The Cheesecake Factory Incorporated (NASDAQ: CAKE) today
reported financial results for the second quarter of fiscal 2024,
which ended on July 2, 2024.
Total revenues were $904.0 million in the second quarter of
fiscal 2024 compared to $866.2 million in the second quarter of
fiscal 2023. Net income and diluted net income per share were $52.4
million and $1.08, respectively, in the second quarter of fiscal
2024.
The Company recorded a pre-tax net expense of $1.0 million
related to Fox Restaurant Concepts (“FRC”) acquisition-related
expenses and impairment of assets and lease termination income.
Excluding the after-tax impact of these items, adjusted net income
and adjusted net income per share for the second quarter of fiscal
2024 were $53.2 million and $1.09, 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 increased 1.4% year-over-year in the second quarter of
fiscal 2024.
“Building on our first quarter momentum, we delivered solid top-
and bottom-line results in the second quarter contributing to a
strong performance in the first half of the year,” said David
Overton, Chairman and Chief Executive Officer. “Our second quarter
revenue finished towards the higher end of our expectations, and we
generated robust earnings growth with profit margins exceeding the
high end of our expectations. Our second quarter results were led
by the strength of The Cheesecake Factory restaurants. The
resilient consumer demand for the distinct, high-quality dining
experiences we provide our guests and brand affinity for our
namesake concept has been pivotal in supporting our continued
outperformance of the broader casual dining industry. Our operators
drove solid operational execution within our restaurants to deliver
year-over-year improvements in labor productivity and hourly staff
and manager retention.”
“We opened five new restaurants across various concepts and
markets during the second quarter. The strong demand and sales
performance at our new restaurant openings underscores the broad
appeal of our experiential concepts. With 11 restaurants opened as
of today, we are well-positioned to meet our development objective
to open as many as 22 new restaurants in 2024. Most importantly,
following three consecutive quarters of stable topline revenue,
strong operational execution and significant profitability growth,
we generated the consistent results that The Cheesecake Factory has
long been known for.”
Development
During the second quarter of fiscal 2024, the Company opened
five new restaurants, including one Cheesecake Factory, one North
Italia restaurant, two Flower Child locations and one Culinary
Dropout. In addition, one Cheesecake Factory restaurant opened
internationally under a licensing agreement in China. Subsequent to
quarter-end, the Company opened one Blanco location.
The Company continues to expect to open as many as 22 new
restaurants in fiscal 2024, including as many as three The
Cheesecake Factory restaurants, six to seven North Italia
restaurants, six to seven Flower Child locations, and seven to
eight other Fox Restaurant Concept locations.
Liquidity and Capital Allocation
As of July 2, 2024, the Company had total available liquidity of
$277.2 million, including a cash balance of $40.7 million and
availability on its revolving credit facility of $236.5 million.
Total principal amount of debt outstanding was $475.0 million,
including $345.0 million in principal amount of 0.375% convertible
senior notes due 2026 and $130.0 million in principal amount drawn
on the Company’s revolving credit facility.
The Company repurchased approximately 111,400 shares of its
stock at a cost of $3.9 million in the second 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 August 27, 2024
to shareholders of record at the close of business on August 14,
2024.
Conference Call and Webcast
The Company will hold a conference call to review its results
for the second 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 August 30, 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 340 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 consumer demand and 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
26 Weeks Ended
26 Weeks Ended
Consolidated Statements of Income
July 2, 2024
July 4, 2023
July 2, 2024
July 4, 2023
Amount
Percent of Revenues
Amount
Percent of Revenues
Amount
Percent of Revenues
Amount
Percent of Revenues
Revenues
$
904,042
100.0
%
$
866,170
100.0
%
$
1,795,265
100.0
%
$
1,732,284
100.0
%
Costs and expenses: Food and beverage costs
201,694
22.3
%
201,094
23.2
%
404,947
22.6
%
407,318
23.5
%
Labor expenses
317,282
35.1
%
306,149
35.3
%
638,212
35.5
%
617,677
35.7
%
Other operating costs and expenses
239,097
26.4
%
226,996
26.2
%
472,638
26.3
%
457,925
26.4
%
General and administrative expenses
54,384
6.0
%
54,488
6.4
%
114,750
6.4
%
108,557
6.3
%
Depreciation and amortization expenses
24,960
2.8
%
23,332
2.7
%
49,716
2.8
%
46,287
2.7
%
Impairment of assets and lease termination (income)/expenses
(188
)
0.0
%
(653
)
-0.1
%
1,895
0.1
%
