ruth-8k_20181206.htm

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 6, 2018

 

RUTH’S HOSPITALITY GROUP, INC.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware

000-51485

72-1060618

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

 

 

 

1030 W. Canton Avenue, Ste. 100

Winter Park, FL

 

32789

(Address of Principal Executive Offices)

 

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (407) 333-7440

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

 

 

 


Item 7.01. Regulation FD Disclosure

Ruth’s Hospitality Group, Inc. will meet with investors and analysts in New York, NY on December 6, 2018 and Chicago, IL on December 7, 2018.  During these meetings, management expects to present a corporate overview and financial highlights.  A copy of the presentation, substantially in the form expected to be used in such meetings, is furnished herewith as Exhibit 99.1. Also, a copy of the reconciliations of non-GAAP financial measures used in the presentation is furnished herewith as Exhibit 99.2.

The information in this Item 7.01 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. The information in this Item 7.01 of this Current Report on Form 8-K shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits

Exhibit 99.1   Investor Update – November 2018 Update.

Exhibit 99.2   Reconciliations of Non-GAAP Financial Measures used in the Investor Update – November 2018 Update.

 

 

 

 


Exhibit Index

 

Exhibit

Number

 

Description

99.1

 

Investor Update – November 2018 Update.

99.2

 

Reconciliations of Non-GAAP Financial Measures used in the Investor Update – November 2018 Update.

 

 

 

 

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

RUTH’S HOSPITALITY GROUP, INC.

 

 

 

 

Date:  December 6, 2018

 

By:

/s/ Arne G. Haak

 

 

 

Arne G. Haak

 

 

 

Executive Vice President and Chief Financial Officer

 

 

ruth-ex991_6.pptx.htm

Slide 1

RUTH’S HOSPITALITY GROUP November 2018 Update Abdiel Aleman, VP of Culinary Development – 1997 Culinary Institute of America Exhibit 99.1

Slide 2

This presentation contains “forward-looking statements” that reflect, when made, the Company’s expectations or beliefs concerning future events that involve risks and uncertainties. Forward-looking statements frequently are identified by the words “believe,” “anticipate,” “expect,” “estimate,” “intend,” “project,” “targeting,” “will be,” “will continue,” “will likely result,” or other similar words and phrases. Similarly, statements herein that describe the Company’s objectives, plans or goals, including with respect to new restaurant openings, strategy, financial outlook, capital expenditures, our effective tax rate and the expected impact and timing of integration of the Hawaii franchisee also are forward-looking statements. Actual results could differ materially from those projected, implied or anticipated by the Company’s forward-looking statements. Some of the factors that could cause actual results to differ include: reductions in the availability of, or increases in the cost of, USDA Prime grade beef, fish and other food items; changes in economic conditions and general trends; the loss of key management personnel; the effect of market volatility on the Company’s stock price; health concerns about beef or other food products; the effect of competition in the restaurant industry; changes in consumer preferences or discretionary spending; labor shortages or increases in labor costs; the impact of federal, state or local government regulations relating to Company employees, the sale or preparation of food, the sale of alcoholic beverages and the opening of new restaurants; harmful actions taken by the Company’s franchisees; a material failure, interruption or security breach of the Company’s information technology network; repeal or reduction of the federal FICA tip credit; the impact of recent tax legislation and accounting policy changes; unexpected expenses incurred as a result of the sale of the Mitchell’s Restaurants; the Company’s ability to protect its name and logo and other proprietary information; an impairment in the financial statement carrying value of the Company’s goodwill, other intangible assets or property; the impact of litigation; the restrictions imposed by the Company’s Credit Agreement; changes in, or the discontinuation of, the Company’s quarterly cash dividend payments or share repurchase program; unanticipated costs associated with the Hawaii franchisee acquisition; and the Company’s inability to successfully integrate the Hawaii franchisee restaurants into its operations. For a discussion of these and other risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, which is 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 presentation to reflect events or circumstances after the date hereof. You should not assume that material events subsequent to the date of this presentation have not occurred.   Unless the context otherwise indicates, all references in this presentation to the “Company,” “Ruth’s,” “we,” “us”, “our” or similar words are to Ruth’s Hospitality Group, Inc. and its subsidiaries. Ruth’s Hospitality Group, Inc. is a Delaware corporation formerly known as Ruth’s Chris Steak House, Inc., and was founded in 1965. DISCLAIMER: THIS PRESENTATION CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.

