Chuy's Holdings' CEO Discusses Q2 2013 Results - Earnings Call Transcript

Aug. 6.13 | About: Chuy's Holdings (CHUY)

Chuy's Holdings, Inc. (NASDAQ:CHUY)

Q2 2013 Results - Earnings Call Transcript

August 6, 2013 5:00 PM ET

Executives

Steve Hislop - Chief Executive Officer and President

Jon Howie - Vice President and Chief Financial Officer

Analysts

David Tarantino - Robert W. Baird

Will Slabaugh - Stephens, Inc.

Jeff Farmer - Wells Fargo

Bryan Elliott - Raymond James

Nick Setyan - Wedbush Securities

Chris O'Cull – KeyBanc Capital Markets

Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Chuy’s Holdings Incorporated second quarter, 2013 earnings conference call. At this time, all participants are placed in a listen-only mode and lines will be open for your questions following the presentation. Please note that this conference is being on today August 6, 2013.

On the call today, we have Steve Hislop, Chief Executive Officer and President in the company and Jon Howie, Vice President and Chief Financial Officer.

And now I turn the conference over to Mr. Jon Howie. Please go ahead sir.

Jon Howie

Thank you, operator and good afternoon. By now everyone should have access to our second quarter 2013 earnings release, can also be found at www.chuys.com in the Investor section.

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

Also during today’s call, we will discuss non-GAAP measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. And the reconciliation to comparable GAAP measures is available in our earnings release.

With that out of the way, I’d like to turn the call over to Steve.

Steven Hislop

Thank you, Jon and thank you all for joining us today on the call. We are very pleased to report another strong quarter of operations. On a pro forma basis, we earned $0.22 per diluted share for the second quarter of 2013, an increase of almost 30% compared to the prior year.

Our results were led by a 23% increase in revenue growth which was again driven by strong new unit performance and a solid contribution from our comparable sales base. Our results continue to reflect the quality of our made-from-scratch food prepared fresh every day, our commitment to value and most importantly the hard work and dedication our employees take each day providing our guests the fun and energetic dining experience. This attributes combined have resulted in our strong business momentum.

On the development front we opened three restaurants during the second quarter, Richmond, Virginia; Little Rock, Arkansas; and Charlotte, North Carolina. Subsequent to the end of the second quarter, an additional Chuy's restaurant was opened in Greenville, South Carolina. As a result we have opened six new restaurants year-to-date and are well on track to meet our goal of eight to nine new units for the year.

As I noted we remain pleased with the performance of our new units. Our operators as well as our development, training and marketing teams continue to do a fantastic job of instilling the Chuy's culture in all our new units. The early results of the units we opened in the second quarter reflect this especially when you consider that each of these units represent the first two tourist location in their respective states.

Our EPS growth over the next few years will be largely driven by new unit growth. We believe the broad appeal of the Chuy's concept our strong unit economics and our flexible real estate strategy with the focused on conversion of existing restaurants but also with the selective use of our prototype building for ground up construction present us a with a large runway of opportunity for continued expansion.

With that, I would like to turn the call over to our CFO, Jon Howie to review the details of our second quarter. Jon?

Jon Howie

Thanks, Steve. For our second quarter ended June 30, 2013 revenue increased 22.7% to $53.4 million from $43.5 million in last year’s second quarter. The increase was driven primarily by $10.1 million incremental revenue provided by an additional 112 operating weeks from the 12 new restaurants open during and subsequent to the second quarter of 2012. Total operating weeks in the second quarter of 2013 increased 25.3% to 554 weeks from 442 weeks in the comparable quarter last year.

Comparable restaurant sales increased 2.1% for the 13-week period ended June 30, 2013 compared to the 13-week period ended July 1 of 2012, driven by a 1.9% increase in average check and 0.2% increase in traffic. I'd like to point out that this is an apples-to-apples calendar comparison, which is a slightly different base period in using the last year's 13-week fiscal second quarter ending on June 24, 2012.

On a strict fiscal quarter basis, comparable sales for the same restaurant increased 2.4%. There were 29% restaurants included in the comparable store base during the second quarter of 2013, which included two new restaurants added to the comparable store base at the beginning of this quarter. The comparable store base in the second quarter of 2012 had 21 restaurants. We consider a restaurant to be comparable in the first full quarter following its 18th month of operation.

