chuy-20220626

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________

FORM 10-Q

__________________________________


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 26, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 001-35603

__________________________________

CHUY’S HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

__________________________________


Delaware						20-5717694
(State of Incorporation or Organization)						(I.R.S. Employer Identification No.)

1623 Toomey Rd.

Austin, Texas 78704

(Address of Principal Executive Offices) (Zip Code)

Registrant’s Telephone Number, Including Area Code: (512) 473-2783

__________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.01 per share	CHUY	Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer

☑

Accelerated filer

☐

Emerging growth company

☐

Non-accelerated filer

☐

Smaller reporting company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

The number of shares of the registrant’s common stock outstanding at July 29, 2022 was 18,845,732.

Table of Contents



Part I – Financial Information			3
Item 1. Financial Statements			3
Unaudited Condensed Consolidated Balance Sheets			3
Unaudited Condensed Consolidated Income Statements			4
Unaudited Condensed Consolidated Statements of Stockholders' Equity			5
Unaudited Condensed Consolidated Statements of Cash Flows			6
Notes to Unaudited Condensed Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			14
Item 3. Quantitative and Qualitative Disclosures about Market Risk			22
Item 4. Controls and Procedures			22
Part II – Other Information			23
Item 1. Legal Proceedings			23
Item 1A. Risk Factors			23
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			23
Item 3. Defaults Upon Senior Securities			23
Item 4. Mine Safety Disclosures			23
Item 5. Other Information			23
Item 6. Exhibits			23

Table of Contents

Part I—Financial Information

Item 1. Financial Statements

Chuy's Holdings, Inc.

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)


	June 26, 2022		December 26, 2021
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	96,258	$	106,621
Accounts receivable	1,823		1,811
Lease incentives receivable	1,000		—
Inventories	1,759		1,676
Income tax receivable	980		1,083
Prepaid expenses and other current assets	5,187		3,273
Total current assets	107,007		114,464
Property and equipment, net	180,467		179,369
Operating lease assets	148,226		148,444
Deferred tax asset, net	4,531		5,400
Other assets and intangible assets, net	2,416		1,678

Tradename	21,900		21,900
Goodwill	24,069		24,069
Total assets	$	488,616	$	495,324
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	5,735	$	4,127
Accrued liabilities	24,859		25,242
Operating lease liabilities	12,638		13,003





Total current liabilities	43,232		42,372

Operating lease liabilities, less current portion	187,729		188,735
Other liabilities	1,905		1,423



Total liabilities	232,866		232,530

Contingencies
Stockholders’ equity:
Common stock, $0.01 par value; 60,000,000 shares authorized; 18,879,917 shares issued and outstanding at June 26, 2022 and 19,538,058 shares issued and outstanding at December 26, 2021	189		195
Preferred stock, $0.01 par value; 15,000,000 shares authorized and no shares issued or outstanding at June 26, 2022 and December 26, 2021	—		—
Paid-in capital	115,232		135,659
Retained earnings	140,329		126,940
Total stockholders’ equity	255,750		262,794
Total liabilities and stockholders’ equity	$	488,616	$	495,324

See Notes to the Unaudited Condensed Consolidated Financial Statements

Table of Contents

Chuy's Holdings, Inc.

Unaudited Condensed Consolidated Income Statements

(in thousands, except share and per share data)


	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	June 26, 2022		June 27, 2021		June 26, 2022		June 27, 2021
Revenue	$	110,946	$	108,153	$	211,432	$	195,863
Costs and expenses:
Cost of sales	30,874		25,565		57,117		46,012
Labor	32,267		30,306		62,092		55,135
Operating	17,493		15,944		33,723		29,415
Occupancy	7,556		7,459		15,208		14,698
General and administrative	6,494		6,679		13,148		13,527
Marketing	1,614		1,238		3,027		2,215
Restaurant pre-opening	342		615		467		1,292

Impairment, closed restaurant and other costs	734		1,404		2,013		3,748

Depreciation	4,981		5,086		9,963		10,004
Total costs and expenses	102,355		94,296		196,758		176,046
Income from operations	8,591		13,857		14,674		19,817
Interest (income) expense, net	(75)		21		(47)		44
Income before income taxes	8,666		13,836		14,721		19,773
Income tax expense	795		2,306		1,332		1,589
Net income	$	7,871	$	11,530	$	13,389	$	18,184
Net income per common share:
Basic	$	0.42	$	0.58	$	0.70	$	0.92
Diluted	$	0.41	$	0.57	$	0.70	$	0.90
Weighted-average shares outstanding:
Basic	18,919,473		19,980,513		19,009,613		19,866,721
Diluted	18,983,553		20,197,574		19,136,313		20,165,155

See Notes to the Unaudited Condensed Consolidated Financial Statements

Table of Contents

Chuy's Holdings, Inc.

