RUTH - Earnings call transcript Q4 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 Fourth 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 ahead. of I Mark the Vice Please go Analysis. Planning President

Mark Taylor

you, Thank good and morning, Sherry, everyone.

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

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

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

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

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

Cheryl Henry

year end House. on another joining Steak Good the call today. strong the Ruth’s morning to fourth for The of everyone us thank marked and quarter XXXX results you Chris of at

were the business. our the as excess occasion For revenue double-digit and inflation. earnings in the X% grew quarter of centers despite in by beef special strength period, led revenues X%, All well of grew our positive

our and two proud the new We of and marking company integrated grew system back EPS, into earnings sales franchise XXXX, accomplished. new year and growth. our opened our sales, I full restaurants. We Looking total consecutive XXth locations of of revenues the the year all am our same-store successfully team company-operated at three

continued our our excellence of restaurants, work like do brand to evolution the I’d and focus consistent through for each offerings experiences in the Overall, for remodels, performance guests. the also remains incredible our enhanced members product franchisees they team operational and to We our on day. our and compelling thank due

Our grow We've ongoing we evolve focus work to and evolving our iconic needs better and and brand. guests, is understand have done twofold. our concluded their What behaviors. is to demographics

we ways need need variety. house the what First, the to amplify for additional past, has steak to us to Ruth elevating traditional create experience through by we second, And guest in the increased experience worked business.

Let me was touch dinner on a are years program, ago. couple more is wine which than that you doing that. our TasteMaker of started five our ways we Many know series

dinner in Now, want If wine dining them. it event equity for restaurant we private TasteMaker revenue centers. TasteMaker throughout for are special we guests room, a a leveraging our this brand experience curate will

love guests through our available one of or pairings If unique the it’s and wines, the bar wine on engagement. in list TasteMaker

XXXX. or TasteMaker a We elevated purchase offers TasteMaker unique ways pass our believe a Our all now gift in card can the purchase in to dinner dinners to a guests brand guests highlighting TasteMaker to experience even an

we new Secondly, experience. the late launched in bar XXXX,

experience as employee years part our menu training we upgraded have our of expanded that points. five introduced address This X.X many new we year variety, to new for remodel products past physically a and and past includes guests’ the desire Over the or bars initiative. price of bar including Ruth's new

currently a which in is program, third restaurants, Early of test results the in positive. been our have of about

look to this forward from year. We operations continue and to rollouts evaluate, incorporate guests our and feedback future teams

increasing digital will that will technology industry. to doubt has played play I The discuss an initiative is continue There and in no that strategy. our last is our role

high-touch brand our how of be nature we our into us However, business. deliberate requires to introduce the very it in hospitality-driven

the friction, that and these reduces end, with launched in we Gifted that Experiences includes we've e-commerce online guest recently ensure way to the off-premise To evaluate XX delivery we our to program, it want in technology, When an markets. our Ruth’s experience site of team. go increases Anywhere authentic ordering productivity and sites enhances our or which

Massachusetts. Now is how we quarter, restaurants; that turn it. Columbus, I’ve in evolving, let to Ohio new grow the discussed how and the two one fourth me brand is opened one we In Somerville,

and pleased the are expired in both new Already one XXXX, XXXX. location location locations. closed previous whose with have We DC in opened of in replaced at end DC a we results the was Washington lease early which

We bringing include Worcester, Short in currently quarter Melville, and year open XXXX, total Hills, expect to this York year full four. Massachusetts to open on in Jersey third the and the Island later in quarter. the three to New New more Long fourth Restaurants restaurants

one Winter in fourth also in We relocate quarter will year. restaurant Park, Florida the of the

today a and newly Florida am to lease our restaurant another a Island, of lease our restaurant location new Long we in in January, signed territories. the announce In for signing I on new second acquired pleased announced Aventura,

now Island; include Aventura, four Grove, Oklahoma. Beach, Long For to Lake open XXXX, Florida; Long California; City, and we expect company-owned which Oklahoma restaurants

Philippines. restaurant the XXXX On business, to of the in our side in the franchise partners of open the first new expect one half

opportunities they We and on signings lease will actively occur. on as development work provide continue to additional updates

the topic shareholders. I’d last of is to to touch like upon capital return excess our The

year, payments repurchases million During of including dividend we million of and shareholders the to share $XX.X XX.X million. XX.X returned

X.X X.X over base our XX XX AUVs have was locations. our million XXXX, driving restaurants, $XXX to accomplished This to Since million while shareholders. company expanding in growing from invest of returned continuing and to our to core, million we from our

protecting, us accomplishment create evolving of the believe that our for our will this and to on value our incredibly focus are and return shareholder We long-term execution strategy. continue proud total allow of growing brand to

to With that, results over details. our Arne to quarter I’ll financial turn it review more in fourth

Arne Haak

Thank you, Cheryl.

