RUTH - Earnings call transcript Q1 2019 | Ruths Hospitality Group Inc

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Operator

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to today's Ruth's Hospitality Group 2019 First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode.

Following the formal remarks, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions.

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

Mark Taylor

morning Thank and everyone. you, good Tony,

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

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

this was calculated refer During 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 will from performance. we

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

you trends with thank for us call achieved joining and everyone, all demonstrated of year. that results XXXX morning, a the We last Good started on the continuation today. solid

had unique well achieved detail share was underlying all X.X% grew period holiday and total a But quarter grew per growth greater moment. pro comparable of and will in revenue discuss trends forma sales the our in for remain restaurant consistent the The as the winter Arne segments. earnings across as timing shifts quarter X.X%, first events. this three For weather we some $X.XX. revenue

Valentine's on Eve Day. significant New business special both experienced and occasion once again Year's growth Our

we traffic. Box Black Dining Fine for to Additionally, continue Index outpace the

ongoing During driven years. focus consistency our our to of their has commitment teams And many excellence. the the quarter, for continued on operational results

As This is our to the foundation in returning through selectively and which excess growing a flow strategy, centers franchisees. total result steady of core cash our of new investing our shareholders unit on that capital is of generation. business, opportunistic consistency the and return acquisition footprint development

we have four development, of signed strong restaurants. terms including company-owned In leases pipeline a for

expect to in and Massachusetts We this Columbus, second year; in City open half Somerville, Oklahoma and Washington of Ohio DC the XXXX.

for XXXX. We continue on work to leases actively

location negotiated only a lease. once restaurant successfully However, the we and we have new announce signed

On the in franchise new side, our new the we first partners George, to a expect Utah restaurant quarter restaurant in XXXX. China and first St. in open opened half of one the in franchise

opportunistic footprint the acquisition restaurants longtime As grow I franchisees. also to I'm to territory New to going acquisition Long York. to that of is growth acquisition strategy company-owned will as This unique as Philadelphia forward. parts price New us the that partner continue mentioned, our Along year Island, including per through front, Brown. overall a will of of of rights new purchased restaurants, three area the restaurants our development we help excited solidify Jersey franchise from five these have Marsha the well On announce we of three

in to We're working Marsha's then corporate a founder a a Ruth thrilled banker I'd Fertel, New I and family. successful Marsha Orleans for had Ruth the Ruth's in office, firstly before who as on, with members very recognize into welcome the Before team franchisee. relationship special ultimately Chris move to corporate like becoming our

that day creativity this grow their continue excited our to returns our of total reduction. growth to the to their us about dividend, first that, franchisees and generated shareholders thank and quarter each over brand returning they them in XXXX and share do turn capital operational for like we our the to of and opportunities organic the the effort team augmenting innovation. to look with execute evolve review of for and and positions I'd details by understand be debt incredible remarkable you excellence, work and our those financial it investing return in beyond, along opportunities to As of iconic remain Arne form to our I'll strategy results. the buyback to With these remainder focus we on

Arne Haak

Cheryl. you, Thank

discrete For ended income million the of to quarter reported diluted income the included with items income in expenses and of $XX.X $XX,XXX our March in income our and $XXX,XXX compared Hawaiian impact in per included or tax during Cheryl in $XX.X tax $XXX,XXX expenses the related benefit share related or of discrete acquisition $X.XX franchisee. we per of quarter first income $XXX,XXX to quarter of the Net of associated net XXXX XX, a with net acquisition restaurants share that Net quarter of just first diluted the to XXXX. the first three items impact million income XXXX $X.XX associated of first the mentioned. benefit

would in the adjustments results Total sales per restaurant The for contributions in were quarter non-GAAP diluted basis sales as quarter was a well Bowl, XXXX. as XXX was been X.X% of the by New country flat shift quarter up operations, as discontinued from check quarter the from for restaurant included traffic shift in headwind Year's restaurants. of Easter common -- the well the share sorry, into the first Eve quarter these up comparable entrees, the the quarter. the unplanned comparable measured Traffic as increase second well for of the approximately in new closures XXXX were the XX compared was from XXXX. to well from winter million million increase of as $X.XX in of X.X% well while restaurant the northern sales tailwind point quarter earnings in holiday driven as Super a as by as compared shifts, from holiday a first X.X%. sales, XXXX. parts basis Excluding XXXX Adjusting Company-owned unusual shift from restaurant $XXX.X as to the as and of comp weather first two first have of point of company-owned the $XXX in $X.XX these the our

