Chuy’s Holdings, Inc. Announces Fourth Quarter and Year-End 2014 Financial Results
Revenue increased 21.7% to $61.8 million from $50.8 million in the fourth quarter of 2013. Comparable restaurant sales increased 3.8% as compared to the same period in 2013, the 18th consecutive quarter of comparable restaurant sales growth.
Chuy’s Holdings, Inc. (NASDAQ:CHUY) yesterday announced financial results for the 13-week and 52-week periods ended December 28, 2014.
Highlights for the fourth quarter ended December 28, 2014 were as follows:
- Revenue increased 21.7% to $61.8 million from $50.8 million in the fourth quarter of 2013.
- Comparable restaurant sales increased 3.8% as compared to the same period in 2013, the 18th consecutive quarter of comparable restaurant sales growth.
- Net income was $2.3 million, or $0.14 per diluted share, compared to $2.5 million, or $0.15 per diluted share, in the fourth quarter of 2013.
- Restaurant-level EBITDA(1) increased 8.2% to $9.6 million from $8.9 million in the fourth quarter of 2013.
- One new restaurant opened during the fourth quarter of 2014.
Highlights for the fiscal year ended December 28, 2014 were as follows:
- Revenue increased 19.9% to $245.1 million from $204.4 million in the 2013 fiscal year.
- Comparable restaurant sales increased 3.3% as compared to the same period in 2013.
- Net income increased to $11.5 million, or $0.69 per diluted share, from $11.1 million, or $0.66 per diluted share during the 2013 fiscal year. Pro forma net income(1) for fiscal 2013 was $11.5 million, or $0.69 per diluted share.
- Restaurant-level EBITDA(1) increased 8.8% to $42.5 million from $39.1 million in the 2013 fiscal year.
- A total of eleven new restaurants opened during 2014.
Steve Hislop, President and Chief Executive Officer of Chuy’s Holdings, Inc., stated, “We’re pleased with the continued momentum of our core business, including a 3.8% increase in comparable sales during the fourth quarter which marked our 18th straight quarter of comparable sales growth. We continue to focus on initiatives to drive sales and improve margins in our non-comparable restaurants and we are pleased with the early results. Our development pipeline for 2015, which now calls for ten to eleven new Chuy’s restaurants is in good shape, and we have already opened two restaurants this year. We believe the evolution of our real estate strategy to increase focus on new unit growth in larger densely populated markets will allow us to more productively grow our geographical footprint and take advantage of the development opportunity that lies ahead.”
Fourth Quarter 2014 Financial Results
Revenue increased 21.7% to $61.8 million in the fourth quarter of 2014 compared to $50.8 million in the fourth quarter of 2013. The increase was primarily driven by $10.5 million in incremental revenue from an additional 148 operating weeks provided by 13 new restaurants opened during and subsequent to the fourth quarter of 2013.
Comparable restaurant sales increased 3.8% during the fourth quarter of 2014 as compared to the fourth quarter of 2013. The increase in comparable sales was driven by a 2.8% increase in average check and a 1.0% increase in average weekly customers. The comparable restaurant base consisted of 41 restaurants during the fourth quarter of 2014.
Total restaurant operating costs as a percentage of revenue increased to 84.4% in the fourth quarter of 2014 from 82.4% in the fourth quarter of 2013, driven primarily by the impact of higher labor costs related to increased training and staffing levels and lower restaurant volumes at certain of our newer restaurants; higher food costs, particularly beef, chicken and dairy costs; and higher occupancy costs related to lower restaurant volumes at certain of our newer restaurants. These increased costs were partially offset by lower liquor taxes as a result of a new liquor tax law in Texas, which went into effect on January 1, 2014.
As a result of the foregoing, net income decreased $0.2 million to $2.3 million for the fourth quarter of 2014, or $0.14 per diluted share, from $2.5 million, or $0.15 per diluted share, for the fourth quarter of 2013.
Development Update
During the fourth quarter, one new Chuy’s restaurant was opened in Springfield, Virginia. Subsequent to the end of the fourth quarter, two additional Chuy’s restaurants were opened in Southlake, Texas and Orlando, Florida.
2015 Outlook
The Company expects 2015 diluted net income per share of $0.74 to $0.77. This compares to diluted net income per share of $0.69 in 2014. The net income guidance for fiscal year 2015 is based, in part, on the following annual assumptions:
- Comparable restaurant sales growth of approximately 2.5%;
- Restaurant pre-opening expenses of approximately $4.2 million to $4.7 million;
- General and administrative expense of approximately $14.5 million to $15.0 million;
- An effective tax rate of approximately 28% to 30%;
- 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:
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.
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.
Total restaurant operating costs includes cost of sales, labor, operating, occupancy and marketing costs.
