Texas Roadhouse, Inc. has announced financial results for the 13 and 39 week periods ended September 27, 2011.
Results for the third quarter included:
- Comparable restaurant sales increased 4.0% at company restaurants and 3.7% at franchise restaurants;
- Five company restaurants and one franchise restaurant opened;
- Restaurant margins, as a percentage of restaurant sales, increased nine basis points to 18.0% due, in large part, to approximately $1.0 million in benefits recorded relating to workers compensation and property tax expenses;
- Diluted earnings per share increased 15% to $0.22 from $0.19 in the prior year period;
- The Company repurchased 1,503,400 shares of its common stock for a total purchase price of $21.2 million.
Results year-to-date included:
- Comparable restaurant sales increased 4.4% at company restaurants and 3.9% at franchise restaurants;
- Ten company restaurants and one franchise restaurant opened;
- Restaurant margins, as a percentage of restaurant sales, decreased 51 basis points to 18.5%;
- Diluted earnings per share increased 7% to $0.71 from $0.66 in the prior period;
- The Company repurchased 3,003,400 shares of its common stock for a total purchase price of $46.4 million.
Kent Taylor, Chief Executive Officer of Texas Roadhouse, commented, “Despite ongoing commodity inflation, we were pleased with our third quarter. Comparable restaurant sales remained strong at 4%, driven by traffic gains and pricing flow through, while our newest units continued to generate very strong volumes. In terms of profitability, although one-time benefits and a lower tax rate bolstered our reported results, our underlying business performance was in-line with our expectations. Finally, we remain on track with our 2011 and 2012 development plans, and are particularly pleased that our cash flow generation remains healthy. This allows us to self-fund our new unit expansion and allocate excess capital for the benefit of shareholders.”
Outlook for 2011
The Company reported that comparable restaurant sales at company restaurants for the first four weeks of the fourth quarter of fiscal 2011 increased approximately 4.2% compared to the prior year period.
With better than expected third quarter results, driven by lower than anticipated workers compensation expense, property tax expense and income tax rate, the Company is increasing its diluted earnings per share expectation for 2011. Diluted earnings per share growth is now expected to be up 7.0% to 8.0%. This full year 2011 estimate is based, in part, on the following assumptions, which have not changed from previously reported guidance:
- Comparable company restaurant sales growth of 4.0% to 4.5%;
- 20 company restaurant openings;
- Food cost inflation of approximately 4.0%; and
- Total capital expenditures of approximately $70.0 million.
Outlook for 2012
With regard to 2012, management provides the following expectations:
- Positive comparable restaurant sales growth;
- 25 restaurant openings;
- Food cost inflation of 7.0% to 9.0%, up from approximately 4.0% in 2011;
- Higher labor costs due to an increase in minimum and tip wages in 6 states, which impacts approximately 50 company-owned restaurants or approximately 20% of our total company-owned restaurants;
- Income tax rate of approximately 32.5%, an increase of 270 basis points over the expected 2011 rate based on the scheduled expiration of certain federal tax credits at the end of 2011; and
- Total capital expenditures of approximately $80.0 million.
Taylor commented on 2012, “We certainly feel very good about our sales momentum and increased restaurant growth heading into 2012. And, while we do anticipate taking some pricing actions, we do not expect those to offset the unusually high inflation we foresee next year. Our job is to balance our long-term positioning with shorter term pressures and that is what we plan to do.”
Texas Roadhouse is a casual dining concept that first opened in 1993 and today operates over 350 restaurants system-wide in 46 states.