TXRH
$60.93
Texas Roadhouse
($1.15)
(1.85%)
Earnings Details
3rd Quarter September 2018
Monday, October 29, 2018 4:03:00 PM
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Summary

Texas Roadhouse Misses

Texas Roadhouse (TXRH) reported 3rd Quarter September 2018 earnings of $0.40 per share on revenue of $594.6 million. The consensus earnings estimate was $0.54 per share on revenue of $591.7 million. The Earnings Whisper number was $0.54 per share. Revenue grew 10.0% 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
$0.40
Earnings Whisper
$0.54
Consensus Estimate
$0.54
Reported Revenue
$594.6 Mil
Revenue Estimate
$591.7 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Texas Roadhouse, Inc. Announces Third Quarter 2018 Results

LOUISVILLE, Ky., Oct. 29, 2018 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (NasdaqGS: TXRH) today announced financial results for the 13 and 39 week periods ended September 25, 2018.

  Third Quarter Year to Date
($000's) 20182017% Change 20182017% Change
         
Total revenue $594,595$540,50710.0% $1,851,537$1,674,45510.6%
Income from operations 35,444 45,511(22.1%)  154,582 148,7473.9%
Net income  29,125 31,014(6.1%)  127,893 102,90824.3%
Diluted EPS $0.40$0.43(6.7%) $1.78$1.4423.5%
         

Results for the third quarter included the following highlights:  

  • Comparable restaurant sales increased 5.5% at company restaurants and 4.2% at domestic franchise restaurants;
  • Restaurant margin, as a percentage of restaurant and other sales, decreased 157 basis points to 16.2%, primarily due to higher labor costs, including the impact of insurance reserve adjustments.  Restaurant margin dollars increased 0.3% to $95.8 million from $95.6 million in the prior year;
  • Diluted earnings per share decreased 6.7% to $0.40 from $0.43 in the prior year primarily due to higher labor costs and higher general and administrative expenses partially offset by higher revenues and lower income tax expense; and 
  • Three company restaurants 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 4.1% at domestic franchise restaurants;
  • Restaurant margin, as a percentage of restaurant and other sales, decreased 102 basis points to 17.9%, primarily due to higher labor costs.  Restaurant margin dollars increased 4.6% to $328.6 million from $314.3 million in the prior year;
  • Diluted earnings per share increased 23.5% to $1.78 from $1.44 in the prior year primarily due to higher revenues and lower income tax expense partially offset by higher labor costs.  In addition, we recorded 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 
  • 17 company restaurants, including four Bubba’s 33 restaurants, and four international franchise restaurants were opened.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "Our top-line momentum continued this quarter highlighted by positive comparable restaurant sales, driven by positive traffic growth.  However, restaurant-level performance continues to be pressured by higher labor costs.  Despite the earnings decline this quarter, 2018 is still shaping up to be a good year for Texas Roadhouse."

Taylor continued, "Our new restaurant pipeline is solid and we feel good about our development plans for 2019.  We are confident that our business is well positioned for long-term sales and profit growth.  In addition, our healthy cash flow generation allows us to fund our new restaurant growth through internal cash flow, while also returning excess capital to our shareholders through our dividend program, further driving shareholder value."

2018 Outlook

Comparable restaurant sales at company restaurants for the first four weeks of our fourth quarter of fiscal 2018 increased approximately 4.0% compared to the prior year period.

Management updated the following expectation for 2018:

  • Total capital expenditures of approximately $160.0 million to $165.0 million.

Management reiterated the following expectations for 2018:

  • Positive comparable restaurant sales growth;
  • 27 or 28 company restaurant openings, including five Bubba’s 33 restaurants;
  • Commodity cost inflation of approximately 1.0%;
  • Mid-single digit growth in labor dollars per store week, excluding the impact of higher guest counts; and
  • An income tax rate of 14.0% to 15.0%.

2019 Outlook

Management provided the following initial expectations for 2019 which includes a 53rd week:

  • Positive comparable restaurant sales growth;
  • 25 to 30 company restaurant openings, including four Bubba’s 33 restaurants;
  • Commodity cost inflation of approximately 1.0% to 2.0%;
  • Mid-single digit growth in labor dollars per store week, excluding the impact of higher guest counts;
  • An income tax rate of 14.0% to 15.0%; and
  • Total capital expenditures of approximately $165.0 million to $175.0 million.

