Exhibit 99.1
Texas Roadhouse, Inc. Announces Fourth Quarter 2016 Results
Increases Quarterly Dividend 10.5% to $0.21 per Share
LOUISVILLE, KY. (February 21, 2017) — Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 52 week periods ended December 27, 2016.
| | Fourth Quarter | | Year to Date | |
($000’s) | | 2016 | | 2015 | | % Change | | 2016 | | 2015 | | % Change | |
| | | | | | | | | | | | | |
Total revenue | | $ | 484,710 | | $ | 454,351 | | 7 | % | $ | 1,990,714 | | $ | 1,807,368 | | 10 | % |
Income from operations | | 30,839 | | 33,713 | | (9 | )% | 171,900 | | 144,565 | | 19 | % |
Net income | | 20,725 | | 22,982 | | (10 | )% | 115,598 | | 96,894 | | 19 | % |
Diluted EPS | | $ | 0.29 | | $ | 0.32 | | (10 | )% | $ | 1.63 | | $ | 1.37 | | 19 | % |
Results for the fourth quarter included the following highlights:
· Comparable restaurant sales growth of 1.2% at company restaurants, including a negative impact of approximately 0.5% related to the calendar shift of the Christmas holiday, and 2.0% at domestic franchise restaurants;
· Restaurant margin, as a percentage of restaurant sales, decreased 44 basis points to 17.1%. Wage rate inflation and higher costs associated with payroll taxes, insurance reserve adjustments and gift card fees more than offset the benefit of lower food costs;
· Restaurant margin dollars increased 4.0% to $82.4 million from $79.2 million in the prior year;
· Diluted earnings per share decreased 10.3% to $0.29 from $0.32 in the prior year primarily due to restaurant margin performance, higher general and administrative expenses and higher depreciation costs; and
· Nine company-owned restaurants were opened, including four Bubba’s 33 restaurants.
Results for the full year included the following highlights:
· Comparable restaurant sales growth of 3.5% at company restaurants and 3.3% at domestic franchise restaurants;
· Restaurant margin, as a percentage of restaurant sales, increased 134 basis points to 18.7%. The benefit of lower food costs more than offset the impact of higher wage rate inflation;
· Restaurant margin dollars increased 18.7% to $368.9 million from $310.8 million in the prior year;
· Diluted earnings per share increased 18.8% to $1.63 from $1.37 in the prior year. During fiscal 2016, we recorded a pre-tax charge of $7.3 million ($4.5 million after-tax) related to a legal settlement which had a $0.06 impact on diluted earnings per share and a 4.6% impact on diluted earnings per share growth;
· 30 company-owned restaurants were opened, including nine Bubba’s 33 restaurants; and
· We repurchased 114,700 shares of our common stock for $4.1 million.
Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, “We are pleased to deliver another strong year of results including a 19% increase in diluted earnings per share driven by double-digit revenue growth and restaurant margin expansion. We also delivered impressive comparable restaurant sales growth during 2016 with an increase of 3.5%, and we extended our streak of consecutive quarters of comparable restaurant sales growth to 28 with our fourth quarter increase. Lastly, our strong balance sheet and healthy cash flows allowed us to return $56.2 million of excess capital to shareholders through quarterly dividend payments and share repurchases during 2016.”
Taylor continued, “In 2017, we expect to open approximately 30 company restaurants and seven franchise restaurants this year, which is over 7% growth system-wide. Going forward, the strength of our brand continues to be our people and our operational focus on delivering legendary food and legendary service.”
Franchise Acquisition
Effective December 28, 2016, we acquired four franchise restaurants in Florida and Georgia for an aggregate purchase price of $16.8 million. The purchase price was paid in cash. Going forward, two of the restaurants will be wholly-owned, while two will be majority-owned. The acquisition did not have a net revenue or accretive impact in 2016 as it occurred on the first day of our 2017 fiscal year.
