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Texas Roadhouse, Inc. Fourth Quarter 2011 Comparable Restaurant Sales Increased 5.6% at All Company Restaurant

2012-02-22

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Texas Roadhouse, Inc. Announces Fourth Quarter 2011 Results

Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 52 week periods ended December 27, 2011.

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

Total revenue	276,616	244,594	13	1,109,226	1,004,993	10
Income from operations	18,210	15,734	16	95,239	90,617	5
Net income	12,297	10,060	22	63,964	58,289	10
Diluted EPS	$0.17	$0.14	28	$0.88	$0.80	11

Results for the fourth quarter included:

Comparable restaurant sales increased 5.6% at all company restaurants and 5.7% at all franchise restaurants;
Ten company restaurants opened;
Restaurant margins, as a percentage of restaurant sales, decreased 25 basis points to 16.8%;
Diluted earnings per share increased 28% to $0.17 from $0.14 in the prior year period;
The Company repurchased 968,700 shares of its common stock for a total purchase price of $12.7 million.

Results for the full year included:

Comparable restaurant sales increased 4.7% at all company restaurants and 4.3% at all franchise restaurants;
20 company restaurants and one international franchise restaurant opened;
Restaurant margins, as a percentage of restaurant sales, decreased 45 basis points to 18.1%;
Diluted earnings per share increased 11% to $0.88 from $0.80 in the prior year;
The Company repurchased 3,972,100 shares of its common stock for a total purchase price of $59.1 million.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, commented, “We are very pleased with our 2011 results and are particularly encouraged that our strong sales trends were driven largely by increased traffic. Despite a challenging consumer environment and continued commodity cost pressures, we reported double-digit revenue and earnings per share growth in 2011, while our strong balance sheet and healthy cash flows enabled us to return $76 million of excess capital to shareholders through share repurchases and quarterly dividend payments.”

Taylor concluded, “For 2012, we have assembled a healthy pipeline of new locations and are on track to open 25 company restaurants. Although we expect to face short-term cost pressures, we remain excited by the ongoing momentum in our top-line and will continue to focus on our long-term brand positioning and growth potential.”

Outlook for 2012

The Company reported that comparable restaurant sales for the first seven weeks of fiscal 2012 increased approximately 6.7% compared to the prior year period. Additionally, the Company announced that it implemented a menu price increase of approximately 2.2% across its restaurants in late January.

The Company estimates that its 2012 diluted earnings per share growth will be up approximately 5% compared to 2011. This range is based, in part, on the following assumptions:

Comparable restaurant sales growth of 4% to 5%;
25 company restaurant openings;
Food cost inflation of approximately 8%;
An income tax rate of 32.5% to 33.0%, an increase of 300 to 350 basis points from 2011 and a 5% impact on diluted earnings per share growth, due to the expiration of certain federal tax credits at the end of 2011; and
Total capital expenditures of $80.0 to $85.0 million.

Stock Repurchase Authorization

The Company announced today that on February 16, 2012 its Board of Directors approved a stock repurchase program under which it authorized the Company to repurchase up to $100.0 million of its common stock. Any repurchases will be made through open market transactions. The Board of Directors cancelled the previous stock repurchase program, which had no expiration date and $40.9 million remaining as of December 27, 2011.

Cash Dividend Payment

On February 16, 2012, the Company’s Board of Directors authorized the payment of a cash dividend of $0.09 per share of common stock. This payment will be distributed on March 30, 2012 to shareholders of record at the close of business on March 14, 2012 and represents an increase from the cash dividend of $0.08 per share of common stock declared each quarter in 2011.

About the Company

Texas Roadhouse is a casual dining concept that first opened in 1993 and today operates over 360 restaurants system-wide in 47 states and one foreign country.

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


			13 Weeks Ended				52 Weeks Ended
			December 27, 2011		December 28, 2010		December 27, 2011		December 28, 2010

Revenue:
	Restaurant sales		$	274,192	$	242,406	$	1,099,475	$	995,988
	Franchise royalties and fees			2,424		2,188		9,751		9,005

Total revenue				276,616		244,594		1,109,226		1,004,993

Costs and expenses:
	Restaurant operating costs:
		Cost of sales		92,634		79,707		367,385		324,267
		Labor		81,682		71,781		326,233		293,022
		Rent		5,997		5,475		23,150		21,361
		Other operating		47,742		44,052		184,073		172,893
	Pre-opening			4,121		2,489		11,534		7,051
	Depreciation and amortization			10,985		10,422		42,709		41,283
	Impairment and closure			1,142		1,703		1,201		2,005
	General and administrative			14,103		13,231		57,702		52,494

Total costs and expenses				258,406		228,860		1,013,987		914,376

Income from operations				18,210		15,734		95,239		90,617

Interest expense, net				637		595		2,413		2,673
Equity income from investments in
	unconsolidated affiliates			95		73		366		428

Income before taxes				17,668		15,212		93,192		88,372
Provision for income taxes				4,831		4,550		26,765		27,683

Net income including noncontrolling interests			$	12,837	$	10,662	$	66,427	$	60,689
Less: Net income attributable to noncontrolling interests				540		602		2,463		2,400
Net income attributable to Texas Roadhouse, Inc. and subsidiaries			$	12,297	$	10,060	$	63,964	$	58,289

Net income per common share attributable to Texas Roadhouse, Inc.
and subsidiaries:
	Basic		$	0.18	$	0.14	$	0.90	$	0.82
	Diluted		$	0.17	$	0.14	$	0.88	$	0.80

Weighted average shares outstanding:
	Basic			69,214		71,918		70,829		71,432
	Diluted			70,463		73,610		72,278		72,929

