Second quarter-to-date through April 27th
comparable sales at The Cheesecake Factory restaurants increased
over 2019 levels
The Cheesecake Factory
Incorporated (NASDAQ: CAKE) today reported financial results for
the first quarter of fiscal 2021, which ended on March 30,
2021.
Total revenues were $627.4 million in the first quarter of
fiscal 2021 compared to $615.1 million in the first quarter of
fiscal 2020. Net loss available to common stockholders and diluted
net loss per common share were $1.2 million and $0.03,
respectively, in the first quarter of fiscal 2021.
During the first quarter of fiscal 2021, the Company recorded
COVID-19 related charges of $4.9 million, for costs such as sick
and vaccination pay, healthcare and meal benefits for furloughed
staff members, additional sanitation and personal protective
equipment. Excluding the after-tax impact of these and certain
other items, and reflecting the potential impact of the conversion
of the Company’s convertible preferred stock into common stock,
adjusted net income and adjusted net income per share for the first
quarter of fiscal 2021 were $10.8 million and $0.20, 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 2.8% year-over-year in the first quarter of
fiscal 2021. Relative to the first quarter of fiscal 2019,
comparable restaurant sales at The Cheesecake Factory restaurants
declined 10.4%.
Fiscal 2021 second quarter-to-date through April 27th comparable
sales for The Cheesecake Factory restaurants increased
approximately 220% year-over-year and 7% relative to the same
period in fiscal 2019, supported by approximately one-third
off-premise sales mix and reflecting eased COVID-19 restrictions,
as well as strong consumer spending trends.
As of today, nearly all of the Company’s restaurants across its
concepts, including 206 Cheesecake Factory locations, are operating
with reopened indoor dining rooms with limited capacity in
accordance with local mandates and social distancing protocols. On
average, Cheesecake Factory restaurants with reopened dining rooms
are operating at approximately 60% indoor capacity. One Cheesecake
Factory location is operating an off-premise only model and two
locations across the Company’s concepts are currently closed with
plans to reopen by the end of the second quarter.
“We saw a significant increase in sales at The Cheesecake
Factory restaurants and across our portfolio in March as COVID-19
dining restrictions eased and consumer spending generally
increased,” said David Overton, Chairman and Chief Executive
Officer. “In addition to these positive macro trends, we believe
our performance also demonstrates the power of The Cheesecake
Factory brand as we saw meaningful pent-up demand to dine at our
restaurants, while we also continued to drive strong off-premise
sales volumes. Our operators did a tremendous job managing the
sales levels - delivering delicious, memorable experiences for our
guests and also exceeding our expectations across our key
performance indicators, including operating margins.”
Overton continued, “We are honored to be recognized as one of
the ‘100 Best Companies to Work For®’ by FORTUNE magazine for the
eighth consecutive year, continuing to underscore our position as
an employer of choice. This accolade is even more meaningful in the
context of the challenges we faced during 2020 and the unique labor
environment the restaurant industry is currently experiencing. We
believe we have one of the best teams in the industry, which we
expect to continue to differentiate us in the COVID-19 operating
environment and as we emerge from the pandemic.”
Development
During the first quarter of fiscal 2021, The Cheesecake Factory
opened in Washington, D.C., North Italia opened in Birmingham,
Alabama and Blanco opened in Nashville. Subsequent to quarter-end,
North Italia opened in Miami and one Cheesecake Factory restaurant
opened internationally in Shanghai under a licensing agreement.
Balance Sheet & Cash Flow
During the first quarter, the Company generated $21.6 million in
cash flow from operating activities.
As of March 30, 2021, the
Company had total available liquidity of approximately $278
million, including a cash balance of approximately $181.3 million
and availability on its revolving credit facility of $96.6 million.
Total debt outstanding was $280.0 million.
As previously announced, a $5.1 million cash dividend for the
first quarter of fiscal 2021 was paid on March 31, 2021 to holders
of the Company’s convertible preferred stock.
Conference Call and Webcast
The Company will hold a conference call to review its results
for the first quarter of fiscal 2021 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 May 28, 2021.
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 298 restaurants throughout the United
States and Canada under brands including The Cheesecake Factory®,
North Italia® and a collection within the Fox Restaurant Concepts
subsidiary. Internationally, 28 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 2021, we were named to the FORTUNE
Magazine “100 Best Companies to Work For®” list for the eighth
consecutive year. To learn more, visit
www.thecheesecakefactory.com, www.northitalia.com and
www.foxrc.com.
From FORTUNE. ©2021 Fortune Media IP Limited. FORTUNE 100 Best
Companies to Work For is a trademark of Fortune Media IP Limited
and is used under license. FORTUNE and Fortune Media IP Limited are
not affiliated with, and do not endorse products or services of,
Licensee.
