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Texas Roadhouse, Inc. Announces First Quarter 2010 Results

2010-05-04

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G.J. Hart, President and Chief Executive Officer of Texas Roadhouse, commented, 'We were very pleased with our first quarter results. Our results were driven by positive comparable restaurant sales and continued restaurant-level margin expansion led by favorable commodity costs. For the balance of 2010, we anticipate a continued favorable commodities environment and we remain focused on providing legendary food and service to our guests in an effort to continue driving positive sales. In addition, we remain committed to investing in new restaurant growth that generates a solid return on invested capital and allows us to maintain a conservative capital structure.'

Texas Roadhouse, Inc. (NasdaqGS: TXRH), announced financial results for the 13 week period ended March 30, 2010.


	First Quarter
($000's)	2010	2009	% Change

Total revenue	259,624	246,073	6
Income from operations	30,106	22,283	35
Net income	19,241	14,334	34
Diluted EPS	$0.27	$0.20	31

Results for the first quarter:

Comparable restaurant sales increased 0.4% at company restaurants and 0.9% at franchise restaurants;
Three company restaurants opened;
Restaurant margins increased 218 basis points to 20.1%;
Diluted earnings per share increased 31% to $0.27 from $0.20 in the prior year period.

G.J. Hart, President and Chief Executive Officer of Texas Roadhouse, commented, “We were very pleased with our first quarter results. Our results were driven by positive comparable restaurant sales and continued restaurant-level margin expansion led by favorable commodity costs. For the balance of 2010, we anticipate a continued favorable commodities environment and we remain focused on providing legendary food and service to our guests in an effort to continue driving positive sales. In addition, we remain committed to investing in new restaurant growth that generates a solid return on invested capital and allows us to maintain a conservative capital structure.”

Outlook for 2010

The Company reported that comparable restaurant sales for the first four weeks of the second quarter of fiscal 2010 decreased 0.3% compared to the same period a year ago.

The Company estimates 2010 diluted earnings per share growth will be 14% to 18% compared to 2009. This estimate is based, in part, on the following assumptions:

Comparable restaurant sales of flat to up 1.0%;
14 to 15 company restaurant openings;
Food cost deflation of approximately 2.5% to 3.0%; and
Total capital expenditures of approximately $50 million.

Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)

			13 Weeks Ended
			March 30, 2010		March 31, 2009

Revenue:
	Restaurant sales		$	257,342	$	244,090
	Franchise royalties and fees			2,282		1,983

Total revenue				259,624		246,073

Costs and expenses:
	Restaurant operating costs:
		Cost of sales		82,799		83,041
		Labor		74,909		71,499
		Rent		5,270		4,912
		Other operating		42,598		40,860
	Pre-opening			1,105		2,284
	Depreciation and amortization			10,337		10,471
	Impairment and closure			158		(86	)
	General and administrative			12,342		10,809

Total costs and expenses				229,518		223,790

Income from operations				30,106		22,283

Interest expense, net				730		857
Equity income from investments in
	unconsolidated affiliates			108		85

Income before taxes				29,484		21,511
Provision for income taxes				9,606		6,715

Net income including noncontrolling interests			$	19,878	$	14,796
Less: Net income attributable to noncontrolling interests				637		462
Net income attributable to Texas Roadhouse, Inc. and subsidiaries			$	19,241	$	14,334

Net income per common share attributable to Texas Roadhouse, Inc.
and subsidiaries:
	Basic		$	0.27	$	0.21
	Diluted		$	0.27	$	0.20

Weighted average shares outstanding:
	Basic			70,690		69,426
	Diluted			72,226		70,506

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

			March 30, 2010		December 29, 2009


	Cash and cash equivalents		$	53,743	$	46,858
	Other current assets			29,203		27,458
	Property and equipment, net			453,752		456,281
	Goodwill			113,465		113,465
	Intangible asset, net			10,925		11,194
	Other assets			6,505		6,817