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



	(unaudited)
	December 27, 2011		December 28, 2010


Cash and cash equivalents	$	73,731	$	82,215
Other current assets		38,243		31,707
Property and equipment, net		497,217		458,983
Goodwill		110,946		111,785
Intangible assets, net		9,042		10,118
Other assets		11,491		7,993

Total assets	$	740,670	$	702,801


Current maturities of long-term debt and obligations under capital leases		304		274
Other current liabilities		136,068		111,784
Long-term debt and obligations under capital leases, excluding current maturities		61,601		51,906
Other liabilities		46,875		39,455
Texas Roadhouse, Inc. and subsidiaries stockholders' equity		491,904		496,616
Noncontrolling interests		3,918		2,766

Total liabilities and equity	$	740,670	$	702,801

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


			52 Weeks Ended
			December 27, 2011			December 28, 2010


Cash flows from operating activities:
Net income including noncontrolling interests			$	66,427		$	60,689
Adjustments to reconcile net income to net cash provided by operating activities
	Depreciation and amortization			42,709			41,283
	Share-based compensation expense			10,525			7,686
	Other noncash adjustments			3,728			5,298
Change in working capital				14,118			4,952
		Net cash provided by operating activities		137,507			119,908

Cash flows from investing activities:
Capital expenditures - property and equipment				(81,758	)		(45,051	)
Proceeds from sale of property and equipment, including insurance proceeds				188			235
		Net cash used in investing activities		(81,570	)		(44,816	)

Cash flows from financing activities:
Proceeds (repayments) of revolving credit facility, net				10,000			(49,000	)
Repurchase shares of common stock				(59,147	)		-
Dividends paid				(17,012	)		-
Other financing activities				1,738			9,265
		Net cash used in financing activities		(64,421	)		(39,735	)

		Net (decrease) increase in cash and cash equivalents		(8,484	)		35,357
Cash and cash equivalents - beginning of year				82,215			46,858
Cash and cash equivalents - end of year			$	73,731		$	82,215

Texas Roadhouse, Inc. and Subsidiaries
Supplemental Financial and Operating Information
($ amounts in thousands, except weekly sales by group)
(unaudited)


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

Restaurant openings
	Company - Texas Roadhouse		10			6		4				20			12			8
	Company - Aspen Creek		0			1		(1	)			0			2			(2	)
	Franchise - Texas Roadhouse		0			0		0				1			1			0
	Total		10			7		3				21			15			6

Restaurant closures
	Company - Texas Roadhouse		0			0		0				0			(1	)		1
	Company - Aspen Creek		0			0		0				0			0			0
	Franchise - Texas Roadhouse		0			0		0				0			0			0
	Total		0			0		0				0			(1	)		1

Restaurants open at the end of the quarter
	Company - Texas Roadhouse		291			271		20
	Company - Aspen Creek		3			3		0
	Franchise - Texas Roadhouse		72			71		1
	Total		366			345		21

Company-owned restaurants
	Restaurant sales	$	274,192		$	242,406		13.1		%	$	1,099,475		$	995,988			10.4		%
	Store weeks		3,755			3,509		7.0		%		14,573			13,803			5.6		%
	Comparable restaurant sales growth (1)		5.6	%		3.1	%					4.7	%		2.4		%
	Texas Roadhouse restaurants only:
	Comparable restaurant sales growth (1)		5.6	%		3.1	%					4.8	%		2.4		%
	Average unit volume (2)	$	945		$	895		5.6		%	$	3,917		$	3,730			5.0		%
	Weekly sales by group (3):
	Comparable restaurants (262 units)	$	72,662
	Average unit volume restaurants (11 units)	$	72,553
	Restaurants less than 6 months old (18 units)	$	85,773

	Restaurant operating costs (as a % of restaurant sales)
	Cost of sales		33.8	%		32.9	%	90		bps		33.4	%		32.6		%	86		bps
	Labor		29.8	%		29.6	%	18		bps		29.7	%		29.4		%	25		bps
	Rent		2.2	%		2.3	%	(7	)	bps		2.1	%		2.1		%	(4	)	bps
	Other operating		17.4	%		18.2	%	(76	)	bps		16.7	%		17.4		%	(62	)	bps
	Total		83.2	%		82.9	%	25		bps		81.9	%		81.5		%	45		bps

	Restaurant margins (4)		16.8	%		17.1	%	(25	)	bps		18.1	%		18.5		%	(45	)	bps

Franchise-owned restaurants
	Franchise royalties and fees	$	2,424		$	2,188		10.8		%	$	9,751		$	9,005			8.3		%
	Store weeks		936			923		1.4		%		3,709			3,630			2.2		%
	Comparable restaurant sales growth (1)		5.7	%		2.9	%					4.3	%		2.5		%
	Average unit volume (2)	$	927		$	881		5.2		%	$	3,831		$	3,715			3.1		%

Pre-opening expense		$	4,121		$	2,489		65.6		%	$	11,534		$	7,051			63.6		%

Depreciation and amortization		$	10,985		$	10,422		5.4		%	$	42,709		$	41,283			3.5		%
	As a % of revenue		4.0	%		4.3	%	(29	)	bps		3.9	%		4.1		%	(26	)	bps

General and administrative expenses		$	14,103		$	13,231		6.6		%	$	57,702		$	52,494			9.9		%
	As a % of revenue		5.1	%		5.4	%	(31	)	bps		5.2	%		5.2		%	(2	)	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 Texas Roadhouse 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 (Texas Roadhouse restaurants only) 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).

Amounts may not foot due to rounding.