-
Revenue $110.9 Million - Earnings Per Share $0.36
Ruth’s Hospitality Group, Inc. (the “Company”) (Nasdaq: RUTH)
today reported unaudited financial results for its second quarter
ended June 27, 2021 and provided a business update.
CEO Comments
Cheryl Henry, President, Chief Executive Officer and Chairperson
of the Board of Ruth’s Hospitality Group, Inc., commented, “I’m
pleased to report that we posted strong operating results in the
second quarter with sequential growth in comparable sales each
month and continued margin improvement. We are excited about this
momentum and our renewed commitment to unit growth as we expect to
open seven new Company-owned or managed restaurants by the end of
2022.”
Henry added, “All in all, we are a stronger and more nimble
enterprise with a balance sheet that affords us flexibility as we
navigate the ever-changing environment. I am extremely proud of our
team members and franchise partners and their continued efforts to
deliver impressive results, while ensuring that the guest
experience in our restaurants is reflective of the hospitality and
amazing food that Ruth’s Chris Steak House has been known for over
56 years.”
Second Quarter 2021 Financial Highlights (1)
- During the second quarter of 2021, 75 of 76 Company-owned or
managed Ruth’s Chris Steak House restaurants were open with dining
service.
- As of the end of the second quarter of 2021, 68 of the
Company’s 72 franchisee-owned restaurants were open, including 63
restaurants offering dining service, two restaurants offering
outdoor seating only and three restaurants offering to-go and
delivery service only.
- Restaurant sales in the second quarter of 2021 were $104.2
million compared to $27.0 million in the second quarter of 2020. By
period, second quarter comparable restaurant sales and average
weekly sales for Company-owned restaurants were as follows:
(dollar amounts in thousands)
April
May
June
Q2 2021
Comparable Restaurant Sales vs.
2020
611.7%
384.6%
124.8%
286.6%
Comparable Restaurant Sales vs.
2019
2.1%
6.0%
7.4%
5.0%
Average Weekly Sales (all
restaurants)(2)
$103.1
$113.9
$114.0
$109.8
- Second quarter comparable restaurant sales compared to 2019
would have increased 11.1% absent the impact of three markets
(Boston, Hawaii and Manhattan), which continued to be challenged by
local restrictions and market conditions.
- Franchise income in the second quarter of 2021 was $4.5 million
compared to $1.0 million in the second quarter of 2020. Second
quarter 2021 comparable restaurant sales at franchisee-owned
restaurants increased 200.9% compared to 2020 and 7.5% compared to
the second quarter of 2019.
- Food and beverage costs, as a percentage of restaurant sales,
increased 60 basis points to 30.3% compared to the second quarter
of 2020. Total beef costs increased 27% compared to the second
quarter of 2020 and 34% compared to the second quarter of
2019.
- Operating income in the second quarter was $16.3 million
compared to an operating loss of $24.1 million in the second
quarter of 2020 and operating income of $11.6 million in the second
quarter of 2019. As a percentage of total revenues, operating
income in the second quarter of 2021 increased to 14.7% compared to
10.6% in the second quarter of 2019.
- Net income in the second quarter of 2021 was $12.4 million, or
$0.36 per diluted share, compared to net loss of $17.6 million, or
($0.59) per diluted share, in the second quarter of 2020.
- Net income in the second quarter of 2021
included a $65 thousand employee retention payroll tax credit,
which reduced restaurant operating expenses, a $394 thousand
impairment loss and a $26 thousand income tax benefit related to
the impact of discrete income tax items. Net income in the second
quarter of 2020 included $330 thousand in severance payments, $488
thousand in gains related to lease modifications, a $4.3 million
impairment loss and a $175 thousand income tax expense related to
the impact of discrete income tax items.
- Excluding these items, non-GAAP diluted
earnings per common share was $0.36 in the second quarter of 2021,
compared to a non-GAAP diluted loss per share of ($0.48) in the
second quarter of 2020. The Company believes that non-GAAP diluted
earnings (loss) 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.
Business and Development Update
- Quarter to date through July 25, 2021, Company-owned comparable
restaurant sales increased 17.5% compared to 2019, and average
weekly sales were $103.8 thousand.
- We expect to open a total of seven new Company-owned or managed
restaurants by the end of 2022: two to three new restaurants in
2021 and four to five new restaurants in 2022.
- We expect to open three new franchisee-owned restaurants by the
end of 2022 with one to two openings in 2021.
