Cheesecake Factory Results

The Cheesecake Factory Reports Results for First Quarter of Fiscal 2019

Total revenues were $599.5 million in the first quarter of fiscal 2019 compared to $584.7 million in the first quarter of fiscal 2018. Net income and diluted net income per share were $27.0 million and $0.60, respectively, in the first quarter of fiscal 2019.

Cheesecake Factory

The Cheesecake Factory Incorporated (NASDAQ: CAKE) today reported financial results for the first quarter of fiscal 2019, which ended on April 2, 2019.

Total revenues were $599.5 million in the first quarter of fiscal 2019 compared to $584.7 million in the first quarter of fiscal 2018. Net income and diluted net income per share were $27.0 million and $0.60, respectively, in the first quarter of fiscal 2019.

Excluding the after-tax impact of the $1.5 million loss on the Company’s minority investments, net income and diluted net income per share for the first quarter of fiscal 2019 would have been $28.1 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 1.3% in the first quarter of fiscal 2019.

“Both comparable sales at The Cheesecake Factory restaurants and adjusted earnings per share were at the higher end of our expectations during the first quarter,” said David Overton, Chairman and Chief Executive Officer. “Strong performance within the off-premise channel and across our marketing initiatives contributed to the top-line results. Importantly, our operators executed well, driving solid flow-through to support profitability.”

Overton concluded, “The year is off to a great start and we look forward to continuing to deliver memorable experiences to our guests, bringing The Cheesecake Factory to new markets, both domestic and abroad, and positioning the Company for additional long-term growth potential.”

Development

The Company continues to expect to open as many as six Cheesecake Factory restaurants in fiscal 2019, including the Oxnard, California location that opened in April. In addition, the first location of the Company’s new fine fast-casual concept, Social Monk Asian Kitchen, opened during the first quarter of 2019, as expected.

During fiscal 2019, the Company also continues to expect as many as five restaurants to open internationally under licensing agreements. This includes the fourth location in Mexico, which opened in February. In addition, the licensed Cheesecake Factory location in Beirut ceased operations today due to the geopolitical environment in Lebanon.

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 May 29, 2019 to shareholders of record at the close of business on May 16, 2019.

During the first quarter of fiscal 2019, the Company repurchased approximately 246,000 shares of its common stock at a cost of $11.1 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 219 restaurants throughout the United States, including Puerto Rico, and Canada, comprised of 202 restaurants under The Cheesecake Factory® mark; 14 restaurants under the Grand Lux Cafe® mark; two restaurants under the RockSugar Southeast Asian Kitchen® mark and one restaurant under the Social Monk 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.

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 2, 2019   April 3, 2018
    Amount   Percent of

Revenues

  Amount   Percent of

Revenues

Revenues   $ 599,481       100.0 %   $ 584,697       100.0 %
Costs and expenses:                
Cost of sales     136,187       22.7 %     134,220       23.0 %
Labor expenses     217,310       36.2 %     209,575       35.8 %
Other operating costs and expenses     153,221       25.6 %     144,976       24.8 %
General and administrative expenses     39,123       6.5 %     39,274       6.7 %
Depreciation and amortization expenses     21,362       3.6 %     24,002       4.1 %
Preopening costs     2,130       0.4 %     1,099       0.2 %
Total costs and expenses     569,333       95.0 %     553,146       94.6 %
Income from operations     30,148       5.0 %     31,551       5.4 %
Loss on investment in unconsolidated affiliates     (1,450 )     (0.2 )%     (89 )     0.0 %
Interest and other income/(expense), net     2       0.0 %     (1,417 )     (0.3 )%
Income before income taxes     28,700       4.8 %     30,045       5.1 %
Income tax provision     1,716       0.3 %     4,016       0.6 %
Net income   $ 26,984       4.5 %   $ 26,029       4.5 %
                 
Basic net income per share   $ 0.61         $ 0.57      
Basic weighted average shares outstanding     44,255           45,552      
                 
Diluted net income per share   $ 0.60         $ 0.56      
Diluted weighted average shares outstanding     44,984           46,574      
                 
Selected Segment Information                
Revenues:                
The Cheesecake Factory restaurants   $ 548,633         $ 535,123      
Other     50,848           49,574      
Total   $ 599,481         $ 584,697      
                 
Income/(loss) from operations:                
The Cheesecake Factory restaurants   $ 61,245         $ 61,566      
Other     5,325           6,362      
Corporate     (36,422 )         (36,377 )    
Total   $ 30,148         $ 31,551      
                 
Selected Consolidated Balance Sheet Information   April 2, 2019 (1)   January 1, 2019
Cash and cash equivalents       $ 22,529         $ 26,578  
Total assets         2,074,954           1,314,133  
Total liabilities         1,533,600           743,074  
Stockholders' equity         541,354           571,059  
                 
(1) Adoption of the new lease accounting standard (ASC 842) at January 2, 2019, resulted in the increase of lease-related assets and liabilities of $788.4 million and $844.6 million, respectively, and a reduction to retained earnings of $42.4 million, net of tax.
                 
The Cheesecake Factory Restaurants   13 Weeks Ended   13 Weeks Ended
Supplemental Information   April 2, 2019   April 3, 2018
Comparable restaurant sales         1.3 %         2.1 %
Restaurants opened during period         -           -  
Restaurants open at period-end         201           199  
Restaurant operating weeks         2,613           2,587  
                         

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 uses these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Reconciliations of our anticipated adjusted diluted net income per share ranges to their corresponding GAAP measures have not been provided as we cannot determine the probable significance or timing of certain reconciling items which are outside of our control and therefore cannot be reasonably predicted.

 
The Cheesecake Factory Incorporated
Reconciliation of Non-GAAP Financial Measures
(unaudited; in thousands, except per share data)
             
             
    13 Weeks Ended   13 Weeks Ended
    April 2, 2019   April 3, 2018
             
Net income (GAAP)     $ 26,984     $ 26,029
After-tax impact from:            
- Loss on investment (1)       1,073       66
Adjusted net income (non-GAAP)     $ 28,057     $ 26,095
             
Diluted net income per share (GAAP)     $ 0.60     $ 0.56
After-tax impact from:            
- Loss on investment       0.02       0.00
Adjusted diluted net income per share (non-GAAP)     $ 0.62     $ 0.56

(1) The pre-tax amounts associated with these items were $1.5 million in fiscal 2019 and $0.1 million in fiscal 2018. These amounts were recorded in loss on investment in unconsolidated affiliates. The tax effect assumes a 26% tax rate based on the federal statutory rate and an estimated blended state tax rate.



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