Texas Roadhouse, Inc. Announces First Quarter 2019 Results
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Texas Roadhouse, Inc. Announces First Quarter 2019 Results

LOUISVILLE, Ky., April 29, 2019 (GLOBE NEWSWIRE - Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 week period ended March 26, 2019.

 

First Quarter

($000's)

 

2019

 

 

2018

 

% Change

 

 

 

 

 

 

Total revenue

$

  690,608

 

$

  627,705

 

10.0

%

Income from operations

 

60,445

 

 

64,871

 

(6.8

%)

Net income

 

50,390

 

 

54,541

 

(7.6

%)

Diluted EPS

$

  0.70

 

$

  0.76

 

(8.1

%)

 

 

 

 

 

 

 

 

 

Results for the first quarter included the following highlights:

  • Comparable restaurant sales increased 5.2% at company restaurants and 4.3% at domestic franchise restaurants;
  • Restaurant margin, as a percentage of restaurant and other sales, decreased 128 basis points to 17.9%, primarily due to labor costs which increased 118 basis points. Restaurant margin dollars increased 2.7% to $122.6 million from $119.4 million in the prior year;
  • Diluted earnings per share decreased 8.1% to $0.70 from $0.76 in the prior year primarily due to higher general and administrative expenses and higher depreciation and amortization expense, partially offset by higher restaurant margin dollars; and
  • Four Texas Roadhouse company restaurants were opened and two international franchise restaurants were opened.

Scott Colosi, President of Texas Roadhouse, Inc., commented, "Our top-line momentum continued this quarter highlighted by comparable restaurant sales growth of 5.2%. Despite our ongoing sales strength, our profits continue to be pressured by higher labor costs. Much of the labor increase was driven by wage rate and other labor inflation that currently does not show signs of abating. As a result, we are updating our labor inflation expectations for 2019. The additional 1.5% of pricing we put in place at the beginning of the second quarter will provide a significant benefit for the remainder of 2019. While we are certainly facing some challenges in our business right now, I have no doubt that our brand positioning is stronger than ever."

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "I am proud of our operators who continue to be committed to actively protecting the guest experience and taking care of our employees in this very competitive labor market. We will continue to manage our business with a long-term view that includes growing average unit volumes from just over $5.0 million to $6.0 million in the coming years. We believe this approach, along with the strength of our operations and our legendary brand, well positions our business for long-term sales and profit growth."

2019 Outlook

Comparable restaurant sales at company restaurants for the first four weeks of our second quarter of fiscal 2019 increased approximately 2.9% compared to the prior year period.

Management updated the following expectation for 2019:

  • Approximately 7.0% to 8.0% growth in total labor dollars per store week.

Management reiterated the following expectations for 2019:

  • Positive comparable restaurant sales growth including a menu price increase of approximately 1.5% implemented at the beginning of the second quarter;
  • 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%;
  • An income tax rate of approximately 15.0%; and
  • Total capital expenditures of approximately $210 million to $220 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, April 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 4384729 as the pass code. There will be a simultaneous Web cast conducted at www.texasroadhouse.com.

About Texas Roadhouse

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:

Tonya Robinson
Investor Relations
(502) 515-7269

Travis Doster
Media Relations
(502) 638-5457

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(in thousands, except per share data)

(unaudited)

 

 

 

 

 

 

 

 

13 Weeks Ended

 

March 26, 2019

 

March 27, 2018

 

 

 

 

 

Revenue:

 

 

 

 

Restaurant and other sales

$

685,117

 

 

$

622,402

 

Franchise royalties and fees

 

5,491

 

 

 

5,303

 

 

 

 

 

 

Total revenue

 

690,608

 

 

 

627,705

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

Restaurant operating costs (excluding depreciation and amortization shown separately below):

 

 

 

 

 

 

 

 

 

Cost of sales

 

223,712

 

 

 

202,786

 

Labor

 

223,880

 

 

 

196,030

 

Rent

 

13,128

 

 

 

11,851

 

Other operating

 

101,802

 

 

 

92,378

 

Pre-opening

 

3,868

 

 

 

5,044

 

Depreciation and amortization

 

27,773

 

 

 

24,484

 

Impairment and closure

 

17

 

 

 

86

 

General and administrative

 

35,983

 

 

 

30,175

 

 

 

 

 

 

Total costs and expenses

 

630,163

 

 

 

562,834

 

 

 

 

 

 

Income from operations

 

60,445

 

 

 

64,871

 

 

 

 

 

 

Interest income (expense), net

 

754

 

 

 

