Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 26 weeks ended June 29, 2021 and provided a business update.

Financial Results

Financial results for the 13 and 26 weeks ended June 29, 2021, June 30, 2020, and June 25, 2019 were as follows:

  Second Quarter
($000's)             % change
  2021   2020   2019   vs. 2020   vs. 2019
Total revenue $ 898,788     $ 476,425     $ 689,828     88.7 %   30.3 %
Income (loss) from operations   89,728       (47,318 )     53,283     289.6 %   68.4 %
Net income (loss)   75,480       (33,553 )     44,845     325.0 %   68.3 %
Diluted earnings (loss) per share $ 1.08     $ (0.48 )   $ 0.63     322.4 %   72.1 %
                   
                   
  Year to Date
              % change
  2021   2020   2019   vs. 2020   vs. 2019
Total revenue $ 1,699,417     $ 1,128,949     $ 1,380,436     50.5 %   23.1 %
Income (loss) from operations   170,655       (31,528 )     113,728     641.3 %   50.1 %
Net income (loss)   139,630       (17,524 )     95,235     896.8 %   46.6 %
Diluted earnings (loss) per share $ 1.99     $ (0.25 )   $ 1.32     888.3 %   50.4 %
                                   

Results for the second quarter included the following:

  • Comparable restaurant sales at company restaurants increased 80.2% and 21.3% compared to 2020 and 2019, respectively1. Comparable restaurant sales at domestic franchise restaurants increased 76.5% and 19.4% compared to 2020 and 2019, respectively;
  • Eight company restaurants, including two Bubba’s 33 restaurants, and two franchise restaurants were opened;
  • Restaurant margin, as a percentage of restaurant and other sales, was 17.7% and restaurant margin dollars were $158.2 million. Restaurant margin was impacted by an increase in comparable restaurant sales partially offset by commodity inflation and higher costs related to the pandemic;
  • Diluted earnings per share increased to $1.08 from a diluted loss per share of ($0.48) in the prior year due to the increase in comparable restaurant sales and the prior year impact of the pandemic; and,
  • The Company ended the quarter with debt of $190.0 million and $483.4 million of cash on hand.

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

  • Comparable restaurant sales at company restaurants increased 44.5% and 14.9% compared to 2020 and 2019, respectively1. Comparable restaurant sales at domestic franchise restaurants increased 41.1% and 12.2% compared to 2020 and 2019, respectively;
  • 11 company restaurants, including three Bubba’s 33 restaurants, and two franchise restaurants were opened;
  • Restaurant margin, as a percentage of restaurant and other sales, was 18.1% and restaurant margin dollars were $305.8 million. Restaurant margin was impacted by an increase in comparable restaurant sales partially offset by higher costs related to the pandemic; and,
  • Diluted earnings per share increased to $1.99 from a diluted loss per share of ($0.25) in the prior year due to the increase in comparable restaurant sales and the prior year impact of the pandemic.

____________________________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.

Jerry Morgan, Chief Executive Officer of Texas Roadhouse, Inc. commented, “We continue to generate sales that are well above pre-pandemic levels thanks to our operators who are successfully managing strong To-Go sales along with the re-opening of our dining rooms without restriction. However, some challenges still remain with certain cost pressures that we expect to continue at least through the end of the year.”

Morgan continued, “Our strong cashflows have further strengthened our financial position which allowed us to reinstate our dividend and repay our short-term debt this quarter. In addition, our development pipeline looks great and continues to move forward as expected.”

