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Texas Roadhouse, Inc. Announces Second Quarter 2017 Results

By: Texas Roadhouse |  0 Shares     84 Reads

LOUISVILLE, Ky. - July 31, 2017 // GLOBE NEWSWIRE // - Texas Roadhouse, Inc. (Nasdaq:TXRH) today announced financial results for the 13 and 26 week periods ended June 27, 2017.

		Second Quarter							Year to Date
($000's)			2017		2016	% Change				2017		2016	% Change
Total revenue		$	566,262	$	508,808	11	%		$	1,133,948	$	1,024,367	11	%
Income from operations			54,214		49,782	9	%			103,236		102,593	1	%
Net income			37,581		33,605	12	%			71,894		69,198	4	%
Diluted EPS		$	0.53	$	0.47	11	%		$	1.01	$	0.98	3	%

Results for the second quarter included the following highlights:

• Comparable restaurant sales increased 4.0% at company restaurants and 3.6% at domestic franchise restaurants;
• Restaurant margin, as a percentage of restaurant sales, decreased 28 basis points to 18.9%, primarily driven by wage rate inflation, partially offset by the benefit of lower food costs;
• Diluted earnings per share increased 11.0% to $0.53 from $0.47 in the prior year; and
• Seven company-owned restaurants were opened, including two Bubba's 33 restaurants.

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

• Comparable restaurant sales increased 3.6% at company restaurants and 3.8% at domestic franchise restaurants;
• Restaurant margin, as a percentage of restaurant sales, decreased 25 basis points to 19.4%, primarily driven by wage rate inflation, partially offset by the benefit of lower food costs;
• A pre-tax charge of $14.9 million ($9.2 million after-tax), or $0.13 per diluted share, was recorded in the first quarter of 2017, related to the settlement of a previously disclosed legal matter. 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;
• Diluted earnings per share increased 3.1% to $1.01 from $0.98 in the prior year; and
• 13 company-owned restaurants were opened, including two Bubba's 33 restaurants.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "We are pleased with our results for the second quarter highlighted by double-digit growth in both revenue and diluted earnings per share. In addition, our comparable restaurant sales growth, driven by traffic gains, continues to be solid with an increase of 4.6% for the first four weeks of the third quarter. We are on track to open 27 to 29 company restaurants this year. Looking ahead, we remain focused on our long-term growth potential as we continue to fill our new restaurant pipeline for next year and beyond. Finally, the strength of our balance sheet and cash flow allow us to internally fund our new restaurant growth and return excess capital to shareholders through dividends and share repurchases."

2017 Outlook

Comparable restaurant sales at company restaurants for the first four weeks of our third quarter of fiscal 2017 increased approximately 4.6% compared to the prior year period.

Management updated the following expectations for 2017:

• 27 to 29 company restaurant openings, including approximately four Bubba's 33 restaurants compared to previous guidance of approximately 30 company restaurants, including approximately six Bubba's 33 restaurants; and,
• An income tax rate of approximately 28.0% compared to previous guidance of 29.0% to 30.0%.

Management reiterated the following expectations for 2017:

