TXRH
$54.21
Texas Roadhouse
($.05)
(.09%)
Earnings Details
2nd Quarter June 2019
Monday, July 29, 2019 4:03:00 PM
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Summary

Texas Roadhouse Beats

Texas Roadhouse (TXRH) reported 2nd Quarter June 2019 earnings of $0.63 per share on revenue of $689.8 million. The consensus earnings estimate was $0.62 per share on revenue of $688.3 million. The Earnings Whisper number was $0.61 per share. Revenue grew 9.6% 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
$0.63
Earnings Whisper
$0.61
Consensus Estimate
$0.62
Reported Revenue
$689.8 Mil
Revenue Estimate
$688.3 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Texas Roadhouse, Inc. Announces Second Quarter 2019 Results

LOUISVILLE, Ky., July 29, 2019 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 26 week periods ended June 25, 2019

    
 Second Quarter Year to Date
($000's) 2019  2018 % Change  2019 2018% Change
          
Total revenue$  689,828 $  629,237 9.6% $  1,380,436$  1,256,9429.8%
Income from operations 53,283  54,267 (1.8%)  113,728 119,138(4.5%)
Net income 44,845  44,227 1.4%  95,235 98,768(3.6%)
Diluted EPS$  0.63 $  0.62 1.6% $  1.32$  1.37(3.7%)
          

 

Results for the second quarter included the following highlights:  

  • Comparable restaurant sales increased 4.7% at company restaurants and 4.3% at domestic franchise restaurants;
  • Restaurant margin, as a percentage of restaurant and other sales, decreased 53 basis points to 17.6%, primarily due to higher labor costs driven by wage rate and other inflation, partially offset by lower cost of sales as the benefit of a higher average check more than offset inflation.  Restaurant margin dollars increased 6.5% to $120.8 million from $113.4 million in the prior year;
  • Diluted earnings per share increased to $0.63 from $0.62 in the prior year primarily due to higher restaurant margin dollars along with lower income taxes partially offset by higher general and administrative expenses and higher depreciation and amortization expense;
  • Three Texas Roadhouse company restaurants were opened and two franchise restaurants were opened; and
  • The Board of Directors approved a stock repurchase program which authorized the repurchase of up to $250 million of common stock.  The Company repurchased 2,096,677 shares of common stock for $112.1 million

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

  • Comparable restaurant sales increased 5.0% at company restaurants and 4.3% at domestic franchise restaurants;
  • Restaurant margin, as a percentage of restaurant and other sales, decreased 90 basis points to 17.8% primarily due to higher labor costs driven by wage rate and other inflation.  Restaurant margin dollars increased 4.6% to $243.4 million from $232.8 million in the prior year;
  • Diluted earnings per share decreased to $1.32 from $1.37 primarily due to higher general and administrative expenses and higher depreciation and amortization expense, partially offset by higher restaurant margin dollars; and
  • Seven Texas Roadhouse company restaurants were opened and four franchise restaurants were opened.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, “We are pleased with our continued top-line momentum highlighted by positive comparable restaurant sales of 4.7%.  While restaurant margins continue to be pressured by higher labor costs driven by increasing wage rates and other inflation, the additional pricing we put in place at the beginning of the quarter provided a significant benefit.”

Taylor continued, “On the development front, we have opened 10 company restaurants so far this year.  We have experienced some construction delays that we expect will push some sites into early next year but remain focused on opening approximately 15 additional locations in 2019.  Finally, our healthy cash flows enabled us to repurchase over 2 million shares of our common stock this quarter.  We believe these share buy backs and our dividend program reflect our commitment to further driving shareholder value.”

2019 Outlook

Comparable restaurant sales at company restaurants for the first four weeks of our third quarter of fiscal 2019 increased approximately 4.3% compared to the prior year period.

Management updated the following expectations for 2019:

  • Approximately 25 company restaurant openings, including as many as four Bubba’s 33 restaurants;
  • An income tax rate of 14.0% to 15.0%; and
  • Total capital expenditures of approximately $210 million.

Management reiterated the following expectations for 2019:

  • Positive comparable restaurant sales growth;
  • Commodity cost inflation of approximately 1.0% to 2.0%; and
  • Approximately 7.0% to 8.0% growth in total labor dollars per store week.

