TXRH
$45.28
Texas Roadhouse
$.09
.20%
Earnings Details
4th Quarter December 2016
Tuesday, February 21, 2017 4:03:00 PM
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Summary

Texas Roadhouse Misses

Texas Roadhouse (TXRH) reported 4th Quarter December 2016 earnings of $0.29 per share on revenue of $484.7 million. The consensus earnings estimate was $0.37 per share on revenue of $496.6 million. The Earnings Whisper number was $0.39 per share. Revenue grew 6.7% on a year-over-year basis.

Texas Roadhouse Inc is a full-service, casual dining restaurant company. It offers steaks, ribs, fish, seafood, chicken, pork chops, pulled pork and vegetable plates, and an assortment of hamburgers, salads and sandwiches.

Results
Reported Earnings
$0.29
Earnings Whisper
$0.39
Consensus Estimate
$0.37
Reported Revenue
$484.7 Mil
Revenue Estimate
$496.6 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Texas Roadhouse, Inc. Announces Fourth Quarter 2016 Results Increases Quarterly Dividend 10.5% to $0.21 per Share

Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 52 week periods ended December 27, 2016.

Fourth Quarter
Year to Date
($000’s)
2016
2015
% Change
2016
2015
% Change
Total revenue
$ 484,710
$ 454,351
7 %
$ 1,990,714
$ 1,807,368
10 %
Income from operations
30,839
33,713
(9 %)
171,900
144,565
19 %
Net income
20,725
22,982
(10 %)
115,598
96,894
19 %
Diluted EPS
$
0.29
$
0.32
(10 %)
$
1.63
$
1.37
19 %

Results for the fourth quarter included the following highlights:

Comparable restaurant sales growth of 1.2% at company restaurants, including a negative impact of approximately 0.5% related to the calendar shift of the Christmas holiday, and 2.0% at domestic franchise restaurants;

Restaurant margin, as a percentage of restaurant sales, decreased 44 basis points to 17.1%. Wage rate inflation and higher costs associated with payroll taxes, insurance reserve adjustments and gift card fees more than offset the benefit of lower food costs;

Restaurant margin dollars increased 4.0% to $82.4 million from $79.2 million in the prior year;

Diluted earnings per share decreased 10.3% to $0.29 from $0.32 in the prior year primarily due to restaurant margin performance, higher general and administrative expenses and higher depreciation costs; and

Nine company-owned restaurants were opened, including four Bubba’s 33 restaurants.

Results for the full year included the following highlights:

Comparable restaurant sales growth of 3.5% at company restaurants and 3.3% at domestic franchise restaurants;

Restaurant margin, as a percentage of restaurant sales, increased 134 basis points to 18.7%. The benefit of lower food costs more than offset the impact of higher wage rate inflation;

Restaurant margin dollars increased 18.7% to $368.9 million from $310.8 million in the prior year;

Diluted earnings per share increased 18.8% to $1.63 from $1.37 in the prior year. During fiscal 2016, we recorded a pre-tax charge of $7.3 million ($4.5 million after-tax) related to a legal settlement which had a $0.06 impact on diluted earnings per share and a 4.6% impact on diluted earnings per share growth;

30 company-owned restaurants were opened, including nine Bubba’s 33 restaurants; and

-- We repurchased 114,700 shares of our common stock for $4.1 million.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "We are pleased to deliver another strong year of results including a 19% increase in diluted earnings per share driven by double-digit revenue growth and restaurant margin expansion. We also delivered impressive comparable restaurant sales growth during 2016 with an increase of 3.5%, and we extended our streak of consecutive quarters of comparable restaurant sales growth to 28 with our fourth quarter increase. Lastly, our strong balance sheet and healthy cash flows allowed us to return $56.2 million of excess capital to shareholders through quarterly dividend payments and share repurchases during 2016."

Taylor continued, "In 2017, we expect to open approximately 30 company restaurants and seven franchise restaurants this year, which is over 7% growth system-wide. Going forward, the strength of our brand continues to be our people and our operational focus on delivering legendary food and legendary service."

Franchise Acquisition

Effective December 28, 2016, we acquired four franchise restaurants in Florida and Georgia for an aggregate purchase price of $16.8 million. The purchase price was paid in cash. Going forward, two of the restaurants will be wholly-owned, while two will be majority-owned. The acquisition did not have a net revenue or accretive impact in 2016 as it occurred on the first day of our 2017 fiscal year.

2017 Outlook

Comparable restaurant sales at company restaurants for the first 55 days of our first quarter of fiscal 2017 increased approximately 1.5% compared to the prior year period.

