UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): May 3, 2017
THE CHEESECAKE FACTORY INCORPORATED
(Exact Name of Registrant as Specified in Charter)
Delaware |
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0-20574 |
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51-0340466 |
(State or Other Jurisdiction |
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(Commission |
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(I.R.S. Employer |
26901 Malibu Hills Road
Calabasas Hills, California 91301
(Address of Principal Executive Offices)
Registrants Telephone Number, Including Area Code (818) 871-3000
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
The following information is intended to be furnished under Item 2.02 of Form 8-K, Results of Operations and Financial Condition. This information shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date of this report, regardless of any general incorporation language in the filing.
In a press release dated May 3, 2017, a copy of which is attached as Exhibit 99.1 to this report, The Cheesecake Factory Incorporated (the Company) reported financial results for the first quarter of fiscal 2017, which ended on April 4, 2017. Total revenues were $563.4 million in the first quarter of fiscal 2017 as compared to $553.7 million in the first quarter of fiscal 2016. Net income and diluted net income per share were $35.0 million and $0.71, respectively, in the first quarter of fiscal 2017. The Company recorded a pre-tax, non-cash charge of $0.8 million during the first quarter of fiscal 2017 related to the planned relocation of one The Cheesecake Factory restaurant. Excluding this item, net income and diluted net income per share were $35.5 million and $0.72, respectively.
ITEM 8.01 OTHER EVENTS.
On May 3, 2017, the Company announced a quarterly cash dividend of $0.24 per share which will be paid on May 30, 2017 to the stockholders of record of each share of the Companys common stock at the close of business on May 17, 2017. Future dividends, if any, will be subject to Board approval.
On April 27, 2017, the Board approved the adoption of a share repurchase plan with Wells Fargo Securities, LLC pursuant to which the Company is authorized to repurchase shares of its common stock in open market transactions in accordance with Rule 10b-18 under the Securities Exchange Act of 1934, such plan to be effective from May 8, 2017 through May 19, 2017 (the New 10b-18 Plan). The New 10b-18 Plan is in addition to an existing share repurchase plan with Wells Fargo Securities, LLC, adopted in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934 (the Current 10b5-1 Plan), previously adopted by the Board, which terminates on June 30, 2017.
On April 27, 2017, the Board of Directors also approved the adoption of a share repurchase plan with Wells Fargo Securities, LLC intended to qualify for the safe harbor under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the New 10b5-1 Plan). The New 10b5-1 Plan will become effective on July 5, 2017 and terminate on December 29, 2017, unless terminated sooner in accordance with its terms. Purchases may be made in the open market or through privately negotiated transactions in support of the Companys share repurchase plan. Purchases in the open market will be made in compliance with Rule 10b-18 under the Securities Exchange Act of 1934.
The Company expects to allocate as much as $100 million toward share repurchases in fiscal 2017 utilizing the Current 10b5-1 Plan, the New 10b-18 Plan and the New 10b5-1 Plan, as well as such other share repurchase plan(s) as the Board may hereafter adopt in fiscal 2017.
On May 3, 2017, the Company posted an Investor Presentation on the Companys Investor Relations website at investors.thecheesecakefactory.com. A copy of the presentation is attached hereto as Exhibit 99.2 and is incorporated by reference herein.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
99.1 Press release dated May 3, 2017 entitled, The Cheesecake Factory Reports Results for First Quarter of Fiscal 2017
99.2 The Cheesecake Factory Investor Presentation dated May 2017
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: May 3, 2017 |
THE CHEESECAKE FACTORY INCORPORATED | |
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By: |
/s/ W. Douglas Benn |
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W. Douglas Benn |
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Executive Vice President and Chief Financial Officer |
EXHIBIT INDEX
Exhibit |
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Description |
99.1 |
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Press release dated May 3, 2017 entitled, The Cheesecake Factory Reports Results for First Quarter of Fiscal 2017 |
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99.2 |
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The Cheesecake Factory Investor Presentation dated May 2017 |
EXHIBIT 99.1
PRESS RELEASE
FOR IMMEDIATE RELEASE |
Contact: Stacy Feit |
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(818) 871-3000 |
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investorrelations@thecheesecakefactory.com |
THE CHEESECAKE FACTORY REPORTS RESULTS FOR
FIRST QUARTER OF FISCAL 2017
Calabasas Hills, Calif., May 3, 2017 The Cheesecake Factory Incorporated (NASDAQ: CAKE) today reported financial results for the first quarter of fiscal 2017, which ended on April 4, 2017.