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 29, 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 5154796 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 590 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 26 Weeks Ended
          
   June 25, 2019 June 26, 2018 June 25, 2019 June 26, 2018
            
Revenue:         
 Restaurant and other sales$  684,373  $  624,073  $  1,369,490  $  1,246,475 
 Franchise royalties and fees   5,455     5,164     10,946     10,467 
            
Total revenue   689,828     629,237     1,380,436     1,256,942 
            
Costs and expenses:         
 Restaurant operating costs (excluding depreciation and amortization shown separately below):         
  Cost of sales   221,266     204,048     444,978     406,834 
  Labor   225,490     199,647     449,370     395,677 
  Rent   13,051     12,119     26,179     23,970 
  Other operating   103,811     94,858     205,613     187,236 
 Pre-opening   4,197     4,107     8,065     9,151 
 Depreciation and amortization   28,454     25,165     56,227     49,649 
 Impairment and closure   316     22     333     108 
 General and administrative   39,960     35,004     75,943     65,179 
            
Total costs and expenses   636,545     574,970     1,266,708     1,137,804 
            
Income from operations   53,283     54,267     113,728     119,138 
            
Interest income (expense), net   691     (283)    1,445     (642)
Equity income from investments in         
 unconsolidated affiliates   141     445     254     769 
            
Income before taxes   54,115     54,429     115,427     119,265 
Provision for income taxes   7,427     8,466     16,546     16,923 
            
Net income including noncontrolling interests   46,688     45,963     98,881     102,342 
Less: Net income attributable to noncontrolling interests   1,843     1,736     3,646     3,574 
Net income attributable to Texas Roadhouse, Inc. and subsidiaries$  44,845  $  44,227  $  95,235  $  98,768 
            
Net income per common share attributable to Texas Roadhouse, Inc.         
  and subsidiaries:         
 Basic$  0.63  $  0.62  $  1.33  $  1.38 
 Diluted$  0.63  $  0.62  $  1.32  $  1.37 
            
Weighted average shares outstanding:         
 Basic   71,362     71,445     71,558     71,389 
 Diluted   71,733     71,897     71,961     71,853 
            
Cash dividends declared per share$  0.30  $  0.25  $  0.60  $  0.50 
               


 
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
      
  June 25, 2019 December 25, 2018
      
      
 Cash and cash equivalents$  144,839  $  210,125 
 Other current assets, net   72,589     134,894 
 Property and equipment, net   991,339     956,676 
 Operating lease right-of-use asset, net   485,818     -  
 Goodwill   123,220     123,220 
 Intangible assets, net   1,513     1,959 
 Other assets   49,533     42,402 
      
 Total assets$  1,868,851  $  1,469,276 
      
      
 Other current liabilities   359,065     385,142 
 Operating lease liabilities, net of current portion   521,820     -  
 Other liabilities, net   82,348     123,426 
 Texas Roadhouse, Inc. and subsidiaries stockholders' equity   890,852     945,569 
 Noncontrolling interests   14,766     15,139 
      
 Total liabilities and equity$  1,868,851  $  1,469,276 
      
      
 Note:  Beginning in 2019, we adopted Accounting Standards Codification 842, Leases, which requires the recognition of an operating lease right-of-use asset and operating lease liability for virtually all leases.
         


 
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
       
       
   26 Weeks Ended
      
   June 25, 2019 June 26, 2018
       
       
Cash flows from operating activities:    
Net income including noncontrolling interests$  98,881   $  102,342 
Adjustments to reconcile net income to net cash provided by operating activities    
 Depreciation and amortization   56,227      49,649 
 Share-based compensation expense   16,873      15,856 
 Other noncash adjustments, net   (27)     7,076 
Change in working capital   15,062      (9,816)
  Net cash provided by operating activities   187,016      165,107 
       
Cash flows from investing activities:    
Capital expenditures - property and equipment   (87,782)     (66,718)
  Net cash used in investing activities   (87,782)     (66,718)
       
Cash flows from financing activities:    
Principal payments on long-term debt and capital lease obligation   -       (50,004)
Repurchase shares of common stock   (112,050)     -  
Dividends paid   (39,452)     (32,798)
Other financing activities, net   (13,018)     (12,152)
  Net cash used in financing activities   (164,520)     (94,954)
       
  Net (decrease) increase in cash and cash equivalents   (65,286)     3,435 
Cash and cash equivalents - beginning of period   210,125      150,918 
Cash and cash equivalents - end of period$  144,839   $  154,353 
       


 
Texas Roadhouse, Inc. and Subsidiaries
Reconciliation of Income from Operations to Restaurant Margin
(in thousands)
(unaudited)
        
