Texas Roadhouse's Q4 net income up 22% year-over-year to US$12.3M as same-store sales grew 5.6% amid increased traffic; revenue up 13% to US$276.6M

LOUISVILLE, Kentucky , February 22, 2012 () – Texas Roadhouse, Inc. today announced financial results for the 13 and 52 week periods ended December 27, 2011.  

      Fourth Quarter       Year to Date
($000's)   2011   2010   % Change       2011   2010   % Change
                               
Total revenue   276,616   244,594   13       1,109,226   1,004,993   10
Income from operations   18,210   15,734   16       95,239   90,617   5
Net income   12,297   10,060   22       63,964   58,289   10
Diluted EPS   $0.17   $0.14   28       $0.88   $0.80   11

Results for the fourth quarter included:

  • Comparable restaurant sales increased 5.6% at all company restaurants and 5.7% at all franchise restaurants;
  • Ten company restaurants opened;
  • Restaurant margins, as a percentage of restaurant sales, decreased 25 basis points to 16.8%;
  • Diluted earnings per share increased 28% to $0.17 from $0.14 in the prior year period;
  • The Company repurchased 968,700 shares of its common stock for a total purchase price of $12.7 million.

Results for the full year included:

  • Comparable restaurant sales increased 4.7% at all company restaurants and 4.3% at all franchise restaurants;
  • 20 company restaurants and one international franchise restaurant opened;
  • Restaurant margins, as a percentage of restaurant sales, decreased 45 basis points to 18.1%;
  • Diluted earnings per share increased 11% to $0.88 from $0.80 in the prior year;
  • The Company repurchased 3,972,100 shares of its common stock for a total purchase price of $59.1 million.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, commented, “We are very pleased with our 2011 results and are particularly encouraged that our strong sales trends were driven largely by increased traffic. Despite a challenging consumer environment and continued commodity cost pressures, we reported double-digit revenue and earnings per share growth in 2011, while our strong balance sheet and healthy cash flows enabled us to return $76 million of excess capital to shareholders through share repurchases and quarterly dividend payments.”

Taylor concluded, “For 2012, we have assembled a healthy pipeline of new locations and are on track to open 25 company restaurants. Although we expect to face short-term cost pressures, we remain excited by the ongoing momentum in our top-line and will continue to focus on our long-term brand positioning and growth potential.”

Outlook for 2012

The Company reported that comparable restaurant sales for the first seven weeks of fiscal 2012 increased approximately 6.7% compared to the prior year period. Additionally, the Company announced that it implemented a menu price increase of approximately 2.2% across its restaurants in late January.

The Company estimates that its 2012 diluted earnings per share growth will be up approximately 5% compared to 2011. This range is based, in part, on the following assumptions:

  • Comparable restaurant sales growth of 4% to 5%;
  • 25 company restaurant openings;
  • Food cost inflation of approximately 8%;
  • An income tax rate of 32.5% to 33.0%, an increase of 300 to 350 basis points from 2011 and a 5% impact on diluted earnings per share growth, due to the expiration of certain federal tax credits at the end of 2011; and
  • Total capital expenditures of $80.0 to $85.0 million.

Stock Repurchase Authorization

The Company announced today that on February 16, 2012 its Board of Directors approved a stock repurchase program under which it authorized the Company to repurchase up to $100.0 million of its common stock. Any repurchases will be made through open market transactions. The Board of Directors cancelled the previous stock repurchase program, which had no expiration date and $40.9 million remaining as of December 27, 2011.

Cash Dividend Payment

On February 16, 2012, the Company’s Board of Directors authorized the payment of a cash dividend of $0.09 per share of common stock. This payment will be distributed on March 30, 2012 to shareholders of record at the close of business on March 14, 2012 and represents an increase from the cash dividend of $0.08 per share of common stock declared each quarter in 2011.

About the Company

Texas Roadhouse is a casual dining concept that first opened in 1993 and today operates over 360 restaurants system-wide in 47 states and one foreign country.


Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
                           
                           
        13 Weeks Ended     52 Weeks Ended
        December 27, 2011     December 28, 2010     December 27, 2011     December 28, 2010
                           
Revenue:                      
  Restaurant sales   $ 274,192     $ 242,406     $ 1,099,475     $ 995,988
  Franchise royalties and fees     2,424       2,188       9,751       9,005
                           
Total revenue     276,616       244,594       1,109,226       1,004,993
                           
Costs and expenses:                      
  Restaurant operating costs:                      
    Cost of sales     92,634       79,707       367,385       324,267
    Labor     81,682       71,781       326,233       293,022
    Rent     5,997       5,475       23,150       21,361
    Other operating     47,742       44,052       184,073       172,893
  Pre-opening     4,121       2,489       11,534       7,051
  Depreciation and amortization     10,985       10,422       42,709       41,283
  Impairment and closure     1,142       1,703       1,201       2,005
  General and administrative     14,103       13,231       57,702       52,494
                           
Total costs and expenses     258,406       228,860       1,013,987       914,376
                           
Income from operations     18,210       15,734       95,239       90,617
                           
Interest expense, net     637       595       2,413       2,673
Equity income from investments in                      
  unconsolidated affiliates     95       73       366       428
                           
Income before taxes     17,668       15,212       93,192       88,372
Provision for income taxes     4,831       4,550       26,765       27,683
                           
Net income including noncontrolling interests   $ 12,837     $ 10,662     $ 66,427     $ 60,689
Less: Net income attributable to noncontrolling interests     540       602       2,463       2,400
Net income attributable to Texas Roadhouse, Inc. and subsidiaries   $ 12,297     $ 10,060     $ 63,964     $ 58,289
                           
Net income per common share attributable to Texas Roadhouse, Inc.                      
and subsidiaries:                      
  Basic   $ 0.18     $ 0.14     $ 0.90     $ 0.82
  Diluted   $ 0.17     $ 0.14     $ 0.88     $ 0.80
                           
Weighted average shares outstanding:                      
  Basic     69,214       71,918       70,829       71,432
  Diluted     70,463       73,610       72,278       72,929
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
             
             
             
      (unaudited)      
      December 27, 2011     December 28, 2010
             
             
Cash and cash equivalents   $ 73,731     $ 82,215
Other current assets     38,243       31,707
Property and equipment, net     497,217       458,983
Goodwill     110,946       111,785
Intangible assets, net     9,042       10,118
Other assets     11,491       7,993
             
Total assets   $ 740,670     $ 702,801
             
             
Current maturities of long-term debt and obligations under capital leases
    304       274
Other current liabilities     136,068       111,784
Long-term debt and obligations under capital leases, excluding current maturities
    61,601       51,906
Other liabilities     46,875       39,455
Texas Roadhouse, Inc. and subsidiaries stockholders' equity     491,904       496,616
Noncontrolling interests     3,918       2,766
             
Total liabilities and equity   $ 740,670     $ 702,801
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
               
               
        52 Weeks Ended
        December 27, 2011     December 28, 2010
               
               
Cash flows from operating activities:          
Net income including noncontrolling interests   $ 66,427       $ 60,689  
Adjustments to reconcile net income to net cash provided by operating activities          
  Depreciation and amortization     42,709         41,283  
  Share-based compensation expense     10,525         7,686  
  Other noncash adjustments     3,728         5,298  
Change in working capital     14,118         4,952  
    Net cash provided by operating activities     137,507         119,908  
               
Cash flows from investing activities:          
Capital expenditures - property and equipment     (81,758 )       (45,051 )
Proceeds from sale of property and equipment, including insurance proceeds     188         235  
    Net cash used in investing activities     (81,570 )       (44,816 )
               
Cash flows from financing activities:          
Proceeds (repayments) of revolving credit facility, net     10,000         (49,000 )
Repurchase shares of common stock     (59,147 )       -  
Dividends paid     (17,012 )       -  
Other financing activities     1,738         9,265  
    Net cash used in financing activities     (64,421 )       (39,735 )
               
    Net (decrease) increase in cash and cash equivalents     (8,484 )       35,357  
Cash and cash equivalents - beginning of year     82,215         46,858  
Cash and cash equivalents - end of year   $ 73,731       $ 82,215  
Texas Roadhouse, Inc. and Subsidiaries
Supplemental Financial and Operating Information
($ amounts in thousands, except weekly sales by group)
(unaudited)
                               
