Texas Roadhouse, Inc 10-Q for FY2020 Q1

Texas Roadhouse, Inc. (TXRH)

10-Q 2020-05-11 For: 2020-03-31

Added on April 10, 2026

About this 10-Q

Texas Roadhouse, Inc filed this 10-Q on May 11, 2020, covering the quarter ended March 31, 2020 (FY2020 Q1).

Headline figures

Quarter ended March 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $652.52M; down 5.5% from $690.61M a year earlier
Net income: $16.03M; down 68.2% from net income of $50.39M a year earlier
Diluted EPS: $0.23; down 67.1% from $0.70 a year earlier

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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 31, 2020 and December 31, 2019		3
Condensed Consolidated Statements of Income and Comprehensive Income — For the 13 Weeks Ended March 31, 2020 and March 26, 2019		4
Condensed Consolidated Statement of Stockholders’ Equity — For the 13 Weeks Ended March 31, 2020 and March 26, 2019		5
Condensed Consolidated Statements of Cash Flows — For the 13 Weeks Ended March 31, 2020 and March 26, 2019		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		29
Item 4 — Controls and Procedures		30

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		32
Item 3 — Defaults Upon Senior Securities		32
Item 4 — Mine Safety Disclosures		33
Item 5 — Other Information		33
Item 6 — Exhibits		33

Signatures		34


	March 31, 2020		December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	230,606	$	107,879
Receivables, net of allowance for doubtful accounts of $72 at March 31, 2020 and $12 at December 31, 2019		25,441		99,305
Inventories, net		20,321		20,267
Prepaid income taxes		6,524		2,015
Prepaid expenses		19,682		18,433
Total current assets		302,574		247,899
Property and equipment, net of accumulated depreciation of $698,841 at March 31, 2020 and $678,988 at December 31, 2019		1,068,701		1,056,563
Operating lease right-of-use asset, net		512,574		499,801
Goodwill		124,748		124,748
Intangible assets, net of accumulated amortization of $13,911 at March 31, 2020 and $14,141 at December 31, 2019		1,101		1,234
Other assets		45,006		53,320
Total assets	$	2,054,704	$	1,983,565
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of operating lease liabilities	$	17,925	$	17,263
Accounts payable		42,984		61,653
Deferred revenue-gift cards		152,261		209,258
Accrued wages		25,612		39,699
Income taxes payable		2,095		—
Accrued taxes and licenses		19,438		30,433
Other accrued liabilities		50,546		58,914
Total current liabilities		310,861		417,220
Operating lease liabilities, net of current portion		553,181		538,710
Long-term debt		190,000		—
Restricted stock and other deposits		8,683		8,249
Deferred tax liabilities, net		23,115		22,695
Other liabilities		58,121		65,522
Total liabilities		1,143,961		1,052,396
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, 69,310,804 and 69,400,252 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively)		69		69
Additional paid-in-capital		129,796		140,501
Retained earnings		766,689		775,649
Accumulated other comprehensive loss		(262)		(225)
Total Texas Roadhouse, Inc. and subsidiaries stockholders’ equity		896,292		915,994
Noncontrolling interests		14,451		15,175
Total equity		910,743		931,169
Total liabilities and equity	$	2,054,704	$	1,983,565



	13 Weeks Ended
	March 31, 2020		March 26, 2019
Revenue:
Restaurant and other sales	$	647,626	$	685,117
Franchise royalties and fees		4,898		5,491
Total revenue		652,524		690,608
Costs and expenses:
Restaurant operating costs (excluding depreciation and amortization shown separately below):
Cost of sales		210,180		223,712
Labor		241,079		223,880
Rent		13,471		13,128
Other operating		104,289		101,802
Pre-opening		5,112		3,868
Depreciation and amortization		29,054		27,773
Impairment and closure, net		595		17
General and administrative		32,954		35,983
Total costs and expenses		636,734		630,163
Income from operations		15,790		60,445
Interest expense (income), net		69		(754)
Equity (loss) income from investments in unconsolidated affiliates		(508)		113
Income before taxes	$	15,213	$	61,312
Income tax (benefit) expense		(1,939)		9,119
Net income including noncontrolling interests	$	17,152	$	52,193
Less: Net income attributable to noncontrolling interests		1,123		1,803
Net income attributable to Texas Roadhouse, Inc. and subsidiaries	$	16,029	$	50,390
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment, net of tax of $13 and ($33), respectively		(37)		97
Total comprehensive income	$	15,992	$	50,487
Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:
Basic	$	0.23	$	0.70
Diluted	$	0.23	$	0.70
Weighted average shares outstanding:
Basic		69,422		71,753
Diluted		69,852		72,187
Cash dividends declared per share	$	0.36	$	0.30


