Texas Roadhouse, Inc. Announces Second Quarter 2006 Results.LOUISVILLE Louisville (l  `ēvĭl), city (1990 pop. 269,063), seat of Jefferson co., NW Ky., at the Falls of the Ohio; inc. 1780. , Ky. -- Texas Roadhouse Texas Roadhouse is a chain restaurant that specializes in steaks and promotes a western theme. It is a publicly traded company NASDAQ: TXRH. As of January, 2007, there are approximately 250 locations in 43 U.S. states. , Inc. (NasdaqGS: TXRH), today
announced financial results for the 13 and 26 week periods ended June June: see month. 27, 2006.
Second Quarter Year to Date
($000's) 2006 2005 % Change 2006 2005 % Change
-------- -------- --------- -------- -------- ---------
Total revenue 146,720 115,757 27 296,119 226,824 31
Income from
operations 14,281 12,684 13 28,378 26,461 7
Net income 8,831 7,990 11 17,013 16,948 0
Diluted EPS $0.12 $0.11 9 $0.22 $0.23 (4)
Highlights for the quarter: --Comparable restaurant sales increased 1.2% at company restaurants and 0.5% at franchise restaurants; --Six company restaurants and one franchise restaurant opened; --Restaurant operating costs operating costs npl → gastos mpl operacionales , as a percentage of sales, were 78 basis points higher than the second quarter of 2005. Stock option expense of $0.8 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta recorded during the second quarter of 2006 negatively impacted restaurant operating costs by 60 basis points. Restaurant operating costs were favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted by 5 basis points in the quarter due to the impact of the franchise acquisitions; --Pre-opening expenses increased $1.6 million quarter-over-quarter. Four additional restaurants were opened in the second quarter of 2006 as compared to 2005. In addition, substantially more restaurants were in more advanced stages of the development pipeline in the second quarter of 2006 as compared to the second quarter of 2005; and --Our effective tax rate increased to 37.5% in second quarter of 2006 from 35.3% in the second quarter of 2005 primarily as a result of the non-deductibility of certain incentive stock options in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with our adoption of Statement of Financial Accounting Standards No. 123R, Share-Based Payment (SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 123R). Reported results for the second quarter also included the following items: --A non-cash pre-tax charge of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $1.7 million ($1.3 million after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. or $0.02 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share), relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the expensing of stock options due to the adoption of SFAS No. 123R. Of the $1.7 million, we included $0.8 million in labor expense and $0.9 million in general and administrative expense; and --An after-tax expense of $1.2 million, or $0.02 per diluted share, in the second quarter of 2005 relating to our annual managing partner conference which occurred in the second quarter of 2005. In 2006, our annual conference occurred during the first quarter, in which we recorded an after-tax expense of $1.6 million or $0.02 per diluted share. G.J. Hart, President and Chief Executive Officer of Texas Roadhouse commented, "Despite a challenging consumer environment, I am pleased to report that comparable restaurant sales for the quarter were positive. Additionally, on the development front, our new restaurants continue to open with strong sales and our pipeline is such that we have increased our forecast from 23 - 24 company restaurant openings to 25 company restaurant openings this year. However, due to incremental costs Costs which are additional costs to the Service appropriations that would not have been incurred absent support of the contingency operation. See also financial management. related to accelerated development and the soft consumer environment, we have decided to lower our full year earnings per share forecast by two to three cents. That said, we remain focused on providing legendary food and legendary service and a great value proposition to each and every guest, and as a result, we believe Texas Roadhouse is ideally positioned for significant growth over the long term." Outlook for 2006 The Company reported that comparable restaurant sales for the first four weeks of the 13 week third fiscal quarter ending September September: see month. 26, 2006 increased by 0.6% over the comparable 2005 period. For the full year 2006, management currently estimates that it will achieve diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of $0.41 to $0.43. This forecast includes the impact of stock option expense and the franchise acquisitions which were completed earlier this year and is two to three cents lower than the guidance provided in last quarter's press release. Conference Call The Company is hosting a conference call today, July July: see month. 31, 2006, at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (800) 811-8824. A replay of the call will be available until August 7, 2006. To access the replay, please dial (719) 457-0820, and use 7207464 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 operates over 236 restaurants system-wide in 43 states. For more information, please visit the Company's Web site at www.texasroadhouse.com. Forward-looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Certain statements in this release that are not historical facts, including, without limitation, those relating to our anticipated financial performance for the full year 2006, are forward-looking statements that involve risks and uncertainties. Such statements are based upon the current beliefs and expectations of the management of the Company. 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 during full year 2006 and beyond, the sales at these and our other company-owned and franchised restaurants, our ability to control other restaurant operating costs, our ability to integrate the franchise restaurants which we acquire, strength of consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. and other factors disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). from time to time in the Company's filings with the U.S. Securities and Exchange Commission. Investors should take such risks into account when making investment decisions. Stockholders 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.
