LOUISVILLE, Ky.--(BUSINESS WIRE)--

Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 39 week periods ended September 27, 2016.

					Third Quarter												Year to Date
($000's)					2016				2015				% Change				2016				2015				% Change
Total revenue					$	481,637			$	438,089			10%				$	1,506,004			$	1,353,017			11%
Income from operations						38,468				30,556			26%					141,061				110,852			27%
Net income						25,675				20,482			25%					94,873				73,912			28%
Diluted EPS					$	0.36			$	0.29			25%				$	1.34			$	1.05			28%

Results for the third quarter included the following highlights:

• Comparable restaurant sales growth of 3.4% at company restaurants and 3.3% at domestic franchise restaurants;
• Restaurant margin, as a percentage of restaurant sales, increased 155 basis points to 18.1%, primarily driven by lower food costs, partially offset by higher labor costs;
• Diluted earnings per share increased 24.9% to $0.36 from $0.29 in the prior year;
• The Company recorded a pre-tax charge of $1.2 million ($0.8 million after-tax) related to a legal settlement; and
• Seven company-owned restaurants were opened, including two Bubba’s 33 restaurants.

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

• Comparable restaurant sales growth of 4.2% at company restaurants and 3.9% at domestic franchise restaurants;
• Restaurant margin, as a percentage of restaurant sales, increased 192 basis points to 19.2%;
• Diluted earnings per share increased 27.9% to $1.34 from $1.05 in the prior year;
• The Company recorded a pre-tax charge of $6.7 million ($4.1 million after-tax) related to a legal settlement which had a $0.06 impact on diluted earnings per share and a 5.6% impact on diluted earnings per share growth;
• 21 company-owned restaurants were opened, including five Bubba’s 33 restaurants; and
• The Company repurchased 114,700 shares of its common stock for $4.1 million.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "We are pleased to report another quarter of restaurant margin expansion and double-digit diluted earnings per share growth. Our results were driven by the opening of new restaurants, positive comparable restaurant sales and continued commodity deflation. As we move into the fourth quarter, our sales momentum continues with October comparable restaurant sales up 3.8%, including positive traffic growth."

Taylor continued, "Looking ahead to 2017, we will stay focused on protecting our long-term brand position by enhancing our ongoing commitment to our value proposition with consumers and to legendary food and legendary service. This commitment has served us well with 26 consecutive quarters of positive traffic growth. In addition, our strong balance sheet and healthy cash flow allow us to continue to internally fund our growth, while returning excess capital to our shareholders through dividend payments and ongoing share repurchases."

2016 Outlook

The Company reported that comparable restaurant sales at company restaurants for the first four weeks of its fourth quarter of fiscal 2016 increased approximately 3.8% compared to the prior year period.

Management updated the following expectations for 2016:

• Approximately 30 company restaurant openings, including as many as nine Bubba’s 33 restaurants; and,
• Food cost deflation of approximately 3.5% compared to previous guidance of 2.5% to 3.0%.

Management reiterated the following expectations for 2016:

• Positive comparable restaurant sales growth;
• An income tax rate of approximately 30.0%; and
• Total capital expenditures of $165.0 million to $175.0 million.

2017 Outlook

Management provided the following initial expectations for 2017:

• Positive comparable restaurant sales growth;
• Approximately 30 company restaurant openings, including at approximately seven to eight Bubba’s restaurants;
• Low-single digit food cost deflation;
• Mid-single digit labor inflation, including increases from wage rates, as well as regulatory changes;
• An income tax rate of 30.0% to 31.0%; and
• Total capital expenditures of $170.0 million.

Conference Call

The Company is hosting a conference call today, November 1, 2016 at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (877) 419-6590 or (719) 325-4798 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 6678390 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 510 restaurants system-wide in 49 states and five 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 restaurant openings; 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.

Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
					13 Weeks Ended								39 Weeks Ended
					September 27,2016				September 29,2015				September 27,2016				September 29,2015
Revenue:
	Restaurant sales				$	477,617			$	433,932			$	1,493,531			$	1,340,917
	Franchise royalties and fees					4,020				4,157				12,473				12,100
Total revenue						481,637				438,089				1,506,004				1,353,017
Costs and expenses:
	Restaurant operating costs (excluding depreciation and amortization shown separately below):
		Cost of sales				161,886				156,643				506,565				484,700
		Labor				145,301				129,198				442,861				392,686
		Rent				10,266				9,325				30,477				27,442
		Other operating				73,583				66,848				227,082				204,523
	Pre-opening					5,017				5,749				14,253				14,476
	Depreciation and amortization					20,941				17,843				60,718				50,994
	Impairment and closure					13				-				54				-
	General and administrative					26,162				21,927				82,933				67,344
Total costs and expenses						443,169				407,533				1,364,943				1,242,165
Income from operations						38,468				30,556				141,061				110,852
Interest expense, net						288				470				902				1,480
Equity income from investments in unconsolidated affiliates						4				449				831				1,288
Income before taxes						38,184				30,535				140,990				110,660
Provision for income taxes						11,381				9,141				42,325				33,419
Net income including noncontrolling interests					$	26,803			$	21,394			$	98,665			$	77,241
Less: Net income attributable to noncontrolling interests						1,128				912				3,792				3,329
Net income attributable to Texas Roadhouse, Inc. and subsidiaries					$	25,675			$	20,482			$	94,873			$	73,912
Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:
	Basic				$	0.36			$	0.29			$	1.35			$	1.06
	Diluted				$	0.36			$	0.29			$	1.34			$	1.05
Weighted average shares outstanding:
	Basic					70,477				70,117				70,338				69,995
	Diluted					70,981				70,735				70,898				70,639
Cash dividends declared per share					$	0.19			$	0.17			$	0.57			$	0.51

Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
					September 27, 2016				December 29, 2015
	Cash and cash equivalents				$	81,713			$	59,334
	Other current assets					51,552				74,479
	Property and equipment, net					802,555				751,288
	Goodwill					116,571				116,571
	Intangible assets, net					3,873				4,827
	Other assets					28,258				26,207
	Total assets				$	1,084,522			$	1,032,706
	Current maturities of long-term debt and obligation under capital lease					163				144
	Other current liabilities					207,775				256,498
	Long-term debt and obligation under capital lease, excluding current maturities					52,424				25,550
	Other liabilities					80,796				73,332
	Texas Roadhouse, Inc. and subsidiaries stockholders' equity					735,590				669,662
	Noncontrolling interests					7,774				7,520
	Total liabilities and equity				$	1,084,522			$	1,032,706

Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
					39 Weeks Ended
					September 27, 2016					September 29, 2015
Cash flows from operating activities:
Net income including noncontrolling interests					$	98,665				$	77,241
Adjustments to reconcile net income to net cash provided by operating activities
	Depreciation and amortization					60,718					50,994
	Share-based compensation expense					18,347					15,649
	Other noncash adjustments					1,321					(5,066	)
Change in working capital						(19,269	)				(7,310	)
		Net cash provided by operating activities				159,782					131,508
Cash flows from investing activities:
Capital expenditures - property and equipment						(113,219	)				(125,100	)
Proceeds from sale of property and equipment, including insurance proceeds						-					272
		Net cash used in investing activities				(113,219	)				(124,828	)
Cash flows from financing activities:
Proceeds from revolving credit facility						25,000					20,000
Repurchase shares of common stock						(4,110	)				(4,741	)
Dividends paid						(38,656	)				(34,247	)
Other financing activities						(6,418	)				(1,198	)
		Net cash used in financing activities				(24,184	)				(20,186	)
		Net increase (decrease) in cash and cash equivalents				22,379					(13,506	)
Cash and cash equivalents - beginning of period						59,334					86,122
Cash and cash equivalents - end of period					$	81,713				$	72,616