• Positive comparable restaurant sales growth;
• Food cost deflation of approximately 1.0% to 2.0%;
• Mid-single digit labor inflation; 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, July 31, 2017 at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (888) 334-3032 or (719) 457-2619 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 3626432 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 535 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									26 Weeks Ended
			June 27, 2017					June 28, 2016				June 27, 2017					June 28, 2016
Revenue:
	Restaurant sales		$	562,160				$	504,630			$	1,125,480				$	1,015,914
	Franchise royalties and fees			4,102					4,178				8,468					8,453
Total revenue				566,262					508,808				1,133,948					1,024,367
Costs and expenses:
	Restaurant operating costs (excluding depreciation and amortization shown separately below):
		Cost of sales		185,171					171,551				369,364					344,679
		Labor		174,585					150,014				344,932					297,560
		Rent		11,112					10,184				21,981					20,211
		Other operating		84,837					75,887				170,497					153,499
	Pre-opening			5,014					4,411				9,754					9,236
	Depreciation and amortization			23,106					20,238				45,702					39,777
	Impairment and closure			-					30				11					41
	General and administrative			28,223					26,711				68,471					56,771
Total costs and expenses				512,048					459,026				1,030,712					921,774
Income from operations				54,214					49,782				103,236					102,593
Interest expense, net				379					309				711					614
Equity income from investments in
	unconsolidated affiliates			(470	)				(475	)			(790	)				(827	)
Income before taxes				54,305					49,948				103,315					102,806
Provision for income taxes				15,126					15,087				28,113					30,944
Net income including noncontrolling interests			$	39,179				$	34,861			$	75,202				$	71,862
Less: Net income attributable to noncontrolling interests				1,598					1,256				3,308					2,664
Net income attributable to Texas Roadhouse, Inc. and subsidiaries			$	37,581				$	33,605			$	71,894				$	69,198
Net income per common share attributable to Texas Roadhouse, Inc.
and subsidiaries:
	Basic		$	0.53				$	0.48			$	1.01				$	0.98
	Diluted		$	0.53				$	0.47			$	1.01				$	0.98
Weighted average shares outstanding:
	Basic			70,973					70,368				70,876					70,269
	Diluted			71,437					70,876				71,398					70,840
Cash dividends declared per share			$	0.21				$	0.19			$	0.42				$	0.38

 

Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
				June 27, 2017				December 27, 2016
	Cash and cash equivalents			$	116,508			$	112,944
	Other current assets				55,904				87,315
	Property and equipment, net				868,668				830,054
	Goodwill				121,040				116,571
	Intangible assets, net				3,161				3,622
	Other assets				34,000				29,465
	Total assets			$	1,199,281			$	1,179,971
	Current maturities of long-term debt and obligation under capital lease				176				167
	Other current liabilities				246,032				279,360
	Long-term debt and obligation under capital lease, excluding current maturities				52,291				52,381
	Other liabilities				91,361				89,821
	Texas Roadhouse, Inc. and subsidiaries stockholders' equity				797,388				750,226
	Noncontrolling interests				12,033				8,016
	Total liabilities and equity			$	1,199,281			$	1,179,971

 

Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
				26 Weeks Ended
				June 27, 2017					June 28, 2016
Cash flows from operating activities:
Net income including noncontrolling interests				$	75,202				$	71,862
Adjustments to reconcile net income to net cash provided by operating activities
	Depreciation and amortization				45,702					39,777
	Share-based compensation expense				12,365					11,703
	Other noncash adjustments				(1,842	)				(493	)
Change in working capital					(3,119	)				(8,781	)
		Net cash provided by operating activities			128,308					114,068
Cash flows from investing activities:
Capital expenditures - property and equipment					(73,637	)				(69,159	)
Acquisition of franchise restaurants, net of cash acquired					(16,528	)				-
		Net cash used in investing activities			(90,165	)				(69,159	)
Cash flows from financing activities:
Proceeds from revolving credit facility, net					-					25,000
Repurchase shares of common stock					-					(4,110	)
Dividends paid					(28,308	)				(25,277	)
Other financing activities					(6,271	)				(4,551	)
		Net cash used in financing activities			(34,579	)				(8,938	)
		Net increase (decrease) in cash and cash equivalents			3,564					35,971
Cash and cash equivalents - beginning of period					112,944					59,334
Cash and cash equivalents - end of period				$	116,508				$	95,305

 

