RUTH - Earnings call transcript Q3 2018 | Ruths Hospitality Group Inc

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to today's Ruth's Hospitality Group 2018 Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode.

Following the formal remarks, we will conduct a Q&A session. Instructions will be provided at this time for you to queue up for questions.

conference recorded. today's reminder, a is being As I to Mr. like to conference over turn the would now Mark President Taylor, Analysis. Vice of Financial and Planning go ahead, Please sir.

Mark Taylor

[ph], everyone. Braith good you, Thank and morning

and today Joining the and Chief Haak, are Chief President Executive Officer. Cheryl Executive me Vice Officer; call Henry, on Financial Arne and President

section a be at remind reliance I'd for the copies future Relations upon are our of not to detailed placed of risks that the our our more with should and impact statements. as discussion like sec.gov SEC's earnings today's we begin, well you filings press release discussion you future forward-looking statements Before results. today and of of These as financial Web undue therefore performance not like to could would refer We operating site and of our part will that at include them. for Web our SEC guarantees to site Investor recent rhgi.com the the

During was calculated refer this a measure measurement as certain measure as items We that This excluding losses this of to per well share. internal believe call, represents adjusted discontinued by non-GAAP operations. earnings useful we from performance. will

per find for in a can like Executive Cheryl Henry. adjusted call Chief officer, earnings reconciliation call. over of press the You release I turn our share today's to now would to our

Cheryl Henry

everyone, morning thank all in you Good Mark. and you, Thank for dialing today.

coordinated highest in I XX-year-old approach the Ruth's capital growth, day I fairly those returns this committed been and shareholders. executing this up. for our confident ground entails and to sound to honor of years, effort now may As surface than a and you at strategy. expanding our I simple, be it's restaurants of returning smartly at Chris That takes also to leader I've many operational brand. organic the on priorities in however strategy as our a every that from realize the know, of level, measured iconic the successful on am pace am an at unified in and more chosen investing total XX executing

me Let expand.

be time While the know spending restaurant in more coming teams. with with that time year, also our value creating shareholders starts I'll I spending with

months, everything six met do with nearly is chefs months. During across success six managers and is single foundation brand. our detail country, again presentation will our the else food and I Their general past to perfect it. built in motivated and have the of underlie of to have the every next the all the be brand, and so be ready, and trained, our absolute to attention are and our have critical, The of upon These The foundation people hospitality every time. principles night. and executive

the our further ultimately acquisition will Revenue last is about third quarter. towards As facilitate and I foundation we the across and With also aided from XXXX, We're look franchised capital expansion, our growth of strong, with late year-over-year a innovation, and revenue restaurants in let's quarter. included on the to performance talk was key year. the of revenue results XX.X%, strong all pleased shareholders. of return that three segments. basis grew our Hawaiian unit Total that,

benefit X.X%. Dining third in Index. During X.X%, Fine Both sales activity did hurricane the lapping the traffic again last Box We of year. Black increased and from outperformed quarter, comparable increased quarter the these restaurant the of of metrics have

we that growth. still However, sales excluding same-store positive benefit, had

believe non-GAAP rebound affects $X.XX. last focus execution teams. also the of to the see our our earnings and side, demonstrate I We hurricanes grew by the the and share basis of from year. On points, of margins pleased results to ongoing operating Restaurant-level margins XXX am our per led

quarter, with solid of X%. partners a franchise also Our restaurant growth had comparable sales

history long is has a we This have partners, are our we path know, the over well well of the excited enjoyed you that they of for on Steakhouse vision group collaboration the a of reach incredibly with successful about success part and to franchisees Ruth's all big the franchise that our of years. are many as tell pleased potential. you Ruth's brand's prospects, aligned I'm brand, as Chris and the our As to

Let's development. to turn now

the a As attention we we focused number of to integration prudent Hawaiian of on conclusion the the exciting growth. have near our is And of developments restaurants, share.

