Chuy’s Holdings, Inc. Announces First Quarter 2014 Financial Results

2014-05-06
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  • Revenue increased 19.8% to $56.0 million from $46.7 million in the first quarter of 2013. Comparable restaurant sales increased 4.2% as compared to the same period in 2013.

    Chuy’s Holdings, Inc. (NASDAQ:CHUY) today announced financial results for the first quarter ended March 30, 2014.

    Highlights for the first quarter ended March 30, 2014 were as follows:

    • Revenue increased 19.8% to $56.0 million from $46.7 million in the first quarter of 2013.
    • Comparable restaurant sales increased 4.2% as compared to the same period in 2013.
    • Net income was $2.6 million, or $0.16 per diluted share, compared to $2.6 million, or $0.16 per diluted share, in the first quarter of 2013.
    • Pro forma net income (1) was $2.5 million, or $0.15 per diluted share in the first quarter of 2013.
    • Restaurant-level EBITDA(1) increased 8.5% to $10.2 million from $9.4 million in last year’s first quarter.
    • Three new restaurants opened during the first quarter of 2014.
     

    (1)

    Pro forma net income and restaurant-level EBITDA are non-GAAP measures. For reconciliations of pro forma net income and restaurant-level EBITDA to GAAP net income and discussions of why we consider them useful, see the “Reconciliation of Non-GAAP Measures” accompanying this release.

     

    Steve Hislop, President and Chief Executive Officer of Chuy’s Holdings, Inc. stated, “We maintained our top-line momentum in the first quarter with a comparable restaurant sales increase of 4.2% leading to a 19.8% increase in revenues. Our made-from-scratch, Tex Mex-inspired menu, commitment to value and upbeat, irreverent atmosphere continue to clearly resonate with our guests. While we faced short-term cost challenges related to commodities, increased labor related to new unit openings and weather, our full-year financial goals remain intact.”

    Added Hislop, “With four new restaurants opened this year, our 2014 development plan of ten to eleven units is on track. We are pleased with the results of our new units as we continue to focus our development efforts on our newer markets with existing Chuy’s restaurants, which we believe will continue to drive awareness for the Chuy’s brand.”

    First Quarter 2014 Financial Results

    Revenue increased $9.3 million, or 19.8%, to $56.0 million in the first quarter of 2014 compared to the first quarter of 2013. The increase was primarily driven by $8.6 million in incremental revenue from an additional 124 operating weeks provided by 12 new restaurants opened during and subsequent to the first quarter of 2013.

    Comparable restaurant sales increased 4.2% in the first quarter of 2014 as compared to the same period in 2013. The increase in comparable sales was driven by a 1.9% increase in average check and a 2.3% increase in average weekly customers. The comparable restaurant base consisted of 35 restaurants during the first quarter of 2014.

    Total restaurant operating costs as a percentage of revenue increased to 81.9% in the first quarter of 2014 from 80.0% in the first quarter of 2013, driven primarily by the impact of higher food costs, particularly beef, dairy and produce costs, and higher labor costs as a percentage of revenue driven by increased training and staffing levels at our new restaurants and inefficiencies associated with the bad weather we experienced in the first quarter across the South and Southeast.

    Net income for the first quarter of 2014 was $2.6 million, or $0.16 per diluted share, compared to $2.6 million, or $0.16 per diluted share, in the first quarter of 2013. Net income for the first quarter of 2013 included approximately $417,000 in costs associated with two separate secondary offerings of the Company’s common stock. Net income for the first quarter of 2013 also included a net favorable tax benefit of $527,000 resulting from the favorable impact of a one-time adjustment for incremental employment tax credits from open tax years which was partially offset by the unfavorable tax impact of the non-deductible secondary offering costs.

    Pro forma net income was $2.5 million or $0.15 per diluted share in the first quarter of 2013. A reconciliation between GAAP net income and pro forma net income is included in the accompanying financial data.

    Development Update

    During the first quarter, three new Chuy’s restaurants were opened — Rogers, Arkansas; Orlando, Florida; and Addison, Texas. Subsequent to the end of the first quarter, one additional Chuy’s restaurant was opened in Noblesville, Indiana.

    2014 Outlook

    The Company reaffirms its fiscal year 2014 guidance with diluted net income per share ranging from $0.81 to $0.84. This compares to pro forma diluted net income per share of $0.69 in 2013. The net income guidance for fiscal year 2014 is based, in part, on the following annual assumptions:

    • Comparable restaurant sales growth of approximately 2.0% to 2.5%, which implies 1.5% to 2.0% comparable restaurant sales growth during the last three quarters of 2014;
    • Restaurant pre-opening expenses of approximately $3.8 million to $4.3 million;
    • General and administrative expense of approximately $12.5 million to $13.0 million;
    • An effective tax rate of approximately 29% to 31%;
    • The opening of 10 to 11 new restaurants;
    • Net capital expenditures (net of tenant improvement allowances) of approximately $27.5 million to $30.0 million; and
    • Annual weighted average diluted shares outstanding of 16.7 million to 16.8 million shares.

    The following definitions apply to these terms as used in this release:

    Comparable restaurant sales reflect changes in sales for the comparable group of restaurants over a specified period of time. We consider a restaurant to be comparable in the first full quarter following the 18th month of operations. Changes in comparable sales reflect changes in customer count trends as well as changes in average check.

    Average check is calculated by dividing revenue by total entrées sold for a given time period. Average check reflects menu price influences as well as changes in menu mix.

