Chuy’s Holdings, Inc. (NASDAQ:CHUY) (the "Company") today announced
financial results for the third quarter ended September 24, 2023.
Highlights for the
third quarter ended
September 24, 2023 were as
follows:
- Revenue
increased 6.4% to $113.5 million compared to $106.7 million in the
third quarter of 2022.
- Comparable
restaurant sales increased 2.0% as compared to the third quarter of
2022.
- Net income
increased $2.1 million, or 41.8%, to $7.1 million, or $0.39 per
diluted share, as compared to $5.0 million, or $0.27 per diluted
share, in the third quarter of 2022.
- Adjusted net
income(1) increased $2.0 million, or 33.0%, to $7.9 million, or
$0.44 per diluted share, as compared to $5.9 million, or $0.31
per diluted share, in the third quarter of 2022.
- Restaurant-level
operating margin(1) increased $3.3 million, or 17.6%, to $22.0
million as compared to $18.7 million in the third quarter of 2022.
Restaurant-level operating margin(1) as a percentage of revenue
increased 190 points to 19.4% as compared to 17.5% in the third
quarter of 2022.
- Cash and cash
equivalents were $69.9 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, “Our solid third quarter
performance was a direct result of our team’s continued progress in
executing our initiatives to drive sustainable top-line growth and
profitability. For the quarter, we grew revenue by over 6% and
posted a comparable sales increase of 2%. We were also able to
achieve one of the best restaurant-level operating margins in the
casual dining industry segment at 19.4% through our continued focus
on four-wall operational excellence. Overall, we believe our
business fundamentals remain strong and our team is eager and
energized to provide our customers with the unique Chuy’s
experience they have come to expect when they visit our
restaurants.”
Hislop added, “During the quarter, we opened our
third restaurant of the year in Harker Heights, TX, bringing our
total to 100 restaurants. We are pleased with the performance of
our recent openings and remain excited about the organic growth
opportunities ahead for the brand.”
Third Quarter
2023 Financial Results
Revenue was $113.5 million in the third quarter
of 2023 compared to $106.7 million in the third quarter of 2022.
The increase was primarily related to an increase in our comparable
restaurant sales as well as incremental revenue from an additional
65 operating weeks provided by new restaurants opened during and
subsequent to the third quarter of 2022. For the third quarter of
2023, off-premise sales were approximately 28% of total revenue
compared to approximately 26% during the same period in fiscal
2022.
Comparable restaurant sales increased 2.0% for
the third quarter of 2023 compared to the same period last year
primarily driven by a 3.8% increase in average check, partially
offset by a 1.8% decrease in average weekly customers.
Total restaurant operating costs as a percentage
of revenue decreased by approximately 190 basis points to 80.6% in
the third quarter of 2023 from 82.5% in the third quarter of 2022
primarily driven by the following:
- Cost of sales
decreased 220 basis points primarily driven by overall commodity
deflation of approximately 5% during the quarter as compared to the
same period a year ago as well as leverage on a menu price increase
taken subsequent to the third quarter of 2022.
- Operating costs
increased 50 basis points primarily driven by higher delivery
service charges as a result of increased delivery sales, an
increase in restaurant repair and maintenance costs, and higher
insurance premiums, partially offset by lower utility costs as
compared to the third quarter of 2022.
- Occupancy costs
decreased 20 basis points primarily as a result of sales leverage
on fixed occupancy expenses.
General and administrative expenses increased to
$7.9 million for the third 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 third quarter
of 2023 from 6.3% in the third quarter of 2022.
Impairment, closed restaurant and other costs
were $1.0 million ($0.8 million, net of tax or $0.04 per diluted
share) during the third quarter of 2023 and $1.2 million ($0.9
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 14.7% compared
to 13.3% 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
$7.1 million, or $0.39 per diluted share in the third quarter of
2023 compared to $5.0 million, or $0.27 per diluted share, in the
third quarter of 2022.
Adjusted net income was $7.9 million, or $0.44
per diluted share, in the third quarter of 2023 compared to
$5.9 million, or $0.31 per diluted share, in the third quarter
of 2022. Please see the reconciliation of net income to adjusted
net income in the accompanying financial tables.
Development Update
During the third quarter of 2023, one restaurant
was opened in Harker Heights, TX, which brings our total number of
restaurants to 100 as of September 24, 2023.
Share Repurchase Program
During the third quarter of 2023, the Company
repurchased 538,907 shares of its common stock for a total of
approximately $20.0 million. During the thirty-nine weeks ended
September 24, 2023, the Company repurchased 622,428 shares of
its common stock for a total of approximately $23.0 million.
