GlobeNewswire Inc | Aug 3, 2020 04:03PM EDT

August 03, 2020

LOUISVILLE, Ky., Aug. 03, 2020 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 26 week periods ended June 30, 2020 and provided a business update in response to the continued COVID-19 pandemic.

Statement from Kent Taylor, Founder and CEO

Let me start by thanking our operators and support teams for their hard work, dedication, courage, and commitment during the most challenging times weve experienced. Our operators were able to quickly transition nearly 600 full-service restaurants to a To-Go only model in March and then transition the majority of those same restaurants back to a hybrid operating model of limited capacity dining rooms together with enhanced To-Go service in May and June. Along the way, they came up with creative ways to drive traffic through increased outdoor dining, executing To-Go, managing wait times and other initiatives, with a priority of keeping our employees and guests safe.

As we began re-opening our dining rooms in May, it was clear that our guests were excited to return. Since then, we have been encouraged to see our sales trend favorably through a solid combination of re-opened dining rooms, outdoor dining, and strong To-Go sales. With these increased sales, we have also seen our cashflows steadily improve. While we know there are challenges that remain relating to the pandemic and its impact on our business, I know that our operators will continue to face them head on.

Financial Results

Financial results for the 13 and 26 week periods ended June 30, 2020 were as follows:

Second Quarter Year to Date ($000's) 2020 2019 % Change 2020 2019 % Change Total $ 476,425 $ 689,828 (30.9 %) $ 1,128,949 $ 1,380,436 (18.2 %) revenue(Loss)income from (47,318 ) 53,283 (188.8 %) (31,528 ) 113,728 (127.7 %) operationsNet(loss) (33,553 ) 44,845 (174.8 %) (17,524 ) 95,235 (118.4 %) incomeDiluted(loss) $ (0.48 ) $ 0.63 (177.4 %) $ (0.25 ) $ 1.32 (119.1 %) earningsper share

Results for the second quarter included the following:

-- For the April, May, and June periods, comparable restaurant sales at company restaurants decreased 46.7%, 41.9%, and 14.1%, respectively. Sales during the June period were positively impacted by the re-opening of dining rooms in a limited capacity in the majority of company restaurants. For the quarter, comparable restaurant sales decreased 32.8% at company restaurants and 32.1% at domestic franchise restaurants; -- Three company restaurants were opened. One company restaurant and two international franchise restaurants were permanently closed. In addition, one company restaurant and five international franchise locations remain temporarily closed; -- Restaurant margin, as a percentage of restaurant and other sales, was 2.5% and restaurant margin dollars were $11.8 million. Restaurant margin was impacted by a decrease in comparable restaurant sales and higher costs related to the pandemic. These costs included $4.7 million incurred for relief pay and benefits for hourly restaurant employees; and, -- The Company increased the capacity of its revolving credit facility by $82.5 million to further enhance financial flexibility and subsequently drew down $50 million of this amount. The Company ended the quarter with debt of $240.0 million and $282.5 million of cash on hand.

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

-- Comparable restaurant sales decreased 20.5% at company restaurants and 20.2% at domestic franchise restaurants; -- Eight company restaurants and one domestic 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 8.1% and restaurant margin dollars were $90.4 million. Restaurant margin included $15.4 million of costs incurred for relief pay and benefits for hourly restaurant employees; and, -- The Company repurchased 252,409 shares of common stock for $12.6 million. These repurchases continued through mid-March and no proceeds from the revolving credit facility were utilized.

Business Update

Comparable restaurant sales during the second quarter were impacted by the re-opening of dining rooms across the country. For the April period, the Company operated under a fully To-Go model, while the May and June periods included various capacity restrictions in the dining rooms. By period, the comparable restaurant sales and average weekly sales for all company restaurants were as follows:

April May June Q2 2020 All restaurantsComparablerestaurant (46.7%) (41.9%) (14.1%) (32.8%) salesAverageweekly $ 54,937 $ 62,343 $ 88,874 $ 70,281 salesNumber ofrestaurants 518 519 521 521 - end ofperiod Limitedcapacity restaurants(1)Comparablerestaurant (28.0%) (8.2%) (13.7%) salesAverageweekly N/A $ 80,235 $ 96,623 $ 92,227 salesTo-Go salesas a % ofaverage 41.9% 25.9% 29.7% weeklysalesNumber ofrestaurants 340 499 499 - end ofperiod (1) Includes the full weekly sales for all restaurants with dining roomsre-opened at limited capacity as of the end of a week and excludes thoserestaurants that were operating as To-Go or outdoor dining only.

