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8-K - 8-K - Texas Roadhouse, Inc.a13-23008_18k.htm

Exhibit 99.1

 

Texas Roadhouse, Inc. Announces Third Quarter 2013 Results

 

LOUISVILLE, KY. (October 28, 2013) — Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 39 week periods ended September 24, 2013.

 

 

 

Third Quarter

 

Year to Date

 

($000’s)

 

2013

 

2012

 

% Change

 

2013

 

2012

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

334,770

 

308,656

 

8

 

1,046,565

 

953,800

 

10

 

Income from operations (a)

 

25,696

 

27,734

 

(7

)

93,661

 

88,383

 

6

 

Net income (a)

 

17,170

 

18,067

 

(5

)

63,304

 

57,246

 

11

 

Diluted EPS (a)

 

$

0.24

 

$

0.25

 

(5

)

$

0.89

 

$

0.80

 

11

 

 


(a) 2012 YTD includes a charge related to a legal settlement discussed below.

 

Results for the third quarter included:

 

·                  Diluted earnings per share decreased 4.6% to $0.24 from $0.25  in the prior year period;

·                  Comparable restaurant sales increased 2.6% at company restaurants and increased 4.0% at franchise restaurants;

·                  Four company restaurants were opened;

·                  Cost of sales, as a percentage of restaurant sales, increased 150 basis points to 35.1% primarily due to food cost inflation of just over 8% in the quarter;

·                  Restaurant margin, as a percentage of restaurant sales, decreased 75 basis points to 17.2% primarily due to higher commodity costs, partially offset by approximately $1.3 million in benefits recorded relating to general liability insurance; and

·                  Pre-opening costs were $2.3 million higher compared to the prior year period primarily due to seven more restaurant openings planned in the fourth quarter of 2013 compared to the fourth quarter of 2012.

 

Results for the year-to-date included:

 

·                  Excluding the impact of a prior year charge, diluted earnings per share increased 5.4% to $0.89 from $0.84 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 impact of $0.04 on diluted earnings per share;

·                  Comparable restaurant sales increased 3.7% at company restaurants and increased 4.2% at franchise restaurants;

·                  14 company and three franchise restaurants were opened;

·                  Restaurant margin, as a percentage of restaurant sales, decreased 45 basis points to 18.3%; and

·                  Costs associated with the Company’s annual managing partner conference were $2.1 million higher compared to the prior year period.

 

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, “Our top-line momentum continued this quarter highlighted by positive comparable restaurant sales, including positive traffic growth, and strong performance from our newest restaurants.  However, we continue to be challenged by high single-digit commodity cost inflation and higher pre-opening costs this quarter.  Looking ahead, we are encouraged by expectations of much lower commodity cost inflation in 2014, and we are excited to be on pace for another year

 



 

of 25 to 30 restaurant openings.  Long-term, we believe that our growth potential and continued restaurant-operations focus, along with our strong balance sheet and healthy cash flow, position us well for future success.”

 

2013 Outlook

 

The Company reported that comparable restaurant sales at company restaurants for the first four weeks of its fourth 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.

 

# # #

 

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

 

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 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)

 

 

 

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.