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Texas Roadhouse, Inc. Announces First Quarter 2011 Results

2011-05-03

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Texas Roadhouse The Company reported that comparable restaurant sales for the first four weeks of the second quarter of fiscal 2011 increased approximately 5.4% compared to the prior year period.

Texas Roadhouse, Inc. (NasdaqGS: TXRH), announced financial results for the 13 week period ended March 29, 2011.


	First Quarter
($000's)	2011	2010	% Change

Total revenue	283,785	259,624	9
Income from operations	30,209	30,106	-
Net income	19,793	19,241	3
Diluted EPS	$0.27	$0.27	1

Results for the first quarter included:

Comparable restaurant sales increased 4.6% at company restaurants and 3.8% at franchise restaurants;
2 company restaurants opened;
Restaurant margins, as a percentage of restaurant sales, decreased 88 basis points to 19.2%;
The Company repurchased 1,500,000 shares of its common stock for a total purchase price of $25.3 million;
Diluted earnings per share increased 1% compared to the prior year period.

G.J. Hart, President and Chief Executive Officer of Texas Roadhouse, commented, “We were very pleased with yet another quarter of strong, top-line momentum, driven by rising guest counts and new restaurant performance. We credit our on-going commitment to Legendary Food and Legendary Service at an affordable price, our fundamental business proposition. That said, commodity inflation continues to present challenges in the marketplace and, although we have modestly raised prices to address the issue, it has not been enough to fully offset the rising costs. If appropriate, we believe we are well positioned to take further modest price increases to help offset inflation.

Hart continued, “We continue to have a lot of confidence in our unit economics and are excited to continue to ramp our development. Accordingly, we plan to open more restaurants in 2011 than in 2010, and we are building a pipeline to open even more units in 2012. This caused pre-opening costs to increase in the first quarter, something we expect to persist throughout the year. While negative to earnings per share short term, we strongly believe the longer term dynamics of new unit and operating week growth is good for our teams and our shareholders. Finally, while we continue to invest in our core business, we are pleased to be returning excess capital to shareholders through dividends and share repurchases. We remain committed to driving total shareholder return through our operational performance, our growth and returning capital to shareholders.”

Outlook for 2011

The Company reported that comparable restaurant sales for the first four weeks of the second quarter of fiscal 2011 increased approximately 5.4% compared to the prior year period.

The Company’s current expectation for 2011 diluted earnings per share growth is 5% to 10% compared to 2010. This estimate is based, in part, on the following assumptions:

Comparable restaurant sales growth of 3.5% to 5%;
Approximately 20 company restaurant openings;
Food cost inflation of approximately 4.0%; and
Total capital expenditures of $65 to $70 million.


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


			(unaudited)
			13 Weeks Ended
			March 29, 2011		March 30, 2010

Revenue:
	Restaurant sales		$	281,320	$	257,342
	Franchise royalties and fees			2,465		2,282

Total revenue				283,785		259,624

Costs and expenses:
	Restaurant operating costs:
		Cost of sales		93,541		82,799
		Labor		82,720		74,909
		Rent		5,657		5,270
		Other operating		45,281		42,598
	Pre-opening			1,890		1,105
	Depreciation and amortization			10,600		10,337
	Impairment and closure			26		158
	General and administrative			13,861		12,342

Total costs and expenses				253,576		229,518

Income from operations				30,209		30,106

Interest expense, net				565		730

Equity income from investments in unconsolidated affiliates				103		108

Income before taxes				29,747		29,484
Provision for income taxes				9,272		9,606

Net income including noncontrolling interests			$	20,475	$	19,878
Less: Net income attributable to noncontrolling interests				682		637
Net income attributable to Texas Roadhouse, Inc. and subsidiaries			$	19,793	$	19,241

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

Weighted average shares outstanding:
	Basic			72,052		70,690
	Diluted			73,727		72,226


