Texas Roadhouse, Inc. Announces Third Quarter 2021 Results

10/28/2021, 10:03 PM (Source: GlobeNewswire)

LOUISVILLE, Ky., Oct. 28, 2021 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 39 weeks ended September 28, 2021.

Financial Results

Financial results for the 13 and 39 weeks ended September 28, 2021, September 29, 2020, and September 24, 2019 were as follows:

 Third Quarter
($000's)      % change
 2021 2020 2019 vs. 2020 vs. 2019
Total revenue$868,943 $631,185 $650,489 37.7% 33.6%
Income from operations 61,698  34,976  44,884 76.4% 37.5%
Net income 52,606  29,230  36,531 80.0% 44.0%
Diluted earnings per share$0.75 $0.42 $0.52 79.3% 43.6%
          
          
 Year to Date
       % change
 2021 2020 2019 vs. 2020 vs. 2019
Total revenue$2,568,360 $1,760,134 $2,030,925 45.9% 26.5%
Income from operations 232,353  3,448  158,612 6638.8% 46.5%
Net income 192,236  11,706  131,766 1542.2% 45.9%
Diluted earnings per share$2.74 $0.17 $1.85 1535.1% 48.3%

Results for the third quarter included the following:

  • Comparable restaurant sales at company restaurants increased 30.2% and 22.3% compared to 2020 and 2019, respectively1. Comparable restaurant sales at domestic franchise restaurants increased 33.5% and 20.4% compared to 2020 and 2019, respectively;
  • Average weekly sales at company restaurants were $120,094 of which 15.1% were to-go sales;
  • Seven company restaurants, including one Bubba’s 33 were opened;
  • Restaurant margin, as a percentage of restaurant and other sales, increased 111 basis points to 15.7% compared to the prior year as the increase in comparable restaurant sales was partially offset by higher food and beverage costs. The higher costs were driven by commodity inflation of 13.9% primarily related to higher beef costs. Restaurant margin dollars increased to $135.1 million from $91.1 million in the prior year;
  • Diluted earnings per share increased to $0.75 from $0.42 in the prior year due to the increase in restaurant margin dollars partially offset by an increase in general and administrative expenses;
  • The Company resumed the repurchase of shares under the stock repurchase program, purchasing 161,034 shares of common stock for $14.7 million; and,
  • The Company ended the quarter with $436.6 million of cash on hand and continued to maintain debt of $190.0 million.

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

  • Comparable restaurant sales at company restaurants increased 39.5% and 17.3% compared to 2020 and 2019, respectively1. Comparable restaurant sales at domestic franchise restaurants increased 38.5% and 14.8% compared to 2020 and 2019, respectively;
  • Average weekly sales at company restaurants were $120,271 of which 18.0% were to-go sales;
  • 18 company restaurants, including four Bubba’s 33, and two franchise restaurants were opened;
  • Restaurant margin, as a percentage of restaurant and other sales, increased 690 basis points to 17.3% compared to the prior year as the increase in comparable restaurant sales was partially offset by higher food and beverage costs as well as the prior year impact of the pandemic. Restaurant margin dollars increased to $440.9 million from $181.6 million in the prior year; and,
  • Diluted earnings per share increased to $2.74 from $0.17 in the prior year due to the increase in restaurant margin dollars partially offset by an increase in general and administrative expenses and income tax expense.

Jerry Morgan, Chief Executive Officer of Texas Roadhouse, Inc. commented, “The demand for our brands has never been stronger, as our operators continue to provide a legendary experience to a historic number of guests. There is no doubt that our industry is being challenged in a number of ways including higher food costs, supply chain shortages, and a tight labor market. We are managing through these pressures and staying committed to our long-term fundamentals. I want to thank our entire team for their legendary dedication and commitment.”

Morgan continued, “Our strong cashflow continues to solidify our financial position and allowed us to resume the repurchase of common stock this quarter, continue our payment of quarterly dividends, open new restaurants, and grow our development pipeline. In addition, we signed the first franchise development agreement for our fast-casual Jaggers concept this quarter. We remain excited about our growth opportunities across all three of our brands.”

