TXRH 10-Q

Texas Roadhouse, Inc. (TXRH)

10-Q 2023-08-04 For: 2023-06-27

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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 —June 27, 2023 and December 27, 2022		3
Condensed Consolidated Statements of Income — For the 13 and 26 Weeks Ended June 27, 2023 and June 28, 2022		4
Condensed Consolidated Statements of Stockholders’ Equity — For the 13 and 26 Weeks Ended June 27, 2023 and June 28, 2022		5
Condensed Consolidated Statements of Cash Flows — For the 26 Weeks Ended June 27, 2023 and June 28, 2022		7
Notes to Condensed Consolidated Financial Statements		8
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
Item 3 — Quantitative and Qualitative Disclosures About Market Risk		29
Item 4 — Controls and Procedures		29

PART II. OTHER INFORMATION

Item 1 — Legal Proceedings		31
Item 1A — Risk Factors		31
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds		31
Item 3 — Defaults Upon Senior Securities		31
Item 4 — Mine Safety Disclosures		31
Item 5 — Other Information		32
Item 6 — Exhibits		32

Signatures		33


	June 27, 2023		December 27, 2022
Assets
Current assets:
Cash and cash equivalents	$	107,324	$	173,861
Receivables, net of allowance for doubtful accounts of $51 at June 27, 2023 and $50 at December 27, 2022		60,537		150,264
Inventories, net		38,121		38,015
Prepaid income taxes		1,402		5,097
Prepaid expenses and other current assets		25,901		29,604
Total current assets		233,285		396,841
Property and equipment, net of accumulated depreciation of $1,019,637 at June 27, 2023 and $968,036 at December 27, 2022		1,360,132		1,270,349
Operating lease right-of-use assets, net		662,730		630,258
Goodwill		169,684		148,732
Intangible assets, net of accumulated amortization of $19,426 at June 27, 2023 and $17,905 at December 27, 2022		4,986		5,607
Other assets		84,174		73,878
Total assets	$	2,514,991	$	2,525,665
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of operating lease liabilities	$	27,015	$	25,490
Accounts payable		120,653		105,560
Deferred revenue-gift cards		226,130		335,403
Accrued wages		67,164		54,544
Income taxes payable		1,963		434
Accrued taxes and licenses		40,673		35,264
Other accrued liabilities		88,385		95,315
Total current liabilities		571,983		652,010
Operating lease liabilities, net of current portion		712,800		677,874
Long-term debt		—		50,000
Restricted stock and other deposits		8,594		7,979
Deferred tax liabilities, net		22,454		20,979
Other liabilities		100,910		89,161
Total liabilities		1,416,741		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, 66,843,456 and 66,973,311 shares issued and outstanding at June 27, 2023 and December 27, 2022, respectively)		67		67
Additional paid-in-capital		—		13,139
Retained earnings		1,082,915		999,432
Total Texas Roadhouse, Inc. and subsidiaries stockholders’ equity		1,082,982		1,012,638
Noncontrolling interests		15,268		15,024
Total equity		1,098,250		1,027,662
Total liabilities and equity	$	2,514,991	$	2,525,665



	13 Weeks Ended				26 Weeks Ended
	June 27, 2023		June 28, 2022		June 27, 2023		June 28, 2022
Revenue:
Restaurant and other sales	$	1,164,385	$	1,018,057	$	2,331,968	$	1,999,029
Franchise royalties and fees		6,818		6,549		13,591		13,063
Total revenue		1,171,203		1,024,606		2,345,559		2,012,092
Costs and expenses:
Restaurant operating costs (excluding depreciation and amortization shown separately below):
Food and beverage		401,204		347,041		811,915		684,437
Labor		391,337		333,042		777,156		654,913
Rent		17,996		16,714		35,824		33,082
Other operating		171,092		152,524		338,621		296,678
Pre-opening		5,671		5,323		11,048		9,614
Depreciation and amortization		37,413		34,420		73,640		68,040
Impairment and closure, net		78		411		133		(235)
General and administrative		51,000		49,213		100,865		89,507
Total costs and expenses		1,075,791		938,688		2,149,202		1,836,036
Income from operations		95,412		85,918		196,357		176,056
Interest income (expense), net		996		(395)		2,234		(792)
Equity income from investments in unconsolidated affiliates		287		545		1,042		879
Income before taxes	$	96,695	$	86,068	$	199,633	$	176,143
Income tax expense		12,270		11,531		26,604		24,278
Net income including noncontrolling interests		84,425		74,537	$	173,029	$	151,865
Less: Net income attributable to noncontrolling interests		2,154		2,118		4,371		4,244
Net income attributable to Texas Roadhouse, Inc. and subsidiaries	$	82,271	$	72,419	$	168,658	$	147,621

Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:
Basic	$	1.23	$	1.07	$	2.52	$	2.16
Diluted	$	1.22	$	1.07	$	2.51	$	2.15
Weighted average shares outstanding:
Basic		66,974		67,654		66,995		68,370
Diluted		67,229		67,890		67,261		68,631
Cash dividends declared per share	$	0.55	$	0.46	$	1.10	$	0.92


	For the 13 Weeks Ended June 27, 2023
								Total Texas
				Additional				Roadhouse, Inc.
		Par		Paid-in-		Retained		and		Noncontrolling
	Shares	Value		Capital		Earnings		Subsidiaries		Interests		Total
Balance, March 28, 2023	67,000,306	$	67	$	6,240	$	1,048,941	$	1,055,248	$	15,291	$	1,070,539
Net income	—		—		—		82,271		82,271		2,154		84,425
Distributions to noncontrolling interest holders	—		—		—		—		—		(2,177)		(2,177)
Dividends declared ($0.55 per share)	—		—		—		(36,820)		(36,820)		—		(36,820)
Shares issued under share-based compensation plans including tax effects	82,547		—		—		—		—		—		—
Indirect repurchase of shares for minimum tax withholdings	(25,422)		—		(2,809)		—		(2,809)		—		(2,809)
Repurchase of shares of common stock, including excise tax	(213,975)		—		(12,021)		(11,477)		(23,498)		—		(23,498)
Share-based compensation	—		—		8,590		—		8,590		—		8,590
Balance, June 27, 2023	66,843,456	$	67	$	—	$	1,082,915	$	1,082,982	$	15,268	$	1,098,250


	For the 13 Weeks Ended June 28, 2022
								Total Texas
				Additional				Roadhouse, Inc.
		Par		Paid-in-		Retained		and		Noncontrolling
	Shares	Value		Capital		Earnings		Subsidiaries		Interests		Total
Balance, March 29, 2022	68,459,769	$	68	$	32,754	$	986,958	$	1,019,780	$	15,479	$	1,035,259
Net income	—		—		—		72,419		72,419		2,118		74,537
Distributions to noncontrolling interest holders	—		—		—		—		—		(2,130)		(2,130)
Acquisition of noncontrolling interest	—		—		(1,395)		—		(1,395)		(340)		(1,735)
Dividends declared ($0.46 per share)	—		—		—		(30,752)		(30,752)		—		(30,752)
Shares issued under share-based compensation plans including tax effects	97,387		—		—		—		—		—		—
Indirect repurchase of shares for minimum tax withholdings	(30,473)		—		(2,499)		—		(2,499)		—		(2,499)
Repurchase of shares of common stock	(1,673,387)		(1)		(38,352)		(89,800)		(128,153)		—		(128,153)
Share-based compensation	—		—		9,492		—		9,492		—		9,492
Balance, June 28, 2022	66,853,296	$	67	$	—	$	938,825	$	938,892	$	15,127	$	954,019


	For the 26 Weeks Ended June 27, 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	—		—		—		168,658		168,658		4,371		173,029
Distributions to noncontrolling interest holders	—		—		—		—		—		(4,127)		(4,127)
Dividends declared ($1.10 per share)	—		—		—		(73,698)		(73,698)		—		(73,698)
Shares issued under share-based compensation plans including tax effects	256,167		—		—		—		—		—		—
Indirect repurchase of shares for minimum tax withholdings	(79,296)		—		(8,239)		—		(8,239)		—		(8,239)
Repurchase of shares of common stock, including excise tax	(306,726)		—		(21,644)		(11,477)		(33,121)		—		(33,121)
Share-based compensation	—		—		16,744		—		16,744		—		16,744
Balance, June 27, 2023	66,843,456	$	67	$	—	$	1,082,915	$	1,082,982	$	15,268	$	1,098,250


