Texas Roadhouse, Inc. Announces Second Quarter 2023 Results

LOUISVILLE, Ky., July 27, 2023 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 26 weeks ended June 27, 2023.

Financial Results

Financial results for the 13 and 26 weeks ended June 27, 2023 and June 28, 2022 were as follows:

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

• Comparable restaurant sales increased 9.1% at company restaurants and increased 9.2% at domestic franchise restaurants;
• Average weekly sales at company restaurants were $146,727 of which $18,496 were to-go sales as compared to average weekly sales of $135,552 of which $17,794 were to-go sales in the prior year;
• Restaurant margin dollars increased 8.3% to $182.8 million from $168.7 million in the prior year primarily due to higher sales. Restaurant margin, as a percentage of restaurant and other sales, decreased 88 basis points to 15.7% as commodity inflation of 6.0% and wage and other labor inflation of 7.0% were partially offset by higher sales;
• Diluted earnings per share increased 14.7% primarily driven by higher restaurant margin dollars partially offset by higher depreciation and amortization and higher general and administrative expenses;
• Three company restaurants and three franchise restaurants were opened; and,
• The Company repurchased 213,975 shares of common stock for $23.4 million.

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

• Comparable restaurant sales increased 11.0% at company restaurants and increased 11.2% at domestic franchise restaurants;
• Average weekly sales at company restaurants were $147,579 of which $18,762 were to-go sales as compared to average weekly sales of $133,917 of which $18,671 were to-go sales in the prior year;
• Restaurant margin dollars increased 11.7% to $368.5 million from $329.9 million in the prior year primarily due to higher sales. Restaurant margin, as a percentage of restaurant and other sales, decreased 70 basis points to 15.8% as commodity inflation of 7.4% and wage and other labor inflation of 7.4% were partially offset by higher sales;
• Diluted earnings per share increased 16.6% primarily driven by higher restaurant margin dollars partially offset by higher general and administrative expenses and higher depreciation and amortization expense;
• Nine company restaurants and four franchise restaurants were opened; and,
• The Company repurchased 306,726 shares of common stock for $33.1 million.

Jerry Morgan, Chief Executive Officer of Texas Roadhouse, Inc. commented, “Once again, our operators generated tremendous sales momentum, including higher guest counts.  This increase in quarterly sales helped offset rising costs and allowed us to further grow our bottom line.”

Morgan continued, “On the development front, we have a significant number of company and franchise locations that will open in the second half of the year.  This includes the first franchise location for Jaggers, our fast-casual concept, that opened in Jacksonville, North Carolina, last week.  We remain confident that our continued development of all three concepts, along with a strong balance sheet and disciplined capital allocation strategy will generate long-term shareholder value.”

2023 Outlook        

Comparable restaurant sales at company restaurants for the first four weeks of our third quarter of fiscal 2023 increased 10.7% compared to 2022.  

Management reiterated the following expectations for 2023:

• Positive comparable restaurant sales growth including the benefit of menu pricing actions; and,
• Commodity cost inflation of 5% to 6%.

Management updated the following expectations for 2023:

• Store week growth of approximately 6% including the impact of franchise locations acquired;
• As many as 28 Texas Roadhouse and Bubba’s 33 company restaurant openings;
• Wage and other labor inflation of 6% to 7%;
• An effective income tax rate of 13% to 14% excluding the impact of any legislative changes enacted; and,
• Total capital expenditures of approximately $300 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 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 excludes pre-opening expense as it occurs at irregular intervals and would impact comparability to prior period results. The Company 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 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, July 27, 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. Second Quarter 2023 Earnings. A replay of the call will be available until August 3, 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 710 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; 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.

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