Ruth’s Hospitality Group, Inc. Reports Second Quarter 2021 Financial Results

Revenue $110.9 Million – Earnings Per Share $0.36

Ruth’s Hospitality Group, Inc. (Nasdaq: RUTH) last week reported unaudited financial results for its second quarter ended June 27, 2021 and provided a business update.

Cheryl Henry, President, Chief Executive Officer and Chairperson of the Board of Ruth’s Hospitality Group, Inc., commented, “I’m pleased to report that we posted strong operating results in the second quarter with sequential growth in comparable sales each month and continued margin improvement. We are excited about this momentum and our renewed commitment to unit growth as we expect to open seven new Company-owned or managed restaurants by the end of 2022.”

Henry added, “All in all, we are a stronger and more nimble enterprise with a balance sheet that affords us flexibility as we navigate the ever-changing environment. I am extremely proud of our team members and franchise partners and their continued efforts to deliver impressive results, while ensuring that the guest experience in our restaurants is reflective of the hospitality and amazing food that Ruth’s Chris Steak House has been known for over 56 years.”

      (dollar amounts in thousands)

April

May

June

Q2 2021

     

Comparable Restaurant Sales vs. 2020

611.7%

384.6%

124.8%

286.6%

     

Comparable Restaurant Sales vs. 2019

2.1%

6.0%

7.4%

5.0%

     

Average Weekly Sales (all restaurants)(2)

$103.1

$113.9

$114.0

$109.8

– Net income in the second quarter of 2021 included a $65 thousand employee retention payroll tax credit, which reduced restaurant operating expenses, a $394 thousand impairment loss and a $26 thousand income tax benefit related to the impact of discrete income tax items. Net income in the second quarter of 2020 included $330 thousand in severance payments, $488 thousand in gains related to lease modifications, a $4.3 million impairment loss and a $175 thousand income tax expense related to the impact of discrete income tax items.

– Excluding these items, non-GAAP diluted earnings per common share was $0.36 in the second quarter of 2021, compared to a non-GAAP diluted loss per share of ($0.48) in the second quarter of 2020. The Company believes that non-GAAP diluted earnings (loss) per common share provides a useful alternative measure of financial performance to improve comparability of diluted earnings per common share between periods. Investors are advised to see the attached Reconciliation of Non-GAAP Financial Measure table for additional information.

(1) 

 

In order to assist with the review of our quarterly results, we have provided an additional comparison to the same period in 2019 for some of our financial measures as many of the 2020 financial measures were impacted by COVID-related restaurant closures.

(2)   

Average Weekly Sales is an average of restaurant sales for all Company-owned restaurants.

Based on current information and its most recent projections, Ruth’s Hospitality Group, Inc. is providing its updated full year 2021 outlook for the following operating measures based on a 52-week year ending December 26, 2021:

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.

The Company will host a conference call to discuss second quarter 2021 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.

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 over 140 Ruth’s Chris Steak House locations worldwide specializing in USDA Prime grade steaks.

RUTH'S HOSPITALITY GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations – Preliminary and Unaudited
(Amounts in thousands, except share and per share data)
               
               
  13 Weeks Ended   26 Weeks Ended
  June 27,   June 28,   June 27,   June 28,
 

2021

 

2020

 

2021

 

2020

               
Revenues:              
Restaurant sales

 $

                                    104,165

 

 $

                                      26,978

 

 $

                                    185,801

 

 $

                                    130,018

Franchise income

                                           4,528

 

                                              956

 

                                           8,320

 

                                           4,582

Other operating income

                                           2,217

 

                                              483

 

                                           4,072

 

                                           2,353

Total revenues

                                       110,910

 

                                         28,417

 

                                       198,193

 

                                       136,953

Costs and expenses:              
Food and beverage costs

                                         31,607

 

                                           8,030

 

                                         54,528

 

                                         38,657

Restaurant operating expenses

                                         45,400

 

                                         26,273

 

                                         82,983

 

                                         81,827

Marketing and advertising

                                           3,232

 

                                           1,487

 

                                           5,225

 

                                           4,925

General and administrative costs

                                           8,774

 

                                           7,066

 

                                         15,970

 

                                         15,095

Depreciation and amortization expenses

                                           5,084

 

                                           5,522

 

                                         10,147

 

                                         11,345

Pre-opening costs

                                              159

 

                                              304

 

                                              604

 

                                              781

Gain on lease modifications

                                                —

 

                                            (488

)

 

                                                —

 

                                            (488

)

Loss on impairment

                                              394

 

                                           4,283

 

                                              394

 

                                         12,980

Total costs and expenses

                                         94,650

 

                                         52,477

 

                                       169,851

 

                                       165,122

Operating income (loss)

                                         16,260

 

                                       (24,060

)

