Ruth’s Hospitality Group, Inc. Reports Full Year and Fourth Quarter 2012 Financial Results

  Ruth’s Hospitality Group, Inc. Reports Full Year and Fourth Quarter 2012
  Financial Results

  Ruth’s Chris Steak House comparable sales increase 5.4% for 11^th straight
                                quarterly gain

            Mitchell’s Fish Market comparable sales increase 3.4%

Business Wire

WINTER PARK, Fla. -- February 15, 2013

Ruth’s Hospitality Group, Inc. (NASDAQ: RUTH) today reported unaudited
financial results for its fourth quarter and full year ended December 30,
2012.

Highlights for the 14-week fourth quarter of 2012 compared to the 13-week
fourth quarter of 2011 were as follows:

Net income was $3.6 million or $0.10 per diluted share in the fourth quarter
of 2012 compared to net income applicable to preferred and common shareholders
of $1.9 million or $0.04 per diluted share in the fourth quarter of 2011.

  *Expenses in the fourth quarter of 2012 included a $683 thousand gain on
    the settlement of unclaimed property liabilities and a $4.96 million net
    charge related to the future relocation of one restaurant, the non-cash
    impairment of assets at two other units, and the disposal of property and
    equipment. Expenses in the fourth quarter of 2011 included a $3.0 million
    non-cash charge for the impairment of an intangible asset and a $0.4
    million non-cash loss on the disposal of property and equipment related to
    restaurant renovations.
  *Excluding these non-cash charges and income from discontinued operations,
    non-GAAP diluted earnings per common share was $0.18 compared to $0.09 in
    the prior year period. The Company believes that non-GAAP earnings per
    diluted share, which excludes non-recurring and non-operating items from
    both periods, provides a useful alternative measure of financial
    performance. Investors are advised to see the attached Reconciliation of
    Non-GAAP Financial Measures table for additional information.
  *The Company’s fourth quarter of 2012 consisted of 14 weeks compared to 13
    weeks in the fourth quarter of 2011. The Company estimates that the extra
    week increased earnings by approximately $0.02 per share.

“We are extremely pleased with the continued strength of our business during
the fourth quarter,” stated Michael P. O'Donnell, Chairman, President and
Chief Executive Officer of Ruth's Hospitality Group, Inc. “Our same store
sales increase of 5.4% at Ruth Chris Steak House marked the 11^th consecutive
quarter of improvement and represents over 20% growth over the last three
years. We’re also pleased with the continued progress at Mitchell’s Fish
Market that resulted in a third straight quarter of same store sales growth.
Together, our top-line growth drove strong earnings during the quarter.”

“2012 was a year of significant accomplishments that not only resulted in
strong results for the year, but will also provide benefits going forward,”
added O’Donnell. “These results reflect the hard work and tireless dedication
of our teammates and valued franchise partners. In addition to the consistent
sales growth and improved earnings, we successfully refinanced our credit
facility and retired our entire class of preferred shares. Furthermore, we
have seen our new unit pipeline grow stronger and gain momentum with increased
openings during the year, and we are on pace for further new unit growth in
the year ahead. As we enter 2013, we believe that we are better positioned for
improved earnings and cash flow, while maintaining the balance sheet
flexibility to continue to invest in our business and create long-term value
for our shareholders.”

Development Update

One franchised Ruth’s Chris Steak House opened during the fourth quarter in
Niagara Falls, Canada and one company-owned Ruth’s Chris Steak House
restaurant opened in Cincinnati, OH. In total, six new Ruth’s Chris Steak
Houses opened during 2012, including four franchised restaurants and one
restaurant operating under a management agreement.

Subsequent to the quarter end a new restaurant opened at the Harrah’s Las
Vegas Casino and Hotel under a licensing agreement. The Company continues to
work towards developing new Ruth’s Chris Steak Houses. The Company’s current
development plans for 2013 include opening a new company-owned restaurant in
Denver, CO and relocating its Houston, TX restaurant. The Company also expects
its franchise partners to open an additional four to five restaurants in 2013.

Additionally, the Company recently announced that it has signed an agreement
for the development of four new franchised Ruth's Chris Steak House
restaurants to be opened in mainland China over the next three years. The new
restaurants are planned for Shanghai and Beijing and will be the first Ruth’s
Chris Steak House restaurants in mainland China.

Review of Fourth Quarter 2012 Operating Results

Total revenues in the fourth quarter rose 15.5% to $115.1 million compared to
$99.6 million in the prior year. The Company estimates that approximately $9
million of the increase in revenues in the fourth quarter can be attributed to
the 14^th week.

