Fourth quarter-to-date through November 2nd
comparable sales at The Cheesecake Factory restaurants increased
10.5% over 2019 levels
The Cheesecake Factory
Incorporated (NASDAQ: CAKE) today reported financial results for
the third quarter of fiscal 2021, which ended on September 28,
2021.
Total revenues were $754.5 million in the third quarter of
fiscal 2021 compared to $517.7 million in the third quarter of
fiscal 2020. Net income available to common stockholders and
diluted net income per common share were $32.7 million and $0.64,
respectively, in the third quarter of fiscal 2021. These results
reflect the impact of $3.3 million in higher than anticipated group
medical insurance costs, as well as $4.6 million in incremental
costs associated with the pandemic environment. Excluding the
after-tax impact of the non-cash acquisition-related contingent
consideration and amortization expense, adjusted net income and
adjusted net income per share for the third quarter of fiscal 2021
were $33.2 million and $0.65, 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 41.1% year-over-year in the third quarter of
fiscal 2021. Relative to the third quarter of fiscal 2019,
comparable restaurant sales at The Cheesecake Factory restaurants
increased 8.3%.
As of today, nearly all of the Company’s restaurants across its
concepts are operating with no indoor dining restrictions. Fiscal
2021 fourth quarter-to-date through November 2nd comparable sales
for The Cheesecake Factory restaurants increased approximately 20%
year-over-year and 10.5% relative to the same period in fiscal
2019, supported by approximately 28% off-premise sales mix. Average
weekly sales quarter-to-date are approximately $213,000 and
off-premise average weekly sales of $60,000 are nearly double the
level seen during the same period in fiscal 2019.
“We drove strong sales performance at The Cheesecake Factory
restaurants and across our concepts during the third quarter
despite the surge in COVID-19 cases from the Delta variant,” said
David Overton, Chairman and Chief Executive Officer. “Our teams
also generated solid profitability in the face of higher than
anticipated group medical insurance costs and pandemic environment
cost pressures during the quarter.”
Overton continued, “Sales across our concepts further
strengthened early in the fourth quarter with continued strong
contribution from the off-premise channel. We also opened eight new
restaurants during the third quarter and fourth quarter-to date
periods, meeting our development objective to open as many as 14
new restaurants across our concepts this year. With a strong
pipeline in place, we believe we are well-positioned to achieve our
targeted 7% unit growth next year, while we continue to focus on
driving comparable sales growth and managing through the continued
volatility in the operating environment.”
Development
During the third quarter of fiscal 2021, four new restaurants
opened, including North Italia and Flower Child in the Phoenix
area, North Italia in the Nashville area, and Blanco in the Chicago
area. Subsequent to quarter-end, The Cheesecake Factory opened in
Huntsville, AL, North Italia opened in Orlando and both Blanco and
Culinary Dropout opened in Denver. The Company met its development
objective of opening 14 new restaurants across its concepts during
fiscal 2021. Internationally, The Cheesecake Factory opened a third
location in Shanghai this week under a licensing agreement.
Balance Sheet & Cash Flow
As of September 28, 2021, the
Company had total available liquidity of $371.1 million, including
a cash balance of $131.0 million and availability on its revolving
credit facility of $240.1 million. Total principal amount of debt
outstanding was $475 million, including $345 million of 0.375%
convertible senior notes due 2026 and $130 million drawn on the
Company’s revolving credit facility.
Conference Call and Webcast
The Company will hold a conference call to review its results
for the third quarter of fiscal 2021 today at 2:00 p.m. Pacific
Time. The conference call will be webcast live on the Company’s
website at investors.thecheesecakefactory.com and a replay of the
webcast will be available through December 3, 2021.
About The Cheesecake Factory Incorporated
The Cheesecake Factory Incorporated is a leader in experiential
dining. We are culinary forward and relentlessly focused on
hospitality. Delicious, memorable experiences created by passionate
people – this defines who we are and where we are going. We
currently own and operate 308 restaurants throughout the United
States and Canada under brands including The Cheesecake Factory®,
North Italia® and a collection within our Fox Restaurant Concepts
business. Internationally, 29 The Cheesecake Factory® restaurants
operate under licensing agreements. Our bakery division operates
two facilities that produce quality cheesecakes and other baked
products for our restaurants, international licensees and
third-party bakery customers. In 2021, we were named to the FORTUNE
Magazine “100 Best Companies to Work For®” list for the eighth
consecutive year. To learn more, visit
www.thecheesecakefactory.com, www.northitalia.com and
www.foxrc.com.