 

                                         28,342

 

                                       (28,169

)

Other income (expense):              
Interest expense, net

                                         (1,128

)

 

                                         (1,291

)

 

                                         (2,431

)

 

                                         (1,919

)

Other   

                                                36

 

                                                  3

 

                                                80

 

                                                36

Income (loss) before income taxes

                                         15,168

 

                                       (25,348

)

 

                                         25,991

 

                                       (30,052

)

Income tax expense (benefit)

                                           2,757

 

                                         (7,750

)

 

                                           4,455

 

                                         (8,636

)

Net income (loss)

 $

                                      12,411

 

 $

                                    (17,598

)

 

 $

                                      21,536

 

 $

                                    (21,416

)

               
Basic earnings (loss) per share

 $

                                          0.36

 

 $

                                        (0.59

)

 

 $

                                          0.63

 

 $

                                        (0.74

)

               
Diluted earnings (loss) per share

 $

                                          0.36

 

 $

                                        (0.59

)

 

 $

                                          0.62

 

 $

                                        (0.74

)

               
Shares used in computing net income per common share:              

Basic

                                  34,398,251

 

                                  29,951,332

 

                                  34,340,492

 

                                  29,119,296

Diluted

                                  34,652,869

 

                                  29,951,332

 

                                  34,620,626

 

                                  29,119,296

Dividends declared per common share

 $

                                             —

 

 $

                                             —

 

 $

                                             —

 

 $

                                          0.15

RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
 
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 diluted earnings per common share. This non-GAAP measurement was calculated by excluding the impact of an employee retention payroll tax credit, accelerated stock compensation and severance payments, loss on impairment and restaurant closure costs and certain discrete income tax items. We exclude the impact of the employee retention payroll tax credit, accelerated stock compensation and severance payments, loss on impairment and restaurant closure costs and certain discrete income tax items to improve comparability of diluted earnings per common share between periods.  This non-GAAP measurement has been included as supplemental information. Management believes that this measure represents a useful internal measure of performance. Accordingly, where this non-GAAP measure is 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 on a quarter-over-quarter basis. However, because this measure is not determined in accordance with GAAP, such a measure is susceptible to varying calculations and not all companies calculate the measure in the same manner. As a result, the aforementioned measure as presented may not be directly comparable to a similarly titled measure presented by other companies. This non-GAAP financial measure is presented as supplemental information and not as an alternative to diluted earnings per share as calculated in accordance with GAAP.
 
Reconciliation of Non-GAAP Financial Measure – Unaudited
(Amounts in thousands, except share and per share data)
               
               
  13 Weeks Ended   26 Weeks Ended
  June 27,   June 28,   June 27,   June 28,
 

2021

 

2020

 

2021

 

2020

GAAP Net income (loss)

 $

                                      12,411

 

 $

                                    (17,598

)

 

 $

                                      21,536

 

 $

                                    (21,416

)

GAAP Income tax expense (benefit)

                                           2,757

 

                                         (7,750

)

 

                                           4,455

 

                                         (8,636

)

GAAP Income (loss) from continuing operations before income taxes

                                         15,168

 

                                       (25,348

)

 

                                         25,991

 

                                       (30,052

)

Adjustments:              
Employee retention credit

                                              (65

)

 

                                                —

 

                                            (365

)

 

                                                —

Accelerated stock compensation and severance payments

                                                —

 

                                              330

 

                                              445

 

                                              330

Gain on lease modifications

                                                —

 

                                            (488

)

 

                                                —

 

                                            (488

)

Loss on impairment and restaurant closure costs

                                              394

 

                                           4,283

 

                                              394

 

                                         12,980

Adjusted net income before income taxes

                                         15,497

 

                                       (21,223

)

 

                                         26,465

 

                                       (17,230

)

Adjusted income tax benefit (expense) (1)

                                         (2,839

)

 

                                           6,712

 

                                         (4,574

)

 

                                           5,412

Impact of excluding certain discrete income tax items

                                              (26

)

 

                                              175

 

                                            (174

)

 

                                                96

Non-GAAP Net income (loss)

 $

                                      12,632

 

 $

                                    (14,336

)

 

 $

                                      21,717

 

 $

                                    (11,722

)

               
GAAP Diluted earnings (loss) per common share

 $

                                          0.36

 

 $

                                        (0.59

)

 

 $

                                          0.62

 

 $

                                        (0.74

)

               
Non-GAAP Diluted earnings (loss) per common share

 $

                                          0.36

 

 $

                                        (0.48

)

 

 $

                                          0.63

 

 $

                                        (0.40

)

               
Weighted-average number of common shares outstanding – diluted

                                  34,652,869

 

                                  29,951,332

 

                                  34,620,626

 

                                  29,119,296

               
(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.