Core Viewpoint - The article expresses a bullish sentiment on full-service restaurants following a market selloff, indicating potential investment opportunities in this sector [1]. Group 1 - The article references a previous publication that highlighted two full-service restaurants as attractive investment options after the S&P 500 experienced a decline on August 5th of the previous year [1].

LOUISVILLE, Ky., June 10, 2025 (GLOBE NEWSWIRE) -- Texas Roadhouse, Inc. (NasdaqGS: TXRH), announced today that Chief Financial Officer Chris Monroe is no longer with the Company. Mr. Monroe was hired by the Company on June 28, 2023. “We appreciate Chris’ nearly two years of service and wish he and his family the best as they transition back to Texas,” said Chief Executive Officer Jerry Morgan. The Company’s Board of Directors has appointed Keith Humpich, Vice President of Finance, as interim CFO until a pe ...

Group 1 - The earnings season has been influenced more by geopolitical news than by the actual financial reports of companies [1] - The focus is on long-term growth and dividend growth investing, with an emphasis on finding undervalued stocks and high-quality dividend-growing companies [1] - Profitability is highlighted as a safer driver of gains compared to low valuation, with a focus on margins, free cash flow stability and growth, and returns on invested capital [1]

Group 1 - Texas Roadhouse is being compared to Costco in the restaurant industry due to its elevated trading multiples and consistent growth, showing resilience despite quarterly results [1] - The company is recognized for its strong qualitative attributes, which makes it an attractive investment opportunity [2] Group 2 - The focus is on investing in companies with solid fundamentals and holding them long-term, indicating a strategy aimed at maximizing exposure to high-performing stocks [2]

Core Viewpoint - Texas Roadhouse (NASDAQ: TXRH) is a restaurant chain that has consistently demonstrated long-term growth and dividend growth potential, despite being overshadowed by the hype surrounding AI companies [1]. Group 1: Company Performance - The company focuses on profitability as a key driver of gains, emphasizing the importance of margins, free cash flow stability and growth, and returns on invested capital [1]. - Texas Roadhouse is recognized for its ability to provide cash for reinvestment, indicating a strong financial position [1]. Group 2: Investment Strategy - The investment strategy involves seeking undervalued stocks and high-quality dividend-growing companies, which aligns with Texas Roadhouse's profile as a solid investment opportunity [1].

Financial Performance - Total revenue increased by $126.4 million or 9.6% to $1,447.6 million in Q1 2025 compared to Q1 2024, driven by a 7.1% increase in store weeks and a 3.5% increase in comparable restaurant sales [77]. - Net income rose by $0.5 million or 0.4% to $113.7 million in Q1 2025, with diluted earnings per share increasing by 1.0% to $1.70 [78]. - Restaurant margin dollars increased by $10.8 million or 4.7% to $239.3 million in Q1 2025, although the restaurant margin percentage decreased to 16.6% due to commodity inflation of 2.1% and wage inflation of 4.6% [79]. - Total revenue for Q1 2025 was $1,447.6 million, a 9.6% increase from $1,321.2 million in Q1 2024 [84]. - Comparable restaurant sales growth was 3.5% in Q1 2025, compared to 8.4% in Q1 2024 [94]. - Net income attributable to Texas Roadhouse, Inc. was $113.7 million in Q1 2025, slightly up from $113.2 million in Q1 2024 [84]. Operational Metrics - The increase in comparable restaurant sales was attributed to a rise in the per person average check and an increase in guest traffic [77]. - Restaurant and other sales increased by 9.6% in Q1 2025, driven by a 7.1% increase in store weeks and a 2.4% increase in average unit volume [90][91]. - The company emphasizes restaurant margin as a key measure for evaluating operational efficiency, excluding certain non-restaurant-level costs [71]. - Texas Roadhouse segment reported a restaurant margin of $225.3 million, a 4.7% increase from Q1 2024, but the margin percentage decreased to 16.7% from 17.4% due to commodity and labor inflation [116]. - Bubba's 33 segment saw a restaurant margin increase of $0.6 million or 5.0%, with the margin percentage decreasing to 16.1% from 17.2% due to increased expenses [117]. Capital Expenditures and Investments - Capital allocation for the 13 weeks ended April 1, 2025, included capital expenditures of $77.4 million, franchise acquisitions of $78.3 million, dividends of $45.2 million, and common stock repurchases of $50.2 million [80]. - Capital expenditures totaled $77.4 million in Q1 2025, with $36.9 million for new company restaurants and $24.5 million for refurbishment or expansion [123]. - The company expects capital expenditures of approximately $400 million in 2025 [125]. - Net cash used in investing activities increased to $155.6 million in Q1 2025, primarily due to the acquisition of 14 franchise restaurants [121]. Shareholder Returns - The quarterly cash dividend was increased to $0.68 per share in Q1 2025, totaling $45.2 million compared to $40.8 million in Q1 2024 [126]. - The company repurchased 281,091 shares for $50.2 million in Q1 2025, with $479.8 million remaining under the stock repurchase program [128]. Debt and Liquidity - The new revolving credit facility allows borrowing up to $450 million, with a maturity date of April 24, 2030 [134]. - As of April 1, 2025, the company had no outstanding borrowings under its credit facility and $296.8 million available [131]. Cost Structure - Food and beverage costs as a percentage of restaurant and other sales increased to 34.1% in Q1 2025 from 33.9% in Q1 2024, primarily due to commodity inflation of 2.1% [99]. - Restaurant labor expenses increased to 33.3% of restaurant and other sales in Q1 2025, up from 32.5% in Q1 2024, driven by wage inflation of 4.6% [101]. - General and administrative expenses decreased to 3.9% of total revenue in Q1 2025 from 4.0% in Q1 2024 [108]. Company Growth - The company operated 688 company restaurants, including 629 Texas Roadhouse, 50 Bubba's 33, and 9 Jaggers restaurants as of April 1, 2025 [68]. - The company opened seven Texas Roadhouse and one Bubba's 33 restaurants in Q1 2025, contributing to a total of 792 restaurants by April 1, 2025 [89][96]. - The company has contractual arrangements to acquire equity interests in 17 of the 19 majority-owned company restaurants and 41 of the 46 systemwide domestic franchise restaurants [66]. Taxation - The effective tax rate increased to 14.8% in Q1 2025 from 13.9% in Q1 2024, primarily due to a decrease in the impact of the FICA tip tax credit [111]. Economic Outlook - The company expects commodity inflation of approximately 4% in 2025, with labor costs pressured by wage inflation of 4% to 5% [100][102]. Fiscal Year Structure - The fiscal year 2025 consists of 52 weeks, with each quarter being 13 weeks long, compared to fiscal year 2024, which was 53 weeks long [70].

