As previously discussed, as a result of the impact of COVID-19 and various state and local restriction on indoor dining, in late
Selected monthly comparable restaurant sales and average weekly sales per restaurant for the second quarter and third quarter to-date are as follows:
|
|
Month Ending |
|||
|
|
|
|
|
|
|
Comparable Restaurant Sales |
(55.2)% |
(44.8)% |
(21.6)% |
(26.3)% |
|
Average Weekly Sales per Restaurant |
|
|
|
|
|
Number of |
92 |
92 |
92 |
92 |
Off-premise sales remained strong at a rate more than double pre-COVID-19 levels comprising approximately 35% to 40% of all revenue in June and
As of
Highlights for the second quarter ended
-
Revenue was
$65.7 million compared to$113.1 million in the second quarter of 2019. - Comparable restaurant sales decreased 39.0%.
-
Net income was
$4.5 million , or$0.26 per diluted share, compared to net income of$6.2 million , or$0.37 per diluted share, in the second quarter of 2019, a decrease of$1.7 million or 27.4%. -
Adjusted net income(1) was
$4.0 million or$0.23 per diluted share compared to$7.0 million and$0.42 per diluted share in the second quarter of 2019. -
Restaurant-level operating profit(1) was
$14.8 million compared to$19.5 million in the second quarter of 2019. Restaurant-level operating margin(1) increased by 530 basis points to 22.5% compared to 17.2% in the second quarter of 2019.
- Adjusted net income, restaurant-level operating profit and restaurant-level operating margin are non-GAAP measures. For reconciliations of adjusted net income, restaurant-level operating profit and restaurant-level operating margin to the most directly comparable GAAP measures see the accompanying financial tables. For a discussion of why we consider adjusted net income, restaurant-level operating profit and restaurant-level operating margin useful, see “Non-GAAP Measures” below.
Second Quarter 2020 Financial Results
Revenue was
Comparable restaurant sales decreased 39.0% for the thirteen weeks ended
Total restaurant operating costs as a percentage of revenue improved to 77.6% in the second quarter of 2020 from 82.8% in the second quarter of 2019 primarily driven by the following:
- Cost of sales decreased 230 basis points primarily as a result of switching to a limited menu and eliminating the complimentary buffet style chips and salsa, “Nacho Car”, partially offset by 125 basis points increase in the cost of beef.
- Labor costs decreased 790 basis points largely as a result of furloughing a substantial number of hourly employees as well as store management personnel as the Company transitioned to an off-premise only operating model. As of the end of the second quarter of 2020, the Company rehired approximately 44% of furloughed management employees and approximately 65% of furloughed hourly employees. Hourly labor rate inflation in comparable stores was approximately 3.1%.
- Operating expenses increased by 220 basis points primarily driven by increases in delivery service charges and to-go supplies as a result of the growth in off-premise business as well as sales deleverage of fixed restaurant operating expenses.
- Occupancy costs increased 360 basis points primarily as a result of sales deleverage of fixed occupancy expenses.
- Marketing expense decreased 80 basis points primarily due to suspension of Company’s national-level marketing initiatives in response to COVID-19 while relying on more cost effective organic local store digital marketing efforts.
Restaurant pre-opening expenses decreased to
General and administrative expenses were
Impairment and closed restaurant costs were
During the second quarter of 2020, the Company received a one-time insurance settlement in the amount of
The Company recorded an income tax benefit of
As a result of the foregoing, net income was
Adjusted net income was
“At-the-market” (“ATM”) Offering
During the second quarter of 2020, the Company issued 3,041,256 shares of its common stock and received net proceeds of
2020 Outlook
Due to the ongoing uncertainty around the magnitude and duration of the COVID-19 pandemic, the Company is not in a position to provide fiscal 2020 financial guidance at this time.
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.
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.
Average weekly sales per restaurant is calculated by dividing total weekly sales by number of operating restaurants in a given week.
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 second quarter of 2020 today at
The conference call can be accessed live over the phone by dialing 877-300-8521 or for international callers by dialing 412-317-6026. A replay will be available after the call and can be accessed by dialing 844-512-2921 or for international callers by dialing 412-317-6671; the passcode is 10146312. The replay will be available until
About Chuy’s
Founded in
Forward-Looking Statements
Certain statements in this release that are not historical facts, including, without limitation, those relating to market conditions 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 ultimate geographic spread, duration and severity of the coronavirus (COVID-19) pandemic, and the effectiveness of actions taken, or actions that may be taken, by governmental authorities to contain the pandemic or treat its impact, the actual number of restaurant openings and reopenings, 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 and closed restaurant 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 and other factors disclosed from time to time in the Company’s filings with the
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 profit, restaurant-level operating margin and adjusted net income. Restaurant-level operating profit represents (loss) income from operations plus the sum of general and administrative expenses, restaurant pre-opening costs, legal settlement costs, gain on insurance settlements, impairment and closed restaurant costs and depreciation and amortization. Restaurant-level operating profit 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 and amortization expenses; and (ii) we use restaurant-level operating profit 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 profit because it excludes the impact of general and administrative expenses, which are not incurred at the restaurant level, restaurant pre-opening costs as well as impairment and closed restaurant costs and legal settlement costs. Although we incur pre-opening costs on an ongoing basis as we continue to open new restaurants, the pre-opening costs, legal settlement costs and impairment and closed restaurant costs are not components of a restaurant's ongoing operating expenses. The use of restaurant-level operating profit 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 profit 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. We present restaurant-level operating margin for the same reasons we present restaurant level operating profit.
