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01/11 03:09
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call revealed several concerning factors: an EPS miss, increased guidance for commodity inflation, and a decline in restaurant margins. Despite a revenue increase, these negative aspects overshadowed positive elements like cash flow and comparable sales growth. The Q&A section highlighted uncertainties in labor costs and commodity prices, further weighing on sentiment. Share repurchases and dividends were maintained, but not enough to offset negative financial indicators. Given these mixed signals and lack of a strong positive catalyst, the stock price is likely to experience a negative reaction in the short term.
Revenue $1.4 billion, up 9.6% year-over-year, driven by a 2.4% increase in average unit volume and 7.1% store week growth.
Earnings Per Share (EPS) $1.70, up 1% year-over-year, but missed expectations of $1.75.
Restaurant Margin Dollars $239 million, up 4.7% year-over-year.
Average Weekly Sales $163,000, with to-go sales representing approximately 13.6% of total weekly sales.
Comparable Sales Increased 3.5%, driven by 1.1% traffic growth and a 2.4% increase in average check.
Restaurant Margin as a Percentage of Total Sales 16.6%, down 77 basis points year-over-year.
Food and Beverage Costs as a Percentage of Total Sales 34.1%, down 22 basis points year-over-year, driven by 2.1% commodity inflation and shifts within the entree category.
Labor as a Percentage of Total Sales 33.3%, up 79 basis points year-over-year.
General and Administrative (G&A) Expenses Grew 6.9% year-over-year, at 3.9% of revenue.
Cash Flow from Operations $238 million.
Cash at End of Quarter $221 million.
Capital Expenditures $173 million, including dividend payments and share repurchases.
Acquisition of Franchise Restaurants $78 million for the acquisition of 14 franchise restaurants.
Commodity Inflation Increased guidance for full year commodity inflation to approximately 4%, driven by updated expectations for beef costs and tariffs.
Labor Inflation Maintaining guidance of 4% to 5% for the full year.
New Beverage Menus: Rolling out new beverage menus tailored to specific geographic preferences, including mocktails and $5 all day, everyday beer and margarita offerings.
Restaurant Openings: Opened eight company-owned restaurants in Q1, including one Bubba’s 33, with plans to open approximately 30 company-owned restaurants this year.
Franchise Openings: Outlook includes five international Texas Roadhouses and two domestic Jaggers, with 13 franchise restaurants acquired at the beginning of the year.
Digital Kitchen Implementation: 65% of restaurants using a digital kitchen, with full conversion expected by year-end, enhancing kitchen efficiency.
Guest Management System Upgrade: 70% of restaurants upgraded to a new guest management system, improving wait time accuracy and floor plan management.
Focus on Core Values: Reaffirmed commitment to delivering legendary food and service, despite external economic factors.
Managing Partner Conference: Theme of 'going all in' on business fundamentals and community service, emphasizing operator engagement.
Earnings Miss: Texas Roadhouse reported an EPS of $1.70, missing expectations of $1.75.
Tariffs Impact: Potential tariffs could impact commodities, supplies, and equipment, particularly seafood and disposables. The timing and extent of cost increases remain uncertain.
Commodity Inflation: Full-year commodity inflation guidance increased to approximately 4%, driven by updated expectations for beef costs and tariffs, which are estimated to contribute 30 basis points.
Labor Inflation: Maintaining guidance for labor inflation at 4% to 5% for the full year, with labor hours growing at approximately 35% of comparable traffic growth.
Cash Flow and Capital Expenditures: Capital expenditures guidance remains unchanged at approximately $400 million, which includes potential tariff-related cost pressures.
Restaurant Margin: Restaurant margin as a percentage of total sales decreased by 77 basis points year-over-year to 16.6%, indicating pressure on profitability.
Restaurant Openings: Opened eight company-owned restaurants in Q1 2025, with plans to open approximately 30 company-owned restaurants this year, including seven Bubba’s 33 and one Jaggers.
Franchise Openings: Outlook includes five international Texas Roadhouses and two domestic Jaggers, with additional acquisitions of franchise restaurants planned.
Technology Initiatives: 65% of restaurants using a digital kitchen, with full conversion expected by year-end. 70% have upgraded guest management systems.
New Beverage Menus: Rolling out regional beverage menus tailored to geographic preferences, including mocktails and $5 all day beer and margarita offerings.
Revenue Guidance: Generated over $1.4 billion in revenue for Q1 2025, with comparable sales up 5% in the first five weeks of Q2.
Commodity Inflation: Increased guidance for full year commodity inflation to approximately 4%, driven by updated expectations for beef costs and tariffs.
Labor Inflation: Maintaining guidance for 4% to 5% wage and other labor inflation for the full year.
Capital Expenditures: Guidance for 2025 capital expenditures remains unchanged at approximately $400 million.
Cash Flow: Ended Q1 with $221 million in cash and cash flow from operations of $238 million.
Dividend Payments: $173 million of capital expenditures, dividend payments and share repurchases.
Share Repurchase: Included in the $173 million of capital expenditures, dividend payments and share repurchases.
The earnings call summary and Q&A reflect a positive sentiment overall. The company reported strong comparable sales growth, effective cost management, and strategic expansion plans. Despite concerns about beef inflation, management expressed confidence in managing through the cycle. Dividend increases and share repurchases are planned, which are positive for shareholder returns. Although there are some uncertainties, such as the structural nature of beef inflation, the company's proactive strategies and optimistic guidance suggest a positive outlook for stock price movement.
The earnings call highlights strong financial performance with revenue growth, positive guidance, and effective cost management. The company is expanding through new restaurant openings and technology initiatives, which are well-received by analysts. Despite inflationary pressures, margins are maintained, and the off-premise sales growth is sustainable. The Q&A reveals optimism about Bubba's 33 expansion and the mobile app's impact, although some details remain unclear. Overall, the positive outlook on revenue and strategic initiatives outweigh the minor concerns, predicting a positive stock price movement in the short term.
The earnings call revealed several concerning factors: an EPS miss, increased guidance for commodity inflation, and a decline in restaurant margins. Despite a revenue increase, these negative aspects overshadowed positive elements like cash flow and comparable sales growth. The Q&A section highlighted uncertainties in labor costs and commodity prices, further weighing on sentiment. Share repurchases and dividends were maintained, but not enough to offset negative financial indicators. Given these mixed signals and lack of a strong positive catalyst, the stock price is likely to experience a negative reaction in the short term.
The earnings report shows mixed results: a slight increase in revenue and EPS, but declining margins and increased labor costs. The Q&A reveals concerns about pricing below inflation and labor leverage, but management remains optimistic about sales rebounds and operational efficiencies. The neutral outlook is due to the balance between positive sales growth and negative margin pressures, with no significant catalysts for a strong price movement.
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