Business Update

Comparable restaurant sales during the quarter were positively impacted by the re-opening of dining rooms, the continued easing of dining room capacity restrictions, and continued strong To-Go sales. As of July 2, all domestic company and franchise locations were operating without restriction. The Company continues to operate with an enhanced To-Go model, which includes curbside and/or drive-up options, as permitted by local guidelines. For the Q2 2021 and July periods, comparable restaurant sales, average weekly sales, and To-Go sales for all company restaurants were as follows:

         
    Q2 2021   July
Comparable restaurant sales vs 2020   80.2%   44.1%
Comparable restaurant sales vs 2019   21.3%   25.5%
Average weekly sales   $ 126,442   $ 123,927
To-Go sales as a % of average weekly sales   16.9%   14.2%
         

As of the end of the quarter, the Company had opened 11 company restaurants and, currently, an additional 18 are under construction.   During the quarter, the Company completed the refinancing of the revolving credit facility. As part of this refinancing, the borrowing capacity was increased to $300 million and $50 million that was previously outstanding was repaid. As previously announced, the Company’s Board of Directors reinstated the quarterly dividend beginning with the Q2 2021 period. The Company currently expects to resume the repurchase of shares under our stock repurchase program in the second half of 2021.  

2021 Outlook

Management updated all expectations for 2021:

  • Commodity cost inflation of approximately 7.0%;
  • 26 to 29 company restaurant openings across all concepts;
  • Store week growth of approximately 5.0%; and,
  • Total capital expenditures of approximately $200 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, reduce capital spend, and/or limit share repurchases 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, July 29, 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 4491322 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 640 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

MediaTravis Doster(502) 638-5457

                                 
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Loss)
(in thousands, except per share data)
(unaudited)
                       
               
      13 Weeks Ended   26 Weeks Ended
      June 29, 2021   June 30, 2020   June 29, 2021   June 30, 2020
                       
Revenue:                  
  Restaurant and other sales $ 892,444     $ 473,090     $ 1,687,367     $ 1,120,716  
  Franchise royalties and fees 6,344     3,335     12,050     8,233  
                               
Total revenue 898,788     476,425     1,699,417     1,128,949  
                               
Costs and expenses:                          
  Restaurant operating costs (excluding depreciation and amortization shown separately below):                          
                               
    Food and beverage 295,504     164,041     546,986     374,221  
    Labor 288,147     194,622     546,183     435,701  
    Rent 14,956     13,251     29,408     26,722  
    Other operating 135,606     89,348     258,985     193,637  
  Pre-opening 6,319     4,290     10,587     9,402  
  Depreciation and amortization 31,650     29,016     62,519     58,070  
  Impairment and closure, net 17     (440 )   521     155  
  General and administrative 36,861     29,615     73,573     62,569  
                               
Total costs and expenses 809,060     523,743     1,528,762     1,160,477  
                               
Income (loss) from operations 89,728     (47,318 )   170,655     (31,528 )
                               
Interest expense, net 975     1,030     2,435     1,099  
Equity income (loss) from investments in unconsolidated affiliates 239     (90 )   22     (598 )
                               
Income (loss) before taxes 88,992     (48,438 )   168,242     (33,225 )
Income tax expense (benefit) 11,067     (15,132 )   23,887     (17,071 )
                               
Net income (loss) including noncontrolling interests 77,925     (33,306 )   144,355     (16,154 )
Less: Net income attributable to noncontrolling interests 2,445     247     4,725     1,370  
Net income (loss) attributable to Texas Roadhouse, Inc. and subsidiaries $ 75,480     $ (33,553 )   $ 139,630     $ (17,524 )
                       
Net income (loss) per common share attributable to Texas Roadhouse, Inc.                  
and subsidiaries:                  
  Basic $ 1.08     $ (0.48 )   $ 2.00     $ (0.25 )
  Diluted $ 1.08     $ (0.48 )   $ 1.99     $ (0.25 )
                       
Weighted average shares outstanding:                  
  Basic 69,790     69,361     69,713     69,391  
  Diluted 70,161     69,361     70,150     69,391  
                       
Cash dividends declared per share $ 0.40     $ -     $ 0.40     $ 0.36  
                       
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
             
             
             