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 measured for comparison to 2020 and for restaurants open a full 30 months before the beginning of the period measured for comparison to 2019.

Franchise acquisitions

The Company has tentatively agreed to acquire seven franchise restaurants with a targeted close date as of the beginning of our 2022 fiscal year.  These acquisitions are subject to the completion of customary negotiations and due diligence.

2021 Outlook        

Comparable restaurant sales at company restaurants for the first four weeks of our fourth quarter of fiscal 2021 increased 22.6% and 23.6% compared to our 2020 and 2019 periods, respectively. In addition, the Company recently implemented a menu price increase of 4.2%.

Management updated the following expectations for 2021:

  • Commodity cost inflation of approximately 10%.

Management reiterated the following expectations for 2021:

  • 26 to 29 company restaurant openings across all concepts;
  • Store week growth of approximately 5.0%; and,
  • Total capital expenditures of approximately $200 million.

2022 Outlook

Management provided the following initial expectations for 2022:

  • Positive comparable restaurant sales growth including the benefit of 2021 menu pricing actions;
  • 25 to 30 Texas Roadhouse and Bubba’s 33 company restaurant openings;
  • Store week growth of 5% to 6%, excluding the impact of potential franchise acquisitions;
  • Commodity cost inflation in the high teens in the first half of 2022;
  • Wage and other inflation of approximately 6%;
  • An effective income tax rate of approximately 15% excluding the impact of any legislative changes enacted; and,
  • Total capital expenditures of approximately $230 million including as many as six relocations.

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 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, the Company excludes 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. The Company also 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 also 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, October 28, 2021 at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (844) 200-6205 or (929) 526-1599 for international calls.   A replay of the call will be available for one week following the conference call. To access the replay, please dial (866) 813-9403 or (929) 458-6194 for international calls, and use 963633 as the pass code. There will be a simultaneous Web cast conducted at www.texasroadhouse.com.

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 650 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. These statements include, but are not limited to, statements related to the potential impact of the COVID-19 pandemic, including reinstated dining room capacity restrictions or closures, and other non-historical statements. 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; 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 29, 2020. 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                                                                
Michael Bailen
(502) 515-7298

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 28, 2021 September 29, 2020 September 28, 2021 September 29, 2020 
             
Revenue:          
 Restaurant and other sales$862,757  $626,429 $2,550,124  $1,747,145 
 Franchise royalties and fees6,186  4,756 18,236  12,989 
             
Total revenue868,943  631,185 2,568,360  1,760,134 
             
Costs and expenses:          
 Restaurant operating costs (excluding depreciation and amortization shown separately below):          
           
  Food and beverage298,164  201,308 845,150  575,529 
  Labor286,593  217,275 832,776  652,976 
  Rent15,089  13,723 44,497  40,445 
  Other operating127,769  102,978 386,754  296,615 
 Pre-opening6,740  4,894 17,327  14,296 
 Depreciation and amortization31,627  29,364 94,146  87,434 
 Impairment and closure, net29  716 550  871 
 General and administrative41,234  25,951 114,807  88,520 
             
Total costs and expenses807,245  596,209 2,336,007  1,756,686 
             
Income from operations61,698  34,976 232,353  3,448 
             
Interest expense, net604  1,502 3,039  2,601 
Equity income (loss) from investments in unconsolidated affiliates266  1 288  (597) 
             
Income before taxes61,360  33,475 229,602  250 
Income tax expense (benefit)7,144  3,072 31,031  (13,999)
             
Net income including noncontrolling interests54,216  30,403 198,571  14,249 
Less: Net income attributable to noncontrolling interests1,610  1,173 6,335  2,543 
Net income attributable to Texas Roadhouse, Inc. and subsidiaries$52,606  $29,230 $192,236  $11,706 
             
