• Texas Roadhouse, Inc. Announces Third Quarter 2022 Results

    Source: Nasdaq GlobeNewswire / 27 Oct 2022 16:03:03   America/New_York

    LOUISVILLE, Ky., Oct. 27, 2022 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 39 weeks ended September 27, 2022.

    Financial Results

    Financial results for the 13 and 39 weeks ended September 27, 2022 and September 28, 2021 were as follows:

     Third Quarter Year to Date
     
    ($000's)               
      2022  2021  % change  2022  2021  % change
     
    Total revenue$993,298 $868,943  14.3% $3,005,390 $2,568,360  17.0% 
    Income from operations 75,288  61,698  22.0%  251,344  232,353  8.2% 
    Net income 62,328  52,606  18.5%  209,949  192,236  9.2% 
    Diluted earnings per share$0.93 $0.75  23.7% $3.08 $2.74  12.4% 

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

    • Comparable restaurant sales increased 8.2% at company restaurants and increased 6.7% at domestic franchise restaurants;
    • Average weekly sales at company restaurants were $129,278 of which 12.6% were to-go sales as compared to average weekly sales of $120,094 of which 15.1% were to-go sales in the prior year;
    • Restaurant margin, as a percentage of restaurant and other sales, decreased 26 basis points to 15.4%. Restaurant margin was negatively impacted by commodity inflation of 8.8% and wage and other labor inflation of 7.7% partially offset by the benefit of an increase in comparable restaurant sales. Restaurant margin dollars increased 12.5% to $152.0 million from $135.1 million in the prior year;
    • Diluted earnings per share increased 23.7% to $0.93 from $0.75 in the prior year as higher restaurant margin dollars were partially offset by higher income tax expense. Diluted earnings per share also benefitted from increased share repurchases;
    • Five company restaurants and two international franchise restaurants were opened; and,
    • The Company ended the quarter with $185.3 million of cash on hand and debt of $75.0 million.

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

    • Comparable restaurant sales increased 10.5% at company restaurants and increased 10.1% at domestic franchise restaurants;
    • Average weekly sales at company restaurants were $132,356 of which 13.5% were to-go sales as compared to average weekly sales of $120,271 of which 18.0% were to-go sales in the prior year;
    • Restaurant margin, as a percentage of restaurant and other sales, decreased 115 basis points to 16.1%. Restaurant margin was negatively impacted by commodity inflation of 12.4% partially offset by the benefit of an increase in comparable restaurant sales. Restaurant margin dollars increased 9.3% to $481.9 million from $440.9 million in the prior year;
    • Diluted earnings per share increased to $3.08 from $2.74 in the prior year as higher restaurant margin dollars were partially offset by higher general and administrative expenses. Diluted earnings per share also benefitted from increased share repurchases;
    • 13 company restaurants and five international franchise restaurants were opened; and,
    • The Company repurchased 2,734,005 shares of common stock for $212.9 million.

    Jerry Morgan, Chief Executive Officer of Texas Roadhouse, Inc. commented, “We are pleased to announce another profitable quarter as our operators continue to focus on providing a legendary guest experience in spite of higher costs in this inflationary environment. This focus, along with our value proposition, keeps us well positioned to continue to grow both our top and bottom lines.”

    Morgan continued, “As we transition into 2023, we are excited about the systemwide store growth we expect to see for all three brands. This store growth along with our planned franchise acquisitions and a disciplined approach to capital allocation reflects our commitment to driving shareholder value.”

    Franchise Acquisitions

    The Company has tentatively agreed to acquire eight domestic franchise restaurants with a targeted close date as of the beginning of our 2023 fiscal year.  These acquisitions are subject to the completion of customary negotiations and due diligence.

    2022 Outlook        

    Comparable restaurant sales at company restaurants for the first four weeks of the fourth quarter of fiscal 2022 increased 8.3% compared to the prior year.   In addition, the Company implemented a menu price increase of approximately 2.9% in late October.

    Management reiterated the following expectations for 2022:

    • Positive comparable restaurant sales growth including the benefit of menu pricing actions;
    • Store week growth of approximately 6% including the impact of the eight franchise locations acquired in 2022;
    • Wage and other labor inflation of approximately 8%;
    • An effective income tax rate of approximately 14% excluding the impact of any legislative changes enacted; and,
    • Total capital expenditures of approximately $230 million including three relocations.

    Management updated the following expectations for 2022:

    • As many as 23 Texas Roadhouse and Bubba's 33 company restaurant openings; and,
    • Commodity cost inflation of approximately 10.5%.

