Chuy's reports solid Q4 performance amid cautious 2024 outlook

Chuy's Holdings Inc. (NASDAQ: CHUY) announced its financial results for the fourth quarter and the entire year of 2023, showcasing substantial growth in key areas despite facing a slight downturn in stock price following softer-than-expected guidance for 2024. Known for its authentic Mexican and Tex-Mex cuisine, the company highlighted significant revenue growth and improvements in net income and operational efficiency.

Financial Highlights

- Q4 revenue increased by 11.8% to $116.3 million, with a yearly growth of 9.3% bringing the total to $461.3 million.

- Net income saw a notable rise of 121.2% in Q4 to $5.5 million, with an annual increase of 51.1% to $31.5 million.

- Earnings per share (EPS) improved to $0.31 in Q4 from $0.14, with a yearly rise to $1.76 from $1.11.

Operational Achievements and Margin Improvement

The company experienced a modest growth of 0.3% in comparable restaurant sales in Q4, with a more robust annual increase of 3.3%. The restaurant-level operating margin expanded by 300 basis points to 20.0% in Q4, reaching a decade high of 20.2% for the year, illustrating Chuy's operational efficiencies and cost management success.

Steve Hislop, CEO, commended the team's execution and dedication to enhancing margins and delivering customer value. Hislop also noted the strategic opening of a new outlet in Q4, with plans to launch 6 to 8 new locations in 2024, focusing on core markets to leverage high average unit volumes (AUVs) and strong brand presence.

Financial Strength and Capital Allocation

Chuy's concluded the year in a strong financial position, with $67.8 million in cash, no debt, and an additional $25.0 million available under its revolving credit facility. The company underscored its commitment to returning value to shareholders by repurchasing approximately $28.9 million of its common stock during the fiscal year.

2024 Outlook and Market Reaction

Despite the positive performance, Chuy's provided a cautious outlook for 2024, forecasting adjusted net income per diluted share of $1.82 to $1.87. This guidance, based on expected general and administrative expenses of $30.0 to $31.0 million, six to eight new restaurant openings, net capital expenditures of approximately $41 to $46 million, and an effective annual tax rate of 13% to 14%, led to a slight decline in stock price as investors reacted to the softer guidance.

Chuy's Holdings Inc. has demonstrated notable financial and operational success in the fourth quarter and throughout 2023. However, the cautious outlook for 2024 has tempered investor enthusiasm.

$CHUY(CHUY)