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 second quarter to-date comparable restaurant sales,
continued strength in off-premise sales, the power of The
Cheesecake Factory brand, the Company’s position as an employer of
choice and the strength of the Company’s team, which the Company
expects to continue to differentiate it in the COVID-19 operating
environment and as the Company emerges from the pandemic. 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: the
rapidly evolving nature of the COVID-19 pandemic and related
containment measures, including the potential for a complete
shutdown of the Company’s restaurants, international licensee
restaurants and the Company’s bakery operations; 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; economic, public health and political conditions
that impact consumer confidence and spending, including the impact
of the COVID-19 pandemic and other health epidemics or pandemics on
the global economy; acceptance and success of The Cheesecake
Factory in international markets; acceptance and success of North
Italia, the Fox Restaurant Concepts, and other concepts; 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; changes in laws impacting
the Company’s business, including laws and regulations related to
COVID-19 impacting restaurant operations and customer access to
off- and on-premise dining; 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; unanticipated costs that may arise in connection
with a return to normal course of business including potential
negative impacts from furlough actions; the economic health of
suppliers, licensees, vendors and other third parties providing
goods or services to the Company; the timing of the resumption of
the Company’s new unit development; compliance with debt covenants;
strategic capital allocation decisions including any share
repurchases or dividends; the ability to achieve projected
financial results; economic and political conditions that impact
consumer confidence and spending; the resolution of uncertain tax
positions with the Internal Revenue Service and the impact of tax
reform legislation; 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 risk, 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
March 30, 2021
March 31, 2020
Amount
Percent of Revenues
Amount
Percent of Revenues
Revenues
$ 627,417
100.0
%
$ 615,106
100.0
%
Costs and expenses: Cost of sales
135,875
21.7
%
140,905
22.9
%
Labor expenses
229,732
36.6
%
236,982
38.6
%
Other operating costs and expenses
181,533
28.9
%
167,970
27.3
%
General and administrative expenses
44,427
7.1
%
43,960
7.1
%
Depreciation and amortization expenses
22,006
3.5
%
23,562
3.8
%
Impairment of assets and lease termination expenses
594
0.1
%
191,896
31.2
%
Acquisition-related costs
-
0.0
%
1,236
0.2
%
Acquisition-related contingent consideration, compensationand
amortization expenses/(benefit)
550
0.1
%
(4,466
)
(0.7
)%
Preopening costs
3,856
0.6
%
3,119
0.5
%
Total costs and expenses
618,573
98.6
%
805,164
130.9
%
Income/(loss) from operations
8,844
1.4
%
(190,058
)
(30.9
)%
Interest and other expense, net
(2,694
)
(0.4
)%
(1,518
)
(0.2
)%
Income/(loss) before income taxes
6,150
1.0
%
(191,576
)
(31.1
)%
Income tax provision/(benefit)
2,282
0.4
%
(55,413
)
(9.0
)%
Net income/(loss)
3,868
0.6
%
(136,163
)
(22.1
)%
Dividends on Series A preferred stock
(5,070
)
(0.8
)%
-
0.0
%
Net loss available to common stockholders
$ (1,202
)
(0.2
)%
$ (136,163
)
(22.1
)%
Basic net loss per common share
$ (0.03
)
$ (3.11
)
Basic weighted average shares outstanding
44,189
43,773
Diluted net loss per common share
$ (0.03
)
$ (3.11
)
Diluted weighted average shares outstanding
44,189
43,773
13 Weeks Ended 13 Weeks Ended Selected
Segment Information March 30, 2021 March 31, 2020
Revenues: The Cheesecake Factory restaurants
$ 499,389
$ 488,471
North Italia
32,823
30,512
Other FRC
36,194
35,583
Other
59,011
60,540
Total
$ 627,417
$ 615,106
Income/(loss) from operations: The Cheesecake Factory restaurants
$ 44,481
$ 39,324
North Italia
332
(72,086
)
Other FRC
3,880
(69,964
)
Other
(39,849
)
(87,332
)
Total
$ 8,844
$ (190,058
)
Preopening costs: The Cheesecake Factory restaurants
$ 2,063
$ 1,414
North Italia
1,217
953
Other FRC
463
(159
)
Other
113
911
Total
$ 3,856
$ 3,119
Impairment of assets and lease termination expenses: The Cheesecake
Factory restaurants
$ -
$ 616
North Italia
-
71,524
Other FRC
-
72,939
Other
594
46,817
Total
$ 594
$ 191,896
Depreciation and amortization expenses: The Cheesecake Factory
restaurants
$ 16,320
$ 17,277
North Italia
844
965
Other FRC
1,177
1,201
Other
3,665
4,119
Total
$ 22,006
$ 23,562
13 Weeks Ended 13 Weeks Ended The
Cheesecake Factory restaurants operating information: March
30, 2021 March 31, 2020 Comparable restaurant sales vs.
