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Texas Roadhouse, Inc. Announces Second Quarter 2012 Results

Stocks in this article: TXRH

2012 Outlook

The Company reported that comparable restaurant sales at company restaurants for the first four weeks of its third quarter of fiscal 2012 increased approximately 5.5% compared to the prior year period which includes a benefit from the timing of the fourth of July holiday.

The Company currently anticipates that GAAP diluted earnings per share for 2012, which includes the legal settlement charge discussed below, will be $0.94 to $0.96. This compares to diluted earnings per share of $0.88 in 2011. The updated guidance is based, in part, on the following assumptions and other information:

  • Comparable restaurant sales growth of 4.0% to 4.5%, the low end of our previously expected range;
  • Approximately 25 company restaurant openings;
  • Food cost inflation of approximately 7.0%, the low end of our previously expected range;
  • A pre-tax charge of $5.0 million ($3.1 million after-tax) relating to a legal settlement. This charge was recorded in the first quarter of 2012 and is expected to negatively impact full year 2012 diluted earnings per share by approximately $0.04;
  • An income tax rate of 32.5% to 33.0%, which is higher than the prior year rate of 29.5% as a result of the expiration of certain federal tax credits at the end of 2011. The increased tax rate is expected to negatively impact full year 2012 diluted earnings per share by approximately $0.04; and
  • Total capital expenditures of approximately $90.0 million, higher than our previous range of $80.0 to $85.0 million.

Conference Call

The Company is hosting a conference call today, July 30, 2012, at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (888) 204-4426 or (913) 312-1301 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 6138467 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 380 restaurants system-wide in 47 states and one foreign country. 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, pending or future legal claims, 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 26 Weeks Ended
June 26, 2012 June 28, 2011 June 26, 2012 June 28, 2011
 
Revenue:
Restaurant sales $ 317,546 $ 277,089 $ 639,558 $ 558,409
Franchise royalties and fees   2,729   2,483   5,586   4,948
 
Total revenue   320,275   279,572   645,144   563,357
 
Costs and expenses:
Restaurant operating costs:
Cost of sales 106,860 92,266 216,515 185,807
Labor 93,235 82,912 186,582 165,632
Rent 6,379 5,700 12,631 11,357
Other operating 50,555 45,938 101,784 91,219
Pre-opening 2,780 2,196 6,365 4,086
Depreciation and amortization 11,546 10,553 22,893 21,153
Impairment and closure 20 20 39 46
General and administrative   17,653   16,239   37,686   30,100
 
Total costs and expenses   289,028   255,824   584,495   509,400
 
Income from operations 31,247 23,748 60,649 53,957
 
Interest expense, net 568 542 1,173 1,107
Equity income from investments in
unconsolidated affiliates   121   97   162   200
 
Income before taxes 30,800 23,303 59,638 53,050
Provision for income taxes   9,952   6,604   19,037   15,876
 
Net income including noncontrolling interests (1) $ 20,848 $ 16,699 $ 40,601 $ 37,174
Less: Net income attributable to noncontrolling interests   538   623   1,422   1,305
Net income attributable to Texas Roadhouse, Inc. and subsidiaries $ 20,310 $ 16,076 $ 39,179 $ 35,869
 

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

Basic $ 0.29 $ 0.23 $ 0.56 $ 0.50
Diluted $ 0.28 $ 0.22 $ 0.55 $ 0.49
 
Weighted average shares outstanding:
Basic   70,129   71,261   69,763   71,654
Diluted   71,587   72,791   71,247   73,256

 

(1)

 

Results for the 26 weeks ended June 26, 2012 include a $5.0 million charge ($3.1 million, net of tax), before the statutory income tax rate, relating to the settlement of a legal matter. The settlement is included in general and administrative costs.

       
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
 
(unaudited)
June 26, 2012 December 27, 2011
 
 
Cash and cash equivalents $ 77,225 $ 73,731
Other current assets 34,469 38,243
Property and equipment, net 515,620 497,217
Goodwill 110,946 110,946
Intangible assets, net 8,504 9,042
Other assets 12,612 11,491
   
Total assets $ 759,376 $ 740,670
 
 
Current maturities of long-term debt
and obligations under capital leases 321 304
Other current liabilities 122,771 136,068
Long-term debt and obligations under
capital leases, excluding current maturities 51,437 61,601
Other liabilities 46,979 46,875
Texas Roadhouse, Inc. and subsidiaries stockholders' equity 533,007 491,904
Noncontrolling interests 4,861 3,918
   
Total liabilities and equity $ 759,376 $ 740,670
 
       
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
   
 
26 Weeks Ended
June 26, 2012 June 28, 2011
 
 
Cash flows from operating activities:
Net income including noncontrolling interests $ 40,601 $ 37,174
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 22,893 21,153
Share-based compensation expense 6,324 5,733
Other noncash adjustments (2,991 ) 2,075
Change in working capital   (6,576 )   (9,784 )
Net cash provided by operating activities   60,251     56,351  
 
