chuy-20220925

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 September 25, 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 October 28, 2022 was 17,996,293.

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)


	September 25, 2022		December 26, 2021
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	84,126	$	106,621
Accounts receivable	1,647		1,811

Inventories	1,622		1,676
Income tax receivable	—		1,083
Prepaid expenses and other current assets	5,058		3,273
Total current assets	92,453		114,464
Property and equipment, net	184,148		179,369
Operating lease assets	149,036		148,444
Deferred tax asset, net	4,903		5,400
Other assets and intangible assets, net	2,891		1,678

Tradename	21,900		21,900
Goodwill	24,069		24,069
Total assets	$	479,400	$	495,324
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	6,634	$	4,127
Accrued liabilities	23,952		25,242
Operating lease liabilities	12,403		13,003
Income tax payable	53		—




Total current liabilities	43,042		42,372

Operating lease liabilities, less current portion	185,443		188,735
Other liabilities	1,956		1,423



Total liabilities	230,441		232,530

Contingencies
Stockholders’ equity:
Common stock, $0.01 par value; 60,000,000 shares authorized; 18,323,647 shares issued and outstanding at September 25, 2022 and 19,538,058 shares issued and outstanding at December 26, 2021	183		195
Preferred stock, $0.01 par value; 15,000,000 shares authorized and no shares issued or outstanding at September 25, 2022 and December 26, 2021	—		—
Paid-in capital	103,458		135,659
Retained earnings	145,318		126,940
Total stockholders’ equity	248,959		262,794
Total liabilities and stockholders’ equity	$	479,400	$	495,324

See Notes to the Unaudited Condensed Consolidated Financial Statements

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Chuy's Holdings, Inc.

Unaudited Condensed Consolidated Income Statements

(in thousands, except share and per share data)


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	September 25, 2022		September 26, 2021		September 25, 2022		September 26, 2021
Revenue	$	106,682	$	101,939	$	318,114	$	297,802
Costs and expenses:
Cost of sales	29,149		24,972		86,266		70,984
Labor	32,378		29,776		94,470		84,911
Operating	17,441		15,001		51,164		44,416
Occupancy	7,490		7,351		22,698		22,049
General and administrative	6,700		6,996		19,848		20,523
Marketing	1,541		1,136		4,568		3,351
Restaurant pre-opening	266		349		733		1,641

Impairment, closed restaurant and other costs	1,190		3,973		3,203		7,721

Depreciation	5,102		5,093		15,065		15,097
Total costs and expenses	101,257		94,647		298,015		270,693
Income from operations	5,425		7,292		20,099		27,109
Interest (income) expense, net	(331)		74		(378)		118
Income before income taxes	5,756		7,218		20,477		26,991
Income tax expense	767		1,218		2,099		2,807
Net income	$	4,989	$	6,000	$	18,378	$	24,184
Net income per common share:
Basic	$	0.27	$	0.30	$	0.97	$	1.22
Diluted	$	0.27	$	0.30	$	0.97	$	1.20
Weighted-average shares outstanding:
Basic	18,685,401		19,913,355		18,901,542		19,882,265
Diluted	18,761,263		20,100,811		19,010,238		20,141,107

See Notes to the Unaudited Condensed Consolidated Financial Statements

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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, June 26, 2022	18,879,917	$	189	$	115,232	$	140,329	$	255,750
Stock-based compensation	—	—		987		—		987

Settlement of restricted stock units	1,850	—		—		—		—
Repurchase of shares of common stock	(557,576)	(6)		(12,749)		—		(12,755)
Indirect repurchase of shares for minimum tax withholdings	(544)	—		(12)		—		(12)
Net income	—	—		—		4,989		4,989
Balance, September 25, 2022	18,323,647	$	183	$	103,458	$	145,318	$	248,959

Balance, June 27, 2021	19,997,123	$	200	$	148,191	$	114,948	$	263,339
Stock-based compensation	—	—		995		—		995


Settlement of restricted stock units	2,148	—		—		—		—
Repurchase of shares of common stock	(196,569)	(2)		(6,115)		—		(6,117)
Indirect repurchase of shares for minimum tax withholdings	(705)	—		(22)		—		(22)
Net income	—	—		—		6,000		6,000
Balance, September 26, 2021	19,801,997	$	198	$	143,049	$	120,948	$	264,195

