Texas Roadhouse, Inc. Announces Third Quarter 2015 Results

By: Texas Roadhouse | 0 Shares 169 Reads

LOUISVILLE, Ky. - (BUSINESS WIRE) - November 2, 2015 - Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 39 week periods ended September 29, 2015.


	Third Quarter					Year to Date
($000's)	2015		2014		% Change	2015		2014		% Change

Total revenue	$	438,089	$	385,218	14	$	1,353,017	$	1,177,723	15
Income from operations		30,556		28,821	6		110,852		103,406	7
Net income		20,482		18,881	8		73,912		68,427	8
Diluted EPS	$	0.29	$	0.27	8	$	1.05	$	0.97	8

Results for the third quarter included the following highlights:

Comparable restaurant sales increased 6.9% at company restaurants and 7.7% at franchise restaurants;
Restaurant margin, as a percentage of restaurant sales, decreased 22 basis points to 16.6%, primarily driven by higher labor costs. Wage rate inflation, along with higher healthcare costs, more than offset the impact of higher average unit volume;
Diluted earnings per share increased 8.0% to $0.29 from $0.27 in the prior year;
10 company-owned restaurants were opened, including one Bubba's 33 restaurant; and,
The Company repurchased 44,000 shares of its common stock for $1.6 million.

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

Comparable restaurant sales increased 8.1% at company restaurants and 7.4% at franchise restaurants;
Restaurant margin, as a percentage of restaurant sales, decreased 78 basis points to 17.3%. Food cost inflation of approximately 6.0% driven by beef, more than offset the impact of higher average unit volume;
Diluted earnings per share increased 8.0% to $1.05 from $0.97 in the prior year;
22 company-owned restaurants were opened, including four Bubba's 33 restaurants; and,
The Company repurchased 132,089 shares of its common stock for $4.7 million.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "We are pleased with our third quarter results, which included double digit revenue growth comprised of solid comparable restaurant sales growth of 6.9% and store week growth of 7.7% from new restaurant development. Our performance continues to be driven by our commitment to legendary food and legendary service."

Taylor continued, "Our new restaurant pipeline is strong and we remain on track with our development plans for 2015 and 2016. The consistency of our business and our healthy cash flow generation allows us to fund our new restaurant growth through internal cash flow, while also returning excess capital to our shareholders through dividends and share repurchases, driving further shareholder value."

2015 Outlook

The Company reported that comparable restaurant sales at company restaurants for the first four weeks of its fourth quarter of fiscal 2015 increased approximately 5.0% compared to the prior year period.

Management updated the following expectations for 2015:

Approximately 30 company restaurant openings, including four Bubba’s 33 restaurants (from as many as five Bubba’s 33 restaurants previously);
Food cost inflation of approximately 5.0% (from 4.0% to 4.5% previously);
An income tax rate of approximately 30.0% to 30.5%, depending on the reinstatement of certain federal tax credits (from 30.0% to 31.0% previously); and,
Total capital expenditures of approximately $160.0 million (from $145.0 million to $155.0 million previously).

Management reiterated the following expectation for 2015:

Mid-single digit comparable restaurant sales growth.

2016 Outlook

Management provided the following expectations for 2016:

Positive comparable restaurant sales growth;
25 to 30 company restaurant openings, including at least five Bubba’s 33 restaurants;
Low-single digit food cost deflation;
An income tax rate of 30.0% to 31.0%, depending on the reinstatement of certain federal tax credits; and,
Total capital expenditures of $155.0 million to $165.0 million.

Conference Call

The Company is hosting a conference call today, November 2, 2015 at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (877) 604-9668 or (719) 325-4794 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 2485478 as the pass code. There will be a simultaneous Web cast conducted at www.texasroadhouse.com.

About Texas Roadhouse

Texas Roadhouse is a casual dining concept that first opened in 1993 and today operates over 480 restaurants system-wide in 49 states and four 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; 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 29, 2015		September 30, 2014			September 29, 2015		September 30, 2014

Revenue:
	Restaurant sales		$	433,932	$	381,991		$	1,340,917	$	1,167,766
	Franchise royalties and fees			4,157		3,227			12,100		9,957

Total revenue				438,089		385,218			1,353,017		1,177,723

Costs and expenses:
	Restaurant operating costs (excluding depreciation and amortization shown separately below):

		Cost of sales		156,643		137,658			484,700		409,552
		Labor		129,198		112,521			392,686		342,375
		Rent		9,325		8,380			27,442		24,550
		Other operating		66,848		59,276			204,523		180,491
	Pre-opening			5,749		3,945			14,476		12,677
	Depreciation and amortization			17,843		15,164			50,994		43,682
	Impairment and closure			-		(16	)		-		10
	General and administrative			21,927		19,469			67,344		60,980

Total costs and expenses				407,533		356,397			1,242,165		1,074,317

Income from operations				30,556		28,821			110,852		103,406

Interest expense, net				470		492			1,480		1,564
Equity income from investments in unconsolidated affiliates				449		410			1,288		975

Income before taxes				30,535		28,739			110,660		102,817
Provision for income taxes				9,141		9,017			33,419		31,462

Net income including noncontrolling interests			$	21,394	$	19,722		$	77,241	$	71,355
Less: Net income attributable to noncontrolling interests				912		841			3,329		2,928
Net income attributable to Texas Roadhouse, Inc. and subsidiaries			$	20,482	$	18,881		$	73,912	$	68,427

Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:
	Basic		$	0.29	$	0.27		$	1.06	$	0.98
	Diluted		$	0.29	$	0.27		$	1.05	$	0.97

