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CST: 23/03/2019 09:59:04   

Texas Roadhouse, Inc. Announces Fourth Quarter 2018 Results

31 Days ago

Increases Quarterly Dividend 20% to $0.30 per Share

LOUISVILLE, Ky., Feb. 19, 2019 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 52 week periods ended December 25, 2018. 

  Fourth Quarter Year to Date
($000's) 2018   2017   % Change 2018 2017 % Change
                 
Total revenue $   605,912   $   545,076   11.2% $   2,457,449   $   2,219,531 10.7%
Income from operations 33,207   37,459   (11.4%) 187,789 186,206 0.9%
Net income 30,332   28,618   6.0% 158,225 131,526 20.3%
Diluted EPS $   0.42   $   0.40   5.4% $   2.20   $   1.84 19.6%

Results for the fourth quarter included the following highlights:  

  • Comparable restaurant sales increased 5.6% at company restaurants and 4.8% at domestic franchise restaurants;
  • Restaurant margin, as a percentage of restaurant and other sales, decreased 112 basis points to 15.9%, primarily due to higher labor costs. Restaurant margin dollars increased 3.7% to $95.6 million from $92.2 million in the prior year;
  • Our income tax rate decreased to 5.8% from 19.8% in the prior year primarily due to the impact of new tax legislation;
  • Diluted earnings per share increased 5.4% to $0.42 from $0.40 in the prior year primarily due to higher revenue and lower income tax expense partially offset by higher labor costs and higher general and administrative expenses; and
  • Eleven company restaurants, including one Bubba’s 33, and one international franchise restaurant were opened.

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

  • Comparable restaurant sales increased 5.4% at company restaurants and 4.3% at domestic franchise restaurants;
  • Restaurant margin, as a percentage of restaurant and other sales, decreased 104 basis points to 17.4%, primarily due to higher labor costs. Restaurant margin dollars increased 4.4% to $424.2 million from $406.4 million in the prior year;
  • Our income tax rate decreased to 12.9% from 26.1% in the prior year primarily due to the impact of new tax legislation;
  • Diluted earnings per share increased 19.6% to $2.20 from $1.84 in the prior year primarily due to higher revenue and lower income tax expense partially offset by higher labor costs. In addition, we overlapped a pre-tax charge of $14.9 million ($9.2 million after-tax), or $0.13 per diluted share, in the first quarter of 2017, related to the settlement of a legal matter; and
  • 28 company restaurants, including five Bubba’s 33, and five international franchise restaurants were opened.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "We finished the year strong, with double digit revenue growth for both the fourth quarter and full year. This represented the 36th consecutive quarter of positive comparable restaurant sales, with growth of 5.6% driven by increased traffic. In addition, our solid balance sheet and healthy cashflow allowed us to open 28 company restaurants this year, while also increasing our quarterly cash dividend to $0.30 per share which is our sixth straight year of increasing our dividends by double digits."

Taylor continued, “Looking ahead to 2019, our development pipeline is in great shape as we expect to open 25 to 30 company restaurants and as many as eight franchise restaurants. While we expect to face continued cost pressures in the near term, we remain excited about the top-line momentum that our operators have generated.”

2019 Outlook

Comparable restaurant sales at company restaurants for the first 54 days of our first quarter of fiscal 2019 increased approximately 6.0% compared to the prior year period, including a positive impact of approximately 1.3% related to the calendar shift of the New Year’s holiday.

Management updated the following expectations for 2019:

  • Positive comparable restaurant sales growth including a menu price increase of approximately 1.5% to be implemented at the beginning of our second quarter;
  • An income tax rate of approximately 15.0%; and
  • Total capital expenditures of approximately $210 million to $220 million.

Management reiterated the following expectations for 2019:

  • 25 to 30 company restaurant openings, including as many as four Bubba’s 33 restaurants;
  • Commodity cost inflation of approximately 1.0% to 2.0%; and
  • Mid-single digit growth in labor dollars per store week, excluding the impact of higher guest counts.

Cash Dividend Payment

On February 13, 2019, our Board of Directors authorized the payment of a quarterly cash dividend of $0.30 per share of common stock. This payment, which will be distributed on March 29, 2019 to shareholders of record at the close of business on March 13, 2019, represents a 20% increase from the cash dividend of $0.25 per share of common stock declared during each quarter of 2018. Since the inception of our dividend program in 2011, our cash dividend per share of common stock has increased an average of 18.0% 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 19, 2019 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 9984178 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 580 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.

