CAVA (CAVA) - 2024 Q2 - Quarterly Report

Part I - Financial Information Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, highlighting significant year-over-year growth in revenue and net income driven by the CAVA segment Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | July 14, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $343,748 | $332,428 | | Total current assets | $369,766 | $354,912 | | Property and equipment, net | $355,014 | $330,730 | | Total assets | $1,038,542 | $983,757 | | Total current liabilities | $123,601 | $109,036 | | Total liabilities | $443,105 | $412,955 | | Total stockholders' equity | $595,437 | $570,802 | Condensed Consolidated Statements of Operations Highlights (in thousands) | Metric | Twelve Weeks Ended July 14, 2024 | Twelve Weeks Ended July 9, 2023 | Twenty-Eight Weeks Ended July 14, 2024 | Twenty-Eight Weeks Ended July 9, 2023 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $233,495 | $172,894 | $492,501 | $375,977 | | Income from operations | $16,144 | $5,762 | $25,397 | $3,510 | | Net income | $19,741 | $6,539 | $33,734 | $4,398 | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Twenty-Eight Weeks Ended July 14, 2024 | Twenty-Eight Weeks Ended July 9, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $87,295 | $47,110 | | Net cash used in investing activities | ($59,882) | ($72,478) | | Net cash (used in) provided by financing activities | ($16,093) | $339,088 | - As of July 14, 2024, the company operated 341 fast-casual CAVA Restaurants. The company no longer operates any Zoes Kitchen locations as of March 2, 2023[18][19] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, emphasizing CAVA segment growth, key metrics like same-restaurant sales, and the company's liquidity position Key Performance Measures The company tracks key performance measures including CAVA Same Restaurant Sales Growth and Adjusted EBITDA, both showing significant year-over-year increases Key Performance Measures Comparison (Twelve Weeks Ended) | Metric | July 14, 2024 | July 9, 2023 | Change | | :--- | :--- | :--- | :--- | | CAVA Revenue (in thousands) | $231,384 | $171,089 | $60,295 | | CAVA Same Restaurant Sales Growth | 14.4% | 18.2% | (3.8)% | | CAVA AUV (in thousands) | $2,689 | $2,599 | $90 | | CAVA Restaurant-Level Profit (in thousands) | $61,265 | $44,616 | $16,649 | | CAVA Restaurant-Level Profit Margin | 26.5% | 26.1% | 0.4% | | Adjusted EBITDA (in thousands) | $34,348 | $21,601 | $12,747 | | Adjusted EBITDA Margin | 14.7% | 12.5% | 2.2% | CAVA Restaurant Unit Data | Period | Beginning of Period | New Openings | Permanent Closures | End of Period | | :--- | :--- | :--- | :--- | :--- | | Twelve Weeks Ended July 14, 2024 | 323 | 18 | 0 | 341 | | Twenty-Eight Weeks Ended July 14, 2024 | 309 | 33 | (1) | 341 | Results of Operations This subsection details financial results, showing CAVA segment revenue growth driven by new openings and same-restaurant sales, and increased consolidated net income - For the twelve weeks ended July 14, 2024, CAVA Revenue increased by $60.3 million (35.2%). This was driven by $36.1 million from 78 net new restaurants opened since Q2 2023 and 14.4% Same Restaurant Sales Growth[62] - CAVA Same Restaurant Sales Growth of 14.4% in Q2 2024 consisted of a 9.5% increase from guest traffic and a 4.9% increase from menu price and product mix[62] CAVA Segment Results (Twelve Weeks Ended) | (in thousands) | July 14, 2024 | % of Revenue | July 9, 2023 | % of Revenue | | :--- | :--- | :--- | :--- | :--- | | Revenue | $231,384 | 100.0% | $171,089 | 100.0% | | Restaurant-level profit | $61,265 | 26.5% | $44,616 | 26.1% | - For the twenty-eight weeks ended July 14, 2024, CAVA Revenue increased by $119.8 million (32.6%), driven by $86.8 million from 104 net new restaurants and 7.8% Same Restaurant Sales Growth[79] Non-GAAP Financial Measures The company utilizes Adjusted EBITDA and Adjusted EBITDA Margin as key non-GAAP metrics, demonstrating significant year-over-year performance improvements Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Metric | Twelve Weeks Ended July 14, 2024 | Twelve Weeks Ended July 9, 2023 | Twenty-Eight Weeks Ended July 14, 2024 | Twenty-Eight Weeks Ended July 9, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net income | $19,741 | $6,539 | $33,734 | $4,398 | | Adjusted EBITDA | $34,348 | $21,601 | $67,665 | $38,347 | | Net income margin | 8.5% | 3.8% | 6.8% | 1.2% | | Adjusted EBITDA Margin | 14.7% | 12.5% | 13.7% | 10.2% | Liquidity and Capital Resources The company maintains a strong liquidity position with substantial cash and cash equivalents, supported by increased operating cash flow to fund expansion - Cash and cash equivalents increased to $343.7 million as of July 14, 2024, from $332.4 million at the end of 2023[100] Cash Flow Summary (in thousands) | Cash Flow Activity | Twenty-Eight Weeks Ended July 14, 2024 | Twenty-Eight Weeks Ended July 9, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $87,295 | $47,110 | | Net cash used in investing activities | ($59,882) | ($72,478) | | Net cash (used in) provided by financing activities | ($16,093) | $339,088 | - The significant decrease in cash from financing activities is due to the $336.1 million in net proceeds from the IPO in the prior year period, which did not recur in 2024[19][104] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks include commodity prices, interest rates, and inflation, with no material changes reported since the 2023 Annual Report - The primary market risks faced by the company are commodity and food price risks, interest rate risk, and inflation[111] - There have been no material changes to the company's exposure to market risks as described in the 2023 Annual Report[111] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of July 14, 2024, with no material changes to internal control over financial reporting - Based on an evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of July 14, 2024[112] - There were no changes to internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[113] Part II - Other Information Legal Proceedings This item details past lawsuits, including those related to PFAS allegations, all of which were settled and dismissed, with no material effect on financial condition expected - A lawsuit alleging PFAS in packaging (Hamman et al. v. Cava Group, Inc.) was settled and the action was dismissed with prejudice on April 15, 2024[40] - A similar lawsuit regarding false advertising claims related to PFAS (GMO Free USA v. Cava Group, Inc.) was also settled and dismissed with prejudice on April 16, 2024[41] - An associated insurance coverage dispute with Travelers Property Casualty Company was settled and dismissed with prejudice on April 17, 2024[42] Risk Factors There have been no material changes to the company's risk factors as previously disclosed in its 2023 Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the company's 2023 Annual Report[116] Unregistered Sales of Equity Securities and Use of Proceeds The company purchased its own equity securities solely to satisfy employee income tax withholding obligations upon the vesting of restricted stock units Issuer Purchases of Equity Securities (Twelve Weeks Ended July 14, 2024) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 22 - May 19, 2024 | 13,346 | $74.68 | | May 20 - June 16, 2024 | 93,231 | $88.92 | | June 17 - July 14, 2024 | 156 | $85.30 | | Total | 106,733 | $87.14 | - Purchases were made to satisfy income tax withholding obligations for employees upon the vesting of restricted stock units[116] Other Information No directors or officers adopted a Rule 10b5-1 trading arrangement during the twelve weeks ended July 14, 2024 - No directors or officers adopted a 'Rule 10b5-1 trading arrangement' during the quarter[119] Exhibits This section lists exhibits filed with the 10-Q report, including CEO and CFO certifications and XBRL data files for interactive reporting - Filed exhibits include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[121] - The filing includes Inline XBRL documents for interactive data reporting[121]