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CST: 22/11/2019 15:34:20   

Texas Roadhouse, Inc. Announces Third Quarter 2019 Results

24 Days ago

LOUISVILLE, Ky., Oct. 28, 2019 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 39 week periods ended September 24, 2019. 

    Third Quarter   Year to Date
($000's)   2019   2018   % Change   2019 2018 % Change
                     
Total revenue   $   650,489   $   594,595   9.4%   $   2,030,925   $   1,851,537 9.7%
Income from operations   44,884   35,444   26.6%   158,612 154,582 2.6%
Net income   36,531   29,125   25.4%   131,766 127,893 3.0%
Diluted EPS   $   0.52   $   0.40   29.1%   $   1.85   $   1.78 3.9%

 

Results for the third quarter included the following highlights:  

  • Comparable restaurant sales increased 4.4% at company restaurants and 3.2% at domestic franchise restaurants;
  • Restaurant margin, as a percentage of restaurant and other sales, increased 49 basis points to 16.7%, as lower cost of sales due to the benefit of a higher average check was partially offset by higher labor costs driven by wage rate and other inflation.  Restaurant margin dollars increased 12.7% to $108.0 million from $95.8 million in the prior year;
  • Diluted earnings per share increased 29.1% to $0.52 from $0.40 in the prior year as higher restaurant margin dollars and a decrease in certain general and administrative expenses were partially offset by higher depreciation and amortization expense;
  • Four company restaurants, including one Bubba’s 33 restaurant, and two international franchise restaurants were opened; and
  • The Company repurchased 358,381 shares of common stock for $18.9 million. 

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

  • Comparable restaurant sales increased 4.8% at company restaurants and 4.0% at domestic franchise restaurants;
  • Restaurant margin, as a percentage of restaurant and other sales, decreased 46 basis points to 17.4%, as higher labor costs driven by wage rate and other inflation was partially offset by lower cost of sales due to the benefit of a higher average check.  Restaurant margin dollars increased 6.9% to $351.3 million from $328.6 million in the prior year;
  • Diluted earnings per share increased 3.9% to $1.85 from $1.78 in the prior year;
  • 11 company restaurants, including one Bubba’s 33 restaurant, and six, primarily international, franchise restaurants were opened; and
  • The Company repurchased 2,455,058 shares of common stock for $131.0 million. 

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, “We are pleased to deliver a solid quarter of results driven by improved restaurant margins and comparable restaurant sales growth of 4.4%.  Our operators continue to execute on our core strategy of getting guests in the door and providing a legendary experience.”

Taylor continued, “On the development front, our restaurant pipeline is as strong as it has ever been.  In 2020 we are targeting at least 30 company restaurant openings and our franchise partners are targeting an additional eight restaurant openings.  As we head into 2020, we are excited about the growth opportunities and the strength of our business.”

2019 Outlook

Comparable restaurant sales at company restaurants for the first four weeks of our fourth quarter of fiscal 2019 increased 5.3% compared to the prior year period.

Management updated the following expectations for 2019:

  • Approximately 22 company restaurant openings, including as many as three Bubba’s 33 restaurants;
  • Commodity cost inflation of 1.5% to 2.0%;
  • Growth in total labor dollars per store week of 6.0% to 7.0%; and
  • Total capital expenditures of approximately $200 million.

Management reiterated the following expectations for 2019:

  • Positive comparable restaurant sales growth; and
  • An income tax rate of 14.0% to 15.0%.

2020 Outlook

Management provided the following initial expectations for 2020:

  • Positive comparable restaurant sales growth;
  • At least 30 company restaurant openings, including as many as eight Bubba’s 33 restaurants;
  • 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;
  • An income tax rate of 14.0% to 15.0%; and
  • Total capital expenditures of $190 million to $200 million.