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) 
 
 
  13 Weeks Ended     52 Weeks Ended  
  December 25,
2018
    December 26,
2017
    December 25,
2018
    December 26,
2017
 
                           
Revenue:                          
Restaurant and other sales  $   600,936       $   541,196     $   2,437,115       $   2,203,017  
Franchise royalties and fees   4,976         3,880       20,334         16,514  
                           
Total revenue   605,912         545,076       2,457,449         2,219,531  
                           
Costs and expenses:                          
Restaurant operating costs (excluding depreciation and amortization shown separately below):                      
Cost of sales   196,476         175,688       795,300         721,550  
Labor   200,086         173,258       793,384         687,545  
Rent   12,491         11,569       48,791         44,807  
Other operating   96,295         88,526       375,477         342,702  
Pre-opening   5,522         4,972       19,051         19,274  
Depreciation and amortization    25,724         24,263       101,216         93,499  
Impairment and closure   150         641       278         654  
General and administrative   35,961         28,700       136,163         123,294  
                           
Total costs and expenses   572,705         507,617       2,269,660         2,033,325  
                           
Income from operations   33,207         37,459       187,789         186,206  
                           
Interest (income) expense, net   (219 )       366       591         1,577  
Equity income from investments in unconsolidated affiliates   (203 )       (339 )     (1,353 )       (1,488 )
                           
Income before taxes   33,629         37,432       188,551         186,117  
Provision for income taxes   1,936         7,422       24,257         48,581  
                           
Net income including noncontrolling interests   31,693         30,010       164,294         137,536  
Less: Net income attributable to noncontrolling interests   1,361         1,392       6,069         6,010  
Net income attributable to Texas Roadhouse, Inc. and subsidiaries $   30,332       $   28,618     $   158,225       $   131,526  
                           
Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:                          
Basic $   0.42       $   0.40     $   2.21       $   1.85  
Diluted $   0.42       $   0.40     $   2.20       $   1.84  
                           
Weighted average shares outstanding:                          
Basic   71,584         71,138       71,467         70,989  
Diluted   72,182         71,753       71,964         71,527  
                           
Cash dividends declared per share $   0.25       $   0.21     $   1.00       $   0.84  


Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 
 
    December 25, 2018   December 26, 2017
             
Cash and cash equivalents   $   210,125     $   150,918  
Other current assets, net     134,894       106,163  
Property and equipment, net     956,676       912,147  
Goodwill     123,220       121,040  
Intangible assets, net     1,959       2,700  
Other assets     42,402       37,655  
             
Total assets   $   1,469,276     $   1,330,623  
             
             
Other current liabilities     385,142       329,998  
Long-term debt and obligation under capital lease, excluding current maturities    2,081       51,981  
Other liabilities, net     121,345       97,253  
Texas Roadhouse, Inc. and subsidiaries stockholders' equity     945,569       839,079  
Noncontrolling interests      15,139       12,312  
               
Total liabilities and equity   $   1,469,276     $   1,330,623  
               


Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
               
               
        52 Weeks Ended
         
        December 25, 2018   December 26, 2017
               
               
Cash flows from operating activities:          
Net income including noncontrolling interests   $   164,294     $   137,536
Adjustments to reconcile net income to net cash provided by operating activities          
  Depreciation and amortization     101,216       93,499
  Share-based compensation expense     33,983       26,934
  Other noncash adjustments, net     18,726       438
Change in working capital     34,649       27,966
    Net cash provided by operating activities     352,868       286,373
               
Cash flows from investing activities:          
Capital expenditures - property and equipment     (155,980)       (161,628)
Acquisition of franchise restaurants, net of cash acquired     (2,165)       (16,528)
    Net cash used in investing activities     (158,145)       (178,156)
               
Cash flows from financing activities:          
Principal payments on long-term debt and capital lease obligation     (50,000)       (558)
Dividends paid     (68,550)       (58,154)
Other financing activities, net     (16,966)       (11,531)
    Net cash used in financing activities     (135,516)       (70,243)
               
    Net increase in cash and cash equivalents     59,207       37,974
Cash and cash equivalents - beginning of period     150,918       112,944
Cash and cash equivalents - end of period   $   210,125     $   150,918


Texas Roadhouse, Inc. and Subsidiaries
Reconciliation of Income from Operations to Restaurant Margin
(in thousands)
(unaudited)
 
   
    13 Weeks Ended   52 Weeks Ended
    December 25, 2018   December 26, 2017   December 25, 2018   December 26, 2017
                 
Income from operations   $   33,207   $   37,459   $   187,789   $   186,206
                 
Less:                
Franchise royalties and fees     4,976     3,880     20,334     16,514
                 
