• Texas Roadhouse, Inc. Announces Second Quarter 2023 Results

    Source: Nasdaq GlobeNewswire / 27 Jul 2023 15:03:11   America/Chicago

    LOUISVILLE, Ky., July 27, 2023 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 26 weeks ended June 27, 2023.

    Financial Results

    Financial results for the 13 and 26 weeks ended June 27, 2023 and June 28, 2022 were as follows:

     Second Quarter Year to Date
     
    ($000's)             
      2023  2022 % change  2023  2022 % change
     
    Total revenue$1,171,203 $1,024,606 14.3% $2,345,559 $2,012,092 16.6% 
    Income from operations 95,412  85,918 11.1%  196,357  176,056 11.5% 
    Net income 82,271  72,419 13.6%  168,658  147,621 14.3% 
    Diluted earnings per share$1.22 $1.07 14.7% $2.51 $2.15 16.6% 

    Results for the second quarter, as compared to the prior year as applicable, included the following:

    • Comparable restaurant sales increased 9.1% at company restaurants and increased 9.2% at domestic franchise restaurants;
    • Average weekly sales at company restaurants were $146,727 of which $18,496 were to-go sales as compared to average weekly sales of $135,552 of which $17,794 were to-go sales in the prior year;
    • Restaurant margin dollars increased 8.3% to $182.8 million from $168.7 million in the prior year primarily due to higher sales. Restaurant margin, as a percentage of restaurant and other sales, decreased 88 basis points to 15.7% as commodity inflation of 6.0% and wage and other labor inflation of 7.0% were partially offset by higher sales;
    • Diluted earnings per share increased 14.7% primarily driven by higher restaurant margin dollars partially offset by higher depreciation and amortization and higher general and administrative expenses;
    • Three company restaurants and three franchise restaurants were opened; and,
    • The Company repurchased 213,975 shares of common stock for $23.4 million.

    Results for the year-to-date period, as compared to the prior year as applicable, included the following:

    • Comparable restaurant sales increased 11.0% at company restaurants and increased 11.2% at domestic franchise restaurants;
    • Average weekly sales at company restaurants were $147,579 of which $18,762 were to-go sales as compared to average weekly sales of $133,917 of which $18,671 were to-go sales in the prior year;
    • Restaurant margin dollars increased 11.7% to $368.5 million from $329.9 million in the prior year primarily due to higher sales. Restaurant margin, as a percentage of restaurant and other sales, decreased 70 basis points to 15.8% as commodity inflation of 7.4% and wage and other labor inflation of 7.4% were partially offset by higher sales;
    • Diluted earnings per share increased 16.6% primarily driven by higher restaurant margin dollars partially offset by higher general and administrative expenses and higher depreciation and amortization expense;
    • Nine company restaurants and four franchise restaurants were opened; and,
    • The Company repurchased 306,726 shares of common stock for $33.1 million.

    Jerry Morgan, Chief Executive Officer of Texas Roadhouse, Inc. commented, “Once again, our operators generated tremendous sales momentum, including higher guest counts.  This increase in quarterly sales helped offset rising costs and allowed us to further grow our bottom line.”

    Morgan continued, “On the development front, we have a significant number of company and franchise locations that will open in the second half of the year.  This includes the first franchise location for Jaggers, our fast-casual concept, that opened in Jacksonville, North Carolina, last week.  We remain confident that our continued development of all three concepts, along with a strong balance sheet and disciplined capital allocation strategy will generate long-term shareholder value.”

    2023 Outlook        

    Comparable restaurant sales at company restaurants for the first four weeks of our third quarter of fiscal 2023 increased 10.7% compared to 2022.  

    Management reiterated the following expectations for 2023:

    • Positive comparable restaurant sales growth including the benefit of menu pricing actions; and,
    • Commodity cost inflation of 5% to 6%.

    Management updated the following expectations for 2023:

    • Store week growth of approximately 6% including the impact of franchise locations acquired;
    • As many as 28 Texas Roadhouse and Bubba’s 33 company restaurant openings;
    • Wage and other labor inflation of 6% to 7%;
    • An effective income tax rate of 13% to 14% excluding the impact of any legislative changes enacted; and,
    • Total capital expenditures of approximately $300 million.

