Ruth’s Hospitality Group, Inc. Reports Second Quarter 2008 Financial Results
HEATHROW, Fla.--(BUSINESS WIRE)--August 5, 2008--Ruth’s Hospitality Group, Inc. (Nasdaq: RUTH) today reported unaudited results for its second quarter ended June 29, 2008. Highlights for the second quarter 2008 compared to second quarter 2007 were as follows:
| · | | Total revenue increased 37.9% to $108.1 million from $78.4 million, including $23.1 |
| | | million from the Mitchell’s acquisition, which closed on February 19, 2008. |
| · | | Net income of $2.8 million, or $0.11 per diluted share, compared to $5.4 million, or |
| | | $0.23 per diluted share in the prior year period. Net income during the second quarter of |
| | | 2008 included a charge of $1.4 million related to the departure of the Company’s former |
| | | CEO as well as a non-cash benefit of $1.2 million related to an interest rate swap. |
| | | Excluding these items would result in earnings of $0.12 per diluted share. |
| · | | Company-owned comparable restaurant sales for Ruth’s Chris Steak House decreased |
| | | 7.1%, compared to a 0.4% decrease in 2007. Combined average weekly sales at |
| | | Mitchell’s were $80,800 compared to $86,900 in the year-ago quarter. |
| · | | Food and beverage costs, as a percentage of restaurant sales, decreased approximately |
| | | 110 basis points to 30.7% versus the prior year quarter. This was primarily driven by |
| | | favorable beef costs and modest price increases, partially offset by higher grocery, and |
| | | dairy costs. |
| · | | Restaurant operating expenses, as a percentage of restaurant sales, were approximately |
| | | 380 basis points higher than the prior year second quarter. The majority of this was de- |
| | | leveraging due to the weak comparable sales, as many of these expenses are fixed. |
| · | | Marketing and advertising expenditures, as a percentage of total revenues, were |
| | | approximately 160 basis points higher due to increased utilization of print media and |
| | | radio to support the Company’s “Summer Celebration” promotion. |
| · | | General and administrative expenses, as a percentage of total revenues, were |
| | | approximately 210 basis points higher, due to $1.4 million in severance related to the |
| | | former CEO departure, $0.6 million in increased FAS123R costs, and additional support |
| | | for the Mitchell’s acquistion. |
| · | | Depreciation and amortization expenses, as a percentage of total revenues, were 40 basis |
| | | points higher at approximately 4.0% of total revenues. |
| · | | Pre-opening costs fell by $0.1 million from a year ago due to the timing of new restaurant |
| | | development activity. |
| · | | Operating income of $4.7 million versus $9.0 million. |
| · | | Net interest expense was slightly higher at $1.2 million. Interest expense during the |
| | | quarter included a $1.2 million “mark-to-market” non-cash benefit related to an interest |
| | | rate swap agreement. |
| · | | Two new Company-owned restaurants were opened in Fort Worth, TX, and downtown |
| | | New Orleans, LA. |
Bob Vincent, Executive Vice President and Chief Financial Officer of Ruth’s Hospitality Group, Inc., “Second quarter performance was consistent with macro-economic challenges that have affected upscale dining and the restaurant industry as a whole. As a result, we are focused on
value-oriented sales initiatives that do not denigrate the Ruth’s Chris brand, expense management at the corporate and store levels, and maximizing free cash flow to pay down debt.”
Review of Operating Results
Total revenues, which include Company-owned restaurant sales, franchise income, and other operating income, increased 37.9% to $108.1 million in the second quarter of 2008 compared to $78.4 million in the second quarter of 2007.
Company-owned restaurant sales grew 39.7% to $102.8 million for the second quarter of 2008 from $73.6 million for the period last year. This was primarily the result of a 59.7% increase in total restaurant operating weeks to 1,097 from 687 (including 286 operating weeks related to the Mitchell’s acquisition for which there is no comparable in the second quarter of 2007). Restaurant sales generated by Mitchell’s were $23.1 million during the second quarter of 2008.