GAAP net of compared million $XX.X income reported XXXX, per December $X.XX during quarter of For or of fourth the we $XX.X diluted per share $X.XX XX, or net the income fourth to share XXXX. million quarter diluted ended

expenses included acquisition the DC. Net a with in with costs Long quarter in restaurant franchisee, closure previously associated of of and Washington accelerating income our associated the in in from the fourth of closure completed the restaurants $XXX,XXX $XXX,XXX Philadelphia Island and three a XXXX

Net income of the fourth in quarter restaurants XXXX the in $XXX,XXX with our six included franchisee. of acquisition associated Hawaiian expenses from

common quarter XXXX. well items, the $X.XX as adjustments tax results compared and these fourth were earnings operations fourth in in quarter share certain to income of Excluding of as non-GAAP from discontinued the our per the diluted XXXX discrete $X.XX

XXX XXXX. The increase to the XXX.X was to in acquisition million a sales restaurant company-owned in comparable driven X.X% X.X% sales. franchise million XXXX growth a Year-over-year, accelerated increase in restaurant new year-over-year and in restaurants, quarter by fourth from recent

measured quarter, by compared entrées, decreased check the during last while to average X.X% year increased X.X%. Traffic as

Our sales were quarter. positive in all months of three the

and strong, X% to Day. loss Christmas was early X% holiday December dining for week Eve XX% holiday Our helped Thanksgiving, particularly This the offset late the Thanksgiving. due in for up for business Christmas of a of

range. this is since now the improvement XXXX to that continued up of in low-single digit trends has quarter-to-date important the note sales running first cadence It quarter are currently continued the to early April, into year, sales which

franchise X.X% in comparable our down driven increased the million. franchise slightly restaurants income Total the international sales which quarter, during X.X%. flat X.X% were and at franchise domestic offset fourth restaurants Franchise year-over-year by quarter were up by $X was which

card was gift for the well increase $X.X higher as Other million was from operating operating breakage up agreement XX% XXXX. income driven management in the million, increased as our The X.X restaurants a quarter from by year-over-year contributions under income.

increased XXX turning guided Now, was total we our on XX.X%. as expenses, to call. of had The points restaurant basis XX% year-over-year previous to and to earnings increase our driven beverage an was increase costs in higher food a by cost and than sales beef percentage

Restaurant labor XX.X%, as points XX restaurant a increased sales occupancy and to operating percentage expenses primarily expenses. to approximately higher due basis year-over-year of

percentage costs periods. total a advertising planned driven the tactics revenues decreased revenues to was the points shift XX Marketing approximately in and primarily across basis X.X%. by as decrease of a total of marketing The percentage as

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

XXX,XXX X.X of $XX.XX price million price XXXX brought an During our totals for of This average average repurchased share. million shares $X.X shares to or the purchase for an approximately we per $XX.X repurchase $XX.XX. quarter, with million

paid fourth quarterly dividend cash XXXX. the end represents the a the $XX of fourth per quarter, end a company increase over its of debt Board is our the At quarter to share which in under $X.XX approved has outstanding the March Subsequent third quarter, the had facility, million senior of Directors of XX% of which XXXX. million from dividend in the $XX down credit

of XXXX outlook our provide metrics. full to like current key our I’d guidance, for of on our some information year the to turning Now, based our financial for

and the to to inflation Our XXXX of accelerated year the in first we of X% beef back expect in this continue range the of XX%. the XXXX half in half

beef we X% retail cuts. inflation and year, continued And between primarily prime expect modest beef be expect back full by the deflation of We the half the for in demand X% year. to driven for

