The Cheesecake Factory Reports Results for Fourth Quarter of Fiscal 2021
Total revenues were $776.7 million in the fourth quarter of fiscal 2021 compared to $554.6 million in the fourth quarter of fiscal 2020. Net income available to common stockholders and diluted net income per common share were $2.1 million and $0.04, respectively, in the fourth quarter of fiscal 2021.
The Cheesecake Factory Incorporated (NASDAQ: CAKE) today reported financial results for the fourth quarter of fiscal 2021, which ended on December 28, 2021.
Total revenues were $776.7 million in the fourth quarter of fiscal 2021 compared to $554.6 million in the fourth quarter of fiscal 2020. Net income available to common stockholders and diluted net income per common share were $2.1 million and $0.04, respectively, in the fourth quarter of fiscal 2021.
The company recorded $29.1 million related to pre-tax charges of asset impairments and FRC acquisition-related items, as well as a reserve for uncertain tax positions. Excluding the after-tax impact of these items, adjusted net income and adjusted net income per share for the fourth quarter of fiscal 2021 were $24.9 million and $0.49, 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 33.8% year-over-year in the fourth quarter of fiscal 2021. Relative to the fourth quarter of fiscal 2019, comparable restaurant sales at The Cheesecake Factory restaurants increased 7.7%.
As of today, indoor dining restrictions have been lifted for nearly all of the company’s restaurants across all its concepts. Fiscal 2022 first quarter-to-date through February 15th comparable sales for The Cheesecake Factory restaurants increased approximately 24.3% year-over-year, supported by approximately 30% off-premise sales mix.
“We posted another quarter of solid sales performance across our brands, continuing to outperform the broader casual dining industry and recording record revenues despite the surge in COVID-19 cases from the Omicron variant towards the end of the year,” said David Overton, Chairman and Chief Executive Officer. “Specifically, fourth quarter comparable sales at The Cheesecake Factory were running at 10.6% going into the third week of December relative to fiscal 2019. We believe our operating results would have been in line with expectations but for the softer sales trend during the last two weeks of the quarter which coincided with the Omicron surge.”
Overton continued, “I remain proud of our teams for how they have navigated through all of the challenges this past year while continuing to deliver delicious, memorable experiences for our guests. As we look ahead, I am confident that our best in-class operators will continue to effectively manage through this volatile operating environment, and with our development pipeline in place and solid comparable sales trends across our brands, we are well-positioned to continue to take market share.”
Development
During the fourth quarter of fiscal 2021, four new restaurants opened, including The Cheesecake Factory in Huntsville, AL, North Italia in Orlando and a Blanco and a Culinary Dropout in Denver, meeting the Company’s development objective of opening 14 new restaurants across its concepts during fiscal 2021.
In addition, internationally a third The Cheesecake Factory opened in Shanghai under a licensing agreement during the fourth quarter of fiscal 2021.
Balance Sheet & Cash Flow
As of December 28, 2021, the Company had total available liquidity of $430 million, including a cash balance of $190 million and availability on its revolving credit facility of $240 million. Total principal amount of debt outstanding was $475 million, including $345 million in principal amount of 0.375% convertible senior notes due 2026 and $130 million in principal amount drawn on the Company’s revolving credit facility.
