Texas Roadhouse, Inc. Announces Third Quarter 2013 Results

  Texas Roadhouse, Inc. Announces Third Quarter 2013 Results

Business Wire

LOUISVILLE, Ky. -- October 28, 2013

Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for
the 13 and 39 week periods ended September 24, 2013.

                                                              
               Third Quarter                     Year to Date
($000's)       2013      2012      %             2013        2012      %
                                   Change                              Change
                                                                       
Total          334,770   308,656   8             1,046,565   953,800   10
revenue
Income from
operations     25,696    27,734    (7)           93,661      88,383    6
(a)
Net income     17,170    18,067    (5)           63,304      57,246    11
(a)
Diluted EPS    $0.24     $0.25     (5)           $0.89       $0.80     11
(a)
                                                                       
(a) 2012 YTD includes a charge related to a legal settlement discussed below.


Results for the third quarter included:

  *Diluted earnings per share decreased 4.6% to $0.24 from $0.25 in the prior
    year period;
  *Comparable restaurant sales increased 2.6% at company restaurants and
    increased 4.0% at franchise restaurants;
  *Four company restaurants were opened;
  *Cost of sales, as a percentage of restaurant sales, increased 150 basis
    points to 35.1% primarily due to food cost inflation of just over 8% in
    the quarter;
  *Restaurant margin, as a percentage of restaurant sales, decreased 75 basis
    points to 17.2% primarily due to higher commodity costs, partially offset
    by approximately $1.3 million in benefits recorded relating to general
    liability insurance; and
  *Pre-opening costs were $2.3 million higher compared to the prior year
    period primarily due to seven more restaurant openings planned in the
    fourth quarter of 2013 compared to the fourth quarter of 2012.

Results for the year-to-date included:

  *Excluding the impact of a prior year charge, diluted earnings per share
    increased 5.4% to $0.89 from $0.84 in the prior year. The year-to-date
    2012 results included a pre-tax charge of $5.0 million ($3.1 million
    after-tax) which had a negative impact of $0.04 on diluted earnings per
    share;
  *Comparable restaurant sales increased 3.7% at company restaurants and
    increased 4.2% at franchise restaurants;
  *14 company and three franchise restaurants were opened;
  *Restaurant margin, as a percentage of restaurant sales, decreased 45 basis
    points to 18.3%; and
  *Costs associated with the Company’s annual managing partner conference
    were $2.1 million higher compared to the prior year period.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, “Our
top-line momentum continued this quarter highlighted by positive comparable
restaurant sales, including positive traffic growth, and strong performance
from our newest restaurants. However, we continue to be challenged by high
single-digit commodity cost inflation and higher pre-opening costs this
quarter. Looking ahead, we are encouraged by expectations of much lower
commodity cost inflation in 2014, and we are excited to be on pace for another
year of 25 to 30 restaurant openings. Long-term, we believe that our growth
potential and continued restaurant-operations focus, along with our strong
balance sheet and healthy cash flow, position us well for future success.”

2013 Outlook

The Company reported that comparable restaurant sales at company restaurants
for the first four weeks of its third quarter of fiscal 2013 increased 3.4%
compared to the prior year period.

Management provided the following expectations for full year 2013:

  *Positive comparable restaurant sales growth;
  *28 company restaurant openings;
  *Food cost inflation of approximately 7.0%, which is updated from the
    previous expectation of 6.5% to 7.0%;
  *An income tax rate of 30.0% to 30.5%; and
  *Total capital expenditures of approximately $105.0 million, which is
    updated from the previous expectation of $100.0 to $105.0 million.

2014 Outlook

Management provided the following expectations for full year 2014:

  *Positive comparable restaurant sales growth;
  *25 to 30 company restaurant openings;
  *Low single digit food cost inflation;
  *An income tax rate of 30.0% to 31.0% which is higher than the 2013 income
    tax rate as a result of the potential expiration of certain federal tax
    credits at the end of 2013; and
  *Total capital expenditures of $100.0 to $110.0 million.