    Non-GAAP Measures

    The Company prepares the consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”). Within the press release, the Company makes reference to restaurant margin (in dollars and as a percentage of restaurant and other sales). Restaurant margin represents restaurant and other sales less restaurant-level operating costs, including food and beverage costs, labor, rent and other operating costs. Restaurant margin also includes sales and operating costs related to the Company’s non-royalty based retail initiatives. 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 core restaurant-level operating efficiency and performance over various reporting periods on a consistent basis. In calculating restaurant margin, the Company excludes certain non-restaurant-level costs that support operations, including general and administrative expenses, but do not have a direct impact on restaurant-level operational efficiency and performance. The Company excludes pre-opening expense as it occurs at irregular intervals and would impact comparability to prior period results. The Company excludes depreciation and amortization expense, substantially all of which relates to restaurant-level assets, as it represents a non-cash charge for the investment in restaurants. The Company excludes impairment and closure expense as it believes 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 the industry. A reconciliation of income from operations to restaurant margin is included in the accompanying financial tables.

    Conference Call

    Texas Roadhouse, Inc. is hosting a conference call today, July 27, 2023, at 5:00 p.m. Eastern Time to discuss these results. The call will be webcast live from the investor relations portion of the Company's website at www.texasroadhouse.com. Listeners may also access the call by dialing (888) 440-5667 or (646) 960-0476 for international calls and referencing the Texas Roadhouse, Inc. Second Quarter 2023 Earnings. A replay of the call will be available until August 3, 2023, by dialing (800) 770-2030 or (647) 362-9199 for international calls.

    About the Company

    Texas Roadhouse, Inc. is a growing restaurant company operating predominantly in the casual dining segment that first opened in 1993 and today has grown to over 710 restaurants system-wide in 49 states and ten foreign countries. For more information, please visit the Company’s Web site at www.texasroadhouse.com.

    Forward-looking Statements

    Certain statements in this release are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. 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, conditions beyond its control such as weather, natural disasters, disease outbreaks, epidemics or pandemics impacting customers or food supplies; labor or supply chain shortages or limited availability of staff or product needed to meet our business standards; changes in consumer discretionary spending and macroeconomic conditions, including inflationary pressures; food safety and food-borne illness concerns; and other factors disclosed from time to time in its filings with the U.S. Securities and Exchange Commission. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors include but are not limited to those described under “Part I—Item 1A. Risk Factors” of the Annual Report on Form 10-K for the fiscal year ended December 27, 2022. These factors should not be construed as exhaustive and should be read in conjunction with other filings with the 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. The Company undertakes no obligation to update any forward-looking statements, except as required by applicable law.

    Contacts:

    Investor RelationsMedia
    Michael BailenTravis Doster
    (502) 515-7298(502) 638-5457


    Texas Roadhouse, Inc. and Subsidiaries
    Consolidated Statements of Income
    (in thousands, except per share data)
    (unaudited)
           
       13 Weeks Ended  26 Weeks Ended 
       June 27, 2023  June 28, 2022  June 27, 2023  June 28, 2022 
                 
    Revenue:          
     Restaurant and other sales$1,164,385  $1,018,057   $2,331,968  $1,999,029  
     Franchise royalties and fees 6,818   6,549    13,591   13,063  
                 
    Total revenue 1,171,203   1,024,606    2,345,559   2,012,092  
                 
    Costs and expenses:          
     Restaurant operating costs (excluding depreciation and amortization shown separately below):
               
     Food and beverage 401,204   347,041    811,915   684,437  
     Labor 391,337   333,042    777,156   654,913  
     Rent 17,996   16,714    35,824   33,082  
     Other operating 171,092   152,524    338,621   296,678  
     Pre-opening 5,671   5,323    11,048   9,614  
     Depreciation and amortization 37,413   34,420    73,640   68,040  
     Impairment and closure, net 78   411    133   (235) 
     General and administrative 51,000   49,213    100,865   89,507  
                 
    Total costs and expenses 1,075,791   938,688    2,149,202   1,836,036  
                 
    Income from operations 95,412   85,918    196,357   176,056  
                 
    Interest income (expense), net 996   (395)   2,234   (792) 
    Equity income from investments in unconsolidated affiliates 287   545    1,042   879  
                 
    Income before taxes 96,695   86,068    199,633   176,143  
    Income tax expense 12,270   11,531    26,604   24,278  
                 
