UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 26, 2017 March 29, 2022
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 000-50972
Texas Roadhouse, Inc.
(Exact name of registrant specified in its charter)
Delaware | | 20-1083890 |
(State or other jurisdiction of | | (IRS Employer |
incorporation or organization) | | Identification Number) |
6040 Dutchmans Lane, Suite 200
Louisville, Kentucky40205
(Address of principal executive offices) (Zip Code)
(502) (502) 426-9984
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| | |
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 |
Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐.☐.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐.☐.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large | Accelerated | Non-accelerated | Smaller |
| Emerging |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒.☒.
The number of shares of common stock outstanding were 71,106,21568,167,949 on October 25, 2017.April 27, 2022.
2
PART I — FINANCIAL INFORMATION
ITEM 1 — FINANCIAL STATEMENTS
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
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| September 26, 2017 |
| December 27, 2016 |
| ||
Assets |
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Current assets: |
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Cash and cash equivalents |
| $ | 114,436 |
| $ | 112,944 |
|
Receivables, net of allowance for doubtful accounts of $52 at September 26, 2017 and $33 at December 27, 2016 |
|
| 24,979 |
|
| 56,127 |
|
Inventories, net |
|
| 15,453 |
|
| 16,088 |
|
Prepaid income taxes |
|
| — |
|
| 954 |
|
Prepaid expenses |
|
| 10,461 |
|
| 12,150 |
|
Deferred tax assets, net |
|
| — |
|
| 1,996 |
|
Total current assets |
|
| 165,329 |
|
| 200,259 |
|
Property and equipment, net of accumulated depreciation of $512,061 at September 26, 2017 and $457,102 at December 27, 2016 |
|
| 886,972 |
|
| 830,054 |
|
Goodwill |
|
| 121,040 |
|
| 116,571 |
|
Intangible assets, net of accumulated amortization of $12,445 at September 26, 2017 and $11,753 at December 27, 2016 |
|
| 2,930 |
|
| 3,622 |
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Other assets |
|
| 36,448 |
|
| 29,465 |
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Total assets |
| $ | 1,212,719 |
| $ | 1,179,971 |
|
Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Current maturities of long-term debt and obligation under capital lease |
| $ | 9 |
| $ | 167 |
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Accounts payable |
|
| 48,979 |
|
| 50,789 |
|
Deferred revenue-gift cards |
|
| 70,648 |
|
| 129,558 |
|
Accrued wages |
|
| 29,580 |
|
| 26,039 |
|
Income taxes payable |
|
| 8,581 |
|
| — |
|
Accrued taxes and licenses |
|
| 23,483 |
|
| 19,698 |
|
Dividends payable |
|
| 14,931 |
|
| 13,418 |
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Other accrued liabilities |
|
| 42,058 |
|
| 39,858 |
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Total current liabilities |
|
| 238,269 |
|
| 279,527 |
|
Long-term debt and obligation under capital lease, excluding current maturities |
|
| 51,984 |
|
| 52,381 |
|
Stock option and other deposits |
|
| 7,549 |
|
| 7,491 |
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Deferred rent |
|
| 40,261 |
|
| 36,103 |
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Deferred tax liabilities, net |
|
| 4,707 |
|
| 12,268 |
|
Other liabilities |
|
| 39,157 |
|
| 33,959 |
|
Total liabilities |
|
| 381,927 |
|
| 421,729 |
|
Texas Roadhouse, Inc. and subsidiaries stockholders’ equity: |
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Preferred stock ($0.001 par value, 1,000,000 shares authorized; no shares issued or outstanding) |
|
| — |
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| — |
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Common stock ($0.001 par value, 100,000,000 shares authorized, 71,101,654 and 70,619,737 shares issued and outstanding at September 26, 2017 and December 27, 2016, respectively) |
|
| 71 |
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| 71 |
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Additional paid-in-capital |
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| 229,909 |
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| 219,626 |
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Retained earnings |
|
| 588,826 |
|
| 530,723 |
|
Accumulated other comprehensive loss |
|
| (63) |
|
| (194) |
|
Total Texas Roadhouse, Inc. and subsidiaries stockholders’ equity |
|
| 818,743 |
|
| 750,226 |
|
Noncontrolling interests |
|
| 12,049 |
|
| 8,016 |
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Total equity |
|
| 830,792 |
|
| 758,242 |
|
Total liabilities and equity |
| $ | 1,212,719 |
| $ | 1,179,971 |
|
See accompanying notes to condensed consolidated financial statements.
3
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Income and Comprehensive Income
| | | | | | | |
|
| March 29, 2022 |
| December 28, 2021 |
| ||
Assets | | | | | | | |
Current assets: | | | | | | | |
Cash and cash equivalents | | $ | 325,723 | | $ | 335,645 | |
Receivables, net of allowance for doubtful accounts of $29 at March 29, 2022 and $17 at December 28, 2021 | |
| 45,152 | |
| 161,358 | |
Inventories, net | |
| 30,043 | |
| 31,595 | |
Prepaid income taxes | |
| 2,668 | |
| 10,701 | |
Prepaid expenses and other current assets | |
| 22,401 | |
| 24,226 | |
Total current assets | |
| 425,987 | |
| 563,525 | |
Property and equipment, net of accumulated depreciation of $896,035 at March 29, 2022 and $869,375 at December 28, 2021 | |
| 1,181,707 | |
| 1,162,441 | |
Operating lease right-of-use assets, net | | | 605,146 | | | 578,413 | |
Goodwill | |
| 144,334 | |
| 127,001 | |
Intangible assets, net of accumulated amortization of $15,764 at March 29, 2022 and $15,092 at December 28, 2021 | |
| 6,848 | |
| 1,520 | |
Other assets | |
| 73,298 | |
| 79,052 | |
Total assets | | $ | 2,437,320 | | $ | 2,511,952 | |
Liabilities and Stockholders’ Equity | | | | | | | |
Current liabilities: | | | | | | | |
Current portion of operating lease liabilities | | $ | 23,845 | | $ | 21,952 | |
Accounts payable | |
| 100,093 | |
| 95,234 | |
Deferred revenue-gift cards | |
| 221,479 | |
| 300,657 | |
Accrued wages and payroll taxes | |
| 79,834 | |
| 64,716 | |
Income taxes payable | | | 3,500 | | | 85 | |
Accrued taxes and licenses | |
| 33,690 | |
| 33,375 | |
Other accrued liabilities | |
| 79,333 | |
| 86,125 | |
Total current liabilities | |
| 541,774 | |
| 602,144 | |
Operating lease liabilities, net of current portion | | | 649,069 | | | 622,892 | |
Long-term debt | |
| 100,000 | |
| 100,000 | |
Restricted stock and other deposits | |
| 8,167 | |
| 8,027 | |
Deferred tax liabilities, net | |
| 14,154 | |
| 11,734 | |
Other liabilities | |
| 88,897 | |
| 93,671 | |
Total liabilities | |
| 1,402,061 | |
| 1,438,468 | |
Texas Roadhouse, Inc. and subsidiaries stockholders’ equity: | | | | | | | |
Preferred stock ($0.001 par value, 1,000,000 shares authorized; 0 shares issued or outstanding) | |
| — | |
| — | |
Common stock ($0.001 par value, 100,000,000 shares authorized, 68,459,769 and 69,382,418 shares issued and outstanding at March 29, 2022 and December 28, 2021, respectively) | |
| 68 | |
| 69 | |
Additional paid-in-capital | |
| 32,754 | |
| 114,504 | |
Retained earnings | |
| 986,958 | |
| 943,551 | |
Total Texas Roadhouse, Inc. and subsidiaries stockholders’ equity | |
| 1,019,780 | |
| 1,058,124 | |
Noncontrolling interests | |
| 15,479 | |
| 15,360 | |
Total equity | |
| 1,035,259 | |
| 1,073,484 | |
Total liabilities and equity | | $ | 2,437,320 | | $ | 2,511,952 | |
(in thousands, except per share data)
(unaudited)
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| 13 Weeks Ended |
| 39 Weeks Ended |
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| September 26, 2017 |
| September 27, 2016 |
| September 26, 2017 |
| September 27, 2016 |
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Revenue: |
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Restaurant sales |
| $ | 536,341 |
| $ | 477,617 |
| $ | 1,661,821 |
| $ | 1,493,531 |
|
Franchise royalties and fees |
|
| 4,166 |
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| 4,020 |
|
| 12,634 |
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| 12,473 |
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Total revenue |
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| 540,507 |
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| 481,637 |
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| 1,674,455 |
|
| 1,506,004 |
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Costs and expenses: |
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Restaurant operating costs (excluding depreciation and amortization shown separately below): |
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Cost of sales |
|
| 176,498 |
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| 161,886 |
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| 545,862 |
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| 506,565 |
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Labor |
|
| 169,355 |
|
| 145,301 |
|
| 514,287 |
|
| 442,861 |
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Rent |
|
| 11,257 |
|
| 10,266 |
|
| 33,238 |
|
| 30,477 |
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Other operating |
|
| 83,679 |
|
| 73,583 |
|
| 254,176 |
|
| 227,082 |
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Pre-opening |
|
| 4,548 |
|
| 5,017 |
|
| 14,302 |
|
| 14,253 |
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Depreciation and amortization |
|
| 23,534 |
|
| 20,941 |
|
| 69,236 |
|
| 60,718 |
|
Impairment and closure |
|
| 2 |
|
| 13 |
|
| 13 |
|
| 54 |
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General and administrative |
|
| 26,123 |
|
| 26,162 |
|
| 94,594 |
|
| 82,933 |
|
Total costs and expenses |
|
| 494,996 |
|
| 443,169 |
|
| 1,525,708 |
|
| 1,364,943 |
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Income from operations |
|
| 45,511 |
|
| 38,468 |
|
| 148,747 |
|
| 141,061 |
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Interest expense, net |
|
| 500 |
|
| 288 |
|
| 1,211 |
|
| 902 |
|
Equity income from investments in unconsolidated affiliates |
|
| (359) |
|
| (4) |
|
| (1,149) |
|
| (831) |
|
Income before taxes |
|
| 45,370 |
|
| 38,184 |
| $ | 148,685 |
| $ | 140,990 |
|
Provision for income taxes |
|
| 13,046 |
|
| 11,381 |
|
| 41,159 |
|
| 42,325 |
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Net income including noncontrolling interests |
|
| 32,324 |
|
| 26,803 |
| $ | 107,526 |
| $ | 98,665 |
|
Less: Net income attributable to noncontrolling interests |
|
| 1,310 |
|
| 1,128 |
|
| 4,618 |
|
| 3,792 |
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Net income attributable to Texas Roadhouse, Inc. and subsidiaries |
| $ | 31,014 |
| $ | 25,675 |
| $ | 102,908 |
| $ | 94,873 |
|
Other comprehensive income (loss), net of tax: |
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Unrealized gain on derivatives, net of tax of ($-), ($-), ($-) and ($18), respectively |
|
| — |
|
| — |
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| — |
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| 27 |
|
Foreign currency translation adjustment, net of tax of ($55), ($18), ($82) and $7, respectively |
|
| 88 |
|
| 29 |
|
| 131 |
|
| (11) |
|
Total other comprehensive income, net of tax |
|
| 88 |
|
| 29 |
|
| 131 |
|
| 16 |
|
Total comprehensive income |
| $ | 31,102 |
| $ | 25,704 |
| $ | 103,039 |
| $ | 94,889 |
|
Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries: |
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Basic |
| $ | 0.44 |
| $ | 0.36 |
| $ | 1.45 |
| $ | 1.35 |
|
Diluted |
| $ | 0.43 |
| $ | 0.36 |
| $ | 1.44 |
| $ | 1.34 |
|
Weighted average shares outstanding: |
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Basic |
|
| 71,067 |
|
| 70,477 |
|
| 70,939 |
|
| 70,338 |
|
Diluted |
|
| 71,532 |
|
| 70,981 |
|
| 71,449 |
|
| 70,898 |
|
Cash dividends declared per share |
| $ | 0.21 |
| $ | 0.19 |
| $ | 0.63 |
| $ | 0.57 |
|
See accompanying notes to condensed consolidated financial statements.
43
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Income and Comprehensive Income
(in thousands, except per share data)
(unaudited)
| | | | | | | | |
| | | | | | | | |
| | 13 Weeks Ended | | | ||||
|
| March 29, 2022 |
| March 30, 2021 |
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Revenue: | | | | | | | | |
Restaurant and other sales | | $ | 980,972 | | $ | 794,923 | | |
Franchise royalties and fees | | | 6,514 | | | 5,706 | | |
Total revenue | |
| 987,486 | |
| 800,629 | | |
Costs and expenses: | | | | | | | | |
Restaurant operating costs (excluding depreciation and amortization shown separately below): | | | | | | | | |
Food and beverage | |
| 337,396 | | | 251,482 | | |
Labor | |
| 321,871 | | | 258,036 | | |
Rent | |
| 16,368 | | | 14,452 | | |
Other operating | |
| 144,154 | | | 123,379 | | |
Pre-opening | |
| 4,291 | | | 4,268 | | |
Depreciation and amortization | |
| 33,620 | | | 30,869 | | |
Impairment and closure, net | |
| (646) | | | 504 | | |
General and administrative | |
| 40,294 | | | 36,712 | | |
Total costs and expenses | |
| 897,348 | |
| 719,702 | | |
Income from operations | |
| 90,138 | |
| 80,927 | | |
Interest expense, net | |
| 397 | | | 1,460 | | |
Equity income (loss) from investments in unconsolidated affiliates | |
| 334 | | | (217) | | |
Income before taxes | | $ | 90,075 | | $ | 79,250 | | |
Income tax expense | |
| 12,747 | | | 12,820 | | |
Net income including noncontrolling interests | | | 77,328 | | | 66,430 | | |
Less: Net income attributable to noncontrolling interests | |
| 2,126 | | | 2,280 | | |
Net income attributable to Texas Roadhouse, Inc. and subsidiaries | | $ | 75,202 | | $ | 64,150 | | |
Other comprehensive loss, net of tax: | | | | | | | | |
Foreign currency translation adjustment, net of tax of $- and $4, respectively | | | — | | | (12) | | |
Total comprehensive income | | $ | 75,202 | | $ | 64,138 | | |
Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries: | | | | | | | | |
Basic | | $ | 1.09 | | $ | 0.92 | | |
Diluted | | $ | 1.08 | | $ | 0.91 | | |
Weighted average shares outstanding: | | | | | | | | |
Basic | |
| 69,086 | | | 69,637 | | |
Diluted | |
| 69,373 | | | 70,137 | | |
Cash dividends declared per share | | $ | 0.46 | | $ | — | | |
See accompanying notes to condensed consolidated financial statements.