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, October 28, 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 5096392 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 600 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)
                       
       13 Weeks Ended     39 Weeks Ended 
      September 24, 2019     September 25, 2018     September 24, 2019   September 25, 2018  
                             
Revenue:                        
  Restaurant and other sales  $   645,230       $   589,704     $   2,014,720     $   1,836,179  
  Franchise royalties and fees   5,259         4,891       16,205       15,358  
                             
Total revenue   650,489         594,595       2,030,925       1,851,537  
                             
Costs and expenses:                        
  Restaurant operating costs (excluding depreciation and amortization shown separately below):                        
                             
    Cost of sales   205,158         191,990       650,136       598,824  
    Labor   218,342         197,621       667,712       593,298  
    Rent   12,994         12,330       39,173       36,300  
    Other operating   100,742         91,946       306,355       279,182  
  Pre-opening   4,736         4,378       12,801       13,529  
  Depreciation and amortization    28,347         25,843       84,574       75,492  
  Impairment and closure   61         20       394       128  
  General and administrative   35,225         35,023       111,168       100,202  
                             
Total costs and expenses   605,605         559,151       1,872,313       1,696,955  
                             
Income from operations   44,884         35,444       158,612       154,582  
                             
Interest income (expense), net   81         (168 )     1,526       (810 )
Equity income from investments in                        
  unconsolidated affiliates   (154 )       381       100       1,150  
                             
Income before taxes   44,811         35,657       160,238       154,922  
Provision for income taxes   6,785         5,398       23,331       22,321  
                             
Net income including noncontrolling interests   38,026         30,259       136,907       132,601  
Less: Net income attributable to noncontrolling interests   1,495         1,134       5,141       4,708  
Net income attributable to Texas Roadhouse, Inc. and subsidiaries $   36,531       $   29,125     $   131,766     $   127,893  
                             
Net income per common share attributable to Texas Roadhouse, Inc.                        
  and subsidiaries:                        
  Basic $   0.53       $   0.41     $   1.86     $   1.79  
  Diluted $   0.52       $   0.40     $   1.85     $   1.78  
                             
Weighted average shares outstanding:                        
  Basic   69,573         71,508       70,896       71,429  
  Diluted   69,939         72,006       71,287       71,906  
                             
Cash dividends declared per share $   0.30       $   0.25     $   0.90     $   0.75  
             
         

 

 
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
               
      September 24, 2019   December 25, 2018
               
               
Cash and cash equivalents   $   99,540     $   210,125  
Other current assets, net     65,122       134,894  
Property and equipment, net     1,020,167       956,676  
Operating lease right-of-use asset, net     495,419       -   
Goodwill     123,220       123,220  
Intangible assets, net     1,375       1,959  
Other assets     50,718       42,402  
               
Total assets   $   1,855,561     $   1,469,276  
               
               
Other current liabilities     332,272       385,142  
Operating lease liabilities, net of current portion     532,480       -   
Other liabilities     82,112       123,426  
Texas Roadhouse, Inc. and subsidiaries stockholders' equity     893,975       945,569  
Noncontrolling interests      14,722       15,139  
               
Total liabilities and equity   $   1,855,561     $   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)
                   
                   
        39 Weeks Ended  
        September 24, 2019     September 25, 2018  
                   
                   
Cash flows from operating activities:              
Net income including noncontrolling interests   $   136,907       $   132,601  
Adjustments to reconcile net income to net cash provided by operating activities              
  Depreciation and amortization     84,574         75,492  
  Share-based compensation expense     25,016         24,820  
  Other noncash adjustments, net     881         6,872  
Change in working capital     (5,381 )       (14,206 )
    Net cash provided by operating activities     241,997         225,579  
                   
Cash flows from investing activities:              
Capital expenditures - property and equipment     (144,917 )       (110,906 )
Proceeds from sale of property and equipment     351         -   
    Net cash used in investing activities     (144,566 )       (110,906 )
                   
Cash flows from financing activities:              
Principal payments on long-term debt and capital lease obligation     -          (50,007 )
Repurchase shares of common stock     (130,963 )       -   
Dividends paid     (60,675 )       (50,666 )
Other financing activities, net     (16,378 )       (13,728 )
    Net cash used in financing activities     (208,016 )       (114,401 )
                   
    Net (decrease) increase in cash and cash equivalents     (110,585 )       272  
Cash and cash equivalents - beginning of period     210,125         150,918  
Cash and cash equivalents - end of period   $   99,540       $   151,190  
                   


 
 
Texas Roadhouse, Inc. and Subsidiaries
Reconciliation of Income from Operations to Restaurant Margin
(in thousands)
(unaudited)
                 
    13 Weeks Ended   39 Weeks Ended
    September 24, 2019   September 25, 2018   September 24, 2019   September 25, 2018
                 
Income from operations   $   44,884   $   35,444   $   158,612   $   154,582
                 
Less:                
Franchise royalties and fees     5,259     4,891     16,205     15,358
                 
