The Cheesecake Factory Reports Results for Fourth Quarter of Fiscal 2022 and Provides Business Update
Total revenues were $892.8 million in the fourth quarter of fiscal 2022 compared to $776.7 million in the fourth quarter of fiscal 2021.
The Cheesecake Factory Incorporated (NASDAQ: CAKE) today reported financial results for the fourth quarter of fiscal 2022, which ended on January 3, 2023.
Total revenues were $892.8 million in the fourth quarter of fiscal 2022 compared to $776.7 million in the fourth quarter of fiscal 2021. The fourth quarter of fiscal 2022 included 14 weeks compared to 13 weeks in the fourth quarter of fiscal 2021; the additional week in fiscal 2022 contributed approximately $78.4 million of sales. Net loss and diluted net loss per common share were $3.3 million and $0.07, respectively, in the fourth quarter of fiscal 2022.
The Company recorded $41.5 million related to pre-tax charges of asset impairments and FRC acquisition-related items. Excluding the after-tax impact of these items, adjusted net income and adjusted net income per share for the fourth quarter of fiscal 2022 were $27.4 million and $0.56, 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 4.0% year-over-year in the fourth quarter of fiscal 2022 (14 weeks vs. 14 weeks). Relative to fiscal 2019, fourth quarter comparable restaurant sales at The Cheesecake Factory restaurants increased 11.4% (14 weeks vs. 14 weeks). Through February 21st, first quarter-to-date comparable sales for The Cheesecake Factory restaurants increased approximately 9.5% year-over-year and 17.0% as compared to the same period in fiscal 2019.
“Our fourth quarter performance was a solid finish to a challenging year marked by persistent inflation, volatility and a dynamic operating environment,” said David Overton, Chairman and Chief Executive Officer. “Our best-in-class operators continued to do an excellent job of managing their restaurants, building sales and delivering delicious, memorable experiences for our valued guests.
“During the quarter we opened eight new restaurants and successfully implemented incremental pricing to support our stated objective of recovering our operating margins. We believe the strong consumer demand we experienced at our new restaurant openings and continued positive sales trends following our pricing actions demonstrate the strength and resilience of our concepts. Building on this momentum, we remain intently focused on effectively managing through higher costs and potential macro headwinds to protect our longterm sales and margins. Given the strength of our operations team, our brands and our commitment to managing the business for longterm, profitable growth, we believe we are well-positioned to take market share and drive shareholder value in the quarters and years ahead.”
Development
During the fourth quarter of fiscal 2022, we opened eight new restaurants, including two Cheesecake Factory restaurants in Nashville, TN and Corpus Christi, TX and two North Italia restaurants in The Woodlands, TX, a suburb of Houston, and Torrance, CA and four FRC restaurants, including two Flower Child locations in Austin, TX and Chandler, AZ, a Fly Bye in Phoenix, AZ and Pushing Daisies, FRC’s newest concept in Nashville, TN. In addition, one Cheesecake Factory restaurant opened internationally in Mexico under a licensing agreement during the fourth quarter of fiscal 2022.
Liquidity and Capital Allocation
As of January 3, 2023, the Company had total available liquidity of $354 million, including a cash balance of $115 million and availability on its revolving credit facility of $239 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 Company repurchased approximately 663,700 shares of its common stock at a cost of $21.6 million in the fourth quarter of fiscal 2022, and also announced today that its Board of Directors declared a quarterly dividend of $0.27 per share to be paid on March 21, 2023 to shareholders of record at the close of business on March 8, 2023.
