Ruth’s Hospitality Group, Inc. (NASDAQ: RUTH) today reported unaudited financial results for its first quarter ended March 25, 2012.
For the first quarter of fiscal year 2012, the Company reported net income of $6.1 million. Due to the previously announced retirement of the Company’s preferred shares in March, the net income applicable to preferred and common shareholders was reduced by $35.8 million to a loss of $30.3 million or $0.89 loss per diluted share. The reduction reflects the excess of redemption value over the carrying value of preferred shares redeemed during the quarter. In the first quarter of 2011, the Company reported net income applicable to preferred and common shareholders of $6.2 million, or $0.14 per diluted share.
Highlights for the first quarter of 2012 compared to the first quarter of 2011 were as follows:
Total revenues in the first quarter rose 3.4% to $101.0 million compared to $97.7 million in the prior year.
- Company-owned comparable restaurant sales for Ruth’s Chris Steak House increased 3.7%.
- Company-owned comparable restaurant sales for Mitchell’s Fish Market were flat.
- Food and beverage costs, as a percentage of restaurant sales, increased 130 basis points in the first quarter to 32.0% driven by unfavorable beef costs.
- Restaurant operating expenses, as a percentage of restaurant sales, decreased 40 basis points in the first quarter to 48.8% as increased sales leverage offset higher health insurance costs.
- Marketing and advertising costs, as a percentage of total revenues, decreased 130 basis points to 1.7% in the first quarter due to a decrease in TV production costs and a shift in the timing of advertising campaigns.
- General and administrative expenses increased $1.0 million to $6.9 million in the first quarter due to increases in legal fees and personnel costs. The increased legal fees pertained to the amendment to our senior credit facility, the redemption of our preferred stock, and on-going litigation.
- In February of 2012, the Company successfully amended its senior credit facility, which among other items, extends the agreement until 2017 and results in increased financial flexibility and lower borrowing costs. In conjunction with the refinancing, the Company recorded a one-time pre-tax expense of $0.9 million related to legal fees and the write-off of financing costs previously deferred.
- In March of 2012, the Company repurchased and retired all of its Series A 10% Redeemable Convertible Preferred Stock for $60 million. The purchase was funded using borrowings from the Company’s amended senior credit facility. After the repurchase and retirement of the preferred stock, the Company’s fully diluted common share base decreased by approximately 8.6 million shares and the 10% annual dividend on the preferred stock, which amounted to $2.5 million in fiscal year 2011, was eliminated.
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