4
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statement of Stockholders' EquityEquity
(in thousands, except share and per share data)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | For the 13 Weeks Ended March 29, 2022 | ||||||||||||||||||||||
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| Accumulated |
| Total Texas |
| | |
| | |
| ||
| | | | | | | Additional | | | | | Other | | Roadhouse, Inc. | | | | | | |
| |||
| | | | Par | | Paid-in- | | Retained | | Comprehensive | | and | | Noncontrolling | | | |
| ||||||
| | Shares | | Value | | Capital | | Earnings | | Loss | | Subsidiaries | | Interests | | Total |
| |||||||
Balance, December 28, 2021 |
| 69,382,418 | | $ | 69 | | $ | 114,504 | | $ | 943,551 | | $ | — | | $ | 1,058,124 | | $ | 15,360 | | $ | 1,073,484 | |
Net income |
| — | |
| — | |
| — | |
| 75,202 | |
| — | |
| 75,202 | |
| 2,126 | |
| 77,328 | |
Distributions to noncontrolling interest holders |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| (2,007) | |
| (2,007) | |
Dividends declared ($0.46 per share) |
| — | |
| — | |
| — | |
| (31,795) | |
| — | |
| (31,795) | |
| — | |
| (31,795) | |
Shares issued under share-based compensation plans including tax effects |
| 204,968 | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
Indirect repurchase of shares for minimum tax withholdings |
| (66,999) | |
| — | |
| (6,166) | |
| — | |
| — | |
| (6,166) | |
| — | |
| (6,166) | |
Repurchase of shares of common stock | | (1,060,618) | | | (1) | | | (84,704) | | | — | | | — | | | (84,705) | | | — | | | (84,705) | |
Share-based compensation |
| — | |
| — | |
| 9,120 | |
| — | |
| — | |
| 9,120 | |
| — | |
| 9,120 | |
Balance, March 29, 2022 |
| 68,459,769 | | $ | 68 | | $ | 32,754 | | $ | 986,958 | | $ | — | | $ | 1,019,780 | | $ | 15,479 | | $ | 1,035,259 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | For the 13 Weeks Ended March 30, 2021 | ||||||||||||||||||||||
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| |
| | |
| | |
| | |
| Accumulated |
| Total Texas |
| | |
| | | | ||
| | | | | | | Additional | | | | | Other | | Roadhouse, Inc. | | | | | | | | |||
| | | | Par | | Paid-in- | | Retained | | Comprehensive | | and | | Noncontrolling | | | | | ||||||
| | Shares | | Value | | Capital | | Earnings | | Loss | | Subsidiaries | | Interests | | Total | | |||||||
Balance, December 29, 2020 |
| 69,561,861 | | $ | 70 | | $ | 145,626 | | $ | 781,915 | | $ | (106) | | $ | 927,505 | | $ | 15,546 | | $ | 943,051 | |
Net income |
| — | |
| — | |
| — | |
| 64,150 | |
| — | |
| 64,150 | |
| 2,280 | |
| 66,430 | |
Other comprehensive loss, net of tax | | — | | | — | | | — | | | — | | | (12) | | | (12) | | | — | | | (12) | |
Distributions to noncontrolling interest holders |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| (1,429) | |
| (1,429) | |
Shares issued under share-based compensation plans including tax effects |
| 269,918 | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
Indirect repurchase of shares for minimum tax withholdings |
| (89,259) | |
| — | |
| (7,930) | |
| — | |
| — | |
| (7,930) | |
| — | |
| (7,930) | |
Share-based compensation |
| — | |
| — | |
| 9,908 | |
| — | |
| — | |
| 9,908 | |
| — | |
| 9,908 | |
Balance, March 30, 2021 |
| 69,742,520 | | $ | 70 | | $ | 147,604 | | $ | 846,065 | | $ | (118) | | $ | 993,621 | | $ | 16,397 | | $ | 1,010,018 | |
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| Accumulated |
| Total Texas |
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| Additional |
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| Other |
| Roadhouse, Inc. |
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| Par |
| Paid-in- |
| Retained |
| Comprehensive |
| and |
| Noncontrolling |
|
|
|
| ||||||
|
| Shares |
| Value |
| Capital |
| Earnings |
| Loss |
| Subsidiaries |
| Interests |
| Total |
| |||||||
Balance, December 27, 2016 |
| 70,619,737 |
| $ | 71 |
| $ | 219,626 |
| $ | 530,723 |
| $ | (194) |
| $ | 750,226 |
| $ | 8,016 |
| $ | 758,242 |
|
Net income |
| — |
|
| — |
|
| — |
|
| 102,908 |
|
| — |
|
| 102,908 |
|
| 4,618 |
|
| 107,526 |
|
Other comprehensive income, net |
| — |
|
| — |
|
| — |
|
| — |
|
| 131 |
|
| 131 |
|
| — |
|
| 131 |
|
Noncontrolling interests contribution |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 3,457 |
|
| 3,457 |
|
Distributions to noncontrolling interest holders |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (4,042) |
|
| (4,042) |
|
Dividends declared and paid ($0.42 per share) |
| — |
|
| — |
|
| — |
|
| (29,805) |
|
| — |
|
| (29,805) |
|
| — |
|
| (29,805) |
|
Dividends declared ($0.21 per share) |
| — |
|
| — |
|
| — |
|
| (14,931) |
|
| — |
|
| (14,931) |
|
| — |
|
| (14,931) |
|
Shares issued under share-based compensation plans |
| 701,827 |
|
| 1 |
|
| 1,484 |
|
| — |
|
| — |
|
| 1,485 |
|
| — |
|
| 1,485 |
|
Indirect repurchase of shares for minimum tax withholdings |
| (219,910) |
|
| (1) |
|
| (10,096) |
|
| — |
|
| — |
|
| (10,097) |
|
| — |
|
| (10,097) |
|
Cumulative effect of change in accounting principle |
| — |
|
| — |
|
| 69 |
|
| (69) |
|
| — |
|
| — |
|
| — |
|
| — |
|
Share-based compensation |
| — |
|
| — |
|
| 18,826 |
|
| — |
|
| — |
|
| 18,826 |
|
| — |
|
| 18,826 |
|
Balance, September 26, 2017 |
| 71,101,654 |
| $ | 71 |
| $ | 229,909 |
| $ | 588,826 |
| $ | (63) |
| $ | 818,743 |
| $ | 12,049 |
| $ | 830,792 |
|
See accompanying notes to condensed consolidated financial statements
5
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| | | | | | | |
| | 13 Weeks Ended | | ||||
|
| March 29, 2022 |
| March 30, 2021 | | ||
Cash flows from operating activities: | | | | | | | |
Net income including noncontrolling interests | | $ | 77,328 | | $ | 66,430 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | |
Depreciation and amortization | |
| 33,620 | |
| 30,869 | |
Deferred income taxes | |
| 2,630 | |
| 1,025 | |
Loss on disposition of assets | |
| 1,151 | |
| 324 | |
Impairment and closure costs | |
| 26 | |
| 494 | |
Equity (income) loss from investments in unconsolidated affiliates | |
| (334) | |
| 217 | |
Distributions of income received from investments in unconsolidated affiliates | |
| 332 | |
| 122 | |
Provision for doubtful accounts | |
| 12 | |
| 9 | |
Share-based compensation expense | |
| 9,120 | |
| 9,908 | |
Changes in operating working capital: | | | | | | | |
Receivables | |
| 116,419 | |
| 60,791 | |
Inventories | |
| 1,820 | |
| (998) | |
Prepaid expenses and other current assets | |
| 651 | |
| 874 | |
Other assets | |
| 5,756 | |
| (2,786) | |
Accounts payable | |
| 6,275 | |
| 19,937 | |
Deferred revenue—gift cards | |
| (80,009) | |
| (50,454) | |
Accrued wages and payroll taxes | |
| 15,118 | |
| 17,896 | |
Prepaid income taxes and income taxes payable | |
| 11,447 | |
| 11,055 | |
Accrued taxes and licenses | |
| 315 | |
| 7,559 | |
Other accrued liabilities | |
| (10,676) | |
| (643) | |
Operating lease right-of-use assets and lease liabilities | |
| 1,542 | |
| 1,520 | |
Other liabilities | |
| (4,774) | |
| 3,864 | |
Net cash provided by operating activities | |
| 187,769 | |
| 178,013 | |
Cash flows from investing activities: | | | | | | | |
Capital expenditures—property and equipment | |
| (49,029) | | | (38,666) | |
Acquisition of franchise restaurants, net of cash acquired | | | (26,437) | | | — | |
Proceeds from sale of property and equipment | | | 2,188 | | | — | |
Proceeds from sale leaseback transactions | |
| — | |
| 2,192 | |
Net cash used in investing activities | |
| (73,278) | |
| (36,474) | |
Cash flows from financing activities: | | | | | | | |
Distributions to noncontrolling interest holders | |
| (2,007) | | | (1,429) | |
Proceeds from restricted stock and other deposits, net | |
| 260 | | | 311 | |
Indirect repurchase of shares for minimum tax withholdings | |
| (6,166) | | | (7,930) | |
Repurchase of shares of common stock | |
| (84,705) | | | — | |
Dividends paid to shareholders | |
| (31,795) | | | — | |
Net cash used in financing activities | |
| (124,413) | |
| (9,048) | |
Net (decrease) increase in cash and cash equivalents | |
| (9,922) | |
| 132,491 | |
Cash and cash equivalents—beginning of period | |
| 335,645 | | | 363,155 | |
Cash and cash equivalents—end of period | | $ | 325,723 | | $ | 495,646 | |
Supplemental disclosures of cash flow information: | | | | | | | |
Interest paid, net of amounts capitalized | | $ | 381 | | $ | 1,195 | |
Income taxes (refunded) paid | | $ | (1,317) | | $ | 740 | |
Capital expenditures included in current liabilities | | $ | 25,006 | | $ | 14,519 | |
See accompanying notes to condensed consolidated financial statements.
56
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
| 39 Weeks Ended |
| ||||
|
| September 26, 2017 |
| September 27, 2016 |
| ||
Cash flows from operating activities: |
|
|
|
|
|
|
|
Net income including noncontrolling interests |
| $ | 107,526 |
| $ | 98,665 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 69,236 |
|
| 60,718 |
|
Deferred income taxes |
|
| (5,647) |
|
| (3,270) |
|
Loss on disposition of assets |
|
| 3,490 |
|
| 3,509 |
|
Impairment and closure costs |
|
| — |
|
| 139 |
|
Equity income from investments in unconsolidated affiliates |
|
| (1,149) |
|
| (831) |
|
Distributions of income received from investments in unconsolidated affiliates |
|
| 585 |
|
| 1,765 |
|
Provision for doubtful accounts |
|
| 19 |
|
| 9 |
|
Share-based compensation expense |
|
| 18,826 |
|
| 18,347 |
|
Changes in operating working capital: |
|
|
|
|
|
|
|
Receivables |
|
| 31,129 |
|
| 23,373 |
|
Inventories |
|
| 805 |
|
| 1,276 |
|
Prepaid expenses |
|
| 1,689 |
|
| 1,985 |
|
Other assets |
|
| (5,729) |
|
| (3,003) |
|
Accounts payable |
|
| (3,162) |
|
| (9,352) |
|
Deferred revenue—gift cards |
|
| (59,302) |
|
| (46,146) |
|
Accrued wages |
|
| 3,541 |
|
| (8,471) |
|
Excess tax benefits from share-based compensation |
|
| — |
|
| (2,698) |
|
Prepaid income taxes and income taxes payable |
|
| 9,535 |
|
| 9,760 |
|
Accrued taxes and licenses |
|
| 3,785 |
|
| 1,698 |
|
Other accrued liabilities |
|
| 3,536 |
|
| 5,594 |
|
Deferred rent |
|
| 4,158 |
|
| 3,412 |
|
Other liabilities |
|
| 5,199 |
|
| 3,303 |
|
Net cash provided by operating activities |
|
| 188,070 |
|
| 159,782 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
Capital expenditures—property and equipment |
|
| (117,037) |
|
| (113,219) |
|
Acquisition of franchise restaurants, net of cash acquired |
|
| (16,528) |
|
| — |
|
Net cash used in investing activities |
|
| (133,565) |
|
| (113,219) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
Proceeds from revolving credit facility, net |
|
| — |
|
| 25,000 |
|
Debt issuance costs |
|
| (476) |
|
| — |
|
Proceeds from noncontrolling interest contribution |
|
| 3,457 |
|
| — |
|
Repurchase of shares of common stock |
|
| — |
|
| (4,110) |
|
Distributions to noncontrolling interest holders |
|
| (4,042) |
|
| (3,538) |
|
Excess tax benefits from share-based compensation |
|
| — |
|
| 2,698 |
|
Proceeds from stock option and other deposits, net |
|
| 438 |
|
| 283 |
|
Indirect repurchase of shares for minimum tax withholdings |
|
| (10,097) |
|
| (7,927) |
|
Principal payments on long-term debt and capital lease obligation |
|
| (555) |
|
| (106) |
|
Proceeds from exercise of stock options |
|
| 1,485 |
|
| 2,172 |
|
Dividends paid to shareholders |
|
| (43,223) |
|
| (38,656) |
|
Net cash used in financing activities |
|
| (53,013) |
|
| (24,184) |
|
Net increase in cash and cash equivalents |
|
| 1,492 |
|
| 22,379 |
|
Cash and cash equivalents—beginning of period |
|
| 112,944 |
|
| 59,334 |
|
Cash and cash equivalents—end of period |
| $ | 114,436 |
| $ | 81,713 |
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
Interest paid, net of amounts capitalized |
| $ | 948 |
| $ | 201 |
|
Income taxes paid |
| $ | 37,271 |
| $ | 35,849 |
|
Capital expenditures included in current liabilities |
| $ | 5,470 |
| $ | 3,189 |
|
See accompanying notes to condensed consolidated financial statements.
6
Texas Roadhouse, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(tabular amounts in thousands, except share and per share data)
(unaudited)
(1) Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of Texas Roadhouse, Inc. ("TRI"), our wholly-owned subsidiaries and subsidiaries in which we have a controlling interest (collectively the "Company," "we," "our" and/or "us") as of September 26, 2017March 29, 2022 and December 27, 201628, 2021 and for the 13 and 39 weeks ended September 26, 2017March 29, 2022 and September 27, 2016. March 30, 2021.
As of September 26, 2017,March 29, 2022, we owned and operated 455576 restaurants and franchised an additional 8596 restaurants in 49 states and six10 foreign countries. Of the 455 company-owned576 company restaurants that were operating at September 26, 2017, 437March 29, 2022, there were 556 wholly-owned restaurants and 1820 majority-owned restaurants. Of the 96 franchise restaurants, there were majority-owned.63 domestic restaurants and 33 international restaurants.
As of September 27, 2016,March 30, 2021, we owned and operated 422540 restaurants and franchised an additional 8597 restaurants in 49 states and five10 foreign countries. Of the 422 company-owned540 company restaurants that were operating at September 27, 2016, 406March 30, 2021, there were 520 wholly-owned restaurants and 1620 majority-owned restaurants. Of the 97 franchise restaurants, there were majority-owned.69 domestic restaurants and 28 international restaurants.
The Company has been subject to risks and uncertainties as a result of the global COVID-19 pandemic (the "pandemic"). These include federal, state and local restrictions on restaurants, some of which limited capacity or seating in the dining rooms while others allowed to-go or curbside service only. As of March 29, 2022, all of our domestic company and franchise locations were operating without restriction. As of March 30, 2021, all of our domestic company and franchise locations had re-opened their dining rooms, many of which were operating under various limited capacity restrictions.
As of September 26, 2017March 29, 2022 and September 27, 2016,March 30, 2021, we owned a 5.0% to 10.0% equity interest in 24 domesticfranchise restaurants. Additionally, as of September 26, 2017 and September 27, 2016,March 30, 2021, we owned a 40% equity interest in four4 non-Texas Roadhouse restaurants as part of a joint venture agreement with a casual dining restaurant operator in China.
The unconsolidated restaurants are accounted for using the equity method. Our investments in these unconsolidated affiliates are included in Otherother assets in our unaudited condensed consolidated balance sheets, and we record our percentage share of net income earned by these unconsolidated affiliates in our unaudited condensed consolidated statements of income and comprehensive income under Equityequity income (loss) from investments in unconsolidated affiliates. The investment balance related to our joint venture agreement in China was fully impaired in late 2021 as the related restaurants closed. All significant intercompany balances and transactions for these unconsolidated restaurants as well as the entities whose accounts have been consolidated have been eliminated.
We have made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reporting of revenue and expenses during the periods to prepare these unaudited condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles ("GAAP"). Significant items subject to such estimates and assumptions include the carrying amountsamount of property and equipment, and goodwill, obligations related to insurance reserves, leases and leasehold improvements, legal reserves, gift card discountsbreakage and breakagethird party fees and income taxes. Actual results could differ from those estimates.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our consolidated financial position, results of operations and cash flows for the periods presented. The unaudited condensed consolidated financial statements have been prepared in accordance with GAAP, except that certain information and footnotes have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission ("SEC").Commission. Operating results for the 13 and 39 weeks ended September 26, 2017March 29, 2022 are not necessarily indicative of the results that may be expected for the year
7
ending December 26, 2017.27, 2022. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 27, 2016.28, 2021.
Our significant interim accounting policies include the recognition of income taxes using an estimated annual effective tax rate.
(2) Share-based CompensationRecent Accounting Pronouncements
On May 16, 2013, our stockholders approved the Texas Roadhouse, Inc. 2013 Long-Term Incentive Plan (the "Plan"). The Plan provides for the granting of incentive and non-qualified stock options to purchase shares of common
7
stock, stock appreciation rights, and full value awards, including restricted stock, restricted stock units ("RSUs"), deferred stock units, performance stock and performance stock units ("PSUs"). This Plan replaced the Texas Roadhouse, Inc. 2004 Equity Incentive Plan.Reference Rate Reform
The following table summarizes the share-based compensation expense recorded in the accompanying unaudited condensed consolidated statements of income and comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 13 Weeks Ended |
| 39 Weeks Ended |
| ||||||||
|
| September 26, 2017 |
| September 27, 2016 |
| September 26, 2017 |
| September 27, 2016 |
| ||||
Labor expense |
| $ | 1,822 |
| $ | 1,570 |
| $ | 5,255 |
| $ | 4,475 |
|
General and administrative expense |
|
| 4,639 |
|
| 5,074 |
|
| 13,571 |
|
| 13,872 |
|
Total share-based compensation expense |
| $ | 6,461 |
| $ | 6,644 |
| $ | 18,826 |
| $ | 18,347 |
|
Effective December 28, 2016, we adopted (Accounting Standards Update No. 2016-09, Compensation – Stock Compensation ("2020-04, "ASU 2020-04")
In March 2020, the Financial Accounting Standards Board issued ASU 2016-09") which amends and simplifies the accounting for stock compensation. As a result2020-04, Reference Rate Reform (Topic 848): Facilitation of the adoptionEffects of ASU 2016-09, weReference Rate Reform on Financial Reporting, which provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting. These changes are intended to simplify the market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. This guidance is effective upon issuance to modifications made a change in our accounting for forfeitures to record as they occur and,early as a result, we recorded a $0.1 million cumulative-effect reduction to retained earnings under the modified retrospective approach. We elected prospective transition for the requirement to classify excess tax benefits as an operating activity in the consolidated statement of cash flows. No prior periods have been adjusted. Additionally, as a resultbeginning of the interim period through December 31, 2022. We are currently assessing the impact of this new guidance requirements,standard on a prospective basis, all excess tax benefits and tax deficiencies are recognized within the income tax provision in the consolidated statements of income and comprehensive income in the period in which the restricted shares vest or options are exercised. See note 4 for further discussion.
Beginning in 2008, we changed the method by which we provide share-based compensation to our employees by granting RSUs as a form of share-based compensation. Prior to 2008, we issued stock options as share-based compensation to our employees. Beginning in 2015, we began granting PSUs to two of our executives. An RSU is the conditional right to receive one share of common stock upon satisfaction of the vesting requirement. A PSU is the conditional right to receive one share of common stock upon meeting defined performance obligations along with the satisfaction of the vesting requirement. Share-based compensation activity by type of grant as of September 26, 2017 and changes during the 39 weeks then ended are presented below.