Slide 3

Proven, differentiated business model with a history of success Record of consistent performance driven by operational excellence Cash flow supports multiple levers to drive total shareholder returns A COMPELLING LONG-TERM INVESTMENT OPPORTUNITY NASDAQ: RUTH

Slide 4

RUTH’S CHRIS STEAK HOUSE: A BRAND WITH STAYING POWER From our beginnings in New Orleans back in 1965, founder Ruth Fertel’s simple and timeless formula of always offering the highest quality food, beverage and service in a warm and inviting atmosphere has resonated strongly with guests.

Slide 5

PROVEN BUSINESS MODEL – HAS GROWN TO 135 U.S. LOCATIONS 80 Company / 55 Franchise Domestic company-owned count includes six locations in Hawaii (not pictured) and locations in Cherokee, NC & Tulsa, OK operating under contractual agreements. Domestic franchise-owned count includes one location in Puerto Rico (not pictured). 15 2 14 1 3 4 1 3 1 1 2 3 9 9 4 1 2 5 2 1 5 3 1 5 2 5 7 1 4 4 1 1 2 1 2 1

Slide 6

Chengdu, China Shanghai, China Taipei, Taiwan Taipei, Taiwan (Dai Zhi) Taichung, Taiwan Kaohsiung, Taiwan Kowloon, Hong Kong Queensway, Hong Kong Tokyo, Japan Marina Square, Singapore Jakarta, Indonesia Palm Beach, Aruba Cabo San Lucas, Mexico Cancun, Mexico Toronto, Canada Mississauga, Canada Niagara Falls, Canada Edmonton, Canada Calgary, Canada PROVEN BUSINESS MODEL – AND 19 INTERNATIONAL LOCATIONS 135 0 Company / 19 Franchise

Slide 7

THE SECRET BEHIND THE SIZZLE Grow sales through same store sales initiatives Ruth’s 2.0 menu updates Ruth’s 2.0 restaurant remodels Strong FCF allows significant return of capital through: Dividend payments Share repurchases Debt repayment MAINTAIN HEALTHY CORE CONTINUE DISCIPLINED GROWTH RETURN EXCESS CAPITAL Three to five new restaurants per year for both franchise and Company Acquire franchise territory at attractive prices

Slide 8

Grow sales through same store sales initiatives Ruth’s 2.0 menu updates Ruth’s 2.0 restaurant remodels THE SECRET BEHIND THE SIZZLE: MAINTAIN A HEALTHY CORE NASDAQ: RUTH

Slide 9

BROAD APPEAL ACROSS MULTIPLE CUSTOMER GROUPS Holiday offerings Birthdays Anniversaries Onsite event managers Extensive private dining and off-site catering HD satellite broadcast for multi-location events Innovation: three prix fixe menu launches each year Sizzle, Swizzle & Swirl Happy Hour Core menu evolution MAKING MEMORIES ON 500 DEGREE SIZZLING PLATES BUSINESS / CORPORATE CORE CUSTOMERS SPECIAL OCCASIONS

Slide 10

Expert, tenured restaurant team Rigorous investment in annual recertification for corporate and franchise team members Classic American steak house with contemporary touches of whimsy All locations uniquely designed to reflect individual market characteristics and local tastes OUR FOOD OUR ATMOSPHERE OUR PEOPLE OUR PEOPLE, OUR FOOD, OUR ATMOSPHERE Only the best will do – USDA prime steak, fresh seafood and local produce Industry-leading bar menu featuring fresh-squeezed, handcrafted, mixology-driven cocktail list

Slide 11

RUTH’S 2.0 MENU UPDATES RUTH’S 2.0 A marketing and operational initiative to evolve our menu, infrastructure and design elements. MENU Adding new menu items that appeal to guests without adding operational complexity. DEPLOYMENT Menu design changes completed in 2016. Multi-year initiative on infrastructure and design changes.

Slide 12

Cowboy Ribeye Crab Beignets Crab Stack Bone-In Filet Chicken Sandwich NEW MENU ITEMS

Slide 13

RUTH’S 2.0 RESTAURANT REMODELS RUTH’S 2.0 A marketing and operational initiative to evolve our menu, infrastructure and design elements. DESIGN All new Company and franchise restaurants will reflect updated infrastructure & design elements. REMODELS Multi-year initiative that will align portions of new design and infrastructure elements. Targeting 6-10 remodels annually. FT. LAUDERDALE, FL

Slide 14

RUTH’S 2.0 - BOSTON, MA

Slide 15

RUTH’S 2.0 - SAVANNAH, GA

Slide 16

Three to five new restaurants per year for both franchise and Company Acquire franchise territory at attractive prices THE SECRET BEHIND THE SIZZLE: CONTINUE DISCIPLINED GROWTH NASDAQ: RUTH

