Financial

The Cheesecake Factory Third Quarter 2015 Comps Up 2.2%

Total revenues were $526.7 million in the third quarter of fiscal 2015 as compared to $499.1 million in the prior year third quarter. Net income and diluted net income per share were $26.2 million and $0.52, respectively, in the third quarter of fiscal 2015.

Cheesecake Factory

The Cheesecake Factory Incorporated (NASDAQ: CAKE) today reported financial results for the third quarter of fiscal 2015, which ended on September 29, 2015.

Total revenues were $526.7 million in the third quarter of fiscal 2015 as compared to $499.1 million in the prior year third quarter. Net income and diluted net income per share were $26.2 million and $0.52, respectively, in the third quarter of fiscal 2015.

The Company recorded a pre-tax, non-cash charge of $6.0 million related to the impairment of RockSugar Pan Asian Kitchen during the third quarter of fiscal 2015. Excluding this item, net income was $29.8 million and diluted net income per share was $0.59.

Operating Results

Comparable restaurant sales at The Cheesecake Factory restaurants increased 2.2% in the third quarter of fiscal 2015.

“The consistency of our results continues to be evident as we delivered our 23rd consecutive quarter of positive comparable sales. We successfully lapped our most difficult sales comparison of the year and continued to exceed the performance of the casual dining industry overall during this past quarter,” said David Overton, Chairman and Chief Executive Officer.

“We experienced similar cost dynamics to the second quarter, with favorability in costs that affected our results last year helping to offset some of the wage inflation that many restaurants and retailers are experiencing. Our solid sales growth combined with healthy four-wall and total operating margin expansion drove earnings per share growth in excess of 20 percent. As we look ahead to 2016, we remain focused on the long-term drivers of our business – innovation, hospitality and operational excellence – and are firmly committed to utilizing our capital to produce the highest returns and maximize total shareholder return,” concluded Overton.

Development

The Company continues to expect to open as many as 11 Company-owned restaurants domestically in fiscal 2015. During the remainder of the fourth quarter, the Company expects to open five restaurants, one of which is scheduled to open this week.

Internationally, the Company anticipates as many as three restaurants will open in the Middle East and Mexico under licensing agreements in fiscal 2015, consistent with its prior expectations. Year to date, one international location has opened in Mexico.

Capital Allocation

The Company’s Board of Directors declared a quarterly cash dividend of $0.20 per share on the Company’s common stock. The dividend is payable on November 23, 2015 to shareholders of record at the close of business on November 9, 2015.

During the third quarter of fiscal 2015, the Company repurchased 59,522 shares of its common stock at a cost of $3.2 million. Year to date, the Company repurchased 1.8 million shares of its common stock at a cost of $87.4 million. The Company repaid the balance on its revolving credit facility in the third quarter of fiscal 2015, earlier than planned, and exited the quarter with no funded debt on its balance sheet.

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 195 full-service, casual dining restaurants throughout the U.S.A. and Puerto Rico, including 182 restaurants under The Cheesecake Factory® mark; 12 restaurants under the Grand Lux Cafe® mark; and one restaurant under the RockSugar Pan Asian Kitchen® mark. Internationally, nine 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 2015, the Company was named to the FORTUNE Magazine “100 Best Companies to Work For®” list for the second consecutive year. 

 

The Cheesecake Factory Incorporated and Subsidiaries

Consolidated Financial Statements

(unaudited; in thousands, except per share and statistical data)

 
  13 Weeks Ended   13 Weeks Ended   39 Weeks Ended   39 Weeks Ended
Consolidated Statements of Operations   September 29, 2015 September 30, 2014 September 29, 2015 September 30, 2014

Amounts

 

Percent of

Revenue

Amounts

 

Percent of

Revenue

 

Amounts

 

Percent of

Revenue

 

Amounts

 