As of September 24, 2023, the Company had $27.0 million remaining
under the share repurchase program. Repurchases of the Company’s
outstanding common stock will be made in accordance with applicable
securities laws and may be made at management’s discretion from
time to time in the open market, through privately negotiated
transactions or otherwise, including pursuant to Rule 10b5-1
trading plans.
2023 Outlook
The Company now expects 2023 adjusted net
income(1) per diluted share of $1.85 to $1.90 as compared to net
income per diluted share of $1.11 and adjusted net income(1) per
diluted share of $1.37 in fiscal 2022. The adjusted 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 $30.0 to $31.0 million;
- Four new
restaurants;
- Net capital
expenditures (net of tenant improvement allowances) of
approximately $35 to $37 million;
- Restaurant
pre-opening expenses of approximately $2.0 to $2.3 million;
- An effective
annual tax rate (excluding unusual items) of approximately 13% to
14%;
- Annual weighted
diluted shares outstanding of 17.9 million to 18.0 million.
(1) Adjusted net income is a non-GAAP
measure. For a reconciliation of adjusted net income for fiscal
2022 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. As a
result, we are unable to assess the probable significance of the
unavailable information.
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 restaurant sales reflect changes in customer count
trends as well as changes in average check. Our comparable
restaurant base consisted of 94 restaurants at September 24,
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 third 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 13734944. The replay will be available until Thursday, November
16, 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 16 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, an estimated $0.08 to $0.10 per diluted share positive
impact due to an extra week in the fourth quarter of 2023 as
compared to 2022, organic growth opportunities 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 |
|
Thirty-Nine Weeks Ended |
|
September 24, 2023 |
September 25, 2022 |
|
September 24, 2023 |
September 25, 2022 |
Revenue |
$ |
113,464 |
|
100.0 |
% |
$ |
106,682 |
|
100.0 |
% |
|
$ |
344,963 |
|
100.0 |
% |
$ |
318,114 |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
Cost of sales |
|
28,517 |
|
25.1 |
|
|
29,149 |
|
27.3 |
|
|
|
86,667 |
|
25.1 |
|
|
86,266 |
|
27.1 |
|
Labor |
|
34,548 |
|
30.4 |
|
|
32,378 |
|
30.4 |
|
|
|
103,809 |
|
30.1 |
|
|
94,470 |
|
29.7 |
|
Operating |
|
19,047 |
|
16.8 |
|
|
17,441 |
|
16.3 |
|
|
|
56,021 |
|
16.2 |
|
|
51,164 |
|
16.1 |
|
Occupancy |
|
7,772 |
|
6.8 |
|
|
7,490 |
|
7.0 |
|
|
|
23,770 |
|
6.9 |
|
|
22,698 |
|
7.1 |
|
General and administrative |
|
7,885 |
|
6.9 |
|
|
6,700 |
|
6.3 |
|
|
|
23,389 |
|
6.8 |
|
|
19,848 |
|
6.2 |
|
Marketing |
|
1,609 |
|
1.5 |
|
|
1,541 |
|
1.5 |
|
|
|
4,852 |
|
1.5 |
|
|
4,568 |
|
1.5 |
|
Restaurant pre-opening |
|
343 |
|
0.3 |
|
|
266 |
|
0.2 |
|
|
|
1,437 |
|
0.4 |
|
|
733 |
|
0.2 |
|
Impairment, closed restaurant and other costs |
|
1,017 |
|
0.9 |
|
|
1,190 |
|
1.1 |
|
|
|
1,870 |
|
0.5 |
|
|
3,203 |
|
1.0 |
|
Depreciation |
|
5,378 |
|
4.8 |
|
|
5,102 |
|
4.8 |
|
|
|
15,740 |
|
4.6 |
|
|
15,065 |
|
4.8 |
|
Total costs and expenses |
|
106,116 |
|
93.5 |
|
|
101,257 |
|
94.9 |
|
|
|
317,555 |
|
92.1 |
|
|
298,015 |
|
93.7 |
|
Income from operations |
|
7,348 |
|
6.5 |
|
|
5,425 |
|
5.1 |
|
|
|
27,408 |
|
7.9 |
|
|
20,099 |
|
6.3 |