X.X%. to expect on to of between Annual to Based goods and sales, between restaurant restaurant XX% of to expected beef the X.X% our range inflation, and costs restaurant expectations operating cost be be we of for and XX% expenses sold be of XX% are current XX% our sales. marketing advertising in

expenses impact XX% to expect $XX between G&A income And effective be expect be we XX%, rate to between excluding million. of and discrete We annual $XX and items. tax million tax our the

timing restaurant $XX openings. $XX $X costs million. the are pre-opening and million based be be million between to new should Capital of million and Annual on expenditures $X.X between expected

to Depreciation and $XX be million. between expected expense $XX million is

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

that, Cheryl remarks. back closing to With now like for I’d turn some to

Cheryl Henry

and guests, of core the closing, grow evolve about brand. In I’m Arne. the initiatives in you, excited while in our focus. sales-driving and have maintaining we I’m place and needs strengths our ability to Thank evolve the confident to our our in different our opportunities operational

past very us create the over returns strategy value long for continue total worked Our run. shareholders the will has our for to and decade in well

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

Operator

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

Our Brian first with Vaccaro question proceed. Raymond is Please James. from

Brian Vaccaro

and you morning. Thank good

for of a Just details couple me.

what level maintain Arne, what comps, to fourth pricing pricing within and quarter that in of expect XXXX? menu was do the you On

Arne Haak

Brian. Sure,

quarter. For we the around were in quarter, the X.X% fourth

of similar of quarter the We price menu amount the for on have first this year. a

Brian Vaccaro

of correctly. the Okay. the fourth And commodities fill think heard was other quarter? you beef XX%, us up side I within seeing on in you what terms in basket if Can in are on key I inflation on the said you categories

Arne Haak

there’s some that produce of The as pressure we’re other seafood places well particularly a and on pressure there’s bit well. little seeing lobster as on cost, cost pressure,

Brian Vaccaro

your handy? have fourth Okay. on outlook in was actually on inflation terms that And XXXX the Do of the number – total the you quarter, basket? what

Arne Haak

I One basket The inflation for the the in here. quarter second was total X.X%. do.

Brian Vaccaro

Okay, on rest in basket, the on areas of that’s but other appreciate you for seafood, basket the great. typically big And for the update helpful stable color XXXX, the be I wine then market? you, know that’s in on outlook? a it Thank what’s seeing what going will item color of are that on XXXX you. on the I embedded the but beef, any in any outlook the whether be

Arne Haak

is inflationary kind meaningful. produce. of a Lobster there’s a pretty pressure quarter expected themes. shared with perspective, expect a little of then it’s think I on Yes, the fourth around bit to And continuation to from dollar we bit be be that year. you of this And We – a beef. little of

at seeing really not anything We’re this cost. point our wine material on

Brian Vaccaro

I XXXX? you into the Any you rolled have go on – this into your we tenderloin may contract have able off in as on to And maybe contract Okay. been think February. side update enter

Arne Haak

share No at this to new information on point. locks [ph]

Brian Vaccaro

you. right. it All on. I’ll pass Thank

Operator

Our from with Barish next proceed. question Jefferies. is Andy Please

Andy Barish

us XXXX? program? Yes, a that labor, Can two Are give you in rolling the bar on additional of expecting through you costs questions. any initiatives at as sense you the quick kind look training experience out enhanced

Cheryl Henry

Yes.

good So, of employees. development is, training restaurants doing news shouldn’t that. impact and we’re constantly it in Andy, The our the

we So and into some additional take rollout new this into that bar we’ll as out the feedback that operational programs kind start items way. the of But and new along specifically rolls get restaurants. rolling we changes anticipate as make that the around we do

Andy Barish

more then give like should into number? color some Can And looks what’s on the it Arne, there? 'XX it’s how ramping think that up. going CapEx, a CapEx, of little you we development Thanks. Is us about that’s 'XX leaking or on

Arne Haak

majority the units that CapEx. new that’s about really development, it’s driving it. of That’s So, Andy,

We’re probably relocation going to well. our between Cheryl also as total the Park Winter building that of announced units $XX million run restaurant about and new the that

in part one DC bit around that’s course that’s back to. of little have a of the and change well we Washington But you And think estate and in a coming have another year. we is our going relocation CapEx the So at front year the there’s as the real the biggest pipeline. the really part in of about it look more

this good as is we’ve on as in XXXX. already pipeline this think advance about had for been our four I far

Andy Barish

you. Thank

Arne Haak

Thanks, Andy.

Operator

[Operator Instructions].

Our Joshua next question Long Sandler. is Please from Piper with proceed.

