The Cheesecake Factory Reports Results for Third Quarter of Fiscal 2018
Business Wire 30-Oct-2018 4:15 PM
The Cheesecake Factory Incorporated (NASDAQ:CAKE) today reported
financial results for the third quarter of fiscal 2018, which ended on
October 2, 2018.
Total revenues were $580.9 million in the third quarter of fiscal 2018
compared to $555.4 million in the third quarter of fiscal 2017. Net
income and diluted net income per share were $28.5 million and $0.61,
respectively, in the third quarter of fiscal 2018.
The Company recorded a pre-tax charge of $0.3 million during the third
quarter of fiscal 2018 related to the previously disclosed termination
of a lease for one The Cheesecake Factory restaurant. Excluding the
after-tax impact from this item, net income and diluted net income per
share for the third quarter of fiscal 2018 would have been $28.7 million
and $0.62, respectively. Please see the Company's reconciliation of
non-GAAP financial measures at the end of this release.
Comparable restaurant sales at The Cheesecake Factory restaurants
increased 1.5% in the third quarter of fiscal 2018.
"Our operators executed on our objectives, wage inflation moderated from
the second quarter and group medical insurance costs normalized," said
David Overton, Chairman and Chief Executive Officer. "These factors,
coupled with comparable sales performance at The Cheesecake Factory
restaurants within our expectations, drove solid profitability during
the third quarter."
Overton continued, "As 2018 comes to a close, we will open our 200th
Cheesecake Factory restaurant next month. This milestone will cap our
40th year of delivering on our mission of absolute guest satisfaction.
We look forward to continuing our culture of excellence by providing our
guests with great dining experiences, offering growth opportunities for
our staff members and maximizing long term value for our shareholders."
Development
The Company now expects to open five restaurants in fiscal 2018. This
includes The Cheesecake Factory in Lynnwood, Washington, a suburb of
Seattle, and Grand Lux Cafe in Atlanta, which both opened during the
third quarter of 2018. The Company expects to open three additional
Cheesecake Factory restaurants during the fourth quarter of 2018. The
first location of Social Monk Asian Kitchen, a fast casual concept under
development, is now expected to open in the first quarter of 2019.
Given a shift in the mall opening date, the Company now expects The
Cheesecake Factory licensed location in Monterrey, Mexico to open in the
first quarter of 2019. As a result, the anticipated international
development for fiscal 2018 is complete, with two restaurants opened
internationally under licensing agreements this year.
Capital Allocation
The Company's Board of Directors declared a quarterly cash dividend of
$0.33 per share of the Company's common stock. The dividend is payable
on November 27, 2018 to shareholders of record at the close of business
on November 14, 2018.
During the third quarter of fiscal 2018, the Company repurchased
approximately 370,000 shares of its common stock at a cost of $18.9
million. Year to date, the Company has repurchased approximately 1.2
million shares of its common stock at a cost of $60.9 million.
Conference Call and Webcast
The Company will hold a conference call to review its results for the
third quarter of fiscal 2018 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 November 29, 2018.
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 215 full-service,
casual dining restaurants throughout the U.S.A., including Puerto Rico,
and Canada, comprised of 199 restaurants under The Cheesecake Factory®
mark; 14 restaurants under the Grand Lux Cafe® mark; and two
restaurants under the RockSugar Southeast Asian Kitchen®
mark. Internationally, 21 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. In 2018, the Company was named to the FORTUNE Magazine
"100 Best Companies to Work For®" list for the fifth
consecutive year. To learn more about the Company, visit www.thecheesecakefactory.com.
