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8-K - 8-K - Texas Roadhouse, Inc.a13-17487_18k.htm

Exhibit 99.1

 

Texas Roadhouse, Inc. Announces Second Quarter 2013 Results

 

LOUISVILLE, KY. (July 29, 2013) — 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

 

% Change

 

2013

 

2012

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

352,119

 

320,275

 

10

 

711,795

 

645,144

 

10

 

Income from operations (a)

 

29,797

 

31,247

 

(5

)

67,965

 

60,649

 

12

 

Net income (a)

 

19,963

 

20,310

 

(2

)

46,134

 

39,179

 

18

 

Diluted EPS (a)

 

$

0.28

 

$

0.28

 

(1

)

$

0.65

 

$

0.55

 

18

 

 


(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.

 

# # #

 

Contacts:

 

Investor Relations

Tonya Robinson

502-515-7300

 

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

 

26 Weeks Ended

 

 

 

June 25, 2013

 

June 26, 2012

 

June 25, 2013

 

June 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 sales

 

120,212

 

106,860

 

244,764

 

216,515

 

Labor

 

101,723

 

93,235

 

203,384

 

186,582

 

Rent

 

7,152

 

6,379

 

14,209

 

12,631

 

Other operating

 

54,989

 

50,555

 

110,767

 

101,784

 

Pre-opening

 

4,240

 

2,780

 

7,064

 

6,365

 

Depreciation and amortization

 

12,190

 

11,546

 

24,402

 

22,893

 

Impairment and closure

 

27

 

20

 

84

 

39

 

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)

 

29,797

 

31,247

 

67,965

 

60,649

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

567

 

568

 

1,162

 

1,173

 

Equity income from investments in unconsolidated affiliates

 

218

 

121

 

398

 

162

 

 

 

 

 

 

 

 

 

 

 

Income before taxes (1)

 

29,448

 

30,800

 

67,201

 

59,638

 

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 milllion 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, 2013

 

December 25, 2012

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

100,117

 

$

81,746

 

Other current assets

 

33,353

 

40,726

 

Property and equipment, net

 

542,211

 

531,654

 

Goodwill

 

113,454

 

113,435

 

Intangible assets, net

 

8,283

 

9,264

 

Other assets

 

15,983

 

14,429

 

 

 

 

 

 

 

Total assets

 

$

813,401

 

$

791,254

 

 

 

 

 

 

 

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

 

317

 

338

 

Other current liabilities

 

132,987

 

158,324

 

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

 

51,120

 

51,264

 

Other liabilities

 

52,800

 

50,591

 

Texas Roadhouse, Inc. and subsidiaries stockholders’ equity

 

570,380

 

525,084

 

Noncontrolling interests

 

5,797

 

5,653

 

 

 

 

 

 

 

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, 2013

 

June 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 amortization

 

24,402

 

22,893

 

Share-based compensation expense

 

6,971

 

6,324

 

Other noncash adjustments

 

552

 

(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 equivalents

 

18,371

 

2,781

 

Cash and cash equivalents - beginning of year

 

81,746

 

78,777

 

Cash and cash equivalents - end of period

 

$

100,117

 

$

81,558

 

 


 


 

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

 

 

 

2013

 

2012

 

vs LY

 

2013

 

2012

 

vs LY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restaurant openings

 

 

 

 

 

 

 

 

 

 

 

 

 

Company - Texas Roadhouse

 

6

 

7

 

(1

)

9

 

15

 

(6

)

Company - Other

 

1

 

0

 

1

 

1

 

0

 

1

 

Franchise - Texas Roadhouse

 

1

 

0

 

1

 

3

 

0

 

3

 

Total

 

8

 

7

 

1

 

13

 

15

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restaurants open at the end of the quarter

 

 

 

 

 

 

 

 

 

 

 

 

 

Company - Texas Roadhouse

 

327

 

306

 

21

 

 

 

 

 

 

 

Company - Other

 

3

 

3

 

0

 

 

 

 

 

 

 

Franchise - Texas Roadhouse

 

75

 

72

 

3

 

 

 

 

 

 

 

Total

 

