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Texas Roadhouse, Inc. Announces Third Quarter 2013 Results

2013 Outlook

The Company reported that comparable restaurant sales at company restaurants for the first four weeks of its third quarter of fiscal 2013 increased 3.4% compared to the prior year period.

Management provided the following expectations for full year 2013:

  • Positive comparable restaurant sales growth;
  • 28 company restaurant openings;
  • Food cost inflation of approximately 7.0%, which is updated from the previous expectation of 6.5% to 7.0%;
  • An income tax rate of 30.0% to 30.5%; and
  • Total capital expenditures of approximately $105.0 million, which is updated from the previous expectation of $100.0 to $105.0 million.

2014 Outlook

Management provided the following expectations for full year 2014:

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

Conference Call

The Company is hosting a conference call today, October 28, 2013, at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (877) 879-6209 or (719) 325-4817 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 2899563 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 410 restaurants system-wide in 48 states and two foreign countries. 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; our ability to continue to generate the necessary cash flows to fund our new restaurant growth, our ability to continue our share repurchase program and pay a quarterly cash dividend; strength of consumer spending; pending or future legal claims; conditions beyond our control such as weather, natural disasters, disease outbreaks, epidemics or pandemics impacting our customers or food supplies; acts of war or terrorism and other factors disclosed from time to time in our filings with the U.S. Securities and Exchange Commission. Investors should take such risks into account when making investment decisions. Shareholders 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. We undertake 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 24,2013

September 25,2012

September 24,2013

September 25,2012

 
Revenue:
Restaurant sales $ 331,746 $ 306,025 $ 1,037,239 $ 945,583
Franchise royalties and fees   3,024   2,631   9,326   8,217
 
Total revenue   334,770   308,656   1,046,565   953,800
 
Costs and expenses:
Restaurant operating costs (excluding depreciation and amortization shown separately below):
 
Cost of sales 116,570 102,930 361,334 319,445
Labor 99,003 91,507 302,387 278,089
Rent 7,181 6,489 21,390 19,120
Other operating 51,949 50,183 162,716 151,967
Pre-opening 4,746 2,458 11,810 8,823
Depreciation and amortization 12,462 11,828 36,864 34,721
Impairment and closure 103 24 187 63
General and administrative (1)   17,060   15,503   56,216   53,189
 
Total costs and expenses   309,074   280,922   952,904   865,417
 
Income from operations (1) 25,696 27,734 93,661 88,383
 
Interest expense, net 525 603 1,687 1,776

 

Equity income from investments in unconsolidated affiliates

  173   141   571   303
 
Income before taxes (1) 25,344 27,272 92,545 86,910
Provision for income taxes   7,500   8,778   26,617   27,815
 
Net income including noncontrolling interests (1) $ 17,844 $ 18,494 $ 65,928 $ 59,095
Less: Net income attributable to noncontrolling interests   674   427   2,624   1,849
Net income attributable to Texas Roadhouse, Inc. and subsidiaries (1) $ 17,170 $ 18,067 $ 63,304 $ 57,246
 

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

Basic $ 0.24 $ 0.26 $ 0.91 $ 0.82
Diluted $ 0.24 $ 0.25 $ 0.89 $ 0.80
 
Weighted average shares outstanding:
Basic   70,361   70,482   69,914   70,004
Diluted   71,620   71,928   71,175   71,480
 
 

(1) Results for the 39 weeks ended September 25, 2012 include a $5.0 million charge, ($3.1 million after-tax), relating to the settlement of a legal matter. The settlement charge is included in general and administrative costs.

       
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 
 
 
September 24, 2013   December 25, 2012
 
 
Cash and cash equivalents $ 87,344 $ 81,746
Other current assets 35,022 40,726
Property and equipment, net 565,433 531,654
Goodwill 113,454 113,435
Intangible assets, net 7,877 9,264
Other assets 17,938 14,429
   
Total assets $ 827,068 $ 791,254
 
 

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

248 338
Other current liabilities 131,077 158,324

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

51,056 51,264
Other liabilities 53,953 50,591
Texas Roadhouse, Inc. and subsidiaries stockholders' equity 584,916 525,084
Noncontrolling interests 5,818 5,653
   
Total liabilities and equity $ 827,068 $ 791,254
       
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
 
39 Weeks Ended

September 24,2013

September 25,2012

 
 
Cash flows from operating activities:
Net income including noncontrolling interests $ 65,928 $ 59,095
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 36,864 34,721
Share-based compensation expense 10,583 9,754
Other noncash adjustments 843 (3,630 )
Change in working capital   (14,557 )   (8,946 )
Net cash provided by operating activities   99,661     90,994  
 
Cash flows from investing activities:
Capital expenditures - property and equipment (71,888 ) (63,146 )
Proceeds from sale of property and equipment, including insurance proceeds   (39 )   255  
Net cash used in investing activities   (71,927 )   (62,891 )
 
Cash flows from financing activities:
Repayments of revolving credit facility, net - (10,000 )
Dividends paid (29,939 ) (18,134 )
Other financing activities   7,803     9,349  
Net cash used in financing activities   (22,136 )   (18,785 )
 
Net increase in cash and cash equivalents 5,598 9,318
Cash and cash equivalents - beginning of year   81,746     78,777  
Cash and cash equivalents - end of period $ 87,344   $ 88,095  
 
