LOUISVILLE, Ky.--(BUSINESS WIRE)-- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 52 week periods ended December 27, 2016.

				Fourth Quarter												Year to Date
($000's)				2016				2015				% Change				2016				2015				% Change
Total revenue				$	484,710			$	454,351			7	%			$	1,990,714			$	1,807,368			10	%
Income from operations					30,839				33,713			(9	%)				171,900				144,565			19	%
Net income					20,725				22,982			(10	%)				115,598				96,894			19	%
Diluted EPS				$	0.29			$	0.32			(10	%)			$	1.63			$	1.37			19	%

Results for the fourth quarter included the following highlights:

• Comparable restaurant sales growth of 1.2% at company restaurants, including a negative impact of approximately 0.5% related to the calendar shift of the Christmas holiday, and 2.0% at domestic franchise restaurants;
• Restaurant margin, as a percentage of restaurant sales, decreased 44 basis points to 17.1%. Wage rate inflation and higher costs associated with payroll taxes, insurance reserve adjustments and gift card fees more than offset the benefit of lower food costs;
• Restaurant margin dollars increased 4.0% to $82.4 million from $79.2 million in the prior year;
• Diluted earnings per share decreased 10.3% to $0.29 from $0.32 in the prior year primarily due to restaurant margin performance, higher general and administrative expenses and higher depreciation costs; and
• Nine company-owned restaurants were opened, including four Bubba’s 33 restaurants.

Results for the full year included the following highlights:

• Comparable restaurant sales growth of 3.5% at company restaurants and 3.3% at domestic franchise restaurants;
• Restaurant margin, as a percentage of restaurant sales, increased 134 basis points to 18.7%. The benefit of lower food costs more than offset the impact of higher wage rate inflation;
• Restaurant margin dollars increased 18.7% to $368.9 million from $310.8 million in the prior year;
• Diluted earnings per share increased 18.8% to $1.63 from $1.37 in the prior year. During fiscal 2016, we recorded a pre-tax charge of $7.3 million ($4.5 million after-tax) related to a legal settlement which had a $0.06 impact on diluted earnings per share and a 4.6% impact on diluted earnings per share growth;
• 30 company-owned restaurants were opened, including nine Bubba’s 33 restaurants; and
• We repurchased 114,700 shares of our common stock for $4.1 million.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "We are pleased to deliver another strong year of results including a 19% increase in diluted earnings per share driven by double-digit revenue growth and restaurant margin expansion. We also delivered impressive comparable restaurant sales growth during 2016 with an increase of 3.5%, and we extended our streak of consecutive quarters of comparable restaurant sales growth to 28 with our fourth quarter increase. Lastly, our strong balance sheet and healthy cash flows allowed us to return $56.2 million of excess capital to shareholders through quarterly dividend payments and share repurchases during 2016."

Taylor continued, "In 2017, we expect to open approximately 30 company restaurants and seven franchise restaurants this year, which is over 7% growth system-wide. Going forward, the strength of our brand continues to be our people and our operational focus on delivering legendary food and legendary service."

Franchise Acquisition

Effective December 28, 2016, we acquired four franchise restaurants in Florida and Georgia for an aggregate purchase price of $16.8 million. The purchase price was paid in cash. Going forward, two of the restaurants will be wholly-owned, while two will be majority-owned. The acquisition did not have a net revenue or accretive impact in 2016 as it occurred on the first day of our 2017 fiscal year.

2017 Outlook

Comparable restaurant sales at company restaurants for the first 55 days of our first quarter of fiscal 2017 increased approximately 1.5% compared to the prior year period.

Management updated the following expectations for 2017:

• Approximately 30 company restaurant openings, including approximately six Bubba’s 33 restaurants;
• Food cost deflation of approximately 1.0% to 2.0% compared to previous guidance of low-single digit food cost deflation; and
• An income tax rate of 29.0% to 30.0% compared to previous guidance of 30.0% to 31.0%.

Management reiterated the following expectations for 2017:

• Positive comparable restaurant sales growth;
• Mid-single digit labor inflation; and
• Total capital expenditures of approximately $170.0 million, excluding any cash used for franchise acquisitions.