    June 29, 2021   December 29, 2020
             
             
Cash and cash equivalents   $ 483,419     $ 363,155  
Other current assets, net   98,354     147,496  
Property and equipment, net   1,117,393     1,088,623  
Operating lease right-of-use assets, net   547,387     530,625  
Goodwill   127,001     127,001  
Intangible assets, net   1,881     2,271  
Other assets   73,510     65,990  
             
Total assets   $ 2,448,945     $ 2,325,161  
             
             
Current maturities of long-term debt   -     50,000  
Other current liabilities   479,808     456,318  
Operating lease liabilities, net of current portion   590,443     572,171  
Long-term debt, excluding current maturities   190,000     190,000  
Other liabilities   126,011     113,621  
Texas Roadhouse, Inc. and subsidiaries stockholders' equity   1,046,835     927,505  
Noncontrolling interests   15,848     15,546  
             
Total liabilities and equity   $ 2,448,945     $ 2,325,161  
             
                     
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
                 
                 
        26 Weeks Ended
        June 29, 2021   June 30, 2020
                 
                 
Cash flows from operating activities:            
Net income (loss) including noncontrolling interests   $ 144,355     $ (16,154 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities        
  Depreciation and amortization   62,519     58,070  
  Share-based compensation expense   19,817     14,490  
  Deferred income taxes   2,948     (10,926 )
  Other noncash adjustments, net   1,955     3,052  
Change in working capital   65,252     13,313  
    Net cash provided by operating activities   296,846     61,845  
                 
Cash flows from investing activities:            
Capital expenditures - property and equipment   (85,068 )   (81,833 )
Proceeds from sale leaseback transactions   3,285     2,167  
    Net cash used in investing activities   (81,783 )   (79,666 )
                 
Cash flows from financing activities:            
(Payments on) proceeds from revolving credit facility, net   (50,000 )   240,000  
Repurchase of shares of common stock   -     (12,621 )
Dividends paid   (27,932 )   (24,989 )
Other financing activities, net   (16,867 )   (9,955 )
    Net cash (used in) provided by financing activities   (94,799 )   192,435  
                 
    Net increase in cash and cash equivalents   120,264     174,614  
Cash and cash equivalents - beginning of period   363,155     107,879  
Cash and cash equivalents - end of period   $ 483,419     $ 282,493  
                 
                         
Texas Roadhouse, Inc. and Subsidiaries
Reconciliation of Income (loss) from Operations to Restaurant Margin
(in thousands)
(unaudited)
                   
    13 Weeks Ended
    June 29, 2021   June 30, 2020   June 25, 2019
                   
Income (loss) from operations   $ 89,728     $ (47,318 )   $ 53,283  
                   
Less:                  
Franchise royalties and fees   6,344     3,335     5,455  
                   
Add:                  
Pre-opening   6,319     4,290     4,197  
Depreciation and amortization   31,650     29,016     28,454  
Impairment and closure, net   17     (440 )   316  
General and administrative   36,861     29,615     39,960  
                   
Restaurant margin   $ 158,231     $ 11,828     $ 120,755  
                   
Restaurant margin (as a percentage of restaurant and other sales)   17.7 %   2.5 %   17.6 %
                   
                   
    26 Weeks Ended
    June 29, 2021   June 30, 2020   June 25, 2019
                   
Income (loss) from operations   $ 170,655     $ (31,528 )   $ 113,728  
                   
Less:                  
Franchise royalties and fees   12,050     8,233     10,946  
                   
Add:                  
Pre-opening   10,587     9,402     8,065  
Depreciation and amortization   62,519     58,070     56,227  
Impairment and closure, net   521     155     333  
General and administrative   73,573     62,569     75,943  
                   
Restaurant margin   $ 305,805     $ 90,435     $ 243,350  
                   
Restaurant margin (as a percentage of restaurant and other sales)   18.1 %   8.1 %   17.8 %
                   
                                           
Texas Roadhouse, Inc. and Subsidiaries
Supplemental Financial and Operating Information
($ amounts in thousands, except weekly sales by group)
(unaudited)
                           