Texas Roadhouse, Inc. and Subsidiaries
Supplemental Financial and Operating Information
($ amounts in thousands, except weekly sales by group and RM $ per store week)
(unaudited)
           
 
Third Quarter Change Year to Date Change
2013 2012 vs LY 2013 2012 vs LY
 
Restaurant openings
Company - Texas Roadhouse 4 3 1 13 18 (5)
Company - Other 0 0 0 1 0 1
Franchise - Texas Roadhouse 0 0 0 3 0 3
Total 4 3 1 17 18 (1)
 
 
Restaurants open at the end of the quarter
Company - Texas Roadhouse 331 309 22
Company - Other 3 3 0
Franchise - Texas Roadhouse 75 72 3
Total 409 384 25
 
Company-owned restaurants
Restaurant sales $ 331,746 $ 306,025 8.4 % $ 1,037,239 $ 945,583 9.7 %
Store weeks 4,294 4,041 6.3 % 12,682 11,854 7.0 %
Comparable restaurant sales growth (1) 2.6 % 3.6 % 3.7 % 4.8 %
Texas Roadhouse restaurants only:
Comparable restaurant sales growth (1) 2.6 % 3.6 % 3.7 % 4.8 %
Average unit volume (2) $ 999 $ 984 1.6 % $ 3,191 $ 3,102 2.8 %
Weekly sales by group:
Comparable restaurants (293 units) $ 77,662
Average unit volume restaurants (25 units) $ 67,409
Restaurants less than 6 months old (13 units) $ 93,889
 
Restaurant operating costs (as a % of restaurant sales) (3)
Cost of sales 35.1 % 33.6 % 150 bps 34.8 % 33.8 % 105 bps
Labor 29.8 % 29.9 % (6) bps 29.2 % 29.4 % (26) bps
Rent 2.2 % 2.1 % 4 bps 2.1 % 2.0 % 4 bps
Other operating 15.7 % 16.4 % (74) bps 15.7 % 16.1 % (38) bps
Total 82.8 % 82.1 % 75 bps 81.7 % 81.3 % 45 bps
 
Restaurant margin (4) 17.2 % 17.9 % (75) bps 18.3 % 18.7 % (45) bps
 
Restaurant margin $/Store week $ 13,284 $ 13,590 (2.2) % $ 14,935 $ 14,928 0.0 %
 
Franchise-owned restaurants
Franchise royalties and fees $ 3,024 $ 2,631 14.9 % $ 9,326 $ 8,217 13.5 %
Store weeks 975 936 4.2 % 2,886 2,808 2.8 %
Comparable restaurant sales growth (1) 4.0 % 4.9 % 4.2 % 5.5 %
Average unit volume (2) $ 1,038 $ 998 4.0 % $ 3,284 $ 3,134 4.8 %
 
Pre-opening expense $ 4,746 $ 2,458 93.1 % $ 11,810 $ 8,823 33.9 %
 
Depreciation and amortization (3) $ 12,462 $ 11,828 5.4 % $ 36,864 $ 34,721 6.2 %
As a % of revenue 3.7 % 3.8 % (11) bps 3.5 % 3.6 % (12) bps
 
General and administrative expenses (5) $ 17,060 $ 15,503 10.0 % $ 56,216 $ 53,189 5.7 %
As a % of revenue 5.1 % 5.0 % 7 bps 5.4 % 5.6 % (21) 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) Depreciation and amortization expense, substantially all of which relates to restaurant-level assets, is excluded from restaurant operating costs and is shown separately as it represents a non-cash charge for the investment in our restaurants.
(4) 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 generally accepted accounting principles ("GAAP") and should not be considered in isolation, or as an alternative, to income from operations or other similarly titled measures of other companies.
(5) Results for the 39 weeks ended September 25, 2012 included 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.

 

The Company used earnings before the impact of the legal settlement as a key performance measure of results of operations for purposes of evaluating performance internally. This non-GAAP measurement is not intended to replace the presentation of our financial results in accordance with GAAP. Rather, the Company believes that the presentation of results before the legal settlement provides additional information to facilitate the comparison of past and present operations, excluding items that the Company does not believe were indicative of our ongoing operations in the 39 weeks ended September 25, 2012.

 
For the 39 weeks Ended
September 24, 2013 September 25, 2012
Net income attributable to Texas Roadhouse, Inc. and subsidiaries, excluding settlement charge $ 63,304 $ 60,308
Amount reserved for settlement of a legal matter, net of tax (1) $ - $ (3,062 )
Net income attributable to Texas Roadhouse, Inc. and subsidiaries $ 63,304 $ 57,246
 
Weighted average diluted shares outstanding 71,175 71,480
 
Diluted earnings per share, excluding settlement charge $ 0.89 $ 0.84
Impact of settlement charge on diluted earnings per share $ - $ (0.04 )
Diluted earnings per share $ 0.89 $ 0.80  
 
(1) Amount reserved in the first quarter of fiscal 2012 for the settlement of a legal matter was $5.0 million before the statutory income tax rate. The settlement amount was included in general and administrative costs on the Company's Condensed Consolidated Statements of Income.




Stock quotes in this article: TXRH 

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