– Increases Quarterly Dividend to $0.16 Per
Share –
Ruth’s Hospitality Group, Inc. (the “Company”) (Nasdaq: RUTH)
today reported financial results for its fourth quarter and fiscal
year ended December 25, 2022 and provided a business update.
Fourth Quarter Highlights
- Total restaurant sales in the fourth quarter increased 9.6%
compared to 2021 driven by comparable sales growth of 4.5% and
incremental sales from six new restaurants that opened over the
last 12 months. Comparable sales increased 5.5% compared to
2019.
- Fourth quarter average weekly sales for Company-owned
restaurants were $130.0 thousand in 2022 compared to $123.0
thousand in 2021.
- Franchise income in the fourth quarter of 2022 was $5.8 million
compared to $5.5 million in the fourth quarter of 2021. Fourth
quarter 2022 comparable restaurant sales at franchisee-owned
restaurants increased 2.8% compared to 2021.
- Food and beverage costs, as a percentage of restaurant sales,
decreased 93 basis points to 33.2% compared to the fourth quarter
of 2021. Total beef costs decreased 4% compared to the fourth
quarter of 2021.
- Net income in the fourth quarter of 2022 was $12.4 million, or
$0.38 per diluted share, compared to net income of $13.8 million,
or $0.40 per diluted share, in the fourth quarter of 2021.
- Adjusted earnings per share(1) increased 13.1% to $0.38
in the fourth quarter of 2022, compared to adjusted earnings per
share(1) of $0.34 in the fourth quarter of 2021.
- Adjusted EBITDA(1) increased 12.2% to $24 million in the
fourth quarter of 2022, compared to adjusted EBITDA(1) of
$21.4 million in the fourth quarter of 2021.
CEO Comments
Cheryl Henry, President, Chief Executive Officer and Chairperson
of the Board of Ruth’s Hospitality Group, Inc., commented, “Our
fourth quarter performance marked the end to another impressive
year for our team at Ruth’s Chris Steak House as we generated
double-digit top-line growth and strong earnings for the year.
Combined with debt reduction and returning excess capital to
shareholders through dividends and share repurchases, we believe we
delivered on our total return strategy on all fronts and have given
ourselves a solid foundation to build on for the future.”
Henry added, “As we look to 2023, I am excited about our
opportunities to grow and evolve our 57-year-old iconic brand. We
have a promising restaurant pipeline; the launch of Phase 2 of our
Data Digital Transformation is expected to drive the next evolution
of the brand; and our capital position remains strong. Together
with our veteran operators and franchise partners, we believe we
are well-positioned to continue to elevate our business in the
years to come.”
Fiscal Year 2022 Highlights
- Restaurant sales in 2022 were $475.4 million compared to $402.0
million in 2021.
- Comparable restaurant sales increased 13.8% in 2022 compared to
2021 and 10.6% compared to 2019.
- Average weekly sales for Company-owned restaurants in 2022 were
$121.9 thousand compared to $105.5 thousand in 2021.
- Franchise income in 2022 was $20.6 million compared to $18.5
million in 2021. Comparable restaurant sales at franchisee-owned
restaurants in 2022 increased 10.5% compared to 2021.
- Food and beverage costs, as a percentage of restaurant sales,
decreased 13 basis points in 2022 to 31.8% compared to 2021. Total
beef costs decreased approximately 1% compared to 2021.
- Net income in 2022 was $38.6 million, or $1.15 per diluted
share, compared to net income of $42.3 million, or $1.23 per
diluted share, in 2021.
- Adjusted earnings per share(1) increased 10.6% to $1.29
in 2022, compared to adjusted earnings per share(1) of $1.17
in 2021.
- Adjusted EBITDA(1) increased 7.2% to $83.8 million in
2022, compared to adjusted EBITDA(1) of $78.2 million in
2021.
(1)
Non-GAAP Financial Measure.
Please refer to the Reconciliation of Non-GAAP Financial Measures,
adjusted earnings per share and adjusted EBITDA, included in the
following tables. The Company believes that adjusted earnings per
share and adjusted EBITDA provide useful alternative measures of
financial performance to enhance investors’ ability to compare
period-to-period financial results.
