Chuy’s Holdings, Inc. (NASDAQ:CHUY) (the "Company") today announced
financial results for the first quarter ended March 26, 2023.
Highlights for the
first quarter ended March
26, 2023 were as follows:
- Revenue
increased 12.0% to $112.5 million compared to $100.5 million in the
first quarter of 2022.
- Comparable
restaurant sales increased 8.0% as compared to fiscal 2022.
- Net income was
$8.2 million, or $0.45 per diluted share, as compared to $5.5
million, or $0.29 per diluted share, in the first quarter of
2022.
- Adjusted net
income(1) was $8.5 million, or $0.47 per diluted share, as compared
to $6.5 million, or $0.34 per diluted share, in the first quarter
of 2022.
- Restaurant-level
operating margin(1) was $22.2 million and 19.7% of revenue,
compared to $19.1 million and 19.0% of revenue in the first quarter
of 2022.
- Cash and cash
equivalents were $82.6 million and the Company had no debt
outstanding with $35.0 million available under its revolving credit
facility.
(1) Adjusted net income
and restaurant-level operating margin are non-GAAP measures. For
reconciliations of adjusted net income and restaurant-level
operating margin to the most directly comparable GAAP measure see
the accompanying financial tables. For a discussion of why we
consider them useful, see “Non-GAAP Measures” below.
Steve Hislop, President and Chief Executive
Officer of Chuy’s Holdings, Inc. stated, “We are pleased with the
continued top-line momentum carried from the fourth quarter into
the new year, resulting in strong comparable restaurant sales
performance during the first quarter. Additionally, through ongoing
focus on our four-wall operations and easing commodity pressures,
we achieved a 19.7% restaurant-level operating margin, which
continues to be one of the best in the casual dining industry
segment. These strong results wouldn’t be possible without our team
members doing what they do best every day – providing our customers
with the unique Chuy’s experience through high-quality,
made-from-scratch food and drinks, offered at an affordable
value.”
Hislop added "We opened our first new restaurant
of 2023 in Fayetteville, Arkansas and are excited about its
performance to date. Overall, we are thrilled about the
opportunities that lie ahead for the Chuy’s brand.”
First Quarter
2023 Financial Results
Revenue was $112.5 million in the first quarter
of 2023 compared to $100.5 million in the first quarter of 2022.
The increase was primarily related to an increase in our comparable
restaurant sales as well as incremental revenue from an additional
43 operating weeks provided by new restaurants opened during and
subsequent to the first quarter of 2022. For the first quarter of
2023, off-premise sales were approximately 27% of total revenue
compared to approximately 28% during the same period in fiscal
2022.
Comparable restaurant sales increased 8.0% for
the first quarter of 2023 compared to the same period last year
primarily driven by a 1.8% increase in average weekly customers and
a 6.2% increase in average check. The comparable restaurant sales
and traffic growth was positively impacted by less severe weather
in the first quarter of 2023 and the negative effect that the
Omicron variant had on January and February of 2022.
Total restaurant operating costs as a percentage
of revenue decreased by approximately 70 basis points to 80.3% in
the first quarter of 2023 from 81.0% in the first quarter of 2022
primarily driven by the following:
- Cost of sales
decreased 60 basis points primarily driven by menu price increases
taken subsequent to the first quarter of 2022, partially offset by
approximately 5% commodity inflation.
- Labor costs
increased 60 basis points largely as a result of hourly labor rate
inflation of approximately 7% at comparable restaurants as well as
an incremental improvement in our hourly staffing levels as
compared to last year. This increase was partially offset by menu
price increases taken subsequent to the first quarter of 2022.
- Operating costs
decreased 10 basis points primarily driven by lower to-go supplies
costs as compared to last year as well as a decrease in our
off-premise business to 27% from 28% of our total sales in the
first quarter of 2023.
- Occupancy costs
decreased 60 basis points primarily as a result of sales leverage
on fixed occupancy expenses.
Restaurant pre-opening expenses increased to
$0.5 million for the first quarter of 2023 compared to $0.1 million
for the same period in 2022 due to the timing of new store
openings.
General and administrative expenses increased to
$7.8 million for the first quarter of 2023 compared to $6.7 million
for the same period in 2022. As a percentage of revenues, general
and administrative expenses increased to 6.9% in the first quarter
of 2023 from 6.6% in the first quarter of 2022.
Impairment, closed restaurant and other costs
were $0.4 million ($0.3 million, net of tax or $0.02 per diluted
share) during the first quarter of 2023 and $1.3 million ($1.0
million, net of tax or $0.05 per diluted share) during the same
period last year. The decrease was primarily related to a reduction
in rent paid on previously closed restaurants. Closed restaurant
costs include rent expense, utilities, insurance and other costs
required to maintain the remaining closed locations.