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 (loss)/income and net (loss)/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)/income and diluted net (loss)/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 excluded the preferred dividend and assumed 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) | ||||||||||||||||
| 14 Weeks Ended | 13 Weeks Ended | 53 Weeks Ended | 52 Weeks Ended | |||||||||||||
| January 3, 2023 | December 28, 2021 | January 3, 2023 | December 28, 2021 | |||||||||||||
| Net (loss)/ income available to common stockholders (GAAP) | $ | (3,298 | ) | $ | 2,110 |
| $ | 43,123 |
| $ | 49,131 |
| ||||
| Dividends on Series A preferred stock |
| - |
|
| - |
|
| - |
|
| 18,661 |
| ||||
| Net income attributable to Series A preferred stock to apply if-converted method |
| - |
|
| - |
|
| - |
|
| 4,581 |
| ||||
| COVID-19 related costs (1) |
| - |
|
| - |
|
| - |
|
| 4,917 |
| ||||
| Impairment of assets and lease termination expenses (2) |
| 31,074 |
|
| 17,545 |
|
| 31,387 |
|
| 18,139 |
| ||||
| Acquisition-related contingent consideration, compensation and amortization expenses (3) |
| 10,448 |
|
| 6,918 |
|
| 13,368 |
|
| 19,510 |
| ||||
| Termination of Interest rate swap |
| - |
|
| - |
|
| - |
|
| 2,354 |
| ||||
| Uncertain tax positions (4) |
| - |
|
| 4,667 |
|
| - |
|
| 7,139 |
| ||||
| Tax effect of adjustments (5) |
| (10,795 | ) |
| (6,361 | ) |
| (11,637 | ) |
| (11,679 | ) | ||||
| Adjusted net (loss)/ income (non-GAAP) | $ | 27,429 |
| $ | 24,879 |
| $ | 76,241 |
| $ | 112,753 |
| ||||
| Diluted net (loss)/ income per common share (GAAP) | $ | (0.07 | ) | $ | 0.04 |
| $ | 0.86 |
| $ | 1.01 |
| ||||
| Dividends on Series A preferred stock |
| - |
|
| - |
|
| - |
|
| 0.35 |
| ||||
| 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 (6) |
| - |
|
| - |
|
| - |
|
| (0.08 | ) | ||||
| COVID-19 related costs |
| - |
|
| - |
|
| - |
|
| 0.09 |
| ||||
| Impairment of assets and lease termination expenses |
| 0.63 |
|
| 0.34 |
|
| 0.62 |
|
| 0.34 |
| ||||
| Acquisition-related contingent consideration, compensation and amortization expenses |
| 0.21 |
|
| 0.14 |
|
| 0.27 |
|
| 0.37 |
| ||||
| Termination of Interest rate swap |
| - |
|
| - |
|
| - |
|
| 0.04 |
| ||||
| Uncertain tax positions |
| - |
|
| 0.09 |
|
| - |
|
| 0.13 |
| ||||
| Tax effect of adjustments |
| (0.22 | ) |
| (0.12 | ) |
| (0.23 | ) |
| (0.22 | ) | ||||
| Adjusted net (loss)/ income per share (non-GAAP) (7) | $ | 0.56 |
| $ | 0.49 |
| $ | 1.51 |
| $ | 2.13 |
| ||||
| (1) Represents incremental costs associated with COVID-19 such as sanitation, personal protective equipment, sick and vaccination pay, and healthcare benefits for furloughed staff members. | ||||||||||||||||
| (2) A detailed breakdown of impairment of assets and lease termination expenses recorded in the fourteen and fifty-three weeks ended January 3, 2023 and thirteen and fifty-two weeks ended December 28, 2021 can be found in the Selected Segment Information table. | ||||||||||||||||
| (3) Represents changes in the fair value of the deferred consideration and contingent consideration and compensation liabilities related to the North Italia and FRC acquisition, as well as amortization of acquired definite-lived licensing agreements. | ||||||||||||||||
| (4) Reserve for uncertain tax position. 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. | ||||||||||||||||
