Texas Roadhouse(TXRH) - 2020 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1 — Financial Statements (Unaudited) Presents unaudited condensed consolidated financial statements, including balance sheets, income statements, equity, and cash flows, with detailed notes Condensed Consolidated Balance Sheets Provides a snapshot of the company's assets, liabilities, and equity at specific points in time | Metric | September 29, 2020 (in thousands) | December 31, 2019 (in thousands) | Change (YoY) | | :-------------------------- | :-------------------------------- | :------------------------------- | :----------- | | Total Assets | $2,188,011 | $1,983,565 | +10.3% | | Cash and cash equivalents | $328,636 | $107,879 | +204.6% | | Total Liabilities | $1,269,508 | $1,052,396 | +20.6% | | Long-term debt | $190,000 | $— | N/A | | Total Equity | $918,503 | $931,169 | -1.4% | Condensed Consolidated Statements of Income and Comprehensive Income Details the company's revenues, expenses, and net income over specific periods, highlighting profitability trends | Metric | 13 Weeks Ended Sep 29, 2020 (in thousands) | 13 Weeks Ended Sep 24, 2019 (in thousands) | Change (YoY) | | :------------------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------- | | Total Revenue | $631,185 | $650,489 | -3.0% | | Net income attributable to Texas Roadhouse, Inc. | $29,230 | $36,531 | -20.0% | | Diluted EPS | $0.42 | $0.52 | -19.2% | | Metric | 39 Weeks Ended Sep 29, 2020 (in thousands) | 39 Weeks Ended Sep 24, 2019 (in thousands) | Change (YoY) | | :------------------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------- | | Total Revenue | $1,760,134 | $2,030,925 | -13.3% | | Net income attributable to Texas Roadhouse, Inc. | $11,706 | $131,766 | -91.1% | | Diluted EPS | $0.17 | $1.85 | -90.8% | - For the 39 weeks ended September 29, 2020, the company recognized an income tax benefit of $13,999 thousand, compared to an expense of $23,331 thousand in the prior year, primarily due to tax credits on near break-even pre-tax income[13][42] Condensed Consolidated Statement of Stockholders' Equity Outlines changes in equity, including retained earnings, dividends, share repurchases, and share-based compensation | Metric | December 31, 2019 (in thousands) | September 29, 2020 (in thousands) | Change (39 Weeks) | | :---------------- | :------------------------------- | :-------------------------------- | :---------------- | | Retained earnings | $775,649 | $762,366 | -$13,283 | | Dividends declared | N/A | $24,989 | N/A | | Repurchase of shares | N/A | $12,621 | N/A | | Share-based compensation | N/A | $22,070 | N/A | - Dividends declared for the 39 weeks ended September 29, 2020, were $0.36 per share, totaling $24,989 thousand, a decrease from $0.90 per share ($63,634 thousand) in the prior year, reflecting the suspension of dividends after March 27, 2020[16][95] - Share repurchases for the 39 weeks ended September 29, 2020, totaled $12,621 thousand for 252,409 shares, a significant decrease from $130,965 thousand for 2,455,058 shares in the prior year, due to the suspension of repurchase activity on March 17, 2020[16][69] Condensed Consolidated Statements of Cash Flows Reports cash inflows and outflows from operating, investing, and financing activities, showing liquidity changes | Cash Flow Activity | 39 Weeks Ended Sep 29, 2020 (in thousands) | 39 Weeks Ended Sep 24, 2019 (in thousands) | Change (YoY) | | :-------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------- | | Net cash provided by operating activities | $146,035 | $241,997 | -39.6% | | Net cash used in investing activities | $(115,322) | $(144,566) | -20.2% | | Net cash provided by (used in) financing activities | $190,044 | $(208,016) | N/A (Shift) | | Net increase (decrease) in cash and cash equivalents | $220,757 | $(110,585) | N/A (Shift) | | Cash and cash equivalents—end of period | $328,636 | $99,540 | +230.2% | - The shift in financing activities from cash used to cash provided was primarily due to $240,000 thousand in proceeds from the revolving credit facility