Quarterly Report (10-q)

Date : 11/01/2019 @ 6:23PM
Source : Edgar (US Regulatory)
Stock : Ruths Hospitality Group Inc (RUTH)
Quote : 6.135  -0.545 (-8.16%) @ 7:32PM

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 September 29, 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 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:

 

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 October 29, 2019 was 29,501,040, which includes 874,349 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 September 29, 2019 and December 30, 2018

 

3

 

 

 

 

 

Condensed Consolidated Statements of Income for the Thirteen and Thirty-nine Week Periods ended September 29, 2019 and September 30, 2018

 

4

 

 

 

 

 

Condensed Consolidated Statements of Shareholders’ Equity for the Thirteen and Thirty-nine Week Periods ended September 29, 2019 and September 30, 2018

 

5

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Thirty-nine Week Periods ended September 29, 2019 and September 30, 2018

 

7

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

8

 

 

 

 

Item 2

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

 

18

 

 

 

 

Item 3

Quantitative and Qualitative Disclosures about Market Risk

 

25

 

 

 

 

Item 4

Controls and Procedures

 

26

 

 

 

Part II — Other Information

 

26

 

 

 

 

Item 1

Legal Proceedings

 

26

 

 

 

 

Item 1A

Risk Factors

 

26

 

 

 

 

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

 

26

 

 

 

 

Item 3

Defaults Upon Senior Securities

 

27

 

 

 

 

Item 4

Mine Safety Disclosures

 

27

 

 

 

 

Item 5

Other Information

 

27

 

 

 

 

Item 6

Exhibits

 

27

 

 

 

 

Signatures

 

29

 

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)

 

 

 

September 29,

 

 

December 30,

 

 

 

2019

 

 

2018

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,308

 

 

$

5,062

 

Accounts receivable, less allowance for doubtful accounts 2019 - $170; 2018 - $322

 

 

16,584

 

 

 

19,476

 

Inventory

 

 

8,873

 

 

 

9,296

 

Prepaid expenses and other

 

 

2,568

 

 

 

2,528

 

Total current assets

 

 

31,333

 

 

 

36,362

 

Property and equipment, net of accumulated depreciation 2019 - $174,028; 2018 -

   $160,153

 

 

137,771

 

 

 

125,991

 

Operating lease right of use assets

 

 

195,629

 

 

 

 

Goodwill

 

 

45,549

 

 

 

36,522

 

Franchise rights, net of accumulated amortization 2019 - $3,773; 2018 - $2,299

 

 

50,545

 

 

 

44,919

 

Other intangibles, net of accumulated amortization 2019 - $1,407; 2018 - $1,395

 

 

4,481

 

 

 

4,862

 

Deferred income taxes

 

 

4,806

 

 

 

5,353

 

Other assets

 

 

595

 

 

 

604

 

Total assets

 

$

470,709

 

 

$

254,613

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

8,860

 

 

 

10,273

 

Accrued payroll

 

 

12,962

 

 

 

19,475

 

Accrued expenses

 

 

7,670

 

 

 

10,535

 

Deferred revenue

 

 

40,999

 

 

 

48,370

 

Current operating lease liabilities

 

 

14,218

 

 

 

 

Other current liabilities

 

 

2,680

 

 

 

6,619

 

Total current liabilities

 

 

87,389

 

 

 

95,272

 

Long-term debt

 

 

83,000

 

 

 

41,000

 

Operating lease liabilities

 

 

210,821

 

 

 

 

Deferred rent

 

 

 

 

 

23,692

 

Unearned franchise fees

 

 

2,738

 

 

 

2,680

 

Other liabilities

 

 

50

 

 

 

1,837

 

Total liabilities

 

 

383,998

 

 

 

164,481

 

Commitments and contingencies (Note 12)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

Common stock, par value $.01 per share; 100,000,000 shares authorized, 28,624,637

   shares issued and outstanding at September 29, 2019, 29,268,776 shares issued and

   outstanding at December 30, 2018

 

 

286

 

 

 

293

 

Additional paid-in capital

 

 

43,669

 

 

 

61,819

 

Retained earnings

 

 

42,756

 

 

 

28,020

 

Treasury stock, at cost; 71,950 shares at September 29, 2019 and December 30, 2018

 

 

 

 

 

 

Total shareholders' equity

 

 

86,711

 

 

 

90,132

 

Total liabilities and shareholders' equity

 

$

470,709

 

 

$

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

 

 

39 Weeks Ended

 

 

 

September 29,

 

 

September 30,

 

