– Company-owned Comparable Restaurant Sales
Increased 1.5% –
– Repurchased 1.2 Million Shares of Common
Stock –
Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH) today reported
unaudited financial results for its second quarter ended June 26,
2016 and announced a quarterly cash dividend of $0.07 per share to
be paid in the third quarter.
Highlights for the second quarter of 2016 compared to the
second quarter of 2015 were as follows:
- The Company reported net income of $6.9
million, or $0.21 per diluted share in the second quarter of 2016
compared to net income of $7.5 million, or $0.22 per diluted share
in the second quarter of 2015.
- Income from continuing operations was
$7.0 million, or $0.21 per diluted share, compared to income from
continuing operations of $7.7 million, or $0.22 per diluted
share.
- Net income in the second quarter of
2016 included a non-recurring $465 thousand charge related to the
accrual of disputed rent charges from 2006 through 2015 for a
leased Company restaurant, as well as a $99 thousand gain related
to the sale of our recently closed Columbus, OH restaurant.
- Excluding the disputed rent charges,
restaurant closing costs and results from discontinued operations,
non-GAAP diluted earnings per common share were $0.22 in the second
quarter of 2016 compared to $0.22 in the second quarter of 2015.
The Company believes that non-GAAP diluted earnings per common
share provides a useful alternative measure of financial
performance. Investors are advised to see the attached
Reconciliation of non-GAAP Financial Measure table for additional
information.
- The Company repurchased 1.2 million
shares of common stock under its current share repurchase
program.
- Two Ruth’s Chris Steak House
restaurants opened in the second quarter of 2016. One new
Company-owned location opened in Albuquerque, NM and one of our
franchisees relocated its Philadelphia, PA restaurant.
Michael P. O'Donnell, Chairman and Chief Executive Officer of
Ruth's Hospitality Group, Inc., noted, “While our results included
another quarter of top-line growth and positive comparable store
sales, we were disappointed that we were unable to surpass last
year’s record second quarter net income. Simply put, we faced
slower revenue growth and higher year-over-year labor costs.”
O’Donnell continued, “More generally, we remain committed to our
strategic plan of running high quality restaurants with a
disciplined development plan. Our Ruth’s 2.0 menu initiative has
been rolled out to all domestic restaurants and our operational
excellence continues to be the strength behind our brand. Finally,
we are very pleased to compliment these organic growth initiatives
with a strong balance sheet and smart capital allocation decisions
that include repurchasing 1.2 million shares during the quarter. As
we look to the back half of the year, we believe that this balanced
approach is the best way to create long-term shareholder
return.”
Review of Second Quarter 2016 Operating Results
Total revenues in the second quarter of 2016 were $92.7 million,
an increase of 1.8% compared to $91.0 million in the second quarter
of 2015.
- Both traffic and sales in the second
quarter were negatively impacted by the shift of the Easter holiday
into the first quarter of 2016. The Company believes that the shift
of the Easter holiday reduced comparable sales by approximately 70
basis points in the quarter.
Company-owned Sales
- For the second quarter of 2016,
Company-owned comparable restaurant sales increased 1.5%, which
consisted of an average check increase of 3.7%, offset by a traffic
decrease of 2.1%.
- Average unit weekly sales were $101.1
thousand in the second quarter of 2016, compared to $100.0 thousand
in the second quarter of 2015.
- 67 Company-owned Ruth’s Chris Steak
House restaurants were open at the end of the second quarter of
2016, compared to 66 Ruth’s Chris Steak House restaurants at the
end of the second quarter of 2015. Total operating weeks for the
second quarter of 2016 increased to 863 from 858 in the second
quarter of 2015.
Franchise Income
- Franchise income in the second quarter
of 2016 decreased to $4.0 million compared to $4.1 million in the
second quarter of 2015. The decrease in franchise income was due
primarily to development fees related to the opening of new
restaurants in 2015.
- 80 franchisee-owned restaurants were
open at the end of the second quarter of 2016 compared to 79 at the
end of the second quarter of 2015.