in 2020 YTD[18][163][164] Notes to Condensed Consolidated Financial Statements Provides detailed explanations and additional information supporting the condensed consolidated financial statements (1) Basis of Presentation Describes the company's restaurant operations, ownership structure, and the impact of the COVID-19 pandemic on business - As of September 29, 2020, the company owned and operated 526 restaurants (506 wholly-owned, 20 majority-owned) and franchised an additional 97 restaurants (70 domestic, 27 international) in 49 states and ten foreign countries[21] - By March 31, 2020, all domestic company and franchise restaurants were operating under To-Go or curbside service only due to the COVID-19 pandemic. By September 29, 2020, nearly all company-owned restaurants had re-opened dining rooms with limited capacity[27][72] - The company developed a hybrid operating model combining limited capacity dining rooms with enhanced To-Go services, including design changes and expanded outdoor seating, while prioritizing employee and guest safety[28][73] (2) Recent Accounting Pronouncements Discusses the adoption and assessment of new accounting standards and their impact on financial statements - The adoption of ASU 2016-13 (Financial Instruments – Credit Losses), ASU 2017-04 (Goodwill Impairment), and ASU 2018-13 (Fair Value Measurement) as of the beginning of fiscal year 2020 did not have a significant impact on the condensed consolidated financial statements[30][31][32] - The company is currently assessing the impact of ASU 2019-12 (Income Taxes) and ASU 2020-04 (Reference Rate Reform), which are effective for fiscal years beginning after December 15, 2020, and upon issuance through December 31, 2022, respectively[33][34] (3) Long-term Debt Details the company's revolving credit facility, outstanding borrowings, and compliance with financial covenants - On May 11, 2020, the revolving credit facility was amended to provide an incremental revolving credit facility of up to $82.5 million[35] - As of September 29, 2020, the company had $190.0 million outstanding on the original revolving credit facility (long-term debt) and $50.0 million outstanding on the incremental facility (current maturities of long-term debt), totaling $240.0 million in combined borrowings[38][39] - The weighted-average interest rate for the combined borrowings was 1.98% as of September 29, 2020, and the company was in compliance with all financial covenants[40] (4) Revenue Breaks down total revenue by source, including restaurant sales, franchise royalties, and fees, and notes deferred revenue | Revenue Source | 13 Weeks Ended Sep 29, 2020 (in thousands) | 13 Weeks Ended Sep 24, 2019 (in thousands) | 39 Weeks Ended Sep 29, 2020 (in thousands) | 39 Weeks Ended Sep 24, 2019 (in thousands) | | :---------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Restaurant and other sales | $626,429 | $645,230 | $1,747,145 | $2,014,720 | | Franchise royalties | $4,141 | $4,645 | $11,195 | $14,316 | | Franchise fees | $615 | $614 | $1,794 | $1,889 | | Total revenue | $631,185 | $650,489 | $1,760,134 | $2,030,925 | - Deferred revenue related to gift cards decreased from $209.3 million at December 31, 2019, to $146.5 million at September 29, 2020[41] (5) Income Taxes Presents income tax expense or benefit and effective tax rates, explaining changes due to tax credits | Period | Income Tax Expense (Benefit) (in thousands) | Effective Tax Rate | | :-------------------------------- | :------------------------------------------ | :----------------- | | 13 Weeks Ended Sep 29, 2020 | $3,072 | 9.2% | | 13 Weeks Ended Sep 24, 2019 | $6,785 | 15.1% | | 39 Weeks Ended Sep 29, 2020 | $(13,999) | Not meaningful | | 39 Weeks Ended Sep 24, 2019 | $23,331 | 14.6% | - The decrease in the effective tax rate for Q3 2020 and the income tax benefit for 2020 YTD were primarily due to the impact of FICA tip and Work opportunity tax credits as a higher percentage of pre-tax income[42][44] (6) Commitments and Contingencies Outlines capital project commitments, lease