	For the 13 Weeks Ended March 31, 2020
								Accumulated		Total Texas
				Additional				Other		Roadhouse, Inc.
		Par		Paid-in-		Retained		Comprehensive		and		Noncontrolling
	Shares	Value		Capital		Earnings		Loss		Subsidiaries		Interests		Total
Balance, December 31, 2019	69,400,252	$	69	$	140,501	$	775,649	$	(225)	$	915,994	$	15,175	$	931,169
Net income	—		—		—		16,029		—		16,029		1,123		17,152
Other comprehensive loss, net of tax	—		—		—		—		(37)		(37)		—		(37)
Distributions to noncontrolling interest holders	—		—		—		—		—		—		(1,847)		(1,847)
Dividends declared ($0.36 per share)	—		—		—		(24,989)		—		(24,989)		—		(24,989)
Shares issued under share-based compensation plans including tax effects	251,792		—		—		—		—		—		—		—
Indirect repurchase of shares for minimum tax withholdings	(88,831)		—		(5,331)		—		—		(5,331)		—		(5,331)
Repurchase of shares of common stock	(252,409)		—		(12,621)		—		—		(12,621)		—		(12,621)
Share-based compensation	—		—		7,247		—		—		7,247		—		7,247
Balance, March 31, 2020	69,310,804	$	69	$	129,796	$	766,689	$	(262)	$	896,292	$	14,451	$	910,743


	For the 13 Weeks Ended March 26, 2019
								Accumulated		Total Texas
				Additional				Other		Roadhouse, Inc.
		Par		Paid-in-		Retained		Comprehensive		and		Noncontrolling
	Shares	Value		Capital		Earnings		Loss		Subsidiaries		Interests		Total
Balance, December 25, 2018	71,617,510	$	72	$	257,388	$	688,337	$	(228)	$	945,569	$	15,139	$	960,708
Net income	—		—		—		50,390		—		50,390		1,803		52,193
Other comprehensive income, net of tax	—		—		—		—		97		97		—		97
Distributions to noncontrolling interest holders	—		—		—		—		—		—		(1,615)		(1,615)
Acquisition of noncontrolling interest and other	—		—		(70)		—		—		(70)		(673)		(743)
Dividends declared ($0.30 per share)	—		—		—		(21,547)		—		(21,547)		—		(21,547)
Shares issued under share-based compensation plans including tax effects	330,628		—		—		—		—		—		—		—
Indirect repurchase of shares for minimum tax withholdings	(120,302)		—		(7,400)		—		—		(7,400)		—		(7,400)
Cumulative effect of adoption of ASC 842, Leases, net of tax	—		—		—		(2,678)		—		(2,678)		—		(2,678)
Share-based compensation	—		—		9,132		—		—		9,132		—		9,132
Balance, March 26, 2019	71,827,836	$	72	$	259,050	$	714,502	$	(131)	$	973,493	$	14,654	$	988,147


	Lease Assignment Date	Current Lease Term Expiration
Everett, Massachusetts (1)(2)	September 2002	February 2023
Longmont, Colorado (1)	October 2003	May 2029
Montgomeryville, Pennsylvania (1)	October 2004	March 2021
Fargo, North Dakota (1)	February 2006	July 2021
Logan, Utah (1)	January 2009	August 2024
Irving, Texas (3)	December 2013	December 2024
Louisville, Kentucky (3)(4)	December 2013	November 2023


	Fair Value Measurements
	Level	March 31, 2020		December 31, 2019
Deferred compensation plan—assets	1	$	35,929	$	44,623
Deferred compensation plan—liabilities	1		(35,836)		(44,679)


	Fair Value Measurements					Total gain (loss)
		March 31,		December 31,		March 31,
	Level	2020		2019		2020
Long-lived assets held for use	1	$	—	$	1,684	$	—
Operating lease right-of-use assets	3	$	—	$	611	$	(501)
Investments in unconsolidated affiliates	3	$	2,000	$	—	$	(528)


	Reconciliation of Income from Operations to Restaurant Margin
	(in thousands)
	13 Weeks Ended
	March 31, 2020		March 26, 2019


Income from operations	$	15,790	$	60,445

Less:
Franchise royalties and fees		4,898		5,491

Add:
Pre-opening		5,112		3,868
Depreciation and amortization		29,054		27,773
Impairment and closure, net		595		17
General and administrative		32,954		35,983
Restaurant margin	$	78,607	$	122,595

Restaurant margin $/store week	$	11,695	$	19,197
Restaurant margin (as a percentage of restaurant and other sales)		12.1%		17.9%


	Total	Texas Roadhouse	Bubba's 33	Other
Balance at December 31, 2019	611	581	28	2
Company openings	5	4	1	—
Franchise openings - Domestic	1	1	—	—
Franchise openings - International	—	—	—	—
Balance at March 31, 2020	617	586	29	2


