<< Previous :: Next >> By Date :: Top Recent :: Top 30 days :: Top 365 days :: Back

Texas Roadhouse Q3 Comparable Restaurant Sales Increased 4.0%

2011-11-02

Send

Text Size:

Texas Roadhouse Restaurant margins, as a percentage of restaurant sales, increased nine basis points to 18.0% due, in large part, to approximately $1.0 million in benefits recorded relating to workers compensation and property tax expenses

Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 39 week periods ended September 27, 2011.


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

Total revenue	269,253	245,613	10	832,610	760,399	9
Income from operations	23,072	21,448	8	77,029	74,883	3
Net income	15,798	13,952	13	51,667	48,229	7
Diluted EPS	$0.22	$0.19	15	$0.71	$0.66	7

Results for the third quarter included:

Comparable restaurant sales increased 4.0% at company restaurants and 3.7% at franchise restaurants;
Five company restaurants and one franchise restaurant opened;
Restaurant margins, as a percentage of restaurant sales, increased nine basis points to 18.0% due, in large part, to approximately $1.0 million in benefits recorded relating to workers compensation and property tax expenses;
Diluted earnings per share increased 15% to $0.22 from $0.19 in the prior year period;
The Company repurchased 1,503,400 shares of its common stock for a total purchase price of $21.2 million.

Results year-to-date included:

Comparable restaurant sales increased 4.4% at company restaurants and 3.9% at franchise restaurants;
Ten company restaurants and one franchise restaurant opened;
Restaurant margins, as a percentage of restaurant sales, decreased 51 basis points to 18.5%;
Diluted earnings per share increased 7% to $0.71 from $0.66 in the prior period;
The Company repurchased 3,003,400 shares of its common stock for a total purchase price of $46.4 million.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, commented, “Despite ongoing commodity inflation, we were pleased with our third quarter. Comparable restaurant sales remained strong at 4%, driven by traffic gains and pricing flow through, while our newest units continued to generate very strong volumes. In terms of profitability, although one-time benefits and a lower tax rate bolstered our reported results, our underlying business performance was in-line with our expectations. Finally, we remain on track with our 2011 and 2012 development plans, and are particularly pleased that our cash flow generation remains healthy. This allows us to self-fund our new unit expansion and allocate excess capital for the benefit of shareholders.”

Outlook for 2011

The Company reported that comparable restaurant sales at company restaurants for the first four weeks of the fourth quarter of fiscal 2011 increased approximately 4.2% compared to the prior year period.

With better than expected third quarter results, driven by lower than anticipated workers compensation expense, property tax expense and income tax rate, the Company is increasing its diluted earnings per share expectation for 2011. Diluted earnings per share growth is now expected to be up 7.0% to 8.0%. This full year 2011 estimate is based, in part, on the following assumptions, which have not changed from previously reported guidance:

Comparable company restaurant sales growth of 4.0% to 4.5%;
20 company restaurant openings;
Food cost inflation of approximately 4.0%; and
Total capital expenditures of approximately $70.0 million.

Outlook for 2012

With regard to 2012, management provides the following expectations:

Positive comparable restaurant sales growth;
25 restaurant openings;
Food cost inflation of 7.0% to 9.0%, up from approximately 4.0% in 2011;
Higher labor costs due to an increase in minimum and tip wages in 6 states, which impacts approximately 50 company-owned restaurants or approximately 20% of our total company-owned restaurants;
Income tax rate of approximately 32.5%, an increase of 270 basis points over the expected 2011 rate based on the scheduled expiration of certain federal tax credits at the end of 2011; and
Total capital expenditures of approximately $80.0 million.

Taylor commented on 2012, “We certainly feel very good about our sales momentum and increased restaurant growth heading into 2012. And, while we do anticipate taking some pricing actions, we do not expect those to offset the unusually high inflation we foresee next year. Our job is to balance our long-term positioning with shorter term pressures and that is what we plan to do.”

About the Company

Texas Roadhouse is a casual dining concept that first opened in 1993 and today operates over 350 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				39 Weeks Ended
	September 27, 2011		September 28, 2010		September 27, 2011		September 28, 2010

Revenue:
Restaurant sales	$	266,874	$	243,405	$	825,283	$	753,582
Franchise royalties and fees		2,379		2,208		7,327		6,817

Total revenue		269,253		245,613		832,610		760,399

Costs and expenses:
Restaurant operating costs:
Cost of sales		88,944		79,101		274,751		244,560
Labor		78,919		71,835		244,551		221,241
Rent		5,796		5,329		17,153		15,886
Other operating		45,112		43,476		136,331		128,841
Pre-opening		3,327		2,150		7,413		4,562
Depreciation and amortization		10,571		10,262		31,724		30,861
Impairment and closure		13		44		59		302
General and administrative		13,499		11,968		43,599		39,263

Total costs and expenses		246,181		224,165		755,581		685,516

Income from operations		23,072		21,448		77,029		74,883

Interest expense, net		669		644		1,776		2,078
Equity income from investments in unconsolidated affiliates		71		155		271		355

Income before taxes		22,474		20,959		75,524		73,160
Provision for income taxes		6,058		6,478		21,934		23,133

Net income including noncontrolling interests	$	16,416	$	14,481	$	53,590	$	50,027
Less: Net income attributable to noncontrolling interests		618		529		1,923		1,798
Net income attributable to Texas Roadhouse, Inc. and subsidiaries	$	15,798	$	13,952	$	51,667	$	48,229

Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:
Basic	$	0.22	$	0.19	$	0.72	$	0.68
Diluted	$	0.22	$	0.19	$	0.71	$	0.66

Weighted average shares outstanding:
Basic		70,800		71,660		71,370		71,273
Diluted		72,186		73,002		72,903		72,727


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


	39 Weeks Ended
	September 27, 2011			September 28, 2010


Cash flows from operating activities:
Net income including noncontrolling interests	$	53,590		$	50,027
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		31,724			30,861
Share-based compensation expense		8,151			5,705
Other noncash adjustments		1,145			1,574
Change in working capital		(13,601	)		(13,865	)
Net cash provided by operating activities		81,009			74,302

Cash flows from investing activities:
Capital expenditures - property and equipment		(51,839	)		(31,598	)
Proceeds from sale of property and equipment, including insurance proceeds		171			175
Net cash used in investing activities		(51,668	)		(31,423	)

Cash flows from financing activities:
Repayments of revolving credit facility, net		-			(39,000	)
Repurchase shares of common stock		(46,445	)		-
Dividends paid		(11,399	)		-
Other financing activities		1,961			4,688
Net cash used in financing activities		(55,883	)		(34,312	)

Net (decrease) increase in cash and cash equivalents		(26,542	)		8,567
Cash and cash equivalents - beginning of year		82,215			46,858
Cash and cash equivalents - end of year	$	55,673		$	55,425


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



	(unaudited)
	September 27, 2011		December 28, 2010


Cash and cash equivalents	$	55,673	$	82,215
Other current assets		28,616		31,707
Property and equipment, net		479,167		458,983
Goodwill		111,785		111,785
Intangible assets, net		9,311		10,118
Other assets		11,431		7,993

Total assets	$	695,983	$	702,801



Current maturities of long-term debt and obligations under capital leases		296		274
Other current liabilities		100,592		111,784
Long-term debt and obligations under capital leases, excluding current maturities		51,681		51,906
Other liabilities		44,446		39,455
Texas Roadhouse, Inc. and subsidiaries stockholders' equity		495,072		496,616
Noncontrolling interests		3,896		2,766

Total liabilities and equity	$	695,983	$	702,801


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
	2011			2010			vs LY			2011			2010			vs LY

Restaurant openings
Company		5			3		2				10			7		3
Franchise		1			0		1				1			1		0
Total		6			3		3				11			8		3

Restaurant closures
Company		0			0		0				0			(1)		1
Franchise		0			0		0				0			0		0
Total		0			0		0				0			(1)		1

Restaurants open at the end of the quarter
Company		284			267		17
Franchise		72			71		1
Total		356			338		18

Company-owned restaurants
Restaurant sales	$	266,874		$	243,405		9.6		%	$	825,283		$	753,582		9.5		%
Store weeks		3,643			3,450		5.6		%		10,818			10,294		5.1		%
Comparable restaurant sales growth (1)		4.0	%		4.3	%					4.4	%		2.1	%
Average unit volume (2)	$	949		$	913		3.9		%	$	2,970		$	2,836		4.7		%
Weekly sales by group (3):
Comparable restaurants (260 units)	$	73,098
Average unit volume restaurants (14 units)	$	71,165
Restaurants less than 6 months old (10 units)	$	84,524

Restaurant operating costs (as a % of restaurant sales)
Cost of sales		33.3	%		32.5	%	83		bps		33.3	%		32.5	%	84		bps
Labor		29.6	%		29.5	%	6		bps		29.6	%		29.4	%	27		bps
Rent		2.2	%		2.2	%	(2	)	bps		2.1	%		2.1	%	(3	)	bps
Other operating		16.9	%		17.9	%	(96	)	bps		16.5	%		17.1	%	(58	)	bps
Total		82.0	%		82.1	%	(9	)	bps		81.5	%		81.0	%	51		bps

Restaurant margins (4)		18.0	%		17.9	%	9		bps		18.5	%		19.0	%	(51	)	bps

Franchise-owned restaurants
Franchise royalties and fees	$	2,379		$	2,208		7.7		%	$	7,327		$	6,817		7.5		%
Store weeks		927			912		1.6		%		2,773			2,707		2.4		%
Comparable restaurant sales growth (1)		3.7	%		4.4	%					3.9	%		2.4	%
Average unit volume (2)	$	935		$	905		3.3		%	$	2,906		$	2,829		2.7		%

Pre-opening expense	$	3,327		$	2,150		54.7		%	$	7,413		$	4,562		62.5		%

Depreciation and amortization	$	10,571		$	10,262		3.0		%	$	31,724		$	30,861		2.8		%
As a % of revenue		3.9	%		4.2	%	(25	)	bps		3.8	%		4.1	%	(25	)	bps

Impairment and closure	$	13		$	44		NM			$	59		$	302		NM

General and administrative expenses	$	13,499		$	11,968		12.8		%	$	43,599		$	39,263		11.0		%
As a % of revenue		5.0	%		4.9	%	14		bps		5.2	%		5.2	%	7		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) Weekly sales by group includes sales from comparable restaurants, sales from average unit restaurants and sales from restaurants which were open less than six months as of the beginning of the measurement period. Average unit volume restaurants includes sales from restaurants open less than 18 months, but more than six months, as of the beginning of the measurement period, excluding sales from restaurants closed during the period.

(4) 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.

Logos, product and company names mentioned are the property of their respective owners.