Summary Details for RSUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted-Average |
| Weighted-Average |
|
|
|
| |
|
|
|
| Grant Date Fair |
| Remaining Contractual |
| Aggregate |
| ||
|
| Shares |
| Value |
| Term (years) |
| Intrinsic Value |
| ||
Outstanding at December 27, 2016 |
| 919,463 |
| $ | 37.06 |
|
|
|
|
|
|
Granted |
| 349,049 |
|
| 46.70 |
|
|
|
|
|
|
Forfeited |
| (35,041) |
|
| 37.40 |
|
|
|
|
|
|
Vested |
| (404,505) |
|
| 38.14 |
|
|
|
|
|
|
Outstanding at September 26, 2017 |
| 828,966 |
| $ | 40.57 |
| 1.2 |
| $ | 39,991 |
|
As of September 26, 2017, with respect to unvested RSUs, there was $17.4 million of unrecognized compensation cost that is expected to be recognized over a weighted-average period of 1.2 years. The vesting terms of the RSUs range from 1.0 to 5.0 years. The total intrinsic value of RSUs vested during the 39 weeks ended September 26, 2017 and September 27, 2016 was $18.8 million and $17.4 million, respectively. The excess tax benefit, which was recognized within the income tax provision, associated with vested RSUs was $1.2 million for the 39 weeks ended September 26, 2017. The excess tax benefit associated with vested RSUs for the 39 weeks ended September 27, 2016 was $1.2 million which was recorded in additional paid-in-capital in the unaudited condensed consolidated balance sheets.financial statements.
8
Summary Details for PSUs
In 2015 and 2016, we granted PSUs to two of our executives subject to an approximate one-year vesting term and the achievement of certain earnings targets, which determine the number of units to vest at the end of the vesting period. Share-based compensation is recognized for the number of units expected to vest at the end of the period and is expensed beginning on the grant date and through the performance period. For each grant, PSUs vest after meeting the performance and service conditions.
On November 19, 2015, we granted PSUs with a grant date fair value of approximately $3.9 million based on a grant date price per share of $34.11. On January 8, 2017, 188,237 shares vested related to this PSU grant and were distributed during the 13 weeks ended March 28, 2017. On November 9, 2016, we granted PSUs with a grant date fair value of approximately $4.6 million based on a grant date price per share of $39.88. As of September 26, 2017, with respect to unvested PSUs, there was $1.1 million of unrecognized compensation cost that is expected to be recognized over a weighted-average period of three months. Any distribution of vested PSUs as common stock related to the November 9, 2016 grants will occur in the first quarter of 2018. For the 39 weeks ended September 26, 2017, the excess tax benefit, recognized within the income tax provision, associated with vested PSUs was $0.8 million.
Summary Details for Stock Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted- |
| Weighted-Average |
|
|
|
| |
|
|
|
| Average Exercise |
| Remaining Contractual |
| Aggregate |
| ||
|
| Shares |
| Price |
| Term (years) |
| Intrinsic Value |
| ||
Outstanding at December 27, 2016 |
| 118,073 |
| $ | 13.57 |
|
|
|
|
|
|
Granted |
| — |
|
| — |
|
|
|
|
|
|
Cancelled/Expired |
| (2,836) |
|
| 15.47 |
|
|
|
|
|
|
Exercised |
| (109,085) |
|
| 13.61 |
|
|
|
|
|
|
Outstanding at September 26, 2017 |
| 6,152 |
| $ | 11.93 |
| 0.1 |
| $ | 223 |
|
Exercisable at September 26, 2017 |
| 6,152 |
| $ | 11.93 |
| 0.1 |
| $ | 223 |
|
No stock options vested during the 39 weeks ended September 26, 2017 or September 27, 2016. For the 39 weeks ended September 26, 2017 and September 27, 2016, the total intrinsic value of options exercised was $3.7 million and $5.3 million, respectively.
For the 39 weeks ended September 26, 2017 and September 27, 2016, cash received before tax withholdings from options exercised was $1.5 million and $2.2 million, respectively. The excess tax benefit, recognized within the income tax provision, associated with options exercised was $1.0 million for the 39 weeks ended September 26, 2017. The excess tax benefit for the 39 weeks ended September 27, 2016 was $1.5 million which was recorded in additional paid-in-capital in the unaudited condensed consolidated balance sheets.
(3) Long-term Debt and Obligation Under Capital Lease
Long-term debt consisted of the following:
|
|
|
|
|
|
|
|
|
| September 26, |
| December 27, |
| ||
|
| 2017 |
| 2016 |
| ||
Installment loan |
| $ | — |
| $ | 550 |
|
Obligation under capital lease |
|
| 1,993 |
|
| 1,998 |
|
Revolver |
|
| 50,000 |
|
| 50,000 |
|
|
|
| 51,993 |
|
| 52,548 |
|
Less current maturities |
|
| 9 |
|
| 167 |
|
|
| $ | 51,984 |
| $ | 52,381 |
|
The interest rate for our installment loan outstanding at December 27, 2016 was 10.46%. The installment loan was repaid during the 13 weeks ended September 26, 2017.
9
During the 52 weeks ended December 27, 2016, we amended an existing lease at one restaurant location to acquire additional square footage. As a result of this amendment, the lease qualified as a capital lease.
On August 7, 2017,May 4, 2021, we entered into the Amended and Restated Credit Agreement (the "Amended Credit Agreement") with respectan agreement to amend our revolving credit facility with a syndicate of commercial lenders led by JPMorgan Chase Bank, N.A., and PNC Bank, N.A., and Wells Fargo Bank, N.A. The amended revolving credit facility remains an unsecured, revolving credit agreement under which we may borrowand has a borrowing capacity of up to $200.0$300.0 million with the option to increase the revolving credit facility by an additional $200.0 million subject to certain limitations.limitations, including approval by the syndicate of lenders. The Amended Credit Agreement extendsamendment also extended the maturity date of our revolving credit facility until August 5, 2022.to May 1, 2026.
The terms of the Amended Credit Agreementamendment require us to pay interest on outstanding borrowings at the London Interbank Offered Rate ("LIBOR")LIBOR plus a margin of 0.875% to 1.875% and to pay a commitment fee of 0.125% to 0.30% per year on any unused portion of the revolving credit facility, in each case depending on our leverage ratio, or theratio. The amendment also provides an Alternate Base Rate which isthat may be substituted for LIBOR.
As of March 29, 2022 and December 28, 2021, we had $100.0 million outstanding on the highestamended revolving credit facility and $189.1 million of availability, net of $10.9 million of outstanding letters of credit. As of March 30, 2021, we had $240.0 million outstanding on the issuing banks’ prime lending rate,revolving credit facility prior to the Federal Funds rate plus 0.50% or the Adjusted Eurodollar Rate for a one month interest periodMay 4, 2021 amendment. These outstanding amounts are included as long-term debt on such day plus 1.0%. our unaudited condensed consolidated balance sheets.
The weighted-average interest rate for the revolving credit facility$100.0 million outstanding as of September 26, 2017 and December 27, 2016March 29, 2022 was 2.11% and 1.57%, respectively. As of September 26, 2017, we had $50.01.20%. The weighted-average interest rate for the $240.0 million outstanding under the revolving credit facility and $142.9 millionas of availability, net of $7.1 million of outstanding letters of credit.March 30, 2021 was 1.95%.
The lenders’ obligation to extend credit pursuant to the Amended Credit Agreementamended revolving credit facility depends on us maintaining certain financial covenants, including a minimum consolidated fixed charge coverage ratio of 2.00 to 1.00 and a maximum consolidated leverage ratio of 3.00 to 1.00. The Amended Credit Agreement permits us to incur additional secured or unsecured indebtedness outside the revolving credit facility, except for the incurrence of secured indebtedness that in the aggregate is equal to or greater than $125.0 million and 20% of our consolidated tangible net worth.covenants. We were in compliance with all financial covenants as of September 26, 2017.March 29, 2022.
8
(4) Income TaxesRevenue
A reconciliationThe following table disaggregates our revenue by major source (in thousands):
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| 13 weeks ended | | ||||
| March 29, 2022 | | March 30, 2021 | | ||
Restaurant and other sales | $ | 980,972 | | $ | 794,923 | |
Franchise royalties | | 5,699 | | | 4,973 | |
Franchise fees | | 815 | | | 733 | |
Total revenue | $ | 987,486 | | $ | 800,629 | |
We record deferred revenue for gift cards which includes cards that have been sold but not yet redeemed, a breakage adjustment for a percentage of gift cards that are not expected to be redeemed, and fees paid on gift cards sold through third party retailers. When gift cards are redeemed, we recognize restaurant sales and reduce deferred revenue. We amortize breakage and third party fees consistent with the historic redemption pattern of the statutory federal income tax rateassociated gift card or on actual redemptions in periods where redemptions do not align with historic redemption patterns. We recognize these amounts as a component of other sales. As of March 29, 2022 and December 28, 2021, our deferred revenue balance related to our effective tax rategift cards was $221.5 million and $300.7 million, respectively. We recognized sales of $102.1 million for the 13 and 39 weeks ended September 26, 2017 and September 27, 2016 is as follows:
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| September 27, 2016 |
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| September 26, 2017 |
| September 27, 2016 |
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Tax at statutory federal rate |
| 35.0 | % | 35.0 | % |
| 35.0 | % | 35.0 | % |
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State and local tax, net of federal benefit |
| 3.4 |
| 3.5 |
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| 3.4 |
| 3.5 |
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FICA tip tax credit |
| (7.1) |
| (7.1) |
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| (7.1) |
| (6.9) |
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Work opportunity tax credit |
| (0.9) |
| (0.9) |
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| (0.8) |
| (0.8) |
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Stock compensation |
| (0.9) |
| — |
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| (2.0) |
| — |
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Net income attributable to noncontrolling interests |
| (1.1) |
| (1.1) |
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| (1.1) |
| (0.9) |
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Other |
| 0.4 |
| 0.4 |
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| 0.3 |
| 0.1 |
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Total |
| 28.8 | % | 29.8 | % |
| 27.7 | % | 30.0 | % |
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As a result of the adoption of ASU 2016-09,excess tax benefits and tax deficiencies from share-based compensation are recognized within the income tax provision in the period in which the restricted shares vest or options are exercised. During the 13 weeks ended September 26, 2017,March 29, 2022 related to the amount in deferred revenue as of December 28, 2021. We recognized sales of $71.4 million for the 13 weeks ended March 30, 2021 related to the amount in deferred revenue as of December 29, 2020.
(5) Income Taxes
For the 13 weeks ended March 29, 2022 and March 30, 2021, we recognized $0.4 million as an income tax benefit, whichexpense using an estimated effective annual tax rate. This resulted in an effective tax rate of 14.2% and 16.2% for the 13 weeks ended March 29, 2022 and March 30, 2021, respectively. The reduction in our tax rate was primarily driven by an increase in FICA Tip and Work Opportunity tax credits partially offset by a 0.9% impact ondecrease in the tax rate. During the 39 weeks ended September 26, 2017, we recognized $3.0 million as an income tax benefit which resulted in a 2.0% impact on the tax rate. Prior to the adoption of ASU 2016-09, excess tax benefits and deficiencies were recognized in additional paid-in capital in the unaudited condensed consolidated balance sheets. for stock compensation.
During the first quarter of 2017, we adopted ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which required deferred tax assets and liabilities to be classified as noncurrent on our condensed consolidated balance sheets. We adopted ASU 2015-17 on a prospective basis.
(6) | Commitments and Contingencies |
10
(5)Commitments and Contingencies
The estimated cost of completing capital project commitments at September 26, 2017March 29, 2022 and December 27, 201628, 2021 was approximately $150.6$160.3 million and $157.5$135.0 million, respectively.
As of September 26, 2017March 29, 2022 and December 27, 2016,28, 2021, we were contingently liable for $15.8$12.0 million and $16.4$12.2 million, respectively, for seven7 lease guarantees, listed in the table below.guarantees. These amounts represent the maximum potential liability of future payments under the guarantees. In the event of default, the indemnity and default clauses in our assignment agreements govern our ability to pursue and recover damages incurred. No material liabilities have been recorded as of September 26, 2017March 29, 2022 and December 27, 201628, 2021 as the likelihood of default was deemed to be less than probable and the fair value of the guarantees is not considered significant.
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During the 13 and 39 weeks ended September 26, 2017,March 29, 2022, we bought most of our beef from three4 suppliers. Although there are a limited number of beef suppliers, we believe that other suppliers could provide a similar product on comparable terms. A change in suppliers, however, could cause supply shortages and/or higher costs to secure adequate supplies and a possible loss of sales, which would affect operating results adversely. We have no material minimum purchase commitments with our vendors that extend beyond a year.
We and the U.S. Equal Employment Opportunity Commission entered into a consent decree dated March 31, 2017 (the "Consent Decree") to settle the lawsuit styled Equal Employment Opportunity Commission v. Texas Roadhouse, Inc., Texas Roadhouse Holdings LLC and Texas Roadhouse Management Corp. in the United States District Court, District of Massachusetts, Civil Action Number 1:11-cv-11732 (the "Lawsuit"). The Consent Decree resolves the issues litigated in the Lawsuit. Under the Consent Decree, among other terms, we have established a fund of $12.0 million, from which awards of monetary relief, allocated as wages for tax purposes, may be made to eligible claimants in accordance with procedures set forth in the Consent Decree. We recorded a pre-tax charge of $14.9 million ($9.2 million after-tax) related to the Lawsuit and Consent Decree. The pre-tax charge includes $12.6 million of costs associated with the legal settlement and $2.3 million of legal fees associated with the defense of the case during the 13 weeks ended March 28, 2017. The pre-tax charge was recorded in general and administrative expense in our unaudited condensed consolidated statements of income and comprehensive income.
Occasionally, we are a defendant in litigation arising in the ordinary course of our business, including "slip and fall" accidents, employment related claims, claims related to our service of alcohol, and claims from guests or employees alleging illness, injury or food quality, health or operational concerns. None of these types of litigation, most of which are covered by insurance, has had a material adverse effect on us during the periods covered by this report and, as of the date of this report, we are not party to any litigation that we believe could have a material adverse effect on our business.
119
(7) Acquisitions
(6) Acquisitions
On December 28, 2016,29, 2021, we acquired four franchisecompleted the acquisition of 7 franchised Texas Roadhouse restaurants located in FloridaSouth Carolina and Georgia. Pursuant to the terms of the acquisition agreements, we paid a total purchase price of $16.5$26.4 million, net of cash acquired. Two of the acquired restaurants are wholly-owned and the remaining two restaurants are majority-owned. These acquisitions are consistent with our long-term strategy to increase net income and earnings per share.
These The transactions were accounted for using the purchaseacquisition method as defined in ASCAccounting Standards Codification ("ASC") 805, Business Combinations ("ASC 805"). Based on a purchase price
The following table summarizes the consideration paid (in thousands) for the acquisitions, and the estimated fair value of $16.5 million, $4.5 million of goodwill was generated bythe assets acquired, and the liabilities assumed at the acquisition date, which are adjusted for measurement-period adjustments through March 29, 2022.
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Inventory | | $ | 268 | |
Other assets | | | 211 | |
Property and equipment | | | 3,456 | |
Goodwill | | | 17,333 | |
Intangible assets | | | 6,000 | |
Current liabilities | | | (831) | |
| | $ | 26,437 | |
The aggregate purchase prices are preliminary as the Company is not amortizable for book purposes, but isfinalizing working capital adjustments. Intangible assets represent reacquired franchise rights which will be amortized over a weighted-average useful life of 3.5 years. We expect all of the goodwill and intangible asset amortization will be deductible for tax purposes.
The purchase price has been allocatedpurposes and believe the resulting amount of goodwill reflects the benefit of sales and unit growth opportunities as follows:
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Current assets |
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| $ | 170 |
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Property and equipment |
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| 12,281 |
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Goodwill |
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| 4,469 |
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Current liabilities |
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| (392) |
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| $ | 16,528 |
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well as the benefit of the assembled workforce of the acquired restaurants.
Pro forma operating results of operations and revenue and earnings for the 3913 weeks ended September 26, 2017March 29, 2022 have not been presented becauseas the effectresults of the acquisitions wasacquired restaurants are not material to our unaudited condensed consolidated financial position, results of operations or cash flows.
(7)(8) Related Party Transactions
As of September 26, 2017March 29, 2022 and September 27, 2016,March 30, 2021, we had 104 franchise restaurants and 1 majority-owned company restaurant owned in whole or part by certain officers, directors and 5% stockholdersa current officer of the Company. For both 13 week periods ended September 26, 2017 and September 27, 2016, theseThe franchise entities paid us fees of approximately $0.5 million. For$0.4 million for both of the 3913 week periods ended September 26, 2017March 29, 2022 and September 27, 2016, these entities paid us fees of approximately $1.6 million and $1.5 million, respectively. As disclosed in note 5, we are contingently liable on leases which are related to two of these restaurants.March 30, 2021.
(8)(9) Earnings Per Share
The share and net income per share data for all periods presented are based on the historical weighted-average shares outstanding. The diluted earnings per share calculations show the effect of the weighted-average restricted stock options and RSUs outstandingunits from our equity incentive plans, except during loss periods as discussedthe effect would be anti-dilutive. Performance stock units are not included in note 2.the diluted earnings per share calculation until the performance-based criteria have been met.
For boththe 13 week periodsweeks ended September 26, 2017 and September 27, 2016,March 29, 2022, there were no29,887 weighted-average shares of nonvested stock that were outstanding but not included in the computation of diluted earnings per share because their inclusionthey would have had an anti-dilutive effect. For the 39 week periods13 weeks ended September 26, 2017 and September 27, 2016,March 30, 2021, there were 7,960 and six4,827 weighted-average shares of nonvested stock respectively, that were outstanding but not included in the computation of diluted earnings per share because they would have had an anti-dilutive effect. For all periods presented, there were no outstanding options that had an anti-dilutive effect.
PSUs are not included in the diluted earnings per share calculation until the performance-based criteria have been met. See note 2 for further discussion of PSUs.