From FORTUNE. ©2021 Fortune Media IP Limited. FORTUNE 100 Best
Companies to Work For is a trademark of Fortune Media IP Limited
and is used under license. FORTUNE and Fortune Media IP Limited are
not affiliated with, and do not endorse products or services of,
Licensee.
Safe Harbor Statement
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, as codified in Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These statements include, without limitation, statements
regarding being well-positioned to achieve the Company’s targeted
7% unit growth objective in fiscal 2022, driving comparable sales
growth and managing through the continued volatility in the
operating environment. Such forward-looking statements include all
other statements that are not historical facts, as well as
statements that are preceded by, followed by or that include words
or phrases such as “believe,” “plan,” “will likely result,”
“expect,” “intend,” “will continue,” “is anticipated,” “estimate,”
“project,” “may,” “could,” “would,” “should” and similar
expressions. These statements are based on current expectations and
involve risks and uncertainties which may cause results to differ
materially from those set forth in such statements. Investors are
cautioned that forward-looking statements are not guarantees of
future performance and that undue reliance should not be placed on
such statements. These forward-looking statements may be affected
by various factors including: the rapidly evolving nature of the
COVID-19 outbreak and related containment measures, including the
potential for a complete shutdown of the Company’s restaurants,
international licensee restaurants and the Company’s bakery
operations; supply chain disruptions; demonstrations, political
unrest, potential damage to or closure of the Company’s restaurants
and potential reputational damage to the Company or any of its
brands; economic, public health and political conditions that
impact consumer confidence and spending, including the impact of
COVID-19 and other health epidemics or pandemics on the global
economy; acceptance and success of The Cheesecake Factory in
domestic and international markets; acceptance and success of North
Italia and the Fox Restaurant Concepts restaurants; the risks of
doing business abroad through Company-owned restaurants and/or
licensees; foreign exchange rates, tariffs and cross border
taxation; changes in unemployment rates; changes in laws impacting
the Company’s business, including laws and regulations related to
COVID-19 impacting restaurant operations and customer access to
off- and on-premise dining; increases in minimum wages and benefit
costs, including the cost of group medical insurance; the economic
health of the Company’s landlords and other tenants in retail
centers in which its restaurants are located, and the Company’s
ability to successfully manage its lease arrangements with
landlords; unanticipated costs that may arise due to a return to
normal course of business including potential negative impacts from
furlough actions; the economic health of suppliers, licensees,
vendors and other third parties providing goods or services to the
Company; compliance with debt covenants; strategic capital
allocation decisions including any share repurchases or dividends;
the ability to achieve projected financial results; economic and
political conditions that impact consumer confidence and spending;
the resolution of uncertain tax positions with the Internal Revenue
Service and the impact of tax reform legislation; adverse weather
conditions in regions in which the Company’s restaurants are
located; factors that are under the control of government agencies,
landlords and other third parties; the risks, costs and
uncertainties associated with opening new restaurants; and other
risks and uncertainties detailed from time to time in the Company’s
filings with the Securities and Exchange Commission (“SEC”).
Forward-looking statements speak only as of the dates on which they
are made and the Company undertakes no obligation to publicly
update or revise any forward-looking statements or to make any
other forward-looking statements, whether as a result of new
information, future events or otherwise, unless required to do so
by law. Investors are referred to the full discussion of risks and
uncertainties associated with forward-looking statements and the
discussion of risk factors contained in the Company’s latest Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K as filed with the SEC, which are available at
www.sec.gov.
