Chuy’s(CHUY) - 2019 Q1 - Quarterly Report

Part I – Financial Information This section provides comprehensive financial data, including statements, management analysis, and risk disclosures for the reporting period Financial Statements Q1 2019 revenue reached $102.1 million with flat net income, and total assets significantly increased due to new lease accounting standard adoption Condensed Consolidated Balance Sheets Total assets increased to $442.7 million from $277.1 million, primarily due to the new lease accounting standard recognizing $167.1 million in operating lease assets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2019 (Unaudited) | December 30, 2018 | | :--- | :--- | :--- | | Total Assets | $442,693 | $277,084 | | Cash and cash equivalents | $7,345 | $8,199 | | Operating lease assets | $167,088 | $— | | Total Liabilities | $247,770 | $83,233 | | Operating lease liabilities (Current & Non-current) | $222,351 | $— | | Total Stockholders' Equity | $194,923 | $193,851 | - The significant increase in assets and liabilities is a direct result of adopting the new lease accounting standard, ASU 2016-02, on December 31, 2018, which required recognizing right-of-use assets and lease liabilities for operating leases on the balance sheet[24][27] Unaudited Condensed Consolidated Income Statements Q1 2019 revenue grew 8.8% to $102.1 million, but operating income slightly decreased, leading to flat net income and EPS at $0.19 Q1 2019 vs Q1 2018 Income Statement (in thousands, except per share data) | Metric | Thirteen Weeks Ended March 31, 2019 | Thirteen Weeks Ended April 1, 2018 | | :--- | :--- | :--- | | Revenue | $102,111 | $93,850 | | Income from operations | $3,371 | $3,675 | | Net income | $3,217 | $3,183 | | Diluted EPS | $0.19 | $0.19 | Unaudited Condensed Consolidated Statements of Cash Flows Net cash from operations decreased to $7.7 million from $12.0 million, with lower investing activities, ending the quarter with $7.3 million cash Q1 2019 vs Q1 2018 Cash Flows (in thousands) | Cash Flow Activity | Thirteen Weeks Ended March 31, 2019 | Thirteen Weeks Ended April 1, 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $7,659 | $11,962 | | Net cash used in investing activities | $(5,919) | $(9,989) | | Net cash used in financing activities | $(2,594) | $(2,322) | | Net decrease in cash | $(854) | $(349) | | Cash at end of period | $7,345 | $8,436 | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail the adoption of ASU 2016-02, significantly impacting the balance sheet with new lease assets and liabilities, alongside share repurchases and restaurant closure costs - The company adopted ASU 2016-02 (Leases) on December 31, 2018, which had a significant impact on the balance sheet by recognizing right-of-use assets and lease liabilities for operating leases[22][24] Impact of Adopting Leases (Topic 842) (in thousands) | Balance Sheet Item | Impact of Adoption | | :--- | :--- | | Operating lease assets | +$170,316 | | Operating lease liabilities | +$225,626 | | Retained earnings | -$349 | - Under its share repurchase program, the company repurchased approximately 80,000 shares for $1.8 million during the quarter, with $24.6 million remaining available for repurchase as of March 31, 2019[41] - The company incurred closure costs of approximately $0.4 million related to the closure of two restaurants in Atlanta, GA, and Miami, FL, during the first quarter of 2019[50] Management's Discussion and Analysis of Financial Condition and Results of Operations Revenue grew 8.8% from new restaurants and comparable sales, but operating margins were pressured by higher labor and occupancy costs, and operating cash flow decreased due to lease-related changes Key Performance Indicators | Indicator | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | Total restaurants (end of period) | 99 | 93 | | Change in comparable restaurant sales | 3.2% | (0.6)% | | Average unit volumes (in thousands) | $1,067 | $1,055 | | Average check | $15.53 | $15.01 | - Revenue increased by $8.3 million (8.8%), primarily driven by $7.1 million from new restaurants and a 3.2% increase in comparable restaurant sales[64] - Cost pressures were evident, with labor costs as a percentage of revenue increasing to 35.9% from 35.7% due to wage inflation, and occupancy costs rising to 7.8% from 7.6% due to higher rents in new markets[64] - Net cash provided by operating activities decreased by $4.3 million, largely due to a $4.2 million decrease in lease incentive receivables and deferred lease incentives driven by the development schedule[70] Quantitative and Qualitative Disclosures about Market Risk No material changes to market risk disclosures were reported since the last Annual Report on Form 10-K - There have been no material changes to the company's market risk disclosures since the last Annual Report[79] Controls and Procedures Disclosure controls were effective, and new internal controls were implemented for the adoption of the new lease accounting standard - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of the end of the period[80] - During the quarter, the company implemented new controls to ensure the proper assessment and adoption of the new lease accounting standard (ASU 2016-02)[81] Part II – Other Information Other information covers legal proceedings, risk factors, equity sales, and required exhibits Legal Proceedings The company is not a party to any material pending legal proceedings that could adversely affect its financial position - As of the report date, the company is not involved in any material legal proceedings[87] Risk Factors No material changes to risk factors were reported since the last Annual Report on Form 10-K - No material changes to risk factors were reported since the last Annual Report[88] Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 80,309 shares for $1.8 million, with $24.6 million remaining for future repurchases Share Repurchase Activity (Q1 2019) | Period | Total Shares Purchased | Average Price Paid Per Share | Approx. Dollar Value Remaining (in millions) | | :--- | :--- | :--- | :--- | | Feb 25 - Mar 31, 2019 | 80,309 | $22.63 | $24.6 | | Total Q1 2019 | 80,309 | $22.63 | $24.6 | Defaults Upon Senior Securities No defaults upon senior securities were reported - The company reported no defaults upon senior securities[91] Mine Safety Disclosures Not applicable, no mine safety disclosures were reported - The company reported no mine safety disclosures[92] Other Information No other material information was reported - The company reported no other information[93] Exhibits The report lists filed exhibits, including CEO and CFO certifications and XBRL data files - Exhibits filed include Sarbanes-Oxley certifications (31.1, 31.2, 32.1) and XBRL interactive data files (101 series)[94]