	For the 26 Weeks Ended June 28, 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	—		—		—		147,621		147,621		4,244		151,865
Distributions to noncontrolling interest holders	—		—		—		—		—		(4,137)		(4,137)
Acquisition of noncontrolling interest	—		—		(1,395)		—		(1,395)		(340)		(1,735)
Dividends declared ($0.92 per share)	—		—		—		(62,547)		(62,547)		—		(62,547)
Shares issued under share-based compensation plans including tax effects	302,355		—		—		—		—		—		—
Indirect repurchase of shares for minimum tax withholdings	(97,472)		—		(8,664)		—		(8,664)		—		(8,664)
Repurchase of shares of common stock	(2,734,005)		(2)		(123,057)		(89,800)		(212,859)		—		(212,859)
Share-based compensation	—		—		18,612		—		18,612		—		18,612
Balance, June 28, 2022	66,853,296	$	67	$	—	$	938,825	$	938,892	$	15,127	$	954,019


Inventory	$	410
Other assets		293
Property and equipment		17,763
Operating lease right-of-use assets		4,775
Goodwill		20,067
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)
	$	39,069


	Fair Value Measurements
	Level	June 27, 2023		December 27, 2022
Deferred compensation plan—assets	1	$	72,626	$	61,835
Deferred compensation plan—liabilities	1	$	(72,504)	$	(61,668)


	Fair Value Measurements

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


	For the 13 Weeks Ended June 27, 2023
	Texas Roadhouse		Bubba's 33		Other		Total
Restaurant and other sales	$	1,096,252	$	61,560	$	6,573	$	1,164,385
Restaurant operating costs (excluding depreciation and amortization)		924,047		51,928		5,654		981,629
Restaurant margin	$	172,205	$	9,632	$	919	$	182,756

Depreciation and amortization	$	30,768	$	3,434	$	3,211	$	37,413
Capital expenditures		76,455		9,750		1,642		87,847

	For the 13 Weeks Ended June 28, 2022
	Texas Roadhouse		Bubba's 33		Other		Total
Restaurant and other sales	$	960,153	$	54,612	$	3,292	$	1,018,057
Restaurant operating costs (excluding depreciation and amortization)		799,102		47,037		3,182		849,321
Restaurant margin	$	161,051	$	7,575	$	110	$	168,736

Depreciation and amortization	$	28,104	$	3,302	$	3,014	$	34,420
Capital expenditures		51,316		6,415		1,807		59,538

	For the 26 Weeks Ended June 27, 2023
	Texas Roadhouse		Bubba's 33		Other		Total
Restaurant and other sales	$	2,197,178	$	122,929	$	11,861	$	2,331,968
Restaurant operating costs (excluding depreciation and amortization)		1,847,983		104,844		10,689		1,963,516
Restaurant margin	$	349,195	$	18,085	$	1,172	$	368,452

Depreciation and amortization	$	60,656	$	6,881	$	6,103	$	73,640
Capital expenditures		133,592		16,005		4,983		154,580

	For the 26 Weeks Ended June 28, 2022
	Texas Roadhouse		Bubba's 33		Other		Total
Restaurant and other sales	$	1,886,882	$	105,837	$	6,310	$	1,999,029
Restaurant operating costs (excluding depreciation and amortization)		1,572,364		90,469		6,277		1,669,110
Restaurant margin	$	314,518	$	15,368	$	33	$	329,919

Depreciation and amortization	$	55,645	$	6,492	$	5,903	$	68,040
Capital expenditures		90,993		13,792		3,782		108,567


	Reconciliation of Income from Operations to Restaurant Margin
	(in thousands)
	13 Weeks Ended				26 Weeks Ended
	June 27, 2023		June 28, 2022		June 27, 2023		June 28, 2022
Income from operations	$	95,412	$	85,918	$	196,357	$	176,056

Less:
Franchise royalties and fees		6,818		6,549		13,591		13,063

Add:
Pre-opening		5,671		5,323		11,048		9,614
Depreciation and amortization		37,413		34,420		73,640		68,040
Impairment and closure, net		78		411		133		(235)
General and administrative		51,000		49,213		100,865		89,507
Restaurant margin	$	182,756	$	168,736	$	368,452	$	329,919

Restaurant margin $/store week	$	22,961	$	22,390	$	23,232	$	22,006
Restaurant margin (as a percentage of restaurant and other sales)		15.7%		16.6%		15.8%		16.5%


	June 27, 2023	June 28, 2022
Company - Texas Roadhouse	566	541
Company - Bubba's 33	41	37
Company - Jaggers	7	4
Franchise - Texas Roadhouse - U.S.	54	62
Franchise - Texas Roadhouse - International	41	34
Total	709	678