Net income per common share attributable to Texas Roadhouse, Inc.          
  and subsidiaries:          
 Basic$0.75  $0.42 $2.76  $0.17 
 Diluted$0.75  $0.42 $2.74  $0.17 
             
Weighted average shares outstanding:          
 Basic69,808  69,446 69,745  69,410 
 Diluted70,146  69,898 70,148  69,830 
             
Cash dividends declared per share$0.40  $- $0.80  $0.36 


Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
     
  September 28, 2021 December 29, 2020
     
     
Cash and cash equivalents $436,563 $363,155
Other current assets, net 101,352 147,496
Property and equipment, net 1,139,661 1,088,623
Operating lease right-of-use assets, net 558,452 530,625
Goodwill 127,001 127,001
Intangible assets, net 1,701 2,271
Other assets 77,823 65,990
     
Total assets $2,442,553 $2,325,161
     
     
Current maturities of long-term debt - 50,000
Other current liabilities 443,854 456,318
Operating lease liabilities, net of current portion 603,964 572,171
Long-term debt, excluding current maturities 190,000 190,000
Other liabilities 124,128 113,621
Texas Roadhouse, Inc. and subsidiaries stockholders' equity 1,065,174 927,505
Noncontrolling interests 15,433 15,546
     
Total liabilities and equity $2,442,553 $2,325,161


Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
         
    39 Weeks Ended
    September 28, 2021 September 29, 2020 
         
         
Cash flows from operating activities:      
Net income including noncontrolling interests $198,571  $14,249 
Adjustments to reconcile net income to net cash provided by operating activities      
 Depreciation and amortization 94,146  87,434 
 Share-based compensation expense 30,797  22,070 
 Deferred income taxes (435) (15,572)
 Other noncash adjustments, net 3,268  3,717 
Change in working capital 22,362  34,137 
  Net cash provided by operating activities 348,709  146,035 
         
Cash flows from investing activities:      
Capital expenditures - property and equipment (139,001) (117,521)
Proceeds from sale of property and equipment -  32 
Proceeds from sale leaseback transactions 5,588  2,167 
  Net cash used in investing activities (133,413)  (115,322)
         
Cash flows from financing activities:      
(Payments on) proceeds from revolving credit facility, net (50,000) 240,000 
Repurchase of shares of common stock (14,683) (12,621)
Dividends paid (55,849) (24,989)
Other financing activities, net (21,356) (12,346)
  Net cash (used in) provided by financing activities (141,888) 190,044 
         
  Net increase in cash and cash equivalents 73,408  220,757 
Cash and cash equivalents - beginning of period 363,155  107,879 
Cash and cash equivalents - end of period $436,563  $328,636 


Texas Roadhouse, Inc. and Subsidiaries
Reconciliation of Income from Operations to Restaurant Margin
(in thousands)
(unaudited)
          
  13 Weeks Ended 
  September 28, 2021September 29, 2020September 24, 2019 
          
Income from operations $61,698  $34,976  $44,884 
          
Less:         
Franchise royalties and fees 6,186  4,756  5,259 
          
Add:         
Pre-opening 6,740  4,894  4,736 
Depreciation and amortization 31,627  29,364  28,347 
Impairment and closure, net 29  716  61 
General and administrative 41,234  25,951  35,225 
          
Restaurant margin $135,142  $91,145  $107,994 
          
Restaurant margin (as a percentage of restaurant and other sales) 15.7% 14.5% 16.7%
          
          
  39 Weeks Ended
  September 28, 2021September 29, 2020September 24, 2019 
          
Income from operations $232,353  $3,448  $158,612 
          
Less:         
Franchise royalties and fees 18,236  12,989  16,205 
          
Add:         
Pre-opening 17,327  14,296  12,801 
Depreciation and amortization 94,146  87,434  84,574 
Impairment and closure, net 550  871  394 
General and administrative 114,807  88,520  111,168 
          
Restaurant margin $440,947  $181,580  $351,344 
          
Restaurant margin (as a percentage of restaurant and other sales) 17.3% 10.4% 17.4%


