Texas Roadhouse(TXRH) - 2025 Q1 - Quarterly Results

First Quarter 2025 Earnings Release Financial Highlights (Q1 2025) Q1 2025 saw Texas Roadhouse's revenue grow 9.6% to $1.45 billion, but net income and EPS growth were minimal due to rising costs and a 77 basis point decline in restaurant margin Q1 2025 Financial Performance vs. Q1 2024 ($000's, except per share amounts) | ($000's, except per share amounts) | April 1, 2025 | March 26, 2024 | % change | | :--- | :--- | :--- | :--- | | Total revenue | $1,447,648 | $1,321,217 | 9.6% | | Income from operations | $134,733 | $133,128 | 1.2% | | Net income | $113,662 | $113,206 | 0.4% | | Diluted earnings per share | $1.70 | $1.69 | 1.0% | - Comparable restaurant sales at company-owned restaurants increased by 3.5% year-over-year[2] - Restaurant margin decreased to 16.6% from 17.4% in the prior year, driven by commodity inflation of 2.1% and wage and other labor inflation of 4.6%, which were not fully offset by higher sales[2] - Key capital allocation activities in Q1 2025 included $77.4 million in capital expenditures, $78.3 million in franchise acquisitions, $45.2 million in dividends, and $50.2 million in common stock repurchases[2] CEO Commentary CEO Jerry Morgan highlighted the company's success in achieving traffic growth across all three brands despite economic challenges, reaffirming focus on business fundamentals, new store development including the 50th Bubba's 33, and a consistent capital allocation strategy - The company successfully navigated challenges to deliver traffic growth across all three brands, maintaining focus on core business fundamentals[3] - The company continues its growth through new store development, highlighted by the opening of the 50th Bubba's 33 restaurant[3] - Management is committed to its capital allocation strategy, using operating cash flow to fund new development, maintain existing restaurants, acquire franchises, and return capital to shareholders via dividends and buybacks[3] 2025 Outlook and Dividend The company observed a 5.0% increase in comparable restaurant sales for early Q2 2025, implemented a 1.4% menu price increase, updated its 2025 outlook for commodity cost inflation to approximately 4%, and declared a quarterly cash dividend of $0.68 per share - Comparable restaurant sales at company restaurants increased 5.0% for the first five weeks of Q2 2025[4] - A menu price increase of approximately 1.4% was implemented in early April 2025[4] Updated & Reiterated 2025 Outlook | Expectation | 2025 Forecast | | :--- | :--- | | Commodity cost inflation (Updated) | ~4.0% | | Comparable restaurant sales | Positive growth | | Store week growth | ~5% | | Wage and other labor inflation | 4% to 5% | | Effective income tax rate | 15% to 16% | | Total capital expenditures | ~$400 million | - A quarterly cash dividend of $0.68 per share was approved, payable on July 1, 2025, to shareholders of record on June 3, 2025[5] Financial Statements and Supplemental Data Condensed Consolidated Statements of Income For Q1 2025, total revenues increased to $1.45 billion from $1.32 billion, driven by a 9.6% rise in restaurant sales, but income from operations and net income saw only marginal increases due to rising operating costs Q1 2025 Statement of Income (in thousands) | Line Item | Q1 2025 (13 wks) | Q1 2024 (13 wks) | | :--- | :--- | :--- | | Total revenue | $1,447,648 | $1,321,217 | | Restaurant and other sales | $1,440,342 | $1,314,152 | | Food and beverage costs | $490,991 | $445,091 | | Labor costs | $479,975 | $427,547 | | Income from operations | $134,733 | $133,128 | | Net income attributable to TXRH | $113,662 | $113,206 | | Diluted EPS | $1.70 | $1.69 | Condensed Consolidated Balance Sheets As of April 1, 2025, total assets remained stable at $3.191 billion, with cash and cash equivalents decreasing