Conference Call

The Company is hosting a conference call today, October 28, 2013, at 5:00 p.m.
Eastern Time to discuss these results. The dial-in number is (877) 879-6209 or
(719) 325-4817 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 2899563 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 410 restaurants system-wide in 48 states and two 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, our
ability to continue our share repurchase program and pay a quarterly cash
dividend; strength of consumer spending; pending or future legal claims;
conditions beyond our control such as weather, natural disasters, disease
outbreaks, epidemics or pandemics impacting our customers or food supplies;
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      September     September     September
                          24,            25,           24,           25,
                          2013           2012          2013          2012
                                                                     
Revenue:
   Restaurant sales       $  331,746     $  306,025    $ 1,037,239   $ 945,583
   Franchise
   royalties and            3,024         2,631       9,326        8,217
   fees
                                                                     
Total revenue               334,770       308,656     1,046,565    953,800
                                                                     
Costs and expenses:
   Restaurant
   operating costs
   (excluding
   depreciation and
   amortization
   shown separately
   below):
                                                                     
        Cost of              116,570        102,930      361,334       319,445
        sales
        Labor                99,003         91,507       302,387       278,089
        Rent                 7,181          6,489        21,390        19,120
        Other                51,949         50,183       162,716       151,967
        operating
   Pre-opening               4,746          2,458        11,810        8,823
   Depreciation and          12,462         11,828       36,864        34,721
   amortization
   Impairment and            103            24           187           63
   closure
   General and
   administrative           17,060        15,503      56,216       53,189
   (1)
                                                                     
Total costs and             309,074       280,922     952,904      865,417
expenses
                                                                     
Income from                  25,696         27,734       93,661        88,383
operations (1)
                                                                     
Interest expense,            525            603          1,687         1,776
net

Equity income from
investments in              173           141         571          303
unconsolidated
affiliates
                                                                     
Income before taxes          25,344         27,272       92,545        86,910
(1)
Provision for               7,500         8,778       26,617       27,815
income taxes
                                                                     
Net income
including                 $  17,844      $  18,494     $ 65,928      $ 59,095
noncontrolling
interests (1)
Less: Net income
attributable to             674           427         2,624        1,849
noncontrolling
interests
Net income
attributable to
Texas Roadhouse,          $  17,170      $  18,067     $ 63,304      $ 57,246
Inc. and
subsidiaries (1)
                                                                     
Net income per
common share
attributable to
Texas Roadhouse,
Inc. and
subsidiaries:
   Basic                  $  0.24        $  0.26       $ 0.91        $ 0.82
   Diluted                $  0.24        $  0.25       $ 0.89        $ 0.80
                                                                     
Weighted average
shares outstanding:
   Basic                    70,361        70,482      69,914       70,004
   Diluted                  71,620        71,928      71,175       71,480
                                                                     
                                                                     
(1) Results for the 39 weeks ended September 25, 2012 include a $5.0 million
charge, ($3.1 million after-tax), relating to the settlement of a legal
matter. The settlement charge is included in general and administrative costs.

                                                        
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
                                                             
                                                             
                                                             
                                      September 24, 2013    December 25, 2012
                                                             
                                                             
Cash and cash equivalents             $      87,344          $     81,746
Other current assets                         35,022                40,726
Property and equipment, net                  565,433               531,654
Goodwill                                     113,454               113,435
Intangible assets, net                       7,877                 9,264
Other assets                                 17,938                14,429
                                                            
Total assets                          $      827,068         $     791,254
                                                             
                                                             
Current maturities of long-term
debt and obligations under                   248                   338
capital leases
Other current liabilities                    131,077               158,324
Long-term debt and obligations
under capital leases, excluding              51,056                51,264
current maturities
Other liabilities                            53,953                50,591
Texas Roadhouse, Inc. and                    584,916               525,084
subsidiaries stockholders' equity
Noncontrolling interests                     5,818                 5,653
                                                            
Total liabilities and equity          $      827,068         $     791,254

                                                            
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
                                                                 
                                                                 
                                               39 Weeks Ended
                                               September 24,     September 25,
                                               2013              2012
                                                                 