Jersey opened Jersey is Jersey New we our in quarter, company-owned During on and location Paramus, the this to month. City, New a track restaurant open

agreement expected. location, Furthermore, Reno, in management will partnership two to we announce. which under in Resorts, addition, December, a restaurants Eldorado open new have In with Nevada will operate our than earlier company-operated

locations Columbus, leases as a in expected in which for a as in have signed Oklahoma in well restaurant Ohio, XXXX, City, open new open will for We XXXX. to lease

openings We restaurant late XXXX. additional continue to work for on well for opportunities XXXX as as

next Lastly, our allow restaurants brand the upgrade experience. standards the and year, will which relocating of us overall will restaurant elevate D.C. the we be to in Washington, of guest one

year. restaurants On the franchise open track on side, our partners this to remain two

Wayne, first in the quarter. during is and in fourth Fort second Ontario restaurant Indiana, the Markham, The opened open expected to

the brand in to on end the in proud of in of total closed operation. returns results our the In We believe after strategy, their the which our third quarter. restaurant subsequent and City, reflect our people. four results of our is Additionally, franchisee success the the summary, these strength of Panama quarter Panama third years we're predicated

to and brand, and iconic authentic this protect grow of to to stewards job it it, it. it, evolve our is As

Arne this With that, in We are turn we detail. over continue will confident quarter going to our so financials do to third to review forward. I'll

Arne Haak

you, Thank Cheryl.

to tax tax impact XXXX. of in deal-related the $XX,XXX $XXX,XXX million the related diluted Hawaiian Net discreet XXXX, net September an third per to quarter net of associated or benefit or with our XX, income $X.XX quarter This income share. we $X.XX compares acquisition third quarter, income included diluted ended of in and million expenses XXXX the share of third reported $X.X the the of of For income during $X.X franchisee, income items. per

than Excluding these to Total doubled discontinued the as for restaurant as operations, $X.XX $XX.X results compared of the our share company-owned as increase contribution year. sales items to an XX.X% last restaurants, driven diluted quarter the X.X% including were common $X.XX from last those well in non-GAAP by third more earnings new well our restaurant of the in The by increase quarter the in third as million, was over comparable of year. acquired increase sales. Hawaii, per

the was comparable last which Total check restaurant as for the resulted operating XX.X% year-over-year, and in XX X.X%, entrees in This quarter of an last in additional from the points operating in quarter up quarter by XX mentioned, of included up measured quarter year, in to were our XXX all year. the to X,XXX, Traffic closures. approximately up third the franchise The Hawaiian and Hawaii acquisition reclassification franchise tailwind was the comparable from Cheryl increased franchisee the was decrease hurricanes contribution Franchise acquisition X% As franchise in was million, the X.X%. lapping included year. restaurant quarter, XXX restaurants days sales franchise advertising of of of during Total XXX Comparable basis sales restaurants the X.X%. domestic down prior driven weeks weeks third franchise $X company-owned the income. restaurants sales, from restaurants. of in versus X.X% income advertising of in increase the X% were by year-over-year. comparable were and quarter restaurant up restaurants, and the the our our from international down in the sales sales partially offset by comparable marketing

primarily restaurant Beef percentage and our expenses, cost, from well costs food turning XX.X%. the of has X.X% quarter a by in to year-over-year, quarter. as points a third check. was decrease the beverage fourth in for Now, driven total sales we the as decrease slowed as average experienced deflation the significantly by XX.X% in trends XXX basis to decreased increase beef This

of X% the we X%. now to beef expect For full-year deflation

healthcare well expenses as of restaurant as to For increase the our decreased check sales quarterly of points of claims basis an primarily in restaurant due was sales to cost decrease percentage XX a restaurant XX.X%. as expenses restaurant quarter, average timing percentage as lower year-over-year of to operating The due a X.X%. in benefit operating

total quarter new restaurant result quarter Pre-opening and X.X%. XXXX, to tax of costs by Act. of as expenses Income timing of in as This $X the largely million, declined compensation to advertising Our based Jobs openings. points increased the Cuts revenues XXXX cost third revenue cost primarily million of $XXX,XXX our were of total the the percentage from to and driven by enactment of as driven G&A to basis to XX XX a restaurants. X.X%. performance as and basis percentage was related increase a percentage revenue integration of Marketing recently expenses $XXX,XXX a of $XXX,XXX in Hawaiian a total the the points the year-over-year Tax compared acquired third increased of

business reinvesting are the form of quarter approximately At we these the to our tax reminder, third initiative. brand, XX% savings core the XX% in had quarter previously a people with sales and of repurchase our As driving of share third end and remaining of announced in $XX million ended We we did million any million debt shares the not in repurchase XXXX, authorization. under outstanding. $XX.X $XX into

