Form 8-K CHUY'S HOLDINGS, INC. For: Nov 04
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
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CURRENT REPORT
Pursuant to Section�13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): November�4, 2014
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CHUYS HOLDINGS, INC.
(Exact Name Of Registrant As Specified In Charter)
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Delaware (State or Other Jurisdiction of Incorporation) | 001-35603 (Commission File Number) | 20-5717694 (IRS Employer Identification No.) |
1623 Toomey Rd.
Austin, Texas 78704
(Address of Principal Executive Offices) (Zip Code)
Registrants telephone number, including area code: (512) 473-2783
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
� | � | Written communications pursuant to Rule�425 under the Securities Act (17 CFR 230.425) |
� | � | Soliciting material pursuant to Rule�14a-12 under the Exchange Act (17 CFR 240.14a-12) |
� | � | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
� | � | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02����Results of Operations and Financial Condition.
The following information is intended to be furnished under Item 2.02 of Form 8-K, Results of Operations and Financial Condition. This information shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act ), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date of this report, regardless of any general incorporation language in the filing. In a press release dated November�4, 2014, Chuy's Holdings, Inc. (the Company ) announced financial results for the Company's thirteen weeks ended September�28, 2014. The full text of the press release is furnished herewith as Exhibit 99.1 to this report.
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Item 9.01����Financial Statements and Exhibits.
(d)����Exhibits.
Exhibit Number | Description |
99.1 | Press release dated November 4, 2014 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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CHUYS HOLDINGS, INC. | ||
By: | /s/ Jon W. Howie | |
� | Jon W. Howie Vice President and Chief Financial Officer | |
Date: November�4, 2014
INDEX TO EXHIBITS
Exhibit Number | Description |
99.1 | Press release dated November 4, 2014 |
Chuys Holdings, Inc. Announces Third Quarter 2014 Financial Results
AUSTIN, Texas, November 4, 2014 - Chuys Holdings, Inc. (NASDAQ: CHUY) today announced financial results for the third quarter ended September�28, 2014.
Highlights for the third quarter ended September�28, 2014 were as follows:
" | Revenue increased 19.9% to $64.1 million from $53.5 million in the third quarter of 2013. |
" | Comparable restaurant sales increased 3.0% as compared to the same period in 2013, the 17th consecutive quarter of comparable restaurant sales growth, including a 1.3% increase in average weekly customers and a 1.7% increase in average check. |
" | Net income was $3.1 million, or $0.19 per diluted share, compared to $2.8 million, or $0.17 per diluted share, in the third quarter of 2013. |
" | Restaurant-level EBITDA(1) increased 13.2% to $11.1 million from $9.8 million in last years third quarter. |
" | Four new restaurants opened during the third quarter of 2014. |
(1)� | Restaurant-level EBITDA is a non-GAAP measure. For a reconciliation of restaurant-level EBITDA to GAAP net income and discussion of why we consider it useful, see the Reconciliation of Non-GAAP Measures section of this release. |
Steve Hislop, President and Chief Executive Officer of Chuys Holdings, Inc. stated, We are pleased with the continued strength of our top line growth. Our revenue increase of 19.9% was led by a comparable restaurant sales increase of 3.0%, which is our 17th straight quarter of comparable restaurant sales growth. Our made-from-scratch, Tex Mex-inspired menu, commitment to value and upbeat, irreverent atmosphere continue to clearly resonate with our guests. Our results continue to reflect near-term cost challenges related to commodities and the ongoing inefficiencies at our non-comparable restaurants which comprise 33% of our open restaurants. Based upon these challenges, and the performance year-to-date, we have revised our key assumptions for the full year guidance and have adjusted our projections accordingly.
Added Hislop, With eleven new restaurants opened this year, as of today, our 2014 development plan is complete. Our development strategy will continue to include opening a majority of our new units through 2015 in developing markets where new restaurants exist. While building the awareness in these new markets will take time, we believe this strategy will continue to drive awareness for the Chuys brand, provide a solid geographic footprint for continued growth and improve efficiencies in operations.
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Third Quarter 2014 Financial Results
Revenue increased $10.6 million, or 19.9%, to $64.1 million in the third quarter of 2014 compared to the third quarter of 2013. The increase was primarily driven by $10.9 million in incremental revenue from an additional 140 operating weeks provided by 14 new restaurants opened during and subsequent to the third quarter of 2013. These increases were partially offset by a decrease in revenue related to non-comparable restaurants that are not included in the incremental revenue discussed above. Revenue for these 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 increased 3.0% in the third quarter of 2014 as compared to the same period in 2013. The increase in comparable sales was driven by a 1.7% increase in average check and a 1.3% increase in average weekly customers. The comparable restaurant base consisted of 39 restaurants during the third quarter of 2014.
