TXRH
$50.20
Texas Roadhouse
$.07
.14%
Earnings Details
3rd Quarter September 2016
Tuesday, November 01, 2016 4:03:00 PM
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Summary

Texas Roadhouse Misses

Texas Roadhouse (TXRH) reported 3rd Quarter September 2016 earnings of $0.36 per share on revenue of $481.6 million. The consensus earnings estimate was $0.37 per share on revenue of $484.1 million. The Earnings Whisper number was $0.37 per share. Revenue grew 9.9% 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
$0.36
Earnings Whisper
$0.37
Consensus Estimate
$0.37
Reported Revenue
$481.6 Mil
Revenue Estimate
$484.1 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Texas Roadhouse, Inc. Announces Third Quarter 2016 Results

Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 39 week periods ended September 27, 2016.

Third Quarter
Year to Date
($000’s)
2016
2015
% Change
2016
2015
% Change
Total revenue
$ 481,637
$ 438,089
10%
$ 1,506,004
$ 1,353,017
11%
Income from operations
38,468
30,556
26%
141,061
110,852
27%
Net income
25,675
20,482
25%
94,873
73,912
28%
Diluted EPS
$
0.36
$
0.29
25%
$
1.34
$
1.05
28%

Results for the third quarter included the following highlights:

Comparable restaurant sales growth of 3.4% at company restaurants and 3.3% at domestic franchise restaurants;

Restaurant margin, as a percentage of restaurant sales, increased 155 basis points to 18.1%, primarily driven by lower food costs, partially offset by higher labor costs;

Diluted earnings per share increased 24.9% to $0.36 from $0.29 in the prior year;

The Company recorded a pre-tax charge of $1.2 million ($0.8 million after-tax) related to a legal settlement; and

Seven company-owned restaurants were opened, including two Bubba’s 33 restaurants.

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

Comparable restaurant sales growth of 4.2% at company restaurants and 3.9% at domestic franchise restaurants;

Restaurant margin, as a percentage of restaurant sales, increased 192 basis points to 19.2%;

Diluted earnings per share increased 27.9% to $1.34 from $1.05 in the prior year;

The Company recorded a pre-tax charge of $6.7 million ($4.1 million after-tax) related to a legal settlement which had a $0.06 impact on diluted earnings per share and a 5.6% impact on diluted earnings per share growth;

21 company-owned restaurants were opened, including five 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, "We are pleased to report another quarter of restaurant margin expansion and double-digit diluted earnings per share growth. Our results were driven by the opening of new restaurants, positive comparable restaurant sales and continued commodity deflation. As we move into the fourth quarter, our sales momentum continues with October comparable restaurant sales up 3.8%, including positive traffic growth."

Taylor continued, "Looking ahead to 2017, we will stay focused on protecting our long-term brand position by enhancing our ongoing commitment to our value proposition with consumers and to legendary food and legendary service. This commitment has served us well with 26 consecutive quarters of positive traffic growth. In addition, our strong balance sheet and healthy cash flow allow us to continue to internally fund our growth, while returning excess capital to our shareholders through dividend payments and ongoing share repurchases."

2016 Outlook

The Company reported that comparable restaurant sales at company restaurants for the first four weeks of its fourth quarter of fiscal 2016 increased approximately 3.8% compared to the prior year period.

Management updated the following expectations for 2016:

Approximately 30 company restaurant openings, including as many as nine Bubba’s 33 restaurants; and,

Food cost deflation of approximately 3.5% compared to previous guidance of 2.5% to 3.0%.

Management reiterated the following expectations for 2016:

-- Positive comparable restaurant sales growth;

-- An income tax rate of approximately 30.0%; and

-- Total capital expenditures of $165.0 million to $175.0 million.

2017 Outlook

Management provided the following initial expectations for 2017:

-- Positive comparable restaurant sales growth;

Approximately 30 company restaurant openings, including at approximately seven to eight Bubba’s restaurants;

-- Low-single digit food cost deflation;

Mid-single digit labor inflation, including increases from wage rates, as well as regulatory changes;

-- An income tax rate of 30.0% to 31.0%; and

-- Total capital expenditures of $170.0 million.

