Cracker Barrel Results

Cracker Barrel Reports Second Quarter Fiscal 2019 Results

Cracker Barrel

Cracker Barrel Old Country Store, Inc. (Nasdaq: CBRL) today reported its financial results for the second quarter of fiscal 2019 ended February 1, 2019.

Second Quarter Fiscal 2019 Highlights

  • Compared to the prior year second quarter, comparable restaurant sales increased 3.8% with comparable restaurant traffic increasing 0.1%. Comparable store retail sales declined 1.4%.
  • Comparable restaurant sales and traffic growth outperformed the casual dining industry.
  • Earnings per diluted share were $2.52, compared to prior year second quarter GAAP earnings per diluted share of $3.79 (including a $1.06 per share benefit in Q2 2018 resulting from a one-time non-cash revaluation of the Company's deferred tax liability in conjunction with the Tax Cut and Jobs Act of 2017) and adjusted earnings per diluted share of $2.73 (see non-GAAP reconciliation below).
  • Operating income margin was 9.5% of revenue, compared to prior year operating income margin of 9.7% of revenue.

Commenting on the second quarter results, Cracker Barrel President and Chief Executive Officer Sandra B. Cochran said, "I am pleased that we delivered positive comparable store restaurant sales and traffic, which reflected improvements versus previous quarters. Our teams continued to make progress driving performance through an increased focus on our menu, the guest experience, and the continued expansion of our off-premise business."

Second Quarter Fiscal 2019 Results

Revenue

The Company reported total revenue of $811.7 million for the second quarter of fiscal 2019, representing an increase of 3.0% over the second quarter of the prior year. Cracker Barrel comparable store restaurant sales increased 3.8%, representing a 3.7% increase in average check and a 0.1% increase in comparable store restaurant traffic. The average menu price increase for the quarter was approximately 2.2%. Comparable store retail sales decreased 1.4% from the prior year quarter.

Cracker Barrel comparable store restaurant traffic, average check, and comparable store restaurant sales and retail sales for the second quarter were as follows:

Second Quarter

Comparable restaurant traffic

0.1%

Average check

3.7%

Comparable restaurant sales

3.8%

Comparable retail sales

-1.4%

Operating Income

Operating income in the second quarter was $76.7 million, or 9.5% of total revenue, which was flat to prior year quarter operating income of $76.7 million, or 9.7% of total revenue. As a percentage of total revenue, increases in labor and related expenses and other operating expenses were partially offset by reductions in cost of goods sold and general and administrative expenses.

Earnings per Diluted Share

Earnings per diluted share were $2.52, compared to prior year second quarter GAAP earnings per diluted share of $3.79 (including a $1.06 per share benefit in Q2 2018 resulting from a one-time non-cash revaluation of the Company's deferred tax liability in conjunction with the Tax Cut and Jobs Act of 2017) and adjusted earnings per diluted share of $2.73 (see non-GAAP reconciliation below).

Fiscal 2019 Outlook

For fiscal 2019, the Company now expects total revenue of approximately $3.05 billion, reflecting the expected opening of eight new Cracker Barrel stores as well as projected increases in comparable store restaurant sales growth in the range of 1% to 2%. The Company now expects comparable store retail sales growth of approximately 1%. The Company continues to project food commodity inflation of approximately 2% for the year. The Company continues to project operating income margin in the range of 9.0% to 9.3% as a percentage of total revenue. The Company now expects depreciation expense of approximately $110 million and net interest expense of approximately $17 million. The Company now projects capital expenditures of approximately $150 million. The Company continues to anticipate an effective tax rate for fiscal 2019 of approximately 17%. The Company continues to project earnings per diluted share for fiscal 2019 of between $8.95 and $9.10. This compares to fiscal 2018 GAAP earnings per diluted share of $10.29 and adjusted earnings per diluted share of $8.87, which reflects the $1.06 impact of the one-time non-cash revaluation of the net deferred tax liability and the $0.36 impact of the 53rd week (for a reconciliation of GAAP to non-GAAP financial measures, please see the table accompanying this release).

The Company reminds investors that its outlook for fiscal 2019 reflects a number of assumptions, many of which are outside the Company's control.

