The Cheesecake Factory Incorporated (NASDAQ: CAKE) today
reported financial results for the first quarter of fiscal 2024,
which ended on April 2, 2024.
Total revenues were $891.2 million in the first quarter of
fiscal 2024 compared to $866.1 million in the first quarter of
fiscal 2023. Net income and diluted net income per share were $33.2
million and $0.68, respectively, in the first quarter of fiscal
2024.
The Company recorded a pre-tax net expense of $3.2 million
related to impairment of assets and lease termination expenses and
Fox Restaurant Concepts (“FRC”) acquisition-related items.
Excluding the after-tax impact of these items, adjusted net income
and adjusted net income per share for the first quarter of fiscal
2024 were $35.6 million and $0.73, respectively. Please see the
Company’s reconciliation of non-GAAP financial measures at the end
of this press release.
Comparable restaurant sales at The Cheesecake Factory
restaurants declined 0.6% year-over-year in the first quarter of
fiscal 2024.
“The Cheesecake Factory restaurants comparable sales and traffic
once again meaningfully outperformed the industry,” said David
Overton, Chairman and Chief Executive Officer. “Our first quarter
sales improved throughout the quarter culminating at the high-end
of our expectations. Our operators continued to deliver
improvements in labor productivity, food efficiency, and hourly
staff and manager retention, all of which contributed to
significant growth in profitability.”
“Our success is undeniably linked to the hard work and
dedication of our experienced restaurant teams who enable us to
deliver the distinct, high quality dining experiences that have
distinguished The Cheesecake Factory as one of the most
differentiated restaurant concepts in the casual dining industry
for over 45 years. We are honored to have been named to the Fortune
magazine '100 Best Companies to Work For' list for the 11th
consecutive year, reinforcing our belief that we are an employer of
choice.”
Development
During the first quarter of fiscal 2024, the Company opened five
new restaurants, including two North Italia restaurants, two FRC
restaurants, and one Flower Child location. In addition, one
Cheesecake Factory restaurant opened internationally under a
licensing agreement in Mexico. Subsequent to quarter-end, one
Cheesecake Factory restaurant opened internationally under a
licensing agreement in Asia.
The Company continues to expect to open as many as 22 new
restaurants in fiscal 2024, including as many as three to four The
Cheesecake Factory restaurants, six to seven North Italia
restaurants, six to seven Flower Child locations, and six to seven
FRC restaurants.
Liquidity and Capital Allocation
As of April 2, 2024, the Company had total available liquidity
of $296.7 million, including a cash balance of $60.2 million and
availability on its revolving credit facility of $236.5 million.
Total principal amount of debt outstanding was $475 million,
including $345 million in principal amount of 0.375% convertible
senior notes due 2026 and $130 million in principal amount drawn on
the Company’s revolving credit facility.
The Company repurchased approximately 359,400 shares of its
stock at a cost of $12.5 million in the first quarter of fiscal
2024. In addition, the Company’s Board of Directors has declared a
quarterly dividend of $0.27 per share to be paid on June 4, 2024 to
shareholders of record at the close of business on May 22,
2024.
Conference Call and Webcast
The Company will hold a conference call to review its results
for the first quarter of fiscal 2024 today at 2:00 p.m. Pacific
Time. The conference call will be webcast live on the Company’s
website at investors.thecheesecakefactory.com and a replay of the
webcast will be available through June 7, 2024.
About The Cheesecake Factory Incorporated
The Cheesecake Factory Incorporated is a leader in experiential
dining. We are culinary forward and relentlessly focused on
hospitality. Delicious, memorable experiences created by passionate
people – this defines who we are and where we are going. We
currently own and operate 335 restaurants throughout the United
States and Canada under brands including The Cheesecake Factory®,
North Italia®, Flower Child® and a collection of other FRC brands.
Internationally, 34 The Cheesecake Factory® restaurants operate
under licensing agreements. Our bakery division operates two
facilities that produce quality cheesecakes and other baked
products for our restaurants, international licensees and
third-party bakery customers. In 2024, we were named to the FORTUNE
Magazine “100 Best Companies to Work For®” list for the eleventh
consecutive year. To learn more, visit
www.thecheesecakefactory.com, www.northitalia.com,
www.iamaflowerchild.com and www.foxrc.com.
From Fortune. ©2024 Fortune Media IP Limited. All rights
reserved. Used under license. Fortune® and Fortune 100 Best
Companies to Work For® are registered trademarks of Fortune Media
IP Limited and are used under license. Fortune and Fortune Media IP
Limited are not affiliated with, and do not endorse products or
services of, The Cheesecake Factory Incorporated.