restaurants up Our our franchise quarter X.X% shift comparable in were versus in a restaurant down was their franchise the during XX% largely $X.X million our and franchise sales. franchise driven of by prior in driven Comparable comparable restaurants income domestic was our franchisees the weekly report the over on sales international a first versus sales comparable our a the of lack by The X.X%. up quarter year monthly sales sales an X.X% were Easter as strength in X.X% basis. domestic of increase

by to this Food year-over-year expenses. driven was points check. turning X.X% primarily in basis costs, to in costs X.X% Now by total beverage as and increase a our XX as beef as XX.X%, decreased decrease of percentage sales a average restaurant well

our quarter G&A costs. total as in For XXXX. as Income compared driven the year-over-year revenues to increased expenses restaurant to remain year. at operating points labor million restaurant X%. primarily of basis expenses quarter advertising included a a increase to and sales of percentage quarter XX expense year-over-year XX.X%. as $XXX,XXX higher first of percentage down in were tax costs to XX in $X.X revenues due by was primarily Marketing XXXX of the first a of million X.X% the of expenses acquisition-related quarter, in total was last $X.X first the percentage The constant as basis points

Excluding income XX.X%. would the discrete tax rate approximately our quarter first XXXX items, tax have been

share XXXX. of to repurchased the of outstanding, price of XX% of an end down in for quarter dividend, -- approved for the had the fourth in dividend represents $X of we our of per quarter, which $X.XX average an During $XX end the XX% of of paid $XXX,XXX our quarterly million share. from increase first debt the first XXXXX we shares cash quarter, Directors $XX.XX At a XXXX. Subsequent million the over quarter, the June Board per purchase

to our but required reduce earnings first in the recorded does have approximately of our Additionally, operating impact flows, quarter, leases per statement This in accounting new will $X.XX sheet. guidance not we our material XXXX. a on by adopted share on that cash be the balance

like these three XXXX, insight of on acquisition preliminary Philadelphia $XXX,XXX the effect XXXX. approximately some revenues generated on franchise give the I'd of total In the restaurants restaurants of to to and and Finally, revenue. Long contributed million Island $XX

XXXX mind, outlook I'd the per earnings With based to like acquisition expect our to We per share be to on update third about $X.XX to to neutral and XXXX quarter provide share. in the an XXXX information. that dilutive earnings close current and in

we look in have our volatility at we trends, As our seen revenue sales. some April

dispersion in and after weeks the second in two four the in two particularly was weeks, weeks the noticeable are right we For far, This and to up weeks positive so first quarter, had negative. Easter. leading

result, running As that and Northeast. a comparable shift flat our sales Easter is spring this the result a the break quarter-to-date. Mid-Atlantic corresponding of particularly volatility We and are in shifts believe

cost remain total of XX% expect X% of year, to the Quarter-to-date, to experienced we of sold in Aside from balance to average year, our and X%. to have goods sales. inflation we expect we the beef the accelerate already XX% range sales, beef inflation of of the and to through for restaurant X%

of restaurant expenses operating sales. expect and We to continue XX% annual restaurant to between XX% be

and X.X% of marketing We revenues. X.X% advertising remain total between to and expect cost

continue acquisition. between We of to to G&A costs to the be exclusive renovation related $XX million franchise million, $XX expenses expect and

impact our to the be $XX capital million share of and inclusive future acquisition. million between effective you for back under to be result million XX%, and the repurchases we call continue diluted expect the That concludes million, to shares program. to excluding $XX exclusive the $XX now With lines of our income And like will discrete fully purchase expenditures I'd open questions. remarks. depreciation share between We between $XX outstanding We This and for repurchase in $XX to turn to rate price million annual Tony items. XX% XX.X the tax company's tax now to expect shares, XX.X prepared expense that, expect the franchise our between million. million be our and of any

Operator

Thank Stephens ahead. you. [Operator go take of Inc. Will Instructions] question now our Please will Slabaugh from first We

Will Slabaugh

on and Two you, in the ones quick congrats Thank I acquisition if could. Yeah. quarter. the

is we in to about with there territory think years? into along the store are territory any and more in that you're acquiring acquisition, franchisee willing territory on discuss stores First anything that coming potential the rolling of terms the you could of that how

Cheryl Henry

Will. Yeah. Thanks

So I mentioned are specific or earlier, we don't we number until signed. leases of leases really discuss

I'll a about what in and people. location say have is population million So Long Island three base of we one currently

So opportunity of the surrounding metro think there as we certainly well as there a valuable area is Philadelphia.

