-
Reports Q3 Earnings Per Share of $0.20
Ruth’s Hospitality Group, Inc. (the “Company”) (Nasdaq: RUTH)
today reported unaudited financial results for its third quarter
ended September 26, 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, “Our
third quarter results demonstrated our team’s operational
excellence in a challenging and dynamic environment. Our
performance this quarter also reminded us of how sought after and
trusted the Ruth’s Chris brand experience is.”
Henry added, “Although elevated beef costs continue to be a
headwind, we are encouraged by our continued sales momentum,
profitability and our financial strength. We have confidence that
we can continue to create value for shareholders as the virus
abates and the economy recovers.”
Third Quarter 2021 Financial Highlights (1)
- Restaurant sales in the third quarter of 2021 were $97.5
million compared to $58.6 million in the third quarter of 2020. By
period, third quarter comparable restaurant sales and average
weekly sales for Company-owned restaurants were as follows:
(dollar amounts in thousands)
July
August
September
Q3 2021
Comparable Restaurant Sales vs.
2020
102.4%
62.2%
39.2%
66.8%
Comparable Restaurant Sales vs.
2019
16.3%
1.9%
3.3%
7.6%
Average Weekly Sales (all
restaurants)(2)
$104.5
$102.4
$101.0
$102.8
- Third quarter comparable restaurant sales compared to 2019
would have increased 14.6% absent the impact of three markets
(Boston, Hawaii and Manhattan), which continued to be challenged by
local restrictions and market conditions during the third quarter
of 2021.
- Franchise income in the third quarter of 2021 was $4.7 million
compared to $3.5 million in the third quarter of 2020. Third
quarter 2021 comparable restaurant sales at franchisee-owned
restaurants increased 35.6% compared to 2020 and 19.5% compared to
the third quarter of 2019.
- Food and beverage costs, as a percentage of restaurant sales,
increased 710 basis points to 34.2% compared to the third quarter
of 2020. Total beef costs increased 65% compared to the third
quarter of 2020 and 47% compared to the third quarter of 2019.
- Operating income in the third quarter was $9.0 million compared
to an operating loss of $5.1 million in the third quarter of 2020
and operating income of $5.6 million in the third quarter of 2019.
As a percentage of total revenues, operating income in the third
quarter of 2021 increased to 8.7% compared to 5.4% in the third
quarter of 2019.
- Net income in the third quarter of 2021 was $6.9 million, or
$0.20 per diluted share, compared to net loss of $5.3 million, or
($0.15) per diluted share, in the third quarter of 2020.
- Net income in the third quarter of 2021
included a $16 thousand employee retention payroll tax credit,
which reduced restaurant operating expenses and a $29 thousand
income tax expense related to the impact of discrete income tax
items. Net loss in the third quarter of 2020 included $1.2 million
in severance costs and accelerated stock compensation expense, $310
thousand in losses related to lease modifications, a $3.3 million
impairment loss and a $217 thousand income tax expense related to
the impact of discrete income tax items.
- Excluding these items, non-GAAP diluted
earnings per common share was $0.20 in the third quarter of 2021,
compared to a non-GAAP diluted loss per share of ($0.04) in the
third 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 October 24, 2021, Company-owned
comparable restaurant sales increased 3.2% compared to 2019, and
average weekly sales were $107.0 thousand.
- We opened two new restaurants in September 2021, including a
Company-owned restaurant in Short Hills, NJ and a franchisee-owned
restaurant in Manila, Philippines.
- We expect to open a total of six additional new Company-owned
or managed restaurants by the end of 2022: one new restaurant in
2021 and five new restaurants in 2022. We expect to open two
additional new franchisee-owned restaurants by the end of
2022.
- During the third quarter of 2021, the Company repurchased 192
thousand shares of common stock under its share repurchase program
for approximately $3.8 million, or an average price of $19.93 per
share.
- On October 18, 2021, the Company entered into an amended and
restated credit agreement with a new five-year term that amended
and restated its existing credit facility. The amended and restated
credit agreement provides a $140.0 million revolving line of credit
and, subject to the satisfaction of certain conditions and lender
consent, may be increased up to a maximum of $200.0 million. The
new credit facility bears interest between 1.50% to 2.25% over
LIBOR, depending upon the Company's consolidated leverage ratio,
and also provides additional flexibility on capital expenditures,
dividends and share repurchases.