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


		(unaudited)
		March 29, 2011		December 28, 2010


	Cash and cash equivalents	$	77,420	$	82,215
	Other current assets		29,903		31,707
	Property and equipment, net		460,522		458,983
	Goodwill		111,785		111,785
	Intangible asset, net		9,849		10,118
	Other assets		9,325		7,993

	Total assets	$	698,804	$	702,801


	Current maturities of long-term debt and obligations under capital leases		281		274
	Other current liabilities		113,971		111,784
	Long-term debt and obligations under capital leases, excluding current maturities		51,832		51,906
	Other liabilities		40,258		39,455
	Texas Roadhouse, Inc. and subsidiaries stockholders' equity		489,625		496,616
	Noncontrolling interests		2,837		2,766

	Total liabilities and equity	$	698,804	$	702,801


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


			13 Weeks Ended
			March 29, 2011			March 30, 2010


Cash flows from operating activities:
Net income including noncontrolling interests			$	20,475		$	19,878
Adjustments to reconcile net income to net cash provided by operating activities
	Depreciation and amortization			10,600			10,337
	Share-based compensation expense			2,960			1,830
	Other noncash adjustments			172			1,815
Change in working capital				(2,071	)		(11,176	)
		Net cash provided by operating activities		32,136			22,684

Cash flows from investing activities:
Capital expenditures - property and equipment				(12,458	)		(7,822	)
Proceeds from sale of property and equipment, including insurance proceeds				49			21
		Net cash used in investing activities		(12,409	)		(7,801	)

Cash flows from financing activities:
Repayments of revolving credit facility, net				-			(12,000	)
Repurchase shares of common stock				(25,269	)		-
Other financing activities				747			4,002
		Net cash used in financing activities		(24,522	)		(7,998	)

		Net (decrease) increase in cash and cash equivalents		(4,795	)		6,885
Cash and cash equivalents - beginning of year				82,215			46,858
Cash and cash equivalents - end of year			$	77,420		$	53,743


Texas Roadhouse, Inc. and Subsidiaries
Supplemental Financial and Operating Information
($ amounts in thousands)
(unaudited)


		First Quarter						Change
		2011			2010			vs LY

Restaurant openings
	Company		2			3		(1	)
	Franchise		0			0		0
	Total		2			3		(1	)

Restaurants open at the end of the quarter
	Company		276			264		12
	Franchise		71			70		1
	Total		347			334		13

Company-owned restaurants
	Restaurant sales	$	281,320		$	257,342		9.3		%
	Store weeks		3,568			3,412		4.6		%
	Comparable restaurant sales growth (1)		4.6	%		0.4	%
	Average unit volume (2)	$	1,022		$	975		4.8		%

	Restaurant operating costs (as a % of restaurant sales)
	Cost of sales		33.3	%		32.2	%	108		bps
	Labor		29.4	%		29.1	%	30		bps
	Rent		2.0	%		2.0	%	(4	)	bps
	Other operating		16.1	%		16.6	%	(46	)	bps
	Total		80.8	%		79.9	%	88		bps

	Restaurant margins (3)		19.2	%		20.1	%	(88	)	bps

Franchise-owned restaurants
	Franchise royalties and fees	$	2,465		$	2,282		8.0		%
	Store weeks		897			910		(1.4	)	%
	Comparable restaurant sales growth (1)		3.8	%		0.9	%
	Average unit volume (2)	$	994		$	964		3.1		%

Pre-opening expense		$	1,890		$	1,105		71.0		%

Depreciation and amortization		$	10,600		$	10,337		2.5		%
	As a % of revenue		3.7	%		4.0	%	(25	)	bps

Impairment and closure		$	26		$	158		NM
	As a % of revenue		0.0	%		0.1	%	(5	)	bps

General and administrative expenses		$	13,861		$	12,342		12.3		%
	As a % of revenue		4.9	%		4.8	%	13		bps

(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 restaurants open six months as of the beginning of the measurement period, excluding sales from restaurants closed during the period.
(3) Restaurant margins represent restaurant sales less restaurant operating costs (as a percentage of restaurant sales).

NM - Not meaningful
Amounts may not foot due to rounding.