2017 Outlook
Comparable restaurant sales at company restaurants for the first 55 days of our first quarter of fiscal 2017 increased approximately 1.5% compared to the prior year period.
Management updated the following expectations for 2017:
· Approximately 30 company restaurant openings, including approximately six Bubba’s 33 restaurants;
· Food cost deflation of approximately 1.0% to 2.0% compared to previous guidance of low-single digit food cost deflation; and
· An income tax rate of 29.0% to 30.0% compared to previous guidance of 30.0% to 31.0%.
Management reiterated the following expectations for 2017:
· Positive comparable restaurant sales growth;
· Mid-single digit labor inflation; and
· Total capital expenditures of approximately $170.0 million, excluding any cash used for franchise acquisitions.
Cash Dividend Payment
On February 16, 2017, our Board of Directors authorized the payment of a quarterly cash dividend of $0.21 per share of common stock. This payment, which will be distributed on March 31, 2017 to shareholders of record at the close of business on March 15, 2017, represents a 10.5% increase from the cash dividend of $0.19 per share of common stock declared during each quarter of 2016. Since the inception of our dividend program in 2011, our cash dividend per share of common stock has increased an average of 17.5% per year.
Conference Call
We will host a conference call today, February 21, 2017 at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (800)949-2163 or (719)785-1748 for international calls. A replay of the call will be available for one week following the conference call. To access the replay, please dial (844)512-2921 or (412)317-6671 for international calls, and use 6581484 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 520 restaurants system-wide in 49 states and six foreign countries. For more information, please visit our 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 our management. 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 restaurant openings; the sales at these and our other company and franchise restaurants; changes in restaurant development or operating costs, such as food and labor; our ability to acquire franchise restaurants; our ability to integrate other concepts we develop or the franchise restaurants we acquire; our ability to continue to generate the necessary cash flows to fund our new restaurant growth, continue our share repurchase program and pay a quarterly cash dividend; strength of consumer spending; pending or future legal claims; breaches of security; conditions beyond our control such as weather, natural disasters, disease outbreaks, epidemics or pandemics impacting our customers or food supplies; food safety and food-borne illness concerns; acts of war or terrorism and other factors disclosed from time to time in our filings with the U.S. 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. We undertake no obligation to update any forward-looking statements.
# # #
Contacts:
Investor Relations
Tonya Robinson
(502)515-7269
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 | | 52 Weeks Ended | |
| | December 27,
2016 | | December 29,
2015 | | December 27,
2016 | | December 29,
2015 | |
| | | | | | | | | |
Revenue: | | | | | | | | | |
Restaurant sales | | $ | 480,730 | | $ | 450,529 | | $ | 1,974,261 | | $ | 1,791,446 | |
Franchise royalties and fees | | 3,980 | | 3,822 | | 16,453 | | 15,922 | |
