1	%
	Texas Roadhouse restaurants only:
		Comparable restaurant sales growth (1)		3.5	%		6.9	%				4.2	%		8.1	%
		Average unit volume (2)	$	1,151		$	1,119		2.8	%	$	3,660		$	3,531		3.7	%
		Weekly sales by group:
		Comparable restaurants (368 units)	$	89,079
		Average unit volume restaurants (24 units) (3)	$	80,390
		Restaurants less than 6 months old (16 units)	$	84,539

Restaurant operating costs (as a % of restaurant sales)
Cost of sales				33.9	%		36.1	%	(220)	bps		33.9	%		36.1	%	(223)	bps
Labor				30.4	%		29.8	%	65	bps		29.7	%		29.3	%	37	bps
Rent				2.1	%		2.1	%	0	bps		2.0	%		2.0	%	(1)	bps
Other operating				15.4	%		15.4	%	0	bps		15.2	%		15.3	%	(5)	bps
Total				81.9	%		83.4	%	(155)	bps		80.8	%		82.7	%	(192)	bps
	Restaurant margin (4)			18.1	%		16.6	%	155	bps		19.2	%		17.3	%	192	bps
	Restaurant margin ($ in thousands)		$	86,581		$	71,917		20.4	%	$	286,546		$	231,566		23.7	%
	Restaurant margin $/Store week		$	15,953		$	14,258		11.9	%	$	17,866		$	15,610		14.5	%

Franchise-owned restaurants
	Franchise royalties and fees		$	4,020		$	4,157		(3.3)	%	$	12,473		$	12,100		3.1	%
	Store weeks			1,095			1,052		4.1	%		3,253			3,112		4.5	%
	Comparable restaurant sales growth (1)			1.9	%		7.7	%				2.5	%		7.4	%
	U.S. franchise restaurants only:
		Comparable restaurant sales growth (1)		3.3	%		6.9	%				3.9	%		8.0	%
		Average unit volume (2)	$	1,191		$	1,160		2.7	%	$	3,760		$	3,640		3.3	%

Pre-opening expense			$	5,017		$	5,749		(12.7)	%	$	14,253		$	14,476		(1.5)	%

Depreciation and amortization			$	20,941		$	17,843		17.4	%	$	60,718		$	50,994		19.1	%
	As a % of revenue			4.3	%		4.1	%	27	bps		4.0	%		3.8	%	26	bps

General and administrative expenses			$	26,162		$	21,927		19.3	%	$	82,933		$	67,344		23.1	%
	As a % of revenue			5.4	%		5.0	%	43	bps		5.5	%		5.0	%	53	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 assets, 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
Media Relations
502-638-5457

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Texas Roadhouse, Inc. Announces Third Quarter 2016 Results

2016 Outlook

Management updated the following expectations for 2016:

2017 Outlook

Conference Call

About the Company

Forward-looking Statements

Contacts:

Comments:

Franchise News

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Texas Roadhouse, Inc. Announces Third Quarter 2016 Results

2016 Outlook

Management updated the following expectations for 2016:

2017 Outlook

Conference Call

About the Company

Forward-looking Statements

Contacts:

Comments:

Franchise News

By Type

By Sector

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