The effective income tax rate was 10.1% compared
to 8.9% in the same period last year. The increase in the effective
tax rate was mainly attributed to a decrease in the proportion of
employee tax credits to estimated annual income.
As a result of the foregoing, net income was
$8.2 million, or $0.45 per diluted share in the first quarter of
2023 compared to $5.5 million, or $0.29 per diluted share, in the
first quarter of 2022.
Adjusted net income was $8.5 million, or $0.47
per diluted share, in the first quarter of 2023 compared to $6.5
million, or $0.34 per diluted share, in the first quarter of 2022.
Please see the reconciliation of net income to adjusted net income
in the accompanying financial tables.
Development Update
During the first quarter of 2023, one new
restaurant was opened in Fayetteville, AR.
2023 Outlook
The Company now expects 2023 adjusted net income
per diluted share of $1.71 to $1.76 as compared to adjusted net
income(1) per diluted share of $1.37 in fiscal 2022. The net income
guidance for fiscal 2023 includes an estimated $0.08 to $0.10 per
diluted share positive impact due to the fourth quarter of 2023
containing 14 weeks versus 13 weeks in fiscal 2022 and is further
based, in part, on the following annual assumptions:
- General and
administrative expense of $29.0 to $30.0 million;
- Six to seven new
restaurants;
- Net capital
expenditures (net of tenant improvement allowances) of
approximately $35 to $39 million;
- Restaurant
pre-opening expenses of approximately $2.5 to $3.0 million;
- An effective
annual tax rate (excluding unusual items) of approximately 13% to
14%;
- Annual weighted
diluted shares outstanding of 18.1 million to 18.2 million.
(1) Adjusted net income is a
non-GAAP measure. For a reconciliation of adjusted net income to
the most directly comparable GAAP measure see the accompanying
financial tables. For a discussion of why we consider adjusted net
income useful, see "Non-GAAP Measures" below.
The Company does not provide a reconciliation of
2023 adjusted net income per diluted share or the most directly
comparable forward-looking GAAP measure of net income per diluted
share because the timing and nature of excluded items are
unreasonably difficult to fully and accurately estimate.
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 as compared to that time in the
prior year. 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. Our comparable restaurant base
consisted of 94 restaurants at March 26, 2023.
Restaurant-level operating
margin represents income from operations plus the sum of
general and administrative expenses, restaurant pre-opening costs,
impairment, closed restaurants and other costs, and
depreciation.
Average check is calculated by
dividing revenue by total entrées sold for a given time period.
Average check reflects menu price increases as well as changes in
menu mix.
Average weekly customers is
measured by the number of entrées sold per week. Our management
team uses this metric to measure changes in customer traffic.
Operating margin represents
income from operations as a percentage of our revenue. By
monitoring and controlling our operating margins, we can gauge the
overall profitability of our Company.
Total restaurant operating
costs includes cost of sales, labor, operating,
occupancy and marketing costs.
Conference Call
The Company will host a conference call to
discuss financial results for the first quarter of 2023 today at
5:00 p.m. Eastern Time. Steve Hislop, President and Chief Executive
Officer, and Jon Howie, Vice President and Chief Financial Officer,
will host the call.
The conference call can be accessed live over
the phone by dialing 201-689-8560. A replay will be available after
the call and can be accessed by dialing 412-317-6671; the passcode
is 13734942. The replay will be available until Thursday, May 18,
2023.
The conference call will also be webcast live
from the Company’s corporate website at www.chuys.com under the
Investors section. An archive of the webcast will be available on
the Company's corporate website shortly after the call has
concluded.
About Chuy’s
Founded in Austin, Texas in 1982, Chuy's owns
and operates full-service restaurants across 17 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!" For further information about Chuy's, including the
nearest location, visit the Chuy's website at www.chuys.com.
