ruth-8k_20190606.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): June 6, 2019

 

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))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

RUTH

Nasdaq

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 at the Piper Jaffray 39th Annual Consumer Marketplace Conference on June 6th in New York, NY and other investors on June 18th and 19th in Nantucket, MA at the Jefferies 2019 Global Consumer Conference.  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 Company recently entered into negotiated set pricing on approximately 70% of our tenderloin supply from August into early 2020.  This represents approximately 35% of the Company’s total beef supply.  The contract price during the entire period will be down 1% over prices paid in the previous year.

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 – June 2019.

Exhibit 99.2  Reconciliations of Non-GAAP Financial Measures used in the Investor Update – June 2019.

 

 

 

 


Exhibit Index

 

Exhibit

Number

 

Description

99.1

 

Investor Update – June 2019.

99.2

 

Reconciliations of Non-GAAP Financial Measures used in the Investor Update – June 2019.

 

 

 

 

 


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:  June 6, 2019

 

By:

/s/ Arne G. Haak

 

 

 

Arne G. Haak

 

 

 

Executive Vice President and Chief Financial Officer

 

 

ruth-ex991_128.pptx.htm

Slide 1

RUTH’S HOSPITALITY GROUP June 2019 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, capital expenditures, strategy, financial outlook, our effective tax rate and the impact of healthcare inflation, recent accounting pronouncements and tax reform legislation, 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 income taxes, unclaimed property, 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; the Company’s indemnification obligations in connection with its 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 our goodwill, other intangible assets or property; the impact of litigation; the restrictions imposed by the Company’s credit agreement; and changes in, or the discontinuation of, the Company’s quarterly cash dividend payments or share repurchase program. 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 30, 2018, 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. Non-GAAP Financial Measures We prepare our financial statements in accordance with U.S. generally accepted accounting principles (GAAP). Within these investor presentation materials, we make reference to “Adjusted EBITDA,” a non-GAAP financial measure, calculated on the basis of net income, excluding interest, taxes, depreciation, amortization, gain/loss on assets, losses on impairment, restructuring benefits/expenses, loss/income on discontinued operations and additional items. 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. 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. DISCLAIMER: THIS PRESENTATION CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.

Slide 3

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

Slide 4

RUTH’S CHRIS STEAK HOUSE: AN EVOLVING ICONIC BRAND 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. This foundation of operational excellence serves as our platform for evolution as we continuously innovate to maintain relevance with both our core and emerging guest.

Slide 5

X Entrees 85% BRAND AWARENESS 157 LOCATIONS GLOBALLY MORE THAN 9 MILLION GUESTS SERVED IN 2018 80% OF RUTH’S CHRIS DINERS BECOME “STORYTELLERS”

Slide 6

PROVEN BUSINESS MODEL – BROAD GEOGRAPHIC APPEAL 80 Company / 55 Franchise Domestic company-owned count includes six locations in Hawaii (not pictured) and locations in Cherokee, NC , Tulsa, OK and Reno, NV 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 1 1 5 3 1 5 2 6 7 1 4 4 2 1 2 1 2 1 81 Company / 55 Franchise

Slide 7

Chengdu, China Shanghai, China Chongqing, 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 (2) Niagara Falls, Canada Edmonton, Canada Calgary, Canada Markham, Canada PROVEN BUSINESS MODEL – AND 21 INTERNATIONAL LOCATIONS 136 0 Company / 21 Franchise

Slide 8

BROAD APPEAL ACROSS MULTIPLE CUSTOMER GROUPS Holiday offerings Birthdays Anniversaries Onsite event managers Extensive private dining options Off-site catering SPECIAL OCCASIONS BUSINESS/CORPORATE CORE CUSTOMER Innovation: three prix fixe menu launches each year Sizzle, Swizzle & Swirl Happy Hour and core menu evolution Wine dinners featuring world-class vintners

Slide 9

THE SECRET BEHIND THE SIZZLE Support and protect our foundation of operational excellence – Our People, Our Food, Our Atmosphere Leverage brand strength to accelerate differentiation of the guest experience 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 10

NASDAQ: RUTH Support and protect our foundation of operational excellence – Our People, Our Food, Our Atmosphere Leverage brand strength to accelerate differentiation of the guest experience THE SECRET BEHIND THE SIZZLE: MAINTAIN A HEALTHY CORE

Slide 11

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

Slide 12

ELEVATING ATMOSPHERE DESIGN Multi-use dining space Evolved bar layout Transitional floor plan design REMODELS Multi-year initiative Align new design and infrastructure elements Targeting 6-10 remodels annually WALTHAM, MA

Slide 13

PASADENA, CA REMODEL COMPLETED 2018 BEFORE AFTER

Slide 14

AMPLIFYING EXPERIENCES EMBRACED CULTURE OF TEST AND LEARN New occasions to share in the Ruth’s Chris experience Seasonal pairings - Filet & Cabernet Wine dinners as spirited celebrations Curated bar menus LOYALTY RECOGNITION VIP TasteMaker Club

Slide 15

INTEGRATED E-COMMERCE PLATFORM E-commerce site developed to support ability to sell in-restaurant experiences. ELEVATED PRODUCT OFFERINGS – ENHANCED GIFT EXPANSION

Slide 16

NASDAQ: RUTH 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

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 (3Q18), Paramus, NJ (4Q18), Reno, NV – Operating Agreement (4Q18) Four openings in 2019-2020: Columbus, OH (2H19), Washington, DC (2H19, Relo), Somerville, MA (2H19), Oklahoma City, OK (2020) Continuing to work on additional opportunities for 2020 PARAMUS, NJ

