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Texas Roadhouse Q2 Sales Up

2011-08-02

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Texas Roadhouse Comparable restaurant sales increased 4.4% at company restaurants and 3.6% at franchise restaurants - Three company restaurants opened;

Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 26 week periods ended June 28, 2011.

	Second Quarter					Year to Date
($000's)		2011		2010	% Change		2011		2010	% Change

Total revenue		279,572		255,162	10		563,357		514,786	9
Income from operations		23,748		23,329	2		53,957		53,435	1
Net income		16,076		15,036	7		35,869		34,277	5
Diluted EPS	$	0.22	$	0.21	7	$	0.49	$	0.47	4

Results for the second quarter included:

Comparable restaurant sales increased 4.4% at company restaurants and 3.6% at franchise restaurants;
Three company restaurants opened;
Restaurant margins, as a percentage of restaurant sales, decreased 69 basis points to 18.1%;
Diluted earnings per share increased 7% to $0.22 from $0.21 in the prior year period.

Results year-to-date included:

Comparable restaurant sales increased 4.5% at company restaurants and 3.8% at franchise restaurants;
Five company restaurants opened;
Restaurant margins decreased 79 basis points to 18.7%;
Diluted earnings per share increased 4% to $0.49 from $0.47 in the prior period.

G.J. Hart, President and Chief Executive Officer of Texas Roadhouse, commented, “We maintained our positive sales momentum through the second quarter generating double digit revenue gains and a seven percent increase in earnings per share. In addition, sales performance at newer restaurants was a highlight as they continued to outpace our system. We continue to build an increasing pipeline of new locations and expect to open at least 25 restaurants in 2012, a 25% increase over our forecast for this year. Finally, our cash flow remains healthy, allowing us to not only fund new development internally, but also return capital to shareholders through share repurchases and our second quarterly dividend in July. We are pleased with our overall progress in an otherwise uncertain environment and we continue to believe Texas Roadhouse is among the best positioned companies in the casual dining sector.”

Outlook for 2011

The Company reported that comparable restaurant sales at company restaurants for the first four weeks of the third quarter of fiscal 2011 increased approximately 3.9% compared to the prior year period.

The Company moderated its current expectation for 2011 diluted earnings per share growth from 5 to 10% to approximately 5% compared to 2010. This resulted from slightly moderated sales and moderated margin expectations due to higher overall inflationary pressures. Additionally, this full year 2011 estimate is based, in part, on the following assumptions:

Comparable company restaurant sales growth of 4.0% to 4.5%;
Approximately 20 company restaurant openings;
Food cost inflation of approximately 4.0%; and
Total capital expenditures of $65 to $70 million.

Texas Roadhouse is a casual dining concept that first opened in 1993 and today operates over 345 restaurants system-wide in 46 states.

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


			13 Weeks Ended				26 Weeks Ended
			June 28, 2011		June 29, 2010		June 28, 2011		June 29, 2010

Revenue:
	Restaurant sales		$	277,089	$	252,835	$	558,409	$	510,177
	Franchise royalties and fees			2,483		2,327		4,948		4,609

Total revenue				279,572		255,162		563,357		514,786

Costs and expenses:
	Restaurant operating costs:
		Cost of sales		92,266		82,660		185,807		165,459
		Labor		82,912		74,497		165,632		149,406
		Rent		5,700		5,287		11,357		10,557
		Other operating		45,938		42,767		91,219		85,365
	Pre-opening			2,196		1,307		4,086		2,412
	Depreciation and amortization			10,553		10,262		21,153		20,599
	Impairment and closure			20		100		46		258
	General and administrative			16,239		14,953		30,100		27,295

Total costs and expenses				255,824		231,833		509,400		461,351

Income from operations				23,748		23,329		53,957		53,435

Interest expense, net				542		704		1,107		1,434
Equity income from investments in
	unconsolidated affiliates			97		92		200		200

Income before taxes				23,303		22,717		53,050		52,201
Provision for income taxes				6,604		7,049		15,876		16,655

Net income including noncontrolling interests			$	16,699	$	15,668	$	37,174	$	35,546
Less: Net income attributable to noncontrolling interests				623		632		1,305		1,269
Net income attributable to Texas Roadhouse, Inc. and subsidiaries			$	16,076	$	15,036	$	35,869	$	34,277

Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:
	Basic		$	0.23	$	0.21	$	0.50	$	0.48
	Diluted		$	0.22	$	0.21	$	0.49	$	0.47

Weighted average shares outstanding:
	Basic			71,261		71,471		71,654		71,076
	Diluted			72,791		72,961		73,256		72,587

