-
Texas Roadhouse, Inc. Announces Second Quarter 2023 Results
Source: Nasdaq GlobeNewswire / 27 Jul 2023 16:03:11 America/New_York
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 Relations Media Michael Bailen Travis 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. 
