SEC Filing | Ruth's Hospitality Group, Inc.

View:

Download DOC

Download PDF

Download XLS

Download XBRL

ruth-10q_20200628.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 28, 2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-51485

Ruth’s Hospitality Group, Inc.

(Exact name of registrant as specified in its charter)

Delaware	72-1060618
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1030 W. Canton Avenue, Suite 100, Winter Park, FL	32789
(Address of principal executive offices)	(Zip code)

(407) 333-7440

Registrant’s telephone number, including area code

None

Former name, former address and former fiscal year, if changed since last report

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☒	Accelerated Filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock as of July 31, 2020 was 34,923,439, which includes 673,007 shares of unvested restricted stock.

TABLE OF CONTENTS


		Page
Part I — Financial Information		3

Item 1	Financial Statements:	3

	Condensed Consolidated Balance Sheets as of June 28, 2020 and December 29, 2019	3

	Condensed Consolidated Statements of Operations for the Thirteen and Twenty-six Week Periods ended June 28, 2020 and June 30, 2019	4

	Condensed Consolidated Statements of Shareholders’ Equity for the Thirteen and Twenty-six Week Periods ended June 28, 2020 and June 30, 2019	5

	Condensed Consolidated Statements of Cash Flows for the Twenty-six Week Periods ended June 28, 2020 and June 30, 2019	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3	Quantitative and Qualitative Disclosures about Market Risk	30

Item 4	Controls and Procedures	31

Part II — Other Information		32

Item 1	Legal Proceedings	32

Item 1A	Risk Factors	32

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	33

Item 3	Defaults Upon Senior Securities	33

Item 4	Mine Safety Disclosures	34

Item 5	Other Information	34

Item 6	Exhibits	34

Signatures		35

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RUTH’S HOSPITALITY GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets—Unaudited

(Amounts in thousands, except share and per share data)

	June 28,		December 29,
	2020		2019
Assets
Current assets:
Cash and cash equivalents	$	96,127	$	5,567
Accounts receivable, less allowance for doubtful accounts 2020 - $346; 2019 - $241		11,441		23,769
Inventory		7,754		9,623
Prepaid expenses and other		4,155		3,052
Total current assets		119,477		42,011
Property and equipment, net of accumulated depreciation 2020 - $173,614; 2019 - $173,845		134,890		142,962
Operating lease right of use assets		202,150		206,358
Goodwill		45,549		45,549
Franchise rights, net of accumulated amortization 2020 - $5,411; 2019 - $4,401		45,607		49,916
Other intangibles, net of accumulated amortization 2020 - $1,504; 2019 - $1,439		4,179		4,449
Deferred income taxes		8,085		4,929
Income tax receivable		5,891		—
Other assets		1,201		702
Total assets	$	567,029	$	496,876
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	6,648		13,598
Accrued payroll		11,334		17,303
Accrued expenses		10,919		10,574
Deferred revenue		48,226		52,856
Current operating lease liabilities		15,384		14,313
Other current liabilities		1,658		4,237
Total current liabilities		94,169		112,881
Long-term debt		135,200		64,000
Operating lease liabilities		227,592		223,292
Unearned franchise fees		2,371		2,489
Other liabilities		69		69
Total liabilities		459,401		402,731
Commitments and contingencies (Note 12)		—		—

Shareholders' equity:
Common stock, par value $.01 per share; 100,000,000 shares authorized, 34,143,931 shares issued and outstanding at June 28, 2020, 28,418,691 shares issued and outstanding at December 29, 2019		341		284
Additional paid-in capital		79,732		40,462
Retained earnings		27,555		53,399
Treasury stock, at cost; 71,950 shares at June 28, 2020 and December 29, 2019		—		—
Total shareholders' equity		107,628		94,145
Total liabilities and shareholders' equity	$	567,029	$	496,876

See accompanying notes to condensed consolidated financial statements.

