-
Earnings Per Share $0.26 - Strengthening Sales Trends
- Accelerated
Development Plan
Ruth’s Hospitality Group, Inc. (the “Company”) (Nasdaq: RUTH)
today reported unaudited financial results for its first quarter
ended March 28, 2021 and provided a business update.
CEO Comments
Cheryl Henry, President and Chief Executive Officer of Ruth’s
Hospitality Group, Inc., commented, “Our impressive first quarter
results reflect not only accelerating sales trends, but also strong
margins as our operators continued to execute the efficiency and
capacity utilization initiatives that we implemented in 2020. I
would like to express my gratitude to our Ruth’s Chris team and
franchise partners for delivering these results, while providing
our guests with our signature service in a safe environment.”
Henry continued, “With dining rooms now open in nearly all of
our restaurants and our improved financial position, we are
focusing our efforts on growing sales and cash flow, building upon
the digital foundation we’ve developed during the last year, and
investing in new unit growth. This includes two to three new
restaurants this year and an additional three to four planned for
2022. I’m optimistic about the future and confident that our iconic
brand and our talented team members have us well positioned for
growth.”
First Quarter 2021 Financial Highlights (1)
- By the end of the first quarter of 2021, nearly all Ruth’s
Chris Steak House restaurants were open and offering limited
capacity dining service.
- 75 of 77 Company-owned and managed restaurants were open,
including 74 restaurants offering limited capacity dining service
and one restaurant offering outdoor seating only. Eleven of twelve
California restaurants re-opened dining rooms in mid-March.
- 100% of the Company’s 72 franchisee-owned restaurants were
open, including 70 restaurants offering limited capacity dining
service, one restaurant offering outdoor seating only and one
restaurant offering to-go and delivery service only.
- Restaurant sales in the first quarter of 2021 were $81.6
million compared to $103.0 million in the first quarter of 2020.
Restaurant sales improved each period during the quarter as our
dining rooms re-opened.
- By period, first quarter comparable restaurant sales and
average weekly sales for Company-owned restaurants:
January
February
March
Q1 2021
Comparable Restaurant Sales vs.
2020
(38.9%)
(25.7%)
72.0%
(14.8%)
Comparable Restaurant Sales vs.
2019
(36.2%)
(25.6%)
(14.8%)
(26.2%)
Average Weekly Sales (all
restaurants)
$69,381
$94,272
$94,806
$84,863
- By period, first quarter comparable restaurant sales for the 40
Company-owned restaurants operating limited capacity dining service
during all 13 weeks of the quarter:
January
February
March
Q1 2021
Comparable Restaurant Sales vs.
2020
(16.0%)
(16.6%)
80.3%
0.7%
Comparable Restaurant Sales vs.
2019
(13.3%)
(15.4%)
(7.1%)
(12.2%)
- Franchise income in the first quarter of 2021 was $3.8 million
compared to $3.6 million in the first quarter of 2020. First
quarter 2021 comparable restaurant sales at franchisee-owned
restaurants increased 4.2% compared to 2020 and decreased 13.1%
compared to 2019.
- Food and beverage costs, as a percentage of restaurant sales,
decreased 160 basis points to 28.1% compared to the first quarter
of 2020. Total beef costs decreased 1.5% compared to the first
quarter of 2020.
- Operating income as a percentage of total revenue was 13.8%
compared to (3.8%) in the first quarter of 2020.
- Net income in the first quarter of 2021 was $9.1 million, or
$0.26 per diluted share, compared to net loss of $3.8 million, or
($0.13) per diluted share, in the first quarter of 2020.
- Net income in the first quarter of 2021 included a $300
thousand employee retention payroll tax credit, which reduced
restaurant operating expenses, $445 thousand of severance related
costs and a $148 thousand income tax benefit related to the impact
of discrete income tax items. Net income in the first quarter of
2020 included a loss on impairment of $8.7 million and a $79
thousand income tax benefit related to the impact of discrete
income tax items.