Business and Development Update
The Company relocated a Company-owned restaurant in Winter Park,
FL in October 2022.
Quarterly Cash Dividend
The Company’s Board of Directors declared a quarterly dividend
of $0.16 per share payable on March 24, 2023 to shareholders of
record as of the close of business on March 10, 2023.
Share Repurchase Program
In 2022, the Company repurchased approximately 1.7 million of
its shares for $29.6 million, at an average price of $17.03 per
share.
Financial Outlook
Based on current information and its most recent projections,
Ruth’s Hospitality Group, Inc. is providing its outlook for the
following 2023 operating measures:
- Fiscal year 2023 has 53 weeks
- Fiscal year 2023 marketing expense is expected to be between
$15 and $17 million
- Fiscal year 2023 general and administrative expenses are
expected to be between $39 and $42 million
- Fiscal year 2023 income tax rate is expected to be between 17%
and 19%
- Fiscal year 2023 capital expenditures are expected to be
between $45 to $50 million
The foregoing statements are not guarantees of future
performance, and therefore, undue reliance should not be placed
upon them. We refer you to the “Cautionary Note Regarding
Forward-Looking Statements” section in this earnings press release
and to our recent filings with the Securities and Exchange
Commission for more detailed discussions of the risks that could
impact our financial outlook and our future operating results and
financial condition.
Conference Call
The Company will host a conference call to discuss fourth
quarter and fiscal year 2022 financial results today at 8:30 AM
Eastern Time. Hosting the call will be Cheryl J. Henry, President,
Chief Executive Officer and Chairperson of the Board, and Kristy
Chipman, Chief Financial Officer and Chief Operating Officer.
The conference call can be accessed live over the phone by
dialing 201-689-8470. A replay will be available one hour after the
call and can be accessed by dialing 412-317-6671; the password is
13734965. The replay will be available until Thursday, March 2,
2023. The call will also be webcast live from the Company's website
at www.rhgi.com under the Investor Relations section.
About Ruth’s Hospitality Group, Inc.
Ruth’s Hospitality Group, Inc., headquartered in Winter Park,
Florida, is the largest fine dining steakhouse company in the U.S.
as measured by the total number of Company-owned and
franchisee-owned restaurants, with more than 150 Ruth’s Chris Steak
House locations worldwide specializing in USDA Prime grade steaks
served in Ruth’s Chris’ signature fashion – “sizzling.”
For information about our restaurants or to purchase gift cards,
please visit www.RuthsChris.com. For more information about Ruth’s
Hospitality Group, Inc., please visit www.rhgi.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains “forward-looking statements”, as
defined in the Private Securities Litigation Reform Act of 1995
that reflect, when made, the Company’s expectations or beliefs
concerning future events that involve risks and uncertainties.
Forward-looking statements frequently are identified by the words
“anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,”
“expect,” “forecast,” “future,” “intend,” “likely result,” “may,”
“might,” “plan,” “potential,” “predict,” “project,” “seek”,
“should,” “target,” “will be,” “will continue,” “will likely
result,” “would” and other similar words and phrases. Similarly,
statements herein that describe the Company’s objectives, plans or
goals, including with respect to restaurant closures and
re-openings, new restaurant openings and acquisitions or closures,
capital expenditures, strategy, financial outlook, liquidity
outlook, our effective tax rate, and the impact of inflation and
recent accounting pronouncements, also are forward-looking
statements. Actual results could differ materially from those
projected, implied or anticipated by the Company’s forward-looking
statements. Some of the factors that could cause actual results to
differ include: the negative impact the COVID-19 pandemic has had
and may continue to have on our business, financial condition,
results of operations and cash flows; reductions in the
availability of, or increases in the cost of, USDA Prime grade
beef, fish and other food items; changes in economic conditions,
including inflation, increasing interest rates, higher
unemployment, slowing growth or recession, reductions in consumer
discretionary income, and general trends; the loss of key
management personnel; the effect of market volatility on the
Company’s stock price; health concerns about beef or other food
products; the effect of competition in the restaurant industry;
changes in consumer preferences or discretionary spending or our
ability to pass along rising costs through selling prices; labor
shortages or increases in labor costs; the impact of federal, state
or local government regulations relating to income taxes, unclaimed
property, Company employees, the sale or preparation of food, the
sale of alcoholic beverages and the opening of new restaurants;
political conditions, civil unrest or other developments and risks
in the markets where the Company’s restaurants are located; harmful
actions taken by the Company’s franchisees; the inability to