Adjusted net income represents net (loss) income before legal settlement costs, impairment and closed restaurant costs, gain on insurance settlements, the income tax effect of these adjustments and the deferred tax revaluation adjustment. 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 profit, 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 profit, 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 Unaudited Condensed Consolidated Income Statements (In thousands, except share and per share data) |
|||||||||||||||||||||
|
|
Thirteen Weeks Ended |
|
Twenty-Six Weeks Ended |
||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||||||
|
Revenue |
$ |
65,712 |
|
100.0 |
% |
$ |
113,132 |
|
100.0 |
% |
|
$ |
160,212 |
|
100.0 |
% |
$ |
215,243 |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
||||||||||||
|
Cost of sales |
15,410 |
|
23.5 |
|
29,174 |
|
25.8 |
|
|
39,972 |
|
24.9 |
|
54,889 |
|
25.5 |
|
||||
|
Labor |
17,337 |
|
26.4 |
|
38,854 |
|
34.3 |
|
|
50,917 |
|
31.8 |
|
75,553 |
|
35.1 |
|
||||
|
Operating |
10,720 |
|
16.3 |
|
15,897 |
|
14.1 |
|
|
25,305 |
|
15.8 |
|
30,456 |
|
14.1 |
|
||||
|
Occupancy |
7,097 |
|
10.8 |
|
8,152 |
|
7.2 |
|
|
15,083 |
|
9.4 |
|
16,134 |
|
7.5 |
|
||||
|
General and administrative |
4,774 |
|
7.3 |
|
5,868 |
|
5.2 |
|
|
10,494 |
|
6.6 |
|
12,035 |
|
5.6 |
|
||||
|
Marketing |
365 |
|
0.6 |
|
1,544 |
|
1.4 |
|
|
1,374 |
|
0.9 |
|
2,995 |
|
1.4 |
|
||||
|
Restaurant pre-opening |
278 |
|
0.4 |
|
1,182 |
|
1.0 |
|
|
1,138 |
|
0.7 |
|
1,900 |
|
0.9 |
|
||||
|
Legal settlement |
— |
|
— |
|
775 |
|
0.7 |
|
|
— |
|
— |
|
775 |
|
0.4 |
|
||||
|
Impairment and closed restaurant costs |
1,782 |
|
2.7 |
|
216 |
|
0.2 |
|
|
20,555 |
|
12.8 |
|
588 |
|
0.3 |
|
||||
|
Gain on insurance settlements |
(1,000 |
) |
(1.5 |
) |
— |
|
— |
|
|
(1,000 |
) |
(0.6 |
) |
— |
|
— |
|
||||
|
Depreciation and amortization |
4,895 |
|
7.3 |
|
5,124 |
|
4.5 |
|
|
10,184 |
|
6.3 |
|
10,201 |
|
4.7 |
|
||||
|
Total costs and expenses |
61,658 |
|
93.8 |
|
106,786 |
|
94.4 |
|
|
174,022 |
|
108.6 |
|
205,526 |
|
95.5 |
|
||||
|
Income (loss) from operations |
4,054 |
|
6.2 |
|
6,346 |
|
5.6 |
|
|
(13,810 |
) |
(8.6 |
) |
9,717 |
|
4.5 |
|
||||
|
Interest expense, net |
153 |
|
0.3 |
|
23 |
|
— |
|
|
205 |
|
0.1 |
|
62 |
|
— |
|
||||
|
Income (loss) before income taxes |
3,901 |
|
5.9 |
|
6,323 |
|
5.6 |
|
|
(14,015 |
) |
(8.7 |
) |
9,655 |
|
4.5 |
|
||||
|
Income tax (benefit) expense |
(601 |
) |
(1.0 |
) |
78 |
|
0.1 |
|
|
(6,113 |
) |
(3.8 |
) |
193 |
|
0.1 |
|
||||
|
Net income (loss) |
$ |
4,502 |
|
6.9 |
% |
$ |
6,245 |
|
5.5 |
% |
|
$ |
(7,902 |
) |
(4.9 |
)% |
$ |
9,462 |
|
4.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Net (loss) income per common share: Basic |
$ |
0.26 |
|
|
$ |
0.37 |
|
|
|
$ |
(0.46 |
) |
|
$ |
0.56 |
|
|
||||
|
Net (loss) income per common share: Diluted |
$ |
0.26 |
|
|
$ |
0.37 |
|
|
|
$ |
(0.46 |
) |
|
$ |
0.56 |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Weighted-average shares outstanding: Basic |
17,555,506 |
|
|
16,804,465 |
|
|
|
17,095,422 |
|
|
16,838,052 |
|
|
||||||||
|
Weighted-average shares outstanding: Diluted |
17,578,129 |
|
|
16,859,657 |
|
|
|
17,095,422 |
|
|
16,902,656 |
|
|
||||||||
|
Reconciliation of GAAP net income (loss) and net income (loss) per share to adjusted results (Unaudited, in thousands except share and per share data) |
|||||||||||||||
|
|
Thirteen Weeks Ended |
|
Twenty-Six Weeks Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
Net (loss) income as reported |
$ |
4,502 |
|
|
$ |
6,245 |
|
|
$ |
(7,902 |
) |
|
$ |
9,462 |
|
|
Legal settlement |
