Texas Roadhouse, Inc. Announces First Quarter 2018 Results
LOUISVILLE, Ky., April 30, 2018 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (Nasdaq: TXRH), today announced financial results for the 13 week period ended March 27, 2018.
| First Quarter | |||||||||
| ($000's) | 2018 | 2017 | % Change | ||||||
| Total revenue | $ | 627,705 | $ | 567,686 | 10.6 | % | |||
| Income from operations | 64,871 | 49,022 | 32.3 | % | |||||
| Net income | 54,541 | 34,313 | 59.0 | % | |||||
| Diluted EPS | $ | 0.76 | $ | 0.48 | 57.9 | % | |||
Results for the first quarter included the following highlights:
- Comparable restaurant sales increased 4.9% at company restaurants and 3.9% at domestic franchise restaurants;
- Diluted earnings per share increased 57.9% to $0.76 from $0.48 in the prior year primarily due to lower general and administrative expenses and the benefit of a lower income tax rate. General and administrative expenses included a pre-tax charge recorded in the prior year period of $14.9 million ($9.2 million after-tax), or $0.13 per diluted share, related to the settlement of a legal matter;
- Restaurant margin dollars increased 6.3% to $119.4 million from $112.3 million in the prior year and restaurant margin, as a percentage of restaurant and other sales, decreased 75 basis points to 19.2%;
- Our income tax rate decreased to 13.0% from 26.5% in the prior year period primarily due to the impact of new tax legislation; and
- Seven company restaurants, including one Bubba’s 33 restaurant, and two international franchise restaurants were opened.
Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "We are pleased to report another solid quarter highlighted by double-digit revenue growth and comparable restaurant sales growth of 4.9%. This sales growth was largely driven by traffic gains which have continued into the second quarter. While restaurant margins remain challenged by ongoing labor inflation, our operators have remained focused on providing our guests with a legendary experience. On the development front, our new restaurant pipeline is in good shape with 11 company restaurants and two international franchise restaurants, including our first in Mexico, open so far this year."
2018 Outlook
Comparable restaurant sales at company restaurants for the first four weeks of our second quarter of fiscal 2018 increased approximately 8.5% compared to the prior year period.
Management updated the following expectation for 2018:
- Commodity cost inflation of approximately 1.0% compared to previous guidance of relatively flat food costs.
Management reiterated the following expectations for 2018:
- Positive comparable restaurant sales growth;
- Approximately 30 company restaurant openings, including up to seven Bubba’s 33 restaurants;
- Mid-single digit growth in labor dollars per store week, excluding the impact of higher guest counts;
- An income tax rate of 15.0% to 16.0%; and
- Total capital expenditures of approximately $165.0 million to $175.0 million.
Non-GAAP Measures
We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”). Within our press release, we make reference to restaurant margin (in dollars and as a percentage of sales). Restaurant margin represents restaurant and other sales less restaurant-level operating costs, including cost of sales, labor, rent and other operating costs. Restaurant margin should not be considered in isolation, or as an alternative, to income from operations. This non-GAAP measure is not indicative of overall company performance and profitability in that this measure does not accrue directly to the benefit of shareholders due to the nature of the costs excluded. Restaurant margin is widely regarded as a useful metric by which to evaluate restaurant-level operating efficiency and performance. In calculating restaurant margin, we exclude certain non-restaurant-level costs that support operations, including pre-opening and general and administrative expenses, but do not have a direct impact on restaurant-level operational efficiency and performance. We also exclude depreciation and amortization expense, substantially all of which relates to restaurant-level assets, as it represents a non-cash charge for the investment in our restaurants. We also exclude impairment and closure expense as we believe this provides a clearer perspective of ongoing operating performance and a more useful comparison to prior period results. Restaurant margin as presented may not be comparable to other similarly titled measures of other companies in our industry. A reconciliation of income from operations to restaurant margin is included in the accompanying financial tables.
