Texas Roadhouse, Inc. Announces Third Quarter 2009 Results

Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 39 week periods ended September 29, 2009.

	Third Quarter			Year to Date
($000's)	2009	2008	% Change	2009	2008	% Change

Total revenue	226,467	217,735	4	714,963	646,259	11
Income from operations	17,281	13,421	29	61,058	51,161	19
Net income (1)	10,695	8,644	24	38,770	32,029	21
Diluted EPS	$0.15	$0.12	27	$0.54	$0.43	28

(1) Net income refers to Net income attributable to Texas Roadhouse, Inc. and subsidiaries.

Results for the quarter included:

Comparable restaurant sales decreased 4.6% at company-owned restaurants and decreased 3.6% at franchise restaurants;
One company restaurant and two franchise restaurants opened, while two company restaurants closed;
Restaurant margins increased 133 basis points;
Diluted earnings per share increased 27% to $0.15 from $0.12 in the prior year period.

Results year-to-date included:

Comparable restaurant sales decreased 3.0% at both company-owned restaurants and franchise restaurants;
Twelve company restaurants and three franchise restaurants opened, while two company restaurants and one franchise restaurant closed;
Restaurant margins increased 9 basis points;
Diluted earnings per share increased 28% to $0.54 from $0.43 in the prior year period.

G.J. Hart, President and Chief Executive Officer of Texas Roadhouse, commented, “Sales trends improved during the third quarter and into the start of the fourth, although they still remain negative. We have continued to experience positive earnings growth due to lower pre-opening costs, a favorable commodity cost environment and the ability of our operators to manage the business in a declining sales environment. Financially, we have continued generating positive free cash flow, thereby enabling us to strengthen an already conservative balance sheet. For the balance of 2009 and into 2010, we believe we are well-positioned from a value, operational and financial position.”

Outlook for 2009

The Company reported that comparable restaurant sales for the first four weeks of the fourth quarter of fiscal 2009 decreased 2.3% compared to the same period of the prior year.

The Company announced it is now estimating that 2009 diluted earnings per share growth will be approximately 20% as compared to its 53 week 2008 year. The Company’s target is based, in part, on the following assumptions for 2009:

17 company and three franchise restaurant openings;
Total capital expenditures of $50-55 million; and
Food cost deflation of 2.5% to 3.0%.

The Company reminds investors that its fourth quarter of fiscal 2008 was a 14 week quarter as compared to a 13 week quarter in fiscal 2009 due to fiscal 2008 being a 53 week year. The Company estimates the extra week in the fourth quarter of 2008 accounted for $0.03 in diluted earnings per share.

Outlook for 2010

Plans relating to fiscal 2010 have not yet been finalized. However, the Company announced that if comparable restaurant sales were negative 2% to flat for the year, 2010 diluted earnings per share growth would likely be flat to up 10% compared to 2009. This is based on the following assumptions:

Approximately 15 company restaurant openings;
Total capital expenditures of $50-55 million; and
Food cost deflation of 2.0-3.0%.

Conference Call

The Company is hosting a conference call today, November 2, 2009, at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (888) 637-7710 or (913) 312-0849 for international calls. A replay of the call will be available for one week following the conference call. To access the replay, please dial (888) 203-1112 or (719) 457-0820 for international calls, and use 1604475 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 operates over 325 restaurants system-wide in 46 states. For more information, please visit the Company’s Web site at www.texasroadhouse.com.

Forward-looking Statements

Certain statements in this release that are not historical facts, including, without limitation, those relating to our anticipated financial performance, are forward-looking statements that involve risks and uncertainties. Such statements are based upon the current beliefs and expectations of the management of the Company. Actual results may vary materially from those contained in forward-looking statements based on a number of factors including, without limitation, the actual number of restaurants opening, the sales at these and our other company and franchise restaurants, changes in restaurant operating costs, our ability to acquire franchise restaurants, our ability to integrate the franchise restaurants we acquire or other concepts we develop, strength of consumer spending, conditions beyond the Company's control such as weather, natural disasters, disease outbreaks, epidemics or pandemics impacting the Company's customers or food supplies, acts of war or terrorism and other factors disclosed from time to time in the Company's filings with the U.S. Securities and Exchange Commission. Investors should take such risks into account when making investment decisions. Stockholders 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.