Total restaurant operating costs as a percentage of revenue increased to 82.7% in the third quarter of 2014 from 81.7% in the third quarter of 2013, driven primarily by the impact of higher labor costs as a percentage of revenue related to increased training and staffing levels and lower restaurant volumes at certain of our newer restaurants; higher food costs as a percentage of revenue, particularly beef, chicken and dairy costs; and higher utility costs as a percentage of revenue. 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 and lower property tax expense as a percentage of revenue related to some of our newly opened restaurants.
Net income for the third quarter of 2014 was $3.1 million, or $0.19 per diluted share, compared to $2.8 million, or $0.17 per diluted share, in the third quarter of 2013.
Development Update
During the third quarter, four new Chuys restaurants were opened San Antonio, Texas; Kennesaw, Georgia; Fairfax, Virginia; and Sugarland, Texas. Subsequent to the end of the third quarter, one additional Chuys restaurant was opened in Springfield, Virginia which completes our development for 2014.
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2014 Outlook
The Company has revised its fiscal year 2014 guidance and now expects its diluted net income per share to range from $0.67 to $0.69 versus a previous range of $0.76 to $0.78. The net income guidance for fiscal year 2014 is based, in part, on the following annual assumptions:
" | Comparable restaurant sales growth of approximately 2.7% to 2.9% (versus a range of 2.3% to 2.6% previously); |
" | Food cost inflation for the full year of approximately 4.5% to 5.0% (versus a range of 3.0% to 4.0% previously); |
" | Labor cost as a percentage of revenue of approximately 33.8% to 34.0%; |
" | Restaurant pre-opening expenses of approximately $4.4 million; |
" | General and administrative expense of approximately $12.0 million (versus a range of $12.5 million to $13.0 million previously); |
" | An effective tax rate of approximately 28% to 29% (versus a range of 29% to 31% previously); |
" | The opening of 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 entr�es 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 third 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 888-801-6498 or for international callers by dialing 913-312-1488. 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 3269301. The replay will be available until November 11, 2014. The conference call will also be webcast live from the Companys 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 Chuys
Founded in Austin, Texas in 1982, Chuys owns and operates 59 full-service restaurants across fourteen states serving a distinct menu of authentic, made from scratch Tex Mex inspired dishes. Chuys 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 concepts motto If youve seen one Chuys, youve seen one Chuys! . For further information about Chuys, including the nearest location, visit the Chuys website at www.chuys.com.
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Forward-Looking Statements
Certain statements in this release that are not historical facts, including, without limitation, those relating to our anticipated financial performance, including the Companys fiscal year 2014 guidance and the related assumptions, are forward-looking statements that involve risks and uncertainties. Such statements are based upon the current beliefs and expectations of the 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 sales at the Companys restaurants, changes in restaurant development or operating costs, such as food and labor, the Companys ability to leverage its existing management and infrastructure, changes in restaurant pre-opening expense, general and administrative expenses, capital expenditures, or our effective tax rate, changes in the number of diluted shares outstanding, strength of consumer spending, conditions beyond the Companys control such as weather, natural disasters, disease outbreaks, epidemics or pandemics impacting the Companys customers or food supplies, acts of war or terrorism and other factors disclosed from time to time in the Companys 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.