Safe Harbor Statement
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, as codified in Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These statements include, without limitation, statements
regarding restaurant development. Such forward-looking statements
include all other statements that are not historical facts, as well
as statements that are preceded by, followed by or that include
words or phrases such as “believe,” “plan,” “will likely result,”
“expect,” “intend,” “will continue,” “is anticipated,” “estimate,”
“project,” “may,” “could,” “would,” “should” and similar
expressions. These statements are based on current expectations and
involve risks and uncertainties which may cause results to differ
materially from those set forth in such statements. Investors are
cautioned that forward-looking statements are not guarantees of
future performance and that undue reliance should not be placed on
such statements. These forward-looking statements may be affected
by various factors including: economic, public health and political
conditions that impact consumer confidence and spending, including
increased interest rates, periods of heightened inflation and
market instability, and armed conflicts; supply chain disruptions;
demonstrations, political unrest, potential damage to or closure of
the Company’s restaurants and potential reputational damage to the
Company or any of its brands; pandemics and related containment
measures, including the potential for quarantines or restriction on
in-person dining; acceptance and success of The Cheesecake Factory
in international markets; acceptance and success of North Italia,
Flower Child and Other Fox Restaurant Concepts restaurants; the
risks of doing business abroad through Company-owned restaurants
and/or licensees; foreign exchange rates, tariffs and cross border
taxation; changes in unemployment rates; increases in minimum wages
and benefit costs; the economic health of the Company’s landlords
and other tenants in retail centers in which its restaurants are
located, and the Company’s ability to successfully manage its lease
arrangements with landlords; the economic health of suppliers,
licensees, vendors and other third parties providing goods or
services to the Company; the timing of new unit development and
related permitting; compliance with debt covenants; strategic
capital allocation decisions including with respect to share
repurchases or dividends; the ability to achieve projected
financial results; the resolution of uncertain tax positions with
the Internal Revenue Service and the impact of tax reform
legislation; changes in laws impacting the Company’s business;
adverse weather conditions in regions in which the Company’s
restaurants are located; factors that are under the control of
government agencies, landlords and other third parties; the risks,
costs and uncertainties associated with opening new restaurants;
and other risks and uncertainties detailed from time to time in the
Company’s filings with the Securities and Exchange Commission
(“SEC”). Forward-looking statements speak only as of the dates on
which they are made, and the Company undertakes no obligation to
publicly update or revise any forward-looking statements or to make
any other forward-looking statements, whether as a result of new
information, future events or otherwise, unless required to do so
by law. Investors are referred to the full discussion of risks and
uncertainties associated with forward-looking statements and the
discussion of risk factors contained in the Company’s latest Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K as filed with the SEC, which are available at
www.sec.gov.
The Cheesecake Factory Incorporated Condensed
Consolidated Financial Statements (unaudited; in thousands,
except per share and statistical data) 13
Weeks Ended 13 Weeks Ended Consolidated Statements of
Income April 2, 2024 April 4, 2023
Amount
Percent of Revenues
Amount
Percent of Revenues
Revenues
$
891,223
100.0%
$
866,114
100.0%
Costs and expenses: Food and beverage costs
203,253
22.8%
206,224
23.8%
Labor expenses
320,930
36.0%
311,528
36.0%
Other operating costs and expenses
233,541
26.3%
230,929
26.7%
General and administrative expenses
60,366
6.8%
54,069
6.2%
Depreciation and amortization expenses
24,756
2.8%
22,955
2.7%
Impairment of assets and lease termination expenses
2,083
0.2%
2,242
0.3%
Acquisition-related contingent consideration, compensationand
amortization expenses
1,121
0.1%
1,189
0.1%
Preopening costs
5,880
0.6%
3,052
0.3%
Total costs and expenses
851,930
95.6%
832,188
96.1%
Income from operations
39,293
4.4%
33,926
3.9%
Interest and other expense, net
(1,761
)
(0.2)%
(1,880
)
(0.2)%
Income before income taxes
37,532
4.2%
32,046
3.7%
Income tax provision
4,341
0.5%
3,996
0.5%
Net income
$
33,191
3.7%
$
28,050
3.2%
Basic net income per share
$
0.70
$
0.58
Basic weighted average shares outstanding
47,749
48,694
Diluted net income per share
$
0.68
$
0.56
Diluted weighted average shares outstanding
48,662
49,778
13 Weeks Ended 13 Weeks Ended Selected Segment
Information April 2, 2024 April 4, 2023 Revenues:
The Cheesecake Factory restaurants
$
667,794
$
656,000
North Italia
70,874
63,303
Other FRC
74,229
68,640
Other
78,326
78,171
Total
$
891,223
$
866,114
Income/(loss) from operations: The Cheesecake Factory
restaurants
$
86,071
$
78,386
North Italia
3,170
4,606
Other FRC
6,292
8,711
Other
(56,240
)
(57,777
)
Total
$
39,293
$
33,926
Depreciation and amortization expenses: The Cheesecake
Factory restaurants
$
16,843
$
16,018
North Italia
1,971
1,467
Other FRC
2,425
1,927
Other
3,517
3,543
Total
$
24,756
$
22,955
Impairment of assets and lease termination expenses: The
Cheesecake Factory restaurants
$
1,859
$
93
North Italia
-
-
Other FRC
-
55
Other
224
2,094
Total
$
2,083
$
2,242
Preopening costs: The Cheesecake Factory restaurants
$
1,758
$
1,448
North Italia
2,002
446
Other FRC
1,724
721
Other
396
437
Total
$
5,880
$
3,052
13 Weeks Ended 13 Weeks Ended The
Cheesecake Factory restaurants operating information: April
2, 2024 April 4, 2023 Comparable restaurant sales vs.
