Texas Roadhouse Inc.

25/07/2024 | Press release | Distributed by Public on 25/07/2024 20:06

Texas Roadhouse, Inc. Announces Second Quarter 2024 Results Form 8 K

Texas Roadhouse, Inc. Announces Second Quarter 2024 Results

LOUISVILLE, KY. (July 25, 2024) - Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 26 weeks ended June 25, 2024.

Financial Results

Financial results for the 13 and 26 weeks ended June 25, 2024 and June 27, 2023 were as follows:

13 Weeks Ended

26 Weeks Ended

($000's, except per share amounts)

June 25, 2024

June 27, 2023

% change

June 25, 2024

June 27, 2023

% change

Total revenue

$

1,341,202

$

1,171,203

14.5%

$

2,662,419

$

2,345,559

13.5

%

Income from operations

142,816

95,412

49.7%

275,944

196,357

40.5

%

Net income

120,141

82,271

46.0%

233,347

168,658

38.4

%

Diluted earnings per share

$

1.79

$

1.22

46.4%

$

3.48

$

2.51

38.7

%

Results for the 13 weeks ended June 25, 2024, as compared to the prior year as applicable, included the following:

● Comparable restaurant sales increased 9.3% at company restaurants and increased 8.3% at domestic franchise restaurants;
● Average weekly sales at company restaurants were $158,991 of which $19,975 were to-go sales as compared to average weekly sales of $146,727 of which $18,496 were to-go sales in the prior year;
● Restaurant margin dollars increased 32.7% to $242.6 million from $182.8 million in the prior year primarily due to higher sales. Restaurant margin, as a percentage of restaurant and other sales, increased to 18.2% from 15.7% in the prior year driven by higher sales. The benefit of a higher average guest check and improved labor productivity more than offset wage and other labor inflation of 4.4% and commodity inflation of 0.4%;
● Diluted earnings per share increased 46.4% primarily driven by higher restaurant margin dollars partially offset by higher general and administrative expenses and higher depreciation and amortization expenses;
● Six company restaurants and three franchise restaurants were opened; and
● Capital allocation spend included capital expenditures of $77.8 million, dividends of $40.7 million, and repurchases of common stock of $26.2 million.

Results for the 26 weeks ended June 25, 2024, as compared to the prior year as applicable, included the following:

● Comparable restaurant sales increased 8.9% at company restaurants and increased 8.0% at domestic franchise restaurants;
● Average weekly sales at company restaurants were $159,184 of which $20,392 were to-go sales as compared to average weekly sales of $147,579 of which $18,762 were to-go sales in the prior year;
● Restaurant margin dollars increased 27.8% to $471.1 million from $368.5 million in the prior year primarily due to higher sales. Restaurant margin, as a percentage of restaurant and other sales, increased to 17.8% from 15.8% in the prior year driven by higher sales. The benefit of a higher average guest check and improved labor productivity more than offset wage and other labor inflation of 4.4% and commodity inflation of 0.7%;
● Diluted earnings per share increased 38.7% primarily driven by higher restaurant margin dollars partially offset by higher general and administrative expenses and higher depreciation and amortization expenses;
● 15 company restaurants and six franchise restaurants were opened; and
● Capital allocation spend included capital expenditures of $155.5 million, dividends of $81.5 million, and repurchases of common stock of $35.1 million.

Jerry Morgan, Chief Executive Officer of Texas Roadhouse, Inc. commented, "We continued our momentum in the current quarter as strong traffic trends and some relief on commodity inflation led to increased profitability across all of our brands. With our operators delivering solid operating results, and a balanced development pipeline, we are well positioned for the second half of the year."

Morgan continued, "We continue to grow our brand globally and now have over 50 international franchise locations. In addition, we recently unveiled our first purpose statement of 'Serving Communities Across America…and the World'. We are confident that through our focus on this purpose and our commitment to providing legendary food and legendary service, we will continue to generate strong operating results that will enhance long-term shareholder value."

2024 Outlook

Comparable restaurant sales at company restaurants for the first four weeks of our third quarter of fiscal 2024 increased 8.0% compared to 2023.

Management updated the following expectations for 2024:

● Store week growth of approximately 7.5%, including a benefit of 2% from the 53rd week;
● Commodity cost inflation of approximately 2%;
● An effective income tax rate of approximately 14.5%; and
● Total capital expenditures of $360 million to $370 million.

Management reiterated the following expectations for 2024:

● Positive comparable restaurant sales growth including the benefit of menu pricing actions; and
● Wage and other labor inflation of 4% to 5%.

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, as a percentage of restaurant and other sales, and per store week). 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 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 expenses as they occur at irregular intervals and would impact comparability to prior period results. The Company excludes depreciation and amortization expenses, substantially all of which relate to restaurant-level assets, as they represent a non-cash charge for the investment in restaurants. The Company excludes impairment and closure expenses 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 25, 2024, 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 2024 Earnings. A replay of the call will be available until August 1, 2024, by dialing (800) 770-2030 or (609) 800-9909 for international calls and using conference ID 7714420.