Texas Roadhouse, Inc. and Subsidiaries Condensed Consolidated Statements of Income (in thousands, except per share data) (unaudited)


			13 Weeks Ended						39 Weeks Ended
			September 29, 2009			September 23, 2008			September 29, 2009			September 23, 2008

Revenue:
	Restaurant sales		$	224,417		$	215,739		$	708,808		$	639,127
	Franchise royalties and fees			2,050			1,996			6,155			7,132

Total revenue				226,467			217,735			714,963			646,259

Costs and expenses:
	Restaurant operating costs:
		Cost of sales		74,489			76,845			237,844			225,205
		Labor		67,630			63,750			210,203			183,996
		Rent		5,029			4,248			14,870			11,138
		Other operating		38,778			36,772			119,450			105,368
	Pre-opening			1,194			2,935			4,411			8,973
	Depreciation and amortization			10,395			9,444			31,482			27,056
	Impairment and closure			(201	)		43			(273	)		777
	General and administrative			11,872			10,277			35,918			32,585

Total costs and expenses				209,186			204,314			653,905			595,098

Income from operations				17,281			13,421			61,058			51,161

Interest expense, net				784			974			2,517			2,336
Equity income from investments in
	unconsolidated affiliates			36			45			185			184

Income before taxes				16,533			12,492			58,726			49,009
Provision for income taxes				5,431			3,906			18,582			16,498

Net income including noncontrolling interests			$	11,102		$	8,586		$	40,144		$	32,511
Less: Net income attributable to noncontrolling interests				407			(58	)		1,374			482
Net income attributable to Texas Roadhouse, Inc. and subsidiaries			$	10,695		$	8,644		$	38,770		$	32,029

Net income per common share attributable to Texas Roadhouse, Inc.
and subsidiaries:
	Basic		$	0.15		$	0.12		$	0.56		$	0.43
	Diluted		$	0.15		$	0.12		$	0.54		$	0.43

Weighted average shares outstanding:
	Basic			70,204			71,947			69,847			73,649
	Diluted			71,550			73,303			71,151			75,242

Texas Roadhouse, Inc. and Subsidiaries Condensed Consolidated Balance Sheet (in thousands)



			(unaudited)
			September 29, 2009		December 30, 2008


	Cash and cash equivalents		$	35,833	$	5,258
	Other current assets			20,814		29,550
	Property and equipment, net			457,267		456,132
	Goodwill			114,859		114,807
	Intangible asset, net			11,958		12,807
	Other assets			5,901		4,109

	Total assets		$	646,632	$	622,663


	Current maturities of long-term debt
		and obligations under capital leases		240		228
	Other current liabilities			76,179		99,415
	Long-term debt and obligations under
		capital leases, excluding current maturities		126,243		132,482
	Other liabilities			32,377		27,741
	Texas Roadhouse, Inc. and subsidiaries stockholders' equity			409,068		359,990
	Noncontrolling interests			2,525		2,807

	Total liabilities and equity		$	646,632	$	622,663

Texas Roadhouse, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (in thousands, except per share data) (unaudited)


			39 Weeks Ended
			September 29, 2009		September 23, 2008


Cash flows from operating activities:
Net income including noncontrolling interests			$ 40,144		$ 32,511
Adjustments to reconcile net income to net cash provided by operating activities
	Depreciation and amortization		31,482		27,056
	Share-based compensation expense		5,642		5,578
	Other noncash adjustments		4,501		(1,152	)
Change in working capital			(13,473	)	(5,743	)
		Net cash provided by operating activities	68,296		58,250

Cash flows from investing activities:
Capital expenditures - property and equipment			(34,814	)	(75,413	)
Acquisition of franchise restaurants, net of cash acquired			25		(18,405	)
Proceeds from sale of property and equipment, including insurance proceeds			2,329		289
		Net cash used in investing activities	(32,460	)	(93,529	)

Cash flows from financing activities:
(Repayments)/proceeds from revolving credit facility, net			(6,000	)	86,000
Repurchase of shares of common stock			-		(52,578	)
Other financing activities			739		4,012
		Net cash (used in)/provided by financing activities	(5,261	)	37,434