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
13 Weeks Ended 26 Weeks Ended
--------------------- ---------------------
June 27, June 28, June 27, June 28,
2006 2005 2006 2005
---------- ---------- ---------- ----------
Revenue:
Restaurant sales $ 144,071 $ 113,108 $ 290,945 $ 221,715
Franchise royalties
and fees 2,649 2,649 5,174 5,109
---------- ---------- ---------- ----------
Total revenue 146,720 115,757 296,119 226,824
---------- ---------- ---------- ----------
Costs and expenses:
Restaurant operating
costs:
Cost of sales 50,460 39,906 102,092 77,940
Labor 40,309 30,473 80,166 59,716
Rent 2,433 2,089 4,809 4,126
Other operating 23,299 18,109 46,893 35,492
Pre-opening 3,229 1,595 5,811 2,959
Depreciation and
amortization 5,155 3,475 10,061 6,723
General and
administrative 7,554 7,426 17,909 13,407
---------- ---------- ---------- ----------
Total costs and expenses 132,439 103,073 267,741 200,363
---------- ---------- ---------- ----------
Income from operations 14,281 12,684 28,378 26,461
Interest expense, net 125 112 469 69
Minority interest 78 194 285 221
Equity income (loss) from
investments in
unconsolidated
affiliates 47 (30) 135 22
---------- ---------- ---------- ----------
Income before taxes 14,125 12,348 27,759 26,193
Provision for income taxes 5,294 4,358 10,746 9,245
---------- ---------- ---------- ----------
Net income $ 8,831 $ 7,990 $ 17,013 $ 16,948
========== ========== ========== ==========
Net income per common
share:
Basic $ 0.12 $ 0.12 $ 0.23 $ 0.25
========== ========== ========== ==========
Diluted $ 0.12 $ 0.11 $ 0.22 $ 0.23
========== ========== ========== ==========
Weighted average shares
outstanding:
Basic 73,907 67,710 73,634 67,520
========== ========== ========== ==========
Diluted 76,540 72,628 76,478 72,396
========== ========== ========== ==========
Texas Roadhouse, Inc.
Supplemental Financial and Operating Information
($ amounts in thousands)
(unaudited)
Second
Quarter Change Year to Date Change
2006 2005 vs LY 2006 2005 vs LY
-------- -------- -------- -------- -------- --------
Restaurant
openings
Company 6 2 4 10 6 4
Franchise 1 4 (3) 2 5 (3)
Total 7 6 1 12 11 1
Restaurant
acquisitions
Company 0 0 0 11 0 11
Franchise 0 0 0 (11) 0 (11)
Total 0 0 0 0 0 0
Restuarants
open at the
end of the
quarter
Company 148 113 35
Franchise 85 91 (6)
Total 233 204 29
Company-owned
restaurants
Restaurant
sales $144,071 $113,108 27.4% $290,945 $221,715 31.2%
Store weeks 1,853 1,460 26.9% 3,661 2,868 27.6%
Comparable
restaurant
sales
growth (1) 1.2% 6.8% 3.9% 6.8%
Average unit
volume (2) $ 1,003 $ 1,008 (0.5%) $ 2,057 $ 2,000 2.9%
Restaurant
costs (as a %
of restaurant
sales)
Cost of sales 35.0% 35.3% (26)bps 35.1% 35.2% (6)bps
Labor 28.0% 26.9% 104 bps 27.6% 26.9% 62 bps
Rent 1.7% 1.8% (16)bps 1.7% 1.9% (21)bps
Other operating 16.2% 16.0% 16 bps 16.1% 16.0% 11 bps
Total 80.9% 80.1% 78 bps 80.4% 80.0% 46 bps
Franchise-owned
restaurants
Franchise
royalties
and fees $ 2,649 $ 2,649 0.0% $ 5,174 $ 5,109 1.3%
Store weeks 1,095 1,162 (5.8%) 2,175 2,280 (4.6%)
Comparable
restaurant
sales
growth (1) 0.5% 6.6% 2.9% 6.4%
Average unit
volume (2) $ 948 $ 945 0.3% $ 1,934 $ 1,888 2.4%
Pre-opening
expense $ 3,229 $ 1,595 102.4% $ 5,811 $ 2,959 96.4%
Depreciation
and
amortization $ 5,155 $ 3,475 48.3% $ 10,061 $ 6,723 49.7%
As a % of
revenue 3.5% 3.0% 51 bps 3.4% 3.0% 43 bps
General &
administrative
expenses $ 7,554 $ 7,426 1.7% $ 17,909 $ 13,407 33.6%
As a % of
revenue 5.1% 6.4% (127)bps 6.0% 5.9% 14 bps
Interest
expense $ 125 $ 112 11.6% $ 469 $ 69 NM
Minority
interest $ 78 $ 194 (59.8%) $ 285 $ 221 29.0%