successfully integrate franchisee acquisitions into the Company’s
business operations; economic, regulatory and other limitations on
the Company’s ability to pursue new restaurant openings and other
organic growth opportunities; a failure, interruption or security
breach of the Company’s information technology network; the
Company’s indemnification obligations in connection with its sale
of the Mitchell’s Restaurants; the Company’s ability to protect its
name and logo and other proprietary information; an impairment in
the financial statement carrying value of our goodwill, other
intangible assets or property; gains or losses on lease
modifications; the impact of litigation; the restrictions imposed
by the Company’s credit agreement; changes in, or the suspension or
discontinuation of, the Company’s quarterly cash dividend payments
or share repurchase program; and the inability to secure additional
financing on terms acceptable to the Company. For a discussion of
these and other risks and uncertainties that could cause actual
results to differ from those contained in the forward-looking
statements, see “Risk Factors” in the Company’s Annual Report on
Form 10-K for the fiscal year ended December 26, 2021, and the
Company’s other filings with the Securities and Exchange Commission
(“SEC”), including the Company’s Annual Report on Form 10-K for the
fiscal year ended December 25, 2022 expected to be filed on or
about February 23, 2023. Such filings are available on the SEC’s
website at www.sec.gov. All forward-looking statements are
qualified in their entirety by this cautionary statement, and the
Company undertakes no obligation to revise or update this press
release to reflect events or circumstances after the date hereof.
You should not assume that material events subsequent to the date
of this press release have not occurred.
Unless the context otherwise indicates, all references in this
report to the “Company,” “Ruth’s,” “we,” “us”, “our” or similar
words are to Ruth’s Hospitality Group, Inc. and its subsidiaries.
Ruth’s Hospitality Group, Inc. is a Delaware corporation formerly
known as Ruth’s Chris Steak House, Inc., and was founded in
1965.
RUTH'S HOSPITALITY GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Income Statement - Preliminary and
Unaudited (Amounts in thousands, except share and per share
data) 13 Weeks Ended 52 Weeks Ended
December 25, December 26, December 25,
December 26,
2022
2021
2022
2021
Revenues: Restaurant sales
$
130,107
$
118,677
$
475,371
$
402,015
Franchise income
5,805
5,471
20,571
18,533
Other operating income
2,428
2,595
9,916
8,575
Total revenues
138,340
126,743
505,858
429,123
Costs and expenses: Food and beverage costs
43,211
40,521
151,290
128,450
Restaurant operating expenses
59,388
50,658
221,352
179,671
Marketing and advertising
4,278
5,803
17,360
13,464
General and administrative costs
9,132
8,840
37,071
32,531
Depreciation and amortization expenses
6,641
5,355
22,103
20,487
Pre-opening costs
340
709
3,058
1,894
Loss on legal settlement
-
-
6,000
-
Loss on lease modifications
90
1,058
90
1,058
Loss on impairment
574
1,461
574
1,854
Total costs and expenses
123,654
114,405
458,898
379,409
Operating income
14,686
12,338
46,960
49,714
Other income (expense): Interest expense, net
(509
)
(368
)
(1,507
)
(3,478
)
Other
62
39
178
102
Income before income taxes
14,239
12,009
45,631
46,338
Income tax expense (benefit)
1,864
(1,791
)
7,010
4,063
Net income
$
12,375
$
13,800
$
38,621
$
42,275
Basic earnings per share
$
0.38
$
0.41
$
1.16
$
1.23
Diluted earnings per share
$
0.38
$
0.40
$
1.15
$
1.23
Shares used in computing net income per common share: Basic
32,557,924
33,921,311
33,203,263
34,255,966
Diluted
32,896,269
34,081,852
33,495,888
34,468,198
Dividends declared per common share
$
0.14
$
—
$
0.54
$
—
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES We prepare our
financial statements in accordance with U.S. generally accepted
accounting principles (GAAP). Within our press release, we make
reference to non-GAAP financial measures: (a) adjusted
earnings per share; and (b) adjusted earnings before interest,
taxes, depreciation and amortization (Adjusted EBITDA). These
non-GAAP financial measures were calculated by excluding the impact
of certain items to improve comparability between periods. We
believe that these measures represent useful internal measures of
performance. Accordingly, where these non-GAAP measures are
provided, it is done so that investors have the same financial data
that management uses in evaluating performance with the belief that
it will assist the investment community in assessing our underlying
performance and valuation on a quarter-over-quarter and
year-over-year basis. However, because these measures are not
determined in accordance with GAAP, such measures are susceptible
to varying calculations and not all companies calculate the
measures in the same manner. As a result, the aforementioned
measures may not be directly comparable to similarly titled
measures presented by other companies. These non-GAAP financial
measures are presented as supplemental information, and not as an
alternative, to net income and diluted earnings per share as
calculated in accordance with GAAP.
