CAKE
$61.10
Cheesecake Fact
($.08)
(.13%)
Earnings Details
4th Quarter December 2016
Wednesday, February 22, 2017 4:15:00 PM
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Summary

Cheesecake Fact Misses

Cheesecake Fact (CAKE) reported 4th Quarter December 2016 earnings of $0.67 per share on revenue of $603.1 million. The consensus earnings estimate was $0.67 per share on revenue of $594.3 million. The Earnings Whisper number was $0.70 per share. Revenue grew 14.5% on a year-over-year basis.

The company said during its conference call it expects first quarter earnings of $0.71 to $0.74 per share and 2017 earnings of $2.95 to $3.07 per share. The current consensus earnings estimate is $0.73 per share for the quarter ending March 31, 2017 and $3.04 per share for the year ending December 31, 2017.

Cheesecake Factory Inc operates casual dining restaurants. It also operates bakery production facilities which produce desserts for its restaurants, international licenses and third-party bakery customers.

Results
Reported Earnings
$0.67
Earnings Whisper
$0.70
Consensus Estimate
$0.67
Reported Revenue
$603.1 Mil
Revenue Estimate
$594.3 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

The Cheesecake Factory Reports Results for Fourth Quarter of Fiscal 2016

The Cheesecake Factory Incorporated (CAKE) today reported financial results for the fourth quarter of fiscal 2016, which ended on January 3, 2017.

Total revenues were $603.1 million in the fourth quarter of fiscal 2016 as compared to $526.8 million in the fourth quarter of fiscal 2015. The fourth quarter of fiscal 2016 included 14 weeks compared to 13 weeks in the fourth quarter of fiscal 2015; the additional week in fiscal 2016 contributed approximately $54.7 million of sales. Net income and diluted net income per share were $32.4 million and $0.66, respectively, in the fourth quarter of fiscal 2016.

The Company recorded a pre-tax, non-cash charge of $0.1 million during the fourth quarter of fiscal 2016 related to the planned relocation of one The Cheesecake Factory restaurant. Excluding this item, net income and diluted net income per share were $32.4 million and $0.67, respectively.

Comparable restaurant sales at The Cheesecake Factory restaurants increased 1.1% in the fourth quarter of fiscal 2016 (14 weeks vs. 14 weeks).

"We delivered our 28th consecutive quarter of positive comparable sales, marking seven years of strong financial performance and meaningful shareholder value creation," said David Overton, Chairman and Chief Executive Officer. "We significantly outperformed the casual dining industry again during the fourth quarter as we continued to take market share."

Overton concluded, "We delivered on all of our objectives in 2016, including producing solid comparable sales performance, achieving our domestic unit growth goal, expanding our international presence to a total of 15 locations and increasing operating margins, all of which contributed to approximately 20% earnings per share growth. By maintaining our differentiated positioning and commitment to operational excellence, we believe we will uphold our leadership position in the casual dining industry in 2017 and beyond."

Development

The Company opened five The Cheesecake Factory restaurants and one Grand Lux Cafe during the fourth quarter of fiscal 2016, meeting its objective to open as many as eight Company-owned restaurants domestically in fiscal 2016.

Internationally, two The Cheesecake Factory restaurants opened in the fourth quarter of fiscal 2016, including the first location in Qatar and the third location in Mexico, for a total of four locations opened under licensing agreements during the year, as expected.

Capital Allocation

The Company’s Board of Directors declared a quarterly cash dividend of $0.24 per share on the Company’s common stock. The dividend is payable on March 21, 2017 to shareholders of record at the close of business on March 8, 2017.

During the fourth quarter of fiscal 2016, the Company repurchased 0.5 million shares of its common stock at a cost of $27.5 million. The Company repurchased a total of 2.9 million shares of its common stock at a cost of $146.5 million during fiscal 2016.

The Company continues to expect that it will return its free cash flow to shareholders in fiscal 2017 in the form of dividends and share repurchases.

