Cheesecake Factory Results

The Cheesecake Factory Reports Results for Second Quarter of Fiscal 2016

Total revenues were $558.9 million in the second quarter of fiscal 2016 as compared to $529.1 million in the second quarter of fiscal 2015. Net income and diluted net income per share were $38.6 million and $0.78, respectively, in the second quarter of fiscal 2016.

Cheesecake Factory

The Cheesecake Factory Incorporated (NASDAQ: CAKE) today reported financial results for the second quarter of fiscal 2016, which ended on June 28, 2016.

Total revenues were $558.9 million in the second quarter of fiscal 2016 as compared to $529.1 million in the second quarter of fiscal 2015. Net income and diluted net income per share were $38.6 million and $0.78, respectively, in the second quarter of fiscal 2016.

Comparable restaurant sales at The Cheesecake Factory restaurants increased 0.3% in the second quarter of fiscal 2016.

“We again outperformed the casual dining industry, delivering our 26th consecutive quarter of positive comparable sales,” said David Overton, Chairman and Chief Executive Officer. “Capturing operational efficiencies, coupled with a benign commodity cost environment, enabled us to offset industry wage inflation and drive strong margins and earnings growth during the quarter. In addition, we achieved a significant milestone in our international expansion with the opening of the first The Cheesecake Factory restaurant in China, at Disneytown in the Shanghai Disney Resort, under a licensing agreement.”

Overton concluded, “Underscoring our confidence in our industry-leading position and future prospects, we are both expanding our share repurchase authorization and meaningfully increasing our quarterly dividend. We will have doubled the amount of our dividend since first initiating one in fiscal 2012, with this increase. We remain committed to investing in returns-focused growth and returning capital to achieve our targeted returns and increase shareholder value.”

Development

The Company continues to expect to open as many as eight Company-owned restaurants domestically in fiscal 2016, the second of which opened in Greenville, South Carolina in the second quarter.

Internationally, the Company continues to expect as many as four to five restaurants to open under licensing agreements in fiscal 2016, including the first The Cheesecake Factory restaurant that opened in China in June 2016.

Capital Allocation

The Company’s Board of Directors declared a quarterly cash dividend of $0.24 per share on the Company’s common stock, representing a 20% increase. The dividend is payable on August 23, 2016 to shareholders of record at the close of business on August 10, 2016.

During the second quarter of fiscal 2016, the Company repurchased 0.5 million shares of its common stock at a cost of $26.6 million. Year-to-date, the Company repurchased 1.6 million shares of its common stock at a cost of $76.6 million. In addition, the Company’s Board of Directors increased its share repurchase authorization by 7.5 million shares to 56.0 million shares. The Company continues to expect that it will return its free cash flow to shareholders in fiscal 2016 in the form of dividends and share repurchases.

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 202 full-service, casual dining restaurants throughout the U.S.A. and Puerto Rico, including 189 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, 12 The Cheesecake Factory® restaurants operate under licensing agreements.

 
The Cheesecake Factory Incorporated and Subsidiaries
Condensed 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 Statement of Operations June 28, 2016 June 30, 2015 June 28, 2016 June 30, 2015
Amount Percent of

Revenues

Amount Percent of

Revenues

Amount Percent of

Revenues

Amount Percent of

Revenues

               
Revenues $ 558,862 100.0 % $ 529,107 100.0 % $ 1,112,555 100.0 % $ 1,047,080 100.0 %
Costs and expenses:
Cost of sales 126,933 22.7 % 126,623 23.9 % 257,706 23.2 % 253,235 24.2 %
Labor expenses 185,211 33.2 % 168,495 31.8 % 370,869 33.3 % 339,664 32.5 %
Other operating costs and expenses 131,980 23.6 % 123,675 23.4 % 261,537 23.5 % 247,110 23.6 %
General and administrative expenses 35,785 6.4 % 35,345 6.7 % 71,122 6.4 % 68,420 6.5 %
Depreciation and amortization expenses 21,461 3.8 % 21,158 4.0 % 42,925 3.9 % 42,335 4.0 %
Preopening costs   2,302     0.4 %   4,058     0.8 %   4,612   0.4 %   5,509   0.5 %
Total costs and expenses   503,672     90.1 %   479,354     90.6 %   1,008,771   90.7 %   956,273   91.3 %
Income from operations 55,190 9.9 % 49,753 9.4 % 103,784 9.3 % 90,807 8.7 %
Interest and other (expense)/income, net   (2,181 )   (0.4 )%   (1,432 )   (0.3 )%   (4,485 ) (0.4 )%   (3,327 ) (0.3 )%
Income before income taxes 53,009 9.5 % 48,321 9.1 % 99,299 8.9 % 87,480 8.4 %
Income tax provision   14,424     2.6 %   13,597     2.5 %   26,760   2.4 %   24,333   2.4 %
Net income $ 38,585     6.9 % $ 34,724     6.6 % $ 72,539   6.5 % $ 63,147   6.0 %
 
Basic net income per share $ 0.80   $ 0.72   $ 1.50   $ 1.29  
Basic weighted average shares outstanding   48,232     48,451     48,375     48,838  
 
Diluted net income per share $ 0.78   $ 0.69   $ 1.46   $ 1.25  
Diluted weighted average shares outstanding   49,598     50,262     49,814     50,681  
 
Selected Segment Information
Revenues:
The Cheesecake Factory restaurants $ 511,918 $ 483,285 $ 1,018,234 $ 956,102
Other   46,944     45,822     94,321     90,978  
$ 558,862   $ 529,107   $ 1,112,555   $ 1,047,080  
 
Income from operations:
The Cheesecake Factory restaurants $ 82,285 $ 77,292 $ 156,577 $ 143,993
Other 5,769 5,263 12,681 11,326
Corporate   (32,864 )   (32,802 )   (65,474 )   (64,512 )
$ 55,190   $ 49,753   $ 103,784   $ 90,807  
 
 
 
Selected Consolidated Balance Sheet Information  

 

June 28, 2016

 

December 29, 2015

Cash and cash equivalents $ 79,618 $ 43,854
Total assets 1,204,318 1,233,346
Total liabilities 607,476 644,807
Stockholders' equity 596,842 588,539
 
 
 

 

13 Weeks Ended

 

13 Weeks Ended

 

26 Weeks Ended

 

26 Weeks Ended

The Cheesecake Factory Supplemental Information  

 

June 28, 2016

 

June 30, 2015

 

June 28, 2016

 

June 30, 2015

Comparable restaurant sales 0.3 % 2.8 % 1.0 % 3.5 %
Restaurants opened during period 1 2 2 2
Restaurants open at period-end 189 179 189 179
Restaurant operating weeks 2,448 2,309 4,884 4,610



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