Texas Roadhouse, Inc. Announces Third Quarter 2014 Results

Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 39 week periods ended September 30, 2014.

Results for the third quarter included:

• Diluted earnings per share increased 11.9% to $0.27 from $0.24 in the prior year;
• Comparable restaurant sales increased 5.9% at company restaurants and 5.2% at franchise restaurants;
• Three company restaurants were opened;
• Restaurant margin, as a percentage of restaurant sales, decreased 40 basis points to 16.8%, primarily due to approximately 4.5% food cost inflation and higher costs associated with general liability insurance due to the impact of overlapping a $1.3 million credit recorded in the prior year period;
• Income tax rate increased 178 basis points to 31.4%, primarily due to reduced activity related to the exercise of incentive stock options and the expiration of certain federal tax credits at the end of 2013; and
• The Company repurchased 315,000 shares of its common stock for $8.2 million.

Results for the year-to-date included:

• Diluted earnings per share increased 8.9% to $0.97 from $0.89 in the prior year;
• Comparable restaurant sales increased 3.9% at company restaurants and 4.4% at franchise restaurants;
• 15 company restaurants and one franchise restaurant were opened;
• Restaurant margin, as a percentage of restaurant sales, decreased 21 basis points to 18.1%;
• Costs associated with the Company’s annual managing partner conference were $2.0 million lower compared to the prior year period;
• Income tax rate increased 182 basis points to 30.6%, primarily due to the expiration of certain federal tax credits at the end of 2013; and
• The Company repurchased 1,575,000 shares of its common stock for $40.0 million.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, “We are pleased to report another quarter of strong top-line growth highlighted by solid traffic growth of 4.4%. While we were challenged by higher commodity cost inflation, we delivered solid diluted earnings per share growth this quarter. As we move into the fourth quarter, we are pleased with our sales momentum, and our development is on track. Looking ahead to 2015, we are well positioned for continued success with 25 to 30 planned restaurant openings, a strong balance sheet and healthy cash flow with a focus on returning excess capital to our shareholders, and an ongoing commitment to legendary food and legendary service.”

2014 Outlook

The Company reported that comparable restaurant sales at company restaurants for the first four weeks of its fourth quarter of fiscal 2014 increased approximately 7.0% compared to the prior year period.

Management reiterated the following expectations for 2014:

• Positive comparable restaurant sales growth;
• Approximately 25 company restaurant openings; and
• An income tax rate of approximately 30.0% to 31.0% which is higher than the 2013 income tax rate primarily as a result of the expiration of certain federal tax credits at the end of 2013.

Management updated the following expectations for 2014:

• Approximately 3.0% food cost inflation for the full year; and
• Total capital expenditures of approximately $110 million.

2015 Outlook

Management provided the following expectations for 2015:

• Positive comparable restaurant sales growth;
• 25 to 30 company restaurant openings;
• Low to mid-single digit food cost inflation;
• An income tax rate of approximately 29.0% to 31.0% depending on the reinstatement of certain federal tax credits and timing of such; and
• Total capital expenditures of $110 million to $120 million.

Conference Call

The Company is hosting a conference call today, November 3, 2014 at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (877) 857-6151 or (719) 325-4879 for international calls. A replay of the call will be available for one week following the conference call. To access the replay, please dial (877) 870-5176 or (858) 384-5517 for international calls, and use 2758536 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 440 restaurants system-wide in 49 states and four foreign countries. 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 development or operating costs, such as food and labor; our ability to acquire franchise restaurants; our ability to integrate the franchise restaurants we acquire or other concepts we develop; our ability to continue to generate the necessary cash flows to fund our new restaurant growth, continue our share repurchase program and pay a quarterly cash dividend; strength of consumer spending; pending or future legal claims; conditions beyond our control such as weather, natural disasters, disease outbreaks, epidemics or pandemics impacting our customers or food supplies; acts of war or terrorism and other factors disclosed from time to time in our filings with the U.S. 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. We undertake no obligation to update any forward-looking statements.