Cracker Barrel Reports First Quarter Fiscal 2024 Results
The Company reported first quarter total revenue of $823.8 million. Compared to the prior year first quarter, total revenue decreased 1.9%.
Cracker Barrel Old Country Store, Inc. (Nasdaq: CBRL) today reported its financial results for the first quarter of fiscal 2024 ended October 27, 2023.
First Quarter Fiscal 2024 Highlights
- The Company reported first quarter total revenue of $823.8 million. Compared to the prior year first quarter, total revenue decreased 1.9%.
- Comparable store restaurant sales decreased 0.5%, while comparable store retail sales decreased 8.1%.
- GAAP operating income for the first quarter was $11.4 million, or 1.4% of total revenue, and adjusted1 operating income was $19.0 million, or 2.3% of total revenue.
- GAAP net income was $5.5 million, or 0.7% of total revenue, and Adjusted EBITDA1 was $45.7 million, or 5.5% of total revenue.
- GAAP earnings per diluted share were $0.25, and adjusted1 earnings per diluted share were $0.51.
Commenting on the first quarter results, Cracker Barrel President and Chief Executive Officer Julie Masino said,
"We were pleased that we delivered sequential monthly improvements in our comparable store traffic performance during the first quarter. This improved trend was largely driven by the actions we took to improve the effectiveness of our marketing and our emphasis on the guest experience. We will continue to focus on these initiatives along with operational excellence, and we believe these efforts will resonate with guests and will support improved performance in the remainder of the fiscal year and beyond. Additionally, during the quarter we launched our Cracker Barrel Rewards loyalty program. Guests have embraced the program, and we are pleased with the levels of enrollment to date, which have exceeded expectations. We remain excited about this program and are confident it will be a meaningful differentiator and traffic driver over the long term."
First Quarter Fiscal 2024 Results
Revenue
The Company reported total revenue of $823.8 million for the first quarter of fiscal 2024, representing a decrease of 1.9% compared to the first quarter of fiscal 2023.
Cracker Barrel comparable store restaurant sales decreased 0.5%, including total menu pricing increases of 6.8%. Comparable store retail sales decreased 8.1% from the prior year quarter.
Operating Income
GAAP operating income for the first quarter was $11.4 million, or 1.4% of total revenue, compared to $23.6 million, or 2.8% of total revenue, in the prior year quarter. Adjusted1 operating income for the first quarter was $19.0 million, or 2.3% of total revenue, compared to $30.0 million, or 3.6%, of total revenue in the prior year quarter.
The decrease in the Company's GAAP and adjusted1 operating income as a percentage of total revenue versus the prior year quarter is primarily the result of higher labor and related expenses, higher other operating expenses, and higher general and administrative expenses, partially offset by lower cost of goods sold in the current year quarter.
Net Income, EBITDA, and Earnings per Diluted Share
GAAP net income for the first quarter was $5.5 million, or 0.7% of total revenue. This represented a 68% decrease compared to prior year quarter GAAP net income of $17.1 million, or 2.0% of total revenue. Adjusted EBITDA1 was $45.7 million, or 5.5% of total revenue, a 16.6% decrease compared to the prior year quarter Adjusted EBITDA1 of $54.8 million, or 6.5% of total revenue.
GAAP earnings per diluted share for the first quarter were $0.25, a 68% decrease compared to the prior year quarter GAAP earnings per diluted share of $0.77. Adjusted1 earnings per diluted share were $0.51, a 48% decrease compared to the prior year quarter adjusted1 earnings per diluted share of $0.99.
Quarterly Dividend Declaration
The Company announced that its Board of Directors declared a quarterly dividend of $1.30 per share on the Company's common stock. The quarterly dividend is payable on February 13, 2024 to shareholders of record as of January 19, 2024.
Fiscal 2024 Outlook
The Company provided the following outlook for fiscal 2024:
- Total revenue of $3.4 billion to $3.5 billion
- Two new Cracker Barrel stores and 9 to 11 new Maple Street Biscuit Company units
- Commodity inflation in the low-single digits
- Hourly wage inflation in the mid-single digits
- GAAP operating income of $95 million to $115 million and adjusted1 operating income of $130 million to $150 million, which includes the impact from the 53rd week in the fiscal 2024 year
- Capital expenditures of $120 million to $135 million
The Company reminds investors that its outlook reflects a number of assumptions, many of which are outside the Company's control. In particular, uncertainties created by macroeconomic conditions, such as ongoing inflation, low consumer confidence and high interest rates may adversely affect consumer behavior and cause actual results to differ materially from those expected.
