Texas Roadhouse, Inc. Announces Second Quarter 2017 Results

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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