Texas Roadhouse, Inc. (TXRH) - Q1 2025 10-Q Summary
Business Context and Reporting Period
This report covers the 13-week period ended April 1, 2025 (Q1 2025). Texas Roadhouse, Inc. operates three restaurant concepts: Texas Roadhouse, Bubba's 33, and Jaggers. As of April 1, 2025, the company owned and operated 688 restaurants and franchised 104 additional locations across 49 states, one U.S. territory, and ten foreign countries. The company is a large accelerated filer with 66,341,653 shares of common stock outstanding as of April 30, 2025.
Key Financial Metrics
| Metric | Q1 2025 | Q1 2024 |
|---|---|---|
| Total Revenue | $1,447.6 million | $1,321.2 million |
| Net Income (Attributable to TXRH) | $113.7 million | $113.2 million |
| Diluted EPS | $1.70 | $1.69 |
| Restaurant Margin | $239.3 million (16.6% of sales) | $228.4 million (17.4% of sales) |
| Operating Cash Flow | $237.7 million | $243.4 million |
| Cash and Equivalents | $221.1 million | $213.4 million |
| Debt Outstanding | $0 | $0 |
| Capital Expenditures | $77.4 million | $77.7 million |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 9.6% year-over-year, driven by a 7.1% increase in store weeks (due to new openings and franchise acquisitions) and a 3.5% increase in comparable restaurant sales.
- Margin Compression: While restaurant margin dollars increased 4.7%, the margin percentage declined from 17.4% to 16.6%. This was primarily due to commodity inflation (2.1%, led by beef costs) and wage/labor inflation (4.6%).
- Acquisitions: The company acquired 14 domestic franchise restaurants for $78.3 million, significantly impacting investing cash flows.
- Shareholder Returns: The quarterly dividend increased to $0.68 per share from $0.61. The company repurchased $50.2 million of common stock (281,091 shares) compared to $8.9 million in the prior year.
Guidance, Outlook, and Risks
- Outlook: Management expects store week growth of approximately 5% in 2025. Commodity inflation is forecasted at approximately 4% for the year, including estimated tariff impacts. Labor cost inflation is expected to range between 4% and 5%.
- Tax Rate: The effective tax rate is expected to be between 15% and 16% for 2025, up from 14.8% in Q1 2025, due to a decrease in the FICA tip tax credit impact.
- Capital Allocation: Total capital expenditures for 2025 are projected to be approximately $400 million.
- Subsequent Event: On April 24, 2025, the company entered into a new $450 million revolving credit facility maturing in 2030, replacing the previous $300 million facility. No borrowings were outstanding under either facility at the time of execution.
- Risks: Key risks include continued inflation in food (specifically beef) and labor costs, potential impacts of tariffs, and general economic conditions affecting guest traffic.
Investor Verification Checklist
- Margin Sustainability: Verify if the 0.8% decline in restaurant margin percentage is a temporary inflationary headwind or a structural shift in cost management.
- Acquisition Integration: Monitor the performance of the 14 newly acquired franchise restaurants to ensure they meet projected earnings accretion.
- Debt Capacity: Confirm the terms and covenants of the new $450 million credit facility entered into in late April 2025.
- Commodity Hedging: Assess the company's exposure to floating market rates for the 50% of forecasted costs not currently locked in.
- Comparable Sales Drivers: Analyze the sustainability of the 3.5% comparable sales growth, specifically the balance between traffic growth (1.1%) and check growth (2.4%).