Operating income in the second quarter of 2016 decreased 8.3% to
$10.5 million, compared to $11.4 million in the second quarter of
2015. As a percentage of total revenues, operating margin decreased
120 basis points to 11.3% year-over-year.
- Food and beverage costs, as a
percentage of restaurant sales, decreased 90 basis points in the
second quarter of 2016 to 29.6%, primarily driven by a 4.9% decline
in total beef costs.
- Restaurant operating expenses, as a
percentage of restaurant sales, increased 180 basis points in the
second quarter of 2016 to 48.8%, primarily due to the accrual for
the disputed rent costs and increased labor costs.
- General and administrative expenses, as
a percentage of total revenues, decreased 60 basis points in the
second quarter of 2016 to 7.6%.
- Pre-opening costs were $0.7 million in
the second quarter of 2016 compared to $0.1 million in the second
quarter of 2015 driven by the timing of new restaurant
openings.
Share Repurchase Program and Debt
During the second quarter of 2016, the Company repurchased 1.2
million shares of common stock under its current share repurchase
program, for approximately $20.0 million or an average price of
$16.78 per share.
At the end of the second quarter of 2016, the Company had $30
million in outstanding debt under its senior credit facility.
Quarterly Cash Dividend
Subsequent to the end of the second quarter of 2016, the
Company’s Board of Directors approved the payment of a quarterly
cash dividend to shareholders of $0.07 per share. This dividend
will be paid on August 25, 2016 to shareholders of record as of the
close of business on August 11, 2016, and represents a 17% increase
year-over-year.
Development Update
During the second quarter, the Company opened one new Ruth’s
Chris Steak House restaurant in Albuquerque, NM, and expects to
open a new restaurant in El Paso, TX during the third quarter of
2016. New Ruth’s Chris Steak House restaurants in Cleveland, OH and
Waltham, MA, previously expected to open in the fourth quarter of
2016, are now expected to open during the first half of 2017.
A franchise partner completed the relocation of a restaurant in
Philadelphia, PA during the second quarter of 2016. New franchised
restaurants are expected to open in Odenton, MD in the fourth
quarter and Greenville, SC during the fourth quarter. Franchisees
are currently expected to complete the relocation of restaurants in
Huntsville, AL in the fourth quarter of 2016, and Mississauga,
Canada during the first half of 2017.
Financial Outlook
Based on current information, Ruth's Hospitality Group, Inc. is
reaffirming its full year 2016 outlook as follows:
- Food and beverage costs of 29.0% to
31.0% of restaurant sales
- Restaurant operating expenses of 47.0%
to 49.0% of restaurant sales
- Marketing and advertising costs of 2.9%
to 3.1% of total revenues
- General and administrative expenses of
$28.5 million to $30.5 million
- Effective tax rate of 32% to 34%
- Capital expenditures of $28 million to
$30 million
- Fully diluted shares outstanding of
32.5 million to 33.0 million (exclusive of any future share
repurchases under the Company's share repurchase program)
The foregoing statements are not guarantees of future
performance, and therefore, undue reliance should not be placed
upon them. We refer you to our recent filings with the Securities
and Exchange Commission for more detailed discussions of the risks
that could impact our financial outlook and our future operating
results and financial condition.
Conference Call
The Company will host a conference call to discuss second
quarter 2016 financial results today at 8:00 AM Eastern Time.
Hosting the call will be Michael P. O’Donnell, Chairman and Chief
Executive Officer, and Arne G. Haak, Executive Vice President and
Chief Financial Officer.
The conference call can be accessed live over the phone by
dialing 719-325-2393. A replay will be available one hour after the
call and can be accessed by dialing 858-384-5517; the password is
7947935. The replay will be available until August 5, 2016. The
call will also be webcast live from the Company's website at
www.rhgi.com under the investor relations section.
About Ruth’s Hospitality Group, Inc.
Ruth's Hospitality Group, Inc., headquartered in Winter Park,
Florida, is the largest fine dining steakhouse company in the U.S.
as measured by the total number of Company-owned and
franchisee-owned restaurants, with over 145 Ruth’s Chris Steak
House locations worldwide specializing in USDA Prime grade steaks
served in Ruth’s Chris’ signature fashion – “sizzling.”