Slide 17

DISCIPLINED GROWTH – COMPANY - OWNED COMPANY- OWNED GROWTH Looking to grow 3 – 5 units per year Focused solely on U.S. Markets Leverage existing management infrastructure Three openings in 2018: Jersey City, NJ (Opened August 27th), Paramus, NJ (4Q18) and Reno, NV (Management Agreement) (4Q18) One opening in 2019: Columbus, OH; One opening in 2020: Oklahoma City, OK Continuing to work on additional opportunities DENVER, CO

Slide 18

COMPANY-OWNED TARGET UNIT ECONOMICS TARGET UNITS 3– 5 units per year TARGET SIZE 8,000 – 10,000 square feet TYPICAL DEMOGRAPHICS Medium and large markets; DMA population > 1 million SALES TARGET $4MM – $6MM NET CASH INVESTMENT $2.5MM – $3.5 MM RESTAURANT LEVEL MARGINS > 20% WALTHAM, MA

Slide 19

FRANCHISE-OWNED GROWTH Allows system growth without additional Company capital Looking to grow 3 – 5 units per year Two openings in 2018: Fort Wayne, IN (Opened May 7th), Markham, Ontario (4Q18) Two openings in 2019: Chongquing, China (1Q19), St. George, UT (4Q19) DISCIPLINED GROWTH – FRANCHISE - OWNED FT WAYNE, IN

Slide 20

Looking to acquire franchise territory at attractive prices Recently completed the acquisition of six restaurants in Hawaii from longtime franchise partner, Desert Island Restaurants Honolulu (Oahu) Kauai Lahaina (Maui) Mauna Lani (Big Island) Waikiki (Oahu) Wailea (Maui) FRANCHISE ACQUISITION IS ALSO A VEHICLE FOR GROWTH LAHAINA, MAUI

Slide 21

Strong FCF allows significant return of capital through: Dividend payments Share repurchases Debt repayment THE SECRET BEHIND THE SIZZLE: RETURN EXCESS CAPITAL NASDAQ: RUTH

Slide 22

CONSISTENT AVERAGE UNIT VOLUME GROWTH FY 2012 and 2017 include a 53rd week. FY 2018 comp sales percentage represents Q3 2018 YTD comp sales on a comparable calendar basis, adjusting for the timing of the 53rd week in 2017. Comp Sales % -10.3% -19.5% +4.0% +5.4% +5.2% +5.3% +3.7% +3.4% +1.6% Full Year Total Location Count Company 66 64 64 63 64 63 65 67 68 +1.0% 77 +1.9% 78 1 1 2

Slide 23

FRANCHISEES ARE THE HEART AND SOUL OF OUR BUSINESS Unique franchise business model provides annuity stream. Provides $17 million to $18 million in annual royalty fees 74 locations/27 franchisees, many of whom date back to our founder, Ruth Fertel. 1. Franchise sales include sales related to the Hawaii-based restaurants acquired from longtime franchise partner, Desert Island Restaurants, in December of 2017. The decrease in franchise sales in 2018 is driven primarily by this acquisition. 1

Slide 24

CONSISTENT EBITDA GROWTH Adjusted EBITDA, a non-GAAP financial measure, excludes interest, taxes, depreciation, amortization, gain/loss on assets, losses on impairment, restructuring benefits/expenses, loss/income on discontinued operations and additional items not listed here. For a reconciliation of adjusted EBITDA to net income, see the reconciliation table furnished as Exhibit 99.2 to our Current Report on Form 8-K. +0.3% +11.4% +2.5% +9.8% +14.3% +8.4% +13.9% +6.3% +8.1% 1. FY 2012 and 2017 include a 53rd week. 1 1 +9.1%

Slide 25

RETURNING CAPITAL TO DRIVE SHAREHOLDER RETURNS ($ in millions) Net Debt Repayment/ (Borrowing) Share Repurchases Dividend Payments Total Capital Returned1 $29 $29MM ($23) $60 $37MM $26 $4 $30MM $6 $15 $7 $29MM $13 $24 $8 $45MM ($25) $45 $9 $29MM 2011 2012 2013 2014 2015 2016 Total ($25) $24 $11 $10MM 2017 $1 $168 $40 $210MM 1. Amounts may not foot due to rounding.

