– Fourth
Quarter GAAP Diluted EPS of $0.50 –
– Fiscal Year
GAAP Diluted EPS of $1.44 –
– Company
Announces 15% Increase in Quarterly Dividend to $0.15 per Share
–
Ruth’s Hospitality Group, Inc. (the “Company”) (NASDAQ: RUTH)
today reported unaudited financial results for its fourth quarter
and fiscal year ended December 29, 2019.
Highlights for the fourth quarter of 2019 were as
follows:
- Total revenues in the fourth quarter of 2019 increased 6.2% to
$135.0 million, compared to $127.2 million in the fourth quarter of
2018.
- Net income in the fourth quarter of 2019 decreased 2.7% to
$14.5 million, or $0.50 per diluted share, compared to net income
of $14.9 million, or $0.49 per diluted share, in the fourth quarter
of 2018.
- Net income in the fourth quarter of 2019
included $0.1 million in acquisition-related expenses associated
with the previously completed acquisition of the three restaurants
from our Philadelphia and Long Island franchisee, and $0.4 million
in closure costs associated with accelerating the closure of a
restaurant in Washington, DC. Net income in the fourth quarter of
2018 included $0.3 million in acquisition-related expenses
associated with the acquisition of the six restaurants from our
Hawaiian franchisee.
- Excluding these adjustments, as well as the
results from discontinued operations and certain discrete income
tax items, non-GAAP diluted earnings per common share were $0.52 in
the fourth quarter of 2019, compared to $0.50 in the fourth quarter
of 2018. 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.
- During the fourth quarter of 2019, the Company returned $9.0
million through dividends and share repurchases.
Cheryl Henry, President and Chief Executive Officer of Ruth's
Hospitality Group, Inc., stated, “I’m proud of what our team was
able to accomplish in both the fourth quarter and the full year of
2019 in the face of a year of record beef prices. For the full
year, we grew revenues and earnings, successfully integrated three
new franchise locations into the Company system and opened two new
Company-operated restaurants. We also continued our evolution of
the brand through remodels, enhanced experiences and compelling
product offerings for our guests.”
Henry added, “In addition, 2019 marked the 10th consecutive year
of comparable restaurant sales and earnings growth. As I look
ahead, I am confident that our focus on executing our total return
strategy will continue to generate long term value for our
shareholders.”
Review of fourth quarter 2019 operating results
Restaurant sales in the fourth quarter of 2019 increased 5.9% to
$127.1 million compared to $120.0 million in the fourth quarter of
2018. Average unit weekly sales were $118.8 thousand in the fourth
quarter of 2019, an increase of 0.9% compared to $117.8 thousand in
the fourth quarter of 2018.
Company-owned Sales
- Comparable restaurant sales at Company-owned restaurants
increased 1.4% compared to the fourth quarter of 2018, which
consisted of a 0.5% decrease in traffic, as measured by entrees,
and an average check increase of 1.8%.
- 83 Company-owned Ruth’s Chris Steak House restaurants were open
at the end of the fourth quarter of 2019, compared to 78 Ruth’s
Chris Steak House restaurants at the end of the fourth quarter of
2018. Total operating weeks for the fourth quarter of 2019
increased to 1,070 from 1,019 in the fourth quarter of 2018.
Franchise Income
- Franchise income in the fourth quarter of 2019 was $5.0
million, down 0.8% compared to the fourth quarter of 2018. The
reduction in franchise income was due to a decrease in franchise
locations driven by the previously completed acquisition of three
restaurants from our Philadelphia and Long Island franchisee.
- 73 franchisee-owned restaurants were open at the end of the
fourth quarter of 2019 compared to 75 at the end of the fourth
quarter of 2018 due to the previously completed acquisition of the
three restaurants from our Philadelphia and Long Island
franchisee.
Operating Expenses
- Food and beverage costs, as a percentage of restaurant sales,
increased 215 basis points to 29.8% as compared to the fourth
quarter of 2018, primarily driven by a 19% increase in total beef
costs.
- Restaurant operating expenses, as a percentage of restaurant
sales, increased 45 basis points to 46.2% as compared to the fourth
quarter of 2018, primarily due to higher labor and occupancy
expenses.
- Marketing and advertising costs, as a percentage of total
revenues, decreased 35 basis points to 3.3% as compared to the
fourth quarter of 2018. The decrease as a percentage of total
revenues, was primarily driven by the planned shift in marketing
tactics across the periods.
- General and administrative expenses, as a percentage of total
revenues, decreased 165 basis points to 6.4% as compared to the
fourth quarter of 2018. The decrease as a percentage of total
revenues, was primarily driven by cost management initiatives and
lower performance-based compensation.
- Pre-opening costs were $0.9 million in the fourth quarter of
2019, compared to $0.6 million in the fourth quarter of 2018 due to
the timing of new restaurant openings.
