LOUISVILLE, Ky.  (Restaurant News Release)  Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 39 week periods ended September 28, 2010.

                                     
        Third Quarter           Year to Date
($000’s)       2010       2009       % Change           2010       2009       % Change
                                                     
Total revenue       245,613       226,467       8           760,399       714,963       6
Income from operations       21,448       17,281       24           74,883       61,058       23
Net income       13,952       10,695       30           48,229       38,770       24
Diluted EPS       $0.19       $0.15       28           $0.66       $0.54       22
                                                     

Results for the quarter included:

  • Comparable restaurant sales increased 4.3% at company restaurants and 4.4% at franchise restaurants;
  • Three company restaurants opened;
  • Restaurant margins increased 79 basis points to 17.9%;
  • Diluted earnings per share increased 28% to $0.19 from $0.15 in the prior year period.

Results year-to-date included:

  • Comparable restaurant sales increased 2.1% at company restaurants and 2.4% at franchise restaurants;
  • Seven company restaurants and one franchise restaurant opened, while one company restaurant closed;
  • Restaurant margins increased 114 basis points to 19.0%;
  • Diluted earnings per share increased 22% to $0.66 from $0.54 in the prior year-to-date period.

Texas Roadhouse, Inc. Announces Third Quarter 2010 ResultsG.J. Hart, President and Chief Executive Officer of Texas Roadhouse, commented, “We are very encouraged by our third quarter results, which have helped position Texas Roadhouse to end 2010 at the high end of our previously expected diluted EPS range. Comparable restaurant sales growth was over 4% for the quarter, driven by traffic gains, which in turn led to continued margin expansion and net income growth. Importantly, our strong performance was achieved without compromising our commitment to legendary food and service, as our adherence to these core values continues to benefit our business in a tough economy.” Hart continued, “Looking ahead, we are excited to increase our development plans for 2011. Along with continued execution at the store level, we believe this reacceleration of our expansion efforts will position Texas Roadhouse to continue driving long-term value for shareholders.”

Outlook for 2010

The Company reported that comparable restaurant sales for the first four weeks of the fourth quarter of fiscal 2010 increased 3.5% compared to the prior year period.

The Company now estimates 2010 diluted earnings per share growth will be approximately 20% compared to 2009, which is at the high-end of the previous 16% to 20% range. This revised estimate is based, in part, on the following assumptions:

  • Comparable restaurant sales growth of approximately 2.0%;
  • 14 company restaurant openings;
  • Food cost deflation of approximately 2.5%; and
  • Total capital expenditures of approximately $50 million.

Outlook for 2011

While the Company is still finalizing its plans relating to 2011, the Company announced that if comparable restaurant sales growth is 2% to 3% for the year, 2011 diluted earnings per share growth would likely be 5% to 15% compared to 2010. This is based, in part, on the following assumptions:

  • Approximately 20 company restaurant openings;
  • Food cost inflation of 2.0% to 3.0%; and
  • Total capital expenditures of approximately $60 to $65 million.

Conference Call

The Company is hosting a conference call today, November 1, 2010, at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (877) 879-6203 or (719) 325-4920 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 8033424 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 330 restaurants system-wide in 46 states. 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 restaurants opening, the sales at these and our other company and franchise restaurants, changes in restaurant development or operating costs, our ability to acquire franchise restaurants, our ability to integrate the franchise restaurants we acquire or other concepts we develop, strength of consumer spending, conditions beyond the Company’s control such as weather, natural disasters, disease outbreaks, epidemics or pandemics impacting the Company’s customers or food supplies, acts of war or terrorism and other factors disclosed from time to time in the Company’s filings with the U.S. Securities and Exchange Commission. Investors should take such risks into account when making investment decisions. Stockholders 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. The Company undertakes 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 28,

2010

    September 29,

2009

    September 28,

2010

    September 29,

2009

                               
Revenue:                          
  Restaurant sales   $ 243,405       $ 224,417       $ 753,582       $ 708,808  
  Franchise royalties and fees     2,208         2,050         6,817         6,155  
                               
