Texas Roadhouse, Inc. Announces Fourth Quarter 2023 Results
Texas Roadhouse, Inc. (TXRH) announced an 11% increase in quarterly dividend to $0.61 per share. Financial results showed a 15.3% revenue growth for the 13 weeks ended December 26, 2023, with net income up by 21.0%. The company saw a 10.6% increase in income from operations and a 21.3% rise in diluted earnings per share. Comparable restaurant sales increased, and the company opened new restaurants. The outlook for 2024 includes positive sales growth, menu price increase, and capital expenditure plans.
Positive
The 13 weeks ended December 26, 2023, showed a 15.3% increase in total revenue compared to the same period in 2022.
Income from operations increased by 21.7% to $83,773 for the 13 weeks ended December 26, 2023.
Net income for the same period increased by 21.0% to $72,430.
Diluted earnings per share rose by 21.3% to $1.08 for the 13 weeks ended December 26, 2023.
Comparable restaurant sales increased by 9.9% at company restaurants and 8.9% at domestic franchise restaurants for the 13 weeks ended December 26, 2023.
The company opened 12 company restaurants and seven franchise restaurants during the same period.
For the 52 weeks ended December 26, 2023, comparable restaurant sales increased by 10.1% at company restaurants and 9.8% at domestic franchise restaurants.
The company repurchased 40,707 shares of common stock for $4.8 million during the same period.
The company's Board of Directors authorized an 11% increase in the quarterly cash dividend to $0.61 per share of common stock.
The company plans to implement a menu price increase of approximately 2.2% in late March 2024.
Management expects commodity cost inflation of approximately 5% and an effective income tax rate of around 14% for 2024.
The outlook for 2024 includes positive comparable restaurant sales growth, store week growth, wage and other labor inflation, and total capital expenditures of $340 million to $350 million.
The announcement by Texas Roadhouse, Inc. of a significant 11% increase in its quarterly dividend to $0.61 per share is a strong signal to shareholders and the market of the company's financial health and confidence in its future cash flows. The company's ability to raise dividends is often seen as a reflection of robust earnings and a stable financial position. This action may also attract income-focused investors, potentially increasing the demand for the company's stock.
Furthermore, the reported 15.3% and 15.4% year-over-year growth in total revenue for the 13 and 52 weeks, respectively, coupled with a 21.0% increase in net income for the 52-week period, indicate solid operational performance and effective cost management despite inflationary pressures. Investors may view these results as a testament to the company's resilience and adaptability in a challenging economic environment.
The reported increases in comparable restaurant sales of 9.9% at company restaurants and 8.9% at domestic franchise restaurants underscore a strong consumer demand for Texas Roadhouse's offerings. This performance, especially in the context of the broader restaurant industry, which often faces fierce competition and fluctuating consumer preferences, highlights the company's competitive positioning and effective marketing strategies.
Additionally, the strategic decision to open a record number of new system-wide restaurants across all three brands aligns with the company's growth-oriented approach. This expansion could potentially capture more market share and contribute to future revenue growth, which is critical for long-term value creation for shareholders.
The management's forward-looking statements regarding the development pipeline and the expected efficiencies from a more evenly distributed opening schedule suggest that Texas Roadhouse is positioning itself for sustainable growth. The anticipated 2.2% menu price increase aligns with inflationary trends and may help offset rising commodity and labor costs without significantly deterring customer spending if executed carefully.
The projected commodity cost inflation of approximately 5% and wage inflation of 4% to 5% for 2024 reflect broader economic trends and the challenges faced by the restaurant industry. The ability to navigate these headwinds through effective pricing strategies and cost management will be crucial for maintaining profitability and shareholder returns in the upcoming fiscal year.
02/15/2024 - 04:03 PM
Increases Quarterly Dividend 11% to $0.61 per Share
LOUISVILLE, Ky., Feb. 15, 2024 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 52 weeks ended December 26, 2023.
