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Texas Roadhouse, Inc. Announces First Quarter 2018 Results

LOUISVILLE, Ky., April 30, 2018 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (Nasdaq:TXRH), today announced financial results for the 13 week period ended March 27, 2018. 

  First Quarter
($000's)  2018  2017 % Change
Total revenue $  627,705 $  567,686 10.6%
Income from operations  64,871  49,022 32.3%
Net income  54,541  34,313 59.0%
Diluted EPS $  0.76 $  0.48 57.9%

Results for the first quarter included the following highlights:  

  • Comparable restaurant sales increased 4.9% at company restaurants and 3.9% at domestic franchise restaurants;
  • Diluted earnings per share increased 57.9% to $0.76 from $0.48 in the prior year primarily due to lower general and administrative expenses and the benefit of a lower income tax rate.  General and administrative expenses included a pre-tax charge recorded in the prior year period of $14.9 million ($9.2 million after-tax), or $0.13 per diluted share, related to the settlement of a legal matter;
  • Restaurant margin dollars increased 6.3% to $119.4 million from $112.3 million in the prior year and restaurant margin, as a percentage of restaurant and other sales, decreased 75 basis points to 19.2%;
  • Our income tax rate decreased to 13.0% from 26.5% in the prior year period primarily due to the impact of new tax legislation; and
  • Seven company restaurants, including one Bubba’s 33 restaurant, and two international franchise restaurants were opened.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "We are pleased to report another solid quarter highlighted by double-digit revenue growth and comparable restaurant sales growth of 4.9%.  This sales growth was largely driven by traffic gains which have continued into the second quarter.  While restaurant margins remain challenged by ongoing labor inflation, our operators have remained focused on providing our guests with a legendary experience.  On the development front, our new restaurant pipeline is in good shape with 11 company restaurants and two international franchise restaurants, including our first in Mexico, open so far this year."

2018 Outlook

Comparable restaurant sales at company restaurants for the first four weeks of our second quarter of fiscal 2018 increased approximately 8.5% compared to the prior year period.

Management updated the following expectation for 2018:

  • Commodity cost inflation of approximately 1.0% compared to previous guidance of relatively flat food costs.

Management reiterated the following expectations for 2018:

  • Positive comparable restaurant sales growth;
  • Approximately 30 company restaurant openings, including up to seven Bubba’s 33 restaurants;
  • Mid-single digit growth in labor dollars per store week, excluding the impact of higher guest counts;
  • An income tax rate of 15.0% to 16.0%; and
  • Total capital expenditures of approximately $165.0 million to $175.0 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, April 30, 2018 at 5:00 p.m. Eastern Time to discuss these results.  The dial-in number is (800) 281-7973 or (323) 794-2093 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 4129643 as the pass code.  There will be a simultaneous Web cast conducted at

About the Company

Texas Roadhouse is a casual dining concept that first opened in 1993 and today has grown to over 560 restaurants system-wide in 49 states and eight foreign countries.  For more information, please visit the Company’s Web site at

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.


Investor Relations                                                                                          
Tonya Robinson
(502) 515-7269

Travis Doster
(502) 638-5457

Texas Roadhouse, Inc. and Subsidiaries 
Condensed Consolidated Statements of Income 
(in thousands, except per share data) 
   13 Weeks Ended  
   March 27, 2018 March 28, 2017  
 Restaurant and other sales$622,402   $563,320   
 Franchise royalties and fees 5,303    4,366   
Total revenue 627,705    567,686   
Costs and expenses:      
 Restaurant operating costs (excluding depreciation and amortization shown separately below):      
  Cost of sales 202,786    184,193   
  Labor 196,030    170,347   
  Rent 11,851    10,869   
  Other operating 92,378    85,660   
 Pre-opening 5,044    4,740   
 Depreciation and amortization 24,484    22,596   
 Impairment and closure 86    11   
 General and administrative 30,175    40,248   
Total costs and expenses 562,834    518,664   
Income from operations 64,871    49,022   
Interest expense, net 359    332   
Equity income from investments in      
 unconsolidated affiliates (324)   (320)  
Income before taxes 64,836    49,010   
Provision for income taxes 8,457    12,987   
Net income including noncontrolling interests 56,379    36,023   
Less: Net income attributable to noncontrolling interests 1,838    1,710   
Net income attributable to Texas Roadhouse, Inc. and subsidiaries$54,541   $34,313   
Net income per common share attributable to Texas Roadhouse, Inc.      
and subsidiaries:      
 Basic$0.76   $0.48   
 Diluted$0.76   $0.48   
Weighted average shares outstanding:      
 Basic 71,333    70,779   
 Diluted 71,805    71,334   
Cash dividends declared per share$0.25   $0.21   


Texas Roadhouse, Inc. and Subsidiaries 
Condensed Consolidated Balance Sheets 
(in thousands) 
    March 27, 2018 December 26, 2017  
 Cash and cash equivalents $197,829  $150,918   
 Other current assets, net  58,139   106,163   
 Property and equipment, net  922,891   912,147   
 Goodwill  121,040   121,040   
 Intangible assets, net  2,514   2,700   
 Other assets  40,729   37,655   
 Total assets $1,343,142  $1,330,623   
 Current maturities of long-term debt and obligation under capital lease  9   9   
 Other current liabilities  299,917   329,989   
 Long-term debt and obligation under capital lease, excluding current maturities 51,979   51,981   
 Other liabilities, net  104,372   97,253   
 Texas Roadhouse, Inc. and subsidiaries stockholders' equity  874,222   839,079   
 Noncontrolling interests  12,643   12,312   
 Total liabilities and equity $1,343,142  $1,330,623   