 

September 29,

 

 

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restaurant sales

 

$

97,226

 

 

$

93,488

 

 

$

314,229

 

 

$

307,390

 

Franchise income

 

 

3,928

 

 

 

4,030

 

 

 

12,907

 

 

 

12,905

 

Other operating income

 

 

1,855

 

 

 

1,497

 

 

 

5,857

 

 

 

4,880

 

Total revenues

 

 

103,009

 

 

 

99,015

 

 

 

332,993

 

 

 

325,175

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Food and beverage costs

 

 

28,817

 

 

 

26,440

 

 

 

89,688

 

 

 

86,894

 

Restaurant operating expenses

 

 

51,216

 

 

 

49,626

 

 

 

155,974

 

 

 

151,328

 

Marketing and advertising

 

 

3,174

 

 

 

3,813

 

 

 

10,925

 

 

 

11,930

 

General and administrative costs

 

 

8,335

 

 

 

8,809

 

 

 

26,016

 

 

 

27,056

 

Depreciation and amortization expenses

 

 

5,361

 

 

 

4,628

 

 

 

15,453

 

 

 

13,762

 

Pre-opening costs

 

 

535

 

 

 

845

 

 

 

876

 

 

 

1,258

 

Total costs and expenses

 

 

97,438

 

 

 

94,161

 

 

 

298,932

 

 

 

292,228

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

5,571

 

 

 

4,854

 

 

 

34,061

 

 

 

32,947

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(638

)

 

 

(470

)

 

 

(1,460

)

 

 

(1,253

)

Other

 

 

18

 

 

 

(65

)

 

 

33

 

 

 

(31

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income tax expense

 

 

4,951

 

 

 

4,319

 

 

 

32,634

 

 

 

31,663

 

Income tax expense

 

 

423

 

 

 

727

 

 

 

4,886

 

 

 

4,873

 

Income from continuing operations

 

 

4,528

 

 

 

3,592

 

 

 

27,748

 

 

 

26,790

 

Income from discontinued operations, net of income taxes

 

 

 

 

 

9

 

 

 

 

 

 

30

 

Net income

 

$

4,528

 

 

$

3,601

 

 

$

27,748

 

 

$

26,820

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.16

 

 

$

0.12

 

 

$

0.95

 

 

$

0.90

 

Discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.16

 

 

$

0.12

 

 

$

0.95

 

 

$

0.90

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.16

 

 

$

0.12

 

 

$

0.94

 

 

$

0.88

 

Discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.16

 

 

$

0.12

 

 

$

0.94

 

 

$

0.88

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

28,951,612

 

 

 

29,720,472

 

 

 

29,159,922

 

 

 

29,708,055

 

Diluted

 

 

29,191,076

 

 

 

30,358,284

 

 

 

29,563,396

 

 

 

30,370,193

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.13

 

 

$

0.11

 

 

$

0.39

 

 

$

0.33

 

 

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, except per share data)

 

 

 

 

 

 

 

 

 

 

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 3)

 

 

 

 

 

 

 

 

 

 

 

(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

 

Net income

 

 

 

 

 

 

 

 

 

 

 

4,528

 

 

 

 

 

 

 

 

 

4,528

 

Cash dividends, $0.13 per common share

 

 

 

 

 

 

 

 

 

 

 

(3,854

)

 

 

 

 

 

 

 

 

(3,854

)

Repurchase of common stock

 

 

(664

)

 

 

(7

)

 

 

(13,449

)

 

 

 

 

 

 

 

 

 

 

 

(13,456

)

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

 

 

61

 

 

 

1

 

 

 

(633

)

 

 

 

 

 

 

 

 

 

 

 

(632

)

Stock-based compensation

 

 

 

 

 

 

 

 

2,014

 

 

 

 

 

 

 

 

 

 

 

 

2,014

 

Balance at September 29, 2019

 

 

28,625

 

 

$

286

 

 

$

43,669

 

 

$

42,756

 

 

 

72

 

 

$

 

 

$

86,711

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements.

5


RUTH’S HOSPITALITY GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity—Unaudited—Continued

(Amounts in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Retained

 

 

Treasury Stock

 

 

Shareholders'

 

 

 

Shares

 

 

Value

 

 

Capital

 

 

Earnings

 

 

Shares

 

 

Value

 

 

Equity

 

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

 

Net income

 

 

 

 

 

 

 

 

 

 

 

3,601

 

 

 

 

 

 

 

 

 

3,601

 

Cash dividends, $0.11 per common share