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Published: 2023-02-16 16:05:15 ET
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EX-99.1 2 tm237068d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

 

 

Texas Roadhouse, Inc. Announces Fourth Quarter 2022 Results 

Increases Quarterly Dividend by 20% to $0.55 per Share

 

LOUISVILLE, KY. (February 16, 2023) – Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 52 weeks ended December 27, 2022.

 

Financial Results

 

Financial results for the 13 and 52 weeks ended December 27, 2022 and December 28, 2021 were as follows:

 

   Fourth Quarter   Year to Date 
($000's)                        
   2022   2021   % change   2022   2021   % change 
Total revenue  $1,009,529   $895,586    12.7%  $4,014,919   $3,463,946    15.9%
Income from operations   68,853    64,839    6.2%   320,197    297,192    7.7%
Net income   59,869    53,058    12.8%   269,818    245,294    10.0%
Diluted earnings per share  $0.89   $0.76    17.4%  $3.97   $3.50    13.5%

 

Results for the fourth quarter, as compared to the prior year as applicable, included the following:

 

·Comparable restaurant sales increased 7.3% at company restaurants and increased 7.2% at domestic franchise restaurants;

 

·Average weekly sales at company restaurants were $130,176 of which 12.6% were to-go sales as compared to average weekly sales of $121,976 of which 14.4% were to-go sales in the prior year;

 

·Restaurant margin, as a percentage of restaurant and other sales, decreased 132 basis points to 14.5% as commodity inflation of 6.6% and wage and other labor inflation of 7.8% were partially offset by higher sales. Restaurant margin dollars increased 3.4% to $145.6 million from $140.8 million in the prior year primarily due to higher sales;

 

·Diluted earnings per share increased 17.4% primarily driven by higher restaurant margin dollars and lower general and administrative expenses. Diluted earnings per share also benefitted from increased share repurchases that occurred in the first half of 2022; and,

 

·10 company restaurants and two international franchise restaurants were opened.

 

 

 

Results for the year-to-date period, as compared to the prior year as applicable, included the following:

 

·Comparable restaurant sales increased 9.7% at company restaurants and increased 9.4% at domestic franchise restaurants;

 

·Average weekly sales at company restaurants were $131,802 of which 13.3% were to-go sales as compared to average weekly sales of $120,706 of which 17.1% were to-go sales in the prior year;

 

·Restaurant margin, as a percentage of restaurant and other sales, decreased 118 basis points to 15.7% as commodity inflation of 10.8% and wage and other labor inflation of 8.3% were partially offset by higher sales. Restaurant margin dollars increased 7.9% to $627.5 million from $581.7 million in the prior year primarily due to higher sales;

 

·Diluted earnings per share increased 13.5% primarily driven by higher restaurant margin dollars partially offset by higher general and administrative expenses and depreciation and amortization expense. Diluted earnings per share also benefitted from increased share repurchases in the first half of 2022;

 

·23 company restaurants and seven international franchise restaurants were opened. In addition, the Company acquired eight domestic franchise restaurants; and,

 

·The Company repurchased 2,734,005 shares of common stock for $212.9 million.

 

Jerry Morgan, Chief Executive Officer of Texas Roadhouse, Inc. commented, “We had another record year in 2022, highlighted by over $4 billion in revenue and double-digit bottom line growth in spite of significant cost pressures. I am extremely proud of our operators who continue to drive sales and consistently deliver on our legendary promise.”

 

Morgan continued, “As we celebrate our 30th anniversary this month, our focus will be on what got us here—providing our guests a legendary experience in all 700 of our restaurants each and every shift. We are excited about our continued growth in 2023, which includes the potential to open a record number of systemwide locations across all of our brands. We are confident this growth, along with our ability to allocate capital for the benefit of our shareholders, will continue to create long term value.”

 

Franchise acquisitions

 

On December 28, 2022, the first day of the 2023 fiscal year, the Company completed the acquisition of eight domestic franchise restaurants for an aggregate purchase price of approximately $39.0 million.

 

2023 Outlook

 

Comparable restaurant sales at company restaurants for the first seven weeks of our first quarter of fiscal 2023 increased 15.8% compared to 2022. In addition, the Company plans to implement a menu price increase of approximately 2.2% in late March.

 

Management updated the following expectations for 2023:

 

·Store week growth of at least 6% including the impact of the franchise locations acquired;

·25 to 30 Texas Roadhouse and Bubba’s 33 company restaurant openings; and,

·An effective income tax rate of approximately 14% excluding the impact of any legislative changes enacted.

 

 

 

Management reiterated the following expectations for 2023:

 

·Positive comparable restaurant sales growth including the benefit of 2022 menu pricing actions;

·Commodity cost inflation of 5% to 6%;

·Wage and other labor inflation of 5% to 6%; and,

·Total capital expenditures of approximately $265 million.

 

Cash Dividend Payment

 

On February 14, 2023, the Company’s Board of Directors authorized the payment of a quarterly cash dividend of $0.55 per share of common stock. This payment, which represents a 20% increase from the quarterly cash dividend authorized in 2022, will be distributed on March 24, 2023, to shareholders of record at the close of business on March 8, 2023.

