Texas Roadhouse Inc TXRH

LOUISVILLE, Ky., Feb. 18, 2021 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 52 week periods ended December 29, 2020 and provided a business update in response to the continued COVID-19 pandemic.

		Fourth Quarter									Year to Date
($000's)			2020			2019		% Change				2020			2019		% Change
Total revenue		$	637,989		$	725,238		(12.0	%)		$	2,398,123		$	2,756,163		(13.0	%)
Income from operations			20,396			53,411		(61.8	%)			23,844			212,023		(88.8	%)
Net income			19,549			42,686		(54.2	%)			31,255			174,452		(82.1	%)
Diluted earnings per share		$	0.28		$	0.61		(54.3	%)		$	0.45		$	2.46		(81.8	%)

Note: Fourth quarter and full year 2020 results include 13 and 52 weeks, respectively, compared to 14 and 53 weeks in the fourth quarter and full year of 2019, respectively.

Results for the fourth quarter included the following:

• Total revenue was negatively impacted by lapping the $59.5 million benefit of the 14^th week in 2019, which represented 7.9% of the decrease in total revenue for the quarter. Diluted earnings per share in the prior year quarter benefitted by $0.10 to $0.11 as a result of the 14^th week;
• For the October, November, and December periods, comparable restaurant sales at domestic company restaurants increased 0.8%, decreased 6.3%, and decreased 18.2%, respectively. Sales during the period were negatively impacted by dining room closures and capacity restrictions throughout the country. For the quarter, comparable restaurant sales decreased 8.9% at domestic company restaurants and decreased 11.2% at domestic franchise restaurants;
• Nine company restaurants, including one Jaggers restaurant, our fast-casual concept, were opened and two franchise restaurants were opened;
• Restaurant margin, as a percentage of restaurant and other sales, was 13.3% and restaurant margin dollars were $84.1 million. Restaurant margin was impacted by a decrease in comparable restaurant sales and higher costs related to the pandemic.   These costs included $0.5 million of costs incurred for relief pay and enhanced benefits for hourly restaurant employees, net of employee retention payroll tax credits of $2.5 million; and,
• The Company ended the quarter with debt of $240.0 million and $363.2 million of cash on hand.
  

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

• Comparable restaurant sales decreased 14.2% at domestic company restaurants and 15.5% at domestic franchise restaurants;
• 22 company restaurants, including three Bubba’s 33 restaurants and one Jaggers restaurant, were opened and four franchise restaurants were opened. One company restaurant and two international franchise restaurants were closed;
• Restaurant margin, as a percentage of restaurant and other sales, was 11.2% and restaurant margin dollars were $265.6 million. Restaurant margin was impacted by a decrease in comparable restaurant sales and higher costs related to the pandemic. These costs included $13.2 million of costs incurred for relief pay and enhanced benefits for hourly restaurant employees, net of employee retention payroll tax credits of $7.0 million; and,
• The Company repurchased 252,409 shares of common stock for $12.6 million, the last of which occurred on March 17th. No proceeds from the revolving credit facility were utilized to repurchase shares.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, “This past year has been without question the most challenging I’ve ever experienced in the restaurant business.   Despite these challenges, our operators quickly adapted and found ways to continue to serve our guests, many times in ways they never had before. This sustained our cashflows at a level that allowed us to continue to grow by opening 22 restaurants during the year. While we expect continued headwinds in the first half of 2021, we remain well-positioned for future growth.”

Business Update

For the quarter, the Company continued to operate under various capacity restrictions in the dining rooms along with enhanced To-Go, which included a curbside and/or drive-up operating model, as permitted by local guidelines. Comparable restaurant sales during the fourth quarter were impacted by dining room closures at a number of company restaurants. At the beginning of the quarter, nearly all company restaurants had their dining rooms open under various limited capacity restrictions. At the end of the quarter, 82% of company restaurants had their dining rooms open. By period, the comparable restaurant sales, average weekly sales, and To-Go sales for all company restaurants were as follows:

		October				November				December				Q4 2020
All restaurants
Comparable restaurant sales			0.8	%			(6.3	%)			(18.2	%)			(8.9	%)
Average weekly sales		$	98,797			$	93,946			$	84,184			$	91,644
To-Go sales as a % of average weekly sales			20.0	%			22.4	%			26.5	%			23.1	%
Number of restaurants - end of period			528				533				537				537
Limited capacity restaurants (1)
Comparable restaurant sales			1.1	%			(3.4	%)			(9.1	%)			(4.0	%)
Average weekly sales		$	99,139			$	96,841			$	93,894			$	96,568
To-Go sales as a % of average weekly sales			19.9	%			21.1	%			21.4	%			20.8	%
Number of restaurants - end of period			519				452				440				440
(1) Includes the full weekly sales for all restaurants with dining rooms re-opened at limited capacity as of the end of a week and excludes those restaurants that were operating as To-Go or outdoor dining only.

