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Texas Roadhouse, Inc. Announces Second Quarter 2024 Results
Source: Nasdaq GlobeNewswire / 25 Jul 2024 15:03:35 America/Chicago
LOUISVILLE, Ky., July 25, 2024 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 26 weeks ended June 25, 2024.
Financial Results
Financial results for the 13 and 26 weeks ended June 25, 2024 and June 27, 2023 were as follows:
13 Weeks Ended 26 Weeks Ended ($000's, except per share amounts) June 25, 2024 June 27, 2023 % change June 25, 2024 June 27, 2023 % change Total revenue $ 1,341,202 $ 1,171,203 14.5 % $ 2,662,419 $ 2,345,559 13.5 % Income from operations 142,816 95,412 49.7 % 275,944 196,357 40.5 % Net income 120,141 82,271 46.0 % 233,347 168,658 38.4 % Diluted earnings per share $ 1.79 $ 1.22 46.4 % $ 3.48 $ 2.51 38.7 % Results for the 13 weeks ended June 25, 2024, as compared to the prior year as applicable, included the following:
- Comparable restaurant sales increased 9.3% at company restaurants and increased 8.3% at domestic franchise restaurants;
- Average weekly sales at company restaurants were $158,991 of which $19,975 were to-go sales as compared to average weekly sales of $146,727 of which $18,496 were to-go sales in the prior year;
- Restaurant margin dollars increased 32.7% to $242.6 million from $182.8 million in the prior year primarily due to higher sales. Restaurant margin, as a percentage of restaurant and other sales, increased to 18.2% from 15.7% in the prior year driven by higher sales. The benefit of a higher average guest check and improved labor productivity more than offset wage and other labor inflation of 4.4% and commodity inflation of 0.4%;
- Diluted earnings per share increased 46.4% primarily driven by higher restaurant margin dollars partially offset by higher general and administrative expenses and higher depreciation and amortization expenses;
- Six company restaurants and three franchise restaurants were opened; and
- Capital allocation spend included capital expenditures of $77.8 million, dividends of $40.7 million, and repurchases of common stock of $26.2 million.
Results for the 26 weeks ended June 25, 2024, as compared to the prior year as applicable, included the following:
- Comparable restaurant sales increased 8.9% at company restaurants and increased 8.0% at domestic franchise restaurants;
- Average weekly sales at company restaurants were $159,184 of which $20,392 were to-go sales as compared to average weekly sales of $147,579 of which $18,762 were to-go sales in the prior year;
- Restaurant margin dollars increased 27.8% to $471.1 million from $368.5 million in the prior year primarily due to higher sales. Restaurant margin, as a percentage of restaurant and other sales, increased to 17.8% from 15.8% in the prior year driven by higher sales. The benefit of a higher average guest check and improved labor productivity more than offset wage and other labor inflation of 4.4% and commodity inflation of 0.7%;
- Diluted earnings per share increased 38.7% primarily driven by higher restaurant margin dollars partially offset by higher general and administrative expenses and higher depreciation and amortization expenses;
- 15 company restaurants and six franchise restaurants were opened; and
- Capital allocation spend included capital expenditures of $155.5 million, dividends of $81.5 million, and repurchases of common stock of $35.1 million.
Jerry Morgan, Chief Executive Officer of Texas Roadhouse, Inc. commented, “We continued our momentum in the current quarter as strong traffic trends and some relief on commodity inflation led to increased profitability across all of our brands. With our operators delivering solid operating results, and a balanced development pipeline, we are well positioned for the second half of the year.”
Morgan continued, “We continue to grow our brand globally and now have over 50 international franchise locations. In addition, we recently unveiled our first purpose statement of ‘Serving Communities Across America…and the World’. We are confident that through our focus on this purpose and our commitment to providing legendary food and legendary service, we will continue to generate strong operating results that will enhance long-term shareholder value.”
2024 Outlook
Comparable restaurant sales at company restaurants for the first four weeks of our third quarter of fiscal 2024 increased 8.0% compared to 2023.
Management updated the following expectations for 2024:
- Store week growth of approximately 7.5%, including a benefit of 2% from the 53rd week;
- Commodity cost inflation of approximately 2%;
- An effective income tax rate of approximately 14.5%; and
- Total capital expenditures of $360 million to $370 million.
Management reiterated the following expectations for 2024:
- Positive comparable restaurant sales growth including the benefit of menu pricing actions; and
- Wage and other labor inflation of 4% to 5%.
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, as a percentage of restaurant and other sales, and per store week). 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 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 excludes pre-opening expenses as they occur at irregular intervals and would impact comparability to prior period results. The Company excludes depreciation and amortization expenses, substantially all of which relate to restaurant-level assets, as they represent a non-cash charge for the investment in restaurants. The Company excludes impairment and closure expenses 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, July 25, 2024, 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. Second Quarter 2024 Earnings. A replay of the call will be available until August 1, 2024, by dialing (800) 770-2030 or (609) 800-9909 for international calls and using conference ID 7714420.