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, October 29, 2018 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 5569057 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 575 restaurants system-wide in 49 states and nine 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 39 Weeks Ended
   September 25, 2018  September 26, 2017 September 25, 2018  September 26, 2017
            
Revenue:         
 Restaurant and other sales$589,704   $536,341  $1,836,179   $1,661,821 
 Franchise royalties and fees 4,891    4,166   15,358    12,634 
            
Total revenue 594,595    540,507   1,851,537    1,674,455 
            
Costs and expenses:         
 Restaurant operating costs (excluding depreciation and amortization shown separately below):
         
            
  Cost of sales 191,990    176,498   598,824    545,862 
  Labor 197,621    169,355   593,298    514,287 
  Rent 12,330    11,257   36,300    33,238 
  Other operating 91,946    83,679   279,182    254,176 
 Pre-opening 4,378    4,548   13,529    14,302 
 Depreciation and amortization 25,843    23,534   75,492    69,236 
 Impairment and closure 20    2   128    13 
 General and administrative 35,023    26,123   100,202    94,594 
            
Total costs and expenses 559,151    494,996   1,696,955    1,525,708 
            
Income from operations 35,444    45,511   154,582    148,747 
            
Interest expense, net 168    500   810    1,211 
Equity income from investments in         
 unconsolidated affiliates (381)   (359)  (1,150)   (1,149)
            
Income before taxes 35,657    45,370   154,922    148,685 
Provision for income taxes 5,398    13,046   22,321    41,159 
            
Net income including noncontrolling interests 30,259    32,324   132,601    107,526 
Less: Net income attributable to noncontrolling interests 1,134    1,310   4,708    4,618 
Net income attributable to Texas Roadhouse, Inc. and subsidiaries$29,125   $31,014  $127,893   $102,908 
            
Net income per common share attributable to Texas Roadhouse, Inc.         
and subsidiaries:         
 Basic$0.41   $0.44  $1.79   $1.45 
 Diluted$0.40   $0.43  $1.78   $1.44 
            
Weighted average shares outstanding:         
 Basic 71,508    71,067   71,429    70,939 
 Diluted 72,006    71,532   71,906    71,449 
            
Cash dividends declared per share$0.25   $0.21  $0.75   $0.63 
            

 

  
Texas Roadhouse, Inc. and Subsidiaries 
Condensed Consolidated Balance Sheets 
(in thousands) 
(unaudited) 
         
         
         
    September 25, 2018  December 26, 2017 
         
 
 Cash and cash equivalents $151,190  $150,918 
 Other current assets, net  64,965   106,163 
 Property and equipment, net  940,955   912,147 
 Goodwill  121,040   121,040 
 Intangible assets, net  2,144   2,700 
 Other assets  44,532   37,655 
      
 Total assets $1,324,826  $1,330,623 
      
      
 Current maturities of long-term debt and obligation under capital lease 10   9 
 Other current liabilities  272,467   329,989 
 Long-term debt and obligation under capital lease, excluding current maturities 1,973   51,981 
 Other liabilities, net  109,078   97,253 
 Texas Roadhouse, Inc. and subsidiaries stockholders' equity  926,255   839,079 
 Noncontrolling interests  15,043   12,312 
      
 Total liabilities and equity $1,324,826  $1,330,623 
      

 

 
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
        
        
    39 Weeks Ended
    September 25, 2018  September 26, 2017
        
 
Cash flows from operating activities: 
Net income including noncontrolling interests $132,601   $107,526 
Adjustments to reconcile net income to net cash provided by operating activities 
 Depreciation and amortization  75,492    69,236 
 Share-based compensation expense  24,820    18,826 
 Other noncash adjustments, net  6,872    (2,702)
Change in working capital  (14,206)   (4,816)
 Net cash provided by operating activities  225,579    188,070 
     
Cash flows from investing activities:     
Capital expenditures - property and equipment  (110,906)   (117,037)
Acquisition of franchise restaurants, net of cash acquired  -    (16,528)
 Net cash used in investing activities  (110,906)   (133,565)
     
Cash flows from financing activities:     
Dividends paid  (50,666)   (43,223)
Other financing activities, net  (63,735)   (9,790)
 Net cash used in financing activities  (114,401)   (53,013)
     
 Net increase in cash and cash equivalents  272    1,492 
Cash and cash equivalents - beginning of period  150,918    112,944 
Cash and cash equivalents - end of period $151,190   $114,436 
     

 

 
Texas Roadhouse, Inc. and Subsidiaries
Reconciliation of Income from Operations to Restaurant Margin
(in thousands)
(unaudited)
         
