Texas Roadhouse, Inc. Announces Fourth Quarter 2019 Results
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Texas Roadhouse, Inc. Announces Fourth Quarter 2019 Results

Increases Quarterly Dividend 20% to $0.36 per Share

LOUISVILLE, Ky., Feb. 20, 2020 // GLOBE NEWSWIRE // - Texas Roadhouse, Inc. (NasdaqGS: TXRH) today announced financial results for the 14 and 53 week periods ended December 31, 2019.

  Fourth Quarter   Year to Date
($000's) 2019 2018 % Change   2019 2018 % Change
               
Total revenue $   725,238 $   605,912 19.7 %   $   2,756,163 $   2,457,449 12.2 %
Income from operations   53,411   33,207 60.8 %     212,023   187,789 12.9 %
Net income   42,686   30,332 40.7 %     174,452   158,225 10.3 %
Diluted EPS $   0.61 $   0.42 45.4 %   $   2.46 $   2.20 11.9 %
                           


Note: Fourth quarter and full year 2019 results include 14 and 53 weeks, respectively, compared to 13 and 52 weeks in the fourth quarter and full year of 2018, respectively.

Results for the fourth quarter included the following highlights:

  • Comparable restaurant sales increased 4.4% at company restaurants and 3.4% at domestic franchise restaurants;
  • Restaurant margin, as a percentage of restaurant and other sales, increased 117 basis points to 17.1% as the benefit of the 53rd week, a higher average check, and labor productivity were partially offset by wage rate and commodity inflation. Restaurant margin dollars increased 28.6% to $122.9 million from $95.6 million in the prior year;
  • Diluted earnings per share increased 45.4% to $0.61 from $0.42 in the prior year. Diluted earnings per share were positively impacted by $0.10 to $0.11 as a result of the 53rd week;
  • 11 company restaurants, including two Bubba’s 33 restaurants, and three international franchise restaurants were opened; and
  • The Company repurchased 170,187 shares of common stock for $8.9 million.

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

  • Comparable restaurant sales increased 4.7% at company restaurants and 3.8% at domestic franchise restaurants;
  • Restaurant margin, as a percentage of restaurant and other sales, decreased six basis points to 17.3%, as higher labor costs driven by wage rate and other inflation was offset by lower cost of sales due to the benefit of a higher average check. Restaurant margin dollars increased 11.8% to $474.2 million from $424.2 million in the prior year;
  • Diluted earnings per share increased 11.9% to $2.46 from $2.20 in the prior year. Diluted earnings per share were positively impacted by $0.10 to $0.11 as a result of the 53rd week;
  • 22 company restaurants, including three Bubba’s 33 restaurants, and nine, primarily international, franchise restaurants were opened; and
  • The Company repurchased 2,625,245 shares of common stock for $139.8 million.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, “We are very pleased to end the year on a strong note, highlighted by our double digit revenue growth and improved restaurant margins in the second half of the year. Fourth quarter comparable restaurant sales grew 4.4% at company restaurants, which represents our 40th consecutive quarter of growth. This is certainly a credit to our operators, who for 10 straight years have found ways to continue to grow sales. In addition, our healthy cash flow allowed us to increase our quarterly cash dividend to $0.36 per share in 2020 which is our seventh straight year of increasing our dividends by double digits.”

Taylor continued, “We are off to a solid start in 2020, with comparable restaurant sales growth of 6.4% for the first seven weeks of the year. In addition, our development pipeline remains strong and we continue to target at least 30 company restaurant openings for the year.”

2020 Outlook

Comparable restaurant sales at company restaurants for the first seven weeks of our first quarter of fiscal 2020 increased 6.4% compared to the prior year period.

Management reiterated the following expectations for 2020:

  • Positive comparable restaurant sales growth;
  • At least 30 company restaurant openings;
  • Store week growth of 3.5% to 4.5%, including the negative impact of lapping the 53rd week from 2019;
  • Commodity cost inflation of 1.0% to 2.0%;
  • Mid-single digit growth in labor dollars per store week; and
  • An income tax rate of 14.0% to 15.0%.

Management updated the following expectations for 2020:

  • Total capital expenditures of $210 million to $220 million.