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Chuys Holdings, Inc. and Subsidiaries
Unaudited Condensed Consolidated Income Statements
(In thousands, except share and per share data)
� | Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||
September 28, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | ||||||||||||
Revenue | $ | 64,107 | $ | 53,476 | $ | 183,342 | $ | 153,601 | |||||||
Costs and expenses: | |||||||||||||||
Cost of sales | 18,110 | 14,863 | 51,618 | 42,064 | |||||||||||
Labor | 21,763 | 17,552 | 61,279 | 49,267 | |||||||||||
Operating | 8,966 | 7,658 | 25,122 | 21,742 | |||||||||||
Occupancy | 3,782 | 3,221 | 11,140 | 9,220 | |||||||||||
General and administrative | 2,876 | 2,418 | 8,738 | 7,720 | |||||||||||
Secondary offering costs | 925 | ||||||||||||||
Marketing | 422 | 409 | 1,327 | 1,163 | |||||||||||
Restaurant pre-opening | 1,273 | 983 | 3,733 | 3,004 | |||||||||||
Depreciation and amortization | 2,663 | 2,324 | 7,418 | 6,418 | |||||||||||
Total costs and expenses | 59,855 | 49,428 | 170,375 | 141,523 | |||||||||||
Income from operations | 4,252 | 4,048 | 12,967 | 12,078 | |||||||||||
Interest expense | 36 | 23 | 77 | 80 | |||||||||||
Income before income taxes | 4,216 | 4,025 | 12,890 | 11,998 | |||||||||||
Income tax expense | 1,110 | 1,209 | 3,706 | 3,381 | |||||||||||
Net income | $ | 3,106 | $ | 2,816 | $ | 9,184 | $ | 8,617 | |||||||
Net income per common share: | |||||||||||||||
Basic | $ | 0.19 | $ | 0.17 | $ | 0.56 | $ | 0.53 | |||||||
Diluted | $ | 0.19 | $ | 0.17 | $ | 0.55 | $ | 0.52 | |||||||
Weighted-average shares outstanding: | |||||||||||||||
Basic | 16,436,585 | 16,344,454 | 16,423,301 | 16,241,661 | |||||||||||
Diluted | 16,706,865 | 16,712,618 | 16,711,794 | 16,658,585 | |||||||||||
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Chuys Holdings, Inc. and Subsidiaries
Unaudited Selected Balance Sheet Data
(In thousands)
September 28, 2014 | December 29, 2013 | ||||||
Cash and cash equivalents | $ | 3,493 | $ | 5,323 | |||
Total assets | 170,825 | 151,162 | |||||
Long-term debt | 8,750 | 6,000 | |||||
Total stockholders equity | 115,445 | 104,488 | |||||
Reconciliation of Non-GAAP Measures
We prepare our financial statements in accordance with generally accepted accounting principles (GAAP). Within our press release, we make reference to non-GAAP restaurant-level EBITDA, 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 Companys 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.
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The following table includes a reconciliation of net income to restaurant-level EBITDA (in thousands):
� | Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||
September 28, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | ||||||||||||
Net income as reported | $ | 3,106 | $ | 2,816 | $ | 9,184 | $ | 8,617 | |||||||
Income tax provision | 1,110 | 1,209 | 3,706 | 3,381 | |||||||||||
Interest expense | 36 | 23 | 77 | 80 | |||||||||||
General and administrative | 2,876 | 2,418 | 8,738 | 7,720 | |||||||||||
Secondary offering costs | 925 | ||||||||||||||
Restaurant pre-opening expenses | 1,273 | 983 | 3,733 | 3,004 | |||||||||||
Depreciation and amortization | 2,663 | 2,324 | 7,418 | 6,418 | |||||||||||
Restaurant-level EBITDA | $ | 11,064 | $ | 9,773 | $ | 32,856 | $ | 30,145 | |||||||
Restaurant-level EBITDA margin (1) | 17.3 | % | 18.3 | % | 17.9 | % | 19.6 | % | |||||||
(1) | Restaurant-level EBITDA margin is calculated by dividing restaurant-level EBITDA by revenue. |
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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):
� | Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||
September 28, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | ||||||||||||
Net income as reported | $ | 3,106 | $ | 2,816 | $ | 9,184 | $ | 8,617 | |||||||
Secondary offering costs (1) | 925 | ||||||||||||||
Income tax expense (2) | (497 | ) | |||||||||||||
Pro forma net income | $ | 3,106 | $ | 2,816 | $ | 9,184 | $ | 9,045 | |||||||
Net income per share - pro forma: | |||||||||||||||
Basic - pro forma | $ | 0.19 | $ | 0.17 | $ | 0.56 | $ | 0.56 | |||||||
Diluted - pro forma | $ | 0.19 | $ | 0.17 | $ | 0.55 | $ | 0.54 | |||||||
Weighted-average shares outstanding - pro forma: | |||||||||||||||
Basic - pro forma | 16,436,585 | 16,344,454 | 16,423,301 | 16,241,661 | |||||||||||
Diluted - pro forma | 16,706,865 | 16,712,618 | 16,711,794 | 16,658,585 | |||||||||||
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. | In 2013, the tax expense for the thirty-nine weeks ended September 29, 2013 reflects the elimination of 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. |
Investor Relations
Fitzhugh Taylor
203-682-8261
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