CHUY - Earnings call transcript Q3 2017

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Operator

Good day, everyone. And welcome to the Chuy's Holdings, Incorporated Third Quarter 2017 Earnings Conference Call. Today's call is being recorded. At this time, all participants have been placed in a listen-only mode, and the lines will be open for your questions following the presentation. On today's call we have Steve Hislop, President and Chief Executive Officer; and Jon Howie, Vice President and Chief Financial Officer of Chuy's Holdings, Incorporated. I'll conference time, to this at turn over the Mr. And Howie. ahead, sir. go Please

Jon W. Howie

Thank now, It afternoon. access good at you, and operator, Investors the By found our third section. XXXX chuys.com in be to quarter everyone earnings also release. can on website the have should

you detailed cause the our to are that all performance, today actual to like filings begin forward-looking out will uncertainties our need statements. and our operating formal from not not part what future that to should more These remarks, risks of we to everyone I'd turn reliance materially could SEC results therefore, that to With of subject of could of that These over statements guarantees we undue include discussion expect. and future financial of the are impact Before you statements of differ I and We condition. to recent forward-looking way, Steve. refer on a call the results review remind put for our discussions risks numerous them. also

Steven J. Hislop

open Thank thoughts call results I'll and remainder the a you for with to you, your financial in Jon our third call for up our overview we of on call our more will today. development an year, questions. of for then quarter start the on us share Jon, quarter and detail review third joining thank the everyone the before then

I then Irma state storms Florida sales quarter, during operating of in the we total, these Houston a these As quarter hours, diluted XX storms subsequently up earnings able XX% from to which a a to days in $X.XX normal in reported reduced remain after lesser store to we approximately our reopening million resulted the proud the operating of hurricanes. in and is our loss team stores and Harvey these Included restaurants as up in of open of running operating aware, Hurricane sales. entire storms. efforts area, negative you're from restaurants well the per faced approximately the base. days $X.X to impact share the the for as well third leading tell affected In of am during from lost wake were as Hurricane not two I get you of disruptions of that certain can't in our the and, from $X.XX our how degree,

areas to many face time you of aftermath. in short news, that challenges saw these and I'm nothing the do While pictures faced, cases, the in was our people justice The sure really still of response they didn't phenomenal. the in

and was our is While some with personal which say inconveniences, that I'm to hurt, lost other pleased employees very no suffered hardships one blessing. a of property

to X.X%. our from Switching $XX,XXX of X.X% results. strategic aid result points To has note Texas a Additionally, and our employees hurricanes the disasters. were Fund comparable by to of in basis quarter $XX.X sales to provide basis the quarter XX paid hurricane to comparable that to decrease and Redfish Relief in Revenues both year's a impacted as a more and approximately sales due points XX bit the million restaurant context, negatively cannibalization. related I'm to so far Florida third last grew proud out our back over in

faced of new base also basis comp entering a their honeymoon as the end the back point result headwind curve. XX units We a on of

positive. are during in improvements comparable we our despite also the restaurant to that Additionally, sales saw October running sales underlying business note I'm pleased early, disruption, while it's September. hurricane slightly still through

underlying want to improving. not where trends while quite appear be we we're be, So our to

scratch believe manage and valuable long-term offerings, our core continue squarely atmosphere We of to made from and of our our business assets, health. remains standards, guests. our fundamentals taking our the our are on restaurants our value we'll for most care focus of unique our Our service

I including reviewing each social local a also updating as on for we store campaigns both Additionally, spoke media on basis. store and about activities, We're store our promote marking last quarterly basis. plans up system-wide have events, various continuing quarter, ramped with and to a local

have markets. in tests also We our recently of initiated three catering

addition it limited new Nashville in and While to have vans awareness. we Houston, added in brand which menu van catering have XXXX. had are Dallas in markets terms of opportunity, also additional recently If XXXX, we will beneficial we in a expand trailer to since the and in catering successful,

of project out rolled quarter Finally, we stages beginning the in online ordering be late the second stores in XXXX. of to starting our are that should the

opened we quarter first restaurants of one development, in our Warrenville, XXXX, Chicagoland third area, the Florida. one Chuy's two and Jacksonville, to Turning in restaurant during in Illinois,

opening, Hurricane of Pasadena, but a Additionally, in as a was restaurant delayed originally during Houston, quarter, the was result fourth just Harvey. opened Texas, scheduled for a we outside quarter which third of

We the also recently Chicago in Schaumburg, second Illinois. opened in area our Chuy's

the For XX of quarter, restaurants we new the us two open fourth in in to restaurants additional year, the balance giving expect XXXX.