| The Cheesecake Factory Incorporated | |||||||||||||||||||||||||||
| Condensed Consolidated Financial Statements | |||||||||||||||||||||||||||
| (unaudited; in thousands, except per share and statistical data) | |||||||||||||||||||||||||||
| 13 Weeks Ended | 13 Weeks Ended | 52 Weeks Ended | 52 Weeks Ended | ||||||||||||||||||||||||
| Consolidated Statements of Income | December 28, 2021 | December 29, 2020 | December 28, 2021 | December 29, 2020 | |||||||||||||||||||||||
| Amount | Percent of Revenues | Amount | Percent of Revenues | Amount | Percent of Revenues | Amount | Percent of Revenues | ||||||||||||||||||||
| Revenues | $ | 776,693 | 100.0 | % | $ | 554,552 | 100.0 | % | $ | 2,927,540 | 100.0 | % | $ | 1,983,225 | 100.0 | % | |||||||||||
| Costs and expenses: | |||||||||||||||||||||||||||
| Cost of sales | 178,896 | 23.0 | % | 127,195 | 22.9 | % | 653,133 | 22.3 | % | 458,332 | 23.1 | % | |||||||||||||||
| Labor expenses | 288,127 | 37.1 | % | 218,126 | 39.3 | % | 1,072,628 | 36.6 | % | 778,586 | 39.3 | % | |||||||||||||||
| Other operating costs and expenses | 209,793 | 27.0 | % | 167,329 | 30.2 | % | 792,311 | 27.0 | % | 616,069 | 31.1 | % | |||||||||||||||
| General and administrative expenses | 47,679 | 6.1 | % | 40,177 | 7.3 | % | 186,136 | 6.4 | % | 157,644 | 7.9 | % | |||||||||||||||
| Depreciation and amortization expenses | 22,849 | 3.0 | % | 22,612 | 4.1 | % | 89,654 | 3.1 | % | 91,415 | 4.6 | % | |||||||||||||||
| Impairment of assets and lease termination expenses | 17,545 | 2.3 | % | 14,602 | 2.6 | % | 18,139 | 0.6 | % | 219,333 | 11.1 | % | |||||||||||||||
| Acquisition-related costs | - | 0.0 | % | 356 | 0.1 | % | - | 0.0 | % | 2,699 | 0.1 | % | |||||||||||||||
| Acquisition-related contingent consideration, compensation and amortization expenses/(benefit) | 6,918 | 0.9 | % | 120 | 0.0 | % | 19,510 | 0.7 | % | (3,872 | ) | (0.2 | )% | ||||||||||||||
| Preopening costs | 3,907 | 0.5 | % | 2,846 | 0.5 | % | 13,711 | 0.5 | % | 10,456 | 0.5 | % | |||||||||||||||
| Total costs and expenses | 775,714 | 99.9 | % | 593,363 | 107.0 | % | 2,845,222 | 97.2 | % | 2,330,662 | 117.5 | % | |||||||||||||||
| Income/(loss) from operations | 979 | 0.1 | % | (38,811 | ) | (7.0 | )% | 82,318 | 2.8 | % | (347,437 | ) | (17.5 | )% | |||||||||||||
| Interest and other expense, net | (1,504 | ) | (0.2 | )% | (1,580 | ) | (0.3 | )% | (10,698 | ) | (0.4 | )% | (8,599 | ) | (0.5 | )% | |||||||||||
| Income/(loss) before income taxes | (525 | ) | (0.1 | )% | (40,391 | ) | (7.3 | )% | 71,620 | 2.4 | % | (356,036 | ) | (18.0 | )% | ||||||||||||
| Income tax benefit | (2,635 | ) | (0.3 | )% | (8,074 | ) | (1.5 | )% | (753 | ) | (0.1 | )% | (102,671 | ) | (5.2 | )% | |||||||||||
| Net income/(loss) | 2,110 | 0.2 | % | (32,317 | ) | (5.8 | )% | 72,373 | 2.5 | % | (253,365 | ) | (12.8 | )% | |||||||||||||
| Dividends on Series A preferred stock (1) | - | 0.0 | % | (4,953 | ) | (0.9 | )% | (18,661 | ) | (0.6 | )% | (13,485 | ) | (0.7 | )% | ||||||||||||
| Direct and incremental Series A preferred stock issuance cost | - | 0.0 | % | - | 0.0 | % | - | 0.0 | % | (10,257 | ) | (0.5 | )% | ||||||||||||||
| Undistributed earnings allocated to Series A preferred stock | - | 0.0 | % | - | 0.0 | % | (4,581 | ) | (0.2 | )% | - | 0.0 | % | ||||||||||||||