Cash Dividend Payment

On February 16, 2017, our Board of Directors authorized the payment of a quarterly cash dividend of $0.21 per share of common stock. This payment, which will be distributed on March 31, 2017 to shareholders of record at the close of business on March 15, 2017, represents a 10.5% increase from the cash dividend of $0.19 per share of common stock declared during each quarter of 2016. Since the inception of our dividend program in 2011, our cash dividend per share of common stock has increased an average of 17.5% per year.

Conference Call

We will host a conference call today, February 21, 2017 at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (800)949-2163 or (719)785-1748 for international calls. A replay of the call will be available for one week following the conference call. To access the replay, please dial (844)512-2921 or (412)317-6671 for international calls, and use 6581484 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 520 restaurants system-wide in 49 states and six foreign countries. For more information, please visit our 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 our management. 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 other concepts we develop or the franchise restaurants we acquire; 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								52 Weeks Ended
						December 27, 2016				December 29, 2015				December 27, 2016				December 29, 2015
Revenue:
	Restaurant sales					$	480,730			$	450,529			$	1,974,261			$	1,791,446
	Franchise royalties and fees						3,980				3,822				16,453				15,922
Total revenue							484,710				454,351				1,990,714				1,807,368
Costs and expenses:
	Restaurant operating costs (excluding depreciation and amortization shown separately below):
		Cost of sales					162,638				159,301				669,203				644,001
		Labor					147,395				131,517				590,256				524,203
		Rent					10,103				9,741				40,580				37,183
		Other operating					78,208				70,773				305,290				275,296
	Pre-opening						5,294				4,640				19,547				19,116
	Depreciation and amortization						22,246				18,700				82,964				69,694
	Impairment and closure						125				974				179				974
	General and administrative						27,862				24,992				110,795				92,336
Total costs and expenses							453,871				420,638				1,818,814				1,662,803
Income from operations							30,839				33,713				171,900				144,565
Interest expense, net							353				479				1,255				1,959
Equity income from investments in unconsolidated affiliates							280				353				1,111				1,641
Income before taxes							30,766				33,587				171,756				144,247
Provision for income taxes							8,858				9,567				51,183				42,986
Net income including noncontrolling interests						$	21,908			$	24,020			$	120,573			$	101,261
Less: Net income attributable to noncontrolling interests							1,183				1,038				4,975				4,367
Net income attributable to Texas Roadhouse, Inc. and subsidiaries						$	20,725			$	22,982			$	115,598			$	96,894
Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:
	Basic					$	0.29			$	0.33			$	1.64			$	1.38
	Diluted					$	0.29			$	0.32			$	1.63			$	1.37
Weighted average shares outstanding:
	Basic						70,569				70,143				70,396				70,032
	Diluted						71,215				70,865				71,052				70,747
Cash dividends declared per share						$	0.19			$	0.17			$	0.76			$	0.68

Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
				December 27, 2016				December 29, 2015
Cash and cash equivalents				$	112,944			$	59,334
Other current assets					87,315				74,479
Property and equipment, net					830,054				751,288
Goodwill					116,571				116,571
Intangible assets, net					3,622				4,827
Other assets					29,465				26,207
Total assets				$	1,179,971			$	1,032,706
Current maturities of long-term debt and obligation under capital lease					167				144
Other current liabilities					279,360				256,498
Long-term debt and obligation under capital lease, excluding current maturities					52,381				25,550
Other liabilities					89,821				73,332
Texas Roadhouse, Inc. and subsidiaries stockholders' equity					750,226				669,662
Noncontrolling interests					8,016				7,520
Total liabilities and equity				$	1,179,971			$	1,032,706

Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
				52 Weeks Ended
				December 27, 2016					December 29, 2015
Cash flows from operating activities:
Net income including noncontrolling interests				$	120,573				$	101,261
Adjustments to reconcile net income to net cash provided by operating activities
	Depreciation and amortization				82,964					69,694
	Share-based compensation expense				26,067					22,825
	Other noncash adjustments				12,075					5,697
Change in working capital					15,386					28,464
		Net cash provided by operating activities			257,065					227,941
Cash flows from investing activities:
Capital expenditures - property and equipment					(164,738	)				(173,475	)
Proceeds from sale of property and equipment, including insurance proceeds					-					272
		Net cash used in investing activities			(164,738	)				(173,203	)
Cash flows from financing activities:
Proceeds from (payments on) revolving credit facility, net					25,000					(25,000	)
Repurchase shares of common stock					(4,110	)				(11,397	)
Dividends paid					(52,054	)				(46,176	)
Other financing activities					(7,553	)				1,047
		Net cash used in financing activities			(38,717	)				(81,526	)
		Net increase (decrease) in cash and cash equivalents			53,610					(26,788	)
Cash and cash equivalents - beginning of period					59,334					86,122
Cash and cash equivalents - end of period				$	112,944				$	59,334