1210
The following table sets forth the calculation of earnings per share and weighted-average shares outstanding (in thousands) as presented in the accompanying unaudited condensed consolidated statements of income and comprehensive income:
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| | 13 Weeks Ended |
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| March 29, 2022 |
| March 30, 2021 |
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Net income attributable to Texas Roadhouse, Inc. and subsidiaries | | $ | 75,202 | | $ | 64,150 | |
Basic EPS: | | | | | | | |
Weighted-average common shares outstanding | |
| 69,086 | | | 69,637 | |
Basic EPS | | $ | 1.09 | | $ | 0.92 | |
Diluted EPS: | | | | | | | |
Weighted-average common shares outstanding | |
| 69,086 | | | 69,637 | |
Dilutive effect of nonvested stock | |
| 287 | | | 500 | |
Shares-diluted | |
| 69,373 | |
| 70,137 | |
Diluted EPS | | $ | 1.08 | | $ | 0.91 | |
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| September 27, 2016 |
| September 26, 2017 |
| September 27, 2016 |
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Net income attributable to Texas Roadhouse, Inc. and subsidiaries |
| $ | 31,014 |
| $ | 25,675 |
| $ | 102,908 |
| $ | 94,873 |
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Basic EPS: |
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Weighted-average common shares outstanding |
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| 71,067 |
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| 70,477 |
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| 70,939 |
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| 70,338 |
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Basic EPS |
| $ | 0.44 |
| $ | 0.36 |
| $ | 1.45 |
| $ | 1.35 |
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Diluted EPS: |
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Weighted-average common shares outstanding |
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| 71,067 |
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| 70,939 |
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| 70,338 |
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Dilutive effect of stock options and nonvested stock |
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| 465 |
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| 504 |
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| 510 |
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| 560 |
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| 70,981 |
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| 71,449 |
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Diluted EPS |
| $ | 0.43 |
| $ | 0.36 |
| $ | 1.44 |
| $ | 1.34 |
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(9)(10) Fair Value Measurements
ASC 820, Fair Value Measurements and Disclosures ("("ASC 820"), establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 establishes a three-level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs in measuring fair value. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date.
Level 1 | Inputs based on quoted prices in active markets for identical assets. |
Level 2 | Inputs other than quoted prices included within Level 1 that are observable for the assets, either directly or indirectly. |
Level 3 | Inputs that are unobservable for the asset. |
Level 1Inputs based on quoted prices in active markets for identical assets.
Level 2Inputs other than quoted prices included within Level 1 that are observable for the assets, either directly or indirectly.
Level 3Inputs that are unobservable for the asset.
There were no0 transfers among levels within the fair value hierarchy during the 13 and 39 weeks ended September 26, 2017.March 29, 2022.
13
The following table presents the fair values for our financial assets and liabilities measured on a recurring basis:
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| March 29, 2022 |
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Deferred compensation plan—assets |
| 1 |
| $ | 26,966 |
| $ | 21,951 |
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| 1 | | $ | 61,996 | | $ | 67,512 | |
Deferred compensation plan—liabilities |
| 1 |
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| (26,980) |
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| (22,128) |
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| 1 | | $ | (61,839) | | $ | (67,431) | |
The Second Amended and Restated Deferred Compensation Plan of Texas Roadhouse Management Corp., as (as amended, (thethe "Deferred Compensation Plan") is a nonqualified deferred compensation plan which allows highly compensated employees to defer receipt of a portion of their compensation and contribute such amounts to one1 or more investment funds held in a rabbi trust. We report the amounts of the rabbi trust in other assets and the corresponding liability in other liabilities in our unaudited condensed consolidated financial statements. These investments are considered trading securities and are reported at fair value based on quoted market prices. The realized and unrealized holding gains and losses related to these investments, as well as the offsetting compensation expense, are recorded in general and administrative expense in the unaudited condensed consolidated statements of income and comprehensive income.
11
The following table presents the fair value of our assets measured on a nonrecurring basis:
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| | Fair Value Measurements | | Total gain (loss) | ||||||||||
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| | Level | | 2022 | | 2021 | | 2022 | | 2021 | ||||
Long-lived assets held for sale | | 3 | | $ | — | | $ | 1,175 | | $ | 690 | | $ | (470) |
Investments in unconsolidated affiliates | | 3 | | $ | — | | $ | — | | $ | — | | $ | (531) |
Long-lived assets held for sale include land and building at a site that was relocated and had a carrying amount of $1.2 million as of December 28, 2021. These assets were included in prepaid expenses and other current assets in our consolidated balance sheets and were valued using a Level 3 input. These assets were sold during the 13 weeks ended March 29, 2022 and resulted in a gain of $0.7 million which is included in impairment and closure, net in our unaudited condensed consolidated statement of income and comprehensive income.
Investments in unconsolidated affiliates included a 40% equity interest in a joint venture in China which was fully impaired in late 2021. This asset was valued using a Level 3 input, or the amount we expected to receive upon the sale of this investment. This resulted in a loss of $0.5 million during the 13 weeks ended March 30, 2021 and is included in equity income (loss) from investments in unconsolidated affiliates in our unaudited condensed consolidated statement of income and comprehensive income for the 13 weeks ended March 30, 2021.
At September 26, 2017March 29, 2022 and December 27, 2016,28, 2021, the fair values of cash and cash equivalents, accounts receivable and accounts payable approximated their carrying values based on the short-term nature of these instruments. TheAt March 29, 2022 and December 28, 2021, the fair value of our amended revolving credit facility at September 26, 2017 and December 27, 2016 approximated its carrying value since it is a variable rate credit facility (Level 2).
(10)(11) Stock Repurchase Program
On May 22, 2014,March 17, 2022, our Board of Directors (the "Board") approved a stock repurchase program under which we may repurchase up to $100.0$300.0 million of our common stock. This stock repurchase program has no expiration date and replaced a previous stock repurchase program which was approved on February 16, 2012.May 31, 2019 that authorized the Company to repurchase up to $250.0 million of our common stock. All repurchases to date under our stock repurchase programprograms have been made through open market transactions. The timing and the amount of any repurchases will beare determined by management under parameters established by ourthe Board, of Directors, based on an evaluation of our stock price, market conditions and other corporate considerations.
We did not repurchase any shares of common stock during the 13 and 39 week periods ended September 26, 2017. As of September 26, 2017, we had approximately $69.9 million remaining under our authorized stock repurchase program.For the 13 week period ended September 27, 2016,March 29, 2022, we paid $84.7 million to repurchase 1,060,618 shares of our common stock. This includes $79.7 million repurchased under our prior authorization and $5.0 million under our current authorized stock repurchase program. For the 13 weeks ended March 30, 2021, we did not repurchase any shares of common stock. For the 39 week period ended September 27, 2016, we paid approximately $4.1 million to repurchase 114,700 shares of our common stock. As of March 29, 2022, $295.0 million remained under our authorized stock repurchase program.
(12) Segment Information
We manage our restaurant and franchising operations by concept and as a result have identified Texas Roadhouse, Bubba’s 33, Jaggers and our retail initiatives as separate operating segments. Our reportable segments are Texas Roadhouse and Bubba’s 33. The Texas Roadhouse reportable segment includes the results of our domestic company Texas Roadhouse restaurants and domestic and international franchise Texas Roadhouse restaurants. The Bubba's 33 reportable segment includes the results of our domestic company Bubba's 33 restaurants. Our remaining operating segments, which include the results of our domestic company Jaggers restaurants and the results of our retail initiatives, are included in Other. In addition, Corporate-related segment assets, depreciation and amortization, and capital expenditures are also included in Other.
Management uses restaurant margin as the measure for assessing performance of our segments. Restaurant margin (in dollars and as a percentage of restaurant and other sales) represents restaurant and other sales less restaurant-level operating costs, including food and beverage costs, labor, rent and other operating costs. Restaurant margin also
12
includes sales and operating costs related to our non-royalty based retail initiatives. Restaurant margin is used by our chief operating decision maker to evaluate restaurant-level operating efficiency and performance.
In calculating restaurant margin, we exclude certain non-restaurant-level costs that support operations, including pre-opening and general and administrative expenses, but do not have a direct impact on restaurant-level operational efficiency and performance. We also exclude depreciation and amortization expense, substantially all of which relates to restaurant-level assets, as it represents a non-cash charge for the investment in our restaurants. We also exclude impairment and closure expense as we believe this provides a clearer perspective of the Company’s ongoing operating performance and a more useful comparison to prior period results. Restaurant margin as presented may not be comparable to other similarly titled measures of other companies in our industry.
Restaurant and other sales for all operating segments are derived primarily from food and beverage sales. We do not rely on any major customer as a source of sales and the customers and assets of our reportable segments are located predominantly in the United States. There are no material transactions between reportable segments.
The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP:
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| 13 Weeks Ended March 29, 2022 | ||||||||||
| Texas Roadhouse | | Bubba's 33 | | Other | | Total | ||||
Restaurant and other sales | $ | 926,729 | | $ | 51,225 | | $ | 3,018 | | $ | 980,972 |
Restaurant operating costs (excluding depreciation and amortization) | | 773,261 | | | 43,431 | | | 3,097 | | | 819,789 |
Restaurant margin | $ | 153,468 | | $ | 7,794 | | $ | (79) | | $ | 161,183 |
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Depreciation and amortization | $ | 27,541 | | $ | 3,190 | | $ | 2,889 | | $ | 33,620 |
Capital expenditures | | 39,677 | | | 7,377 | | | 1,975 | | | 49,029 |
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| 13 Weeks Ended March 30, 2021 | ||||||||||
| Texas Roadhouse | | Bubba's 33 | | Other | | Total | ||||
Restaurant and other sales | $ | 756,597 | | $ | 35,685 | | $ | 2,641 | | $ | 794,923 |
Restaurant operating costs (excluding depreciation and amortization) | | 615,485 | | | 29,682 | | | 2,182 | | | 647,349 |
Restaurant margin | $ | 141,112 | | $ | 6,003 | | $ | 459 | | $ | 147,574 |
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Depreciation and amortization | $ | 25,663 | | $ | 3,013 | | $ | 2,193 | | $ | 30,869 |
Capital expenditures | | 31,154 | | | 5,580 | | | 1,932 | | | 38,666 |
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13
A reconciliation of restaurant margin to income from operations is presented below. We do not allocate interest expense, net and equity income (loss) from investments in unconsolidated affiliates to reportable segments.
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| 13 Weeks Ended | ||||
| March 29, 2022 | | March 30, 2021 | ||
Restaurant margin | $ | 161,183 | | $ | 147,574 |
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Add: | | | | | |
Franchise royalties and fees | | 6,514 | | | 5,706 |
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Less: | | | | | |
Pre-opening | | 4,291 | | | 4,268 |
Depreciation and amortization | | 33,620 | | | 30,869 |
Impairment and closure, net | | (646) | | | 504 |
General and administrative | | 40,294 | | | 36,712 |
Income from operations | $ | 90,138 | | $ | 80,927 |
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14
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CAUTIONARY STATEMENT
This report contains forward-looking statements based on our current expectations, estimates and projections about our industry and certain assumptions made by us. These statements include, but are not limited to, statements related to the potential impact of the COVID-19/Coronavirus outbreak and other non-historical statements. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," "may," "will" and variations of these words or similar expressions are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Such statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. The section entitled "Risk Factors" in our Annual Report on Form 10-K for the year ended December 27, 2016,28, 2021, and in Part II, Item 1A in this Form 10-Q, andalong with disclosures in our other Securities and Exchange Commission ("SEC") filings discuss some of the important risk factors that may affect our business, results of operations, or financial condition. You should carefully consider those risks, in addition to the other information in this report, and in our other filings with the SEC, before deciding to invest in our Company or to maintain or increase your investment. We undertake no obligation to revise or update publicly any forward-looking statements, for any reason.except as may be required by applicable law. The information contained in this Form 10-Q is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC that discuss our business in greater detail and advise interested parties of certain risks, uncertainties and other factors that may affect our business, results of operations or financial condition.
OVERVIEWOur Company
Texas Roadhouse, Inc. is a growing restaurant company operating predominatelypredominantly in the casual dining segment. Our late founder, chairman and chief executive officer ("CEO"), W. Kent Taylor, started the businessCompany in 1993 with the opening of the first Texas Roadhouse restaurant in Clarksville, Indiana. Since then, we have grown to 540 company and franchisethree concepts with 672 restaurants in 49 states and sixten foreign countries. Our mission statement is "Legendary Food, Legendary Service®." Our operating strategy is designed to position each of our restaurants as the local hometown favorite for a broad segment of consumers seeking high quality, affordable meals served with friendly, attentive service. As of September 26, 2017,March 29, 2022, our 540672 restaurants included:
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We have contractual arrangements whichthat grant us the right to acquire at pre-determined formulas the remaining equity interests in 1618 of the 1820 majority-owned company restaurants and 6659 of the 63 domestic franchise restaurants.
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Throughout this report, we use the term "restaurants" to include Texas Roadhouse and Bubba’s 33, unless otherwise noted.
Presentation of Financial and Operating Data
Throughout this report, the 13 weeks ended September 26, 2017March 29, 2022, and September 27, 2016March 30, 2021, are referred to as Q3 2017Q1 2022 and Q3 2016,Q1 2021, respectively.
COVID-19 and Related Impacts
The 39 weeks ended September 26, 2017Company has been subject to risks and September 27, 2016uncertainties as a result of the COVID-19 pandemic (the "pandemic"). These include federal, state and local restrictions on restaurants, some of which limited capacity or seating in the dining rooms while others allowed to-go or curbside service only. As of March 29, 2022, all of our domestic company and franchise locations were operating without restriction. As of March 30, 2021, all of our domestic company and franchise locations had re-opened their dining rooms, many of which were operating under various limited capacity restrictions.
As a result of a significant increase in sales, the lingering impact of the pandemic and other supply constraints, we have experienced and expect to continue to experience commodity inflation and certain food and supply shortages. The commodity inflation, which primarily relates to proteins, is mostly due to increased demand and increased costs incurred by our vendors related to higher labor, transportation, packaging and raw material costs. To date, we have been able to properly manage any food or supply shortages but have experienced increased costs. If our vendors are unable to fulfill their obligations under their contracts, we may encounter further shortages and/or higher costs to secure adequate supply and a possible loss of sales, any of which would harm our business.
In addition, as our dining rooms have returned to operating without restriction, our ability to attract and retain restaurant-level employees has become more challenging due to an increasingly competitive job market throughout the country. To the extent these challenges persist, we could continue to experience increased labor costs and/or decreased sales.
As a result of the pandemic, legislation referred to as 2017 YTDthe Coronavirus Aid, Relief, and 2016 YTD, respectively.Economic Security Act (the "CARES Act") was passed in 2020 to benefit companies that were significantly impacted by the pandemic. This legislation allowed for the deferral of the social security portion of the employer portion of FICA payroll taxes from the date of enactment through the end of 2020. In total, we deferred $47.3 million in payroll taxes, of which $24.3 million was repaid in 2021 and $23.0 million is required to be repaid at the end of 2022. The amount due in 2022 is included in accrued wages and payroll taxes in our unaudited condensed consolidated balance sheets.
Long-termLong-Term Strategies to Grow Earnings Per Share and Create Shareholder Value
Our long-term strategies with respect to increasing net income and earnings per share, along with creating shareholder value, include the following:
Expanding Our Restaurant Base.We will continue to evaluate opportunities to develop restaurants in existing markets and in new domestic and international markets. Domestically, we will remain focused primarily on markets where we believe a significant demand for our restaurants exists because of population size, income levels, and the presence of shopping and entertainment centers and a significant employment base. Our abilityIn recent years, we have relocated several existing Texas Roadhouse locations at or near the end of the associated lease or as a result of eminent domain which allows us to move to a better site, update them to a current prototypical design, construct a larger building with more seats and greater number of available parking spaces, accommodate increased to-go sales and/or obtain more favorable lease terms. We continue to evaluate these opportunities particularly as it relates to older locations with strong sales. At our high volume restaurants, we continue to look for opportunities to increase our dining room capacity by adding on to our existing building and/or to increase our parking capacity by leasing or purchasing property that adjoins our site. In addition, we continue to execute and pursue opportunities to acquire domestic franchise locations to expand our company restaurant base is influenced by many factors beyond our controlbase.
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In Q1 2022, three company Texas Roadhouse restaurants opened and therefore, we may not be able to achieve our anticipated growth.
In 2017 YTD, we opened 20 company restaurants while our franchise partners opened threetwo international restaurants. We currently plan to open 26 or 27approximately 25 Texas Roadhouse and Bubba’s 33 company restaurants in 2017 including four Bubba’s 33 restaurants. In addition, we anticipate that2022. We currently expect our existing franchise partners will open as many as five, primarily international,seven Texas Roadhouse restaurants, during 2017.primarily international, in 2022.
Our average capital investment for the 2123 Texas Roadhouse restaurants opened during 2016,2021, including pre‑openingpre-opening expenses and a capitalized rent factor, was $5.0 $5.7 million. We expect our average capital investment for Texas Roadhouse restaurants opening in 20172022 to be approximately $5.2 million. For 2016,$6.4 million with the increase over 2021 due to higher supply costs. Our average capital investment for the five Bubba’s 33 restaurants opened during 2021, including pre-opening expenses and a capitalized rent factor, for the nine Bubba’s 33 restaurants opened during the year was $6.6$7.4 million. We expect our average capital investment for Bubba’s 33 restaurants openedopening in 20172022 to be approximately $6.1 million.$7.3 million with the decrease over 2021 due to lower pre-opening costs offset by higher supply costs.