| | | | | | | | | |
Total revenue | | 484,710 | | 454,351 | | 1,990,714 | | 1,807,368 | |
| | | | | | | | | |
Costs and expenses: | | | | | | | | | |
Restaurant operating costs (excluding depreciation and amortization shown separately below): | | | | | | | | | |
| | | | | | | | | |
Cost of sales | | 162,638 | | 159,301 | | 669,203 | | 644,001 | |
Labor | | 147,395 | | 131,517 | | 590,256 | | 524,203 | |
Rent | | 10,103 | | 9,741 | | 40,580 | | 37,183 | |
Other operating | | 78,208 | | 70,773 | | 305,290 | | 275,296 | |
Pre-opening | | 5,294 | | 4,640 | | 19,547 | | 19,116 | |
Depreciation and amortization | | 22,246 | | 18,700 | | 82,964 | | 69,694 | |
Impairment and closure | | 125 | | 974 | | 179 | | 974 | |
General and administrative | | 27,862 | | 24,992 | | 110,795 | | 92,336 | |
| | | | | | | | | |
Total costs and expenses | | 453,871 | | 420,638 | | 1,818,814 | | 1,662,803 | |
| | | | | | | | | |
Income from operations | | 30,839 | | 33,713 | | 171,900 | | 144,565 | |
| | | | | | | | | |
Interest expense, net | | 353 | | 479 | | 1,255 | | 1,959 | |
Equity income from investments in unconsolidated affiliates | | 280 | | 353 | | 1,111 | | 1,641 | |
| | | | | | | | | |
Income before taxes | | 30,766 | | 33,587 | | 171,756 | | 144,247 | |
Provision for income taxes | | 8,858 | | 9,567 | | 51,183 | | 42,986 | |
| | | | | | | | | |
Net income including noncontrolling interests | | $ | 21,908 | | $ | 24,020 | | $ | 120,573 | | $ | 101,261 | |
Less: Net income attributable to noncontrolling interests | | 1,183 | | 1,038 | | 4,975 | | 4,367 | |
Net income attributable to Texas Roadhouse, Inc. and subsidiaries | | $ | 20,725 | | $ | 22,982 | | $ | 115,598 | | $ | 96,894 | |
| | | | | | | | | |
Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries: | | | | | | | | | |
Basic | | $ | 0.29 | | $ | 0.33 | | $ | 1.64 | | $ | 1.38 | |
Diluted | | $ | 0.29 | | $ | 0.32 | | $ | 1.63 | | $ | 1.37 | |
| | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | |
Basic | | 70,569 | | 70,143 | | 70,396 | | 70,032 | |
Diluted | | 71,215 | | 70,865 | | 71,052 | | 70,747 | |
| | | | | | | | | |
Cash dividends declared per share | | $ | 0.19 | | $ | 0.17 | | $ | 0.76 | | $ | 0.68 | |
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
| | December 27, 2016 | | December 29, 2015 | |
| | | | | |
Cash and cash equivalents | | $ | 112,944 | | $ | 59,334 | |
Other current assets | | 87,315 | | 74,479 | |
Property and equipment, net | | 830,054 | | 751,288 | |
Goodwill | | 116,571 | | 116,571 | |
Intangible assets, net | | 3,622 | | 4,827 | |
Other assets | | 29,465 | | 26,207 | |
| | | | | |
Total assets | | $ | 1,179,971 | | $ | 1,032,706 | |
| | | | | |
Current maturities of long-term debt and obligation under capital lease | | 167 | | 144 | |
Other current liabilities | | 279,360 | | 256,498 | |
Long-term debt and obligation under capital lease, excluding current maturities | | 52,381 | | 25,550 | |
Other liabilities | | 89,821 | | 73,332 | |
Texas Roadhouse, Inc. and subsidiaries stockholders’ equity | | 750,226 | | 669,662 | |
Noncontrolling interests | | 8,016 | | 7,520 | |
| | | | | |
Total liabilities and equity | | $ | 1,179,971 | | $ | 1,032,706 | |
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| | 52 Weeks Ended | |
| | December 27, 2016 | | December 29, 2015 | |
| | | | | |
Cash flows from operating activities: | | | | | |
Net income including noncontrolling interests | | $ | 120,573 | | $ | 101,261 | |