(359

)

Equity income from investments in unconsolidated affiliates

 

113

 

 

 

324

 

 

 

 

 

 

Income before taxes

 

61,312

 

 

 

64,836

 

Provision for income taxes

 

9,119

 

 

 

8,457

 

 

 

 

 

 

Net income including noncontrolling interests

 

52,193

 

 

 

56,379

 

Less: Net income attributable to noncontrolling interests

 

1,803

 

 

 

1,838

 

Net income attributable to Texas Roadhouse, Inc. and subsidiaries

$

50,390

 

 

$

54,541

 

 

 

 

 

 

Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:

 

 

 

 

Basic

$

0.70

 

 

$

0.76

 

Diluted

$

0.70

 

 

$

0.76

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

Basic

 

71,753

 

 

 

71,333

 

Diluted

 

72,187

 

 

 

71,805

 

 

 

 

 

 

Cash dividends declared per share

$

0.30

 

 

$

0.25

 

 

 

 

 

 

 

 

 

 

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

 

 

 

 

 

 

March 26, 2019

 

December 25, 2018

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

252,107

 

 

$

210,125

 

Other current assets, net

 

70,891

 

 

 

134,894

 

Property and equipment, net

 

971,135

 

 

 

956,676

 

Operating lease right-of-use asset, net

 

472,122

 

 

 

-

 

Goodwill

 

123,220

 

 

 

123,220

 

Intangible assets, net

 

1,711

 

 

 

1,959

 

Other assets

 

46,764

 

 

 

42,402

 

 

 

 

 

 

 

Total assets

$

1,937,950

 

 

$

1,469,276

 

 

 

 

 

 

 

 

 

 

 

 

 

Other current liabilities

 

362,450

 

 

 

385,142

 

Operating lease liabilities, net of current portion

 

506,973

 

 

 

-

 

Other liabilities, net

 

80,380

 

 

 

123,426

 

Texas Roadhouse, Inc. and subsidiaries stockholders' equity

 

973,493

 

 

 

945,569

 

Noncontrolling interests

 

14,654

 

 

 

15,139

 

 

 

 

 

 

 

Total liabilities and equity

$

1,937,950

 

 

$

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)

 

 

 

 

 

 

 

 

 

 

 

13 Weeks Ended

 

March 26, 2019

 

March 27, 2018

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

Net income including noncontrolling interests

$

  52,193

 

 

 

$

  56,379

 

Adjustments to reconcile net income to net cash provided by operating activities

 

 

 

 

Depreciation and amortization

 

  27,773

 

 

 

 

  24,484

 

Share-based compensation expense

 

  9,132

 

 

 

 

  7,475

 

Other noncash adjustments, net

 

  360

 

 

 

 

  4,661

 

Change in working capital

 

  21,957

 

 

 

 

  13,808

 

Net cash provided by operating activities

 

  111,415

 

 

 

 

  106,807

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Capital expenditures - property and equipment

 

  (42,044

)

 

 

 

  (35,307

)

Acquisition of franchise restaurants, net of cash acquired

 

  - 

 

 

 

 

  - 

 

Net cash used in investing activities

 

  (42,044

)

 

 

 

  (35,307

)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Dividends paid

 

  (17,904

)

 

 

 

  (14,945

)

Other financing activities, net

 

  (9,485

)

 

 

 

  (9,644

)

Net cash used in financing activities

 

  (27,389

)

 

 

 

  (24,589

)

 

 

 

 

 

Net increase in cash and cash equivalents

 

  41,982

 

 

 

 

  46,911

 

Cash and cash equivalents - beginning of period

 

  210,125

 

 

 

 

  150,918

 

Cash and cash equivalents - end of period

$

  252,107

 

 

 

$

  197,829

 

 

 

 

 

 

 

Texas Roadhouse, Inc. and Subsidiaries

Reconciliation of Income from Operations to Restaurant Margin

(in thousands)

(unaudited)

 

 

 

 

 

13 Weeks Ended

 

March 26, 2019

 

March 27, 2018

 

 

 

 

Income from operations

$

60,445

 

 

$

64,871

 

 

 

 

 

Less:

 

 

 

Franchise royalties and fees

 

5,491

 

 

 

5,303

 

 

 

 

 

Add:

 

 

 

Pre-opening

 

3,868

 

 

 

5,044

 

Depreciation and amortization

 

27,773

 

 

 

24,484

 

Impairment and closure

 

17

 

 

 

86

 

General and administrative

 

35,983

 

 

 

30,175

 

 

 

 

 