guarantees, and the status of ordinary course litigation - Estimated cost of completing capital project commitments was $110.5 million at September 29, 2020. Construction on 18 restaurants, with an estimated completion cost of $46.3 million, had resumed or was approved to resume after delays due to the pandemic[45] - The company was contingently liable for $13.3 million for seven lease guarantees as of September 29, 2020, representing maximum potential liability for future payments[46] - No material adverse effect from ordinary course litigation has been experienced[49] (7) Related Party Transactions Identifies franchise and majority-owned restaurants with officer ownership and details fees from related entities - As of September 29, 2020, six franchise restaurants and one majority-owned company restaurant were partly owned by certain officers of the company[50] | Period | Fees from Franchise Entities (in millions) | | :-------------------------------- | :----------------------------------------- | | 13 Weeks Ended Sep 29, 2020 | $0.3 | | 13 Weeks Ended Sep 24, 2019 | $0.3 | | 39 Weeks Ended Sep 29, 2020 | $0.8 | | 39 Weeks Ended Sep 24, 2019 | $1.0 | (8) Earnings Per Share Presents basic and diluted earnings per share for various reporting periods | EPS Type | 13 Weeks Ended Sep 29, 2020 | 13 Weeks Ended Sep 24, 2019 | 39 Weeks Ended Sep 29, 2020 | 39 Weeks Ended Sep 24, 2019 | | :--------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Basic EPS | $0.42 | $0.53 | $0.17 | $1.86 | | Diluted EPS | $0.42 | $0.52 | $0.17 | $1.85 | (9) Fair Value Measurements Explains the three-level hierarchy for fair value measurements and lists assets and liabilities measured at fair value - The company uses a three-level hierarchy for fair value measurements: Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[58] | Asset/Liability | Level | September 29, 2020 (in thousands) | December 31, 2019 (in thousands) | | :-------------------------------- | :---- | :-------------------------------- | :------------------------------- | | Deferred compensation plan—assets | 1 | $49,175 | $44,623 | | Deferred compensation plan—liabilities | 1 | $(49,150) | $(44,679) | - Nonrecurring fair value measurements for the 39 weeks ended September 29, 2020, included a $0.4 million loss on long-lived assets held for sale, a $0.5 million loss on operating lease right-of-use assets, and a $0.5 million loss on investments in unconsolidated affiliates[62][63][64] (10) Share Based Compensation Details share-based compensation expense by category and unrecognized compensation costs for unvested PSUs | Expense Category | 13 Weeks Ended Sep 29, 2020 (in thousands) | 13 Weeks Ended Sep 24, 2019 (in thousands) | 39 Weeks Ended Sep 29, 2020 (in thousands) | 39 Weeks Ended Sep 24, 2019 (in thousands) | | :-------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Labor expense | $2,480 | $2,164 | $7,400 | $6,513 | | General and administrative expense | $5,100 | $5,979 | $14,670 | $18,503 | | Total share-based compensation expense | $7,580 | $8,143 | $22,070 | $25,016 | - As of September 29, 2020, there was $0.1 million of unrecognized compensation cost related to unvested PSUs, expected to be recognized over a weighted-average period of 0.3 years[67] (11) Stock Repurchase Program Describes the authorized stock repurchase program, shares repurchased, and its suspension due to the pandemic - The Board of Directors approved a stock repurchase program on May 31, 2019, authorizing up to $250.0 million of common stock repurchases[68] - For the 39 weeks ended September 29, 2020, the company repurchased 252,409 shares for $12.6 million[69] - All share repurchase activity was suspended on March 17, 2020, to preserve cash flow due to the pandemic, with $147.8 million remaining authorized as of September 29, 2020[69] Item 2 — Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, condition, and COVID-19 impact on operations, revenue, and profitability, detailing strategic responses and liquidity CAUTIONARY STATEMENT Warns that forward-looking statements are subject to risks