Management updated the following expectations for 2017:

Approximately 30 company restaurant openings, including approximately six Bubba’s 33 restaurants;

Food cost deflation of approximately 1.0% to 2.0% compared to previous guidance of low-single digit food cost deflation; and

An income tax rate of 29.0% to 30.0% compared to previous guidance of 30.0% to 31.0%.

Management reiterated the following expectations for 2017:

-- Positive comparable restaurant sales growth;

-- Mid-single digit labor inflation; and

Total capital expenditures of approximately $170.0 million, excluding any cash used for franchise acquisitions.

Cash Dividend Payment

On February 16, 2017, our Board of Directors authorized the payment of a quarterly cash dividend of $0.21 per share of common stock. This payment, which will be distributed on March 31, 2017 to shareholders of record at the close of business on March 15, 2017, represents a 10.5% increase from the cash dividend of $0.19 per share of common stock declared during each quarter of 2016. Since the inception of our dividend program in 2011, our cash dividend per share of common stock has increased an average of 17.5% per year.

Conference Call

We will host a conference call today, February 21, 2017 at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (800)949-2163 or (719)785-1748 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 6581484 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 over 520 restaurants system-wide in 49 states and six foreign countries. For more information, please visit our 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 our management. 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 restaurant openings; 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 other concepts we develop or the franchise restaurants we acquire; 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
52 Weeks Ended
December 27,
December 29,
December 27,
December 29,
2016
2015
2016
2015
Revenue:
Restaurant sales
$ 480,730
$ 450,529
$ 1,974,261
$
1,791,446
Franchise royalties and fees
3,980
3,822
16,453
15,922
Total revenue
484,710
454,351
1,990,714
1,807,368
Costs and expenses:
Restaurant operating costs (excluding depreciation and amortization
shown separately below):
Cost of sales
162,638
159,301
669,203
644,001
Labor
147,395
131,517
590,256
524,203
Rent
10,103
9,741
40,580
37,183
Other operating
78,208
70,773
305,290
275,296
Pre-opening
5,294
4,640
19,547
19,116
Depreciation and amortization
22,246
18,700
82,964
69,694
Impairment and closure
125
974
179
974
General and administrative
27,862
24,992
110,795
92,336
Total costs and expenses
453,871
420,638
1,818,814
1,662,803
Income from operations
30,839
33,713
171,900
144,565
Interest expense, net
353
479
1,255
1,959
Equity income from investments in unconsolidated affiliates
280
353
1,111
1,641
Income before taxes
30,766
33,587
171,756
144,247
Provision for income taxes
8,858
9,567
51,183
42,986
Net income including noncontrolling interests
$
21,908
$
24,020
$
120,573
$
101,261
Less: Net income attributable to noncontrolling interests
1,183
1,038
4,975
4,367
Net income attributable to Texas Roadhouse, Inc. and subsidiaries
$
20,725
$
22,982
$
115,598
$
96,894
Net income per common share attributable to Texas Roadhouse, Inc.
and subsidiaries:
Basic
$
0.29
$
0.33
$
1.64
$
1.38
Diluted
$
0.29
$
0.32
$
1.63
$
1.37
Weighted average shares outstanding:
Basic
70,569
70,143
70,396
70,032
Diluted
71,215
70,865
71,052
70,747
Cash dividends declared per share
$
0.19
$
0.17
$
0.76
$
0.68
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
December 27,
December 29,
2016
2015
Cash and cash equivalents
$
112,944
$
59,334
Other current assets
87,315
74,479
Property and equipment, net
830,054
751,288
Goodwill
116,571
116,571
Intangible assets, net
3,622
4,827
Other assets
29,465
26,207
Total assets
$
1,179,971
$
1,032,706
Current maturities of long-term debt and obligation under capital
167
144
lease
Other current liabilities
279,360
256,498
Long-term debt and obligation under capital lease, excluding current
52,381
25,550