FORTUNE and FORTUNE 100 Best Companies to Work For® are registered
trademarks of Time Inc. and are used under license. From FORTUNE
Magazine, March 1, 2018 ©2018 Time Inc. Used under license. FORTUNE and
Time Inc. 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. These
statements involve known and unknown risks, uncertainties and other
factors that may cause the actual results, performance or achievements
of the Company to be materially different from any future results,
performance or achievements expressed or implied by forward-looking
statements, including uncertainties related to the Company's ability to:
deliver comparable sales growth; provide a differentiated experience to
guests; outperform the casual dining industry and increase its market
share; leverage sales increases and manage flow through; manage cost
pressures, including increasing wage rates, group medical insurance
costs and legal expenses, and stabilize margins; grow earnings; remain
relevant to consumers; attract and retain qualified management and other
staff; manage risks associated with the magnitude and complexity of
regulations in the jurisdictions where the Company's restaurants are
located; increase shareholder value; find suitable sites and manage
increasing construction costs; profitably expand its concepts
domestically and in Canada, and work with its licensees to expand its
concept internationally; support the growth of North Italia and Flower
Child restaurants; develop the Social Monk Asian Kitchen fast casual
concept; expand consumer packaged goods licensing revenue; utilize its
capital effectively and continue to increase cash dividends and
repurchase its shares; and factors outside of the Company's control
including: economic and political conditions that impact consumer
confidence and spending; impact of recently enacted tax reform;
acceptance and success of The Cheesecake Factory in international
markets; acceptance and success of the North Italia and Flower Child
restaurants and the Social Monk Asian Kitchen fast casual concept; 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; the economic health of the Company's
landlords and other tenants in retail centers in which its restaurants
are located; the economic health of suppliers, licensees, vendors and
other third parties providing goods or services to the Company; 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"). Investors are cautioned
that forward-looking statements are not guarantees of future performance
and that undue reliance should not be placed on such statements.
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 securities laws.
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.
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The Cheesecake Factory Incorporated
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Condensed Consolidated Financial Statements
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(unaudited; in thousands, except per share and statistical data)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Consolidated Statements of Income
|
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13 Weeks Ended
October 2, 2018
|
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13 Weeks Ended
October 3, 2017
|
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39 Weeks Ended
October 2, 2018
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39 Weeks Ended
October 3, 2017
|
|
|
|
Amount
|
|
Percent of
Revenues
|
|
Amount
|
|
Percent of
Revenues
|
|
Amount
|
|
Percent of
Revenues
|
|
Amount
|
|
Percent of
Revenues
|
|
Revenues
|
|
$
|
580,882
|
|
|
|
100.0%
|
|
$
|
555,392
|
|
|
|
100.0%
|
|
$
|
1,764,751
|
|
|
100.0%
|
|
$
|
1,688,687
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|
|
100.0%
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Cost of sales
|
|
|
133,598
|
|
|
|
23.0%
|
|
|
127,453
|
|
|
|
22.9%
|
|
|
402,453
|
|
|
22.8%
|
|
|
385,373
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|
|
22.8%
|
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Labor expenses
|
|
|
204,537
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|
|
|
35.2%
|
|
|
193,466
|
|
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|
34.9%
|
|
|
627,772
|
|
|
35.6%
|
|
|
580,364
|
|
|
34.4%
|
|
Other operating costs and expenses
|
|
|
144,180
|
|
|
|
24.8%
|
|
|
138,423
|
|
|
|
24.9%
|
|
|
436,308
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|
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24.7%
|
|
|
411,534