The Cheesecake Factory Incorporated Condensed
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 Income
September 28, 2021 September 29, 2020 September
28, 2021 September 29, 2020 Amount Percent
ofRevenues Amount Percent ofRevenues
Amount Percent ofRevenues Amount Percent
ofRevenues Revenues
$
754,474
100.0
%
$
517,716
100.0
%
$
2,150,847
100.0
%
$
1,428,673
100.0
%
Costs and expenses: Cost of sales
169,418
22.5
%
118,093
22.8
%
474,237
22.0
%
331,137
23.2
%
Labor expenses
279,957
37.1
%
200,666
38.7
%
784,501
36.5
%
560,460
39.2
%
Other operating costs and expenses
201,490
26.7
%
159,095
30.7
%
582,518
27.1
%
448,740
31.4
%
General and administrative expenses
45,802
6.1
%
37,795
7.3
%
138,457
6.4
%
117,467
8.2
%
Depreciation and amortization expenses
22,576
3.0
%
22,651
4.4
%
66,805
3.1
%
68,803
4.8
%
Impairment of assets and lease termination expenses
-
0.0
%
10,402
2.0
%
594
0.0
%
204,731
14.3
%
Acquisition-related costs
-
0.0
%
39
0.0
%
-
0.0
%
2,343
0.2
%
Acquisition-related contingent consideration, compensationand
amortization expenses/(benefit)
685
0.1
%
1,439
0.3
%
12,592
0.6
%
(3,992
)
(0.3
)%
Preopening costs
3,169
0.4
%
2,394
0.5
%
9,804
0.5
%
7,610
0.6
%
Total costs and expenses
723,097
95.9
%
552,574
106.7
%
2,069,508
96.2
%
1,737,299
121.6
%
Income/(loss) from operations
31,377
4.1
%
(34,858
)
(6.7
)%
81,339
3.8
%
(308,626
)
(21.6
)%
Interest and other expense, net
(1,794
)
(0.2
)%
(2,935
)
(0.6
)%
(9,194
)
(0.4
)%
(7,019
)
(0.5
)%
Income/(loss) before income taxes
29,583
3.9
%
(37,793
)
(7.3
)%
72,145
3.4
%
(315,645
)
(22.1
)%
Income tax provision/(benefit)
(3,097
)
(0.4
)%
(9,447
)
(1.8
)%
1,882
0.1
%
(94,597
)
(6.6
)%
Net income/(loss)
32,680
4.3
%
(28,346
)
(5.5
)%
70,263
3.3
%
(221,048
)
(15.5
)%
Dividends on Series A preferred stock (1)
-
0.0
%
(4,838
)
(0.9
)%
(18,661
)
(0.9
)%
(8,532
)
(0.6
)%
Direct and incremental Series A preferred stock issuance cost
-
0.0
%
-
0.0
%
-
0.0
%
(10,257
)
(0.7
)%
Undistributed earnings allocated to Series A preferred stock
-
0.0
%
-
0.0
%
(5,804
)
(0.3
)%
-
0.0
%
Net income/(loss) available to common stockholders
$
32,680
4.3
%
$
(33,184
)
(6.4
)%
$
45,798
2.1
%
$
(239,837
)
(16.8
)%
Basic net income/(loss) per common share
$
0.65
$
(0.76
)
$
0.98
$
(5.47
)
Basic weighted average shares outstanding
50,212
43,900
46,624
43,849
Diluted net income/(loss) per common share (2)
$
0.64
$
(0.76
)
$
0.96
$
(5.47
)
Diluted weighted average shares outstanding
51,113
43,900
47,675
43,849
(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 an adjustment
for reallocation of undistributed earnings to preferred stock of
$113,796 for the thirty-nine weeks ended September 28, 2021.
13 Weeks Ended 13 Weeks Ended 39 Weeks Ended
39 Weeks Ended Selected Segment Information
September 28, 2021 September 29, 2020 September
28, 2021 September 29, 2020 Revenues: The Cheesecake
Factory restaurants
$
592,555
$
416,984
$
1,698,635
$
1,146,524
North Italia
44,357
27,990
120,747
72,262
Other FRC
44,326
20,273
127,978
68,063
Other
73,236
52,469
203,487
141,824
Total
$
754,474
$
517,716
$
2,150,847
$
1,428,673
Income/(loss) from operations: The Cheesecake Factory
restaurants
$
66,791
$
18,836
$
194,470
$
31,208
North Italia
1,962
(831
)
5,320
(77,321
)
Other FRC
3,403
(1,901
)
14,565
(77,077
)
Other
(40,779
)
(50,962
)
(133,016
)
(185,436
)
Total
$
31,377
$
(34,858
)
$
81,339
$
(308,626
)
Preopening costs: The Cheesecake Factory restaurants
$
968
$
976
$
3,616
$
3,157
North Italia
1,057
631
3,335
1,895
Other FRC
849
306
1,948
527
Other
295
481
905
2,031
Total
$
3,169
$
2,394
$
9,804
$
7,610
Impairment of assets and lease termination expenses: The
Cheesecake Factory restaurants
$
-
$
(157
)
$
-
$
2,784
North Italia
-
-
-
71,524
Other FRC
-
-
-
72,939
Other
-
10,559
594
57,484
Total
$
-
$
10,402
$
594
$
204,731
Depreciation and amortization expenses: The Cheesecake
Factory restaurants
$
16,414
$
16,713
$
49,221
$
50,857
North Italia
1,068
901
2,893
2,767
Other FRC
1,208
987
3,423
3,002
Other
3,886
4,050
11,268
12,177
Total
$
22,576
$
22,651
$
66,805
$
68,803
13 Weeks Ended 13 Weeks Ended 39 Weeks
Ended 39 Weeks Ended The Cheesecake Factory
restaurants operating information: September 28, 2021
September 29, 2020 September 28, 2021 September
29, 2020 Comparable restaurant sales vs. prior year
41.1
%
(23.3
)%
48.0
%
(31.1
)%
