TXRH
$66.16
Texas Roadhouse
($1.35)
(2.00%)
Earnings Details
2nd Quarter June 2018
Monday, July 30, 2018 4:03:00 PM
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Summary

Texas Roadhouse Misses

Texas Roadhouse (TXRH) reported 2nd Quarter June 2018 earnings of $0.62 per share on revenue of $629.2 million. The consensus earnings estimate was $0.67 per share on revenue of $635.4 million. The Earnings Whisper number was $0.69 per share. Revenue grew 11.1% 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
$0.62
Earnings Whisper
$0.69
Consensus Estimate
$0.67
Reported Revenue
$629.2 Mil
Revenue Estimate
$635.4 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Texas Roadhouse, Inc. Announces Second Quarter 2018 Results

LOUISVILLE, Ky., July 30, 2018 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 26 week periods ended June 26, 2018.

  Second Quarter Year to Date
($000's) 20182017% Change 20182017% Change
         
Total revenue $629,237 $566,262 11.1% $1,256,942 $1,133,948 10.8%
Income from operations  54,267  54,214 0.1%  119,138  103,236 15.4%
Net income  44,227  37,581 17.7%  98,768  71,894 37.4%
Diluted EPS $0.62 $0.53 16.9% $1.37 $1.01 36.5%
         

Results for the second quarter included the following highlights:  

  • Comparable restaurant sales increased 5.7% at company restaurants and 3.9% at domestic franchise restaurants;
  • Diluted earnings per share increased 16.9% to $0.62 from $0.53 in the prior year;                                                                                                                                                                                
  • Restaurant margin dollars increased 6.5% to $113.4 million from $106.5 million in the prior year, and restaurant margin, as a percentage of restaurant and other sales, decreased 77 basis points to 18.2% primarily due to higher labor costs;
  • General and administrative expenses increased primarily due to higher costs of $2.5 million associated with our annual managing partner conference, which marked our 25th anniversary;
  • Our income tax rate decreased to 15.6% from 27.9% in the prior year period primarily due to the impact of new tax legislation; and
  • Seven company restaurants, including three Bubba’s 33 restaurants, and one international franchise restaurant were opened.

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

  • Comparable restaurant sales increased 5.3% at company restaurants and 4.0% at domestic franchise restaurants;
  • Diluted earnings per share increased 36.5% to $1.37 from $1.01 in the prior year;
  • Restaurant margin dollars increased 6.4% to $232.8 million from $218.7 million in the prior year, and restaurant margin, as a percentage of restaurant and other sales, decreased 76 basis points to 18.7% primarily due to higher labor costs;
  • General and administrative expenses decreased primarily due to a pre-tax charge of $14.9 million ($9.2 million after-tax), or $0.13 per diluted share, recorded in the first quarter of 2017, related to the settlement of a legal matter, which was partially offset by higher costs associated with our annual managing partner conference in 2018;
  • Our income tax rate decreased to 14.2% from 27.2% in the prior year period primarily due to the impact of new tax legislation; and
  • 14 company restaurants, including four Bubba’s 33 restaurants, and three international franchise restaurants were opened.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "Our top-line results for the second quarter were strong with double-digit revenue growth, including 5.7% comparable restaurant sales growth.  We are pleased with the consistency of our traffic gains this year and the continued strength headed into the third quarter.”

Taylor continued, “On the development front, with 14 company restaurants opened in the first half of 2018, we are on track to open 27 or 28 restaurants for the year.  We continue to fund our new restaurant growth through internal cash flow, while also returning excess capital to our shareholders through dividends, further driving shareholder value.”

2018 Outlook

Comparable restaurant sales at company restaurants for the first four weeks of our third quarter of fiscal 2018 increased approximately 4.7% compared to the prior year period.

Management updated the following expectations for 2018:

  • 27 or 28 company restaurant openings, including up to five Bubba’s 33 restaurants; and
  • An income tax rate of 14.0% to 15.0%.