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 760 restaurants system-wide in 49 states, one U.S. territory, 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 of 1933, as amended, 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, Inc. Actual results may vary materially from those contained in forward-looking statements based on a number of factors including, without limitation, conditions beyond management’s 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 its business standards; changes in consumer discretionary spending and macroeconomic conditions, including inflationary pressures; 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 26, 2023. 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 7298Media
Travis Doster
(502) 638 5457Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)13 Weeks Ended 26 Weeks Ended June 25, 2024 June 27, 2023 June 25, 2024 June 27, 2023 Revenue: Restaurant and other sales $ 1,333,642 $ 1,164,385 $ 2,647,794 $ 2,331,968 Franchise royalties and fees 7,560 6,818 14,625 13,591 Total revenue 1,341,202 1,171,203 2,662,419 2,345,559 Costs and expenses: Restaurant operating costs (excluding depreciation and amortization shown separately below): Food and beverage 436,001 401,204 881,092 811,915 Labor 438,212 391,337 865,759 777,156 Rent 19,956 17,996 39,381 35,824 Other operating 196,862 171,092 390,504 338,621 Pre-opening 6,202 5,671 14,297 11,048 Depreciation and amortization 42,915 37,413 84,408 73,640 Impairment and closure, net 90 78 291 133 General and administrative 58,148 51,000 110,743 100,865 Total costs and expenses 1,198,386 1,075,791 2,386,475 2,149,202 Income from operations 142,816 95,412 275,944 196,357 Interest income, net 1,683 996 3,091 2,234 Equity income from investments in unconsolidated affiliates 286 287 543 1,042 Income before taxes 144,785 96,695 279,578 199,633 Income tax expense 21,710 12,270 40,513 26,604 Net income including noncontrolling interests 123,075 84,425 239,065 173,029 Less: Net income attributable to noncontrolling interests 2,934 2,154 5,718 4,371 Net income attributable to Texas Roadhouse, Inc. and subsidiaries $ 120,141 $ 82,271 $ 233,347 $ 168,658 Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries: Basic $ 1.80 $ 1.23 $ 3.49 $ 2.52 Diluted $ 1.79 $ 1.22 $ 3.48 $ 2.51 Weighted average shares outstanding: Basic 66,785 66,974 66,814 66,995 Diluted 67,044 67,229 67,077 67,261 Cash dividends declared per share $ 0.61 $ 0.55 $ 1.22 $ 1.10 Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)June 25, 2024 December 26, 2023 (unaudited) Cash and cash equivalents $ 197,454 $ 104,246 Other current assets, net 135,832 252,228 Property and equipment, net 1,523,393 1,474,722 Operating lease right-of-use assets, net 726,378 694,014 Goodwill 169,684 169,684 Intangible assets, net 2,374 3,483 Other assets 106,796 94,999 Total assets $ 2,861,911 $ 2,793,376 Current liabilities 644,327 745,434 Operating lease liabilities, net of current portion 779,517 743,476 Other liabilities 160,377 146,955 Texas Roadhouse, Inc. and subsidiaries stockholders’ equity 1,262,636 1,141,662 Noncontrolling interests 15,054 15,849 Total liabilities and equity $ 2,861,911 $ 2,793,376 Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)26 Weeks Ended June 25, 2024 June 27, 2023 Cash flows from operating activities: Net income including noncontrolling interests $ 239,065 $ 173,029 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 84,408 73,640 Share-based compensation expense 18,378 16,744 Deferred income taxes (4,254 ) 1,767 Other noncash adjustments, net 1,662 2,831 Change in working capital, net of acquisitions 38,088 20,222 Net cash provided by operating activities 377,347 288,233 Cash flows from investing activities: Capital expenditures - property and equipment (155,478 ) (154,580 ) Acquisition of franchise restaurants, net of cash acquired — (39,153 ) Proceeds from sale of investments in unconsolidated affiliates — 632 Proceeds from sale of property and equipment 197 — Proceeds from sale leaseback transactions 9,126 7,097 Net cash used in investing activities (146,155 ) (186,004 ) Cash flows from financing activities: Payments on revolving credit facility — (50,000 ) Repurchase of shares of common stock (35,139 ) (33,058 ) Dividends paid to shareholders (81,509 ) (73,698 ) Other financing activities, net (21,336 ) (12,010 ) Net cash used in financing activities (137,984 ) (168,766 ) Net increase (decrease) in cash and cash equivalents 93,208 (66,537 ) Cash and cash equivalents - beginning of period 104,246 173,861 Cash and cash equivalents - end of period $ 197,454 $ 107,324 Texas Roadhouse, Inc. and Subsidiaries