and uncertainties, especially regarding the COVID-19 pandemic - The report contains forward-looking statements based on current expectations, estimates, and projections, which are subject to risks, uncertainties, and assumptions, particularly concerning the COVID-19 pandemic[71] - Readers are advised to carefully consider the risk factors discussed in the Annual Report on Form 10-K and Part II, Item 1A of this Form 10-Q[71] RECENT DEVELOPMENTS Highlights operational changes due to COVID-19, including dining room re-openings, hybrid models, and financial flexibility measures - The COVID-19 pandemic led to temporary dining room closures and a shift to To-Go/curbside service by March 31, 2020, with nearly all dining rooms re-opening under limited capacity by September 29, 2020[72] - The company implemented a hybrid operating model, including enhanced To-Go services, design changes, outdoor seating, booth partitions, increased sanitation, and daily employee health checks[73] - Financial flexibility measures included decreasing planned new restaurants, suspending quarterly cash dividends and share repurchases, expanding the revolving credit facility by $240 million, and reducing executive compensation to fund employee relief grants[81] - The CARES Act allowed for the deferral of $30.0 million in payroll taxes and provided a $4.5 million Employee Retention Credit in Q3 2020 for relief pay to hourly employees[77][78] OVERVIEW Provides an overview of the company's restaurant portfolio, including owned and franchised units, and equity interests - Texas Roadhouse, Inc. operates 623 restaurants (526 company-owned, 97 franchised) across 49 states and ten foreign countries as of September 29, 2020[80][83] - Company-owned restaurants include 493 Texas Roadhouse, 31 Bubba's 33, and two other concepts. Franchise restaurants are all Texas Roadhouse[83] - The company holds minority equity interests in 24 domestic franchise restaurants (5.0% to 10.0%) and a 40% equity interest in four non-Texas Roadhouse restaurants in China[23][83] Long-Term Strategies to Grow Earnings Per Share and Create Shareholder Value Outlines strategies for EPS growth and shareholder value, including restaurant expansion, profitability, infrastructure, and capital returns - Strategies include expanding the restaurant base (13 company, 2 franchise openings in 2020 YTD, with 18 delayed restaurants resuming construction), maintaining/improving restaurant-level profitability (balancing inflation, enhancing To-Go, launching Texas Roadhouse Butcher Shop), leveraging scalable infrastructure, and returning capital to shareholders (suspended dividends and share repurchases)[86][87][88][91][92][93][94][95][98] Key Measures We Use to Evaluate Our Company Identifies key performance indicators used to assess company performance, including sales growth, unit volume, and restaurant margin - Key measures include Number of Restaurant Openings, Comparable Restaurant Sales Growth, Average Unit Volume, Store Weeks, and Restaurant Margin (a non-GAAP measure for restaurant-level operating efficiency)[99][100][101][102][103] Other Key Definitions Provides definitions for various financial and operational metrics used in the company's reporting - Definitions are provided for Restaurant and Other Sales, Franchise Royalties and Fees, Food and Beverage Costs (beef is ~half), Restaurant Labor Expenses, Restaurant Rent Expense, Restaurant Other Operating Expenses, Pre-opening Expenses, Depreciation and Amortization Expenses, Impairment and Closure Costs, General and Administrative Expenses, Interest Expense (Income), Equity Income (Loss) from Unconsolidated Affiliates, and Net Income Attributable to Noncontrolling Interests[106][107][108][109][110][111][112][113][114][116][117][118][119] Q3 2020 Financial Highlights Summarizes key financial results for Q3 2020, including revenue, restaurant margin, net income, and diluted EPS | Metric | Q3 2020 (in millions) | Q3 2019 (in millions) | Change (YoY) | | :-------------------------- | :-------------------- | :-------------------- | :----------- | | Total