		Net increase in cash	30,575		2,155
Cash and cash equivalents - beginning of year			5,258		11,564
Cash and cash equivalents - end of year			35,833		13,719

Supplemental Financial and Operating Information ($ amounts in thousands) (unaudited)


		Third Quarter								Change			Year to Date								Change
			2009				2008			vs LY				2009				2008			vs LY

Restaurant openings
	Company		1				7			(6	)			12				23			(11	)
	Franchise		2				1			1				3				1			2
	Total		3				8			(5	)			15				24			(9	)

Restaurant acquisitions
	Company		0				9			(9	)			0				12			(12	)
	Franchise		0				(9	)		9				0				(12	)		12
	Total		0				0			0				0				0			0

Restaurant closures
	Company		(2	)			0			(2	)			(2	)			(1	)		(1	)
	Franchise		0				0			0				(1	)			0			(1	)
	Total		(2	)			0			(2	)			(3	)			(1	)		(2	)

Restaurants open at the end of the quarter
	Company		255				238			17
	Franchise		71				70			1
	Total		326				308			18

Company-owned restaurants
	Restaurant sales	$	224,417			$	215,739			4.0		%	$	708,808			$	639,127			10.9		%
	Store weeks		3,331				3,000			11.0		%		9,893				8,472			16.8		%
	Comparable restaurant sales growth (1)		(4.6	)	%		(3.2	)	%					(3.0	)	%		(1.5	)	%
	Average unit volume (2)	$	874			$	927			(5.7	)	%	$	2,792			$	2,920			(4.4	)	%

	Restaurant operating costs (as a % of restaurant sales)
	Cost of sales		33.2		%		35.6		%	(243	)	bps		33.6		%		35.2		%	(168	)	bps
	Labor		30.1		%		29.5		%	59		bps		29.7		%		28.8		%	87		bps
	Rent		2.2		%		2.0		%	27		bps		2.1		%		1.7		%	36		bps
	Other operating		17.3		%		17.0		%	23		bps		16.9		%		16.5		%	37		bps
	Total		82.8		%		84.2		%	(133	)	bps		82.2		%		82.3		%	(9	)	bps

	Restaurant margins (3)		17.2		%		15.8		%	133		bps		17.8		%		17.7		%	9		bps

Franchise-owned restaurants
	Franchise royalties and fees	$	2,050			$	1,996			2.7		%	$	6,155			$	7,132			(13.7	)	%
	Store weeks		900				974			(7.6	)	%		2,694				3,041			(11.4	)	%
	Comparable restaurant sales growth (1)		(3.6	)	%		(4.5	)	%					(3.0	)	%		(3.1	)	%
	Average unit volume (2)	$	856			$	887			(3.5	)	%	$	2,721			$	2,804			(3.0	)	%

Pre-opening expense		$	1,194			$	2,935			(59.3	)	%	$	4,411			$	8,973			(50.8	)	%

Depreciation and amortization		$	10,395			$	9,444			10.1		%	$	31,482			$	27,056			16.4		%
	As a % of revenue		4.6		%		4.3		%	25		bps		4.4		%		4.2		%	22		bps

General and administrative expenses		$	11,872			$	10,277			15.5		%	$	35,918			$	32,585			10.2		%
	As a % of revenue		5.2		%		4.7		%	52		bps		5.0		%		5.0		%	(2	)	bps

(1) Comparable restaurant sales growth includes sales from restaurants open 18 months as of the beginning of the measurement period.

(2) Average unit volume includes sales from restaurants open six months as of the beginning of the measurement period. For comparative purposes, average unit volumes for Q3 2008 and 2008 YTD were adjusted to reflect restaurant sales of any acquired franchise restaurants as part of Company-owned restaurants average unit volume and were excluded from franchise-owned restaurants average unit volume.

(3) Restaurant margins represent restaurant sales less restaurant operating costs (as a percentage of restaurant sales).

NM - not meaningful
Amounts may not foot due to rounding.

For Texas Roadhouse, Inc.
Investor Relations
Price Cooper, 502-515-7300
or
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Travis Doster, 502-638-5457

Texas Roadhouse Inc ( TXRH )

Texas Roadhouse, Inc. Announces Third Quarter 2009 Results