I'd like to remind everyone that many of our restaurants opened at volumes greater than their eventual normalized run rate. In the case of our strongest opening, this honeymoon period may last longer than the 18 months we allow before a restaurant enters the comparable store base. Given the small number of restaurants currently in our comparable store base, the timing and strength of our new unit openings may create a headwind in our comparable restaurant sales percentage in some quarters in the near term.

Switching over to expenses, I will touch on some key line items. Cost of sales as a percentage of revenue increased approximately 70 basis points in the second quarter to 27.4%. The increase resulted primarily from higher chicken and produce cost into a lesser degree higher dairy cost. Our cost of sales have trended a little lower than expected in the first half of the year, we continue to see cost pressures in produce and chicken and therefore we expect to see cost of sales as a percentage of revenue in the 27.5% to 27.% range for the rest of 2013.

Labor cost as a percentage of revenue decreased 30 basis points to 31.3%. the decrease was largely attributable to improve the labor efficiencies and the compatible restaurants and lower training cost as a percentage of revenues.

General and administrative expenses in the second quarter increased approximately $400,000 to $2.5 million. This increase was primarily driven by increases in staffing as we continue to strengthen our infrastructure for future growth, additional payroll taxes due to the exercise employee stock options and incremental cost associated could be in a public company.

During the second quarter of 2013, we incurred $508,000 of operating expenses related to the two secondary offerings of the company’s common stock. All of the stock in each offering was sold by a certain existing stockholders and as a result, the company did not receive any proceeds from either offering.

Depreciation and amortization as a percentage of revenue increased 40 basis points to 3.9% from 3.5% last year. Driven primarily by the increased equipment and leasehold improvement cost associated with our newer restaurants. We expect our depreciation and amortization as a percentage of revenue to run approximately 4.3% of revenues for the year.

On a GAAP basis, interest expense was $24,000 for the quarter compared with approximately $1.9 million in the second quarter of 2012. On a pro forma basis, the interest expense totaled approximately $107,000 in the second quarter of 2012. The total outstanding debt under our credit facility at the end of the second quarter of 2013 was approximately $4.5 million.

During the second quarter, our tax rate was negatively impacted by the non-deductibility of the previously mentioned secondary operating cost. After excluding the effect of these costs, our pro forma effective tax rate was approximately 30% a midpoint of our expected range. A component of our pre-IPO capital structure was participating convertible preferred stock. For each prior year period presented, our GAAP results include undistributed earnings allocated to the preferred participating interest.

In connection with our IPO these preferred shares were converted into common shares. GAAP net income in the second quarter of 2013 was approximately $3.2 million compared to $1.7 million in 2012. Net income available to common stockholders in the second quarter of 2013 was also approximately $3.2 million or $0.19 per diluted share, compared to a net income available to common stockholders of $31,000 or $0.15 per diluted share in 2012.

Weighted average diluted shares outstanding were approximately $16.7 million for the second quarter of 2013, and approximately $9.5 million for 2012. Please also note that the historical weighted average shares outstanding for 2012 does not reflect the full impact of our IPO transaction to conversion of our preferred stock or our stock repurchased during the second quarter of 2012.

Attached to our press release is a reconciliation of our GAAP results to our pro forma financial results. In connection with our 2012 IPO, we simplified their capital structure by converting all preferred stock to common stock and reducing our long-term debt. Our pro forma results include adjustments to reflect our post IPO capital structure including our basic and diluted share count as if the IPO conversion in preferred stock and the stock repurchase occurred at the beginning of fiscal 2012 as well as other non-recurring or one-time adjustments.

We believe that our pro forma results provide easier view of our business given our new capital structure in post IPO cost structure. Pro forma net income for the second quarter of 2013 increased approximately 35% to $3.7 million compared to $2.7 million in the second quarter of 2012.

Earnings per diluted share increased approximately 29% to $0.22 per share compared to $0.17 a share in the prior year quarter. For our pro forma earnings per share calculation, note that the diluted weighted average share count of approximately 16.6 million shares for the second quarter of 2012 reflects our estimated post IPO share count.

With respect to our 2013 outlook, we are providing the following update to our annual guidance. We are increasing our guidance range and currently expect the pro forma diluted net income per share to range from $0.68 to $0.70. This compares to pro forma’s diluted net income per share of $0.60 in 2012 which included an estimated $0.04 to $0.05 per share positive impact due to the 53rd week during that fiscal year.

Net income guidance for the fiscal 2013 is based in part on the following annual assumptions. Our revenues expectations include a comparable store sales increase for the full year of approximately 1.75% which implies a range of 1% to 1.5% in the back half of the year.

