Texas Roadhouse, Inc. Announces Third Quarter 2017 Results

LOUISVILLE, Ky. - Oct. 30, 2017 // GLOBE NEWSWIRE // - Texas Roadhouse, Inc. (Nasdaq:TXRH), today announced financial results for the 13 and 39 week periods ended September 26, 2017.

    Third Quarter   Year to Date
($000's)     2017   2016 % Change     2017   2016 % Change
                 
Total revenue $   540,507 $   481,637 12.2 %   $   1,674,455 $   1,506,004 11.2 %
Income from operations   45,511   38,468 18.3 %     148,747   141,061 5.4 %
Net income   31,014   25,675 20.8 %     102,908   94,873 8.5 %
Diluted EPS $   0.43 $   0.36 19.9 %   $   1.44 $   1.34 7.6 %
                 


Results for the third quarter included the following highlights:

  • Comparable restaurant sales increased 4.5% at company restaurants and 4.7% at domestic franchise restaurants;
  • Restaurant margin, as a percentage of restaurant sales, decreased 31 basis points to 17.8%, primarily driven by wage rate inflation, partially offset by the benefit of lower food costs;
  • Diluted earnings per share increased 19.9% to $0.43 from $0.36 in the prior year. This includes overlapping a pre-tax charge recorded in the prior year quarter of $1.2 million ($0.8 million after-tax) related to the settlement of a legal matter; and
  • Seven company-owned restaurants, including two Bubba's 33 restaurants, and one franchise restaurant were opened.

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

  • Comparable restaurant sales increased 4.0% at both company restaurants and 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;
  • 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 legal matter. The impact of the legal charge was partially offset by a pre-tax charge recorded in 2016 of $6.7 million ($4.1 million after-tax) related to a separate legal matter which had an impact of $0.06 on diluted earnings per share;
  • Diluted earnings per share increased 7.6% to $1.44 from $1.34 in the prior year; and
  • 20 company-owned restaurants, including four Bubba’s 33 restaurants, and three franchise restaurants were opened.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "We are pleased to deliver another solid quarter of results including a 19.9% increase in diluted earnings per share driven by double-digit revenue growth. Comparable restaurant sales grew 4.5%, driven primarily by traffic gains of 3.5%. In addition, our positive sales momentum has continued into the fourth quarter. None of this growth would be possible without the commitment from our operators and everyone associated with our legendary brand."

Taylor continued, “As we look to 2018, our balance sheet and strong cashflow have us well positioned for continued growth including approximately 30 planned restaurant openings. In addition, our allocation strategy will continue to be focused on returning capital to shareholders, primarily through our dividend program.”

2017 Outlook

Comparable restaurant sales at company restaurants for the first four weeks of our fourth quarter of fiscal 2017 increased approximately 5.3% compared to the prior year period.

Management updated the following expectations for 2017:

  • 26 or 27 company restaurant openings (compared to previous guidance of 27 to 29 company restaurant openings), including four Bubba’s 33 restaurants;
  • Food cost deflation of approximately 2.0%, compared to previous guidance of approximately 1.0% to 2.0%; and
  • Labor inflation of approximately 7.0% to 8.0%, compared to previous guidance of mid-single digit inflation.

Management reiterated the following expectations for 2017:

  • Positive comparable restaurant sales growth;
  • An income tax rate of approximately 28.0%; and
  • Total capital expenditures of approximately $170.0 million, excluding any cash used for franchise acquisitions.

2018 Outlook

Management provided the following initial expectations for 2018:

  • Positive comparable restaurant sales growth;
  • Approximately 30 company restaurant openings, including up to seven Bubba’s 33 restaurants;
  • Relatively flat food costs;
  • Mid-single digit labor inflation;
  • An income tax rate of between 28.0% and 29.0%; and
  • Total capital expenditures of approximately $175.0 million, excluding any cash used for franchise acquisitions.

Conference Call

The Company is hosting a conference call today, October 30, 2017 at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (888) 297-0358 or (719) 325-2396 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 1901754 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 has grown to over 540 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.