Forward-Looking Statements
Certain statements in this release that are not
historical facts, including, without limitation, those relating to
the Company’s 2023 outlook, including 2023 adjusted net income,
general and administrative expense, new restaurant openings, net
capital expenditures, restaurant pre-opening expenses, effective
annual tax rate and annual weighted diluted shares outstanding
guidance, the opportunities that lie ahead and other statements
that can often be identified by words such as “expect,” “believe,”
“intend,” “estimate,” “plans” and similar expressions, and
variations or negatives of these words are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995 that involve risks and uncertainties. Such
statements are based upon the current beliefs and expectations of
management of the Company. Actual results may vary materially from
those contained in forward-looking statements based on a number of
factors including, without limitation, the actual number of
restaurant openings, the sales at the Company’s restaurants,
changes in restaurant development or operating costs, such as food
and labor, the Company’s ability to leverage its existing
management and infrastructure, changes in restaurant pre-opening
expense, general and administrative expenses, capital expenditures,
our effective tax rate, impairment, closed restaurant and other
costs, changes in the number of diluted shares outstanding,
strength of consumer spending, conditions beyond the Company’s
control such as timing of holidays, weather, natural disasters,
acts of war or terrorism, the timing and amount of repurchases of
our common stock, if any, changes to the Company’s expected
liquidity position, the possibility that the repurchase program may
be suspended or discontinued and other factors disclosed from time
to time in the Company’s filings with the U.S. Securities and
Exchange Commission. Investors should take such risks into account
when making investment decisions. Stockholders and other readers
are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date on which they are made.
The Company undertakes no obligation to update any forward-looking
statements, except as required by law.
Non-GAAP Measures
We prepare our financial statements in
accordance with GAAP. Within our press release, we make reference
to non-GAAP restaurant-level operating margin and adjusted net
income. Restaurant-level operating margin represents income from
operations plus the sum of general and administrative expenses,
restaurant pre-opening costs, impairment, closed restaurant and
other costs, and depreciation. Restaurant-level operating margin is
presented because: (i) we believe it is a useful measure for
investors to assess the operating performance of our restaurants
without the effect of non-cash depreciation expense; and (ii) we
use restaurant-level operating margin internally as a benchmark to
evaluate our restaurant operating performance and to compare our
performance to that of our competitors. Additionally, we present
restaurant-level operating margin because it excludes the impact of
general and administrative expenses, which are not incurred at the
restaurant level, restaurant pre-opening costs, and impairment,
closed restaurant and other costs. Although we incur pre-opening
costs on an ongoing basis as we continue to open new restaurants,
the pre-opening costs, and impairment, closed restaurant and other
costs are not components of a restaurant's ongoing operating
expenses. The use of restaurant-level operating margin thereby
enables us and our investors to compare operating performance
between periods and to compare our operating performance to the
performance of our competitors. The measure is also widely used
within the restaurant industry to evaluate restaurant-level
productivity, efficiency and performance. The use of
restaurant-level operating margin 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.
Adjusted net income represents net income before
impairment, closed restaurant and other costs, and the income tax
effect of these adjustments. We believe the use of adjusted net
income provides additional information to enable us and our
investors to facilitate year-over-year performance comparison and a
comparison to the performance of our peers.
Restaurant-level operating margin and adjusted
net income exclude various expenses as discussed above that may
materially impact our consolidated results of operations. As a
result, these measures are not indicative of the Company’s
consolidated results of operations. We present these measures