	Thirty-Nine 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	—	—		3,042		—		3,042

Settlement of restricted stock units	174,596	2		(2)		—		—
Repurchase of shares of common stock	(1,334,388)	(13)		(33,794)		—		(33,807)
Indirect repurchase of shares for minimum tax withholdings	(54,619)	(1)		(1,447)		—		(1,448)
Net income	—	—		—		18,378		18,378
Balance, September 25, 2022	18,323,647	$	183	$	103,458	$	145,318	$	248,959

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

Stock-based compensation	—	—		3,039		—		3,039
Proceeds from exercise of stock options	163,354	2		3,759		—		3,761

Settlement of restricted stock units	181,966	2		(2)		—		—
Repurchase of shares of common stock	(196,569)	(2)		(6,115)		—		(6,117)
Indirect repurchase of shares for minimum tax withholdings	(57,303)	(1)		(2,529)		—		(2,530)
Net income	—	—		—		24,184		24,184
Balance, September 26, 2021	19,801,997	$	198	$	143,049	$	120,948	$	264,195

See Notes to the Unaudited Condensed Consolidated Financial Statements

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Chuy's Holdings, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)


	Thirty-Nine Weeks Ended
	September 25, 2022		September 26, 2021
Cash flows from operating activities:
Net income	$	18,378	$	24,184
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	15,065		15,097
Amortization of operating lease assets	7,149		7,241
Amortization of loan origination costs	65		105
Impairment, closed restaurant and other costs	880		2,767
Stock-based compensation	2,885		2,893

Loss on disposal of property and equipment	204		9

Deferred income taxes	497		1,424
Changes in operating assets and liabilities:
Accounts receivable	164		(76)
Lease incentive receivable	—		200
Income tax receivable and payable	1,136		(415)
Inventories	54		26
Prepaid expenses and other assets	(1,858)		(686)
Accounts payable	985		1,087
Accrued and other liabilities	(756)		355

Operating lease liabilities	(11,975)		(17,221)


Net cash provided by operating activities	32,873		36,990
Cash flows from investing activities:
Purchase of property and equipment, net	(20,113)		(13,554)

Net cash used in investing activities	(20,113)		(13,554)
Cash flows from financing activities:









Loan origination costs	—		(260)
Repurchase of shares of common stock	(33,807)		(6,117)
Proceeds from the exercise of stock options	—		3,761
Indirect repurchase of shares for minimum tax withholdings	(1,448)		(2,530)
Net cash used in financing activities	(35,255)		(5,146)
Net (decrease) increase in cash and cash equivalents	(22,495)		18,290
Cash and cash equivalents, beginning of period	106,621		86,817
Cash and cash equivalents, end of period	$	84,126	$	105,107

Supplemental disclosure of non-cash investing and financing activities:
Property and equipment and other assets acquired by accounts payable	$	1,522	$	386

Supplemental cash flow disclosures:
Cash paid for interest	$	41	$	26
Cash paid for income taxes	$	466	$	1,806

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 September 25, 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.

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 September 25, 2022 and September 26, 2021, there were approximately 91,952 and 19,300 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 thirty-nine weeks ended September 25, 2022 and September 26, 2021, there were approximately 65,638 and 6,400 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.

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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				Thirty-Nine Weeks Ended
	September 25, 2022		September 26, 2021		September 25, 2022		September 26, 2021
BASIC
Net income	$	4,989	$	6,000	$	18,378	$	24,184

Weighted-average common shares outstanding	18,685,401		19,913,355		18,901,542		19,882,265
Basic net income per common share	$	0.27	$	0.30	$	0.97	$	1.22

DILUTED
Net income	$	4,989	$	6,000	$	18,378	$	24,184

Weighted-average common shares outstanding	18,685,401		19,913,355		18,901,542		19,882,265
Dilutive effect of stock options and restricted stock units	75,862		187,456		108,696		258,842
Weighted-average of diluted shares	18,761,263		20,100,811		19,010,238		20,141,107
Diluted net income per common share	$	0.27	$	0.30	$	0.97	$	1.20

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 September 25, 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

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