| Net income/(loss) available to common stockholders | $ | 2,110 | 0.2 | % | $ | (37,270 | ) | (6.7 | )% | $ | 49,131 | 1.7 | % | $ | (277,107 | ) | (14.0 | )% | |||||||||
| Basic net income/(loss) per common share | $ | 0.04 | $ | (0.85 | ) | $ | 1.03 | $ | (6.32 | ) | |||||||||||||||||
| Basic weighted average shares outstanding | 50,243 | 43,928 | 47,529 | 43,869 | |||||||||||||||||||||||
| Diluted net income/(loss) per common share (2) | $ | 0.04 | $ | (0.85 | ) | $ | 1.01 | $ | (6.32 | ) | |||||||||||||||||
| Diluted weighted average shares outstanding | 51,053 | 43,928 | 48,510 | 43,869 | |||||||||||||||||||||||
(1) During the second quarter of fiscal 2021, the Company completed the cash-settled conversion of 150,000 shares of its previously outstanding convertible preferred stock and the conversion of the remaining 50,000 shares of convertible preferred stock into approximately 2.4 million shares of the Company’s common stock, which simplified the Company’s capital structure and eliminated future convertible preferred dividends.
(2) Diluted net income per common share reflects the reallocation of undistributed earnings to preferred stock of $84,883 for the fifty-two weeks ended December 28, 2021.
| 13 Weeks Ended | 13 Weeks Ended | 52 Weeks Ended | 52 Weeks Ended | |||||||||||||
| Selected Segment Information | December 28, 2021 | December 29, 2020 | December 28, 2021 | December 29, 2020 | ||||||||||||
| Revenues: | ||||||||||||||||
| The Cheesecake Factory restaurants | $ | 594,590 | $ | 438,485 | $ | 2,293,225 | $ | 1,585,008 | ||||||||
| North Italia | 51,155 | 30,324 | 171,901 | 102,585 | ||||||||||||
| Other FRC | 54,197 | 28,792 | 182,175 | 96,856 | ||||||||||||
| Other | 76,751 | 56,951 | 280,239 | 198,776 | ||||||||||||
| Total | $ | 776,693 | $ | 554,552 | $ | 2,927,540 | $ | 1,983,225 | ||||||||
| Income/(loss) from operations: | ||||||||||||||||
| The Cheesecake Factory restaurants | $ | 48,129 | $ | 14,331 | $ | 242,599 | $ | 45,540 | ||||||||
| North Italia | 3,304 | (49 | ) | 8,624 | (77,371 | ) | ||||||||||
| Other FRC | 1,758 | 51 | 16,323 | (77,026 | ) | |||||||||||
| Other | (52,212 | ) | (53,144 | ) | (185,228 | ) | (238,580 | ) | ||||||||
| Total | $ | 979 | $ | (38,811 | ) | $ | 82,318 | $ | (347,437 | ) | ||||||
| Preopening costs: | ||||||||||||||||
| The Cheesecake Factory restaurants | $ | 1,253 | $ | 1,049 | $ | 4,868 | $ | 4,206 | ||||||||
| North Italia | 1,175 | 683 | 4,510 | 2,578 | ||||||||||||
| Other FRC | 1,239 | 797 | 3,188 | 1,324 | ||||||||||||
| Other | 240 | 317 | 1,145 | 2,348 | ||||||||||||
| Total | $ | 3,907 | $ | 2,846 | $ | 13,711 | $ | 10,456 | ||||||||
| Impairment of assets and lease termination expenses: | ||||||||||||||||
| The Cheesecake Factory restaurants | $ | 11,904 | $ | 477 | $ | 11,904 | $ | 3,261 | ||||||||
| North Italia | - | 258 | - | 71,782 | ||||||||||||
| Other FRC | 1,305 | 110 | 1,305 | 73,049 | ||||||||||||
| Other | 4,336 | 13,757 | 4,930 | 71,241 | ||||||||||||
| Total | $ | 17,545 | $ | 14,602 | $ | 18,139 | $ | 219,333 | ||||||||
| Depreciation and amortization expenses: | ||||||||||||||||
| The Cheesecake Factory restaurants | $ | 16,766 | $ | 16,657 | $ | 65,987 | $ | 67,514 | ||||||||