| (5) 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 2022 and 2021 periods. | ||||||||||||||||
| (6) 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. | ||||||||||||||||
| (7) Adjusted net (loss)/ income per share may not add due to rounding. | ||||||||||||||||
| The Cheesecake Factory Incorporated | ||||||||||||||||||||||||||
| Condensed Consolidated Financial Statements | ||||||||||||||||||||||||||
| (unaudited; in thousands, except per share and statistical data) | ||||||||||||||||||||||||||
| 14 Weeks Ended |
| 13 Weeks Ended |
| 53 Weeks Ended |
| 52 Weeks Ended | ||||||||||||||||||||
| Consolidated Statements of Income | January 3, 2023 |
| December 28, 2021 |
| January 3, 2023 |
| December 28, 2021 | |||||||||||||||||||
| Amount | Percent of |
| Amount | Percent of |
| Amount | Percent of |
| Amount | Percent of | ||||||||||||||||
|
|
|
| ||||||||||||||||||||||||
| Revenues | $ | 892,802 |
|
| 100.0 | % | $ | 776,693 |
|
| 100.0 | % | $ | 3,303,156 |
| 100.0 | % | $ | 2,927,540 |
| 100.0 | % | ||||
| Costs and expenses: | ||||||||||||||||||||||||||
| Food and beverage cost |
| 220,469 |
|
| 24.7 | % |
| 178,896 |
|
| 23.0 | % |
| 810,926 |
| 24.6 | % |
| 653,133 |
| 22.3 | % | ||||
| Labor expenses |
| 318,629 |
|
| 35.7 | % |
| 288,127 |
|
| 37.1 | % |
| 1,211,951 |
| 36.7 | % |
| 1,072,628 |
| 36.6 | % | ||||
| Other operating costs and expenses |
| 237,783 |
|
| 26.6 | % |
| 209,793 |
|
| 27.0 | % |
| 881,627 |
| 26.7 | % |
| 792,311 |
| 27.0 | % | ||||
| General and administrative expenses |
| 56,115 |
|
| 6.3 | % |
| 47,679 |
|
| 6.1 | % |
| 205,753 |
| 6.2 | % |
| 186,136 |
| 6.4 | % | ||||
| Depreciation and amortization expenses |
| 25,616 |
|
| 2.9 | % |
| 22,849 |
|
| 3.0 | % |
| 92,380 |
| 2.8 | % |
| 89,654 |
| 3.1 | % | ||||
| Impairment of assets and lease termination expenses |
| 31,074 |
|
| 3.5 | % |
| 17,545 |
|
| 2.3 | % |
| 31,387 |
| 1.0 | % |
| 18,139 |
| 0.6 | % | ||||
| Acquisition-related contingent consideration, compensation and amortization expenses |
| 10,448 |
|
| 1.2 | % |
| 6,918 |
|
| 0.9 | % |
| 13,368 |
| 0.4 | % |
| 19,510 |
| 0.7 | % | ||||
| Preopening costs |
| 7,791 |
|
| 0.8 | % |
| 3,907 |
|
| 0.5 | % |
| 16,829 |
| 0.4 | % |
| 13,711 |
| 0.5 | % | ||||
| Total costs and expenses |
| 907,925 |
|
| 101.7 | % |
| 775,714 |
|
| 99.9 | % |
| 3,264,221 |
| 98.8 | % |
| 2,845,222 |
| 97.2 | % | ||||
| (Loss)/ income from operations |
| (15,123 | ) |
| (1.7 | )% |
| 979 |
|
| 0.1 | % |
| 38,935 |
| 1.2 | % |
| 82,318 |
| 2.8 | % | ||||
| Interest and other expense, net |
| (2,137 | ) |
| (0.2 | )% |
| (1,504 | ) |
| (0.2 | )% |
| (6,043 | ) | (0.2 | )% |
| (10,698 | ) | (0.4 | )% | ||||
| (Loss)/ income before income taxes |
| (17,260 | ) |
| (1.9 | )% |
| (525 | ) |
| (0.1 | )% |
| 32,892 |
| 1.0 | % |
| 71,620 |
| 2.4 | % | ||||
| Income tax benefit |
| (13,962 | ) |
| (1.5 | )% |
| (2,635 | ) |
| (0.3 | )% |
| (10,231 | ) | (0.3 | )% |
| (753 | ) | (0.1 | )% | ||||
| Net (loss)/ income |
| (3,298 | ) |
| (0.4 | )% |
| 2,110 |
|
| 0.2 | % |
| 43,123 |
| 1.3 | % |
| 72,373 |
| 2.5 | % | ||||
| Dividends on Series A preferred stock (1) |
| - |
|
| 0.0 | % |
| - |
|
| 0.0 | % |
| - |
| 0.0 | % |
| (18,661 | ) | (0.6 | )% | ||||
| Undistributed earnings allocated to Series A preferred stock |
| - |
|
| 0.0 | % |
| - |
|
| 0.0 | % |
| - |
| 0.0 | % |
| (4,581 | ) | (0.2 | )% | ||||
| Net (loss)/ income available to common stockholders | $ | (3,298 | ) |