                                                                 
Cash flows from operating activities:
Net income including noncontrolling            $  65,928         $  59,095
interests
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization                     36,864            34,721
Share-based compensation expense                  10,583            9,754
Other noncash adjustments                         843               (3,630   )
Change in working capital                        (14,557  )       (8,946   )
Net cash provided by operating activities        99,661          90,994   
                                                                 
Cash flows from investing activities:
Capital expenditures - property and               (71,888  )        (63,146  )
equipment
Proceeds from sale of property and               (39      )       255      
equipment, including insurance proceeds
Net cash used in investing activities            (71,927  )       (62,891  )
                                                                 
Cash flows from financing activities:
Repayments of revolving credit facility,          -                 (10,000  )
net
Dividends paid                                    (29,939  )        (18,134  )
Other financing activities                       7,803           9,349    
Net cash used in financing activities            (22,136  )       (18,785  )
                                                                 
Net increase in cash and cash equivalents         5,598             9,318
Cash and cash equivalents - beginning of         81,746          78,777   
year
Cash and cash equivalents - end of period      $  87,344        $  88,095   


Texas Roadhouse, Inc. and Subsidiaries
Supplemental Financial and Operating Information
($ amounts in thousands, except weekly sales by group and RM $ per store week)
(unaudited)
                                                                                 
                                                                                             
                  Third Quarter               Change      Year to Date                  Change
                  2013          2012          vs LY       2013            2012          vs LY
                                                                                             
Restaurant
openings
Company - Texas     4             3           1             13              18          (5)
Roadhouse
Company - Other     0             0           0             1               0           1
Franchise -         0             0           0             3               0           3
Texas Roadhouse
Total               4             3           1             17              18          (1)
                                                                                             
                                                                                             
Restaurants
open at the end
of the quarter
Company - Texas     331           309         22
Roadhouse
Company - Other     3             3           0
Franchise -         75            72          3
Texas Roadhouse
Total               409           384         25
                                                                                             
Company-owned
restaurants
Restaurant        $ 331,746     $ 306,025     8.4   %     $ 1,037,239     $ 945,583     9.7  %
sales
Store weeks         4,294         4,041       6.3   %       12,682          11,854      7.0  %
Comparable
restaurant          2.6     %     3.6     %                 3.7       %     4.8     %
sales growth
(1)
Texas Roadhouse
restaurants
only:
Comparable
restaurant          2.6     %     3.6     %                 3.7       %     4.8     %
sales growth
(1)
Average unit      $ 999         $ 984         1.6   %     $ 3,191         $ 3,102       2.8  %
volume (2)
Weekly sales by
group:
Comparable
restaurants       $ 77,662
(293 units)
Average unit
volume            $ 67,409
restaurants (25
units)
Restaurants
less than 6       $ 93,889
months old (13
units)
                                                                                             
Restaurant
operating costs
(as a % of
restaurant
sales) (3)
Cost of sales       35.1    %     33.6    %   150   bps     34.8      %     33.8    %   105  bps
Labor               29.8    %     29.9    %   (6)   bps     29.2      %     29.4    %   (26) bps
Rent                2.2     %     2.1     %   4     bps     2.1       %     2.0     %   4    bps
Other operating     15.7    %     16.4    %   (74)  bps     15.7      %     16.1    %   (38) bps
Total               82.8    %     82.1    %   75    bps     81.7      %     81.3    %   45   bps
                                                                                             
Restaurant          17.2    %     17.9    %   (75)  bps     18.3      %     18.7    %   (45) bps
margin (4)
                                                                                             
Restaurant
margin $/Store    $ 13,284      $ 13,590      (2.2) %     $ 14,935        $ 14,928      0.0  %
week
                                                                                             
