GlobeNewswire Inc | Oct 28, 2020 04:03PM EDT

October 28, 2020

LOUISVILLE, Ky., Oct. 28, 2020 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 39 week periods ended September 29, 2020 and provided a business update in response to the continued COVID-19 pandemic.

Financial Results

Financial results for the 13 and 39 week periods ended September 29, 2020 were as follows:

Third Quarter Year to Date($000's) 2020 2019 % Change 2020 2019 % Change Total $ 631,185 $ 650,489 (3.0 %) $ 1,760,134 $ 2,030,925 (13.3 %)revenueIncomefrom 34,976 44,884 (22.1 %) 3,448 158,612 (97.8 %)operationsNet income 29,230 36,531 (20.0 %) 11,706 131,766 (91.1 %)Dilutedearnings $ 0.42 $ 0.52 (19.9 %) $ 0.17 $ 1.85 (90.9 %)per share

Results for the third quarter included the following:

-- For the July, August, and September periods, comparable restaurant sales at company restaurants decreased 13.0%, 6.6%, and 0.5%, respectively. Sales during the period were positively impacted by the continued easing of dining room capacity restrictions throughout the country. For the quarter, comparable restaurant sales decreased 6.3% at domestic company restaurants and 9.6% at domestic franchise restaurants; -- Five company restaurants, including one Bubbas 33 restaurant, and one international franchise restaurant were opened. Three international franchise locations remain temporarily closed as of the end of the quarter; -- Restaurant margin, as a percentage of restaurant and other sales, was 14.5% and restaurant margin dollars were $91.1 million. Restaurant margin was impacted by a decrease in comparable restaurant sales and higher costs related to the pandemic. These costs included $1.8 million of costs incurred for enhanced benefits for hourly restaurant employees which were more than offset by employee retention payroll tax credits of $4.5 million related to relief pay for hourly restaurant employees provided in the first half of the year; -- General and administrative expenses included a $3.0 million benefit related to the sale of a legal claim; and, -- The Company ended the quarter with debt of $240.0 million and $328.6 million of cash on hand.

Results for the year-to-date period included the following highlights:

-- Comparable restaurant sales decreased 16.0% at domestic company restaurants and 16.8% at domestic franchise restaurants; -- 13 company restaurants, including three Bubbas 33 restaurants, one domestic franchise restaurant and one international franchise restaurant were opened. One company restaurant and two international franchise restaurants were permanently closed; -- Restaurant margin, as a percentage of restaurant and other sales, was 10.4% and restaurant margin dollars were $181.6 million. Restaurant margin was impacted by a decrease in comparable restaurant sales and higher costs related to the pandemic. These costs included $12.7 million of costs incurred for relief pay and enhanced benefits for hourly restaurant employees, net of employee retention payroll tax credits; 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, As our dining rooms continue to operate under decreasing capacity limitations, we are pleased to see our average weekly sales getting closer to historical levels. In addition, our operators continue to drive traffic through strong To-Go sales and outdoor dining. On the development front, we expect to open at least 20 company restaurants in 2020 despite pausing construction on a number of sites earlier in the year. Thanks to the strength of our operators, we remain confident in the positioning of our brands as we close out the year and head into 2021.

Business Update

Comparable restaurant sales during the third quarter were positively impacted by the continued easing of dining room capacity restrictions throughout the country. For the quarter, the Company operated 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. By period, the comparable restaurant sales, average weekly sales, and To-Go sales for all company restaurants were as follows:

July August September Q3 2020All restaurants Comparablerestaurant (13.0 %) (6.6 %) (0.5 %) (6.3 %)salesAverage weekly $ 86,065 $ 93,849 $ 95,803 $ 92,213 salesTo-Go sales asa % of average 26.2 % 23.6 % 21.1 % 23.3 %weekly sales

For the October period, comparable restaurant sales at company restaurants increased 0.8%, average weekly sales at all company restaurants were $98,797, and To-Go sales as a percentage of average weekly sales were 20.0%.

For the third quarter, the Companys cash on hand position increased approximately $46.1 million due to increased sales performance and working capital inflows, partially offset by cash used for capital expenditures. As of the end of the quarter, the Company had opened 13 company restaurants and an additional 18 company restaurants had either resumed construction or were approved to resume construction soon. As many as eight of these restaurants are expected to open in 2020 and the remaining 10 are expected to open in the first half of 2021. The Companys development pipeline also includes an additional 15 restaurants that are fully approved or in permitting.

In addition, the Company continues to look for ways through various strategic initiatives to drive awareness of its brands and increase profitability. This includes Texas Roadhouse Butcher Shop, an on-line platform for the purchase and delivery of hand-cut quality steaks.

Kent Taylor commented, During any crisis, if you look close enough, an opportunity like the Texas Roadhouse Butcher Shop arises. Back in March and April, our guests looked to us to stock up on steaks at home. As a result, we saw an opportunity to provide the same Texas Roadhouse quality and value with our on-line Butcher Shop, which will launch in early November.