 

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 also includes sales and operating costs related to the Company’s non-royalty based retail initiatives. 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 also excludes pre-opening expense as it occurs at irregular intervals and would impact comparability to prior period results. 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, February 16, 2023, 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. Fourth Quarter 2022 Earnings. A replay of the call will be available until February 23, 2023, by dialing (800) 770-2030 or (647) 362-9199 for international calls.

 

 

 

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 700 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. 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; labor or supply chain shortages or limited availability of staff or product needed to meet our business standards; 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 28, 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 Media

Michael Bailen Travis Doster

(502) 515-7298 (502) 638-5457

 

 

 

Texas Roadhouse, Inc. and Subsidiaries
Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)

 

   13 Weeks Ended   52 Weeks Ended 
   December 27, 2022   December 28, 2021   December 27, 2022   December 28, 2021 
Revenue:                    
Restaurant and other sales  $1,002,763   $889,052   $3,988,791   $3,439,176 
Franchise royalties and fees   6,766    6,534    26,128    24,770 
                     
Total revenue   1,009,529    895,586    4,014,919    3,463,946 
                     
Costs and expenses:                    
Restaurant operating costs (excluding depreciation and amortization shown separately below):                    
                     
Food and beverage   351,723    311,478    1,378,192    1,156,628 
Labor   334,827    290,227    1,319,959    1,123,003 
Rent   17,049    15,508    66,834    60,005 
Other operating   153,591    131,054    596,305    517,808 
Pre-opening   6,568    7,008    21,883    24,335 
Depreciation and amortization   35,462    32,615    137,237    126,761 
Impairment and closure, net   1,063    184    1,600    734 
General and administrative   40,393    42,673    172,712    157,480 
                     
Total costs and expenses   940,676    830,747    3,694,722    3,166,754 
                     
Income from operations   68,853    64,839    320,197    297,192 
                     
Interest (income)/expense, net   (753)   624    124    3,663 
Equity income (loss) from investments in unconsolidated affiliates   170    (925)   1,239    (637)
                     
Income before taxes   69,776    63,290    321,312    292,892 
Income tax expense   8,007    8,547    43,715    39,578 
                     
Net income including noncontrolling interests   61,769    54,743    277,597    253,314 
Less: Net income attributable to noncontrolling interests   1,900    1,685    7,779    8,020 
Net income attributable to Texas Roadhouse, Inc. and subsidiaries  $59,869   $53,058   $269,818   $245,294 
                     
Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:                    
Basic  $0.89   $0.76   $3.99   $3.52 
Diluted  $0.89   $0.76   $3.97   $3.50 
                     
Weighted average shares outstanding:                    
Basic   66,946    69,601    67,643    69,709 
Diluted   67,270    69,969    67,920    70,098 
                     
Cash dividends declared per share  $0.46   $0.40   $1.84   $1.20 

 

 

 

Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

 

   December 27, 2022   December 28, 2021 
Cash and cash equivalents  $173,861   $335,645 
Other current assets, net   222,980    227,880 
Property and equipment, net   1,270,349    1,162,441 
Operating lease right-of-use assets, net   630,258    578,413 
Goodwill   148,732    127,001 
Intangible assets, net   5,607    1,520 
Other assets   73,878    79,052 
           
Total assets  $2,525,665   $2,511,952 
           
Other current liabilities   652,010    602,144 
Operating lease liabilities, net of current portion   677,874    622,892 
Long-term debt   50,000    100,000 
Other liabilities   118,119    113,432 
Texas Roadhouse, Inc. and subsidiaries stockholders' equity   1,012,638    1,058,124 
Noncontrolling interests   15,024    15,360 
           
Total liabilities and equity  $2,525,665   $2,511,952 

 

 

 

Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

 

   52 Weeks Ended 
   December 27, 2022   December 28, 2021 
Cash flows from operating activities:          
Net income including noncontrolling interests  $277,597   $253,314 
Adjustments to reconcile net income to net cash provided by operating activities          
Depreciation and amortization   137,237    126,761 
Share-based compensation expense   36,663    38,139 
Deferred income taxes   9,456    8,896 
Other noncash adjustments, net   6,792    5,555 
Change in working capital   43,980    36,161 
Net cash provided by operating activities   511,725    468,826 
           
Cash flows from investing activities:          
Capital expenditures - property and equipment   (246,121)   (200,692)
Acquistion of franchise restaurants, net of cash acquired   (33,069)   - 
Proceeds from sale of investment in unconsolidated affiliate   316    - 
Proceeds from sale of property and equipment   2,269    - 
Proceeds from sale leaseback transactions   12,871    5,588 
Net cash used in investing activities   (263,734)   (195,104)
           
Cash flows from financing activities:          
Payments on revolving credit facility, net   (50,000)   (140,000)
Repurchase of shares of common stock   (212,859)   (51,634)
Dividends paid   (124,137)   (83,658)
Other financing activities, net   (22,779)   (25,940)
Net cash used in financing activities   (409,775)   (301,232)
           