Total revenues were $563.4 million in the first quarter of fiscal 2017 as compared to $553.7 million in the first quarter of fiscal 2016. Net income and diluted net income per share were $35.0 million and $0.71, respectively, in the first quarter of fiscal 2017.
The Company recorded a pre-tax, non-cash charge of $0.8 million during the first quarter of fiscal 2017 related to the planned relocation of one The Cheesecake Factory restaurant. Excluding this item, net income and diluted net income per share were $35.5 million and $0.72, respectively.
Comparable restaurant sales at The Cheesecake Factory restaurants increased 0.3% in the first quarter of fiscal 2017.
Our first quarter results were in line with our expectations as we posted our 29th consecutive quarter of positive comparable sales, again outperforming the casual dining industry, said David Overton, Chairman and Chief Executive Officer. We remain top of mind with our guests; in fact, The Cheesecake Factory was named brand of the year in the casual dining category of the Harris Poll EquiTrend® study. In addition, we were recently recognized as one of the 100 Best Companies to Work For® by Fortune magazine for the fourth consecutive year, reinforcing that we continue to be an employer of choice in the restaurant industry.
Overton concluded, We recently achieved two exciting international milestones. Our first location in Hong Kong opened under a licensing agreement earlier this week and we will bring The Cheesecake Factory concept to Canada, with the execution of the lease for our first Company-owned international location in Toronto.
Development
The Company continues to expect to open as many as eight Company-owned restaurants in fiscal 2017, including one relocation, which is slated to open in the second quarter.
26901 Malibu Hills Road, Calabasas Hills, CA 91301 · Telephone (818) 871-3000 · Fax (818) 871-3100
In addition, the Company continues to expect as many as four to five restaurants to open under licensing agreements internationally in fiscal 2017. This includes the first location in Hong Kong, which opened earlier this week.
Capital Allocation
The Companys Board of Directors declared a quarterly cash dividend of $0.24 per share on the Companys common stock. The dividend is payable on May 30, 2017 to shareholders of record at the close of business on May 17, 2017.
During the first quarter of fiscal 2017, the Company repurchased approximately 150,000 shares of its common stock at a cost of $9.3 million. 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 first quarter of fiscal 2017 today at 2:00 p.m. Pacific Time. The conference call will be webcast live on the Companys website at investors.thecheesecakefactory.com and a replay of the webcast will be available through June 2, 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® mark; 13 restaurants under the Grand Lux Cafe® mark; and one restaurant under the Rock Sugar Pan Asian Kitchen® mark. Internationally, 16 The Cheesecake Factory® restaurants operate under licensing agreements. The Companys 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 2017, the Company was named to the FORTUNE Magazine 100 Best Companies to Work For® list for the fourth 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 15, 2017 ©2017 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 Companys ability to: deliver consistent and dependable comparable sales results over a sustained period of time; deliver increases in guest traffic; provide a differentiated experience to guests; outperform the casual dining industry and increase its market share; leverage sales increases and manage flow through; increase margins; grow earnings; remain relevant to consumers; attract and retain qualified management and other staff; increase shareholder value; 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 a fast casual concept; utilize its capital effectively and continue to repurchase its shares; and factors outside of the Companys control including: economic and political conditions that impact consumer confidence and spending; acceptance and success of The Cheesecake Factory in international markets; 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 Companys landlords and other tenants in retail centers in which its restaurants are
26901 Malibu Hills Road, Calabasas Hills, CA 91301 · Telephone (818) 871-3000 · Fax (818) 871-3100
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 Companys 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 Companys 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 Companys 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.
