TXRH 10-Q

Texas Roadhouse, Inc. (TXRH)

10-Q 2023-05-05 For: 2023-03-28

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Added on April 10, 2026

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Delaware		20-1083890
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification Number)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	TXRH	NASDAQ Global Select Market

Large Accelerated Filer ☒	Accelerated Filer ☐	Non-accelerated Filer ☐	Smaller Reporting Company ☐
			Emerging Growth Company ☐

PART I. FINANCIAL INFORMATION

Item 1 — Financial Statements (Unaudited) — Texas Roadhouse, Inc. and Subsidiaries		3
Condensed Consolidated Balance Sheets —March 28, 2023 and December 27, 2022		3
Condensed Consolidated Statements of Income — For the 13 Weeks Ended March 28, 2023 and March 29, 2022		4
Condensed Consolidated Statements of Stockholders’ Equity — For the 13 Weeks Ended March 28, 2023 and March 29, 2022		5
Condensed Consolidated Statements of Cash Flows — For the 13 Weeks Ended March 28, 2023 and March 29, 2022		6
Notes to Condensed Consolidated Financial Statements		7
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
Item 3 — Quantitative and Qualitative Disclosures About Market Risk		26
Item 4 — Controls and Procedures		27

PART II. OTHER INFORMATION

Item 1 — Legal Proceedings		28
Item 1A — Risk Factors		28
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds		28
Item 3 — Defaults Upon Senior Securities		28
Item 4 — Mine Safety Disclosures		28
Item 5 — Other Information		29
Item 6 — Exhibits		29

Signatures		30


	March 28, 2023		December 27, 2022
Assets
Current assets:
Cash and cash equivalents	$	156,143	$	173,861
Receivables, net of allowance for doubtful accounts of $78 at March 28, 2023 and $50 at December 27, 2022		41,528		150,264
Inventories, net		36,812		38,015
Prepaid income taxes		—		5,097
Prepaid expenses and other current assets		34,235		29,604
Total current assets		268,718		396,841
Property and equipment, net of accumulated depreciation of $995,149 at March 28, 2023 and $968,036 at December 27, 2022		1,310,782		1,270,349
Operating lease right-of-use assets, net		643,485		630,258
Goodwill		169,641		148,732
Intangible assets, net of accumulated amortization of $18,554 at March 28, 2023 and $17,905 at December 27, 2022		5,859		5,607
Other assets		76,380		73,878
Total assets	$	2,474,865	$	2,525,665
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of operating lease liabilities	$	26,466	$	25,490
Accounts payable		113,834		105,560
Deferred revenue-gift cards		240,729		335,403
Accrued wages		66,153		54,544
Income taxes payable		5,718		434
Accrued taxes and licenses		38,401		35,264
Other accrued liabilities		96,797		95,315
Total current liabilities		588,098		652,010
Operating lease liabilities, net of current portion		692,016		677,874
Long-term debt		—		50,000
Restricted stock and other deposits		8,487		7,979
Deferred tax liabilities, net		23,674		20,979
Other liabilities		92,051		89,161
Total liabilities		1,404,326		1,498,003
Texas Roadhouse, Inc. and subsidiaries stockholders’ equity:
Preferred stock ($0.001 par value, 1,000,000 shares authorized; no shares issued or outstanding)		—		—
Common stock ($0.001 par value, 100,000,000 shares authorized, 67,000,306 and 66,973,311 shares issued and outstanding at March 28, 2023 and December 27, 2022, respectively)		67		67
Additional paid-in-capital		6,240		13,139
Retained earnings		1,048,941		999,432
Total Texas Roadhouse, Inc. and subsidiaries stockholders’ equity		1,055,248		1,012,638
Noncontrolling interests		15,291		15,024
Total equity		1,070,539		1,027,662
Total liabilities and equity	$	2,474,865	$	2,525,665



	13 Weeks Ended
	March 28, 2023		March 29, 2022
Revenue:
Restaurant and other sales	$	1,167,583	$	980,972
Franchise royalties and fees		6,773		6,514
Total revenue		1,174,356		987,486
Costs and expenses:
Restaurant operating costs (excluding depreciation and amortization shown separately below):
Food and beverage		410,711		337,396
Labor		385,819		321,871
Rent		17,828		16,368
Other operating		167,529		144,154
Pre-opening		5,377		4,291
Depreciation and amortization		36,227		33,620
Impairment and closure, net		55		(646)
General and administrative		49,865		40,294
Total costs and expenses		1,073,411		897,348
Income from operations		100,945		90,138
Interest income (expense), net		1,238		(397)
Equity income from investments in unconsolidated affiliates		755		334
Income before taxes	$	102,938	$	90,075
Income tax expense		14,334		12,747
Net income including noncontrolling interests		88,604		77,328
Less: Net income attributable to noncontrolling interests		2,217		2,126
Net income attributable to Texas Roadhouse, Inc. and subsidiaries	$	86,387	$	75,202

Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:
Basic	$	1.29	$	1.09
Diluted	$	1.28	$	1.08
Weighted average shares outstanding:
Basic		67,016		69,086
Diluted		67,293		69,373
Cash dividends declared per share	$	0.55	$	0.46


	For the 13 Weeks Ended March 28, 2023
								Total Texas
				Additional				Roadhouse, Inc.
		Par		Paid-in-		Retained		and		Noncontrolling
	Shares	Value		Capital		Earnings		Subsidiaries		Interests		Total
Balance, December 27, 2022	66,973,311	$	67	$	13,139	$	999,432	$	1,012,638	$	15,024	$	1,027,662
Net income	—		—		—		86,387		86,387		2,217		88,604
Distributions to noncontrolling interest holders	—		—		—		—		—		(1,950)		(1,950)
Dividends declared ($0.55 per share)	—		—		—		(36,878)		(36,878)		—		(36,878)
Shares issued under share-based compensation plans including tax effects	173,620		—		—		—		—		—		—
Indirect repurchase of shares for minimum tax withholdings	(53,874)		—		(5,430)		—		(5,430)		—		(5,430)
Repurchase of shares of common stock	(92,751)		—		(9,623)		—		(9,623)		—		(9,623)
Share-based compensation	—		—		8,154		—		8,154		—		8,154
Balance, March 28, 2023	67,000,306	$	67	$	6,240	$	1,048,941	$	1,055,248	$	15,291	$	1,070,539


	For the 13 Weeks Ended March 29, 2022
								Total Texas
				Additional				Roadhouse, Inc.
		Par		Paid-in-		Retained		and		Noncontrolling
	Shares	Value		Capital		Earnings		Subsidiaries		Interests		Total
Balance, December 28, 2021	69,382,418	$	69	$	114,504	$	943,551	$	1,058,124	$	15,360	$	1,073,484
Net income	—		—		—		75,202		75,202		2,126		77,328
Distributions to noncontrolling interest holders	—		—		—		—		—		(2,007)		(2,007)
Dividends declared ($0.46 per share)	—		—		—		(31,795)		(31,795)		—		(31,795)
Shares issued under share-based compensation plans including tax effects	204,968		—		—		—		—		—		—
Indirect repurchase of shares for minimum tax withholdings	(66,999)		—		(6,166)		—		(6,166)		—		(6,166)
Repurchase of shares of common stock	(1,060,618)		(1)		(84,704)		—		(84,705)		—		(84,705)
Share-based compensation	—		—		9,120		—		9,120		—		9,120
Balance, March 29, 2022	68,459,769	$	68	$	32,754	$	986,958	$	1,019,780	$	15,479	$	1,035,259


Inventory	$	410
Other assets		293
Property and equipment		17,763
Operating lease right-of-use assets		4,775
Goodwill		20,024
Intangible assets		1,700
Deferred revenue-gift cards		(1,164)
Current portion of operating lease liabilities		(110)
Operating lease liabilities, net of current portion		(4,665)
	$	39,026


	Fair Value Measurements
	Level	March 28, 2023		December 27, 2022
Deferred compensation plan—assets	1	$	64,682	$	61,835
Deferred compensation plan—liabilities	1	$	(64,476)	$	(61,668)


	Fair Value Measurements

		March 28,		December 27,
	Level	2023		2022
Long-lived assets held for use	3	$	—	$	2,000


	For the 13 Weeks Ended March 28, 2023
	Texas Roadhouse		Bubba's 33		Other		Total
Restaurant and other sales	$	1,100,926	$	61,369	$	5,288	$	1,167,583
Restaurant operating costs (excluding depreciation and amortization)		923,936		52,916		5,035		981,887
Restaurant margin	$	176,990	$	8,453	$	253	$	185,696

Depreciation and amortization	$	29,888	$	3,447	$	2,892	$	36,227
Capital expenditures		57,137		6,255		3,341		66,733

	For the 13 Weeks Ended March 29, 2022
	Texas Roadhouse		Bubba's 33		Other		Total
Restaurant and other sales	$	926,729	$	51,225	$	3,018	$	980,972
Restaurant operating costs (excluding depreciation and amortization)		773,261		43,431		3,097		819,789
Restaurant margin	$	153,468	$	7,794	$	(79)	$	161,183

Depreciation and amortization	$	27,541	$	3,190	$	2,889	$	33,620
Capital expenditures		39,677		7,377		1,975		49,029


	Reconciliation of Income from Operations to Restaurant Margin
	(in thousands)
	13 Weeks Ended
	March 28, 2023		March 29, 2022


Income from operations	$	100,945	$	90,138

Less:
Franchise royalties and fees		6,773		6,514

Add:
Pre-opening		5,377		4,291
Depreciation and amortization		36,227		33,620
Impairment and closure, net		55		(646)
General and administrative		49,865		40,294
Restaurant margin	$	185,696	$	161,183

