Texas Roadhouse, Inc. Announces Third Quarter 2019 Results

LOUISVILLE, Ky., Oct. 28, 2019 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. TXRH, today announced financial results for the 13 and 39 week periods ended September 24, 2019. 

Results for the third quarter included the following highlights:  

• Comparable restaurant sales increased 4.4% at company restaurants and 3.2% at domestic franchise restaurants;
• Restaurant margin, as a percentage of restaurant and other sales, increased 49 basis points to 16.7%, as lower cost of sales due to the benefit of a higher average check was partially offset by higher labor costs driven by wage rate and other inflation.  Restaurant margin dollars increased 12.7% to $108.0 million from $95.8 million in the prior year;
• Diluted earnings per share increased 29.1% to $0.52 from $0.40 in the prior year as higher restaurant margin dollars and a decrease in certain general and administrative expenses were partially offset by higher depreciation and amortization expense;
• Four company restaurants, including one Bubba's 33 restaurant, and two international franchise restaurants were opened; and
• The Company repurchased 358,381 shares of common stock for $18.9 million. 

Results for the year-to-date period included the following highlights:

• Comparable restaurant sales increased 4.8% at company restaurants and 4.0% at domestic franchise restaurants;
• Restaurant margin, as a percentage of restaurant and other sales, decreased 46 basis points to 17.4%, as higher labor costs driven by wage rate and other inflation was partially offset by lower cost of sales due to the benefit of a higher average check.  Restaurant margin dollars increased 6.9% to $351.3 million from $328.6 million in the prior year;
• Diluted earnings per share increased 3.9% to $1.85 from $1.78 in the prior year;
• 11 company restaurants, including one Bubba's 33 restaurant, and six, primarily international, franchise restaurants were opened; and
• The Company repurchased 2,455,058 shares of common stock for $131.0 million. 

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "We are pleased to deliver a solid quarter of results driven by improved restaurant margins and comparable restaurant sales growth of 4.4%.  Our operators continue to execute on our core strategy of getting guests in the door and providing a legendary experience."

Taylor continued, "On the development front, our restaurant pipeline is as strong as it has ever been.  In 2020 we are targeting at least 30 company restaurant openings and our franchise partners are targeting an additional eight restaurant openings.  As we head into 2020, we are excited about the growth opportunities and the strength of our business."

2019 Outlook

Comparable restaurant sales at company restaurants for the first four weeks of our fourth quarter of fiscal 2019 increased 5.3% compared to the prior year period.

Management updated the following expectations for 2019:

• Approximately 22 company restaurant openings, including as many as three Bubba's 33 restaurants;
• Commodity cost inflation of 1.5% to 2.0%;
• Growth in total labor dollars per store week of 6.0% to 7.0%; and
• Total capital expenditures of approximately $200 million.

Management reiterated the following expectations for 2019:

• Positive comparable restaurant sales growth; and
• An income tax rate of 14.0% to 15.0%.

2020 Outlook

Management provided the following initial expectations for 2020:

• Positive comparable restaurant sales growth;
• At least 30 company restaurant openings, including as many as eight Bubba's 33 restaurants;
• Store week growth of 3.5% to 4.5%, including the negative impact of lapping the 53^rd week from 2019;
• Commodity cost inflation of 1.0% to 2.0%;
• Mid-single digit growth in labor dollars per store week;
• An income tax rate of 14.0% to 15.0%; and
• Total capital expenditures of $190 million to $200 million.

Non-GAAP Measures

We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles ("GAAP").  Within our press release, we make reference to restaurant margin (in dollars and as a percentage of sales).  Restaurant margin represents restaurant and other sales less restaurant-level operating costs, including cost of sales, 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 restaurant-level operating efficiency and performance.  In calculating restaurant margin, we exclude 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.  We also exclude depreciation and amortization expense, substantially all of which relates to restaurant-level assets, as it represents a non-cash charge for the investment in our restaurants.  We also exclude impairment and closure expense as we believe 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 our industry.  A reconciliation of income from operations to restaurant margin is included in the accompanying financial tables.

Conference Call

Texas Roadhouse is hosting a conference call today, October 28, 2019 at 5:00 p.m. Eastern Time to discuss these results.  The dial-in number is (877) 699-0953 or (647) 689-5456 for international calls.  A replay of the call will be available for one week following the conference call.  To access the replay, please dial (800) 585-8367 or (416) 621-4642 for international calls, and use 5096392 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 has grown to over 600 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 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 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, the actual number of restaurants opening; 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 the franchise restaurants we acquire or other concepts we develop; 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, except as required by applicable law.

Contacts:

Investor Relations                                                                                          
Tonya Robinson
(502) 515-7269

Media
Travis Doster
(502) 638-5457