- As of August 4, 2021, the Company’s cash balance was
approximately $95.5 million, with $70.0 million of debt outstanding
under its senior credit facility and $4.7 million of outstanding
letters of credit.
Financial Outlook
Based on current information and its most recent projections,
Ruth’s Hospitality Group, Inc. is providing its updated full year
2021 outlook for the following operating measures based on a
52-week year ending December 26, 2021:
- Restaurant labor efficiency of 250-300 basis points compared to
2019
- Marketing and advertising costs of $12 million to $14
million
- General and administrative expenses of $32 million to $33.5
million
- Effective income tax rate of 17% to 19%
- Total capital expenditures of $20 million to $25 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 second
quarter 2021 financial results today at 8:30 AM Eastern Time.
Hosting the call will be Cheryl J. Henry, President, Chief
Executive Officer and Chairperson of the Board, 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
13721345. The replay will be available until Friday, August 13,
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, results of operations
and cash flows; 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 26 Weeks Ended
June 27, June 28, June 27, June 28,
2021
2020
2021
2020
Revenues: Restaurant sales
$
104,165
$
26,978
$
185,801
$
130,018
Franchise income
4,528
956
8,320
4,582
Other operating income
2,217
483
4,072
2,353
Total revenues
110,910
28,417
198,193
136,953
Costs and expenses: Food and beverage costs
31,607
8,030
54,528
38,657
Restaurant operating expenses
45,400
26,273
82,983
81,827
Marketing and advertising
3,232
1,487
5,225
4,925
General and administrative costs
8,774
7,066
15,970
15,095
Depreciation and amortization expenses
5,084
5,522
10,147
11,345
Pre-opening costs
159
304
604
781
Gain on lease modifications
—
(488
)
—
(488
)
Loss on impairment
394
4,283
394
12,980
Total costs and expenses
94,650
52,477
169,851
165,122
Operating income (loss)
16,260
(24,060
)
28,342
(28,169
)
Other income (expense): Interest expense, net
(1,128
)
(1,291
)
(2,431
)
(1,919
)
Other
36
3
80
36
Income (loss) before income taxes
15,168
(25,348
)
25,991
(30,052
)
Income tax expense (benefit)
2,757
(7,750
)
4,455
(8,636
)
Net income (loss)
$
12,411
$
(17,598
)
$
21,536
$
(21,416
)
Basic earnings (loss) per share
$
0.36
$
(0.59
)
$
0.63
$
(0.74
)
Diluted earnings (loss) per share
$
0.36
$
(0.59
)
$
0.62
$
(0.74
)
Shares used in computing net income per common share:
Basic
34,398,251
29,951,332
34,340,492
29,119,296
Diluted
34,652,869
29,951,332
34,620,626
29,119,296
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. Management believes 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
26 Weeks Ended June 27, June 28, June
27, June 28,
2021
2020
2021
2020
GAAP Net income (loss)
$
12,411
$
(17,598
)
$
21,536
$
(21,416
)
GAAP Income tax expense (benefit)
2,757
(7,750
)
4,455
(8,636
)
GAAP Income (loss) from continuing operations before income taxes
15,168
(25,348
)
25,991
(30,052
)
Adjustments: Employee retention credit
(65
)
—
(365
)
—
Accelerated stock compensation and severance payments
—
330
445
330
Gain on lease modifications
—
(488
)
—
(488
)
Loss on impairment and restaurant closure costs
394
4,283
394
12,980
Adjusted net income before income taxes
15,497
(21,223
)
26,465
(17,230
)
Adjusted income tax benefit (expense) (1)
(2,839
)
6,712
(4,574
)
5,412
Impact of excluding certain discrete income tax items
(26
)
175
(174
)
96
Non-GAAP Net income (loss)
$
12,632
$
(14,336
)
$
21,717
$
(11,722
)
GAAP Diluted earnings (loss) per common share
$
0.36
$
(0.59
)
$
0.62
$
(0.74
)
Non-GAAP Diluted earnings (loss) per common share
$
0.36
$
(0.48
)
$
0.63
$
(0.40
)
Weighted-average number of common shares outstanding -
diluted
34,652,869
29,951,332
34,620,626
29,119,296
(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: https://www.businesswire.com/news/home/20210806005066/en/
Investor Relations Fitzhugh
Taylor ftaylor@icrinc.com
Ruths Hospitality (NASDAQ:RUTH)
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