I But, to there. We will say, why per the go through part to we opportunities is thinking our about certainly as for process forth. are of more acquisition and five of solidifying year. our in site this so so think our three unique have us selection growth It's

Will Slabaugh

a follow-up little thoughts Got something quarter if And market? then to beef it. watching and Can on X% may the fever, any What that's could hearing And bit you're you swine that be that think if or beef the date? in already of a later on the on? then, what more inflation and African about that could bubble talk factoring up behind you're sort you I have commentary do in seeing you could.

Arne Haak

Arne. is This Will. Sure

over look of In at have think terms started outlook prices remains today. year, same quarter terms XX%, I we second prices down in we in of as very the quarter in they you last what great the we the particular, much beef our the had and actually pretty XX%. last third prices the prices, were down And year. it absolute year in beef if commentary, good was were What of

its beginning are the supply In demand consistent of good. is just it's we the had the year. more and big looks bit the it. certainly declines it's as think at back are it's worldwide to work this, a we there and if year. prime. there grading regards But fairly paying the not significant is of outlook But surprised to an over we So, have to a take the still we way then basket. a to beef the little the that attention by swine to little But, way last it, we we giving I eye we while overall, think to all a for flu, demand same I keep up that food bit with on the issue are looks other while to going for proteins good that's think

Will Slabaugh

Understood. Thank you.

Operator

ahead. go from comes Please Jefferies. question Barish of next Our Andy

Andy Barish

Hey guys.

bit a little little costs more you're that On input at? I Is as pricing looking period closely of maybe the beef looking you beef are more through into side. maybe bit on down what little bit more mean of the coming prices side are something inflationary a kind you closely pricing this

Cheryl Henry

Yes, I Andy, look that, year, at we remain looking mentioned we we've it few and a have at currently before it, -- reluctant X%. are we we carrying been about said having a times as

to we around traffic We the take will look and impact the again if not we'll can. at believe negative a side think we we there's where it business, opportunity that opportunity have of

Andy Barish

little side Okay. And up there be to for anticipating million CapEx is back on may more capital $XX on overall capital full and for CapEx? acquired the year putting or something a the acquisition. some restaurants going the going else the Arne added Is year development into then CapEx, the on that than is the the that the

Arne Haak

Massachusetts the Andy. And acquisition territories immediately. first likely feel for to some think one there looks or bit Whether what of concretely opening. quarter, the that the still or And is we the going I Somerville, good it's then timing we going fourth morning be it it a There's the to now kind really think Hey, we to more around not of put both. was fourth like come second quarter site. and capital It little a quarter in questions. are in were is

only So, that's change. the

Andy Barish

Okay. Thank you.

Operator

next ahead. Vaccaro Brian Instructions] Our James. Please question [Operator from of go Raymond comes

Brian Vaccaro

Thanks and good morning.

I -- have million you three store a a And people. one back quick Long of in Cheryl mentioned Island a the and franchise you think reacquired rights. Just population on

Just curious store an in market? what's average pop your average per

Cheryl Henry

smaller in think looking So, What there. have exactly stores. can format we can blindly put different what's are do equally us, rent, be think stores I'm for larger territories can worked populations, We trying without in There based you interesting how we question equally have markets, that to about opportunity these and ones to into that acquiring larger to answer is in populates, the about populations actually go is that saying us solidify successful I strategy. be I -- do to cetera. when would some that et good many say that our our and stores different here stores ability smaller is on for smaller we growth we and

Brian Vaccaro

be about $XX Any I margin about last is margins? already you sounds store or also plans -- it the help these like million near-term part performed. these on thinking Okay. you units, got the could the of And here And perhaps performance an budget? that stores how the CapEx planned Arne, within may appreciate the How remodel year. that's of there some the opening then in pipeline

Arne Haak

Brian. Hey Okay.

this would have the that in to acquisition see all of year. budget we terms some there first of this in hardware; that to that. upgrade There it CapEx for expect component not of that planned anything that additional is money we So, is openings, capital package equipment, is our IT for we

are anything you on that's or next regards significant that XXXX. of As -- remodel kind a In in see we or be below average in well. you system terms margin have little system when they margin sales, slightly than you bit less our bit lower have And a the little tend as tend of to to any can probably would XXXX like year, further system the to move performance basis, average. into

relatively Long people think great they've I new. restaurant great. run great. restaurants. And Philadelphia The is it's are the So, Island

we the think opportunities grow. are and there thrilled in existing both we're to opportunity. So excited about is to. the restaurants We And

we've know about time. talked this you think I some for

that now glad are we this. can do We

Brian Vaccaro

then, was like that, seem food but have account if might beef X.X% QX the would been basket roughly the into period, overall on That's taking costs it mentioned in helpful. checks. margins down you great. And up flat not your the Okay slightly X%

to that seeing are you of to sort the things, that And what rest that of non-beef curious inflation your just is year? is expected food side expected So the of in continue the rest for of continue basket?

