Texas Roadhouse(TXRH) - 2022 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for the 13-week periods ended March 29, 2022, and March 30, 2021 Condensed Consolidated Balance Sheets Total assets decreased slightly to $2.44 billion from $2.51 billion, primarily due to reduced cash and receivables Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 29, 2022 | December 28, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $325,723 | $335,645 | | Total current assets | $425,987 | $563,525 | | Total assets | $2,437,320 | $2,511,952 | | Liabilities & Equity | | | | Deferred revenue-gift cards | $221,479 | $300,657 | | Total current liabilities | $541,774 | $602,144 | | Long-term debt | $100,000 | $100,000 | | Total liabilities | $1,402,061 | $1,438,468 | | Total equity | $1,035,259 | $1,073,484 | Condensed Consolidated Statements of Income and Comprehensive Income Total revenues increased 23.3% to $987.5 million, with net income rising to $75.2 million and diluted EPS to $1.08 Q1 2022 vs Q1 2021 Income Statement (in thousands, except per share data) | Metric | 13 Weeks Ended March 29, 2022 | 13 Weeks Ended March 30, 2021 | | :--- | :--- | :--- | | Total revenue | $987,486 | $800,629 | | Income from operations | $90,138 | $80,927 | | Net income attributable to Texas Roadhouse, Inc. | $75,202 | $64,150 | | Diluted EPS | $1.08 | $0.91 | | Cash dividends declared per share | $0.46 | $— | Condensed Consolidated Statement of Stockholders' Equity Stockholders' equity decreased to $1.04 billion, primarily due to $84.7 million in stock repurchases and $31.8 million in dividends - Key activities affecting stockholders' equity in Q1 2022 included net income of $75.2 million, dividend payments of $31.8 million, and common stock repurchases totaling $84.7 million[14] Condensed Consolidated Statements of Cash Flows Operating activities generated $187.8 million cash, while investing and financing used $73.3 million and $124.4 million, respectively Cash Flow Summary (in thousands) | Activity | 13 Weeks Ended March 29, 2022 | 13 Weeks Ended March 30, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $187,769 | $178,013 | | Net cash used in investing activities | ($73,278) | ($36,474) | | Net cash used in financing activities | ($124,413) | ($9,048) | | Net (decrease) increase in cash | ($9,922) | $132,491 | Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, debt, revenue, acquisitions, and restaurant operations, including 576 owned and 96 franchised restaurants - As of March 29, 2022, the company owned and operated 576 restaurants and franchised 96, with all domestic locations operating without COVID-19 restrictions, unlike the prior year period[19][21] - The company had $100.0 million outstanding on its revolving credit facility as of March 29, 2022, with a weighted-average interest rate of 1.20%[31][32] - On December 29, 2021, the company acquired seven franchised Texas Roadhouse restaurants for a total purchase price of $26.4 million[39] - The Board approved a new stock repurchase program for up to $300.0 million on March 17, 2022, with 1,060,618 shares repurchased for $84.7 million in Q1 2022[52][53] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2022 financial results, highlighting 23.3% revenue growth and 16.0% comparable sales growth amid inflation Q1 2022 Financial Highlights Q1 2022 revenue grew 23.3% to $987.5 million, with restaurant margin percentage declining to 16.4% due to inflation Q1 2022 Key Performance Indicators | Metric | Q1 2022 | Q1 2021 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $987.5M | $800.6M | +23.3% | | Net Income | $75.2M | $64.2M | +17.2% | | Diluted EPS | $1.08 | $0.91 | +18.5% | | Comparable Restaurant Sales | 16.0% | 18.5% | N/A | | Restaurant Margin % | 16.4% | 18.6% | -2.2 p.p. | Results of Operations Operations saw 23.4% sales growth from traffic and average check, but 17.0% commodity and labor inflation pressured profitability Comparable Restaurant Sales Growth Drivers (Q1 2022 vs Q1 2021) | Component | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Guest traffic counts | 7.0% | 13.0% | | Per person average check | 9.0% | 5.5% | | Total Comp Sales Growth | 16.0% | 18.5% | - Menu price increases of approximately 4.2% (Oct 2021) and 1.75% (Apr 2021) contributed to higher average checks, with an additional 3.2% increase implemented in April 2022[127] - Food and beverage costs rose to 34.4% of sales from 31.6% year-over-year, driven by 17.0% commodity inflation, primarily in protein costs, with 12% to 14% commodity inflation expected for the full year 2022[132][133] - Restaurant labor costs increased to 32.8% of sales from 32.5% year-over-year due to wage pressures and increased staffing for dining rooms, with approximately 7% labor inflation anticipated for 2022[134][135] Segment Information Both Texas Roadhouse and Bubba's 33 segments reported margin dollar growth but percentage declines due to inflation Restaurant Margin by Segment (in thousands) | Segment | Margin $ (Q1 2022) | Margin % (Q1 2022) | Margin $ (Q1 2021) | Margin % (Q1 2021) | | :--- | :--- | :--- | :--- | :--- | | Texas Roadhouse | $153,468 | 16.5% | $141,112 | 18.6% | | Bubba's 33 | $7,794 | 15.2% | $6,003 | 16.8% | | Other | ($79) | (2.6%) | $459 | 17.4% | | Total | $161,183 | 16.4% | $147,574 | 18.6% | Liquidity and Capital Resources Liquidity remains strong with $187.8 million cash from operations, $230.0 million capital expenditures planned, and capital returned to shareholders - Expects capital expenditures of approximately $230.0 million in 2022, with plans to open around 25 Texas Roadhouse and Bubba's 33 company restaurants[158] - In Q1 2022, the company used $124.4 million in financing activities, primarily for share repurchases ($84.7 million) and dividend payments ($31.8 million)[159][161][162] - As of March 29, 2022, $295.0 million remained available under the authorized stock repurchase program[161] - The company had $100.0 million outstanding on its revolving credit facility with $189.1 million of availability as of March 29, 2022[167] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from interest rate changes and commodity price volatility, particularly for beef, without hedging - A hypothetical one-percentage-point increase in interest rates would increase estimated annual interest expense by $1.0 million[171] - The company does not use financial instruments to hedge commodity prices, instead relying on contracts of one year or less, which exposes it to price volatility[172] - The beef supply is highly dependent on four vendors, posing a business risk if these vendors cannot fulfill their obligations[173] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective with no significant changes to internal control - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[175] - No significant changes to internal control over financial reporting occurred during Q1 2022[176] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in ordinary course litigation, none of which is expected to have a material adverse effect - The company is not party to any litigation that it believes could have a material adverse effect on its business[179] Item 1A. Risk Factors No material changes were reported from the risk factors previously disclosed in the 2021 Form 10-K - No material changes from the risk factors disclosed in the 2021 Form 10-K were reported[180] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds A new $300.0 million stock repurchase program was approved, with $84.7 million in shares repurchased during Q1 2022 Share Repurchases in Q1 2022 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Dec 29 to Jan 25 | 177,420 | $85.26 | | Jan 26 to Feb 22 | 123,198 | $85.18 | | Feb 23 to Mar 29 | 760,000 | $77.74 | | Total | 1,060,618 | N/A | - A new stock repurchase program for up to $300.0 million was approved on March 17, 2022, replacing a prior program[181] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported - None[183] Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - Not applicable[184] Item 5. Other Information No other material information was reported - None[185] Item 6. Exhibits This section lists all exhibits filed with the report, including required certifications and XBRL data files - Exhibits filed include certifications by the Principal Executive Officer and Principal Financial Officer, as well as XBRL data files[186]