additional that August was Hurricane We closed severely by been in and Harvey will Houston also damaged since area XX. reopen has restaurant one

of quarter, result open as Hurricane with Our XXXX will and unit in originally a associated for new in Miami, now slated delays damages fourth Irma. the early

in expect we between As and to XXXX. X call, XX units quarter's stated last on open

CFO, third XXXX. of our of Jon in to balance growth detailed a for create through like million to the Directors program more to call capital the additional With the $XX results. to business, excess addition continue that third having enhancing and approved us of December core Board long-term Finally, brand, believe a confidence flexibility initiation share our our for quarter, also our authorization gives indicative ability opportunity long value Howie, Chuy's of the ahead, subsequent sheet shareholders. We returns is have To have our our that to the the quarter growing this in we to that, XX, our to a for of our use strong turn commitment to review end a over our repurchase I'd the of shareholders. we end, runway

Jon W. Howie

X.X% a during quarter offset of loss We last quarter six increased year-over-year of new Revenues included from opened partially XX for of closing the weeks revenues XXXX. incremental million The the year's quarter. by to ended the X,XXX North third year, of quarter the third operating during an in weeks, third September XX, XXX Carolina last additional Charlotte, weeks $XX.X produced and had subsequent Steve. $XX.X by due million approximately during our the increase restaurants Thanks, operating to total third operating to XXXX. of locations

that earlier of days the stores lost days days. our the as other during XX limited quarter XX% resulted in other from hurricanes, closed Steve with days as impacted or We sales we lost well noted limited As XX sales. sales and $X.X operating million estimate in

the X.X% traffic, increase driven as approximately a high-volume points was approximately and the revenue cannibalization impacted quarter, of quarter. to our margins restaurants entering of in negatively the due share operating comments, $X.XX XX a for comparable for per basis basis by comparable sales were the result points by To from XX XX two hurricane X.X% basis units approximately we during restaurant to third X.X%. earlier impacted by Effective Additionally, in Austin in at honeymoon points basis restaurant decreased pricing basis base, strategic end reiterate Steve's loss our XX whose XXXX. XX before of by in check. XX X.X% our the allow enters quarter the sales offset newer than restaurants Comparable months calculation. points average the third have restaurant restaurant were decrease periods and by sales the diluted base comparable our the longer XX negatively we third profit estimate points lasted comparable operating of income the quarter restaurant There about activity,

basis of lesser prices. Turning Cost selected in approximately to a to to by of XX.X%, chicken, points degree, offset produce as pricing increased largely beef X.X% percentage driven groceries, a a partially inflation by expense year-over-year and of sales to favorable discussion commodity related and, revenue of XX items.

produce Looking volatility expect we balance year. of prices at in of year, remainder through continued this pricing in and the experience continue the to the the elevated

As approximately opening cost XXXX The the quarter pressures, a points XX.X%. increase approximately XXXX. year a unit to new XXX basis disruptions prior was XX and to attributable to expect fourth management percentage and in and Jacksonville scheduled of area Denver revenue specifically percentage the of result, basis from increase the as trainee, points of as points a during Chicago, rate managers Labor delays, quarter. the hurricane, basis cost sales to result we to waste our markets to ongoing of particularly hourly increased XX as compared revenue in a Miami, labor, inefficiencies, restaurant

will we which believe which with in expect new In complete scheduled the implement on this of process system, labor are labor. and of point-of-sale we our enhance new currently a projections additional by program, implementing scheduling system point-of-sale we the hourly sales modules our management our mid-November. conjunction to will We

related to path our a a a salaries stores rate. to basis as to activity. takes overall from due points locations, administrative increased General glide delivery due reach to and expansion maintenance in count time new $X.X by our costs will long approximately productivity to of over support continue as term. on higher rental in operating reduced to productivity year-over-year and points management the and Restaurant increase XX to Occupancy in which we again operations driven restaurant increased driven newer sales third equity as expenses related XX.X%, sales our benefit percentage our X%, our compensation of to an percentage the higher our and improve leverage review leverage additional approximately increase the to basis to as head training Additionally, operating $XXX,XXX the percentage to utility new insurance and revenue quarter, reduced lost growth increases costs, the as Hurricane in processes to well million an by our and normal it related to costs office, business XX sales operating the primarily shorten existing primarily in stores the expense hurricanes. lost of revenue due card decreased of and fees, credit cost related labor and to a to rent,

us in status, the be beginning compliant increases with see fees requires of to end year. also growth SOX final emerging by year our fiscal exemption of which in professional are associated our to We this being

of bonuses. year-over-year In period. was diluted a for million, compared of year-to-date summary, related $X.XX third in approximately approximately share, per $X.XX the mainly by a performance XX On or G&A As year to to $X.X to X.X%, diluted $X.X points ago income share, basis per XXXX X.X%. decreased percentage XX million, G&A quarter basis increased the revenue, points basis, net or to in decreases

to the of related expenses Third quarter the closure one XXXX results included restaurant.

