RUTH - Earnings call transcript Q3 2019 | Ruths Hospitality Group Inc

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Mark Taylor

Thank you, Gavin, and good morning everyone.

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

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

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

reconciliation can for release of You call. a adjusted per our today’s share earnings press in find

Executive now would Chief turn Henry. over to the I Cheryl call to our like Officer,

Cheryl Henry

the the our morning, Florida south east. face the storm third today. I call everyone. on us the the headwinds. external And Good several area which of that for proud of thank and results of This joining quarter tropical impacted delivered you Dorian, parts Hurricane in New all for a restaurants we am and included Orleans affected

increase total in we costs. year-over-year prices, Additionally, high record XX% managed beef through beef a which drove

positive evolve we sales excellence, and commitment earnings long-term per operational challenges, were store our brand XX% in our deliver success. of around the which to strength and is to able business pro same increase these continues our share. forma foundation and of growth innovation Despite to The

our and to we initiatives within conclude. our efforts our value main the believe innovation, increased strong as successful enhance programs, With during offerings, if These Happy experiences also our our new new soon initiatives more only excited look which succeed providing guest evolve these we'll is to launch dining as Hour initiatives we operations. progress to and are as drive enticing tests testing sales foundation to bar while can room guests. we about, these details our made that and regards will traffic quarter, help share We and

of operational on a every treating guest our are work people touch within deserve. ensuring We excellence, they our and with continuously restaurants hospitality focused

expertise, continuous manager third chef sales for quarter work focused for hospitality the together meetings. and general restaurant to manager, innovation. on concluded These our the and every laying elevating art ground meetings The regional bring sales of efforts our

also Ohio, an we later are strategic openings Columbus In open restaurant early of a month. we this our in Massachusetts and efforts. to important New in pillar opened expect restaurant October, new Somerville

new on first We signed Beach County of New have also restaurants. York; Long Suffolk California for acquisition. One scheduled Long Island, one our and company within the in the leases in franchise restaurant recent territory recently two

For Washington XXXX, we lease Jersey, to New restaurants. late expires island will DC, Worcester, New previously whose Hills, in open to five and currently York was Massachusetts, DC long expect Beach, restaurant Long includes This in open and Washington XXXX, our XXXX. current Short DC expected replace California. Washington

work as and We on occur. for both continue on to actively XXXX additional they lease updates provide signings beyond, development opportunities we’ll and

share to reflecting of stability annual amount And share for over authorized the XXXX Directors In of our to million. repurchase the a and million core $XX.X $XX brings million. addition repurchase $XX our of million This our Board our end million to regards shareholders new program, and of strength quarter, In included $XX business. in quarter. $X.X over we the of also during dividend to business, payments the repurchases share to investing returned this subsequent latter,

we excellence our their are to with that do by XXXX, incredible generated they team along iconic franchise their each Beyond them to continue and work to evolve for be to dedicated brand. These like opportunities day. thank our operational this innovation. opportunities focused remarkable and on I’d grow and partners

I’ll our the turn Arne it that, quarter of to third with And financial to results. review over details

Arne Haak

Cheryl. you, Thank

third or XXXX. net share XXXX, net income XX, For quarter million during diluted $X.XX of we $X.XX of diluted reported quarter ended of September per the or income $X.X to million share. This third the compares $X.X per

acquisition third in of Hawaiian $XXX,XXX impact this of associated the quarter income and impact the related of tax and the income discrete discrete with $XX,XXX franchisee. expenses with tax related of income franchisee. $XXX,XXX former items XXXX to restaurants in items related Net of the deal benefit our six included our benefit the income to the Net in an included $XXX,XXX quarter expenses year’s in acquisition of third associated

adjustments, these our XXXX. as $X.XX common to the quarter as per Excluding of the share diluted non-GAAP the earnings discontinued well $X.XX were in from third results quarter compared in third operations, of XXXX

restaurant the by compared $XX.X for year, compared The million quarter million last in Total check quarter third company increase sales driven including to entrées to increase recent the by measured year-over-year X.X% franchise the as average comparable increased X.X%. in X.X% decreased sales. Traffic acquisition new were $XX.X during XXXX. owned restaurants, the and was restaurant while

by that Our estimate XX that basis sales points these approximately trends events challenges improved despite the well quarter. weather storm reduced as resulted loss which operating the Cheryl of unexpected quarter, to in by XX basis points. and impacted days sales sales We traffic period during the comparable preparation, XX mentioned, during restaurant the our as during negatively