Unaudited Condensed Consolidated Statements of Stockholders' Equity

(in thousands, except share and per share data)


	Thirteen Weeks Ended
	Common Stock					Retained
	Shares	Amount		Paid-in Capital		Earnings		Total
Balance, March 27, 2022	18,937,768	$	189	$	115,587	$	132,458	$	248,234
Stock-based compensation	—	—		987		—		987

Settlement of restricted stock units	1,256	—		—		—		—
Repurchase of shares of common stock	(58,700)	—		(1,332)		—		(1,332)
Indirect repurchase of shares for minimum tax withholdings	(407)	—		(10)		—		(10)
Net income	—	—		—		7,871		7,871
Balance, June 26, 2022	18,879,917	$	189	$	115,232	$	140,329	$	255,750

Balance, March 28, 2021	19,946,228	$	199	$	145,731	$	103,418	$	249,348
Stock-based compensation	—	—		1,053		—		1,053
Proceeds from exercise of stock options	50,000	1		1,425		—		1,426

Settlement of restricted stock units	1,304	—		—		—		—

Indirect repurchase of shares for minimum tax withholdings	(409)	—		(18)		—		(18)
Net income	—	—		—		11,530		11,530
Balance, June 27, 2021	19,997,123	$	200	$	148,191	$	114,948	$	263,339

	Twenty-Six Weeks Ended
	Common Stock					Retained
	Shares	Amount		Paid-in Capital		Earnings		Total
Balance, December 26, 2021	19,538,058	$	195	$	135,659	$	126,940	$	262,794

Stock-based compensation	—	—		2,055		—		2,055

Settlement of restricted stock units	172,746	2		(2)		—		—
Repurchase of shares of common stock	(776,812)	(7)		(21,045)		—		(21,052)
Indirect repurchase of shares for minimum tax withholdings	(54,075)	(1)		(1,435)		—		(1,436)
Net income	—	—		—		13,389		13,389
Balance, June 26, 2022	18,879,917	$	189	$	115,232	$	140,329	$	255,750

Balance, December 27, 2020	19,710,549	$	197	$	144,897	$	96,764	$	241,858

Stock-based compensation	—	—		2,044		—		2,044
Proceeds from exercise of stock options	163,354	2		3,759		—		3,761

Settlement of restricted stock units	179,818	2		(2)		—		—

Indirect repurchase of shares for minimum tax withholdings	(56,598)	(1)		(2,507)		—		(2,508)
Net income	—	—		—		18,184		18,184
Balance, June 27, 2021	19,997,123	$	200	$	148,191	$	114,948	$	263,339

See Notes to the Unaudited Condensed Consolidated Financial Statements

Table of Contents

Chuy's Holdings, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)


	Twenty-Six Weeks Ended
	June 26, 2022		June 27, 2021
Cash flows from operating activities:
Net income	$	13,389	$	18,184
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	9,963		10,004
Amortization of operating lease assets	4,747		4,851
Amortization of loan origination costs	44		34
Impairment, closed restaurant and other costs	456		(1,575)
Stock-based compensation	1,950		1,947

Loss on disposal of property and equipment	57		—

Deferred income taxes	869		(127)
Changes in operating assets and liabilities:
Accounts receivable	(12)		261
Lease incentive receivable	(1,000)		200
Income tax receivable and payable	103		974
Inventories	(83)		18
Prepaid expenses and other assets	(1,713)		(1,585)
Accounts payable	258		1,199
Accrued and other liabilities	100		4,619

Operating lease liabilities	(6,861)		(6,922)


Net cash provided by operating activities	22,267		32,082
Cash flows from investing activities:
Purchase of property and equipment, net	(10,142)		(6,582)

Net cash used in investing activities	(10,142)		(6,582)
Cash flows from financing activities:









Loan origination costs	—		(23)
Repurchase of shares of common stock	(21,052)		—
Proceeds from the exercise of stock options	—		3,761
Indirect repurchase of shares for minimum tax withholdings	(1,436)		(2,508)
Net cash (used in) provided by financing activities	(22,488)		1,230
Net (decrease) increase in cash and cash equivalents	(10,363)		26,730
Cash and cash equivalents, beginning of period	106,621		86,817
Cash and cash equivalents, end of period	$	96,258	$	113,547

Supplemental disclosure of non-cash investing and financing activities:
Property and equipment and other assets acquired by accounts payable	$	1,350	$	134

Supplemental cash flow disclosures:
Cash paid for interest	$	30	$	16
Cash paid for income taxes	$	361	$	704

See Notes to the Unaudited Condensed Consolidated Financial Statements

Chuy's Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(Tabular dollar amounts in thousands, except share and per share data)

1. Basis of Presentation

Chuy’s Holdings, Inc. (the “Company” or “Chuy’s”) develops and operates Chuy’s restaurants throughout the United States. Chuy’s is a growing, full-service restaurant concept offering a distinct menu of authentic, freshly-prepared Mexican and Tex-Mex inspired food. As of June 26, 2022, the Company operated 97 restaurants across 17 states.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements and the related notes reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods presented. The unaudited condensed consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles (“GAAP”), except that certain information and notes have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission (the “SEC”). Results for interim periods are not necessarily indicative of the results that may be expected for the full fiscal year. The unaudited condensed consolidated financial statements should be read in conjunction with consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 26, 2021. The accompanying condensed consolidated balance sheet as of December 26, 2021, has been derived from our audited consolidated financial statements.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the period. Actual results could differ from those estimates.

