Exhibit 99.1
Texas Roadhouse, Inc. Announces Third Quarter 2006 Results
LOUISVILLE, Ky, (October 30, 2006) — Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 39 week periods ended September 26, 2006.
| | Third Quarter | | Year to Date | |
($000’s) | | 2006 | | 2005 | | % Change | | 2006 | | 2005 | | % Change | |
| | | | | | | | | | | | | |
Total revenue | | 148,454 | | 114,327 | | 30 | | 444,573 | | 341,151 | | 30 | |
Income from operations | | 14,241 | | 11,124 | | 28 | | 42,619 | | 37,585 | | 13 | |
Net income | | 9,150 | | 7,061 | | 30 | | 26,163 | | 24,009 | | 9 | |
Diluted EPS | | $ | 0.12 | | $ | 0.10 | | 20 | | $ | 0.34 | | $ | 0.33 | | 3 | |
| | | | | | | | | | | | | | | | | |
Highlights for the quarter:
· Comparable restaurant sales increased 2.3% at company restaurants and 1.8% at franchise restaurants; and
· Five company restaurants and three franchise restaurants opened.
Reported results for the quarter also included:
· A pre-tax credit of approximately $1.9 million ($1.2 million after tax or $0.02 per diluted share) to our insurance expense based on our most recent actuarial report relating to workers compensation and general liability insurance; and
· A pre-tax charge of approximately $1.5 million ($1.2 million after-tax or $0.02 per diluted share), relating to the expensing of stock options due to the adoption of Statement of Financial Accounting Standards No. 123 (Revised 2004), Share-Based Payment.
G.J. Hart, President and Chief Executive Officer of Texas Roadhouse, commented, “We are very pleased to see an increase in our comparable restaurant sales and believe moderating gas prices and interest rates may have given consumers an added level of confidence. As we transition through the fourth quarter and look to 2007, we’re still confident in our market position and excited about our development plan. In fact, our 2007 pipeline is very strong and we believe the sites we’ve selected will produce solid returns, consistent with previous Texas Roadhouse successes. As a result, we believe we are well positioned to achieve earnings growth of at least 20% in the coming fiscal year.”
Outlook for 2006
The Company reported that comparable restaurant sales for the first four weeks of the 13 week fourth fiscal quarter ending December 26, 2006 increased by approximately 3.9% over the comparable 2005 period. For the full year 2006, management currently estimates that it will achieve diluted earnings per share of $0.41 to $0.43, which is unchanged from the Company’s previous guidance. This forecast includes the impact of stock option expense and the franchise acquisitions which were completed earlier this year, but excludes any special non-cash charges or ongoing earnings impact related to the Company’s potential acquisition of franchise restaurants as described below.
Franchise Acquisitions
The Company has initiated the process to acquire two to six franchise restaurants within the next 90 days. These transactions are subject to the completion of customary negotiations and due diligence and the approval of our board of directors.
Outlook for 2007
The Company currently estimates that it will generate diluted earnings per share growth of at least 20% for 2007.
This estimate is based in part on the following assumptions:
· New restaurant openings of 28 to 30 company-owned and two to four franchised; and
· Comparable restaurant sales growth of 2% to 3%.
The 2007 earnings estimate presented above excludes any special non-cash charges or ongoing earnings impact related to the Company’s potential acquisition of franchise restaurants.
Conference Call
The Company is hosting a conference call today, October 30, 2006, at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (800) 765-0709. A replay of the call will be available until November 6, 2006. To access the replay, please dial (888) 203-1112, and use 5631334 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 242 restaurants system-wide in 43 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 for the full year 2006 and 2007, 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 during full year 2006 and beyond, the sales at these and our other company-owned and franchised restaurants, our ability to control other restaurant operating costs, our ability to complete the acquisition of franchise restaurants, our ability to integrate the franchise restaurants which we acquire, strength of consumer spending 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.