26901 Malibu Hills Road, Calabasas Hills, CA 91301 · Telephone (818) 871-3000 · Fax (818) 871-3100
The Cheesecake Factory Incorporated
Condensed Consolidated Financial Statements
(unaudited; in thousands, except per share and statistical data)
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13 Weeks Ended |
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13 Weeks Ended |
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Consolidated Statement of Operations |
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April 4, 2017 |
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March 29, 2016 |
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Amount |
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Percent of |
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Amount |
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Percent of |
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Revenues |
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$ |
563,426 |
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100.0% |
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$ |
553,693 |
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100.0% |
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Costs and expenses: |
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Cost of sales |
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129,139 |
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22.9% |
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130,773 |
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23.6% |
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Labor expenses |
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193,835 |
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34.4% |
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185,658 |
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33.5% |
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Other operating costs and expenses |
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135,650 |
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24.1% |
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129,557 |
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23.4% |
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General and administrative expenses |
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36,287 |
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6.4% |
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35,337 |
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6.4% |
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Depreciation and amortization expenses |
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23,196 |
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4.1% |
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21,464 |
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3.9% |
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Impairment of assets and lease terminations |
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786 |
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0.1% |
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- |
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0.0% |
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Preopening costs |
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970 |
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0.3% |
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2,310 |
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0.4% |
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Total costs and expenses |
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519,863 |
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92.3% |
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505,099 |
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91.2% |
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Income from operations |
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43,563 |
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7.7% |
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48,594 |
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8.8% |
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Interest and other expense, net |
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(1,256) |
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(0.2)% |
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(2,304) |
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(0.4)% |
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Income before income taxes |
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42,307 |
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7.5% |
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46,290 |
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8.4% |
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Income tax provision |
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7,264 |
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1.3% |
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12,336 |
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2.3% |
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Net income |
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$ |
35,043 |
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6.2% |
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$ |
33,954 |
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6.1% |
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Basic net income per share |
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$ |
0.74 |
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$ |
0.70 |
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Basic weighted average shares outstanding |
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47,634 |
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48,518 |
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Diluted net income per share |
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$ |
0.71 |
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$ |
0.68 |
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Diluted weighted average shares outstanding |