to $221.1 million, while goodwill significantly increased to $218.9 million primarily due to franchise acquisitions Balance Sheet Highlights (in thousands) | Account | April 1, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $221,085 | $245,225 | | Property and equipment, net | $1,662,825 | $1,617,673 | | Goodwill | $218,921 | $169,684 | | Total assets | $3,191,133 | $3,190,779 | | Current liabilities | $751,966 | $828,130 | | Total liabilities and equity | $3,191,133 | $3,190,779 | Condensed Consolidated Statements of Cash Flows In Q1 2025, cash from operations slightly decreased to $237.7 million, while cash used in investing activities significantly increased to $155.6 million due to franchise acquisitions, and financing activities used $106.3 million for share repurchases and dividends, resulting in a net cash decrease of $24.1 million Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 (13 wks) | Q1 2024 (13 wks) | | :--- | :--- | :--- | | Net cash provided by operating activities | $237,740 | $243,439 | | Net cash used in investing activities | ($155,557) | ($74,692) | | Acquisitions of franchise restaurants | ($78,297) | — | | Net cash used in financing activities | ($106,323) | ($59,565) | | Repurchase of shares of common stock | ($50,151) | ($8,941) | | Net (decrease) increase in cash | ($24,140) | $109,182 | Supplemental Financial and Operating Information Company-wide comparable restaurant sales grew 3.5%, with Texas Roadhouse and Bubba's 33 showing similar growth, while restaurant margin percentage declined by 77 basis points to 16.6% despite a 4.7% increase in margin dollars, due to higher food and labor costs as a percentage of sales Q1 2025 vs Q1 2024 Operating Metrics (All Company Restaurants) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Comparable restaurant sales | 3.5% | 8.4% | N/A | | Restaurant margin % | 16.6% | 17.4% | (77) bps | | Food and beverage costs (% sales) | 34.1% | 33.9% | (22) bps | | Labor (% sales) | 33.3% | 32.5% | (79) bps | Comparable Restaurant Sales by Brand | Brand | Q1 2025 Comp Sales | Q1 2024 Comp Sales | | :--- | :--- | :--- | | Texas Roadhouse | 3.5% | 8.7% | | Bubba's 33 | 3.9% | 3.5% | Restaurant Unit Activity During Q1 2025, the company opened 8 new restaurants and acquired 14 franchise locations, resulting in a net increase of 44 company-owned restaurants year-over-year, bringing the total system-wide count to 792 Q1 2025 Unit Activity | Activity | Count | | :--- | :--- | | Company Restaurant Openings | 8 | | Franchise Restaurant Acquisitions | 14 | Total Restaurants at Quarter End | Category | April 1, 2025 | March 26, 2024 | | :--- | :--- | :--- | | Total company restaurants | 688 | 644 | | Total franchise restaurants | 104 | 109 | | Total system-wide restaurants | 792 | 753 | Other Information Non-GAAP Measures The company uses 'restaurant margin' as a non-GAAP measure to assess core restaurant-level operational efficiency, which was $239.3 million or 16.6% of sales in Q1 2025, down from 17.4% in the prior year - The company defines restaurant margin as restaurant sales less restaurant-level operating costs (food, beverage, labor, rent, other operating), used to evaluate core restaurant-level operating efficiency and excluding G&A, pre-opening, depreciation, and impairment costs[6] Reconciliation of Income from Operations to Restaurant Margin ($ in thousands) | | April 1, 2025 | March 26, 2024 | | :--- | :--- | :--- | | Income from operations | $134,733 | $133,128 | | Less: Royalties and franchise fees | 7,306 | 7,065 | | Add: Pre-opening | 6,812 | 8,095 | | Add: Depreciation and amortization | 48,800 | 41,493 | | Add: Impairment and closure, net | 28 | 201 | | Add: General and administrative | 56,217 | 52,595 | | Restaurant margin | $239,284 | $228,447 | | Restaurant margin (% of sales) | 16.6% | 17.4% |