prior year
2.8 %
(12.9)%
Comparable restaurant sales vs. 2019
(10.4)%
Restaurants opened during period
1
-
Restaurants open at period-end
207
206
Restaurant operating weeks
2,678
2,674
North Italia operating information: Comparable
restaurant sales vs. prior year
5 %
(12)%
Comparable restaurant sales vs. 2019
(5)%
Restaurants opened during period
1
1
Restaurants open at period-end
24
23
Restaurant operating weeks
303
290
Other Fox Restaurant Concepts (FRC) operating
information:(1) Restaurants opened during period
1
-
Restaurants open at period-end
28
25
Restaurant operating weeks
342
313
Other operating information:(2) Restaurants opened
during period
-
1
Restaurants open at period-end
38
40
Restaurant operating weeks
477
492
Number of company-owned restaurants: The Cheesecake
Factory
207
North Italia
24
Other FRC
28
Other
38
Total
297
Number of international-licensed restaurants: The
Cheesecake Factory
27
(1) The Other FRC segment includes all FRC brands except Flower
Child. (2) The Other segment includes the Flower Child, Grand Lux
Cafe, RockSugar Southeast Asian Kitchen 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 March 30, 2021 December 29,
2020 Cash and cash equivalents
$ 181,345
$ 154,085
Long-term debt
280,000
280,000
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 loss and diluted
net loss per share the impact of items the Company does not
consider indicative of its ongoing operations. To reflect the
potential impact of the conversion of the Company’s convertible
preferred stock into common stock, the Company excludes the
preferred dividend and assumes all convertible preferred shares
convert to common stock. 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
March 30, 2021
March 31, 2020
Net loss available to common stockholders (GAAP)
$ (1,202
)
$ (136,163
)
Dividends on Series A preferred stock
5,070
-
COVID-19 related costs(1)
4,917
3,290
Impairment of assets and lease termination expenses(2)
594
191,896
Acquisition-related costs(3)
-
1,236
Acquisition-related contingent consideration,compensation and
amortization expenses/(benefit)(4)
550
(4,466
)
Uncertain tax position related to tenant improvement allowances(5)
2,471
-
Tax effect of adjustments(6)
(1,576
)
(49,908
)
Adjusted net income (non-GAAP)
$ 10,824
$ 5,885
Diluted net loss per common share (GAAP)
$ (0.03
)
$ (3.11
)
Dividends on Series A preferred stock
0.09
-
Assumed impact of potential conversion of Series A preferred stock
into common stock(7)
0.00
-
COVID-19 related costs
0.09
0.07
Impairment of assets and lease termination expenses
0.01
4.38
Acquisition-related costs
-
0.03
Acquisition-related contingent consideration,compensation and
amortization expenses/(benefit)
0.01
(0.10
)
Uncertain tax position related to tenant improvement allowances
0.05
-
Tax effect of adjustments
(0.03
)
(1.14
)
Adjusted net income per share (non-GAAP)(8)
$ 0.20
$ 0.13
(1) Represents incremental costs associated with COVID-19 such as
sick and vaccination pay, healthcare and meal benefits for
furloughed staff members, additional sanitation and personal
protective equipment. For the thirteen weeks ended March 30, 2021,
the Company recorded $4.9 million for these costs with
approximately $4.6 million reflected in other operating expenses
and $0.3 million in labor expenses. For the thirteen weeks ended
March 31, 2020, the Company recorded $3.3 million for these costs
with approximately $2.3 million reflected in labor expenses and
$1.0 million in other operating expenses. (2) A detailed breakdown
of impairment of assets and lease termination expenses recorded in
the thirteen weeks ended March 30, 2021 and March 31, 2020 can be
found in the Selected Segment Information table. (3) Represents
costs incurred to effect and integrate the North and FRC
acquisition. (4) Represents changes in the fair value of the
deferred consideration and contingent consideration and
compensation liabilities related to the North and FRC acquisition,
as well as amortization of acquired definite-lived licensing
agreements. (5) Reserve for uncertain tax position related to
tenant improvement allowances. Uncertain tax positions taken in a
tax return are recognized in the financial statements when it is
more likely than not that the position will be sustained upon
examination by tax authorities based on its technical merits,
taking into account available administrative remedies and
litigation. (6) 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 2021 and 2020 periods. (7)
Represents the impact of assuming the conversion of Series A
preferred stock into common stock (9,598,559 shares for the
thirteen weeks ended March 30, 2021), resulting in an assumption of
53,787,314 weighted-average common shares outstanding for the
thirteen weeks ended March 30, 2021. (8) Adjusted net income per
share may not add due to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210428006007/en/
Stacy Feit (818) 871-3000 investorrelations@thecheesecakefactory.com
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