Total revenue     245,613         226,467         760,399         714,963  
                               
Costs and expenses:                          
  Restaurant operating costs:                          
    Cost of sales     79,101         74,489         244,560         237,844  
    Labor     71,835         67,630         221,241         210,203  
    Rent     5,329         5,029         15,886         14,870  
    Other operating     43,476         38,778         128,841         119,450  
  Pre-opening     2,150         1,194         4,562         4,411  
  Depreciation and amortization     10,262         10,395         30,861         31,482  
  Impairment and closure     44         (201 )       302         (273 )
  General and administrative     11,968         11,872         39,263         35,918  
                               
Total costs and expenses     224,165         209,186         685,516         653,905  
                               
Income from operations     21,448         17,281         74,883         61,058  
                               
Interest expense, net     644         784         2,078         2,517  
Equity income from investments in unconsolidated affiliates     155         36         355         185  
                               
Income before taxes     20,959         16,533         73,160         58,726  
Provision for income taxes     6,478         5,431         23,133         18,582  
                               
Net income including noncontrolling interests   $ 14,481       $ 11,102       $ 50,027       $ 40,144  
Less: Net income attributable to noncontrolling interests     529         407         1,798         1,374  
Net income attributable to Texas Roadhouse, Inc. and subsidiaries   $ 13,952       $ 10,695       $ 48,229       $ 38,770  
                               
Net income per common share attributable to Texas Roadhouse, Inc.                          
and subsidiaries:                          
  Basic   $ 0.19       $ 0.15       $ 0.68       $ 0.56  
  Diluted   $ 0.19       $ 0.15       $ 0.66       $ 0.54  
                               
Weighted average shares outstanding:                          
  Basic     71,660         70,204         71,273         69,847  
  Diluted     73,002         71,550         72,727         71,151  
                                         
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
(in thousands)
                     
                     
        (unaudited)          
        September 28, 2010       December 29, 2009
                     
                     
Cash and cash equivalents     $ 55,425         $ 46,858  
Other current assets       27,167           27,458  
Property and equipment, net       456,473           456,281  
Goodwill       113,465           113,465  
Intangible asset, net       10,387           11,194  
Other assets       7,630           6,817  
                     
Total assets     $ 670,547         $ 662,073  
                     
                     
Current maturities of long-term debt                  
  and obligations under capital leases       267           247  
Other current liabilities       88,399           107,956  
Long-term debt and obligations under                  
  capital leases, excluding current maturities       61,977           101,179  
Other liabilities       39,079           29,741  
Texas Roadhouse, Inc. and subsidiaries stockholders’ equity       478,123           420,372  
Noncontrolling interests       2,702           2,578  
                     
Total liabilities and equity     $ 670,547         $ 662,073  
                       
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands, except per share data)
(unaudited)
                   
                   
          39 Weeks Ended
          September 28,

2010

      September 29,

2009

                   
                   
Cash flows from operating activities:              
Net income including noncontrolling interests     $ 50,027         $ 40,144  
Adjustments to reconcile net income to net cash provided by operating activities              
  Depreciation and amortization       30,861           31,482  
  Share-based compensation expense       5,705           5,642  
  Other noncash adjustments       (752 )         2,830  
Change in working capital       (11,539 )         (11,802 )
    Net cash provided by operating activities       74,302           68,296  
                   
Cash flows from investing activities:              
Capital expenditures – property and equipment       (31,598 )         (34,814 )
Acquisition of franchise restaurants, net of cash acquired                 25  
Proceeds from sale of property and equipment, including insurance proceeds       175           2,329  
    Net cash used in investing activities       (31,423 )         (32,460 )
                   
Cash flows from financing activities:              
Repayments of revolving credit facility, net       (39,000 )         (6,000 )
Other financing activities       4,688           739  
    Net cash used in financing activities       (34,312 )         (5,261 )
                   
    Net increase in cash and cash equivalents       8,567           30,575  
Cash and cash equivalents – beginning of year       46,858           5,258  
Cash and cash equivalents – end of year     $ 55,425         $ 35,833  
               