Group 1 - Texas Roadhouse reported $1.45 billion in revenue for the quarter ended March 2025, a year-over-year increase of 9.6% [1] - The EPS for the same period was $1.70, slightly up from $1.69 a year ago, but below the consensus estimate of $1.75, resulting in an EPS surprise of -2.86% [1] - The reported revenue exceeded the Zacks Consensus Estimate of $1.44 billion, indicating a surprise of +0.53% [1] Group 2 - Comparable restaurant sales growth for company restaurants was 3.5%, surpassing the nine-analyst average estimate of 3.2% [4] - The total number of company restaurants at the end of the period was 688, slightly above the six-analyst average estimate of 684 [4] - Franchise royalties and fees revenue was reported at $7.31 million, below the average estimate of $8.42 million, but represented a year-over-year change of +3.4% [4] Group 3 - Texas Roadhouse shares returned +3.2% over the past month, compared to the Zacks S&P 500 composite's +11.3% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Company Performance - Texas Roadhouse reported quarterly earnings of $1.70 per share, missing the Zacks Consensus Estimate of $1.75 per share, representing an earnings surprise of -2.86% [1] - The company posted revenues of $1.45 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.53%, compared to year-ago revenues of $1.32 billion [2] - Over the last four quarters, Texas Roadhouse has surpassed consensus EPS estimates two times and topped consensus revenue estimates three times [2] Stock Movement and Outlook - Texas Roadhouse shares have lost about 5.1% since the beginning of the year, while the S&P 500 has declined by -4.3% [3] - The company's earnings outlook will be crucial for future stock performance, with current consensus EPS estimates at $1.95 for the coming quarter and $6.93 for the current fiscal year [4][7] - The current Zacks Rank for Texas Roadhouse is 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Retail - Restaurants industry, to which Texas Roadhouse belongs, is currently in the bottom 22% of over 250 Zacks industries, which may impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that industry outlook can materially affect stock performance [5][8]

