TXRH
$59.71
Texas Roadhouse
($.52)
(.86%)
Earnings Details
4th Quarter December 2018
Tuesday, February 19, 2019 4:03:00 PM
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Summary

Texas Roadhouse Beats

Texas Roadhouse (TXRH) reported 4th Quarter December 2018 earnings of $0.42 per share on revenue of $605.9 million. The consensus earnings estimate was $0.40 per share on revenue of $597.5 million. The Earnings Whisper number was $0.40 per share. Revenue grew 11.2% on a year-over-year basis.

Texas Roadhouse Inc is a full-service, casual dining restaurant company. It offers steaks, ribs, fish, seafood, chicken, pork chops, pulled pork and vegetable plates, and an assortment of hamburgers, salads and sandwiches.

Results
Reported Earnings
$0.42
Earnings Whisper
$0.40
Consensus Estimate
$0.40
Reported Revenue
$605.9 Mil
Revenue Estimate
$597.5 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Texas Roadhouse, Inc. Announces Fourth Quarter 2018 Results

LOUISVILLE, Ky., Feb. 19, 2019 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 52 week periods ended December 25, 2018

 Fourth QuarterYear to Date
($000's)2018 2017 % Change20182017% Change
         
Total revenue$  605,912 $  545,076 11.2%$  2,457,449 $  2,219,53110.7%
Income from operations33,207 37,459 (11.4%)187,789186,2060.9%
Net income30,332 28,618 6.0%158,225131,52620.3%
Diluted EPS$  0.42 $  0.40 5.4%$  2.20 $  1.8419.6%

Results for the fourth quarter included the following highlights:  

  • Comparable restaurant sales increased 5.6% at company restaurants and 4.8% at domestic franchise restaurants;
  • Restaurant margin, as a percentage of restaurant and other sales, decreased 112 basis points to 15.9%, primarily due to higher labor costs. Restaurant margin dollars increased 3.7% to $95.6 million from $92.2 million in the prior year;
  • Our income tax rate decreased to 5.8% from 19.8% in the prior year primarily due to the impact of new tax legislation;
  • Diluted earnings per share increased 5.4% to $0.42 from $0.40 in the prior year primarily due to higher revenue and lower income tax expense partially offset by higher labor costs and higher general and administrative expenses; and
  • Eleven company restaurants, including one Bubba’s 33, and one international franchise restaurant were opened.

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

  • Comparable restaurant sales increased 5.4% at company restaurants and 4.3% at domestic franchise restaurants;
  • Restaurant margin, as a percentage of restaurant and other sales, decreased 104 basis points to 17.4%, primarily due to higher labor costs. Restaurant margin dollars increased 4.4% to $424.2 million from $406.4 million in the prior year;
  • Our income tax rate decreased to 12.9% from 26.1% in the prior year primarily due to the impact of new tax legislation;
  • Diluted earnings per share increased 19.6% to $2.20 from $1.84 in the prior year primarily due to higher revenue and lower income tax expense partially offset by higher labor costs. In addition, we overlapped a pre-tax charge of $14.9 million ($9.2 million after-tax), or $0.13 per diluted share, in the first quarter of 2017, related to the settlement of a legal matter; and
  • 28 company restaurants, including five Bubba’s 33, and five international franchise restaurants were opened.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "We finished the year strong, with double digit revenue growth for both the fourth quarter and full year. This represented the 36th consecutive quarter of positive comparable restaurant sales, with growth of 5.6% driven by increased traffic. In addition, our solid balance sheet and healthy cashflow allowed us to open 28 company restaurants this year, while also increasing our quarterly cash dividend to $0.30 per share which is our sixth straight year of increasing our dividends by double digits."

Taylor continued, “Looking ahead to 2019, our development pipeline is in great shape as we expect to open 25 to 30 company restaurants and as many as eight franchise restaurants. While we expect to face continued cost pressures in the near term, we remain excited about the top-line momentum that our operators have generated.”