2020 Outlook

As previously announced, due to the uncertainty surrounding the pandemic, the Company withdrew the financial outlook for the fiscal year ending December 29, 2020. However, based on the improved cashflow at company restaurants, the Company is providing the following expectations for 2020:

-- At least 20 company restaurant openings; and, -- Total capital expenditures of approximately $160 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 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, October 28, 2020 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 7594428 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 620 restaurants system-wide in 49 states and ten foreign countries. For more information, please visit the 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 IItem 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 October 28, 2020. 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

MediaTravis Doster(502) 638-5457

Texas Roadhouse, Inc. and SubsidiariesCondensed Consolidated Statements of Income(in thousands, except per share data)(unaudited) 13 Weeks Ended 39 Weeks Ended September September September September 29, 2020 24, 2019 29, 2020 24, 2019 Revenue: Restaurant and other $ 626,429 $ 645,230 $ 1,747,145 $ 2,014,720 sales Franchise royalties and 4,756 5,259 12,989 16,205 fees Total revenue 631,185 650,489 1,760,134 2,030,925 Costs and expenses: Restaurant operating costs (excluding depreciation and amortization shown separately below): Food and beverage 201,308 205,158 575,529 650,136 Labor 217,275 218,342 652,976 667,712 Rent 13,723 12,994 40,445 39,173 Other operating 102,978 100,742 296,615 306,355 Pre-opening 4,894 4,736 14,296 12,801 Depreciation and 29,364 28,347 87,434 84,574 amortization Impairment and closure, 716 61 871 394 net General and 25,951 35,225 88,520 111,168 administrative Total costs and expenses 596,209 605,605 1,756,686 1,872,313 Income from operations 34,976 44,884 3,448 158,612 Interest expense (income), 1,502 (81) 2,601 (1,526)netEquity income (loss) from investments in unconsolidated 1 (154) (597) 100 affiliates Income before taxes 33,475 44,811 250 160,238Income tax expense 3,072 6,785 (13,999) 23,331(benefit) Net income including 30,403 38,026 14,249 136,907noncontrolling interestsLess: Net incomeattributable to 1,173 1,495 2,543 5,141noncontrolling interestsNet income attributable toTexas Roadhouse, Inc. and $ 29,230 $ 36,531 $ 11,706 $ 131,766subsidiaries Net income per commonshare attributable to Texas Roadhouse, Inc. andsubsidiaries: Basic $ 0.42 $ 0.53 $ 0.17 $ 1.86 Diluted $ 0.42 $ 0.52 $ 0.17 $ 1.85 Weighted average shares outstanding: Basic 69,446 69,573 69,410 70,896 Diluted 69,898 69,939 69,830 71,287 Cash dividends declared $ - $ 0.30 $ 0.36 $ 0.90per share

Texas Roadhouse, Inc. and SubsidiariesCondensed Consolidated Balance Sheets(in thousands)(unaudited) September 29, December 31, 2020 2019 Cash and cash equivalents $ 328,636 $ 107,879Other current assets, net 70,905 140,020Property and equipment, net 1,076,924 1,056,563Operating lease right-of-use assets, net 526,501 499,801Goodwill 124,748 124,748Intangible assets, net 890 1,234Other assets 59,407 53,320 Total assets $ 2,188,011 $ 1,983,565 Current liabilities 396,402 417,220Operating lease liabilities, net of current 567,480 538,710portionLong-term debt, excluding current maturities 190,000 -Other liabilities 115,626 96,466Texas Roadhouse, Inc. and subsidiaries 902,916 915,994stockholders' equityNoncontrolling interests 15,587 15,175 Total liabilities and equity $ 2,188,011 $ 1,983,565

Texas Roadhouse, Inc. and SubsidiariesCondensed Consolidated Statements of Cash Flows(in thousands)(unaudited) 39 Weeks Ended September September 29, 2020 24, 2019 Cash flows from operating activities: Net income including noncontrolling interests $ 14,249 $ 136,907Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 87,434 84,574 Share-based compensation expense 22,070 25,016 Deferred income taxes (15,572) (3,660) Other noncash adjustments, net 3,717 4,541Change in working capital 34,137 (5,381) Net cash provided by operating activities 146,035 241,997 Cash flows from investing activities: Capital expenditures - property and equipment (117,521) (144,917)Proceeds from sale of property and equipment 32 351Proceeds from sale leaseback transaction 2,167 - Net cash used in investing activities (115,322) (144,566) Cash flows from financing activities: Proceeds from revolving credit facility 240,000 -Repurchase of shares of common stock (12,621) (130,963)Dividends paid (24,989) (60,675)Other financing activities, net (12,346) (16,378) Net cash provided by (used in) financing 190,044 (208,016) activities Net increase (decrease) in cash and cash 220,757 (110,585) equivalentsCash and cash equivalents - beginning of period 107,879 210,125Cash and cash equivalents - end of period $ 328,636 $ 99,540