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49,210 |
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50,037 |
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Selected Segment Information |
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Revenues: |
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The Cheesecake Factory restaurants |
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$ |
515,234 |
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$ |
506,316 |
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Other |
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48,192 |
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47,377 |
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Total |
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$ |
563,426 |
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$ |
553,693 |
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Income/(loss) from operations: |
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The Cheesecake Factory restaurants (1) |
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$ |
70,543 |
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$ |
74,292 |
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Other |
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6,638 |
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6,912 |
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Corporate |
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(33,618) |
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(32,610) |
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Total |
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$ |
43,563 |
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$ |
48,594 |
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(1) Includes $0.8 million of accelerated depreciation expense related to the planned relocation of one The Cheesecake Factory restaurant in the thirteen weeks ended April 4, 2017. This amount was recorded in impairment of assets and lease terminations in the condensed consolidated statements of income.
Selected Consolidated Balance Sheet Information |
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April 4, 2017 |
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January 3, 2017 |
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Cash and cash equivalents |
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$ 65,666 |
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$ 53,839 |
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Total assets |
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1,276,828 |
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1,293,319 |
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Total liabilities |
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649,293 |
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690,112 |
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Stockholders equity |
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627,535 |
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603,207 |
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13 Weeks Ended |
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13 Weeks Ended |
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The Cheesecake Factory Supplemental Information |
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April 4, 2017 |
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March 29, 2016 |
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Comparable restaurant sales |
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0.3% |
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1.7% |
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Restaurants opened during period |
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- |
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1 |
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Restaurants open at period-end |
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194 |
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188 |
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Restaurant operating weeks |
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2,522 |
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2,436 |
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26901 Malibu Hills Road, Calabasas Hills, CA 91301 · Telephone (818) 871-3000 · Fax (818) 871-3100
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 Companys 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
Reconciliation of Non-GAAP Financial Measures
(unaudited; in thousands, except per share data)
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13 Weeks Ended |
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13 Weeks Ended |
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April 4, 2017 |
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March 29, 2016 |
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Net income (GAAP) |
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$ |
35,043 |
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$ |
33,954 |
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After-tax impact from: |
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- Impairment of assets and lease terminations (1) |
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472 |
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- |
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Adjusted net income (non-GAAP) |
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$ |
35,515 |
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$ |
33,954 |
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Diluted net income per share (GAAP) |
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$ |
0.71 |
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$ |
0.68 |
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After-tax impact from: |
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- Impairment of assets and lease terminations |
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0.01 |
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- |