Certain prior year amounts have been reclassified in our unaudited condensed consolidated financial statements to conform to current year presentation. These reclassifications have no effect on previously reported net income, income per share or stockholder's equity.

The Company operates on a 52- or 53- week fiscal year that ends on the last Sunday of the calendar year. Each quarterly period has 13 weeks, except for a 53-week year when the fourth quarter has 14 weeks. Our 2022 and 2021 fiscal years both consist of 52 weeks.

2. Recent Accounting Pronouncements

The Company reviewed all recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on the Company's consolidated financial statements.

3. Net Income Per Share

The number of shares and net income per share data for all periods presented are based on the historical weighted-average shares of common stock outstanding.

Basic net income per share of the Company's common stock is computed by dividing net income by the weighted-average number of shares of common stock outstanding for the period.

Diluted net income per share of common stock is computed on the basis of the weighted-average number of shares of common stock plus the effect of dilutive potential shares of common stock equivalents outstanding during the period using the treasury stock method for dilutive options and restricted stock units (the options and restricted stock units were granted under the Chuy's Holdings, Inc. 2012 Omnibus Equity Incentive Plan (the "2012 Plan") and the Chuy's Holdings, Inc. 2020 Omnibus Incentive Plan (the "2020 Plan")).

For the thirteen weeks ended June 26, 2022 and June 27, 2021, there were approximately 93,137 and no shares, respectively, of common stock equivalents that were excluded from the calculation of diluted net income per share because their inclusion would have been anti-dilutive. For the twenty-six weeks ended June 26, 2022 and June 27, 2021, there were approximately 54,334 and 3,396 shares, respectively, of common stock equivalents that were excluded from the calculation of diluted net income per share because their inclusion would have been anti-dilutive.

Table of Contents

Chuy's Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(Tabular dollar amounts in thousands, except share and per share data)

The computation of basic and diluted net income per share is as follows:


	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	June 26, 2022		June 27, 2021		June 26, 2022		June 27, 2021
BASIC
Net income	$	7,871	$	11,530	$	13,389	$	18,184

Weighted-average common shares outstanding	18,919,473		19,980,513		19,009,613		19,866,721
Basic net income per common share	$	0.42	$	0.58	$	0.70	$	0.92

DILUTED
Net income	$	7,871	$	11,530	$	13,389	$	18,184

Weighted-average common shares outstanding	18,919,473		19,980,513		19,009,613		19,866,721
Dilutive effect of stock options and restricted stock units	64,080		217,061		126,700		298,434
Weighted-average of diluted shares	18,983,553		20,197,574		19,136,313		20,165,155
Diluted net income per common share	$	0.41	$	0.57	$	0.70	$	0.90

4. Stock-Based Compensation

The Company has outstanding awards under the 2012 Plan and the 2020 Plan. On July 30, 2020, the Company’s stockholders approved the 2020 Plan, which replaced the 2012 Plan and no further awards may be granted under the 2012 plan. The termination of the 2012 Plan did not affect outstanding awards granted under the 2012 Plan. Options granted under these plans vest over five years from the date of grant and have a maximum term of ten years. As of June 26, 2022, the Company had 13,165 of stock options outstanding and exercisable with a remaining weighted average contractual term of approximately one year.

Restricted stock units granted under the 2012 Plan and 2020 Plan vest over four years to five years from the date of grant. As of June 26, 2022, a total of 878,057 shares of common stock were reserved and remained available for issuance under the 2020 Plan.

Stock-based compensation expense recognized in the accompanying condensed consolidated income statements was approximately $934,000 and $1,003,000 for the thirteen weeks ended June 26, 2022 and June 27, 2021, respectively, and approximately $1,950,000 and $1,947,000 for the twenty-six weeks ended June 26, 2022 and June 27, 2021, respectively.

A summary of stock-based compensation activity related to restricted stock units for the twenty-six weeks ended June 26, 2022 is as follows:


	Shares	Weighted Average Fair Value		Weighted Average Remaining Contractual Term (Year)
Outstanding at December 26, 2021	417,017	$	24.10
Granted	142,152	31.28
Vested	(

SEC Form 10-Q filed by Chuy's Holdings Inc.