Baird s 2018 Global Consumer, Technology & Services Conference

Transcription

1 Baird s 2018 Global Consumer, Technology & Services Conference

2 Cautionary Statements Forward Looking Statements This presentation may include forward looking statements. These statements reflect the current views of the Company s senior management with respect to future events and financial performance. These statements include forward looking statements with respect to the Company s business and industry in general. Statements that include the words expect, intend, plan, believe, project, forecast, estimate, may, should, anticipate and similar statements of a future or forward looking nature identify forward looking statements for purposes of the federal securities laws or otherwise. Forward looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause the Company s actual results to differ materially from those indicated in these statements. The statements made herein speak only as of the date of this presentation. Non GAAP Financial Measures This presentation contains certain non GAAP financial measures. A non GAAP financial measure is defined as a numerical measure of a company s financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in the statements of income, balance sheets or statements of cash flow of the Company. The Company has provided a reconciliation of non GAAP financial measures to the most directly comparable financial measure in the Appendix to this presentation. The non GAAP financial measures used within this presentation are Adjusted EBITDA and Restaurant Level Operating Profit. These measures are presented because management uses this information to monitor and evaluate financial results and trends and believes this information to also be useful for investors. For additional information about our non GAAP financial measures, see our earnings releases and filings with the Securities and Exchange Commission. 1

3 Senior Management Presenters Steve Hislop President and Chief Executive Officer Jon Howie Vice President and Chief Financial Officer 2

4 If you ve seen one Chuy s, you ve seen one Chuy s! Barton Springs in Austin, TX El Paso, TX Columbus, OH Leave the cookie cutters to the other guys. Each Chuy s has genuine character: a noisy, sprawling Tex Mex hacienda full of feel good drinks and home cooked foods. 3

5 Atmosphere We aren t this: 4 8

6 Atmosphere We ARE this: 5 9

7 Chuy s Highlights Fresh, Authentic Mexican and Tex Mex Inspired Cuisine Considerable Dining Value and Broad Customer Appeal Upbeat Atmosphere Coupled with Irrelevant Brand Helps Differentiate Concept Flexible Business Model with Industry Leading Unit Economics Deep Rooted and Inspiring Company Culture Highly Experienced Management Team 6

8 Industry Leading Operating Metrics Comparable restaurant base generated LTM average unit volumes of $4.4 million Highest volume restaurant had LTM sales of $8.9 million Serve approximately 294,000 customers per location per year, on average Comparable restaurant base generated LTM restaurant level operating margins of ~19% Average Unit Volume ($Millions) $10.0 $8.0 $6.0 $4.0 $2.0 $0.0 $6.7 Full Service Mexican Concepts $4.4 $3.7 $3.2 $2.5 Select Best in Class Concepts $5.7 $4.9 $4.7 $4.1 Source: Calculations based on Company Filings and 2017 Technomic Industry Report as of most recent available fiscal year and estimates. Chuy s based on latest filed LTM period. 7

9 Proven Concept With Over A 35-Year History 88 new restaurants opened in 19 new states entered during the last 123 months Acquired by Goode Partners (Nov ) 2007 Steve Hislop joined as President & CEO 2008 Onset of growth initiatives 2009 Opened first location outside of TX (Nashville) 2010 Opened in AL, KY and TN 2011 Opened in IN, KY, TN and GA 2012 Opened in FL, OK, TN and KY 2013 Opened in AR, FL, VA, NC, SC, MO and OH 2014 Opened in AR, IN, FL, NC, VA and GA 2015 Opened in AL, AR, FL, OH and OK 2016 Opened in VA, LA, NC, TN, FL and MD 2017 December Opened in GA, OH, KS, CO, IL, FL and MD 2018 May Opened in FL, IL and CO Total Restaurants at End of Period 8

10 Fresh, Authentic Tex-Mex Cuisine Offer authentic Tex Mex food using only the freshest ingredients Recipes and cooking techniques originated from friends and family of our founders, who are from Mexico, New Mexico, and Texas Commitment to made from scratch, freshly prepared cooking Generous portions support value priced offering Customizable food offering is core to the Chuy s concept 9

11 We Take One Thing Seriously: Our Food. Ten Signature Sauces 1) Ranchero 2) Tomatillo 3) Deluxe Tomatillo 4) Creamy Jalapeño 5) Tex Mex 6) Fresca 7) Queso 8) Boom Boom 9) Green Chile 10) Hatch Green Chile Big As Yo Face Burritos A homemade, 12 flour tortilla stuffed with refried beans, cheese and choice of beef or chicken. Served with choice of sauce & choice of Mexican or green chile rice Price: $8.89 $10.69 Chicka Chicka Boom Boom Texas Martini Freshly roasted, handpulled chicken & cheese with Boom Boom sauce, made with cheese, roasted New Mexican green chiles, tomatillos, green onions, cilantro and lime juice. Served with choice of Mexican or green chile rice & refried or charro beans Price: $10.89 Served shaken, not stirred, this south ofthe border martini features tequila, Patrón Citrónge, fresh lime juice and a jalapeño stuffed olive Three drinks for the price of one Price: $9.69 SPICE METER: = MILD = MEDIUM = HOT Note: Prices above represent menu prices in Texas and Oklahoma as of January 29, 2018 which may vary from prices in other states. 10