For the fourth quarter, the Company’s cash on hand position increased approximately $34.5 million due to operating cashflows and working capital inflows, partially offset by cash used for capital expenditures. In addition, the Company acquired two franchise locations for a total purchase price of $10.6 million. As of the end of the year, the Company had opened 22 company restaurants across all concepts and an additional ten company restaurants were under construction.
  
For the January period and the first seven weeks of the first quarter of fiscal 2021, the comparable restaurant sales, average weekly sales, and To-Go sales for all company restaurants were as follows:

							First 7 weeks
		January					Q1 2021
All restaurants
Comparable restaurant sales			(0.3	%)				(2.0	%)
Average weekly sales		$	105,595				$	105,505
To-Go sales as a % of average weekly sales			25.9	%				24.8	%
Number of restaurants - end of period			537					538
Limited capacity restaurants (1)
Comparable restaurant sales			3.8	%				0.3	%
Average weekly sales		$	110,587				$	108,374
To-Go sales as a % of average weekly sales			23.7	%				23.4	%
Number of restaurants - end of period			504					530
(1) Includes the full weekly sales for all restaurants with dining rooms re-opened at limited capacity as of the end of a week and excludes those restaurants that were operating as To-Go or outdoor dining only.

2021 Outlook

As previously announced, due to the uncertainty surrounding the pandemic, the Company had not yet provided a financial outlook for the fiscal year ending December 28, 2021. However, based on improved cashflow and stabilizing operations at company restaurants, the Company is providing the following expectations for 2021:

• 25 to 30 company restaurant openings across all concepts;
• Store week growth of 4.0% to 5.0%;
• Commodity cost inflation of approximately 3.0%; and
• Total capital expenditures of $210 million to $220 million.

To the extent that state and local guidelines begin to significantly reduce capacity and/or re-close dining rooms, the Company could pull back on development and reduce capital spend accordingly.

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 is hosting a conference call today, February 18, 2021 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 6659886 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 630 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/Coronavirus outbreak 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 31, 2019 and in the Current Report on Form 8-K filed on February 18, 2021. 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 and 14 Weeks Ended					52 and 53 Weeks Ended
			December 29, 2020			December 31, 2019		December 29, 2020			December 31, 2019
Revenue:
	Restaurant and other sales		$ 633,032			$ 719,457		$ 2,380,177			$ 2,734,177
	Franchise royalties and fees		4,957			5,781		17,946			21,986
Total revenue			637,989			725,238		2,398,123			2,756,163
Costs and expenses:
	Restaurant operating costs (excluding depreciation and amortization shown separately below):
		Food and beverage	205,117			233,221		780,646			883,357
		Labor	222,788			237,902		875,764			905,614
		Rent	13,956			13,358		54,401			52,531
		Other operating	107,111			112,093		403,726			418,448
	Pre-opening		5,803			7,355		20,099			20,156
	Depreciation and amortization		30,443			30,970		117,877			115,544
	Impairment and closure, net		1,392			(1,293)		2,263			(899)
	General and administrative		30,983			38,221		119,503			149,389
Total costs and expenses			617,593			671,827		2,374,279			2,544,140
Income from operations			20,396			53,411		23,844			212,023
Interest expense (income), net			1,490			12		4,091			(1,514)
Equity income (loss) from investments in
	unconsolidated affiliates		97			278		(500)			378
Income before taxes			19,003			53,677		19,253			213,915
Income tax (benefit) expense			(1,673)			9,066		(15,672)			32,397
Net income including noncontrolling interests			20,676			44,611		34,925			181,518
Less: Net income attributable to noncontrolling interests			1,127			1,925		3,670			7,066
Net income attributable to Texas Roadhouse, Inc. and subsidiaries			$ 19,549			$ 42,686		$ 31,255			$ 174,452
Net income per common share attributable to Texas Roadhouse, Inc.
and subsidiaries:
	Basic		$ 0.28			$ 0.61		$ 0.45			$ 2.47
	Diluted		$ 0.28			$ 0.61		$ 0.45			$ 2.46
Weighted average shares outstanding:
	Basic		69,525			69,431		69,438			70,509
	Diluted		70,052			69,888		69,893			70,916
Cash dividends declared per share			$ -			$ 0.30		$ 0.36			$ 1.20

Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
				December 29, 2020			December 31, 2019
	Cash and cash equivalents			$ 363,155			$ 107,879
	Other current assets, net			147,496			140,020
	Property and equipment, net			1,088,623			1,056,563
	Operating lease right-of-use assets, net			530,625			499,801
	Goodwill			127,001			124,748
	Intangible assets, net			2,271			1,234
	Other assets			65,990			53,320
	Total assets			$ 2,325,161			$ 1,983,565
	Current maturities of long-term debt			50,000			-
	Other current liabilities			456,318			417,220
	Operating lease liabilities, net of current portion			572,171			538,710
	Long-term debt, excluding current maturities			190,000			-
	Other liabilities			113,621			96,466
	Texas Roadhouse, Inc. and subsidiaries stockholders' equity			927,505			915,994
	Noncontrolling interests			15,546			15,175
	Total liabilities and equity			$ 2,325,161			$ 1,983,565

Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
				52 and 53 Weeks Ended
				December 29, 2020			December 31, 2019
Cash flows from operating activities:
Net income including noncontrolling interests				$ 34,925			$ 181,518
Adjustments to reconcile net income to net cash provided by operating activities
	Depreciation and amortization			117,877			115,544
	Share-based compensation expense			29,431			35,500
	Deferred income taxes			(19,932)			6,335
	Other noncash adjustments, net			6,262			6,039
Change in working capital				61,875			29,362
		Net cash provided by operating activities		230,438			374,298
Cash flows from investing activities:
Capital expenditures - property and equipment				(154,401)			(214,340)
Acquisition of franchise restaurants, net of cash acquired				(10,580)			(1,536)
Proceeds from sale of property and equipment				1,709			1,056
Proceeds from sale leaseback transaction				2,167			-
		Net cash used in investing activities		(161,105)			(214,820)
Cash flows from financing activities:
Proceeds from revolving credit facility				240,000			-
Repurchase of shares of common stock				(12,621)			(139,849)
Dividends paid				(24,989)			(102,366)
Other financing activities, net				(16,447)			(19,509)
		Net cash provided by (used in) financing activities		185,943			(261,724)
		Net increase (decrease) in cash and cash equivalents		255,276			(102,246)
Cash and cash equivalents - beginning of period				107,879			210,125
Cash and cash equivalents - end of period				$ 363,155			$ 107,879

Texas Roadhouse, Inc. and Subsidiaries
Reconciliation of Income from Operations to Restaurant Margin
(in thousands)
(unaudited)
		13 and 14 Weeks Ended								52 and 53 Weeks Ended
		December 29, 2020				December 31, 2019				December 29, 2020				December 31, 2019
Income from operations		$	20,396			$	53,411			$	23,844			$	212,023
Less:
Franchise royalties and fees			4,957				5,781				17,946				21,986
Add:
Pre-opening			5,803				7,355				20,099				20,156
Depreciation and amortization			30,443				30,970				117,877				115,544
Impairment and closure, net			1,392				(1,293	)			2,263				(899	)
General and administrative			30,983				38,221				119,503				149,389
Restaurant margin		$	84,060			$	122,883			$	265,640			$	474,227
Restaurant margin (as a percentage of restaurant and other sales)			13.3	%			17.1	%			11.2	%			17.3	%

