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The Cheesecake Factory Reports Results for Second Quarter of Fiscal 2011

2011-07-21
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    • Cheesecake Factory Total revenues were $430.7 million in the second quarter of fiscal 2011 as compared to $418.9 million in the prior year second quarter. Net income and diluted net income per share were $24.7 million and $0.42, respectively.

    The Cheesecake Factory Incorporated (NASDAQ: CAKE) today reported financial results for the second quarter of fiscal 2011, which ended on June 28, 2011.

    “We experienced higher sales in every day part, with solid gains in the ‘shoulder periods,’ consistent with our performance last quarter. Our average ticket progressed nicely again this quarter as well, with menu mix showing further improvement, as expected.”

    Total revenues were $430.7 million in the second quarter of fiscal 2011 as compared to $418.9 million in the prior year second quarter. Net income and diluted net income per share were $24.7 million and $0.42, respectively.

    Operating Results

    Comparable restaurant sales at The Cheesecake Factory and Grand Lux Cafe increased 2.1% in the second quarter of fiscal 2011 from the second quarter of the prior year. By concept, comparable restaurant sales grew 2.3% at The Cheesecake Factory and were flat at Grand Lux Cafe.

    “We continue to demonstrate a best-in-class competitive position with our sixth consecutive quarter of positive comparable sales and increases in guest traffic,” said David Overton, Chairman and CEO. “We experienced higher sales in every day part, with solid gains in the ‘shoulder periods,’ consistent with our performance last quarter. Our average ticket progressed nicely again this quarter as well, with menu mix showing further improvement, as expected.

    “In spite of the high food cost inflation environment, we are managing expenses well, offsetting cost pressures to deliver solid earnings growth. Our operators are doing an outstanding job of running our restaurants efficiently and productively. We are on-track to deliver mid-teens earnings per share growth this year, which is in-line with our longer-term objectives,” continued Overton.

    Development

    The Company currently expects to open seven new restaurants in fiscal 2011. Its most recent opening – The Cheesecake Factory in Short Hills, New Jersey – opened on July 18, 2011, as previously announced.

    Capital Allocation

    Based on its outlook for continued, healthy cash flow generation in fiscal 2011, the Company is increasing its share repurchase target for fiscal 2011 to a range of between $125 million and $150 million, from its previous target of $100 million.

    During the second quarter, the Company repurchased 1,482,343 shares of its common stock at a cost of approximately $44.4 million. Year-to-date, the Company has repurchased 3,231,463 shares at a total cost of approximately $95.0 million.

    “We are confident in the near- and long-term outlook for our Company. The health of our business drives our ability to generate increasingly stronger levels of cash flow, which we are returning to shareholders in a meaningful way through share repurchases this year,” concluded Overton.

    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 operates 165 full-service, casual dining restaurants throughout the U.S., including 151 restaurants under The Cheesecake Factory® mark; 13 restaurants under the Grand Lux Cafe® mark; and one restaurant under the RockSugar Pan Asian Kitchen® mark. The Company also operates two bakery production facilities in Calabasas Hills, CA and Rocky Mount, NC that produce over 70 varieties of quality cheesecakes and other baked products.

     
    The Cheesecake Factory Incorporated and Subsidiaries
    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 Operations   June 28, 2011 June 29,2010 June 28, 2011 June 29, 2010

    Amounts

    		  

    Percent of Revenue

    Amounts

    		  

    Percent of Revenue

     

    Amounts

    		  

    Percent of Revenue

     

    Amounts

    		  