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Adjusted diluted net income per share (non-GAAP) |
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$ |
0.72 |
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$ |
0.68 |
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(1) The pre-tax amount associated with the item in fiscal 2017 was $786 and was recorded in impairment of assets and lease terminations. |
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26901 Malibu Hills Road, Calabasas Hills, CA 91301 · Telephone (818) 871-3000 · Fax (818) 871-3100
Exhibit 99.2 Investor Presentation May 2017
Safe Harbor Statement This presentation contains forward-looking statements about our financial condition, results of operations, performance, plans, goals and other matters. These statements are based on our current expectations and involve known and unknown risks and uncertainties that may cause our actual results or performance to differ materially from those expressed or implied by such statements. These forward-looking statements include statements related to our ability to: provide a differentiated experience to guests; grow our comparable sales; outperform the casual dining industry and increase our market share; deliver consistent and predictable financial performance; profitably expand our Company-owned restaurants domestically and in Canada, and work with our licensees to expand our concept internationally; maintain our broad consumer appeal and remain relevant to guests; attract and retain qualified management and other staff; maintain our unit economics; leverage sales and manage costs to increase earnings per share; provide mid-teens total return to shareholders; leverage technology to enhance the guest experience and to manage costs; leverage our brand in the CPG channel; support the growth of North Italia and Flower Child restaurants; develop a fast casual concept; and utilize capital effectively and continue to repurchase our shares and pay dividends. Forward-looking statements are not guarantees of future performance, and undue reliance should not be placed on such statements. Forward-looking statements speak only as of todays date, and we undertake no obligation to publicly update or revise any forward-looking statements to take into account or otherwise reflect subsequent events, corrections in underlying assumptions, or changes in circumstances arising after the date that the forward-looking statement was made, unless required to do so by law. Please see the full discussion of risks and uncertainties contained in our filings with the Securities and Exchange Commission, including our latest Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, which are available at www.sec.gov. The Private Securities Litigation Reform Act of 1995 provides certain safe harbor provisions for forward-looking statements. All forward-looking statements made in this presentation are made pursuant to the Act. 2
A Compelling Investment Opportunity Highly differentiated concepts delivering experience Diversified growth drivers a unique guest Track record of consistent and predictable financial performance Robust cash flow to support growth and maximize shareholder value 3
Company Overview and Key Competitive Advantages 4
Our Global Footprint High quality, high profile locations worldwide Kuwait Saudi (5) (1) China (2) (3) 5 Company-Owned 194 13 1 International - Licensed Middle East11 Mexico3 China25 Mexico Guadalajara Mexico City (2) Shanghai ng Kong Lebanon (1) (3) Qatar (1) ArabiaUAE Ho U.S.A. (Company-Owned: 208)
The Cheesecake Factory - A Highly Differentiated Concept Bakery 6 Integrated Ambiance, Service and Hospitality Best-in-Class Operational Execution Leader in Menu Innovation
Industry Leader in Menu Innovation Breadth of menu is a key competitive advantage Quality 250 menu items made fresh from scratch in-house Relevance No veto vote something for everyone across price points Menu updated twice a year Performance Drives sales Continued market share gains Profit Increases sales at full margin 7
Dining With Us Is an Experience Ambiance, Service and Hospitality Drive Sales 8
Leveraging Technology to Further Enhance the Guest Experience 9 Training Redesign KMS Delivery CakePay App
Integrated Bakery The Cheesecake Magic Produces over 70 cheesecakes and other baked desserts Industry-Leading Dessert Sales 16% Enables creativity and quality control 10
Broad Consumer Appeal A division of Vice Media LLC The women and men behind The Cheesecake Factory reveal the untold story of how a tiny Beverly Hills restaurant known for its brown bread became a global chain mentioned in Drake songs and on Keeping up with the Kardashians. Highest Unit Volumes ($ in millions) With $32 a Moderate Average Check $10.7 $16 Maggianos Yard House BJ'sTexas OliveOutback LongHorn Bonefish Carrabbas Yard House Maggianos Bonefish Outback Carrabbas LongHorn Olive TexasBJ's Roadhouse Garden Garden Roadhouse Source: Latest SEC filings and company presentations 11 $27 $25 $22$21$21$21 $18 $15 $8.4$8.2 $5.7 $4.7$4.5 $3.4$3.3$3.0$3.0
Strong Consumer Engagement Across Channels 5M+ likes 360K followers Millions of Viewers 490K followers 12
Best-in-Class Operational Execution Average Tenure by Position Industry-Leading Retention Dual Management Structure Above 4-Walls 28 years 19 years 18 years 17 years 12 years 12 Senior VP of Operations Regional Vice President Area Director of Operations Area Kitchen Operations Manager General Manager ------------------Executive Kitchen Manager years FORTUNE and 100 Best Companies to Work For® are registered trademarks of Time Inc. and are used under license. From FORTUNE Magazine, March 15, 2017 ©2017 Time Inc. Used under license. FORTUNE and Time Inc. are not affiliated with, and do not endorse products or services of, The Cheesecake Factory Incorporated. 13 EKM EKM EKM EKM EKM EKM Area Kitchen Operations Manager GM GM GM GM GM GM Area Director of Operations
Leveraging Technology Manage Costs to Analytics 14 Automated Production Call Energy Management Optimization Market-Based Labor Dashboards KMS
Diversified Growth Drivers 15
