– Company-owned Comparable Restaurant Sales
Increased 2.1% –
Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH) today reported
unaudited financial results for its third quarter ended September
25, 2016 and announced a quarterly cash dividend of $0.07 per share
to be paid in the fourth quarter.
Highlights for the third quarter of 2016 compared to the
third quarter of 2015 were as follows:
- The Company reported net income of $3.6
million, or $0.11 per diluted share, in the third quarter of 2016
compared to net income of $2.6 million, or $0.08 per diluted share,
in the third quarter of 2015.
- Income from continuing operations was
$3.5 million, or $0.11 per diluted share, compared to income from
continuing operations of $2.6 million, or $0.08 per diluted, share
in the third quarter of 2015.
- Net income in the third quarter of 2016
included a non-recurring $335 thousand benefit related to the
settlement of disputed rent charges from 2006 through 2015 for a
leased Company restaurant, which were incurred in the second
quarter of 2016.
- Excluding the previously noted benefit
and results from discontinued operations, non-GAAP diluted earnings
per common share were $0.10 in the third quarter of 2016 compared
to $0.08 in the third 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.
- During the third quarter the Company
repurchased 553 thousand shares of common stock under its current
share repurchase program.
- One Company-owned Ruth’s Chris Steak
House restaurant opened in the third quarter of 2016, in El Paso,
TX.
Michael P. O'Donnell, Chairman and Chief Executive Officer of
Ruth's Hospitality Group, Inc., noted, “I am pleased to report
earnings per share of $0.11 in the quarter driven by top line
growth, a favorable commodity environment, and our balanced
shareholder return strategy. We have also seen improvement in our
restaurant level margins driven by favorable food costs and the
hard work of our team members to control operating costs. We
believe our operational focus, along with our strategy of
reinvesting in our core operations, driving disciplined growth, and
returning excess capital, continues to be a formula for delivering
long term value to our shareholders.”
O’Donnell added, “During the third quarter, we opened our newest
Ruth’s Chris Steak House, in El Paso, TX. The restaurant’s
comfortably elegant atmosphere is enhanced by a large open bar and
an outdoor patio with beautiful city views. I am pleased with the
early success of this restaurant and the focus of our team members
as they were profitable in their very first month of
operation.”
Review of Third Quarter 2016 Operating Results
Total revenues in the third quarter of 2016 were $83.8 million,
an increase of 4.3% compared to $80.3 million in the third quarter
of 2015.
Company-owned Sales
- For the third quarter of 2016,
Company-owned comparable restaurant sales increased 2.1%, which
consisted of an average check increase of 3.6%, offset by a traffic
decrease of 1.5%.
- Average unit weekly sales were $89.8
thousand in the third quarter of 2016, compared to $87.7 thousand
in the third quarter of 2015.
- 68 Company-owned Ruth’s Chris Steak
House restaurants were open at the end of the third quarter of
2016, compared to 66 Ruth’s Chris Steak House restaurants at the
end of the third quarter of 2015. Total operating weeks for the
third quarter of 2016 increased to 877 from 858 in the third
quarter of 2015.
Franchise Income
- Franchise income in the third quarter
of 2016 was flat year-over-year at $3.9 million.
- 80 franchisee-owned restaurants were
open at the end of the third quarter of 2016 compared to 79 at the
end of the third quarter of 2015.
Operating income in the third quarter of 2016 increased 34.8% to
$5.6 million, compared to $4.2 million in the third quarter of
2015. As a percentage of total revenues, operating margin increased
150 basis points year-over-year to 6.7%. Third quarter 2016 results
included a non-recurring $335 thousand benefit related to the
settlement of the disputed rent charges from 2006 through 2015 for
a leased Company restaurant, which were incurred in the second
quarter of 2016 for $465 thousand.
- Food and beverage costs, as a
percentage of restaurant sales, decreased 140 basis points in the
third quarter of 2016 to 30.1%, primarily driven by a 3.5% increase
in average check and a 6.3% decline in total beef costs.
- Restaurant operating expenses, as a
percentage of restaurant sales, decreased 80 basis points in the
third quarter of 2016 to 51.5%, due to the previously noted benefit
for disputed rent costs and leverage from higher sales.
- General and administrative expenses, as
a percentage of total revenues, decreased 50 basis points in the
third quarter of 2016 to 8.8% driven primarily by a decrease in
performance based compensation.
- Pre-opening costs were $0.6 million in
the third quarter of 2016 compared to $0.1 million in the third
quarter of 2015 driven by a new restaurant opening in El Paso, TX
during the third quarter of 2016 as well pre-opening rent costs
related to early 2017 restaurant openings.
Share Repurchase Program and Debt
During the third quarter of 2016, the Company repurchased 553
thousand shares of common stock under its current share repurchase
program for approximately $8.3 million, or an average price of
$15.01 per share. Since the beginning of 2014, the Company has
repurchased an aggregate of 5.2 million shares for approximately
$79.1 million under the current and prior share repurchase
programs.
At the end of the third quarter of 2016, the Company had $38
million in debt outstanding under its senior credit facility.
Quarterly Cash Dividend
Subsequent to the end of the third 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 November 23, 2016 to shareholders of record as of
the close of business on November 10, 2016, and represents a 17%
increase from the quarterly cash dividend paid in November of
2015.