Conference Call
Texas Roadhouse is hosting a conference call today, April 30, 2018 at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (800) 281-7973 or (323) 794-2093 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 4129643 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 has grown to over 560 restaurants system-wide in 49 states and eight 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 Texas Roadhouse. 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, 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.
Contacts:
Investor Relations Tonya Robinson(502) 515-7269
MediaTravis Doster(502) 638-5457
| Texas Roadhouse, Inc. and Subsidiaries | ||||||||||||
| Condensed Consolidated Statements of Income | ||||||||||||
| (in thousands, except per share data) | ||||||||||||
| (unaudited) | ||||||||||||
| 13 Weeks Ended | ||||||||||||
| March 27, 2018 | March 28, 2017 | |||||||||||
| Revenue: | ||||||||||||
| Restaurant and other sales | $ | 622,402 | $ | 563,320 | ||||||||
| Franchise royalties and fees | 5,303 | 4,366 | ||||||||||
| Total revenue | 627,705 | 567,686 | ||||||||||
| Costs and expenses: | ||||||||||||
| Restaurant operating costs (excluding depreciation and amortization shown separately below): | ||||||||||||
| Cost of sales | 202,786 | 184,193 | ||||||||||
| Labor | 196,030 | 170,347 | ||||||||||
| Rent | 11,851 | 10,869 | ||||||||||
| Other operating | 92,378 | 85,660 | ||||||||||
| Pre-opening | 5,044 | 4,740 | ||||||||||
| Depreciation and amortization | 24,484 | 22,596 | ||||||||||
| Impairment and closure | 86 | 11 | ||||||||||
| General and administrative | 30,175 | 40,248 | ||||||||||
| Total costs and expenses | 562,834 | 518,664 | ||||||||||
| Income from operations | 64,871 | 49,022 | ||||||||||
| Interest expense, net | 359 | 332 | ||||||||||
| Equity income from investments in | ||||||||||||
| unconsolidated affiliates | (324 | ) | (320 | ) | ||||||||
| Income before taxes | 64,836 | 49,010 | ||||||||||
| Provision for income taxes | 8,457 | 12,987 | ||||||||||
| Net income including noncontrolling interests | 56,379 | 36,023 | ||||||||||
| Less: Net income attributable to noncontrolling interests | 1,838 | 1,710 | ||||||||||
| Net income attributable to Texas Roadhouse, Inc. and subsidiaries | $ | 54,541 | $ | 34,313 | ||||||||
| Net income per common share attributable to Texas Roadhouse, Inc. | ||||||||||||
| and subsidiaries: | ||||||||||||
| Basic | $ | 0.76 | $ | 0.48 | ||||||||
| Diluted | $ | 0.76 | $ | 0.48 | ||||||||
| Weighted average shares outstanding: | ||||||||||||
| Basic | 71,333 | 70,779 | ||||||||||
| Diluted | 71,805 | 71,334 | ||||||||||
| Cash dividends declared per share | $ | 0.25 | $ | 0.21 | ||||||||
| Texas Roadhouse, Inc. and Subsidiaries | ||||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||||
| (in thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| March 27, 2018 | December 26, 2017 | |||||||||||
| Cash and cash equivalents | $ | 197,829 | $ | 150,918 | ||||||||
| Other current assets, net | 58,139 | 106,163 | ||||||||||
| Property and equipment, net | 922,891 | 912,147 | ||||||||||
| Goodwill | 121,040 | 121,040 | ||||||||||
| Intangible assets, net | 2,514 | 2,700 | ||||||||||
| Other assets | 40,729 | 37,655 | ||||||||||