Restaurant margin

$

122,595

 

 

$

119,357

 

 

 

 

 

Restaurant margin (as a percentage of restaurant and other sales)

 

17.9

%

 

 

19.2

%

 

 

 

 

 

 

 

 

 

Texas Roadhouse, Inc. and Subsidiaries

Supplemental Financial and Operating Information

($ amounts in thousands, except weekly sales by group)

(unaudited)

 

 

 

 

 

 

 

 

 

First Quarter

 

Change

 

2019

 

2018

 

vs LY

 

 

 

 

 

 

 

 

Restaurant openings

 

 

 

 

 

 

 

Company - Texas Roadhouse

 

4

 

 

6

 

(2

 

Company - Bubba's 33

 

0

 

 

1

 

(1

 

Company - Other

 

0

 

 

0

 

0

 

 

Franchise - Texas Roadhouse - U.S.

 

0

 

 

0

 

0

 

 

Franchise - Texas Roadhouse - International

 

2

 

 

2

 

0

 

 

Total

 

6

 

 

9

 

(3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restaurants open at the end of the quarter

 

 

 

 

 

 

 

Company - Texas Roadhouse

 

468

 

 

446

 

22

 

 

Company - Bubba's 33

 

25

 

 

21

 

4

 

 

Company - Other

 

2

 

 

2

 

0

 

 

Franchise - Texas Roadhouse - U.S.

 

69

 

 

70

 

(1

 

Franchise - Texas Roadhouse - International

 

24

 

 

19

 

5

 

 

Total

 

588

 

 

558

 

30

 

 

 

 

 

 

 

 

 

 

Company restaurants

 

 

 

 

 

 

 

Restaurant and other sales

$

  685,117

 

$

  622,402

 

  10.1

%

 

Store weeks

 

6,386

 

 

6,048

 

  5.6

%

 

Comparable restaurant sales growth (1)

 

5.2

%

 

4.9

%

 

 

 

Texas Roadhouse restaurants only:

 

 

 

 

 

 

 

Comparable restaurant sales growth (1)

 

5.1

%

 

4.9

%

 

 

 

Average unit volume (2)

$

  1,418

 

$

  1,356

 

  4.6

%

 

Weekly sales by group:

 

 

 

 

 

Comparable restaurants (429 units)

$

  109,634

 

 

 

 

 

 

Average unit volume restaurants (22 units) (3)

$

  98,938

 

 

 

 

 

 

Restaurants less than 6 months old (17 units)

$

  113,880

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restaurant operating costs (as a % of restaurant and other sales)

 

 

 

 

 

 

 

Cost of sales

 

32.7

%

 

32.6

%

  7

 

bps

Labor

 

32.7

%

 

31.5

%

  118

 

bps

Rent

 

1.9

%

 

1.9

%

  1

 

bps

Other operating

 

14.9

%

 

14.8

%

  2

 

bps

Total

 

82.1

%

 

80.8

%

  128

 

bps

 

 

 

 

 

 

 

 

Restaurant margin

 

17.9

%

 

19.2

%

  (128

)

bps

 

 

 

 

 

 

 

 

Restaurant margin ($ in thousands)

$

  122,595

 

$

  119,357

 

  2.7

%

 

Restaurant margin $/Store week

$

  19,197

 

$

  19,735

 

  (2.7

)%

 

 

 

 

 

 

 

 

 

Franchise restaurants

 

 

 

 

 

 

 

Franchise royalties and fees

$

  5,491

 

$

  5,303

 

  3.5

%

 

Store weeks

 

1,191

 

 

1,139

 

  4.6

%

 

Comparable restaurant sales growth (1)

 

2.8

%

 

1.8

%

 

 

 

U.S. franchise restaurants only:

 

 

 

 

 

 

 

Comparable restaurant sales growth (1)

 

4.3

%

 

3.9

%

 

 

 

Average unit volume (2)

$

  1,461

 

$

  1,401

 

  4.3

%

 

 

 

 

 

 

 

 

 

Pre-opening expense

$

  3,868

 

$

  5,044

 

  (23.3

)%

 

 

 

 

 

 

 

 

 

Depreciation and amortization

$

  27,773

 

$

  24,484

 

  13.4

%

 

As a % of revenue

 

4.0

%

 

3.9

%

  12

 

bps

 

 

 

 

 

 

 

 

General and administrative expenses

$

  35,983

 

$

  30,175

 

  19.2

%

 

As a % of revenue

 

5.2

%

 

4.8

%

  40

 

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.

SOURCE Texas Roadhouse

###

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