For the July period, comparable restaurant sales at company restaurants decreased 13.0% and average weekly sales at all restaurants were $86,062. The decrease in average weekly sales was impacted by the decision of some states to further limit capacity or require dining rooms to be re-closed, the negative impact of the shift in the Fourth of July holiday, and normal seasonality. As of the end of July, over 95% of company restaurants had dining rooms operating in a limited capacity. For the July period, comparable restaurant sales per week and the average weekly sales for all company restaurants were as follows:

Week Ended 7/7/2020 7/14/2020 7/21/2020 7/28/2020 July All restaurantsComparablerestaurant (16.9%) (12.3%) (13.1%) (9.9%) (13.0%) salesAverageweekly $ 79,630 $ 86,704 $ 87,835 $ 90,080 $ 86,062 salesNumber ofrestaurants 523 523 523 523 523 - end ofperiod Limitedcapacity restaurants(1)Comparablerestaurant (14.9%) (10.2%) (11.4%) (8.4%) (11.2%) salesAverageweekly $ 81,725 $ 89,063 $ 89,377 $ 91,364 $ 87,882 salesTo-Go salesas a % ofaverage 25.4% 25.3% 25.7% 25.0% 25.3% weeklysalesNumber ofrestaurants 497 490 497 499 499 - end ofperiod (1) Includes the full weekly sales for all restaurants with dining roomsre-opened at limited capacity as of the end of the week and excludes thoserestaurants that were operating as To-Go or outdoor dining only.

For the second quarter, the Companys cash on hand position increased approximately $51.9 million due to working capital inflows, proceeds from the revolving credit facility and increased sales performance, partially offset by cash used for capital expenditures. At the current level of restaurant sales, the Company expects to continue to generate cash from operations and continue restaurant development. As of today, the Company has opened 10 restaurants and has resumed construction on an additional 12 restaurants. The Company currently expects to open as many as six restaurants in the third quarter, with two of these already opened. To the extent that state and local guidelines begin to further reduce capacity and/or re-close dining rooms, the Company will evaluate further development and reduce capital expenditures accordingly.

2020 Outlook

As previously announced, due to the current unprecedented global market and economic conditions, the Company withdrew the financial outlook for the fiscal year ending December 29, 2020. The Company cannot yet reasonably estimate the impact to the business and therefore cannot provide an updated outlook.

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 cost of sales, 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, August 3, 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 8064639 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 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 August 3, 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 RelationsTonya Robinson(502) 515-7269

MediaTravis Doster(502) 638-5457

Texas Roadhouse, Inc. and SubsidiariesCondensed Consolidated Statements of Income (Loss)(in thousands, except per share data)(unaudited) 13 Weeks Ended 26 Weeks Ended June 30, 2020 June 25, 2019 June 30, 2020 June 25, 2019 Revenue: Restaurant and $ 473,090 $ 684,373 $ 1,120,716 $ 1,369,490 other sales Franchise royalties and 3,335 5,455 8,233 10,946 fees Total revenue 476,425 689,828 1,128,949 1,380,436 Costs and expenses: Restaurant operating costs (excluding depreciation and amortization shown separately below): Cost of sales 164,041 221,266 374,221 444,978 Labor 194,622 225,490 435,701 449,370 Rent 13,251 13,051 26,722 26,179 Other operating 89,348 103,811 193,637 205,613 Pre-opening 4,290 4,197 9,402 8,065 Depreciation and 29,016 28,454 58,070 56,227 amortization Impairment and (440 ) 316 155 333 closure, net General and 29,615 39,960 62,569 75,943 administrative Total costs and 523,743 636,545 1,160,477 1,266,708 expenses (Loss) income from (47,318 ) 53,283 (31,528 ) 113,728 operations Interest expense 1,030 (691 ) 1,099 (1,445 ) (income), netEquity (loss)income from investments in unconsolidated (90 ) 141 (598 ) 254 affiliates (Loss) income (48,438 ) 54,115 (33,225 ) 115,427 before taxesIncome tax (15,132 ) 7,427 (17,071 ) 16,546 (benefit) expense Net (loss) incomeincluding (33,306 ) 46,688 (16,154 ) 98,881 noncontrollinginterestsLess: Net incomeattributable to 247 1,843 1,370 3,646 noncontrollinginterestsNet (loss) incomeattributable toTexas Roadhouse, $ (33,553 ) $ 44,845 $ (17,524 ) $ 95,235 Inc. andsubsidiaries Net (loss) incomeper common shareattributable to Texas Roadhouse,Inc.and subsidiaries: Basic $ (0.48 ) $ 0.63 $ (0.25 ) $ 1.33 Diluted $ (0.48 ) $ 0.63 $ (0.25 ) $ 1.32 Weighted averageshares outstanding: Basic 69,361 71,362 69,391 71,558 Diluted 69,361 71,733 69,391 71,961 Cash dividends $ - $ 0.30 $ 0.36 $ 0.60 declared per share

