Texas Roadhouse, Inc. : Announces Third Quarter 2011 Results
11/01/2011| 03:05pm US/Eastern
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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."
Conference Call
The Company is hosting a conference call today, November 1, 2011, at
5:00 p.m. Eastern Time to discuss these results. The dial-in number is
(877) 419-6594 or (719) 325-4888 for international calls. A replay of
the call will be available for one week following the conference call.
To access the replay, please dial (877) 870-5176 or (858) 384-5517 for
international calls, and use 6062456 as the pass code. There will be a
simultaneous Web cast conducted at www.texasroadhouse.com.
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. For more
information, please visit the Company's Web site at www.texasroadhouse.com.
Forward-looking Statements
Certain statements in this release that are not historical facts,
including, without limitation, those relating to our anticipated
financial performance, are forward-looking statements that involve risks
and uncertainties. Such statements are based upon the current beliefs
and expectations of the management of the Company. Actual results may
vary materially from those contained in forward-looking statements based
on a number of factors including, without limitation, the actual number
of restaurants opening, the sales at these and our other company and
franchise restaurants, changes in restaurant development or operating
costs, such as food and labor, our ability to acquire franchise
restaurants, our ability to integrate the franchise restaurants we
acquire or other concepts we develop, strength of consumer spending,
conditions beyond the Company's control such as weather, natural
disasters, disease outbreaks, epidemics or pandemics impacting the
Company's customers or food supplies, acts of war or terrorism and other
factors disclosed from time to time in the Company's filings with the
U.S. Securities and Exchange Commission. Investors should take such
risks into account when making investment decisions. Stockholders and
other readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date on which
they are made. The Company undertakes no obligation to update any
forward-looking statements.
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.
Texas Roadhouse, Inc. Investor Relations: Price Cooper,
502-515-7300 or Media: Travis Doster, 502-638-5457
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