I'd like to point out that on the comparable calendar week basis; we expect our third quarter comparable sales growth to be consistent with our guidance. However as previously noted due to the 53rd week in fiscal 2012, there is a one week calendar shift in the start of each fiscal quarter of 2013 compared to each fiscal quarter in 2012.

As a result of this shift, this year's third quarter will include a lower volume fall week in place of a typically higher volume summer week compared to last year. The company estimates this shift will reduce revenues by approximately $600,000 to $700,000 and negatively impact comparable restaurant sales on a fiscal basis by approximately 120 basis points.

Continuing on with the 2013 assumptions, restaurant preopening expenses are expected to range between $3.3 million to $3.9 million, we expect G&A expenses to run between $10.5 million and $11 million, this excludes approximately $925,000 of expenses related to the two recent secondary offerings which we will disclose separately from G&A expenses on the income statement. We expect the pro forma effective tax rate for the full year to range between 29% and 31%, and we expect annual weighted average diluted shares outstanding of $16.7 million to $16.8 million.

Lastly as Steve noted, our development plans for 2013 calls for eight to nine new Chuy’s restaurants of which six have opened here to-date. Our capital expenditures net of tenant improvement allowances are projected to be approximately $19.1 million to $21.2 million.

And now, I'll turn the call back over to Steve to wrap up.

Steve Hislop

Thank you, Jon. We continue to be excited about the opportunities that we have ahead of us to continue to grow the Chuy's brand and bring our distinct menu of authentic, freshly prepared Mexican and Tex-Mex inspired food to a wider audience while enhancing long-term value for our shareholders.

Before we go to Q&A portion of our call, I would like to again take a moment to thank all of our Chuy’s employees. Our successful results are a testament to their hard work and dedication to earn the dollar every single day.

And with that said, we thank you for your interest in our company. We will be happy to answer any questions you might have. Operator, please open the lines for question.

Question-and-Answer Session

Operator

(Operator Instructions). We will take our first question from David Tarantino with Robert W. Baird.

David Tarantino - Robert W. Baird

My first question is related to the same store sales trend you've seen recently and we've heard a lot of comments about the industry slowing, casual dining industry in particular slowing in June and July, and I was just wondering if you could maybe share what you've seen over the last couple of months as you have exited Q2 and entered Q3?

Jon Howie

Well, thank you, David. Dave, as we finished the year up around at 3.1%, what we're seeing is the trend continued through the entire year, right, close to that on their existing base of our existing 24 stores that we entered the year on as far as our trend line and that’s what we're seeing right around there. I think if you look at our original 24, that we start the year with, we ended the year around, I mean ended the quarter right around that 2.7% number on the original 24. And so we are keeping that trend pretty throughout the year and is continued into the third quarter for us.

David Tarantino - Robert W. Baird

Sounds great. And then maybe the second question, Steve, you mentioned being satisfied or happy with the recent openings, and I was just wondering if you could elaborate on how the openings in some of the newer markets which have been a fairly big percentage of the openings recently, how those have trended relative to your expectations and maybe comment on what you have learned about the brand as you’ve entered some of those newer markets, and whether that makes you think differently about the near term opportunity for unit growth?

Steve Hislop

I got Dave, I’ll tell you, I am excited as we mentioned in my comments earlier, our last four restaurants we actually opened in four new states and we are with a right on target with our expectations not only in a sales perspective but on a cost perspective. So we are very, very pleased and we believe what the -- all our firstly remain product, our 12 sauces that we made from scratch that have very different profiles, we feel like the concept like I said can move anywhere, because of the choices within that menu and that different taste profile. So I am as excited as I was a year ago or I was five years ago about the expansion possibilities of our concept.

David Tarantino - Robert W. Baird

Great, maybe just a quick follow-up on that, and some of the markets you’ve entered in are relatively small in comparison to some of the metro markets around, are you thinking now you might be able to go into some of those smaller markets or some of the openings given you more confidence in your ability to do that, and if so, is the long term target in your mind for the number of locations ultimately changing or is that pretty consistent with 25?

Steve Hislop

No, Dave, thank you for the question. I think it’s exactly what we have planned, Greenville, Charlotte those are all good mix size markets, maybe Greenville is a little bit small but has a good drawer into it. So I am really well pleased and same thing with Richmond and halfway up the -- just hour and half D.C. So I am comfortable and that was always in our plan along with major metropolitan markets that we will go into like we have whether it’d be Atlanta eventually into the D.C. market and so forth.