Cash Dividend Payment

On February 20, 2020, our Board of Directors authorized the payment of a quarterly cash dividend of $0.36 per share of common stock. This payment, which will be distributed on March 27, 2020 to shareholders of record at the close of business on March 11, 2020, represents a 20% increase from the cash dividend of $0.30 per share of common stock declared during each quarter of 2019. Since the inception of our dividend program in 2011, our cash dividend per share of common stock has increased an average of 18.2% per year.

Non-GAAP Measures

We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”). Within our press release, we make reference to restaurant margin (in dollars and as a percentage of sales). Restaurant margin represents restaurant and other sales less restaurant-level operating costs, including cost of sales, labor, rent and other operating costs. Restaurant margin should not be considered in isolation, or as an alternative, to income from operations. This non-GAAP measure is not indicative of overall company performance and profitability in that this measure does not accrue directly to the benefit of shareholders due to the nature of the costs excluded. Restaurant margin is widely regarded as a useful metric by which to evaluate restaurant-level operating efficiency and performance. In calculating restaurant margin, we exclude certain non-restaurant-level costs that support operations, including pre-opening and general and administrative expenses, but do not have a direct impact on restaurant-level operational efficiency and performance. We also exclude depreciation and amortization expense, substantially all of which relates to restaurant-level assets, as it represents a non-cash charge for the investment in our restaurants. We also exclude impairment and closure expense as we believe this provides a clearer perspective of ongoing operating performance and a more useful comparison to prior period results. Restaurant margin as presented may not be comparable to other similarly titled measures of other companies in our industry. A reconciliation of income from operations to restaurant margin is included in the accompanying financial tables.

Conference Call

Texas Roadhouse is hosting a conference call today, February 20, 2020 at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (877) 699-0953 or (647) 689-5456 for international calls. A replay of the call will be available for one week following the conference call. To access the replay, please dial (800) 585-8367 or (416) 621-4642 for international calls, and use 8963721 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 610 restaurants system-wide in 49 states and ten 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 Texas Roadhouse. 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, except as required by applicable law.

Contacts:

Investor Relations
Tonya Robinson
(502) 515-7269

Media
Travis Doster
(502) 638-5457

Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
 
  14 and 13 Weeks Ended   53 and 52 Weeks Ended
  December 31, 2019   December 25, 2018   December 31, 2019   December 25, 2018
               
Revenue:              
Restaurant and other sales $ 719,457     $ 600,936   $ 2,734,177     $ 2,437,115  
Franchise royalties and fees   5,781       4,976     21,986       20,334  
               
Total revenue   725,238       605,912     2,756,163       2,457,449  
               
Costs and expenses:              
Restaurant operating costs (excluding depreciation and amortization shown separately below):              
Cost of sales   233,221       196,476     883,357       795,300  
Labor   237,902       200,086     905,614       793,384  
Rent   13,358       12,491     52,531       48,791  
Other operating   112,093       96,295     418,448       375,477  
Pre-opening   7,355       5,522     20,156       19,051  
Depreciation and amortization   30,970       25,724     115,544       101,216  
Impairment and closure, net   (1,293 )     150     (899 )     278  
General and administrative   38,221       35,961     149,389       136,163  
               
Total costs and expenses   671,827       572,705     2,544,140       2,269,660  
               
Income from operations   53,411       33,207     212,023       187,789  
               
Interest (expense) income, net   (12 )     219     1,514       (591 )
Equity income from investments in unconsolidated affiliates   278       203     378       1,353  
               
Income before taxes   53,677       33,629     213,915       188,551  
Provision for income taxes   9,066       1,936     32,397       24,257  
               
Net income including noncontrolling interests   44,611       31,693     181,518       164,294  
Less: Net income attributable to noncontrolling interests   1,925       1,361     7,066       6,069  
Net income attributable to Texas Roadhouse, Inc. and subsidiaries $ 42,686     $ 30,332   $ 174,452     $ 158,225  
               
Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:              
Basic $ 0.61     $ 0.42   $ 2.47     $ 2.21  
Diluted $ 0.61     $ 0.42   $ 2.46     $ 2.20  
               
Weighted average shares outstanding:              
Basic   69,431       71,584     70,509       71,467  
Diluted   69,888       72,182     70,916       71,964  
               
Cash dividends declared per share $ 0.30     $ 0.25   $ 1.20     $ 1.00  
                             

 

Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
           
  December 31, 2019   December 25, 2018
           
           
Cash and cash equivalents $   107,879     $   210,125  
Other current assets, net     140,020         134,894  
Property and equipment, net     1,056,563         956,676  
Operating lease right-of-use asset, net     499,801         -   
Goodwill     124,748         123,220  
Intangible assets, net     1,234         1,959  
Other assets     53,320         42,402  
           
Total assets $   1,983,565     $   1,469,276  
           
           
Current liabilities     417,220         385,142  
Operating lease liabilities, net of current portion     538,710         -   
Other liabilities     96,466         123,426  
Texas Roadhouse, Inc. and subsidiaries stockholders' equity     915,994         945,569  
Noncontrolling interests     15,175         15,139  
           
Total liabilities and equity $   1,983,565     $   1,469,276  
           
Note: Beginning in 2019, we adopted Accounting Standards Codification 842, Leases, which requires the recognition of an operating lease right-of-use asset and operating lease liability for virtually all leases.
 

 

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

       
  53 and 52 Weeks Ended
  December 31, 2019   December 25, 2018
       
       
Cash flows from operating activities:      
Net income including noncontrolling interests $   181,518     $   164,294  
Adjustments to reconcile net income to net cash provided by operating activities      
Depreciation and amortization     115,544         101,216  
Share-based compensation expense     35,500         33,983  
Other noncash adjustments, net     12,374         18,726  
Change in working capital     29,362         34,649  
Net cash provided by operating activities     374,298         352,868  
       
Cash flows from investing activities:      
Capital expenditures - property and equipment     (214,340 )       (155,980 )
Acquisition of franchise restaurants, net of cash acquired     (1,536 )       (2,165 )
Proceeds from sale of property and equipment     1,056         -   
Net cash used in investing activities     (214,820 )       (158,145 )
       
Cash flows from financing activities:      
Principal payments on long-term debt     -          (50,000 )
Repurchase of shares of common stock     (139,849 )       -   
Dividends paid     (102,366 )       (68,550 )
Other financing activities, net     (19,509 )       (16,966 )
Net cash used in financing activities     (261,724 )       (135,516 )
       
Net (decrease) increase in cash and cash equivalents     (102,246 )       59,207  
Cash and cash equivalents - beginning of period     210,125         150,918  
Cash and cash equivalents - end of period $   107,879     $   210,125  
       

 

Texas Roadhouse, Inc. and Subsidiaries
Reconciliation of Income from Operations to Restaurant Margin
(in thousands)
(unaudited)
               
  14 and 13 Weeks Ended   53 and 52 Weeks Ended
  December 31, 2019   December 25, 2018   December 31, 2019   December 25, 2018
               
Income from operations $   53,411     $   33,207     $   212,023     $   187,789  
               
Less:              
Franchise royalties and fees     5,781         4,976         21,986         20,334  
               
Add:              
Pre-opening     7,355         5,522         20,156         19,051  
Depreciation and amortization     30,970         25,724         115,544         101,216  
Impairment and closure, net     (1,293 )       150         (899 )       278  
General and administrative     38,221         35,961         149,389         136,163  
               
Restaurant margin $   122,883     $   95,588     $   474,227     $   424,163  
               
Restaurant margin (as a percentage of restaurant and other sales)   17.1 %     15.9 %     17.3 %     17.4 %
               

 

Texas Roadhouse, Inc. and Subsidiaries
Supplemental Financial and Operating Information
($ amounts in thousands, except weekly sales by group)
(unaudited)
                           
  Fourth Quarter   Change     Year to Date   Change  
  2019   2018   vs LY     2019   2018   vs LY  
                           
Restaurant openings                          
Company - Texas Roadhouse   9       10     (1 )       19       23     (4 )  
Company - Bubba's 33   2       1     1         3       5     (2 )  
Company - Other   0       0     0         0       0     0    
Franchise - Texas Roadhouse - U.S.   0       0     0         1       0     1    
Franchise - Texas Roadhouse - International   3       1     2         8       5     3    
Total   14       12     2         31       33     (2 )  
                           
Restaurant acquisitions/dispositions                          
Company   1       1     0         1       1     0    
Franchise   (1 )     (1 )   0         (1 )     (1 )   0    
Total   0       0     0         0       0     0    
                           