      Second Quarter Change Year to Date Change
      2021 2020 vs 2020 2021 2020 vs 2020
Restaurant openings                      
  Company - Texas Roadhouse 6 2 4 8 6 2
  Company - Bubba's 33 2 1 1 3 2 1
  Company - Jaggers 0 0 0 0 0 0
  Franchise - Texas Roadhouse - U.S. 0 0 0 0 1 (1)
  Franchise - Texas Roadhouse - International 2 0 2 2 0 2
  Total 10 3 7 13 9 4
                           
                           
Restaurants open at the end of the quarter                      
  Company - Texas Roadhouse 511 489 22          
  Company - Bubba's 33 34 30 4          
  Company - Jaggers 3 2 1          
  Franchise - Texas Roadhouse - U.S. 69 70 (1)          
  Franchise - Texas Roadhouse - International 30 26 4          
  Total 647 617 30          
                           
      Second Quarter Change Change  
      2021 2020 2019 vs 2020 vs 2019  
                           
Company restaurants                      
  Restaurant and other sales $ 892,444     $ 473,090     $ 684,373     88.6   % 30.4   %  
  Store weeks   7,085       6,742       6,460     5.1   % 9.7   %  
  Comparable restaurant sales (1)   80.2   %   (32.8 ) %   4.7   %          
  Texas Roadhouse restaurants only:                      
    Comparable restaurant sales (1)   79.0   %   (32.4 ) %   4.6   %          
    Average unit volume (2) $ 1,664     $ 935     $ 1,384     78.0   % 20.2   %  
    Weekly sales by group:              
    Comparable restaurants (476, 454, and 434 units respectively) $ 128,716     $ 72,005     $ 106,838              
    Average unit volume restaurants (3) (19, 20, and 21 units, respectively) $ 110,459     $ 69,174     $ 98,046              
    Restaurants less than 6 months old (16, 15, and 16 units, respectively) $ 134,822     $ 61,781     $ 114,735              
                           
Restaurant operating costs (as a % of restaurant and other sales)                    
Food and beverage costs   33.1   %   34.7   %   32.3   % (156 ) bps 78   bps
Labor   32.3   %   41.1   %   32.9   % (885 ) bps (66 ) bps
Rent   1.7   %   2.8   %   1.9   % (113 ) bps (23 ) bps
Other operating   15.2   %   18.9   %   15.2   % (369 ) bps 3   bps
Total   82.3   %   97.5   %   82.4   % (1,523 ) bps (9 ) bps
                           
  Restaurant margin   17.7   %   2.5   %   17.6   % 1,523   bps 9   bps
                           
  Restaurant margin ($ in thousands) $ 158,231     $ 11,828     $ 120,755     1,237.8   % 31.0   %  
  Restaurant margin $/Store week $ 22,333     $ 1,754     $ 18,692     1,173.3   % 19.5   %  
                           
Franchise restaurants                      
  Franchise royalties and fees $ 6,344     $ 3,335     $ 5,455     90.2   % 16.3   %  
  Store weeks   1,269       1,248       1,208     1.7   % 5.1   %  
  Comparable restaurant sales (1)   86.3   %   (38.2 ) %   3.7   %          
  U.S. franchise restaurants only:                      
    Comparable restaurant sales (1)   76.5   %   (32.1 ) %   4.3   %          
    Average unit volume (2) $ 1,739     $ 980     $ 1,433     77.5   % 21.3   %  
                           
Pre-opening expense $ 6,319     $ 4,290     $ 4,197     47.3   % 50.6   %  
                           
Depreciation and amortization $ 31,650     $ 29,016     $ 28,454     9.1   % 11.2   %  
  As a % of revenue   3.5   %   6.1   %   4.1   % (257 ) bps (60 ) bps
                           
General and administrative expenses $ 36,861     $ 29,615     $ 39,960     24.5   % (7.8 ) %  
  As a % of revenue   4.1   %   6.2   %   5.8   % (211 ) bps (169 ) 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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