Ruth’s Hospitality Group, Inc. Reports First Quarter 2010 Financial Results

Ruth’s Hospitality Group, Inc. (NASDAQ: RUTH) today reported unaudited financial results for its first quarter ended March 28, 2010.

Highlights for the first quarter of 2010 compared to the first quarter of 2009 were as follows:

• Total revenues were flat compared to prior year at $94.7 million.
• Net income available to common shareholders of $6.0 million, or $0.19 per diluted share, compared to $3.7 million, or $0.16 per diluted share, in the first quarter of 2009. Net income available to common shareholders for the first quarter of 2010 included a $0.7 million income tax benefit for a correction of an immaterial error related to certain prior year tax credits. Excluding this adjustment, net income available to common shareholders in the quarter was $0.17 per diluted share.
• Company-owned comparable restaurant sales for Ruth’s Chris Steak House decreased 0.5%. Company-owned comparable restaurant sales for Mitchell’s Fish Market increased 2.4%.
• Food and beverage costs, as a percentage of restaurant sales, decreased 80 basis points to 29.3%, which was primarily driven by favorable beef costs.
• Restaurant operating expenses, as a percentage of restaurant sales, decreased 90 basis points to 51.3%, as a result of continued reductions in variable costs from initiatives implemented throughout 2009.
• General and administrative expenses were essentially even to prior year at $5.6 million.
• Depreciation and amortization expenses, as a percentage of total revenues, decreased 20 basis points to 4.1% primarily due to the home office building sale in the fourth quarter of 2009.
• Interest expense decreased by $0.3 million to $2.0 million in the first quarter of 2010.
• At the end of the first quarter of 2010, the Company had $74.0 million in debt outstanding under its senior credit agreement. This represents a reduction of $51.5 million from the December 27, 2009 balance of $125.5 million. On February 12, 2010, the Company applied approximately $44.3 million of the net proceeds from the rights offering and the private placement, together with cash on hand, to reduce its outstanding borrowings under its existing credit facility.

Michael P. O'Donnell, President and Chief Executive Officer of Ruth’s Hospitality Group, Inc., stated, “Our net income growth year over year reflects a combination of stabilizing comparable sales at both our brands and the continuation of effective cost management. As we look to the future we believe that the operational and financial improvements that began in late 2008, position Ruth’s Hospitality Group to benefit from strong operating leverage as the economy recovers. While successful four-wall execution at existing locations is a top priority, we are closely evaluating new restaurant development at Ruth’s Chris Steak House and Mitchell’s Fish Market. We are scheduled to open our newest Mitchell’s Fish Market in Orlando, Florida in June and we’re selectively analyzing other real estate sites for both brands. As always we will be prudent with development and only commit capital when we believe adequate returns will be generated for shareholders.”

Review of Operating Results

Total revenues, which include Company-owned restaurant sales, franchise income, and other operating income, were $94.7 million compared to $94.7 million in the first quarter of 2009. Company-owned restaurant sales declined 0.3% to $91.2 million for the first quarter of 2010 from $91.4 million in the same quarter last year. Total operating weeks decreased 0.8% to 1,118 from 1,127.

Average weekly sales for Ruth’s Chris Steak House were $85.6 thousand in the first quarter of 2010 compared to $85.9 thousand in the first quarter of 2009. Average weekly sales at Mitchell’s Fish Market were $70.5 thousand compared to $68.8 thousand in the prior year first quarter.

For the first quarter of 2010, Company-owned comparable restaurant sales at Ruth’s Chris Steak House decreased 0.5%, which consisted of an average check decrease of 2.3% and an entr