Add:                
Pre-opening     5,522     4,972     19,051     19,274
Depreciation and amortization     25,724     24,263     101,216     93,499
Impairment and closure     150     641     278     654
General and administrative     35,961     28,700     136,163     123,294
                 
Restaurant margin   $   95,588   $   92,155   $   424,163   $   406,413
                 
Restaurant margin (as a percentage of restaurant and other sales)   15.9%   17.0%   17.4%   18.4%


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  
      2018   2017   vs LY     2018   2017   vs LY  
                               
Restaurant openings                          
  Company - Texas Roadhouse 10   7   3     23   23   0  
  Company - Bubba's 33 1   0   1     5   4   1  
  Company - Other 0   0   0     0   0   0  
  Franchise - Texas Roadhouse - U.S. 0   0   0     0   1   (1)  
  Franchise - Texas Roadhouse - International 1   2   (1)     5   4   1  
  Total 12   9   3     33   32   1  
                               
Restaurant acquisitions/dispositions                          
  Company - Texas Roadhouse 1   0   1     1   4   (3)  
  Franchise - Texas Roadhouse (1)   0   (1)     (1)   (4)   3  
  Total 0   0   0     0   0   0  
                               
Restaurants open at the end of the quarter                          
  Company - Texas Roadhouse 464   440   24                
  Company - Bubba's 33 25   20   5                
  Company - Other 2   2   0                
  Franchise - Texas Roadhouse - U.S. 69   70   (1)                
  Franchise - Texas Roadhouse - International 22   17   5                
  Total 582   549   33                
                               
Company restaurants                          
  Restaurant and other sales $ 600,936   $ 541,196     11.0 % $ 2,437,115   $  2,203,017     10.6 %
  Store weeks 6,307   5,950     6.0 % 24,693   23,274     6.1 %
  Comparable restaurant sales growth (1) 5.6 % 5.8 %     5.4 % 4.5 %  
  Texas Roadhouse restaurants only:                          
    Comparable restaurant sales growth (1) 5.6 % 5.9 %     5.4 % 4.5 %  
    Average unit volume (2) $   1,252   $   1,193     5.0 % $   5,211   $   4,973     4.8 %
    Weekly sales by group:                  
      Comparable restaurants (424 units) $   96,879                        
      Average unit volume restaurants (23 units) (3) $   85,690                        
      Restaurants less than 6 months old (17 units) $   104,533                        
                               
Restaurant operating costs (as a % of restaurant and other sales)                          
Cost of sales 32.7 % 32.5 %   23 bps 32.6 % 32.8 %   (12) bps
Labor 33.3 % 32.0 %   128 bps 32.6 % 31.2 %   134 bps
Rent   2.1 % 2.1 %   (6) bps 2.0 % 2.0 %   (3) bps
Other operating  16.0 % 16.4 %   (33) bps 15.4 % 15.6 %   (15) bps
Total  84.1 % 83.0 %   112 bps 82.6 % 81.6 %   104 bps
                               
  Restaurant margin 15.9 % 17.0 %   (112) bps 17.4 % 18.4 %   (104) bps
                             
  Restaurant margin ($ in thousands) $   95,588   $   92,155     3.7 % $   424,163   $   406,413     4.4 %
  Restaurant margin $/Store week $   15,156   $   15,488     (2.1) % $   17,177   $   17,462     (1.6) %
                               
Franchise restaurants                          
  Franchise royalties and fees $   4,976   $   3,880     28.2 % $   20,334   $   16,514     23.1 %
  Store weeks 1,192   1,117     6.7 % 4,670   4,381     6.6 %
  Comparable restaurant sales growth (1) 2.7 % 2.9 %     2.2 % 2.9 %  
  U.S. franchise restaurants only:                          
    Comparable restaurant sales growth (1) 4.8 % 4.7 %     4.3 % 4.2 %  
    Average unit volume (2) $   1,284   $   1,226     4.8 % $   5,338   $   5,077     5.1 %
                               
Pre-opening expense $   5,522   $   4,972     11.1 % $   19,051   $   19,274     (1.2) %
                               
Depreciation and amortization  $   25,724   $   24,263     6.0 % $   101,216   $   93,499     8.3 %
  As a % of revenue  4.2 % 4.5 %   (21) bps 4.1 % 4.2 %   (9) bps
                               
General and administrative expenses  $   35,961   $   28,700     25.3 % $   136,163   $   123,294     10.4 %
  As a % of revenue 5.9 % 5.3 %   67 bps 5.5 % 5.6 %   (1) 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 and up to 18 months before the beginning of the period measured.  
   
Amounts may not foot due to rounding.  


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