Texas Roadhouse reports Q4 net earnings of US$17.1M, up 23% from year-ago period as revenue rises 21% to US$376M

LOUISVILLE, Kentucky , February 24, 2014 (press release) – Texas Roadhouse, Inc. (TXRH), today announced financial results for the 14 and 53 week periods ended December 31, 2013.

Results for the fourth quarter included:

Diluted earnings per share increased to $0.24 from $0.19 in the prior year period. Diluted earnings per share were positively impacted by an estimated $0.03 to $0.04 as a result of the 53rd week;

Comparable restaurant sales increased 2.1% at company restaurants and increased 4.5% at franchise restaurants;

12 company restaurants and one franchise restaurant were opened;

Restaurant margin, as a percentage of restaurant sales, decreased 64 basis points to 16.9% primarily due to approximately 7% food cost inflation;

The Company recorded a pre-tax gain of $1.8 million related to the sale of its Aspen Creek concept;

The Company incurred expenses of $1.4 million, which includes $0.7 million of general and administrative expense related to employment separation costs and $0.7 million of depreciation and amortization expense related to leasehold asset life adjustments; and

The Company repurchased 461,600 shares of common stock for a total purchase price of $12.8 million.

Results for the full year included:

Diluted earnings per share increased 13.2% to $1.13 from $1.00 in the prior year. Year-to-date 2013 results were positively impacted by approximately $0.04 per diluted share as a result of the 53rd week. Year-to-date 2012 results were negatively impacted by $0.04 per diluted share due to a pre-tax charge of $5.0 million ($3.1 million after-tax);

Comparable restaurant sales increased 3.4% at company restaurants and increased 4.3% at franchise restaurants; and

26 company and four franchise restaurants were opened.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, “The continued focus by our operators on legendary food and legendary service resulted in our fourth consecutive year of positive comparable restaurant sales growth and a strong finish to 2013. As we head into 2014, we look forward to low single-digit commodity cost inflation and another year of 25 to 30 company restaurant openings. In addition, we expect to generate a significant amount of free cash flow, which we will continue to allocate to new store development, along with returning excess capital to our shareholders through quarterly dividend payments and share repurchases.”

Sale of Aspen Creek Restaurants and Related Franchise Acquisition

Effective December 31, 2013, the Company sold its Aspen Creek concept and two restaurants in a transaction valued at $6.0 million. In exchange, the Company received two Texas Roadhouse franchise restaurants in Ohio and $1.5 million in cash. The Company recorded a $1.8 million gain in Q4 2013 in conjunction with the sale. The acquisition of the two franchise restaurants did not have a net revenue or an accretive impact in 2013 as it occurred on the last day of the Company's 2013 fiscal year.

2014 Outlook

The Company reported that comparable restaurant sales at company restaurants for the first seven weeks of fiscal 2014 increased approximately 1.0% compared to the prior year period.

Management reiterated 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 primarily as a result of the expiration of certain federal tax credits at the end of 2013; and

Total capital expenditures of $100.0 to $110.0 million.

Cash Dividend Payment

On February 20, 2014, the Company’s Board of Directors authorized the payment of a quarterly cash dividend of $0.15 per share of common stock. This payment, which will be distributed on April 4, 2014 to shareholders of record at the close of business on March 19, 2014, represents a 25% increase from the cash dividend of $0.12 per share of common stock declared during each quarter of 2013.

Conference Call

The Company is hosting a conference call today, February 24, 2014, at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (888) 523-1191 or (719) 325-2314 for international calls. A replay of the call will be available until Monday, March 3, 2014. To access the replay, please dial (877) 870-5176 or (858) 384-5517 for international calls, and use 8877996 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 420 restaurants system-wide in 48 states and three foreign countries. For more information, please visit the Company’s Web site at www.texasroadhouse.com.

Industry Intelligence editor's note: In an omitted table, the company reported fourth-quarter 2013 net income of US$17.1 million and revenue of $376 million compared to fourth-quarter 2013 net income of $13.9 million and revenue of $309.5 million.

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