    2023 Outlook

    Management provided the following initial expectations for 2023:

    • Positive comparable restaurant sales growth including the benefit of 2022 menu pricing actions;
    • Approximately 30 Texas Roadhouse and Bubba’s 33 company restaurant openings;
    • Store week growth of approximately 5% excluding the impact of potential franchise acquisitions;
    • Commodity cost inflation of 5% to 6%;
    • Wage and other labor inflation of 5% to 6%;
    • An effective income tax rate of approximately 15% excluding the impact of any legislative changes enacted; and,
    • Total capital expenditures of approximately $265 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 restaurant-level operating efficiency and performance. In calculating restaurant margin, the Company excludes 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. The Company also 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 also 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, October 27, 2022, 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. Third Quarter 2022 Earnings. A replay of the call will be available until November 3, 2022, 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 680 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; 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 28, 2021. 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
     
    Condensed Consolidated Statements of Income
     
    (in thousands, except per share data)
     
    (unaudited)
     
                   
               
       13 Weeks Ended  39 Weeks Ended 
        September 27, 2022  September 28, 2021  September 27, 2022  September 28, 2021 
                   
    Revenue:            
     Restaurant and other sales$986,999 $862,757 $2,986,028 $2,550,124 
     Franchise royalties and fees 6,299  6,186  19,362  18,236 
                   
    Total revenue 993,298  868,943  3,005,390  2,568,360 
                   
    Costs and expenses:            
     Restaurant operating costs (excluding depreciation and amortization shown separately below):            
                   
      Food and beverage 342,032  298,164  1,026,469  845,150 
      Labor 330,219  286,593  985,132  832,776 
      Rent 16,703  15,089  49,785  44,497 
      Other operating 146,036  127,769  442,714  386,754 
     Pre-opening 5,701  6,740  15,315  17,327 
     Depreciation and amortization 33,735  31,627  101,775  94,146 
     Impairment and closure, net 772  29  537  550 
     General and administrative 42,812  41,234  132,319  114,807 
                   
    Total costs and expenses 918,010  807,245  2,754,046  2,336,007 
                   
    Income from operations 75,288  61,698  251,344  232,353 
                   
    Interest expense, net 85  604  877  3,039 
    Equity income from investments in unconsolidated affiliates 190  266  1,069  288 
                   
    Income before taxes 75,393  61,360  251,536  229,602 
    Income tax expense 11,430  7,144  35,708  31,031 
                   
    Net income including noncontrolling interests 63,963  54,216  215,828  198,571 
    Less: Net income attributable to noncontrolling interests 1,635  1,610  5,879  6,335 
    Net income attributable to Texas Roadhouse, Inc. and subsidiaries$62,328 $52,606 $209,949 $192,236 
                   
    Net income per common share attributable to Texas Roadhouse, Inc.            
    and subsidiaries:            
     Basic$0.93 $0.75 $3.09 $2.76 
     Diluted$0.93 $0.75 $3.08 $2.74 
                   
    Weighted average shares outstanding:            
     Basic 66,886  69,808  67,875  69,745 
     Diluted 67,159  70,146  68,140  70,148 
                   
    Cash dividends declared per share$0.46 $0.40 $1.38 $0.80 
                   


    Texas Roadhouse, Inc. and Subsidiaries
     
    Condensed Consolidated Balance Sheets
     
    (in thousands)
     
    (unaudited)
     
              
        September 27, 2022 December 28, 2021 
              
              
     Cash and cash equivalents $185,315  $335,645  
     Other current assets, net  92,063   227,880  
     Property and equipment, net  1,237,345   1,162,441  
     Operating lease right-of-use assets, net  626,551   578,413  
     Goodwill  148,732   127,001  
     Intangible assets, net  6,304   1,520  
     Other assets  68,741   79,052  
              
     Total assets $2,365,051  $2,511,952  
              
              
     Other current liabilities  515,693   602,144  
     Operating lease liabilities, net of current portion  672,774   622,892  
     Long-term debt  75,000   100,000  
     Other liabilities  108,951   113,432  
     Texas Roadhouse, Inc. and subsidiaries stockholders' equity  977,575   1,058,124  
     Noncontrolling interests  15,058   15,360  
              
     Total liabilities and equity $2,365,051  $2,511,952  
              


    Texas Roadhouse, Inc. and Subsidiaries  
    Condensed Consolidated Statements of Cash Flows  
    (in thousands)  
    (unaudited)  
              
              
        39 Weeks Ended  
        September 27, 2022  September 28, 2021  
              
              
    Cash flows from operating activities:       
    Net income including noncontrolling interests215,828 $198,571  
    Adjustments to reconcile net income to net cash provided by operating activities       
     Depreciation and amortization 101,775  94,146  
     Share-based compensation expense 28,192  30,797  
     Deferred income taxes 5,246  (435)  
     Other noncash adjustments, net 4,191  3,268  
    Change in working capital 39,825  22,362  
      Net cash provided by operating activities 395,057  348,709  
              
    Cash flows from investing activities:       
    Capital expenditures - property and equipment (174,194)  (139,001)  
    Acquisition of franchise restaurants, net of cash acquired (33,069)  -  
    Proceeds from sale of investment in unconsolidated affiliate 316  -  
    Proceeds from sale of property and equipment 2,262  -  
    Proceeds from sale leaseback transactions 9,078  5,588  
      Net cash used in investing activities (195,607)  (133,413)  
              