    Percent of Revenue
    Revenues $ 430,746 100.0 % $ 418,909 100.0 % 849,511 100.0 % $ 824,342 100.0 %
    Costs and expenses:
    Cost of sales 109,924 25.5 % 102,752 24.5 % 214,588 25.3 % 201,355 24.5 %
    Labor expenses 139,469 32.4 % 136,038 32.5 % 276,967 32.6 % 271,207 32.9 %
    Other operating costs and expenses 103,392 24.0 % 100,391 24.0 % 206,666 24.3 % 199,702 24.2 %
    General and administrative expenses 24,208 5.6 % 23,766 5.7 % 48,473 5.7 % 47,190 5.7 %
    Depreciation and amortization expenses 17,483 4.1 % 18,026 4.3 % 34,936 4.1 % 36,181 4.4 %
    Preopening costs   1,108     0.2 %   641     0.1 %   2,868   0.3 %   2,735   0.3 %
    Total costs and expenses   395,584     91.8 %   381,614     91.1 %   784,498   92.3 %   758,370   92.0 %
    Income from operations 35,162 8.2 % 37,295 8.9 % 65,013 7.7 % 65,972 8.0 %
    Interest expense (1,128 ) (0.3 )% (10,547 ) (2.5 )% (2,485 ) (0.3 )% (13,556 ) (1.7 )%
    Interest income 40 – 17 – 79 – 168 –
    Other (expense)/income, net   (6 )   –     191     –     (90 ) –     537   0.1 %
    Income before income taxes 34,068 7.9 % 26,956 6.4 % 62,517 7.4 % 53,121 6.4 %
    Income tax provision   9,320     2.2 %   7,727     1.8 %   17,313   2.1 %   15,226   1.8 %
    Net income $ 24,748     5.7 % $ 19,229     4.6 % $ 45,204   5.3 % $ 37,895   4.6 %
     
    Basic net income per share $ 0.44   $ 0.32   $ 0.79   $ 0.64  
    Basic weighted average shares outstanding   56,554     59,238     57,517     59,261  
     
    Diluted net income per share $ 0.42   $ 0.32   $ 0.76   $ 0.62  
    Diluted weighted average shares outstanding   58,595     60,863     59,543     60,706  
     
    Selected Segment Information  
    Revenues:
    Restaurants $ 416,549 $ 404,797 $ 823,452 $ 798,469
    Bakery 28,110 27,182 53,947 52,530
    Intercompany bakery sales   (13,913 )   (13,070 )   (27,888 )   (26,657 )
    $ 430,746   $ 418,909   $ 849,511   $ 824,342  
     
    Income from operations:
    Restaurants $ 56,621 $ 58,387 $ 108,518 $ 107,727
    Bakery 1,885 2,219 2,885 4,734
    Corporate   (23,344 )   (23,311 )   (46,390 )   (46,489 )
    $ 35,162   $ 37,295   $ 65,013   $ 65,972  
     

    Selected Consolidated Balance Sheet Information

    		  

    June 28, 2011

    December 28, 2010
    Cash and cash equivalents $ 58,933 $ 81,619
    Total assets 995,722 1,037,307
    Total liabilities 439,060 444,970
    Stockholders' equity 556,662 592,337
     
    13 Weeks Ended 13 Weeks Ended 26 Weeks Ended 26 Weeks Ended
    Supplemental Information   June 28, 2011 June 29, 2010 June 28, 2011 June 29, 2010
    Comparable restaurant sales percentage change 2.1 % 1.6 % 1.8 % 2.2 %
    Restaurants opened during period – – 1 2
    Restaurants open at period-end 164 162 164 162
    Restaurant operating weeks 2,132 2,106 4,258 4,196
     

    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 the second quarter and year-to-date fiscal 2010 changes to net income and diluted net income per share excluding the impact from a certain item. Additional detail regarding this item can be found in the Company’s Quarterly Report on Form 10-Q for the period ended June 29, 2010 filed with the Securities and Exchange Commission.

    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.

       
    13 Weeks Ended 26 Weeks Ended
    June 28, 2011   June 29, 2010 June 28, 2011   June 29, 2010
    (unaudited; in thousands, except per share data)
    Net income (GAAP) $ 24,748 $ 19,229 $ 45,204 $ 37,895
    After-tax impact from:

    - Unwinding of interest rate collar (1)

     

     

    -

    		  

    4,426

     

    -

     

    4,426
    Net income (non-GAAP) $ 24,748 $ 23,655 $ 45,204

    $

    		 42,321
     
    Diluted net income per share (GAAP) $ 0.42 $ 0.32 $ 0.76 $ 0.62
    After-tax impact from:
    - Unwinding of interest rate collar (2)   -   0.07   -   0.08
    Diluted net income per share (non-GAAP) $ 0.42 $ 0.39 $ 0.76 $ 0.70

    ________________

    (1) The pre-tax amount associated with this item is $7,376 and was recorded in interest expense.

    (2) The diluted weighted average shares outstanding are different for the 13 and 26 weeks ended June 29, 2010. As a result, the after-tax impact to diluted net income per share from unwinding the interest rate collar in fiscal 2010 is not the same for both periods.

     



    Logos, product and company names mentioned are the property of their respective owners.

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