prior year
(0.6
)%
5.7
%
Restaurants opened during period
-
-
Restaurants open at period-end
216
210
Restaurant operating weeks
2,807
2,737
North Italia operating information: Comparable
restaurant sales vs. prior year
3
%
9
%
Restaurants opened during period
2
-
Restaurants open at period-end
38
33
Restaurant operating weeks
480
429
Other Fox Restaurant Concepts (FRC) operating
information:(1) Restaurants opened during period
2
1
Restaurants open at period-end
42
35
Restaurant operating weeks
528
451
Other operating information:(2) Restaurants opened
during period
1
1
Restaurants open at period-end
40
40
Restaurant operating weeks
516
515
Number of company-owned restaurants: The Cheesecake
Factory
216
North Italia
38
Other FRC
42
Other
40
Total
336
Number of international-licensed restaurants: The
Cheesecake Factory
33
(1) The Other FRC segment
includes all FRC brands except Flower Child.
(2) The Other segment includes
the Flower Child, Grand Lux Cafe and Social Monk Asian Kitchen
concepts, as well as the Company's third-party bakery,
international and consumer packaged goods businesses, unallocated
corporate expenses and gift card costs.
Selected Consolidated Balance Sheet Information
April 2, 2024 January 2, 2024 Cash and cash
equivalents
$
60,220
$
56,290
Long-term debt, net of issuance costs (1)
470,551
470,047
(1) Includes $340.0 million net
balance of 0.375% convertible senior notes due 2026 (principal
amount of $345 million less $4.4 million in unamortized issuance
costs) and $130 million drawn on the Company's revolving credit
facility. The unamortized issuance costs were recorded as a
contra-liability and netted with long-term debt on the Condensed
Consolidated Balance Sheet and are being amortized as interest
expense.
Reconciliation of Non-GAAP Results to GAAP Results
In addition to the results provided in accordance with
accounting principles generally accepted in the United States of
America (“GAAP”) in this press release, the Company is providing
non-GAAP measurements which present net income and net income per
share excluding the impact of certain items. The non-GAAP
measurements are intended to supplement the presentation of the
Company’s financial results in accordance with GAAP. These non-GAAP
measures are calculated by eliminating from net income and diluted
net income per share the impact of items the Company does not
consider indicative of its ongoing operations. The Company uses
these non-GAAP financial measures for financial and operational
decision-making and as a means to evaluate period-to-period
comparisons.
The Cheesecake Factory Incorporated Reconciliation of
Non-GAAP Financial Measures (unaudited; in thousands, except
per share data) 13 Weeks Ended 13 Weeks
Ended April 2, 2024 April 4, 2023 Net
income (GAAP)
$
33,191
$
28,050
Impairment of assets and lease termination expenses(1)
2,083
2,242
Acquisition-related contingent consideration, compensation and
amortization expenses(2)
1,121
1,189
Tax effect of adjustments(3)
(833
)
(892
)
Adjusted net income (non-GAAP)
$
35,562
$
30,589
Diluted net income per share (GAAP)
$
0.68
$
0.56
Impairment of assets and lease termination expenses
0.04
0.05
Acquisition-related contingent consideration, compensation and
amortization expenses
0.02
0.02
Tax effect of adjustments
(0.02
)
(0.02
)
Adjusted net income per share (non-GAAP)(4)
$
0.73
$
0.61
(1) A detailed breakdown of
impairment of assets and lease termination expenses recorded in the
thirteen weeks ended April 2, 2024 and April 4, 2023 can be found
in the Selected Segment Information table.
(2) Represents changes in the
fair value of the deferred consideration and contingent
consideration and compensation liabilities related to the North
Italia and FRC acquisition, as well as amortization of acquired
definite-lived licensing agreements.
(3) Based on the federal
statutory rate and an estimated blended state tax rate, the tax
effect on all adjustments assumes a 26% tax rate for the fiscal
2024 and 2023 periods.
(4) Adjusted net income per share
may not add due to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240508744934/en/
Etienne Marcus (818) 871-3000
investorrelations@thecheesecakefactory.com
Cheesecake Factory (NASDAQ:CAKE)
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