Conference Call

The Company is hosting a conference call today, November 1, 2016 at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (877) 419-6590 or (719) 325-4798 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 6678390 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 510 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 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 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)
(unaudited)
13 Weeks Ended
39 Weeks Ended
September 27,
September 29,
September 27,
September 29,
2016
2015
2016
2015
Revenue:
Restaurant sales
$ 477,617
$ 433,932
$ 1,493,531
$
1,340,917
Franchise royalties and fees
4,020
4,157
12,473
12,100
Total revenue
481,637
438,089
1,506,004
1,353,017
Costs and expenses:
Restaurant operating costs (excluding depreciation and amortization
shown separately below):
Cost of sales
161,886
156,643
506,565
484,700
Labor
145,301
129,198
442,861
392,686
Rent
10,266
9,325
30,477
27,442
Other operating
73,583
66,848
227,082
204,523
Pre-opening
5,017
5,749
14,253
14,476
Depreciation and amortization
20,941
17,843
60,718
50,994
Impairment and closure
13
-
54
-
General and administrative
26,162
21,927
82,933
67,344
Total costs and expenses
443,169
407,533
1,364,943
1,242,165
Income from operations
38,468
30,556
141,061
110,852
Interest expense, net
288
470
902
1,480
Equity income from investments in unconsolidated affiliates
4
449
831
1,288
Income before taxes
38,184
30,535
140,990
110,660
Provision for income taxes
11,381
9,141
42,325
33,419
Net income including noncontrolling interests
$
26,803
$
21,394
$
98,665
$
77,241
Less: Net income attributable to noncontrolling interests
1,128
912
3,792
3,329
Net income attributable to Texas Roadhouse, Inc. and subsidiaries
$
25,675
$
20,482
$
94,873
$
73,912
Net income per common share attributable to Texas Roadhouse, Inc.
and subsidiaries:
Basic
$
0.36
$
0.29
$
1.35
$
1.06
Diluted
$
0.36
$
0.29
$
1.34
$
1.05
Weighted average shares outstanding:
Basic
70,477
70,117
70,338
69,995
Diluted
70,981
70,735
70,898
70,639
Cash dividends declared per share
$
0.19
$
0.17
$
0.57
$
0.51
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
September 27, 2016
December 29, 2015
Cash and cash equivalents
$
81,713
$
59,334
Other current assets
51,552
74,479
Property and equipment, net
802,555
751,288
Goodwill
116,571
116,571
Intangible assets, net
3,873
4,827
Other assets
28,258
26,207
Total assets
$
1,084,522
$
1,032,706
Current maturities of long-term debt and obligation under capital
163
144
lease
Other current liabilities
207,775
256,498
Long-term debt and obligation under capital lease, excluding
52,424
25,550
current maturities
Other liabilities
80,796
73,332
Texas Roadhouse, Inc. and subsidiaries stockholders’ equity
735,590
669,662
Noncontrolling interests
7,774
7,520
Total liabilities and equity
$
1,084,522
$
1,032,706
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
39 Weeks Ended
September 27, 2016
September 29, 2015
Cash flows from operating activities:
Net income including noncontrolling interests
$
98,665
$
77,241
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and amortization
60,718
50,994
Share-based compensation expense
18,347
15,649
Other noncash adjustments
1,321
(5,066 )
Change in working capital
(19,269 )
(7,310 )
Net cash provided by operating activities