	March 31, 2020	March 26, 2019
Company - Texas Roadhouse	488	468
Company - Bubba's 33	29	25
Company - Other	2	2
Franchise - Texas Roadhouse - U.S.	70	69
Franchise - Texas Roadhouse - International	28	24
Total (1)	617	588


	Q1 2020			Q1 2019
Company Restaurants:
Increase in store weeks		5.3	%		5.6	%
(Decrease) increase in average unit volume		(8.5)	%		4.6	%
Other(1)		(2.1)	%		0.1	%
Total (decrease) increase in restaurant sales		(5.3)	%		10.3	%
Other sales(2)		(0.2)	%		(0.2)	%
Total (decrease) increase in restaurant and other sales		(5.5)	%		10.1	%

Store weeks		6,721			6,386
Comparable restaurant sales growth		(8.4)	%		5.2	%

Texas Roadhouse restaurants only:
Comparable restaurant sales growth		(8.2)	%		5.1	%
Average unit volume (in thousands)	$	1,283		$	1,401


Weekly sales by group:
Comparable restaurants (452 and 429 units, respectively)	$	98,979		$	109,634
Average unit volume restaurants (20 and 22 units, respectively)(3)	$	91,373		$	98,938
Restaurants less than six months old (16 and 17 units, respectively)	$	97,353		$	113,880


	Q1 2020		Q1 2019
New company restaurants	$	19,124	$	17,233
Refurbishment of existing restaurants		12,902		12,317
Relocation of existing restaurants		11,188		4,960
Capital expenditures related to Support Center office		3,458		7,534
Total capital expenditures	$	46,672	$	42,044


	13 Weeks Ended
	March 31, 2020		March 26, 2019
Tax at statutory federal rate	21.0	%	21.0	%
State and local tax, net of federal benefit	3.8		3.6
FICA tip tax credit	(33.1)		(9.4)
Work opportunity tax credit	(4.4)		(1.4)
Stock compensation	(0.8)		(0.5)
Net income attributable to noncontrolling interests	(1.2)		(0.5)
Officers compensation	0.3		1.4
Other	1.7		0.7
Total	(12.7)	%	14.9	%


	Payments Due by Period
			Less than						More than
	Total		1 year		1 - 3 Years		3 - 5 Years		5 years
Long-term debt obligation	$	190,000	$	—	$	190,000	$	—	$	—
Obligation under finance lease		2,113		—		—		—		2,113
Interest(1)		12,145		3,396		4,720		570		3,459
Operating lease obligations		1,010,893		53,516		109,770		110,093		737,514
Capital obligations		141,058		141,058		—		—		—
Total contractual obligations(2)	$	1,356,209	$	197,970	$	304,490	$	110,663	$	743,086


	Lease	Current Lease
	Assignment Date	Term Expiration
Everett, Massachusetts (1)(2)	September 2002	February 2023
Longmont, Colorado (1)	October 2003	May 2029
Montgomeryville, Pennsylvania (1)	October 2004	March 2021
Fargo, North Dakota (1)	February 2006	July 2021
Logan, Utah (1)	January 2009	August 2024
Irving, Texas (3)	December 2013	December 2024
Louisville, Kentucky (3)(4)	December 2013	November 2023


					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
January 1 to January 28	43,795	$	56.60	43,795	$	157,899,316
January 29 to February 25	—	$	—	—	$	157,899,316
February 26 to March 31	208,614	$	48.62	208,614	$	147,756,786

Total	252,409			252,409

Exhibit No.		Description

10.1		First Amendment to 2018 Employment Agreement between Texas Roadhouse Management Corp. and W. Kent Taylor entered into as of March 24, 2020 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated March 24, 2020 (File No. 000-50972))
10.2		First Amendment to 2018 Employment Agreement between Texas Roadhouse Management Corp. and Doug Thompson entered into as of April 6, 2020 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated April 6, 2020 (File No. 000-50972))
10.3		First Amendment to 2018 Employment Agreement between Texas Roadhouse Management Corp. and S. Chris Jacobsen entered into as of April 6, 2020 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated April 6, 2020 (File No. 000-50972))
10.4		First Amendment to 2018 Employment Agreement between Texas Roadhouse Management Corp. and Tonya Robinson entered into as of April 6, 2020 (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K dated April 6, 2020 (File No. 000-50972))
10.5		First Amendment to Amended and Restated Credit Agreement, dated as of May 11, 2020 by and among Texas Roadhouse, Inc., and the lenders named therein and JP Morgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated May 11, 2020 (File 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		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		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		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 11, 2020	By:	/s/ W. KENT TAYLOR
		W. Kent Taylor
		Chairman, Chief Executive Officer and President (principal executive officer)


Date: May 11, 2020	By:	/s/ TONYA R. ROBINSON
		Tonya R. Robinson
		Chief Financial Officer
		(principal financial officer)
		(principal accounting officer)