So our plans are right on track. I am pretty comfortable with layout of our towns and cities that we’re going into and our original expectation over the next what do we see in the United States 300 to 350 initially and then with every get knowledge in the market we believe we can go up to 500 in the United States. So I think we are right on target, right on plan, and exactly what I have said before.

David Tarantino - Robert W. Baird

Great, thank you very much.

Operator

We will take our next question from Will Slabaugh with Stephens, Inc.

Will Slabaugh - Stephens, Inc.

Sorry to ask the question same every quarter, but I wanted to ask you again about the product type, I am sorry the U.S. for pipeline, could you talk a little bit more about now you are eight to nine for the year, looking out for next year, how confident you feel that that never picks up by one or two, it is sort of what that outlook looks like over the next year or so?

Steve Hislop

Thank you, Will. I really appreciate kind of the same questions because believe me you are going to be getting the same answers. At the end of the day we are very comfortable with our growth progress, we expect us to grow around 20% fiscal growth so we are very comfortable with the one excess store or two excess stores next year. Our pipeline is excellent. We are currently I would say about 20 months out on our real estate, which is really good. I think we've talked to most people on the industry, there like to be 18 months out. So I'm pretty excited about where we're at.

Also when you look that we've already opened six in the basically the first half of this year with that's that all be eight to nine. We did a nice job on that. So for 2014, I'm excited on our 20% fiscal growth rate and we are pretty set for 2014. Most of our efforts are now at the end of 2015.

Will Slabaugh - Stephens, Inc.

Perfect. As a follow up to that, in the past you talked about your personnel building both in number and in quality. So given the 20% rate you're talking about, can you just talk about your confidence around the people you have in place to do that or did you expect some more hiring would take place next year etcetera?

Steve Hislop

Great question, most important question. I think we're and from a infrastructure of our home office, we're very excited, we're in front of the curve and we're very well set for our growth in the future and not only in the near but a little bit further than that. As far as operators which is probably the most important question, we are a little top heavy like I want to be, we have as we say about 45 restaurants ready to open or that we have opened, already have 10 to 11 supervisors on our roster currently. I expect them to run five stores probably the best of them can run six. So you see I'm a little ahead on that and you always want me to be in a growth company.

So, I'm very comfortable with our infrastructure, not only at the home office and more importantly out in the field and we currently have 36 managers in training which is kind of our part as we move forward, we're doing very, very well and we're excited about where we're at and we'll always stay in front of the curve.

Will Slabaugh - Stephens, Inc.

And one last question for me, you noted trends that have been just steady that could be really throughout the year. I wonder if you've seen anything different from a mix perspective, from a daypart perspective, weekend versus weekday, anything like that it’s all is spend through it steady as it goes?

Steve Hislop

Steady as it goes.

Operator

We will take our next question from Jeff Farmer with Wells Fargo.

Jeff Farmer - Wells Fargo

Just falling of in that last question again. We talked about this industry same-store sales didn’t accelerate pretty materially for May, June and to July. Obviously, you guys have made a pretty clear that you have been stable but again just thinking about your concept, if you had to point to a few things that would drive that relatively low volatility, what would you point to if you had to point out a couple of things that you thought really stood out for the concept?

Steve Hislop

I think there is a couple of things and I appreciate it. First of all, it's our made from scratch items. We are the one of the only ones that go out there and we believe we have capable food because we make everything from scratch. Second thing would be our price value relationship. It's very, very strong over the last five years. We've averaged only about 1.5% price increase for a lot of our competitors, they’ve been a lot more. And finally, our operational focus is very, very fundamental and we believe we have to earn the dollars. So as we know the dollars is more expensive to our guests than it was yesterday or the day before.

So everything that we do is looking at the focus on that and given them a little bit more than they expect. I would believe, maybe lot of our competitors have had the binoculars on a little bit backwards over the last few years. We've always been doing that. That’s our number market one for the last five, six years maybe since our concept started in 1982.

So those are our three big ones but our [silver] balls which there aren’t any in our industry is the fundamentals of our business and earn the dollar and we very, very focused. We don’t get outside the lines too much. We're pretty steady, we're pretty basic. And so I was saying earlier, you probably, if you are going to ask me new questions I am probably going to give you old answers, because they seem to work for us. And that’s kind of our basis, we stay pretty fundamental, keep our nose down and really pump our operations.

