Texas Roadhouse(TXRH) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The unaudited financial statements show revenue growth driven by restaurant sales and strong operational cash flow Condensed Consolidated Balance Sheets Total assets grew to $3.26 billion, driven by acquisitions, while total equity increased to $1.47 billion Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | July 1, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $3,255,276 | $3,190,779 | | Cash and cash equivalents | $176,801 | $245,225 | | Property and equipment, net | $1,714,551 | $1,617,673 | | Goodwill | $229,944 | $169,684 | | Total Liabilities | $1,789,054 | $1,817,056 | | Deferred revenue-gift cards | $277,293 | $401,198 | | Total Equity | $1,466,222 | $1,373,723 | Condensed Consolidated Statements of Income Q2 2025 revenue increased 12.7% year-over-year to $1.51 billion, with net income growing 3.3% to $124.1 million Q2 2025 vs Q2 2024 Performance (in thousands, except per share data) | Metric | 13 Weeks Ended July 1, 2025 | 13 Weeks Ended June 25, 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $1,512,054 | $1,341,202 | 12.7% | | Income from Operations | $146,341 | $142,816 | 2.5% | | Net Income | $124,085 | $120,141 | 3.3% | | Diluted EPS | $1.86 | $1.79 | 3.9% | YTD 2025 vs YTD 2024 Performance (in thousands, except per share data) | Metric | 26 Weeks Ended July 1, 2025 | 26 Weeks Ended June 25, 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $2,959,702 | $2,662,419 | 11.2% | | Income from Operations | $281,074 | $275,944 | 1.9% | | Net Income | $237,747 | $233,347 | 1.9% | | Diluted EPS | $3.57 | $3.48 | 2.6% | Condensed Consolidated Statements of Stockholders' Equity Total equity increased to $1.47 billion, driven by net income and partially offset by dividends and share repurchases Equity Roll-Forward for 26 Weeks Ended July 1, 2025 (in thousands) | Description | Amount | | :--- | :--- | | Balance, December 31, 2024 | $1,373,723 | | Net Income | $242,752 | | Dividends Declared | ($90,292) | | Repurchase of common stock | ($60,174) | | Share-based compensation | $23,249 | | Balance, July 1, 2025 | $1,466,222 | Condensed Consolidated Statements of Cash Flows The company generated $366.0 million in operating cash flow, funding significant investing and financing activities Cash Flow Summary for 26 Weeks Ended (in thousands) | Cash Flow Activity | July 1, 2025 | June 25, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $365,980 | $377,347 | | Net cash used in investing activities | ($259,527) | ($146,155) | | Net cash used in financing activities | ($174,877) | ($137,984) | | Net (decrease) increase in cash | ($68,424) | $93,208 | Notes to Condensed Consolidated Financial Statements Key disclosures include franchise acquisitions, a new credit facility, a stock repurchase program, and segment margin details - As of July 1, 2025, the company owned and operated 695 restaurants and franchised an additional 102 restaurants across three concepts: Texas Roadhouse, Bubba's 33, and Jaggers[20] - On April 24, 2025, the company entered into a new unsecured revolving credit facility with a borrowing capacity of up to $450.0 million, maturing in 2030, with no outstanding borrowings as of July 1, 2025[28][29][31] - During the first 26 weeks of 2025, the company acquired 17 domestic franchise Texas Roadhouse restaurants for a total purchase price of $93.9 million, resulting in $60.3 million of goodwill[40][42] - A new stock repurchase program of up to $500.0 million was approved on February 19, 2025, and the company repurchased $60.0 million of its common stock in the first 26 weeks of 2025[49][52] Segment Restaurant Margin (% of segment sales) | Segment | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Texas Roadhouse | 17.1% | 18.3% | 16.9% | 17.8% | | Bubba's 33 | 16.7% | 17.1% | 16.4% | 17.2% | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes revenue growth to increased store weeks and comparable sales, despite margin pressure from inflation Results of Operations Q2 2025 revenue growth was driven by increased guest traffic, though profitability was impacted by rising food and labor costs Key Performance Drivers - Q2 2025 vs Q2 2024 | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Increase in store weeks | 7.2% | 5.6% | | Comparable restaurant sales | 5.8% | 9.3% | | Guest traffic counts | 4.0% | 4.5% | | Per person average check | 1.8% | 4.8% | - Food and beverage costs rose as a percentage of sales due to 5.2% commodity inflation in Q2 2025, primarily from higher beef costs[93] - Restaurant labor expenses increased as a percentage of sales due to 3.8% wage and other labor inflation in Q2 2025[95] - For the full year 2025, the company expects commodity inflation of approximately 5% and wage/labor inflation of approximately 4%[94][96] Liquidity and Capital Resources Strong operating cash flow supports capital allocation for new stores, acquisitions, and shareholder returns YTD 2025 Capital Allocation (in millions) | Activity | Amount | | :--- | :--- | | Capital Expenditures | $169.9 | | Acquisitions of franchise restaurants | $93.9 | | Dividends paid | $90.3 | | Repurchase of common stock | $60.0 | - The company expects total capital expenditures of approximately $400 million for fiscal year 2025[119] - A new $450 million revolving credit facility was established in April 2025, with $446.8 million available as of July 1, 2025[125][126][127] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes in market risk exposures from its 2024 Annual Report - There have been no material changes in market risk from the disclosures in the 2024 Form 10-K[130] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - Management concluded that disclosure controls and procedures were effective as of July 1, 2025[131] - No material changes in internal control over financial reporting occurred during the 13 weeks ended July 1, 2025[132] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not involved in any litigation expected to have a material adverse effect on its business - The company is not party to any litigation that it believes could have a material adverse effect on its business[38][135] Item 1A. Risk Factors No material changes from the risk factors disclosed in the 2024 Annual Report on Form 10-K are reported - No material changes have occurred regarding the risk factors disclosed in the 2024 Form 10-K[136] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased $9.8 million in common stock in Q2 2025, with $470.0 million remaining under its new authorization Share Repurchases for the 13 Weeks Ended July 1, 2025 | Period | Total Shares Purchased | Average Price Paid per Share | Remaining Authorization | | :--- | :--- | :--- | :--- | | April 2 to July 1 | 61,698 | $159.69 | $470.0 million | Item 5. Other Information No executive officer or director adopted, modified, or terminated a Rule 10b5-1 trading plan during the quarter - No executive officer or director adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the quarter[142] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including a new credit agreement and required certifications - Key exhibits filed include: * 10.1: Credit Agreement, dated April 24, 2025 * 31.1 & 31.2: Certifications pursuant to Section 302 of the Sarbanes-Oxley Act * 32.1: Certifications pursuant to Section 906 of the Sarbanes-Oxley Act[143]