Welcome to The Closing Bell. This is your last stop for biz scoops and big news before the weekend — a roundup of stories that can’t wait till Monday.
Texas Roadhouse to increase workers’ pay, return more money to shareholders because of tax reform
Louisville-based steakhouse chain Texas Roadhouse announced that it planned to invest the money it would save from the federal tax reform to pay employees more, offer them additional benefits, keep menu prices aggressive and pay out higher stock dividends to shareholders.
The company already has received a tax benefit of $3.1 million related to the tax reform, Tonya Robinson, senior director of investor relations and financial reporting for Texas Roadhouse, said during a call with analysts this week.
Texas Roadhouse’s expected tax rate for 2018 will be 15 percent to 16 percent, she said. That’s down considerably from the 28.8 percent tax rate the steakhouse chain paid in 2017.
Company leaders declined to give specifics about employee compensation and benefit changes but said some would be at the restaurant level.
“Whatever we do will be an ongoing investment,” not a one-time bonus, said Texas Roadhouse’s president Scott Colosi.
The steakhouse doesn’t plan to invest any of its savings in restaurant remodels or bump-outs, though may purchase some franchise locations, executives said.
“Some of it will be definitely to protect pricing and ultimately result in us taking probably less pricing than we might otherwise would have,” Robinson said.
Texas Roadhouse has reported 32 consecutive quarters of same-store sales growth. During the fourth quarter of 2017, same-store sales growth jumped 5.8 percent. For the year, it rose 4.5 percent, including a 3.6 percent increase in the guest count.
During 2017, Texas Roadhouse’s revenue jumped 11.5 percent, to $2.2 billion, and its net income rose 13.8 percent, to $131 million, according to the earnings report.
“We feel very good about the positioning of our business, the strength of our business, the strength of our people, the quality of the people that we have running our restaurants every day,” Colosi said. “We’ve got a lot of momentum. We feel very good about it.” —Caitlin Bowling
Former GLI CEO Joe Reagan resigns as head of St. Louis chamber
The St. Louis Regional Chamber announced the resignation of its CEO Joe Reagan this week, six months after its executive committee decided to stand by him in the face of allegations that he had created a hostile workplace.
Reagan took the top position with the St. Louis chamber in 2012 after seven years leading Greater Louisville Inc.
No reason was given for the resignation, but the St. Louis chamber began an inquiry into his leadership last summer after the accusations surfaced. That inquiry cleared him in August, but concluded that the chamber needed improved financial performance, communications and employee relations.
During the St. Louis inquiry, former GLI CEO Steve Higdon told the chamber that Reagan was to blame for running up deficits at the Louisville chamber and weakening its influence, though some of his former GLI colleagues spoke up to defend Reagan’s performance. One letter praising Reagan was signed by Humana founder David Jones Sr., Tandem Public Relations president Sandra Frazier, Frost Brown Todd chairman emeritus Ed Glasscock and University of Louisville board of trustees chairman J. David Grissom.
Arbitration panel orders Hilliard Lyons to pay client $445K
Hilliard Lyons has been ordered to pay an elderly Louisville client $445,000 after she filed a complaint with a federal arbitration panel alleging that a company financial adviser had invested her retirement savings in unsuitably risky companies, including some that went bankrupt.
An arbitration panel of the Financial Industry Regulatory Authority on Friday said the company would have to pay Elizabeth Nickens, an 84-year-old retired hairdresser, compensatory damages after holding a hearing in Louisville.
“I think this award is significant,” Nickens’ attorney, Michael A. Valenti, told Insider. “Hilliard fought this vigorously.”
Hilliard Lyons told Insider via email, “To protect client confidentiality, we do not comment on litigation, arbitration, or individual customer matters, though we do defend ourselves vigorously in adversarial matters.” The company would not say whether it planned to appeal the ruling.
Nickens, in a claim filed in March 2017, had alleged that Hilliard Lyons and financial adviser Christopher Duke Bennett had, among other things, executed financial transactions without her knowledge, placed her assets “in an unsuitable manner for her age and investment objectives without discussing the risks associated with such reallocation and engaged in excessive trading in her accounts.”
“She lost a lot of money as a result of this brokers’ activities,” Valenti said.
Bennett made risky bets even though Nickens wanted a moderately conservative portfolio to shore up her retirement savings.
Valenti took special exception to Hilliard’s defense of describing his client as a risk taker because she goes to casinos. Nickens is a “very frugal woman” who withdrew from her retirement savings only the minimum that she was required to withdraw, he said. She occasionally took a couple hundred dollars to play slot machines with friends.
