Ruth's Hospitality Group, Inc. Reports First Quarter 2022 Financial Results

Ruth’s Hospitality Group, Inc. (Nasdaq: RUTH) reported unaudited financial results for its first quarter ended March 27, 2022 and provided a business update.

Year to Date Highlights ⁽¹⁾

• Opened our first of five anticipated 2022 new restaurants in Aventura, FL. The Company has opened three new Company-owned restaurants in the past two quarters.
• Announced a second quarter dividend increase to $0.14 from $0.12
• Repaid $20.0 million of debt on our revolving credit facility during the first quarter and repaid an additional $25.0 million in April
• First quarter comparable sales were positive compared to both fiscal years 2021 and 2019. By period, comparable restaurant sales and average weekly sales for Company-owned restaurants for the first quarter 2022 were as follows:

CEO Comments

Cheryl Henry, President, Chief Executive Officer and Chairperson of the Board of Ruth’s Hospitality Group, Inc., commented, “I’m extremely proud of our team members for delivering impressive first quarter sales and earnings growth. Given our momentum, we are optimistic about our business, particularly in light of our operational improvements, the strength of our development pipeline for both 2022 and 2023, and positive early results from our digital initiatives, which are clearly benefiting our top line. While we acknowledge the challenges that still exist at home and abroad, we believe we are well-positioned to deliver on our total return strategy that combines organic growth investments with returning cash to shareholders.”

First Quarter 2022

• Restaurant sales in the first quarter of 2022 were $118.7 million compared to $81.6 million in the first quarter of 2021. Comparable sales increased 41.5% compared to the first quarter of 2021 and 8.1% compared to the first quarter of 2019.
• Franchise income in the first quarter of 2022 was $4.7 million compared to $3.8 million in the first quarter of 2021. First quarter 2022 comparable restaurant sales at franchisee-owned restaurants increased 24.6% compared to 2021 and 8.1% compared to the first quarter of 2019.
• Food and beverage costs, as a percentage of restaurant sales, increased 445 basis points to 32.5% compared to the first quarter of 2021. Total beef costs increased 37% compared to the first quarter of 2021.
• Marketing and advertising plus general and administrative costs were 11.2% as a percentage of revenue compared to 10.5% in the first quarter of 2021. The increase was primarily related to planned investments in data and digital initiatives.
• Net income in the first quarter of 2022 was $10.4 million, or $0.31 per diluted share, compared to net income of $9.1 million, or $0.26 per diluted share, in the first quarter of 2021.

Business and Development Update

• We opened a new Company-owned restaurant in Aventura, FL in the first quarter of 2022.
• We expect to open four additional new Company-owned or managed restaurants by the end of 2022. The Company currently has two leases signed for Company-owned restaurants scheduled to open in 2023.

Cash and Debt

As of May 2, 2022, the Company’s cash balance was approximately $50.7 million, with $25.0 million of debt outstanding under its amended and restated credit agreement and $4.7 million of outstanding letters of credit.

Quarterly Cash Dividend

The Company’s Board of Directors declared a quarterly dividend of $0.14 per share payable on June 2, 2022, to shareholders of record as of the close of business on May 19, 2022.

Financial Outlook

Based on current information and its most recent projections, Ruth’s Hospitality Group, Inc. is providing its outlook for the following 2022 operating measures:

• Fiscal year 2022 restaurant labor expense improvement of approximately 200 basis points (as a percentage of restaurants sales) compared to 2019
• Fiscal year 2022 combined marketing and general and administrative expenses is expected to be between 10.3% and 10.8% of revenue
• Effective income tax rate of 17% to 19%
• Fiscal year 2022 capital expenditures of $53 to $58 million

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.

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 151 Ruth’s Chris Steak House locations worldwide specializing in USDA Prime grade steaks served in Ruth’s Chris’ signature fashion – “sizzling.”

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, and certain discrete income tax items. We exclude the impact of the employee retention payroll tax credit, accelerated stock compensation and severance payments, 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. We believe 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.

(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.