12 Our Defining Differences 11

13 Exceptional Dining Value Significant value proposition to customers Only 14 out of 50 menu items priced over $10.00 (1) Average check of $14.83 $30.0 $26.36 $25.0 $21.40 $22.10 $20.0 $15.0 $14.83 $15.75 $16.83 $17.50 $18.14 $10.0 $5.0 $0.0 Source: Company filings as of most recent available fiscal year and equity research, and Piper Jaffray Restaurant Benchmark Analysis: 11 th Annual Cookbook, Chuy s based on latest filed LTM period. (1) Applies to our tier 1 menu as of January 29, 2018 which is in place at 36 of our 91 restaurants as of that date. 12

14 Chipotle vs. Chuy s Fast Casual Dining 2,363 Total Restaurants in 47 U.S. States 7.5% 2017 Unit Growth ~$11.94 Average Check (~1.0% Alcohol Mix) Sample Offerings: Entrée: Chicken Burrito $6.85 Chips & Salsa: $2.05 Total: $8.90 Full Service Dining 91 Total Restaurants in 19 U.S. States 13.8% 2017 Unit Growth $14.83 Average Check (18.4% Alcohol Mix) Sample Offerings: Entrée: Big As Yo Face Burrito Oven Roasted Chicken Includes a side of Rice & Beans $9.99 Chips & Salsa: Unlimited & Complimentary Total: $9.99 Note: Chipotle and Chuy s sample offerings represent menu items and prices from restaurants in the same geographic region as of December 31, Source: Company data, public filings and equity research as of December 31, Chuy s average check and alcohol mix based on latest filed LTM period. 13

15 Upbeat Atmosphere and Appealing, Irreverent Brand 14

16 Growth Opportunities

17 Enhanced Restaurant Development Strategy Identify and pursue development in major markets Backfill smaller existing markets to build brand awareness Flexible real estate strategy Conversions and new prototype construction Enhancements to Real Estate Department Restaurant Growth 4 new units completed in new units total expected in 2018 Pre Hub Locations Note: Map as of May

18 Industry Leading New Unit Economics Targeted cash on cash return beginning in the third operating year of ~30.0% and a sales to investment ratio of 1.9x Casual Dining Fast Casual New Unit Economics ($000s) LTM Comparable Restaurants Blended Target Actual (7) Target Actual (7) Target Target Target Actual (7) Average Unit Volume $4,366 $3,750 (1) $4,802 $4,500 $3,139 $1,800 $1,300 $1,500 $2,400 Restaurant Level Operating Profit % Margin 18.8% % 16.5% 18.6% 19.0% 15.8% 19.0% 18.0% 16.0% 23.0% Average Cash Investment $2,300 (2) $2,000 (6) 3,125 $3,100 $2,400 $1,650 $750 $810 $1,800 Customers Served Per Year (3) ~294,000 Sales to Investment Ratio 1.9x (4) 1.5x 1.4x 1.3x 1.1x 1.7x 1.9x 1.3x Cash on Cash Return ~30% (5) 28.6% 27.5% 20.6% 20.0%+ 30.0%+ 30.0%+ 30.0%+ Source: Public filings and equity research estimates. Note: Cash on Cash Return defined as Restaurant Level Operating Profit divided by Net Cash Investment excluding Pre Opening Expense. (1) Represents targeted Normalized Average Unit Volume. (2) Represents Average cash investment based on historical new restaurant openings less land lord allowances and excludes preopening expenses. (3) Estimated as Average Unit Volume divided by LTM Average Check. (4) Represents targeted Year 3 Sales: Investment Ratio. (5) Represents targeted Year 3 Cash on Cash Return. (6) Represents targeted cash investment less land lord allowances and excludes preopening expenses. (7) Based on actual data per most recent filing. 16

19 Initiatives Partnership with a national level marketing firm Off Premise Sales Catering, Online Ordering and Delivery Integration of new labor management system 17

