Earnings Release
Texas Roadhouse, Inc. Announces Second Quarter 2016 Results
Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial
results for the 13 and 26 week periods ended June 28, 2016.
Second Quarter
Year to Date
($000’s)
2016
2015
% Change
2016
2015
% Change
Total revenue
$ 508,808
$ 454,698
12 %
$ 1,024,367
$ 914,928
12 %
Income from operations
49,782
31,696
57 %
102,593
80,296
28 %
Net income
33,605
21,138
59 %
69,198
53,430
30 %
Diluted EPS
$
0.47
$
0.30
58 %
$
0.98
$
0.76
29 %
Results for the second quarter included the following highlights:
•
Comparable restaurant sales growth of 4.5% at company restaurants and
2.6% at franchise restaurants;
•
Restaurant margin, as a percentage of restaurant sales, increased 302
basis points to 19.2%, primarily driven by lower food costs;
•
Diluted earnings per share increased 58.5% to $0.47 from $0.30 in the
prior year; and,
•
Seven company-owned restaurants were opened, including one Bubba’s 33
restaurant.
Results for year-to-date included the following highlights:
•
Comparable restaurant sales increased 4.5% at company restaurants and
2.8% at franchise restaurants;
•
Restaurant margin, as a percentage of restaurant sales, increased 208
basis points to 19.7% primarily driven by lower food costs;
•
Diluted earnings per share increased 29.1% to $0.98 from $0.76 in the
prior year;
•
The Company recorded a pre-tax charge of $5.5 million ($3.4 million
after-tax) related to a legal settlement which had a $0.05 impact on
diluted earnings per share and a 6.3% impact on diluted earnings per
share growth;
•
14 company-owned restaurants were opened, including three Bubba’s 33
restaurants; and,
•
The Company repurchased 114,700 shares of its common stock for $4.1
million.
Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc.,
commented, "Our operators continued to deliver strong operational and
financial results with solid comparable restaurant sales growth and an
increase in restaurant margin. Positive guest counts primarily drove the
increase in comparable restaurant sales, marking our 26th
consecutive quarter of growth, while lower commodity costs continued to
pave the way for margin expansion. On the development front, we are on
track to open approximately 30 company restaurants this year and we
continue to fill our new restaurant pipeline for next year and beyond."
2016 Outlook
The Company reported that comparable restaurant sales at company
restaurants for the first four weeks of its third quarter of fiscal 2016
increased approximately 3.7% compared to the prior year period.
Management updated the following expectation for 2016:
•
2.5% to 3.0% food cost deflation compared to previous guidance of 1.0%
to 2.0% food cost deflation.
Management reiterated the following expectations for 2016:
--
Positive comparable restaurant sales growth;
•
Approximately 30 company restaurant openings, including approximately
seven Bubba’s 33 restaurants;
--
An income tax rate of approximately 30.0%; and,
--
Total capital expenditures of $165.0 million to $175.0 million.
Conference Call
The Company is hosting a conference call today, August 1, 2016 at 5:00
p.m. Eastern Time to discuss these results. The dial-in number is (888)
334-3004 or (719) 325-2410 for international calls. A replay of the call
will be available for one week following the conference call. To access
the replay, please dial (877) 870-5176 or (858) 384-5517 for
international calls, and use 8691041 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 500 restaurants system-wide in 49 states and five
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.
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(in thousands, except per share data)
13 Weeks Ended
26 Weeks Ended
June 28, 2016
June 30, 2015
June 28, 2016
June 30, 2015
Restaurant sales
$ 504,630
$ 450,692
$ 1,015,914
$
906,985
Franchise royalties and fees
4,178
4,006
8,453
7,943
Total revenue
508,808
454,698
1,024,367
914,928
Restaurant operating costs (excluding depreciation and amortization
Cost of sales
171,551
168,077
344,679
328,057
Labor
150,014
132,084
297,560
263,488
Rent
10,184
9,138
20,211
18,117
Other operating
75,887
68,358
153,499
137,675
Pre-opening
4,411
4,909
9,236
8,727
Depreciation and amortization
20,238
16,816
39,777
33,151
Impairment and closure
30
-
41
-
General and administrative
26,711
23,620
56,771
45,417
Total costs and expenses
459,026
423,002
921,774
834,632
Income from operations
49,782
31,696
102,593
80,296
Interest expense, net
309
495
614
1,010
Equity income from investments in unconsolidated affiliates
475
467
827
839
Income before taxes
49,948
31,668
102,806
80,125
Provision for income taxes
15,087
9,402
30,944
24,278
Net income including noncontrolling interests
$
34,861
$
22,266
$
71,862
$
55,847
Less: Net income attributable to noncontrolling interests
1,256
1,128
2,664
2,417
Net income attributable to Texas Roadhouse, Inc. and subsidiaries
$
33,605
$
21,138
$
69,198
$
53,430
Net income per common share attributable to Texas Roadhouse, Inc.