We remain focused on driving sales and managing restaurant investment costs to maintain our restaurant development in the future. Our capital investment (including cash and non-cash costs) for new restaurants varies significantly depending on a number of factors including, but not limited to: the square footage, layout, scope of required site work, geographical location, cost of materials, type of construction labor, (union or non-union), local permitting requirements, hook-up fees, our ability to negotiate with landlords and cost of liquor and other licenseslicenses.
We have entered into area development and hook-up fees and geographical location.
We may, at our discretion, add franchise restaurants, domestically and/or internationally, primarily with franchisees who have demonstrated prior success with Texas Roadhouse or other restaurant concepts and in markets in which the franchisee demonstrates superior knowledge of the demographics and restaurant operating conditions. In conjunction with this strategy, we signed our first international franchise development agreement in 2010agreements for the development and operation of Texas Roadhouse restaurants in eightnumerous foreign countries and one U.S. territory. We currently have signed franchise and/or development agreements in nine countries in the Middle East over a 10-year period. In 2015, we amended our agreement in the Middle East to add one country to the territory. In addition to the Middle East, we currently have signed franchise development agreements for the development of Texas Roadhouse restaurants inas well as Taiwan, the Philippines, Mexico, China, South Korea, Brazil and China. We currently have 10Puerto Rico. As of March 29, 2022, we had 15 restaurants open in fourfive countries in the Middle East, threefive restaurants openin the Philippines, five in Taiwan, four in South Korea, three in Mexico and twoone in the PhilippinesChina for a total of 1533 restaurants in sixten foreign countries. Additionally,For the existing international agreements, the franchisee is required to pay us a franchise fee for each restaurant to be opened, royalties on the sales of each restaurant and a development fee for our grant of development rights in 2010,the named countries. We anticipate that the specific business terms of any future franchise agreement for international restaurants might vary significantly from the standard terms of our domestic agreements and from the terms of existing international agreements, depending on the territory to be franchised and the extent of franchisor-provided services to each franchisee.
In 2021, we entered into our first area development agreements for Jaggers, our fast-casual concept. These agreements allow for the development and operation of restaurants in specific territories in Texas, Oklahoma and North Carolina. As part of these agreements, the franchisees are required to pay us a joint venture agreement withfranchise fee for each restaurant to be opened, royalties on the sales of each restaurant and a casual diningdevelopment fee for our grant of development rights in the named territories. We currently expect our first Jaggers franchise restaurant operator in China for a minority ownership in four non‑Texas Roadhouse restaurants, all of which are currently open. We continue to explore opportunities in other countries for international expansion. We may also look to acquire domestic franchise restaurants under terms favorable to us and our stockholders. In Q1 2017, we acquired four franchise restaurants located in Florida and Georgia for an aggregate purchase price of $16.5 million. Additionally, from time to time, we will evaluate potential mergers, acquisitions, joint ventures or other strategic initiatives to acquire or develop additional concepts domestically and/or internationally.open as early as Q4 2022.
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Maintaining and/or Improving Restaurant LevelRestaurant-Level Profitability.We plan to maintain, or possibly increase, restaurant-level profitability (restaurant margin) through a combination of increased comparable restaurant sales and operating cost management. In general, we continue to balance the impacts of inflationary pressures with our value positioning as we remain focused on our long-term success. This may create a challenge in terms of maintaining and/or increasing restaurant margin, as a percentage of restaurant sales,restaurant-level profitability (restaurant margin), in any given year, depending on the level of inflation we experience. Restaurant margin is not a U.S. generally accepted accounting principle ("GAAP") measure and should not be considered in isolation, or as an alternative to income from operations. See further discussion of restaurant margin below. In addition to restaurant margin, as a percentage of restaurant and other sales, we also focus on the growth of restaurant margin dollars per store week as a measure of restaurant-level profitability. In terms of driving higher guest traffic counts,comparable restaurant sales, we remain focused on encouraging repeat visits by our guests and attracting new guests through our continued commitment to operational standards relating to food and service quality. To attract new guests and increase the frequency of visits of our existing guests, we also continue to drive various localized marketing programs, focus on speed of service, and increase throughput by adding seats and parking at certain restaurants and continue to enhance the guest digital experience. In addition, with the increase in certainsales, we have made changes to our building layout to better accommodate higher volume at our restaurants.
We also continue to look for ways through various strategic initiatives to drive awareness of our brands and increase sales and profitability. At the onset of the pandemic, we began selling ready-to-grill steaks for customers to prepare at
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home. Based on the success of this program we developed Texas Roadhouse Butcher Shop. This on-line retail store allows for the purchase and delivery of quality steaks that are similar to those available in our restaurants. This non-royalty-based product launched in late 2020.
We also further expanded our retail business in 2021 with the introduction of our non-alcoholic Margarita Mixer, and our canned cocktail Margarita Seltzer, which rolled out in test markets. These Texas Roadhouse-branded products are subject to royalty-based license agreements.
Leveraging Our Scalable Infrastructure.To support our growth, we continue to makehave made investments in our infrastructure. Overinfrastructure over the past several years, we have made significant investments in our infrastructure, including information and accounting systems, real estate, human resources, legal, marketing, international and restaurant operations, including the development of new concepts. Our goal is for general and administrative costs to increase at a slower growth rate than our revenue.strategic initiatives. Whether we canare able to leverage our infrastructure in future years by growing our general and administrative costs at a slower rate than our revenue will depend, in part, on our new restaurant openings, our comparable restaurant sales growth rate going forward and the level of investment we continue to make in our infrastructure.
Returning Capital to Shareholders. We continue to pay dividends and evaluate opportunities to return capital to our shareholders through repurchasesincluding the payment of dividends and repurchase of common stock. In 2011, our Board of Directors (the "Board") declared our first quarterly dividend of $0.08 per share of common stock. We havestock which has consistently grown our per share dividend each year since that time and our long-term strategy includes increasing our regular quarterly dividend amount over time. On August 31, 2017, our BoardThe payment of Directors declared a quarterly dividend was suspended in 2020 to preserve cash flow due to the pandemic. On April 28, 2021, the Board reinstated the payment of $0.21a quarterly cash dividend of $0.40 per share of common stock. On February 17, 2022, the Board declared a quarterly cash dividend of $0.46 per share of common stock.
The declaration and payment of cash dividends on our common stock is at the discretion of ourthe Board, of Directors, and any decision to declare a dividend will be based on many factors, including, but not limited to, earnings, financial condition, applicable covenants under our amended revolving credit facility, other contractual restrictions and other factors deemed relevant.
In 2008, ourthe Board of Directors approved our first stock repurchase program. From inception through September 26, 2017,March 29, 2022, we have paid $216.6$505.4 million through our authorized stock repurchase programs to repurchase 14,844,85119,368,055 shares of our common stock at an average price per share of $14.59.$26.09. On May 22, 2014, ourMarch 17, 2022, the Board of Directors approved a stock repurchase program under which we may repurchase up to $100.0$300.0 million of our common stock. This stock repurchase program has no expiration date and replaced a previous stock repurchase program which was approved on February 16, 2012.May 31, 2019 that authorized the Company to repurchase up to $250.0 million of our common stock. All repurchases to date have been made through open market transactions. The Company suspended all share repurchase activity in 2020 in order to preserve cash flow due to the pandemic. On August 2, 2021, the Company resumed the repurchase of shares and in Q1 2022 paid $84.7 million to repurchase 1,060,618 shares of common stock. This includes $79.7 million repurchased under our prior authorization and $5.0 million under our current authorized stock repurchase program. As of September 26, 2017, $69.9March 29, 2022, $295.0 million remainsremained authorized for stock repurchases.
Key Measures We Use to Evaluate Our Company
Key measures we use to evaluate and assess our business include the following:
Number of Restaurant Openings.Number of restaurant openings reflects the number of restaurants opened during a particular fiscal period. For company restaurant openings, we incur pre‑openingpre-opening costs, which are defined below, before the restaurant opens. Typically, new Texas Roadhouse restaurants open with an initial start‑upstart-up period of higher than normalized sales volumes, which decrease to a steady level approximately three to six months after opening. However, although sales volumes are generally higher, so are initial costs, resulting in restaurant margins that are generally lower during the start‑upstart-up period of operation and increase to a steady level approximately three to six months after opening.
Comparable Restaurant Sales Growth. Sales. Comparable restaurant sales growth reflects the change in restaurant sales for company-ownedall company restaurants over the same period inof the prior yearsyear for the comparable restaurant base. We define the comparable restaurant base to include those restaurants open for a full 18 months before the beginning of the period measured excluding restaurants permanently closed during the period. Comparable restaurant sales growth can be impacted by changes in
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changes in guest traffic counts or by changes in the per person average check amount. Menu price changes, and the mix of menu items sold, and the mix of dine-in versus to-go sales can affect the per person average check amount.
Average Unit Volume. Average unit volume represents the average quarterly or annual restaurant sales for company-ownedTexas Roadhouse and Bubba’s 33 restaurants open for a full six months before the beginning of the period measured excluding sales of restaurants permanently closed during the period. Historically, average unit volume growth is less than comparable restaurant sales growth which indicates that newer restaurants are operating with sales levels lower than the company average. At times, average unit volume growth may be more than comparable restaurant sales growth which indicates that newer restaurants are operating with sales levels higher than the company average.
Store Weeks.Store weeks represent the number of weeks that our company-ownedall company restaurants, unless otherwise noted, were open during the period measured.reporting period. Store weeks include weeks in which a restaurant is temporarily closed.
Restaurant Margin.Margin. Restaurant margin (in dollars and as a percentage of restaurant and other sales) represents restaurant and other sales less restaurant-level operating costs, including cost of sales,food and beverage costs, labor, rent and other operating costs. DepreciationRestaurant margin is not a measurement determined in accordance with GAAP and amortization expense, substantially allshould not be considered in isolation, or as an alternative, to income from operations. This non-GAAP measure is not indicative of which relatesoverall company performance and profitability in that this measure does not accrue directly to restaurant-level assets, is excluded from restaurant operatingthe benefit of shareholders due to the nature of the costs and is shown separately as it represents a non-cash charge for the investment in our restaurants.excluded. Restaurant margin is widely regarded as a useful metric by which to evaluate restaurant-level operating efficiency and performance. In calculating restaurant margin, we exclude certain non-restaurant-level costs that support operations, including pre-opening and general and administrative expenses, but do not have a direct impact on restaurant-level operational efficiency and performance. We also exclude depreciation and amortization expense, substantially all of which relates to restaurant-level assets, as it represents a non-cash charge for the investment in our restaurants. We also exclude impairment and closure expense as we believe this provides a clearer perspective of the Company’s ongoing operating performance and a more useful comparison to prior period results. Restaurant margin is not a measurement determined in accordance with U.S. generally accepted accounting principles ("GAAP") and shouldas presented may not be considered in isolation, or as an alternative,comparable to income from operations or other similarly titled measures of other companies. Restaurant margin, as a percentagecompanies in our industry. A reconciliation of restaurant sales, may fluctuate based on many factors, including, but not limitedincome from operations to inflationary pressures, commodity costs and wage rates. As such, we also focus on the growth of restaurant margin dollars per store week as a measureis included in the Results of restaurant-level profitability as it provides additional insight on operating performance.Operations section below.
Other Key Definitions
Restaurant and Other Sales.Restaurant sales include gross food and beverage sales, net of promotions and discounts, for all company-ownedcompany restaurants. Sales taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from restaurant sales in the unaudited condensed consolidated statements of income and comprehensive income. Other sales include the amortization of fees associated with our third party gift card sales net of the amortization of gift card breakage income. These amounts are amortized consistent with the historic redemption pattern of the associated gift card or on actual redemptions in periods where redemptions do not align with historic redemption patterns. Other sales also include sales related to our non-royalty-based retail products.
Franchise Royalties and Fees.Franchise royalties consist of royalties, as defined in our franchise agreements,agreement, paid to us by our domestic and international franchisees. Franchise royalties also include sales related to our royalty-based retail products. Domestic and/or international franchisees also typically pay an initial franchise fee and/or development fee for each new restaurant or territory. The terms of the international agreements may vary significantly from our domestic agreements. These include advertising fees paid by domestic franchisees to our system-wide marketing and advertising fund and management fees paid by certain domestic franchisees for supervisory and administrative services that we perform.
Restaurant CostFood and Beverage Costs.Food and beverage costs consists of Sales. Restaurant costthe costs of sales consistsraw materials and ingredients used in the preparation of food and beverage costsproducts sold in our company restaurants. Approximately half of which approximately 50%our food and beverage costs relates to beef costs.
Restaurant Labor Expenses. Restaurant labor expenses include all direct and indirect labor costs incurred in operations except for profit-sharingprofit sharing incentive compensation expenses earned by our restaurant managing partners and
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market partners. These profit-sharingprofit sharing expenses are reflected in restaurant other operating expenses. Restaurant labor expenses also include share-based compensation expense related to restaurant-level employees.
Restaurant Rent Expense. Restaurant rent expense includes all rent, except pre-opening rent, associated with the leasing of real estate and includes base, percentage and straight-line rent expense.
Restaurant Other Operating Expenses.Restaurant other operating expenses consist of all other restaurant-level operating costs, the major components of which are utilities, dining room and to-go supplies, local store advertising, repairs and maintenance, equipment rent, property taxes, credit card and gift card fees and general liability insurance offset by gift card breakage income. Profit-sharinginsurance. Profit sharing incentive compensation expenses earned by our restaurant managing partners and market partners are also included in restaurant other operating expenses.
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Pre-opening Expenses.Pre-opening expenses, which are charged to operations as incurred, consist of expenses incurred before the opening of a new or relocated restaurant and are comprised principally of opening team and training team compensation and benefits, travel expenses, rent, food, beverage and other initial supplies and expenses. On average, over 70% of total pre-opening costs incurred per restaurant opening relate to the hiring and training of employees. Pre-opening costs vary by location depending on many factors, including the size and physical layout of each location; the number of management and hourly employees required to operate each restaurant; the availability of qualified restaurant staff members; the cost of travel and lodging for different geographic areas; the timing of the restaurant opening; and the extent of unexpected delays, if any, in obtaining final licenses and permits to open the restaurants.
Depreciation and Amortization Expenses. Depreciation and amortization expenses ("D&A") include the depreciation of fixed assets and amortization of intangibles with definite lives, substantially all of which relates to restaurant-level assets.
Impairment and Closure Costs. Costs, Net. Impairment and closure costs, net include any impairment of long-lived assets, including property and equipment, operating lease right-of-use assets and goodwill, and expenses associated with the closure of a restaurant. Closure costs also include any gains or losses associated with a relocated restaurant or the sale of a closed restaurant and/or assets held for sale as well as lease costs associated with closed or relocated restaurants.
General and Administrative Expenses.General and administrative expenses ("G&A") are comprised of expenses associated with corporate and administrative functions that support development and restaurant operations and provide an infrastructure to support future growth including certain advertising costs incurred less amounts remitted by franchise restaurants. Supervision and accounting fees received from certain franchise restaurants are offset against G&A.incurred. G&A also includes legal fees, settlement charges and share-based compensation expense related to executive officers, support centerSupport Center employees and area managers, including market partners. Thepartners and the realized and unrealized holding gains and losses related to the investments in our deferred compensation plan, as well as offsetting compensation expense, are also recorded in G&A.plan.
Interest Expense, Net. Interest expense, net includes the cost ofinterest expense on our debt or financing obligations including the amortization of loan fees reduced by interest income and capitalized interest. Interest income includes earnings on cash and cash equivalents.
Equity Income (Loss) from Unconsolidated Affiliates.Equity income (loss) includes our percentage share of net income (loss) earned by unconsolidated affiliates. As of September 26, 2017March 29, 2022 and September 27, 2016,March 30, 2021, we owned a 5.0% to 10.0% equity interest in 24 domestic franchise restaurants. Additionally, as of September 26, 2017 and September 27, 2016,March 30, 2021, we owned a 40% equity interest in four non-Texas Roadhouse restaurants as part of a joint venture agreement with a casual dining restaurant operator in China. Equity income from unconsolidated affiliates representsWe fully impaired our percentage share of net income earned byequity investment related to this joint venture in late 2021 as these unconsolidated affiliates.restaurants closed.
Net Income Attributable to Noncontrolling Interests.Net income attributable to noncontrolling interests represents the portion of income attributable to the other owners of the majority-owned restaurants. Our consolidated subsidiaries at September 26, 2017 and September 27, 2016 included 18 and 16include 20 majority-owned restaurants respectively,for all of which were open.periods presented.
Q3 2017Q1 2022 Financial Highlights
Total revenue increased $58.9$186.9 million or 12.2%,23.3% to $540.5$987.5 million in Q3 2017Q1 2022 compared to $481.6$800.6 million in Q3 2016Q1 2021 primarily due to the opening of new restaurants combined with an increase in average unit volume driven by comparable restaurant sales growth.growth, along with an
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increase in store weeks. Store weeks and comparable restaurant sales increased 8.1%6.6% and 4.5%16.0%, respectively, at company restaurants in Q3 2017.Q1 2022. The increase in comparable restaurant sales was primarily due to all company restaurants operating without restriction for the entire Q1 2022 period, continued strong to-go sales and increases in our per person average check.
Restaurant margin dollars increased $9.0$13.6 million or 9.2% to $95.6$161.2 million in Q3 2017Q1 2022 compared to $86.6$147.6 million in Q3 2016 while restaurantQ1 2021. Restaurant margin, as a percentage of restaurant and other sales, decreased to 17.8%16.4% in Q3 2017Q1 2022 compared to 18.1%18.6% in Q3 2016.Q1 2021. The decrease in restaurant margin, as a percentage of restaurant and other sales, was due to commodity and labor inflation partially offset by higher sales.