About Cracker Barrel Old Country Store®

Cracker Barrel Old Country Store, Inc. (Nasdaq: CBRL) shares warm welcomes and friendly service while offering guests high-quality homestyle food and unique shopping – all at a fair price. By creating a world filled with hospitality and charm through an experience that combines dining and shopping, guests are cared for like family. Established in 1969 in Lebanon, Tenn., Cracker Barrel and its affiliates operate 659 company-owned Cracker Barrel Old Country Store® locations in 45 states and own the fast-casual Holler and Dash® restaurants.

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED INCOME STATEMENT

(Unaudited)

(In thousands, except share and per share amounts, percentages and ratios)

Second Quarter Ended

Six Months Ended

Percentage

Percentage

2/1/19

1/26/18

Change

2/1/19

1/26/18

Change

Total revenue

$811,707

$787,771

3%

$1,545,250

$1,498,139

3%

Cost of goods sold (exclusive of depreciation and rent)

265,179

260,952

2

487,472

471,701

3

Labor and other related expenses

276,774

263,726

5

534,933

511,794

5

Other store operating expenses

156,819

150,407

4

309,297

294,227

5

Store operating income

112,935

112,686

0

213,548

220,417

(3)

General and administrative expenses

36,224

36,012

1

75,159

72,905

3

Operating income

76,711

76,674

0

138,389

147,512

(6)

Interest expense

4,177

3,680

14

8,526

7,298

17

Pretax income

72,534

72,994

(1)

129,863

140,214

(7)

Provision for income taxes

11,779

(18,145)

165

21,901

2,695

713

Net income

$60,755

$91,139

(33)

$107,962

$137,519

(21)

Earnings per share – Basic:

$2.53

$3.80

(33)

$4.49

$5.73

(22)

Earnings per share – Diluted:

$2.52

$3.79

(34)

$4.48

$5.71

(22)

Weighted average shares:

Basic

24,040,374

24,001,493

24,031,480

24,018,347

Diluted

24,093,725

24,056,533

24,083,723

24,080,860

Ratio Analysis

Total revenue:

Restaurant

77.8%

76.6%

79.1%

78.9%

Retail

22.2

23.4

20.9

21.1

Total revenue

100.0

100.0

100.0

100.0

Cost of goods sold, (exclusive of

depreciation and rent)

32.7

33.1

31.5

31.5

Labor and other related expenses

34.1

33.5

34.7

34.2

Other store operating expenses

19.3

19.1

20.0

19.6

Store operating income

13.9

14.3

13.8

14.7

General and administrative expenses

4.4

4.6

4.8

4.9

Operating income

9.5

9.7

9.0

9.8

Interest expense

0.6

0.4

0.6

0.4

Pretax income

8.9

9.3

8.4

9.4

Provision for income taxes

1.4

(2.3)

1.4

0.2

Net income

7.5%

11.6%

7.0%

9.2%

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited and in thousands, except share amounts)

2/1/19

1/26/18

Assets

Cash and cash equivalents

$169,564

$168,808

Accounts receivable

16,977

21,259

Inventory

151,402

159,583

Prepaid expenses and other current assets

21,200

23,328

Property and equipment, net

1,162,186

1,114,240

Other long-term assets

66,474

69,725

Total assets

$1,587,803

$1,556,943

Liabilities and Shareholders' Equity

Accounts payable

$117,885

$106,502

Other current liabilities

262,245

258,603

Long-term debt

400,000

400,000

Other long-term obligations

127,719

132,639

Deferred income taxes

51,336

43,574

Shareholders' equity, net

628,618

615,625

Total liabilities and shareholders' equity

$1,587,803

$1,556,943

Common shares issued and outstanding

24,041,374

24,003,611

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

(Unaudited and in thousands)

Six Months Ended

2/1/19

1/26/18

Cash flows from operating activities:

Net income

$107,962

$137,519

Depreciation and amortization

51,056

44,344

Loss on disposition of property and equipment

5,760

3,029

Share-based compensation, net of excess tax benefit

4,133

4,321

Decrease (increase) in inventories

4,851

(3,216)

Decrease in accounts payable

(4,447)

(11,893)

Net changes in other assets and liabilities

21,548

(25,599)

Net cash provided by operating activities

190,863

148,505

Cash flows from investing activities:

Purchase of property and equipment, net of insurance recoveries

(69,829)

(63,453)