About Cracker Barrel Old Country Store
Cracker Barrel Old Country Store, Inc. (Nasdaq: CBRL) provides a caring and friendly home-away-from-home experience while offering guests high-quality homestyle food to enjoy in-store or to-go and unique shopping — all at a fair price. Established in 1969 in Lebanon, Tenn., Cracker Barrel and its affiliates operate over 660 company-owned Cracker Barrel Old Country Store locations in 45 states and own the fast-casual Maple Street Biscuit Company
| CRACKER BARREL OLD COUNTRY STORE, INC. CONDENSED CONSOLIDATED INCOME STATEMENT (Unaudited) (In thousands, except share and per share amounts, percentages and ratios) | |||
| First Quarter Ended | |||
| 10/27/23 | 10/28/22 | Percentage | |
| Total revenue | $823,839 | $839,519 | (2 %) |
| Cost of goods sold (exclusive of depreciation & rent) | 255,559 | 281,540 | (9) |
| Labor and other related expenses | 304,447 | 291,708 | 4 |
| Other store operating expenses | 203,685 | 196,704 | 4 |
| General and administrative expenses | 48,735 | 45,948 | 6 |
| Operating income | 11,413 | 23,619 | (52) |
| Interest expense | 4,938 | 3,532 | 40 |
| Income before income taxes | 6,475 | 20,087 | (68) |
| Provision for income taxes | 1,019 | 2,958 | (66) |
| Net income | $5,456 | $17,129 | (68) |
| Earnings per share – Basic: | $0.25 | $0.77 | (68) |
| Earnings per share – Diluted: | $0.25 | $0.77 | (68) |
| Weighted average shares: | |||
| Basic | 22,165,852 | 22,193,774 | (0) |
| Diluted | 22,263,690 | 22,292,654 | (0) |
| Ratio Analysis | |||
| Total revenue: | |||
| Restaurant | 80.2 % | 78.9 % | |
| Retail | 19.8 | 21.1 | |
| Total revenue | 100.0 | 100.0 | |
| Cost of goods sold (exclusive of depreciation & rent) | 31.0 | 33.5 | |
| Labor and other related expenses | 37.0 | 34.8 | |
| Other store operating expenses | 24.7 | 23.4 | |
| General and administrative expenses | 5.9 | 5.5 | |
| Operating income | 1.4 | 2.8 | |
| Interest expense | 0.6 | 0.4 | |
| Income before income taxes | 0.8 | 2.4 | |
| Provision for income taxes | 0.1 | 0.4 | |
| Net income | 0.7 % | 2.0 % | |
| CRACKER BARREL OLD COUNTRY STORE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited and in thousands, except share amounts) | ||||
| 10/27/23 | 10/28/22 | |||
| Assets | ||||
| Cash and cash equivalents | $13,914 | $38,705 | ||
| Accounts receivable | 32,218 | 32,943 | ||
| Inventories | 207,269 | 231,010 | ||
| Prepaid expenses and other current assets | 34,288 | 28,583 | ||
| Property and equipment, net | 968,441 | 965,795 | ||
| Operating lease right-of-use assets, net | 891,371 | 918,725 | ||
| Intangible assets | 24,517 | 21,191 | ||
| Other assets | 42,923 | 45,411 | ||
| Goodwill | 4,690 | 4,690 | ||
| Total assets | $2,219,631 | $2,287,053 | ||
| Liabilities and Shareholders' Equity | ||||
| Accounts payable | $143,294 | $135,480 | ||
| Other current liabilities | 318,604 | 334,040 | ||
| Long-term debt | 475,340 | 483,679 | ||
| Long-term operating lease liabilities | 696,871 | 714,155 | ||
| Other long-term obligations | 51,130 | 52,110 | ||
| Deferred income taxes | 74,140 | 80,076 | ||
| Shareholders' equity, net | 460,252 | 487,513 | ||
| Total liabilities and shareholders' equity | $2,219,631 | $2,287,053 | ||
| Common shares issued and outstanding | 22,185,112 | 22,195,467 | ||
| CRACKER BARREL OLD COUNTRY STORE, INC. CONDENSED CONSOLIDATED CASH FLOW STATEMENT (Unaudited and in thousands) | |||
| Three Months Ended | |||
| 10/27/23 | 10/28/22 | ||
| Cash flows from operating activities: | |||
| Net income | $5,456 | $17,129 | |
| Depreciation and amortization | 26,669 | 24,791 | |
| Amortization of debt issuance costs | 436 | 431 | |
| Loss on disposition of property and equipment | 1,632 | 683 | |
| Share-based compensation | 1,622 | 2,422 | |
| Noncash lease expense | 15,180 | 15,013 | |
| Amortization of asset recognized from gain on sale and leaseback transaction | 3,184 | 3,184 | |
| Increase in inventories | (17,905) | (17,761) | |
| Decrease in accounts payable | (22,190) | (34,391) | |
| Net changes in other assets and liabilities | (29,881) | (12,101) | |
| Net cash used in operating activities | (15,797) | (600) | |
| Cash flows from investing activities: | |||
| Purchase of property and equipment, net of insurance recoveries | (24,637) | (21,626) | |
| Proceeds from sale of property and equipment | 39 | 166 | |
| Net cash used in investing activities | (24,598) | (21,460) | |
| Cash flows from financing activities: | |||
| Net proceeds under long-term debt | 60,000 | 60,000 | |
| Taxes withheld from issuance of share-based compensation awards | (1,501) | (2,380) | |