  *Food and beverage costs, as a percentage of restaurant sales, decreased 40
    basis points in the fourth quarter to 31.2% despite a 5.1% increase in
    beef prices. This was due to an increase in alcohol mix, pricing
    increases, and lower costs on other commodities.
  *Restaurant operating expenses, as a percentage of restaurant sales,
    decreased 310 basis points in the fourth quarter to 47.8% due to lower
    benefits costs, favorable utilities costs and the effect of higher sales
    on fixed costs.
  *Marketing and advertising costs in the fourth quarter increased 10 basis
    points to 4.2% due to a timing shift in advertising from the second
    quarter to the third and fourth quarters of 2012.
  *General and administrative expenses increased to $9.2 million in the
    quarter due to the extra week, increases in performance based compensation
    and contract labor, the filling of open positions, and an increase in
    stock-based compensation.

At the end of the fourth quarter of 2012, the Company had $45 million in debt
outstanding under its senior credit facility, a decrease of $24 million from
the $69 million in debt outstanding at the end of the third quarter of 2012.

Ruth’s Chris Steak House Sales

  *64 company-owned Ruth’s Chris Steak House restaurants were open at the end
    of the fourth quarter of 2012 compared to 63 at the end of the prior year
    fourth quarter. Total operating weeks for the quarter increased to 893
    from 819, including 64 additional weeks as a result of the 14^th week.
  *Average weekly sales for Ruth’s Chris Steak House were $101.0 thousand in
    the fourth quarter of 2012, an increase of 7.0% compared to $94.4 thousand
    in the fourth quarter of 2011.
  *On a comparable 13-week basis, the 5.4% increase in company-owned
    comparable restaurant sales at Ruth’s Chris Steak House consisted of a
    traffic increase of 1.7% along with an average check increase of 3.6%.

Mitchell’s Fish Market Sales

  *19 company-owned Mitchell’s Fish Market restaurants were open at the end
    of the fourth quarter of 2012 and 2011. Total operating weeks for the
    quarter increased to 266, including 19 additional weeks as a result of the
    14^th week. Total operating weeks exclude discontinued operations.
  *Average weekly sales at Mitchell’s Fish Market were ^ $67.4 thousand in
    the fourth quarter of 2012, an increase of 5.2% compared to $64.0 thousand
    in the fourth quarter of 2011.
  *On a comparable 13-week basis, the 3.4% increase in comparable restaurant
    sales at Mitchell’s Fish Market consisted of a traffic increase of 5.4%
    and an average check decrease of 1.9%.

Franchise Income

  *72 franchise-owned Ruth’s Chris Steak House restaurants were open at the
    end of the fourth quarter of 2012 compared to 68 at the end of the prior
    year fourth quarter.
  *Franchise income increased 7.9% to $3.9 million in the fourth quarter of
    2012 from $3.6 million in the prior year period, driven by a 3.4% increase
    in comparable franchise restaurant sales, the 14^th week during the
    quarter, and new franchised unit development during the last 12 months.

Review of Full Year 2012 Operating Results

For the full year 2012, the Company reported a net loss applicable to
preferred and common shareholders of $20.0 million or ($0.58) per diluted
share compared to a net income applicable to preferred and common shareholders
of $16.7 million or $0.39 per diluted share in 2011.

  *In addition to the non-cash charges incurred in the fourth quarter, the
    Company’s expenses in 2012 included a one-time pre-tax expense of $0.9
    million related to legal fees and the write-off of financing costs
    previously deferred in conjunction with the refinancing of the Company’s
    credit facility which enabled us to repurchase our preferred shares. 2012
    also included a one-time $35.8 million reduction of net income available
    to preferred and common shareholders, reflecting the excess of redemption
    value over the carrying value in conjunction with the retirement of the
    Company’s preferred shares in March.
  *Expenses in 2011 included a one-time tax benefit of $4.0 million, a $3.0
    million non-cash charge for the impairment of an intangible asset and a
    $0.4 million non-cash loss on the disposal of property and equipment
    related to restaurant renovations.
  *Excluding these non-cash charges and income from discontinued operations,
    non-GAAP diluted earnings per common share was $0.55 during the 53 weeks
    of 2012 compared to $0.32 during the 52 weeks of the prior year. Investors
    are advised to see the attached Reconciliation of Non-GAAP Financial
    Measures table for additional information.

Total revenues in 2012 rose 7.9% to $398.6 million compared to $369.6 million
in the prior year. The increase in revenues was due to additional company and
franchise restaurants, year-over-year increases in comparable store sales, and
the additional week in fiscal year 2012.