franchise to-date sales our was The improvement quarter the our in low restaurants third trends compared in million $X.X encouraged up driven comparable $X.X to and XXXX. and X.X%. The our in from quarter, third our comp a also the continued agreement. million, up international down from Comparable the increase running operating Franchise the during XX% that in operating the single-digits. in by into X.X% are sales for million are quarter has under were $X.X sales Other increased management $X we in fourth domestic contribution million XXXX. while restaurants franchise sales traffic income income year-over-year was quarter restaurants our was

cost The and Food largely approximately points driven basis XX% increased a Now, XX.X%. beef XXX turning noted to Cheryl the increase sales, as increase in that by to total year-over-year expenses. was percentage restaurants beverage costs, earlier. of our

be demand driven for cuts. expect rate XX% retail Looking to increased fourth to XX%, to prime quarter the primarily between beef, now the of by for inflation we

of advertising the to planned marketing approximately decreased primarily points revenues, compensation. XX incentive driven Restaurant XX.X%, and operating expenses, percentage The periods. sales, by points a total as decrease, decreased percentage based the to restaurant shift revenues, due as lower basis in percentage of total Marketing basis was year-over-year a as X.X%. across of XX tactics to primarily approximately costs,

revenues, initiatives year-over-year compensation, G&A expenses, to points as was driven percentage performance based and decrease management primarily cost of total lower acquisition X.X%. The approximately were down lower cost. XX a by basis deal

of During the $XX $XX.X plus York, the the to third Jersey quarter, we million. area Long franchise had development three Island, and expenditures million, included restaurants which rights for capital of of New acquisition parts New Philadelphia the

restaurant $XX expenditures up and from million new the purchase based per cash price brings outstanding repurchases per on an company of repurchase second the XXXX. or increased the approved share third represents Subsequent credit dividend, share the facility, its share. quarter, the our is in repurchased November end Also, which an the of Board end of quarter approximately $XX.XX. paid $XX.X the we of of This over debt under price shares total which with XX% Directors for million acquisition, At our of quarterly of third average capital during $XX million $XX.XX in share due for to franchise year-to-date XXXX the XXX,XXX shares quarter, senior $XX.X openings. $X.XX average XXX,XXX dividend to quarter, an had million the to increase

expect on with XX.X% provide like range this XXXX for year financial revised annual million I now marketing to we restaurant to now to some of guidance. metrics. We sales. outlook be and Island. our million, Based XX.X% of expenses of current We operating earlier costs expect current in between now our acquired advertising beef restaurant $XX.X and for expect our expect G&A inclusive between to $XX.X costs key integration the on XX% based and our our sold of to We expenses between call, XX% of information inflation and Long in and to sales. in would be be be franchise provided Philadelphia now to X.X% expectations turning XXXX Now full cost in restaurants related the to to goods the X.X%. restaurant

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

between and We million million the $X to new in preopening based openings $X.X on expect annual restaurant fourth quarter. timing the our be of costs

between between expect be and expenditures $XX expense million. depreciation capital We expect remain now and $XX to million to million million. $XX We $XX

our now shares, any expect share million repurchase program. between and of XX.X repurchases be diluted fully exclusive million XX.X to the company's shares We under outstanding share program

I'd now like closing for call to that, turn back With to Cheryl the remarks.

Cheryl Henry

our Thank results. our the entire how third you, Arne. reiterate pleased as and strength testament brands, like well of to to iconic I In dedication I’d resilience, as agility our closing, of They're with am a the team. quarter

to believe in excited create business are our opportunities about value our evolve to shareholder will operational run. commitment grow and long the excellence We continue and to innovation and the

turn you the to have. any like may Kevin With back that, now for I’d call questions to

Operator

a this At Thank session [Operator you. conducting be Instructions]. question-and-answer time, we’ll

Please Stephens question. the question comes first Our Inc. proceed with line with Will from your of Slabaugh

Will Slabaugh

Wondering And a curious more the if I you’d it menu Is willing to be as you that they little in could bit more they anything also were with say be talk you operational there initiatives if the else well? like sounds referenced, anything nature. would about helpful? they was involved

Cheryl Henry

beyond in I’m investments that the talked, variety, we I doing guests -- well And test operations. we as year that value they some our think as made work initiatives with seeking. understanding previous calls, go in yes around about do last to So, needs and and are the speaking

menu well. room, three to So dining about there I'd them all centers some it. main implications the with from bar of to I mentioned our are private in more speak of dining, revenue as

test. in We’re

look this you sharing tests at But the So forward it results that’s can seeing point, those I say. all. to what probably of with and

