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Ruth’s Hospitality Group, Inc. Reports Fourth Quarter and Full Year 2016 Financial Results

  • Orlando, FL
  • Ruth’s Hospitality Group
  • 2/17/17

Fourth Quarter GAAP Earnings Per Share Up 7.1% to $0.30

Full Year 2016 GAAP Earnings Per Share Up 8.9% to $0.95

Company Announces 29% Increase in Quarterly Dividend to $0.09 per Share

WINTER PARK, Fla.--(BUSINESS WIRE)--Feb. 17, 2017-- Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH) today reported unaudited financial results for its fourth quarter and full year ended December 25, 2016 and announced a quarterly cash dividend of $0.09 per share to be paid in the first quarter.

Highlights for the fourth quarter of 2016 compared to the fourth quarter of 2015 were as follows:

The Company reported net income of $9.2 million, or $0.30 per diluted share, in the fourth quarter of 2016 compared to net income of $9.5 million, or $0.28 per diluted share, in the fourth quarter of 2015.

Two franchisee-owned Ruth’s Chris Steak House restaurants were opened during the quarter.

Michael P. O'Donnell, Chairman and Chief Executive Officer of Ruth's Hospitality Group, Inc., noted, “Our fourth quarter results capped off our 5th consecutive year of earnings growth. These results would not be possible without the dedication to operational excellence from our franchisees and team members.”

O’Donnell added, “Looking ahead to 2017, we are excited about our development plans. So far this year, we have opened two new Company-owned Ruth’s Chris Steak House restaurants, one in Waltham, MA and one in Tulsa, OK, and we have one more expected to open in the first quarter in Cleveland, OH. Additionally, we will open a fourth Company-operated restaurant in Denver, CO later this year, the most Company restaurants that we have opened in a single year since 2008.”

Review of Fourth Quarter 2016 Operating Results

Total revenues in the fourth quarter of 2016 were $107.6 million, an increase of 2.8% compared to $104.7 million in the fourth quarter of 2015.

Company-owned Sales

Franchise Income

Operating income in the fourth quarter of 2016 increased 15.9% to $15.1 million, compared to $13.0 million in the fourth quarter of 2015. As a percentage of total revenues, operating margin increased 160 basis points year-over-year to 14.0%.

Share Repurchase Program and Debt

During the fourth quarter of 2016, the Company repurchased 347 thousand shares of common stock under its current share repurchase program for approximately $5.1 million, or an average price of $14.69 per share.

At the end of the fourth quarter of 2016, the Company had $25 million in debt outstanding under its senior credit facility.

On February 2, 2017, the Company entered into a new credit agreement that replaced the existing credit facility. The new credit agreement provides a $90.0 million revolving line of credit and, subject to the satisfaction of certain conditions and lender consent, may be increased up to a maximum of $150.0 million. The new credit facility bears interest between 1.50% to 2.25% over LIBOR, depending upon the Company's consolidated leverage ratio. The new credit facility also provides additional flexibility on capital distributions and contains generally less restrictive financial covenants. At the closing of the credit agreement, approximately $15.0 million in revolving loans were drawn thereunder.

Quarterly Cash Dividend

Subsequent to the end of the fourth quarter of 2016, the Company’s Board of Directors approved the payment of a quarterly cash dividend to shareholders of $0.09 per share. This dividend will be paid on March 9, 2017 to shareholders of record as of the close of business on February 23, 2017, and represents a 29% increase from the quarterly cash dividend paid in March of 2016.

Review of Full Year 2016 Operating Results

Net income was $30.5 million, or $0.95 per diluted share, for the full year of 2016 compared to net income of $30.0 million, or $0.87 per diluted share for the full year of 2015.

Total revenues in 2016 increased 3.4% to $385.9 million compared to $373.4 million in the prior year. The increase in revenues was due to new Company and franchise restaurants opened within the last twelve months as well as an increase in comparable restaurant sales.

Company-owned Sales

Franchise Income

Operating income in 2016 increased 6.2% to $47.6 million, compared to $44.8 million in 2015. As a percentage of total revenues, operating margin increased 30 basis points year-over-year to 12.3%

Share Repurchase Program

During 2016, the Company repurchased 2.8 million shares of common stock for approximately $45.1 million or an average price of $15.96 per share. As of the end of 2016, the Company had $26.6 million remaining under its current authorization. Since the beginning of 2014, the Company has repurchased an aggregate of 5.6 million shares for approximately $84.2 million under the current and prior share repurchase programs.

Development Update

Subsequent to the end of the fourth quarter of 2016, the Company opened two new Ruth’s Chris Steak House restaurants, one in Waltham, MA and one in Tulsa, OK in January 2017. Additionally, during the first quarter of 2017, the Company expects to open a new Ruth’s Chris Steak House restaurant in Cleveland, OH. The Company plans to open our fourth new Company-owned restaurant in 2017 in the Denver, CO Tech Center during the fourth quarter.

During the fourth quarter, Ruth’s Chris Steak House franchisees opened two new restaurants, one in Odenton, MD and one in Greenville, SC. As previously announced, due to the opening of the new Odenton, MD restaurant, one of the franchised locations in downtown Baltimore, MD was closed in the fourth quarter of 2016. Franchisees also completed the relocation of a restaurant in Huntsville, AL during the fourth quarter of 2016. Franchise partners are slated to open their second restaurant in China and relocate the restaurant in Mississauga, Canada during the second half of 2017, as well as open a new restaurant in Fort Wayne, IN in 2018.

Financial Outlook

Based on current information, Ruth's Hospitality Group, Inc. is providing its full year 2017 outlook based on a 53 week year ending December 31, 2017, as follows:

The foregoing statements are not guarantees of future performance, and therefore, undue reliance should not be placed upon them. We refer you 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 2016 financial results today at 8:00 AM Eastern Time. Hosting the call will be Michael P. O’Donnell, Chairman and Chief Executive Officer, and Arne G. Haak, Executive Vice President and Chief Financial Officer.

The conference call can be accessed live over the phone by dialing 719-325-2344. A replay will be available one hour after the call and can be accessed by dialing 412-317-6671; the password is 2577862. The replay will be available until February 24, 2017. 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 over 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, to make reservations, 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” 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 “believe,” “anticipate,” “expect,” “estimate,” “intend,” “project,” “targeting,” “will be,” “will continue,” “will likely result,” or other similar words and phrases. Similarly, statements herein that describe the Company’s objectives, plans or goals, including with respect to new restaurant openings, capital expenditures and the impact of healthcare inflation and minimum wage legislation, 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: reductions in the availability of, or increases in the cost of, USDA Prime grade beef, fish and other food items; changes in economic conditions 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; labor shortages or increases in labor costs; the impact of federal, state or local government regulations relating to Company employees, the sale or preparation of food, the sale of alcoholic beverages and the opening of new restaurants; harmful actions taken by the Company’s franchisees; a material failure, interruption or security breach of the Company’s information technology network; repeal or reduction of the federal FICA tip credit; unexpected expenses incurred as a result of the 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; the impact of litigation; the restrictions imposed by the Company’s Credit Agreement; and changes in, or the discontinuation of, the Company’s quarterly cash dividend payments or share repurchase program. 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 27, 2015, which is 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.

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