20 Financial Summary

21 Comparable Restaurant Sales Growth 4.0% 3.0% 3.1% 3.3% 3.1% 2.0% (1) 2.2% 2.3% (2) 1.0% 0.0% 0.7% 0.8% (3) (0.7)% (0.6)% (2) 1.0% Q KNAPP TRACK SSS (0.5%) 1.5% 0.5% (1.3%) (0.2%) 1.1% (1.5%) (0.9%) (0.0%) Number of Comparable Restaurants Note: KNAPP TRACK is a monthly sales and guest count tracking service for the full service restaurant market in the United States. Source: KNAPP TRACK and Company data. (1) Adjusted to remove impact of the 53 rd week and extra 1.5 operating days in fiscal (2) As a result of one week calendar shift comparable sales calculation in 2013 and 2018 are based on comparing the sales in the fiscal periods of 2013 and 2018 to the corresponding calendar periods in 2012 and (3) Adjusted to remove impact of the 53 rd week in fiscal

22 Demonstrated Revenue and Unit Growth Total Restaurants Revenue ($Millions) $400 $350 $300 $250 $200 $150 $100 $50 $ $172.6 $204.4 $369.6 $330.6 $ % $245.1 $130.6 $86.9 $ Q Q % Q Q

23 Consistent Cost of Sales Management Cost of Sales (% of Revenue) Commodity Basket % s (1) 30.0% 18.0% 24.5% 27.5% 25.0% 28.2% 27.7% 26.9% 27.4% 26.4% 26.0% 25.9% 25.1% 25.1% 11.6% 13.0% 15.6% 17.3% 22.5% 20.0% Q1 Q Groceries Beef Chicken Produce Dairy Bar & Other (1) Based on the latest LTM period. 20

24 Increasing Restaurant-Level Operating Profit and Adjusted EBITDA Restaurant Level Operating Profit ($Millions) $70.0 $63.8 $64.6 $60.0 $56.5 $50.0 $42.5 (1) $34.8 $39.1 $40.0 $30.0 $25.0 $20.0 $16.6 $15.3 $ % 20.2% 19.1% 17.3% 19.7% 19.3% $ % 19.1% 16.3% Q Q Total 31 Restaurants: (1) 75.0% 60.0% 45.0% 30.0% 15.0% 0.0% Adjusted EBITDA ($Millions) $55.0 $45.0 $35.0 $25.0 $15.0 $5.0 $46.3 $46.0 $40.3 $30.8 $29.1 $25.5 $18.9 $11.7 $ Q Q Note: Restaurant Level Operating Profit represents income from operators plus the sum of general and administrative expenses, the advisory agreement termination fee, the settlement with our former director, offering costs, restaurant pre opening costs, loss on asset impairment, closure costs, and depreciation and amortization. Note: Adjusted EBITDA represents net income before interest, taxes, depreciation and amortization plus the sum of restaurant pre opening costs, loss on asset impairment, closure costs, deferred compensation, the advisory agreement termination fee, the settlement with our former director, offering costs, management fees and expenses and special one time bonus payment. (1) Fiscal year 2012 and 2017 include one extra week of operations. 21

25 Balance Sheet December 25, December 31, April 1, Cash $ 13.7 $ 8.8 $ 8.4 Other Current Assets Property & Equipment, Net Other Long Term Assets Total Assets $ $ $ Current Liabilities $ 28.1 $ 25.7 $ 24.6 Debt Other Long Term Liabilities Total Liabilities Total Equity Total Liabilities and Equity $ $ $

26 Appendix

27 Restaurant-Level Operating Profit FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Q Q Income from operations as reported $ 9.5 $ 13.3 $ 15.4 $ 15.9 $ 18.7 $ 24.3 $ 23.5 $ 6.5 $ 3.7 General and Administration Advisory Agreement Termination Offering Costs Settlement with Former Director Loss on asset impairment Closure costs Restaurant Pre opening Gain on insurance settlements (1.4) - - Depreciation and Amortization Restaurant Level Operating Profit $ 25.0 $ 34.8 $ 39.1 $ 42.5 $ 56.5 $ 63.8 $ 64.6 $ 16.6 $

28 Adjusted EBITDA Reconciliation FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Q Q Net Income $ 3.5 $ 5.5 $ 11.1 $ 11.5 $ 12.9 $ 17.2 $ 29.0 $ 4.6 $ 3.2 Income Tax provision (benefit) (5.5) Interest Expense Depreciation and Amortization EBITDA $ 13.9 $ 19.8 $ 24.3 $ 26.2 $ 31.5 $ 39.5 $ 41.2 $ 10.6 $ 8.4 Deferred Compensation Management Fees & Expenses Advisory Agreement Termination Offering Costs Settlement with Former Director Loss on asset impairment Closure costs Restaurant Pre opening Gain on insurance settlements (1.4) - - Special one time bonus payment Adjusted EBITDA $ 18.9 $ 25.5 $ 29.1 $ 30.8 $ 40.3 $ 46.3 $ 46.0 $ 11.7 $