Texas Roadhouse, Inc. and SubsidiariesReconciliation of Income from Operations to Restaurant Margin(in thousands)(unaudited) 13 Weeks Ended 39 Weeks Ended September September 24, September 29, September 24, 29, 2020 2019 2020 2019 Income from $ 34,976 $ 44,884 $ 3,448 $ 158,612 operations Less: Franchiseroyalties and 4,756 5,259 12,989 16,205 fees Add: Pre-opening 4,894 4,736 14,296 12,801 Depreciationand 29,364 28,347 87,434 84,574 amortizationImpairment and 716 61 871 394 closure, netGeneral and 25,951 35,225 88,520 111,168 administrative Restaurant $ 91,145 $ 107,994 $ 181,580 $ 351,344 margin Restaurantmargin (as apercentage of 14.5 % 16.7 % 10.4 % 17.4 %restaurant andother sales)

Texas Roadhouse, Inc. and SubsidiariesSupplemental Financial and Operating Information($ amounts in thousands, except weekly sales by group)(unaudited) Third Quarter Change Year to Date Change 2020 2019 vs LY 2020 2019 vs LY Restaurant openings Company - Texas 4 3 1 10 10 0 Roadhouse Company - Bubba's 33 1 1 0 3 1 2 Company - Other 0 0 0 0 0 0 Franchise - Texas 0 0 0 1 1 0 Roadhouse - U.S. Franchise - Texas Roadhouse - 1 2 (1) 1 5 (4) International Total 6 6 0 15 17 (2) Restaurant closures Company - Texas 0 0 0 (1) 0 (1) Roadhouse Company - Bubba's 33 0 0 0 0 0 0 Company - Other 0 0 0 0 0 0 Franchise - Texas Roadhouse - 0 0 0 (2) (2) 0 International Total 0 0 0 (3) (2) (1) Restaurants open at the end of the quarter (1) Company - Texas 493 474 19 Roadhouse Company - Bubba's 33 31 26 5 Company - Other 2 2 0 Franchise - Texas 70 70 0 Roadhouse - U.S. Franchise - Texas Roadhouse - 27 25 2 International Total 623 597 26 Company restaurants Restaurant and other $ 626,429 $ 645,230 (2.9 ) % $ 1,747,145 $ 2,014,720 (13.3 ) % sales Store weeks 6,810 6,509 4.6 % 20,274 19,355 4.7 % Comparable restaurant (6.3 ) % 4.4 % (16.0 ) % 4.8 % sales (2) Texas Roadhouse restaurants only: Comparable restaurant sales (6.5 ) % 4.2 % (15.8 ) % 4.7 % (2) Average unit volume $ 1,211 $ 1,302 (7.0 ) % $ 3,433 $ 4,088 (16.0 ) % (3) Weekly sales by group: Comparable restaurants (464 $ 93,659 units) Average unit volume $ 80,556 restaurants (19 units) (4) Restaurants less than 6 months $ 93,616 old (10 units) Restaurant operating costs (as a % of restaurant and other sales)Food and beverage costs 32.1 % 31.8 % 34 bps 32.9 % 32.3 % 67 bpsLabor 34.7 % 33.8 % 85 bps 37.4 % 33.1 % 423 bpsRent 2.2 % 2.0 % 18 bps 2.3 % 1.9 % 37 bpsOther operating 16.4 % 15.6 % 83 bps 17.0 % 15.2 % 177 bpsTotal 85.5 % 83.3 % 219 bps 89.6 % 82.6 % 705 bps Restaurant margin 14.5 % 16.7 % (219 ) bps 10.4 % 17.4 % (705 ) bps Restaurant margin ($ $ 91,145 $ 107,994 (15.6 ) % $ 181,580 $ 351,344 (48.3 ) % in thousands) Restaurant margin $/ $ 13,384 $ 16,591 (19.3 ) % $ 8,956 $ 18,153 (50.7 ) % Store week Franchise restaurants Franchise royalties $ 4,756 $ 5,259 (9.6 ) % $ 12,989 $ 16,205 (19.8 ) % and fees Store weeks 1,259 1,220 3.2 % 3,788 3,623 4.6 % Comparable restaurant (11.2 ) % 2.4 % (19.5 ) % 3.0 % sales (2) U.S. franchise restaurants only: Comparable restaurant sales (9.6 ) % 3.2 % (16.8 ) % 4.0 % (2) Average unit volume $ 1,228 $ 1,349 (9.0 ) % $ 3,543 $ 4,230 (16.2 ) % (3) Pre-opening expense $ 4,894 $ 4,736 3.3 % $ 14,296 $ 12,801 11.7 % Depreciation and $ 29,364 $ 28,347 3.6 % $ 87,434 $ 84,574 3.4 %amortization As a % of revenue 4.7 % 4.4 % 29 bps 5.0 % 4.2 % 80 bps General and $ 25,951 $ 35,225 (26.3 ) % $ 88,520 $ 111,168 (20.4 ) %administrative expenses As a % of revenue 4.1 % 5.4 % (130 ) bps 5.0 % 5.5 % (44 ) bps (1) Includes three international franchise locations that are temporarily closed.(2) Comparable restaurant sales reflects the change in year-over-year sales forrestaurants open a full 18 months before the beginning of the period measured, excluding sales from restaurants permanently closed during the period.(3) Average unit volume includes sales from Texas Roadhouse restaurants openfor a full six months before the beginning of the period measured, excluding sales from restaurants permanently closed during the period.(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.