- As of October 27, 2021, the Company’s cash balance was
approximately $84.6 million, with $70.0 million of debt outstanding
under its amended and restated credit agreement 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 approximately 300 basis points
compared to 2019
- Marketing and advertising costs of $13 million to $14
million
- General and administrative expenses of $32 million to $33
million
- Effective income tax rate of 17% to 19%
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 third 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
13723829. The replay will be available until Friday, November 5,
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
39 Weeks Ended
September 26,
September 27,
September 26,
September 27,
2021
2020
2021
2020
Revenues: Restaurant sales
$
97,537
$
58,594
$
283,339
$
188,611
Franchise income
4,742
3,511
13,062
8,094
Other operating income
1,908
1,318
5,980
3,671
Total revenues
104,187
63,423
302,381
200,376
Costs and expenses: Food and beverage costs
33,401
15,908
87,929
54,563
Restaurant operating expenses
46,030
34,868
129,013
117,224
Marketing and advertising
2,436
889
7,661
5,285
General and administrative costs
7,721
7,572
23,691
22,668
Depreciation and amortization expenses
4,985
5,316
15,131
16,660
Pre-opening costs
581
403
1,185
1,185
Loss (gain) on lease modifications
—
310
—
(178
)
Loss on impairment
—
3,272
394
16,253
Total costs and expenses
95,154
68,538
265,004
233,660
Operating income (loss)
9,033
(5,115
)
37,377
(33,284
)
Other income (expense): Interest expense, net
(678
)
(1,422
)
(3,109
)
(3,341
)
Other
(18
)
(48
)
61
(12
)
Income (loss) before income taxes
8,337
(6,585
)
34,329
(36,637
)
Income tax expense (benefit)
1,398
(1,284
)
5,854
(9,920
)
Net income (loss)
$
6,939
$
(5,301
)
$
28,475
$
(26,717
)
Basic earnings (loss) per share
$
0.20
$
(0.15
)
$
0.83
$
(0.87
)
Diluted earnings (loss) per share
$
0.20
$
(0.15
)
$
0.82
$
(0.87
)
Shares used in computing net income per common share: Basic
34,421,570
34,240,318
34,367,518
30,826,304
Diluted
34,592,930
34,240,318
34,606,611
30,826,304
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,
gain on lease modifications, 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, gain on lease
modifications, 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
39 Weeks Ended
September 26,
September 27,
September 26,
September 27,
2021
2020
2021
2020
GAAP Net income (loss)
$
6,939
$
(5,301
)
$
28,475
$
(26,717
)
GAAP Income tax expense (benefit)
1,398
(1,284
)
5,854
(9,920
)
GAAP Income (loss) from continuing operations before income taxes
8,337
(6,585
)
34,329
(36,637
)
Adjustments: Employee retention credit
(16
)
—
(381
)
—
Accelerated stock compensation and severance payments
—
1,172
445
1,502
Gain on lease modifications
—
310
—
(178
)
Loss on impairment and restaurant closure costs
—
3,272
394
16,253
Adjusted net income before income taxes
8,321
(1,831
)
34,787
(19,060
)
Adjusted income tax benefit (expense) (1)
(1,394
)
89
(5,969
)
5,502
Impact of excluding certain discrete income tax items
29
217
(145
)
313
Non-GAAP Net income (loss)
$
6,956
$
(1,525
)
$
28,673
$
(13,245
)
GAAP Diluted earnings (loss) per common share
$
0.20
$
(0.15
)
$
0.82
$
(0.87
)
Non-GAAP Diluted earnings (loss) per common share
$
0.20
$
(0.04
)
$
0.83
$
(0.43
)
Weighted-average number of common shares outstanding -
diluted
34,592,930
34,240,318
34,606,611
30,826,304
(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/20211029005089/en/
Investor Relations Fitzhugh
Taylor ftaylor@icrinc.com
Ruths Hospitality (NASDAQ:RUTH)
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