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Texas Roadhouse, Inc. Announces Fourth Quarter 2020 Results and Provides Business Update

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Texas Roadhouse, Inc
·18 min read
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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 14th 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 14th 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.