Texas Roadhouse, Inc. Announces Fourth Quarter 2021 Results

Fourth quarter results

Financial results for the 13 and 52 weeks ended December 28, 2021 and December 29, 2020, and 14 and 53 weeks ended December 31, 2019 were as follows:

Note: The 53rd week in 2019 resulted in additional revenue of $59.5 million and diluted earnings per share of $0.10 to $0.11.

Results for the fourth quarter included the following:

• Comparable restaurant sales at company restaurants increased 33.1% and 21.2% compared to 2020 and 2019, respectively1. Comparable restaurant sales at domestic franchise restaurants increased 34.8% and 18.8% compared to 2020 and 2019, respectively;

• Average weekly sales at company restaurants were $121,976 of which 14.4% were to-go sales;

• 11 company restaurants, including one Bubba’s 33 and one Jaggers, were opened and two franchise restaurants were opened;

• Restaurant margin, as a percentage of restaurant and other sales, was 15.8% and restaurant margin dollars were $140.8 million. Restaurant margin benefited by an increase in comparable restaurant sales partially offset by commodity inflation of 17.6% primarily due to higher beef costs;

• Diluted earnings per share increased to $0.76 from $0.28 in the prior year due to a significant increase in restaurant margin dollars partially offset by an increase in general and administrative expenses and income tax expense;

• The Company repurchased 423,898 shares of common stock for $37.0 million; and,

• The Company ended the quarter with $335.6 million of cash on hand and reduced outstanding debt to $100 million.

Year to date results

Results for the year-to-date period included the following highlights:

• Comparable restaurant sales at company restaurants increased 37.8% and 18.3% compared to 2020 and 2019, respectively1 . Comparable restaurant sales at domestic franchise restaurants increased 37.5% and 15.8% compared to 2020 and 2019, respectively;

• Average weekly sales at company restaurants were $120,706 of which 17.1% were to-go sales;

• 29 company restaurants, including five Bubba’s 33 and one Jaggers, were opened and four franchise restaurants were opened;

• Restaurant margin, as a percentage of restaurant and other sales, was 16.9% and restaurant margin dollars were $581.7 million. Restaurant margin benefited by an increase in comparable restaurant sales partially offset by commodity inflation of 10% primarily due to higher beef costs;

• Diluted earnings per share increased to $3.50 from $0.45 in the prior year due to a significant increase in restaurant margin dollars partially offset by an increase in general and administrative expenses and income tax expense; and,

• The Company repurchased 584,932 shares of common stock for $51.6 million.

Jerry Morgan, Chief Executive Officer of Texas Roadhouse, Inc. commented, “We had a historic year in terms of the number of guests that we served and the operating results that we generated. This is all due to the hard work and commitment of our operators and their ability to continue to deliver on our legendary standards in these challenging times. Looking ahead, I am excited about the leadership that we have in place throughout the organization and their ability to keep growing and developing all of our brands.”

Morgan continued, “Our strong cashflow generation allowed us to continue opening new stores as well as getting back to our normal strategy of quarterly cash dividends and share repurchases. In addition, we repaid a significant portion of our outstanding debt during the year. As we transition into 2022, we are well positioned to continue to grow sales, build new restaurants and handle the current inflationary environment.”

_____________________________ 1 Comparable restaurant sales reflect the change in year-over-year sales for restaurants open a full 18 months before the beginning of the period measured for comparison to 2020 and for restaurants open a full 30 months before the beginning of the period measured for comparison to 2019.

Outlook and updates

On December 29, 2021, the first day of the 2022 fiscal year, the Company completed the acquisition of seven franchise restaurants in South Carolina and Georgia for an aggregate purchase price of approximately $27 million.

Comparable restaurant sales at company restaurants for the first seven weeks of our first quarter of fiscal 2022 increased 20.6% compared to 2021.

Management updated the following expectations for 2022:

• Store week growth of approximately 6.5%, including the impact of the seven franchise locations acquired;

• Approximately 25 Texas Roadhouse and Bubba's 33 company restaurant openings;

• Commodity cost inflation of approximately 17% in the first half of 2022 and 12% to 14% for the year; and,

• Wage and other labor inflation of approximately 7%.

Management reiterated the following expectations for 2022:

• Positive comparable restaurant sales growth including the benefit of 2021 menu pricing actions;

• An effective income tax rate of approximately 15% excluding the impact of any legislative changes enacted; and,

• Total capital expenditures of approximately $230 million including as many as six relocations.

On February 17, 2022, our Board of Directors authorized the payment of a quarterly cash dividend of $0.46 per share of common stock. This payment will be distributed on March 25, 2022, to shareholders of record at the close of business on March 9, 2022.

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 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 restaurant-level operating efficiency and performance. In calculating restaurant margin, the Company excludes certain non-restaurant-level costs that support operations, including pre-opening and general and administrative expenses, but do not have a direct impact on restaurant-level operational efficiency and performance.

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.

Texas Roadhouse, Inc. is hosting a conference call today, February 22, 2022, 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.