Texas Roadhouse, Inc. and Subsidiaries 
Condensed Consolidated Statements of Cash Flows 
(in thousands) 
    13 Weeks Ended 
    March 27, 2018 March 28, 2017 
Cash flows from operating activities:  
Net income including noncontrolling interests $56,379   $36,023  
Adjustments to reconcile net income to net cash provided by operating activities   
 Depreciation and amortization  24,484    22,596  
 Share-based compensation expense  7,475    6,218  
 Other noncash adjustments, net  4,661    (3,973) 
Change in working capital  13,808    33,473  
 Net cash provided by operating activities  106,807    94,337  
Cash flows from investing activities:      
Capital expenditures - property and equipment  (35,307)   (36,063) 
Acquisition of franchise restaurants, net of cash acquired  -    (16,528) 
 Net cash used in investing activities  (35,307)   (52,591) 
Cash flows from financing activities:      
Dividends paid  (14,945)   (13,418) 
Other financing activities, net  (9,644)   (3,760) 
 Net cash used in financing activities  (24,589)   (17,178) 
 Net increase in cash and cash equivalents  46,911    24,568  
Cash and cash equivalents - beginning of period  150,918    112,944  
Cash and cash equivalents - end of period $197,829   $137,512  


Texas Roadhouse, Inc. and Subsidiaries
Reconciliation of Income from Operations to Restaurant Margin
(in thousands)
  13 Weeks Ended 
  March 27, 2018 March 28, 2017 
Income from operations $64,871  $49,022  
Franchise royalties and fees  5,303   4,366  
Pre-opening  5,044   4,740  
Depreciation and amortization  24,484   22,596  
Impairment and closure  86   11  
General and administrative  30,175   40,248  
Restaurant margin $119,357  $112,251  
Restaurant margin (as a percentage of restaurant and other sales)  19.2%  19.9% 


Texas Roadhouse, Inc. and Subsidiaries 
Supplemental Financial and Operating Information 
($ amounts in thousands, except weekly sales by group) 
   First Quarter Change   
    2018  2017  vs LY   
Restaurant openings        
 Company - Texas Roadhouse 6  6  0    
 Company - Bubba's 33 1  0  1    
 Company - Other 0  0  0    
 Franchise - Texas Roadhouse - U.S. 0  1  (1)   
 Franchise - Texas Roadhouse - International 2  1  1    
 Total 9  8  1    
Restaurant acquisitions/dispositions        
 Company - Texas Roadhouse 0  4  (4)   
 Franchise - Texas Roadhouse 0  (4) 4    
 Total 0  0  0    
Restaurants open at the end of the quarter        
 Company - Texas Roadhouse 446  423  23    
 Company - Bubba's 33 21  16  5    
 Company - Other 2  2  0    
 Franchise - Texas Roadhouse - U.S. 70  70  0    
 Franchise - Texas Roadhouse - International 19  14  5    
 Total 558  525  33    
Company restaurants        
 Restaurant and other sales$622,402 $563,320  10.5%   
 Store weeks 6,048  5,681  6.5%   
 Comparable restaurant sales growth (1) 4.9% 3.1%    
 Texas Roadhouse restaurants only:        
  Comparable restaurant sales growth (1) 4.9% 3.2%    
  Average unit volume (2)$1,356 $1,299  4.4%   
  Weekly sales by group:      
  Comparable restaurants (407 units)$104,849       
  Average unit volume restaurants (21 units) (3)$93,684       
  Restaurants less than 6 months old (18 units)$106,627       
Restaurant operating costs (as a % of restaurant and other sales)        
Cost of sales 32.6% 32.7% (12) bps  
Labor 31.5% 30.2% 126 bps  
Rent  1.9% 1.9% (3) bps  
Other operating 14.8% 15.2% (36) bps  
Total 80.8% 80.1% 75 bps  
 Restaurant margin 19.2% 19.9% (75) bps  
 Restaurant margin ($ in thousands)$119,357 $112,251  6.3%   
 Restaurant margin $/Store week$19,735 $19,760  (0.1)%   
Franchise restaurants        
 Franchise royalties and fees$5,303 $4,366  21.5%   
 Store weeks 1,139  1,080  5.5%   
 Comparable restaurant sales growth (1) 1.8% 3.0%    
 U.S. franchise restaurants only:        
  Comparable restaurant sales growth (1) 3.9% 3.8%    
  Average unit volume (2)$1,398 $1,333  4.9%   
Pre-opening expense$5,044 $4,740  6.4%   
Depreciation and amortization $24,484 $22,596  8.4%   
 As a % of revenue 3.9% 4.0% (7) bps   
General and administrative expenses$30,175 $40,248  (25.0)%   
 As a % of revenue 4.8% 7.1% (227) 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 and up to 18 months before the beginning of the period measured.
Amounts may not foot due to rounding.

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