Texas Roadhouse, Inc. and Subsidiaries 
Supplemental Financial and Operating Information 
($ amounts in thousands, except weekly sales by group) 
(unaudited) 
             
   Third QuarterChange Year to Date Change
    2021   2020 vs 2020 2021  2020  vs 2020
Restaurant openings          
 Company - Texas Roadhouse 6   4   2  14  10  4
 Company - Bubba's 33 1   1   0  4  3  1
 Company - Jaggers 0   0   0  0  0  0
 Franchise - Texas Roadhouse - U.S. 0   0   0  0  1  (1)
 Franchise - Texas Roadhouse - International 0   1   (1) 2  1  1
 Total 7   6   1  20  15  5
             
             
Restaurants open at the end of the quarter          
 Company - Texas Roadhouse 517   493   24       
 Company - Bubba's 33 35   31   4       
 Company - Jaggers 3   2   1       
 Franchise - Texas Roadhouse - U.S. 69   70   (1)      
 Franchise - Texas Roadhouse - International 30   27   3       
 Total 654   623   31       
             
   Third Quarter Change Change  
    2021   2020   2019  vs 2020 vs 2019  
             
Company restaurants          
 Restaurant and other sales$862,757  $626,429  $645,230  37.7 33.7  
 Store weeks 7,164   6,810   6,509  5.2 10.1  
 Comparable restaurant sales (1) 30.2%  (6.3)%  4.4      
 Texas Roadhouse restaurants only:          
  Comparable restaurant sales (1) 30.6%  (6.5)%  4.2      
  Average unit volume (2)$1,580  $1,211  $1,302  30.5 21.4  
  Weekly sales by group:       
      Comparable restaurants (485, 464, and 441 units respectively)$121,633  $93,659  $100,578       
      Average unit volume restaurants (3) (18, 19, and 23 units, respectively)$118,703  $80,556  $95,324       
      Restaurants less than 6 months old (14, 10, and 10 units, respectively)$128,001  $93,616  $107,347       
             
Restaurant operating costs (as a % of restaurant and other sales)         
Food and beverage costs 34.6%  32.1  31.8 242bps  276bps  
Labor 33.2%  34.7  33.8 (147)bps (62)bps 
Rent 1.7%  2.2  2.0 (44)bps (26)bps 
Other operating 14.8%  16.4  15.6 (163)bps (80)bps 
Total 84.3%  85.5  83.3 (111)bps 107bps  
             
 Restaurant margin 15.7%  14.5  16.7 111bps  (107)bps 
             
 Restaurant margin ($ in thousands)$135,142  $91,145  $107,994  48.3 25.1  
 Restaurant margin $/Store week$18,865  $13,384  $16,591  41.0 13.7  
             
Franchise restaurants          
 Franchise royalties and fees$6,186  $4,756  $5,259  30.1 17.6  
 Store weeks 1,287   1,259   1,220  2.2 5.5  
 Comparable restaurant sales (1) 31.2%  (11.2)%  2.4%      
 U.S. franchise restaurants only:          
  Comparable restaurant sales (1) 33.5%  (9.6)%  3.2%      
  Average unit volume (2)$1,638  $1,228  $1,350  33.3 21.3  
             
Pre-opening expense$6,740  $4,894  $4,736  37.7 42.3  
             
Depreciation and amortization$31,627  $29,364  $28,347  7.7 11.6  
 As a % of revenue 3.6%  4.7   4.4% (101)bps (72)bps 
             
General and administrative expenses$41,234  $25,951  $35,225  58.9 17.1  
 As a % of revenue 4.7%  4.1   5.4 63bps  (67)bps 
             
(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 measured, excluding sales from restaurants permanently 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 sales from restaurants permanently closed during the period. 
(3) Average unit volume restaurants include restaurants open a full six and up to 18 months before the beginning of the period measured. 
Amounts may not foot due to rounding.   
   

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