The Cheesecake Factory(CAKE) - 2025 Q1 - Quarterly Results

Executive Summary & Q1 2024 Financial Highlights Q1 2024 Financial Performance and CEO Commentary Q1 2024 revenues rose to $891.2 million, net income $33.2 million, and diluted EPS $0.68, reflecting operational improvements Q1 Fiscal 2024 Financial Performance (GAAP & Adjusted) | Metric | Q1 Fiscal 2024 (GAAP, in millions) | Q1 Fiscal 2024 (Adjusted, in millions) | Q1 Fiscal 2023 (GAAP, in millions) | | :-------------------------------- | :-------------------- | :------------------------ | :-------------------- | | Total Revenues | $891.2 | N/A | $866.1 | | Net Income | $33.2 | $35.6 | $28.05 | | Diluted Net Income Per Share | $0.68 | $0.73 | $0.56 | | Comparable Restaurant Sales (The Cheesecake Factory) | (0.6)% | N/A | 5.7% | - CEO David Overton stated that The Cheesecake Factory restaurants' comparable sales and traffic meaningfully outperformed the industry, with sales improving throughout the quarter and operational improvements contributing to significant profitability growth[3] Business Operations & Development Restaurant Development Q1 2024 saw five new restaurant openings, including one international Cheesecake Factory, with plans for up to 22 new restaurants - During Q1 fiscal 2024, the Company opened five new restaurants: two North Italia, two FRC, and one Flower Child location. Additionally, one Cheesecake Factory restaurant opened internationally under a licensing agreement in Mexico. Subsequent to quarter-end, another Cheesecake Factory restaurant opened internationally in Asia[4] - The Company expects to open as many as 22 new restaurants in fiscal 2024, including 3-4 The Cheesecake Factory, 6-7 North Italia, 6-7 Flower Child, and 6-7 FRC restaurants[4] Company Overview The Cheesecake Factory operates 335 U.S./Canada restaurants and 34 international licensed locations, recognized as a top employer - The Company owns and operates 335 restaurants throughout the United States and Canada under brands including The Cheesecake Factory, North Italia, Flower Child, and a collection of other FRC brands. Internationally, 34 The Cheesecake Factory restaurants operate under licensing agreements[7][18] - The Company was named to the FORTUNE Magazine "100 Best Companies to Work For" list for the eleventh consecutive year in 2024[3][7] Liquidity and Capital Allocation Liquidity and Capital Allocation Details As of April 2, 2024, liquidity was $296.7 million, debt $475 million, with $12.5 million in share repurchases and a $0.27 dividend Liquidity and Debt (as of April 2, 2024) | Metric | Amount (in millions) | | :-------------------------------- | :------------- | | Total Available Liquidity | $296.7 | | Cash Balance | $60.2 | | Revolving Credit Facility Availability | $236.5 | | Total Principal Debt Outstanding | $475 | | - 0.375% Convertible Senior Notes due 2026 | $345 | | - Revolving Credit Facility Drawn | $130 | - In Q1 fiscal 2024, the Company repurchased approximately 359,400 shares of its stock at a cost of $12.5 million. The Board of Directors declared a quarterly dividend of $0.27 per share, payable on June 4, 2024[5] Condensed Consolidated Financial Statements Condensed Consolidated Statements of Income Q1 2024 revenues grew 2.9% to $891.2 million, operating income rose 15.8% to $39.3 million, with diluted EPS at $0.68 Consolidated Statements of Income (13 Weeks Ended) | Metric | April 2, 2024 (in thousands) | April 2, 2024 (% of Revenues) | April 4, 2023 (in thousands) | April 4, 2023 (% of Revenues) | | :--------------------------------------- | :-------------------------------- | :---------------------------- | :-------------------------------- | :---------------------------- | | Revenues | $891,223 | 100.0% | $866,114 | 100.0% | | Food and beverage