Will Slabaugh

being authorization, the good about authorized a then XX% the question market cap a quick purchase signal was of nearly that there. share of And

if aggressive to knew you curious that want about plans with you Just had how be authorization? any or

Cheryl Henry

lever and to when you, been It our we Board. with something we’ve tell that its recommendation I’ll that it's the of part believe return the remains pull is a discussion out, do. opportunity and a strategy Will, it’s we that total make continuously we a

as go on through quarters more the we to that. So come

Operator

with next proceed of with Our question question. Andy your from line comes Barish Please the Jefferies.

Andy Barish

helpful? But there I be real seeing external there is process mean, that'd the in a that? new terms maybe out Is like or anything of territory. picking little sites obviously, lease up you internal anything estate competitors Can address it got for fewer you’ve bit. the -- seems

Cheryl Henry

The team been thank to the you, behind do giving now I team for you that’s recognize tell board. would they and in flexibility the department, worked years. site have that for some some environment, us, they our the because over in and great don’t work And got our that’s development say Long at build have two you we’ve Island come place all the in what the help the acquisition Experts on will the Andy, relaxed extent, really I to all. do. they so pipeline in tirelessly scenes. competitive first to yes, and opportunity just has helped saw I that know in

out it's still we we great working think But team competitive for sites. get good those access sites there. have hard to I a I to sure make that's think

Andy Barish

the line inflation and their seeing these labor where Arne, the the equation, side was was And certainly helpful, and wage expense that it variance the would saw least on we was on Street color versus incentive mean, more, then, I Just were all kind positive up, comp? actually of looking at operating and restaurant be of days? a what the any Anything expenses within for. you're

Arne Haak

and of nimble, sales off both and beef the here. think third is work hard this. is really in second are saw I better quarter we April pressure against very saw the margin and to can and there. moving, some We around really on Andy, end challenging Labor There labor. we operating hats to at initiatives team the we the inflation still teams quarter. challenged They They there what the on are it. working inflation do

there, or nothing light done a and still work job. managing that. but managing old it's business. of kind things think similar hard did good just of We're And fashioned new, good really the your nice There of they in like even just monumental I seeing real pressures against a job hurricanes they is around that,

Operator

the comes Piper your Nicole of question question. from line with next Please proceed Our Jaffray. with Miller

Nicole Miller

year, you appropriate about a how little of it might those be Could how the next -- talk bit five model stores those? to sequencing the

Arne Haak

Hills Then rest second will quarter. of area quarter Short and towards the the half back of first then one it mall in be first call Washington DC, little I press talked in of the the But mall and bit the end a New year. our be in Jersey, the that the the the about on we release. and up will will the in think be

Nicole Miller

And then gone when has being bar in you the the look up. at down, I know traffic business the past

traffic, a are undercuts little can that customers being that you are entrée case other that essentially kind and sort ways, of example, having count for sometimes order pops getting misleading. Is drinks year? So be of out or

Cheryl Henry

question, It's great yes. a and

the still center. variety a we're that for offers And eat. menu revenue chose with So seeing to intents that bar the guests growth to in of point, your to ways

very count, And so each counted person necessarily in entrée is it's our not traffic specific.

so space and sales count. in And dining the and impact does on having a that good people can't way that, in have necessarily you it traffic positive very not check

centers I third up will quarter, kind saw we to also the the revenue private play. of say, stepped as far in as diving back

does for yes, as encouraged not traffic are is And direct so to well. entrée direct within that your count meals. necessarily the dine question, other to there bar as ways we a by that But

Nicole Miller

we And but the too, running really a this lot saw then digital. last last and of calls, about just question, season better on everybody ask for year year of and just these we this a and part not

So crest? how does doing, what to doing consumer we're digitally Ruth's today the apply

Cheryl Henry

say programs? you specific digitally, ordering around referencing and you're online delivery, royalty When or

Nicole Miller

uses digital, delivery, and to off-premise a catering. all of different inside say, would things definition everyone bit that I those be little tends combines.

delivered. how you not I’m I want Ruth's to sure some it, So I'm but no dice crest slice guys get and sure,

Cheryl Henry

So we about digital is friction how about technology really for reducing guest. the think

test do markets we delivery. in around so And have some a

expenses to it. make in –it it, everywhere, And want certainly the anywhere it’s opportunity it’s guest it the make about that roots way for they is doesn’t markets. think think could have necessarily providing going I some we but Nicole, to about sense