Adjustments to reconcile net income to net cash provided by operating activities | | | | | |
Depreciation and amortization | | 82,964 | | 69,694 | |
Share-based compensation expense | | 26,067 | | 22,825 | |
Other noncash adjustments | | 12,075 | | 5,697 | |
Change in working capital | | 15,386 | | 28,464 | |
Net cash provided by operating activities | | 257,065 | | 227,941 | |
| | | | | |
Cash flows from investing activities: | | | | | |
Capital expenditures - property and equipment | | (164,738 | ) | (173,475 | ) |
Proceeds from sale of property and equipment, including insurance proceeds | | — | | 272 | |
Net cash used in investing activities | | (164,738 | ) | (173,203 | ) |
| | | | | |
Cash flows from financing activities: | | | | | |
Proceeds from (payments on) revolving credit facility, net | | 25,000 | | (25,000 | ) |
Repurchase shares of common stock | | (4,110 | ) | (11,397 | ) |
Dividends paid | | (52,054 | ) | (46,176 | ) |
Other financing activities | | (7,553 | ) | 1,047 | |
Net cash used in financing activities | | (38,717 | ) | (81,526 | ) |
| | | | | |
Net increase (decrease) in cash and cash equivalents | | 53,610 | | (26,788 | ) |
Cash and cash equivalents - beginning of period | | 59,334 | | 86,122 | |
Cash and cash equivalents - end of period | | $ | 112,944 | | $ | 59,334 | |
Texas Roadhouse, Inc. and Subsidiaries
Supplemental Financial and Operating Information
($ amounts in thousands, except weekly sales by group)
(unaudited)
| | Fourth Quarter | | Change | | Year to Date | | Change | |
| | 2016 | | 2015 | | vs LY | | 2016 | | 2015 | | vs LY | |
| | | | | | | | | | | | | |
Restaurant openings | | | | | | | | | | | | | |
Company - Texas Roadhouse | | 5 | | 7 | | (2 | ) | 21 | | 24 | | (3 | ) |
Company - Bubba’s 33 | | 4 | | 0 | | 4 | | 9 | | 4 | | 5 | |
Company - Other | | 0 | | 0 | | 0 | | 0 | | 1 | | (1 | ) |
Franchise - Texas Roadhouse - U.S. | | 0 | | 0 | | 0 | | 1 | | 2 | | (1 | ) |
Franchise - Texas Roadhouse - International | | 1 | | 1 | | 0 | | 3 | | 1 | | 2 | |
Total | | 10 | | 8 | | 2 | | 34 | | 32 | | 2 | |
| | | | | | | | | | | | | |
Restaurants open at the end of the quarter | | | | | | | | | | | | | |
Company - Texas Roadhouse | | 413 | | 392 | | 21 | | | | | | | |
Company - Bubba’s 33 | | 16 | | 7 | | 9 | | | | | | | |
Company - Other | | 2 | | 2 | | 0 | | | | | | | |
Franchise - Texas Roadhouse - U.S. | | 73 | | 72 | | 1 | | | | | | | |
Franchise - Texas Roadhouse - International | | 13 | | 10 | | 3 | | | | | | | |
Total | | 517 | | 483 | | 34 | | | | | | | |
| | | | | | | | | | | | | |
Company-owned restaurants | | | | | | | | | | | | | |
Restaurant sales | | $ | 480,730 | | $ | 450,529 | | 6.7 | % | $ | 1,974,261 | | $ | 1,791,446 | | 10.2 | % |
Store weeks | | 5,544 | | 5,186 | | 6.9 | % | 21,583 | | 20,020 | | 7.8 | % |
Comparable restaurant sales growth (1) | | 1.2 | % | 4.5 | % | | | 3.5 | % | 7.2 | % | | |
Texas Roadhouse restaurants only: | | | | | | | | | | | | | |
Comparable restaurant sales growth (1) | | 1.3 | % | 4.5 | % | | | 3.6 | % | 7.2 | % | | |
Average unit volume (2) | | $ | 1,133 | | $ | 1,130 | | 0.3 | % | $ | 4,802 | | $ | 4,664 | | 3.0 | % |
Weekly sales by group: | | | | | | | | | | | | | |
Comparable restaurants (370 units) | | $ | 88,003 | | | | | | | | | | | |
Average unit volume restaurants (27 units) (3) | | $ | 75,330 | | | | | | | | | | | |
Restaurants less than 6 months old (16 units) | | $ | 88,912 | | | | | | | | | | | |