costs | $203,253 | 22.8% | $206,224 | 23.8% | | Labor expenses | $320,930 | 36.0% | $311,528 | 36.0% | | Other operating costs and expenses | $233,541 | 26.3% | $230,929 | 26.7% | | General and administrative expenses | $60,366 | 6.8% | $54,069 | 6.2% | | Depreciation and amortization expenses | $24,756 | 2.8% | $22,955 | 2.7% | | Impairment of assets and lease termination expenses | $2,083 | 0.2% | $2,242 | 0.3% | | Acquisition-related contingent consideration, compensation and amortization expenses | $1,121 | 0.1% | $1,189 | 0.1% | | Preopening costs | $5,880 | 0.6% | $3,052 | 0.3% | | Total costs and expenses | $851,930 | 95.6% | $832,188 | 96.1% | | Income from operations | $39,293 | 4.4% | $33,926 | 3.9% | | Interest and other expense, net | $(1,761) | (0.2)% | $(1,880) | (0.2)% | | Income before income taxes | $37,532 | 4.2% | $32,046 | 3.7% | | Income tax provision | $4,341 | 0.5% | $3,996 | 0.5% | | Net income | $33,191 | 3.7% | $28,050 | 3.2% | | Basic net income per share | $0.70 | N/A | $0.58 | N/A | | Diluted net income per share | $0.68 | N/A | $0.56 | N/A | Selected Segment Information The Cheesecake Factory segment led revenue and operating income growth; North Italia and Other FRC saw revenue gains but operating income declines Segment Revenues Revenues by Segment (13 Weeks Ended) | Segment | April 2, 2024 (in thousands) | April 4, 2023 (in thousands) | YoY Change | | :----------------------------- | :--------------------------- | :--------------------------- | :--------- | | The Cheesecake Factory restaurants | $667,794 | $656,000 | +1.8% | | North Italia | $70,874 | $63,303 | +11.9% | | Other FRC | $74,229 | $68,640 | +8.1% | | Other | $78,326 | $78,171 | +0.2% | | Total | $891,223 | $866,114 | +2.9% | Segment Operating Income/(Loss) Income/(Loss) from Operations by Segment (13 Weeks Ended) | Segment | April 2, 2024 (in thousands) | April 4, 2023 (in thousands) | YoY Change | | :----------------------------- | :--------------------------- | :--------------------------- | :--------- | | The Cheesecake Factory restaurants | $86,071 | $78,386 | +9.8% | | North Italia | $3,170 | $4,606 | -31.2% | | Other FRC | $6,292 | $8,711 | -27.7% | | Other | $(56,240) | $(57,777) | +2.7% | | Total | $39,293 | $33,926 | +15.8% | Segment Depreciation and Amortization Depreciation and Amortization Expenses by Segment (13 Weeks Ended) | Segment | April 2, 2024 (in thousands) | April 4, 2023 (in thousands) | | :----------------------------- | :--------------------------- | :--------------------------- | | The Cheesecake Factory restaurants | $16,843 | $16,018 | | North Italia | $1,971 | $1,467 | | Other FRC | $2,425 | $1,927 | | Other | $3,517 | $3,543 | | Total | $24,756 | $22,955 | Segment Impairment and Lease Termination Expenses Impairment of Assets and Lease Termination Expenses by Segment (13 Weeks Ended) | Segment | April 2, 2024 (in thousands) | April 4, 2023 (in thousands) | | :----------------------------- | :--------------------------- | :--------------------------- | | The Cheesecake Factory restaurants | $1,859 | $93 | | North Italia | - | - | | Other FRC | - | $55 | | Other | $224 | $2,094 | | Total | $2,083 | $2,242 | Segment Preopening Costs Preopening Costs by Segment (13 Weeks Ended) | Segment | April 2, 2024 (in thousands) | April 4, 2023 (in thousands) | | :----------------------------- | :--------------------------- | :--------------------------- | | The Cheesecake Factory restaurants | $1,758 | $1,448 | | North Italia | $2,002 | $446 | | Other FRC | $1,724 | $721 | | Other | $396 | $437 | | Total | $5,880 | $3,052 | Segment Operating Information Comparable Restaurant Sales vs. Prior Year (13 Weeks Ended) | Segment | April 2, 2024 | April 4, 2023 | | :----------------------------- | :-------------- | :-------------- | | The