The Cheesecake Factory Continued Domestic Growth Opportunity for 300 domestic locations Illustrative example of target returns for new restaurant openings. 16 The Grove, Los Angeles Strong Unit Economics ($ millions, assumes 10,000 sq. ft. unit) Sales $10.0 $2.3 $7.8 $4.0 ~ 20% EBITDAR Cash Capex Investment Capitalized Rent Fully Capitalized ROI
The Cheesecake Factory Expanding International Licensed Presence Continued expansion within current geographies Potential for additional geographies with current Opportunity territories licensees to add licensees and 17 Shanghai $0 Capital Expenditure +1¢ Per Restaurant in EPS
Incremental Growth Opportunities North Italia and Flower Child investment Bringing The Cheesecake Factory to Canada Measured growth of Grand Lux Cafe and RockSugar Further leveraging the power of The Cheesecake Factory brand in the CPG channel Internal development of a fast casual concept 18
Track Record of Consistent & Predictable Financial Performance 19
Outperforming the Industry and Taking Market Share 29 Consecutive Quarters of Comparable Sales Growth 2010 2011 2012 2013 2014 2015 2.6% 2016 1Q17 2.2% 2.0% 2.0% 1.5% 1.5% 1.2% 1.1% 1.0% 0.5% 0.3% (0.2)% (0.5)% (0.9)% (1.4)% (1.4)% Knapp-Track Index 20
Leveraging Sales & Managing Costs to Drive Earnings Growth Adjusted Earnings Per Share* ~11% CAGR $2.98 $2.83 $1.97 $1.88 2010 2011 2012 2013 2014 2015 2016 2017E** * Please see Appendix for GAAP to non-GAAP reconciliations. ** Midpoint of 2017 guidance provided May 3, 2017. 21 $2.37 $2.10 $1.64 $1.42
Our Restaurants Generate Significant Cash Flow Cash Flow and Strong Balance Sheet Provide Significant Financial ($ millions) Flexibility $173 2010 2011 2012 2013 2014 2015 2016 Proceeds from Exercise of Stock Options Free Cash Flow 22 Free cash flow defined as cash flow from operations less capital expenditures/investments. Please see Appendix for GAAP to non-GAAP reconciliations. $172 $156$148 $149 $109 $135
Effective Capital Allocation Supports Our Financial Objectives ~$900 Million in Share Repurchases Reducing WASO 3% ($ millions) Per Year 60,446 49,372 $13 2010 2011 2012 2013 2014 Dividend 2015 WASO 2016 Capex/Inv Share Repurchases 23 $42 $27 $36 $146 $184 $30 $109 $141 $172 $101 $158 $154 $114 $106 $52 $86 $77 $42
Disciplined, Returns-Focused Growth Has Paid Off Return on Invested Capital (ROIC) 17% 14% 13% 2010 2011 2012 2013 2014 2015 2016 ROIC = NOPAT / Average invested capital NOPAT = Income from operations excluding non-recurring expenses (-) income tax provision Invested Capital = Property and equipment + long-term assets + net working capital (-) cash and cash equivalents 24 15%15% 14% 13%
Creating Value for Shareholders Targeting Mid-Teens Total Return to Shareholders (EPS + Dividend) Core Business ~6% International ~2% Incremental Growth Opportunities ~1-2% Share Repurchases ~3% Dividend ~2% Philadelphia 25 Total Return to Shareholders
2017 Financial Targets Anticipating another year of solid performance Company-Owned Restaurants As many as 8 International Licensed Restaurants As many as 4 5 Comparable Sales 0.5% - 1.5% Adjusted EPS Growth 4% - 7% 2017 guidance provided May 3, 2017. EPS growth rate reflects adjusted EPS, excluding impairment and lease terminations, and lapping of 53-week year in 2016. 26 2017E
A Compelling Investment Opportunity Highly differentiated concepts delivering experience Diversified growth drivers a unique guest Track record of consistent and predictable financial performance Robust cash flow to support growth and maximize shareholder value 27
Appendix 28
Non-GAAP Reconciliation In addition to the results provided in accordance with the Generally Accepted Accounting Principles (GAAP) in this presentation, the Company is providing non-GAAP measurements which present diluted net income per share excluding the impact of certain items and free cash flow. The non-GAAP measurements are intended to supplement the presentation of the companys financial results in accordance with GAAP. The company believes facilitate that the presentation of these items provides additional information to the comparison of past and present financial results. 29
Non-GAAP Reconciliation The Cheesecake Factory Incorporated Reconciliation of Non-GAAP Financial Measures ($ thousands, except per share data) Fiscal Year 2010 2011 2012 2013 2014 2015 2016 Net income (GAAP) After-tax impact from: - Impairment of assets and lease terminations (1) - Partial IRS settlement (2) - Unwinding of interest rate collars (3) - Proceeds from variable life insurance contract (4) Adjusted net income (non-GAAP) $ 81,713 $ 95,720 $ 98,423 $ 114,356 $ 101,276 $ 116,523 $ 139,494 - - 4,425 - 928 (1,506) - - 5,722 - - (419) (337) 418 3,607 - - - 68 - - - - - - - - - $ 86,138 $ 95,142 $ 103,726 $ 114,019 $ 101,694 $ 120,130 $ 139,562 Diluted net income per share (GAAP) After-tax impact from: - Impairment of assets and lease terminations - Partial IRS settlement - Unwinding of interest rate collars - Proceeds from variable life insurance contract Adjusted diluted net income per share (non-GAAP) (5) $ 1.35 $ 1.64 $ 1.78 $ 2.10 $ 1.96 $ 2.30 $ 2.83 - - 0.02 (0.03) - - 0.11 (0.01) - - - 0.01 0.07 0.00 - - (0.01) - - - - - - - - - 0.07 - $ 1.42 $ 1.64 $ 1.88 $ 2.10 $ 1.97 $ 2.37 $ 2.83 (1) The pre-tax amounts associates with these items in fiscal 2011, 2012, 2013, 2014, 2015 and 2016 were $1,547, $9,536, $(561), $696, $6,011 and $114, respectively, and were recorded in impairment of assets and lease terminations. (2) The pre-tax amounts associated with this item were $719 and $1,075 and were recorded in interest and other (expense)/income, net and income tax provision, respectively. (3) The pre-tax amount associated with this item was $7,376 and was recorded in interest expense. (4) This item is non-taxable and is recorded in interest and other (expense)/income, net. (5) Adjusted diluted net income per share may not add due to rounding. 30
Non-GAAP Reconciliation The Cheesecake Factory Incorporated Reconciliation of Non-GAAP Financial Measures ($ in millions) Fiscal Year 2010 2011 2012 2013 2014 2015 2016 Cash Flow from Operations Capital Expenditures / Investments Free Cash Flow $ 167 42 $ 196 77 $ 195 86 $ 205 106 $ 240 114 $ 235 154 $ 303 158 $ 125 $ 119 $ 109 $ 99 $ 126 $ 81 $ 145 31
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