RUTH’S HOSPITALITY GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations—Unaudited

(Amounts in thousands, except share and per share data)

	13 Weeks Ended						26 Weeks Ended
	June 28,			June 30,			June 28,			June 30,
	2020			2019			2020			2019

Revenues:
Restaurant sales	$	26,978		$	104,017		$	130,018		$	217,003
Franchise income		956			4,421			4,582			8,979
Other operating income		483			1,805			2,353			4,002
Total revenues		28,417			110,243			136,953			229,984

Costs and expenses:
Food and beverage costs		8,030			29,023			38,657			60,871
Restaurant operating expenses		26,273			51,156			81,827			104,759
Marketing and advertising		1,487			4,121			4,925			7,751
General and administrative costs		7,066			8,929			15,095			17,681
Depreciation and amortization expenses		5,522			5,124			11,345			10,092
Pre-opening costs		304			244			781			341
Gain on lease modifications		(488	)		—			(488	)		—
Loss on impairment		4,283			—			12,980			—
Total costs and expenses		52,477			98,597			165,122			201,495

Operating income (loss)		(24,060	)		11,646			(28,169	)		28,489

Other income (expense):
Interest expense, net		(1,291	)		(417	)		(1,919	)		(822	)
Other		3			13			36			15

Income (loss) before income taxes		(25,348	)		11,242			(30,052	)		27,682
Income tax expense (benefit)		(7,750	)		1,933			(8,636	)		4,462
Net income (loss)	$	(17,598	)	$	9,309		$	(21,416	)	$	23,220

Basic earnings (loss) per common share	$	(0.59	)	$	0.32		$	(0.74	)	$	0.79

Diluted earnings (loss) per common share	$	(0.59	)	$	0.31		$	(0.74	)	$	0.78

Shares used in computing earnings (loss) per common share:
Basic		29,951,332			29,252,651			29,119,296			29,264,076
Diluted		29,951,332			29,726,102			29,119,296			29,768,702

Cash dividends declared per common share	$	—		$	0.13		$	0.15		$	0.26

See accompanying notes to condensed consolidated financial statements.

RUTH’S HOSPITALITY GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity—Unaudited

(Amounts in thousands, except per share data)

							Additional
	Common Stock						Paid-in			Retained			Treasury Stock				Shareholders'
	Shares			Value			Capital			Earnings			Shares		Value		Equity
Balance at December 29, 2019		28,419		$	284		$	40,462		$	53,399			72	$	—	$	94,145
Net loss		—			—			—			(3,818	)		—		—		(3,818	)
Cash dividends, $0.15 per common share		—			—			—			(4,428	)		—		—		(4,428	)
Repurchase of common stock		(902	)		(9	)		(13,217	)		—			—		—		(13,226	)
Shares issued under stock compensation plan net of shares withheld for tax effects		100			1			(659	)		—			—		—		(658	)
Stock-based compensation		—			—			2,065			—			—		—		2,065
Balance at March 29, 2020		27,617		$	276		$	28,652		$	45,153			72	$	—	$	74,081
Net loss		—			—			—			(17,598	)		—		—		(17,598	)
Stock issuance		6,455			65			49,517			—			—		—		49,582
Shares issued under stock compensation plan net of shares withheld for tax effects		72			1			(395	)		—			—		—		(394	)
Stock-based compensation		—			—			1,958			—			—		—		1,958
Balance at June 28, 2020		34,144		$	341		$	79,732		$	27,555			72	$	—	$	107,628

Balance at December 30, 2018		29,269		$	293		$	61,819		$	28,020			72	$	—	$	90,132
Net income		—			—			—			13,911			—		—		13,911
Cash dividends, $0.13 per common share		—			—			—			(3,967	)		—		—		(3,967	)
Repurchase of common stock		(26	)		—			(568	)		—			—		—		(568	)
Shares issued under stock compensation plan net of shares withheld for tax effects		133			1			(1,632	)		—			—		—		(1,631	)
Stock-based compensation		—			—			2,033			—			—		—		2,033
Cumulative effect of a change in accounting principle		—			—			—			(1,261	)		—		—		(1,261	)
Balance at March 31, 2019		29,376		$	294		$	61,652		$	36,703			72	$	—	$	98,649
Net income		—			—			—			9,309			—		—		9,309
Cash dividends, $0.13 per common share		—			—			—			(3,931	)		—		—		(3,931	)
Repurchase of common stock		(250	)		(3	)		(6,569	)		—			—		—		(6,572	)
Shares issued under stock compensation plan net of shares withheld for tax effects		102			1			(1,446	)		—			—		—		(1,445	)
Stock-based compensation		—			—			2,101			—			—		—