159,782
131,508
Cash flows from investing activities:
Capital expenditures - property and equipment
(113,219 )
(125,100 )
Proceeds from sale of property and equipment, including insurance
-
272
proceeds
Net cash used in investing activities
(113,219 )
(124,828 )
Cash flows from financing activities:
Proceeds from revolving credit facility
25,000
20,000
Repurchase shares of common stock
(4,110 )
(4,741 )
Dividends paid
(38,656 )
(34,247 )
Other financing activities
(6,418 )
(1,198 )
Net cash used in financing activities
(24,184 )
(20,186 )
Net increase (decrease) in cash and cash equivalents
22,379
(13,506 )
Cash and cash equivalents - beginning of period
59,334
86,122
Cash and cash equivalents - end of period
$
81,713
$
72,616
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
2016
2015
vs LY
2016
2015
vs LY
Restaurant openings
Company - Texas Roadhouse
5
9
(4)
16
17
(1)
Company - Bubba’s 33
2
1
1
5
4
1
Company - Other
0
0
0
0
1
(1)
Franchise - Texas Roadhouse - U.S.
1
1
0
1
2
(1)
Franchise - Texas Roadhouse - International
0
0
0
2
0
2
Total
8
11
(3)
24
24
0
Restaurants open at the end of the quarter
Company - Texas Roadhouse
408
385
23
Company - Bubba’s 33
12
7
5
Company - Other
2
2
0
Franchise - Texas Roadhouse - U.S.
73
72
1
Franchise - Texas Roadhouse - International
12
9
3
Total
507
475
32
Company-owned restaurants
Restaurant sales
$
477,617
$ 433,932
10.1
%
$ 1,493,531
$ 1,340,917
11.4
%
Store weeks
5,427
5,044
7.6
%
16,039
14,834
8.1
%
Comparable restaurant sales growth (1)
3.4
%
6.9
%
4.2
%
8.1
%
Texas Roadhouse restaurants only:
Comparable restaurant sales growth (1)
3.5
%
6.9
%
4.2
%
8.1
%
Average unit volume (2)
$
1,151
$
1,119
2.8
%
$
3,660
$
3,531
3.7
%
Weekly sales by group:
Comparable restaurants (368 units)
$
89,079
Average unit volume restaurants (24 units) (3)
$
80,390
Restaurants less than 6 months old (16 units)
$
84,539
Restaurant operating costs (as a % of restaurant sales)
Cost of sales
33.9
%
36.1
%
(220)
bps
33.9
%
36.1
%
(223)
bps
Labor
30.4
%
29.8
%
65
bps
29.7
%
29.3
%
37
bps
Rent
2.1
%
2.1
%
0
bps
2.0
%
2.0
%
(1)
bps
Other operating
15.4
%
15.4
%
0
bps
15.2
%
15.3
%
(5)
bps
Total
81.9
%
83.4
%
(155)
bps
80.8
%
82.7
%
(192)
bps
Restaurant margin (4)
18.1
%
16.6
%
155
bps
19.2
%
17.3
%
192
bps
Restaurant margin ($ in thousands)
$
86,581
$
71,917
20.4
%
$
286,546
$
231,566
23.7
%
Restaurant margin $/Store week
$
15,953
$
14,258
11.9
%
$
17,866
$
15,610
14.5
%
Franchise-owned restaurants
Franchise royalties and fees
$
4,020
$
4,157
(3.3)
%
$
12,473
$
12,100
3.1
%
Store weeks
1,095
1,052
4.1
%
3,253
3,112
4.5
%
Comparable restaurant sales growth (1)
1.9
%
7.7
%
2.5
%
7.4
%
U.S. franchise restaurants only:
Comparable restaurant sales growth (1)
3.3
%
6.9
%
3.9
%
8.0
%
Average unit volume (2)
$
1,191
$
1,160
2.7
%
$
3,760
$
3,640
3.3
%
Pre-opening expense
$
5,017
$
5,749
(12.7)
%
$
14,253
$
14,476
(1.5)
%
Depreciation and amortization
$
20,941
$
17,843
17.4
%
$
60,718
$
50,994
19.1
%
As a % of revenue
4.3
%
4.1
%
27
bps
4.0
%
3.8
%
26
bps
General and administrative expenses
$
26,162
$
21,927
19.3
%
$
82,933
$
67,344
23.1
%
As a % of revenue
5.4
%
5.0
%
43
bps
5.5
%
5.0
%
53
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 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 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