                               
      Fourth Quarter   Change     Year to Date   Change  
      2011   2010   vs LY     2011   2010   vs LY  
                               
Restaurant openings                            
  Company - Texas Roadhouse     10     6   4         20     12     8    
  Company - Aspen Creek     0     1   (1 )       0     2     (2 )  
  Franchise - Texas Roadhouse     0     0   0         1     1     0    
  Total     10     7   3         21     15     6    
                               
Restaurant closures                            
  Company - Texas Roadhouse     0     0   0         0     (1 )   1    
  Company - Aspen Creek     0     0   0         0     0     0    
  Franchise - Texas Roadhouse     0     0   0         0     0     0    
  Total     0     0   0         0     (1 )   1    
                               
Restaurants open at the end of the quarter                            
  Company - Texas Roadhouse     291     271   20                  
  Company - Aspen Creek     3     3   0                  
  Franchise - Texas Roadhouse     72     71   1                  
  Total     366     345   21                  
                               
Company-owned restaurants                            
  Restaurant sales   $ 274,192   $ 242,406   13.1   %   $ 1,099,475   $ 995,988     10.4   %
  Store weeks     3,755     3,509   7.0   %     14,573     13,803     5.6   %
  Comparable restaurant sales growth (1)     5.6 %   3.1 %         4.7 %   2.4   %    
  Texas Roadhouse restaurants only:                            
  Comparable restaurant sales growth (1)     5.6 %   3.1 %         4.8 %   2.4   %    
  Average unit volume (2)   $ 945   $ 895   5.6   %   $ 3,917   $ 3,730     5.0   %
  Weekly sales by group (3):                            
  Comparable restaurants (262 units)   $ 72,662                        
  Average unit volume restaurants (11 units)   $ 72,553                        
  Restaurants less than 6 months old (18 units)   $ 85,773                        
                               
  Restaurant operating costs (as a % of restaurant sales)                            
  Cost of sales     33.8 %   32.9 % 90   bps     33.4 %   32.6   % 86   bps
  Labor     29.8 %   29.6 % 18   bps     29.7 %   29.4   % 25   bps
  Rent     2.2 %   2.3 % (7 ) bps     2.1 %   2.1   % (4 ) bps
  Other operating     17.4 %   18.2 % (76 ) bps     16.7 %   17.4   % (62 ) bps
  Total     83.2 %   82.9 % 25   bps     81.9 %   81.5   % 45   bps
                               
  Restaurant margins (4)     16.8 %   17.1 % (25 ) bps     18.1 %   18.5   % (45 ) bps
                               
Franchise-owned restaurants                            
  Franchise royalties and fees   $ 2,424   $ 2,188   10.8   %   $ 9,751   $ 9,005     8.3   %
  Store weeks     936     923   1.4   %     3,709     3,630     2.2   %
  Comparable restaurant sales growth (1)     5.7 %   2.9 %         4.3 %   2.5   %    
  Average unit volume (2)   $ 927   $ 881   5.2   %   $ 3,831   $ 3,715     3.1   %
                               
Pre-opening expense   $ 4,121   $ 2,489   65.6   %   $ 11,534   $ 7,051     63.6   %
                               
Depreciation and amortization   $ 10,985   $ 10,422   5.4   %   $ 42,709   $ 41,283     3.5   %
  As a % of revenue     4.0 %   4.3 % (29 ) bps     3.9 %   4.1   % (26 ) bps
                               
General and administrative expenses   $ 14,103   $ 13,231   6.6   %   $ 57,702   $ 52,494     9.9   %
  As a % of revenue     5.1 %   5.4 % (31 ) bps     5.2 %   5.2   % (2 ) 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) Weekly sales by group (Texas Roadhouse restaurants only) includes sales from comparable restaurants, sales from average unit restaurants and sales from restaurants which were open less than six months as of the beginning of the measurement period. Average unit volume restaurants includes sales from restaurants open less than 18 months, but more than six months, as of the beginning of the measurement period, excluding sales from restaurants closed during the period.
(4) Restaurant margins represent restaurant sales less restaurant operating costs (as a percentage of restaurant sales).

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