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 760 restaurants system-wide in 49 states, one U.S. territory, 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 of 1933, as amended, 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, Inc. Actual results may vary materially from those contained in forward-looking statements based on a number of factors including, without limitation, conditions beyond management's 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 its 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 26, 2023. 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

Condensed Consolidated Statements of Income

(in thousands, except per share data)

(unaudited)

13 Weeks Ended

26 Weeks Ended

June 25, 2024

June 27, 2023

June 25, 2024

June 27, 2023

Revenue:

Restaurant and other sales

$

1,333,642

$

1,164,385

$

2,647,794

$

2,331,968

Franchise royalties and fees

7,560

6,818

14,625

13,591

Total revenue

1,341,202

1,171,203

2,662,419

2,345,559

Costs and expenses:

Restaurant operating costs (excluding depreciation and amortization shown separately below):

Food and beverage

436,001

401,204

881,092

811,915

Labor

438,212

391,337

865,759

777,156

Rent

19,956

17,996

39,381

35,824

Other operating

196,862

171,092

390,504

338,621

Pre-opening

6,202

5,671

14,297

11,048

Depreciation and amortization

42,915

37,413

84,408

73,640

Impairment and closure, net

90

78

291

133

General and administrative

58,148

51,000

110,743

100,865

Total costs and expenses

1,198,386

1,075,791

2,386,475

2,149,202

Income from operations

142,816

95,412

275,944

196,357

Interest income, net

1,683

996

3,091

2,234

Equity income from investments in unconsolidated affiliates

286

287

543

1,042

Income before taxes

144,785

96,695

279,578

199,633

Income tax expense

21,710

12,270

40,513

26,604

Net income including noncontrolling interests

123,075

84,425

239,065

173,029

Less: Net income attributable to noncontrolling interests

2,934

2,154

5,718

4,371

Net income attributable to Texas Roadhouse, Inc. and subsidiaries

$

120,141

$

82,271

$

233,347

$

168,658

Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:

Basic

$

1.80

$

1.23

$

3.49

$

2.52

Diluted

$

1.79

$

1.22

$

3.48

$

2.51

Weighted average shares outstanding:

Basic

66,785

66,974

66,814

66,995

Diluted

67,044

67,229

67,077

67,261

Cash dividends declared per share

$

0.61

$

0.55

$

1.22

$

1.10

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)

June 25, 2024

December 26, 2023

(unaudited)

Cash and cash equivalents

$

197,454

$

104,246

Other current assets, net

135,832

252,228

Property and equipment, net

1,523,393

1,474,722

Operating lease right-of-use assets, net

726,378

694,014

Goodwill

169,684

169,684

Intangible assets, net

2,374

3,483

Other assets

106,796

94,999

Total assets

$

2,861,911

$

2,793,376

Current liabilities

644,327

745,434

Operating lease liabilities, net of current portion

779,517

743,476

Other liabilities

160,377

146,955

Texas Roadhouse, Inc. and subsidiaries stockholders' equity

1,262,636

1,141,662

Noncontrolling interests

15,054

15,849

Total liabilities and equity

$

2,861,911

$

2,793,376

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

26 Weeks Ended

June 25, 2024

June 27, 2023

Cash flows from operating activities:

Net income including noncontrolling interests

$

239,065

$

173,029

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation and amortization

84,408

73,640

Share-based compensation expense

18,378

16,744

Deferred income taxes

(4,254)

1,767

Other noncash adjustments, net

1,662

2,831

Change in working capital, net of acquisitions

38,088

20,222

Net cash provided by operating activities

377,347

288,233

Cash flows from investing activities:

Capital expenditures - property and equipment

(155,478)

(154,580)

Acquisition of franchise restaurants, net of cash acquired

-

(39,153)

Proceeds from sale of investments in unconsolidated affiliates

-

632

Proceeds from sale of property and equipment

197

-

Proceeds from sale leaseback transactions

9,126

7,097

Net cash used in investing activities

(146,155)

(186,004)

Cash flows from financing activities:

Payments on revolving credit facility

-

(50,000)

Repurchase of shares of common stock

(35,139)

(33,058)

Dividends paid to shareholders

(81,509)

(73,698)

Other financing activities, net

(21,336)

(12,010)

Net cash used in financing activities

(137,984)

(168,766)

Net increase (decrease) in cash and cash equivalents

93,208

(66,537)

Cash and cash equivalents - beginning of period

104,246

173,861

Cash and cash equivalents - end of period

$

197,454

$

107,324

Texas Roadhouse, Inc. and Subsidiaries

Reconciliation of Income from Operations to Restaurant Margin

($ in thousands)

(unaudited)

13 Weeks Ended

26 Weeks Ended

June 25, 2024

June 27, 2023

June 25, 2024

June 27, 2023

Income from operations

$

142,816

$

95,412

$

275,944

$

196,357

Less:

