Texas Roadhouse, Inc. Announces First Quarter 2014 Results

2014-05-06
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  • Texas Roadhouse Comparable restaurant sales increased 2.8% at company restaurants and 3.8% at franchise restaurants

    Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 week period ended April 1, 2014.

                 
     
    First Quarter
    ($000's)

    2014

    2013

    % Change

     
    Total revenue 397,142 359,676 10
    Income from operations 40,184 38,168 5
    Net income 26,465 26,171 1
    Diluted EPS $0.37 $0.37 0
     

    Results for the first quarter included:

    • Comparable restaurant sales increased 2.8% at company restaurants and 3.8% at franchise restaurants;
    • Six company and one franchise restaurant were opened;
    • Restaurant margin, as a percentage of restaurant sales, increased 25 basis points to 19.2%;
    • Income tax rate increased 280 basis points to 30.7%, primarily due to the expiration of certain federal tax credits at the end of 2013;
    • Diluted earnings per share was flat at $0.37 compared to the prior period due largely to the increase in the income tax rate mentioned above; and
    • Repurchased 960,000 shares of our common stock for $24.2 million.

    Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "Our operating momentum continued during the first quarter with double-digit revenue growth. Positive comparable restaurant sales growth, including solid traffic growth, once again drove our top-line results and we are pleased to see our sales momentum extend into the second quarter. As we look ahead, we believe we are well-positioned for long-term success. We continue to open restaurants with six openings so far this year. Beyond new restaurant development, our balance sheet and cash flow remain healthy as we continue to internally fund our growth while returning excess capital to our shareholders through dividend payments and share repurchases."

    2014 Outlook

    The Company reported that comparable restaurant sales at company restaurants for the first four weeks of its second quarter of fiscal 2014 increased approximately 1.6% compared to the prior year period. Additionally, the Company noted that these results were negatively impacted by approximately 1.5% due to the calendar shift of Easter weekend to this four week April period as compared to the Company's first quarter of the prior year.

    Management reiterated the following expectations for 2014:

    • Positive comparable restaurant sales growth;
    • 25 to 30 company restaurant openings;
    • Low single digit food cost inflation;
    • An income tax rate of approximately 30.0% to 31.0% which is higher than the 2013 income tax rate primarily as a result of the expiration of certain federal tax credits at the end of 2013; and
    • Total capital expenditures of $100.0 to $110.0 million.

    About the Company

    Texas Roadhouse is a casual dining concept that first opened in 1993 and today operates over 425 restaurants system-wide in 48 states and three foreign countries.

           
    Texas Roadhouse, Inc. and Subsidiaries
    Condensed Consolidated Statements of Income
    (in thousands, except per share data)
    (unaudited)
     
     
    13 Weeks Ended
    April 1, 2014   March 26, 2013
     
    Revenue:
    Restaurant sales $ 393,956 $ 356,564
    Franchise royalties and fees   3,186   3,112
     
    Total revenue   397,142   359,676
     
    Costs and expenses:
    Restaurant operating costs (excluding depreciation and amortization shown separately below):
    Cost of sales 134,812 124,552
    Labor 114,672 101,661
    Rent 8,042 7,057
    Other operating 60,853 55,778
    Pre-opening 4,277 2,824
    Depreciation and amortization 14,085 12,212
    Impairment and closure 17 57
    General and administrative   20,200   17,367
     
    Total costs and expenses   356,958   321,508
     
    Income from operations 40,184 38,168
     
    Interest expense, net 558 595

    Equity income from investments in unconsolidated affiliates

      212   180
     
    Income before taxes 39,838 37,753
    Provision for income taxes   12,230   10,534
     
    Net income including noncontrolling interests $ 27,608 $ 27,219
    Less: Net income attributable to noncontrolling interests   1,143   1,048
    Net income attributable to Texas Roadhouse, Inc. and subsidiaries $ 26,465 $ 26,171
     

    Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:

    Basic $ 0.38 $ 0.38
    Diluted $ 0.37 $ 0.37
     
    Weighted average shares outstanding:
    Basic   70,132   69,359
    Diluted   71,080   70,583
     
         
    Texas Roadhouse, Inc. and Subsidiaries
    Condensed Consolidated Balance Sheets
    (in thousands)
    (unaudited)
     
     
    (As Adjusted) (1)
    April 1, 2014   December 31, 2013
     
     
    Cash and cash equivalents $ 90,696 $ 94,874
    Other current assets 42,654 50,869
    Property and equipment, net 596,656 586,212
    Goodwill 117,197 117,197
    Intangible assets, net 7,433 7,876
    Other assets 19,903 20,616
       
    Total assets $ 874,539 $ 877,644
     
     

    Current maturities of long-term debt and obligations under capital leases

    240 243
    Other current liabilities 177,925 174,937

    Long-term debt and obligations under capital leases, excluding current maturities

    50,922 50,990
    Other liabilities 57,112 57,614
    Texas Roadhouse, Inc. and subsidiaries stockholders' equity 582,140 587,659
    Noncontrolling interests 6,200 6,201
       
    Total liabilities and equity $ 874,539 $ 877,644
     
     
    (1) December 31, 2013 revised to reflect the impact of adjustments to purchase price accounting related to 2013 acquisitions in accordance with generally accepted accounting principles ("GAAP").
     