directors cash dividend the XXXX. an in share per represents paid dividend $X.XX a of quarterly recently approved over Finally, XX% our increase broad November which

quarters of X% financial Through outlook XXXX to current to metrics. on to X.X% key has the year, year-over-year. of turning of three up information the year I'd like for Now guidance, provide based our been revised full our cadence some sales first our the for our running

strength are last date shift due hurricane comparable from week. the to currently following running restaurant year, of tougher as well However, prior to sales restaurant sales as comparisons fourth the primarily the restaurant of year to flat

once the strongest to in dollars. be terms our quarter fourth this sales quarter of expect seasonally year We revenue again

be in restaurant expect week, XX% approximately expenses Based we result of points our deflation expect between provide to beef earlier the current to now headwind our this now cost on a We sold restaurant the sales. in in restaurant XXXX to to call, of year's XX.X% on a revenue will goods range XXX the of New quarter. XX.X% However, of of as be annual of Holiday operating and XXrd of of expectations XX.X% the Eve provided last XXX sales. Year's timing basis

quarter. advertising X.X% integration reminder, the a modest we million a $XX expenses $XX level excluding see and Hawaii margin As million, in now fourth cost to expect now between to and result, expect We this year's expect as included week. XXXX marketing fourth and costs. G&A a be to of our be a And X.X%. XXrd de-leveraging We between of quarter

impact We continue our income tax the between be and tax XX% annual excluding discrete XX%, of items. effective to expect to rate

expenditures We million remain expect million. and to $XX between $XX capital

the turn now diluted the share With any back repurchase We Braith of shares our questions I'd exclusive we shares, now million have. like $XX.X be fully to program. that repurchases $XX.X might outstanding to share and call between expect under million Company's to any for that,

Operator

Thank We go sir. you, Citi. first Instructions] question ahead. Badishkanian [Operator take our Please from can from Greg now

Fred Wightman

actually how to you Hey, that basis, from Can been year? Fred there for sense It's hurricanes. Wightman XQ impact And back you on XXX mentioned good you on have mentioned. the circle basis headwind that last just think I the you a wanted to comp quarter-to-date calendar Greg. that a us comps XXX give shift, progressed I discussed might lingering morning. correct? then point some from on that's for

Arne Haak

morning, Good Fred. Correct.

in So month first sales. terms in the of in October. progression strong year very last was comparable strongest last the October all, year-over-year was of quarter the year

we October activity it look lot into the looks the year. that rebounded, it October on two-year are is basis September, through that restaurants And the Florida, got up really in in pushed look so we of weak restaurants and of last restaurant of when When down, kind at very that Florida happens a normal. of kind and a

pretty So overall, we feel good that. about

to on terms a is Ruth's news calendar New just New is Chris. the at Year's But we'll of is Eve, on And it, time Eve comp In get celebrate come sales comp. still Year's obviously the it'll a good it XXXX. great in

Fred Wightman

a lot. thanks Great,

Cheryl Henry

of the seen areas our in year I we've strength just Fred, all add, would business. through

I we at so QX. as think that And helps look

private feel the trends positive the of make about in we've in the seen segment dining quarter. us QX Some

Fred Wightman

that Sure. sense. makes think I No,

have that indications any on quickly, touching Just into spend fourth as we you look as far as guys ahead holiday the quarter?

Cheryl Henry

reiterate. I'll Yes,

seen to expect not are we we've I we -- see that us trends think anything that allow so expect and don't would continue. to positive, the

Fred Wightman

forward? of with us then consistent And you past sort have where how repurchases years, you just is the thanks. Can second give on Okay, in you're been the few this going the market. pretty over an finally, about but lever been update quarters guys thinking you of that three just haven't

Arne Haak

Sure.

our into to are kind And board First board-level repurchases. actively our it's capital looking of ways we we invest on our for high-return projects. all, But to decision. a present of thoughts actually

rather And in acquisition. new this build have we So we past invest would if we year the too fairly restaurant a Hawaii can strongly invested there.

there So board and it around I is is ebbs a our to board-level it, committed will repurchase decision, program. but and believe flows be share our

Fred Wightman

lot. a Thanks Great.