Highlights for fiscal year 2019 were as follows:
- Total revenues in 2019 increased 3.5% to $468.0 million,
compared to $452.3 million in 2018.
- Net income in 2019 increased 1.3% to $42.2 million, or $1.44
per diluted share, compared to net income of $41.7 million, or
$1.38 per diluted share, in 2018.
- Net income in 2019 included $0.5 million in
acquisition-related expenses associated with the acquisition of the
three restaurants from our Philadelphia and Long Island franchisee,
$0.4 million in closure costs associated with accelerating the
closure of a restaurant in Washington, DC and a $0.8 million
benefit related to other discrete income tax items. Net income in
2018 included $1.5 million in acquisition-related expenses
associated with the acquisition of our Hawaiian franchisee and a
$0.7 million benefit related to other discrete income tax
items.
- Excluding these adjustments, as well as the
results from discontinued operations and certain discrete income
tax items, non-GAAP diluted earnings per common share were $1.43 in
2019, compared to $1.39 in 2018. 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.
- During the year, the Company returned $41.4 million through
dividends and share repurchases.
Review of fiscal year 2019 operating results
Restaurant sales in 2019 increased 3.3% to $441.4 million,
compared to $427.4 million in 2018.
Company-owned Sales
- Comparable restaurant sales at Company-owned restaurants
increased 0.9% compared to 2018, which consisted of a 0.8% decrease
in traffic, as measured by entrees, and an average check increase
of 1.7%.
- Total operating weeks for 2019 increased to 4,139 from 4,027 in
2018. Total operating weeks exclude discontinued operations.
Franchise Income
- Franchise income in 2019 was $17.9 million, down 0.2% compared
to 2018. The reduction in franchise income was due to a decrease in
franchise locations driven by the previously completed acquisition
of three restaurants from our Philadelphia and Long Island
franchisee.
Operating Expenses
- Food and beverage costs, as a percentage of restaurant sales,
increased 80 basis points to 28.9% as compared to 2018, primarily
due to an 8.4% increase in total beef costs.
- Restaurant operating expenses, as a percentage of restaurant
sales, increased 40 basis points to 48.6% as compared to 2018,
primarily due to wage rate pressure and occupancy related
increases.
- Marketing and advertising costs, as a percentage of total
revenues, decreased 40 basis points to 3.3% as compared to 2018,
primarily due to the timing of Marketing research investments.
- General and administrative expenses, as a percentage of total
revenues, decreased 85 basis points to 7.4% as compared to 2018,
primarily driven by cost management initiatives, decreased
franchise acquisition costs and lower performance-based
compensation.
- Pre-opening costs were $1.8 million in 2019, compared to $1.9
million in 2018.
Development Update
During the fourth quarter, the Company opened two new
restaurants, one in Columbus, OH and one in Somerville, MA.
For 2020 and 2021 the Company currently expects to open four new
restaurants in each year. For 2020, a restaurant in Washington DC
opened earlier this quarter, while Short Hills, NJ and Worcester,
MA should open in the third quarter, and Melville, NY in the
fourth. For 2021, the Company currently expects to open new
restaurants in Lake Grove, NY, Aventura, FL, Long Beach, CA, and
Oklahoma City, OK.
Our franchise partners currently expect to open a new restaurant
in Manila, Philippines and relocate another in Chesterfield, MO in
2020. A new restaurant opening in St. George, UT is currently
scheduled for 2021.
Share Repurchase and Debt
During the fourth quarter, the Company repurchased approximately
208 thousand shares for $5.2 million, at an average price of $25.11
per share. For 2019, the Company has repurchased 1.1 million shares
for $25.8 million, at an average price of $22.48 per share.
The Company ended the year with approximately $54.8 million
remaining under its new $60 million share repurchase authorization.
Since the beginning of 2014, the Company has repurchased an
aggregate of 8.6 million shares for approximately $152.5 million
under the current and previous share repurchase programs.
At the end of the fourth quarter, the Company had $64 million in
debt outstanding under its senior credit facility.
Quarterly Cash Dividend
Subsequent to the end of the quarter, the Company’s Board of
Directors approved the payment of a quarterly cash dividend to
shareholders of $0.15 per share. The dividend will be paid on March
20, 2020 to shareholders of record as of the close of business on
March 6, 2020 and represents an 15% increase from the quarterly
cash dividend paid in March of 2019.