    Net income including noncontrolling interests 84,425   74,537    173,029   151,865  
    Less: Net income attributable to noncontrolling interests 2,154   2,118    4,371   4,244  
    Net income attributable to Texas Roadhouse, Inc. and subsidiaries$82,271  $72,419   $168,658  $147,621  
                 
    Net income per common share attributable to Texas Roadhouse, Inc.          
    and subsidiaries:          
     Basic$1.23  $1.07   $2.52  $2.16  
     Diluted$1.22  $1.07   $2.51  $2.15  
                 
    Weighted average shares outstanding:          
     Basic 66,974   67,654    66,995   68,370  
     Diluted 67,229   67,890    67,261   68,631  
                 
    Cash dividends declared per share$0.55  $0.46   $1.10  $0.92  
                    


    Texas Roadhouse, Inc. and Subsidiaries
    Condensed Consolidated Balance Sheets
    (in thousands)
    (unaudited)
            
        June 27, 2023 December 27, 2022 
            
            
     Cash and cash equivalents $107,324 $173,861 
     Other current assets, net  125,961  222,980 
     Property and equipment, net  1,360,132  1,270,349 
     Operating lease right-of-use assets, net  662,730  630,258 
     Goodwill  169,684  148,732 
     Intangible assets, net  4,986  5,607 
     Other assets  84,174  73,878 
            
     Total assets $2,514,991 $2,525,665 
            
            
     Other current liabilities  571,983  652,010 
     Operating lease liabilities, net of current portion  712,800  677,874 
     Long-term debt  -  50,000 
     Other liabilities  131,958  118,119 
     Texas Roadhouse, Inc. and subsidiaries stockholders' equity  1,082,982  1,012,638 
     Noncontrolling interests  15,268  15,024 
            
     Total liabilities and equity $2,514,991 $2,525,665 
            


    Texas Roadhouse, Inc. and Subsidiaries
    Condensed Consolidated Statements of Cash Flows
    (in thousands)
    (unaudited)
           
        26 Weeks Ended 
        June 27, 2023 June 28, 2022 
              
           
    Cash flows from operating activities:    
    Net income including noncontrolling interests $173,029  $151,865  
    Adjustments to reconcile net income to net cash provided by operating activities    
     Depreciation and amortization  73,640   68,040  
     Share-based compensation expense  16,744   18,612  
     Deferred income taxes  1,767   3,906  
     Other noncash adjustments, net  2,831   2,144  
    Change in working capital, net of acquisitions  20,222   54,136  
      Net cash provided by operating activities  288,233   298,703  
              
    Cash flows from investing activities:       
    Capital expenditures - property and equipment  (154,580)  (108,567) 
    Acquisition of franchise restaurants, net of cash acquired  (39,153)  (33,069) 
    Proceeds from sale of investments in unconsolidated affiliates  632   316  
    Proceeds from the sale of property and equipment  -   2,188  
    Proceeds from sale leaseback transactions  7,097   -  
      Net cash used in investing activities  (186,004)  (139,132) 
              
    Cash flows from financing activities:       
    Payments on revolving credit facility  (50,000)  (25,000) 
    Repurchase of shares of common stock  (33,058)  (212,859) 
    Dividends paid  (73,698)  (62,547) 
    Other financing activities, net  (12,010)  (14,399) 
      Net cash used in financing activities  (168,766)  (314,805) 
              
      Net decrease in cash and cash equivalents  (66,537)  (155,234) 
    Cash and cash equivalents - beginning of period  173,861   335,645  
    Cash and cash equivalents - end of period $107,324  $180,411  
              


    Texas Roadhouse, Inc. and Subsidiaries
    Reconciliation of Income from Operations to Restaurant Margin
    (in thousands)
    (unaudited)
             
      13 Weeks Ended 26 Weeks Ended 
      June 27, 2023 June 28, 2022 June 27, 2023 June 28, 2022 
             
    Income from operations $95,412  $85,918  $196,357  $176,056  
             
    Less:        
    Franchise royalties and fees  6,818   6,549   13,591   13,063  
             
    Add:        
    Pre-opening  5,671   5,323   11,048   9,614  
    Depreciation and amortization  37,413   34,420   73,640   68,040  
    Impairment and closure, net  78   411   133   (235) 
    General and administrative  51,000   49,213   100,865   89,507  
             
    Restaurant margin $182,756  $168,736  $368,452  $329,919  
             
    Restaurant margin(as a percentage of restaurant and other sales)  15.7%  16.6%  15.8%  16.5% 
             