About Chuy’s
Founded in Austin, Texas in 1982, Chuy’s owns and operates 61 full-service restaurants across 14 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) | ||||||||||||||||||||
Quarter Ended | Year Ended | |||||||||||||||||||
December 28, | December 29, | December 28, | December 29, | |||||||||||||||||
Revenue | $ | 61,759 | $ | 50,760 | $ | 245,101 | $ | 204,361 | ||||||||||||
Costs and expenses: | ||||||||||||||||||||
Cost of sales | 17,541 | 13,830 | 69,159 | 55,894 | ||||||||||||||||
Labor | 21,386 | 17,298 | 82,665 | 66,565 | ||||||||||||||||
Operating | 8,775 | 7,537 | 33,897 | 29,279 | ||||||||||||||||
Occupancy | 4,027 | 3,042 | 15,167 | 12,262 | ||||||||||||||||
General and administrative | 2,955 | 2,295 | 11,693 | 10,015 | ||||||||||||||||
Secondary offering costs | — | — | — | 925 | ||||||||||||||||
Marketing | 392 | 143 | 1,719 | 1,306 | ||||||||||||||||
Restaurant pre-opening | 806 | 879 | 4,539 | 3,883 | ||||||||||||||||
Depreciation and amortization | 2,892 | 2,440 | 10,310 | 8,858 | ||||||||||||||||
Total costs and expenses | 58,774 | 47,464 | 229,149 | 188,987 | ||||||||||||||||
Income from operations | 2,985 | 3,296 | 15,952 | 15,374 | ||||||||||||||||
Interest expense | 47 | 29 | 124 | 109 | ||||||||||||||||
Income before income taxes | 2,938 | 3,267 | 15,828 | 15,265 | ||||||||||||||||
Income tax expense | 631 | 815 | 4,337 | 4,196 | ||||||||||||||||
Net income | 2,307 | 2,452 | 11,491 | 11,069 | ||||||||||||||||
Net income per common share: | ||||||||||||||||||||
Basic | $ | 0.14 | $ | 0.15 | $ | 0.70 | $ | 0.68 | ||||||||||||
Diluted | $ | 0.14 | $ | 0.15 | $ | 0.69 | $ | 0.66 | ||||||||||||
Weighted-average shares outstanding: | ||||||||||||||||||||
Basic | 16,440,906 | 16,383,013 | 16,427,732 | 16,276,999 | ||||||||||||||||
Diluted | 16,697,884 | 16,726,038 | 16,709,471 | 16,677,387 | ||||||||||||||||
Chuy’s Holdings, Inc. and Subsidiaries | |||||||||||
Unaudited Selected Balance Sheet Data | |||||||||||
(In thousands) | |||||||||||
December 28, | December 29, | ||||||||||
Cash and cash equivalents | $ | 3,815 | $ | 5,323 | |||||||
Total assets | 179,212 | 151,162 | |||||||||
Long-term debt | 8,750 | 6,000 | |||||||||
Total stockholders’ equity | 118,188 | 104,488 | |||||||||
Reconciliation of Non-GAAP Measures
We prepare our financial statements in accordance with GAAP. Within our press release, we make reference to non-GAAP restaurant-level EBITDA, restaurant-level EBITDA margin, 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):
Quarter Ended | Year Ended | |||||||||||||||||||||||
December 28, | December 29, | December 28, | December 29, | |||||||||||||||||||||
Net income as reported | $ | 2,307 | $ | 2,452 | $ | 11,491 | $ | 11,069 | ||||||||||||||||
Income tax provision | 631 | 815 | 4,337 | 4,196 | ||||||||||||||||||||
Interest expense | 47 | 29 | 124 | 109 | ||||||||||||||||||||
General and administrative | 2,955 | 2,295 | 11,693 | 10,015 | ||||||||||||||||||||
Secondary offering costs | — | — | — | 925 | ||||||||||||||||||||
Restaurant pre-opening expenses | 806 | 879 | 4,539 | 3,883 | ||||||||||||||||||||
Depreciation and amortization | 2,892 | 2,440 | 10,310 | 8,858 | ||||||||||||||||||||
Restaurant-level EBITDA | $ | 9,638 | $ | 8,910 | $ | 42,494 | $ | 39,055 | ||||||||||||||||
Restaurant-level EBITDA margin (1) | 15.6 | % | 17.6 | % | 17.3 | % | 19.1 | % | ||||||||||||||||
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, except for share and per share data):
Quarter Ended | Year Ended | ||||||||||||||||||||
December 28, | December 29, | December 28, | December 29, | ||||||||||||||||||
Net income as reported | $ | 2,307 | $ | 2,452 | $ | 11,491 | $ | 11,069 | |||||||||||||
Secondary offering costs (1) | — | — | — | 925 | |||||||||||||||||
Income tax expense (2) | — | — | — | (497 | ) | ||||||||||||||||
Pro forma net income | $ | 2,307 | $ | 2,452 | $ | 11,491 | $ | 11,497 | |||||||||||||
Net income per share - pro forma: | |||||||||||||||||||||
Basic - pro forma | $ | 0.14 | $ | 0.15 | $ | 0.70 | $ | 0.71 | |||||||||||||
Diluted - pro forma | $ | 0.14 | $ | 0.15 | $ | 0.69 | $ | 0.69 | |||||||||||||
Weighted-average shares outstanding - pro forma: | |||||||||||||||||||||
Basic - pro forma | 16,440,906 | 16,383,013 | 16,427,732 | 16,276,999 | |||||||||||||||||
Diluted - pro forma | 16,697,884 | 16,726,038 | 16,709,471 | 16,677,387 | |||||||||||||||||
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. | Reflects the tax expense associated with the adjustment in footnote 1 above. In 2013, the tax expense reflects 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 year ended December 29, 2013 was 29.0%. |