Ruth’s Hospitality Group, Inc. Reports Third Quarter 2010 Financial Results

Ruth’s Hospitality Group, Inc. (NASDAQ: RUTH) today reported unaudited financial results for its third quarter ended September 26, 2010.

Highlights for the third quarter of 2010 compared to the third quarter of 2009 were as follows:

• Total revenues were $79.8 million compared to $76.1 million in the prior year.
• Net loss available to common shareholders of $0.5 million, or $0.01 per diluted share, compared to a net loss of $1.0 million, or $0.04 per diluted share, in the third quarter of 2009. The third quarter of 2009 results included restructuring costs related to two restaurant lease terminations of $0.4 million or $0.01 per diluted share.
• Company-owned comparable restaurant sales for Ruth’s Chris Steak House increased 4.9%. Company-owned comparable restaurant sales for Mitchell’s Fish Market decreased 2.8%.
• Food and beverage costs, as a percentage of restaurant sales, increased 80 basis points to 30.0%, which was primarily driven by unfavorable beef costs.
• Restaurant operating expenses, as a percentage of restaurant sales, decreased 40 basis points to 56.1%.
• General and administrative expenses were $5.4 million, unchanged from the prior year.
• Depreciation and amortization expenses, as a percentage of total revenues, decreased 60 basis points to 4.8% primarily due to the home office building sale in the fourth quarter of 2009.
• Interest expense decreased by $0.9 million to $1.0 million in the third quarter of 2010.
• At the end of the third quarter of 2010, the Company had $67.0 million in debt outstanding under its senior credit agreement. This represents a reduction of $2.0 million from the June 27, 2010 balance of $69.0 million.

Michael P. O'Donnell, Chairman, President and Chief Executive Officer of Ruth’s Hospitality Group, Inc., stated, “During the third quarter, we generated our strongest comparable restaurant sales at the Ruth’s Chris brand since the fourth quarter of 2006, and that helped narrow our net loss compared to the year-ago period. Against a backdrop of continued economic uncertainty, we were pleased with this progress and continue to work diligently to improve top line trends at both brands while managing expenses carefully.”

O'Donnell continued, “We are also pleased to have restarted the development process at the Ruth’s Chris Steak House brand by evaluating sites for Company-owned restaurants and seeking alliances with the gaming and hospitality industries. We are also pursuing Company development at Mitchell’s Fish Market, where we believe that the Florida market represents a strong opportunity. We have strengthened our balance sheet, and now believe prudent development is an attractive use of our capital. We look forward to communicating our first development agreement as soon as it is signed.”

Review of Operating Results

Total revenues, which include Company-owned restaurant sales, franchise income, and other operating income, were $79.8 million compared to $76.1 million in the third quarter of 2009.

Company-owned restaurant sales increased 4.4% to $76.9 million for the third quarter of 2010 from $73.6 million in the same quarter last year. Total operating weeks increased 1.2% to 1,131 from 1,118.

Average weekly sales for Ruth’s Chris Steak House were $69.3 thousand in the third quarter of 2010 compared to $66.1 thousand in the third quarter of 2009. Average weekly sales at Mitchell’s Fish Market were $66.4 thousand compared to $67.9 thousand in the prior year third quarter.

For the third quarter of 2010, Company-owned comparable restaurant sales at Ruth’s Chris Steak House increased 4.9%, which consisted of an entrée increase of 5.3% offset by an average check decrease of 0.3%. Company-owned comparable restaurant sales at Mitchell’s Fish Market decreased 2.8%, which consisted of an entrée decrease of 2.5% and an average check decrease of 0.3%.

Franchise income increased 11.7% to $2.6 million from $2.4 million. Comparable franchise-owned restaurant sales increased 6.8%.

Operating income was $1.6 million in the third quarter of 2010 and $1.0 million in the prior year third quarter, which included a $0.4 million charge for lease terminations

Net loss available to common shareholders was $0.5 million, or $0.01 per diluted share, compared to a net loss of $1.0 million, or $0.04 per diluted share, in the third quarter of 2009. The third quarter of 2009 results included restructuring costs related to two restaurant lease terminations of $0.4 million or $0.01 per diluted share

Financial Outlook

Based on current information, Ruth's Hospitality Group, Inc. is reaffirming its 2010 outlook:

• Cost of goods sold of 29% to 30% of restaurant sales
• General and administrative expenses of $22 million to $24 million
• Effective tax rate of 25% to 30%
• Capital expenditures of $5 million to $6 million

Michael P. O’Donnell Named Chairman of the Board

Effective immediately, Michael P. O’Donnell, who has served as the Company’s President and Chief Executive Officer since August 2008, was named Chairman of the Board of Directors. In his new capacity, Mr. O’Donnell replaces Robin P. Selati, who has served as the Chairman of the Board of Directors since April 2008 and as a member of the Company’s Board of Directors since 1999. Mr. Selati will continue to serve the Company in a newly created position of Lead Director.

Reader Comments:

Be the first to leave a comment for this article

Tweet