| Total assets | $ | 1,343,142 | $ | 1,330,623 | ||||||||
| Current maturities of long-term debt and obligation under capital lease | 9 | 9 | ||||||||||
| Other current liabilities | 299,917 | 329,989 | ||||||||||
| Long-term debt and obligation under capital lease, excluding current maturities | 51,979 | 51,981 | ||||||||||
| Other liabilities, net | 104,372 | 97,253 | ||||||||||
| Texas Roadhouse, Inc. and subsidiaries stockholders' equity | 874,222 | 839,079 | ||||||||||
| Noncontrolling interests | 12,643 | 12,312 | ||||||||||
| Total liabilities and equity | $ | 1,343,142 | $ | 1,330,623 | ||||||||
| Texas Roadhouse, Inc. and Subsidiaries | ||||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||||
| (in thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| 13 Weeks Ended | ||||||||||||
| March 27, 2018 | March 28, 2017 | |||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income including noncontrolling interests | $ | 56,379 | $ | 36,023 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities | ||||||||||||
| Depreciation and amortization | 24,484 | 22,596 | ||||||||||
| Share-based compensation expense | 7,475 | 6,218 | ||||||||||
| Other noncash adjustments, net | 4,661 | (3,973 | ) | |||||||||
| Change in working capital | 13,808 | 33,473 | ||||||||||
| Net cash provided by operating activities | 106,807 | 94,337 | ||||||||||
| Cash flows from investing activities: | ||||||||||||
| Capital expenditures - property and equipment | (35,307 | ) | (36,063 | ) | ||||||||
| Acquisition of franchise restaurants, net of cash acquired | - | (16,528 | ) | |||||||||
| Net cash used in investing activities | (35,307 | ) | (52,591 | ) | ||||||||
| Cash flows from financing activities: | ||||||||||||
| Dividends paid | (14,945 | ) | (13,418 | ) | ||||||||
| Other financing activities, net | (9,644 | ) | (3,760 | ) | ||||||||
| Net cash used in financing activities | (24,589 | ) | (17,178 | ) | ||||||||
| Net increase in cash and cash equivalents | 46,911 | 24,568 | ||||||||||
| Cash and cash equivalents - beginning of period | 150,918 | 112,944 | ||||||||||
| Cash and cash equivalents - end of period | $ | 197,829 | $ | 137,512 | ||||||||
| Texas Roadhouse, Inc. and Subsidiaries | |||||||||
| Reconciliation of Income from Operations to Restaurant Margin | |||||||||
| (in thousands) | |||||||||
| (unaudited) | |||||||||
| 13 Weeks Ended | |||||||||
| March 27, 2018 | March 28, 2017 | ||||||||
| Income from operations | $ | 64,871 | $ | 49,022 | |||||
| Less: | |||||||||
| Franchise royalties and fees | 5,303 | 4,366 | |||||||
| Add: | |||||||||
| Pre-opening | 5,044 | 4,740 | |||||||
| Depreciation and amortization | 24,484 | 22,596 | |||||||
| Impairment and closure | 86 | 11 | |||||||
| General and administrative | 30,175 | 40,248 | |||||||
| Restaurant margin | $ | 119,357 | $ | 112,251 | |||||
| Restaurant margin (as a percentage of restaurant and other sales) | 19.2 | % | 19.9 | % | |||||
| Texas Roadhouse, Inc. and Subsidiaries | ||||||||||||||
| Supplemental Financial and Operating Information | ||||||||||||||
| ($ amounts in thousands, except weekly sales by group) | ||||||||||||||
| (unaudited) | ||||||||||||||
| First Quarter | Change | |||||||||||||
| 2018 | 2017 | vs LY | ||||||||||||