Management reiterated the following expectations for 2018:

  • Positive comparable restaurant sales growth;
  • 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
  • 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, July 30, 2018 at 5:00 p.m. Eastern Time to discuss these results.  The dial-in number is (866) 548-4713 or (323) 794-2093 for international calls.  A replay of the call will be available for one week following the conference call.  To access the replay, please dial (844) 512-2921 or (412) 317-6671 for international calls, and use 2736628 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 565 restaurants system-wide in 49 states and eight 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 26 Weeks Ended
   June 26, 2018 June 27, 2017 June 26, 2018 June 27, 2017
            
Revenue:         
 Restaurant and other sales$624,073   $562,160  $1,246,475   $1,125,480 
 Franchise royalties and fees 5,164    4,102   10,467    8,468 
            
Total revenue 629,237    566,262   1,256,942    1,133,948 
            
Costs and expenses:         
 Restaurant operating costs (excluding depreciation and amortization shown separately below):         
          
  Cost of sales 204,048    185,171   406,834    369,364 
  Labor 199,647    174,585   395,677    344,932 
  Rent 12,119    11,112   23,970    21,981 
  Other operating 94,858    84,837   187,236    170,497 
 Pre-opening 4,107    5,014   9,151    9,754 
 Depreciation and amortization 25,165    23,106   49,649    45,702 
 Impairment and closure 22    -   108    11 
 General and administrative 35,004    28,223   65,179    68,471 
            
Total costs and expenses 574,970    512,048   1,137,804    1,030,712 
            
Income from operations 54,267    54,214   119,138    103,236 
            
Interest expense, net 283    379   642    711 
Equity income from investments in         
 unconsolidated affiliates (445)   (470)  (769)   (790)
            
Income before taxes 54,429    54,305   119,265    103,315 
Provision for income taxes 8,466    15,126   16,923    28,113 
            
Net income including noncontrolling interests 45,963    39,179   102,342    75,202 
Less: Net income attributable to noncontrolling interests 1,736    1,598   3,574    3,308 
Net income attributable to Texas Roadhouse, Inc. and subsidiaries$44,227   $37,581  $98,768   $71,894 
            
Net income per common share attributable to Texas Roadhouse, Inc.         
and subsidiaries:         
 Basic$0.62   $0.53  $1.38   $1.01 
 Diluted$0.62   $0.53  $1.37   $1.01 
            
Weighted average shares outstanding:         
 Basic 71,445    70,973   71,389    70,876 
 Diluted 71,897    71,437   71,853    71,398 
            
Cash dividends declared per share$0.25   $0.21  $0.50   $0.42 
                  


 
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
      
      
      
  June 26, 2018 December 26, 2017
      
      
Cash and cash equivalents $154,353  $150,918
Other current assets, net  62,446   106,163
Property and equipment, net  928,765   912,147
Goodwill  121,040   121,040
Intangible assets, net  2,329   2,700
Other assets  42,660   37,655
      
Total assets $1,311,593  $1,330,623
      
      
Current maturities of long-term debt and obligation under capital lease  10   9
Other current liabilities  280,382   329,989
Long-term debt and obligation under capital lease, excluding current maturities 1,976   51,981
Other liabilities, net  107,627   97,253
Texas Roadhouse, Inc. and subsidiaries stockholders' equity  908,049   839,079
Noncontrolling interests  13,549   12,312
      
Total liabilities and equity $1,311,593  $1,330,623
      


 
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
 
  26 Weeks Ended
  June 26, 2018 June 27, 2017
      
      
Cash flows from operating activities:     
Net income including noncontrolling interests $102,342   $75,202 
Adjustments to reconcile net income to net cash provided by operating activities     
 Depreciation and amortization  49,649    45,702 
 Share-based compensation expense  15,856    12,365 
 Other noncash adjustments, net  7,076    (1,842)
Change in working capital  (9,816)   (3,119)
  Net cash provided by operating activities  165,107    128,308 
      
Cash flows from investing activities:     
Capital expenditures - property and equipment  (66,718)   (73,637)
Acquisition of franchise restaurants, net of cash acquired  -    (16,528)
  Net cash used in investing activities  (66,718)   (90,165)
      
Cash flows from financing activities:     
Principal payments on long-term debt and capital lease obligation  (50,004)   (81)
Dividends paid  (32,798)   (28,308)
Other financing activities, net  (12,152)   (6,190)
  Net cash used in financing activities  (94,954)   (34,579)
      
  Net increase in cash and cash equivalents  3,435    3,564 
Cash and cash equivalents - beginning of period  150,918    112,944 
Cash and cash equivalents - end of period $154,353   $116,508 
      


 
Texas Roadhouse, Inc. and Subsidiaries
Reconciliation of Income from Operations to Restaurant Margin
(in thousands)
(unaudited)
         