Operator

We Long Joshua can go now you. from take Thank next Piper ahead. Please from Jaffray. our question

Joshua Long

that? market closure franchisee in there any in be Great, Wanted other about how any for question. in the additional thank saw might if quarter? you dig you able geographic of brand of you in that to opportunities there's provide how taking sort either stay to the and/or if my color trends could touch Panama, terms see to thinking then also And performed on you to during the you're that or

Cheryl Henry

Sure.

that was were necessarily any given Black the broad areas think I against and the so underperforming, regionally, So, we hurricane. mentioned shift as performance talked about say pretty we and looked didn't we it I would that we the Box, across, see

States. obviously there and on strong speaking, it's a Florida saw the trends geographically, pretty things So in we But issue United changing the are throughout And positive the came dynamics quarter question, some year. a in Panama versus marketplace. back market broadly last really that had they as

Joshua Long

thanks at of an I that where done one with great some while, quite through where of provide to work? Could update or about job obviously terms expansions you've you remodels Got it, in remodels we're and the building cash some of a for that mean, to ability of the a in for put uses refreshing also high-returning stores available. you've base priorities and capacity either that. asset is your talked

sit now about kind do the So dollars on remodel opportunity the work to put you and think how where portfolio to of does side? some the

Cheryl Henry

Sure.

for complete doing We're year between We're at earlier and looking we eight. similar seven nine talked next this about to number as nine of well. on a year. So seven track to

at have more we've right year, eight that And this puts us completed So the completed. date. that end, around XX we'll to

Joshua Long

you you projects being do balance kind larger think to of many with of about of light the opportunity how retouches? think units, of date, total or How And do mix XX those gotten address mean of versus dollars a capacity those across Great. through maybe the about done the to of touch I expansion kind opportunities have spent? you kind

Cheryl Henry

Right.

we from refresh. process prioritize Where before consider remodels brand capacity the now, project. talked sit expansion about we've so, And go to the buckets, a we we how our through we filter around how

We left, have, is have from standpoint completed buckets maintenance brand ones. we still there across potential of each several on well. larger then we'll as capacity, a and we certainly think look I touch the those side, But what's as of still

in hit would all a But think I I early. standpoint prioritization So still we opportunities we've those of have larger say ones buckets. from some

Arne Haak

into the to add fall of this Josh, and kind that, we've category. thing, I maintenance to of last one learned, One the would things think

and work lot we cost As of up California doing to that some regulatory these remodel. of a kind we've the that of up the gone opened restaurants into of adds there's end some

running the remodels been across we've So the per seen portfolio. little higher California have than unit a definitely bit what

Joshua Long

forward. understand that. But beef piece thinking bit Okay, number, a rest for then of nice thanks deflations in you're of commodity And going little you're and about and curious down forward? price moderates of about last me, going kind the on how contracting that XX% a thinking maybe for the your quarter, the that the basket how terms one or COGS

Arne Haak

Cheryl guess I this it prime and were I'll really on really I'll We quarter blessed good take question, to price. supply. with contracting turn third Sure. the over

or was mean, really the the And contraction last of remember, probably it's of year, high. in a the had third in supply you inflation running ended over year, retail still quarter the prime of a went increase I has north prime X%. it's as bit year. the there we XX%-plus been This of demand. grading grading running So And in a XX% we last been summer. but summer little XX% up good demand, we and through if lot retail over with

As six, we this big of supply a to could year. to there summer third but are that into we've been We'd they've the talk at headed And nobody's opportunities these where because in the for years. but quarter about we that quite levels. see her unfortunately to sure next XXXX. that look, five, into we seven increase of focused in pretty continue I high, any the going for. are to feel in signup supply see we're really haven't compelling that is we keep love we on to Not had these lowest mean, go prime. But excited And on it. people grading to tried extend we levels the some side been contracting the

Cheryl Henry

On the what will call sales we price reluctant price as we build continue the side, traffic. and through trying first, [ph] we to at, have look been to be

we're just So in price. X% around currently

it a We what We're try again. like. will at decide of at looks to the that We thoughtful to about look look process. inputs lot

And be. we look get revisit through the so and the might certainly into for it year quarter as and we'll what opportunity next

Joshua Long

Great, thank you.

