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Chuy’s Holdings, Inc. Announces Second Quarter 2013 Financial Results

Pro forma net income represents our net income plus the sum of the net reduction in our interest expense, the reduction in our management fees and expenses as a result of our IPO, the application of the net proceeds of the IPO to repay $79.4 million of the Company’s debt, and the expenses incurred related to our secondary offerings, less the incremental costs of being a public company and the pro forma incremental income tax expense resulting from the adjustments above as well as other discrete tax items in 2013 and to adjust the effective tax rate to 30%, our long-term estimated effective rate, for the comparable period in 2012.

The following table includes a reconciliation of net income to restaurant-level EBITDA (in thousands):
      Thirteen Weeks Ended     Twenty-Six Weeks Ended
June 30,2013   June 24,2012 June 30,2013   June 24,2012
 
Net income as reported $ 3,160 $ 1,731 $ 5,801 $ 2,111
Income tax provision 1,621 739 2,172 902
Interest expense 24 1,884 57 3,166
General and administrative 2,507 2,137 5,302 3,922
Advisory agreement termination fee 2,000
Secondary offering costs 508 925
Restaurant pre-opening expenses 1,050 1,224 2,021 1,980
Depreciation and amortization   2,126     1,543     4,094     2,947  
Restaurant-level EBITDA $ 10,996   $ 9,258   $ 20,372   $ 17,028  
 
Restaurant-level EBITDA margin (1)   20.6 %   21.3 %   20.3 %   21.0 %
 
(1) Restaurant-level EBITDA margin is calculated by dividing restaurant-level EBITDA by revenue.
 
 

The following is a reconciliation of GAAP net income and net income per share to pro forma net income and pro forma net income per share (in thousands):
    Thirteen Weeks Ended     Twenty-Six Weeks Ended
June 30,2013   June 24,2012 June 30,2013   June 24,2012
 
Net income as reported $ 3,160 $ 1,731 $ 5,801 $2,111
Interest expense as reported (1) 1,884 3,166
Pro forma interest expense based upon reduced debt balance (2) (107 ) (214 )
Management fees and expenses (3) 2,094   2,094
Secondary offering costs (4) 508 925
Incremental public costs (5) (338 ) (676 )
Income tax expense (6)   30   (432 )   (497 ) (1,311 )
Pro forma net income $ 3,698 $ 2,738   $ 6,229   $5,170  
 
Net income per share - pro forma:
Basic - pro forma $ 0.23 $ 0.17 $ 0.38 $0.32
Diluted - pro forma $ 0.22 $ 0.17 $ 0.37 $0.31
 
Weighted-average shares outstanding - pro forma:
Basic - pro forma (7) 16,269,243 15,918,427 16,190,264 15,918,427
Diluted - pro forma (7) 16,677,221 16,567,153 16,626,012 16,566,943
 
 

Notes to reconciliation of GAAP net income to non-GAAP pro forma net income:
 
1.

Reflects the adjustment to eliminate the historical interest expense for all periods presented that were based upon actual outstanding balances before the application of the net proceeds from our IPO.
 
2.

Reflects interest expense assuming the post-IPO long-term debt balance of $5.0 million was outstanding as of the beginning of fiscal year 2012. This balance reflects the repayment of $79.4 million of long-term debt from the net proceeds from our IPO. This interest expense calculation assumes a change in interest rate from 8.5% to 7.0% due to the reduction in our total leverage ratio to below 2.0 to 1.0 upon application of the net proceeds from the IPO. The interest adjustment is also based on the following assumptions:

a. an unused facility fee on the unfunded $10.5 million of our revolver and delayed Term B Loan at an annual rate of 0.5%; and

b. a lower annual amortization of deferred loan costs of approximately $25,000 after the write-off of approximately $1.6 million, which occurred in the third quarter of 2012 but is assumed to occur at the beginning of fiscal 2012.
 
3.

Reflects the elimination of the management fees and expenses paid and reimbursed to Goode Partners, LLC for the periods presented.
 
4. Reflects the elimination of the offering expenses associated with the two secondary offerings completed in January 2013 and April 2013.
 
5. Reflects an estimate of recurring incremental legal, accounting, insurance and other compliance costs we expect to incur as a public company for the periods prior to being a public company.
 
6.

Reflects the tax expense associated with the adjustment in 1 through 5 above and normalizing the tax rate to 30.0% in 2012, which reflects our estimated long-term effective tax rate. In 2013, the tax expense reflects the favorable impact of a one-time tax adjustment for incremental employment tax credits from open tax years offset by the unfavorable tax impact of the non-deductible secondary offering costs. After excluding this net favorable tax benefit in 2013, our pro forma effective tax rate for the twenty-six weeks ended June 30, 2013 was 30.0%.
 
7. For 2012 periods, this reflects (i) 6,708,332 additional shares of common stock issued in the IPO, (ii) the repurchase by the Company of 1,655,662 shares of its common and preferred stock on April 6, 2012, and (iii) the conversion of all series of our outstanding preferred stock into common stock as if all of these transactions occurred at the beginning of fiscal year 2012.
 

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