Texas Roadhouse, Inc. Announces First Quarter 2017 Results

LOUISVILLE, Ky. - May 01, 2017 // GLOBE NEWSWIRE // - Texas Roadhouse, Inc. (Nasdaq:TXRH), today announced financial results for the 13-week period ended March 28, 2017.

    First Quarter
($000's)   2017   2016    % Change 
           
Total revenue $   567,686   $   515,559   10%
Income from operations   49,022 52,811   (7%)
Net income 34,313 35,593   (4%)
Diluted EPS $   0.48   $   0.50   (4%)
           

Results for the first quarter included the following highlights:

  • Comparable restaurant sales increased 3.1% at company restaurants and 3.8% at domestic franchise restaurants;
  • Restaurant margin, as a percentage of restaurant sales, decreased 21 basis points to 19.9%, primarily driven by wage rate inflation, partially offset by the benefit of lower food costs;
  • Results for the quarter included a pre-tax charge of $14.9 million ($9.2 million after-tax), or $0.13 per diluted share, related to a previously disclosed legal matter which was settled during March 2017. The impact of the legal charge was partially offset by a pre-tax charge recorded in the first quarter of 2016 of $5.5 million ($3.4 million after-tax) related to a separate legal matter which had an impact of $0.05 on diluted earnings per share in that quarter;
  • Diluted earnings per share decreased 4.4% to $0.48 from $0.50 in the prior year; and,
  • Six company-owned restaurants and two franchise restaurants were opened.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "We are pleased with our top-line momentum and operating performance in the first quarter of 2017 with positive comparable restaurant sales and traffic growth, which continued through the first four weeks of the second quarter. We credit our success to our operators’ ability to execute on our mission of Legendary Food and Legendary Service every single shift. In addition, we remain committed to investing in new restaurant growth that generates solid returns and allows us to maintain a conservative capital structure."

Franchise Acquisition

Effective December 28, 2016, we acquired four franchise restaurants in Florida and Georgia for an aggregate purchase price of $16.5 million. The purchase price was paid in cash. Going forward, two of the restaurants are wholly-owned, while two are majority-owned. The acquisitions are expected to have an accretive impact in 2017.

2017 Outlook

Comparable restaurant sales at company restaurants for the first four weeks of our second quarter of fiscal 2017 increased approximately 2.6% compared to the prior year period.

Management reiterated the following expectations for 2017:

  • Positive comparable restaurant sales growth;
  • Approximately 30 company restaurant openings, including approximately six Bubba’s 33 restaurants;
  • Food cost deflation of approximately 1.0% to 2.0%;
  • Mid-single digit labor inflation;
  • An income tax rate of 29.0% to 30.0%; and
  • Total capital expenditures of approximately $170.0 million, excluding any cash used for franchise acquisitions.

Conference Call

The Company is hosting a conference call today, May 1, 2017 at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (888) 300-2343 or (719) 325-2323 for international calls. A replay of the call will be available for one week following the conference call. To access the replay, please dial (844) 512-2921 or (412) 317-6671 for international calls, and use 8307466 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 525 restaurants system-wide in 49 states and six 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  
      March 28, 2017   March 29, 2016  
               
Revenue:          
        Restaurant sales $  563,320     $   511,284  
  Franchise royalties and fees   4,366       4,275  
               
Total revenue   567,686       515,559  
               
Costs and expenses:          
  Restaurant operating costs (excluding depreciation and amortization shown separately below):            
           
    Cost of sales   184,193       173,128  
    Labor   170,347       147,546  
    Rent   10,869       10,027  
    Other operating   85,660       77,612  
  Pre-opening   4,740       4,825  
  Depreciation and amortization    22,596       19,539  
  Impairment and closure   11       11  
  General and administrative   40,248       30,060  
               
Total costs and expenses   518,664       462,748  
               
Income from operations   49,022       52,811  
               
Interest expense, net   332       305  
Equity income from investments in          
  unconsolidated affiliates   320       352  
               
Income before taxes   49,010       52,858  
Provision for income taxes   12,987       15,857  
               
Net income including noncontrolling interests   36,023       37,001  
Less: Net income attributable to noncontrolling interests   1,710       1,408  
Net income attributable to Texas Roadhouse, Inc. and subsidiaries $   34,313     $   35,593  
               
Net income per common share attributable to Texas Roadhouse, Inc.          
  and subsidiaries:          
  Basic $   0.48     $   0.51  
  Diluted $   0.48     $   0.50  
               
Weighted average shares outstanding:          
  Basic   70,779       70,169  
  Diluted   71,334       70,764  
               
Cash dividends declared per share $   0.21     $   0.19  
 

 

 
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
                   
                   
                   
        March 28, 2017   December 27, 2016  
                   
                   
  Cash and cash equivalents   $   137,512     $   112,944    
  Other current assets     49,192       87,315    
  Property and equipment, net     855,027       830,054    
  Goodwill     121,040       116,571    
  Intangible assets, net     3,392       3,622    
  Other assets     31,725       29,465    
                   