Texas Roadhouse, Inc. and Subsidiaries
Supplemental Financial and Operating Information
($ amounts in thousands)
(unaudited)
                                         
                                         
      Third Quarter     Change       Year to Date     Change  
      2010     2009     vs LY       2010     2009     vs LY  
                                         
Restaurant openings                                      
  Company     3       1       2           7         12       (5 )  
  Franchise     0       2       (2 )         1         3       (2 )  
  Total     3       3       0           8         15       (7 )  
                                         
Restaurant closures                                      
  Company     0       (2 )     2           (1 )       (2 )     1    
  Franchise     0       0       0           0         (1 )     1    
  Total     0       (2 )     2           (1 )       (3 )     2    
                                         
Restaurants open at the end of the quarter                                      
  Company     267       255       12                        
  Franchise     71       71       0                        
  Total     338       326       12                        
                                         
Company-owned restaurants                                      
  Restaurant sales   $ 243,405     $ 224,417       8.5   %     $ 753,582       $ 708,808       6.3   %
  Store weeks     3,450       3,331       3.6   %       10,294         9,893       4.1   %
  Comparable restaurant sales growth (1)     4.3 %     (4.6 ) %             2.1   %     (3.0 ) %      
  Average unit volume (2)   $ 914     $ 874       4.6   %     $ 2,836       $ 2,792       1.6   %
                                         
  Restaurant operating costs (as a % of restaurant sales)                                      
  Cost of sales     32.5 %     33.2   %   (69 ) bps       32.5   %     33.6   %   (110 ) bps
  Labor     29.5 %     30.1   %   (62 ) bps       29.4   %     29.7   %   (30 ) bps
  Rent     2.2 %     2.2   %   (5 ) bps       2.1   %     2.1   %   1   bps
  Other operating     17.9 %     17.3   %   58   bps       17.1   %     16.9   %   24   bps
  Total     82.1 %     82.8   %   (79 ) bps       81.0   %     82.2   %   (114 ) bps
                                         
  Restaurant margins (3)     17.9 %     17.2   %   79   bps       19.0   %     17.8   %   114   bps
                                         
Franchise-owned restaurants                                      
  Franchise royalties and fees   $ 2,208     $ 2,050       7.7   %     $ 6,817       $ 6,155       10.8   %
  Store weeks     912       900       1.3   %       2,707         2,694       0.5   %
  Comparable restaurant sales growth (1)     4.4 %     (3.6 ) %             2.4   %     (3.0 ) %      
  Average unit volume (2)   $ 905     $ 856       5.7   %     $ 2,829       $ 2,721       4.0   %
                                         
Pre-opening expense   $ 2,150     $ 1,194       80.1   %     $ 4,562       $ 4,411       3.4   %
                                         
Depreciation and amortization   $ 10,262     $ 10,395       (1.3 ) %     $ 30,861       $ 31,482       (2.0 ) %
  As a % of revenue     4.2 %     4.6   %   (41 ) bps       4.1   %     4.4   %   (34 ) bps
                                         
Impairment and closure   $ 44     $ (201 )     NM         $ 302       $ (273 )     NM    
  As a % of revenue     0.0 %     (0.1 ) %   11   bps       0.0   %     (0.0 ) %   8   bps
                                         
General and administrative expenses   $ 11,968     $ 11,872       0.8   %     $ 39,263       $ 35,918       9.3   %
  As a % of revenue     4.9 %     5.2   %   (37 ) bps       5.2   %     5.0   %   14   bps
                                                           
(1) Comparable restaurant sales growth includes sales from restaurants open 18 months as of the beginning of the measurement period.
 
(2) Average unit volume includes sales from restaurants open six months as of the beginning of the measurement period. For comparative purposes, average unit volumes for Q3 2009 and 2009 YTD were adjusted to reflect restaurant sales of any acquired franchise restaurants as part of Company-owned restaurants average unit volume and were excluded from franchise-owned restaurants average unit volume.
 
(3) Restaurant margins represent restaurant sales less restaurant operating costs (as a percentage of restaurant sales).
 
NM – Not meaningful
Amounts may not foot due to rounding.