  13 Weeks Ended 39 Weeks Ended
  September 25, 2018 September 26, 2017 September 25, 2018 September 26, 2017
         
Income from operations $35,444  $45,511  $154,582  $148,747 
         
Less:        
Franchise royalties and fees  4,891   4,166   15,358   12,634 
         
Add:        
Pre-opening  4,378   4,548   13,529   14,302 
Depreciation and amortization  25,843   23,534   75,492   69,236 
Impairment and closure  20   2   128   13 
General and administrative  35,023   26,123   100,202   94,594 
         
Restaurant margin $95,817  $95,552  $328,575  $314,258 
         
Restaurant margin (as a percentage of restaurant and other sales)  16.2%  17.8%  17.9%  18.9%
         

 

  
Texas Roadhouse, Inc. and Subsidiaries 
Supplemental Financial and Operating Information 
($ amounts in thousands, except weekly sales by group) 
(unaudited) 
         
 Third Quarter Change
 Year to Date Change
 2018 2017 vs LY
 2018 2017
 vs LY
         
Restaurant openings             
 Company - Texas Roadhouse3 5 (2)
 13 16
 (3)
 Company - Bubba's 330 2 (2)
 4 4
 0
 Company - Other0 0 0
 0 0
 0
 Franchise - Texas Roadhouse - U.S.0 0 0
 0 1
 (1)
 Franchise - Texas Roadhouse - International1 1 0
 4 2
 2
 Total4 8 (4)
 21 23
 (2)
              
Restaurant acquisitions/dispositions             
 Company - Texas Roadhouse0 0 0
 0 4
 (4)
 Franchise - Texas Roadhouse0 0 0
 0 (4) 4
 Total0 0 0
 0 0
 0
              
Restaurants open at the end of the quarter             
 Company - Texas Roadhouse453 433 20
       
 Company - Bubba's 3324 20 4
       
 Company - Other2 2 0
       
 Franchise - Texas Roadhouse - U.S.70 70 0
       
 Franchise - Texas Roadhouse - International21 15 6
       
 Total570 540 30
       
           
Company restaurants         
 Restaurant and other sales$589,704 $536,341 9.9 % $1,836,179 $1,661,821  10.5 %
 Store weeks 6,196  5,868 5.6 %  18,386  17,324  6.1 %
 Comparable restaurant sales growth (1) 5.5% 4.5%  5.4% 4.0 % 
 Texas Roadhouse restaurants only:            
 Comparable restaurant sales growth (1) 5.5% 4.6%  5.3% 4.0 % 
 Average unit volume (2)$1,255 $1,197 4.8 % $3,954 $3,776  4.7 %
 Weekly sales by group:             
 Comparable restaurants (417 units)$97,137            
 Average unit volume restaurants (23 units) (3)$85,217            
 Restaurants less than 6 months old (13 units)$96,347            
           
Restaurant operating costs (as a % of restaurant and other sales)         
Cost of sales 32.6% 32.9%(35)bps 32.6% 32.8 %(23)bps
Labor 33.5% 31.6%194 bps 32.3% 30.9 %136 bps
Rent 2.1% 2.1%(1)bps 2.0% 2.0 %(2)bps
Other operating 15.6% 15.6%(1)bps 15.2% 15.3 %(9)bps
Total 83.8% 82.2%157 bps 82.1% 81.1 %102 bps
              
 Restaurant margin 16.2% 17.8%(157)bps 17.9% 18.9 %(102)bps
                
 Restaurant margin ($ in thousands)$95,817 $95,552 0.3 % $328,575 $314,258  4.6 %
 Restaurant margin $/Store week$15,464 $16,284 (5.0)% $17,871 $18,140  (1.5)%
         
Franchise restaurants         
 Franchise royalties and fees$4,891 $4,166 17.4 % $15,358 $12,634  21.6 %
 Store weeks 1,175  1,092 7.6 %  3,478  3,264  6.6 %
 Comparable restaurant sales growth (1) 1.8% 2.8%  2.0% 2.9 % 
 U.S. franchise restaurants only:            
  Comparable restaurant sales growth (1) 4.2% 4.7%  4.1% 4.0 % 
 Average unit volume (2)$1,281 $1,227 4.4 % $4,053 $3,862  5.0 %
            
Pre-opening expense$4,378 $4,548 (3.7)% $13,529 $14,302  (5.4)%
              
Depreciation and amortization $25,843 $23,534 9.8 % $75,492 $69,236  9.0 %
 As a % of revenue 4.3% 4.4%(1)bps 4.1% 4.1 %(6)bps
              
General and administrative expenses$35,023 $26,123 34.1 % $100,202 $94,594  5.9 %
 As a % of revenue 5.9% 4.8%106 bps 5.4% 5.6 %(24)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