Average weekly sales for Ruth’s Chris Steak House were $98,300 in the second quarter of 2008 compared to $107,300 in the second quarter of 2007. Combined average weekly sales for the Mitchell’s acquisition were $80,800 compared to $86,900 in the prior year. The Company will consider restaurants acquired through the Mitchell’s acquisition to be comparable in the second quarter of 2009.
For the second quarter of 2008, Company-owned comparable restaurant sales at Ruth’s Chris Steak House decreased 7.1% from the second quarter of 2007. Comparable sales consisted of an average check increase of 2.1%, driven by menu mix shifts, as well as an entrée reduction of 9.0%, offset by year over year effective menu pricing of approximately 2.5%. Company-owned comparable restaurant sales at Ruth’s Chris Steak House overlapped last year's second quarter decline of 0.4%.
Franchise income increased 3.4% to $3.0 million from $2.9 million in the second quarter of 2007. This was due to 7 additional franchise-owned locations, net of acquisitions year over year, partially offset by a decrease in blended comparable franchise-owned restaurant sales of 7.0%.
Operating income was $4.7 million in the second quarter of 2008 versus $9.0 million in the same period last year.
Net income was $2.8 million in the second quarter of 2008, or $0.11 per diluted share, compared to $5.4 million, or $0.23 per diluted share, in the second quarter of 2007. Net income during the second quarter of 2008 included a charge of $1.4 million related to the departure of the Company’s former CEO as well as a non-cash benefit of $1.2 million related to an interest rate swap. Excluding these items would result in earnings of $0.12 per diluted share.
Financial Guidance
Ruth’s Hospitality Group, Inc.’s earnings guidance for fiscal 2008 remains unchanged. The Company continues to expect fiscal 2008 earnings per share from continuing operations of between $0.55 and $0.60 per diluted share, excluding non-recurring costs associated with the former CEO departure.
Conference Call
The Company will host a conference call to discuss second quarter 2008 financial results today at 4:30 PM Eastern Time. Hosting the call will be Rob Selati, Chairman of the Board, Bob Vincent, Executive Vice-President and Chief Financial Officer, Geoffrey Stiles, Executive Vice-President and President of the Ruth's Chris Restaurants.
The conference call can be accessed live over the phone by dialing 800-925-2151 or for international callers by dialing 913-312-1433. A replay will be available one hour after the call and can be accessed by dialing 888-203-1112 or 719-457-0820 for international callers; the password is 6147653. The replay will be available until August 12, 2008. 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
Ruth’s Hospitality Group, Inc. (Nasdaq: RUTH) is a leading restaurant company focused exclusively on the upscale dining segment. The Company owns the Ruth’s Chris Steak House, Mitchell’s Fish Market, Mitchell’s Steakhouse and Cameron’s Steakhouse concepts. With more than 144 company- and franchisee-owned locations worldwide, Ruth’s Hospitality Group was founded in 1965 and is headquartered in Heathrow, Fla.