Financial Results
Financial results for the 13 and 52 weeks ended December 26, 2023 and December 27, 2022 were as follows:
13 Weeks Ended 52 Weeks Ended ($000 's) December 26, December 27, % change December 26, December 27, % change Total revenue $ 1,164,361 $ 1,009,529 15.3 % $ 4,631,672 $ 4,014,919 15.4 % Income from operations 83,773 68,853 21.7 % 353,989 320,197 10.6 % Net income 72,430 59,869 21.0 % 304,876 269,818 13.0 % Diluted earnings per share $ 1.08 $ 0.89 21.3 % $ 4.54 $ 3.97 14.3 %
Results for the 13 weeks ended December 26, 2023, as compared to the prior year as applicable, included the following:
Comparable restaurant sales increased 9.9% at company restaurants and increased 8.9% at domestic franchise restaurants; Average weekly sales at company restaurants were $141,653 of which $17,793 were to-go sales as compared to average weekly sales of $130,176 of which $16,414 were to-go sales in the prior year; Restaurant margin dollars increased 21.4% to $176.7 million from $145.6 million in the prior year primarily due to higher sales. Restaurant margin, as a percentage of restaurant and other sales, increased 75 basis points to 15.3% driven by higher sales partially offset by commodity inflation of 3.2% , wage and other labor inflation of 5.5% and higher general liability insurance expense; Diluted earnings per share increased 21.3% primarily driven by higher restaurant margin dollars partially offset by higher general and administrative expenses and higher depreciation and amortization expenses; 12 company restaurants and seven franchise restaurants were opened; and The Company repurchased 40,707 shares of common stock for $4.8 million . Results for the 52 weeks ended December 26, 2023, as compared to the prior year as applicable, included the following:
Comparable restaurant sales increased 10.1% at company restaurants and increased 9.8% at domestic franchise restaurants; Average weekly sales at company restaurants were $143,837 of which $18,088 were to-go sales as compared to average weekly sales of $131,802 of which $17,504 were to-go sales in the prior year; Restaurant margin dollars increased 12.8% to $708.0 million from $627.5 million in the prior year primarily due to higher sales. Restaurant margin, as a percentage of restaurant and other sales, decreased 36 basis points to 15.4% primarily due to commodity inflation of 5.6% , wage and other labor inflation of 6.6% and higher general liability insurance expense partially offset by higher sales; Diluted earnings per share increased 14.3% primarily driven by higher restaurant margin dollars partially offset by higher general and administrative expenses and higher depreciation and amortization expenses; 30 company restaurants and 15 franchise restaurants were opened; and The Company repurchased 455,026 shares of common stock for $50.0 million . Jerry Morgan, Chief Executive Officer of Texas Roadhouse, Inc. commented, “We had another outstanding year in 2023, which was highlighted by double-digit same store sales growth and a record number of new system-wide openings across all three brands. We are extremely thankful to our operators for their exceptional leadership and all Roadies who make dining at our restaurants such a legendary experience.”
Morgan continued, “As we move into 2024, our development pipeline is progressing as we anticipated with 19 new company restaurants under construction. We expect a more evenly distributed opening schedule will create efficiencies and positively impact store week growth. Our strong balance sheet and disciplined capital allocation strategy continues to provide us the necessary flexibility to fund new store growth and return capital to our shareholders.”
2024 Outlook
Comparable restaurant sales at company restaurants for the first 50 days of our first quarter of fiscal 2024 increased 6.8% compared to 2023. In addition, the Company plans to implement a menu price increase of approximately 2.2% in late March.
Management updated the following expectations for 2024:
Commodity cost inflation of approximately 5% ; and An effective income tax rate of approximately 14% . Management reiterated the following expectations for 2024:
Positive comparable restaurant sales growth including the benefit of 2023 menu pricing actions; Store week growth of approximately 8% , including a benefit of 2% from the 53rd week; Wage and other labor inflation of 4% to 5% ; and Total capital expenditures of $340 million to $350 million . Cash Dividend Payment
On February 14, 2024, the Company’s Board of Directors authorized the payment of a quarterly cash dividend of $0.61 per share of common stock. This payment, which represents an 11% increase from the quarterly cash dividend authorized in 2023, will be distributed on March 26, 2024, to shareholders of record at the close of business on March 13, 2024.