    Texas Roadhouse, Inc. and Subsidiaries 
    Supplemental Financial and Operating Information 
    ($ amounts in thousands, except weekly sales by group) 
    (unaudited) 
                   
       Second Quarter   Year to Date   
        2023   2022  Change 2023  2022  Change 
    Restaurant openings            
     Company - Texas Roadhouse 2   4  (2)  6  7  (1)  
     Company - Bubba's 33 1   1  0  1  1  0  
     Company - Jaggers 0   0  0  2  0  2  
     Franchise - Texas Roadhouse - U.S. 1   0  1  1  0  1  
     Franchise - Texas Roadhouse - International 2   1  1  3  3  0  
     Total 6   6  0  13  11  2  
                   
    Restaurant acquisitions/dispositions            
     Company - Texas Roadhouse 0   1  (1)  8  8  0  
     Franchise - Texas Roadhouse - U.S. 0   (1)  1  (8)  (8)  0  
                   
    Restaurant closures            
     Company - Texas Roadhouse 0   0  0  0  0  0  
     Franchise - Texas Roadhouse - U.S. (1)   0  (1)  (1)  0  (1)  
     Total (1)   0  (1)  (1)  0  (1)  
                   
    Restaurants open at the end of the quarter            
     Company - Texas Roadhouse 566   541  25        
     Company - Bubba's 33 41   37  4        
     Company - Jaggers 7   4  3        
     Franchise - Texas Roadhouse - U.S. 54   62  (8)        
     Franchise - Texas Roadhouse - International 41   34  7        
     Total 709   678  31        
                   
       Second Quarter   
        2023   2022  Change       
    Company restaurants (all concepts)            
     Restaurant and other sales$1,164,385  $1,018,057  14.4 %      
     Store weeks 7,960   7,536  5.6 %      
     Comparable restaurant sales (1) 9.1 % 7.6 %        
                   
     Restaurant operating costs (as a % of restaurant and other sales)            
     Food and beverage costs 34.5 % 34.1 %37 bps      
     Labor 33.6 % 32.7 %90 bps      
     Rent 1.5 % 1.6 %(10)bps      
     Other operating 14.7 % 15.0 %(29)bps      
     Total 84.3 % 83.4 %88 bps      
                   
      Restaurant margin 15.7 % 16.6 %(88)bps      
                   
      Restaurant margin ($ in thousands)$182,756  $168,736  8.3 %      
      Restaurant margin $/Store week$22,961  $22,390  2.5 %      
                   
     Texas Roadhouse restaurants only:            
      Store weeks 7,343   7,006  4.8 %      
      Comparable restaurant sales (1) 9.4 % 7.6 %        
      Average unit volume (2)$1,946  $1,781  9.2 %      
      Weekly sales by group:        
      Comparable restaurants (533 and 503 units)$149,847  $137,599          
      Average unit volume restaurants (20 and 22 units)$144,554  $132,222          
      Restaurants less than 6 months old (13 and 16 units)$158,608  $145,756          
                   
     Bubba's 33 restaurants only:            
      Store weeks 526   478  10.0 %      
      Comparable restaurant sales (1) 3.9 % 8.1 %        
      Average unit volume (2)$1,514  $1,475  2.6 %      
      Weekly sales by group:        
      Comparable restaurants (35 and 31 units)$117,906  $110,740          
      Average unit volume restaurants (3 and 4 units)$99,324  $134,386          
      Restaurants less than 6 months old (3 and 2 units)$123,594  $128,134          
                   
    Franchise restaurants            
     Franchise royalties and fees$6,818  $6,549  4.1 %      
     Store weeks 1,220   1,238  (1.5)%      
     Comparable restaurant sales 10.8 % 8.7 %        
     U.S. franchise restaurants only:            
      Comparable restaurant sales 9.2 % 6.2 %        
      Average unit volume$2,129  $1,932  10.2 %      
                   
    (1) Comparable restaurant sales reflect the change in year-over-year sales for restaurants open a full 18 months before the beginning of the period, excluding sales from restaurants permanently closed during the period.
     
                           
    (2) Average unit volume includes sales from restaurants open for a full six months before the beginning of the period, excluding sales from restaurants permanently closed during the period. 
    Amounts may not foot due to rounding.
     
                           

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