         
    Texas Roadhouse, Inc. and Subsidiaries
    Condensed Consolidated Statements of Cash Flows
    (in thousands)
    (unaudited)
     
     
    13 Weeks Ended
    April 1, 2014 March 26, 2013
     
     
    Cash flows from operating activities:
    Net income including noncontrolling interests $ 27,608 $ 27,219
    Adjustments to reconcile net income to net cash provided by operating activities
    Depreciation and amortization 14,085 12,212
    Share-based compensation expense 3,621 3,512
    Other noncash adjustments (284 ) (110 )
    Change in working capital   (66 )   (4,062 )
    Net cash provided by operating activities   44,964     38,771  
     
    Cash flows from investing activities:
    Capital expenditures - property and equipment (23,087 ) (14,955 )
    Proceeds from sale of property and equipment, including insurance proceeds   -     132  
    Net cash used in investing activities   (23,087 )   (14,823 )
     
    Cash flows from financing activities:
    Repurchase of shares of common stock (24,172 ) -
    Dividends paid - (13,135 )
    Other financing activities   (1,883 )   2,894  
    Net cash used in financing activities   (26,055 )   (10,241 )
     
    Net (decrease) increase in cash and cash equivalents (4,178 ) 13,707
    Cash and cash equivalents - beginning of year   94,874     81,746  
    Cash and cash equivalents - end of period $ 90,696   $ 95,453  
     
     
    Texas Roadhouse, Inc. and Subsidiaries
    Supplemental Financial and Operating Information
    ($ amounts in thousands, except weekly sales by group and restaurant margin per store week)
    (unaudited)
             
     
    First Quarter Change

    2014

    2013

    vs LY

     
    Restaurant openings
    Company - Texas Roadhouse 6 3 3
    Company - Other 0 0 0
    Franchise - Texas Roadhouse 1 2 (1 )
    Total 7 5 2
     
     
    Restaurants open at the end of the quarter
    Company - Texas Roadhouse 351 321 30
    Company - Other 1 2 (1 )
    Franchise - Texas Roadhouse 75 74 1
    Total 427 397 30
     
    Company-owned restaurants
    Restaurant sales $ 393,956 $ 356,564 10.5 %
    Store weeks 4,524 4,174 8.4 %
    Comparable restaurant sales growth (1) 2.8 % 3.5 %
    Texas Roadhouse restaurants only:
    Comparable restaurant sales growth (1) 2.8 % 3.5 %
    Average unit volume (2) $ 1,121 $ 1,096 2.2 %
    Weekly sales by group:
    Comparable restaurants (310 units) $ 86,670
    Average unit volume restaurants (19 units) $ 78,958
    Restaurants less than 6 months old (22 units) $ 102,589
     
    Restaurant operating costs (as a % of restaurant sales)
    Cost of sales 34.2 % 34.9 % (71 ) bps
    Labor 29.1 % 28.5 % 60 bps
    Rent 2.0 % 2.0 % 6 bps
    Other operating 15.4 % 15.6 % (20 ) bps
    Total 80.8 % 81.1 % (25 ) bps
     
    Restaurant margin (3) 19.2 % 18.9 % 25 bps
    Restaurant margin $/Store week $ 16,706 $ 16,175 3.3 %
     
    Franchise-owned restaurants
    Franchise royalties and fees $ 3,186 $ 3,112 2.4 %
    Store weeks 962 945 1.8 %
    Comparable restaurant sales growth (1) 3.8 % 4.5 %
    Average unit volume (2) $ 1,191 $ 1,124 5.9 %
     
    Pre-opening expense $ 4,277 $ 2,824 51.5 %
     
    Depreciation and amortization $ 14,085 $ 12,212 15.3 %
    As a % of revenue 3.5 % 3.4 % 15 bps
     
    General and administrative expenses $ 20,200 $ 17,367 16.3 %
    As a % of revenue 5.1 % 4.8 % 26 bps
     
    (1) Comparable restaurant sales growth reflects the change in sales over the same period of the prior year and 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) Restaurant margin represents restaurant sales less cost of sales, labor, rent and other operating costs (as a percentage of restaurant sales). Restaurant margin is widely regarded in the restaurant industry as a useful metric by which to evaluate restaurant-level operating efficiency and performance. Restaurant margin is not a measurement determined in accordance with GAAP and should not be considered in isolation, or as an alternative, to income from operations or other similarly titled measures of other companies.
     
     
     
    Amounts may not foot due to rounding.


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

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