to related currently of the the in or balance net expenses Excluding $XX.X on and sheet quarter share. we per year's income ended have was the $X.X million, quarter We third $X.XX last million closure, adjusted diluted debt. no with cash

Turning the to we This compares of and the are lowering to consumer given a as lingering our to $X. $X.XX our share diluted effects $X.XX current challenging of as the range per our range guidance to hurricanes, income to annual XXXX $X.XX. well retail net outlook, environment, of previous

XXXX reminder, which and is guidance week, includes year a in an the a occur fourth will As our quarter. extra XX-week

basis. assumptions. for per on negative diluted flat following XXXX X.X% revised now annual to on adjusted Our expect net XX-week of sales comparable restaurant is growth the guidance share a income based comparable We

negative comparable the in store of full-year basis from high-volume restaurants sales two point incorporates Austin. a Our cannibalization still impact growth strategic XX resulting

million on this it system We expect to a sales. now and operational our previous expect million comparable to a pre-opening now million to $X.X to We versus range long $XX.X $XX.X have between over million $X return While an we term, G&A million. of expenses help expenses a million previous from of the million of impact both near-term $XX.X expect continue to $XX range will million. and $X.X $X.X restaurant a standpoint versus

a estimated XX%. between versus previous of and to effective be XX% rate Our XX% XX% is tax to range now

to due now million expect million to XX We XX.X Florida, this diluted we new continue outstanding to the average weighted hurricane year. in annual shares. shares XX open to Chuy's damage restaurants expect And of

between be I'll our net to $XX up. to projected million With the million. capital that, Lastly, wrap of back improvement and Steve over to expenditures tenant allowances are turn call $XX

Steven J. Hislop

Jon. Thanks,

and to through growth focus We we our consistent returning maintaining take believe on solid core strategy capital, We disciplined business. focus can our a continue to long-term a development fundamentals, returns and steadfast a over shareholder achieve time. excess

to employees thank the our to Chuy's single earning their for I'd questions. and the turn day. answer for I you. call to Thank Before that, hard the any work back over dollar operator With dedication are like questions, all of to happy we every

Operator

And Please of day go with from take ahead. the we Slabaugh the Will question will first Stephens.

Will Slabaugh

about saw could impacted the how Yeah. out stores I you the you've attribute there a lot Thanks, try what recent Wondered improvement ups rather or guys. period if could more period. to given your throughout the you were and seen throughout downs bit talk of little were. know a if hurricanes what you think the But to? of what in parse we like terms looked what trends you and and it

Steven J. Hislop

that the the would right second I that we shell how we was is And get attribute and we've Xth – everything week people person under we're obviously, from and on first first obviously on we're The kind October second where and period following dreadful. to from Yeah. our for both with quarter, tough really with our Will. then saw When loving and parties our period a in them greeting a the hurricanes, same us, through sure time like And and an with and all focus from food. through, was Xth away do, we're making green tortoise and don't knuckle the things we get that really we uptick items. and that really chili slightly and along, of the jerk. care we the continued of to all need trend food little specifically dealt that But second and bit of doing And everything large of cooking of and bit we how evaluate our in hurricane October. uptick kind that's taking into September really the little up a we're and in back-to-school saw a a a is when sales focus same-store through we noise our period specifically take slight week,

bit go So a later times out I that we attribute we little a into how to tough come early. bit we probably think why and little

really our our And nothing been, really four what that's so real has focus main walls. outside

Will Slabaugh

Makes area Denver sense. the Chicago And as new well. a opened you up and in mentioned you store

curious in as new have opening? do any far you commentary are more as your So all markets, I'm those how

Steven J. Hislop

You or continue roughly very, of Denver in know We two now just in We're we one a bunch not And we me it's market again, to for very Warrenville, a weeks new on. first we're excuse is about again, first really – being awareness whole – entrance markets. market. the four six emerging area. brand about the The The our or not the is in excited excited which even with one where was Chicago, pleased the was Schaumburg built those into about how it ago. into need in started. or three awareness Denver we're And to because our that market been in opened five work months We've solid. months. Chuy's

Will Slabaugh

on on thing then if XQ cost any cannibalization see that Austin strategic incorporated into more one-time was well, expenses those? carry as also carrying guidance the should we in last And as curious the should one XXXX I Houston the it. if either on of and Got that into side, Jon, in

