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Ruth’s Hospitality Group, Inc. Reports Third Quarter 2016 Financial Results

  • Orlando, FL
  • Ruth's Chris Steak House
  • 10/28/16

Ruth’s Hospitality Group, Inc. Reports Third Quarter 2016 Financial Results

– Company-owned Comparable Restaurant Sales Increased 2.1% –

WINTER PARK, Fla.—(BUSINESS WIRE)—October 28, 2016—Ruth’s Hospitality Group, Inc. (NASDAQ: RUTH) today reported unaudited financial results for its third quarter ended September 25, 2016 and announced a quarterly cash dividend of $0.07 per share to be paid in the fourth quarter.

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

The Company reported net income of $3.6 million, or $0.11 per diluted share, in the third quarter of 2016 compared to net income of $2.6 million, or $0.08 per diluted share, in the third quarter of 2015.

Michael P. O'Donnell, Chairman and Chief Executive Officer of Ruth's Hospitality Group, Inc., noted, “I am pleased to report earnings per share of $0.11 in the quarter driven by top line growth, a favorable commodity environment, and our balanced shareholder return strategy. We have also seen improvement in our restaurant level margins driven by favorable food costs and the hard work of our team members to control operating costs. We believe our operational focus, along with our strategy of reinvesting in our core operations, driving disciplined growth, and returning excess capital, continues to be a formula for delivering long term value to our shareholders.”

O’Donnell added, “During the third quarter, we opened our newest Ruth’s Chris Steak House, in El Paso, TX. The restaurant’s comfortably elegant atmosphere is enhanced by a large open bar and an outdoor patio with beautiful city views. I am pleased with the early success of this restaurant and the focus of our team members as they were profitable in their very first month of operation.”

Review of Third Quarter 2016 Operating Results

Total revenues in the third quarter of 2016 were $83.8 million, an increase of 4.3% compared to $80.3 million in the third quarter of 2015.

Company-owned Sales

Franchise Income

Operating income in the third quarter of 2016 increased 34.8% to $5.6 million, compared to $4.2 million in the third quarter of 2015. As a percentage of total revenues, operating margin increased 150 basis points year-over-year to 6.7%. Third quarter 2016 results included a non-recurring $335 thousand benefit related to the settlement of the disputed rent charges from 2006 through 2015 for a leased Company restaurant, which were incurred in the second quarter of 2016 for $465 thousand.

Share Repurchase Program and Debt

During the third quarter of 2016, the Company repurchased 553 thousand shares of common stock under its current share repurchase program for approximately $8.3 million, or an average price of $15.01 per share. Since the beginning of 2014, the Company has repurchased an aggregate of 5.2 million shares for approximately $79.1 million under the current and prior share repurchase programs.

At the end of the third quarter of 2016, the Company had $38 million in debt outstanding under its senior credit facility.

Quarterly Cash Dividend

Subsequent to the end of the third quarter of 2016, the Company’s Board of Directors approved the payment of a quarterly cash dividend to shareholders of $0.07 per share. This dividend will be paid on November 23, 2016 to shareholders of record as of the close of business on November 10, 2016, and represents a 17% increase from the quarterly cash dividend paid in November of 2015.

Development Update

During the third quarter, the Company opened one new Ruth’s Chris Steak House restaurant in El Paso, TX. Subsequent to the end of the third quarter of 2016, the Company signed an agreement to operate a new restaurant in Tulsa, OK which is expected to open in the first quarter of 2017. This restaurant will be located in the River Spirit Casino and is under an operating agreement, similar to our Cherokee, NC restaurant. New Ruth’s Chris Steak House restaurants in Cleveland, OH and Waltham, MA are expected to open during the first quarter of 2017. As a result of early 2017 restaurant openings, we expect higher year over year pre-opening costs in the fourth quarter of 2016.

Subsequent to the end of the third quarter of 2016, new franchised restaurants opened in Odenton, MD and Greenville, SC. As a result of the opening of the new Odenton, MD restaurant, one of the franchised locations in downtown Baltimore, MD is expected to close in the fourth quarter of 2016. Franchisees are currently expected to complete the relocation of restaurants in Huntsville, AL in the fourth quarter of 2016, and Mississauga, Canada during the first half of 2017.

Financial Outlook

Based on current information, Ruth's Hospitality Group, Inc. is reaffirming its full year 2016 outlook, and revising expectations of the full year share count for recent repurchases, 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 third 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 719-325-2330. A replay will be available one hour after the call and can be accessed by dialing 858-384-5517; the password is 1595138. The replay will be available until November 4, 2016. The call will also be webcast live from the Company’s website at http://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 145 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 http://www.RuthsChris.com. For more information about Ruth’s Hospitality Group, Inc., please visit http://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. These forward-looking statements include all statements other than those made solely with respect to historical facts and include, but are not limited to, statements regarding the Company’s financial outlook, objectives, plans and goals. Forward-looking statements frequently are identified by the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “project,” “will be,” “will continue,” “will likely result,” or other similar words and phrases. Actual results could differ materially from those projected, implied or anticipated by these 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; the Company’s ability to protect its name and logo and other proprietary information; the impact of litigation; the restrictions imposed by the Company’s Amended and Restated Credit Agreement; changes in, or the discontinuation of, the Company’s share repurchase program or dividend payments; and the risk factors or uncertainties identified in the reports the Company files with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended December 28, 2014 and subsequently filed Quarterly Reports on Form 10-Q, all of which are available on the Securities and Exchange Commission’s website at http://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 after the date hereof, whether as a result of new information, future events or otherwise.

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