– Restaurant Sales Grow 10% to $85.8 Million
–
– Net Income from Continuing Operations
Increased 15% to $7.7 Million –
– Quarterly Earnings Per Share from Continuing
Operations Up 22% to $0.22 –
Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH) today reported
unaudited financial results for its second quarter ended June 28,
2015.
Highlights for the second quarter of 2015 compared to the
second quarter of 2014 were as follows:
Net income was $7.5 million, or $0.22 per diluted share, in the
second quarter of 2015 compared to net income of $6.9 million, or
$0.19 per diluted share, in the second quarter of 2014.
- Income from continuing operations was
$7.7 million, or $0.22 per diluted share, in the second quarter of
2015 compared to income from continuing operations of $6.7 million,
or $0.18 per diluted share, in the second quarter of 2014.
At the end of the second quarter of 2015, the Company had no
outstanding funded debt under its senior credit facility, down from
$3 million at the end of the first quarter of 2015.
Michael P. O’Donnell, Chairman, President and Chief Executive
Officer of Ruth's Hospitality Group, Inc., noted, “We were pleased
to see a continuation of positive operating trends throughout the
second quarter. Our solid revenue growth was driven by a balanced
contribution from our new restaurants and a 4.2% increase in
comparable store sales, which included a return to positive traffic
growth. Furthermore, our topline momentum and strong operational
execution enabled us to generate another quarter of strong earnings
growth.”
O’Donnell added, “As we look forward, we intend to continue to
manage our business with a balanced approach of reinvesting in our
core operations, maintaining disciplined growth, and returning
excess capital, pursuing a strategy that we believe can deliver
consistent and meaningful shareholder returns over the long
term.”
Review of Second Quarter 2015 Operating Results from
Continuing Operations
Total revenues in the second quarter of 2015 were $91.0 million,
an increase of 9.7% as compared to $83.0 million in the second
quarter of 2014.
Company-owned Sales
- For the second quarter of 2015,
Company-owned comparable restaurant sales increased 4.2%, which was
driven by an increase in traffic of 0.7% and an average check
increase of 3.5%.
- Average unit weekly sales were $100.3
thousand in the second quarter of 2015, an increase of 4.9%
compared to $95.6 thousand in the second quarter of 2014.
- 66 Company-owned Ruth’s Chris Steak
House restaurants were open at the end of the second quarter of
2015 compared to 64 Ruth’s Chris Steak House restaurants at the end
of the second quarter of 2014. Total operating weeks for the second
quarter of 2015 increased to 858 from 819 in the second quarter of
2014. Total operating weeks exclude discontinued operations.
Franchise Income
- Franchise income in the second quarter
of 2015 was up 8.1% to $4.1 million compared to $3.8 million in the
second quarter of 2014. Franchise income included a 1.0% increase
in comparable franchised restaurant sales, and an increase in
opening fees and royalties from new franchise restaurant openings
during the last 12 months.
- 79 franchisee-owned restaurants were
open at the end of the second quarter of 2015 compared to 75 at the
end of the prior year second quarter.
Operating income in the second quarter of 2015 increased 16.0%
to $11.4 million, compared to $9.8 million in the second quarter of
2014. As a percentage of total revenues, operating margin increased
68 basis points year-over-year.
- Food and beverage costs, as a
percentage of restaurant sales, decreased 133 basis points in the
second quarter of 2015 to 30.5%, driven predominately by a 2%
year-over-year decline in beef prices.
- Restaurant operating expenses, as a
percentage of restaurant sales, decreased 145 basis points in the
second quarter of 2015 to 46.9%, primarily due to lower healthcare
claims experience in the quarter and the effects of higher sales on
fixed costs.
- General and administrative expenses, as
a percentage of total revenues, increased 113 basis points in the
second quarter of 2015 to 8.2%, driven by an increase in
performance based compensation expense.
At the end of the second quarter of 2015, the Company had $0 in
debt outstanding under its senior credit facility, a decrease from
$3 million in debt outstanding at the end of the first quarter of
2015.
During the second quarter of 2015, the Company repurchased
143,092 shares of common stock for approximately $2.3 million under
the Company’s previously announced $50 million share repurchase
program. Since the beginning of 2014, the Company has repurchased
1.6 million shares for approximately $20.7 million. As of the end
of the second quarter of 2015, the Company had $39.6 million
remaining under its current authorization.
Subsequent to the end of the second quarter of 2015, the
Company’s Board of Directors, as part of the Company’s focus on
long-term shareholder returns, approved the payment of a quarterly
cash dividend to shareholders of $0.06 per share. This dividend
will be paid on August 27, 2015 to shareholders of record as of the
close of business on August 13, 2015. This dividend represents a
20% increase from the quarterly cash dividend paid to shareholders
in August 2014.
Development Update
The Company expects to open its second Dallas, TX restaurant
early in the fourth quarter of 2015. As previously announced, the
Company has signed a lease to open a restaurant in Albuquerque, NM,
which is now currently expected to open early in 2016.
Additionally, the Company has signed leases to open restaurants in
Cleveland, OH and El Paso, TX in the second half of 2016.