| Restaurant openings | ||||||||||||||
| Company - Texas Roadhouse | 6 | 6 | 0 | |||||||||||
| Company - Bubba's 33 | 1 | 0 | 1 | |||||||||||
| Company - Other | 0 | 0 | 0 | |||||||||||
| Franchise - Texas Roadhouse - U.S. | 0 | 1 | (1 | ) | ||||||||||
| Franchise - Texas Roadhouse - International | 2 | 1 | 1 | |||||||||||
| Total | 9 | 8 | 1 | |||||||||||
| Restaurant acquisitions/dispositions | ||||||||||||||
| Company - Texas Roadhouse | 0 | 4 | (4 | ) | ||||||||||
| Franchise - Texas Roadhouse | 0 | (4 | ) | 4 | ||||||||||
| Total | 0 | 0 | 0 | |||||||||||
| Restaurants open at the end of the quarter | ||||||||||||||
| Company - Texas Roadhouse | 446 | 423 | 23 | |||||||||||
| Company - Bubba's 33 | 21 | 16 | 5 | |||||||||||
| Company - Other | 2 | 2 | 0 | |||||||||||
| Franchise - Texas Roadhouse - U.S. | 70 | 70 | 0 | |||||||||||
| Franchise - Texas Roadhouse - International | 19 | 14 | 5 | |||||||||||
| Total | 558 | 525 | 33 | |||||||||||
| Company restaurants | ||||||||||||||
| Restaurant and other sales | $ | 622,402 | $ | 563,320 | 10.5 | % | ||||||||
| Store weeks | 6,048 | 5,681 | 6.5 | % | ||||||||||
| Comparable restaurant sales growth (1) | 4.9 | % | 3.1 | % | ||||||||||
| Texas Roadhouse restaurants only: | ||||||||||||||
| Comparable restaurant sales growth (1) | 4.9 | % | 3.2 | % | ||||||||||
| Average unit volume (2) | $ | 1,356 | $ | 1,299 | 4.4 | % | ||||||||
| Weekly sales by group: | ||||||||||||||
| Comparable restaurants (407 units) | $ | 104,849 | ||||||||||||
| Average unit volume restaurants (21 units) (3) | $ | 93,684 | ||||||||||||
| Restaurants less than 6 months old (18 units) | $ | 106,627 | ||||||||||||
| Restaurant operating costs (as a % of restaurant and other sales) | ||||||||||||||
| Cost of sales | 32.6 | % | 32.7 | % | (12 | ) bps | ||||||||
| Labor | 31.5 | % | 30.2 | % | 126 | bps | ||||||||
| Rent | 1.9 | % | 1.9 | % | (3 | ) bps | ||||||||
| Other operating | 14.8 | % | 15.2 | % | (36 | ) bps | ||||||||
| Total | 80.8 | % | 80.1 | % | 75 | bps | ||||||||
| Restaurant margin | 19.2 | % | 19.9 | % | (75 | ) bps | ||||||||
| Restaurant margin ($ in thousands) | $ | 119,357 | $ | 112,251 | 6.3 | % | ||||||||
| Restaurant margin $/Store week | $ | 19,735 | $ | 19,760 | (0.1 | )% | ||||||||
| Franchise restaurants | ||||||||||||||
| Franchise royalties and fees | $ | 5,303 | $ | 4,366 | 21.5 | % | ||||||||
| Store weeks | 1,139 | 1,080 | 5.5 | % | ||||||||||
| Comparable restaurant sales growth (1) | 1.8 | % | 3.0 | % | ||||||||||
| U.S. franchise restaurants only: | ||||||||||||||
| Comparable restaurant sales growth (1) | 3.9 | % | 3.8 | % | ||||||||||
| Average unit volume (2) | $ | 1,398 | $ | 1,333 | 4.9 | % | ||||||||
| Pre-opening expense | $ | 5,044 | $ | 4,740 | 6.4 | % | ||||||||
| Depreciation and amortization | $ | 24,484 | $ | 22,596 | 8.4 | % | ||||||||
| As a % of revenue | 3.9 | % | 4.0 | % | (7 | ) bps | ||||||||
| General and administrative expenses | $ | 30,175 | $ | 40,248 | (25.0 | )% | ||||||||
| As a % of revenue | 4.8 | % | 7.1 | % | (227 | ) 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 and up to 18 months before the beginning of the period measured. | ||||||||||||||
| Amounts may not foot due to rounding. | ||||||||||||||