| North Italia | 1,185 | 841 | 4,078 | 3,608 | ||||||||||||
| Other FRC | 1,379 | 1,088 | 4,802 | 4,090 | ||||||||||||
| Other | 3,519 | 4,026 | 14,787 | 16,203 | ||||||||||||
| Total | $ | 22,849 | $ | 22,612 | $ | 89,654 | $ | 91,415 | ||||||||
| 13 Weeks Ended | 13 Weeks Ended | 52 Weeks Ended | 52 Weeks Ended | |||||
| The Cheesecake Factory restaurants operating information: | December 28, 2021 | December 29, 2020 | December 28, 2021 | December 29, 2020 | ||||
| Comparable restaurant sales vs. prior year | 33.8 % | (19.5)% | 44.0 % | (28.2)% | ||||
| Comparable restaurant sales vs. 2019 | 7.7 % | 3.3 % | ||||||
| Restaurants opened during period | 1 | 1 | 2 | 1 | ||||
| Restaurants open at period-end | 208 | 206 | 208 | 206 | ||||
| Restaurant operating weeks | 2,700 | 2,666 | 10,758 | 10,642 | ||||
| North Italia operating information: | ||||||||
| Comparable restaurant sales vs. prior year | 37 % | (18)% | 48 % | (28)% | ||||
| Comparable restaurant sales vs. 2019 | 14 % | 7 % | ||||||
| Restaurants opened during period | 1 | - | 6 | 1 | ||||
| Restaurants open at period-end | 29 | 23 | 29 | 23 | ||||
| Restaurant operating weeks | 372 | 299 | 1,352 | 1,146 | ||||
| Other Fox Restaurant Concepts (FRC) operating information: (1) | ||||||||
| Restaurants opened during period | 2 | 2 | 4 | 2 | ||||
| Restaurants open at period-end | 31 | 27 | 31 | 27 | ||||
| Restaurant operating weeks | 393 | 330 | 1,460 | 1,139 | ||||
| Other operating information: (2) | ||||||||
| Restaurants opened during period | - | - | 2 | 3 | ||||
| Restaurants open at period-end | 40 | 39 | 40 | 39 | ||||
| Restaurant operating weeks | 519 | 479 | 1,993 | 1,721 | ||||
| Number of company-owned restaurants: | ||||||||
| The Cheesecake Factory | 208 | |||||||
| North Italia | 29 | |||||||
| Other FRC | 31 | |||||||
| Other | 40 | |||||||
| Total | 308 | |||||||
| Number of international-licensed restaurants: | ||||||||
| The Cheesecake Factory | 29 |
(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 | December 28, 2021 | December 29, 2020 | ||||
| Cash and cash equivalents | $ | 189,627 | $ | 154,085 | ||
| Long-term debt, net of issuance costs (1) | 466,017 | 280,000 | ||||
(1) Incudes $336 million net balance of 0.375% convertible senior notes due 2026 (principal amount of $345 million less $9 million in unamortized issuance cost) 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 Sheets and were 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. To reflect the then potential impact of the conversion of the Company’s convertible preferred stock into common stock for the period that it was outstanding prior to the repurchase and conversion on June 15, 2021, 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 | 52 Weeks Ended | 52 Weeks Ended | |||||||||||||
| December 28, 2021 | December 29, 2020 | December 28, 2021 | December 29, 2020 | |||||||||||||
| Net income/(loss) available to common stockholders (GAAP) | $ | 2,110 | $ | (37,270 | ) | $ | 49,131 | $ | (277,107 | ) | ||||||
| Dividends on Series A preferred stock | - | 4,953 | 18,661 | 13,485 | ||||||||||||
| Direct and incremental Series A preferred stock issuance costs | - | - | - | 10,257 | ||||||||||||