Operator

next our Instructions] from Brian now James. from We'll [Operator question take Raymond Vaccaro

Brian Vaccaro

Could third the the provide you quarter the little different could performed start good during with how we comps, and more a and business Thanks color morning. period? segments on

Cheryl Henry

Sure.

know, a generally think steady strength diners. we Florida around as again, lot private just separating great it, had deal I'll private and as recovery of wine dining the of we thinking through in then now carte, and business in dining of Obviously, good group And a the menu impacted We in the bars. it was kind around as business our programming revenue about especially dining carte centers the and our as then consistent we've really la about well travel. la new last efforts items a and our and you because saw segments. done quarter. all talk dinners, through side as in So a year a strength But segment

and So of that, we like think trends seeing far results we're each as in we the we're the center. what as seeing

Brian Vaccaro

isolate seeing there's thinking how menu, guess just highlight curious through or or if and private to about on moving Ruth's any read-throughs items, mix you're special diner, in noticeable dining are occasion Okay. if any Classics the I higher-end customers the just the anything if And if there? those been there's you because the ex changes

Cheryl Henry

some seen We've in the past.

talked shift we of we think saw necessarily. not I little in in QX bit QX a classic, to but

I think into a the carte But shift in in la that a the bar idea people of to experience something was the that no. geography full for menu, not restaurant is in itself the quarter, continue a we the and see. moving

Brian Vaccaro

Okay. disaggregate. you And could Arne,

I said was think up How average the in price there? versus you the check X.X% mix much quarter.

Arne Haak

X.X% around of right in running the X.X% X.X%, price, We're kind price was number.

didn't we have fairly a we -- So mix. negative really any had

talked You and remember had the shift earlier in a kind of in there a in of promotions bar, that kind some the we've year, center July. revenue lapped as we we about had had we

So that's where we the were on price quarter. in

Brian Vaccaro

inflation last there? a the a healthcare And Could said think Okay, maybe of claims. anything and What in on drill else moving shift that, then, was quarter, the worth line also perfect. items quantify in you wage on other down then touch you line the just was second. but for And any could you highlighting? could OpEx other there for quantify me, one we topic the I

Arne Haak

Sure.

this around the So wage that across look employees. around like year. X% million running is minimum Brian. running for right the all component we're The for us $X.X we Overall, inflation everybody just experiencing wage else, as is inflation of year wage

the number been just But going our of healthcare, terms exact terms I don't it has people. in we're for trend history out think on generally us favorable for claim to what the call was. In of

the or obviously, So can are of events change our other know, beef. quarter that that two by are can like -- that in in we're and line helped it But two our things those the profile. we're the hopeful you significantly that take that experiencing are kind continues. trend it being aren't And one big We pressuring. people

think the I I a And quarter make last really the me, it in the around we well happened. had back. fair pleasing happen to that but margin had them it compression their mean, the hurricane. was and came third rebounded to doing obviously amount plans thing teams really year it, of

really have growing of our and And operators their good so running done sales. job restaurants a

Brian Vaccaro

But All meetings little to learnings right, scenes those one, the that's great. view or just meetings. primary And what or takeaways months, I'm were from new last over just Cheryl, so then circling Any last guess. a six back I question the curious opportunities identified? the

Cheryl Henry

our market. when able And and I great with and really, time in is commitment leave. have amazing top it, shareholders. what tightness of the our and it's the folks. them about how will our the approach and field strategy as think organization one to I the it's there to go ensure the approach do the Everyone and interesting, have market to And lived I restaurants think it's be that that aligned in is leave labor get the happening It's how of of me from amazing it's Brian, talking strategy we and the all by and the the when I restaurants. you, inspiring that is to And every to I the the out inspire the And to really day meet a is folks when with of on thing I me the of we inspired. to in teams. we're is And that tell favorite what's that, company getting And labor well, make and my purpose sure just go the one-on-one out people, generally, we let guests through think, the I tenure. and way teams, we have

speak ensure a and in out, good to opportunity then So them person, get just the organization with aligned. is

Brian Vaccaro

along. it All I'll right, you. pass thank

Operator

team closing the turn for it That will conclude I Q&A like to to remarks. our or any management today. back you. session would additional Thank

Cheryl Henry

forward much conference speaking this morning you quarter the Have certainly call. call. joining to fourth again all all in us look on we earnings day. you great very And our with Thank for a

Operator

conference you. your gentlemen. will conclude today's participation, Thank call. ladies you Thank That for and

You disconnect. may now

Ruths Hospitality (RUTH) 2 Nov 182018 Q3 Earnings call transcript