Contacts:

Tonya Robinson
Investor Relations
(502) 515-7269

Travis Doster
Media Relations
(502) 638-5457

Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
                       
           
      13 Weeks Ended   39 Weeks Ended
      September 26,
2017
  September 27,
2016
  September 26,
2017
  September 27,
2016
                       
Revenue:                  
  Restaurant sales $   536,341       $   477,617     $   1,661,821       $   1,493,531  
  Franchise royalties and fees     4,166           4,020         12,634           12,473  
                       
Total revenue     540,507           481,637         1,674,455           1,506,004  
                       
Costs and expenses:                  
  Restaurant operating costs (excluding depreciation and
amortization shown separately below):
                 
                   
    Cost of sales     176,498           161,886         545,862           506,565  
    Labor     169,355           145,301         514,287           442,861  
    Rent     11,257           10,266         33,238           30,477  
    Other operating     83,679           73,583         254,176           227,082  
  Pre-opening     4,548           5,017         14,302           14,253  
  Depreciation and amortization      23,534           20,941         69,236           60,718  
  Impairment and closure     2           13         13           54  
  General and administrative     26,123           26,162         94,594           82,933  
                       
Total costs and expenses     494,996           443,169         1,525,708           1,364,943  
                       
Income from operations     45,511           38,468         148,747           141,061  
                       
Interest expense, net     500           288         1,211           902  
Equity income from investments in                  
  unconsolidated affiliates     (359 )         (4 )       (1,149 )         (831 )
                       
Income before taxes     45,370           38,184         148,685           140,990  
Provision for income taxes     13,046           11,381         41,159           42,325  
                       
Net income including noncontrolling interests     32,324           26,803         107,526           98,665  
Less: Net income attributable to noncontrolling interests     1,310           1,128         4,618           3,792  
Net income attributable to Texas Roadhouse, Inc. and subsidiaries $   31,014       $   25,675     $   102,908       $   94,873  
                       
Net income per common share attributable to Texas Roadhouse, Inc.                  
  and subsidiaries:                  
  Basic $   0.44       $   0.36     $   1.45       $   1.35  
  Diluted $   0.43       $   0.36     $   1.44       $   1.34  
                       
Weighted average shares outstanding:                  
  Basic     71,067           70,477         70,939           70,338  
  Diluted     71,532           70,981         71,449           70,898  
                       
Cash dividends declared per share $   0.21       $   0.19     $   0.63       $   0.57  
         

 

Texas Roadhouse, Inc. and Subsidiaries  
Condensed Consolidated Balance Sheets  
(in thousands)  
(unaudited)  
                     
                     
                     
        September 26, 2017   December 27, 2016    
                     
         
  Cash and cash equivalents   $   114,436     $   112,944      
  Other current assets       50,893         87,315      
  Property and equipment, net       886,972         830,054      
  Goodwill       121,040         116,571      
  Intangible assets, net       2,930         3,622      
  Other assets       36,448         29,465      
               
  Total assets   $   1,212,719     $   1,179,971      
               
               
  Current maturities of long-term debt and obligation under capital lease       9         167      
  Other current liabilities       238,260         279,360      
  Long-term debt and obligation under capital lease, excluding current maturities      51,984         52,381      
  Other liabilities       91,674         89,821      
  Texas Roadhouse, Inc. and subsidiaries stockholders' equity       818,743         750,226      
  Noncontrolling interests        12,049         8,016      
               
  Total liabilities and equity   $   1,212,719     $   1,179,971      
               

 

Texas Roadhouse, Inc. and Subsidiaries  
Condensed Consolidated Statements of Cash Flows  
(in thousands)  
(unaudited)  
                 
                 
        39 Weeks Ended  
        September 26, 2017   September 27, 2016  
                 
   
Cash flows from operating activities:    
Net income including noncontrolling interests   $   107,526       $   98,665    
Adjustments to reconcile net income to net cash provided by operating activities      
  Depreciation and amortization       69,236           60,718    
  Share-based compensation expense       18,826           18,347    
  Other noncash adjustments       (2,702 )         1,321    
Change in working capital       (4,816 )         (19,269 )  
  Net cash provided by operating activities       188,070           159,782    
           
Cash flows from investing activities:            
Capital expenditures - property and equipment       (117,037 )         (113,219 )  
Acquisition of franchise restaurants, net of cash acquired       (16,528 )       -    
  Net cash used in investing activities       (133,565 )         (113,219 )  
           
Cash flows from financing activities:            
Proceeds from revolving credit facility, net     -           25,000    
Repurchase shares of common stock     -           (4,110 )  
Dividends paid       (43,223 )         (38,656 )  
Other financing activities       (9,790 )         (6,418 )  
  Net cash used in financing activities       (53,013 )         (24,184 )  
           
  Net increase in cash and cash equivalents       1,492           22,379    
Cash and cash equivalents - beginning of period       112,944           59,334    
Cash and cash equivalents - end of period   $   114,436       $   81,713    
           

For full wide spreadsheet, please go to: http://phoenix.corporate-ir.net/phoenix.zhtml?c=179897&p=irol-newsArticle&ID=2312561 

SOURCE Texas Roadhouse

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