Texas Roadhouse, Inc. Announces Fourth Quarter 2012 Results and Increases Quarterly Dividend to $0.1

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Texas Roadhouse, Inc. Announces Fourth Quarter 2012 Results and Increases Quarterly Dividend to $0.12 per Share

LOUISVILLE, Ky.--(BUSINESS WIRE)-- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 52 week periods ended December 25, 2012.

   Fourth Quarter   Year to Date
($000's)2012  2011 % Change2012  2011 % Change
 
Total revenue309,531276,616121,263,3311,109,22614
Income from operations (1)22,07518,21021110,45895,23916
Net income (1)13,92412,2971371,17063,96411
Diluted EPS (1)$0.19$0.1712$1.00$0.8813
 
(1) 2012 YTD includes a charge related to a legal settlement discussed below.
 

Results for the fourth quarter included:

  • Comparable restaurant sales increased 4.4% at company restaurants and 4.5% at franchise restaurants;
  • Seven company and two franchise restaurants were opened;
  • Restaurant margins, as a percentage of restaurant sales, increased 74 basis points to 17.6%;
  • Diluted earnings per share increased 12% to $0.19 from $0.17 in the prior year; and
  • The Company repurchased 1,786,855 shares of its common stock for a total purchase price of $29.4 million.

Results year-to-date included:

  • Comparable restaurant sales increased 4.7% at company restaurants and 5.3% at franchise restaurants;
  • 25 company and two franchise restaurants were opened;
  • Restaurant margins, as a percentage of restaurant sales, increased 37 basis points to 18.4%;
  • As previously disclosed, the Company recorded a one-time, pre-tax charge of $5.0 million ($3.1 million after-tax) in the first quarter of 2012 for a legal settlement, which had a $0.04 impact on diluted earnings per share;
  • Before the previously disclosed first quarter charge, diluted earnings per share increased 17% to $1.04 from $0.88 in the prior year; and
  • In the fourth quarter, the Company repurchased 1,786,855 shares of its common stock for a total purchase price of $29.4 million.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, commented, "We were very pleased to have finished 2012 on a strong note, with double-digit revenue and earnings per share growth. Despite the consumer and inflationary challenges, we achieved our third consecutive year of positive same-store sales growth and another year of increased store level profitability. In addition, our strong balance sheet and healthy cash flows enabled us to return $54 million of excess capital to shareholders through share repurchases and quarterly dividend payments. While we anticipate further commodity inflation in 2013, we believe our brand is well-positioned for future growth and feel confident about increasing our new restaurant growth for the third consecutive year."

Franchise Acquisition

Effective December 25, 2012, the Company acquired two franchise restaurants in Illinois for an aggregate purchase price of $4.3 million. The purchase price was paid in cash. The acquisition did not have a net revenue or accretive impact in 2012 as it occurred on the last day of the Company's 2012 fiscal year.

2013 Outlook

The Company reported that comparable restaurant sales at company restaurants for the first 55 days of its fiscal 2013 increased approximately 2.2% compared to the prior year period. Additionally, the Company announced that it implemented a menu price increase of approximately 2.0% across its restaurants in December 2012.

Management is providing the following expectations for 2013:

  • Positive comparable restaurant sales growth;
  • Approximately 28 company restaurant openings;
  • Food cost inflation of 6.0% to 7.0%;
  • An income tax rate of approximately 31.0%, which is lower than the prior year rate of 32.8% primarily as a result of the reinstatement of certain federal tax credits at the beginning of 2013; and
  • Total capital expenditures of $100.0 to $105.0 million.

Cash Dividend Payment

On February 14, 2013, the Company's Board of Directors authorized the payment of a quarterly cash dividend of $0.12 per share of common stock. This payment, which will be distributed on March 29, 2013 to shareholders of record at the close of business on March 13, 2013, represents a 33% increase from the cash dividend of $0.09 per share of common stock declared during each quarter of 2012.

Conference Call

The Company is hosting a conference call today, February 19, 2013, at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (888) 710-4022 or (913) 312-1406 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 5918054 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 390 restaurants system-wide in 47 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, continue our share repurchase program and pay a quarterly cash dividend; 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 Ended52 Weeks Ended

December 25,

2012

December 27,

2011

December 25,

2012

December 27,

2011

 
Revenue:
Restaurant sales$306,775$274,192$1,252,358$1,099,475
Franchise royalties and fees 2,756 2,424 10,973 9,751
 
Total revenue 309,531 276,616 1,263,331 1,109,226
 
Costs and expenses:

Restaurant operating costs (excluding depreciation and

amortization shown separately below):

 
Cost of sales104,17092,634423,615367,385
Labor89,67481,682367,763326,233
Rent6,6775,99725,79723,150
Other operating52,35147,742204,318184,073
Pre-opening3,5764,12112,39911,534
Depreciation and amortization11,99610,98546,71742,709
Impairment and closure1,5611,1421,6241,201
General and administrative 17,451 14,103 70,640 57,702
 
Total costs and expenses 287,456 258,406 1,152,873 1,013,987
 
Income from operations22,07518,210110,45895,239
 
Interest expense, net5716372,3472,413

Equity income from investments in unconsolidated affiliates

 125 95 428 366
 
Income before taxes21,62917,668108,53993,192
Provision for income taxes 6,923 4,831 34,738 26,765
 
Net income including noncontrolling interests (1)$14,706$12,837$73,801$66,427
Less: Net income attributable to noncontrolling interests 782 540 2,631 2,463
Net income attributable to Texas Roadhouse, Inc. and subsidiaries$13,924$12,297$71,170$63,964
 
Net income per common share attributable to Texas Roadhouse, Inc.
and subsidiaries:
Basic$0.20$0.18$1.02$0.90
Diluted$0.19$0.17$1.00$0.88
 
Weighted average shares outstanding:
Basic 70,097 69,214 70,026 70,829
Diluted 71,509 70,463 71,485 72,278
 
(1) Results for the 52 weeks ended December 25, 2012 include a $5.0 million charge, 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)

     

December 25,

2012

December 27,

2011

 
 
Cash and cash equivalents$81,746$78,777
Other current assets40,72633,197
Property and equipment, net531,654497,217
Goodwill113,435110,946
Intangible assets, net9,2649,042
Other assets14,42911,491
  
Total assets$791,254$740,670
 
 
Current maturities of long-term debt
and obligations under capital leases338304
Other current liabilities158,324136,068
Long-term debt and obligations under
capital leases, excluding current maturities51,26461,601
Other liabilities50,59146,875
Texas Roadhouse, Inc. and subsidiaries stockholders' equity525,084491,904
Noncontrolling interests5,6533,918
  
Total liabilities and equity$791,254$740,670
 
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Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
     
 
52 Weeks Ended

December 25,

2012

December 27,

2011

 
 
Cash flows from operating activities:
Net income including noncontrolling interests$73,801$66,427
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization46,71742,709
Share-based compensation expense13,19310,525
Other noncash adjustments2,1163,728
Change in working capital 10,113  15,125 
Net cash provided by operating activities 145,940  138,514 
 
Cash flows from investing activities:
Capital expenditures - property and equipment(84,879)(81,758)
Acquisitions of franchise restaurants, net of cash acquired(4,297)-
Proceeds from sale of property and equipment, including insurance proceeds 1,128  188 
Net cash used in investing activities (88,048) (81,570)
 
Cash flows from financing activities:
(Repayments) of revolving credit facility, net(10,000)10,000
Repurchase shares of common stock(29,421)(59,147)
Dividends paid(24,486)(17,012)