Add:                
Pre-opening     4,736     4,378     12,801     13,529
Depreciation and amortization     28,347     25,843     84,574     75,492
Impairment and closure     61     20     394     128
General and administrative     35,225     35,023     111,168     100,202
                 
Restaurant margin   $   107,994   $   95,817   $   351,344   $   328,575
                 
Restaurant margin (as a percentage of restaurant and other sales)   16.7%   16.2%   17.4%   17.9%


   
   
   
Texas Roadhouse, Inc. and Subsidiaries
Supplemental Financial and Operating Information
($ amounts in thousands, except weekly sales by group)
(unaudited)  
                         
      Third Quarter   Change       Year to Date   Change    
      2019   2018   vs LY       2019   2018   vs LY    
                                   
Restaurant openings                              
  Company - Texas Roadhouse 3   3   0       10   13   (3)    
  Company - Bubba's 33 1   0   1       1   4   (3)    
  Company - Other 0   0   0       0   0   0    
  Franchise - Texas Roadhouse - U.S. 0   0   0       1   0   1    
  Franchise - Texas Roadhouse - International 2   1   1       5   4   1    
  Total 6   4   2       17   21   (4)    
                                   
Restaurant closures                              
  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 474   453   21                    
  Company - Bubba's 33 26   24   2                    
  Company - Other 2   2   0                    
  Franchise - Texas Roadhouse - U.S. 70   70   0                    
  Franchise - Texas Roadhouse - International 25   21   4                    
  Total 597   570   27                    
                                   
Company restaurants                              
  Restaurant and other sales $   645,230   $   589,704     9.4   %   $   2,014,720   $   1,836,179     9.7   %
  Store weeks 6,509   6,196     5.0   %   19,355   18,386     5.3   %
  Comparable restaurant sales growth (1) 4.4 % 5.5 %         4.8 % 5.4 %      
  Texas Roadhouse restaurants only:                              
    Comparable restaurant sales growth (1) 4.2 % 5.5 %         4.7 % 5.3 %      
    Average unit volume (2) $   1,304   $   1,254     4.0   %   $   4,118   $   3,953     4.2   %
    Weekly sales by group:                      
      Comparable restaurants (441 units) $   100,578                            
      Average unit volume restaurants (23 units) (3) $   95,324                            
      Restaurants less than 6 months old (10 units) $   107,347                            
                                   
Restaurant operating costs (as a % of restaurant and other sales)                              
Cost of sales 31.8 % 32.6 %   (76 ) bps 32.3 % 32.6 %   (34 ) bps
Labor 33.8 % 33.5 %   33   bps 33.1 % 32.3 %   83   bps
Rent   2.0 % 2.1 %   (8 ) bps 1.9 % 2.0 %   (3 ) bps
Other operating  15.6 % 15.6 %   2   bps 15.2 % 15.2 %   0   bps
Total  83.3 % 83.8 %   (49 ) bps 82.6 % 82.1 %   46   bps
                                   
  Restaurant margin 16.7 % 16.2 %   49   bps 17.4 % 17.9 %   (46 ) bps
                                   
  Restaurant margin ($ in thousands) $   107,994   $   95,817     12.7   %   $   351,344   $   328,575     6.9   %
  Restaurant margin $/Store week $   16,591   $   15,464     7.3   %   $   18,153   $   17,871     1.6   %
                                   
Franchise restaurants                              
  Franchise royalties and fees $   5,259   $   4,891     7.5   %   $   16,205   $   15,358     5.5   %
  Store weeks 1,220   1,175     3.8   %   3,623   3,478     4.2   %
  Comparable restaurant sales growth (1) 2.4 % 1.8 %         3.0 % 2.0 %      
  U.S. franchise restaurants only:                              
    Comparable restaurant sales growth (1) 3.2 % 4.2 %         4.0 % 4.1 %      
    Average unit volume (2) $   1,346   $   1,304     3.2   %   $   4,243   $   4,081     4.0   %
                                   
Pre-opening expense $   4,736   $   4,378     8.2   %   $   12,801   $   13,529     (5.4 ) %
                                   
Depreciation and amortization  $   28,347   $   25,843     9.7   %   $   84,574   $   75,492     12.0   %
  As a % of revenue  4.4 % 4.3 %   1   bps 4.2 % 4.1 %   9   bps
                                   
General and administrative expenses  $   35,225   $   35,023     0.6   %   $   111,168   $   100,202     10.9   %
  As a % of revenue 5.4 % 5.9 %   (48)   bps 5.5 % 5.4 %   6   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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