Reconciliation of Net
Income to Non-GAAP Adjusted Earnings per Share (Amounts in
thousands, except share and per share data) 13
Weeks Ended 52 Weeks Ended December 25,
December 26, December 25, December 26,
2022
2021
2022
2021
GAAP Net income
$
12,375
$
13,800
$
38,621
$
42,275
GAAP Income tax expense (benefit)
1,864
(1,791
)
7,010
4,063
GAAP Income before income taxes
14,239
12,009
45,631
46,338
Adjustments: Employee retention credit
-
-
-
(381
)
Accelerated stock compensation and severance payments
-
-
-
445
Loss on legal settlement
-
-
6,000
-
Loss on lease modifications
90
1,058
90
1,058
Loss on impairment and restaurant closure costs
574
1,461
574
1,854
Adjusted net income before income taxes
14,903
14,528
52,295
49,314
Adjusted income tax benefit (expense) (1)
(2,030
)
1,161
(8,676
)
(4,807
)
Impact of excluding certain discrete income tax items
(259
)
(4,129
)
(393
)
(4,274
)
Non-GAAP Net income
$
12,614
$
11,560
$
43,226
$
40,233
GAAP Diluted earnings per share
$
0.38
$
0.40
$
1.15
$
1.23
Non-GAAP Adjusted earnings per share
$
0.38
$
0.34
$
1.29
$
1.17
Weighted-average number of common shares outstanding -
diluted
32,896,269
34,081,852
33,495,888
34,468,198
(1) Adjusted income tax is calculated by multiplying the Non-GAAP
adjustments by our marginal federal and state income tax rates and
adding or subtracting the result to/from our GAAP income tax
expense.
Reconciliation of Net Income to Non-GAAP
Adjusted EBITDA (Amounts in thousands) 13
Weeks Ended 52 Weeks Ended December 25,
December 26, December 25, December 26,
2022
2021
2022
2021
GAAP Net income
$
12,375
$
13,800
$
38,621
$
42,275
Adjustments: Interest expense, net
509
368
1,507
3,478
Income tax expense (benefit)
1,864
(1,791
)
7,010
4,063
Depreciation and amortization expenses
6,641
5,355
22,103
20,487
Earnings before interest, taxes, depreciation and
amortization
$
21,389
$
17,732
$
69,241
$
70,303
Employee retention credit
-
-
-
(381
)
Accelerated stock compensation and severance payments
-
-
-
445
Loss on legal settlement
-
-
6,000
-
Loss on lease modifications
90
1,058
90
1,058
Loss on impairment and restaurant closure costs
574
1,461
574
1,854
Share based compensation expense
1,925
1,111
7,872
4,888
Non-GAAP Adjusted EBITDA
$
23,978
$
21,362
$
83,777
$
78,167
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version on businesswire.com: https://www.businesswire.com/news/home/20230223005276/en/
Investor Relations Jeff
Priester investor@rhgi.com
Ruths Hospitality (NASDAQ:RUTH)
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