Weighted average shares outstanding:
	Basic			70,117		69,544			69,995		69,793
	Diluted			70,735		70,395			70,639		70,639


Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)



	September 29, 2015		December 30, 2014


Cash and cash equivalents	$	72,616	$	86,122
Other current assets		48,972		61,604
Property and equipment, net		723,294		649,637
Goodwill		116,571		116,571
Intangible assets, net		5,171		6,203
Other assets		25,847		23,005

Total assets	$	992,471	$	943,142


Current maturities of long-term debt		20,140		129
Other current liabilities		195,122		215,842
Long-term debt, excluding current maturities		50,587		50,693
Other liabilities		61,112		61,522
Texas Roadhouse, Inc. and subsidiaries stockholders' equity		658,309		607,892
Noncontrolling interests		7,201		7,064

Total liabilities and equity	$	992,471	$	943,142


Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)


			39 Weeks Ended
			September 29, 2015			September 30, 2014


Cash flows from operating activities:
Net income including noncontrolling interests			$	77,241		$	71,355
Adjustments to reconcile net income to net cash provided by operating activities
	Depreciation and amortization			50,994			43,682
	Share-based compensation expense			15,649			10,937
	Other noncash adjustments			(5,066	)		(1,392	)
Change in working capital				(8,939	)		(7,277	)
		Net cash provided by operating activities		129,879			117,305

Cash flows from investing activities:
Capital expenditures - property and equipment				(123,471	)		(89,645	)
Proceeds from sale of property and equipment, including insurance proceeds				272			1,197
		Net cash used in investing activities		(123,199	)		(88,448	)

Cash flows from financing activities:
Proceeds from revolving credit facility				20,000			-
Repurchase shares of common stock				(4,741	)		(39,966	)
Dividends paid				(34,247	)		(20,923	)
Other financing activities				(1,198	)		(3,535	)
		Net cash used in financing activities		(20,186	)		(64,424	)

		Net decrease in cash and cash equivalents		(13,506	)		(35,567	)
Cash and cash equivalents - beginning of period				86,122			94,874
Cash and cash equivalents - end of period			$	72,616		$	59,307


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
			2015			2014			vs LY		2015			2014			vs LY

Restaurant openings
	Company - Texas Roadhouse			9			3		6			17			15		2
	Company - Bubba's 33			1			0		1			4			0		4
	Company - Jaggers			0			0		0			1			0		1
	Franchise - Texas Roadhouse			1			0		1			2			1		1
	Total			11			3		8			24			16		8

Restaurants open at the end of the quarter
	Company - Texas Roadhouse			385			360		25
	Company - Bubba's 33			7			1		6
	Company - Jaggers			2			0		2
	Franchise - Texas Roadhouse			81			75		6
	Total			475			436		39

Company-owned restaurants
	Restaurant sales		$	433,932		$	381,991		13.6	%	$	1,340,917		$	1,167,766		14.8	%
	Store weeks			5,044			4,682		7.7	%		14,834			13,799		7.5	%
	Comparable restaurant sales growth (1)			6.9	%		5.9	%				8.1	%		3.9	%
	Texas Roadhouse restaurants only:
		Comparable restaurant sales growth (1)		6.9	%		5.9	%				8.1	%		3.9	%
		Average unit volume (2)	$	1,119		$	1,050		6.6	%	$	3,531		$	3,267		8.1	%
		Weekly sales by group:
		Comparable restaurants (346 units)	$	86,331
		Average unit volume restaurants (22 units) (3)	$	82,555
		Restaurants less than 6 months old (17 units)	$	92,082

Restaurant operating costs (as a % of restaurant sales)
Cost of sales				36.1	%		36.0	%	6	bps		36.1	%		35.1	%	108	bps
Labor				29.8	%		29.5	%	32	bps		29.3	%		29.3	%	(3)	bps
Rent				2.1	%		2.2	%	(4)	bps		2.0	%		2.1	%	(6)	bps
Other operating				15.4	%		15.5	%	(11)	bps		15.3	%		15.5	%	(20)	bps
Total				83.4	%		83.2	%	22	bps		82.7	%		81.9	%	78	bps

	Restaurant margin (4)			16.6	%		16.8	%	(22)	bps		17.3	%		18.1	%	(78)	bps

	Restaurant margin ($ in thousands)		$	71,917		$	64,156		12.1	%	$	231,566		$	210,798		9.9	%
	Restaurant margin $/Store week		$	14,258		$	13,703		4.1	%	$	15,610		$	15,276		2.2	%

Franchise-owned restaurants
	Franchise royalties and fees		$	4,157		$	3,227		28.8	%	$	12,100		$	9,957		21.5	%
	Store weeks			1,052			975		7.9	%		3,112			2,912		6.9	%
	Comparable restaurant sales growth (1)			7.7	%		5.2	%				7.4	%		4.4	%
	Average unit volume (2)		$	1,205		$	1,134		6.2	%	$	3,808		$	3,473		9.6	%

Pre-opening expense			$	5,749		$	3,945		45.7	%	$	14,476		$	12,677		14.2	%

Depreciation and amortization			$	17,843		$	15,164		17.7	%	$	50,994		$	43,682		16.7	%
	As a % of revenue			4.1	%		3.9	%	14	bps		3.8	%		3.7	%	6	bps

General and administrative expenses			$	21,927		$	19,469		12.6	%	$	67,344		$	60,980		10.4	%
	As a % of revenue			5.0	%		5.1	%	(5)	bps		5.0	%		5.2	%	(20)	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 sales from restaurants closed during the period.
(3) Average unit volume restaurants include Texas Roadhouse restaurants open a full six to 18 months before the beginning of the period measured.
(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 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.