EX-99.1 2 tm1921276d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

Texas Roadhouse, Inc. Announces Third Quarter 2019 Results

 

LOUISVILLE, KY. (October 28, 2019) – Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 39 week periods ended September 24, 2019.

 

   Third Quarter   Year to Date 
($000's)  2019   2018   % Change   2019   2018   % Change 
Total revenue  $650,489   $594,595    9.4%  $2,030,925   $1,851,537    9.7%
Income from operations   44,884    35,444    26.6%   158,612    154,582    2.6%
Net income   36,531    29,125    25.4%   131,766    127,893    3.0%
Diluted EPS  $0.52   $0.40    29.1%  $1.85   $1.78    3.9%

 

Results for the third quarter included the following highlights:

 

·Comparable restaurant sales increased 4.4% at company restaurants and 3.2% at domestic franchise restaurants;

·Restaurant margin, as a percentage of restaurant and other sales, increased 49 basis points to 16.7%, as lower cost of sales due to the benefit of a higher average check was partially offset by higher labor costs driven by wage rate and other inflation. Restaurant margin dollars increased 12.7% to $108.0 million from $95.8 million in the prior year;

·Diluted earnings per share increased 29.1% to $0.52 from $0.40 in the prior year as higher restaurant margin dollars and a decrease in certain general and administrative expenses were partially offset by higher depreciation and amortization expense;

·Four company restaurants, including one Bubba’s 33 restaurant, and two international franchise restaurants were opened; and

·The Company repurchased 358,381 shares of common stock for $18.9 million.

 

Results for the year-to-date period included the following highlights:

 

·Comparable restaurant sales increased 4.8% at company restaurants and 4.0% at domestic franchise restaurants;

·Restaurant margin, as a percentage of restaurant and other sales, decreased 46 basis points to 17.4%, as higher labor costs driven by wage rate and other inflation was partially offset by lower cost of sales due to the benefit of a higher average check. Restaurant margin dollars increased 6.9% to $351.3 million from $328.6 million in the prior year;

·Diluted earnings per share increased 3.9% to $1.85 from $1.78 in the prior year;

·11 company restaurants, including one Bubba’s 33 restaurant, and six, primarily international, franchise restaurants were opened; and

·The Company repurchased 2,455,058 shares of common stock for $131.0 million.

 

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, “We are pleased to deliver a solid quarter of results driven by improved restaurant margins and comparable restaurant sales growth of 4.4%.  Our operators continue to execute on our core strategy of getting guests in the door and providing a legendary experience.”

 

Taylor continued, “On the development front, our restaurant pipeline is as strong as it has ever been.  In 2020 we are targeting at least 30 company restaurant openings and our franchise partners are targeting an additional eight restaurant openings.  As we head into 2020, we are excited about the growth opportunities and the strength of our business.”

 

 

 

 

2019 Outlook

 

Comparable restaurant sales at company restaurants for the first four weeks of our fourth quarter of fiscal 2019 increased 5.3% compared to the prior year period.

 

Management updated the following expectations for 2019:

 

·Approximately 22 company restaurant openings, including as many as three Bubba’s 33 restaurants;
·Commodity cost inflation of 1.5% to 2.0%;
·Growth in total labor dollars per store week of 6.0% to 7.0%; and
·Total capital expenditures of approximately $200 million.

 

Management reiterated the following expectations for 2019:

 

·Positive comparable restaurant sales growth; and
·An income tax rate of 14.0% to 15.0%.

 

2020 Outlook

 

Management provided the following initial expectations for 2020:

 

·Positive comparable restaurant sales growth;
·At least 30 company restaurant openings, including as many as eight Bubba’s 33 restaurants;
·Store week growth of 3.5% to 4.5%, including the negative impact of lapping the 53rd week from 2019;

·Commodity cost inflation of 1.0% to 2.0%;
·Mid-single digit growth in labor dollars per store week;
·An income tax rate of 14.0% to 15.0%; and
·Total capital expenditures of $190 million to $200 million.

 

Non-GAAP Measures

 

We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”). Within our press release, we make reference to restaurant margin (in dollars and as a percentage of sales). Restaurant margin represents restaurant and other sales less restaurant-level operating costs, including cost of sales, labor, rent and other operating costs. Restaurant margin should not be considered in isolation, or as an alternative, to income from operations. This non-GAAP measure is not indicative of overall company performance and profitability in that this measure does not accrue directly to the benefit of shareholders due to the nature of the costs excluded. Restaurant margin is widely regarded as a useful metric by which to evaluate restaurant-level operating efficiency and performance. In calculating restaurant margin, we exclude certain non-restaurant-level costs that support operations, including pre-opening and general and administrative expenses, but do not have a direct impact on restaurant-level operational efficiency and performance. We also exclude depreciation and amortization expense, substantially all of which relates to restaurant-level assets, as it represents a non-cash charge for the investment in our restaurants. We also exclude impairment and closure expense as we believe this provides a clearer perspective of ongoing operating performance and a more useful comparison to prior period results. Restaurant margin as presented may not be comparable to other similarly titled measures of other companies in our industry. A reconciliation of income from operations to restaurant margin is included in the accompanying financial tables.

