Quarterly Report (10-q)

Date : 08/02/2019 @ 6:56PM
Source : Edgar (US Regulatory)
Stock : Ruths Hospitality Group Inc (RUTH)
Quote : 6.52  0.0 (0.00%) @ 10:29AM
Pre-Market
Last Trade
Last $ 6.75 ▲ 0.23 (3.53%)

Quarterly Report (10-q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                       to                      

Commission File Number 000-51485

 

Ruth’s Hospitality Group, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

72-1060618

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

1030 W. Canton Avenue, Suite 100,

Winter Park, FL

32789

(Address of principal executive offices)

(Zip code)

(407) 333-7440

Registrant’s telephone number, including area code

None

Former name, former address and former fiscal year, if changed since last report

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

RUTH

Nasdaq

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes       No  

Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes       No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one):

 

Large accelerated filer

Accelerated Filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    

 


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes      No  

 

The number of shares outstanding of the registrant’s common stock as of July 29, 2019 was 30,128,548, which includes 861,235 shares of unvested restricted stock.

 

 

 

 

 


TABLE OF CONTENTS

 

 

 

 

Page

Part I — Financial Information

 

3

 

 

 

 

Item 1

Financial Statements:

 

3

 

 

 

 

 

Condensed Consolidated Balance Sheets as of June 30, 2019 and December 30, 2018

 

3

 

 

 

 

 

Condensed Consolidated Statements of Income for the Thirteen and Twenty-six Week Periods ended June 30, 2019 and July 1, 2018

 

4

 

 

 

 

 

Condensed Consolidated Statements of Shareholders’ Equity for the Thirteen and Twenty-six Week Periods ended June 30, 2019 and July 1, 2018

 

5

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Twenty-six Week Periods ended June 30, 2019 and July 1, 2018

 

6

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

7

 

 

 

 

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

16

 

 

 

 

Item 3

Quantitative and Qualitative Disclosures about Market Risk

 

23

 

 

 

 

Item 4

Controls and Procedures

 

24

 

 

 

Part II — Other Information

 

24

 

 

 

 

Item 1

Legal Proceedings

 

24

 

 

 

 

Item 1A

Risk Factors

 

24

 

 

 

 

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

 

24

 

 

 

 

Item 3

Defaults Upon Senior Securities

 

25

 

 

 

 

Item 4

Mine Safety Disclosures

 

25

 

 

 

 

Item 5

Other Information

 

25

 

 

 

 

Item 6

Exhibits

 

25

 

 

 

 

Signatures

 

26

 

2


PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RUTH’S HOSPITALITY GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets—Unaudited

(Amounts in thousands, except share and per share data)

 

 

 

June 30,

 

 

December 30,

 

 

 

2019

 

 

2018

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,148

 

 

$

5,062

 

Accounts receivable, less allowance for doubtful accounts 2019 - $139; 2018 - $322

 

 

15,576

 

 

 

19,476

 

Inventory

 

 

8,545

 

 

 

9,296

 

Prepaid expenses and other

 

 

3,099

 

 

 

2,528

 

Total current assets

 

 

30,368

 

 

 

36,362

 

Property and equipment, net of accumulated depreciation 2019 - $169,246; 2018 -

   $160,153

 

 

129,010

 

 

 

125,991

 

Right of use assets, net of accumulated amortization: operating leases 2019 - $7,820; 2018 - $0

 

 

191,847

 

 

 

 

Goodwill

 

 

36,522

 

 

 

36,522

 

Franchise rights, net of accumulated amortization 2019 - $3,226; 2018 - $2,299

 

 

43,991

 

 

 

44,919

 

Other intangibles, net of accumulated amortization 2019 - $1,375; 2018 - $1,395

 

 

4,038

 

 

 

4,862

 

Deferred income taxes

 

 

5,642

 

 

 

5,353

 

Other assets

 

 

573

 

 

 

604

 

Total assets

 

$

441,991

 

 

$

254,613

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

8,819

 

 

 

10,273

 

Accrued payroll

 

 

14,638

 

 

 

19,475

 

Accrued expenses

 

 

8,873

 

 

 

10,535

 

Deferred revenue

 

 

40,108

 

 

 

48,370

 

Current operating lease liabilities

 

 

13,440

 

 

 

 

Other current liabilities

 

 

2,532

 

 

 

6,619

 

Total current liabilities

 

 

88,410

 

 

 

95,272

 

Long-term debt

 

 

45,000

 

 

 

41,000

 

Operating lease liabilities

 

 

207,628

 

 

 

 

Deferred rent

 

 

 

 

 

23,692

 

Unearned franchise fees

 

 

2,797

 

 

 

2,680

 

Other liabilities

 

 

45

 

 

 

1,837

 

Total liabilities

 

 

343,880

 

 

 

164,481

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

Common stock, par value $.01 per share; 100,000,000 shares authorized, 29,227,635

   shares issued and outstanding at June 30, 2019, 29,268,776 shares issued and

   outstanding at December 30, 2018

 

 

292

 

 

 

293

 

Additional paid-in capital

 

 

55,738

 

 

 

61,819

 

Retained earnings

 

 

42,081

 

 

 

28,020

 

Treasury stock, at cost; 71,950 shares at June 30, 2019 and December 30, 2018

 

 

 

 

 

 

Total shareholders' equity

 

 

98,111

 

 

 

90,132

 

Total liabilities and shareholders' equity

 

$

441,991

 

 

$

254,613

 

 

See accompanying notes to condensed consolidated financial statements.

