Chuy’s(CHUY) - 2022 Q2 - Quarterly Report

Part I—Financial Information Financial Statements The financial statements for the period ended June 26, 2022, reflect a slight decrease in total assets and stockholders' equity, with revenue growth offset by declining net income and operating cash flow due to rising costs and share repurchases Unaudited Condensed Consolidated Balance Sheets As of June 26, 2022, total assets decreased slightly to $488.6 million, driven by reduced cash, while stockholders' equity declined to $255.8 million due to share repurchases Condensed Consolidated Balance Sheet Data (in thousands) | Account | June 26, 2022 (in thousands) | December 26, 2021 (in thousands) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $96,258 | $106,621 | | Total current assets | $107,007 | $114,464 | | Property and equipment, net | $180,467 | $179,369 | | Total assets | $488,616 | $495,324 | | Liabilities & Equity | | | | Total current liabilities | $43,232 | $42,372 | | Total liabilities | $232,866 | $232,530 | | Total stockholders' equity | $255,750 | $262,794 | | Total liabilities and stockholders' equity | $488,616 | $495,324 | Unaudited Condensed Consolidated Income Statements For the thirteen and twenty-six weeks ended June 26, 2022, revenue increased, but net income declined significantly due to rising cost of sales, labor, and operating expenses Income Statement Highlights (in thousands) | Metric | Thirteen Weeks Ended June 26, 2022 (in thousands) | Thirteen Weeks Ended June 27, 2021 (in thousands) | Twenty-Six Weeks Ended June 26, 2022 (in thousands) | Twenty-Six Weeks Ended June 27, 2021 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $110,946 | $108,153 | $211,432 | $195,863 | | Income from operations | $8,591 | $13,857 | $14,674 | $19,817 | | Net income | $7,871 | $11,530 | $13,389 | $18,184 | Net Income Per Share (Diluted) | Period | 2022 (per share) | 2021 (per share) | | :--- | :--- | :--- | | Thirteen Weeks Ended | $0.41 | $0.57 | | Twenty-Six Weeks Ended | $0.70 | $0.90 | Unaudited Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased to $255.8 million as of June 26, 2022, primarily due to $21.1 million in common stock repurchases offsetting $13.4 million in net income - For the twenty-six weeks ended June 26, 2022, key changes to stockholders' equity included net income of $13.4 million and common stock repurchases of approximately $21.1 million[14] Unaudited Condensed Consolidated Statements of Cash Flows For the first twenty-six weeks of 2022, operating cash flow decreased to $22.3 million, investing cash outflow increased, and financing activities used $22.5 million, resulting in a $10.4 million net decrease in cash Summary of Cash Flows (in thousands) | Activity | Twenty-Six Weeks Ended June 26, 2022 (in thousands) | Twenty-Six Weeks Ended June 27, 2021 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $22,267 | $32,082 | | Net cash used in investing activities | ($10,142) | ($6,582) | | Net cash (used in) provided by financing activities | ($22,488) | $1,230 | | Net (decrease) increase in cash | ($10,363) | $26,730 | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail operations, a $50.0 million share repurchase program with $20.6 million remaining, a $35.0 million undrawn credit facility, and an ongoing IRS audit with a potential $0.5-$2.5 million tax liability - As of June 26, 2022, the Company operated 97 restaurants across 17 states[21] - The company has a $50.0 million share repurchase program, effective until December 31, 2023, with $20.6 million remaining available for repurchases as of June 26, 2022[30] - The company has a secured $35.0 million revolving credit facility maturing in July 2024, with no borrowings under this facility as of June 26, 2022[28] - The IRS is auditing the company's 2016 tax return regarding tenant allowances, with a potential tax liability of $0.5 million to $2.5 million, though the company believes its position will be sustained[38] Management's Discussion and Analysis of Financial Condition and Results of Operations Q2 2022 revenue grew 2.6% due to new restaurants and 1.7% comparable sales, but profitability declined 31.7% from 24% commodity and 11% labor inflation, despite strong liquidity and $21.1 million in share repurchases Performance Indicators As of Q2 2022, the company operated 97 restaurants, with comparable restaurant sales increasing 1.7% for the thirteen weeks ended June 26, 2022, driven by a higher average check Key Operating Data | Metric | Thirteen Weeks Ended June 26, 2022 | Thirteen Weeks Ended June 27, 2021 | Twenty-Six Weeks Ended June 26, 2022 | Twenty-Six Weeks Ended June 27, 2021 | | :--- | :--- | :--- | :--- | :--- | | Total open restaurants | 97 | 95 | 97 | 95 | | Change in comparable restaurant sales | 1.7% | 60.0% | 6.1% | 23.6% | | Average check | $18.15 | $17.53 | $17.94 | $17.36 | Results of Operations Q2 2022 revenue grew 2.6% to $110.9 million, but net income fell 31.7% to $7.9 million due to significant cost inflation, with similar trends observed for the first half of 2022 - In Q2 2022, comparable restaurant sales increased 1.7%, driven by a 3.4% increase in average check, offset by a 1.7% decrease in average weekly customers[52] - Significant cost pressures in Q2 2022 included approximately 24% commodity inflation and 11% hourly labor rate inflation at comparable restaurants[52] - For the first half of 2022, comparable restaurant sales increased 6.1%, driven by a 2.7% increase in average weekly customers and a 3.4% increase in average check[55] Liquidity and Capital Resources As of June 26, 2022, the company maintained strong liquidity with $96.3 million in cash and no debt, utilizing its $35.0 million credit facility and repurchasing $21.1 million in shares - As of June 26, 2022, the Company had $96.3 million in cash and cash equivalents, no debt, and $35.0 million of availability under its revolving credit facility[58] - The company repurchased 776,812 shares for approximately $21.1 million during the twenty-six weeks ended June 26, 2022[58] 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[67] Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 26, 2022, with no material changes to internal control over financial reporting during the quarter - 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[68] - There were no material changes in internal control over financial reporting during the quarter ended June 26, 2022[69] Part II – Other Information Legal Proceedings No legal proceedings were reported during the period - None[72] Risk Factors No material changes to risk factors were reported from those previously disclosed in the Annual Report - No material changes from the risk factors disclosed in the Annual Report[73] Unregistered Sales of Equity Securities and Use of Proceeds During the thirteen weeks ended June 26, 2022, the company repurchased 58,700 shares for $22.71 per share, with $20.6 million remaining in the $50.0 million program Share Repurchases (Thirteen Weeks Ended June 26, 2022) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | May 23, 2022 - June 26, 2022 | 58,700 | $22.71 | | Total | 58,700 | $22.71 | - The share repurchase program, which expires on December 31, 2023, had approximately $20.6 million remaining available for future purchases as of June 26, 2022[73] Defaults Upon Senior Securities No defaults upon senior securities were reported - None[73] Mine Safety Disclosures Not applicable - None[73] Other Information No other information was reported - None[73] Exhibits Exhibits filed include CEO and CFO certifications under Sarbanes-Oxley Act and Inline XBRL data files