Basic
$
0.48
$
0.30
$
0.98
$
0.76
Diluted
$
0.47
$
0.30
$
0.98
$
0.76
Weighted average shares outstanding:
Basic
70,368
70,026
70,269
69,933
Diluted
70,876
70,648
70,840
70,588
Cash dividends declared per share
$
0.19
$
0.17
$
0.38
$
0.34
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
June 28, 2016
December 29, 2015
Cash and cash equivalents
$
95,305
$
59,334
Other current assets
50,655
74,479
Property and equipment, net
778,634
751,288
Intangible assets, net
4,150
4,827
Total assets
$
1,073,201
$
1,032,706
Current maturities of long-term debt
151
144
Other current liabilities
218,725
256,498
Long-term debt, excluding current maturities
50,472
25,550
Other liabilities
78,731
73,332
Texas Roadhouse, Inc. and subsidiaries stockholders’ equity
717,425
669,662
Noncontrolling interests
7,697
7,520
Total liabilities and equity
$
1,073,201
$
1,032,706
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
June 28, 2016
June 30, 2015
Cash flows from operating activities:
Net income including noncontrolling interests
$
71,862
$
55,847
Adjustments to reconcile net income to net cash provided by
Depreciation and amortization
39,777
33,151
Share-based compensation expense
11,703
10,215
Other noncash adjustments
(493 )
(2,992 )
Change in working capital
(8,781 )
(1,398 )
Net cash provided by operating activities
114,068
94,823
Cash flows from investing activities:
Capital expenditures - property and equipment
(69,159 )
(70,933 )
Proceeds from sale of property and equipment, including insurance
-
9
Net cash used in investing activities
(69,159 )
(70,924 )
Cash flows from financing activities:
Proceeds from revolving credit facility
25,000
-
Repurchase shares of common stock
(4,110 )
(3,138 )
Dividends paid
(25,277 )
(34,247 )
Other financing activities
(4,551 )
(1,671 )
Net cash used in financing activities
(8,938 )
(39,056 )
Net increase (decrease) in cash and cash equivalents
35,971
(15,157 )
Cash and cash equivalents - beginning of period
59,334
86,122
Cash and cash equivalents - end of period
$
95,305
$
70,965
Texas Roadhouse, Inc. and Subsidiaries
Supplemental Financial and Operating Information
($ amounts in thousands, except weekly sales by group)
Second Quarter
Change
Year to Date
Change
2016
2015
vs LY
2016
2015
vs LY
Company - Texas Roadhouse
6
6
0
11
8
3
Company - Bubba’s 33
1
2
(1 )
3
3
0
Company - Other
0
1
(1 )
0
1
(1 )
Franchise - Texas Roadhouse
1
1
0
2
1
1
Restaurants open at the end of the quarter
Company - Texas Roadhouse
403
376
27
Franchise - Texas Roadhouse
84
80
4
Company-owned restaurants
Restaurant sales
$ 504,630
$ 450,692
12.0
%
$ 1,015,914
$ 906,985
12.0
%
Store weeks
5,350
4,934
8.4
%
10,612
9,790
8.4
%
Comparable restaurant sales growth (1)
4.5
%
8.2
%
4.5
%
8.5
%
Texas Roadhouse restaurants only:
Comparable restaurant sales growth (1)
4.5
%
8.2
%
4.5
%
8.5
%
Average unit volume (2)
$
1,232
$
1,188
3.7
%
$
2,505
$
2,409
4.0
%
Comparable restaurants (361 units)
$
95,434
Average unit volume restaurants (24 units) (3)
$
84,272
Restaurants less than 6 months old (18 units)
$
98,319
Restaurant operating costs (as a % of restaurant sales)
Cost of sales
34.0
%
37.3
%
(330 )
bps
33.9
%
36.2
%
(224 )
bps
Labor
29.7
%
29.3
%
42
bps
29.3
%
29.1
%
24
bps
Rent
2.0
%
2.0
%
(1 )
bps
2.0
%
2.0
%
(1 )
bps
Other operating
15.0
%
15.2
%
(13 )
bps
15.1
%
15.2
%
(7 )
bps
Total
80.8
%
83.8
%
(302 )
bps
80.3
%
82.4
%
(208 )
bps
Restaurant margin (4)
19.2
%
16.2
%
302
bps
19.7
%
17.6
%
208
bps
Restaurant margin ($ in thousands)
$
96,994
$
73,035
32.8
%
$
199,965
$ 159,648
25.3
%
Restaurant margin $/Store week
$
18,130
$
14,804
22.5
%
$
18,843
$
16,307
15.6
%
Franchise-owned restaurants
Franchise royalties and fees
$
4,178
$
4,006
4.3
%
$
8,453
$
7,943
6.4
%
Store weeks
1,088
1,032
5.4
%
2,157
2,059
4.8
%
Comparable restaurant sales growth (1)
2.6
%
6.9
%
2.8
%
7.5
%
Average unit volume (2)
$
1,273
$
1,274
(0.1 )
%
$
2,590
$
2,580
0.4
%
Pre-opening expense
$
4,411
$
4,909
(10.1 )
%
$
9,236
$
8,727
5.8
%
Depreciation and amortization
$
20,238
$
16,816
20.3
%
$
39,777
$
33,151
20.0
%
As a % of revenue
4.0
%
3.7
%
28
bps
3.9
%
3.6
%
26
bps
General and administrative expenses
$
26,711
$
23,620
13.1
%
$
56,771
$
45,417
25.0
%
As a % of revenue
5.2
%
5.2
%
6
bps
5.5
%
5.0
%
58
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
(3) Average unit volume restaurants include restaurants open a full
six to 18 months before the beginning of the period measured.
(4) Restaurant margin represents restaurant sales less restaurant
operating costs, including cost of sales, labor, rent and other
operating costs (as a percentage of restaurant sales). Depreciation
and amortization expense, substantially all of which relates to
restaurant-level asset, 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.
Tonya Robinson, 502-515-7269
Travis Doster, 502-638-5457