- Excluding these items, non-GAAP diluted earnings per common
share was $0.26 in the first quarter of 2021, compared to $0.09 in
the first quarter of 2020. The Company believes that non-GAAP
diluted earnings per common share provides a useful alternative
measure of financial performance to improve comparability of
diluted earnings per common share between periods. Investors are
advised to see the attached Reconciliation of Non-GAAP Financial
Measure table for additional information.
(1)
In order to assist with the review of our quarterly results,
we have provided an additional comparison to the same period in
2019 for some of our financial measures as many of the 2020
financial measures were impacted by COVID-related restaurant
closures.
(2)
Average Weekly Sales is an average of restaurant sales for
all Company-owned restaurants.
Liquidity Update
- As of March 28, 2021, the Company’s cash balance was
approximately $112.3 million, with $115.0 million of debt
outstanding under its senior credit facility and $4.7 million of
outstanding letters of credit.
- Subsequent to the end of the first quarter, the Company made a
$10.0 million debt repayment in accordance with its credit
agreement.
- On May 4, 2021, the Company entered into an amendment to its
existing $110.0 million credit agreement that increased its 2021
growth capital expenditure limit to $20.0 million.
Business and Development Update
- Quarter to date through April 25, 2021, Company-owned
comparable restaurant sales increased 2.7% compared to 2019, and
average weekly sales were $101 thousand for the three weeks after
Easter. Quarter to date comparable restaurant sales through April
25th compared to 2019 were negatively impacted by 710 basis points
due to three markets (Boston, Hawaii and Manhattan), which
continued to be challenged by local restrictions and market
conditions.
- As of April 30, 2021: 74 of 76 Company-owned and managed
restaurants were offering limited capacity dining service and 66 of
72 franchisee-owned restaurants were offering limited capacity
dining service. Open dining rooms continued to operate at
approximately 50% average capacity.
- We previously announced plans to open two new Company-owned
restaurants in 2021 and 2022. Due to improving operating results
and the expansion of permitted capital expenditures under our
credit agreement, the Company is accelerating plans for new
restaurant development. We currently expect to open a total of six
new Company-owned restaurants by the end of 2022: two to three new
restaurants in 2021 and three to four new restaurants in 2022.
- We expect to open two new franchisee-owned restaurants in
2022.
- Subsequent to the end of the quarter, the Company permanently
closed one restaurant in Bellevue, WA. One franchisee-owned
restaurant located in Hong Kong will close in the fourth quarter of
2021.
Financial Outlook
Based on current information and its most recent projections,
Ruth’s Hospitality Group, Inc. is providing its full year 2021
outlook based on a 52-week year ending December 26, 2021, as
follows:
- Restaurant labor efficiency of 100-150 basis points compared to
2019
- Marketing and advertising costs of $12 million to $14
million
- General and administrative expenses of $30 million to $32
million
- Effective income tax rate of 17% to 19%
- Total capital expenditures of $20 million to $25.0 million
- Fully diluted shares of 34.6 million to 35.2 million
The foregoing statements are not guarantees of future
performance, and therefore, undue reliance should not be placed
upon them. We refer you to the “Cautionary Note Regarding
Forward-Looking Statements” section in this earnings press release
and 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 first quarter
2021 financial results today at 8:30 AM Eastern Time. Hosting the
call will be Cheryl J. Henry, President and Chief Executive
Officer, and Kristy Chipman, Chief Financial Officer.