  13 Weeks Ended 26 Weeks Ended
  June 26, 2018 June 27, 2017 June 26, 2018 June 27, 2017
         
Income from operations $54,267  $54,214  $119,138  $103,236 
         
Less:        
Franchise royalties and fees  5,164   4,102   10,467   8,468 
         
Add:        
Pre-opening  4,107   5,014   9,151   9,754 
Depreciation and amortization  25,165   23,106   49,649   45,702 
Impairment and closure  22   -   108   11 
General and administrative  35,004   28,223   65,179   68,471 
         
Restaurant margin $113,401  $106,455  $232,758  $218,706 
         
Restaurant margin (as a percentage of restaurant and other sales)  18.2%  18.9%  18.7%  19.4%
         


 
Texas Roadhouse, Inc. and Subsidiaries
Supplemental Financial and Operating Information
($ amounts in thousands, except weekly sales by group)
(unaudited)
                
   Second Quarter Change  Year to Date Change 
   2018 2017 vs LY  2018 2017 vs LY 
                
Restaurant openings             
 Company - Texas Roadhouse4 5 (1)  10 11 (1) 
 Company - Bubba's 333 2 1  4 2 2 
 Company - Other0 0 0  0 0 0 
 Franchise - Texas Roadhouse - U.S.0 0 0  0 1 (1) 
 Franchise - Texas Roadhouse - International1 0 1  3 1 2 
 Total8 7 1  17 15 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 Roadhouse450 428 22        
 Company - Bubba's 3324 18 6        
 Company - Other2 2 0        
 Franchise - Texas Roadhouse - U.S.70 70 0        
 Franchise - Texas Roadhouse - International20 14 6        
 Total566 532 34        
                
Company restaurants             
 Restaurant and other sales$624,073 $562,160 11.0  $1,246,475 $1,125,480  10.8 
 Store weeks 6,142  5,775 6.4   12,190  11,456  6.4 
 Comparable restaurant sales growth (1) 5.7% 4.0%   5.3% 3.6%  
 Texas Roadhouse restaurants only:             
  Comparable restaurant sales growth (1) 5.6% 4.1%   5.2% 3.7%  
  Average unit volume (2)$1,338 $1,274 5.0  $2,696 $2,575  4.7 
  Weekly sales by group:         
  Comparable restaurants (412 units)$103,464            
  Average unit volume restaurants (21 units) (3)$91,973            
  Restaurants less than 6 months old (17 units)$105,386            
                
Restaurant operating costs (as a % of restaurant and other sales)             
Cost of sales 32.7% 32.9%(24) bps 32.6% 32.8% (18) bps
Labor 32.0% 31.1%93 bps 31.7% 30.6% 110 bps
Rent  1.9% 2.0%(3) bps 1.9% 2.0% (3) bps
Other operating 15.2% 15.1%11 bps 15.0% 15.1% (13) bps
Total 81.8% 81.1%77 bps 81.3% 80.6% 76 bps
                
 Restaurant margin 18.2% 18.9%(77) bps 18.7% 19.4% (76) bps
                
 Restaurant margin ($ in thousands)$113,401 $106,455 6.5  $232,758 $218,706  6.4 
 Restaurant margin $/Store week$18,463 $18,434 0.2  $19,094 $19,091  0.0 
                
Franchise restaurants             
 Franchise royalties and fees$5,164 $4,102 25.9  $10,467 $8,468  23.6 
 Store weeks 1,164  1,092 6.6   2,303  2,172  6.1 %
 Comparable restaurant sales growth (1) 1.9% 2.9%   1.9% 3.0%  
 U.S. franchise restaurants only:             
  Comparable restaurant sales growth (1) 3.9% 3.6%   4.0% 3.8%  
  Average unit volume (2)$1,373 $1,321 4.0  $2,771 $2,644  4.8 %
                
Pre-opening expense$4,107 $5,014 (18.1)  $9,151 $9,754  (6.2) %
                
Depreciation and amortization$25,165 $23,106 8.9  $49,649 $45,702  8.6 
 As a % of revenue 4.0% 4.1%(8) bps 3.9% 4.0% (8) bps
                
General and administrative expenses$35,004 $28,223 24.0 % $65,179 $68,471  (4.8) %
 As a % of revenue 5.6% 5.0%58 bps 5.2% 6.0% (85) 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. 
 

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Source: Texas Roadhouse, Inc