Cracker Barrel Results

Cracker Barrel Reports Results for Second Quarter Fiscal 2017 and Reaffirms Earnings Guidance for Fiscal 2017

Eleventh Consecutive Quarter of Positive Comparable Restaurant Sales Growth - Second Quarter Operating Income Margin increased 150 basis points

Cracker Barrel

Cracker Barrel Old Country Store, Inc. (Nasdaq:  CBRL) today reported its financial results for the second quarter of fiscal 2017 ended January 27, 2017.

Second Quarter Fiscal 2017 Highlights

  • Compared to the prior year second quarter, comparable store restaurant sales increased 0.6%, marking the Company's eleventh consecutive quarter of positive comparable store restaurant sales.
  • Operating income as a percent of total revenue increased 150 basis points, over the prior year quarter, to 10.7%. 
  • Earnings per diluted share were $2.19, compared to GAAP earnings per diluted share of $2.01 in the prior year quarter, an increase of 9.0%. Adjusted for the impact of the prior year retroactive reinstatement of the Work Opportunity Tax Credit ("WOTC"), earnings per diluted share increased 15% from adjusted EPS of $1.91 in the prior year quarter. (See non-GAAP reconciliation below.)

Commenting on the second quarter, Cracker Barrel President and Chief Executive Officer Sandra B. Cochran said, "I am pleased to report another significant increase in earnings per diluted share. We delivered second quarter operating margin growth largely driven by continued commodity favorability and the success of our cost reduction initiatives. As we look to the second half of this fiscal year, our teams remain focused on executing at the store level, providing the great food, friendly service, welcoming atmosphere and retail shopping experience that differentiates our brand from our competitors." 

Second Quarter Fiscal 2017 Results 

Revenue

The Company reported total revenue of $772.7 million for the second quarter of fiscal 2017, representing an increase of 1.1% over the second quarter of the prior year. Comparable store restaurant sales increased 0.6%, including a 2.7% increase in average check partially offset by a 2.1% decrease in comparable store restaurant traffic. The average menu price increase for the quarter was approximately 2.1%. Comparable store retail sales decreased 2.2% from the prior year quarter. 

Comparable store restaurant traffic, average check and comparable store restaurant sales and retail sales for the fiscal months of November, December and January and the second quarter were as follows:

November

December(1,2)

January(2)

Second Quarter

Comparable restaurant traffic

0.8%

-1.0%

-5.7%

-2.1%

Average check

2.6%

3.0%

2.6%

2.7%

Comparable restaurant sales

3.4%

2.0%

-3.1%

0.6%

Comparable retail sales

-1.7%

-2.6%

-1.9%

-2.2%

(1) The Company estimates inclement weather in December reduced traffic and sales by approximately 1.6%. 

(2) The Company estimates the Christmas fiscal calendar timing shift, from fiscal December in the prior year to fiscal January in the current year, increased December traffic and sales by approximately 5.7% while reducing January traffic and sales by approximately 5.0%.

Operating Income

Operating income in the second quarter was $82.7 million, or 10.7% of total revenue, an increase over the prior year quarter result of $70.5 million, or 9.2% of total revenue. As a percentage of total revenue, reductions in cost of goods sold, other store operating expenses, and general and administrative expenses were partially offset by an increase in labor and related expenses. 

Diluted Earnings per Share

Earnings per diluted share were $2.19, compared to GAAP EPS of $2.01 in the prior year quarter, an increase of 9.0%. Adjusted for the impact of the prior year retroactive reinstatement of the Work Opportunity Tax Credit, earnings per diluted share increased 15% from adjusted EPS of $1.91 in the prior year quarter. (For a reconciliation of GAAP to non-GAAP financial measures, please see the tables accompanying this release.)

Fiscal 2017 Outlook

The Company reaffirmed its previous earnings guidance and expects to report earnings per diluted share for the 2017 fiscal year between $8.10 and $8.25. The Company now expects total revenue of approximately $2.95 billion, reflecting the expected opening of eight new Cracker Barrel stores and four new Holler & Dash Biscuit House restaurants. The Company now expects comparable store restaurant sales of between 0.5% and 1.0% and comparable store retail sales of approximately -2.0%, reflecting the Company's more cautious expectations for the second half of the fiscal year. The Company expects food commodity deflation of approximately 4.0% for the year. The Company projects an operating income margin in the range of 10.0% and 10.5% of total revenue for fiscal 2017. The Company expects depreciation expense between $85 million and $87 million; net interest expense of approximately $15 million; and capital expenditures of approximately $125 million. The Company anticipates an effective tax rate for fiscal 2017 of approximately 32%. 