Conference Call and Webcast

The Company will hold a conference call to review its results for the fourth quarter of fiscal 2016 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 March 24, 2017.

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 208 full-service, casual dining restaurants throughout the U.S.A. and Puerto Rico, including 194 restaurants under The Cheesecake Factory(R) mark; 13 restaurants under the Grand Lux Cafe(R) mark; and one restaurant under the Rock Sugar Pan Asian Kitchen(R) mark (rebranding to RockSugar Southeast Asian Kitchen(TM)). Internationally, 15 The Cheesecake Factory(R) 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 2016, the Company was named to the FORTUNE Magazine "100 Best Companies to Work For(R)" list for the third consecutive year. To learn more about the Company, visit www.thecheesecakefactory.com.

FORTUNE and 100 Best Companies to Work For(R) are registered trademarks of Time Inc. and are used under license. From FORTUNE Magazine, March 3, 2016 (C)2016 Time Inc. 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 consistent and dependable comparable sales results over a sustained period of time; the Company’s ability to deliver increases in guest traffic; the strength of the Company’s brand; the Company’s ability to provide a differentiated experience to guests; the Company’s ability to outperform the casual dining industry and increase its market share; the Company’s ability to leverage sales increases and manage flow through; the Company’s ability to increase margins; the Company’s ability to grow earnings; the Company’s ability to remain relevant to consumers; the Company’s ability to increase shareholder value; the Company’s ability to expand its concepts domestically and work with its licensees to expand its concept internationally; the Company’s ability to support the growth of North Italia and Flower Child restaurants; the Company’s ability to develop a fast casual concept; the Company’s ability to utilize its capital effectively and continue to repurchase its shares; factors outside of the Company’s control that impact consumer confidence and spending; current and future macroeconomic conditions; acceptance and success of The Cheesecake Factory in international markets; 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; 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.