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|
|
24.4%
|
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General and administrative expenses
|
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|
37,469
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6.5%
|
|
|
35,364
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|
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|
6.4%
|
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|
118,166
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6.7%
|
|
|
106,946
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|
|
6.3%
|
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Depreciation and amortization expenses
|
|
|
24,090
|
|
|
|
4.1%
|
|
|
22,999
|
|
|
|
4.1%
|
|
|
71,819
|
|
|
4.1%
|
|
|
69,492
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|
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4.1%
|
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Impairment of assets and lease terminations
|
|
|
263
|
|
|
|
0.0%
|
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|
-
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|
|
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0.0%
|
|
|
2,846
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|
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0.2%
|
|
|
1,231
|
|
|
0.1%
|
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Preopening costs
|
|
|
3,250
|
|
|
|
0.6%
|
|
|
3,370
|
|
|
|
0.6%
|
|
|
5,798
|
|
|
0.3%
|
|
|
5,649
|
|
|
0.3%
|
|
Total costs and expenses
|
|
|
547,387
|
|
|
|
94.2%
|
|
|
521,075
|
|
|
|
93.8%
|
|
|
1,665,162
|
|
|
94.4%
|
|
|
1,560,589
|
|
|
92.4%
|
|
Income from operations
|
|
|
33,495
|
|
|
|
5.8%
|
|
|
34,317
|
|
|
|
6.2%
|
|
|
99,589
|
|
|
5.6%
|
|
|
128,098
|
|
|
7.6%
|
|
Interest and other expense, net
|
|
|
(3,290
|
)
|
|
|
(0.6)%
|
|
|
(1,600
|
)
|
|
|
(0.3)%
|
|
|
(7,704
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)
|
|
(0.4)%
|
|
|
(4,426
|
)
|
|
(0.3)%
|
|
Income before income taxes
|
|
|
30,205
|
|
|
|
5.2%
|
|
|
32,717
|
|
|
|
5.9%
|
|
|
91,885
|
|
|
5.2%
|
|
|
123,672
|
|
|
7.3%
|
|
Income tax provision
|
|
|
1,730
|
|
|
|
0.3%
|
|
|
6,272
|
|
|
|
1.1%
|
|
|
9,028
|
|
|
0.5%
|
|
|
24,018
|
|
|
1.4%
|
|
Net income
|
|
$
|
28,475
|
|
|
|
4.9%
|
|
$
|
26,445
|
|
|
|
4.8%
|
|
$
|
82,857
|
|
|
4.7%
|
|
$
|
99,654
|
|
|
5.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per share
|
|
$
|
0.63
|
|
|
|
|
$
|
0.57
|
|
|
|
|
$
|
1.82
|
|
|
|
|
$
|
2.11
|
|
|
|
|
Basic weighted average shares outstanding
|
|
|
45,321
|
|
|
|
|
|
46,602
|
|
|
|
|
|
45,418
|
|
|
|
|
|
47,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share
|
|
$
|
0.61
|
|
|
|
|
$
|
0.56
|
|
|
|
|
$
|
1.77
|
|
|
|
|
$
|
2.05
|
|
|
|
|
Diluted weighted average shares outstanding
|
|
|
46,403
|
|
|
|
|
|
47,519
|
|
|
|
|
|
46,682
|
|
|
|
|
|
48,582
|
|
|
|
|
|
|
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Selected Segment Information
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Revenues:
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
The Cheesecake Factory restaurants
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|
$
|
530,210
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|
|
|
|
$
|
507,572
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|
|
|
|
$
|
1,613,085
|
|
|
|
|
$
|
1,543,034
|
|
|
|
|
Other
|
|
|
50,672
|
|
|
|
|
|
47,820
|
|
|
|
|
|
151,666
|
|
|
|
|
|
145,653
|
|
|
|
|
Total
|
|
$
|
580,882
|
|
|
|
|
$
|
555,392
|
|
|
|
|
$
|
1,764,751
|
|
|
|
|
$
|
1,688,687
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Cheesecake Factory restaurants (1)
|
|
$
|
61,950
|
|
|
|
|
$
|
60,496
|
|
|
|
|
$
|
193,956
|
|
|
|
|
$
|
207,028
|
|
|
|
|
Other
|
|
|
4,559
|
|
|
|
|
|
6,003
|
|
|
|
|
|
14,353
|
|
|
|
|
|
18,932
|
|
|
|
|
Corporate
|
|
|
(33,014
|
)
|
|
|
|
|
(32,182
|
)
|
|
|
|
|
(108,720
|
)
|
|
|
|
|
(97,862
|
)
|
|
|
|
Total
|
|
$
|
33,495
|
|
|
|
|
$
|
34,317
|
|
|
|
|
$
|
99,589
|
|
|
|
|
$
|
128,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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(1) Includes $0.3 million and $2.8 million in the thirteen weeks and
thirty-nine weeks ended October 2, 2018, respectively, of lease
termination costs related to the closure of one The Cheesecake
Factory restaurant, and $1.2 million in the thirty-nine weeks ended
October 3, 2017 of accelerated depreciation and impairment expense
related to the relocation of one The Cheesecake Factory restaurant
and the lease termination of one The Cheesecake Factory restaurant.