| Purchases and retirement of common stock | (12,448) | ||
| Dividends on common stock | (29,337) | (29,512) | |
| Net cash provided by financing activities | 29,162 | 15,660 | |
| Net decrease in cash and cash equivalents | (11,233) | (6,400) | |
| Cash and cash equivalents, beginning of period | 25,147 | 45,105 | |
| Cash and cash equivalents, end of period | $13,914 | $38,705 | |
| First Quarter Ended | |||
| 10/27/23 | 10/28/22 | ||
| Net Change in Company-Owned Units During Quarter: | |||
| Cracker Barrel | 1 | ||
| Maple Street Biscuit Company | 1 | 3 | |
| Company-Owned Units in Operation at End of Quarter: | |||
| Cracker Barrel | 661 | 664 | |
| Maple Street Biscuit Company | 60 | 54 | |
| First Quarter Ended | |||
| 10/27/23 | 10/28/22 | ||
| Total revenue*: (In thousands) | |||
| Restaurant | $644,889 | $647,245 | |
| Retail | 163,034 | 177,141 | |
| Total revenue | $807,923 | $824,386 | |
| Cost of goods sold* (exclusive of depreciation | |||
| Restaurant | $169,572 | $188,505 | |
| Retail | 82,084 | 88,926 | |
| Total cost of goods sold | $251,656 | $277,431 | |
| Average unit volume*: (In thousands) | |||
| Restaurant | $975.6 | $974.9 | |
| Retail | 246.7 | 266.8 | |
| Total | $1,222.3 | $1,241.7 | |
| Operating weeks*: | 8,593 | 8,631 | |
| Note*: This information is for Cracker Barrel stores only and excludes Maple Street Biscuit Company |
CRACKER BARREL OLD COUNTRY STORE, INC.
Reconciliation of GAAP-Basis Operating Results to Non-GAAP Operating Results
(Unaudited and in thousands, except per share amounts)
Adjusted Operating Income and Earnings Per Share
In the accompanying press release, the Company makes reference to its first quarter fiscal 2023 and fiscal 2024 adjusted operating income and earnings per share. In regard to fiscal 2023, this reconciliation excludes the non-cash amortization of the asset recognized from the gains on the sale and leaseback transactions and expenses related to the proxy contest and settlement in connection with the Company's 2022 annual meeting of shareholders and the related tax impacts. In regard to fiscal 2024, this reconciliation excludes the non-cash amortization of the asset recognized from the gains on the sale and leaseback transactions, expenses related to the Company's CEO transition, expenses associated with a strategic transformation initiative, and a corporate restructuring charge and the related tax impacts. The Company believes excluding these items from its financial results provides investors with an enhanced understanding of the Company's financial results and enhances comparability across periods. This information is not intended to be considered in isolation or as a substitute for operating income or earnings per share information prepared in accordance with GAAP.
| First Quarter Ended October 27, 2023 | |||
| As Reported | Adjustment | As Adjusted | |
| (1) | |||
| Total Revenue | $823,839 | $0 | $823,839 |
| Store operating expense | 763,691 | (3,184) | 760,507 |
| General and administrative expense | 48,735 | (4,419) | 44,316 |
| Operating income | 11,413 | 7,603 | 19,016 |
| Interest expense | 4,938 | 4,938 | |
| Income before income taxes | 6,475 | 7,603 | 14,078 |
| Provision for income taxes | 1,019 | 1,787 | 2,806 |
| Net income | $5,456 | $5,816 | $11,272 |
| Earnings per share – basic | $0.25 | $0.26 | $0.51 |
| Earnings per share – diluted | $0.25 | $0.26 | $0.51 |
| (1) Adjusted for the non-cash amortization of the asset recognized from the gains on the sale and leaseback transactions, expenses related to the Company's CEO transition, expenses associated with a strategic transformation initiative, and a corporate restructuring charge and the related tax impacts. |
| First Quarter Ended October 28, 2022 | |||
| As Reported | Adjustment | As Adjusted | |
| (1) | |||
| Total Revenue | $839,519 | $0 | $839,519 |
| Store operating expense | 769,952 | (3,184) | 766,768 |
| General and administrative expense | 45,948 | (3,198) | 42,750 |
| Operating income | 23,619 | 6,382 | 30,001 |
| Interest expense | 3,532 | 3,532 | |
| Income before income taxes | 20,087 | 6,382 | 26,469 |
| Provision for income taxes | 2,958 | 1,500 | 4,458 |
| Net income | $17,129 | $4,882 | $22,011 |
| Earnings per share – basic | $0.77 | $0.22 | $0.99 |
| Earnings per share – diluted | $0.77 | $0.22 | $0.99 |
| (1) Adjusted for the non-cash amortization of the asset recognized from the gains on the sale and leaseback transactions and expenses related to the proxy contest and settlement in connection with the Company's 2022 annual meeting of shareholders and the related tax impacts. |
CRACKER BARREL OLD COUNTRY STORE, INC.