The Cheesecake Factory Incorporated and Subsidiaries
Condensed Consolidated Financial Statements
(unaudited; in thousands, except per share and statistical data)
14 Weeks Ended
13 Weeks Ended
53 Weeks Ended
52 Weeks Ended
Consolidated Statement of Operations
January 3, 2017
December 29, 2015
January 3, 2017
December 29, 2015
Amount
Percent of
Amount
Percent of
Amount
Percent of
Amount
Percent of
Revenues
Revenues
Revenues
Revenues
Revenues
$ 603,146
100.0 %
$ 526,841
100.0 %
$ 2,275,719
100.0 %
$ 2,100,609
100.0 %
Costs and expenses:
Cost of sales
140,084
23.2 %
125,191
23.8 %
526,628
23.2 %
504,031
24.0 %
Labor expenses
202,562
33.6 %
173,053
32.8 %
759,998
33.4 %
684,818
32.6 %
Other operating costs and expenses
143,951
23.9 %
125,103
23.7 %
540,365
23.7 %
500,640
23.8 %
General and administrative expenses
38,863
6.4 %
35,705
6.8 %
146,042
6.4 %
137,402
6.5 %
Depreciation and amortization expenses
23,451
3.9 %
21,911
4.2 %
88,010
3.9 %
85,563
4.1 %
Impairment of assets and lease terminations
114
0.0 %
-
0.0 %
114
0.0 %
6,011
0.3 %
Preopening costs
6,975
1.2 %
7,083
1.3 %
13,569
0.6 %
16,898
0.8 %
Total costs and expenses
556,000
92.2 %
488,046
92.6 %
2,074,726
91.2 %
1,935,363
92.1 %
Income from operations
47,146
7.8 %
38,795
7.4 %
200,993
8.8 %
165,246
7.9 %
Interest and other expense, net
(2,263 )
(0.4 )%
(1,845 )
(0.4 )%
(9,225 )
(0.4 )%
(5,894 )
(0.3 )%
Income before income taxes
44,883
7.4 %
36,950
7.0 %
191,768
8.4 %
159,352
7.6 %
Income tax provision
12,502
2.0 %
9,750
1.8 %
52,274
2.3 %
42,829
2.1 %
Net income
$
32,381
5.4 %
$
27,200
5.2 %
$
139,494
6.1 %
$
116,523
5.5 %
Basic net income per share
$
0.68
$
0.56
$
2.91
$
2.39
Basic weighted average shares outstanding
47,403
48,808
47,981
48,833
Diluted net income per share
$
0.66
$
0.54
$
2.83
$
2.30
Diluted weighted average shares outstanding
48,795
50,470
49,372
50,605
Selected Segment Information
Revenues:
The Cheesecake Factory restaurants
$ 547,809
$ 476,580
$ 2,078,083
$ 1,913,758
Other
55,337
50,261
197,636
186,851
$ 603,146
$ 526,841
$ 2,275,719
$ 2,100,609
Income from operations:
The Cheesecake Factory restaurants
$
74,673
$
64,220
$
308,058
$
275,686
Other (1)
8,189
7,446
27,623
18,047
Corporate
(35,716 )
(32,871 )
(134,688 )
(128,487 )
$
47,146
$
38,795
$
200,993
$
165,246
(1) Includes $0.1 million of accelerated depreciation expense
related to the planned relocation of one The Cheesecake Factory
restaurant in the fourteen and fifty-three weeks ended January 3,
2017 and $6.0 million of impairment expense related to Rock Sugar
Pan Asian Kitchen in the fifty-two weeks ended December 29, 2015.
Selected Consolidated Balance Sheet Information
January 3, 2017
December 29, 2015
Cash and cash equivalents
$
53,839
$
43,854
Total assets
1,293,319
1,233,346
Total liabilities
690,112
644,807
Stockholders’ equity
603,207
588,539
14 Weeks Ended
13 Weeks Ended
53 Weeks Ended
52 Weeks Ended
The Cheesecake Factory Supplemental Information
January 3, 2017
December 29, 2015
January 3, 2017
December 29, 2015
Comparable restaurant sales
1.1 %
1.1 %
1.2 %
2.6 %
Restaurants opened during period
5
6
7
10
Restaurants open at period-end
194
187
194
187
Restaurant operating weeks
2,690
2,394
10,031
9,341

Reconciliation of Non-GAAP Results to GAAP Results

In addition to the results provided in accordance with Generally Accepted Accounting Principles ("GAAP") in this press release, the Company is providing non-GAAP measurements which present net income and diluted 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. The Company believes that the presentation of these items provides additional information to facilitate the comparison of past and present financial results.

The Cheesecake Factory Incorporated and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
(unaudited; in thousands, except per share data)
14 Weeks Ended
13 Weeks Ended
53 Weeks Ended
52 Weeks Ended
January 3, 2017
December 29, 2015
January 3, 2017
December 29, 2015
Net Income (GAAP)
$ 32,381
$ 27,200
$ 139,494
$
116,523
After-tax impact from:
- Impairment of assets and lease terminations (1)
68
-
68
3,607
Net Income (non-GAAP)
$ 32,449
$ 27,200
$ 139,562
$
120,130
Diluted net income per share (GAAP)
$
0.66
$
0.54
$
2.83
$
2.30
After-tax impact from:
- Impairment of assets and lease terminations
0.00
-
0.00
0.07
Diluted net income per share (non-GAAP) (2)
$
0.67
$
0.54
$
2.83
$
2.37
(1) The pre-tax amount associated with these items in fiscal 2016
and 2015 were $114 and $6,011, and were recorded in impairment of
assets and lease terminations.
(2) Adjusted diluted net income per share may not add due to
rounding.

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SOURCE: The Cheesecake Factory Incorporated

The Cheesecake Factory Incorporated
Stacy Feit, 818-871-3000
investorrelations@thecheesecakefactory.com