 

 

 

 

Conference Call

 

Texas Roadhouse is hosting a conference call today, October 28, 2019 at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (877) 699-0953 or (647) 689-5456 for international calls. A replay of the call will be available for one week following the conference call. To access the replay, please dial (800) 585-8367 or (416) 621-4642 for international calls, and use 5096392 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 has grown to over 600 restaurants system-wide in 49 states and ten 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 Texas Roadhouse. 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; breaches of security; conditions beyond our control such as weather, natural disasters, disease outbreaks, epidemics or pandemics impacting our customers or food supplies; food safety and food-borne illness concerns; 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, except as required by applicable law.

 

# # #

Contacts:

 

Investor Relations

Tonya Robinson

(502) 515-7269

 

Media

Travis Doster

(502) 638-5457

 

 

 

 

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,
2019		   September 25,
2018		   September 24,
2019		   September 25,
2018		 
Revenue:                
Restaurant and other sales  $645,230   $589,704   $2,014,720   $1,836,179 
Franchise royalties and fees   5,259    4,891    16,205    15,358 
                     
Total revenue   650,489    594,595    2,030,925    1,851,537 
                     
Costs and expenses:                    
Restaurant operating costs (excluding depreciation and amortization shown separately below):                    
                     
Cost of sales   205,158    191,990    650,136    598,824 
Labor   218,342    197,621    667,712    593,298 
Rent   12,994    12,330    39,173    36,300 
Other operating   100,742    91,946    306,355    279,182 
Pre-opening   4,736    4,378    12,801    13,529 
Depreciation and amortization   28,347    25,843    84,574    75,492 
Impairment and closure   61    20    394    128 
General and administrative   35,225    35,023    111,168    100,202 
                     
Total costs and expenses   605,605    559,151    1,872,313    1,696,955 
                     
Income from operations   44,884    35,444    158,612    154,582 
                     
Interest income (expense), net   81    (168)   1,526    (810)
Equity income from investments in unconsolidated affiliates   (154)   381    100    1,150 
                     
Income before taxes   44,811    35,657    160,238    154,922 
Provision for income taxes   6,785    5,398    23,331    22,321 
                     
Net income including noncontrolling interests   38,026    30,259    136,907    132,601 
Less: Net income attributable to noncontrolling interests   1,495    1,134    5,141    4,708 
Net income attributable to Texas Roadhouse, Inc. and subsidiaries  $36,531   $29,125   $131,766   $127,893 
                     
Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:                    
Basic  $0.53   $0.41   $1.86   $1.79 
Diluted  $0.52   $0.40   $1.85   $1.78 
                     
Weighted average shares outstanding:                    
Basic   69,573    71,508    70,896    71,429 
Diluted   69,939    72,006    71,287    71,906 
                     
Cash dividends declared per share  $0.30   $0.25   $0.90   $0.75 

 

 

 

 

 

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

   September 24, 2019   December 25, 2018 
Cash and cash equivalents  $99,540   $210,125 
Other current assets, net   65,122    134,894 
Property and equipment, net   1,020,167    956,676 
Operating lease right-of-use asset, net   495,419    - 
Goodwill   123,220    123,220 
Intangible assets, net   1,375    1,959 
Other assets   50,718    42,402 
           
Total assets  $1,855,561   $1,469,276 
           
Other current liabilities   332,272    385,142 
Operating lease liabilities, net of current portion   532,480    - 
Other liabilities   82,112    123,426 
Texas Roadhouse, Inc. and subsidiaries stockholders' equity   893,975    945,569 
Noncontrolling interests   14,722    15,139 
           
Total liabilities and equity  $1,855,561   $1,469,276 

 

Note:  Beginning in 2019, we adopted Accounting Standards Codification 842, Leases, which requires the recognition of an operating lease right-of-use asset and operating lease liability for virtually all leases.  

 

 

 

 

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

   39 Weeks Ended 
   September 24, 2019   September 25, 2018 
Cash flows from operating activities:          
Net income including noncontrolling interests  $136,907   $132,601 
Adjustments to reconcile net income to net cash provided by operating activities          
Depreciation and amortization   84,574    75,492 
Share-based compensation expense   25,016    24,820 
Other noncash adjustments, net   881    6,872 
Change in working capital   (5,381)   (14,206)
Net cash provided by operating activities   241,997    225,579 
           
Cash flows from investing activities:          
Capital expenditures - property and equipment   (144,917)   (110,906)
Proceeds from sale of property and equipment   351    - 
Net cash used in investing activities   (144,566)   (110,906)
           
Cash flows from financing activities:          
Principal payments on long-term debt and capital lease obligation   -    (50,007)
Repurchase shares of common stock   (130,963)   - 
Dividends paid   (60,675)   (50,666)
Other financing activities, net   (16,378)   (13,728)
Net cash used in financing activities   (208,016)   (114,401)
           
Net (decrease) increase in cash and cash equivalents   (110,585)   272 
Cash and cash equivalents - beginning of period   210,125    150,918 
Cash and cash equivalents - end of period  $99,540   $151,190 