Reconciliation of GAAP-Basis Operating Results to Non-GAAP Operating Results
(Unaudited and in thousands)
EBITDA
In the accompanying press release, the Company makes reference to its first quarter fiscal 2023 and fiscal 2024 EBITDA. The Company defines EBITDA as net income excluding depreciation and amortization, non-cash amortization of the asset recognized from the gains on sale and leaseback transactions, interest expense and tax expense. In regard to fiscal 2023, the Company further adjusts EBITDA to exclude expenses related to the proxy contest and settlement in connection with the Company's 2022 annual meeting of shareholders and the related tax impacts. In regard to fiscal 2024, the Company further adjusts EBITDA to exclude expenses related to the Company's CEO transition, expenses associated with a strategic transformation initiative, and a corporate restructuring charge and the related tax impacts. The Company believes that presentation of EBITDA and Adjusted EBITDA provides investors with an enhanced understanding of the Company's operating performance and debt leverage metrics and enhances comparability with the Company's historical results, and that the presentation of this non-GAAP financial measure, when combined with the primary presentation of net income, is beneficial to an investor's complete understanding of the Company's operating performance. This information is not intended to be considered in isolation or as a substitute for net income prepared in accordance with GAAP.
| First Quarter Ended | |||||
| Net Income | $5,456 | ||||
| (+) Depreciation & amortization | 26,669 | ||||
| (+) Amortization of asset recognized from gain on sale and leaseback transactions | 3,184 | ||||
| (+) Interest expense | 4,938 | ||||
| (+) Tax expense | 1,019 | ||||
| EBITDA | $41,266 | ||||
| Adjustments | |||||
| (+) CEO transition expenses | 1,636 | ||||
| (+) Strategic transformation initiative expenses | 1,141 | ||||
| (+) Corporate restructuring charge | 1,642 | ||||
| Adjusted EBITDA | $45,685 | ||||
| First Quarter Ended | |||||
| Net Income | $17,129 | ||||
| (+) Depreciation & amortization | 24,791 | ||||
| (+) Amortization of asset recognized from gain on sale and leaseback transactions | 3,184 | ||||
| (+) Interest expense | 3,532 | ||||
| (+) Tax expense | 2,958 | ||||
| EBITDA | $51,594 | ||||
| Adjustments | |||||
| (+) Proxy contest and settlement expenses | 3,198 | ||||
| Adjusted EBITDA | $54,792 | ||||
Reconciliation of GAAP Operating Income Outlook to Non-GAAP Operating Income Outlook
In the accompanying press release, the Company provides its current outlook for adjusted operating income, a non-GAAP financial measure, for fiscal 2024. The Company's adjusted operating income outlook excludes the non-cash amortization of the asset recognized from the gains on the sale and leaseback transactions, expenses related to the Company's CEO transition, expenses associated with a strategic transformation initiative, and a corporate restructuring charge and the related tax impacts. The Company believes presenting its current outlook for adjusted operating income that excludes these items provides investors with an enhanced understanding of the Company's expected performance and enhances comparability with the Company's historical results. This information is not intended to be considered in isolation or as a substitute for operating income outlook reported in accordance with GAAP.
| $ Million | ||||||
| Reported GAAP Operating Income Outlook | $95 | to | $115 | |||
| Non-cash amortization of the asset recognized from the gain on sale and leaseback transactions | $13 | $13 | ||||
| Expenses related to CEO transition | $10 | $10 | ||||
| Expenses related to strategic transformation initiative | $10 | $10 | ||||
| Corporate restructuring charge | $2 | $2 | ||||
| Adjusted Operating Income Outlook | $130 | to | $150 | |||
| Investor Contact: | Adam Hanan |
| (615) 443-9887 | |
| Media Contact: | Heidi Pearce |
| (615) 235-4135 |
SOURCE Cracker Barrel Old Country Store, Inc.