So we are that. doing some tests around

there tests itself experience that there restaurant we're exploring the of think within some friction. that other beyond strategy, to kind the that, is are think I our as around, about we of our of and included opportunities in data are digital inside opportunities reduce some

Operator

question. question Please James. proceed [Operator the with Instructions] Our next comes line of with your from Raymond Brian Vaccaro

Brian Vaccaro

third just period? encouraging during improving else? centers to? hear you revenue a I provide wanted a that with what attribute bit. what on broader little could Curious to the segment Is comps. something across to obviously, And more color quarter start improvement also, you’d it saw October the And or

Cheryl Henry

So strong in really private quarter, just been Again, earlier in saw within I the year which the this I backup. the really think stepped call. as dining, mentioned we hasn’t

bar as encouraged center And so we really continued revenue enjoying. people has are opportunity were by and The that. to a be that

again, work. So doing we’re some

the Some the think say sales over two I the year and year the look connects of tests and that seen. you increases at the it interesting were in there's slates, traffic we’ve turn would because I attribute stack to three well. around Arne, some some as of when I’ll

Arne Haak

would talked Cheryl throw lot them the think a kind shout out of a again, about, I I well. and to as I think team,

to very go they specific charge rally the talk Our they to as And had sales them, that earn some some rewards rewards some well. we could we the managers, initiatives them earn. about summer, for and

As last high at and when over pretty in was terms quarter little we comp back the of look think X.X Xs year, the tripping from our in that bit A round here I back, of XXXX. we versus of Black the peers. third we in comp tough the a data Box have hurricanes look at look

us. large are with having they our business Florida for part normal a So presence unfortunately of

trajectory on traffic, kind the encouraged slow of two steady April, improvement that pace in a of kind with I here sales. terms and And basis, like on really of for the three we’re we’re think But fourth pace we’ve comps was the the sales. a seen the year After quarter. in we certainly I of challenging basis, stack surprising what year a think on of really multiyear

Brian Vaccaro

are average the And incremental take QX? check quarter, pricing menu on you your was up the how in quarters? what next expectations the in over much pricing two on any Did year-on-year? And

Arne Haak

So, Brian about pricers. we’ve talked always reluctant being

Florida kind there, -- little were quarter. to so cancels We the storms our and parts saw events, revenue in around bit our it some an mix those check of third basis, which are And around in the center X.X% the on business. of X%. X% annual is private mix through of target change conferences normally, is comes here better and a We a when more dining of

But we around quarter, on lot a have look We're twos price. we priority. to we don’t right we by fourth as trying the today we're And the terms run the that’s aggressive price to more X% on in first ahead looking of our running In have move we next are mid what menu price driving get menu now. not year, this weather really we the and -- our to. to on business out, have traffic, this have in unless about sales menu

Brian Vaccaro

last hopefully then your is touch specifically on fundamentals on, outside And we take on the Thank just driving the Arne, could the think side? maybe market you. to wanted I topic prime beef just inflation you and what

Arne Haak

January knew we go On of the was of I year. we in of expecting. were front, half inflation And was us back than of I thing surprised higher this think the have that rate the even we if were what you back that to we the kind the year, think to knew inflation beef only going

that And grading up when growth and high, help to looks driven supply supply But is Number of around its. there obviously a several driven is still for holding little. flat the very third the not is the to so think one seen side, by supply, of the good. supply in no cattle. on part in quarter is we But there worst historically a still growth the it's two It's we grading So higher supply high is years up being still things. and out. had it's really

about about retail conferences, and this talked Sam's I, more we earlier and beef. and What with are I demand think consumers we system year retail promotion talked are seeing this seeing I a Club prime wide. had is out in this, The we are Mark, and rolling you channels, it seeing investor for big

we're that’s kind weather and and hopefully, too west flattish with we're mid a you a we'll some next So year. cleaner demand, think should kind kind for supply what of we spring, looking if get issues be I in have of tripping round winter couple outlook that We increased hopeful of better at.

Operator

to any session. like question-and-answer end Henry We our to remarks. closing turn would for I have reached Cheryl the over back the of call And

Cheryl Henry

us forward all the thank with call. joining speaking the near this morning for Again, you on you I in look future. to

Operator

This concludes today's teleconference.

You lines may day. your for time. your at this now you And Thank have a disconnect participation. wonderful

Ruths Hospitality (RUTH) 1 Nov 192019 Q3 Earnings call transcript