2019 Outlook

Comparable restaurant sales at company restaurants for the first 54 days of our first quarter of fiscal 2019 increased approximately 6.0% compared to the prior year period, including a positive impact of approximately 1.3% related to the calendar shift of the New Year’s holiday.

Management updated the following expectations for 2019:

  • Positive comparable restaurant sales growth including a menu price increase of approximately 1.5% to be implemented at the beginning of our second quarter;
  • An income tax rate of approximately 15.0%; and
  • Total capital expenditures of approximately $210 million to $220 million.

Management reiterated the following expectations for 2019:

  • 25 to 30 company restaurant openings, including as many as four Bubba’s 33 restaurants;
  • Commodity cost inflation of approximately 1.0% to 2.0%; and
  • Mid-single digit growth in labor dollars per store week, excluding the impact of higher guest counts.

Cash Dividend Payment

On February 13, 2019, our Board of Directors authorized the payment of a quarterly cash dividend of $0.30 per share of common stock. This payment, which will be distributed on March 29, 2019 to shareholders of record at the close of business on March 13, 2019, represents a 20% increase from the cash dividend of $0.25 per share of common stock declared during each quarter of 2018. Since the inception of our dividend program in 2011, our cash dividend per share of common stock has increased an average of 18.0% per year.

Non-GAAP Measures

We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”).  Within our press release, we make reference to restaurant margin (in dollars and as a percentage of sales). Restaurant margin represents restaurant and other sales less restaurant-level operating costs, including cost of sales, 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, we exclude 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. We also exclude depreciation and amortization expense, substantially all of which relates to restaurant-level assets, as it represents a non-cash charge for the investment in our restaurants. We also exclude impairment and closure expense as we believe 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 our industry.  A reconciliation of income from operations to restaurant margin is included in the accompanying financial tables.

Conference Call

Texas Roadhouse is hosting a conference call today, February 19, 2019 at 5:00 p.m. Eastern Time to discuss these results.  The dial-in number is (877) 699-0953 or (647) 689-5456 for international calls. A replay of the call will be available for one week following the conference call. To access the replay, please dial (800) 585-8367 or (416) 621-4642 for international calls, and use 9984178 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 has grown to over 580 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 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 Texas Roadhouse. 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; breaches of security; conditions beyond our control such as weather, natural disasters, disease outbreaks, epidemics or pandemics impacting our customers or food supplies; food safety and food-borne illness concerns; 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.

Contacts:

Investor Relations  
Tonya Robinson
(502) 515-7269

Media
Travis Doster
(502) 638-5457

Texas Roadhouse, Inc. and Subsidiaries 
Condensed Consolidated Statements of Income
(in thousands, except per share data)
 (unaudited) 
 
 
 13 Weeks Ended  52 Weeks Ended 
 December 25,
2018
  December 26,
2017
  December 25,
2018
  December 26,
2017
 
              
Revenue:             
Restaurant and other sales $  600,936   $  541,196  $  2,437,115   $  2,203,017 
Franchise royalties and fees  4,976     3,880    20,334     16,514 
              
Total revenue  605,912     545,076    2,457,449     2,219,531 
              
Costs and expenses:             
Restaurant operating costs (excluding depreciation and amortization shown separately below):           
Cost of sales  196,476     175,688    795,300     721,550 
Labor  200,086     173,258    793,384     687,545 
Rent  12,491     11,569    48,791     44,807 
Other operating  96,295     88,526    375,477     342,702 
Pre-opening  5,522     4,972    19,051     19,274 
Depreciation and amortization   25,724     24,263    101,216     93,499 
Impairment and closure  150     641    278     654 
General and administrative  35,961     28,700    136,163     123,294 
              
Total costs and expenses  572,705     507,617    2,269,660     2,033,325 
              
Income from operations  33,207     37,459    187,789     186,206 
              
Interest (income) expense, net  (219)    366    591     1,577 
Equity income from investments in unconsolidated affiliates  (203)     (339)   (1,353)    (1,488)
              
Income before taxes  33,629     37,432    188,551     186,117 
Provision for income taxes  1,936     7,422    24,257     48,581 
              