Jeff Farmer - Wells Fargo

All right that’s helpful and just a follow-up on that again sort of having, have a benefit of listening to a dozen of these casual earning calls over the last two weeks, lot of similar themes, a lot of consumer under pressure type themes, consumer spending some of their dollars elsewhere, troubles and what not, if you look at your core consumer, do you think that they have any way change their behavior or check management anything like that, trends, anything that you can point through that it sounds like you are not seeing anything, but anything you can point to in terms of a little bit consumer pressure?

Steve Hislop

No, we talked about this throughout the last couple of months and we actually talked a lot about in our two secondary offerings, we saw last year, there was whether it be the tax or so on, I can’t feel like in our concept and the way the world looks, its candle lights new year resolutions, where you going to lose weight. I think you really work hard at it for a couple of weeks and after that you get sick and tired of doing and then you go back to your normal everyday life, I kind of thing that’s the worse scene with our guest, and again with our attributes, I think we are the natural place for them to go.

Jeff Farmer - Wells Fargo

And then if I may just one more quick question on the site selection strategy, especially as you guys go into some of these newer markets just in terms of how you pulling this of and if I heard a little bit of the color before but just a demographic focus your relationship with developers, realtors, anything in terms of finding those sites that you are most comfortable with, any color in terms of how you are doing that moving forward would be helpful?

Steve Hislop

Well, the key, we have a demographic model, we are now getting to the sign that we are having add a psychographic model just barely started to do that because you got to have a really good

size to be able to have that statistically viable for you and we do well on urban and suburban markets but the key for us is making sure we have a great day time part but there is plenty of market for us that we are attacking and then the areas in the south east. We are going to continue to backfill in Texas and backfill in the Nationals and the south.

We are pretty comfortable in places the key for us is our local broker system. These are primary brokers out of Dallas but then we have over 30 local brokers in our market that not only are working in the markets they have currently at but more importantly working over the market that we are going to be in the next year and half, that is real key for us and we really want to know our markets, know how the roads are running, how the rivers flow, what the restaurants are doing well, where are the new power centers are going to go and where is the nice day time part is.

So we have a very detailed sight identification model and we stick to it pretty well. We never form well with the fact we do form with other metrics of the site. So that’s our pretty disciplined approach to our business as far as that goes.

Operator

(Operator Instructions) We will take our next question from Bryan Elliott with Raymond James.

Bryan Elliott - Raymond James

Well that’s pretty impressive because I punched file one before the music even stop, so yes we are dialing in at 3:00 O’clock and then I got in the queue, but anyway couple of questions to finish out here, did you give the pricing for the quarter Jon?

Jon Howie

Yeah, it’s right around the 15.

Bryan Elliott - Raymond James

Okay, would you expect that to continue for the year?

Jon Howie

Yeah.

Bryan Elliott - Raymond James

I wanted to make sure I heard correctly your commentary around the guidance and the comps, so you said the implied full year works out to be a 1 to 1.5 for the second half of the year?

Jon Howie

Yeah.

Bryan Elliott - Raymond James

And that the third quarter you said would be in line with that second half guidance or a full year guidance?

Jon Howie

The second half guidance.

Bryan Elliott - Raymond James

The second half guidance, okay, that's a part, I wasn't sure about. And then the calendar shift that's a -- not a -- the comps that you're guiding to are calendar not fiscal, that's the questions, right. So this shift of 600K and 700K is a?

Jon Howie

Fiscal.

Bryan Elliott - Raymond James

AUV fiscal issue, it's not a comp issue, right?

Jon Howie

Correct.

Bryan Elliott - Raymond James

And I guess a big picture question, the payroll numbers and government is telling us that restaurant hiring is leading to the job creation out there so far this year year-to-date and that does seem to be in conflict with what we're really hearing and seeing at the company level. And are you seeing a lot of independents opening or are you seeing increased competition for sites, is there evidence as you go back your day to day work that there is significantly more restaurants out there than 6 and 12 months ago?

Steve Hislop

No, not really, I haven't seen anything like that. Back when I might have been able to see it, Brian is when we really started that growth in 2009 and 2010, but over the last year and half there is far looks out there, who is in the markets some adults to, because I'm obviously going to high profile markets where we can at least do that 42.5 and grow from there as far as sales 4.25 million. So we're going to pretty high profile markets that all your basic players are there or are going to come in there, a little bit bet on that since we started our growth prospects.