Joshua Long

just like been we then done I experience as Thanks restaurants do of larger a that? third if pretty amplifications us to other before, dollars think that talked of Great. you’ve you part now, on my testing that’s in terms curious about really you any, your of can are think wanted a bar of what putting a Cheryl? And about CapEx to your of way experience But question. portfolio? is before these initiatives. talked thoughts some the much, for of there lot thoughtful how earmarked out in of kind see expanding a I remind we new have against about, as all taking we’re in the these for what

Cheryl Henry

for Josh, the Thanks, Sure. question.

of restaurants the table I into asked, really a of that’s significant rolling the costs is of these, into as far new Andy on there your we of experience. ware question, kind in think menu number dining you There’s enhanced on to budget. part in restaurants? to roll not go It’s first regard out? significant support – will think some but do as that R&D to marketing the similar impact the a So that something small And some CapEx into isn’t. There new around items, overall. then kind the the that as I As that’s asked is are put question there

of more So than do as and in incremental marketing lot for about just costs year. dedicated function are that those so we necessarily advertising, we a brand as think the of fund, a necessarily out not so

Joshua Long

as test, the expand with as marinate that think you’re to want Is Do opportunity? Great. little of bar let more a about a Thank you. And you and maybe you then expect now. gaining here to the in it bit that a experience restaurants more XXXX? would you XXXX about something third in longer think

Cheryl Henry

Yes.

think I see it you’ll both spread So years. probably

out We is foundation are focus are as – stated, because new you’d one business. you know of we programs number and the operational cautious as on the to roll our

don’t that any we in So way. want to impact

a it of for to. longer So with we we, we one, the and that it’s the resonating they the it’s sure working to we deal it’s new behaving tests guests that program of good over them then operators expect period manage make can the and time way them. two, – and do And ultimately go through for

with then of tests more the first towards potential in, bit some program the little future this half we’re back rollouts tweaks to and the a year. probably So, group that

Joshua Long

you Great. there, couple Would the provide Thank update an the program. whether some or maybe also through mentioned off-premise on delivery strategy? to able you. a of it’s You sides-to-go opportunities the But what there what’s off-premise occasions are the year? it but supplementing for course then with of you Ruth's appetite experience over thinking both that giving also some in-store the and be

Cheryl Henry

great question, Josh. Yes,

that, be the Having meaningful brands. is of for delivery revenue part not a what us come would of kind it’s the So I we’ve had lines of to said is guests. at Ruth's for is as lot experience. probably big going in-restaurant call of request The other that it these as

that been your every where to around is sweet system. your we’ve protein, get so I technology that’s use that? year something love I’ll in holidays take how I spinach, say, do the our actually so potato and We casserole So our is people make sides-to-go what the okay, program but creamed can done And love online. I

our convenience have holidays, us way life, at a brand. the or your share guests So so restaurant the wonderful with for about roots can you’re it’s to added increase for of in It's house, to really a connection in us. whether then and you that’s the

a point, now of on part this in it. guest I keep we So we’re – put delivery. of At say relationship package what do tied our build that necessarily us significant and overall is them awareness don’t we and I forward. right how of sales are it’s number And increase in would how we do meaningful them going with

have partners couple possibility would in guests demand. the that. there certain We a a but as for system, something of it’s will that say throughout It’s in is markets not everywhere I restaurants. the go expansion in XX

Joshua Long

Thank And Great. me. last for you. one then

in You the strong in comparison comps mentioned the year. XQ which encouraging that being to from very low-single date the digit prior up is given here range,

As lapping I from benefit shift us you New think look last on notes well? 'XX then first that XQ be my over driving that from you this be might remind XQ at else quarter anything nice the we period. comment back Year's think and year Can into might as 'XX into what any I increased Eve here had momentum provide a

Cheryl Henry

Yes.

year. was I one the that So from think last big

a and seeing the that think point, continuation have a was of been of year, we’re last moving really it think since in things we if we you comping we we back a Eve over the – New that. – It had if so As so seems fairly Year's been that. XX what April that had shift, you I And is more are the mentioned, direction, go in I now timeframe we’ve months, had towards concern encouraged I year. think positive

to momentum. the continue I about we’re quantify that and look have that to point, can’t brand that excited at that this increased but campaigns. We initiatives some new and marketing of

Joshua Long

you. Great. Thank

Operator

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

Cheryl Henry

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

Operator

Thank conference. you. This concludes today’s

You you time participation. for lines may thank your and at your this disconnect

Ruths Hospitality (RUTH) 21 Feb 202019 Q4 Earnings call transcript