Cheesecake Factory restaurants | (0.6)% | 5.7% | | North Italia | 3% | 9% | Restaurant Counts and Openings (13 Weeks Ended April 2, 2024) | Segment | Restaurants Opened During Period | Restaurants Open at Period-End (Company-Owned) | | :----------------------------- | :----------------------------- | :--------------------------------------------- | | The Cheesecake Factory restaurants | - | 216 | | North Italia | 2 | 38 | | Other FRC | 2 | 42 | | Other (Flower Child, Grand Lux Cafe, Social Monk Asian Kitchen) | 1 | 40 | | Total Company-Owned | 5 | 336 | | International-licensed The Cheesecake Factory | 1 (subsequent to quarter-end, another opened) | 33 | Selected Consolidated Balance Sheet Information As of April 2, 2024, cash and cash equivalents increased to $60.2 million, with long-term debt remaining stable at $470.6 million Selected Consolidated Balance Sheet Information | Metric | April 2, 2024 (in thousands) | January 2, 2024 (in thousands) | | :-------------------------------- | :--------------------------- | :--------------------------- | | Cash and cash equivalents | $60,220 | $56,290 | | Long-term debt, net of issuance costs | $470,551 | $470,047 | Reconciliation of Non-GAAP Results to GAAP Results Non-GAAP Reconciliation Details Non-GAAP adjustments for Q1 2024 resulted in adjusted net income of $35.6 million and adjusted diluted EPS of $0.73, excluding non-recurring items - Non-GAAP measurements are intended to supplement GAAP results by eliminating the impact of items the Company does not consider indicative of its ongoing operations. These measures are used for financial and operational decision-making and period-to-period comparisons[21] Reconciliation of Non-GAAP Financial Measures (13 Weeks Ended) | Metric | April 2, 2024 (in thousands) | April 4, 2023 (in thousands) | | :--------------------------------------------------------------------------------- | :--------------------------- | :--------------------------- | | Net income (GAAP) | $33,191 | $28,050 | | Impairment of assets and lease termination expenses | 2,083 | 2,242 | | Acquisition-related contingent consideration, compensation and amortization expenses | 1,121 | 1,189 | | Tax effect of adjustments | (833) | (892) | | Adjusted net income (non-GAAP) | $35,562 | $30,589 | | Diluted net income per share (GAAP) | $0.68 | $0.56 | | Impairment of assets and lease termination expenses | 0.04 | 0.05 | | Acquisition-related contingent consideration, compensation and amortization expenses | 0.02 | 0.02 | | Tax effect of adjustments | (0.02) | (0.02) | | Adjusted net income per share (non-GAAP) | $0.73 | $0.61 | Additional Information Conference Call and Webcast A conference call on May 8, 2024, discussed Q1 fiscal 2024 results, with a webcast replay available until June 7, 2024 - The Company held a conference call to review its Q1 fiscal 2024 results on May 8, 2024, at 2:00 p.m. Pacific Time. A live webcast and replay are available on investors.thecheesecakefactory.com until June 7, 2024[6] Safe Harbor Statement Forward-looking statements are subject to risks and uncertainties; investors should consult SEC filings for full risk factor disclosure - The press release contains forward-looking statements regarding restaurant development and other non-historical facts, which are based on current expectations and involve risks and uncertainties that may cause results to differ materially[9] - Investors are cautioned that forward-looking statements are not guarantees of future performance and are affected by various factors including economic conditions, supply chain disruptions, operational risks, market acceptance, and regulatory changes. A full discussion of risks and uncertainties is available in the Company's SEC filings (Form 10-K, 10-Q, 8-K)[9]