Percent of

Revenue

Revenues $ 526,688 100.0 % $ 499,114 100.0 % $ 1,573,768 100.0 % $ 1,476,951 100.0 %
Costs and expenses:
Cost of sales 125,605 23.9 % 124,028 24.9 % 378,840 24.1 % 364,057 24.7 %
Labor expenses 172,101 32.7 % 163,279 32.7 % 511,765 32.5 % 483,506 32.7 %
Other operating costs and expenses 128,427 24.4 % 123,095 24.7 % 375,537 23.9 % 358,305 24.3 %
General and administrative expenses 33,277 6.3 % 29,641 5.9 % 101,697 6.5 % 89,925 6.1 %
Depreciation and amortization expenses 21,317 4.0 % 20,930 4.2 % 63,652 4.0 % 61,715 4.2 %
Impairment of assets and lease terminations 6,011 1.1 % - - 6,011 0.4 % 696 -
Preopening costs 4,306   0.8 %   3,966     0.8 %   9,815   0.6 %   8,808   0.6 %
Total costs and expenses 491,044   93.2 %   464,939     93.2 %   1,447,317   92.0 %   1,367,012   92.6 %
Income from operations 35,644 6.8 % 34,175 6.8 % 126,451 8.0 % 109,939 7.4 %
Interest and other (expense)/income, net (722 ) (0.2 )%   (1,381 )   (0.2 )%   (4,049 ) (0.2 )%   (4,316 ) (0.2 )%
Income before income taxes 34,922 6.6 % 32,794 6.6 % 122,402 7.8 % 105,623 7.2 %
Income tax provision 8,746   1.6 %   8,571     1.7 %   33,079   2.1 %   28,833   2.0 %
Net income $ 26,176   5.0 % $ 24,223     4.9 % $ 89,323   5.7 % $ 76,790   5.2 %
 
Basic net income per share $ 0.54   $ 0.49   $ 1.83   $ 1.55  
Basic weighted average shares outstanding 48,848     48,981     48,841     49,690  
 
Diluted net income per share $ 0.52   $ 0.48   $ 1.76   $ 1.48  
Diluted weighted average shares outstanding 50,637     50,963     50,660     51,722  
 
Selected Segment Information
Revenues:
The Cheesecake Factory restaurants $ 481,076 $ 454,271 $ 1,437,178 $ 1,342,331
Other 45,612     44,843     136,590     134,620  
$ 526,688   $ 499,114   $ 1,573,768   $ 1,476,951  
 
Income from operations:
The Cheesecake Factory restaurants (1) $ 67,473 $ 59,214 $ 211,466 $ 182,250
Other (2) (725 ) 2,418 10,601 11,433
Corporate (31,104 )   (27,457 )   (95,616 )   (83,744 )
$ 35,644   $ 34,175   $ 126,451   $ 109,939  
 

Selected Consolidated Balance Sheet Information

 

September 29, 2015

December 30, 2014

Cash and cash equivalents   $ 29,607 $ 58,018
Total assets 1,175,856 1,176,452
Total liabilities 596,317 619,942
Stockholders' equity 579,539 556,510
 
13 Weeks Ended 13 Weeks Ended 39 Weeks Ended 39 Weeks Ended
Supplemental Information   September 29, 2015 September 30, 2014 September 29, 2015 September 30, 2014
The Cheesecake Factory comparable restaurant sales 2.2 % 2.1 % 3.0 % 1.6 %
Restaurants opened during period 2 2 5 5
Restaurants open at period-end 194 184 194 184
Restaurant operating weeks 2,505 2,383 7,428 7,085
 

(1) Includes $696 in the 39 weeks ended September 30, 2014 of lease termination expenses related to the relocation of one The Cheesecake Factory restaurant.

(2) Includes $6.0 million in the 13 and 39 weeks ended September 29, 2015 of impairment expense related to RockSugar Pan Asian Kitchen.

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 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.

       
13 Weeks Ended 13 Weeks Ended 39 Weeks Ended 39 Weeks Ended
September 29, 2015 September 30, 2014 September 29, 2015 September 30, 2014
(unaudited; in thousands, except per share data)
Net income (GAAP) $ 26,176 $ 24,223 $ 89,323 $ 76,790
After-tax impact from:

- Impairment of assets and lease terminations (1)

 

 

3,607

 

-

 

3,607

 

418
Net income (non-GAAP) $ 29,783 $ 24,223 $ 92,930 $ 77,208
 
Diluted net income per share (GAAP) $ 0.52 $ 0.48 $ 1.76 $ 1.48
After-tax impact from:

- Impairment of assets and lease terminations

 

0.07   -   0.07   0.01
Diluted net income per share (non-GAAP)

 

$

0.59

$ 0.48 $ 1.83 $ 1.49
 

(1) The pre-tax amount associated with the item in fiscal 2015 was $6.0 million. The pre-tax amount associated with the item in fiscal 2014 was $696.



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