| Net income attributable to Series A preferred stock to apply if-converted method | - | - | 4,581 | - | ||||||||||||
| COVID-19 related costs (1) | - | 5,384 | 4,917 | 22,963 | ||||||||||||
| Impairment of assets and lease termination expenses (2) | 17,545 | 14,602 | 18,139 | 219,333 | ||||||||||||
| Acquisition-related costs (3) | - | 356 | - | 2,699 | ||||||||||||
| Acquisition-related contingent consideration, compensation and amortization expenses/(benefit) (4) | 6,918 | 120 | 19,510 | (3,872 | ) | |||||||||||
| Termination of Interest rate swap | - | - | 2,354 | - | ||||||||||||
| Uncertain tax positions (5) | 4,667 | - | 7,139 | - | ||||||||||||
| Tax effect of adjustments (6) | (6,361 | ) | (5,321 | ) | (11,679 | ) | (62,692 | ) | ||||||||
| Adjusted net income/(loss) (non-GAAP) | $ | 24,879 | $ | (17,176 | ) | $ | 112,753 | $ | (74,934 | ) | ||||||
| Diluted net income/(loss) per common share (GAAP) | $ | 0.04 | $ | (0.85 | ) | $ | 1.01 | $ | (6.32 | ) | ||||||
| Dividends on Series A preferred stock | - | 0.09 | 0.35 | 0.27 | ||||||||||||
| Direct and incremental Series A preferred stock issuance costs | - | - | - | 0.20 | ||||||||||||
| Net income attributable to Series A preferred stock to apply if-converted method | - | - | 0.09 | - | ||||||||||||
| Assumed impact of potential conversion of Series A preferred stock into common stock (7) | - | 0.15 | (0.08 | ) | 0.80 | |||||||||||
| COVID-19 related costs | - | 0.10 | 0.09 | 0.46 | ||||||||||||
| Impairment of assets and lease termination expenses | 0.34 | 0.27 | 0.34 | 4.36 | ||||||||||||
| Acquisition-related costs | - | 0.01 | - | 0.05 | ||||||||||||
| Acquisition-related contingent consideration, compensation and amortization expenses/(benefit) | 0.14 | 0.00 | 0.37 | (0.08 | ) | |||||||||||
| Termination of Interest rate swap | - | - | 0.04 | - | ||||||||||||
| Uncertain tax positions | 0.09 | - | 0.13 | - | ||||||||||||
| Tax effect of adjustments | (0.12 | ) | (0.10 | ) | (0.22 | ) | (1.25 | ) | ||||||||
| Adjusted net income/(loss) per share (non-GAAP) (8) | $ | 0.49 | $ | (0.32 | ) | $ | 2.13 | $ | (1.49 | ) | ||||||
(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.
(2) A detailed breakdown of impairment of assets and lease termination expenses recorded in the thirteen and fifty-two weeks ended December 28, 2021 and December 29, 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 positions related to tenant improvement allowances and Section 199 deductions. 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 (0 and 4,431,140 shares for the thirteen and fifty-two weeks ended December 28, 2021, respectively), resulting in an assumption of 50,243,003 and 51,959,879 weighted-average common shares outstanding for the thirteen and fifty-two weeks ended December 28, 2021, respectively. The impact of assuming the conversion of Series A preferred stock into common stock (9,378,275 and 6,390,210 shares for the thirteen and fifty-two weeks ended December 29, 2020, respectively), resulting in an assumption of 53,306,694 and 50,258,815 weighted-average common shares outstanding for the thirteen and fifty-two weeks ended December 29, 2020, respectively.
(8) Adjusted net income per share may not add due to rounding.
