The Cheesecake Factory Reports Results for First Quarter of Fiscal 2018
Comparable restaurant sales at The Cheesecake Factory restaurants increased 2.1% in the first quarter of fiscal 2018.
The Cheesecake Factory Incorporated (NASDAQ: CAKE) today reported financial results for the first quarter of fiscal 2018, which ended on April 3, 2018.
Total revenues were $590.7 million in the first quarter of fiscal 2018 as compared to $563.4 million in the first quarter of fiscal 2017. Net income and diluted net income per share were $26.0 million and $0.56, respectively, in the first quarter of fiscal 2018.
Comparable restaurant sales at The Cheesecake Factory restaurants increased 2.1% in the first quarter of fiscal 2018.
“Comparable sales at The Cheesecake Factory were very strong during the first quarter and meaningfully outperformed the casual dining industry,” said David Overton, Chairman and Chief Executive Officer. “However, increased labor costs to support the better guest traffic levels, as well as higher than expected insurance costs, impacted our bottom line results this quarter.”
Overton continued, “Consistent with our long-term approach, we are making investments to maintain our high level of food quality, service and hospitality, which we believe will continue to differentiate us in the industry. In fact, The Cheesecake Factory was again named brand of the year in the casual dining category of the Harris Poll EquiTrend® study, underscoring the continued relevance of the brand and our strong guest affinity. We were pleased to see these attributes reflected in our sales trend during the first quarter and believe we can continue to take share in 2018, which will better position us to manage through the cost pressures.”
Development
The Company continues to expect to open as many as four to six restaurants in fiscal 2018, including one Grand Lux Cafe, as well as the first location of a fast casual concept the Company is developing internally. The first restaurant opening is expected in the third quarter of fiscal 2018.
In addition, the Company now expects as many as four restaurants to open internationally under licensing agreements in fiscal 2018. This includes the first location in Beijing, which opened in January, and the second location in Saudi Arabia, which is scheduled to open soon.
Capital Allocation
The Company’s Board of Directors declared a quarterly cash dividend of $0.29 per share on the Company’s common stock. The dividend is payable on May 22, 2018 to shareholders of record at the close of business on May 10, 2018.
During the first quarter of fiscal 2018, the Company repurchased approximately 0.7 million shares of its common stock at a cost of $34.9 million.
About The Cheesecake Factory Incorporated
The Cheesecake Factory Incorporated created the upscale casual dining segment in 1978 with the introduction of its namesake concept. The Company, through its subsidiaries, owns and operates 214 full-service, casual dining restaurants throughout the U.S.A., including Puerto Rico, and Canada, comprised of 199 restaurants under The Cheesecake Factory® mark; 13 restaurants under the Grand Lux Cafe® mark; and two restaurants under the RockSugar Southeast Asian Kitchen® mark (formerly known as Rock Sugar Pan Asian Kitchen®). Internationally, 20 The Cheesecake Factory® restaurants operate under licensing agreements. The Company’s bakery division operates two bakery production facilities, in Calabasas Hills, CA and Rocky Mount, NC, that produce quality cheesecakes and other baked products for its restaurants, international licensees and third-party bakery customers.