    About Chuy’s

    Founded in Austin, Texas in 1982, Chuy’s owns and operates 52 full-service restaurants across fourteen states serving a distinct menu of authentic, made from scratch Tex Mex inspired dishes. Chuy’s highly flavorful and freshly prepared fare is served in a fun, eclectic and irreverent atmosphere, while each location offers a unique, “unchained” look and feel, as expressed by the concept’s motto “If you’ve seen one Chuy’s, you’ve seen one Chuy’s!”. 

       

    Chuy’s Holdings, Inc. and Subsidiaries

    Unaudited Condensed Consolidated Income Statements

    (In thousands, except share and per share data)

     
    Thirteen Weeks Ended
    March 30,

    2014

        March 31,

    2013

    Revenue $ 55,951 $ 46,698
     
    Costs and expenses:
    Cost of sales 15,528 12,557
    Labor 18,710 14,975
    Operating 7,561 6,547
    Occupancy 3,554 2,891
    General and administrative 2,923 2,795
    Secondary offering costs 417
    Marketing 422 352
    Restaurant pre-opening 1,155 971
    Depreciation and amortization 2,316   1,968
    Total costs and expenses 52,169   43,473
    Income from operations 3,782 3,225
    Interest expense 22   33
    Income before income taxes 3,760 3,192
    Income tax expense 1,128   551
    Net income 2,632   2,641
     
    Net income per common share:
    Basic $ 0.16   $ 0.16
    Diluted $ 0.16   $ 0.16
     
    Weighted-average shares outstanding:
    Basic 16,397,629   16,111,286
    Diluted 16,712,418   16,577,053
     
           

    Chuy’s Holdings, Inc. and Subsidiaries

    Unaudited Selected Balance Sheet Data

    (In thousands)

     
           
    March 30,

    2014

    December 30,

    2012

    Cash and cash equivalents $ 4,806 $ 5,323
    Total assets 155,442 151,162
    Long-term debt 8,000 6,000
    Total stockholders’ equity 108,161 104,488
     

    Reconciliation of Non-GAAP Measures

    We prepare our financial statements in accordance with generally accepted accounting principles (GAAP). Within our press release, we make reference to non-GAAP restaurant-level EBITDA, and pro forma net income. Restaurant-level EBITDA represents net income plus the sum of general and administrative expenses, secondary offering costs, restaurant pre-opening costs, depreciation and amortization, interest and taxes. Restaurant-level EBITDA is presented because: (i) the Company believes it is a useful measure for investors to assess the operating performance of our business without the effect of non-cash depreciation and amortization expenses; and (ii) the Company uses restaurant-level EBITDA internally as a benchmark to evaluate its operating performance or compare our performance to that of our competitors. Additionally, the Company presents restaurant-level EBITDA because it excludes the impact of general and administrative expenses, which are not incurred at the restaurant level, and restaurant pre-opening costs, which are non-recurring at the restaurant level. The use of restaurant-level EBITDA thereby enables the Company and its investors to compare operating performance between periods and to compare our operating performance to the performance of the Company’s competitors. The measure is also widely used within the restaurant industry to evaluate restaurant level productivity, efficiency and performance. The use of restaurant-level EBITDA as a performance measure permits a comparative assessment of our operating performance relative to our performance based on our GAAP results, while isolating the effects of some items that vary from period to period without any correlation to core operating performance or that vary widely among similar companies. The Company presents restaurant-level EBITDA margin for the same reasons it presents restaurant-level EBITDA.

    Pro forma net income represents our net income plus the expenses incurred related to our secondary offerings, less the pro forma incremental income tax expense resulting from discrete tax items in 2013.

    The following table includes a reconciliation of net income to restaurant-level EBITDA (in thousands):

        Thirteen Weeks Ended
    March 30,

    2014

        March 31,

    2013

     
    Net income as reported $ 2,632 $ 2,641
    Income tax provision 1,128 551
    Interest expense 22 33
    General and administrative 2,923 2,795
    Secondary offering costs 417
    Restaurant pre-opening expenses 1,155 971
    Depreciation and amortization 2,316   1,968  
    Restaurant-level EBITDA $ 10,176   $ 9,376  
     
    Restaurant-level EBITDA margin (1) 18.2 % 20.1 %
     

    (1) Restaurant-level EBITDA margin is calculated by dividing restaurant-level EBITDA by revenue.

    The following is a reconciliation of GAAP net income and net income per share to pro forma net income and pro forma net income per share (in thousands):

        Thirteen Weeks Ended
    March 30,

    2014

        March 31,

    2013

     
    Net income as reported $ 2,632 $ 2,641
    Secondary offering costs (1) 417
    Income tax expense (2)   (527 )
    Pro forma net income $ 2,632   $ 2,531  
     
    Net income per share - pro forma:
    Basic - pro forma $ 0.16 $ 0.16
    Diluted - pro forma $ 0.16 $ 0.15
     
    Weighted-average shares outstanding - pro forma:
    Basic - pro forma (7) 16,397,629 16,111,286
    Diluted - pro forma (7) 16,712,418 16,577,053
     

    Notes to reconciliation of GAAP net income to non-GAAP pro forma net income:

    1.

     

    Reflects the elimination of the offering expenses associated with the two secondary offerings completed in January 2013 and April 2013.

     

    2.

    In 2013, the tax expense reflects the elimination of the favorable impact of a one-time tax adjustment for incremental employment tax credits from open tax years offset by the unfavorable tax impact of the non-deductible secondary offering costs. After excluding this net favorable tax benefit in 2013, our pro forma effective tax rate for the thirteen weeks ended March 31, 2013 was 29.9%.



    Logos, product and company names mentioned are the property of their respective owners.

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