Texas Roadhouse, Inc. and SubsidiariesCondensed Consolidated Balance Sheets(in thousands)(unaudited) June 30, December 31, 2020 2019 Cash and cash equivalents $ 282,493 $ 107,879 Other current assets, net 76,884 140,020 Property and equipment, net 1,072,173 1,056,563 Operating lease right-of-use assets, 517,260 499,801 net Goodwill 124,748 124,748 Intangible assets, net 993 1,234 Other assets 55,933 53,320 Total assets $ 2,130,484 $ 1,983,565 Current liabilities 402,242 417,220 Operating lease liabilities, net of 557,543 538,710 current portion Long-term debt, excluding current 190,000 - maturities Other liabilities 97,980 96,466 Texas Roadhouse, Inc. and subsidiaries 868,021 915,994 stockholders' equity Noncontrolling interests 14,698 15,175 Total liabilities and equity $ 2,130,484 $ 1,983,565

Texas Roadhouse, Inc. and SubsidiariesCondensed Consolidated Statements of Cash Flows(in thousands)(unaudited) 26 Weeks Ended June 30, 2020 June 25, 2019 Cash flows from operating activities: Net (loss) income including $ (16,154 ) $ 98,881 noncontrolling interestsAdjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 58,070 56,227 Share-based compensation expense 14,490 16,873 Deferred income taxes (10,926 ) (2,734 ) Other noncash adjustments, net 3,052 2,707 Change in working capital 13,313 15,062 Net cash provided by operating 61,845 187,016 activities Cash flows from investing activities: Capital expenditures - property and (81,833 ) (87,782 ) equipmentProceeds from sale leaseback transaction 2,167 - Net cash used in investing (79,666 ) (87,782 ) activities Cash flows from financing activities: Proceeds from revolving credit facility 240,000 - Repurchase of shares of common stock (12,621 ) (112,050 ) Dividends paid (24,989 ) (39,452 ) Other financing activities, net (9,955 ) (13,018 ) Net cash provided by (used in) 192,435 (164,520 ) financing activities Net increase (decrease) in cash and 174,614 (65,286 ) cash equivalentsCash and cash equivalents - beginning of 107,879 210,125 periodCash and cash equivalents - end of period $ 282,493 $ 144,839

Texas Roadhouse, Inc. and SubsidiariesReconciliation of (Loss) Income from Operations to Restaurant Margin(in thousands)(unaudited) 13 Weeks Ended 26 Weeks Ended June 30, 2020 June 25, 2019 June 30, 2020 June 25, 2019 (Loss) incomefrom $ (47,318 ) $ 53,283 $ (31,528 ) $ 113,728 operations Less: Franchiseroyalties and 3,335 5,455 8,233 10,946 fees Add: Pre-opening 4,290 4,197 9,402 8,065 Depreciationand 29,016 28,454 58,070 56,227 amortizationImpairment and (440 ) 316 155 333 closure, netGeneral and 29,615 39,960 62,569 75,943 administrative Restaurant $ 11,828 $ 120,755 $ 90,435 $ 243,350 margin Restaurantmargin (as apercentage of 2.5% 17.6% 8.1% 17.8% restaurant andother sales)

