– Declares $0.14 Per Share Quarterly Dividend
–
Ruth’s Hospitality Group, Inc. (the “Company”) (Nasdaq: RUTH)
today reported unaudited financial results for its third quarter
ended September 25, 2022 and provided a business update.
Third Quarter Highlights (1)
- Total restaurant sales in the third quarter increased 8.5%
compared to 2021 driven by comparable sales growth and incremental
sales from six new restaurants that opened over the last 12 months.
- Third quarter comparable sales increased 2.9% versus 2021 and
11.2% versus 2019.
- Third quarter average weekly sales were $107.5 thousand in 2022
compared to $102.8 thousand in 2021 and $93.4 thousand in 2019.
(2)
- Franchise income in the third quarter of 2022 was $4.9 million
compared to $4.7 million in the third quarter of 2021. Third
quarter 2022 comparable restaurant sales at franchisee-owned
restaurants increased 4.1% compared to 2021.
- Food and beverage costs, as a percentage of restaurant sales,
decreased 257 basis points to 31.7% compared to the third quarter
of 2021. Total beef costs decreased 14% compared to the third
quarter of 2021.
- Net income in the third quarter of 2022 was $5.5 million, or
$0.16 per diluted share, compared to net income of $6.9 million, or
$0.20 per diluted share, in the third quarter of 2021.
- Net income in the third quarter of 2022
included a $270 thousand income tax benefit related to the impact
of discrete income tax items. 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. - Excluding these items, non-GAAP adjusted earnings per
common share was $0.16 in the third quarter of 2022, compared to a
non-GAAP adjusted earnings per common share of $0.20 in the third
quarter of 2021. The Company believes that non-GAAP adjusted
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.
(1) In order to assist with the review of our quarterly
and annual results, we have provided an additional comparison to
the same period in 2019 for some of our financial measures.
(2) Average Weekly Sales is an average of restaurant sales
for all Company-owned restaurants.
CEO Comments
Cheryl Henry, President, Chief Executive Officer and Chairperson
of the Board of the Company commented, “Our solid third quarter
performance is a direct testament to the hard work and dedication
of our team members, supported by early benefits from our digital
transformation.” Henry added, “We believe the demand for the Ruth’s
Chris experience remains strong, as exhibited by our three
successful new restaurant openings in the quarter. Looking to the
future, our capital position is secure and we remain committed to
investing in the long-term growth of the business.”
Business and Development Update
The Company opened three new Company-owned restaurants during
the third quarter in Worcester, MA, Long Beach, CA and Melville,
NY.
The Company recently signed a lease for a new restaurant in
Jupiter, FL and currently expects to open at least five
Company-owned or managed restaurants in 2023.
Quarterly Cash Dividend
The Company’s Board of Directors declared a quarterly dividend
of $0.14 per share payable on December 2, 2022 to shareholders of
record as of the close of business on November 18, 2022.
Share Repurchase Program
Year to date through October 31, 2022, the Company has
repurchased approximately 1.1 million of its shares for $19.6
million, at an average price of $17.61 per share.
Financial Outlook
Based on current information and its most recent projections,
Ruth’s Hospitality Group, Inc. is providing its updated outlook for
the following 2022 operating measures:
- Fiscal year 2022 restaurant labor expense improvement of
approximately 200 basis points (as a percentage of restaurants
sales) compared to 2019
- Fiscal year 2022 marketing and advertising expenses are
expected to be between $17 and $18 million
- Fiscal year 2022 general and administrative costs are expected
to be between $37 and $38 million
- Effective income tax rate of 16% to 17%
- Fiscal year 2022 capital expenditures of $45 to $48
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 third quarter
2022 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 and Chief Operating 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
13732782. The replay will be available until Friday, November 11,
2022. 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 more than 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 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
“anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,”
“expect,” “forecast,” “future,” “intend,” “likely result,” “may,”
“might,” “plan,” “potential,” “predict,” “project,” “seek,”
“should,” “target,” “would” and other similar words and phrases.
Similarly, statements herein that describe the Company’s
objectives, plans or goals, including with respect to restaurant
closures and re-openings, new restaurant openings and acquisitions
or closures, capital expenditures, strategy, financial outlook,
liquidity 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: the negative impact the COVID-19
pandemic has had and will continue to have on our business,
financial condition and results of operations; reductions in the
availability of, or increases in the cost of, USDA Prime grade
beef, fish and other food items; impacts from the conflict in
Ukraine, including potential supply disruptions; changes in
economic conditions, including inflationary concerns, interest rate
increases 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 26, 2021, 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 25, September 26, September 25,
September 26,
2022
2021
2022
2021
Revenues: Restaurant sales
$
105,792
$
97,537
$
345,264
$
283,339
Franchise income
4,906
4,742
14,766
13,062
Other operating income
2,041
1,908
7,488
5,980
Total revenues
112,739
104,187
367,518
302,381
Costs and expenses: Food and beverage costs
33,505
33,401
108,079
87,929
Restaurant operating expenses
53,084
46,030
161,964
129,013
Marketing and advertising
3,419
2,436
13,082
7,661
General and administrative costs
9,372
7,721
27,939
23,691
Depreciation and amortization expenses
5,535
4,985
15,462
15,131
Pre-opening costs
1,093
581
2,718
1,185
Loss on legal settlement
—
—
6,000
—
Loss on impairment
—
—
—
394
Total costs and expenses
106,008
95,154
335,244
265,004
Operating income
6,731
9,033
32,274
37,377
Other income (expense): Interest expense, net
(434
)
(678
)
(998
)
(3,109
)
Other
53
(18
)
116
61
Income before income taxes
6,350
8,337
31,392
34,329
Income tax expense
852
1,398
5,146
5,854
Net income
$
5,498
$
6,939
$
26,246
$
28,475
Basic earnings per share
$
0.17
$
0.20
$
0.79
$
0.83
Diluted earnings per share
$
0.16
$
0.20
$
0.78
$
0.82
Shares used in computing net income per common share: Basic
33,135,562
34,421,570
33,418,376
34,367,518
Diluted
33,459,508
34,592,930
33,729,577
34,606,611
Dividends declared per common share
$
0.14
$
—
$
0.40
$
—
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 adjusted 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, a loss on legal settlement,
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, a loss on legal settlement, 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 25, September 26, September 25,
September 26,
2022
2021
2022
2021
GAAP Net income
$
5,498
$
6,939
$
26,246
$
28,475
GAAP Income tax expense
852
1,398
5,146
5,854
GAAP Income from continuing operations before income taxes
6,350
8,337
31,392
34,329
Adjustments: Employee retention credit
—
(16
)
—
(381
)
Accelerated stock compensation and severance payments
—
—
—
445
Loss on legal settlement
—
—
6,000
—
Loss on impairment and restaurant closure costs
—
—
—
394
Adjusted net income before income taxes
6,350
8,321
37,392
34,787
Adjusted income tax expense (1)
(852
)
(1,394
)
(6,646
)
(5,969
)
Impact of excluding certain discrete income tax items
(270
)
29
(274
)
(145
)
Non-GAAP Net income
$
5,228
$
6,956
$
30,472
$
28,673
GAAP Diluted earnings per common share
$
0.16
$
0.20
$
0.78
$
0.82
Non-GAAP Adjusted earnings per common share
$
0.16
$
0.20
$
0.90
$
0.83
Weighted-average number of common shares outstanding -
diluted
33,459,508
34,592,930
33,729,577
34,606,611
(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/20221104005197/en/
Investor Relations Fitzhugh
Taylor ftaylor@icrinc.com
Ruths Hospitality (NASDAQ:RUTH)
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