TXRH: GLANCE AT THE 2Q MENU

Here is a look at TXRH guidance going into earnings on Monday.

 

Comparable-store sales

  • TXRH  needs to post company-owned same-store sales of 1.9% to maintain two-year trends
  • Per Factset, the Street is expecting two-year trends to slow sequentially from 1Q.  Company-owned same-store sales are expected to come in at 0.6%.  Tellingly, the highest estimate of the twelve estimates that make up the Factset estimate is +1.5%.  This would still imply a slowdown in two-year top line trends.
  • Earnings estimates have been holding steady recently, but in the past 6 months have increased 18% on a next fiscal year basis

Guidance

  • G&A will be tough to leverage without positive comparable restaurant sales for the year
  • Anticipating a tax rate for 2010 of 33%
  • We anticipate continuing to generate excess cash flow and paying down more debt throughout the balance of 2010
  • 2010 EPS growth up 14% to 18% - assuming flat to+1% comparable restaurant sales growth, food cost deflation of 2.5% to 3% and total capex of approximately $50 million
  • Food cost deflation will be less for the balance of the year with the lowest deflation in 2Q
  • April trends were better and management expects this to improve
  • On pace to open 14 to 15 new units this year – slowing growth in 2Q, picking up in 2H

 

Other

  • All locations in 2010 will include the new kitchen design which is reducing development costs by $100k
  • Plans to open a few locations that are ~10% smaller in terms of square footage – expecting to see these perform well
  • There is no price increase on the new menu and no imminent plans to take price…maybe in 2011
  • Increased seating capacity at 47 locations thus far – 4 in 1Q and doing 6 or 7 for the balance of 2010
  • Close to 100% locked on beef for 2010

 

Howard Penney

Managing Director


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