  *Food and beverage costs, as a percentage of restaurant sales, increased 80
    basis points to 31.8% compared to 2011 and were driven by beef costs which
    were up 13% year-over-year.
  *Restaurant operating expenses, as a percentage of restaurant sales,
    decreased 130 basis points for the full year to 50.5% due to cost
    management and the effect of higher sales on fixed costs.
  *Marketing and advertising costs, as a percentage of total revenues,
    decreased 40 basis points to 2.8% for the year due to leverage from higher
    sales.
  *General and administrative expenses, as a percentage of total revenues,
    increased 90 basis points to 7.1% for the year due to the extra week,
    increases in contract labor, the filling of open positions, and an
    increase in stock-based compensation.

Ruth’s Chris Steak House Sales

  *For the full-year, average unit volume at company-owned Ruth’s Chris Steak
    House restaurants was $4.8 million. On a 52-week basis, comparable
    restaurant sales increased 5.2%.

Mitchell’s Fish Market Sales

  *For the full-year, average unit volume at Mitchell’s Fish Market
    restaurants was $3.7 million. On a 52-week basis, comparable restaurant
    sales increased 2.5%.

Franchise Income

  *Franchise income for the full year increased 11.0% to $13.8 million in
    2012 driven by an increase in comparable franchise restaurant sales, the
    53^rd week of the year, and new franchised unit development during the
    year. Comparable restaurant sales increased 4.6%.

Financial Outlook

The following statements are not guarantees of future performance, and
therefore, undue reliance should not be placed upon them. We refer all of you
to our recent filings with the SEC for a more detailed discussion of the risks
that could impact future operating results and financial conditions.

Based on current information, Ruth's Hospitality Group, Inc. is introducing
its full year 2013 outlook:

  *Cost of goods sold of 32.5% to 33.5% of restaurant sales
  *Restaurant operating expenses of 50.0% to 51.0% of restaurant sales
  *Marketing and advertising of 3.0% to 3.5% of total revenues
  *General and administrative expenses of $27 million to $28 million
  *Effective tax rate of 28% to 32%
  *Capital expenditures of $14 to $16 million
  *Basic shares outstanding of 34.3 million to 35.0 million
  *Fully-diluted shares outstanding of 35.3 million to 36.0 million

Conference Call

The Company will host a conference call to discuss fourth quarter 2012
financial results today at 8:30 AM Eastern Time. Hosting the call will be Mike
O’Donnell, Chairman, President and Chief Executive Officer, and Arne Haak,
Executive Vice President and Chief Financial Officer.

The conference call can be accessed live over the phone by dialing
719-457-2697. A replay will be available one hour after the call and can be
accessed by dialing 858-384-5517; the password is 7634985. The replay will be
available until February 22, 2013. The call will also be webcast live from the
Company's website at www.rhgi.com under the investor relations section.

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
restaurants worldwide, Ruth’s Hospitality Group, Inc. was founded in 1965 and
is headquartered in Winter Park, 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.

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 outlook on
earnings, cash flow and operational flexibility. 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 the risk factors 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 December25, 2011 and
subsequently filed Quarterly Reports on Form 10-Q, all of which are available
on the SEC’s website at 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.

                                                                                         
                                                                                         
RUTH'S HOSPITALITY GROUP, INC AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Loss) - Unaudited
(Amounts in thousands, except share and per share data)
                                                                  
                     14/13 Weeks Ended                   53/52 Weeks Ended
                     December 30,     December 25,       December 30,     December 25,
                     2012             2011               2012             2011
                                                                                         
Revenues:
Restaurant           $ 110,502        $ 95,409           $ 380,968        $ 353,606
sales
Franchise              3,881            3,598              13,836           12,464
income
Other
operating             696            634              3,785          3,503      
income
                                                                                         
Total revenues         115,079          99,641             398,589          369,573
                                                                                         
Costs and
expenses:
Food and               34,484           30,179             121,030          109,577
beverage costs
Restaurant
operating              52,788           48,560             192,417          183,294
expenses
Marketing and          4,847            4,106              11,220           11,806
advertising
General and
administrative         9,217            5,789              28,299           22,803
costs
Depreciation
and                    3,632            3,884              14,556           14,859
amortization
expenses
Pre-opening            274              0                  540              192
costs
Loss on
impairment and         4,955            3,478              4,955            3,478
asset
disposals, net
Restructuring          0                0                  0                (502       )
benefit
Gain on the
settlement of
unclaimed              (683       )     0                  (683       )     0
property
liabilities
                                                                       
Total costs            109,514          95,996             372,334          345,507
and expenses
                                                                                         
Operating              5,565            3,645              26,255           24,066
income
                                                                                         
