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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

OR

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

 

2


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.

 

3


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.

 

4


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

 

 

 

 

 

 

 

 

 

 

 

 

2,101