TXRH - Texas Roadhouse Inc. Announces Third Quarter 2022 Results

LOUISVILLE, Ky., Oct. 27, 2022 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 39 weeks ended September 27, 2022.

Financial Results

Financial results for the 13 and 39 weeks ended September 27, 2022 and September 28, 2021 were as follows:

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

• Comparable restaurant sales increased 8.2% at company restaurants and increased 6.7% at domestic franchise restaurants;
• Average weekly sales at company restaurants were $129,278 of which 12.6% were to-go sales as compared to average weekly sales of $120,094 of which 15.1% were to-go sales in the prior year;
• Restaurant margin, as a percentage of restaurant and other sales, decreased 26 basis points to 15.4%. Restaurant margin was negatively impacted by commodity inflation of 8.8% and wage and other labor inflation of 7.7% partially offset by the benefit of an increase in comparable restaurant sales. Restaurant margin dollars increased 12.5% to $152.0 million from $135.1 million in the prior year;
• Diluted earnings per share increased 23.7% to $0.93 from $0.75 in the prior year as higher restaurant margin dollars were partially offset by higher income tax expense. Diluted earnings per share also benefitted from increased share repurchases;
• Five company restaurants and two international franchise restaurants were opened; and,
• The Company ended the quarter with $185.3 million of cash on hand and debt of $75.0 million.

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

• Comparable restaurant sales increased 10.5% at company restaurants and increased 10.1% at domestic franchise restaurants;
• Average weekly sales at company restaurants were $132,356 of which 13.5% were to-go sales as compared to average weekly sales of $120,271 of which 18.0% were to-go sales in the prior year;
• Restaurant margin, as a percentage of restaurant and other sales, decreased 115 basis points to 16.1%. Restaurant margin was negatively impacted by commodity inflation of 12.4% partially offset by the benefit of an increase in comparable restaurant sales. Restaurant margin dollars increased 9.3% to $481.9 million from $440.9 million in the prior year;
• Diluted earnings per share increased to $3.08 from $2.74 in the prior year as higher restaurant margin dollars were partially offset by higher general and administrative expenses. Diluted earnings per share also benefitted from increased share repurchases;
• 13 company restaurants and five international franchise restaurants were opened; 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 are pleased to announce another profitable quarter as our operators continue to focus on providing a legendary guest experience in spite of higher costs in this inflationary environment. This focus, along with our value proposition, keeps us well positioned to continue to grow both our top and bottom lines.”

Morgan continued, “As we transition into 2023, we are excited about the systemwide store growth we expect to see for all three brands. This store growth along with our planned franchise acquisitions and a disciplined approach to capital allocation reflects our commitment to driving shareholder value.”

Franchise Acquisitions

The Company has tentatively agreed to acquire eight domestic franchise restaurants with a targeted close date as of the beginning of our 2023 fiscal year.  These acquisitions are subject to the completion of customary negotiations and due diligence.

2022 Outlook

Comparable restaurant sales at company restaurants for the first four weeks of the fourth quarter of fiscal 2022 increased 8.3% compared to the prior year.   In addition, the Company implemented a menu price increase of approximately 2.9% in late October.

Management reiterated the following expectations for 2022:

• Positive comparable restaurant sales growth including the benefit of menu pricing actions;
• Store week growth of approximately 6% including the impact of the eight franchise locations acquired in 2022;
• Wage and other labor inflation of approximately 8%;
• An effective income tax rate of approximately 14% excluding the impact of any legislative changes enacted; and,
• Total capital expenditures of approximately $230 million including three relocations.
  

Management updated the following expectations for 2022:

• As many as 23 Texas Roadhouse and Bubba's 33 company restaurant openings; and,
• Commodity cost inflation of approximately 10.5%.

2023 Outlook

Management provided the following initial expectations for 2023:

• Positive comparable restaurant sales growth including the benefit of 2022 menu pricing actions;
• Approximately 30 Texas Roadhouse and Bubba’s 33 company restaurant openings;
• Store week growth of approximately 5% excluding the impact of potential franchise acquisitions;
• Commodity cost inflation of 5% to 6%;
• Wage and other labor inflation of 5% to 6%;
• An effective income tax rate of approximately 15% excluding the impact of any legislative changes enacted; and,
• Total capital expenditures of approximately $265 million.
  

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 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, Inc. is hosting a conference call today, October 27, 2022, 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. Third Quarter 2022 Earnings. A replay of the call will be available until November 3, 2022, 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 680 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.

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