Bryan Elliott - Raymond James

So nothing has really changed?

Steve Hislop

No, I don’t believe so.

Bryan Elliott - Raymond James

Thank you very much.

Operator

We will take our next question from Nick Setyan with Wedbush Securities.

Nick Setyan - Wedbush Securities

A quick question here on the labor line. It seems like we saw some leverage ahead of expectation. As we see some of these stores opening up stronger than expected and we continue to see the strong [AUVs] on the new stores even as we go away from taxes. Has your timeframe for, when we can start seeing some more leverage and other level operating expense line items, maybe moved forward a little bit?

Jon Howie

No, I don't think so, Nick. We had a great quarter in labor as far as our comparable stores. Last quarter, we had, if you look on a fiscal basis, we lost $600,000 to $700,000. So you kind of have that deleveraging impact. This quarter was more in line and plus we opened about the same number of stores. So you had a comparable amount of training. However, you had a larger sales line. So you saw some leverage in the training, but as we continue growth, we still expect that line as those new stores roll in. That is going to be higher here in the next couple of years.

Nick Setyan - Wedbush Securities

Okay, and is there maybe like a ceiling on cost of sales where you just don’t feel comfortable, allowing it to go up, every 28%, 28.5%, well you might actually take some more pricing?

Jon Howie

Well, Steve and I have always said that we think that the proper amount is in the high 27 lows 28, I think that beyond your 28.5 then we are probably talking about.

Nick Setyan - Wedbush Securities

Okay. And just a clarification question, I think you guys earlier said, that the comp base is at about 2.7% comp, so the two story that came in pressured the comp by about 60 bps, is that correct?

Jon Howie

Actually that’s 2.7 is from the beginning of the year Nick, it’s actually up five restaurant that are coming in diluting that by 60 bps.

Nick Setyan - Wedbush Securities

What about the quarter?

Jon Howie

The quarter, it is just 20 bps, maybe 20 bps, we don’t really disclose that, we’ve always gone with the beginning of the year comps, but it’s about 20 bps I think those two stores that roll in.

Nick Setyan - Wedbush Securities

Perfect, thanks so much.

Operator

We’ll take our next question from Chris O'Cull with KeyBanc.

Chris O'Cull – KeyBanc Capital Markets

Jon, do you have the turnover numbers for hourly employees and managers?

Jon Howie

I do. Currently, there are at about 83% at the hourly level and for managers about 26.

Chris O'Cull – KeyBanc Capital Markets

Is that managers, all managers, or just general managers?

Jon Howie

That’s all managers.

Chris O'Cull – KeyBanc Capital Markets

And then, I apologize, if I missed this, did you give non-comp store volumes and do you have the CapEx for the second quarter?

Jon Howie

The CapEx for the second quarter, I believe it was right around [$13 million], I apologize, just one second. And Chris, no, I didn’t give non-comp volumes.

Steve Hislop

Yeah, we didn’t give that Chris.

Chris O'Cull – KeyBanc Capital Markets

Okay. So the 12 stores, you talk about the incremental revenue, those include some comp stores as well?

Jon Howie

The incremental revenues Chris would just be the new stores that have opened during or subsequent to the second quarter, so any new I guess a quarter that doesn’t have any sales in a comparable week and the prior year.

Chris O'Cull – KeyBanc Capital Markets

Okay, so store goes into the comp base on a weekly basis not like it’s beginning of the quarter?

Jon Howie

No, it goes in at the beginning of the quarter, so you have the incremental sales from new stores that really doesn’t have a comparable week in the prior year, but then you also have the other non comparable stores if you will that haven’t really -- they got there beyond a calendar year, but they haven’t gotten to their 18 months the roll into the comp as yet.

Chris O'Cull – KeyBanc Capital Markets

Okay, great. Thank you.

Jon Howie

And the PP&E purchases for the 26 we sent is about 13.5, Chris.

Operator

Ladies and gentlemen, this does conclude today’s question-and-answer session. At this time for closing remarks, I’d like to turn the conference back over to the management team.

Steve Hislop

Okay, this is Steve. Well, everybody thank you so much. John and I appreciate your interest in Chuy’s. We always will be available to answer any and all questions. Again, thank you and have a great evening.

Operator

Ladies and gentlemen, this does conclude today’s conference. We appreciate your participation.

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Chuy's (CHUY): Q2 EPS of $0.22 beats by $0.01. Revenue of $53.4M beats by $0.28M. (PR)