Slide 26

RHGI INVESTMENT SUMMARY PROVEN BUSINESS MODEL WITH A LONG HISTORY OF SUCCESS High-end fine-dining steak experience remains timeless after 53 years. RECORD OF CONSISTENT PERFORMANCE DRIVEN BY OPERATIONAL EXCELLENCE Consistent traffic, revenue, net income EBITDA and EPS growth. STRONG CASH FLOW SUPPORTS MULTIPLE LEVERS TO DRIVE SHAREHOLDER RETURN Maintaining a healthy core, growing in a disciplined fashion, returning excess capital to shareholders through dividends, share repurchases and debt repayment. Returned over $200MM to shareholders since 2011 through dividends and share repurchases.

ruth-ex992_7.htm

Exhibit 99.2

Reconciliation of Non-GAAP Financial Measures

We prepare our financial statements in accordance with U.S. generally accepted accounting principles (GAAP). Within our investor presentation materials, we make reference to adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA), a non-GAAP financial measure. We believe that this measurement represents a useful internal measure of performance. Accordingly, where we provide a non-GAAP measure like Adjusted EBITDA, 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. However, because Adjusted EBITDA is not determined in accordance with GAAP, it is susceptible to varying calculations and not all companies calculate the measure in the same manner. As a result, Adjusted EBITDA as presented may not be directly comparable to a similarly titled measure presented by other companies. Adjusted EBITDA is presented as supplemental information and not as an alternative to any GAAP measurements.

Reconciliation of Non-GAAP Financial Measures - Unaudited

(amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended

 

 

 

Fiscal Year

 

 

September 30,

 

 

 

2008 (1)

 

 

2009 (1)

 

 

2010

 

 

2011

 

 

2012

 

 

2013

 

 

2014

 

 

2015

 

 

2016

 

 

2017

 

 

2018

 

Net income (loss)

 

$

(53,883

)

 

$

2,419

 

 

$

15,957

 

 

$

19,549

 

 

$

16,379

 

 

$

22,489

 

 

$

16,455

 

 

$

30,004

 

 

$

30,465

 

 

$

30,137

 

 

$

36,401

 

Interest expense

 

 

10,334

 

 

 

7,756

 

 

 

4,244

 

 

 

2,892

 

 

 

3,171

 

 

 

1,640

 

 

 

1,159

 

 

 

790

 

 

 

1,154

 

 

 

821

 

 

 

1,553

 

Income tax expense (benefit)

 

 

(26,844

)

 

 

99

 

 

 

5,026

 

 

 

2,963

 

 

 

7,855

 

 

 

10,744

 

 

 

11,830

 

 

 

14,168

 

 

 

15,660

 

 

 

15,669

 

 

 

10,910

 

Depreciation and amortization expenses

 

 

12,757

 

 

 

13,217

 

 

 

12,182

 

 

 

11,516

 

 

 

11,050

 

 

 

10,229

 

 

 

10,917

 

 

 

12,520

 

 

 

13,434

 

 

 

14,995

 

 

 

17,668

 

Impact of excluding a cumulative catch-up adjustment from a change in accounting estimate related to gift card breakage revenue

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,306

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Loss on impairment and asset disposals, net

 

 

24,355

 

 

 

9,640

 

 

 

483

 

 

 

436

 

 

 

3,262

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,904

 

 

 

3,904

 

Restructuring expense (benefit)

 

 

5,195

 

 

 

56

 

 

 

(1,457

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Gain on settlements, net

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(683

)

 

 

(1,719

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Certain restaurant closing and rent dispute costs

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

278

 

 

 

-

 

 

 

-

 

Cost related to the acquisition of franchisee-owned restaurants

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

619

 

 

 

1,894

 

Loss (income) on discontinued operations, net of tax

 

 

60,546

 

 

 

(615

)

 

 

(160

)

 

 

(171

)

 

 

(187

)

 

 

2,004

 

 

 

10,255

 

 

 

162

 

 

 

290

 

 

 

108

 

 

 

(23

)

Adjusted EBITDA

 

$

32,460

 

 

$

32,572

 

 

$

36,275

 

 

$

37,185

 

 

$

40,847

 

 

$

46,693

 

 

$

50,616

 

 

$

57,644

 

 

$

61,281

 

 

$

66,253

 

 

$

72,307

 

 

(1) The net income (loss) for fiscal years 2008 and 2009 were last reported on Form 10-K for the fiscal years 2012 and 2013, respectively. The operating results of eighteen Mitchell's Fish Market and three Cameron's/Mitchell's Steakhouse restaurants sold in January 2015 and three Ruth's Chris Steak House restaurants closed in 2014 have been reclassified to discontinued operations. These reclassifications had no effect on previously reported net income.