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Ruth’s Hospitality Group, Inc. Reports First Quarter 2011 Financial Results

2011-05-02

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Ruth’s Hospitality Group Total revenues were $98.8 million compared to $94.7 million in the prior year.

Ruth’s Hospitality Group, Inc. (NASDAQ: RUTH) reported unaudited financial results for its first quarter ended March 27, 2011.

Michael P. O'Donnell, Chairman, President and Chief Executive Officer of Ruth's Hospitality Group, Inc., stated, "We were pleased that our comparable sales momentum at Ruth’s Chris Steak House restaurants continued during the first quarter. These higher sales volumes helped us expand restaurant level margins, despite higher food costs. In late March, we rolled out a small price increase to mitigate the impact of commodity pressures. We believe the Ruth’s Chris brand has pricing power, but with five consecutive quarters of traffic growth, our goal is to remain prudent with additional pricing at this time. Our efforts to strengthen our balance sheet continued in the first quarter, as we reduced our outstanding debt by $6 million. We also remain active on the real estate front, as we continue to evaluate opportunities for 2012.”

Review of Operating Results

Total revenues, which include Company-owned restaurant sales, franchise income, and other operating income were $98.8 million compared to $94.7 million in the first quarter of 2010.

Company-owned restaurant sales increased 4.5% to $95.3 million for the first quarter of 2011 from $91.2 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 $90 thousand in the first quarter of 2011 compared to $85.6 thousand in the first quarter of 2010. Average weekly sales at Mitchell’s Fish Market were $68.5 thousand compared to $70.5 thousand in the prior year first quarter.

For the first quarter of 2011, Company-owned comparable restaurant sales at Ruth’s Chris Steak House increased 5.2%, which consisted of an entrée increase of 3.9% along with an average check increase of 1.2%. Comparable restaurant sales at Mitchell’s Fish Market decreased 2.7%, which consisted of an entrée decrease of 6.1% and an average check increase of 3.5%.

Franchise income increased 4.3% to $3.1 million in the first quarter of 2011 from $2.9 million in the prior year first quarter. Comparable franchise-owned restaurant sales increased 9.3%.

Operating income was $10.0 million in the first quarter of 2011 compared to $9.8 million in the prior year first quarter. The first quarter of 2010 included a one-time $0.6 million restructuring benefit for which there was no comparable benefit in the first quarter of 2011.

Financial Outlook

Based on current information, Ruth's Hospitality Group, Inc. is reiterating its previous 2011 outlook:

Cost of goods sold of 30.5% to 31.5% of restaurant sales
Marketing and advertising of 3.0% to 3.5% of total revenues
General and administrative expenses of $23 million to $25 million
Effective tax rate of 25% to 30%
Capital expenditures of $10 million to $12 million
Free cash flow of $21 million to $23 million
Fully-diluted shares outstanding of 43.0 million to 44.0 million


RUTH'S HOSPITALITY GROUP, INC
Condensed Consolidated Statements of Income - Unaudited
(dollar amounts in thousands, except share and per share data)


	13 Weeks Ending
	March 28,			March 27,
		2010			2011

Revenues:
Restaurant sales	$	91,166		$	95,282
Franchise income		2,929			3,056
Other operating income		614			501
Total revenues		94,709			98,839

Costs and expenses:
Food and beverage costs		26,749			29,236
Restaurant operating expenses		46,780			47,048
Marketing and advertising		2,524			2,957
General and administrative costs		5,566			5,877
Depreciation and amortization expenses		3,887			3,711
Pre-opening costs		4			1
Restructuring benefit		(562	)		-
Operating income		9,761			10,009

Other expense:
Interest expense, net		(1,330	)		(831	)
Other		(100	)		(167	)

Income from continuing operations before income tax		8,331			9,011

Income tax expense		1,407			2,670

Income from continuing operations		6,924			6,341

(Loss) income from discontinued operations, net of income tax (benefit) expense		(165	)		237

Net income	$	6,759		$	6,578
Preferred stock dividends		308			623
Accretion of preferred stock redemption value		-			88
Net income available to preferred and common shareholders	$	6,451		$	5,867
Basic earnings per common share:
Continuing operations	$	0.20		$	0.13
Discontinued operations		-			0.01
Basic earnings per share	$	0.20		$	0.14

Diluted earnings per common share:
Continuing operations	$	0.20		$	0.13
Discontinued operations		-			0.01
Diluted earnings per share	$	0.20		$	0.14

Shares used in computing net income per common share:
Basic		28,156,360			34,000,032
Diluted		32,502,898			43,084,686





RUTH'S HOSPITALITY GROUP, INC
Selected Balance Sheet Data
(dollar amounts in thousands)

	December 26,			March 27,
		2010			2011
Cash and cash equivalents		5,018			2,590
Total assets		249,069			239,133
Long-term debt		51,000			45,000
Total shareholders' equity		80,361			86,949