Development Update
During the third quarter, the Company opened one new Ruth’s
Chris Steak House restaurant in El Paso, TX. Subsequent to the end
of the third quarter of 2016, the Company signed an agreement to
operate a new restaurant in Tulsa, OK which is expected to open in
the first quarter of 2017. This restaurant will be located in the
River Spirit Casino and is under an operating agreement, similar to
our Cherokee, NC restaurant. New Ruth’s Chris Steak House
restaurants in Cleveland, OH and Waltham, MA are expected to open
during the first quarter of 2017. As a result of early 2017
restaurant openings, we expect higher year over year pre-opening
costs in the fourth quarter of 2016.
Subsequent to the end of the third quarter of 2016, new
franchised restaurants opened in Odenton, MD and Greenville, SC. As
a result of the opening of the new Odenton, MD restaurant, one of
the franchised locations in downtown Baltimore, MD is expected to
close in the fourth quarter of 2016. 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, and revising expectations
of the full year share count for recent repurchases, 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
32.0 million to 32.5 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 third 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 719-325-2330. A replay will be available one hour after the
call and can be accessed by dialing 858-384-5517; the password is
1595138. The replay will be available until November 4, 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 herein that
describe the Company’s objectives, plans or goals, including with
respect to new restaurant openings, capital expenditures and the
impact of healthcare inflation and minimum wage legislation, also
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 Income - Preliminary and
Unaudited (Amounts in thousands, except share and per share
data)
13 Weeks Ended 39 Weeks Ended September
25, September 27, September 25, September
27, 2016 2015 2016 2015
Revenues: Restaurant sales $ 78,760 $ 75,249 $ 261,941 $ 253,085
Franchise income 3,928 3,965 12,463 12,103 Other operating income
1,086 1,078 3,914
3,497 Total revenues 83,774 80,292 278,318 268,685
Costs and expenses: Food and beverage costs 23,723 23,709
78,022 77,971 Restaurant operating expenses 40,549 39,321 127,026
121,286 Marketing and advertising 2,546 2,312 7,134 6,352 General
and administrative costs 7,346 7,442 22,068 21,334 Depreciation and
amortization expenses 3,435 3,241 9,907 9,347 Pre-opening costs
574 112 1,665 627
Total costs and expenses 78,173 76,137 245,822
236,917 Operating income 5,601 4,155 32,496 31,768
Other income (expense): Interest expense, net (333 ) (188 ) (799 )
(588 ) Other (92 ) 9 60
40 Income from continuing operations before income
tax expense 5,176 3,976 31,757 31,220 Income tax expense
1,668 1,338 10,410 10,145
Income from continuing operations 3,508 2,638 21,347
21,075 Income (loss) from discontinued operations, net of income
taxes 75 (73 ) (94 ) (582 ) Net
income $ 3,583 $ 2,565 $ 21,253 $ 20,493
Basic earnings (loss) per common share: Continuing
operations $ 0.11 $ 0.08 $ 0.67 $ 0.62 Discontinued operations
- - - (0.02 )
Basic earnings per share $ 0.11 $ 0.08 $ 0.67
$ 0.60 Diluted earnings (loss) per common share:
Continuing operations $ 0.11 $ 0.08 $ 0.66 $ 0.61 Discontinued
operations - - -
(0.02 ) Diluted earnings per share $ 0.11 $ 0.08 $
0.66 $ 0.59 Shares used in computing net
income (loss) per common share: Basic 31,305,952 33,989,364
32,023,814 34,183,137 Diluted 31,737,036 34,338,440 32,437,142
34,537,553 Dividends declared per common share $ 0.07 $ 0.06
$ 0.21 $ 0.18
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 and the benefit from the
favorable settlement 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 or benefits 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 39 Weeks Ended September 25,
September 27, September 25, September 27,
2016 2015 2016 2015 GAAP net
income $ 3,583 $ 2,565 $ 21,253 $ 20,493 GAAP Income tax
expense 1,668 1,338 10,410 10,145 GAAP Income (loss) from
discontinued operations (75 ) 73 94 582
GAAP Income from continuing operations before income tax expense
5,176 3,976 31,757 31,220 Adjustments: Restaurant closing
costs - - 148 - Accrual of prior years' rent dispute costs
(335 ) - 130 - Adjusted net income from
continuing operations before income taxes 4,841 3,976 32,035 31,220
Adjusted income tax expense (1) 1,537 1,338 10,519 10,145
Non-GAAP net income $
3,304 $ 2,638 $ 21,516
$ 21,075 GAAP diluted
earnings per common share 0.11
0.08 0.66 0.59
Non-GAAP diluted earnings per common share
0.10 0.08 0.66
0.61 Weighted-average number of common shares
outstanding - diluted 31,737,036 34,338,440 32,437,142 34,537,553
(1) Adjusted income tax is calculated by multiplying
the Non-GAAP adjustments by our marginal federal and state income
tax rates and adding or subtracting the result to/from our GAAP
income tax expense.
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version on businesswire.com: http://www.businesswire.com/news/home/20161028005060/en/
Investor RelationsFor Ruth’s
Hospitality Group, Inc.Fitzhugh Taylor,
203-682-8261ftaylor@icrinc.com
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