	Total assets		$	667,593	$	662,073


	Current maturities of long-term debt
		and obligations under capital leases		253		247
	Other current liabilities			97,085		107,956
	Long-term debt and obligations under
		capital leases, excluding current maturities		89,113		101,179
	Other liabilities			32,702		29,741
	Texas Roadhouse, Inc. and subsidiaries stockholders' equity			445,786		420,372
	Noncontrolling interests			2,654		2,578

	Total liabilities and equity		$	667,593	$	662,073

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

			13 weeks ended
			March 30, 2010			March 31, 2009


Cash flows from operating activities:
Net income including noncontrolling interests			$	19,878		$	14,796
Adjustments to reconcile net income to net cash provided by operating activities
	Depreciation and amortization			10,337			10,471
	Share-based compensation expense			1,830			1,961
	Other noncash adjustments			316			1,982
Change in working capital				(9,677	)		(9,032	)
		Net cash provided by operating activities		22,684			20,178

Cash flows from investing activities:
Capital expenditures - property and equipment				(7,822	)		(13,430	)
Acquisition of franchise restaurants, net of cash acquired				-			13
Proceeds from sale of property and equipment, including insurance proceeds				21			67
		Net cash used in investing activities		(7,801	)		(13,350	)

Cash flows from financing activities:
Repayments of revolving credit facility, net				(12,000	)		(3,000	)
Other financing activities				4,002			(1,333	)
		Net cash used in financing activities		(7,998	)		(4,333	)

		Net increase in cash and cash equivalents		6,885			2,495
Cash and cash equivalents - beginning of year				46,858			5,258
Cash and cash equivalents - end of year			$	53,743		$	7,753

Supplemental Financial and Operating Information
($ amounts in thousands)
(unaudited)

		First Quarter							Change
			2010			2009			vs LY

Restaurant openings
	Company		3			9			(6	)
	Franchise		0			0			0
	Total		3			9			(6	)

Restaurants open at the end of the quarter
	Company		264			254			10
	Franchise		70			69			1
	Total		334			323			11

Company-owned restaurants
	Restaurant sales	$	257,342		$	244,090			5.4		%
	Store weeks		3,412			3,249			5.0		%
	Comparable restaurant sales growth (1)		0.4	%		(1.3	)	%
	Average unit volume (2)	$	974		$	972			0.2		%

	Restaurant operating costs (as a % of restaurant sales)
	Cost of sales		32.2	%		34.0		%	(185	)	bps
	Labor		29.1	%		29.3		%	(18	)	bps
	Rent		2.0	%		2.0		%	4		bps
	Other operating		16.6	%		16.7		%	(19	)	bps
	Total		79.9	%		82.1		%	(218	)	bps

	Restaurant margins (3)		20.1	%		17.9		%	218		bps

Franchise-owned restaurants
	Franchise royalties and fees	$	2,282		$	1,983			15.1		%
	Store weeks		910			897			1.4		%
	Comparable restaurant sales growth (1)		0.9	%		(1.7	)	%
	Average unit volume (2)	$	964		$	946			1.8		%

Pre-opening expense		$	1,105		$	2,284			(51.6	)	%

Depreciation and amortization		$	10,337		$	10,471			(1.3	)	%
	As a % of revenue		4.0	%		4.3		%	(27	)	bps

Impairment and closure		$	158		$	(86	)		(283.7	)	%
	As a % of revenue		0.1	%		(0.0	)	%	10		bps

General and administrative expenses		$	12,342		$	10,809			14.2		%
	As a % of revenue		4.8	%		4.4		%	36		bps

(1) Comparable restaurant sales growth includes sales from restaurants open 18 months as of the beginning of the measurement period.

(2) Average unit volume includes sales from restaurants open six months as of the beginning of the measurement period. For comparative purposes, average unit volumes for Q1 2009 were adjusted to reflect restaurant sales of any acquired franchise restaurants as part of Company-owned restaurants average unit volume and were excluded from franchise-owned restaurants average unit volume.

(3) Restaurant margins represent restaurant sales less restaurant operating costs (as a percentage of restaurant sales).

Amounts may not foot due to rounding.