Chuy's Holdings reports Q1 net earnings of US$2.6M, flat from year-ago period as revenue rises 19.8% to US$56M

AUSTIN, Texas , May 6, 2014 (press release) – Chuy’s Holdings, Inc. (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.

Conference Call

The Company will host a conference call to discuss financial results for the first quarter of 2014 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 888-228-5271 or for international callers by dialing 913-312-1376. A replay will be available one hour after the call and can be accessed by dialing 877-870-5176 or 858-384-5517 for international callers; the passcode is 9579563. The replay will be available until May 13, 2014. The conference call will also be webcast live from the Company’s website at www.chuys.com under the investors tab. An archive of the webcast will also be available through the corporate website shortly after the call has concluded.

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!”. For further information about Chuy’s, including the nearest location, visit the Chuy’s website at www.chuys.com.

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