The conference call can be accessed live over the phone by
dialing 201-689-8470. A replay will be available one hour after the
call and can be accessed by dialing 412-317-6671; the password is
13718600. The replay will be available until Friday, May 14, 2021.
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 140 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 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 restaurant openings and acquisitions or closures,
capital expenditures, strategy, financial outlook, cash flows, our
effective tax rate and the impact of recent accounting
pronouncements, 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: the
negative impact the COVID-19 pandemic has had and will continue to
have on our business, financial condition and results of
operations; 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 income taxes, unclaimed
property, Company employees, the sale or preparation of food, the
sale of alcoholic beverages and the opening of new restaurants;
political conditions, civil unrest or other developments and risks
in the markets where the Company’s restaurants are located; harmful
actions taken by the Company’s franchisees; the inability to
successfully integrate franchisee acquisitions into the Company’s
business operations; economic, regulatory and other limitations on
the Company’s ability to pursue new restaurant openings and other
organic growth opportunities; a material failure, interruption or
security breach of the Company’s information technology network;
the Company’s indemnification obligations in connection with its
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; gains or losses on
lease modifications; the impact of litigation; the restrictions
imposed by the Company’s credit agreement; changes in, or the
suspension or discontinuation of, the Company’s quarterly cash
dividend payments or share repurchase program; and the inability to
secure additional financing on terms acceptable to the Company. 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,
2020, and the Company’s other filings with the Securities and
Exchange Commission (“SEC”). Such filings are 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 March 28,
March 29,
2021
2020
Revenues: Restaurant sales
$ 81,636
$ 103,040
Franchise income
3,792
3,626
Other operating income
1,855
1,870
Total revenues
87,283
108,536
Costs and expenses: Food and beverage costs
22,921
30,626
Restaurant operating expenses
37,583
55,554
Marketing and advertising
1,993
3,438
General and administrative costs
7,196
8,031
Depreciation and amortization expenses
5,063
5,822
Pre-opening costs
445
477
Loss on impairment
—
8,697
Total costs and expenses
75,201
112,645
Operating income (loss)
12,082
(4,109)
Other income (expense): Interest expense, net
(1,303)
(628)
Other
44
33
Income (loss) before income taxes
10,823
(4,704)
Income tax expense (benefit)
1,698
(886)
Net income (loss)
$ 9,125
$ (3,818)
Basic earnings (loss) per share
$ 0.27
$ (0.13)
Diluted earnings (loss) per share
$ 0.26
$ (0.13)
Shares used in computing net income per common share: Basic
34,282,733
28,287,261
Diluted
34,599,764
28,287,261
Dividends declared per common share
$ —
$ 0.15
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 the impact of an
employee retention payroll tax credit, accelerated stock
compensation and severance payments, loss on impairment and
restaurant closure costs and certain discrete income tax items. We
exclude the impact of the employee retention payroll tax credit,
accelerated stock compensation and severance payments, loss on
impairment and restaurant closure costs and certain discrete income
tax items to improve comparability of diluted earnings per common
share between periods. 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 and
per share data) 13 Weeks Ended March
28, March 29,
2021
2020
GAAP Net income (loss)
$
9,125
$
(3,818)
GAAP Income tax expense (benefit)
1,698
(886)
GAAP Income (loss) from continuing operations before income taxes
10,823
(4,704)
Adjustments: Employee retention credit
(300)
—
Accelerated stock compensation and severance payments
445
—
Loss on impairment and restaurant closure costs
—
8,697
Adjusted net income before income taxes
10,968
3,993
Adjusted income tax benefit (expense) (1)
(1,734)
(1,300)
Impact of excluding certain discrete income tax items
(148)
(79)
Non-GAAP Net income (loss)
$
9,086
$
2,614
GAAP Diluted earnings (loss) per common share
$
0.26
$
(0.13)
Non-GAAP Diluted earnings (loss) per common share
$
0.26
$
0.09
Weighted-average number of common shares outstanding -
diluted
34,599,764
28,573,114
(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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210507005062/en/
Investor Relations Fitzhugh
Taylor ftaylor@icrinc.com
Ruths Hospitality (NASDAQ:RUTH)
Historical Stock Chart
From Mar 2024 to Apr 2024
Ruths Hospitality (NASDAQ:RUTH)
Historical Stock Chart
From Apr 2023 to Apr 2024