Other income
(expense):
Interest               (605       )     (604       )       (2,365     )     (2,892     )
expense, net
Debt issuance
costs                  0                0                  (807       )     0
written-off
Other                 99             (8         )      6              (486       )
                                                                                         
Income from
continuing
operations             5,059            3,033              23,089           20,688
before income
tax expense
Income tax            1,391          451              6,659          1,597      
expense
                                                                                         
Income from
continuing             3,668            2,582              16,430           19,091
operations
Loss (income)
from
discontinued
operations,
net of income         18             (33        )      51             (458       )
tax

benefit
(expense)
                                                                                         
Net income           $ 3,650          $ 2,615            $ 16,379         $ 19,549
                                                                                         
Preferred
stock                  0                623                514              2,493
dividends
Accretion of
preferred
stock                  0                88                 73               353
redemption
value
                                                                                         
Excess of
redemption
value over
carrying value        0              0                35,776         0          
of preferred

shares
redeemed
Net income
(loss)
applicable to        $ 3,650         $ 1,904            (19,984    )   $ 16,703     
preferred and
common
shareholders
Basic earnings
(loss) per
common share:
Continuing           $ 0.11           $ 0.04             $ (0.58      )   $ 0.38
operations
Discontinued          0              0                0              0.01       
operations
Basic earnings
(loss) per           $ 0.11          $ 0.04            $ (0.58      )   $ 0.39       
share
                                                                                         
Diluted
earnings
(loss) per
common share:
Continuing           $ 0.10           $ 0.04             $ (0.58      )   $ 0.38
operations
Discontinued          0              0                0              0.01       
operations
Diluted
earnings             $ 0.10          $ 0.04            $ (0.58      )   $ 0.39       
(loss) per
share
                                                                                         
Shares used in
computing net
income (loss)
per common
share:
Basic                  34,398,789       34,149,429         34,313,636       34,093,104
Diluted                35,314,347       43,324,815         34,313,636       43,252,101

                                                                   
RUTH'S HOSPITALITY GROUP, INC AND SUBSIDIARIES
Selected Balance Sheet Data - Unaudited
(dollar amounts in thousands)
                                              
                                     December 30,     December 25,
                                     2012             2011
Cash and cash equivalents            $   7,909        $   3,925
Total assets                             231,357          240,220
Long-term debt                           45,000           22,000
Total shareholders' equity               82,388           99,640

 
    
    Non-GAAP Measure
    
    We prepare our financial statements in accordance with 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 certain non-recurring items and income (loss)
    on discontinued operations. 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 accounting principles generally
    accepted in the United States, 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 measure is presented as supplemental information
    and not as alternatives to any GAAP measurements.

                                                                                         
                                                                                         
Reconciliation of Non-GAAP Financial Measure - Unaudited
(amounts in thousands, except share data)
                                                                  
                       14/13 Weeks Ended                 53/52 Weeks Ended
                       December 30,   December 25,       December 30,     December 25,
                       2012           2011               2012             2011
GAAP net income
(loss)
applicable to          $ 3,650        $ 1,904            $ (19,984    )   $ 16,703
preferred and
common
shareholders
Net of tax
impact of
excluding                2,583          2,210              3,332            (2,191     )
certain
non-recurring
items - see Note
Net of tax
impact of
excluding loss           18             (34        )       51               (459       )
(income) on
discontinued
operations
Net of tax
impact of
excluding excess
of redemption
value over              -             -                35,776         -          

carrying value
of preferred
shares redeemed
Non-GAAP net
income
applicable to          $ 6,251        $ 4,080           $ 19,175        $ 14,053     
preferred and
common
shareholders
                                                                       
Non-GAAP diluted
earnings per           $ 0.18         $ 0.09            $ 0.55          $ 0.32       
share
                                                                                         
Shares:
Weighted average
number of common
shares                   34,398,789     34,149,429         34,313,636       34,093,104
outstanding -
basic
Dilutive shares          915,558        554,696            854,791          538,307
Dilutive
convertible             -             8,620,690        -              8,620,690  
preferred stock
Weighted-average
number of common
shares                  35,314,347    43,324,815       35,168,427     43,252,101 
outstanding -
diluted


Note: Excludes after tax impacts of loss on impairment and asset disposals,
restructuring benefit, gain on the settlement of unclaimed property
liabilities, and non-recurring income tax adjustments.


Contact:

ICR
Media
Alecia Pulman, 203-682-8224
apulman@icrinc.com
or
Investor Relations
Fitzhugh Taylor, 203-682-8261
ftaylor@icrinc.com
 
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