Results for the fourth quarter included the following highlights:
- Comparable restaurant sales increased 5.6% at company restaurants and 4.8% at domestic franchise restaurants;
- Restaurant margin, as a percentage of restaurant and other sales, decreased 112 basis points to 15.9%, primarily due to higher labor costs. Restaurant margin dollars increased 3.7% to $95.6 million from $92.2 million in the prior year;
- Our income tax rate decreased to 5.8% from 19.8% in the prior year primarily due to the impact of new tax legislation;
- Diluted earnings per share increased 5.4% to $0.42 from $0.40 in the prior year primarily due to higher revenue and lower income tax expense partially offset by higher labor costs and higher general and administrative expenses; and
- Eleven company restaurants, including one Bubba’s 33, 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 4.3% at domestic franchise restaurants;
- Restaurant margin, as a percentage of restaurant and other sales, decreased 104 basis points to 17.4%, primarily due to higher labor costs. Restaurant margin dollars increased 4.4% to $424.2 million from $406.4 million in the prior year;
- Our income tax rate decreased to 12.9% from 26.1% in the prior year primarily due to the impact of new tax legislation;
- Diluted earnings per share increased 19.6% to $2.20 from $1.84 in the prior year primarily due to higher revenue and lower income tax expense partially offset by higher labor costs. In addition, we overlapped 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
- 28 company restaurants, including five Bubba’s 33, and five international franchise restaurants were opened.
Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, “We finished the year strong, with double digit revenue growth for both the fourth quarter and full year. This represented the 36th consecutive quarter of positive comparable restaurant sales, with growth of 5.6% driven by increased traffic. In addition, our solid balance sheet and healthy cashflow allowed us to open 28 company restaurants this year, while also increasing our quarterly cash dividend to $0.30 per share which is our sixth straight year of increasing our dividends by double digits.”
Taylor continued, “Looking ahead to 2019, our development pipeline is in great shape as we expect to open 25 to 30 company restaurants and as many as eight franchise restaurants. While we expect to face continued cost pressures in the near term, we remain excited about the top-line momentum that our operators have generated.”
2019 Outlook
Comparable restaurant sales at company restaurants for the first 54 days of our first quarter of fiscal 2019 increased approximately 6.0% compared to the prior year period, including a positive impact of approximately 1.3% related to the calendar shift of the New Year’s holiday.
Management updated the following expectations for 2019:
- Positive comparable restaurant sales growth including a menu price increase of approximately 1.5% to be implemented at the beginning of our second quarter;
- An income tax rate of approximately 15.0%; and
- Total capital expenditures of approximately $210 million to $220 million.
Management reiterated the following expectations for 2019:
- 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%; and
- Mid-single digit growth in labor dollars per store week, excluding the impact of higher guest counts.
Cash Dividend Payment
On February 13, 2019, our Board of Directors authorized the payment of a quarterly cash dividend of $0.30 per share of common stock. This payment, which will be distributed on March 29, 2019 to shareholders of record at the close of business on March 13, 2019, represents a 20% increase from the cash dividend of $0.25 per share of common stock declared during each quarter of 2018. Since the inception of our dividend program in 2011, our cash dividend per share of common stock has increased an average of 18.0% per year.