“I think she’s entitled to have a little fun,” Valenti said.
Though it declined to comment on the case, Hilliard Lyons told Insider, “We are proud of the service we provide thousands of clients every day in navigating life’s financial challenges.”
FINRA is a nonprofit self-regulatory entity of the financial industry that oversees more than 3,700 securities firms. It fielded more than 3,000 investor complaints in 2016, taking more than 1,400 disciplinary actions and awarding nearly $28 million to harmed investors.
Bennett has 22 years of experience, according to FINRA, and has had five other customer disputes filed against him since October 2016. Three were denied, and two, including a $5 million complaint filed Jan. 26, are pending.
According to On Wall Street magazine, Bennett in 2008 was one of the to 10 regional advisers with $502 million in assets under management. —Boris Ladwig
MSD to install floodwall closures at 7 a.m. Friday
Because of the rising Ohio River, Louisville MSD said it would install floodwall roadway closures at 10th and 27th streets on Friday morning. The process takes several hours, the agency said.
Normally those sites are open to car and pedestrian traffic, however, projections show the river will crest early next week at 34.4 feet on the upper gauge and 65.9 feet on the lower gauge.
MSD says it has 14 of its 16 flood pumping stations in service. As the river continues to rise through the weekend, all 16 will be in service. Additionally, more floodwall roadway closures may be installed, MSD said, with the closures at 2nd Street and Bingham Way next in line.
Since 1987, MSD has maintained the city’s Ohio River Flood Protection System, built by the U.S. Army Corps of Engineers. The system was put in place after the 1937 and 1945 floods, MSD said. —Mickey Meece
Woodford Reserve promotes Elizabeth McCall to assistant master distiller
Elizabeth McCall has worked behind the scenes at Woodford Reserve since 2009, most recently as master taster and senior quality control specialist. Now, the Brown-Forman-owned distillery has named her assistant master distiller.
McCall will work alongside Master Distiller Chris Morris.
“Elizabeth brings not only exceptional sensory and analytic skills to the distillery but also an inspiring passion for Woodford Reserve,” Morris said in a news release. “I look forward to continue mentoring Elizabeth as she begins her new role.”
McCall, 33, has a master’s degree from UofL and is the second generation of her family to work in the bourbon industry. She joins a handful of elite women distillers in Kentucky, including Marianne Barnes (Castle & Key), Pam Heilmann (Michter’s) and Joyce Nethery (Jeptha Creed).
“It has been the utmost pleasure to work with the Woodford Reserve team as master taster — and I look forward to continuing to elevate my skills and broaden my knowledge as we craft the world’s best bourbon,” said McCall in the release. —Sara Havens
Mightily moving to Whiskey Row
Digital branding and advertising agency Mightily is relocating to 111 Whiskey Row in late summer.
The space, located at 222 S. First St., is triple the size of the agency’s current 3,000-square-foot offices, which will allow the firm to grow, Mightily said in a news release.
“Our rapid growth is a direct reflection of our culture: high levels of energy, creativity and passion,” Lesa Seibert, chief executive of Mightily, said in the release.
Mightily has 26 employees after adding 10 employees in 2017 and another two so far this year. Its revenue is growing as well; the company earned an estimated $1.5 million in 2017 and is on track to double that to $3 million by the end of the year.
Gary’s On Spring abruptly closes
Guy Sutcliffe announced on Facebook this week that his restaurant Gary’s On Spring is closing. The restaurant describes itself as New American and French.
It’s with a heavy heart that I have to announce we are closing after seven years. I want to thank all our guests for their support over the years. It was a pleasure serving, and getting to know so many great people. I will leave with some fond memories, and new friendships. Most of all I want to thank all of the great staff I have had both past, and present.
Without you, none of this would have been possible. I will do all I can to help them in this time of transition.
By all appearances, the restaurant has already shut its doors.
Insider Louisville reached out to Sutcliffe about the closure and his plans for the building, which he has owned since 2007. It’s unclear if he will sell the building or lease it for a new use. —Caitlin Bowling
Yum Brands‘ subsidiary Taco Bell is now the fourth-largest U.S. chain, following McDonald’s, Starbucks and Subway, according to the research firm Technomic. Taco Bell’s systemwide sales reached $9.8 billion in 2017.
The National Farm Machinery Show at the Kentucky Exposition Center saw record attendance this year, with more than 314,000 attendees and 920 booths. The event has an estimated economic impact of $17 million.