Texas Roadhouse, Inc. and SubsidiariesSupplemental Financial and Operating Information($ amounts in thousands, except weekly sales by group)(unaudited) Second Quarter Change Year to Date Change 2020 2019 vs LY 2020 2019 vs LY Restaurant openings Company - Texas 2 3 (1 ) 6 7 (1 ) Roadhouse Company - 1 0 1 2 0 2 Bubba's 33 Company - 0 0 0 0 0 0 Other Franchise - Texas 0 1 (1 ) 1 1 0 Roadhouse - U.S. Franchise - Texas 0 1 (1 ) 0 3 (3 ) Roadhouse - International Total 3 5 (2 ) 9 11 (2 ) Restaurant closures Company - Texas (1 ) 0 (1 ) (1 ) 0 (1 ) Roadhouse Company - 0 0 0 0 0 0 Bubba's 33 Company - 0 0 0 0 0 0 Other Franchise - Texas (2 ) (2 ) 0 (2 ) (2 ) 0 Roadhouse - International Total (3 ) (2 ) (1 ) (3 ) (2 ) (1 ) Restaurants openat the end of the quarter (1) Company - Texas 489 471 18 Roadhouse Company - 30 25 5 Bubba's 33 Company - 2 2 0 Other Franchise - Texas 70 70 0 Roadhouse - U.S. Franchise - Texas 26 23 3 Roadhouse - International Total 617 591 26 Company restaurants Restaurant and $ 473,090 $ 684,373 (30.9 ) % $ 1,120,716 $ 1,369,490 (18.2 ) % other sales Store weeks 6,742 6,460 4.4 % 13,463 12,846 4.8 % Comparable restaurant (32.8 ) % 4.7 % (20.5 ) % 5.0 % sales growth (2) Texas Roadhouse restaurants only: Comparable restaurant (32.4 ) % 4.6 % (20.2 ) % 4.9 % sales growth (2) Average unit volume $ 935 $ 1,384 (32.5 ) % $ 2,218 $ 2,786 (20.4 ) % (3) Weekly sales by group: Comparable restaurants $ 72,005 (454 units) Average unit volume restaurants $ 69,174 (20 units) (4) Restaurants less than 6 $ 61,781 months old (15 units) Restaurantoperating costs(as a % of restaurant andother sales)Cost of sales 34.7 % 32.3 % 234 bps 33.4 % 32.5 % 90 bps Labor 41.1 % 32.9 % 819 bps 38.9 % 32.8 % 606 bps Rent 2.8 % 1.9 % 89 bps 2.4 % 1.9 % 47 bps Other operating 18.9 % 15.2 % 372 bps 17.3 % 15.0 % 226 bps Total 97.5 % 82.4 % 1,514 bps 91.9 % 82.2 % 970 bps Restaurant 2.5 % 17.6 % (1,514 ) bps 8.1 % 17.8 % (970 ) bps margin Restaurant margin ($ in $ 11,828 $ 120,755 (90.2 ) % $ 90,435 $ 243,350 (62.8 ) % thousands) Restaurant margin $/Store $ 1,754 $ 18,692 (90.6 ) % $ 6,717 $ 18,943 (64.5 ) % week Franchise restaurants Franchise royalties and $ 3,335 $ 5,455 (38.9 ) % $ 8,233 $ 10,946 (24.8 ) % fees Store weeks 1,248 1,208 3.3 % 2,511 2,403 4.5 % Comparable restaurant (38.2 ) % 3.7 % (23.4 ) % 3.3 % sales growth (2) U.S. franchise restaurants only: Comparable restaurant (32.1 ) % 4.3 % (20.2 ) % 4.3 % sales growth (2) Average unit volume $ 980 $ 1,432 (31.6 ) % $ 2,314 $ 2,880 (19.7 ) % (3) Pre-opening $ 4,290 $ 4,197 2.2 % $ 9,402 $ 8,065 16.6 % expense Depreciation and $ 29,016 $ 28,454 2.0 % $ 58,070 $ 56,227 3.3 % amortization As a % of 6.1 % 4.1 % 197 bps 5.1 % 4.1 % 107 bps revenue General andadministrative $ 29,615 $ 39,960 (25.9 ) % $ 62,569 $ 75,943 (17.6 ) % expenses As a % of 6.2 % 5.8 % 42 bps 5.5 % 5.5 % 4 bps revenue (1) Includes one domestic company-owned and five international franchise locations that are temporarily closed.(2) Comparable restaurant sales growth reflects the change in year-over-yearsales for restaurants open a full 18 months before the beginning of the period measured, excluding sales from restaurants permanently closed during theperiod. (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.