Net income increased $11.0 million or 17.2% to $75.2 million in Q1 2022 compared to $64.2 million in Q1 2021 primarily due to higher labor costs as a result of higher average wage rates, current staffing initiatives, and a change in our compensation structure. Higher labor costs were partially offset by commodity deflation of approximately 2.0% driven by lower food costs, primarily beef.
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Net income increased $5.3 million, or 20.8%, to $31.0 million in Q3 2017 compared to $25.7 million in Q3 2016 primarily due to an increase in restaurant margin dollars partially offset by higher depreciation costs.general and administrative expense. Diluted earnings per share increased 18.5% to $1.08 in Q3 2017 by 19.9% to $0.43Q1 2022 from $0.36$0.91 in Q3 2016.Q1 2021.
Results of Operations
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Restaurant and other sales | | 980,972 | | 99.3 | | 794,923 | | 99.3 | |
Franchise royalties and fees | | 6,514 | | 0.7 | | 5,706 | | 0.7 | |
Total revenue | | 987,486 | | 100.0 | | 800,629 | | 100.0 | |
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(As a percentage of restaurant and other sales) | | | | | | | | | |
Restaurant operating costs (excluding depreciation and amortization shown separately below): | | | | | | | | | |
Food and beverage | | 337,396 | | 34.4 | | 251,482 | | 31.6 | |
Labor | | 321,871 | | 32.8 | | 258,036 | | 32.5 | |
Rent | | 16,368 | | 1.7 | | 14,452 | | 1.8 | |
Other operating | | 144,154 | | 14.7 | | 123,379 | | 15.5 | |
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Pre-opening | | 4,291 | | 0.4 | | 4,268 | | 0.5 | |
Depreciation and amortization | | 33,620 | | 3.4 | | 30,869 | | 3.9 | |
Impairment and closure, net | | (646) | | NM | | 504 | | NM | |
General and administrative | | 40,294 | | 4.1 | | 36,712 | | 4.6 | |
Total costs and expenses | | 897,348 | | 90.9 | | 719,702 | | 89.9 | |
Income from operations | | 90,138 | | 9.1 | | 80,927 | | 10.1 | |
Interest expense, net | | 397 | | NM | | 1,460 | | 0.2 | |
Equity income (loss) from investments in unconsolidated affiliates | | 334 | | NM | | (217) | | NM | |
Income before taxes | | 90,075 | | 9.1 | | 79,250 | | 9.9 | |
Income tax expense | | 12,747 | | 1.3 | | 12,820 | | 1.6 | |
Net income including noncontrolling interests | | 77,328 | | 7.8 | | 66,430 | | 8.3 | |
Net income attributable to noncontrolling interests | | 2,126 | | 0.2 | | 2,280 | | 0.3 | |
Net income attributable to Texas Roadhouse, Inc. and subsidiaries | | 75,202 | | 7.6 | | 64,150 | | 8.0 | |
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Restaurant sales |
| 536,341 |
| 99.2 |
| 477,617 |
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| 1,661,821 |
| 99.2 |
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| 12,634 |
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|
|
|
|
Cost of sales |
| 176,498 |
| 32.9 |
| 161,886 |
| 33.9 |
| 545,862 |
| 32.8 |
| 506,565 |
| 33.9 |
|
Labor |
| 169,355 |
| 31.6 |
| 145,301 |
| 30.4 |
| 514,287 |
| 30.9 |
| 442,861 |
| 29.7 |
|
Rent |
| 11,257 |
| 2.1 |
| 10,266 |
| 2.1 |
| 33,238 |
| 2.0 |
| 30,477 |
| 2.0 |
|
Other operating |
| 83,679 |
| 15.6 |
| 73,583 |
| 15.4 |
| 254,176 |
| 15.3 |
| 227,082 |
| 15.2 |
|
(As a percentage of total revenue) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-opening |
| 4,548 |
| 0.8 |
| 5,017 |
| 1.0 |
| 14,302 |
| 0.9 |
| 14,253 |
| 0.9 |
|
Depreciation and amortization |
| 23,534 |
| 4.4 |
| 20,941 |
| 4.3 |
| 69,236 |
| 4.1 |
| 60,718 |
| 4.0 |
|
Impairment and closure |
| 2 |
| NM |
| 13 |
| NM |
| 13 |
| NM |
| 54 |
| NM |
|
General and administrative |
| 26,123 |
| 4.8 |
| 26,162 |
| 5.4 |
| 94,594 |
| 5.6 |
| 82,933 |
| 5.5 |
|
Total costs and expenses |
| 494,996 |
| 91.6 |
| 443,169 |
| 92.0 |
| 1,525,708 |
| 91.1 |
| 1,364,943 |
| 90.6 |
|
Income from operations |
| 45,511 |
| 8.4 |
| 38,468 |
| 8.0 |
| 148,747 |
| 8.9 |
| 141,061 |
| 9.4 |
|
Interest expense, net |
| 500 |
| 0.1 |
| 288 |
| 0.1 |
| 1,211 |
| 0.1 |
| 902 |
| 0.1 |
|
Equity income from investments in unconsolidated affiliates |
| (359) |
| (0.1) |
| (4) |
| NM |
| (1,149) |
| (0.1) |
| (831) |
| (0.1) |
|
Income before taxes |
| 45,370 |
| 8.4 |
| 38,184 |
| 7.9 |
| 148,685 |
| 8.9 |
| 140,990 |
| 9.4 |
|
Provision for income taxes |
| 13,046 |
| 2.4 |
| 11,381 |
| 2.4 |
| 41,159 |
| 2.5 |
| 42,325 |
| 2.8 |
|
Net income including noncontrolling interests |
| 32,324 |
| 6.0 |
| 26,803 |
| 5.6 |
| 107,526 |
| 6.4 |
| 98,665 |
| 6.6 |
|
Net income attributable to noncontrolling interests |
| 1,310 |
| 0.2 |
| 1,128 |
| 0.2 |
| 4,618 |
| 0.3 |
| 3,792 |
| 0.3 |
|
Net income attributable to Texas Roadhouse, Inc. and subsidiaries |
| 31,014 |
| 5.7 |
| 25,675 |
| 5.3 |
| 102,908 |
| 6.1 |
| 94,873 |
| 6.3 |
|
NM — Not meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 13 Weeks Ended |
| 39 Weeks Ended |
| ||||||||||||
|
| September 26, 2017 |
| September 27, 2016 |
| September 26, 2017 |
| September 27, 2016 |
| ||||||||
|
| $ |
| % |
| $ |
| % |
| $ |
| % |
| $ |
| % |
|
(As a percentage of restaurant sales) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant margin ($ in thousands) |
| 95,552 |
| 17.8 |
| 86,581 |
| 18.1 |
| 314,258 |
| 18.9 |
| 286,546 |
| 19.2 |
|
Restaurant margin $/store week |
| 16,284 |
|
|
| 15,953 |
|
|
| 18,140 |
|
|
| 17,866 |
|
|
|
21
| | | | | | |
| Reconciliation of Income from Operations to Restaurant Margin | | ||||
| (in thousands) | | ||||
| 13 Weeks Ended | | ||||
| March 29, 2022 | | March 30, 2021 | | ||
| | | | | | |
| | | | | | |
Income from operations | $ | 90,138 | | $ | 80,927 | |
| | | | | | |
Less: | | | | | | |
Franchise royalties and fees | | 6,514 | | | 5,706 | |
| | | | | | |
Add: | | | | | | |
Pre-opening | | 4,291 | | | 4,268 | |
Depreciation and amortization | | 33,620 | | | 30,869 | |
Impairment and closure, net | | (646) | | | 504 | |
General and administrative | | 40,294 | | | 36,712 | |
Restaurant margin | $ | 161,183 | | $ | 147,574 | |
| | | | | | |
Restaurant margin $/store week | $ | 21,618 | | $ | 21,097 | |
Restaurant margin (as a percentage of restaurant and other sales) | | 16.4% | | | 18.6% | |
See page 18above for the definition of restaurant margin.
NM — Not meaningful
Restaurant Unit Activity
| | | | | | | | |
|
| Total | | Texas Roadhouse | | Bubba's 33 |
| Jaggers |
Balance at December 28, 2021 |
| 667 | | 627 | | 36 |
| 4 |
Company openings |
| 3 | | 3 | | — | | — |
Company closings | | — | | — | | — | | — |
Franchise openings - Domestic | | — | | — | | — | | — |
Franchise openings - International |
| 2 | | 2 | | — | | — |
Franchise closings | | — | | — | | — | | — |
Balance at March 29, 2022 |
| 672 | | 632 | | 36 |
| 4 |
| | | | |
|
| March 29, 2022 |
| March 30, 2021 |
Company - Texas Roadhouse |
| 536 | | 505 |
Company - Bubba's 33 |
| 36 | | 32 |
Company - Jaggers |
| 4 | | 3 |
Franchise - Texas Roadhouse - U.S. |
| 63 | | 69 |
Franchise - Texas Roadhouse - International |
| 33 | | 28 |
Total |
| 672 |
| 637 |
2022
Restaurant Unit Activity
|
|
|
|
|
|
|
|
|
|
| Total |
| Texas Roadhouse |
| Bubba's 33 |
| Jaggers |
Balance at December 27, 2016 |
| 517 |
| 499 |
| 16 |
| 2 |
Company openings |
| 20 |
| 16 |
| 4 |
| — |
Franchise openings - Domestic |
| 1 |
| 1 |
| — |
| — |
Franchise openings - International |
| 2 |
| 2 |
| — |
| — |
Balance at September 26, 2017 |
| 540 |
| 518 |
| 20 |
| 2 |
Q3 2017Q1 2022 (13 weeks) compared to Q3 2016Q1 2021 (13 weeks)
Restaurant and 2017 YTD (39 weeks) compared to 2016 YTD (39 weeks)
Other Sales.Restaurant Sales. Restaurantand other sales increased by 12.3%23.4% in Q3 2017 asQ1 2022 compared to Q3 2016 and by 11.3% in 2017 YTD compared to 2016 YTD.Q1 2021. The following table summarizes certain key drivers and/or attributes of restaurant and other sales at company restaurants for the periods presented. Company restaurant count activity is shown in the restaurant unit activity table above.
| | | | | | | |
|
| Q1 2022 |
| Q1 2021 |
| ||
Company Restaurants: | | | | | | | |
Increase in store weeks |
| | 6.6 | % | | 4.1 | % |
Increase in average unit volume(1) |
| | 15.7 | % | | 17.5 | % |
Other(2) |
| | 1.1 | % | | 1.0 | % |
Total increase in restaurant sales |
| | 23.4 | % | | 22.6 | % |
Other sales | | | — | % | | 0.1 | % |
Total increase in restaurant and other sales | | | 23.4 | % | | 22.7 | % |
| | | | | | | |
Store weeks |
| | 7,456 | | | 6,995 | |
Comparable restaurant sales |
| | 16.0 | % | | 18.5 | % |
| | | | | | | |
Texas Roadhouse restaurants: | | | | | | | |
Store weeks | | | 6,936 | | | 6,551 | |
Comparable restaurant sales |
| | 15.8 | % | | 18.3 | % |
Average unit volume (in thousands) | | $ | 1,745 | | $ | 1,509 | |
| | | | | | | |
Weekly sales by group: | | | | | | | |
Comparable restaurants (498 and 473 units, respectively) | | $ | 134,422 | | $ | 116,816 | |
Average unit volume restaurants (20 and 18 units, respectively) | | $ | 129,143 | | $ | 96,780 | |
Restaurants less than six months old (18 and 14 units, respectively) | | $ | 140,535 | | $ | 117,833 | |
| | | | | | | |
Bubba's 33 restaurants: | | | | | | | |
Store weeks | | | 468 | | | 405 | |
Comparable restaurant sales | | | 21.3 | % | | 24.1 | % |
Average unit volume (in thousands) | | $ | 1,398 | | $ | 1,151 | |
| | | | | | | |
Weekly sales by group: | | | | | | | |
Comparable restaurants (30 and 25 units, respectively) | | $ | 107,387 | | $ | 91,663 | |
Average unit volume restaurants (4 and 5 units, respectively) | | $ | 108,771 | | $ | 72,742 | |
Restaurants less than six months old (2 units, respectively) | | $ | 140,855 | | $ | 75,610 | |
| | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Q3 2017 |
| Q3 2016 |
| 2017 YTD |
| 2016 YTD |
|
| ||||
Company Restaurants: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in store weeks |
|
| 8.1 | % |
| 7.6 | % |
| 8.0 | % |
| 8.1 | % |
|
Increase in average unit volume |
|
| 3.9 | % |
| 2.8 | % |
| 3.1 | % |
| 3.7 | % |
|
Other(1) |
|
| 0.3 | % |
| (0.3) | % |
| 0.2 | % |
| (0.4) | % |
|
Total increase in restaurant sales |
|
| 12.3 | % |
| 10.1 | % |
| 11.3 | % |
| 11.4 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Store weeks |
|
| 5,868 |
|
| 5,427 |
|
| 17,324 |
|
| 16,039 |
|
|
Comparable restaurant sales growth |
|
| 4.5 | % |
| 3.4 | % |
| 4.0 | % |
| 4.2 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas Roadhouse restaurants only: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable restaurant sales growth |
|
| 4.6 | % |
| 3.5 | % |
| 4.0 | % |
| 4.2 | % |
|
Average unit volume (in thousands) |
| $ | 1,197 |
| $ | 1,152 |
| $ | 3,776 |
| $ | 3,663 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weekly sales by group: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable restaurants (396 and 368 units, respectively) |
| $ | 92,712 |
| $ | 89,079 |
|
|
|
|
|
|
|
|
Average unit volume restaurants (21 and 24 units, respectively)(2) |
| $ | 79,891 |
| $ | 80,390 |
|
|
|
|
|
|
|
|
Restaurants less than six months old (16 units for each period) |
| $ | 93,419 |
| $ | 84,539 |
|
|
|
|
|
|
|
|
(1) |
|
(2) | Includes the impact of the year-over-year change in sales volume of all |
|
|
The increasesincrease in restaurant sales for all periods presented wereQ1 2022 is primarily attributabledue to the opening of new restaurants combined with an increase in average unit volume, driven by an increase in comparable restaurant sales, growth.along with an increase in store weeks driven by the opening of new restaurants and the acquisition of franchise restaurants. Comparable restaurant sales growth for allboth periods presented was due to an increaseincreases in our guest traffic counts and an increaseincreases in our per person average check as shown in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Q3 2017 |
|
| Q3 2016 |
|
| 2017 YTD |
|
| 2016 YTD |
|
|
Guest traffic counts |
|
| 3.5 | % |
| 2.0 | % |
| 3.2 | % |
| 2.7 | % |
|
Per person average check |
|
| 1.0 | % |
| 1.4 | % |
| 0.8 | % |
| 1.5 | % |
|
Comparable restaurant sales growth |
|
| 4.5 | % |
| 3.4 | % |
| 4.0 | % |
| 4.2 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2123
| | | | | | | |
| |
| Q1 2022 |
| | Q1 2021 | |
Guest traffic counts | | | 7.0 | % | | 13.0 | % |
Per person average check | | | 9.0 | % | | 5.5 | % |
Comparable restaurant sales growth | | | 16.0 | % | | 18.5 | % |
| | | | | | | |
Year-over-yearThe increase in guest traffic counts was driven by the re-opening of our dining rooms, the continued easing of dining room capacity restrictions through 2021 and continued strong to-go sales. As of March 29, 2022, all of our company restaurants were operating without capacity restrictions and had done so for the entire Q1 2022 period. As of March 30, 2021, all of our domestic company and franchise locations had re-opened their dining rooms, many of which were operating under various limited capacity restrictions. To-go sales for newer restaurants included in our average unit volume, but excluded from our comparableas a percentage of restaurant sales partially offset the impact of positive comparable restaurant sales growth in Q3 2017 and 2017 YTD. were 14.8% for Q1 2022 compared to 22.3% for Q1 2021.
The increases in our perPer person average check forincludes the periods presented were primarily driven bybenefit of menu price increases takenof approximately 4.2% and 1.75% implemented in 2017, 2016October 2021 and 2015. In 2016 and 2015, we increased menu prices in the fourth quarter by approximately 1.0% and approximately 2.0%,April 2021, respectively. In May 2017, we took an additional price increase of 0.5%. These menu price increases were taken primarily as a result of inflationary pressures, primarily commodities and/or labor.commodity and labor inflation. In Q3 2017 and 2017 YTD, average guest check did not increase in line with theaddition, we implemented a menu price increases implemented as some guests shifted to lower priced menu items and/or purchased fewer beverages. increase of 3.2% in April 2022 and may take additional pricing in 2022.
In 2017,Q1 2022, we opened three company restaurants and on the first day of our 2022 fiscal year we acquired seven franchise restaurants. As of March 29, 2022, an additional 11 restaurants were under construction. In 2022, we plan to open 26 or 27 company restaurants, including fourapproximately 25 Texas Roadhouse and Bubba’s 33 company restaurants. We opened 20In total, we expect store week growth of approximately 6.5% in 2022, including the impact of the seven franchise restaurants acquired.
Other sales primarily represent the net impact of the amortization of third party gift card fees and gift card breakage income. The unfavorable impact was $5.5 million and $4.1 million for Q1 2022 and Q1 2021, respectively. The change is due to higher amortization of third party fees due to the increase in 2017 YTD including 16 Texas Roadhouse restaurants and four Bubba’s 33 restaurants. We have begun construction for all ofsales through our expected 2017 openings. Additionally, we currently plan to open approximately 30 company restaurants in 2018, including up to seven Bubba’s 33 restaurants.third party gift card program, partially offset by higher breakage income.