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
				2016					2015					vs LY				2016					2015					vs LY
Restaurant openings
	Company - Texas Roadhouse				5					9				(4)					16					17				(1)
	Company - Bubba's 33				2					1				1					5					4				1
	Company - Other				0					0				0					0					1				(1)
	Franchise - Texas Roadhouse - U.S.				1					1				0					1					2				(1)
	Franchise - Texas Roadhouse - International				0					0				0					2					0				2
	Total				8					11				(3)					24					24				0
Restaurants open at the end of the quarter
	Company - Texas Roadhouse				408					385				23
	Company - Bubba's 33				12					7				5
	Company - Other				2					2				0
	Franchise - Texas Roadhouse - U.S.				73					72				1
	Franchise - Texas Roadhouse - International				12					9				3
	Total				507					475				32
Company-owned restaurants
	Restaurant sales			$	477,617				$	433,932				10.1		%		$	1,493,531				$	1,340,917				11.4		%
	Store weeks				5,427					5,044				7.6		%			16,039					14,834				8.1		%
	Comparable restaurant sales growth (1)				3.4		%			6.9		%							4.2		%			8.1		%
	Texas Roadhouse restaurants only:
		Comparable restaurant sales growth (1)			3.5		%			6.9		%							4.2		%			8.1		%
		Average unit volume (2)		$	1,151				$	1,119				2.8		%		$	3,660				$	3,531				3.7		%
		Weekly sales by group:
		Comparable restaurants (368 units)		$	89,079
		Average unit volume restaurants (24 units) (3)		$	80,390
		Restaurants less than 6 months old (16 units)		$	84,539
Restaurant operating costs (as a % of restaurant sales)
Cost of sales					33.9		%			36.1		%		(220)		bps			33.9		%			36.1		%		(223)		bps
Labor					30.4		%			29.8		%		65		bps			29.7		%			29.3		%		37		bps
Rent					2.1		%			2.1		%		0		bps			2.0		%			2.0		%		(1)		bps
Other operating					15.4		%			15.4		%		0		bps			15.2		%			15.3		%		(5)		bps
Total					81.9		%			83.4		%		(155)		bps			80.8		%			82.7		%		(192)		bps
	Restaurant margin (4)				18.1		%			16.6		%		155		bps			19.2		%			17.3		%		192		bps
	Restaurant margin ($ in thousands)			$	86,581				$	71,917				20.4		%		$	286,546				$	231,566				23.7		%
	Restaurant margin $/Store week			$	15,953				$	14,258				11.9		%		$	17,866				$	15,610				14.5		%
Franchise-owned restaurants
	Franchise royalties and fees			$	4,020				$	4,157				(3.3)		%		$	12,473				$	12,100				3.1		%
	Store weeks				1,095					1,052				4.1		%			3,253					3,112				4.5		%
	Comparable restaurant sales growth (1)				1.9		%			7.7		%							2.5		%			7.4		%
	U.S. franchise restaurants only:
		Comparable restaurant sales growth (1)			3.3		%			6.9		%							3.9		%			8.0		%
		Average unit volume (2)		$	1,191				$	1,160				2.7		%		$	3,760				$	3,640				3.3		%
Pre-opening expense				$	5,017				$	5,749				(12.7)		%		$	14,253				$	14,476				(1.5)		%
Depreciation and amortization				$	20,941				$	17,843				17.4		%		$	60,718				$	50,994				19.1		%
	As a % of revenue				4.3		%			4.1		%		27		bps			4.0		%			3.8		%		26		bps
General and administrative expenses				$	26,162				$	21,927				19.3		%		$	82,933				$	67,344				23.1		%
	As a % of revenue				5.4		%			5.0		%		43		bps			5.5		%			5.0		%		53		bps
(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 to 18 months before the beginning of the period measured.
(4) Restaurant margin represents restaurant sales less restaurant operating costs, including cost of sales, labor, rent and other operating costs (as a percentage of restaurant sales). Depreciation and amortization expense, substantially all of which relates to restaurant-level assets, is excluded from restaurant operating costs. 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 GAAP and should not be considered in isolation, or as an alternative, to income from operations or other similarly titled measures of other companies.
Amounts may not foot due to rounding.

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Texas Roadhouse, Inc.

Investor Relations:

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or

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Travis Doster, 502-638-5457

Source: Texas Roadhouse, Inc.

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