Jon W. Howie

Yeah.

of I XXXX, So, second it We opened I'll because cannibalization believe that will first January XXXX. lapping period in of the continue start that on period cannibalization, The XXXX. store through should address in the the Austin we XX first. of

in back it And November the hoping of us one get of cost labor was actually that store, it a going so it with it's have As time under little if to here. into closed as extra because by about the keep going we're open, that that stores end open cost to seven-foot there at the far tried get to costs busy water, taken other a we've labor. employees in is the forward, meantime, that us little some remodel Houston store those we even and associated of

So really of we're way kind labor just a actually possibly the that can in put to the hurricane fourth crazy we will line, quarter directly the be it's in those the And result requires of record not you in out identified GAAP gain but to looking be at quarter that that, will in gain. and item will we the the one-line proceeds. all, broken proceeds or in expect probably XXXX. that insurance eventually either first be But all insurance quarter it on in about million $X recording fourth

Will Slabaugh

Great. Thank you.

Steven J. Hislop

Thanks, Will.

Operator

We next will the take James. Raymond Vaccaro Brian from with question

Steven J. Hislop

Brian. Hey,

Brian M. Vaccaro

for thanks and evening, Good questions. Jon. Hey, my taking

and things comps on one noting quarter, versus far in so played or to the trends lunch Anything how quarter circle sort back in and trends? and of the versus the period. worth you dinner Just mentioned wanted between dinner and out trends other. some lunch quarter during slipping the last in Curious those third shifts to-date

Steven J. Hislop

the was numbers, whole equal the far dinner on last obviously, of ton noise it a on hurricanes. because fairly as the period, there decrease. Well the But of as lunch and is

Brian M. Vaccaro

right. All basis of Jon, labor Was is hear correctly most the that the points – impact And of hurricane. you XX did XX you that line? most to of the mentioned Okay. within I –

Jon W. Howie

it's it of but other the labor lines, big also the in some line. some deleveraging of the all costs of other Well, Yes. the in of was piece a fixed

Brian M. Vaccaro

All a you comps, period. definition talked of being Okay. on you your comparable us And about can remind the XX-week right.

the comps. you'll What's Just same want fourth page report? the we're to you report make comparing when sure going that how dates to be on all you're quarter

Jon W. Howie

XX, year as last through December December We'll be compared year. XX comparing this the sales to through

Brian M. Vaccaro

All Okay. right.

Jon W. Howie

day an our at XX-week when that, that you're looking comp. So us gives in actually extra

Brian M. Vaccaro

That's you. right. helpful. All Okay. Thank

Jon W. Howie

Thanks.

Operator

And a Wells from Please Fargo. Mollins take question with Robert we'll now ahead. go

Robert Mollins

a to-go, great. be working delivery is delivery as out, of couple had the give us of for percent and Thanks and that would question. a you could guys. to-go is just sales how if questions I what Hey, taking around

Steven J. Hislop

get Sure. percent. Jon will the

As of have about AUV. around million because we to-go far in as XX% there, we north stores, of percent a stay to probably stable $X.X little that. bit $X.X very I delivery, delivery million, right our roughly healthy a that expect on a about have

cannibalizing get there. probably And own we'll really to stay service. into our the So Jon want services, We don't percent? our delivery existing pickup

Jon W. Howie

overall over our about and up to XX.X% sales comp X% the That's compared year. Yeah. about stores at for on XX.X% We're last year. of about to-go

Robert Mollins

into guys inflation And All XXXX? great. inflation and thoughts have around do then, you heading any right, labor initial commodity

Jon W. Howie

that X% labor early like I think we're lot the and enter Maryland quarter X.X% in in about a minimum we the inflation for some those a although Florida. a of We're this of and you it's about ran increases, little that tell starting I now. to Colorado wage have we are will and states year-to-date. that not

So next an may from bit, if been average standpoint, industry. standpoint hit little you us industry, a low us year pretty a that we've the from a from inflation weighted but to compare

Robert Mollins

just you then around thought And capital use if buyback Great. Could that's $XX I and you why time? more on the million elaborate this of one think process could. best the at the

Jon W. Howie

Yeah.

right the it's I think flexible think, now, most use. we So

were want buy want We in future. continue to do a to And have the we use have is thing number to with you that. If of to dividend, back. you I the don't to maybe think use to to the it leverage increase stores one flexibility

through but currently we'll all of on rest We're use cash future million have of to XXXX. obviously, flow about not use end the of use going for $XX.X the away. then sheet balance that we'll that So, currently it right we the

Robert Mollins

That's perfect. guys. Thanks, right. All

Steven J. Hislop

Thank you.