maturities
Other liabilities
89,821
73,332
Texas Roadhouse, Inc. and subsidiaries stockholders’ equity
750,226
669,662
Noncontrolling interests
8,016
7,520
Total liabilities and equity
$
1,179,971
$
1,032,706
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
52 Weeks Ended
December 27,
December 29,
2016
2015
Cash flows from operating activities:
Net income including noncontrolling interests
$
120,573
$
101,261
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and amortization
82,964
69,694
Share-based compensation expense
26,067
22,825
Other noncash adjustments
12,075
5,697
Change in working capital
15,386
28,464
Net cash provided by operating activities
257,065
227,941
Cash flows from investing activities:
Capital expenditures - property and equipment
(164,738 )
(173,475 )
Proceeds from sale of property and equipment, including insurance
-
272
proceeds
Net cash used in investing activities
(164,738 )
(173,203 )
Cash flows from financing activities:
Proceeds from (payments on) revolving credit facility, net
25,000
(25,000 )
Repurchase shares of common stock
(4,110 )
(11,397 )
Dividends paid
(52,054 )
(46,176 )
Other financing activities
(7,553 )
1,047
Net cash used in financing activities
(38,717 )
(81,526 )
Net increase (decrease) in cash and cash equivalents
53,610
(26,788 )
Cash and cash equivalents - beginning of period
59,334
86,122
Cash and cash equivalents - end of period
$
112,944
$
59,334
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
2016
2015
vs LY
2016
2015
vs LY
Restaurant openings
Company - Texas Roadhouse
5
7
(2 )
21
24
(3 )
Company - Bubba’s 33
4
0
4
9
4
5
Company - Other
0
0
0
0
1
(1 )
Franchise - Texas Roadhouse - U.S.
0
0
0
1
2
(1 )
Franchise - Texas Roadhouse - International
1
1
0
3
1
2
Total
10
8
2
34
32
2
Restaurants open at the end of the quarter
Company - Texas Roadhouse
413
392
21
Company - Bubba’s 33
16
7
9
Company - Other
2
2
0
Franchise - Texas Roadhouse - U.S.
73
72
1
Franchise - Texas Roadhouse - International
13
10
3
Total
517
483
34
Company-owned restaurants
Restaurant sales
$ 480,730
$ 450,529
6.7 %
$ 1,974,261
$ 1,791,446
10.2 %
Store weeks
5,544
5,186
6.9 %
21,583
20,020
7.8 %
Comparable restaurant sales growth (1)
1.2 %
4.5 %
3.5 %
7.2 %
Texas Roadhouse restaurants only:
Comparable restaurant sales growth (1)
1.3 %
4.5 %
3.6 %
7.2 %
Average unit volume (2)
$
1,133
$
1,130
0.3 %
$
4,802
$
4,664
3.0 %
Weekly sales by group:
Comparable restaurants (370 units)
$
88,003
Average unit volume restaurants (27 units) (3)
$
75,330
Restaurants less than 6 months old (16 units)
$
88,912
Restaurant operating costs (as a % of restaurant sales)
Cost of sales
33.8 %
35.4 %
(153) bps
33.9 %
35.9 %
(205) bps
Labor
30.7 %
29.2 %
147 bps
29.9 %
29.3 %
64 bps
Rent
2.1 %
2.2 %
(6) bps
2.1 %
2.1 %
(2) bps
Other operating
16.3 %
15.7 %
56 bps
15.5 %
15.4 %
10 bps
Total
82.9 %
82.4 %
44 bps
81.3 %
82.7 %
(134) bps
Restaurant margin (4)
17.1 %
17.6 %
(44) bps
18.7 %
17.3 %
134 bps
Restaurant margin $ ($ in thousands) (4)
$
82,387
$
79,196
4.0 %
$
368,933
$
310,762
18.7 %
Restaurant margin $ (4)/Store week
$
14,862
$
15,272
(2.7 )%
$
17,094
$
15,523
10.1 %
Franchise-owned restaurants
Franchise royalties and fees
$
3,980
$
3,822
4.1 %
$
16,453
$
15,922
3.3 %
Store weeks
1,108
1,062
4.3 %
4,360
4,174
4.5 %
Comparable restaurant sales growth (1)
0.8 %
4.0 %
2.0 %
6.5 %
U.S. franchise restaurants only:
Comparable restaurant sales growth (1)
2.0 %
4.4 %
3.3 %
7.1 %
Average unit volume (2)
$
1,181
$
1,164
1.4 %
$
4,929
$
4,799
2.7 %
Pre-opening expense
$
5,294
$
4,640
14.1 %
$
19,547
$
19,116
2.3 %
Depreciation and amortization
$
22,246
$
18,700
19.0 %
$
82,964
$
69,694
19.0 %
As a % of revenue
4.6 %
4.1 %
47 bps
4.2 %
3.9 %
31 bps
General and administrative expenses
$
27,862
$
24,992
11.5 %
$
110,795
$
92,336
20.0 %
As a % of revenue
5.7 %
5.5 %
25 bps
5.6 %
5.1 %
46 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.

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SOURCE: Texas Roadhouse, Inc.

Texas Roadhouse, Inc.
Investor Relations:
Tonya Robinson, 502-515-7269
or
Media:
Travis Doster, 502-638-5457