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 it occurs at irregular intervals and would impact comparability to prior period results. The Company excludes depreciation and amortization expenses, substantially all of which relates to restaurant-level assets, as it represents 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, February 15, 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. Fourth Quarter 2023 Earnings. A replay of the call will be available until February 22, 2024, by dialing (800) 770-2030 or (647) 362-9199 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 740 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 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 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 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 27, 2022. 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 Media Michael Bailen Travis Doster (502) 515-7298 (502) 638-5457
Texas Roadhouse, Inc. and Subsidiaries Consolidated Statements of Income (in thousands, except per share data) (unaudited) 13 Weeks Ended 52 Weeks Ended December 26, 2023 December 27, 2022 December 26, 2023 December 27, 2022 Revenue: Restaurant and other sales $ 1,157,362 $ 1,002,763 $ 4,604,554 $ 3,988,791 Franchise royalties and fees 6,999 6,766 27,118 26,128 Total revenue 1,164,361 1,009,529 4,631,672 4,014,919 Costs and expenses: Restaurant operating costs (excluding depreciation and amortization shown separately below): Food and beverage 395,753 351,723 1,593,852 1,378,192 Labor 383,154 334,827 1,539,124 1,319,959 Rent 18,765 17,049 72,766 66,834 Other operating 183,002 153,591 690,848 596,305 Pre-opening 9,523 6,568 29,234 21,883 Depreciation and amortization 40,438 35,462 153,202 137,237 Impairment and closure, net 144 1,063 275 1,600 General and administrative 49,809 40,393 198,382 172,712 Total costs and expenses 1,080,588 940,676 4,277,683 3,694,722 Income from operations 83,773 68,853 353,989 320,197 Interest income (expense), net 254 753 2,984 (124 ) Equity income from investments in unconsolidated affiliates 170 170 1,351 1,239 Income before taxes 84,197 69,776 358,324 321,312 Income tax expense 9,175 8,007 44,649 43,715 Net income including noncontrolling interests 75,022 61,769 313,675 277,597 Less: Net income attributable to noncontrolling interests 2,592 1,900 8,799 7,779 Net income attributable to Texas Roadhouse, Inc. and subsidiaries $ 72,430 $ 59,869 $ 304,876 $ 269,818 Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries: Basic $ 1.08 $ 0.89 $ 4.56 $ 3.99 Diluted $ 1.08 $ 0.89 $ 4.54 $ 3.97 Weighted average shares outstanding: Basic 66,803 66,946 66,893 67,643 Diluted 67,078 67,270 67,149 67,920 Cash dividends declared per share $ 0.55 $ 0.46 $ 2.20 $ 1.84
Texas Roadhouse, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in thousands) (unaudited) December 26, 2023 December 27, 2022 Cash and cash equivalents $ 104,246 $ 173,861 Other current assets, net 252,228 222,980 Property and equipment, net 1,474,722 1,270,349 Operating lease right-of-use assets, net 694,014 630,258 Goodwill 169,684 148,732 Intangible assets, net 3,483 5,607 Other assets 94,999 73,878 Total assets $ 2,793,376 $ 2,525,665 Other current liabilities 745,434 652,010 Operating lease liabilities, net of current portion 743,476 677,874 Long-term debt — 50,000 Other liabilities 146,955 118,119 Texas Roadhouse, Inc. and subsidiaries stockholders’ equity 1,141,662 1,012,638 Noncontrolling interests 15,849 15,024 Total liabilities and equity $ 2,793,376 $ 2,525,665
Texas Roadhouse, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) Fiscal Year Ended December 26, 2023 December 27, 2022 Cash flows from operating activities: Net income including noncontrolling interests $ 313,675 $ 277,597 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 153,202 137,237 Share-based compensation expense 34,230 36,663 Deferred income taxes 3,115 9,456 Other noncash adjustments, net 3,307 6,792 Change in working capital, net of acquisitions 57,455 43,980 Net cash provided by operating activities 564,984 511,725 Cash flows from investing activities: Capital expenditures - property and equipment (347,034 ) (246,121 ) Acquisition of franchise restaurants, net of cash acquired (39,153 ) (33,069 ) Proceeds from sale of investments in unconsolidated affiliates 627 316 Proceeds from sale of property and equipment 2,110 2,269 Proceeds from sale leaseback transactions 16,283 12,871 Net cash used in investing activities (367,167 ) (263,734 ) Cash flows from financing activities: Payments on revolving credit facility (50,000 ) (50,000 ) Repurchase of shares of common stock (49,993 ) (212,859 ) Dividends paid to shareholders (147,182 ) (124,137 ) Other financing activities, net (20,257 ) (22,779 ) Net cash used in financing activities (267,432 ) (409,775 ) Net decrease in cash and cash equivalents (69,615 ) (161,784 ) Cash and cash equivalents - beginning of period 173,861 335,645 Cash and cash equivalents - end of period $ 104,246 $ 173,861