  Total assets   $  1,197,888     $   1,179,971    
                   
                   
  Current maturities of long-term debt and obligation under capital lease     172       167    
  Other current liabilities     276,986       279,360    
  Long-term debt and obligation under capital lease, excluding current maturities     52,336       52,381    
  Other liabilities     86,772       89,821    
  Texas Roadhouse, Inc. and subsidiaries stockholders' equity     769,463       750,226    
  Noncontrolling interests      12,159       8,016    
                   
  Total liabilities and equity   $  1,197,888     $   1,179,971    
                   

 

 
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
               
               
        13 Weeks Ended
        March 28, 2017   March 29, 2016
               
               
Cash flows from operating activities:          
Net income including noncontrolling interests   $   36,023     $   37,001
Adjustments to reconcile net income to net cash provided by operating activities            
    Depreciation and amortization     22,596       19,539
  Share-based compensation expense     6,218       5,788
  Other noncash adjustments     (3,973)       802
Change in working capital     33,473       1,758
      Net cash provided by operating activities     94,337       64,888
               
Cash flows from investing activities:          
Capital expenditures - property and equipment     (36,063)       (34,179)
Acquisition of franchise restaurants, net of cash acquired     (16,528)       - 
    Net cash used in investing activities     (52,591)       (34,179)
               
Cash flows from financing activities:          
Proceeds from revolving credit facility, net     -        25,000
Repurchase shares of common stock     -        (4,110)
Dividends paid     (13,418)       (11,919)
Other financing activities     (3,760)       (3,022)
    Net cash (used in) provided by financing activities     (17,178)       5,949
               
    Net increase in cash and cash equivalents     24,568       36,658
Cash and cash equivalents - beginning of period     112,944       59,334
Cash and cash equivalents - end of period   $   137,512     $   95,992
               

  

Texas Roadhouse, Inc. and Subsidiaries
Supplemental Financial and Operating Information
($ amounts in thousands, except weekly sales by group)
(unaudited)
                   
                   
      First Quarter   Change    
      2017   2016   vs LY    
                   
Restaurant openings              
  Company - Texas Roadhouse 6   5   1    
  Company - Bubba's 33 0   2   (2)    
  Company - Other 0   0   0    
  Franchise - Texas Roadhouse - U.S. 1   0   1    
  Franchise - Texas Roadhouse - International 1   1   0    
  Total 8   8   0    
                   
Restaurant acquisitions/dispositions              
  Company - Texas Roadhouse 4   0   4    
  Company - Bubba's 33 0   0   0    
  Company - Other 0   0   0    
  Franchise - Texas Roadhouse (4)   0   (4)    
  Total 0   0   0    
                   
Restaurants open at the end of the quarter              
  Company - Texas Roadhouse 423   397   26    
  Company - Bubba's 33 16   9   7    
  Company - Other 2   2   0    
  Franchise - Texas Roadhouse - U.S. 70   72   (2)    
  Franchise - Texas Roadhouse - International 14   11   3    
  Total 525   491   34    
                   
Company-owned restaurants              
  Restaurant sales $   563,320   $   511,284     10.2 %  
  Store weeks 5,681   5,262     8.0 %  
  Comparable restaurant sales growth (1) 3.1 % 4.6 %    
  Texas Roadhouse restaurants only:              
    Comparable restaurant sales growth (1) 3.2 % 4.6 %    
    Average unit volume (2) $   1,299   $   1,271     2.3 %  
    Weekly sales by group:          
    Comparable restaurants (380 units) $   100,840            
    Average unit volume restaurants (27 units) (3) $   87,331            
    Restaurants less than 6 months old (16 units) $   103,316            
                   
Restaurant operating costs (as a % of restaurant sales)              
Cost of sales 32.7 % 33.9 %   (116) bps
Labor 30.2 % 28.9 %   138 bps
Rent   1.9 % 2.0 %   (3) bps
Other operating  15.2 % 15.2 %   3 bps
Total  80.1 % 79.9 %   21 bps
                   
  Restaurant margin (4) 19.9 % 20.1 %   (21) bps
  Restaurant margin $  ($ in thousands) (4) $   112,251   $   102,970     9.0 %  
  Restaurant margin $ (4)/Store week $   19,760   $   19,569     1.0 %  
                   
Franchise-owned restaurants              
  Franchise royalties and fees $   4,366   $   4,275     2.1 %  
  Store weeks 1,080   1,070     0.9 %  
  Comparable restaurant sales growth (1) 3.0 % 3.1 %    
  U.S. franchise restaurants only:              
    Comparable restaurant sales growth (1) 3.8 % 4.1 %    
    Average unit volume (2) $   1,333   $   1,287     3.6 %  
                   
Pre-opening expense $   4,740   $   4,825     (1.8) %  
                   
Depreciation and amortization  $   22,596   $   19,539     15.6 %  
  As a % of revenue  4.0 % 3.8 %   19 bps
                   
General and administrative expenses  $   40,248   $   30,060     33.9 %  
  As a % of revenue 7.1 % 5.8 %   126 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 (in dollars and as a percentage of restaurant sales) represents restaurant sales less restaurant operating costs, including cost of sales, labor, rent and other operating costs.  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.

Contacts:

Tonya Robinson
Investor Relations
(502) 515-7269

Travis Doster
Media Relations
(502) 638-5457

SOURCE Texas Roadhouse, Inc

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