The Company expects to report earnings per diluted share for the third quarter of 2017 of between $1.75 and $1.85. The Company reminds investors that its outlook for fiscal 2017 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 provides a friendly home-away-from-home in its old country stores and restaurants. Guests are cared for like family while relaxing and enjoying real home-style food and shopping that's surprisingly unique, genuinely fun and reminiscent of America's country heritage…all at a fair price. The restaurants serve up delicious, home-style country food such as meatloaf and homemade chicken n' dumplins as well as our signature biscuits using an old family recipe. The authentic old country retail store is fun to shop and offers unique gifts and self-indulgences. 

Cracker Barrel Old Country Store, Inc. (Nasdaq:  CBRL) was established in 1969 in Lebanon, Tenn. and operates 641 company-owned Cracker Barrel locations and four company-owned Holler & Dash Biscuit House locations across 43 states. Every Cracker Barrel store is open seven days a week with hours Sunday through Thursday, 6 a.m. – 10 p.m., and Friday and Saturday, 6 a.m. - 11 p.m.

 

 

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

1/27/17

1/29/16

Change

1/27/17

1/29/16

Change

Total revenue

$772,682

$764,002

1%

$1,482,653

$1,466,631

1%

Cost of goods sold (exclusive of depreciation and rent)

254,920

264,932

(4)

468,029

487,905

(4)

Labor and other related expenses

259,270

251,935

3

508,374

496,257

2

Other store operating expenses

140,979

141,103

(0)

278,905

276,810

1

Store operating income

117,513

106,032

11

227,345

205,659

11

General and administrative expenses

34,817

35,507

(2)

68,905

69,826

(1)

Operating income

82,696

70,525

17

158,440

135,833

17

Interest expense

3,638

3,569

2

7,314

7,113

3

Pretax income

79,058

66,956

18

151,126

128,720

17

Provision for income taxes

26,331

18,714

41

50,044

39,613

26

Net income

$52,727

$48,242

9

$101,082

$89,107

13

Earnings per share – Basic:

$2.19

$2.02

8

$4.21

$3.72

13

Earnings per share – Diluted:

$2.19

$2.01

9

$4.19

$3.70

13

Weighted average shares:

    Basic

24,040,243

23,937,812

0

24,020,976

23,947,183

0

    Diluted

24,109,000

24,047,042

0

24,106,748

24,060,047

0

Ratio Analysis

Total revenue:

    Restaurant

76.5%

76.0%

78.6%

77.9%

    Retail

23.5

24.0

21.4

22.1

            Total revenue

100.0

100.0

100.0

100.0

Cost of goods sold (exclusive of depreciation and rent)

33.0

34.7

31.6

33.3

Labor and other related expenses

33.6

33.0

34.3

33.8

Other store operating expenses

18.2

18.4

18.8

18.9

Store operating income

15.2

13.9

15.3

14.0

General and administrative expenses

4.5

4.7

4.6

4.7

Operating income

10.7

9.2

10.7

9.3

Interest expense

0.5

0.5

0.5

0.5

Pretax income

10.2

8.7

10.2

8.8

Provision for income taxes

3.4

2.4

3.4

2.7

Net income

6.8%

6.3%

6.8%

6.1%

 

 

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited and in thousands, except share amounts)

 

1/27/17

1/29/16

Assets

   Cash and cash equivalents

$185,698

$171,643

   Accounts receivable

19,654

15,900

   Income tax receivable

0

2,447

   Inventory

155,879

150,959

   Prepaid expenses

18,727

18,289

   Deferred income taxes

2,252

5,795

   Property and equipment, net

1,088,612

1,048,715

   Other long-term assets

64,069

63,051

Total assets

$1,534,891

$1,476,799

Liabilities and Shareholders' Equity

   Accounts payable

$100,388

$91,474

   Other current liabilities

259,247

234,854

   Long-term debt

400,000

400,000

   Interest rate swap liability

6,538

15,649

   Other long-term obligations

126,607

134,552

   Deferred income taxes

60,394

45,401

   Shareholders' equity, net

581,717

554,869

Total liabilities and shareholders' equity

$1,534,891

$1,476,799

Common shares issued and outstanding

24,042,573

23,939,248

 

 

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

(Unaudited and in thousands)

Six Months Ended

1/27/17

1/29/16

Cash flows from operating activities:

             Net income

$101,082

$89,107

             Depreciation and amortization

41,830

37,783

             Loss on disposition of property and equipment

2,472

2,667

             Share-based compensation, net of excess tax benefit

2,808

3,007

             (Increase) decrease in inventories

(3,571)

2,099

             (Decrease) in accounts payable

(32,105)

(41,643)

             Net changes in other assets and liabilities

36,986

(7,407)

                           Net cash provided by operating activities

149,502

85,613

Cash flows from investing activities:

             Purchase of property and equipment, net of insurance recoveries

(52,934)

(36,797)

             Proceeds from sale of property and equipment

412

472

                           Net cash (used in) investing activities

(52,522)

(36,325)

Cash flows from financing activities:

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

(6,031)

(5,343)

              Excess tax benefit from share-based compensation

1,203

1,948

              Purchases and retirement of common stock

0

(14,653)

              Dividends on common stock

(57,420)

(125,052)

                           Net cash (used in) financing activities

(62,248)

(143,100)

Net increase (decrease) in cash and cash equivalents

34,732

(93,812)

Cash and cash equivalents, beginning of period

150,966

265,455

Cash and cash equivalents, end of period

$185,698

$171,643

 

 

CRACKER BARREL OLD COUNTRY STORE, INC.