Franchise Royalties and Fees.Franchise royalties and fees increased by $0.1$0.8 million, or by 3.6%14.2%, in Q3 2017 from Q3 2016 and $0.2 million, or by 1.3%, in 2017 YTD from 2016 YTD.Q1 2022 compared to Q1 2021. The increases in Q3 2017 and 2017 YTD were attributableincrease was due to an increase inhigher average unit volume, at domestic restaurants, driven by comparable restaurant sales growth and the opening of new franchise restaurants. These increases were partially offset by the loss of royalties associated with the acquisition of four franchise restaurants in Q1 2017 and a decrease in average unit volume at international restaurants, driven by a decrease in comparable restaurant sales at those locations.
Franchise comparable restaurant sales increased 2.8% and 2.9%22.9% in Q3 2017 and 2017 YTD,Q1 2022 which included an increase in domestic franchise comparable restaurantrestaurants sales of 4.7%20.4%. These increases were partially offset by decreased royalties related to the seven franchise restaurants that were acquired.
In Q1 2022, our existing franchise partners opened two Texas Roadhouse restaurants and 4.0%, respectively. Franchise restaurant count activity is shown in the restaurant activity table above. In 2017, we anticipate that our existing franchise restaurant partners will open as many as five, primarily international, Texas Roadhouse restaurants, three of which opened in 2017 YTD. Additionally, we currently anticipate our franchise partnersthey will open as many as seven Texas Roadhouse restaurants, primarily international, in 2018.2022.
Restaurant Cost of Sales. Restaurant cost of sales,Food and Beverage Costs.Food and beverage costs, as a percentage of restaurant and other sales, decreasedincreased to 32.9%34.4% in Q3 2017 from 33.9%Q1 2022 compared to 31.6% in Q3 2016 and decreased to 32.8% in 2017 YTD from 33.9% in 2016 YTD. These decreases wereQ1 2021. The increase was primarily attributabledue to commodity deflation and menu pricing actions.inflation partially offset by the benefit of a higher guest check. Commodity deflation of approximately 2.0% in Q3 2017 and 2.1% in 2017 YTDinflation was 17.0% for Q1 2022, primarily driven by lower food costs, primarily beef. Recent menu pricing actions are summarized in our discussion of restaurant sales above. higher protein costs.
For the remainder of 2017,2022, we have fixed price contracts for approximately 60% of our overall food costs with the remainder subject to fluctuating market prices. We expect approximately 2.0% food cost deflation in 2017.
In 2018, wecurrently expect commodity costsinflation of 12% to be relatively flat. However,14% for 2018, we only have fixed price contractsthe year with prices locked for approximately 30% of our overall foodremaining forecasted costs withand the remainder subject to fluctuatingfloating market prices.
Restaurant Labor Expenses. Restaurant labor expenses, as a percentage of restaurant and other sales, increased to 31.6%32.8% in Q3 2017Q1 2022 compared to 30.4%32.5% in Q3 2016 and increased to 30.9% in 2017 YTD compared to 29.7% in 2016 YTD. These increases wereQ1 2021. The increase was primarily attributabledue to higher average wage rates, current staffing initiatives, and a change in our compensation structure, as discussed below, partially offset by lower workers’ compensationbenefit expense as well as the benefit from an increase in average unit volume. Lower workers’ compensation expense was driven by a $1.5 million reduction in workers’ compensation costs recorded in Q3 2017 compared to a $0.3 million reduction in costs recorded in Q3 2016 due to changes in our claims development history.
In 2016, the Department of Labor published changes related to the Fair Labor Standards Act ("FLSA") which would have resulted in changes to the threshold for overtime pay. The changes were scheduled to go into effect on December 1, 2016, however, in late November a federal judge blocked the implementation of the changes. Despite the injunction, we continuedlabor market pressures along with the implementation of the changes to our overtime policies as originally planned.
22
For the remainder of 2017, we expect approximately 7.0% to 8.0% inflation due to increases in state-mandated minimum and tipped wageswage rates and increased competition for qualified workers, as well asinvestment in our people. In addition, higher dining room sales versus to-go sales also contributed to the increase. These were partially offset by the impactbenefit of changesa higher guest check, the increase in average unit volume and a decrease of $1.8 million in group insurance due to favorable claims experience.
In 2022, we anticipate our labor costs will continue to be pressured by wage and other inflation of approximately 7% driven by labor market pressures, increases in state-mandated minimum and tipped wage rates, and increased investment in our compensation structure as discussed above. We expect the changes to our compensation structure to increase our 2017 labor costs by $4.5 million to $5.5 million, which is included in our 7.0% to 8.0% inflation guidance. These increases may or may not be offset by additional menu price adjustments or guest traffic growth.people.
24
Restaurant Rent Expense.Restaurant rent expense, as a percentage of restaurant and other sales, remained relatively unchanged at 2.1%decreased to 1.7% in Q3 2017 and Q3 2016 as well as 2.0%Q1 2022 compared to 1.8% in 2017 YTD and 2016 YTD. For both periods,Q1 2021. The decrease was due to the benefit from an increase in average unit volume was partially offset by higher rent expense, as a percentage of restaurant and other sales, at our newer restaurants.
Restaurant Other Operating Expenses.Restaurant other operating expenses, as a percentage of restaurant and other sales, increaseddecreased to 15.6%14.7% in Q3 2017Q1 2022 compared to 15.4%15.5% in Q3 2016 and increasedQ1 2021. The decrease was primarily due to 15.3% in 2017 YTD compared to 15.2% in 2016 YTD. In Q3 2017, higher general liability insurance and higher costs associated with remodels were partially offset by lower costs associated with utilities and lower bonus expense along with anthe increase in average unit volume. In 2017 YTD, higher general liability insurance wasvolume and lower supplies and bonus expense partially offset by lower bonus expense along with an increase in average unit volume. Higher general liability insurance was driven by a $1.5 million reduction to general liability insurance costs recorded in Q3 2016 compared to a $0.2 million reduction in costs recorded in Q3 2017 due to changes in our claims development history. higher credit card charges and higher travel costs.
Restaurant Pre-opening Expenses.Pre-opening expenses decreased to $4.5were $4.3 million in Q3 2017 from $5.0 million in Q3 2016Q1 2022 and remained relatively unchanged at $14.3 million in 2017 YTD and 2016 YTD. These variances were primarily due to the timing of restaurant openings.
Overall, we plan to open 26 or 27 company-owned restaurants in 2017 compared to 30 company-owned restaurants in 2016.Q1 2021, respectively. Pre-opening costs will fluctuate from quarter to quarter based on the specific pre-opening costs incurred for each restaurant, the number and timing of restaurant openings and the number and timing of restaurant managers hired.
Depreciation and Amortization Expense.D&A, as a percentage of total revenue, increaseddecreased to 4.4%3.4% in Q3 2017Q1 2022 compared to 4.3%3.9% in Q3 2016 and increased to 4.1% in 2017 YTD compared to 4.0% in 2016 YTD. These increases wereQ1 2021. The decrease was primarily due to the increase in average unit volume partially offset by higher depreciation as a percentage of revenue, at new restaurants and increased re-investmentintangible asset amortization.
Impairment and Closure Costs, Net. Impairment and closure costs, net was ($0.6) million in equipmentQ1 2022 compared to $0.5 million in Q1 2021. For Q1 2022, impairment and closure costs, net included a gain of $0.7 million associated with the sale of land and building that was previously classified as assets held for sale. For Q1 2021, impairment and closure costs, net included the impairment of land and building at oldera site that was relocated and was classified as assets held for sale.
General and Administrative Expenses. G&A, as a percentage of total revenue, decreased to 4.1% in Q1 2022 compared to 4.6% in Q1 2021. The decrease was primarily driven by the increase in average unit volume and lower legal settlement expense partially offset by an increase in travel and meeting expenses as we fully resumed in-person activities.
Interest Expense, Net.Interest expense, net was $0.4 million and $1.5 million in Q1 2022 and Q1 2021, respectively. The decrease was primarily driven by lower interest rates and decreased borrowings on our amended revolving credit facility.
Equity Income (Loss) from Unconsolidated Affiliates. Equity income was $0.3 million in Q1 2022 compared to equity loss of $0.2 million in Q1 2021. This was primarily due to an impairment charge of $0.5 million recorded in Q1 2021 related to our investment in a joint venture in China.
Income Tax Expense. Our effective tax rate decreased to 14.2% in Q1 2022 compared to 16.2% in Q1 2021. The reduction in our tax rate was primarily driven by an increase in FICA Tip and Work Opportunity tax credits partially offset by a reduction in the tax benefit for stock compensation. For 2022, we expect our effective tax rate to be approximately 15%, excluding the impact of any legislative changes enacted.
Segment Information
We manage our restaurant and franchising operations by concept and as a result have identified Texas Roadhouse, Bubba's 33, Jaggers, and our retail initiatives as separate operating segments. Our reportable segments are Texas Roadhouse and Bubba's 33. The Texas Roadhouse reportable segment includes the results of our domestic company Texas Roadhouse restaurants and domestic and international franchise Texas Roadhouse restaurants. ThisThe Bubba's 33 reportable segment includes the results of our domestic company Bubba's 33 restaurants. Our remaining operating segments, which include the results of our domestic company Jaggers restaurants and the results of our retail initiatives, are included in Other.
Management uses restaurant margin as the measure for assessing performance of our segments. Restaurant margin (in dollars and as a percentage of restaurant and other sales) represents restaurant and other sales less restaurant-level
25
operating costs, including food and beverage costs, labor, rent and other operating costs. Restaurant margin also includes sales and operating costs related to our non-royalty based retail initiatives. Restaurant margin is used by our chief operating decision maker to evaluate restaurant-level operating efficiency and performance. A reconciliation of income from operations to restaurant margin is included in the Results of Operations section above.
The following table presents a summary of restaurant margin by segment (in thousands):
| | | | | | | | | | | | |
| 13 Weeks Ended | | ||||||||||
| March 29, 2022 | | March 30, 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 | % | |
| | | | | | | | | | | | |
The increase wasin Texas Roadhouse and Bubba’s 33 restaurant margin dollars is driven by an increase in restaurant sales partially offset by commodity and labor inflation. The increase in restaurant sales is primarily attributable to an increase in average unit volume, driven by an increase in comparable restaurant sales along within an increase in store weeks.
The decrease in restaurant margin, as a percentage of restaurant and other sales, for the Texas Roadhouse and Bubba’s 33 segments is primarily driven by the impact of commodity and labor inflation partially offset by the benefit of an increase in average unit volume.comparable restaurant sales.
For the remainder of 2017 and 2018, we expect D&A, as a percentage of revenue, to continue to be higher than the prior year due to an increase in our capitalized costs related to restaurants opened in 2016 and 2017, along with an increase in the level of reinvestment in our existing restaurants.
General and Administrative Expenses. G&A, as a percentage of total revenue, decreased to 4.8% in Q3 2017 compared to 5.4% in Q3 2016 and increased to 5.6% in 2017 YTD compared to 5.5% in 2016 YTD. In Q3 2017, the decrease was driven by lower costs associated with incentive and share-based compensation, along with an increase in average unit volume. In 2017 YTD, the increase was primarily due to a pre-tax charge of $14.9 million ($9.2 million after-tax) related to legal fees and the settlement of a legal matter in March 2017 partially offset by lower incentive and share-based compensation and an increase in average unit volume. In addition, Q3 2016 and 2016 YTD also included charges of $1.2 million ($0.8 million after-tax) and $6.7 million ($4.1 million after-tax), respectively, related to the settlement of a legal matter.
Interest Expense, Net. Interest expense increased to $0.5 million in Q3 2017 compared to $0.3 million in Q3 2016 and increased to $1.2 million in 2017 YTD compared to $0.9 million in 2016 YTD. These increases were due to higher interest rates.
Income Tax Expense. Our effective tax rate decreased to 28.8% in Q3 2017 compared to 29.8% in Q3 2016 and decreased to 27.7% in 2017 YTD compared to 30.0% in 2016 YTD primarily due to the adoption of Accounting Standards Update 2016-09, Compensation – Stock Compensation. As a result of the new guidance requirements, excess tax benefits and tax deficiencies from share-based compensation are recognized within the income tax provision. During
23
Q3 2017, we recognized $0.4 million, or $0.01 per share, as an income tax benefit. During 2017 YTD, we recognized $3.0 million, or $0.04 per share, as an income tax benefit. For the remainder of 2017, we expect the effective tax rate to be approximately 28.0%. For 2018, we expect the effective tax rate to be between 28.0% and 29.0%.
Liquidity and Capital Resources
The following table presents a summary of our net cash provided by (used in) operating, investing and financing activities (in thousands):
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| 39 Weeks Ended |
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| September 26, 2017 |
| September 27, 2016 |
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| | | | | | | |||||||
| | 13 Weeks Ended | |||||||||||
|
| March 29, 2022 |
| March 30, 2021 | |||||||||
Net cash provided by operating activities |
| $ | 188,070 |
| $ | 159,782 |
| | $ | 187,769 | | $ | 178,013 |
Net cash used in investing activities |
|
| (133,565) |
|
| (113,219) |
| |
| (73,278) | |
| (36,474) |
Net cash used in financing activities |
|
| (53,013) |
|
| (24,184) |
| |
| (124,413) | |
| (9,048) |
Net increase in cash and cash equivalents |
| $ | 1,492 |
| $ | 22,379 |
| ||||||
Net (decrease) increase in cash and cash equivalents | | $ | (9,922) | | $ | 132,491 |
Net cash provided by operating activities was $188.1$187.8 million in 2017 YTDQ1 2022 compared to $159.8$178.0 million in 2016 YTD.Q1 2021. This increase was primarily due to an increaseincreases in net income and non-cash items such as depreciation and amortization expense along with an increaseamortization. This was partially offset by unfavorable changes in working capital. The increase in working capital was attributed to an increase in cash flows related to a change in the payment timing of accrued wages in the prior year along with a decrease in receivables partially offset by a change in deferred revenue related to gift cards.
Our operations have not required significant working capital and, like many restaurant companies, we have been able to operate with negative working capital.capital, if necessary. Sales are primarily for cash, and restaurant operations do not require significant inventories or receivables. In addition, we receive trade credit for the purchase of food, beverages and supplies, thereby reducing the need for incremental working capital to support growth.
Net cash used in investing activities was $133.6$73.3 million in 2017 YTDQ1 2022 compared to $113.2$36.5 million in 2016 YTD.Q1 2021. The increase was primarily due to the acquisition of fourseven franchise restaurants in Q1 2017 for a net purchase price of $16.5$26.4 million along withas well as an increase in capital expenditures. Theexpenditures, driven by an increase in capital expenditures was primarily due to increased spending related to new restaurant openings. company restaurants, refurbishments of existing restaurants and relocation of existing restaurants.
We require capital principally for the development of new company restaurants, the refurbishment or relocation of existing restaurants and the acquisition of franchise restaurants, if any. We either lease our restaurant site locations under operating leases for periods of five to 30 years (including renewal periods) or purchase the land when appropriate. As of September 26, 2017,March 29, 2022, we had developed 140148 of the 455576 company restaurants on land whichthat we own.
26
The following table presents a summary of capital expenditures related to the development of new restaurants and the refurbishment of existing restaurants (in thousands):
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| 2017 YTD |
| 2016 YTD |
| ||
New company restaurants |
| $ | 78,943 |
| $ | 75,231 |
|
Refurbishment of existing restaurants(1) |
|
| 38,094 |
|
| 37,988 |
|
Total capital expenditures |
| $ | 117,037 |
| $ | 113,219 |
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|
|
|
|
|
|
|
Restaurant-related repairs and maintenance expense(2) |
| $ | 18,956 |
| $ | 16,501 |
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|
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|
| | | | | | |
|
| 13 Weeks Ended | ||||
| | March 29, 2022 |
| March 30, 2021 | ||
New company restaurants | | $ | 26,326 | | $ | 22,975 |
Refurbishment or expansion of existing restaurants | |
| 18,160 | |
| 13,742 |
Relocation of existing restaurants | | | 3,666 | | | 705 |
Capital expenditures related to Support Center office | | | 877 | | | 1,244 |
Total capital expenditures | | $ | 49,029 | | $ | 38,666 |
Our future capital requirements will primarily depend on the number and mix of new restaurants we open, the timing of those openings and the restaurant prototype developed in a given fiscal year. These requirements will include costs directly related to opening new restaurants or relocating existing restaurants and may also include costs necessary to ensure that our infrastructure is able to support a larger restaurant base. In 2017,2022, we expect our capital expenditures to be approximately $170.0$230.0 million the
24
majority of which will relateand we currently plan to planned restaurant openings, including 26 or 27 restaurant openings in 2017. These amounts exclude any cash used for franchise acquisitions. In Q1 2017, we acquired four franchise restaurants for an aggregate purchase price of $16.5 million. See note 6 in the unaudited condensed consolidated financial statements for further discussion of these acquisitions.open approximately 25 Texas Roadhouse and Bubba’s 33 restaurants. We intend to satisfy our capital requirements over the next 12 months with cash on hand, net cash provided by operating activities and, if needed, funds available under our amended revolving credit facility. For 2017, we anticipate2022, net cash provided by operating activities willshould exceed capital expenditures. We currently anticipate this excess will be usedexpenditures, which we plan to use, along with cash on hand, to pay dividends, as approved by our Board of Directors, repurchase common stock and/or repay borrowings under our revolving credit facility.and acquire franchise restaurants, if applicable.
As of March 29, 2022, the estimated cost of completing capital project commitments over the next 12 months was approximately $160.3 million. See note 6 to the unaudited condensed consolidated financial statements for a discussion of contractual obligations.