	Q2 2023			Q2 2022			2023 YTD			2022 YTD
Company Restaurants:
Increase in store weeks		5.6	%		6.4	%		5.8	%		6.5	%
Increase in average unit volume		8.7	%		7.4	%		10.6	%		11.3	%
Other(1)		0.0	%		0.2	%		0.2	%		0.7	%
Total increase in restaurant sales		14.3	%		14.0	%		16.6	%		18.5	%
Other sales		0.1	%		0.1	%		0.1	%		—	%
Total increase in restaurant and other sales		14.4	%		14.1	%		16.7	%		18.5	%

Store weeks		7,960			7,536			15,860			14,992
Comparable restaurant sales		9.1	%		7.6	%		11.0	%		11.7	%

Texas Roadhouse restaurants:
Store weeks		7,343			7,006			14,647			13,942
Comparable restaurant sales		9.4	%		7.6	%		11.2	%		11.5	%
Average unit volume (in thousands)	$	1,946		$	1,781		$	3,912		$	3,525

Weekly sales by group:
Comparable restaurants (533, 503, 527 and 499 units)	$	149,847		$	137,599		$	150,770		$	136,096
Average unit volume restaurants (20, 22, 22 and 20 units)(2)	$	144,554		$	132,222		$	143,496		$	130,576
Restaurants less than six months old (13, 16, 17, and 22 units)	$	158,608		$	145,756		$	157,585		$	139,534

Bubba's 33 restaurants:
Store weeks		526			478			1,046			946
Comparable restaurant sales		3.9	%		8.1	%		6.4	%		14.3	%
Average unit volume (in thousands)	$	1,514		$	1,475		$	3,044		$	2,864

Weekly sales by group:
Comparable restaurants (35, 31, 34 and 30 units)	$	117,906		$	110,740		$	117,181		$	109,896
Average unit volume restaurants (3, 4, 3 and 4 units)(2)	$	99,324		$	134,386		$	115,846		$	111,997
Restaurants less than six months old (3, 2, 4, and 3 units)	$	123,594		$	128,134		$	120,459		$	135,393


	13 Weeks Ended				26 Weeks Ended
	June 27, 2023		June 28, 2022		June 27, 2023		June 28, 2022
Beginning balance	$	240,729	$	221,479	$	335,403	$	300,657
Gift card activations, net		67,991		59,637		118,554		101,661
Gift card redemptions and breakage		(82,590)		(72,687)		(227,827)		(193,889)
Ending balance	$	226,130	$	208,429	$	226,130	$	208,429


	13 Weeks Ended				26 Weeks Ended
	June 27, 2023		June 28, 2022		June 27, 2023		June 28, 2022
Tax at statutory federal rate	21.0	%	21.0	%	21.0	%	21.0	%
State and local tax, net of federal benefit	3.7		3.8		3.7		3.8
FICA tip tax credit	(11.1)		(10.8)		(10.6)		(10.3)
Work opportunity tax credit	(1.1)		(1.7)		(1.1)		(1.5)
Stock compensation	(0.8)		0.2		(0.5)		—
Net income attributable to noncontrolling interests	(0.4)		(0.4)		(0.4)		(0.4)
Officers compensation	0.7		0.6		0.7		0.6
Other	0.7		0.7		0.5		0.6
Total	12.7	%	13.4	%	13.3	%	13.8	%


					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
March 29 to April 25	—	$	—	—	$	157,253,537
April 26 to May 23	53,303	$	109.12	53,303	$	151,437,200
May 24 to June 27	160,672	$	109.66	160,672	$	133,817,946
Total	213,975			213,975

Exhibit No.		Description
10.1		Employment Agreement between Texas Roadhouse Management Corp. and David Christopher Monroe dated May 17, 2023 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated May 17, 2023 (File No. 000-50972))
10.2		Amendment No. 3 to Amended and Restated Credit Agreement dated May 19, 2023 by and among Texas Roadhouse, Inc., the lenders named therein and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8‑K dated May 19, 2023 (File No. 000‑50972))
31.1		Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.3		Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certifications 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: August 4, 2023	By:	/s/ GERALD L. MORGAN
		Gerald L. Morgan
		Chief Executive Officer (Principal Executive Officer)


Date: August 4, 2023	By:	/s/ D. CHRISTOPHER MONROE
		D. Christopher Monroe
		Chief Financial Officer
		(Principal Financial Officer)

Date: August 4, 2023	By:	/s/ KEITH V. HUMPICH
		Keith V. Humpich
		Vice President of Finance
		(Principal Accounting Officer)