For information about our restaurants, to make reservations, or
to purchase gift cards, please visit www.RuthsChris.com. For more
information about Ruth’s Hospitality Group, Inc., please visit
www.rhgi.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains “forward-looking statements” that
reflect, when made, the Company’s expectations or beliefs
concerning future events that involve risks and uncertainties.
Forward-looking statements frequently are identified by the words
“believe,” “anticipate,” “expect,” “estimate,” “intend,” “project,”
“targeting,” “will be,” “will continue,” “will likely result,” or
other similar words and phrases. Similarly, statements about the
Company’s financial outlook and statements that describe the
Company’s objectives, plans or goals, including with respect to new
restaurant openings, are forward-looking statements. Actual results
could differ materially from those projected, implied or
anticipated by the Company’s forward-looking statements. Some of
the factors that could cause actual results to differ include:
reductions in the availability of, or increases in the cost of,
USDA Prime grade beef, fish and other food items; changes in
economic conditions and general trends; the loss of key management
personnel; the effect of market volatility on the Company’s stock
price; health concerns about beef or other food products; the
effect of competition in the restaurant industry; changes in
consumer preferences or discretionary spending; labor shortages or
increases in labor costs; the impact of federal, state or local
government regulations relating to Company employees, the sale or
preparation of food, the sale of alcoholic beverages and the
opening of new restaurants; harmful actions taken by the Company’s
franchisees; a material failure, interruption or security breach of
the Company’s information technology network; repeal or reduction
of the federal FICA tip credit; unexpected expenses incurred as a
result of the sale of the Mitchell’s Restaurants; the Company’s
ability to protect its name and logo and other proprietary
information; an impairment in the financial statement carrying
value of our goodwill, other intangible assets or property; the
impact of litigation; the restrictions imposed by the Company’s
Amended and Restated Credit Agreement; and changes in, or the
discontinuation of, the Company’s quarterly cash dividend payments
or share repurchase program. For a discussion of these and other
risks and uncertainties that could cause actual results to differ
from those contained in the forward-looking statements, see “Risk
Factors” in the Company’s Annual Report on Form 10-K for the fiscal
year ended December 27, 2015, which is available on the SEC’s
website at www.sec.gov. All forward-looking statements are
qualified in their entirety by this cautionary statement, and the
Company undertakes no obligation to revise or update this press
release to reflect events or circumstances after the date hereof.
You should not assume that material events subsequent to the date
of this press release have not occurred.
Unless the context otherwise indicates, all references in this
report to the “Company,” “Ruth’s,” “we,” “us”, “our” or similar
words are to Ruth’s Hospitality Group, Inc. and its subsidiaries.
Ruth’s Hospitality Group, Inc. is a Delaware corporation formerly
known as Ruth’s Chris Steak House, Inc., and was founded in
1965.