| 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 3, 2018 | April 4, 2017 | ||||||||||||||
| Amount | Percent of
Revenues |
Amount | Percent of
Revenues |
|||||||||||||
| Revenues | $ | 590,691 | 100.0 | % | $ | 563,426 | 100.0 | % | ||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of sales | 135,719 | 23.0 | % | 129,139 | 22.9 | % | ||||||||||
| Labor expenses | 210,714 | 35.7 | % | 193,835 | 34.4 | % | ||||||||||
| Other operating costs and expenses | 148,332 | 25.1 | % | 135,650 | 24.1 | % | ||||||||||
| General and administrative expenses | 39,274 | 6.6 | % | 36,287 | 6.4 | % | ||||||||||
| Depreciation and amortization expenses | 24,002 | 4.1 | % | 23,196 | 4.1 | % | ||||||||||
| Impairment of assets and lease terminations | – | 0.0 | % | 786 | 0.1 | % | ||||||||||
| Preopening costs | 1,099 | 0.2 | % | 970 | 0.3 | % | ||||||||||
| Total costs and expenses | 559,140 | 94.7 | % | 519,863 | 92.3 | % | ||||||||||
| Income from operations | 31,551 | 5.3 | % | 43,563 | 7.7 | % | ||||||||||
| Interest and other expense, net | (1,506 | ) | (0.2 | )% | (1,256 | ) | (0.2 | )% | ||||||||
| Income before income taxes | 30,045 | 5.1 | % | 42,307 | 7.5 | % | ||||||||||
| Income tax provision | 4,016 | 0.7 | % | 7,264 | 1.3 | % | ||||||||||
| Net income | $ | 26,029 | 4.4 | % | $ | 35,043 | 6.2 | % | ||||||||
| Basic net income per share | $ | 0.57 | $ | 0.74 | ||||||||||||
| Basic weighted average shares outstanding | 45,552 | 47,634 | ||||||||||||||
| Diluted net income per share | $ | 0.56 | $ | 0.71 | ||||||||||||
| Diluted weighted average shares outstanding | 46,574 | 49,210 | ||||||||||||||
| Selected Segment Information | ||||||||||||||||
| Revenues: | ||||||||||||||||
| The Cheesecake Factory restaurants | $ | 540,773 | $ | 515,234 | ||||||||||||
| Other | 49,918 | 48,192 | ||||||||||||||
| Total | $ | 590,691 | $ | 563,426 | ||||||||||||
| Income/(loss) from operations: | ||||||||||||||||
| The Cheesecake Factory restaurants (1) | $ | 62,117 | $ | 70,543 | ||||||||||||
| Other | 5,747 | 6,638 | ||||||||||||||
| Corporate | (36,313 | ) | (33,618 | ) | ||||||||||||
| Total | $ | 31,551 | $ | 43,563 | ||||||||||||
(1) Includes $0.8 million of accelerated depreciation expense related to the planned relocation of one The Cheesecake Factory restaurant in the thirteen weeks ended April 4, 2017. This amount was recorded in impairment of assets and lease terminations in the condensed consolidated statements of income.
| Selected Consolidated Balance Sheet Information | April 3, 2018 | January 2, 2018 | ||||||||
| Cash and cash equivalents | $ | 24,801 | $ | 6,008 | ||||||
| Total assets | 1,287,343 | 1,333,060 | ||||||||
| Total liabilities | 691,610 | 719,530 | ||||||||
| Stockholders’ equity | 595,733 | 613,530 | ||||||||
| 13 Weeks Ended | 13 Weeks Ended | |||||||||
| The Cheesecake Factory Supplemental Information | April 3, 2018 | April 4, 2017 | ||||||||
| Comparable restaurant sales | 2.1 | % | 0.3 | % | ||||||
| Restaurants opened during period | – | – | ||||||||
| Restaurants open at period-end | 199 | 194 | ||||||||
| Restaurant operating weeks | 2,587 | 2,522 | ||||||||
Reconciliation of Non-GAAP Results to GAAP Results
In addition to the results provided in accordance with Generally Accepted Accounting Principles (“GAAP”) in this press release, the Company is providing non-GAAP measurements which present net income and diluted 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. The Company believes that the presentation of these items provides additional information to facilitate the comparison of past and present financial results.
| The Cheesecake Factory Incorporated | ||||||||
| Reconciliation of Non-GAAP Financial Measures | ||||||||
| (unaudited; in thousands, except per share data) | ||||||||
| 13 Weeks Ended | 13 Weeks Ended | |||||||
| April 3, 2018 | April 4, 2017 | |||||||
| Net Income (GAAP) | $ | 26,029 | $ | 35,043 | ||||
| After-tax impact from: | ||||||||
| – Impairment of assets and lease terminations (1) | – | 472 | ||||||
| Adjusted net income (non-GAAP) | $ | 26,029 | $ | 35,515 | ||||
| Diluted net income per share (GAAP) | $ | 0.56 | $ | 0.71 | ||||
| After-tax impact from: | ||||||||
| – Impairment of assets and lease terminations | – | 0.01 | ||||||
| Adjusted diluted net income per share (non-GAAP) | $ | 0.56 | $ | 0.72 | ||||
| (1) The pre-tax amount associated with the item in fiscal 2017 was $0.8 million and was recorded in impairment of assets and lease terminations. | ||||||||