Ruth’s Hospitality Group, Inc. (NASDAQ: RUTH) today reported unaudited financial results for its fourth quarter ended December 26, 2010.
Highlights for the fourth quarter of 2010 compared to the fourth quarter of 2009 were as follows:
- Total revenues were $94.1 million compared to $87.4 million in the prior year.
- Net income available to preferred and common shareholders of $3.9 million, or $0.09 per diluted share, compared to a net loss of $2.7 million, or $0.11 net loss per diluted share, in the fourth quarter of 2009. Excluding a $0.5 million tax benefit in the fourth quarter of 2010, net income was $0.08 per diluted share. Excluding one-time charges, net income in the prior year was $0.11 per diluted share.
- Company-owned comparable restaurant sales for Ruth’s Chris Steak House increased 9.2%. Company-owned comparable restaurant sales for Mitchell’s Fish Market decreased 2.1%.
- Food and beverage costs, as a percentage of restaurant sales, increased 140 basis points to 30.5%, primarily due to unfavorable beef costs.
- Restaurant operating expenses, as a percentage of restaurant sales, decreased 180 basis points to 50.9%, primarily due to sales leveraging on fixed costs.
- General and administrative expenses decreased $0.8 million to $6.5 million, primarily due to a reduction in severance and legal costs.
- Depreciation and amortization expenses, as a percentage of total revenues, decreased 70 basis points to 4.0%, primarily due to the home office building sale in the fourth quarter of 2009.
- Interest expense decreased by $0.8 million to $0.9 million in the fourth quarter of 2010.
- At the end of the fourth quarter of 2010, the Company had $51.0 million in debt outstanding under its senior credit agreement. This represents a reduction of $16.0 million from the September 26, 2010 balance of $67.0 million.
Michael P. O’Donnell, Chairman, President and Chief Executive Officer of Ruth’s Hospitality Group, Inc., stated, “We delivered a solid performance in the fourth quarter marked by top-line growth and bottom-line improvement. We also strengthened our balance sheet through aggressive debt reduction. Our 2010 holiday season was our most successful in three years, and we are encouraged by our guests’ renewed interest in upscale dining, which has continued thus far into 2011. While beef inflation could pose some cost challenges to us this year, we are confident in our ability to selectively take pricing and thereby mitigate margin impact. Overall, we are encouraged by the momentum in our business, and look forward to another successful year at Ruth’s Hospitality.”
Review of Operating Results
Total revenues, which include Company-owned restaurant sales, franchise income, and other operating income, were $94.1 million compared to $87.4 million in the fourth quarter of 2009.
Company-owned restaurant sales increased 8.0% to $90.4 million for the fourth quarter of 2010 from $83.8 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 $86 thousand in the fourth quarter of 2010 compared to $79 thousand in the fourth quarter of 2009. Average weekly sales at Mitchell’s Fish Market were $62 thousand compared to $64 thousand in the prior year fourth quarter.
For the fourth quarter of 2010, Company-owned comparable restaurant sales at Ruth’s Chris Steak House increased 9.2%, which consisted of an entrée increase of 9.4% along with an average check decline of 0.1%. Approximately 1.6% of the comparable restaurant sales result is attributable to additional restaurants being open on Thanksgiving Day in 2010 versus 2009. Comparable restaurant sales at Mitchell’s Fish Market decreased 2.1%, which consisted of an entrée decrease of 4.4% and an average check increase of 2.4%.
Franchise income increased 5.5% to $3.2 million in the fourth quarter of 2010 from $3.0 million in the prior year fourth quarter. Comparable franchise-owned restaurant sales increased 9.5%.
Operating income was $6.0 million in the fourth quarter of 2010 compared to a loss of $4.3 million in the prior year fourth quarter.
Net income available to preferred and common shareholders was $3.9 million, or $0.09 per diluted share, compared to a net loss of $2.7 million, or $0.11 net loss per diluted share, in the fourth quarter of 2009.
Net income for the fourth quarter of 2010 included $0.8 million of non-cash impairment charges, a non-cash benefit of $0.8 million in connection with a lease settlement, and a $0.5 million one-time income tax benefit. Excluding these items, net income available to preferred and common shareholders was $0.08 per diluted share for the fourth quarter of 2010. Net loss for the fourth quarter of 2009 included $8.3 million in non-cash impairment charges, a $0.8 million loss on the sale of the Company’s home office building, $0.4 million in severance costs, and a recovery of $0.4 million on a previously written down lease. Excluding these charges, on a tax adjusted basis, net income for the fourth quarter of 2009 was $0.11 per diluted share.
Financial Outlook
Based on current information, Ruth’s Hospitality Group, Inc. is providing the following 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 to $23 million
- Fully-diluted shares outstanding of 43.0 million to 44.0 million
About Ruth’s Hospitality Group, Inc.
Ruth’s Hospitality Group, Inc. (NASDAQ: RUTH) is a leading restaurant company focused exclusively on the upscale dining segment. The Company owns the Ruth’s Chris Steak House, Mitchell’s Fish Market, Mitchell’s Steakhouse and Cameron’s Steakhouse concepts. With more than 150 Company- and franchisee-owned locations worldwide, Ruth’s Hospitality Group, Inc. was founded in 1965 and is headquartered in Heathrow, Fla.
For further information about our restaurants, to make reservations, or to purchase gift cards, please visit: www.RuthsChris.com, www.MitchellsFishMarket.com, www.MitchellsSteakhouse.com and www.Camerons-Steakhouse.com. For more information about Ruth’s Hospitality Group, Inc., please visit www.rhgi.com.