RUTH'S HOSPITALITY GROUP, INC. AND SUBSIDIARIES Condensed
Consolidated Statements of Operations - Preliminary and
Unaudited (Amounts in thousands, except share and per share
data) 13
Weeks Ended 26 Weeks Ended June 26, June
28, June 26, June 28, 2016 2015
2016 2015 Revenues: Restaurant sales $ 87,244
$ 85,765 $ 183,181 $ 177,836 Franchise income 4,034 4,117 8,535
8,139 Other operating income 1,376 1,167
2,828 2,419 Total
revenues 92,654 91,049 194,544 188,394 Costs and expenses:
Food and beverage costs 25,853 26,162 54,299 54,262 Restaurant
operating expenses 42,556 40,264 86,477 81,966 Marketing and
advertising 2,618 2,448 4,587 4,040 General and administrative
costs 7,058 7,445 14,721 13,892 Depreciation and amortization
expenses 3,371 3,187 6,472 6,106 Pre-opening costs 737
139 1,092 515
Total costs and expenses 82,193 79,645 167,648 160,781
Operating income 10,461 11,404 26,896 27,613 Other
income (expense): Interest expense, net (253 ) (174 ) (466 ) (400 )
Other 144 16 151
31 Income from continuing operations before income
tax expense 10,352 11,246 26,581 27,244 Income tax expense
3,396 3,577 8,742 8,807
Income from continuing operations 6,956 7,669 17,839
18,437 Loss from discontinued operations, net of income taxes
(48
) (153 ) (169 ) (509 ) Net income $
6,908 $ 7,516 $ 17,670 $ 17,928
Basic earnings (loss) per common share: Continuing operations $
0.22 $ 0.22 $ 0.55 $ 0.53 Discontinued operations -
- - (0.01 ) Basic earnings per
share $ 0.22 $ 0.22 $ 0.55 $ 0.52
Diluted earnings (loss) per common share: Continuing
operations $ 0.21 $ 0.22 $ 0.54 $ 0.53 Discontinued operations
- - - (0.01 )
Diluted earnings per share $ 0.21 $ 0.22 $ 0.54
$ 0.52 Shares used in computing net income
(loss) per common share: Basic 32,138,846 34,343,691 32,382,746
34,280,024 Diluted 32,540,633 34,611,107 32,796,134 34,640,397
Dividends declared per common share $ 0.07 $ 0.06 $ 0.14 $
0.12
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE We prepare
our financial statements in accordance with U.S. generally accepted
accounting principles (GAAP). Within our press release, we make
reference to non-GAAP diluted earnings per common share. This
non-GAAP measurement was calculated by excluding certain items and
losses from discontinued operations. We exclude the impact of the
loss from discontinued operations and restaurant closing costs
because these items are not reflective of the ongoing operations of
our business, and we exclude the impact of rent dispute costs
because the accrual was taken as a result of a dispute with a
landlord related to rent costs in prior years and we do not expect
to take similar accruals in the future. This non-GAAP measurement
has been included as supplemental information. We believe that this
measure represents a useful internal measure of performance.
Accordingly, where this non-GAAP measure is provided, it is done so
that investors have the same financial data that management uses in
evaluating performance with the belief that it will assist the
investment community in assessing our underlying performance on a
quarter-over-quarter basis. However, because this measure is not
determined in accordance with GAAP, such a measure is susceptible
to varying calculations and not all companies calculate the measure
in the same manner. As a result, the aforementioned measure as
presented may not be directly comparable to a similarly titled
measure presented by other companies. This non-GAAP financial
measure is presented as supplemental information and not as an
alternative to diluted earnings per share as calculated in
accordance with GAAP.
Reconciliation of Non-GAAP Financial
Measure - Unaudited (Amounts in thousands, except share
data) 13 Weeks Ended
26 Weeks Ended June 26, June 28, June
26, June 28, 2016 2015 2016
2015 GAAP net income $ 6,908 $ 7,516 $ 17,670 $
17,928 GAAP Income tax expense 3,396 3,577 8,742 8,807 GAAP Loss
from discontinued operations 48 153 169
509 GAAP Income from continuing operations before income tax
expense 10,352 11,246 26,581 27,244 Adjustments: Restaurant
closing costs (99 ) - 148 - Accrual of prior years' rent dispute
costs 465 - 465 -
Adjusted net income from continuing operations before income taxes
10,719 11,246 27,194 27,244 Adjusted income tax expense
3,539 3,577 8,982 8,807
Non-GAAP net
income $ 7,179 $ 7,669
$ 18,212 $ 18,437
GAAP diluted earnings per common share
0.21 0.22 0.54
0.52 Non-GAAP diluted
earnings per common share 0.22
0.22 0.56 0.53
Weighted-average number of common shares outstanding - diluted
32,540,633 34,611,107 32,796,134 34,640,397
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version on businesswire.com: http://www.businesswire.com/news/home/20160729005095/en/
Investor RelationsFitzhugh
Taylor (203) 682-8261ftaylor@icrinc.com
Ruths Hospitality (NASDAQ:RUTH)
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