The Cheesecake Factory Reports Results for Second Quarter of Fiscal 2018
CALABASAS HILLS, Calif.--(BUSINESS WIRE)--Jul 31, 2018--The Cheesecake Factory Incorporated (NASDAQ: CAKE) today reported financial results for the second quarter of fiscal 2018, which ended on July 3, 2018.
Total revenues were $593.2 million in the second quarter of fiscal 2018 as compared to $569.9 million in the second quarter of fiscal 2017. Net income and diluted net income per share were $28.4 million and $0.61, respectively, in the second quarter of fiscal 2018.
The Company recorded a pre-tax charge of $2.6 million during the second quarter of fiscal 2018 related to the termination of a lease for one The Cheesecake Factory restaurant. Excluding the after-tax impact from this item, net income and diluted net income per share for the second quarter of fiscal 2018 would have been $30.3 million and $0.65, respectively. Please see the Company’s reconciliation of non-GAAP financial measures at the end of this release.
Comparable restaurant sales at The Cheesecake Factory restaurants increased 1.4% in the second quarter of fiscal 2018.
“Comparable sales at The Cheesecake Factory and core restaurant operating performance were in line with our expectations during the second quarter,” said David Overton, Chairman and Chief Executive Officer. “However, $4.6 million in higher group medical insurance costs year-over-year and $4.5 million in increased legal expenses impacted our bottom line results this quarter.”
Overton continued, “We generated over $65 million in operating cash flow during the quarter. The consistency of our cash flow enabled us to increase our dividend for the sixth consecutive year. We continue to execute a balanced capital allocation strategy, investing in long-term growth while returning substantially all of our free cash flow to shareholders through our dividend and share repurchase program.”
The Company now expects to open as many as six restaurants in fiscal 2018, including one Grand Lux Cafe, scheduled to open in August 2018, as well as the first location of Social Monk Asian Kitchen, a fast casual concept under development and expected to open in the fourth quarter of 2018.
In addition, the Company now expects three restaurants to open internationally under licensing agreements in fiscal 2018. This includes the second location in Saudi Arabia, which opened in April.
The Company’s Board of Directors declared a quarterly cash dividend of $0.33 per share on the Company’s common stock. The dividend is payable on August 28, 2018 to shareholders of record at the close of business on August 15, 2018.
During the second quarter of fiscal 2018, the Company repurchased approximately 140,000 shares of its common stock at a cost of $7.1 million.
Conference Call and Webcast
The Company will hold a conference call to review its results for the second quarter of fiscal 2018 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 August 30, 2018.
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 213 full-service, casual dining restaurants throughout the U.S.A., including Puerto Rico, and Canada, comprised of 198 restaurants under The Cheesecake Factory ® mark; 13 restaurants under the Grand Lux Cafe ® mark; and two restaurants under the RockSugar Southeast Asian Kitchen ® mark. Internationally, 21 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 2018, the Company was named to the FORTUNE Magazine “100 Best Companies to Work For ® ” list for the fifth consecutive year. To learn more about the Company, visit www.thecheesecakefactory.com.
FORTUNE and FORTUNE 100 Best Companies to Work For® are registered trademarks of Time Inc. and are used under license. From FORTUNE Magazine, March 1, 2018 ©2018 Time Inc. Used under license. FORTUNE and Time Inc. are not affiliated with, and do not endorse products or services of, The Cheesecake Factory Incorporated.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements, including uncertainties related to the Company’s ability to: deliver comparable sales growth; provide a differentiated experience to guests; outperform the casual dining industry and increase its market share; leverage sales increases and manage flow through; manage through cost pressures, including increasing wage rates, group medical insurance costs and legal expenses, and stabilize margins; grow earnings; remain relevant to consumers; attract and retain qualified management and other staff; manage risks associated with the magnitude and complexity of regulations in the states and municipalities where the Company’s restaurants are located; increase shareholder value; find suitable sites and manage increasing construction costs; profitably expand its concepts domestically and in Canada, and work with its licensees to expand its concept internationally; support the growth of North Italia and Flower Child restaurants; develop the Social Monk Asian Kitchen fast casual concept; expand consumer packaged goods licensing revenue; utilize its capital effectively and continue to increase cash dividends and repurchase its shares; and factors outside of the Company’s control including: economic and political conditions that impact consumer confidence and spending; impact of recently enacted tax reform; acceptance and success of The Cheesecake Factory in international markets; acceptance and success of the North Italia and Flower Child restaurants and the Social Monk Asian Kitchen fast casual concept; the risks of doing business abroad through Company-owned restaurants and/or licensees; foreign exchange rates and potential changes in NAFTA and cross border taxation; changes in unemployment rates; the economic health of the Company’s landlords and other tenants in retail centers in which its restaurants are located; the economic health of suppliers, licensees, vendors and other third parties providing goods or services to the Company; 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”). Investors are cautioned that forward-looking statements are not guarantees of future performance and that undue reliance should not be placed on such statements. 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 securities laws. 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.
Reconciliation of Non-GAAP Results to GAAP Results
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