exclusively as supplements to, and not substitutes for, net income
or income from operations computed in accordance with GAAP. As
supplemental disclosures, restaurant-level operating margin and
adjusted net income should not be considered as alternatives to net
income or income from operations as an indicator of our performance
or as alternatives to any other measure determined in accordance
with GAAP.
|
Chuy’s Holdings, Inc.Condensed
Consolidated Income Statements(Unaudited, in
thousands, except share and per share data) |
|
|
|
Thirteen Weeks Ended |
|
March 26, 2023 |
March 27, 2022 |
Revenue |
$ |
112,498 |
|
100.0 |
% |
$ |
100,486 |
100.0 |
% |
|
|
|
|
|
Costs and expenses: |
|
|
|
|
Cost of sales |
|
28,718 |
|
25.5 |
|
|
26,243 |
26.1 |
|
Labor |
|
34,102 |
|
30.3 |
|
|
29,825 |
29.7 |
|
Operating |
|
18,078 |
|
16.1 |
|
|
16,230 |
16.2 |
|
Occupancy |
|
7,882 |
|
7.0 |
|
|
7,652 |
7.6 |
|
General and administrative |
|
7,806 |
|
6.9 |
|
|
6,654 |
6.6 |
|
Marketing |
|
1,550 |
|
1.4 |
|
|
1,413 |
1.4 |
|
Restaurant pre-opening |
|
481 |
|
0.4 |
|
|
125 |
0.1 |
|
Impairment, closed restaurant and other costs |
|
371 |
|
0.3 |
|
|
1,279 |
1.3 |
|
Depreciation |
|
5,140 |
|
4.7 |
|
|
4,982 |
4.9 |
|
Total costs and expenses |
|
104,128 |
|
92.6 |
|
|
94,403 |
93.9 |
|
Income from operations |
|
8,370 |
|
7.4 |
|
|
6,083 |
6.1 |
|
Interest (income) expense, net |
|
(777 |
) |
(0.7 |
) |
|
28 |
0.1 |
|
Income before income
taxes |
|
9,147 |
|
8.1 |
|
|
6,055 |
6.0 |
|
Income tax expense |
|
925 |
|
0.8 |
|
|
537 |
0.5 |
|
Net income |
$ |
8,222 |
|
7.3 |
% |
$ |
5,518 |
5.5 |
% |
|
|
|
|
|
Net income per common share: Basic |
$ |
0.46 |
|
|
$ |
0.29 |
|
Net income per common share: Diluted |
$ |
0.45 |
|
|
$ |
0.29 |
|
|
|
|
|
|
Weighted-average shares outstanding: Basic |
|
18,020,434 |
|
|
|
19,099,754 |
|
Weighted-average shares outstanding: Diluted |
|
18,176,121 |
|
|
|
19,288,718 |
|
|
|
|
|
|
|
Chuy’s Holdings, Inc.Reconciliation of
GAAP Net Income and Net Income Per Share to Adjusted
Results(Unaudited, in thousands, except share and
per share data) |
|
|
Thirteen Weeks Ended |
|
March 26, 2023 |
|
March 27, 2022 |
Net income as reported |
$ |
8,222 |
|
|
$ |
5,518 |
|
Impairment, closed restaurant and other costs |
|
371 |
|
|
|
1,279 |
|
Income tax effect on adjustment(1) |
|
(86 |
) |
|
|
(295 |
) |
Adjusted net income |
$ |
8,507 |
|
|
$ |
6,502 |
|
|
|
|
|
Adjusted net income per common share: basic |
$ |
0.47 |
|
|
$ |
0.34 |
|
Adjusted net income per common share: diluted |
$ |
0.47 |
|
|
$ |
0.34 |
|
|
|
|
|
Weighted-average shares outstanding: basic |
|
18,020,434 |
|
|
|
19,099,754 |
|
Weighted-average shares outstanding: diluted |
|
18,176,121 |
|
|
|
19,288,718 |
|
|
Year Ended |
|
December 25, 2022 |
Net income as
reported |
$ |
20,855 |
|
Impairment, closed restaurant and other
costs |
|
6,452 |
|
Income tax effect on adjustments
(1) |
|
(1,487 |
) |
Adjusted net
income |
$ |
25,820 |
|
|
|
Adjusted net income per common share:
basic |
$ |
1.38 |
|
Adjusted net income per common share:
diluted |
$ |
1.37 |
|
|
|
Weighted-average shares outstanding:
basic |
|
18,682,255 |
|
Weighted-average shares outstanding:
diluted |
|
18,793,455 |
|
(1) Reflects the tax expense
associated with the adjustment for impairment, closed restaurant
and other costs during the thirteen weeks ended March 26, 2023
and March 27, 2022 and during the year ended December 25,
2022. The Company uses its statutory rate to calculate the tax
effect on adjustments.
|
Chuy’s Holdings, Inc.Reconciliation of
GAAP Income from Operations to Restaurant-Level Operating
Margin(Unaudited, in thousands) |
|
|
Thirteen Weeks Ended |
|
March 26, 2023 |
% of Revenue |
|
March 27, 2022 |
% of Revenue |
Income from operations as reported |
$ |
8,370 |
7.4 |
% |
|
$ |
6,083 |
6.1 |
% |
General and
administrative |
|
7,806 |
6.9 |
|
|
|
6,654 |
6.6 |
|
Restaurant pre-opening
expenses |
|
481 |
0.4 |
|
|
|
125 |
0.1 |
|
Impairment, closed restaurant and other
costs |
|
371 |
0.3 |
|
|
|
1,279 |
1.3 |
|
Depreciation |
|
5,140 |
4.7 |
|
|
|
4,982 |
4.9 |
|
Restaurant-level operating
margin |
$ |
22,168 |
19.7 |
% |
|
$ |
19,123 |
19.0 |
% |
|
Chuy’s Holdings, Inc.Selected Balance
Sheets Data(Unaudited, in thousands) |
|
|
March 26, 2023 |
|
December 25, 2022 |
Cash and cash equivalents |
$ |
82,598 |
|
$ |
78,028 |
Total assets |
|
479,433 |
|
|
474,781 |
Long-term debt |
|
— |
|
|
— |
Total stockholders’
equity |
|
252,578 |
|
|
244,561 |
|
|
|
|
|
|
Investor RelationsNatalie
Harden512-370-2691
Jeff Priester332-242-4370investors@chuys.com
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