Cheesecake Factory: Reports Q2-2021 Financial Results

Calabas Hills / CA. (cf) The Cheesecake Factory Incorporated reported financial results for the second quarter of fiscal 2021, which ended on June 29, 2021. Total revenues were USD 769.0 million in the second quarter of fiscal 2021 compared to USD 295.9 million in the second quarter of fiscal 2020. Net income available to common stockholders and diluted net income per common share were USD 17.1 million and USD 0.37, respectively, in the second quarter of fiscal 2021.

During the second quarter of fiscal 2021, the Company recorded USD 11.4 million in non-cash acquisition-related contingent consideration and amortization expense primarily associated with the amendment to the Fox Restaurant Concepts («FRC») acquisition agreement, including the extension of the earn-out period through 2026. Excluding the after-tax impact of this item, the termination of the Company’s interest rate swap agreement and reflecting the then potential impact of the conversion of the Company’s convertible preferred stock into common stock for the period that it was outstanding during the quarter prior to the repurchase and conversion on June 15, 2021, adjusted net income and adjusted net income per share for the second quarter of fiscal 2021 were USD 43.9 million and USD 0.80, respectively. Please see the Company’s reconciliation of non-GAAP financial measures at the end of this press release.

Comparable restaurant sales at The Cheesecake Factory restaurants increased 150.0 percent year-over-year in the second quarter of fiscal 2021. Relative to the second quarter of fiscal 2019, comparable restaurant sales at The Cheesecake Factory restaurants increased 7.8 percent.

As of today, nearly all of the Company’s restaurants across its concepts are operating with no indoor dining restrictions. Fiscal 2021 third quarter-to-date through July 26th comparable sales for The Cheesecake Factory restaurants increased approximately 61 percent year-over-year and 10 percent relative to the same period in fiscal 2019, supported by approximately 27 percent off-premise sales mix. Based on average weekly sales quarter-to-date of approximately USD 230,000, this equates to nearly USD 12 million on average, per unit on an annualized basis. Off-premise average weekly sales are about double the level seen during the same period in fiscal 2019.

«We had a tremendous second quarter, driving record revenues and strong cash flow,» said David Overton, Chairman and Chief Executive Officer. «When we reflect on where we were a year ago during the depths of Covid-19, we are so proud of our team’s accomplishments that have driven our recovery. Comparable sales at The Cheesecake Factory restaurants far outpaced pre-Covid levels during the second quarter and we leveraged the sales to drive solid bottom line performance. Sales across our concepts further strengthened early in the third quarter as nearly all of our restaurants are now operating with no indoor dining restrictions. Additionally, we opened three new restaurants during the second quarter and with our most recent opening last week, we are on track to meet our development objective to open as many as 14 new restaurants across our concepts this year.»

Development

During the second quarter of fiscal 2021, two North Italia restaurants opened in Miami and San Antonio, Flower Child opened in Atlanta, and one Cheesecake Factory restaurant opened internationally in Shanghai under a licensing agreement. Subsequent to quarter-end, a second North Italia opened in the Nashville area.

Balance Sheet + Cash Flow

During the second quarter, the Company generated USD 108.8 million in cash flow from operating activities.

As of June 29, 2021, the Company had total available liquidity of USD 401.9 million, including a cash balance of USD 161.8 million and availability on its revolving credit facility of USD 240.1 million. Total principal amount of debt outstanding was USD 475 million, including USD 345 million of 0.375 percent convertible senior notes due 2026 issued during the second quarter and USD 130 million drawn on the Company’s revolving credit facility following the previously announced USD 150 million repayment during the second quarter.

The Company also completed the offering of 3.125 million shares of common stock during the second quarter of fiscal 2021. As previously disclosed, the Company used the net proceeds from the convertible senior note and common stock offerings to fund approximately USD 457.4 million payable in connection with the repurchase of 150,000 shares of its previously outstanding convertible preferred stock and the conversion of the remaining 50,000 shares of convertible preferred stock into approximately 2.4 million shares of the Company’s common stock, which simplified the Company’s capital structure and eliminated future convertible preferred dividends. For GAAP accounting purposes, USD 13.6 million of the total consideration paid was deemed to be an assumed dividend during the second quarter of fiscal 2021.