 

3


RUTH’S HOSPITALITY GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income—Unaudited

(Amounts in thousands, except share and per share data)

 

 

 

13 Weeks Ended

 

 

26 Weeks Ended

 

 

 

June 30,

 

 

July 1,

 

 

June 30,

 

 

July 1,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restaurant sales

 

$

104,017

 

 

$

103,538

 

 

$

217,003

 

 

$

213,902

 

Franchise income

 

 

4,421

 

 

 

4,457

 

 

 

8,979

 

 

 

8,874

 

Other operating income

 

 

1,805

 

 

 

1,640

 

 

 

4,002

 

 

 

3,384

 

Total revenues

 

 

110,243

 

 

 

109,635

 

 

 

229,984

 

 

 

226,160

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Food and beverage costs

 

 

29,023

 

 

 

29,049

 

 

 

60,871

 

 

 

60,454

 

Restaurant operating expenses

 

 

51,156

 

 

 

50,022

 

 

 

104,759

 

 

 

101,702

 

Marketing and advertising

 

 

4,121

 

 

 

4,640

 

 

 

7,751

 

 

 

8,117

 

General and administrative costs

 

 

8,929

 

 

 

9,274

 

 

 

17,681

 

 

 

18,248

 

Depreciation and amortization expenses

 

 

5,124

 

 

 

4,673

 

 

 

10,092

 

 

 

9,134

 

Pre-opening costs

 

 

244

 

 

 

272

 

 

 

341

 

 

 

412

 

Total costs and expenses

 

 

98,597

 

 

 

97,930

 

 

 

201,495

 

 

 

198,067

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

11,646

 

 

 

11,705

 

 

 

28,489

 

 

 

28,093

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(417

)

 

 

(403

)

 

 

(822

)

 

 

(783

)

Other

 

 

13

 

 

 

22

 

 

 

15

 

 

 

34

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income tax expense

 

 

11,242

 

 

 

11,324

 

 

 

27,682

 

 

 

27,344

 

Income tax expense

 

 

1,933

 

 

 

1,763

 

 

 

4,462

 

 

 

4,147

 

Income from continuing operations

 

 

9,309

 

 

 

9,561

 

 

 

23,220

 

 

 

23,197

 

Income from discontinued operations, net of income taxes

 

 

 

 

 

12

 

 

 

 

 

 

22

 

Net income

 

$

9,309

 

 

$

9,573

 

 

$

23,220

 

 

$

23,219

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.32

 

 

$

0.32

 

 

$

0.79

 

 

$

0.78

 

Discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.32

 

 

$

0.32

 

 

$

0.79

 

 

$

0.78

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.31

 

 

$

0.32

 

 

$

0.78

 

 

$

0.76

 

Discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.31

 

 

$

0.32

 

 

$

0.78

 

 

$

0.76

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

29,252,651

 

 

 

29,713,825

 

 

 

29,264,076

 

 

 

29,701,847

 

Diluted

 

 

29,726,102

 

 

 

30,375,306

 

 

 

29,768,702

 

 

 

30,377,194

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.13

 

 

$

0.11

 

 

$

0.26

 

 

$

0.22

 

 

See accompanying notes to condensed consolidated financial statements.

 

4


RUTH’S HOSPITALITY GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity—Unaudited  

(Amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Retained

 

 

Treasury Stock

 

 

Shareholders'

 

 

 

Shares

 

 

Value

 

 

Capital

 

 

Earnings

 

 

Shares

 

 

Value

 

 

Equity

 

Balance at December 30, 2018

 

 

29,269

 

 

$

293

 

 

$

61,819

 

 

$

28,020

 

 

 

72

 

 

$

 

 

$

90,132

 

Net income

 

 

 

 

 

 

 

 

 

 

 

13,911

 

 

 

 

 

 

 

 

 

13,911

 

Cash dividends, $0.13 per common share

 

 

 

 

 

 

 

 

 

 

 

(3,967

)

 

 

 

 

 

 

 

 

(3,967

)

Repurchase of common stock

 

 

(26

)

 

 

 

 

 

(568

)

 

 

 

 

 

 

 

 

 

 

 

(568

)

Shares issued under stock compensation plan net of shares withheld for tax effects

 

 

133

 

 

 

1

 

 

 

(1,632

)

 

 

 

 

 

 

 

 

 

 

 

(1,631

)

Stock-based compensation

 

 

 

 

 

 

 

 

2,033

 

 

 

 

 

 

 

 

 

 

 

 

2,033

 

Cumulative effect of a change in accounting principle (Note 2)

 

 

 

 

 

 

 

 

 

 

 

(1,261

)

 

 

 

 

 

 

 

 

(1,261

)

Balance at March 31, 2019

 

 

29,376

 

 

$

294

 

