Texas Roadhouse, Inc. Announces Fourth Quarter 2010 Results, Stock Repurchase Authorization and Quarterly Dividend

Texas Roadhouse, Inc. (NasdaqGS: TXRH), announced financial results for the 13 and 52 week periods ended December 28, 2010.

“Our balance sheet remains strong and due to a proven economic model, we are excited to be adding more restaurants this year. We are also very pleased to announce that we will be returning excess capital to shareholders through share repurchases and dividends, thus enhancing total shareholder returns.”

Results for the quarter included:

• Comparable restaurant sales increased 3.1% at company restaurants and 2.9% at franchise restaurants;
• Seven company restaurants opened;
• Restaurant margins decreased 35 basis points to 17.1%;
• Diluted earnings per share increased 13% to $0.14 from $0.12 in the prior year period.

Results for the full year included:

• Comparable restaurant sales increased 2.4% at company restaurants and 2.5% at franchise restaurants;
• Fourteen company restaurants and one franchise restaurant opened, while one company restaurant closed;
• Restaurant margins increased 78 basis points to 18.5%;
• Diluted earnings per share increased 20% to $0.80 from $0.67 in the prior year-to-date period.

G.J. Hart, President and Chief Executive Officer of Texas Roadhouse, commented, “2010 ended on a very strong note with sales growth continuing through the fourth quarter. And despite severe weather in early 2011, our momentum has continued and we are pleased to have seen continued traffic growth. While we do anticipate inflation this year, we believe we are in a good position to manage through this pressure with limited pricing actions. Consequently, we expect solid profitability in 2011.” Hart continued, “Our balance sheet remains strong and due to a proven economic model, we are excited to be adding more restaurants this year. We are also very pleased to announce that we will be returning excess capital to shareholders through share repurchases and dividends, thus enhancing total shareholder returns.”

Stock Repurchase Authorization

The Company announced today that on February 17, 2011 its Board of Directors approved a stock repurchase program under which it authorized the Company to repurchase up to $50 million of its common stock. Any repurchases will be made through open market transactions. The previous stock repurchase program, which had been extended by the Board of Directors in November 2009, expired on February 14, 2011.

The timing and the amount of any repurchases will be determined by the Company’s management under parameters established by its Board of Directors, based on its evaluation of the Company’s stock price, market conditions and other corporate considerations.

Cash Dividend Payment

Also on February 17, 2011, the Company’s Board of Directors authorized the payment of a cash dividend of $0.08 per share of common stock. This payment will be distributed on April 1, 2011, to shareholders of record at the close of business on March 16, 2011. While no assurance can be made regarding the declaration of and/or payment of future cash dividends, the Company is optimistic that similar payments will be authorized in subsequent quarters and that the dividend amount might increase annually as cash flow increases.

Outlook for 2011

The Company reported that comparable restaurant sales for the first seven weeks of fiscal 2011 increased approximately 3.8% compared to the prior year period. Additionally, the Company announced that it is implementing a menu price increase averaging approximately 1.0% across its restaurants.

The Company’s goal for 2011 diluted earnings per share growth is approximately 10% compared to 2010. This estimate is based, in part, on the following assumptions:

• Comparable restaurant sales growth of approximately 3.5%;
• Approximately 20 company restaurant openings;
• Food cost inflation of approximately 3.0%; and
• Total capital expenditures of $65 to $70 million.

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