Financial Outlook
Based on current information, Ruth's Hospitality Group, Inc. is
providing its fiscal year 2020 outlook based on a 52-week year
ending December 27, 2020, as follows:
- Food and beverage costs of 28% to 30% of restaurant sales,
- Restaurant operating expenses of 48% to 50% of restaurant
sales,
- Marketing and advertising costs of 3.1% to 3.4% of total
revenue,
- General and administrative expenses of $35 million to $36
million,
- Pre-opening costs of $3.0 million to $3.5 million,
- Effective tax rate of 17% to 19%,
- Capital expenditures of $43 million to $45 million, which
contributes to depreciation expense of $23 million to $25
million,
- Fully diluted shares outstanding of 28.8 million to 29.3
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 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 fourth
quarter and fiscal year 2020 financial results today at 8:30 AM
Eastern Time. Hosting the call will be Cheryl Henry, President 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 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
13698522. The replay will be available until Friday, February 28,
2020. 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 150 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 and acquisitions, capital
expenditures, strategy, financial outlook, our effective tax rate
and the impact of healthcare inflation and 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:
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;
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; the impact of litigation; the restrictions imposed by
the Company’s 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 30, 2018, 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
52 Weeks Ended
December 29,
December 30,
December 29,
December 30,
2019
2018
2019
2018
Revenues: Restaurant sales
$
127,132
$
120,043
$
441,361
$
427,433
Franchise income
4,972
5,014
17,879
17,919
Other operating income
2,929
2,102
8,786
6,982
Total revenues
135,033
127,159
468,026
452,334
Costs and expenses: Food and beverage costs
37,909
33,219
127,597
120,112
Restaurant operating expenses
58,740
54,930
214,715
206,258
Marketing and advertising
4,508
4,709
15,432
16,639
General and administrative costs
8,627
10,195
34,643
37,253
Depreciation and amortization expenses
5,901
4,776
21,354
18,538
Pre-opening costs
948
617
1,824
1,875
Total costs and expenses
116,633
108,446
415,565
400,675
Operating income
18,400
18,713
52,461
51,659
Other income (expense): Interest expense, net
(737
)
(486
)
(2,197
)
(1,739
)
Other
82
(42
)
115
(73
)
Income from continuing operations before income tax expense
17,745
18,185
50,379
49,847
Income tax expense
3,287
3,375
8,173
8,247
Income from continuing operations
14,458
14,810
42,206
41,600
Income from discontinued operations, net of income taxes
-
50
-
80
Net income
$
14,458
$
14,860
$
42,206
$
41,680
Basic earnings per common share: Continuing operations
$
0.51
$
0.50
$
1.46
$
1.40
Discontinued operations
-
-
-
0.01
Basic earnings per share
$
0.51
$
0.50
$
1.46
$
1.41
Diluted earnings per common share: Continuing operations
$
0.50
$
0.49
$
1.44
$
1.37
Discontinued operations
-
-
-
0.01
Diluted earnings per share
$
0.50
$
0.49
$
1.44
$
1.38
Shares used in computing net income per common share: Basic
28,513,764
29,513,678
28,998,382
29,659,461
Diluted
28,835,275
30,071,992
29,376,980
30,273,841
Dividends declared per common share
$
0.13
$
0.11
$
0.52
$
0.44
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 acquisition costs,
restaurant closure costs, results from discontinued operations and
certain discrete income tax items. We exclude the impact of the
results from discontinued operations, the impact of acquisition
related costs and restaurant closure costs, and the impact of
certain discrete income tax items because these items are not
reflective of the ongoing operations of our business. 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
52 Weeks Ended
December 29,
December 30,
December 29,
December 30,
2019
2018
2019
2018
GAAP Net income
$
14,458
$
14,860
$
42,206
$
41,680
GAAP Income tax expense
3,287
3,375
8,173
8,247
GAAP Income from discontinued operations
-
(50
)
-
(80
)
GAAP Income from continuing operations before income tax expense
17,745
18,185
50,379
49,847
Adjustments: Franchisee acquisition costs
124
250
536
1,525
Restaurant closure costs
374
-
374
-
Adjusted net income from continuing operations before income taxes
18,243
18,435
51,289
51,372
Adjusted income tax expense (1)
(3,411
)
(3,436
)
(8,400
)
(8,621
)
Impact of excluding certain discrete income tax items
36
-
(849
)
(711
)
Non-GAAP net income
$
14,868
$
14,999
$
42,040
$
42,040
GAAP diluted earnings per common share
$
0.50
$
0.49
$
1.44
$
1.38
Non-GAAP diluted earnings per common share
$
0.52
$
0.50
$
1.43
$
1.39
Weighted-average number of common shares outstanding -
diluted
28,835,275
30,071,992
29,376,980
30,273,841
(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/20200221005053/en/
Investor Relations Fitzhugh
Taylor (203) 682-8261 ftaylor@icrinc.com
Ruths Hospitality (NASDAQ:RUTH)
Historical Stock Chart
From Aug 2024 to Sep 2024
Ruths Hospitality (NASDAQ:RUTH)
Historical Stock Chart
From Sep 2023 to Sep 2024