Texas Roadhouse, Inc. Announces Second Quarter 2013 Results

Texas Roadhouse, Inc. Announces Second Quarter 2013 Results

LOUISVILLE, Ky.--(BUSINESS WIRE)-- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 26 week periods ended June 25, 2013.

   Second Quarter   Year to Date
($000's)2013  2012  % Change2013  2012  % Change
 
Total revenue352,119320,27510711,795645,14410
Income from operations (a)29,79731,247(5)67,96560,64912
Net income (a)19,96320,310(2)46,13439,17918
Diluted EPS (a)$0.28$0.28(1)$0.65$0.5518
 
(a) 2012 YTD includes a charge related to a legal settlement discussed below.
 

Results for the second quarter included:

  • Diluted earnings per share remained relatively flat at $0.28 compared to the prior year period;
  • Comparable restaurant sales increased 4.5% at company restaurants and 5.3% at franchise restaurants;
  • Seven company restaurants and one franchise restaurant were opened;
  • Restaurant margin, as a percentage of restaurant sales, decreased 47 basis points to 18.6% primarily due to higher commodity costs; and
  • Higher than average spending on the Company's annual managing partner conference, which marked its 20th anniversary, impacted year-over-year operating results for the quarter as costs were $2.3 million higher compared to the prior year period.

Results for the year-to-date included:

  • Excluding the impact of a prior year charge, diluted earnings per share increased 9.7% to $0.65 from $0.59 in the prior year. The year-to-date 2012 results included a pre-tax charge of $5.0 million ($3.1 million after-tax) which had a negative $0.04 impact on diluted earnings per share;
  • Comparable restaurant sales increased 4.1% at company restaurants and 4.5 % at franchise restaurants;
  • 10 company and three franchise restaurants were opened;
  • Restaurant margin, as a percentage of restaurant sales, decreased 32 basis points to 18.8%; and
  • Costs associated with the Company's annual managing partner conference were $2.4 million higher compared to the prior year period.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "We are pleased with our top-line momentum, which resulted in another quarter of solid revenue growth led by positive comparable restaurant sales. Our new restaurants continue to generate solid returns, and we are still generating sufficient cash flows to not only fund our restaurant growth, but also enhance our existing assets and return capital to shareholders. We are confident that our relentless focus on legendary food and service is the best way to continue driving market share gains in this economic environment."

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 1.9% compared to the prior year period.

Management provided the following expectations for 2013:

  • Positive comparable restaurant sales growth;
  • Approximately 28 company restaurant openings;
  • Food cost inflation of 6.5% to 7.0%, which is updated from the previous expectation of 6.0% to 7.0%;
  • An income tax rate of 30.0% to 30.5% which is lower than the previous expectation of approximately 31.0%; and
  • Total capital expenditures of $100.0 to $105.0 million.

Conference Call

The Company is hosting a conference call today, July 29, 2013, at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (888) 277-7114 or (913) 312-6667 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 6656022 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 400 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 Ended26 Weeks Ended
June 25, 2013June 26, 2012June 25, 2013June 26, 2012
 
Revenue:
Restaurant sales$348,929$317,546$705,493$639,558
Franchise royalties and fees 3,190 2,729 6,302 5,586
 
Total revenue 352,119 320,275 711,795 645,144
 
Costs and expenses:
Restaurant operating costs (excluding depreciation and amortization shown separately below):
 
Cost of sales120,212106,860244,764216,515
Labor101,72393,235203,384186,582
Rent7,1526,37914,20912,631
Other operating54,98950,555110,767101,784
Pre-opening4,2402,7807,0646,365
Depreciation and amortization12,19011,54624,40222,893
Impairment and closure27208439
General and administrative (1) 21,789 17,653 39,156 37,686
 
Total costs and expenses 322,322 289,028 643,830 584,495
 
Income from operations (1)29,79731,24767,96560,649
 
Interest expense, net5675681,1621,173
Equity income from investments in
unconsolidated affiliates 218 121 398 162
 
Income before taxes (1)29,44830,80067,20159,638
Provision for income taxes 8,583 9,952 19,117 19,037
 
Net income including noncontrolling interests (1)$20,865$20,848$48,084$40,601
Less: Net income attributable to noncontrolling interests 902 538 1,950 1,422
Net income attributable to Texas Roadhouse, Inc. and subsidiaries (1)$19,963$20,310$46,134$39,179
 
Net income per common share attributable to Texas Roadhouse, Inc.
and subsidiaries:
Basic$0.29$0.29$0.66$0.56
Diluted$0.28$0.28$0.65$0.55
 
Weighted average shares outstanding:
Basic 70,030 70,129 69,693 69,763
Diluted 71,267 71,587 70,924 71,247
 

(1) Results for the 26 weeks ended June 26, 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)
 
June 25, 2013December 25, 2012
 
 
Cash and cash equivalents$100,117$81,746
Other current assets33,35340,726
Property and equipment, net542,211531,654
Goodwill113,454113,435
Intangible assets, net8,2839,264
Other assets15,98314,429
  
Total assets$813,401$791,254
 
 
Current maturities of long-term debt
and obligations under capital leases317338
Other current liabilities132,987158,324
Long-term debt and obligations under
capital leases, excluding current maturities51,12051,264
Other liabilities52,80050,591
Texas Roadhouse, Inc. and subsidiaries stockholders' equity570,380525,084
Noncontrolling interests5,7975,653
  
Total liabilities and equity$813,401$791,254
 
 
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
    
26 Weeks Ended
June 25, 2013June 26, 2012
 
 
Cash flows from operating activities:
Net income including noncontrolling interests$48,084$40,601
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization24,40222,893
Share-based compensation expense6,9716,324
Other noncash adjustments552(2,991)
Change in working capital (10,656) (7,289)
Net cash provided by operating activities 69,353  59,538 
 
Cash flows from investing activities:
Capital expenditures - property and equipment(35,915)(42,547)
Proceeds from sale of property and equipment, including insurance proceeds 4  106 
Net cash used in investing activities (35,911) (42,441)
 
Cash flows from financing activities:
Repayments of revolving credit facility, net-(10,000)
Dividends paid(21,512)(11,806)
Other financing activities 6,441  7,490 
Net cash used in financing activities (15,071) (14,316)
 
Net increase in cash and cash equivalents18,3712,781
Cash and cash equivalents - beginning of year 81,746  78,777 
Cash and cash equivalents - end of period$100,117 $81,558 
 
  
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