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