Net cash used in financing activities was $53.0$124.4 million in 2017 YTDQ1 2022 compared to $24.2$9.0 million in 2016 YTD.Q1 2021. The increase is primarily due to borrowings on our revolving credit facility that occurred in Q1 2016 and an increase in dividends paid. These increases were partially offset by a decrease in spending onthe resumption of share repurchases along with proceeds from noncontrolling interest contributions.and the reinstatement of our quarterly dividend payment.
On May 22, 2014, ourAugust 2, 2021, the Company resumed the share repurchase program that had been suspended at the onset of the pandemic. On March 17, 2022, the Board of Directors approved a stock repurchase program under which we may repurchase up to $100.0$300.0 million of our common stock. This stock repurchase program has no expiration date and replaced a previous stock repurchase program which was approved on February 16, 2012.May 31, 2019. All repurchases to date under our stock repurchase programprograms have been made through open market transactions. The timing and the amount of any repurchases will be determined by management under parameters established by the Board, of Directors, based on an evaluation of our stock price, market conditions and other corporate considerations.
During 2017 YTD,Q1 2022, we made no share repurchases and had approximately $69.9paid $84.7 million remainingto repurchase 1,060,618 shares of our common stock. This includes $79.7 million repurchased under our prior authorization and $5.0 million under our current authorized stock repurchase program asprogram. As of September 26, 2017.March 29, 2022, $295.0 million remained authorized for stock repurchases.
On August 31, 2017,April 28, 2021, the Board reinstated the payment of a quarterly cash dividend. This was the first dividend since the Board voted to suspend the payment of quarterly cash dividends at the onset of the pandemic. On February 17, 2022, our Board of Directors authorized the payment of a quarterly cash dividend of $0.21$0.46 per share of common stock. stock which was distributed on March 25, 2022. The payment of this dividend totaling $14.9these dividends totaled $31.8 million was distributed on September 29, 2017 to shareholders of record at the close of business on September 13, 2017. The declared dividend is included as a liability in our unaudited condensed consolidated balance sheet as of September 26, 2017.Q1 2022.
We paid distributions of $4.0$2.0 million to equity holders of 1719 of our 1820 majority-owned company restaurants in 2017 YTD. In 2016 YTD, weQ1 2022. We paid $3.5distributions of $1.4 million to equity holders of all16 of our 1620 majority-owned company restaurants.restaurants in Q1 2021.
On August 7, 2017May 4, 2021, we entered into the Amended and Restated Credit Agreement (the "Amended Credit Agreement") with respectan agreement to amend our revolving credit facility with a syndicate of commercial lenders led by JPMorgan Chase Bank, N.A., and PNC Bank, N.A., and Wells Fargo Bank, N.A. The amended revolving credit facility remains an unsecured, revolving credit agreement under which we may borrowand has a borrowing capacity of up to $200.0$300.0 million with the option to increase the revolving credit facility by an additional $200.0 million subject to certain limitations.limitations, including approval by the syndicate of lenders. The Amended Credit Agreement extendsamendment also extended the maturity date to May 1, 2026.
27
The terms of the Amended Credit Agreementamendment require us to pay interest on outstanding borrowings at the London Interbank Offered RateLIBOR plus a margin of 0.875% to 1.875% and to pay a commitment fee of 0.125% to 0.30% per year on any unused portion of the amended revolving credit facility, in each case depending on our leverage ratio, or theratio. The amendment also provides an Alternate Base Rate which isthat may be substituted for LIBOR.
As of March 29, 2022 and December 28, 2021, we had $100.0 million outstanding on the highestamended revolving credit facility and $189.1 million of availability, net of $10.9 million of outstanding letters of credit. As of March 30, 2021, we had $240.0 million outstanding on the issuing banks’ prime lending rate,revolving credit facility prior to the Federal Funds rate plus 0.50% or the Adjusted Eurodollar Rate for a one month interest periodMay 4, 2021 amendment. These outstanding amounts are included as long-term debt on such day plus 1.0%. our unaudited condensed consolidated balance sheets.
The weighted-average interest rate for the revolving credit facility$100.0 million outstanding as of September 26, 2017 and December 27, 2016March 29, 2022 was 2.11% and 1.57%, respectively. As of September 26, 2017, we had $50.0 million outstanding under1.20%. The weighted-average interest rate for the revolving credit facility and $142.9$240.0 million of availability, netborrowings as of $7.1 million of outstanding letters of credit.March 30, 2021 was 1.95%.
The lenders’ obligation to extend credit pursuant to the Amended Credit Agreementamended revolving credit facility depends on us maintaining certain financial covenants, including a minimum consolidated fixed charge coverage ratio of 2.00 to 1.00 and a maximum consolidated leverage ratio of 3.00 to 1.00. The Amended Credit Agreement permits us to incur additional secured or unsecured indebtedness outside the revolving credit facility, except for the incurrence of secured indebtedness that in the aggregate is equal to or greater than $125.0 million and 20% of our consolidated tangible net worth.covenants. We were in compliance with all financial covenants as of September 26, 2017.March 29, 2022.
25
Contractual ObligationsGuarantees
The following table summarizes the amount of payments due under specified contractual obligations as of September 26, 2017 (in thousands):
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| Payments Due by Period |
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| Less than |
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| More than |
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| Total |
| 1 year |
| 1 - 3 Years |
| 3 - 5 Years |
| 5 years |
| |||||
Long-term debt obligations |
| $ | 51,993 |
| $ | 9 |
|
| 22 |
|
| 50,030 |
|
| 1,932 |
|
Interest(1) |
|
| 10,777 |
|
| 1,280 |
|
| 2,588 |
|
| 2,525 |
|
| 4,384 |
|
Operating lease obligations |
|
| 839,920 |
|
| 45,037 |
|
| 90,067 |
|
| 89,885 |
|
| 614,931 |
|
Capital obligations |
|
| 150,629 |
|
| 150,629 |
|
| — |
|
| — |
|
| — |
|
Total contractual obligations(2) |
| $ | 1,053,319 |
| $ | 196,955 |
| $ | 92,677 |
| $ | 142,440 |
| $ | 621,247 |
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|
|
|
|
We have no material minimum purchase commitments with our vendors that extend beyond a year. See note 5 to the unaudited condensed consolidated financial statements for a discussion of contractual obligations.
Off-Balance Sheet Arrangements
Except for operating leases (primarily restaurant leases), we do not have any material off-balance sheet arrangements.
Guarantees
As of September 26, 2017March 29, 2022 and December 27, 2016,28, 2021, we are contingently liable for $15.8$12.0 million and $16.4$12.2 million, respectively, for seven lease guarantees, listed in the table below.guarantees. These amounts represent the maximum potential liability of future payments under the guarantees. In the event of default, the indemnity and default clauses in our assignment agreements govern our ability to pursue and recover damages incurred. No material liabilities have been recorded as of September 26, 2017March 29, 2022 and December 27, 201628, 2021 as the likelihood of default was deemed to be less than probable and the fair value of the guarantees is not considered significant.
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Recently Issued Accounting Standards
Revenue Recognition
(Accounting Standards Update 2014‑09, "ASU 2014‑09")
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in GAAP when it becomes effective. In July 2015, the FASB approved a one-year deferral of the effective date of the new revenue standard. ASU 2014-09 is now effective for fiscal years beginning on or after December 15, 2017 (our 2018 fiscal year), including interim periods within those annual periods, with early adoption permitted in the first quarter of 2017. The standard permits the use of either the full retrospective or cumulative-effect transition method. In March and April 2016, the FASB issued the following amendments to clarify the implementation guidance: ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) and ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. Additionally, on December 21, 2016, the FASB issued ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, which provides disclosure relief and clarifies the scope and application of the new revenue standard and related cost guidance. The standard will not impact our recognition of sales from company-owned restaurants or our recognition of continuing fees from franchisees, which are based on a percentage of franchise sales. Under this standard, initial franchise fees and upfront fees from international development agreements will be recognized over the life of the applicable franchise agreements. We currently recognize initial franchise fees when the related services have been provided, which is generally upon the opening of the restaurant, and upfront fees on a pro-rata basis as restaurants under the development agreement are opened. In addition, certain transactions that were previously recorded as a reduction of expense will be classified as revenue. These include breakage income from our gift card program which is currently recognized as a reduction of other operating expense and advertising contributions received from our franchisees which are currently recognized as a reduction of general and administrative expense. We continue to evaluate the standard’s impact on other transactions currently not classified as revenue. We currently expect to use the cumulative-effect method of adoption and do not believe this adoption will have a material impact on our consolidated statements of income and comprehensive income.
27
Leases
(Accounting Standards Update 2016-02, "ASU 2016-02")
In February 2016, the FASB issued ASU 2016-02, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. This update also requires additional disclosures about the amount, timing, and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 (our 2019 fiscal year). Early adoption is permitted. A modified retrospective approach is required for all leases existing or entered into after the beginning of the earliest comparative period in the consolidated financial statements.
We had operating leases with remaining rental payments of approximately $839.9 million as of September 26, 2017. The discounted minimum remaining rental payments will be the starting point for determining the right-of-use asset and lease liability. While we are still in the process of assessing the impact of this new standard on our consolidated financial position, results of operations and cash flows, we expect the adoption of this standard will have a material impact on our consolidated balance sheets due to the recognition of the right-of-use asset and lease liability related to operating leases. While the new standard is also expected to impact the measurement and presentation of elements of expenses and cash flows related to leasing arrangements, we do not presently believe there will be a material impact on our consolidated statements of income and comprehensive income or our consolidated statement of cash flows.
Financial Instruments
(Accounting Standards Update 2016-13, "ASU 2016-13")
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires measurement and recognition of expected versus incurred losses for financial assets held. ASU 2016-13 is effective for annual periods beginning after December 15, 2019 (our 2020 fiscal year), with early adoption permitted for annual periods beginning after December 15, 2018. We are currently assessing the impact of this new standard on our consolidated financial position, results of operations and cash flows.
Statement of Cash Flows
(Accounting Standards Update 2016-15, "ASU 2016-15")
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which adds and/or clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. ASU 2016-15 is effective for annual periods beginning after December 15, 2017 (our 2018 fiscal year) and interim periods within those annual periods. Early adoption is permitted. We do not expect the adoption of this guidance will have a material impact on our consolidated financial position, results of operations or cash flows.
Income Taxes
(Accounting Standards Update 2016-16, "ASU 2016-16")
In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740), which addresses the income tax consequences of intra-entity transfers of assets other than inventory. Current GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. This standard will require recognition of current and deferred income taxes resulting from an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 is effective for annual and interim periods beginning after December 15, 2017 (our 2018 fiscal year). Early adoption is permitted. We do not expect the adoption of this guidance will have a material impact on our consolidated financial position, results of operations or cash flows.
28
Goodwill
(Accounting Standards Update 2017-04, "ASU 2017-04")
In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Text for Goodwill Impairment, which simplifies the accounting for goodwill impairment and is expected to reduce the cost and complexity of accounting for goodwill. ASU 2017-04 removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Instead, goodwill impairment will be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of the goodwill. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019 (our 2020 fiscal year) and will be applied on a prospective basis. Early adoption is permitted for interim and annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently assessing the impact of this new standard on our consolidated financial position, results of operations and cash flows.
Compensation – Stock Compensation
(Accounting Standards Update 2017-09, "ASU 2017-09")
In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies when a change in the terms or conditions of a share-based payment award must be accounted for as a modification. ASU 2017-09 requires modification accounting if the fair value, vesting condition or the classification of the award is not the same immediately before and after a change in the terms and conditions of the award. ASU 2017-09 is effective for annual and interim periods beginning after December 15, 2017 (our 2018 fiscal year). Early adoption is permitted. We do not expect the adoption of this guidance will have a material impact on our consolidated financial position, results of operations or cash flows.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk from changes in interest rates on variable rate debt and changes in commodity prices. Our exposure to interest rate fluctuations is limited to our outstanding bank debt. The terms of the amended revolving credit facility require us to pay interest on outstanding borrowings at London Interbank Offering Rate ("LIBOR") plus a margin of 0.875% to 1.875%, and pay a commitment fee of 0.125% to 0.30% per year on any unused portion of the revolving credit facility, in each case depending on our leverage ratio, or theratio. The amended revolving credit facility also provides an Alternate Base Rate which is the highestthat may be substituted for LIBOR. As of the issuing banks’ prime lending rate, the Federal Funds rate plus 0.50% or the Adjusted Eurodollar Rate for a one month interest period on such day plus 1.0%. At September 26, 2017,March 29, 2022, we had $50.0$100.0 million outstanding underon our amended credit agreement. This outstanding amount is included as long-term debt on our unaudited condensed consolidated balance sheets.
The weighted-average interest rate for the $100.0 million outstanding on our amended revolving credit facility which bears interest at 87.5 to 187.5 basis points (depending on our leverage ratios) over LIBOR. The interest rate on our revolving credit facility at September 26, 2017as of March 29, 2022 was 2.11%1.20%. Should interest rates based on thisthese variable rate borrowingborrowings increase by one percentage point, our estimated annual interest expense would increase by $0.5$1.0 million.
In an effort to secure high quality, low costlow-cost ingredients used in the products sold in our restaurants, we employ various purchasing and pricing contract techniques. When purchasing certain types of commodities, we may be subject to prevailing market conditions resulting in unpredictable price volatility. For certain commodities, we may also enter into contracts for terms of one year or less that are either fixed price agreements or fixed volume agreements where the price is negotiated with reference to fluctuating market prices. We currently do not use financial instruments to hedge commodity prices, but we will continue to evaluate their effectiveness. Extreme and/or long termlong-term increases in commodity prices could adversely affect our future results, especially if we are unable, primarily due to competitive reasons, to increase menu prices. Additionally, if there is a time lag between the increasing commodity prices and our ability to increase menu prices or if we believe the commodity price increase to be short in duration and we choose not to pass on the cost increases, our short‑termshort-term financial results could be negatively affected.
We are subject to business risk as our beef supply is highly dependent upon threefour vendors. To date, we have been able to properly manage any supply shortages but have experienced increased costs. If these vendors wereare unable to fulfill
28
their obligations under their contracts, we may encounter further supply shortages and/or higher costs to secure adequate suppliessupply and a possible loss of sales, any of which would harm our business.
29
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controlsDisclosure Controls and proceduresProcedures
We have evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to, and as defined in, Rules 13a‑15(e)13a-15(e) and 15d‑15d-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report. Based on the evaluation, performed under the supervision and with the participation of our management, including the Chief Executive Officer (the "CEO") and the Chief Financial Officer (the "CFO"), our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective as of September 26, 2017.March 29, 2022.
Changes in internal controlInternal Control
There were no significant changes in the Company’s internal control over financial reporting that occurred during the period covered by this report13 weeks ended March 29, 2022 that materially affected or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
3029
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Occasionally, we are a defendant in litigation arising in the ordinary course of our business, including "slip and fall" accidents, employment related claims, claims related to our service of alcohol, and claims from guests or employees alleging illness, injury or food quality, health or operational concerns. None of these types of litigation, most of which are covered by insurance, has had a material adverse effect on us during the periods covered by this report and, as of the date of this report, we are not party to any litigation that we believe could have a material adverse effect on our business.
Information regarding risk factors appears in our Annual Report on Form 10-K for the year ended December 27, 2016,28, 2021, under the heading "Special Note Regarding Forward-looking Statements" and in the Form 10-K Part I, Item 1A, Risk Factors. There have been no material changes from the risk factors previously disclosed in our Form 10-K for the year ended December 27, 2016.28, 2021.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On May 22, 2014,March 17, 2022, our Board of Directors (the "Board") approved a stock repurchase program which authorized us to repurchase up to $100.0$300.0 million of our common stock. For the 13 and 39 weeks ended September 26, 2017, we did not repurchase any shares of common stock. As of September 26, 2017, we had approximately $69.9 million remaining under our authorized repurchase program. This stock repurchase program has no expiration date and replaced a previous stock repurchase program which was approved on February 16, 2012.May 31, 2019. The previous program authorized us to repurchase up to $250.0 million of our common stock and did not have an expiration date. All repurchases to date under our stock repurchase programprograms have been made through open market transactions. The timing and the amount of any repurchases through this program will be determined by management under parameters established by ourthe Board, of Directors, based on an evaluation of our stock price, market conditions and other corporate considerations. During Q1 2022, we paid $84.7 million to repurchase 1,060,618 shares of our common stock. This includes $79.7 million repurchased under our prior authorization and $5.0 million under our current authorized stock repurchase program. As of March 29, 2022, $295.0 million remained authorized for stock repurchases.
The following table includes information regarding purchases of our common stock made by us during the 13 weeks ended March 29, 2022 in connection with the repurchase programs described above:
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| Maximum Number |
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| | | | | | | | | (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 |
| ||
December 29 to January 25 |
| 177,420 | | $ | 85.26 |
| 177,420 | | $ | 80,997,439 | |
January 26 to February 22 |
| 123,198 | | $ | 85.18 |
| 123,198 | | $ | 70,503,193 | |
February 23 to March 29 |
| 760,000 | | $ | 77.74 |
| 760,000 | | $ | 295,030,590 | |
| | | | | | | | | | | |
Total |
| 1,060,618 | | | |
| 1,060,618 | | | | |
ITEM 3. DEFAULTS UPON SENIOR SECURITIESSECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
30
31
Exhibit No. | Description | |
| | |
31.1 | | |
31.2 | | |
32.1 | | |
32.2 | | |
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) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| TEXAS ROADHOUSE, INC. | |
| | |
Date: | By: | /s/ |
| |
|
| | Chief Executive Officer and President (principal executive officer) |
| | |
| | |
Date: | By: | /s/ |
| |
|
| |
|
| | (principal financial officer) |
| | ( |
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