Cash flows from investing activities:
Capital expenditures - property and equipment (42,547 ) (29,093 )
Proceeds from sale of property and equipment, including insurance proceeds   106     75  
Net cash used in investing activities   (42,441 )   (29,018 )
 
Cash flows from financing activities:
(Repayments) of revolving credit facility, net (10,000 ) -
Repurchase shares of common stock - (25,269 )
Dividends paid (11,806 ) (5,692 )
Other financing activities   7,490     789  
Net cash used in financing activities   (14,316 )   (30,172 )
 
Net increase (decrease) in cash and cash equivalents 3,494 (2,839 )
Cash and cash equivalents - beginning of year   73,731     82,215  
Cash and cash equivalents - end of year $ 77,225   $ 79,376  
 
             
Texas Roadhouse, Inc. and Subsidiaries
Supplemental Financial and Operating Information
($ amounts in thousands, except weekly sales by group)
(unaudited)
 
 
Second Quarter Change Year to Date Change

2012

2011

vs LY

2012

2011

vs LY

 
Restaurant openings
Company - Texas Roadhouse 7 3 4 15 5 10
Company - Aspen Creek 0 0 0 0 0 0
Franchise - Texas Roadhouse 0 0 0 0 0 0
Total 7 3 4 15 5 10
 
Restaurants open at the end of the quarter
Company - Texas Roadhouse 306 276 30
Company - Aspen Creek 3 3 0
Franchise - Texas Roadhouse 72 71 1
Total 381 350 31
 
Company-owned restaurants
Restaurant sales $ 317,546 $ 277,089 14.6 % $ 639,558 $ 558,409 14.5 %
Store weeks 3,962 3,607 9.8 % 7,813 7,175 8.9 %
Comparable restaurant sales growth (1) 4.5 % 4.4 % 5.3 % 4.5 %
Texas Roadhouse restaurants only:
Comparable restaurant sales growth (1) 4.5 % 4.4 % 5.3 % 4.6 %
Average unit volume (2) $ 1,038 $ 997 4.1 % $ 2,118 $ 2,019 4.9 %
Weekly sales by group:
Comparable restaurants (265 units) $ 80,141
Average unit volume restaurants (16 units) $ 74,531
Restaurants less than 6 months old (25 units) $ 87,954
 
Restaurant operating costs (as a % of restaurant sales)
Cost of sales 33.7 % 33.3 % 35 bps 33.9 % 33.3 % 58 bps
Labor 29.4 % 29.9 % (56 ) bps 29.2 % 29.7 % (49 ) bps

Rent

2.0 % 2.1 % (5 ) bps 2.0 % 2.0 % (6 ) bps
Other operating 15.9 % 16.6 % (66 ) bps 15.9 % 16.3 % (42 ) bps
Total 80.9 % 81.9 % (91 ) bps 80.9 % 81.3 % (39 ) bps
 
Restaurant margins (3) 19.1 % 18.1 % 91 bps 19.1 % 18.7 % 39 bps
 
Franchise-owned restaurants
Franchise royalties and fees $ 2,729 $ 2,483 9.9 % $ 5,586 $ 4,948 12.9 %
Store weeks 936 923 1.4 % 1,872 1,846 1.4 %
Comparable restaurant sales growth (1) 4.8 % 3.6 % 5.9 % 3.8 %
Average unit volume (2) $ 1,030 $ 983 4.8 % $ 2,091 $ 1,972 6.1 %
 
Pre-opening expense $ 2,780 $ 2,196 26.6 % $ 6,365 $ 4,086 55.8 %
 
Depreciation and amortization $ 11,546 $ 10,553 9.4 % $ 22,893 $ 21,153 8.2 %
As a % of revenue 3.6 % 3.8 % (17 ) bps 3.5 % 3.8 % (21 ) bps
 
General and administrative expenses (4) $ 17,653 $ 16,239 8.7 % $ 37,686 $ 30,100 25.2 %
As a % of revenue 5.5 % 5.8 % (30 ) bps 5.8 % 5.3 % 50 bps

 

(1)

 

Comparable restaurant sales growth includes sales from domestic 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 domestic Texas Roadhouse 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).

(4)

Results for the 26 weeks ended June 26, 2012 include a $5.0 million pre-tax charge for the settlement of a legal matter.

 
Amounts may not foot due to rounding.
 

Texas Roadhouse, Inc. and Subsidiaries Reconciliation of GAAP and Non-GAAP Information (in thousands, except per share data) (unaudited)

In addition to the results provided in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") throughout this document, the Company has provided non-GAAP measurements which present operating results on a basis before the impact of a settlement of a legal matter. This item is described in detail throughout this document.

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