Restaurant closures                          
Company - Texas Roadhouse   0       0     0         0       0     0    
Franchise - Texas Roadhouse - International   0       0     0         (2 )     0     (2 )  
Total   0       0     0         (2 )     0     (2 )  
                           
Restaurants open at the end of the quarter                          
Company - Texas Roadhouse   484       464     20                  
Company - Bubba's 33   28       25     3                  
Company - Other   2       2     0                  
Franchise - Texas Roadhouse - U.S.   69       69     0                  
Franchise - Texas Roadhouse - International   28       22     6                  
Total   611       582     29                  
                           
Company restaurants                          
Restaurant and other sales $ 719,457     $ 600,936     19.7   %   $ 2,734,177     $ 2,437,115     12.2   %
Store weeks   7,118       6,307     12.9   %     26,473       24,693     7.2   %
Comparable restaurant sales growth (1)   4.4   %   5.6   %       4.7   %   5.4   %  
Texas Roadhouse restaurants only:                          
Comparable restaurant sales growth (1)   4.3   %   5.6   %       4.6   %   5.4   %  
Average unit volume (2) $ 1,434     $ 1,251     14.6   %   $ 5,555     $ 5,209     6.6   %
Average unit volume, 2018 adjusted (3) $ 1,434     $ 1,380     4.0   %   $ 5,555     $ 5,338     4.1   %
Weekly sales by group:                  
Comparable restaurants (448 units) $ 102,824                          
Average unit volume restaurants (21 units) (4) $ 94,379                          
Restaurants less than 6 months old (15 units) $ 106,328                          
                           
Restaurant operating costs (as a % of restaurant and other sales)                          
Cost of sales   32.4   %   32.7   % (28 ) bps     32.3   %   32.6   % (32 ) bps
Labor   33.1   %   33.3   % (23 ) bps     33.1   %   32.6   % 57   bps
Rent   1.9   %   2.1   % (22 ) bps     1.9   %   2.0   % (8 ) bps
Other operating   15.6   %   16.0   % (44 ) bps     15.3   %   15.4   % (10 ) bps
Total   82.9   %   84.1   % (117 ) bps     82.7   %   82.6   % 6   bps
Restaurant margin   17.1   %   15.9   % 117   bps     17.3   %   17.4   % (6 ) bps
Restaurant margin ($ in thousands) $ 122,883     $ 95,588     28.6   %   $ 474,227     $ 424,163     11.8   %
Restaurant margin $/Store week $ 17,264     $ 15,156     13.9   %   $ 17,914     $ 17,177     4.3   %
                           
Franchise restaurants                          
Franchise royalties and fees $ 5,781     $ 4,976     16.2   %   $ 21,986     $ 20,334     8.1   %
Store weeks   1,330       1,192     11.6   %     4,953       4,670     6.1   %
Comparable restaurant sales growth (1)   3.0   %   2.7   %       3.0   %   2.2   %  
U.S. franchise restaurants only:                          
Comparable restaurant sales growth (1)   3.4   %   4.8   %       3.8   %   4.3   %  
Average unit volume (2) $ 1,489     $ 1,308     13.8   %   $ 5,732     $ 5,389     6.4   %
Average unit volume, 2018 adjusted (3) $ 1,489     $ 1,440     3.4   %   $ 5,732     $ 5,521     3.8   %
                           
Pre-opening expense $ 7,355     $ 5,522     33.2   %   $ 20,156     $ 19,051     5.8   %
                           
Depreciation and amortization $ 30,970     $ 25,724     20.4   %   $ 115,544     $ 101,216     14.2   %
As a % of revenue   4.3   %   4.2   % 2   bps     4.2   %   4.1   % 7   bps
                           
General and administrative expenses $ 38,221     $ 35,961     6.3   %   $ 149,389     $ 136,163     9.7   %
As a % of revenue   5.3   %   5.9   % (66 ) bps     5.4   %   5.5   % (12 ) 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.  Q4 2019 and 2019 YTD include 14 and 53 weeks, respectively, while Q4 2018 and 2018 YTD include 13 and 52 weeks.
(3)  For comparative purposes, Q4 2018 and 2018 YTD were adjusted to include 14 and 53 weeks, respectively.
(4)  Average unit volume restaurants include restaurants open a full six and up to 18 months before the beginning of the period measured.
Amounts may not foot due to rounding.

SOURCE Texas Roadhouse

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