Revenue | $631.2 | $650.5 | -3.0% | | Restaurant Margin Dollars | $91.1 | $108.0 | -15.6% | | Net Income | $29.2 | $36.5 | -20.0% | | Diluted EPS | $0.42 | $0.52 | -19.2% | - Restaurant margin, as a percentage of restaurant and other sales, decreased to 14.5% in Q3 2020 from 16.7% in Q3 2019, due to lower sales, higher labor, other operating costs, food and beverage costs, and less profitable To-Go sales[121] Results of Operations Analyzes revenue and expense components for Q3 and YTD 2020, detailing their impact on operating income | Metric | 13 Weeks Ended Sep 29, 2020 (in thousands) | % of Total Revenue | 13 Weeks Ended Sep 24, 2019 (in thousands) | % of Total Revenue | | :-------------------------------- | :----------------------------------------- | :----------------- | :----------------------------------------- | :----------------- | | Total revenue | $631,185 | 100.0% | $650,489 | 100.0% | | Food and beverage | $201,308 | 32.1%* | $205,158 | 31.8%* | | Labor | $217,275 | 34.7%* | $218,342 | 33.8%* | | Rent | $13,723 | 2.2%* | $12,994 | 2.0%* | | Other operating | $102,978 | 16.4%* | $100,742 | 15.6%* | | Pre-opening | $4,894 | 0.8% | $4,736 | 0.7% | | Depreciation and amortization | $29,364 | 4.7% | $28,347 | 4.4% | | General and administrative | $25,951 | 4.1% | $35,225 | 5.4% | | Income from operations | $34,976 | 5.5% | $44,884 | 6.9% | | Net income attributable to Texas Roadhouse, Inc. and subsidiaries | $29,230 | 4.6% | $36,531 | 5.6% | | Metric | 39 Weeks Ended Sep 29, 2020 (in thousands) | % of Total Revenue | 39 Weeks Ended Sep 24, 2019 (in thousands) | % of Total Revenue | | :-------------------------------- | :----------------------------------------- | :----------------- | :----------------------------------------- | :----------------- | | Total revenue | $1,760,134 | 100.0% | $2,030,925 | 100.0% | | Food and beverage | $575,529 | 32.9%* | $650,136 | 32.3%* | | Labor | $652,976 | 37.4%* | $667,712 | 33.1%* | | Rent | $40,445 | 2.3%* | $39,173 | 1.9%* | | Other operating | $296,615 | 17.0%* | $306,355 | 15.2%* | | Pre-opening | $14,296 | 0.8% | $12,801 | 0.6% | | Depreciation and amortization | $87,434 | 5.0% | $84,574 | 4.2% | | General and administrative | $88,520 | 5.0% | $111,168 | 5.5% | | Income from operations | $3,448 | 0.2% | $158,612 | 7.8% | | Net income attributable to Texas Roadhouse, Inc. and subsidiaries | $11,706 | 0.7% | $131,766 | 6.5% | *As a percentage of restaurant and other sales. | Restaurant Margin Metric | 13 Weeks Ended Sep 29, 2020 (in thousands) | 13 Weeks Ended Sep 24, 2019 (in thousands) | 39 Weeks Ended Sep 29, 2020 (in thousands) | 39 Weeks Ended Sep 24, 2019 (in thousands) | | :-------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Restaurant margin | $91,145 | $107,994 | $181,580 | $351,344 | | Restaurant margin $/store week | $13,384 | $16,591 | $8,956 | $18,153 | | Restaurant margin (% of sales) | 14.5% | 16.7% | 10.4% | 17.4% | Restaurant Unit Activity Provides a breakdown of restaurant openings and closings by concept, showing changes in the unit count | Category | Total | Texas Roadhouse | Bubba's 33 | Other | | :-------------------------------- | :---- | :-------------- | :--------- | :---- | | Balance at December 31, 2019 | 611 | 581 | 28 | 2 | | Company openings | 13 | 10 | 3 | — | | Company closings | (1) | (1) | — | — | | Franchise openings - Domestic | 1 | 1 | — | — | | Franchise openings - International | 1 | 1 | — | — | | Franchise closings - International | (2) | (2) | — | — | | Balance at September 29, 2020 | 623 | 590 | 31 | 2 | Q3 2020 and 2020 YTD Performance Analysis Analyzes Q3 and YTD 2020 performance, focusing on sales, costs, and expenses, and the impact of the pandemic - Restaurant and other sales decreased by 2.9% in Q3 2020 and 13.3% in 2020 YTD, primarily due to a decline in comparable restaurant sales (down 6.3% in Q3 2020 and 16.0% in 2020 YTD) driven by pandemic-related dining room restrictions[130][131][132] - To-Go sales represented 23.3% of total sales at company restaurants in Q3 2020, and a 1.0% menu price