Franchise royalties and fees

7,560

6,818

14,625

13,591

Add:

Pre-opening

6,202

5,671

14,297

11,048

Depreciation and amortization

42,915

37,413

84,408

73,640

Impairment and closure, net

90

78

291

133

General and administrative

58,148

51,000

110,743

100,865

Restaurant margin

$

242,611

$

182,756

$

471,058

$

368,452

Restaurant margin (as a percentage of restaurant and other sales)

18.2%

15.7%

17.8

%

15.8

%

Texas Roadhouse, Inc. and Subsidiaries

Supplemental Financial and Operating Information

($ amounts in thousands, except restaurant margin per

store week and weekly sales by group)

(unaudited)

13 Weeks Ended

June 25, 2024

June 27, 2023

Change

Company restaurants (all concepts)

Restaurant and other sales

$

1,333,642

$

1,164,385

14.5

%

Store weeks

8,408

7,960

5.6

%

Comparable restaurant sales (1)

9.3

%

9.1

%

Restaurant operating costs (as a % of restaurant and other sales)

Food and beverage costs

32.7

%

34.5

%

176

bps

Labor

32.8

%

33.6

%

76

bps

Rent

1.5

%

1.5

%

5

bps

Other operating

14.8

%

14.7

%

(7)

bps

Total

81.8

%

84.3

%

Restaurant margin %

18.2

%

15.7

%

250

bps

Restaurant margin $

$

242,611

$

182,756

32.8

%

Restaurant margin $/Store week

$

28,855

$

22,961

25.7

%

Texas Roadhouse restaurants only:

Store weeks

7,708

7,343

5.0

%

Comparable restaurant sales (1)

9.4

%

9.4

%

Average unit volume (2)

$

2,123

$

1,946

9.1

%

Weekly sales by group:

Comparable restaurants (553 and 533 units)

$

163,797

$

149,847

9.3

%

Average unit volume restaurants (20 and 20 units)

$

150,736

$

144,554

4.3

%

Restaurants less than 6 months old (21 and 13 units)

$

151,647

$

158,608

(4.4)

%

Bubba's 33 restaurants only:

Store weeks

596

526

13.3

%

Comparable restaurant sales (1)

5.5

%

3.9

%

Average unit volume (2)

$

1,580

$

1,514

4.4

%

Weekly sales by group:

Comparable restaurants (38 and 35 units)

$

122,868

$

117,906

4.2

%

Average unit volume restaurants (5 and 3 units)

$

111,244

$

99,324

12.0

%

Restaurants less than 6 months old (5 and 3 units)

$

142,429

$

123,594

15.2

%

Texas Roadhouse franchise restaurants only:

Store weeks

1,389

1,220

13.9

%

Comparable restaurant sales

6.6

%

10.8

%

U.S. franchise restaurants only:

Comparable restaurant sales (1)

8.3

%

9.2

%

Average unit volume (2)

$

2,268

2,129

6.5

%

(1) Comparable restaurant sales reflect the change insales for all company restaurants across all concepts, unless otherwise noted, over the same period of the prior year 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 sixmonths before the beginning of the period, excluding sales from restaurants permanently closed during the period, if applicable.

Amounts may not foot due to rounding.

Texas Roadhouse, Inc. and Subsidiaries

Restaurant Unit Activity

(unaudited)

13 Weeks Ended

26 Weeks Ended

June 25, 2024

June 27, 2023

Change

June 25, 2024

June 27, 2023

Change

Restaurant openings

Company - Texas Roadhouse

3

2

1

12

6

6

Company - Bubba's 33

3

1

2

3

1

2

Company - Jaggers

-

-

-

-

2

(2)

Total company restaurants

6

3

3

15

9

6

Franchise - Texas Roadhouse - Domestic

-

1

(1)

1

1

-

Franchise - Jaggers - Domestic

-

-

-

1

-

1

Franchise - Texas Roadhouse - Int'l (1)

3

2

1

4

3

1

Total franchise restaurants

3

3

-

6

4

2

Total restaurants

9

6

3

21

13

8

Restaurant acquisitions/dispositions

Company - Texas Roadhouse

-

-

-

-

8

(8)

Franchise - Texas Roadhouse - Domestic

-

-

-

-

(8)

8

Restaurant closures

Franchise - Texas Roadhouse - Domestic

-

(1)

1

-

(1)

1

Restaurants open at the end of the quarter

Company - Texas Roadhouse

594

566

28

Company - Bubba's 33

48

41

7

Company - Jaggers

8

7

1

Total company restaurants

650

614

36

Franchise - Texas Roadhouse - Domestic

56

54

2

Franchise - Jaggers - Domestic

3

-

3

Franchise - Texas Roadhouse - Int'l (1)

53

41

12

Total franchise restaurants

112

95

17

Total restaurants

762

709

53

(1) Includes Puerto Rico.