| (0.4 | )% | $ | 2,110 |
|
| 0.2 | % | $ | 43,123 |
| 1.3 | % | $ | 49,131 |
| 1.7 | % | ||||
| Basic net (loss)/ income per common share | $ | (0.07 | ) | $ | 0.04 |
| $ | 0.87 |
| $ | 1.03 |
| ||||||||||||||
| Basic weighted average shares outstanding |
| 48,951 |
|
| 50,243 |
|
| 49,815 |
|
| 47,529 |
| ||||||||||||||
| Diluted net (loss)/ income per common share (2) | $ | (0.07 | ) | $ | 0.04 |
| $ | 0.86 |
| $ | 1.01 |
| ||||||||||||||
| Diluted weighted average shares outstanding |
| 48,951 |
|
| 51,053 |
|
| 50,414 |
|
| 48,510 |
| ||||||||||||||
| (1) During the second quarter of fiscal 2021, the Company completed the repurchase 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. For GAAP accounting purposes, $13.6 million of the total consideration paid was deemed to be a dividend during the second quarter of fiscal 2021. | ||||||||||||||||||||||||||
| (2) Diluted net (loss)/ income per common share reflects an adjustment for reallocation of undistributed earnings to preferred stock of $84,883 for the fifty-two weeks ended December 28, 2021. | ||||||||||||||||||||||||||
| 14 Weeks Ended | 13 Weeks Ended | 53 Weeks Ended | 52 Weeks Ended | |||||||||||||||||||||||
| Selected Segment Information | January 3, 2023 | December 28, 2021 | January 3, 2023 | December 28, 2021 | ||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||
| The Cheesecake Factory restaurants | $ | 674,467 |
| $ | 594,590 |
| $ | 2,528,043 |
| $ | 2,293,225 |
| ||||||||||||||
| North Italia |
| 65,514 |
|
| 51,155 |
|
| 228,622 |
|
| 171,901 |
| ||||||||||||||
| Other FRC |
| 66,507 |
|
| 54,197 |
|
| 237,552 |
|
| 182,175 |
| ||||||||||||||
| Other |
| 86,314 |
|
| 76,751 |
|
| 308,939 |
|
| 280,239 |
| ||||||||||||||
| Total | $ | 892,802 |
| $ | 776,693 |
| $ | 3,303,156 |
| $ | 2,927,540 |
| ||||||||||||||
| (Loss)/ Income from operations: | ||||||||||||||||||||||||||
| The Cheesecake Factory restaurants | $ | 50,872 |
| $ | 48,129 |
| $ | 220,765 |
| $ | 242,599 |
| ||||||||||||||
| North Italia |
| 3,553 |
|
| 3,304 |
|
| 13,934 |
|
| 8,624 |
| ||||||||||||||
| Other FRC |
| 5,346 |
|
| 1,758 |
|
| 23,577 |
|
| 16,323 |
| ||||||||||||||
| Other |
| (74,894 | ) |
| (52,212 | ) |
| (219,341 | ) |
| (185,228 | ) | ||||||||||||||
| Total | $ | (15,123 | ) | $ | 979 |
| $ | 38,935 |
| $ | 82,318 |
| ||||||||||||||
| Preopening costs: | ||||||||||||||||||||||||||
| The Cheesecake Factory restaurants | $ | 4,362 |
| $ | 1,253 |
| $ | 9,525 |
| $ | 4,868 |
| ||||||||||||||
| North Italia |
| 1,550 |
|
| 1,175 |
|
| 4,305 |
|
| 4,510 |
| ||||||||||||||
| Other FRC |
| 1,004 |
|
| 1,239 |
|
| 1,361 |
|
| 3,188 |
| ||||||||||||||
| Other |
| 875 |
|
| 240 |
|
| 1,638 |
|
| 1,145 |
| ||||||||||||||
| Total | $ | 7,791 |
| $ | 3,907 |
| $ | 16,829 |
| $ | 13,711 |
| ||||||||||||||
| Impairment of assets and lease termination expenses: | ||||||||||||||||||||||||||
| The Cheesecake Factory restaurants | $ | 19,760 |
| $ | 11,904 |
| $ | 19,701 |
| $ | 11,904 |
| ||||||||||||||
| North Italia |
| - |
|
| - |
|
| - |
|
| - |
| ||||||||||||||
| Other FRC |
| 3,909 |
|
| 1,305 |
|
| 3,909 |
|
| 1,305 |
| ||||||||||||||
| Other |
| 7,405 |
|
| 4,336 |
|
| 7,777 |
|
| 4,930 |
| ||||||||||||||
| Total | $ | 31,074 |
| $ | 17,545 |
| $ | 31,387 |
| $ | 18,139 |
| ||||||||||||||
| Depreciation and amortization expenses: | ||||||||||||||||||||||||||
| The Cheesecake Factory restaurants | $ | 18,803 |
| $ | 16,766 |