 

 

 

 

Texas Roadhouse, Inc. and Subsidiaries

Reconciliation of Income from Operations to Restaurant Margin

(in thousands)

(unaudited)

 

   13 Weeks Ended   39 Weeks Ended 
   September 24, 2019   September 25, 2018   September 24, 2019   September 25, 2018 
Income from operations  $44,884   $35,444   $158,612   $154,582 
                     
Less:                    
Franchise royalties and fees   5,259    4,891    16,205    15,358 
                     
Add:                    
Pre-opening   4,736    4,378    12,801    13,529 
Depreciation and amortization   28,347    25,843    84,574    75,492 
Impairment and closure   61    20    394    128 
General and administrative   35,225    35,023    111,168    100,202 
                     
Restaurant margin  $107,994   $95,817   $351,344   $328,575 
                     
Restaurant margin (as a percentage of restaurant and other sales)   16.7%   16.2%   17.4%   17.9%

 

 

 

 

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 
   2019   2018   vs LY   2019   2018   vs LY 
Restaurant openings                              
Company - Texas Roadhouse   3    3    0    10    13    (3)
Company - Bubba's 33   1    0    1    1    4    (3)
Company - Other   0    0    0    0    0    0 
Franchise - Texas Roadhouse - U.S.   0    0    0    1    0    1 
Franchise - Texas Roadhouse - International   2    1    1    5    4    1 
Total   6    4    2    17    21    (4)
                               
Restaurant closures                              
Franchise - Texas Roadhouse - International   0    0    0    (2)   0    (2)
Total   0    0    0    (2)   0    (2)
                               
Restaurants open at the end of the quarter                              
Company - Texas Roadhouse   474    453    21                
Company - Bubba's 33   26    24    2                
Company - Other   2    2    0                
Franchise - Texas Roadhouse - U.S.   70    70    0                
Franchise - Texas Roadhouse - International   25    21    4                
Total   597    570    27                
                               
Company restaurants                              
Restaurant and other sales  $645,230   $589,704    9.4%  $2,014,720   $1,836,179    9.7%
Store weeks   6,509    6,196    5.0%   19,355    18,386    5.3%
Comparable restaurant sales growth (1)   4.4%   5.5%        4.8%   5.4%     
Texas Roadhouse restaurants only:                              
Comparable restaurant sales growth (1)   4.2%   5.5%        4.7%   5.3%     
Average unit volume (2)  $1,304   $1,254    4.0%  $4,118   $3,953    4.2%
Weekly sales by group:                              
    Comparable restaurants (441 units)  $100,578                          
    Average unit volume restaurants (23 units) (3)  $95,324                          
    Restaurants less than 6 months old (10 units)  $107,347                          
                               
Restaurant operating costs (as a % of restaurant and other sales)                              
Cost of sales   31.8%   32.6%   (76)bps   32.3%   32.6%   (34)bps
Labor   33.8%   33.5%   33bps   33.1%   32.3%   83bps
Rent   2.0%   2.1%   (8)bps   1.9%   2.0%   (3)bps
Other operating   15.6%   15.6%   2bps   15.2%   15.2%   0bps
Total   83.3%   83.8%   (49)bps   82.6%   82.1%   46bps
                               
Restaurant margin   16.7%   16.2%   49bps   17.4%   17.9%   (46)bps
                              

 
Restaurant margin ($ in thousands)  $107,994   $95,817    12.7%  $351,344   $328,575    6.9%
Restaurant margin $/Store week  $16,591   $15,464    7.3%  $18,153   $17,871    1.6%
                               
Franchise restaurants                              
Franchise royalties and fees  $5,259   $4,891    7.5%  $16,205   $15,358    5.5%
Store weeks   1,220    1,175    3.8%   3,623    3,478    4.2%
Comparable restaurant sales growth (1)   2.4%   1.8%        3.0%   2.0%     
U.S. franchise restaurants only:                              
Comparable restaurant sales growth (1)   3.2%   4.2%        4.0%   4.1%     
Average unit volume (2)  $1,346   $1,304    3.2%  $4,243   $4,081    4.0%
                               
Pre-opening expense  $4,736   $4,378    8.2%  $12,801   $13,529    (5.4)%
                               
Depreciation and amortization   $28,347   $25,843    9.7%  $84,574   $75,492    12.0%
As a % of revenue   4.4%   4.3%   1bps   4.2%   4.1%   9bps
                               
General and administrative expenses  $35,225   $35,023    0.6%  $111,168   $100,202    10.9%
As a % of revenue   5.4%   5.9%   (48)bps   5.5%   5.4%   6bps

 

(1)  Comparable restaurant sales growth reflects the change in year-over-year sales for restaurants open a full 18 months before the beginning of the period measured, excluding sales from restaurants closed during the period.

(2)  Average unit volume includes sales from Texas Roadhouse restaurants open for a full six months before the beginning of the period measured, excluding any sales at restaurants closed during the period.

(3)  Average unit volume restaurants include restaurants open a full six and up to 18 months before the beginning of the period measured.

 

Amounts may not foot due to rounding.