 

$

61,652

 

 

$

36,703

 

 

 

72

 

 

$

 

 

$

98,649

 

Net income

 

 

 

 

 

 

 

 

 

 

 

9,309

 

 

 

 

 

 

 

 

 

9,309

 

Cash dividends, $0.13 per common share

 

 

 

 

 

 

 

 

 

 

 

(3,931

)

 

 

 

 

 

 

 

 

(3,931

)

Repurchase of common stock

 

 

(250

)

 

 

(3

)

 

 

(6,569

)

 

 

 

 

 

 

 

 

 

 

 

(6,572

)

Shares issued under stock compensation plan net of shares withheld for tax effects

 

 

102

 

 

 

1

 

 

 

(1,446

)

 

 

 

 

 

 

 

 

 

 

 

(1,445

)

Stock-based compensation

 

 

 

 

 

 

 

 

2,101

 

 

 

 

 

 

 

 

 

 

 

 

2,101

 

Balance at June 30, 2019

 

 

29,228

 

 

$

292

 

 

$

55,738

 

 

$

42,081

 

 

 

72

 

 

$

 

 

$

98,111

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2017

 

 

29,646

 

 

$

296

 

 

$

77,017

 

 

$

2,191

 

 

 

72

 

 

$

 

 

$

79,504

 

Net income

 

 

 

 

 

 

 

 

 

 

 

13,646

 

 

 

 

 

 

 

 

 

13,646

 

Cash dividends, $0.11 per common share

 

 

 

 

 

 

 

 

 

 

 

(3,390

)

 

 

 

 

 

 

 

 

(3,390

)

Shares issued under stock compensation plan net of shares withheld for tax effects

 

 

146

 

 

 

2

 

 

 

(1,689

)

 

 

 

 

 

 

 

 

 

 

 

(1,687

)

Stock-based compensation

 

 

 

 

 

 

 

 

1,841

 

 

 

 

 

 

 

 

 

 

 

 

1,841

 

Cumulative effect of a change in accounting principle (Note 3)

 

 

 

 

 

 

 

 

 

 

 

(2,324

)

 

 

 

 

 

 

 

 

(2,324

)

Balance at April 1, 2018

 

 

29,792

 

 

$

298

 

 

$

77,169

 

 

$

10,122

 

 

 

72

 

 

$

 

 

$

87,589

 

Net income

 

 

 

 

 

 

 

 

 

 

 

9,573

 

 

 

 

 

 

 

 

 

9,573

 

Cash dividends, $0.11 per common share

 

 

 

 

 

 

 

 

 

 

 

(3,397

)

 

 

 

 

 

 

 

 

(3,397

)

Repurchase of common stock

 

 

(225

)

 

 

(2

)

 

 

(5,941

)

 

 

 

 

 

 

 

 

 

 

 

(5,943

)

Shares issued under stock compensation plan net of shares withheld for tax effects

 

 

129

 

 

 

1

 

 

 

(2,063

)

 

 

 

 

 

 

 

 

 

 

 

(2,062

)

Stock-based compensation

 

 

 

 

 

 

 

 

2,029

 

 

 

 

 

 

 

 

 

 

 

 

2,029

 

Balance at July 1, 2018

 

 

29,696

 

 

$

297

 

 

$

71,194

 

 

$

16,298

 

 

 

72

 

 

$

 

 

$

87,789

 

 

See accompanying notes to condensed consolidated financial statements.

 

5


RUTH’S HOSPITALITY GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows—Unaudited

(Amounts in thousands)

 

 

 

26 Weeks Ended

 

 

 

June 30,

 

 

July 1,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

23,220

 

 

$

23,219

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

10,092

 

 

 

9,134

 

Deferred income taxes

 

 

124

 

 

 

(61

)

Non-cash interest expense

 

 

41

 

 

 

41

 

Amortization of below market lease

 

 

 

 

 

39

 

Stock-based compensation expense

 

 

4,134

 

 

 

3,870

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

4,712

 

 

 

10,826

 

Inventories

 

 

752

 

 

 

583

 

Prepaid expenses and other

 

 

(571

)

 

 

(291

)

Other assets

 

 

(10

)

 

 

 

Accounts payable and accrued expenses

 

 

(12,444

)

 

 

(8,600

)

Deferred revenue

 

 

(8,262

)

 

 

(8,996

)

Deferred rent

 

 

 

 

 

630

 

Lease liabilities

 

 

2,407

 

 

 

 

Other liabilities

 

 

(1,040

)

 

 

(1,861

)

Net cash provided by operating activities

 

 

23,155

 

 

 

28,533

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Acquisition of property and equipment

 

 

(10,955

)

 

 

(11,889

)

Acquisition of intangible assets

 

 

 

 

 

(1,171

)

Net cash used in investing activities

 

 

(10,955

)

 

 

(13,060

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Principal borrowings on long-term debt

 

 

14,000

 

 

 

15,000

 

Principal repayments on long-term debt

 

 

(10,000

)

 

 

(15,000

)

Repurchase of common stock

 

 

(7,140

)

 

 

(5,943

)

Cash dividend payments

 

 

(7,898

)