Supplemental Information

(Unaudited)

 

 

 

Second Quarter Ended

Six Months Ended

1/27/17

1/29/16

1/27/17

1/29/16

Units in operation:

     Open at beginning of period

643

635

641

637

     Opened during period

2

0

4

0

     (Closed) during period

0

0

0

(2)

     Open at end of period

645

635

645

635

Total revenue: (In thousands)

      Restaurant

$591,113

$580,918

$1,164,790

$1,143,197

      Retail

181,569

183,084

317,863

323,434

      Total revenue

$772,682

$764,002

$1,482,653

$1,466,631

Cost of goods sold: (In thousands)

      Restaurant

$153,316

$164,776

$298,852

$319,566

      Retail

101,604

100,156

169,177

168,339

      Total cost of goods sold

$254,920

$264,932

$468,029

$487,905

  Average unit volume: (In thousands)

      Restaurant

$917.6

$914.9

$1,811.3

$1,798.0

      Retail

281.8

288.3

494.3

508.7

      Total

$1,199.4

$1,203.2

$2,305.6

$2,306.7

Operating weeks:

8,375

8,255

16,720

16,531

Q2 2017 vs. Q2 2016

6 mo. 2017 vs. 6 mo. 2016

Comparable store sales period to period increase (decrease):

Restaurant

0.6%

0.9%

Retail

(2.2%)

(3.0%)

Number of locations in comparable store base:

632

632

 

CRACKER BARREL OLD COUNTRY STORE, INC.

Reconciliation of GAAP basis operating

results to adjusted non-GAAP operating results

(Unaudited and in thousands)

In the accompanying press release the Company makes reference to As Adjusted provision for taxes and net income per share before the impact of the retroactive restatement of the Work Opportunity Tax Credit. The Company believes that excluding this item and its related tax effects from its financial results reflects operating results that are more indicative of the Company's ongoing operating performance while improving comparability to prior periods, and, as such may provide investors with an enhanced understanding of the Company's past financial performance and prospects for the future. 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.

 

Second Quarter ended January 27, 2017

Second Quarter ended January 29, 2016

As Reported

Adjust

As Adjusted

As Reported

Adjust

As Adjusted

(1)

Store operating income

$117,513

$-

$117,513

$106,032

$-

$106,032

General and administrative expenses

34,817

-

34,817

35,507

-

35,507

Operating income

82,696

-

82,696

70,525

-

70,525

Interest Expense

3,638

-

3,638

3,569

-

3,569

Pretax income

79,058

-

79,058

66,956

-

66,956

Provision for income taxes

26,331

-

26,331

18,714

2,292

21,006

Net income

$52,727

$-

$52,727

$48,242

($2,292)

$45,950

Earnings per share - Basic

$2.19

$-

$2.19

$2.02

($0.10)

$1.92

Earnings per share - Diluted

$2.19

$-

$2.19

$2.01

($0.10)

$1.91

Six Months ended January 27, 2017

Six Months ended January 29, 2016

As Reported

Adjust

As Adjusted

As Reported

Adjust

As Adjusted

(1)

Store operating income

$227,345

$-

$227,345

$205,659

$-

$205,659

General and administrative expenses

68,905

-

68,905

69,826

-

69,826

Operating income

158,440

-

158,440

135,833

-

135,833

Interest Expense

7,314

-

7,314

7,113

-

7,113

Pretax income

151,126

-

151,126

128,720

-

128,720

Provision for income taxes

50,044

-

50,044

39,613

2,292

41,905

Net income

$101,082

$-

$101,082

$89,107

($2,292)

$86,815

Earnings per share - Basic

$4.21

$-

$4.21

$3.72

($0.09)

$3.63

Earnings per share - Diluted

$4.19

$-

$4.19

$3.70

($0.09)

$3.61

 

(1) Provision for income taxes adjusted to exclude the prior year favorable effect of the retroactive reinstatement of the Work Opportunity Tax Credit.

 

Investor Contact:         

Jessica Hazel

(615) 235-4367

Media Contact:             

Janella Escobar

(615) 235-4618

 

SOURCE Cracker Barrel Old Country Store, Inc.



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