Operator

Markets. next BMO will The Capital from Andrew Strelzik question come with

Jon W. Howie

Hi, Andrew.

Ryan Royce

Thanks Ryan Andrew. on question. is for for taking actually This the

Jon W. Howie

Ryan.

Ryan Royce

comp hurricane October. September that you any versus any trends, other extra I markets? regional follow-up a those in and from just trends one pickup the markets the you're in seeing on in your Are seeing difference couple, had

Steven J. Hislop

over else out Houston had a dealing got because couple going that extra swept games the were with FEMA not for We from much the of issues. big a the it of end kind playoff the our it Yeah. of the was then and at existing last of but hurricanes us Houston consistent of country. because But – hurt definitely in the weeks there that there, first we pick Astros things. with really the little with weeks definitely the been up was get with overall, there. Not and and people not no-electricity of And everything, few this really over didn't because all it's or they in guests it cloudy, believe horrible through pretty there, everywhere initially after disaster bounce Florida so the bit and throughout that really

Ryan Royce

That's this of a the obviously, think we that helpful. openings of Austin had in Thanks. next unit year? year. the cannibalization similar then, year Are openings next for there the as for we planned And cannibalizations have market impact for any about year, some may next

Jon W. Howie

the two detrimental on guess, is I – Yeah, so those No. mean, stores are what being those stores cannibalized definitely two market standpoint the the effect a I in volume Austin are company, highest has it makes special, from cannibalization stores.

However, offsets the new the doing more well, very, the stores over cannibalization so very it than long-term. are

Ryan Royce

Great. It's very helpful. Thank you.

Steven J. Hislop

you. Thank

Operator

the will with And Mary Baird. come next from McNellis question

Mary L. McNellis

about period? question. I positive a in that, the for wide I for and remainder Thanks the imply afternoon. a a given running around you're the quite of the talk to you could taking you comps if quarter was full-year does keep guidance that are so wondering the quarter-to-date wide such bit the range was in just takes leading range little Good QX, puts wondering

Jon W. Howie

December positive obviously slightly are the we're Well, last not really year, really rollovers sales of period. and puts especially takes during and some the good to-date so

extent to over in December. periods positive we that, so, to to be we're projecting quite and those And get roll there

Steven J. Hislop

at specifically with you not be or rest a the we're don't it, for what. stuff of of I are, and know And not obviously that, year, hearing retail because whether hearing cautious things, of am positive the all variety malls if I'm the a spin real Amazon I

holiday about anxious So, we're season. the very

Jon W. Howie

right Right, and December. in both fall there those

the of takes really that's So, December. puts and

Mary L. McNellis

you. Thank helpful perspective. Quite Understood.

Steven J. Hislop

Thanks.

Operator

And Brian ahead. Vaccaro Please with Raymond has James a go follow-up.

Brian M. Vaccaro

Yeah.

food maybe the on that embedded the the of to on But fourth the and is of the pieces appreciate with if meaningful Jon, one what margins, wanted fourth on you lines. to will store quick some give assumptions have could. pretty a Would some Just costs. guardrails expectation on in or the overall quarter the line other the your extra quarter? moving circle maybe color for the just one margin impact back week labor I be all more guidance able level I

Jon W. Howie

Well, right reason we're up points now, probably is to that expecting labor year, existing. basis be XX to points. XX the about really over basis And not for last is,

with spoken think all I've quarter. that fourth the of in you a I As in past, leverage little the we week expect get with to extra

openings, the hurricane. given of new one store as However, store now in damaged some reopening that pushback four the our the fourth stores got of we're the as opening well in quarter

So, have of going we're fourth lot going quarter. inefficiencies to through the a

up last be So, XX basis XX points. year really now, to that basis – over I'm expecting to by points,

Steven J. Hislop

full in And we've extra there good with the Chicago push-backs teams from of figures that's push-backs management and the another piece carrying month that's in been a as months Denver, our to and the the year labor Miami two throughout also.

Brian M. Vaccaro

All right. Thank you. That's helpful.

Operator

Steve closing And for additional will session. to question-and-answer conclude Hislop I'd back any that to it turn or like remarks. our

Steven J. Hislop

and Thank always you. be in and thank Again, any have available Thank you questions. we to a evening. all good your answer continued and so much. you, and appreciate will Chuy's, interest Jon I

Operator

conference to our your does and And today. much. Thank you you thank for participation, very I'd everyone like now may conclude that disconnect. for

Chuy's (CHUY) 2 Nov 172017 Q3 Earnings call transcript