increase was implemented in late October 2020[135][136] - Food and beverage costs increased as a percentage of sales (32.1% in Q3 2020 vs. 31.8% in Q3 2019) due to commodity inflation (3.0% in Q3 2020, 2.3% in 2020 YTD, primarily beef) and a shift to higher-priced, lower-margin menu items[141] - Restaurant labor expenses increased as a percentage of sales (34.7% in Q3 2020 vs. 33.8% in Q3 2019) due to higher wage rates (shift to non-tipped), increased benefits ($1.8 million in Q3, $17.2 million in YTD) and health insurance costs, partially offset by $4.5 million in employee retention payroll tax credits[142][144][145] - General and administrative expenses decreased as a percentage of total revenue (4.1% in Q3 2020 vs. 5.4% in Q3 2019) due to lower salary and incentive compensation, a $3.0 million legal claim sale, and reduced travel costs[151] Liquidity and Capital Resources Examines cash flow activities, capital expenditures, and measures taken to enhance financial flexibility during the pandemic | Cash Flow Activity | 39 Weeks Ended Sep 29, 2020 (in thousands) | 39 Weeks Ended Sep 24, 2019 (in thousands) | Change (YoY) | | :-------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------- | | Net cash provided by operating activities | $146,035 | $241,997 | -39.6% | | Net cash used in investing activities | $(115,322) | $(144,566) | -20.2% | | Net cash provided by (used in) financing activities | $190,044 | $(208,016) | N/A (Shift) | - Net cash provided by financing activities increased significantly due to $240.0 million in borrowings from the revolving credit facility, taken as a precautionary measure to bolster cash position and enhance financial flexibility during the pandemic[163][164] | Capital Expenditures Category | 2020 YTD (in thousands) | 2019 YTD (in thousands) | | :-------------------------------- | :---------------------- | :---------------------- | | New company restaurants | $55,081 | $68,161 | | Refurbishment of existing restaurants | $37,222 | $41,636 | | Relocation of existing restaurants | $17,381 | $15,315 | | Capital expenditures related to Support Center office | $7,837 | $19,805 | | Total capital expenditures | $117,521 | $144,917 | - The company suspended quarterly cash dividends after March 27, 2020, and all share repurchase activity on March 17, 2020, to preserve cash flow, with $147.8 million remaining authorized for repurchases[165][166] Contractual Obligations Details the company's contractual obligations, including long-term debt, lease obligations, and capital commitments | Obligation Type | Total (in thousands) | Less than 1 year (in thousands) | 1 - 3 Years (in thousands) | 3 - 5 Years (in thousands) | More than 5 years (in thousands) | | :-------------------------- | :------------------- | :------------------------------ | :------------------------- | :------------------------- | :----------------------------- | | Long-term debt obligation | $240,000 | $50,000 | $190,000 | $— | $— | | Obligation under finance lease | $2,119 | $— | $— | $— | $2,119 | | Interest | $11,563 | $4,499 | $3,178 | $571 | $3,315 | | Operating lease obligations | $1,039,391 | $55,273 | $113,348 | $112,270 | $758,500 | | Capital obligations | $110,542 | $110,542 | $— | $— | $— | | Total contractual obligations | $1,403,615 | $220,314 | $306,526 | $112,841 | $763,934 | Off-Balance Sheet Arrangements States that the company does not have any material off-balance sheet arrangements - The company does not have any material off-balance sheet arrangements[176] Guarantees Reports the company's contingent liabilities related to lease guarantees for franchisees or acquirers - As of September 29, 2020, the company was contingently liable for $13.3 million for seven lease guarantees, primarily related to real estate lease agreements assigned to franchisees or acquirers[177][179] Item 3 — Quantitative and Qualitative Disclosures About Market Risk Outlines market risks from interest rate changes on variable debt, commodity price fluctuations (especially beef), and supply chain dependency - The company is exposed