Franchise-owned
restaurants
Franchise
royalties and     $ 3,024       $ 2,631       14.9  %     $ 9,326         $ 8,217       13.5 %
fees
Store weeks         975           936         4.2   %       2,886           2,808       2.8  %
Comparable
restaurant          4.0     %     4.9     %                 4.2       %     5.5     %
sales growth
(1)
Average unit      $ 1,038       $ 998         4.0   %     $ 3,284         $ 3,134       4.8  %
volume (2)
                                                                                             
Pre-opening       $ 4,746       $ 2,458       93.1  %     $ 11,810        $ 8,823       33.9 %
expense
                                                                                             
Depreciation
and               $ 12,462      $ 11,828      5.4   %     $ 36,864        $ 34,721      6.2  %
amortization
(3)
As a % of           3.7     %     3.8     %   (11)  bps     3.5       %     3.6     %   (12) bps
revenue
                                                                                             
General and
administrative    $ 17,060      $ 15,503      10.0  %     $ 56,216        $ 53,189      5.7  %
expenses (5)
As a % of           5.1     %     5.0     %   7     bps     5.4       %     5.6     %   (21) bps
revenue
                                                                                             
(1) Comparable restaurant sales growth includes sales from restaurants open 18 months as of the
beginning of the measurement period, excluding sales from restaurants closed during the period.
(2) Average unit volume includes sales from Texas Roadhouse restaurants open six months as of
the beginning of the measurement period, excluding sales from restaurants closed during the
period.
(3) Depreciation and amortization expense, substantially all of which relates to
restaurant-level assets, is excluded from restaurant operating costs and is shown separately as
it represents a non-cash charge for the investment in our restaurants.
(4) Restaurant margin represents restaurant sales less cost of sales, labor, rent and other
operating costs (as a percentage of restaurant sales). 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
generally accepted accounting principles ("GAAP") and should not be considered in isolation, or
as an alternative, to income from operations or other similarly titled measures of other
companies.
(5) Results for the 39 weeks ended September 25, 2012 included a $5.0 million pre-tax charge for
the settlement of a legal matter.
                                                                                             
Amounts may not foot due to rounding.

                                                 
Texas Roadhouse, Inc. and Subsidiaries
Reconciliation of GAAP and Non-GAAP Information
(in thousands, except per share data)
(unaudited)
                                                        
In addition to the results provided in accordance with U.S. Generally Accepted
Accounting Principles ("GAAP") throughout this document, the Company has
provided non-GAAP measurements which present operating results on a basis
before the impact of a settlement of a legal matter. This item is described in
detail throughout this document.

The Company used earnings before the impact of the legal settlement as a key
performance measure of results of operations for purposes of evaluating
performance internally. This non-GAAP measurement is not intended to replace
the presentation of our financial results in accordance with GAAP. Rather, the
Company believes that the presentation of results before the legal settlement
provides additional information to facilitate the comparison of past and
present operations, excluding items that the Company does not believe were
indicative of our ongoing operations in the 39 weeks ended September 25, 2012.
                                                        
                                For the 39 weeks Ended
                                September 24,           September 25, 2012
                                2013
Net income
attributable to Texas
Roadhouse, Inc. and             $     63,304            $     60,308
subsidiaries,
excluding settlement
charge
Amount reserved for
settlement of a legal           $     -                 $     (3,062     )
matter, net of tax (1)
Net income
attributable to Texas           $     63,304            $     57,246
Roadhouse, Inc. and
subsidiaries
                                                        
Weighted average
diluted shares                        71,175                  71,480
outstanding
                                                        
Diluted earnings per
share, excluding                $     0.89              $     0.84
settlement charge
Impact of settlement
charge on diluted               $     -                 $     (0.04      )
earnings per share
Diluted earnings per            $     0.89              $     0.80       
share
                                                        
(1) Amount reserved in the first quarter of fiscal 2012 for the settlement of
a legal matter was $5.0 million before the statutory income tax rate. The
settlement amount was included in general and administrative costs on the
Company's Condensed Consolidated Statements of Income.

Contact:

Texas Roadhouse, Inc.
Investor Relations
Tonya Robinson, 502-515-7300
or
Media
Travis Doster, 502-638-5457
 
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