Financial Data and Key Metrics Changes - For the first quarter, the company generated over $1.4 billion in revenue, with a same-store sales increase of 3.5% and positive traffic growth [7][21] - Revenue growth was reported at 9.6%, driven by a 2.4% increase in average unit volume and 7.1% store week growth [21] - Diluted earnings per share increased by 1% to $1.7, while restaurant margin dollars increased by 4.7% to $239 million [21][22] Business Line Data and Key Metrics Changes - Weekly sales averaged $167,000 at Texas Roadhouse, $123,000 at Bubba's 33, and $71,000 at Jaggers, all showing positive same-store sales and traffic growth [15] - Average weekly sales for the first quarter were over $163,000, with To Go sales representing approximately 13.6% of total weekly sales [21] Market Data and Key Metrics Changes - The company opened eight company-owned restaurants in the first quarter, with plans to open approximately 30 company-owned restaurants this year [9][10] - Franchise openings are expected to include five international Texas Roadhouses and two domestic Jaggers [10] Company Strategy and Development Direction - The company aims to focus on delivering legendary food and service while navigating external economic factors [8] - Technology initiatives are progressing, with 65% of restaurants using a digital kitchen and 70% having upgraded guest management systems [11][12] - The company is committed to maintaining its pricing strategy, which is below inflation levels for both commodities and labor [32][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the current operating environment, citing strong demand for the brand and positive sales trends [8][15] - The company anticipates a full-year commodity inflation of approximately 4%, influenced by updated expectations for beef costs and tariffs [19][95] Other Important Information - The company celebrated the success of its operators at the annual Managing Partner Conference, emphasizing the importance of community engagement [26] - The company is focusing on improving the guest experience through new beverage menus tailored to regional preferences [12] Q&A Session Summary Question: Pricing strategy in relation to inflation - The company confirmed a 3.1% price increase in the first quarter, which is expected to drop to 2.3% in the following quarters, indicating pricing below inflation [32][34] Question: Labor leverage and hours - Labor hours grew at approximately 35% of comparable traffic growth, maintaining productivity despite challenges [40][41] Question: Restaurant margin performance - Management acknowledged a slight decline in restaurant profit dollars per week and emphasized the importance of monitoring this metric throughout the year [45][47] Question: To Go sales performance - The company noted improvements in To Go sales due to operational enhancements and better packaging, with margins being neutral to slightly positive [101][103] Question: Commodity inflation outlook - The company expects commodity inflation to remain under pressure, with specific guidance of approximately 4% for the full year [19][95] Question: Franchise acquisitions - The company maintains an active dialogue with franchisees regarding potential acquisitions but has no imminent plans beyond those already disclosed [140][142]

Financial Data and Key Metrics Changes - For the first quarter, the company reported revenue of over $1.4 billion, representing a 9.6% increase year-over-year, driven by a 2.4% increase in average unit volume and 7.1% store week growth [19][5] - The diluted earnings per share increased by 1% to $1.7, while restaurant margin dollars increased by 4.7% to $239 million [19][20] - Cash flow from operations was $238 million, with $221 million in cash at the end of the quarter [18] Business Line Data and Key Metrics Changes - Average weekly sales were $167,000 at Texas Roadhouse, $123,000 at Bubba's 33, and $71,000 at Jaggers, all showing positive same-store sales and traffic growth [13] - Same-store sales increased by 3.5% in the first quarter, with traffic growth of 1.1% and a 2.4% increase in average check [19] Market Data and Key Metrics Changes - The company opened eight company-owned restaurants in the first quarter, with plans to open approximately 30 company-owned restaurants this year [6][7] - Franchise openings are expected to include five international Texas Roadhouses and two domestic Jaggers [7] Company Strategy and Development Direction - The company aims to focus on delivering legendary food and service while navigating external economic factors [5] - The management emphasized the importance of maintaining operational excellence and community engagement as part of their long-term growth strategy [23] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the current demand for their brands, despite external challenges such as tariffs and inflation [5][14] - The company anticipates a full-year commodity inflation of approximately 4%, influenced by updated expectations for beef costs and tariffs [16][89] Other Important Information - The company is implementing technology upgrades, with 65% of restaurants using a digital kitchen and 70% having a new guest management system [9][10] - The company celebrated the achievements of its top operators during the annual Managing Partner Conference, reinforcing its commitment to operational excellence [2][11] Q&A Session Summary Question: Pricing strategy in relation to inflation - Management confirmed a 3.1% price increase in Q1, which is expected to drop to 2.3% in the following quarters, indicating they are pricing below inflation [29][30] Question: Labor leverage and hours - Management clarified that labor hours grew at 35% of traffic growth, maintaining productivity despite challenges [37][38] Question: Restaurant margin performance - Management acknowledged a slight decline in restaurant profit dollars per week and emphasized the importance of monitoring this metric throughout the year [42][44] Question: Consumer behavior and sales trends - Management attributed sales fluctuations to weather conditions and noted a strong rebound in March, April, and May [68][69] Question: Franchise acquisitions and future plans - Management stated there are no immediate plans for further franchise roll-ups but maintains active dialogue with existing franchisees [135][137] Question: Bar menu relaunch and profitability - Management indicated that the bar menu changes were driven by consumer demand and are expected to enhance profitability [141][144]