# # #
Contacts:
Investor Relations
Scott Colosi
502-515-7300
Media
Travis Doster
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 26,
2006 | | September 27,
2005 | | September 26,
2006 | | September 27,
2005 | |
Revenue: | | | | | | | | | |
Restaurant sales | | $ | 145,859 | | $ | 111,642 | | $ | 436,804 | | $ | 333,357 | |
Franchise royalties and fees | | 2,595 | | 2,685 | | 7,769 | | 7,794 | |
| | | | | | | | | |
Total revenue | | 148,454 | | 114,327 | | 444,573 | | 341,151 | |
| | | | | | | | | |
Costs and expenses: | | | | | | | | | |
Restaurant operating costs: | | | | | | | | | |
Cost of sales | | 51,243 | | 39,335 | | 153,335 | | 117,275 | |
Labor (1) | | 40,509 | | 30,715 | | 120,675 | | 90,431 | |
Rent | | 2,588 | | 2,099 | | 7,397 | | 6,225 | |
Other operating | | 23,481 | | 19,205 | | 70,374 | | 54,697 | |
Pre-opening | | 2,948 | | 2,306 | | 8,759 | | 5,265 | |
Depreciation and amortization | | 5,580 | | 3,818 | | 15,641 | | 10,541 | |
General and administrative (1)(2) | | 7,864 | | 5,725 | | 25,773 | | 19,132 | |
| | | | | | | | | |
Total costs and expenses | | 134,213 | | 103,203 | | 401,954 | | 303,566 | |
| | | | | | | | | |
Income from operations | | 14,241 | | 11,124 | | 42,619 | | 37,585 | |
| | | | | | | | | |
Interest expense, net | | 64 | | 93 | | 533 | | 162 | |
Minority interest | | 76 | | 181 | | 361 | | 402 | |
Equity (income) from investments in unconsolidated affiliates | | (47 | ) | (65 | ) | (182 | ) | (87 | ) |
| | | | | | | | | |
Income before taxes | | 14,148 | | 10,915 | | 41,907 | | 37,108 | |
Provision for income taxes | | 4,998 | | 3,854 | | 15,744 | | 13,099 | |
| | | | | | | | | |
Net income | | $ | 9,150 | | $ | 7,061 | | $ | 26,163 | | $ | 24,009 | |
| | | | | | | | | |
Net income per common share: | | | | | | | | | |
Basic | | $ | 0.12 | | $ | 0.10 | | $ | 0.35 | | $ | 0.35 | |
Diluted | | $ | 0.12 | | $ | 0.10 | | $ | 0.34 | | $ | 0.33 | |
| | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | |
Basic | | 74,052 | | 69,471 | | 73,774 | | 68,166 | |
Diluted | | 76,323 | | 73,833 | | 76,437 | | 72,538 | |
(1) We recorded expense of $1.5 million ($1.2 million, net of tax) and $5.0 million ($4.0 million, net of tax) for the 13 weeks and 39 weeks ended September 26, 2006, respectively, relating to the expensing of stock options in conjunction with the adoption of SFAS 123R. Of the $1.5 million for the 13 weeks ended September 26, 2006, we included $0.7 million in labor expense and $0.8 million in general and administrative expenses. Of the $5.0 million for the 39 weeks ended September 26, 2006, we included $2.4 million in labor expense and $2.6 million in general and administrative expenses.
(2) For the 39 weeks ended September 26, 2006, general and administrative expenses includes a charge of $0.8 million in conjunction with the application of EITF 04-1 relating to the acquisition of 11 franchise restaurants in the first quarter of 2006.
Texas Roadhouse, Inc.