— |
|
|
775 |
|
|
— |
|
|
775 |
|
||||
|
Impairment and closed restaurant costs |
1,782 |
|
|
216 |
|
|
20,555 |
|
|
588 |
|
||||
|
Gain on insurance settlements |
(1,000 |
) |
|
— |
|
|
(1,000 |
) |
|
— |
|
||||
|
Income tax effect on adjustments (1) |
(183 |
) |
|
(232 |
) |
|
(4,570 |
) |
|
(319 |
) |
||||
|
Deferred tax revaluation adjustment (2) |
(1,103 |
) |
|
— |
|
|
(1,636 |
) |
|
— |
|
||||
|
Adjusted net income |
$ |
3,998 |
|
|
$ |
7,004 |
|
|
$ |
5,447 |
|
|
$ |
10,506 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Adjusted net income per common share: Basic |
$ |
0.23 |
|
|
$ |
0.42 |
|
|
$ |
0.32 |
|
|
$ |
0.62 |
|
|
Adjusted net income per common share: Diluted |
$ |
0.23 |
|
|
$ |
0.42 |
|
|
$ |
0.32 |
|
|
$ |
0.62 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Weighted-average shares outstanding: Basic |
17,555,506 |
|
|
16,804,465 |
|
|
17,095,422 |
|
|
16,838,052 |
|
||||
|
Weighted-average shares outstanding: Diluted |
17,578,129 |
|
|
16,859,657 |
|
|
17,095,422 |
|
|
16,902,656 |
|
||||
-
Reflects the tax expense associated with the adjustments for impairment and closed restaurant costs as well as gain on insurance settlements during the thirteen weeks and twenty-six weeks ended
June 28, 2020 andJune 30, 2019 . The Company has changed its method of calculating the interim income tax effect on adjustments to improve consistency and predictability of calculations at the interim period and to better align it with the year end tax effect of these adjustments. The Company now uses its statutory rate to calculate the tax effect on adjustments as compared to calculations based on the change in the tax provision calculation after adjusting for these reconciling items. The prior period amounts have been restated for comparability. -
Reflects the tax benefit recorded during the twenty-six weeks ended
June 28, 2020 associated with the CARES Act administrative correction of the depreciation recovery period for qualified improvement property.
Reconciliation of GAAP income (loss) from operations to restaurant-level operating profit
(Unaudited, in thousands)
|
|
Thirteen Weeks Ended |
|
Twenty-Six Weeks Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
Income (loss) from operations as reported |
$ |
4,054 |
|
|
$ |
6,346 |
|
|
$ |
(13,810 |
) |
|
$ |
9,717 |
|
|
General and administrative |
4,774 |
|
|
5,868 |
|
|
10,494 |
|
|
12,035 |
|
||||
|
Restaurant pre-opening |
278 |
|
|
1,182 |
|
|
1,138 |
|
|
1,900 |
|
||||
|
Legal settlement |
— |
|
|
775 |
|
|
— |
|
|
775 |
|
||||
|
Impairment and closed restaurant costs |
1,782 |
|
|
216 |
|
|
20,555 |
|
|
588 |
|
||||
|
Gain on insurance settlements |
(1,000 |
) |
|
— |
|
|
(1,000 |
) |
|
— |
|
||||
|
Depreciation and amortization |
4,895 |
|
|
5,124 |
|
|
10,184 |
|
|
10,201 |
|
||||
|
Restaurant-level operating profit |
$ |
14,783 |
|
|
$ |
19,511 |
|
|
$ |
27,561 |
|
|
$ |
35,216 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Restaurant-level operating margin (1) |
22.5 |
% |
|
17.2 |
% |
|
17.2 |
% |
|
16.4 |
% |
||||
(1) Restaurant-level operating margin is calculated by dividing restaurant-level operating profit by revenue.
|
Chuy’s Unaudited Selected Balance Sheet Data (In thousands) |
|||||||
|
|
|
|
|
||||
|
Cash and cash equivalents |
$ |
67,237 |
|
|
$ |
10,074 |
|
|
Total assets |
486,081 |
|
|
446,069 |
|
||
|
Long-term debt |
— |
|
|
— |
|
||
|
Total stockholders’ equity |
235,115 |
|
|
194,936 |
|
||
View source version on businesswire.com: https://www.businesswire.com/news/home/20200806005953/en/
Investor Relations
203-682-8261
investors@chuys.com
Source: Chuy’s