Texas Roadhouse, Inc. and Subsidiaries Reconciliation of Income from Operations to Restaurant Margin ($ in thousands) (unaudited) 13 Weeks Ended 52 Weeks Ended December 26, 2023 December 27, 2022 December 26, 2023 December 27, 2022 Income from operations $ 83,773 $ 68,853 $ 353,989 $ 320,197 Less: Franchise royalties and fees 6,999 6,766 27,118 26,128 Add: Pre-opening 9,523 6,568 29,234 21,883 Depreciation and amortization 40,438 35,462 153,202 137,237 Impairment and closure, net 144 1,063 275 1,600 General and administrative 49,809 40,393 198,382 172,712 Restaurant margin $ 176,688 $ 145,573 $ 707,964 $ 627,501 Restaurant margin(as a percentage of restaurant and other sales) 15.3 % 14.5 % 15.4 % 15.7 %
Texas Roadhouse, Inc. and Subsidiaries Supplemental Financial and Operating Information ($ amounts in thousands, except weekly sales by group) (unaudited) 13 Weeks Ended December 26, 2023 December 27, 2022 Change Company restaurants (all concepts) Restaurant and other sales $ 1,157,362 $ 1,002,763 15.4 % Store weeks 8,158 7,691 6.1 % Comparable restaurant sales (1) 9.9 % 7.3 % Restaurant operating costs (as a % of restaurant and other sales) Food and beverage costs 34.2 % 35.1 % 88 bps Labor 33.1 % 33.4 % 28 bps Rent 1.6 % 1.7 % 8 bps Other operating 15.8 % 15.3 % (49 ) bps Total 84.7 % 85.5 % Restaurant margin 15.3 % 14.5 % 75 bps Restaurant margin ($ in thousands) $ 176,688 $ 145,573 21.4 % Restaurant margin $/Store week $ 21,658 $ 18,927 14.4 % Texas Roadhouse restaurants only: Store weeks 7,487 7,123 5.1 % Comparable restaurant sales (1) 10.2 % 7.3 % Average unit volume (2) $ 1,888 $ 1,715 10.1 % Weekly sales by group: Comparable restaurants (545 and 513 units) $ 145,361 $ 132,430 9.8 % Average unit volume restaurants (19 and 24 units) $ 140,765 $ 129,117 9.0 % Restaurants less than 6 months old (18 and 15 units) $ 137,123 $ 141,991 (3.4 ) % Bubba’s 33 restaurants only: Store weeks 574 504 13.9 % Comparable restaurant sales (1) 3.3 % 6.6 % Average unit volume (2) $ 1,411 $ 1,391 1.4 % Weekly sales by group: Comparable restaurants (36 and 32 units) $ 110,490 $ 104,880 5.3 % Average unit volume restaurants (4 and 4 units) $ 90,822 $ 124,063 (26.8 ) % Restaurants less than 6 months old (5 and 4 units) $ 124,389 $ 104,110 19.5 % Texas Roadhouse franchise restaurants only: Franchise royalties and fees $ 6,959 $ 6,766 2.9 % Store weeks 1,310 1,287 1.8 % Comparable restaurant sales 7.9 % 6.1 % U.S. franchise restaurants only: Comparable restaurant sales (1) 8.9 % 7.2 % Average unit volume (2) $ 2,067 $ 1,898 8.9 %
(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.
Amounts may not foot due to rounding.
Texas Roadhouse, Inc. and Subsidiaries Restaurant Unit Activity (unaudited) 13 Weeks Ended 52 Weeks Ended December 26, December 27, Change December 26, December 27, Change Restaurant openings Company - Texas Roadhouse 9 7 2 22 18 4 Company - Bubba’s 33 2 2 — 5 4 1 Company - Jaggers 1 1 — 3 1 2 Total company restaurants 12 10 2 30 23 7 Franchise - Texas Roadhouse - Domestic 2 — 2 3 — 3 Franchise - Jaggers - Domestic 1 — 1 2 — 2 Franchise - Texas Roadhouse - Int'l 4 2 2 10 7 3 Total franchise restaurants 7 2 5 15 7 8 Total restaurants 19 12 7 45 30 15 Restaurant acquisitions/dispositions Company - Texas Roadhouse — — — 8 8 — Franchise - Texas Roadhouse - Domestic — — — (8 ) (8 ) — Restaurant closures Franchise - Texas Roadhouse - Domestic — — — (1 ) — (1 ) Restaurants open at the end of the quarter Company - Texas Roadhouse 582 552 30 Company - Bubba’s 33 45 40 5 Company - Jaggers 8 5 3 Total company restaurants 635 597 38 Franchise - Texas Roadhouse - Domestic 56 62 (6 ) Franchise - Jaggers - Domestic 2 — 2 Franchise - Texas Roadhouse - Int'l 48 38 10 Total franchise restaurants 106 100 6 Total restaurants 741 697 44
Total revenue increased by 15.3% for the 13 weeks ended December 26, 2023, compared to the same period in 2022.
Net income increased by 21.0% to $72,430 for the 13 weeks ended December 26, 2023.
Diluted earnings per share rose by 21.3% to $1.08 for the 13 weeks ended December 26, 2023.
12 company restaurants and seven franchise restaurants were opened during the 13 weeks ended December 26, 2023.
Comparable restaurant sales increased by 10.1% at company restaurants for the 52 weeks ended December 26, 2023.
Comparable restaurant sales increased by 9.8% at domestic franchise restaurants for the 52 weeks ended December 26, 2023.
The company repurchased 40,707 shares of common stock for $4.8 million during the 52 weeks ended December 26, 2023.
The quarterly cash dividend authorized in 2024 increased by 11% compared to 2023.
The company plans to implement a menu price increase of approximately 2.2% in late March 2024.
Management expects commodity cost inflation of approximately 5% and an effective income tax rate of around 14% for 2024.