Comparable restaurant sales vs. 2019
8.3
%
1.9
%
Restaurants opened during period
-
-
1
-
Restaurants open at period-end
207
205
207
205
Restaurant operating weeks
2,689
2,662
8,058
7,976
North Italia operating information: Comparable
restaurant sales vs. prior year
38
%
(22
)%
53
%
(32
)%
Comparable restaurant sales vs. 2019
8
%
5
%
Restaurants opened during period
2
-
5
1
Restaurants open at period-end
28
23
28
23
Restaurant operating weeks
349
296
980
847
Other Fox Restaurant Concepts (FRC) operating
information:(1) Restaurants opened during period
1
-
2
-
Restaurants open at period-end
29
25
29
25
Restaurant operating weeks
371
275
1,067
809
Other operating information:(2) Restaurants opened
during period
1
2
2
3
Restaurants open at period-end
40
41
40
41
Restaurant operating weeks
507
437
1,474
1,242
Number of company-owned restaurants: The Cheesecake
Factory
207
North Italia
28
Other FRC
29
Other
40
Total
304
Number of international-licensed restaurants: The
Cheesecake Factory
28
(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 September
28, 2021 December 29, 2020 Cash and cash equivalents
$
131,030
$
154,085
Long-term debt, net of issuance costs (1)
465,514
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 39 Weeks Ended 39 Weeks Ended September
28, 2021 September 29, 2020 September 28, 2021
September 29, 2020 Net income/(loss) available to
common stockholders (GAAP)
$
32,680
$
(33,184
)
$
45,798
$
(239,837
)
Dividends on Series A preferred stock
-
4,838
18,661
8,532
Net income attributable to Series A preferred stock to apply
if-converted method
-
-
5,804
-
Direct and incremental Series A preferred stock issuance costs
-
-
-
10,257
COVID-19 related costs(1)
-
2,558
4,917
17,579
Impairment of assets and lease termination expenses(2)
-
10,402
594
204,731
Acquisition-related costs(3)
-
39
-
2,343
Acquisition-related contingent consideration,compensation and
amortization expenses/(benefit)(4)
685
1,439
12,592
(3,992
)
Termination of Interest rate swap
-
-
2,354
-
Uncertain tax position related to tenant improvement allowances(5)
-
-
2,471
-
Tax effect of adjustments(6)
(178
)
(3,754
)
(5,318
)
(57,372
)
Adjusted net income/(loss) (non-GAAP)
$
33,187
$
(17,662
)
$
87,873
$
(57,759
)
Diluted net income/(loss) per common share (GAAP)
$
0.64
$
(0.76
)
$
0.96
$
(5.47
)
Dividends on Series A preferred stock
-
0.09
0.35
0.17
Net income attributable to Series A preferred stock to apply
if-converted method
-
-
0.11
-
Direct and incremental Series A preferred stock issuance costs
-
-
-
0.21
Assumed impact of potential conversion of Series A preferred stock
into common stock(7)
-
0.13
(0.11
)
0.60
COVID-19 related costs
-
0.05
0.09
0.36
Impairment of assets and lease termination expenses
-
0.20
0.01
4.16
Acquisition-related costs
-
0.00
-
0.05
Acquisition-related contingent consideration,compensation and
amortization expenses/(benefit)
0.01
0.03
0.23
(0.08
)
Termination of Interest rate swap
-
-
0.04
-
Uncertain tax position related to tenant improvement allowances
-
-
0.05
-
Tax effect of adjustments
(0.00
)
(0.07
)
(0.10
)
(1.17
)
Adjusted net income/(loss) per share (non-GAAP)(8)
$
0.65
$
(0.33
)
$
1.64
$
(1.17
)
(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 thirty-nine weeks
ended September 28, 2021 and September 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 position related to tenant
improvement allowances. 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 5,908,187 shares for the
thirteen and thirty-nine weeks ended September 28, 2021,
respectively), resulting in an assumption of 51,112,650 and
53,582,824 weighted-average common shares outstanding for the
thirteen and thirty-nine weeks ended September 28, 2021,
respectively. The impact of assuming the conversion of Series A
preferred stock into common stock (9,163,043 and 5,394,188 shares
for the thirteen and thirty-nine weeks ended September 29, 2020,
respectively), resulting in an assumption of 53,062,945 and
49,243,370 weighted-average common shares outstanding for the
thirteen and thirty-nine weeks ended September 29, 2020,
respectively.
(8) Adjusted net income per share may not add due to
rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211103006205/en/
Etienne Marcus
(818) 871-3000
investorrelations@thecheesecakefactory.com
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