Cheesecake Factory Q3 Profit Down 12%, But Revenues Beat View

(RTTNews) - Cheesecake Factory Inc. (CAKE) on Wednesday reported a 12 percent decrease in profit for the third quarter from last year as higher revenues and the absence of charges were offset by an increase in costs and expenses. However, revenue for the quarter beat analysts' expectations, while adjusted earnings missed their estimates.

David Overton, Chairman and Chief Executive Officer of Cheesecake Factory said, "There are clearly some significant external cost headwinds in our current environment, including unprecedented increases in butter and related dairy prices during the third quarter, resulting in about $4.3 million of additional expense compared to the third quarter of 2013. However, recently we are seeing the dairy market beginning to correct..."

The casual dining chain's net income for the third quarter was $24.22 million or $0.48 per share, down from $27.48 million or $0.50 per share in the year-ago period.

The prior-year quarter's results include an after-tax impact of $0.01 per share related to impairment of assets and lease terminations.

Adjusted net income for the quarter was $24.22 million or $0.48 per share, compared to $28.14 million or $0.52 per share in the same period last year. On average, 21 analysts polled by Thomson Reuters expected the company to report earnings of $0.57 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenues for the quarter rose 6 percent to $499.11 million from $469.70 million in the year-ago period. Analysts had a consensus revenue estimate of $497.93 million for the quarter.

Total costs and expenses for the quarter rose 8 percent to $464.94 million from $431.07 million in the same period last year.

Comparable restaurant sales at Cheesecake Factory and Grand Lux Cafe increased 1.8 percent in the quarter, compared to an increase of 0.8 percent in the year-ago period. By concept, comparable restaurant sales grew 2.1 percent at Cheesecake Factory and declined 2.0 percent at Grand Lux Cafe.

Cheesecake Factory expects to open as many as ten company-owned restaurants in fiscal 2014, including one relocation. The company has so far opened six restaurants this year.

Further, the company continues to expect as many as four restaurants to open internationally under licensing agreements in fiscal 2014.

Cheesecake Factory's board of directors declared a quarterly cash dividend of $0.165 per share on the company's common stock. The dividend is payable on November 18, 2014 to shareholders of record at the close of business on November 5, 2014.

The company continues to expect that it will return substantially all of its free cash flow to shareholders in fiscal 2014 in the form of dividends and share repurchases.

CAKE closed Wednesday's regular trading session at $44.50, down $0.15 or 0.34 percent on a volume of 2.85 million shares. In after-hours, the stock further declined $2.34 or 5.26 percent to $42.16.