Arne Haak

from actually most little here again our that have bit basket. quarter are expect quarter down first in slightly inflation, we were to significant pretty in to basket and even the in has we do big the the and any the third aside minuses been so second more are flat But good seen on quarter. terms beef, in of food seafood. a some surprises Overall, shape. and haven't we think pluses going the For on other We There our basket food I inflation.

Brian Vaccaro

the on one, last just then, And Okay. quarter-to-date.

to is being QX. do that in in be should as might some little on a explain any softness QX. particular to basis it? peel look choppiness more there, you I importantly, shift bit concentrated may So point in you be some market would mentioned onion trends Easter in on But the -- XX that's guide a April bad we Easter magnitude you just any as kind about quarter-to-date think helpful? maybe geographically a mentioned given color think the of that How of the even you back choppiness a Or segment but was incremental

Arne Haak

Sure.

So, back year. we moved Easter three this weeks had

back can spring in is it sales have days. Sunday. tends you but Easter Day, the tend big Day, for when Easter Day Easter Valentine's cadence do big When other little to as so and day Father's It's comes with pretty not And Mother's occasion impact. a a us some to big moves it a our line a an those of average quarter, any above special as a bit a holiday breaks not when of further slower earlier, see as as is you better. then

see the in the year. spring Florida, when And for it it saw vacation effect versus on And further this on out locations sales you Easter that more home at seem was break to affect what tends muted Easter well. like and to we particularly you're can on back as was the so, California, because year

So that's anything it. kind if I to Cheryl know don't of the add on color else. wants

Cheryl Henry

Yeah.

just shift that Brian. of kind are of We out

early impact, or kind like say that. shift it's of the generally it's early So think I direction five out days The I and of would again.

was the -- Easter the certainly noise -- of around So I the think break. but there caused and spring those was timing

Brian Vaccaro

thank you. right, All

Operator

ahead. question of Our Long Joshua go Jaffray. Piper next Please from comes

Joshua Long

to of just communication thanks the if evolving the you're it like Cheryl, of Great, and us your different across seeing all with how pretty about there three over course I'm sounds could question. some with pleased for my the those segments. curious consumer were you're you the talk balanced trends maybe taking the groups trends you year?

Cheryl Henry

Yes three. so in centers we we you kind carte of from private way main revenue think, the think à we a And And bar different of were within dining test I all dining revenue year. right, the business drive the la about positive on working question the it's is standpoint whether asked to I opportunity traffic. those or dining centers through before different this to mentioned and things some are exactly then

so QX, those about of are forward And I to there look with think, in they more to things far each in. some as am talking and we those so come I pleased roll

Joshua Long

you overall base. Great. in Thank of terms And of could for asset the we're you refreshing the us where that. at remind just

remodel going in maybe available may out expanding in You done think an opportunities and XXXX about great be where in how and a there the should terms we X.X capacity of it's years? just in have update job investing

Cheryl Henry

Sure.

of this that those actually -- year, -- be through done. the are will are that be two-thirds it can system We about

private it opportunities So in We and larger have bar, you the have so opportunity looking it's footprints, the we some some that we anywhere. make at expand, recall if of remodels, is can don't the locations. dining, to

base through can are we of about kind changes which we this at we attainable and as eight So we make two-thirds and year. ones finish about the will look of

but idea experience itself. and where the and to the that's really with just we really are. footprint to up, So offerings remodels align what of not the And atmosphere the deliver these was remind the to was everyone, freshen an restaurant can just it

the on expanding so for that to and at the main where well we where how can dining there and and room bars dining that evolve the And as looking bars then atmosphere we expanding area. and can then that our menu Working our as can. we we on work private program

-- gone are used we to the we So it. program we continue where work has with

about things our experience how that and would those it -- and it's future, program, experience think the reduce but in way still work efforts guest to with what pleased done we system. are would to say, remodel we still friction do evolving the use As and be the come, for around we are some the guest of technology I as like enhance more through the we

Joshua Long

Great. Thank you.

Operator

to I appears further additional time. the turn no It there are would or now team conference over back for the to at closing this like questions management any remarks.

Cheryl Henry

for us you and joining morning Have near of support. great I all a in call. appreciate the to to thanks day. forward with look all this on Again, future you speaking the the

Operator

This concludes today's call. Thank you for your participation.

disconnect. now may You

Ruths Hospitality (RUTH) 3 May 192019 Q1 Earnings call transcript