|
Interest income, net |
|
(945 |
) |
(0.8 |
) |
|
(331 |
) |
(0.3 |
) |
|
|
(2,576 |
) |
(0.8 |
) |
|
(378 |
) |
(0.1 |
) |
Income before income
taxes |
|
8,293 |
|
7.3 |
|
|
5,756 |
|
5.4 |
|
|
|
29,984 |
|
8.7 |
|
|
20,477 |
|
6.4 |
|
Income tax expense |
|
1,219 |
|
1.1 |
|
|
767 |
|
0.7 |
|
|
|
3,954 |
|
1.2 |
|
|
2,099 |
|
0.6 |
|
Net income |
$ |
7,074 |
|
6.2 |
% |
$ |
4,989 |
|
4.7 |
% |
|
$ |
26,030 |
|
7.5 |
% |
$ |
18,378 |
|
5.8 |
% |
|
|
|
|
|
|
|
|
|
|
Net income per common share: Basic |
$ |
0.40 |
|
|
$ |
0.27 |
|
|
|
$ |
1.45 |
|
|
$ |
0.97 |
|
|
Net income per common share: Diluted |
$ |
0.39 |
|
|
$ |
0.27 |
|
|
|
$ |
1.44 |
|
|
$ |
0.97 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding: Basic |
|
17,877,063 |
|
|
|
18,685,401 |
|
|
|
|
17,992,608 |
|
|
|
18,901,542 |
|
|
Weighted-average shares outstanding: Diluted |
|
17,987,525 |
|
|
|
18,761,263 |
|
|
|
|
18,103,825 |
|
|
|
19,010,238 |
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
Thirty-Nine Weeks Ended |
|
September 24, 2023 |
|
September 25, 2022 |
|
September 24, 2023 |
|
September 25, 2022 |
Net income as reported |
$ |
7,074 |
|
|
$ |
4,989 |
|
|
$ |
26,030 |
|
|
$ |
18,378 |
|
Impairment, closed restaurant and other costs |
|
1,017 |
|
|
|
1,190 |
|
|
|
1,870 |
|
|
|
3,203 |
|
Income tax effect on adjustment(1) |
|
(234 |
) |
|
|
(274 |
) |
|
|
(431 |
) |
|
|
(738 |
) |
Adjusted net income |
$ |
7,857 |
|
|
$ |
5,905 |
|
|
$ |
27,469 |
|
|
$ |
20,843 |
|
|
|
|
|
|
|
|
|
Adjusted net income per common share: basic |
$ |
0.44 |
|
|
$ |
0.32 |
|
|
$ |
1.53 |
|
|
$ |
1.10 |
|
Adjusted net income per common share: diluted |
$ |
0.44 |
|
|
$ |
0.31 |
|
|
$ |
1.52 |
|
|
$ |
1.10 |
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding: basic |
|
17,877,063 |
|
|
|
18,685,401 |
|
|
|
17,992,608 |
|
|
|
18,901,542 |
|
Weighted-average shares outstanding: diluted |
|
17,987,525 |
|
|
|
18,761,263 |
|
|
|
18,103,825 |
|
|
|
19,010,238 |
|
|
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 and thirty-nine weeks
ended September 24, 2023 and September 25, 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 |
|
Thirty-Nine Weeks Ended |
|
September 24, 2023 |
|
September 25, 2022 |
|
September 24, 2023 |
|
September 25, 2022 |
Income from operations as reported |
$ |
7,348 |
6.5 |
% |
|
$ |
5,425 |
5.1 |
% |
|
$ |
27,408 |
7.9 |
% |
|
$ |
20,099 |
6.3 |
% |
General and administrative |
|
7,885 |
6.9 |
|
|
|
6,700 |
6.3 |
|
|
|
23,389 |
6.8 |
|
|
|
19,848 |
6.2 |
|
Restaurant pre-opening expenses |
|
343 |
0.3 |
|
|
|
266 |
0.2 |
|
|
|
1,437 |
0.4 |
|
|
|
733 |
0.2 |
|
Impairment, closed restaurant and other costs |
|
1,017 |
0.9 |
|
|
|
1,190 |
1.1 |
|
|
|
1,870 |
0.5 |
|
|
|
3,203 |
1.0 |
|
Depreciation |
|
5,378 |
4.8 |
|
|
|
5,102 |
4.8 |
|
|
|
15,740 |
4.6 |
|
|
|
15,065 |
4.8 |
|
Restaurant-level operating
margin |
$ |
21,971 |
19.4 |
% |
|
$ |
18,683 |
17.5 |
% |
|
$ |
69,844 |
20.2 |
% |
|
$ |
58,948 |
18.5 |
% |
Chuy’s Holdings, Inc.Selected Balance
Sheets Data(Unaudited, in thousands) |
|
|
|
|
|
September 24, 2023 |
|
December 25, 2022 |
Cash and cash equivalents |
$ |
69,863 |
|
$ |
78,028 |
Total assets |
|
474,303 |
|
|
474,781 |
Long-term debt |
|
— |
|
|
— |
Total stockholders’
equity |
|
249,227 |
|
|
244,561 |
Investor RelationsNatalie
Harden512-370-2691
Jeff
Priester332-242-4370investors@chuys.com
Chuy s (NASDAQ:CHUY)
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Chuy s (NASDAQ:CHUY)
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