For further information about our restaurants, to make reservations, or to purchase gift cards,
| please | | visit: | | www.RuthsChris.com, | | www.MitchellsFishMarket.com, |
| www.MitchellsSteakhouse.com | | and www.Camerons-Steakhouse.com. For more information |
| about Ruth’s Hospitality Group, please visit www.rhgi.com. | | |
| RUTH'S HOSPITALITY GROUP, INC. AND SUBSIDIARIES |
| Consolidated Income Statements - Unaudited |
| (dollar amounts in thousands, except share and per share data) |
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| | | | | 13 Weeks Ending | | | | 26 Weeks Ending |
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| | | | | July 1, | | | | June 29, | | | | July 1, | | | | June 29, |
| | | | | 2007 | | | | 2008 | | | | 2007 | | | | 2008 |
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| Revenues: | | | | | | | | | | | | | | | | |
| Restaurant sales | | $ | | 73,646 | | $ | | 102,791 | | $ | | 151,781 | | $ | | 197,787 |
| Franchise income | | | | 2,904 | | | | 2,966 | | | | 6,077 | | | | 6,293 |
| Other operating income | | | | 1,885 | | | | 2,360 | | | | 2,075 | | | | 2,621 |
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| Total revenues | | | | 78,435 | | | | 108,117 | | | | 159,933 | | | | 206,701 |
| Costs and expenses: | | | | | | | | | | | | | | | | |
| Food and beverage costs | | | | 23,402 | | | | 31,591 | | | | 48,839 | | | | 61,979 |
| Restaurant operating expenses | | | | 34,141 | | | | 51,595 | | | | 68,572 | | | | 97,128 |
| Marketing and advertising | | | | 2,174 | | | | 4,804 | | | | 4,496 | | | | 7,393 |
| General and administrative costs | | | | 5,647 | | | | 10,010 | | | | 12,208 | | | | 16,933 |
| Depreciation and amortization expenses | | | | 2,858 | | | | 4,372 | | | | 5,777 | | | | 7,919 |
| Pre-opening costs | | | | 1,147 | | | | 1,007 | | | | 2,516 | | | | 1,356 |
| Hurricane and relocation costs, net of | | | | | | | | | | | | | | | | |
| insurance proceeds | | | | 40 | | | | - | | | | (3,490) | | | | - |
| Loss on the disposal of property and equipment, net | | | | - | | | | - | | | | 1,108 | | | | 1 |
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| Operating income | | | | 9,026 | | | | 4,738 | | | | 19,907 | | | | 13,992 |
| Other income (expense): | | | | | | | | | | | | | | | | |
| Interest expense | | | | (1,159) | | | | (1,182) | | | | (2,190) | | | | (4,390) |
| Other | | | | 178 | | | | 185 | | | | 366 | | | | 522 |
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| Income from continuing operations | | | | | | | | | | | | | | | | |
| before income tax expense | | | | 8,045 | | | | 3,741 | | | | 18,083 | | | | 10,124 |
| Income tax expense | | | | 2,598 | | | | 984 | | | | 5,840 | | | | 2,835 |
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| Income from continuing operations | | | | 5,447 | | | | 2,757 | | | | 12,243 | | | | 7,289 |
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| Discontinued operations, net of income tax benefit | | | | 3 | | | | 2 | | | | 17 | | | | 3 |
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| Net income available to common shareholders | | $ | | 5,444 | | $ | | 2,755 | | $ | | 12,226 | | $ | | 7,286 |
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| Basic earnings per share: | | | | | | | | | | | | | | | | |
| Continuing operations | | $ | | 0.23 | | $ | | 0.11 | | $ | | 0.53 | | $ | | 0.30 |
| Discontinued operations | | | | - | | | | - | | | | - | | | | - |
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| Basic earnings per share | | $ | | 0.23 | | $ | | 0.11 | | $ | | 0.53 | | $ | | 0.30 |
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| Diluted earnings per share: | | | | | | | | | | | | | | | | |
| Continuing operations | | $ | | 0.23 | | $ | | 0.11 | | $ | | 0.52 | | $ | | 0.30 |
| Discontinued operations | | | | - | | | | - | | | | - | | | | - |
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| Diluted earnings per share | | $ | | 0.23 | | $ | | 0.11 | | $ | | 0.52 | | $ | | 0.30 |
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| Shares used in computing net income per common share: | | | | | | | | | | | | | | | | |
| Basic | | | | 23,188,748 | | | | 24,260,211 | | | | 23,206,657 | | | | 23,911,489 |
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| Diluted | | | | 23,494,847 | | | | 24,411,428 | | | | 23,407,937 | | | | 24,070,298 |
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| RUTH'S HOSPITALITY GROUP, INC. AND SUBSIDIARIES |
| Selected Balance Sheet Data |
| (dollar amounts in thousands) |
| | | December 30, | | June 29, |
| | | | | 2007 | | 2008 |
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| Cash and cash equivalents | | $ | | 12,311 | | $ 2,699 |
| Total assets | | | | 260,278 | | 359,419 |
| Long-term debt | | | | 96,750 | | 179,750 |
| Total shareholders' equity | | | | 88,067 | | 97,130 |