Reconciliation of Income from Operations to Restaurant Margin
($ in thousands)
(unaudited)13 Weeks Ended 26 Weeks Ended June 25, 2024 June 27, 2023 June 25, 2024 June 27, 2023 Income from operations $ 142,816 $ 95,412 $ 275,944 $ 196,357 Less: Franchise royalties and fees 7,560 6,818 14,625 13,591 Add: Pre-opening 6,202 5,671 14,297 11,048 Depreciation and amortization 42,915 37,413 84,408 73,640 Impairment and closure, net 90 78 291 133 General and administrative 58,148 51,000 110,743 100,865 Restaurant margin $ 242,611 $ 182,756 $ 471,058 $ 368,452 Restaurant margin (as a percentage of restaurant and other sales) 18.2 % 15.7 % 17.8 % 15.8 % Texas Roadhouse, Inc. and Subsidiaries
Supplemental Financial and Operating Information
($ amounts in thousands, except restaurant margin per
store week and weekly sales by group)
(unaudited)13 Weeks Ended June 25, 2024 June 27, 2023 Change Company restaurants (all concepts) Restaurant and other sales $ 1,333,642 $ 1,164,385 14.5 % Store weeks 8,408 7,960 5.6 % Comparable restaurant sales (1) 9.3 % 9.1 % Restaurant operating costs (as a % of restaurant and other sales) Food and beverage costs 32.7 % 34.5 % 176 bps Labor 32.8 % 33.6 % 76 bps Rent 1.5 % 1.5 % 5 bps Other operating 14.8 % 14.7 % (7 ) bps Total 81.8 % 84.3 % Restaurant margin % 18.2 % 15.7 % 250 bps Restaurant margin $ $ 242,611 $ 182,756 32.8 % Restaurant margin $/Store week $ 28,855 $ 22,961 25.7 % Texas Roadhouse restaurants only: Store weeks 7,708 7,343 5.0 % Comparable restaurant sales (1) 9.4 % 9.4 % Average unit volume (2) $ 2,123 $ 1,946 9.1 % Weekly sales by group: Comparable restaurants (553 and 533 units) $ 163,797 $ 149,847 9.3 % Average unit volume restaurants (20 and 20 units) $ 150,736 $ 144,554 4.3 % Restaurants less than 6 months old (21 and 13 units) $ 151,647 $ 158,608 (4.4 )% Bubba’s 33 restaurants only: Store weeks 596 526 13.3 % Comparable restaurant sales (1) 5.5 % 3.9 % Average unit volume (2) $ 1,580 $ 1,514 4.4 % Weekly sales by group: Comparable restaurants (38 and 35 units) $ 122,868 $ 117,906 4.2 % Average unit volume restaurants (5 and 3 units) $ 111,244 $ 99,324 12.0 % Restaurants less than 6 months old (5 and 3 units) $ 142,429 $ 123,594 15.2 % Texas Roadhouse franchise restaurants only: Store weeks 1,389 1,220 13.9 % Comparable restaurant sales 6.6 % 10.8 % U.S. franchise restaurants only: Comparable restaurant sales (1) 8.3 % 9.2 % Average unit volume (2) $ 2,268 2,129 6.5 % _______________
(1) Comparable restaurant sales reflect the change in sales for all company restaurants across all concepts, unless otherwise noted, over the same period of the prior year 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, if applicable.
Amounts may not foot due to rounding.Texas Roadhouse, Inc. and Subsidiaries
Restaurant Unit Activity
(unaudited)13 Weeks Ended 26 Weeks Ended June 25, 2024 June 27, 2023 Change June 25, 2024 June 27, 2023 Change Restaurant openings Company - Texas Roadhouse 3 2 1 12 6 6 Company - Bubba’s 33 3 1 2 3 1 2 Company - Jaggers — — — — 2 (2 ) Total company restaurants 6 3 3 15 9 6 Franchise - Texas Roadhouse - Domestic — 1 (1 ) 1 1 — Franchise - Jaggers - Domestic — — — 1 — 1 Franchise - Texas Roadhouse - Int'l (1) 3 2 1 4 3 1 Total franchise restaurants 3 3 — 6 4 2 Total restaurants 9 6 3 21 13 8 Restaurant acquisitions/dispositions Company - Texas Roadhouse — — — — 8 (8 ) Franchise - Texas Roadhouse - Domestic — — — — (8 ) 8 Restaurant closures Franchise - Texas Roadhouse - Domestic — (1 ) 1 — (1 ) 1 Restaurants open at the end of the quarter Company - Texas Roadhouse 594 566 28 Company - Bubba’s 33 48 41 7 Company - Jaggers 8 7 1 Total company restaurants 650 614 36 Franchise - Texas Roadhouse - Domestic 56 54 2 Franchise - Jaggers - Domestic 3 — 3 Franchise - Texas Roadhouse - Int'l (1) 53 41 12 Total franchise restaurants 112 95 17 Total restaurants 762 709 53 _______________
(1) Includes Puerto Rico.