Net income including noncontrolling interests  31,693     30,010    164,294     137,536 
Less: Net income attributable to noncontrolling interests  1,361     1,392    6,069     6,010 
Net income attributable to Texas Roadhouse, Inc. and subsidiaries$  30,332   $  28,618  $  158,225   $  131,526 
              
Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:             
Basic$  0.42   $  0.40  $  2.21   $  1.85 
Diluted$  0.42   $  0.40  $  2.20   $  1.84 
              
Weighted average shares outstanding:             
Basic  71,584     71,138    71,467     70,989 
Diluted  72,182     71,753    71,964     71,527 
              
Cash dividends declared per share$  0.25   $  0.21  $  1.00   $  0.84 


Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 
 
  December 25, 2018 December 26, 2017
       
Cash and cash equivalents $  210,125  $  150,918 
Other current assets, net   134,894    106,163 
Property and equipment, net   956,676    912,147 
Goodwill   123,220    121,040 
Intangible assets, net   1,959    2,700 
Other assets   42,402    37,655 
       
Total assets $  1,469,276  $  1,330,623 
       
       
Other current liabilities   385,142    329,998 
Long-term debt and obligation under capital lease, excluding current maturities   2,081    51,981 
Other liabilities, net   121,345    97,253 
Texas Roadhouse, Inc. and subsidiaries stockholders' equity   945,569    839,079 
Noncontrolling interests    15,139    12,312 
        
Total liabilities and equity $  1,469,276  $  1,330,623 
        


Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
        
        
    52 Weeks Ended
     
    December 25, 2018 December 26, 2017
        
        
Cash flows from operating activities:     
Net income including noncontrolling interests $  164,294  $  137,536
Adjustments to reconcile net income to net cash provided by operating activities     
 Depreciation and amortization   101,216    93,499
 Share-based compensation expense   33,983    26,934
 Other noncash adjustments, net   18,726    438
Change in working capital   34,649    27,966
  Net cash provided by operating activities   352,868    286,373
        
Cash flows from investing activities:     
Capital expenditures - property and equipment   (155,980)    (161,628)
Acquisition of franchise restaurants, net of cash acquired   (2,165)    (16,528)
  Net cash used in investing activities   (158,145)    (178,156)
        
Cash flows from financing activities:     
Principal payments on long-term debt and capital lease obligation   (50,000)    (558)
Dividends paid   (68,550)    (58,154)
Other financing activities, net   (16,966)    (11,531)
  Net cash used in financing activities   (135,516)    (70,243)
        
  Net increase in cash and cash equivalents   59,207    37,974
Cash and cash equivalents - beginning of period   150,918    112,944
Cash and cash equivalents - end of period $  210,125  $  150,918


Texas Roadhouse, Inc. and Subsidiaries
Reconciliation of Income from Operations to Restaurant Margin
(in thousands)
(unaudited)
 
  
  13 Weeks Ended 52 Weeks Ended
  December 25, 2018 December 26, 2017 December 25, 2018 December 26, 2017
         
Income from operations $  33,207 $  37,459 $  187,789 $  186,206
         
Less:        
Franchise royalties and fees   4,976   3,880   20,334   16,514
         
Add:        
Pre-opening   5,522   4,972   19,051   19,274
Depreciation and amortization   25,724   24,263   101,216   93,499
Impairment and closure   150   641   278   654
General and administrative   35,961   28,700   136,163   123,294
         
Restaurant margin $  95,588 $  92,155 $  424,163 $  406,413
         
Restaurant margin (as a percentage of restaurant and other sales) 15.9% 17.0% 17.4% 18.4%


Texas Roadhouse, Inc. and Subsidiaries
Supplemental Financial and Operating Information
($ amounts in thousands, except weekly sales by group)
(unaudited)
                
   Fourth Quarter Change  Year to Date Change 
   2018 2017 vs LY  2018 2017 vs LY 
                
Restaurant openings             
 Company - Texas Roadhouse10 7 3  23 23 0 
 Company - Bubba's 331 0 1  5 4 1 
 Company - Other0 0 0  0 0 0 
 Franchise - Texas Roadhouse - U.S.0 0 0  0 1 (1) 
 Franchise - Texas Roadhouse - International1 2 (1)  5 4 1 
 Total12 9 3  33 32 1 
                