Net decrease in cash and cash equivalents   (161,784)   (27,510)
Cash and cash equivalents - beginning of period   335,645    363,155 
Cash and cash equivalents - end of period  $173,861   $335,645 

 

 

 

Texas Roadhouse, Inc. and Subsidiaries
Reconciliation of Income from Operations to Restaurant Margin
(in thousands)
(unaudited)

 

   13 Weeks Ended   52 Weeks Ended 
   December 27, 2022   December 28, 2021   December 27, 2022   December 28, 2021 
Income from operations  $68,853   $64,839   $320,197   $297,192 
                     
Less:                    
Franchise royalties and fees   6,766    6,534    26,128    24,770 
                     
Add:                    
Pre-opening   6,568    7,008    21,883    24,335 
Depreciation and amortization   35,462    32,615    137,237    126,761 
Impairment and closure, net   1,063    184    1,600    734 
General and administrative   40,393    42,673    172,712    157,480 
                     
Restaurant margin  $145,573   $140,785   $627,501   $581,732 
                     
Restaurant margin (as a percentage of restaurant and other sales)   14.5%   15.8%   15.7%   16.9%

 

 

 

Texas Roadhouse, Inc. and Subsidiaries
Supplemental Financial and Operating Information
($ amounts in thousands, except weekly sales by group)
(unaudited)

 

   Fourth Quarter       Year to Date     
   2022   2021   Change   2022   2021   Change 
Restaurant openings                              
Company - Texas Roadhouse   7    9    (2)   18    23    (5)
Company - Bubba's 33   2    1    1    4    5    (1)
Company - Jaggers   1    1    0    1    1    0 
Franchise - Texas Roadhouse - U.S.   0    1    (1)   0    1    (1)
Franchise - Texas Roadhouse - International   2    1    1    7    3    4 
Total   12    13    (1)   30    33    (3)
                               
Restaurant acquisitions/dispositions                              
Company - Texas Roadhouse   0    0    0    8    0    8 
Franchise - Texas Roadhouse - U.S.   0    0    0    (8)   0    (8)
                               
Restaurants open at the end of the quarter                              
Company - Texas Roadhouse   552    526    26                
Company - Bubba's 33   40    36    4                
Company - Jaggers   5    4    1                
Franchise - Texas Roadhouse - U.S.   62    70    (8)               
Franchise - Texas Roadhouse - International   38    31    7                
Total   697    667    30                

 

   Fourth Quarter   
   2022   2021   Change   
Company restaurants (all concepts)                 
Restaurant and other sales  $1,002,763   $889,052    12.8 % 
Store weeks   7,691    7,288    5.5 % 
Comparable restaurant sales (1)   7.3%   33.1%       
                  
Restaurant operating costs (as a % of restaurant and other sales)                 
Food and beverage costs   35.1%   35.0%   4   bps 
Labor   33.4%   32.6%   75   bps 
Rent   1.7%   1.7%   (4 ) bps 
Other operating   15.3%   14.7%   58   bps 
Total   85.5%   84.2%   132   bps 
                  
Restaurant margin   14.5%   15.8%   (132 ) bps 
                  
Restaurant margin ($ in thousands)  $145,573   $140,785    3.4 % 
Restaurant margin $/Store week  $18,927   $19,318    (2.0 )% 
                  
Texas Roadhouse restaurants only:                 
Store weeks   7,123    6,779    5.1 % 
Comparable restaurant sales (1)   7.3%   33.3%       
Average unit volume (2)  $1,720   $1,604    7.2 % 
Weekly sales by group:                 
Comparable restaurants (513 and 489 units)  $132,430   $123,860        
Average unit volume restaurants (24 and 16 units)  $129,117   $113,657        
Restaurants less than 6 months old (15 and 21 units)  $141,991   $130,295        
                  
Bubba's 33 restaurants only:                 
Store weeks   504    463    8.9 % 
Comparable restaurant sales (1)   6.6%   30.8%       
Average unit volume (2)  $1,391   $1,279    8.8 % 
Weekly sales by group:                 
Comparable restaurants (32 and 29 units)  $104,880   $99,465        
Average unit volume restaurants (4 and 3 units)  $124,063   $87,844        
Restaurants less than 6 months old (4 and 4 units)  $104,110   $136,579        
                  
Franchise restaurants                 
Franchise royalties and fees  $6,766   $6,534    3.6 % 
Store weeks   1,287    1,301    (1.1 )% 
Comparable restaurant sales   6.1%   30.6%       
U.S. franchise restaurants only:                 
Comparable restaurant sales   7.2%   34.8%       
Average unit volume  $1,818   $1,684    8.0 % 

 

(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, excluding sales from restaurants permanently closed during the period.

(2)  Average unit volume includes sales from restaurants open for a full six months before the beginning of the period, excluding sales from restaurants permanently closed during the period.

 

Amounts may not foot due to rounding.