(1) Comparable restaurant sales growth includes sales from restaurants
open 18 months as of the beginning of the measurement period.
(2) Average unit volume includes sales from restaurants open six
months as of the beginning of the measurement period.
NM - not meaningful
Amounts may not foot due to rounding.
Reconciliation of Non-GAAP Measurements to GAAP Results
(in thousands, except per share data)
The Company believes that the presentation of results before the
impact of franchise acquisitions and non-comparable items provides
additional information to facilitate the comparison of past and
present operations. Non-comparable items include stock option expense,
annual conference expense, and a non-cash charge relating to the
application of EITF 04-1.
Hence, in addition to the results provided in accordance with U.S.
Generally Accepted Accounting Principles ("GAAP") throughout this
document, the Company has provided the non-GAAP measurements outlined
in the tables below which present operating results on a basis before
the impact from franchise acquisitions and non-comparable items. The
impact from franchise acquisitions relates to the operating results
for the second quarter and year to date 2006 of the 11 franchise
restaurants acquired on December 28, 2005.
The Company uses earnings before the impact of franchise acquisitions
and non-comparable items as a key performance measure of results of
operations for purposes of evaluating performance internally. This
non-GAAP measurement is not intended to, and does not, replace the
presentation of our financial results in accordance with GAAP.
Detail of Non-comparable Items for Q2 2006 and Q2 2005
------------------------------------------------------
2005 Annual
Stock Option Conference
Expense Expenses
------------- ------------
Labor $ 806 $ -
G&A 868 1,758
------------- ------------
Total non-comparable items 1,674 1,758
Tax on non-comparable items (334) (541)
------------- ------------
Total $ 1,340 $ 1,217
============= ============
Detail of Impact of Franchise Acquisitions
------------------------------------------
Restaurant sales $ 10,420
Restaurant operating costs 8,364
Depreciation 396
-------------
Income from operations 1,660
Foregone franchise royalty income 346
-------------
Incremental income from operations due to
franchise acquisitions
$ 1,314
=============
Reconciliation of Restaurant Sales and Operating Costs to Restaurant
Sales and Operating Costs excluding Acquisitions and Non-comparable
Items
----------------------------------------------------------------------
Change
Q2 2006 Q2 2005 vs LY
--------------------- ---------------------- --------
% of % of
Restaurant Restaurant
$ Sales $ Sales
---------- ---------- ---------- -----------
Restaurant sales $ 144,071 $ 113,108 27.4%
Impact of
franchise
acquisitions 10,420 -
Restaurant sales
excluding
acquisitions ---------- ----------
$ 133,651 $ 113,108 18.2%
========== ==========
Restaurant
operating costs $ 116,501 80.9% $ 90,577 80.1% 78 bps
Impact of
franchise
acquisitions 8,364 -
Stock option
expense 806 -
---------- ----------
9,170 -
Restaurant
operating costs
excluding
acquisitions and
non-comparable
items $ 107,331 80.3% $ 90,577 80.1% 23 bps
========== ==========
Reconciliation of Income from Operations to Income from Operations
excluding Acquisitions and Non-comparable Items
----------------------------------------------------------------------
Change
Q2 2006 Q2 2005 vs LY
-------- -------- --------
Income from operations $14,281 $12,684 12.6%
Acquisitions of 11 franchise restaurants 1,314 -