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
					2016				2015				vs LY				2016				2015				vs LY
Restaurant openings
	Company - Texas Roadhouse					5				7			(2	)				21				24			(3	)
	Company - Bubba's 33					4				0			4					9				4			5
	Company - Other					0				0			0					0				1			(1	)
	Franchise - Texas Roadhouse - U.S.					0				0			0					1				2			(1	)
	Franchise - Texas Roadhouse - International					1				1			0					3				1			2
	Total					10				8			2					34				32			2
Restaurants open at the end of the quarter
	Company - Texas Roadhouse					413				392			21
	Company - Bubba's 33					16				7			9
	Company - Other					2				2			0
	Franchise - Texas Roadhouse - U.S.					73				72			1
	Franchise - Texas Roadhouse - International					13				10			3
	Total					517				483			34
Company-owned restaurants
	Restaurant sales				$	480,730			$	450,529			6.7	%			$	1,974,261			$	1,791,446			10.2	%
	Store weeks					5,544				5,186			6.9	%				21,583				20,020			7.8	%
	Comparable restaurant sales growth (1)					1.2	%			4.5	%							3.5	%			7.2	%
	Texas Roadhouse restaurants only:
		Comparable restaurant sales growth (1)				1.3	%			4.5	%							3.6	%			7.2	%
		Average unit volume (2)			$	1,133			$	1,130			0.3	%			$	4,802			$	4,664			3.0	%
		Weekly sales by group:
		Comparable restaurants (370 units)			$	88,003
		Average unit volume restaurants (27 units) (3)			$	75,330
		Restaurants less than 6 months old (16 units)			$	88,912
Restaurant operating costs (as a % of restaurant sales)
Cost of sales						33.8	%			35.4	%		(153) bps					33.9	%			35.9	%		(205) bps
Labor						30.7	%			29.2	%		147 bps					29.9	%			29.3	%		64 bps
Rent						2.1	%			2.2	%		(6) bps					2.1	%			2.1	%		(2) bps
Other operating						16.3	%			15.7	%		56 bps					15.5	%			15.4	%		10 bps
Total						82.9	%			82.4	%		44 bps					81.3	%			82.7	%		(134) bps
	Restaurant margin (4)					17.1	%			17.6	%		(44) bps					18.7	%			17.3	%		134 bps
	Restaurant margin $ ($ in thousands) (4)				$	82,387			$	79,196			4.0	%			$	368,933			$	310,762			18.7	%
	Restaurant margin $ (4)/Store week				$	14,862			$	15,272			(2.7	)%			$	17,094			$	15,523			10.1	%
Franchise-owned restaurants
	Franchise royalties and fees				$	3,980			$	3,822			4.1	%			$	16,453			$	15,922			3.3	%
	Store weeks					1,108				1,062			4.3	%				4,360				4,174			4.5	%
	Comparable restaurant sales growth (1)					0.8	%			4.0	%							2.0	%			6.5	%
	U.S. franchise restaurants only:
		Comparable restaurant sales growth (1)				2.0	%			4.4	%							3.3	%			7.1	%
		Average unit volume (2)			$	1,181			$	1,164			1.4	%			$	4,929			$	4,799			2.7	%
Pre-opening expense					$	5,294			$	4,640			14.1	%			$	19,547			$	19,116			2.3	%
Depreciation and amortization					$	22,246			$	18,700			19.0	%			$	82,964			$	69,694			19.0	%
	As a % of revenue					4.6	%			4.1	%		47 bps					4.2	%			3.9	%		31 bps
General and administrative expenses					$	27,862			$	24,992			11.5	%			$	110,795			$	92,336			20.0	%
	As a % of revenue					5.7	%			5.5	%		25 bps					5.6	%			5.1	%		46 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 (in dollars and as a percentage of restaurant sales) represents restaurant sales less restaurant operating costs, including cost of sales, labor, rent and other operating costs. 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:

Tonya Robinson, 502-515-7269

or

Media:

Travis Doster, 502-638-5457

Source: Texas Roadhouse, Inc.

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