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
				2020				2019			vs LY					2020				2019			vs LY
Restaurant openings
	Company - Texas Roadhouse			8				9			(1	)				18				19			(1	)
	Company - Bubba's 33			0				2			(2	)				3				3			0
	Company - Jaggers			1				0			1					1				0			1
	Franchise - Texas Roadhouse - U.S.			1				0			1					2				1			1
	Franchise - Texas Roadhouse - International			1				3			(2	)				2				8			(6	)
	Total			11				14			(3	)				26				31			(5	)
Restaurant acquisitions/dispositions
		Company		2				1			1					2				1			1
		Franchise		(2	)			(1	)		(1	)				(2	)			(1	)		(1	)
		Total		0				0			0					0				0			0
Restaurant closures
	Company - Texas Roadhouse			0				0			0					(1	)			0			(1	)
	Company - Bubba's 33			0				0			0					0				0			0
	Company - Jaggers			0				0			0					0				0			0
	Franchise - Texas Roadhouse - International			0				0			0					(2	)			(2	)		0
	Total			0				0			0					(3	)			(2	)		(1	)
Restaurants open at the end of the quarter
	Company - Texas Roadhouse			503				484			19
	Company - Bubba's 33			31				28			3
	Company - Jaggers			3				2			1
	Franchise - Texas Roadhouse - U.S.			69				69			0
	Franchise - Texas Roadhouse - International			28				28			0
	Total			634				611			23
Company restaurants
	Restaurant and other sales		$	633,032			$	719,457			(12.0	)	%		$	2,380,177			$	2,734,177			(12.9	)	%
	Store weeks			6,908				7,118			(3.0	)	%			27,181				26,473			2.7		%
	Comparable restaurant sales (1)			(8.9	)	%		4.4		%						(14.2	)	%		4.7		%
	Texas Roadhouse restaurants only:
		Comparable restaurant sales (1)		(9.0	)	%		4.3		%						(14.1	)	%		4.6		%
		Average unit volume (2)	$	1,208			$	1,435			(15.8	)	%		$	4,649			$	5,555			(16.3	)	%
		Average unit volume, as adjusted (3)	$	1,208			$	1,336			(9.5	)	%		$	4,649			$	5,427			(14.3	)	%
		Weekly sales by group:
		Comparable restaurants (470 units)	$	93,530
		Average unit volume restaurants (19 units) (4)	$	78,402
		Restaurants less than 6 months old (14 units)	$	90,994
Restaurant operating costs (as a % of restaurant and other sales)
Food and beverage costs				32.4		%		32.4		%	(1	)	bps			32.8		%		32.3		%	49		bps
Labor				35.2		%		33.1		%	213		bps			36.8		%		33.1		%	367		bps
Rent				2.2		%		1.9		%	35		bps			2.3		%		1.9		%	36		bps
Other operating				16.9		%		15.6		%	134		bps			17.0		%		15.3		%	166		bps
Total				86.7		%		82.9		%	380		bps			88.8		%		82.7		%	618		bps
	Restaurant margin			13.3		%		17.1		%	(380	)	bps			11.2		%		17.3		%	(618	)	bps
	Restaurant margin ($ in thousands)		$	84,060			$	122,883			(31.6	)	%		$	265,640			$	474,227			(44.0	)	%
	Restaurant margin $/Store week		$	12,169			$	17,264			(29.5	)	%		$	9,773			$	17,914			(45.4	)	%
Franchise restaurants
	Franchise royalties and fees		$	4,957			$	5,781			(14.3	)	%		$	17,946			$	21,986			(18.4	)	%
	Store weeks			1,260				1,330			(5.2	)	%			5,048				4,953			1.9		%
	Comparable restaurant sales (1)			(10.7	)	%		3.0		%						(17.3	)	%		3.0		%
	U.S. franchise restaurants only:
		Comparable restaurant sales (1)		(11.2	)	%		3.4		%						(15.5	)	%		3.8		%
		Average unit volume (2)	$	1,242			$	1,491			(16.7	)	%		$	4,779			$	5,749			(16.9	)	%
		Average unit volume, as adjusted (3)	$	1,242			$	1,387			(10.5	)	%		$	4,779			$	5,617			(14.9	)	%
Pre-opening expense			$	5,803			$	7,355			(21.1	)	%		$	20,099			$	20,156			(0.3	)	%
Depreciation and amortization			$	30,443			$	30,970			(1.7	)	%		$	117,877			$	115,544			2.0		%
	As a % of revenue			4.8		%		4.3		%	50		bps			4.9		%		4.2		%	72		bps
General and administrative expenses			$	30,983			$	38,221			(18.9	)	%		$	119,503			$	149,389			(20.0	)	%
	As a % of revenue			4.9		%		5.3		%	(41	)	bps			5.0		%		5.4		%	(44	)	bps
(1) Comparable restaurant sales 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 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. Q4 2020 and 2020 YTD include 13 and 52 weeks, respectively, while Q4 2019 and 2019 YTD include 14 and 53 weeks, respectively.
(3) For comparative purposes, Q4 2019 and 2019 YTD were adjusted to include 13 and 52 weeks, respectively.
(4) 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.