These amounts were recorded in impairment of assets and lease
terminations in the condensed consolidated statements of income.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Consolidated Balance Sheet Information
|
|
October 2, 2018
|
|
January 2, 2018
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
12,639
|
|
|
|
$
|
6,008
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
1,308,063
|
|
|
|
|
1,333,060
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
694,657
|
|
|
|
|
719,530
|
|
|
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
|
613,406
|
|
|
|
|
613,530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Cheesecake Factory Restaurants
|
|
|
|
|
|
|
|
|
|
Supplemental Information
|
|
13 Weeks Ended
October 2, 2018
|
|
13 Weeks Ended
October 3, 2017
|
|
39 Weeks Ended
October 2, 2018
|
|
39 Weeks Ended
October 3, 2017
|
|
Comparable restaurant sales
|
|
|
|
|
1.5%
|
|
|
|
|
-2.3%
|
|
|
|
1.7%
|
|
|
|
-0.8%
|
|
Restaurants opened during period
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
1
|
|
|
|
2
|
|
Restaurants open at period-end
|
|
|
|
|
199
|
|
|
|
|
194
|
|
|
|
199
|
|
|
|
194
|
|
Restaurant operating weeks
|
|
|
|
|
2,580
|
|
|
|
|
2,511
|
|
|
|
7,749
|
|
|
|
7,550
|
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 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
|
|
39 Weeks Ended
|
|
39 Weeks Ended
|
|
|
|
October 2, 2018
|
|
October 3, 2017
|
|
October 2, 2018
|
|
October 3, 2017
|
|
|
|
|
|
|
|
|
|
|
|
Net income (GAAP)
|
|
$
|
28,475
|
|
$
|
26,445
|
|
$
|
82,857
|
|
$
|
99,654
|
|
After-tax impact from:
|
|
|
|
|
|
|
|
|
|
- Impairment of assets and lease terminations (1)
|
|
|
195
|
|
|
-
|
|
|
2,106
|
|
|
739
|
|
Adjusted net income (non-GAAP)
|
|
$
|
28,670
|
|
$
|
26,445
|
|
$
|
84,963
|
|
$
|
100,393
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share (GAAP)
|
|
$
|
0.61
|
|
$
|
0.56
|
|
$
|
1.77
|
|
$
|
2.05
|
|
After-tax impact from:
|
|
|
|
|
|
|
|
|
|
- Impairment of assets and lease terminations
|
|
|
0.00
|
|
|
-
|
|
|
0.05
|
|
|
0.02
|
|
Adjusted diluted net income per share (non-GAAP) (2)
|
|
$
|
0.62
|
|
$
|
0.56
|
|
$
|
1.82
|
|
$
|
2.07
|
|
|
|
(1) The pre-tax amounts associated with the items in the thirteen
and thirty-nine weeks ended October 2, 2018 were $0.3 million and
$2.8 million, respectively. The pre-tax amount associated with the
item in the thirty-nine weeks ended October 3, 2017 was $1.2
million. These amounts were recorded in impairment of assets and
lease terminations.
|
|
|
|
(2) Adjusted diluted net income per share may not add due to
rounding.
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20181030005879/en/