| | | | | | | | | | | | | |
Restaurant operating costs (as a % of restaurant sales) | | | | | | | | | | | | | |
Cost of sales | | 33.8 | % | 35.4 | % | (153 | )bps | 33.9 | % | 35.9 | % | (205 | )bps |
Labor | | 30.7 | % | 29.2 | % | 147 | bps | 29.9 | % | 29.3 | % | 64 | bps |
Rent | | 2.1 | % | 2.2 | % | (6 | )bps | 2.1 | % | 2.1 | % | (2 | )bps |
Other operating | | 16.3 | % | 15.7 | % | 56 | bps | 15.5 | % | 15.4 | % | 10 | bps |
Total | | 82.9 | % | 82.4 | % | 44 | bps | 81.3 | % | 82.7 | % | (134 | )bps |
| | | | | | | | | | | | | |
Restaurant margin (4) | | 17.1 | % | 17.6 | % | (44 | )bps | 18.7 | % | 17.3 | % | 134 | bps |
| | | | | | | | | | | | | |
Restaurant margin $ ($ in thousands) (4) | | $ | 82,387 | | $ | 79,196 | | 4.0 | % | $ | 368,933 | | $ | 310,762 | | 18.7 | % |
Restaurant margin $ (4)/Store week | | $ | 14,862 | | $ | 15,272 | | (2.7 | )% | $ | 17,094 | | $ | 15,523 | | 10.1 | % |
| | | | | | | | | | | | | |
Franchise-owned restaurants | | | | | | | | | | | | | |
Franchise royalties and fees | | $ | 3,980 | | $ | 3,822 | | 4.1 | % | $ | 16,453 | | $ | 15,922 | | 3.3 | % |
Store weeks | | 1,108 | | 1,062 | | 4.3 | % | 4,360 | | 4,174 | | 4.5 | % |
Comparable restaurant sales growth (1) | | 0.8 | % | 4.0 | % | | | 2.0 | % | 6.5 | % | | |
U.S. franchise restaurants only: | | | | | | | | | | | | | |
Comparable restaurant sales growth (1) | | 2.0 | % | 4.4 | % | | | 3.3 | % | 7.1 | % | | |
Average unit volume (2) | | $ | 1,181 | | $ | 1,164 | | 1.4 | % | $ | 4,929 | | $ | 4,799 | | 2.7 | % |
| | | | | | | | | | | | | |
Pre-opening expense | | $ | 5,294 | | $ | 4,640 | | 14.1 | % | $ | 19,547 | | $ | 19,116 | | 2.3 | % |
| | | | | | | | | | | | | |
Depreciation and amortization | | $ | 22,246 | | $ | 18,700 | | 19.0 | % | $ | 82,964 | | $ | 69,694 | | 19.0 | % |
As a % of revenue | | 4.6 | % | 4.1 | % | 47 | bps | 4.2 | % | 3.9 | % | 31 | bps |
| | | | | | | | | | | | | |
General and administrative expenses | | $ | 27,862 | | $ | 24,992 | | 11.5 | % | $ | 110,795 | | $ | 92,336 | | 20.0 | % |
As a % of revenue | | 5.7 | % | 5.5 | % | 25 | bps | 5.6 | % | 5.1 | % | 46 | bps |
(1) Comparable restaurant sales growth reflects the change in year-over-year sales for restaurants open a full 18 months before the beginning of the period measured, excluding sales from restaurants closed during the period.
(2) Average unit volume includes sales from Texas Roadhouse restaurants open for a full six months before the beginning of the period measured, excluding any sales at restaurants closed during the period.
(3) Average unit volume restaurants include restaurants open a full six to 18 months before the beginning of the period measured.
(4) Restaurant margin (in dollars and as a percentage of restaurant sales) represents restaurant sales less restaurant operating costs, including cost of sales, labor, rent and other operating costs. Depreciation and amortization expense, substantially all of which relates to restaurant-level assets, is excluded from restaurant operating costs. Restaurant margin is widely regarded in the restaurant industry as a useful metric by which to evaluate restaurant-level operating efficiency and performance. Restaurant margin is not a measurement determined in accordance with GAAP and should not be considered in isolation, or as an alternative, to income from operations or other similarly titled measures of other companies.
Amounts may not foot due to rounding.
