9:59 am Texas Roadhouse has now served up back-to-back sizzling earnings/comps reports (TXRH)
Texas Roadhouse (TXRH) is trading higher (+3%) this morning after reporting a strong Q2 earnings result last night. In case you're not familiar, Texas Roadhouse is a casual dining steakhouse restaurant chain. Its founder and CEO W. Kent Taylor started the business in 1993 with the opening of the first Texas Roadhouse restaurant in Clarksville, Indiana. Since then, TXRH has grown to 535 restaurants. Its operating strategy is position each restaurant as the local hometown favorite for a broad segment of consumers.
Texas Roadhouse is a moderately priced, full-service, casual dining restaurant concept offering an assortment of specially seasoned and aged steaks hand-cut daily on the premises and cooked to order over open grills. In addition to steaks, TXRH also offers a selection of ribs, fish, seafood, chicken, pork chops, pulled pork and vegetable plates, and an assortment of hamburgers, salads and sandwiches. The majority of its entrees include two made-from-scratch side items, and it offers all customers a free unlimited supply of roasted in-shell peanuts and fresh baked yeast rolls. TXRH also operates Bubba's 33, a family-friendly, sports restaurant concept offering an assortment of wings, sandwiches, pizza and burgers, including its signature 33% bacon grind patty.
In a high percentage of its restaurants, TXRH limits its operating hours to dinner-only during the weekdays with about one half of restaurants offering lunch on Friday. By focusing on dinner, its restaurant teams have to prepare for and manage only one shift per day during the week. This allows for more consistent food and service. In addition, the dinner focus provides a better "quality-of-life" for its management teams and, therefore, is a key ingredient in attracting and retaining personnel.
Turning to the Q2 results, Texas Roadhouse reported EPS of $0.53, which was up 11% YoY. Revenue rose 11.3% year/year to $566.3 mln. Both results were in-lime with or better than market expectations. Comparable restaurant sales increased +4.0% at company restaurants and +3.6% at domestic franchise restaurants. That compares to +3.1% and +3.8%, respectively, in Q1. Comp sales at company restaurants for the first four weeks of Q3 were +4.6%, so that is trending nicely higher. Restaurant margin, as a percentage of restaurant sales, decreased 28 basis points to 18.9%, primarily driven by wage rate inflation, partially offset by the benefit of lower food costs.
TXRH says it was pleased with its Q2 results, highlighted by double-digit growth in both revenue and EPS. In addition, its comp sales growth, driven by traffic gains, continues to be solid with an increase of +4.6% for the first four weeks of Q3. In terms of new openings, TXRH is on track to open 27-29 company restaurants this year. Looking ahead, the company is filling its new restaurant pipeline for next year and beyond.
In sum, after a sizable miss in Q4, Texas Roadhouse and reported impressive back-to-back quarters in Q1 and Q2. Also, as you can see the same store comps are trending nicely higher and Q3 has gotten off to a good start with a +4.6% comp so far. This restaurant chain does not provide specific revenue and guidance so its earnings can be difficult to predict. The stock had been weak over the past few days apparently on concerns over the Q2 results, however, these were solid results with good comps.
9:55 am TrueBlue Has Growth and Guidance Blues after Q2 Report (TBI)
TrueBlue (TBI 21.05, -4.50, -17.6%), which is a provider of specialized workforce solutions, reported its second quarter results after Monday's close. Those results lacked growth while the company's guidance had its share of disappointment. Fittingly, the performance of TBI today fits with the company's name.
For the fiscal second quarter, TrueBlue's revenue was $610 million, which was down 9.3% from the same period a year ago as it felt the pinch of reduced services to its former largest customer. Excluding the scope of services to that particular customer, revenue declined by 5.0%. Its adjusted diluted earnings per share were $0.42. The latter was in-line with analysts' average expectation, but down 22% on a comparable basis from last year.
TrueBlue cited a modest demand environment for its weak results, but noted that it is taking the right approach in the face of modest demand by reducing its operating expenses and emphasizing pricing discipline over simply expanding its market share.
The second quarter results matched the company's expectations, although it would be remiss not to add that True Blue lowered its second quarter guidance bar at the time of its first quarter report in May.