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
				2017			2016		vs LY					2017				2016		vs LY
Restaurant openings
	Company - Texas Roadhouse			5			6		(1	)				11				11		0
	Company - Bubba's 33			2			1		1					2				3		(1	)
	Company - Other			0			0		0					0				0		0
	Franchise - Texas Roadhouse - U.S.			0			0		0					1				0		1
	Franchise - Texas Roadhouse - International			0			1		(1	)				1				2		(1	)
	Total			7			8		(1	)				15				16		(1	)
Restaurant acquisitions/dispositions
	Company - Texas Roadhouse			0			0		0					4				0		4
	Company - Bubba's 33			0			0		0					0				0		0
	Company - Other			0			0		0					0				0		0
	Franchise - Texas Roadhouse			0			0		0					(4	)			0		(4	)
	Total			0			0		0					0				0		0
Restaurants open at the end of the quarter
	Company - Texas Roadhouse			428			403		25
	Company - Bubba's 33			18			10		8
	Company - Other			2			2		0
	Franchise - Texas Roadhouse - U.S.			70			72		(2	)
	Franchise - Texas Roadhouse - International			14			12		2
	Total			532			499		33
Company-owned restaurants
	Restaurant sales		$	562,160		$	504,630		11.4		%		$	1,125,480			$	1,015,914		10.8		%
	Store weeks			5,775			5,350		7.9		%			11,456				10,612		8.0		%
	Comparable restaurant sales growth (1)			4.0	%		4.5	%						3.6		%		4.5	%
	Texas Roadhouse restaurants only:
		Comparable restaurant sales growth (1)		4.1	%		4.5	%						3.7		%		4.5	%
		Average unit volume (2)	$	1,274		$	1,233		3.3		%		$	2,575			$	2,506		2.7		%
		Weekly sales by group:
		Comparable restaurants (389 units)	$	98,689
		Average unit volume restaurants (23 units) (3)	$	85,958
		Restaurants less than 6 months old (16 units)	$	105,972
Restaurant operating costs (as a % of restaurant sales)
Cost of sales				32.9	%		34.0	%	(106	)	bps			32.8		%		33.9	%	(111	)	bps
Labor				31.1	%		29.7	%	133		bps			30.6		%		29.3	%	136		bps
Rent				2.0	%		2.0	%	(4	)	bps			2.0		%		2.0	%	(4	)	bps
Other operating				15.1	%		15.0	%	5		bps			15.1		%		15.1	%	4		bps
Total				81.1	%		80.8	%	28		bps			80.6		%		80.3	%	25		bps
	Restaurant margin (4)			18.9	%		19.2	%	(28	)	bps			19.4		%		19.7	%	(25	)	bps
	Restaurant margin ($ in thousands) (4)		$	106,455		$	96,994		9.8		%		$	218,706			$	199,965		9.4		%
	Restaurant margin $ (4)/Store week		$	18,434		$	18,130		1.7		%		$	19,091			$	18,843		1.3		%
Franchise-owned restaurants
	Franchise royalties and fees		$	4,102		$	4,178		(1.8	)	%		$	8,468			$	8,453		0.2		%
	Store weeks			1,092			1,088		0.4		%			2,172				2,157		0.7		%
	Comparable restaurant sales growth (1)			2.9	%		2.6	%						3.0		%		2.8	%
	U.S. franchise restaurants only:
		Comparable restaurant sales growth (1)		3.6	%		4.3	%						3.8		%		4.2	%
		Average unit volume (2)	$	1,321		$	1,265		4.4		%		$	2,644			$	2,552		3.6		%
Pre-opening expense			$	5,014		$	4,411		13.7		%		$	9,754			$	9,236		5.6		%
Depreciation and amortization			$	23,106		$	20,238		14.2		%		$	45,702			$	39,777		14.9		%
	As a % of revenue			4.1	%		4.0	%	10		bps			4.0		%		3.9	%	15		bps
General and administrative expenses			$	28,223		$	26,711		5.7		%		$	68,471			$	56,771		20.6		%
	As a % of revenue			5.0	%		5.2	%	(27	)	bps			6.0		%		5.5	%	50		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.

News Provided by Acquire Media

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