Restaurant acquisitions/dispositions             
 Company - Texas Roadhouse1 0 1  1 4 (3) 
 Franchise - Texas Roadhouse(1) 0 (1)  (1) (4) 3 
 Total0 0 0  0 0 0 
                
Restaurants open at the end of the quarter             
 Company - Texas Roadhouse464 440 24        
 Company - Bubba's 3325 20 5        
 Company - Other2 2 0        
 Franchise - Texas Roadhouse - U.S.69 70 (1)        
 Franchise - Texas Roadhouse - International22 17 5        
 Total582 549 33        
                
Company restaurants             
 Restaurant and other sales$600,936 $541,196   11.0%$2,437,115 $ 2,203,017   10.6%
 Store weeks6,307 5,950   6.0%24,693 23,274   6.1%
 Comparable restaurant sales growth (1)5.6%5.8%  5.4%4.5% 
 Texas Roadhouse restaurants only:             
  Comparable restaurant sales growth (1)5.6%5.9%  5.4%4.5% 
  Average unit volume (2)$  1,252 $  1,193   5.0%$  5,211 $  4,973   4.8%
  Weekly sales by group:         
    Comparable restaurants (424 units)$  96,879            
    Average unit volume restaurants (23 units) (3)$  85,690            
    Restaurants less than 6 months old (17 units)$  104,533            
                
Restaurant operating costs (as a % of restaurant and other sales)             
Cost of sales32.7%32.5%  23bps32.6%32.8%  (12)bps
Labor33.3%32.0%  128bps32.6%31.2%  134bps
Rent 2.1%2.1%  (6)bps2.0%2.0%  (3)bps
Other operating 16.0%16.4%  (33)bps15.4%15.6%  (15)bps
Total 84.1%83.0%  112bps82.6%81.6%  104bps
                
 Restaurant margin15.9%17.0%  (112)bps17.4%18.4%  (104)bps
               
 Restaurant margin ($ in thousands)$  95,588 $  92,155   3.7%$  424,163 $  406,413   4.4%
 Restaurant margin $/Store week$  15,156 $  15,488   (2.1)%$  17,177 $  17,462   (1.6)%
                
Franchise restaurants             
 Franchise royalties and fees$  4,976 $  3,880   28.2%$  20,334 $  16,514   23.1%
 Store weeks1,192 1,117   6.7%4,670 4,381   6.6%
 Comparable restaurant sales growth (1)2.7%2.9%  2.2%2.9% 
 U.S. franchise restaurants only:             
  Comparable restaurant sales growth (1)4.8%4.7%  4.3%4.2% 
  Average unit volume (2)$  1,284 $  1,226   4.8%$  5,338 $  5,077   5.1%
                
Pre-opening expense$  5,522 $  4,972   11.1%$  19,051 $  19,274   (1.2)%
                
Depreciation and amortization $  25,724 $  24,263   6.0%$  101,216 $  93,499   8.3%
 As a % of revenue 4.2%4.5%  (21)bps4.1%4.2%  (9)bps
                
General and administrative expenses $  35,961 $  28,700   25.3%$  136,163 $  123,294   10.4%
 As a % of revenue5.9%5.3%  67bps5.5%5.6%  (1)bps
               
(1)  Comparable restaurant sales growth reflects the change in year-over-year sales for restaurants open a full 18 months before the beginning of the period measured, excluding sales from restaurants closed during the period. 
(2)  Average unit volume includes sales from Texas Roadhouse restaurants open for a full six months before the beginning of the period measured, excluding any sales at restaurants closed during the period.  
(3)  Average unit volume restaurants include restaurants open a full six and up to 18 months before the beginning of the period measured. 
  
Amounts may not foot due to rounding. 


Texas Roadhouse logo.jpg

Source: Texas Roadhouse, Inc