In fact, TrueBlue has formed a bad habit of issuing disappointing quarterly guidance. The company did so once again in conjunction with its second quarter report, marking the fourth consecutive quarter that its guidance has not met, or exceeded, analysts' average expectations.
For the third quarter, TrueBlue anticipates revenues will range from $645 million to $660 million and that its adjusted net income per diluted share will be between $0.55 and $0.60. The high end of those guidance ranges is below analysts' average expectations.
9:40 am Honda Motor Climbs After Beating Expectations and Boosting Guidance (HMC)
Honda Motor (HMC 28.56, +0.54) has climbed 1.9% after beating first quarter expectations and raising its guidance for the full year.
The Japanese automaker reported above-consensus first quarter earnings of JPY115.04 per share on a 7.0% year-over-year increase in revenue to JPY3.71 trillion, which was also ahead of expectations.
Honda's first quarter was highlighted by the launch of a CBR250RR motorcycle in Japan, the launch of an all-new CR-V in China, and the launch of a new Odyssey and Civic Type R vehicles in North America. Sales in China reached 340,000 units, which was an all-time first quarter record.
Consolidated unit sales of motorcycles increased to 3.245 million from 2.831 million, driving the overall sales growth. Consolidated automobile sales declined modestly, slipping to 900,000 from 908,000 one year ago. Unit sales of power products fell to 1.331 million from 1.488 million.
Operating profit increased 0.9% year-over-year to JPY269.20 billion while operating margin dipped 40 basis points to 7.3%.
Looking ahead, Honda has raised its outlook for the fiscal year, expecting earnings of JPY302.39 per share, up from previous guidance that called for earnings of JPY294.07 per share. Revenue for the full year is expected to hit JPY14.50 trillion after the previous forecast called for revenue of JPY14.20 trillion.
9:30 am Smooth Sailing for Royal Caribbean as it Delivers Solid Q2 Report (RCL)
Earlier this morning, cruise liner Royal Caribbean (RCL) issued strong Q2 results and provided upside EPS guidance for both Q3 and FY17. The report has shares trading higher by 4% in pre-market action, poised to hit new all-time highs. When it comes to outperforming the Street's earnings expectations, RCL has been on quite a roll, beating the bottom line estimate for ten straight quarters -- including this quarter. That consistency and its earnings growth have been significant catalysts for the stock over the past couple of years.
As we discuss in more detail below, its topline performance has been much less impressive. However, RCL is certainly not a topline growth story at this stage, but rather, its operating leverage, cost management, and execution are the key factors that most investors are focusing in on. And that is where RCL has been excelling, evidenced by its impressive earnings winning streak and the stock's 43% gain so far this year.
Taking a closer look at its Q2 results, RCL reported EPS of $1.71, beating the Capital IQ consensus by $0.04. On a year/year basis, Non-GAAP EPS grew by a healthy 57%, despite revenue growing by a modest 4% to $2.19 billion, virtually inline with expectations. The double-digit earnings growth was mainly driven by cost containment once again as gross cruise costs, excluding fuel, were down 0.9% on a constant currency basis.
Additionally, gross yields were up 10.2% and net yields increased 11.5%. Those yields exceeded its prior guidance and was driven by strong close-in demand, resulting in higher pricing and occupancy. Specifically, occupancy came in at 108.7% compared to 104.6% in the year ago quarter, with passengers carried increasing by 2.1% to 1.4 million. What's especially encouraging and positive for RCL is that occupancy should remain very strong going forward as its booked position for the remainder of 2017 is setting new records and its booked position for the next twelve months is also strong, higher in both rates and volume versus last year.
With that healthy demand in place, RCL issued upside Q3 EPS guidance of $3.45 vs. the $3.30 Capital IQ consensus, and, issued upside FY17 EPS guidance of $7.35-$7.45 vs. the $7.25 consensus. This puts the company on target to reach its "Double/Double" targets -- achieving Adjusted EPS of at least $6.78 in 2017 (double its FY14 EPS), and ROIC of 10% in 2017, compared to 5.9% in 2014.
In summary, while RCL hasn't been knocking the cover off the ball in terms of revenue growth, and it has under-performed a bit there relative to estimates, it is more than offsetting that by keeping a tight lid on costs and executing well. If it can continue to operate as efficiently as it has, the outlook for the remainder of this year looks promising given that demand seems to be on the rise.