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

			26 Weeks Ended
			June 28, 2011			June 29, 2010


Cash flows from operating activities:
Net income including noncontrolling interests			$	37,174		$	35,546
Adjustments to reconcile net income to net cash provided by operating activities
	Depreciation and amortization			21,153			20,599
	Share-based compensation expense			5,733			3,736
	Other noncash adjustments			2,075			2,395
Change in working capital				(9,784	)		(13,948	)
		Net cash provided by operating activities		56,351			48,328

Cash flows from investing activities:
Capital expenditures - property and equipment				(29,093	)		(17,967	)
Proceeds from sale of property and equipment, including insurance proceeds				75			51
		Net cash used in investing activities		(29,018	)		(17,916	)

Cash flows from financing activities:
Repayments of revolving credit facility, net				-			(22,000	)
Repurchase shares of common stock				(25,269	)		-
Dividends paid				(5,692	)		-
Other financing activities				789			4,965
		Net cash used in financing activities		(30,172	)		(17,035	)

		Net (decrease) increase in cash and cash equivalents		(2,839	)		13,377
Cash and cash equivalents - beginning of year				82,215			46,858
Cash and cash equivalents - end of year			$	79,376		$	60,235

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

			(unaudited)
			June 28, 2011		December 28, 2010


	Cash and cash equivalents		$	79,376	$	82,215
	Other current assets			29,218		31,707
	Property and equipment, net			467,378		458,983
	Goodwill			111,785		111,785
	Intangible assets, net			9,580		10,118
	Other assets			10,872		7,993

	Total assets		$	708,209	$	702,801


	Current maturities of long-term debt
		and obligations under capital leases		289		274
	Other current liabilities			104,905		111,784
	Long-term debt and obligations under
		capital leases, excluding current maturities		51,757		51,906
	Other liabilities			44,813		39,455
	Texas Roadhouse, Inc. and subsidiaries stockholders' equity			502,632		496,616
	Noncontrolling interests			3,813		2,766

	Total liabilities and equity		$	708,209	$	702,801

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

		Second Quarter						Change			Year to Date						Change
			2011			2010		vs LY				2011			2010		vs LY

Restaurant openings
	Company		3			1		2				5			4		1
	Franchise		0			1		(1	)			0			1		(1	)
	Total		3			2		1				5			5		0

Restaurants open at the end of the quarter
	Company		279			264		15
	Franchise		71			71		0
	Total		350			335		15

Company-owned restaurants
	Restaurant sales	$	277,089		$	252,835		9.6		%	$	558,409		$	510,177		9.5		%
	Store weeks		3,607			3,432		5.1		%		7,175			6,844		4.8		%
	Comparable restaurant sales growth (1)		4.4	%		1.4	%					4.5	%		0.9	%
	Average unit volume (2)	$	995		$	952		4.6		%	$	2,017		$	1,925		4.8		%

	Restaurant operating costs (as a % of restaurant sales)
	Cost of sales		33.3	%		32.7	%	61		bps		33.3	%		32.4	%	84		bps
	Labor		29.9	%		29.5	%	46		bps		29.7	%		29.3	%	38		bps
	Rent		2.1	%		2.1	%	(3	)	bps		2.0	%		2.1	%	(4	)	bps
	Other operating		16.6	%		16.9	%	(34	)	bps		16.3	%		16.7	%	(40	)	bps
	Total		81.9	%		81.2	%	69		bps		81.3	%		80.5	%	79		bps

	Restaurant margins (3)		18.1	%		18.8	%	(69	)	bps		18.7	%		19.5	%	(79	)	bps

Franchise-owned restaurants
	Franchise royalties and fees	$	2,483		$	2,327		6.7		%	$	4,948		$	4,609		7.4		%
	Store weeks		923			911		1.3		%		1,846			1,821		1.4		%
	Comparable restaurant sales growth (1)		3.6	%		2.0	%					3.8	%		1.4	%
	Average unit volume (2)	$	981		$	951		3.2		%	$	1,979		$	1,919		3.1		%

Pre-opening expense		$	2,196		$	1,307		68.0		%	$	4,086		$	2,412		69.4		%

Impairment and closure		$	20		$	100		NM			$	46		$	258		NM

Depreciation and amortization		$	10,553		$	10,262		2.8		%	$	21,153		$	20,599		2.7		%
	As a % of revenue		3.8	%		4.0	%	(25	)	bps		3.8	%		4.0	%	(25	)	bps

General and administrative expenses		$	16,239		$	14,953		8.6		%	$	30,100		$	27,295		10.3		%
	As a % of revenue		5.8	%		5.9	%	(5	)	bps		5.3	%		5.3	%	4		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.