Chuys Holdings Results

Chuy’s Holdings, Inc. Announces Second Quarter 2017 Financial Results

Revenue increased 7.5% to $94.5 million from $87.9 million in the second quarter of 2016. Comparable restaurant sales decreased 1.0% as compared to the same period in 2016.

Chuy’s

Chuy’s Holdings, Inc. (NASDAQ:CHUY) today announced financial results for the second quarter ended June 25, 2017.

Highlights for the second quarter ended June 25, 2017 were as follows:

  • Revenue increased 7.5% to $94.5 million from $87.9 million in the second quarter of 2016.
  • Comparable restaurant sales decreased 1.0% as compared to the same period in 2016.
  • Net income was $5.3 million, or $0.31 per diluted share, compared to $5.8 million, or $0.34 per diluted share, in the second quarter of 2016.
  • Restaurant-level operating profit(1) was $18.1 million compared to $18.4 million in the second quarter of 2016.
  • Three new restaurants opened during the second quarter of 2017.

Steve Hislop, President and Chief Executive Officer of Chuy’s Holdings, Inc. stated, “Despite ongoing challenges in the restaurant industry, we remain focused on fundamentals and execution at the store level, to ensure we provide our guests with high-quality food and great service in an upbeat environment. In addition, we are redoubling our efforts with regard to local store marketing and continue to refine our social media strategies in order to increase awareness of the Chuy’s brand.”

Hislop added, “While we’re pleased with our new unit performance to date, for the full year we are refining our development target to 12 new restaurants - the lower end of our previous range. Additionally, we’re continuing to review our 2018 pipeline, as we believe it makes sense to temper the speed of our new unit openings given the uncertainty of industry-wide sales, while keeping an eye on creating the best returns for our shareholders. We currently expect 2018 openings to range between 8 and 12 units. Our strong balance sheet gives us the flexibility to thoughtfully manage our development in the near-term, and the ability to use our excess capital in other ways to create value to our shareholders. We continue to believe we have substantial room for growth ahead of us and remain excited about the long-term prospects of the Chuy’s brand.”

Second Quarter 2017 Financial Results

Revenue increased $6.6 million, or 7.5%, to $94.5 million in the second quarter of 2017 compared to the second quarter of 2016. The increase was driven by $10.9 million in incremental revenue from an additional 134 operating weeks provided by 14 new restaurants which opened during and subsequent to the second quarter of 2016. This increase was partially offset by a decrease in revenue related to our non-comparable restaurants that are not included in the incremental revenue discussed above and the loss of 13 operating weeks due to the closing of the Charlotte, NC location during the third quarter of 2016. Revenue for the non-comparable restaurants is historically lower as the restaurants transition out of the 'honeymoon' period that follows a restaurant's initial opening.

Comparable restaurant sales decreased 1.0% in the second quarter of 2017 as compared to the same period in 2016. The decrease in comparable sales was driven by a 2.4% decrease in average weekly customers offset by a 1.4% increase in average check. Comparable restaurant sales and average weekly customers were negatively affected by approximately 30 basis points due to Easter falling in the second quarter of 2017 compared to the first quarter of 2016. The comparable restaurant base consisted of 64 restaurants at the end of the second quarter of 2017.

Total restaurant operating costs as a percentage of revenue increased to 80.8% in the second quarter of 2017 from 79.0% in the second quarter of 2016. This increase was primarily driven by higher labor costs due to hourly labor rate inflation, higher operating costs due to increases in repairs and maintenance and utility costs and higher cost of sales driven by unfavorable commodity pricing.

Net income was $5.3 million, or $0.31 per diluted share, compared to $5.8 million, or $0.34 per diluted share, in the second quarter of 2016.

Development Update

During the second quarter, three new Chuy’s restaurants were opened in West Chester, Ohio, Olathe, Kansas and Westminster, Colorado. Subsequent to the end of the second quarter, one additional Chuy’s restaurant was opened in Warrenville, Illinois.

2017 Outlook

The Company has revised its fiscal year 2017 guidance and now expects its diluted net income per share to range from $1.04 to $1.08 versus a previous range of $1.11 to $1.15. The diluted net income per share guidance for fiscal year 2017 includes an estimated $0.05 per share positive impact due to the fourth quarter of 2017 containing 14 weeks versus 13 weeks in fiscal 2016 and is further based, in part, on the following annual assumptions:

  • Comparable restaurant sales growth of (1.5%) to 0.5% versus a previous range of 0.5% to 1.5%;
  • Restaurant pre-opening expenses of $6.0 million to $6.5 million versus a previous range of $5.8 million to $6.3 million;
  • General and administrative expense of $19.5 million to $20.0 million versus a previous range of $20.6 million to $21.1 million;
  • An effective tax rate of 28% to 30% versus a previous range of 29% to 31%;
  • The opening of 12 new restaurants versus a previous range of 12 to 14;
  • Annual weighted average diluted shares outstanding of 17.0 million to 17.1 million shares; and
  • Net capital expenditures (net of tenant improvement allowances) of $36.0 million to $41.0 million versus a previous range of $39.0 million to $44.0 million.

About Chuy’s

Founded in Austin, Texas in 1982, Chuy’s owns and operates 86 full-service restaurants across 19 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.
Unaudited Condensed Consolidated Income Statements
(In thousands, except share and per share data)
 
Thirteen Weeks Ended Twenty-Six Weeks Ended
June 25, 2017   June 26, 2016 June 25, 2017   June 26, 2016
Revenue $ 94,472 $ 87,909 $ 181,376 $ 165,963
 
Costs and expenses:
Cost of sales 24,449 22,397 46,274 42,395
Labor 31,732 28,708 61,431 54,388
Operating 13,164 12,034 25,196 22,590
Occupancy 6,324 5,637 12,445 10,942
General and administrative 4,704 4,870 9,576 9,403
Marketing 712 692 1,343 1,275
Restaurant pre-opening 1,722 1,534 2,824 2,967
Depreciation and amortization 4,307   3,707   8,468   7,184

Total costs and expenses

87,114   79,579   167,557   151,144
Income from operations 7,358 8,330 13,819 14,819
Interest expense, net 16   16   32   31
Income before income taxes 7,342 8,314 13,787 14,788
Income tax expense 2,013   2,534   3,908   4,476
Net income $ 5,329   $ 5,780   $ 9,879   $ 10,312
 
Net income per common share: Basic $ 0.32   $ 0.35   $ 0.59   $ 0.62
Net income per common share: Diluted $ 0.31   $ 0.34   $ 0.58   $ 0.61
 
Weighted-average shares outstanding: Basic 16,899,249   16,578,537   16,877,262   16,534,569
Weighted-average shares outstanding: Diluted 17,016,006   16,840,629   17,006,845   16,814,647
 

Reconciliation of GAAP income from operations to restaurant-level operating profit:

 
                          Thirteen Weeks Ended   Twenty-Six Weeks Ended
June 25, 2017   June 26, 2016 June 25, 2017   June 26, 2016
 
Income from operations as reported $ 7,358 $ 8,330 $ 13,819 $ 14,819
General and administrative 4,704 4,870 9,576 9,403
Restaurant pre-opening 1,722 1,534 2,824 2,967
Depreciation and amortization 4,307   3,707   8,468   7,184  
Restaurant-level operating profit $ 18,091   $ 18,441   $ 34,687   $ 34,373  
 
Restaurant-level operating margin (1) 19.1 % 21.0 % 19.1 % 20.7 %
 



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