Slide 18

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 (2Q18), Markham, Ontario (3Q18) Two openings in 2019 and 2020: Chongqing, China (1H19), St. George, UT (1H20) DISCIPLINED GROWTH – FRANCHISE - OWNED FT. WAYNE, IN

Slide 19

Looking to acquire franchise territory at attractive prices December 2017 acquisition of six restaurants in Hawaii Acquisition of three restaurants and territory in the Philadelphia area, including parts of New Jersey as well as Long Island, New York scheduled for Q3 2019 Garden City, NY Philadelphia, PA King of Prussia, PA DISCIPLINED GROWTH – FRANCHISE ACQUISITION PHILADELPHIA, PA

Slide 20

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% DENVER, CO

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

KEYS TO STRONG CASH FLOWS: CONSISTENT AVERAGE UNIT VOLUME GROWTH FY 2012 and 2017 include a 53rd week. 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 +1.4% 78 1 1 +1.8% 78

Slide 23

KEYS TO STRONG CASH FLOWS: COMMITTED FRANCHISEES Unique franchise business model provides annuity stream Provides $17 million to $18 million in annual royalty fees 76 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 in December of 2017. The decrease in franchise sales in 2018 is driven primarily by this acquisition. 1

Slide 24

CONSISTENT NET INCOME AND ADJUSTED EBITDA GROWTH +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. +8.1% 2009 2010 2011 20121 2013 2014 2015 2016 20171 2018 GAAP Net Income and Adjusted EBITDA ($MM) $33 $36 $37 $41 $47 $51 $58 $61 $66 $72 $2 $16 $20 $16 $22 $16 $30 $30 $30 $42 Adjusted EBITDA GAAP Net Income Adjusted EBITDA, a non-GAAP financial measure, excludes from net income 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. 2019 Q1 LTM $72 +1.0% $42

Slide 25

CAPITAL ALLOCATION METHODOLOGY FINANCIAL PRINCIPLES: Focus on Organic Sales Growth Through Traffic Drive Margin Expansion Deploy Capital to Highest Return Opportunities Maintain a Healthy Balance Sheet Reasonable Debt of 1-2X EBITDA Return Excess Capital Debt Paydown, Dividends and Share Repurchases

Slide 26

TOTAL RETURN STRATEGY TO DRIVE SHAREHOLDER RETURNS ($ in millions) Net Debt Repayment/ (Borrowing) Share Repurchases Dividend Payments Total 1 $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 $10 $187 $54 $251MM 1. Amounts may not foot due to rounding. 2018 $9 $19 $14 $41MM

Slide 27

RHGI INVESTMENT SUMMARY PROVEN BUSINESS MODEL WITH A LONG HISTORY OF SUCCESS High-end fine-dining steak experience remains timeless after 54 years RECORD OF CONSISTENT PERFORMANCE DRIVEN BY OPERATIONAL EXCELLENCE Consistent revenue, net income, EBITDA and EPS growth STRONG CASH FLOW SUPPORTS MULTIPLE LEVERS TO DRIVE SHAREHOLDER RETURN Focused on disciplined deployment of capital and augmenting returns to shareholders through dividends, share repurchases and debt repayment Returned over $240MM to shareholders since 2011 through dividends and share repurchases JERSEY CITY, NJ

ruth-ex992_6.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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

52 Weeks Ended

 

 

 

 

 

2009 (1)

 

 

2010 (1)

 

 

2011

 

 

2012

 

 

2013

 

 

2014

 

 

2015

 

 

2016

 

 

2017

 

 

2018

 

 

March 31, 2019

 

 

 

Net income (loss)

 

$

2,419

 

 

$

15,957

 

 

$

19,549

 

 

$

16,379

 

 

$

22,489

 

 

$

16,455

 

 

$

30,004

 

 

$

30,465

 

 

$

30,137

 

 

$

41,680

 

 

$

41,945

 

 

 

Interest expense

 

 

7,756

 

 

 

4,244

 

 

 

2,892

 

 

 

3,171

 

 

 

1,640

 

 

 

1,159

 

 

 

790

 

 

 

1,154

 

 

 

821

 

 

 

1,739

 

 

 

1,764

 

 

 

Income tax expense (benefit)

 

 

99

 

 

 

5,026

 

 

 

2,963

 

 

 

7,855

 

 

 

10,744

 

 

 

11,830

 

 

 

14,168

 

 

 

15,660

 

 

 

15,669

 

 

 

8,247

 

 

 

8,392

 

 

 

Depreciation and amortization expenses

 

 

13,217

 

 

 

12,182

 

 

 

11,516

 

 

 

11,050

 

 

 

10,229

 

 

 

10,917

 

 

 

12,520

 

 

 

13,434

 

 

 

14,995

 

 

 

18,538

 

 

 

19,046

 

 

 

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

 

 

9,640

 

 

 

483

 

 

 

436

 

 

 

3,262

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,904

 

 

 

-

 

 

 

-

 

 

 

Restructuring expense (benefit)

 

 

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

 

 

 

1,525

 

 

 

1,112

 

 

 

Loss (income) on discontinued operations, net of tax

 

 

(615

)

 

 

(160

)

 

 

(171

)

 

 

(187

)

 

 

2,004

 

 

 

10,255

 

 

 

162

 

 

 

290

 

 

 

108

 

 

 

(80

)

 

 

(70

)

 

 

Adjusted EBITDA

 

$

32,572

 

 

$

36,275

 

 

$

37,185

 

 

$

40,847

 

 

$

46,693

 

 

$

50,616

 

 

$

57,644

 

 

$

61,281

 

 

$

66,253

 

 

$

71,649

 

 

$

72,189

 

 

 

 

(1) The net income (loss) for fiscal years 2008, 2009 and 2010 were last reported on Form 10-K for the fiscal years 2012, 2013 and 2014, 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.