Proceeds from sale of property and equipment

91

340

Net cash (used in) investing activities

(69,738)

(63,113)

Cash flows from financing activities:

(Taxes withheld) from exercise of share-based compensation awards, net

(2,057)

(3,360)

Purchases and retirement of common stock

0

(14,772)

Deferred Financing Costs

(3,022)

0

Dividends on common stock

(61,138)

(59,453)

Net cash (used in) financing activities

(66,217)

(77,585)

Net increase in cash and cash equivalents

54,908

7,807

Cash and cash equivalents, beginning of period

114,656

161,001

Cash and cash equivalents, end of period

$169,564

$168,808

CRACKER BARREL OLD COUNTRY STORE, INC.

Supplemental Information

(Unaudited)

Second Quarter Ended

Six Months Ended

2/1/19

1/26/18

2/1/19

1/26/18

Units in operation:

Open at beginning of period

663

651

660

649

Opened during period

2

3

5

5

Closed during period

1

0

1

0

Open at end of period

664

654

664

654

Total revenue: (In thousands)

Restaurant

$631,175

$603,198

$1,222,153

$1,181,435

Retail

180,532

184,573

323,097

316,704

Total revenue

$811,707

$787,771

$1,545,250

$1,498,139

Cost of goods sold (exclusive of

depreciation and rent): (In thousands)

Restaurant

$165,861

$157,213

$315,049

$301,063

Retail

99,318

103,739

172,423

170,638

Total cost of goods sold

$265,179

$260,952

$487,472

$471,701

Average unit volume: (In thousands)

Restaurant

$950.4

$923.2

$1,843.9

$1,812.8

Retail

271.8

282.5

487.5

485.9

Total

$1,222.2

$1,205.7

$2,331.4

$2,298.7

Operating weeks:

8,634

8,494

17,233

16,945

Q2 2019 vs. Q2 2018

6 mo. 2019 vs. 6 mo. 2018

Comparable store sales period to period increase (decrease):

Restaurant

3.8%

2.7%

Retail

-1.4%

1.1%

Number of locations in comparable store base:

642

640

CRACKER BARREL OLD COUNTRY STORE, INC.

Reconciliation of GAAP basis operating results to adjusted non-GAAP operating results

(Unaudited)

In the accompanying press release the Company makes reference to its second quarter and full year 2018 adjusted earnings per share which excluded the one-time non-cash revaluation of a net deferred tax liability and, in the case of 2018 full year results, the impact of the 53rd week during the 2018 fiscal year. The Tax Cuts and Jobs Act of 2017, which became effective on January 1, 2018 and prior to the end of our fiscal 2018 second quarter, lowered the federal corporate income tax rate to 21%. During the second quarter of fiscal 2018, the Company recorded a provisional tax benefit for re-measurement of deferred tax liabilities due to this rate change of approximately $25 million. The Company believed that excluding this item from its financial results reflected the cash impact of tax reform for fiscal 2018, and as such provided investors with an enhanced understanding of the Company's financial results. This information is not intended to be considered in isolation or as a substitute for net income or earnings per share information prepared in accordance with GAAP.

Twelve months ended August 3, 2018

As Reported

Adjust

53rd week

As Adjusted

(1)

Total Revenue

$ 3,030,445

$ -

(58,353)

$ 2,972,092

Store operating income

437,348

-

(13,309)

424,039

General and administrative expenses

143,756

-

(2,071)

141,685

Operating income

293,592

-

(11,238)

282,354

Interest Expense

15,169

-

(323)

14,846

Pretax income

278,423

-

(10,915)

267,508

Provision for income taxes

30,803

25,596

(2,383)

54,016

Net income

$ 247,620

$ (25,596)

$ (8,532)

$ 213,492

Earnings per share - Basic

$10.31

(1.06)

(0.36)

$8.89

Earnings per share - Diluted

$10.29

(1.06)

(0.36)

$8.87

(1) One-time Non-Cash Revaluation of Net Deferred Tax Liability

FY 2018

Second Quarter Ended

GAAP Reported Earnings per Diluted Share

$ 3.79

One-time Non-Cash Revaluation of Net Deferred Tax Liability

($1.06)

Adjusted Earnings per Diluted Share

$2.73

SOURCE Cracker Barrel Old Country Store, Inc.



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