Texas Roadhouse, Inc. Announces Fourth Quarter 2022 Results

LOUISVILLE, Ky., Feb. 16, 2023 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 52 weeks ended December 27, 2022.

Financial Results

Financial results for the 13 and 52 weeks ended December 27, 2022 and December 28, 2021 were as follows:

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

• Comparable restaurant sales increased 7.3% at company restaurants and increased 7.2% at domestic franchise restaurants;
• Average weekly sales at company restaurants were $130,176 of which 12.6% were to-go sales as compared to average weekly sales of $121,976 of which 14.4% were to-go sales in the prior year;
• Restaurant margin, as a percentage of restaurant and other sales, decreased 132 basis points to 14.5% as commodity inflation of 6.6% and wage and other labor inflation of 7.8% were partially offset by higher sales. Restaurant margin dollars increased 3.4% to $145.6 million from $140.8 million in the prior year primarily due to higher sales;
• Diluted earnings per share increased 17.4% primarily driven by higher restaurant margin dollars and lower general and administrative expenses. Diluted earnings per share also benefitted from increased share repurchases that occurred in the first half of 2022; and,
• 10 company restaurants and two international franchise restaurants were opened.
  
  

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

• Comparable restaurant sales increased 9.7% at company restaurants and increased 9.4% at domestic franchise restaurants;
• Average weekly sales at company restaurants were $131,802 of which 13.3% were to-go sales as compared to average weekly sales of $120,706 of which 17.1% were to-go sales in the prior year;
• Restaurant margin, as a percentage of restaurant and other sales, decreased 118 basis points to 15.7% as commodity inflation of 10.8% and wage and other labor inflation of 8.3% were partially offset by higher sales. Restaurant margin dollars increased 7.9% to $627.5 million from $581.7 million in the prior year primarily due to higher sales;
• Diluted earnings per share increased 13.5% primarily driven by higher restaurant margin dollars partially offset by higher general and administrative expenses and depreciation and amortization expense. Diluted earnings per share also benefitted from increased share repurchases in the first half of 2022;
• 23 company restaurants and seven international franchise restaurants were opened. In addition, the Company acquired eight domestic franchise restaurants; 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 had another record year in 2022, highlighted by over $4 billion in revenue and double-digit bottom line growth in spite of significant cost pressures. I am extremely proud of our operators who continue to drive sales and consistently deliver on our legendary promise.”

Morgan continued, “As we celebrate our 30^th anniversary this month, our focus will be on what got us here—providing our guests a legendary experience in all 700 of our restaurants each and every shift. We are excited about our continued growth in 2023, which includes the potential to open a record number of systemwide locations across all of our brands. We are confident this growth, along with our ability to allocate capital for the benefit of our shareholders, will continue to create long term value.”

Franchise acquisitions

On December 28, 2022, the first day of the 2023 fiscal year, the Company completed the acquisition of eight domestic franchise restaurants for an aggregate purchase price of approximately $39.0 million.

2023 Outlook

Comparable restaurant sales at company restaurants for the first seven weeks of our first quarter of fiscal 2023 increased 15.8% compared to 2022. In addition, the Company plans to implement a menu price increase of approximately 2.2% in late March.

Management updated the following expectations for 2023:

• Store week growth of at least 6% including the impact of the franchise locations acquired;
• 25 to 30 Texas Roadhouse and Bubba’s 33 company restaurant openings; and,
• An effective income tax rate of approximately 14% excluding the impact of any legislative changes enacted.
  

Management reiterated the following expectations for 2023:

• Positive comparable restaurant sales growth including the benefit of 2022 menu pricing actions;
• Commodity cost inflation of 5% to 6%;
• Wage and other labor inflation of 5% to 6%; and,
• Total capital expenditures of approximately $265 million.

Cash Dividend Payment

On February 14, 2023, the Company’s Board of Directors authorized the payment of a quarterly cash dividend of $0.55 per share of common stock. This payment, which represents a 20% increase from the quarterly cash dividend authorized in 2022, will be distributed on March 24, 2023, to shareholders of record at the close of business on March 8, 2023.

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 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 also excludes pre-opening expense as it occurs at irregular intervals and would impact comparability to prior period results. 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, February 16, 2023, 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 2022 Earnings. A replay of the call will be available until February 23, 2023, 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 700 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.