Restaurant margin $/store week	$	23,505	$	21,618
Restaurant margin (as a percentage of restaurant and other sales)		15.9%		16.4%


	March 28, 2023	March 29, 2022
Company - Texas Roadhouse	564	536
Company - Bubba's 33	40	36
Company - Jaggers	7	4
Franchise - Texas Roadhouse - U.S.	54	63
Franchise - Texas Roadhouse - International	39	33
Total	704	672


	Q1 2023			Q1 2022
Company Restaurants:
Increase in store weeks		6.0	%		6.6	%
Increase in average unit volume		12.5	%		15.7	%
Other(1)		0.4	%		1.1	%
Total increase in restaurant sales		18.9	%		23.4	%
Other sales		0.1	%		—	%
Total increase in restaurant and other sales		19.0	%		23.4	%

Store weeks		7,900			7,456
Comparable restaurant sales		12.9	%		16.0	%

Texas Roadhouse restaurants:
Store weeks		7,304			6,936
Comparable restaurant sales		13.1	%		15.8	%
Average unit volume (in thousands)	$	1,966		$	1,741

Weekly sales by group:
Comparable restaurants (527 and 498 units)	$	151,439		$	134,422
Average unit volume restaurants (22 and 20 units)(2)	$	146,220		$	129,143
Restaurants less than six months old (15 and 18 units)	$	162,150		$	140,535

Bubba's 33 restaurants:
Store weeks		520			468
Comparable restaurant sales		8.7	%		21.3	%
Average unit volume (in thousands)	$	1,521		$	1,398

Weekly sales by group:
Comparable restaurants (34 and 30 units)	$	116,916		$	107,387
Average unit volume restaurants (3 and 4 units)(2)	$	117,920		$	108,771
Restaurants less than six months old (3 and 2 units)	$	127,955		$	140,855


	Q1 2023		Q1 2022
Guest traffic counts	7.6	%	7.0	%
Per person average check	5.3	%	9.0	%
Comparable restaurant sales growth	12.9	%	16.0	%


	13 Weeks Ended
	March 28, 2023		March 29, 2022
Beginning balance	$	335,403	$	300,657
Gift card activations, net		50,563		42,024
Gift card redemptions and breakage		(145,237)		(121,202)
Ending balance		240,729		221,479


	13 Weeks Ended
	March 28, 2023		March 29, 2022
Tax at statutory federal rate	21.0	%	21.0	%
State and local tax, net of federal benefit	3.7		3.8
FICA tip tax credit	(10.2)		(9.7)
Work opportunity tax credit	(1.1)		(1.3)
Stock compensation	(0.3)		(0.2)
Net income attributable to noncontrolling interests	(0.4)		(0.4)
Officers compensation	0.6		0.5
Other	0.6		0.5
Total	13.9	%	14.2	%


					Maximum Number
					(or Approximate
				Total Number of	Dollar Value)
				Shares Purchased	of Shares that
	Total Number	Average		as Part of Publicly	May Yet Be
	of Shares	Price Paid		Announced Plans	Purchased Under the
Period	Purchased	per Share		or Programs	Plans or Programs
December 28 to January 24	—	$	—	—	$	166,877,726
January 25 to February 21	—	$	—	—	$	166,877,726
February 22 to March 28	92,751	$	103.76	92,751	$	157,253,537

Total	92,751			92,751

Exhibit No.		Description
3.1		Amended and Restated Bylaws for Texas Roadhouse, Inc. dated February 23, 2023 (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K dated February 23, 2023 (File No. 000-50972))
10.1		Second Amendment to Employment Agreement between Texas Roadhouse Management Corp. and Gerald L. Morgan dated January 9, 2023 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated January 6, 2023 (File No. 000-50972))
10.2		First Amendment to Employment Agreement between Texas Roadhouse Management Corp. and Regina A. Tobin dated January 9, 2023 (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K dated January 6, 2023 (File No. 000-50972))
10.3		First Amendment to Employment Agreement between Texas Roadhouse Management Corp. and Hernan E. Mujica dated January 9, 2023 (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K dated January 6, 2023 (File No. 000-50972))
10.4		First Amendment to Employment Agreement between Texas Roadhouse Management Corp. and Christopher C. Colson dated January 9, 2023 (incorporated by reference to Exhibit 10.4 to the Registrant's Current Report on Form 8-K dated January 6, 2023 (File No. 000-50972))
10.5		Separation Agreement and Release of Claims dated January 5, 2023 by and between Tonya R. Robinson and Texas Roadhouse Management Corp. (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated January 4, 2023 (File No. 000-50972))
31.1		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

	TEXAS ROADHOUSE, INC.

Date: May 5, 2023	By:	/s/ GERALD L. MORGAN
		Gerald L. Morgan
		Chief Executive Officer (principal executive officer)


Date: May 5, 2023	By:	/s/ KEITH V. HUMPICH
		Keith V. Humpich
		Interim Chief Financial Officer
		(principal financial officer)
		(principal accounting officer)