405

 

381

 

24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company-owned restaurants

 

 

 

 

 

 

 

 

 

 

 

 

 

Restaurant sales

 

$

348,929

 

$

317,546

 

9.9

%

$

705,493

 

$

639,558

 

10.3

%

Store weeks

 

4,214

 

3,962

 

6.4

%

8,388

 

7,813

 

7.4

%

Comparable restaurant sales growth (1)

 

4.5

%

4.5

%

 

 

4.1

%

5.3

%

 

 

Texas Roadhouse restaurants only:

 

 

 

 

 

 

 

 

 

 

 

 

 

Comparable restaurant sales growth (1)

 

4.5

%

4.5

%

 

 

4.1

%

5.3

%

 

 

Average unit volume (2)

 

$

1,077

 

$

1,038

 

3.7

%

$

2,188

 

$

2,118

 

3.3

%

Weekly sales by group:

 

 

 

 

 

 

 

 

 

 

 

 

 

Comparable restaurants (283 units)

 

$

83,433

 

 

 

 

 

 

 

 

 

 

 

Average unit volume restaurants (28 units)

 

$

76,603

 

 

 

 

 

 

 

 

 

 

 

Restaurants less than 6 months old (16 units)

 

$

85,810

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restaurant operating costs (as a % of restaurant sales) (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

34.5

%

33.7

%

80

bps

34.7

%

33.9

%

84

bps

Labor

 

29.2

%

29.4

%

(21

)bps

28.8

%

29.2

%

(34

)bps

Rent

 

2.0

%

2.0

%

4

bps

2.0

%

2.0

%

4

bps

Other operating

 

15.8

%

15.9

%

(16

)bps

15.7

%

15.9

%

(21

)bps

Total

 

81.4

%

80.9

%

47

bps

81.2

%

80.9

%

32

bps

Restaurant margin (4)

 

18.6

%

19.1

%

(47

)bps

18.8

%

19.1

%

(32

)bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Franchise-owned restaurants

 

 

 

 

 

 

 

 

 

 

 

 

 

Franchise royalties and fees

 

$

3,190

 

$

2,729

 

16.9

%

$

6,302

 

$

5,586

 

12.8

%

Store weeks

 

966

 

936

 

3.2

%

1,332

 

1,872

 

(28.8

)%

Comparable restaurant sales growth (1)

 

5.3

%

4.8

%

 

 

4.5

%

5.9

%

 

 

Average unit volume (2)

 

$

1,112

 

$

1,052

 

5.7

%

$

1,123

 

$

1,068

 

5.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-opening expense

 

$

4,240

 

$

2,780

 

52.5

%

$

7,064

 

$

6,365

 

11.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

$

12,190

 

$

11,546

 

5.6

%

$

24,402

 

$

22,893

 

6.6

%

As a % of revenue

 

3.5

%

3.6

%

(14

)bps

3.4

%

3.5

%

(12

)bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses (5)

 

$

21,789

 

$

17,653

 

23.4

%

$

39,156

 

$

37,686

 

3.9

%

As a % of revenue

 

6.2

%

5.5

%

68

bps

5.5

%

5.8

%

(34

)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) 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 26 weeks ended June 26, 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 26 weeks ended June 26, 2012.

 

 

 

For the 26 weeks Ended

 

 

 

June 25, 2013

 

June 26, 2012

 

Net income attributable to Texas Roadhouse, Inc. and subsidiaries, excluding settlement charge

 

$

46,134

 

$

42,240

 

Amount reserved for settlement of a legal matter, net of tax (1)

 

$

 

$

(3,062

)

Net income attributable to Texas Roadhouse, Inc. and subsidiaries

 

$

46,134

 

$

39,179

 

 

 

 

 

 

 

Weighted average diluted shares outstanding

 

70,924

 

71,247

 

 

 

 

 

 

 

Diluted earnings per share, excluding settlement charge

 

$

0.65

 

$

0.59

 

Impact of settlement charge on diluted earnings per share

 

$

 

$

(0.04

)

Diluted earnings per share

 

$

0.65

 

$

0.55

 

 


(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.