Ruth’s Chris Steak House franchisees opened restaurants in
Charleston, SC and Ann Arbor, MI during the second quarter.
Franchisees are currently projected to open a third restaurant in
San Antonio, TX in the fourth quarter of 2015, and a new location
in Jakarta, Indonesia in the first quarter of 2016.
Financial Outlook
Based on current information, Ruth's Hospitality Group, Inc. is
updating its full year 2015 outlook as follows:
- Cost of goods sold of 31.5% to 32.5% of
restaurant sales, inclusive of beef inflation of 3-6%
year-over-year in the second half of 2015,
- Restaurant operating expenses of 46.5%
to 48.5% of restaurant sales,
- Marketing and advertising costs of 2.9%
to 3.1% of total revenues,
- General and administrative expenses of
$27.5 million to $29.5 million,
- Effective tax rate of 31% to 34%,
- Capital expenditures of $20 million to
$23 million,
- Fully diluted shares outstanding of
34.7 million to 35.2 million (exclusive of any future share
repurchases under the Company's previously announced 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 our recent filings with the Securities
and Exchange Commission for more detailed discussions of the risks
that could impact future operating results and financial
conditions.
Conference Call
The Company will host a conference call to discuss second
quarter 2015 financial results today at 8:30 AM Eastern Time.
Hosting the call will be Michael P. O’Donnell, Chairman, 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 719-457-1035. A replay will be available one hour after the
call and can be accessed by dialing 858-384-5517; the password is
3128529. The replay will be available until August 7, 2015. 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, 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.
These forward-looking statements include all statements other than
those made solely with respect to historical facts and include, but
are not limited to, statements regarding the Company’s financial
outlook, objectives, plans and goals. Forward-looking statements
frequently are identified by the words “anticipate,” “believe,”
“estimate,” “expect,” “intend,” “project,” “will be,” “will
continue,” “will likely result,” or other similar words and
phrases. Actual results could differ materially from those
projected, implied or anticipated by these 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 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 Company’s ability to protect its name
and logo and other proprietary information; the impact of
litigation; the restrictions imposed by the Company’s Amended and
Restated Credit Agreement; changes in, or the discontinuation of,
the Company’s share repurchase program or dividend payments; and
the risk factors or uncertainties identified in the reports the
Company files with the Securities and Exchange Commission,
including its Annual Report on Form 10-K for the fiscal year ended
December 28, 2014 and subsequently filed Quarterly Reports on Form
10-Q, all of which are available on the Securities and Exchange
Commission’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 after the date hereof, whether as a result of new
information, future events or otherwise.
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
26 Weeks Ended June 28, June 29, June
28, June 29, 2015
2014 2015 2014
Revenues: Restaurant sales $ 85,765 $ 77,989 $
177,836 $ 163,059 Franchise income 4,117 3,807 8,139 7,843 Other
operating income 1,167 1,210
2,419 2,458 Total revenues 91,049 83,006
188,394 173,360 Costs and expenses: Food and beverage costs
26,162 24,828 54,262 51,496 Restaurant operating expenses 40,264
37,741 81,966 76,584 Marketing and advertising 2,448 1,923 4,040
3,669 General and administrative costs 7,445 5,847 13,892 12,072
Depreciation and amortization expenses 3,187 2,714 6,106 5,224
Pre-opening costs 139 119 515
528 Total costs and expenses 79,645 73,172
160,781 149,573 Operating income 11,404 9,834 27,613 23,787
Other income (expense): Interest expense, net (174 ) (298 )
(400 ) (585 ) Other 16 12 31
21 Income from continuing operations
before income tax expense 11,246 9,548 27,244 23,223 Income tax
expense 3,577 2,880 8,807
7,566 Income from continuing operations 7,669
6,668 18,437 15,657 Income (loss) from discontinued operations, net
of income taxes (153 ) 236 (509 )
111 Net income $ 7,516 $ 6,904 $ 17,928
$ 15,768 Basic earnings (loss) per common
share: Continuing operations $ 0.22 $ 0.19 $ 0.53 $ 0.45
Discontinued operations (0.00 ) 0.01
(0.01 ) 0.00 Basic earnings per share $ 0.22 $
0.20 $ 0.52 $ 0.45 Diluted earnings
(loss) per common share: Continuing operations $ 0.22 $ 0.18 $ 0.53
$ 0.44 Discontinued operations (0.00 ) 0.01
(0.01 ) 0.00 Diluted earnings per share $ 0.22
$ 0.19 $ 0.52 $ 0.44 Shares used
in computing net income (loss) per common share: Basic 34,343,691
35,122,131 34,280,024 35,108,391 Diluted 34,611,107 35,587,975
34,640,397 35,703,436 Dividends declared per common share $
0.06 $ 0.05 $ 0.12 $ 0.10
The operating results of the Mitchell's Restaurants and a Ruth's
Chris Steak House restaurant closed in September 2014 have been
reclassified to the discontinued operations line of the condensed
consolidated statements of income. These reclassifications had no
effect on previously reported net income.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150731005122/en/
Investor RelationsFitzhugh
Taylor, 203-682-8261ftaylor@icrinc.com
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