 13 Weeks Ended 26 Weeks Ended
 June 25, 2019 June 26, 2018 June 25, 2019 June 26, 2018
        
Income from operations$  53,283  $  54,267  $  113,728  $  119,138 
        
Less:       
Franchise royalties and fees   5,455     5,164     10,946     10,467 
        
Add:       
Pre-opening   4,197     4,107     8,065     9,151 
Depreciation and amortization   28,454     25,165     56,227     49,649 
Impairment and closure   316     22     333     108 
General and administrative   39,960     35,004     75,943     65,179 
        
Restaurant margin$  120,755  $  113,401  $  243,350  $  232,758 
        
Restaurant margin (as a percentage of restaurant and other sales) 17.6%  18.2%  17.8%  18.7%
        


 
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 
    2019  2018 vs LY  2019  2018 vs LY 
             
Restaurant openings          
 Company - Texas Roadhouse 3  4 (1)  7  10 (3) 
 Company - Bubba's 33 0  3 (3)  0  4 (4) 
 Company - Other 0  0 0   0  0 0  
 Franchise - Texas Roadhouse - U.S. 1  0 1   1  0 1  
 Franchise - Texas Roadhouse - International 1  1 0   3  3 0  
 Total 5  8 (3)  11  17 (6) 
             
Restaurant closures          
 Franchise - Texas Roadhouse - International (2) 0 (2)  (2) 0 (2) 
 Total (2) 0 (2)  (2) 0 (2) 
             
Restaurants open at the end of the quarter          
 Company - Texas Roadhouse 471  450 21       
 Company - Bubba's 33 25  24 1       
 Company - Other 2  2 0       
 Franchise - Texas Roadhouse - U.S. 70  70 0       
 Franchise - Texas Roadhouse - International 23  20 3       
 Total 591  566 25       
             
Company restaurants          
 Restaurant and other sales$  684,373 $  624,073   9.7% $  1,369,490 $  1,246,475   9.9% 
 Store weeks 6,460  6,142   5.2%  12,846  12,190   5.4% 
 Comparable restaurant sales growth (1) 4.7% 5.7%    5.0% 5.3%   
 Texas Roadhouse restaurants only:          
  Comparable restaurant sales growth (1) 4.6% 5.6%    4.9% 5.2%   
  Average unit volume (2)$  1,393 $  1,337   4.2% $  2,812 $  2,695   4.4% 
  Weekly sales by group:      
    Comparable restaurants (434 units)$  107,590          
    Average unit volume restaurants (20 units) (3)$  98,426          
    Restaurants less than 6 months old (17 units)$  115,233          
             
Restaurant operating costs (as a % of restaurant and other sales)          
Cost of sales 32.3% 32.7%  (37)bps 32.5% 32.6%  (15)bps
Labor 32.9% 32.0%  96 bps 32.8% 31.7%  107 bps
Rent  1.9% 1.9%  (4)bps 1.9% 1.9%  (1)bps
Other operating 15.2% 15.2%  (3)bps 15.0% 15.0%  (1)bps
Total 82.4% 81.8%  53 bps 82.2% 81.3%  90 bps
             
 Restaurant margin 17.6% 18.2%  (53)bps 17.8% 18.7%  (90)bps
             
 Restaurant margin ($ in thousands)$  120,755 $  113,401   6.5% $  243,350 $  232,758   4.6% 
 Restaurant margin $/Store week$  18,692 $  18,463   1.2% $  18,943 $  19,094   (0.8)% 
             
Franchise restaurants          
 Franchise royalties and fees$  5,455 $  5,164   5.6% $  10,946 $  10,467   4.6% 
 Store weeks 1,208  1,164   3.8%  2,403  2,303   4.3% 
 Comparable restaurant sales growth (1) 3.7% 1.9%    3.3% 1.9%   
 U.S. franchise restaurants only:                
  Comparable restaurant sales growth (1) 4.3% 3.9%    4.3% 4.0%   
  Average unit volume (2)$  1,436 $  1,376   4.3% $  2,897 $  2,777   4.3% 
             
Pre-opening expense$  4,197 $  4,107   2.2% $  8,065 $  9,151   (11.9)% 
             
Depreciation and amortization$  28,454 $  25,165   13.1% $  56,227 $  49,649   13.2% 
 As a % of revenue 4.1% 4.0%  13 bps 4.1% 3.9%  12 bps
             
General and administrative expenses$  39,960 $  35,004   14.2% $  75,943 $  65,179   16.5% 
 As a % of revenue 5.8% 5.6%  23 bps 5.5% 5.2%  32 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