    Cash flows from financing activities:       
    Payments on revolving credit facility, net (25,000)  (50,000)  
    Repurchase of shares of common stock (212,859)  (14,683)  
    Dividends paid (93,328)  (55,849)  
    Other financing activities, net (18,593)  (21,356)  
      Net cash used in financing activities (349,780)  (141,888)  
              
      Net (decrease) increase in cash and cash equivalents (150,330)  73,408  
    Cash and cash equivalents - beginning of period 335,645  363,155  
    Cash and cash equivalents - end of period$185,315 $436,563  
              


    Texas Roadhouse, Inc. and Subsidiaries 
    Reconciliation of Income from Operations to Restaurant Margin 
    (in thousands) 
    (unaudited) 
              
      13 Weeks Ended 39 Weeks Ended 
      September 27, 2022September 28, 2021September 27, 2022September 28, 2021 
              
    Income from operations $75,288  $61,698  $251,344  $232,353  
              
    Less:         
    Franchise royalties and fees  6,299   6,186   19,362   18,236  
              
    Add:         
    Pre-opening  5,701   6,740   15,315   17,327  
    Depreciation and amortization  33,735   31,627   101,775   94,146  
    Impairment and closure, net  772   29   537   550  
    General and administrative  42,812   41,234   132,319   114,807  
              
    Restaurant margin $152,009  $135,142  $481,928  $440,947  
              
    Restaurant margin (as a percentage of restaurant and other sales)  15.4%  15.7%  16.1%  17.3% 
              


    Texas Roadhouse, Inc. and Subsidiaries 
    Supplemental Financial and Operating Information 
    ($ amounts in thousands, except weekly sales by group) 
    (unaudited) 
                   
       Third Quarter   Year to Date   
        2022  2021 Change 2022  2021 Change 
    Restaurant openings            
     Company - Texas Roadhouse 4  6 (2) 11  14 (3) 
     Company - Bubba's 33 1  1 0  2  4 (2) 
     Company - Jaggers 0  0 0  0  0 0  
     Franchise - Texas Roadhouse - U.S. 0  0 0  0  0 0  
     Franchise - Texas Roadhouse - International 2  0 2  5  2 3  
     Total 7  7 0  18  20 (2) 
                   
    Restaurant acquisitions/dispositions            
     Company - Texas Roadhouse 0  0 0  8  0 8  
     Franchise - Texas Roadhouse - U.S. 0  0 0  (8) 0 (8) 
                   
                   
    Restaurants open at the end of the quarter            
     Company - Texas Roadhouse 545  517 28        
     Company - Bubba's 33 38  35 3        
     Company - Jaggers 4  3 1        
     Franchise - Texas Roadhouse - U.S. 62  69 (7)       
     Franchise - Texas Roadhouse - International 36  30 6        
     Total 685  654 31        
                   
       Third Quarter   
        2022  2021 Change       
    Company restaurants (all concepts)            
     Restaurant and other sales$986,999 $862,757 14.4 %      
     Store weeks 7,600  7,164 6.1 %      
     Comparable restaurant sales (1) 8.2% 30.2%        
                   
     Restaurant operating costs (as a % of restaurant and other sales)            
     Food and beverage costs 34.7% 34.6%9 bps      
     Labor 33.5% 33.2%24 bps      
     Rent 1.7% 1.7%(6)bps      
     Other operating 14.8% 14.8%(1)bps      
     Total 84.6% 84.3%26 bps      
                   
      Restaurant margin 15.4% 15.7%(26)bps      
                   
      Restaurant margin ($ in thousands)$152,009 $135,142 12.5 %      
      Restaurant margin $/Store week$20,001 $18,865 6.0 %      
                   
     Texas Roadhouse restaurants only:            
      Store weeks 7,062  6,675 5.8 %      
      Comparable restaurant sales 8.2% 30.6%        
      Average unit volume (2)$1,705 $1,578 8.0 %      
      Weekly sales by group:        
      Comparable restaurants (511 and 485 units)$131,378 $121,633         
      Average unit volume restaurants (23 and 18 units)$125,421 $118,703         
      Restaurants less than 6 months old (11 and 14 units)$143,801 $128,001         
                   
     Bubba's 33 restaurants only:            
      Store weeks 486  449 8.2 %      
      Comparable restaurant sales 6.2% 25.6%        
      Average unit volume$1,395 $1,281 8.9 %      
      Weekly sales by group:        
      Comparable restaurants (31 and 28 units)$104,669 $99,768         
      Average unit volume restaurants (5 and 3 units)$123,760 $86,993         
      Restaurants less than 6 months old (2 and 4 units)$95,312 $140,011         
                   
    Franchise restaurants            
     Franchise royalties and fees$6,299 $6,186 1.8 %      
     Store weeks 1,256  1,287 (2.4)%      
     Comparable restaurant sales 7.6% 31.2%        
     U.S. franchise restaurants only:            
      Comparable restaurant sales 6.7% 33.5%        
      Average unit volume$1,786 $1,661 7.5 %      
                   
    (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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