Ruth's Hospitality Group, Inc.

Good morning, ladies and gentlemen, and welcome to today's Ruth's Hospitality Group fourth quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. Following the company's formal remarks, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions. As a reminder, today's conference is being recorded. I would now like to turn the conference over to Christy Chipman, Chief Financial Officer and Chief Operating Officer. Please go ahead.

Thank you, Sherry, and good morning, everyone. Joining me on the call today is Cheryl Henry, our President, Chief Executive Officer, and Chairperson of the Board, and Michael Hines, Vice President of Finance and Accounting. Before we begin, I'd like to remind you that part of our discussion today will include forward-looking statements. These statements are not guarantees of our future performance and therefore undue reliance should not be placed upon them. We'd also encourage you to refer to the investor relations section of our website at rhgi.com as well as the SEC's website at sec.gov for copies of today's earnings press release and our recent filings with the SEC for a more detailed discussion of the risks that impact our future operating and financial results. During this call, we will refer to adjusted earnings per share. This non-GAAP measurement was calculated by excluding certain items. We believe that this measure represents a useful internal measure of performance. You can find a reconciliation of adjusted earnings per share in our press release for today's call. I would now like to turn the call over to the company's Chief Executive Officer, Cheryl Henry.

Thank you, Christy, and good morning, everyone. Let me begin by expressing my gratitude to all our team members and franchise partners for their continued hard work and dedication during this past year. Our success is a direct result of their ability to adapt to a changing environment and deliver on our strategic initiatives. Our performance in 2021 has demonstrated that our iconic brand remains relevant across generations and our underlying business is strong. To that end, we returned to positive sales in the second half of the year, as well as new unit growth, strengthened our balance sheet and liquidity position, reinstated our share repurchase program, and more recently, reinstated our dividends. Highlights for the fourth quarter included a 61% increase in comparable sales, driving restaurant sales to near $120 million, with adjusted earnings of $0.34 per share. Notably, comparable sales were positive in October, strengthened further in November, before softening in December due to the emergence of Omicron late in the quarter. Comps were also impacted by approximately 640 basis points due to the underperformance of our restaurants in Boston, Manhattan, and Hawaii. Looking to the first quarter of 2022, January continues to feel the effects from the virus, but I'm pleased to report that we've seen a rebound in sales in February, with comp sales of positive 4.3% through eight weeks of the quarter. With that, we believe our underlying business remains strong, and based on our accomplishments in 2021 and thus far in 2022, we're committed to investing in the long-term growth and health of our business. As we look to the remainder of 22 and beyond, our strategy is to return to a more consistent cadence of new restaurant development with a goal of opening between five and seven new restaurants each year. To that point, we are currently scheduled to open five new restaurants in 2022, the first of which opens in two weeks in Aventura, Florida. We also recently signed two new leases for 2023 and are continuing to fill the pipeline. We will continue to invest in data and digital technologies and a team to support those initiatives. We began this transformation in 2021 and believe it's a key catalyst for maintaining our core customer base, as well as introducing new guests to our brands. The nature of our high touch hospitality requires us to be very deliberate in how we introduce technology to our business as we want to ensure that it not only enhances guest experiences in an authentic way, but also reduces friction in the restaurants and increases our productivity. We continue to expand both our commercial and operational tests that include in and out of restaurant personalization as well as capacity management using a proprietary platform to provide real-time, detailed insights into each individual restaurant. The early read on these tests is positive, and we rolled out our capacity management initiative system-wide in late January. We look forward to sharing more on the system-wide results on future calls. With our focus on investing for the future, and more importantly, team members and franchise partners who are committed to operational excellence, we believe we are well-positioned for continued success. I'll now turn the call over to Christy to cover the specifics of the quarter.