On July 31, 2024, Cheesecake Factory Inc (CAKE, Financial) released its 8-K filing for the second quarter of fiscal 2024, which ended on July 2, 2024. The company reported total revenues of $904.0 million, slightly below the analyst estimate of $908.66 million. However, the company exceeded earnings expectations with a diluted net income per share of $1.08, surpassing the estimated $1.02.
Company Overview
Cheesecake Factory Inc owns and operates restaurants in the United States and Canada under brands that include The Cheesecake Factory, North Italia, and a collection within the Fox Restaurants Concepts subsidiary. The company's international presence, in the Middle East and Mexico, is through licensing agreements with third parties. The company also has a bakery division that produces cheesecakes and other baked products for sale in its restaurants, international licensees, and third-party bakery customers. The company has four operating business segments: The Cheesecake Factory restaurants, North Italia, other FRC, and Flower Child. The majority of the company's revenue comes from The Cheesecake Factory restaurants segment.
Performance and Challenges
Cheesecake Factory Inc (CAKE, Financial) reported a year-over-year revenue increase from $866.2 million in Q2 2023 to $904.0 million in Q2 2024. Net income for the quarter was $52.4 million, translating to a diluted net income per share of $1.08. The company recorded a pre-tax net expense of $1.0 million related to Fox Restaurant Concepts acquisition-related expenses and impairment of assets and lease termination income. Excluding these items, adjusted net income was $53.2 million, or $1.09 per share.
Comparable restaurant sales at The Cheesecake Factory restaurants increased by 1.4% year-over-year. Despite the revenue miss, the company’s ability to exceed earnings expectations highlights its operational efficiency and cost management.
Financial Achievements
Cheesecake Factory Inc (CAKE, Financial) achieved significant financial milestones in Q2 2024. The company opened five new restaurants across various concepts and markets, including one Cheesecake Factory, one North Italia restaurant, two Flower Child locations, and one Culinary Dropout. Additionally, one Cheesecake Factory restaurant opened internationally under a licensing agreement in China. The company remains on track to meet its development objective of opening up to 22 new restaurants in 2024.
As of July 2, 2024, the company had total available liquidity of $277.2 million, including a cash balance of $40.7 million and availability on its revolving credit facility of $236.5 million. The total principal amount of debt outstanding was $475.0 million.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Total Revenues | $904.0 million | $866.2 million |
| Net Income | $52.4 million | $42.7 million |
| Diluted Net Income Per Share | $1.08 | $0.87 |
| Adjusted Net Income Per Share | $1.09 | $0.88 |
Analysis
Cheesecake Factory Inc (CAKE, Financial) demonstrated resilience in Q2 2024, with a notable increase in net income and earnings per share despite a slight revenue miss. The company's strategic expansion and strong operational execution have contributed to its robust performance. The increase in comparable restaurant sales and the successful opening of new restaurants underscore the brand's appeal and market demand.
However, the company faces challenges such as managing acquisition-related expenses and maintaining profitability amidst rising costs. The company's liquidity position and strategic capital allocation, including share repurchases and dividends, reflect its commitment to shareholder value.
Overall, Cheesecake Factory Inc (CAKE, Financial) continues to show strong financial health and growth potential, making it an attractive consideration for value investors.
Explore the complete 8-K earnings release (here) from Cheesecake Factory Inc for further details.
