Texas Roadhouse(US:TXRH)2024-02-23 16:25Financial Performance - Total revenue increased by $616.8 million or 15.4% to $4.6 billion in 2023 compared to $4.0 billion in 2022, driven by an increase in comparable restaurant sales and store weeks [266]. - Comparable restaurant sales increased by 10.1% and store weeks increased by 5.8% at company restaurants in 2023 [266]. - Net income rose by $35.1 million or 13.0% to $304.9 million in 2023 compared to $269.8 million in 2022, primarily due to higher restaurant margin dollars [267]. - Diluted earnings per share increased by 14.3% to $4.54 from $3.97 in the prior year, reflecting the increase in net income [267]. - Total revenue for 2023 was $4,631.7 million, a 15.4% increase from $4,014.9 million in 2022 [272]. - Restaurant and other sales increased by 15.4% in 2023, driven by a 10.1% increase in comparable restaurant sales and a 5.8% increase in store weeks [276][278]. Restaurant Expansion - The company opened 30 company restaurants in 2023, including 22 Texas Roadhouse, five Bubba's 33, and three Jaggers restaurants [243]. - The company completed the acquisition of eight domestic franchise Texas Roadhouse restaurants for an aggregate purchase price of $39.1 million [244]. - The company continues to evaluate opportunities for restaurant expansion in both domestic and international markets [241]. - The company expects store week growth of approximately 8% in 2024, including a benefit of 2% from the 53rd week [282]. Costs and Expenses - Restaurant margin dollars increased by $80.5 million or 12.8% to $708.0 million in 2023 compared to $627.5 million in 2022, primarily due to higher sales [269]. - Food and beverage costs remained flat at 34.6% of restaurant and other sales, with commodity inflation at 5.6% primarily due to higher beef costs [286]. - Restaurant labor expense increased to 33.4% of restaurant and other sales in 2023, up from 33.1% in 2022, driven by wage and labor inflation of 6.6% [287]. - General and administrative expenses remained flat at 4.3% of total revenue in both periods presented [295]. Shareholder Returns - The Board declared a quarterly cash dividend of $0.55 per share in 2023, with an increase to $0.61 per share in February 2024, representing an 11% increase compared to the prior year [248]. - The quarterly dividend was increased to $0.55 per share in 2023 from $0.46 per share in 2022, with total dividend payments of $147.2 million in 2023 [313]. Cash Flow and Financing - Net cash provided by operating activities was $565.0 million in 2023, up from $511.7 million in 2022, attributed to increased net income and favorable changes in working capital [304]. - Capital expenditures totaled $347.0 million in 2023, up from $246.1 million in 2022, driven by new restaurant development and refurbishment [308]. - The company expects capital expenditures for 2024 to be between $340 million and $350 million [309]. - Net cash used in financing activities decreased to $267.4 million in 2023 from $409.8 million in 2022, primarily due to reduced share repurchases [310]. - As of December 26, 2023, the company had no outstanding balance on its $300 million revolving credit facility, with $295.3 million available [317]. Tax and Income - Interest income increased to $3.0 million in 2023 compared to $(0.1) million in 2022, driven by increased earnings on cash and cash equivalents [296]. - The effective tax rate decreased to 12.5% in 2023 from 13.6% in 2022, with an expected rate of approximately 14% for 2024 [298][299]. - Equity income from unconsolidated affiliates increased to $1.4 million in 2023 from $1.2 million in 2022, driven by a $0.6 million gain on the acquisition of four affiliates compared to a $0.3 million gain on one affiliate in 2022 [297]. Market Risks - The company has faced high inflation driven by commodity costs and wage inflation, which has been partially offset by menu price increases [333]. - The company is exposed to market risk from changes in interest rates on variable rate debt, with no outstanding borrowings on its credit facility as of December 26, 2023 [334]. - The company employs various purchasing and pricing contract techniques to secure low-cost ingredients, but is subject to unpredictable price volatility in commodity markets [335]. - The beef supply is highly dependent on four vendors, posing a risk of supply shortages or higher costs if these vendors fail to meet their obligations [336]. Goodwill and Impairment - As of December 26, 2023, the Texas Roadhouse reporting unit had allocated goodwill of $169.7 million, with no other reporting units holding goodwill balances [329]. - A qualitative assessment indicated no impairment indicators for the Texas Roadhouse reporting unit, and no additional impairment indicators were identified through the end of the fourth quarter [330].