| $ | 66,539 |
| $ | 65,987 |
| ||||||||||||||
| North Italia |
| 1,638 |
|
| 1,185 |
|
| 5,714 |
|
| 4,078 |
| ||||||||||||||
| Other FRC |
| 1,519 |
|
| 1,379 |
|
| 6,231 |
|
| 4,802 |
| ||||||||||||||
| Other |
| 3,656 |
|
| 3,519 |
|
| 13,896 |
|
| 14,787 |
| ||||||||||||||
| Total | $ | 25,616 |
| $ | 22,849 |
| $ | 92,380 |
| $ | 89,654 |
| ||||||||||||||
| The Cheesecake Factory restaurants operating information: |
| 14 Weeks Ended |
| 13 Weeks Ended |
| 53 Weeks Ended |
| 52 Weeks Ended | ||||||||||||||||||
| Comparable restaurant sales vs. prior year |
| 4.0 | % |
| 33.8 | % |
| 7.0 | % |
| 44.0 | % | ||||||||||||||
| Comparable restaurant sales vs. 2019 |
| 11.4 | % |
| 7.7 | % |
| 10.5 | % |
| 3.3 | % | ||||||||||||||
| Restaurants opened during period |
| 2 |
|
| 1 |
|
| 3 |
|
| 2 |
| ||||||||||||||
| Restaurants open at period-end |
| 211 |
|
| 208 |
|
| 211 |
|
| 208 |
| ||||||||||||||
| Restaurant operating weeks |
| 2,939 |
|
| 2,700 |
|
| 11,052 |
|
| 10,758 |
| ||||||||||||||
| North Italia operating information: | ||||||||||||||||||||||||||
| Comparable restaurant sales vs. prior year |
| 9 | % |
| 37 | % |
| 15 | % |
| 48 | % | ||||||||||||||
| Comparable restaurant sales vs. 2019 |
| 26 | % |
| 14 | % |
| 22 | % |
| 7 | % | ||||||||||||||
| Restaurants opened during period |
| 2 |
|
| 1 |
|
| 4 |
|
| 6 |
| ||||||||||||||
| Restaurants open at period-end |
| 33 |
|
| 29 |
|
| 33 |
|
| 29 |
| ||||||||||||||
| Restaurant operating weeks |
| 454 |
|
| 372 |
|
| 1,604 |
|
| 1,352 |
| ||||||||||||||
| Other Fox Restaurant Concepts (FRC) operating information: (1) | ||||||||||||||||||||||||||
| Restaurants opened during period |
| 2 |
|
| 2 |
|
| 3 |
|
| 4 |
| ||||||||||||||
| Restaurants open at period-end |
| 34 |
|
| 31 |
|
| 34 |
|
| 31 |
| ||||||||||||||
| Restaurant operating weeks |
| 462 |
|
| 393 |
|
| 1,681 |
|
| 1,460 |
| ||||||||||||||
| Other operating information: (2) | ||||||||||||||||||||||||||
| Restaurants opened during period |
| 2 |
|
| - |
|
| 3 |
|
| 2 |
| ||||||||||||||
| Restaurants open at period-end |
| 40 |
|
| 40 |
|
| 40 |
|
| 40 |
| ||||||||||||||
| Restaurant operating weeks |
| 558 |
|
| 519 |
|
| 2,072 |
|
| 1,993 |
| ||||||||||||||
| Number of company-owned restaurants: | ||||||||||||||||||||||||||
| The Cheesecake Factory |
| 211 |
| |||||||||||||||||||||||
| North Italia |
| 33 |
| |||||||||||||||||||||||
| Other FRC |
| 34 |
| |||||||||||||||||||||||
| Other |
| 40 |
| |||||||||||||||||||||||
| Total |
| 318 |
| |||||||||||||||||||||||
| Number of international-licensed restaurants: | ||||||||||||||||||||||||||
| The Cheesecake Factory |
| 30 |
| |||||||||||||||||||||||
| (1) The Other FRC segment includes all FRC brands except Flower Child. | ||||||||||||||||||||||||||
| (2) The Other segment includes the Flower Child, Grand Lux Cafe 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 | January 3, 2023 | December 28, 2021 | ||||||||||||||||||||||||
| Cash and cash equivalents | $ | 114,777 |
| $ | 189,627 |
| ||||||||||||||||||||
| Long-term debt, net of issuance costs (1) |
| 468,032 |
|
| 466,017 |
| ||||||||||||||||||||
| (1) Includes $338 million net balance of 0.375% convertible senior notes due 2026 (principal amount of $345 million less $7.0 million in unamortized issuance costs) 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 Sheet and are being amortized as interest expense. | ||||||||||||||||||||||||||