-------- --------
Income from operations excluding
acquisitions 12,967 12,684 2.2%
Annual conference expenses - 1,758
Stock option expense 1,674 -
-------- --------
Total non-comparable items 1,674 1,758
Income from operations excluding
acquistions and non-comparable items
$14,641 $14,442 1.4%
======== ========
Reconciliation of Reported EPS to EPS before Non- comparable Items
----------------------------------------------------------------------
Change
Q2 2006 Q2 2005 vs LY
-------- -------- --------
Diluted EPS $ 0.12 $ 0.11 9.1%
Annual conference expenses - 0.02
Stock option expense 0.02 -
-------- --------
Total non-comparable items 0.02 0.02
-------- --------
Diluted EPS before non-comparable items $ 0.14 $ 0.13 7.7%
======== ========
Detail of Non-comparable Items for 2006 YTD
-------------------------------------------
Charge
Stock Option relating to
Expense EITF 04-1 Total
------------ ----------- -------
Labor $ 1,694 $ - $1,694
G&A 1,822 786 2,608
------------ ----------- -------
Total non-comparable items 3,516 786 4,302
Tax on non-comparable items (697) - (697)
------------ ----------- -------
Total $ 2,819 $ 786 $3,605
=========== =========== =======
Detail of Impact of Franchise Acquisitions
------------------------------------------
Restaurant sales $ 21,188
Restaurant operating costs 16,830
Depreciation 764
-----------
Income from operations 3,594
Foregone franchise royalty income 703
-----------
Incremental income from operations due
to franchise acquisitions $ 2,891
===========
Reconciliation of Restaurant Sales and Operating Costs to Restaurant
Sales and Operating Costs excluding Acquisitions and Non-comparable
Items
----------------------------------------------------------------------
Change
2006 YTD 2005 YTD vs LY
--------------------- ---------------------- --------
% of % of
Restaurant Restaurant
$ Sales $ Sales
---------- ---------- ---------- -----------
Restaurant
sales $ 290,945 $ 221,715 31.2%
Impact of
franchise
acquisitions 21,188 -
---------- ----------
Restaurant sales
excluding
acquisitions $ 269,757 $ 221,715 21.7%
========== ==========
Restaurant
operating
costs $ 233,960 80.4% $ 177,274 80.0% 46 bps
Impact of
franchise
acquisitions 16,830 -
Stock option
expense 1,694 -
---------- ----------
18,524 -
Restaurant
operating
costs
excluding
acquisitions
and
non-comparable
items $ 215,436 79.9% $ 177,274 80.0% (9)bps
========== ==========
Reconciliation of Income from Operations to Income from Operations
excluding Acquisitions and Non-comparable Items
----------------------------------------------------------------------
2006 YTD 2005 YTD Change vs LY
-------- -------- ------------
Income from operations $28,378 $26,461 7.2%
Acquisitions of 11 franchise
restaurants 2,891 -
-------- --------
Income from operations excluding
acquisitions 25,487 26,461 (3.7%)
Stock option expense 3,516 -
Charge relating to EITF 04-1 786 -
-------- --------
Total non-comparable items 4,302 -
Income from operations excluding
acquisitions and non-comparable items $29,789 $26,461 12.6%
======== ========
Reconciliation of Reported EPS to EPS before Non-comparable Items
-----------------------------------------------------------------
2006 YTD 2005 YTD Change vs LY
-------- -------- ------------
Diluted EPS $ 0.22 $ 0.23 (4.3%)
Stock option expense 0.04 -
Charge relating to EITF 04-1 0.01 -
-------- --------
Total non-comparable items 0.05 -
-------- --------
Diluted EPS before non-comparable
items $ 0.27 $ 0.23 17.4%
======== ========
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