Supplemental Financial and Operating Information
($ amounts in thousands)
(unaudited)
| | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | Third Quarter | | Change | | Year to Date | | Change | | |
| | 2006 | | 2005 | | vs LY | | 2006 | | 2005 | | vs LY | | |
| | | | | | | | | | | | | | |
Restaurant openings | | | | | | | | | | | | | | |
Company | | 5 | | 7 | | (2 | ) | 15 | | 13 | | 2 | | |
Franchise | | 3 | | 3 | | 0 | | 5 | | 8 | | (3 | ) | |
Total | | 8 | | 10 | | (2 | ) | 20 | | 21 | | (1 | ) | |
| | | | | | | | | | | | | | |
Restaurant acquisitions | | | | | | | | | | | | | | |
Company | | 0 | | 0 | | 0 | | 11 | | 0 | | 11 | | |
Franchise | | 0 | | 0 | | 0 | | (11 | ) | 0 | | (11 | ) | |
Total | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | |
| | | | | | | | | | | | | | |
Restaurants open at the end of the quarter | | | | | | | | | | | | | | |
Company | | 153 | | 120 | | 33 | | | | | | | | |
Franchise | | 88 | | 94 | | (6 | ) | | | | | | | |
Total | | 241 | | 214 | | 27 | | | | | | | | |
| | | | | | | | | | | | | | |
Company-owned restaurants | | | | | | | | | | | | | | |
Restaurant sales | | $ | 145,859 | | $ | 111,642 | | 30.6 | % | $ | 436,804 | | $ | 333,357 | | 31.0 | % | |
Store weeks | | 1,949 | | 1,522 | | 28.1 | % | 5,610 | | 4,390 | | 27.8 | % | |
Comparable restaurant sales growth (1) | | 2.3 | % | 3.8 | % | | | | | 3.4 | % | 6.0 | % | |
Average unit volume (2) | | $ | 963 | | $ | 950 | | 1.4 | % | $ | 3,023 | | $ | 2,953 | | 2.4 | % | |
| | | | | | | | | | | | | | |
Restaurant costs (as a % of restaurant sales) | | | | | | | | | | | | | | |
Cost of sales | | 35.1 | % | 35.2 | % | (10 | )bps | 35.1 | % | 35.2 | % | (8 | )bps | |
Labor | | 27.8 | % | 27.5 | % | 26 | bps | 27.6 | % | 27.1 | % | 50 | bps | |
Rent | | 1.8 | % | 1.9 | % | (11 | )bps | 1.7 | % | 1.9 | % | (17 | )bps | |
Other operating | | 16.1 | % | 17.2 | % | (110 | )bps | 16.1 | % | 16.4 | % | (30 | )bps | |
Total | | 80.8 | % | 81.8 | % | (105 | )bps | 80.5 | % | 80.6 | % | (5 | )bps | |
| | | | | | | | | | | | | | |
Franchise-owned restaurants | | | | | | | | | | | | | | |
Franchise royalties and fees | | $ | 2,595 | | $ | 2,685 | | (3.4 | )% | $ | 7,769 | | $ | 7,794 | | (0.3 | )% | |
Store weeks | | 1,122 | | 1,196 | | (6.2 | )% | 3,297 | | 3,476 | | (5.1 | )% | |
Comparable restaurant sales growth (1) | | 1.8 | % | 3.2 | % | | | | | 2.5 | % | 5.3 | % | |
Average unit volume (2) | | $ | 914 | | $ | 906 | | 0.9 | % | $ | 2,847 | | $ | 2,792 | | 2.0 | % | |
| | | | | | | | | | | | | | |
Pre-opening expense | | $ | 2,948 | | $ | 2,306 | | 27.8 | % | $ | 8,759 | | $ | 5,265 | | 66.4 | % | |
| | | | | | | | | | | | | | |
Depreciation and amortization | | $ | 5,580 | | $ | 3,818 | | 46.1 | % | $ | 15,641 | | $ | 10,541 | | 48.4 | % | |
As a % of revenue | | 3.8 | % | 3.3 | % | 42 | bps | 3.5 | % | 3.1 | % | 43 | bps | |
| | | | | | | | | | | | | | |
General and administrative expenses | | $ | 7,864 | | $ | 5,725 | | 37.4 | % | $ | 25,773 | | $ | 19,132 | | 34.7 | % | |
As a % of revenue | | 5.3 | % | 5.0 | % | 29 | bps | 5.8 | % | 5.6 | % | 19 | bps | |
| | | | | | | | | | | | | | |
Interest expense | | $ | 64 | | $ | 93 | | (31.2 | )% | $ | 533 | | $ | 162 | | NM | | |
Minority interest | | $ | 76 | | $ | 181 | | (58.0 | )% | $ | 361 | | $ | 402 | | (10.2 | )% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(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.
NM - not meaningful
Amounts may not foot due to rounding.