1,589
0.1
%
Acquisition-related contingent consideration, compensationand
amortization expenses
1,146
0.1
%
1,287
0.1
%
2,267
0.1
%
2,476
0.1
%
Preopening costs
6,975
0.8
%
6,006
0.7
%
12,855
0.7
%
9,058
0.5
%
Total costs and expenses
845,350
93.5
%
818,699
94.5
%
1,697,280
94.5
%
1,650,887
95.3
%
Income from operations
58,692
6.5
%
47,471
5.5
%
97,985
5.5
%
81,397
4.7
%
Interest and other expense, net
(2,348
)
(0.3
)%
(2,162
)
(0.3
)%
(4,109
)
(0.3
)%
(4,042
)
(0.2
)%
Income before income taxes
56,344
6.2
%
45,309
5.2
%
93,876
5.2
%
77,355
4.5
%
Income tax provision
3,900
0.4
%
2,634
0.3
%
8,241
0.4
%
6,630
0.4
%
Net income
$
52,444
5.8
%
$
42,675
4.9
%
$
85,635
4.8
%
$
70,725
4.1
%
Basic net income per share
$
1.10
$
0.88
$
1.79
$
1.46
Basic weighted average shares outstanding
47,702
48,492
47,726
48,593
Diluted net income per share
$
1.08
$
0.87
$
1.76
$
1.43
Diluted weighted average shares outstanding
48,775
49,085
48,685
49,296
13 Weeks Ended 13 Weeks Ended 26 Weeks Ended
26 Weeks Ended Selected Segment Information July
2, 2024 July 4, 2023 July 2, 2024 July 4,
2023 Revenues: The Cheesecake Factory restaurants
$
676,697
$
652,481
$
1,344,491
$
1,308,481
North Italia
75,514
65,934
146,388
129,237
Other FRC
73,637
65,728
147,866
134,368
Other
78,194
82,027
156,520
160,198
Total
$
904,042
$
866,170
$
1,795,265
$
1,732,284
Income/(loss) from operations: The Cheesecake Factory
restaurants
$
101,035
$
85,677
$
187,106
$
164,073
North Italia
5,507
6,627
8,677
11,233
Other FRC
3,590
6,079
9,882
14,790
Other
(51,440
)
(50,912
)
(107,680
)
(108,699
)
Total
$
58,692
$
47,471
$
97,985
$
81,397
Depreciation and amortization expenses: The Cheesecake
Factory restaurants
$
16,257
$
16,235
$
33,100
$
32,244
North Italia
2,322
1,668
4,293
3,135
Other FRC
2,790
1,809
5,215
3,736
Other
3,591
3,620
7,108
7,172
Total
$
24,960
$
23,332
$
49,716
$
46,287
Impairment of assets and lease termination
(income)/expenses: The Cheesecake Factory restaurants
$
267
$
38
$
2,126
131
North Italia
-
-
-
-
Other FRC
-
-
-
55
Other
(455
)
(691
)
(231
)
1,403
Total
$
(188
)
$
(653
)
$
1,895
$
1,589
Preopening costs: The Cheesecake Factory restaurants
$
2,374
$
3,091
$
4,132
$
4,539
North Italia
1,412
618
3,414
1,064
Other FRC
2,186
1,999
3,910
2,720
Other
1,003
298
1,399
735
Total
$
6,975
$
6,006
$
12,855
$
9,058
13 Weeks Ended 13 Weeks Ended 26 Weeks
Ended 26 Weeks Ended The Cheesecake Factory
restaurants operating information: July 2, 2024 July
4, 2023 July 2, 2024 July 4, 2023 Comparable
restaurant sales vs. prior year
1.4
%
1.5
%
0.4
%
3.6
%
Restaurants opened during period
1
1
1
1
Restaurants open at period-end
217
211
217
211
Restaurant operating weeks
2,808
2,734
5,615
5,471
North Italia operating information: Comparable
restaurant sales vs. prior year
2
%
8
%
3
%
8
%
Restaurants opened during period
1
-
3
-
Restaurants open at period-end
39
33
39
33
Restaurant operating weeks
499
429
979
858
Other Fox Restaurant Concepts (FRC) operating
information:(1) Restaurants opened during period
1
2
3
3
Restaurants open at period-end
43
37
43
37
Restaurant operating weeks
549
462
1,079
913
Other operating information:(2) Restaurants opened
during period
2
-
3
1
Restaurants open at period-end
41
40
41
40
Restaurant operating weeks
520
520
1,036
1,035
Number of company-owned restaurants: The Cheesecake
Factory
217
North Italia
39
Other FRC
43
Other
41
Total
340
Number of international-licensed restaurants: The
Cheesecake Factory
34
(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 July 2, 2024 January 2, 2024 Cash and
cash equivalents
$
40,654
$
56,290
Long-term debt, net of issuance costs (1)
471,054
470,047
(1) Includes $341.1 million net balance of 0.375% convertible
senior notes due 2026 (principal amount of $345 million less $3.9
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 26 Weeks Ended 26 Weeks Ended July 2,
2024 July 4, 2023 July 2, 2024 July 4,
2023 Net income (GAAP)
$
52,444
$
42,675
$
85,635
$
70,725
Impairment of assets and lease termination (income)/expenses(1)
(188
)
(653
)
1,895
1,589
Acquisition-related contingent consideration,compensation and
amortization expenses(2)
1,146
1,287
2,267
2,476
Tax effect of adjustments(3)
(249
)
(165
)
(1,082
)
(1,057
)
Adjusted net income (non-GAAP)
$
53,153
$
43,144
$
88,715
$
73,733
Diluted net income per share (GAAP)
$
1.08
$
0.87
$
1.76
$
1.43
Impairment of assets and lease termination (income)/expenses
(0.00
)
(0.01
)
0.04
0.03
Acquisition-related contingent consideration,compensation and
amortization expenses
0.02
0.03
0.05
0.05
Tax effect of adjustments
(0.01
)
(0.00
)
(0.02
)
(0.02
)
Adjusted net income per share (non-GAAP)(4)
$
1.09
$
0.88
$
1.82
$
1.50
(1) A detailed breakdown of impairment of assets and lease
termination (income)/expenses recorded in the thirteen and
twenty-six weeks ended July 2, 2024 and July 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/20240731651443/en/
Etienne Marcus (818) 871-3000
investorrelations@thecheesecakefactory.com
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