to market risk from changes in interest rates on its variable rate debt, with $240.0 million outstanding on its revolving credit facility at a weighted-average interest rate of 1.98% as of September 29, 2020[179][181] - A one percentage point increase in interest rates on variable rate borrowings would increase estimated annual interest expense by $2.4 million[181] - The company is subject to unpredictable price volatility for commodities, especially beef, and is highly dependent on three beef suppliers, posing a supply chain risk[182][183] Item 4 — Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no significant changes in internal control over financial reporting - The company's disclosure controls and procedures were evaluated and deemed effective as of September 29, 2020, under the supervision of the CEO and CFO[184] - There were no significant changes in the company's internal control over financial reporting during the period covered by the report[185] PART II. OTHER INFORMATION Item 1 — Legal Proceedings The company is involved in ordinary course litigation, none of which has had a material adverse effect on business during the reporting periods - The company is a defendant in litigation arising in the ordinary course of business, including 'slip and fall' accidents, employment-related claims, and claims related to alcohol service or food quality[187] - None of these litigations have had a material adverse effect on the company during the periods covered by this report[187] Item 1A — Risk Factors Highlights significant risks from the COVID-19 pandemic, detailing adverse effects on operations, financial condition, and results, including closures, delays, liquidity, and supply chain - The COVID-19 pandemic has disrupted business, leading to temporary dining room closures and subsequent limited capacity re-openings, significantly decreasing traffic and impacting operating results[190][192] - The pandemic has adversely affected the ability to open new restaurants, causing construction delays, and necessitated increased borrowings ($240.0 million) to enhance financial flexibility, with no guarantee of additional liquidity if needed[194][195] - Risks include potential supply chain disruptions if suppliers are impacted by the pandemic and staffing shortages if employees seek other employment or are quarantined due to illness[196][197][198] Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds Details the stock repurchase program, including authorized amount, shares repurchased, and suspension due to the pandemic for financial flexibility - The Board of Directors approved a stock repurchase program on May 31, 2019, authorizing up to $250.0 million of common stock repurchases[199] - For the 39 weeks ended September 29, 2020, the company repurchased 252,409 shares for $12.6 million[199] - All share repurchase activity was suspended on March 17, 2020, to enhance financial flexibility due to the pandemic, with $147.8 million remaining authorized as of September 29, 2020[199] Item 3 — Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[200] Item 4 — Mine Safety Disclosures This item is not applicable to the company - This item is not applicable[201] Item 5 — Other Information The company reported no other information for the period - No other information to report[203] Item 6 — Exhibits Lists exhibits filed with Form 10-Q, including principal officer certifications and various XBRL documents - Exhibits include certifications of the Principal Executive Officer and Principal Financial Officer (31.1, 31.2, 32.1, 32.2) as required by the Sarbanes-Oxley Act of 2002[204] - XBRL-related documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase Documents) and the Cover page Interactive Data File are also included[204] Signatures The report is signed by W. Kent Taylor, Chairman, CEO and President, and Tonya R. Robinson, CFO, on behalf of Texas Roadhouse, Inc - The report is signed by W. Kent Taylor, Chairman, Chief Executive Officer and President, and Tonya R. Robinson, Chief Financial Officer, on November 6, 2020[208]