Cracker Barrel Results

Cracker Barrel Reports Results for Third Quarter Fiscal 2017

Raises Full-Year Earnings Guidance, Increases Quarterly Dividend and Declares Special Dividend

Cracker Barrel

Cracker Barrel Old Country Store, Inc. (Nasdaq:  CBRL) today reported its financial results for the third quarter of fiscal 2017 ended April 28, 2017.

Third Quarter Fiscal 2017 Highlights

  • Operating income margin as a percent of total revenue increased 60 basis points over the prior year quarter to 10.2%. 
  • Earnings per diluted share were $1.95, compared to GAAP earnings per diluted share of $2.04 in the prior year quarter. Adjusted for the impact of the reduction of provisions for uncertain tax positions, earnings per diluted share increased 7.1% from adjusted EPS of $1.82 in the prior year quarter. (See non-GAAP reconciliation below.)
  • The Company announced that its Board of Directors increased the quarterly dividend to $1.20 per share on the Company's common stock, which represents a 4.3% increase over the Company's previous quarterly dividend of $1.15.
  • The Board of Directors also declared a special dividend of $3.50 per share on the Company's common stock.

Commenting on the third quarter, Cracker Barrel President and Chief Executive Officer Sandra B. Cochran said, "We are pleased to report that third quarter earnings per diluted share exceeded our expectations. Our operating income margin continues to grow as a result of commodity market favorability and our ongoing cost reduction initiatives. Our confidence in the strength of the Cracker Barrel brand is reflected in our raised full-year earnings guidance, our increased quarterly dividend, and our declared special dividend." 

Third Quarter Fiscal 2017 Results 

Revenue

Total revenue for the third quarter of fiscal 2017 of $700.4 million was flat compared to the prior year quarter. Comparable store restaurant sales decreased 0.4%, as a 2.1% decline in comparable store restaurant traffic was partially offset by a 1.7% increase in average check. The average menu price increase for the quarter was approximately 1.6%. Comparable store retail sales decreased 4.7% from the prior year quarter. 

Comparable store restaurant traffic, average check and comparable store restaurant sales and retail sales for the fiscal months of February, March, and April and the third quarter were as follows: 

 

February

March

April

Third Quarter

Comparable restaurant traffic

-3.2%

-2.8%

-0.7%

-2.1%

Average check

1.5%

1.5%

1.9%

1.7%

Comparable restaurant sales

-1.7%

-1.3%

1.2%

-0.4%

Comparable retail sales

-8.4%

-11.4%

3.5%

-4.7%

Beginning in the third quarter, the Company modified its method for calculating traffic to more accurately reflect both dine-in and off premise dining occasions. The Company now measures traffic growth as change in entrées sold (reflected in the above table), which includes entrees in our dine-in, to-go, and catering business; as we believe this measurement approach more accurately reflects underlying business growth.

Within the Supplemental Information section of this earnings release, the Company has provided comparable restaurant traffic, measured as change in entrées sold, for fiscal 2017 by quarter.

Operating Income

Operating income in the third quarter was $71.5 million, or 10.2% of total revenue, an increase over the prior year quarter result of $67.0 million, or 9.6% of total revenue. As a percentage of total revenue, reductions in cost of goods sold and general and administrative expenses were partially offset by increases in labor and related expenses and other store operating expenses. 

Diluted Earnings per Share

Earnings per diluted share were $1.95, compared to GAAP EPS of $2.04 in the prior year quarter. Adjusted for the impact of the reduction of provisions for uncertain tax positions, earnings per diluted share increased 7.1% from adjusted EPS of $1.82 in the prior year quarter. (For a reconciliation of GAAP to non-GAAP financial measures, please see the tables accompanying this release.)

Quarterly Dividend Increase and Special Dividend

The Company announced that its Board of Directors increased the quarterly dividend to $1.20 per share on the Company's common stock, which represents a 4.3% increase over the Company's previous quarterly dividend of $1.15. The quarterly dividend is payable on August 4, 2017 to shareholders of record on July 14, 2017.

The Board of Directors also declared a special dividend of $3.50 per share on the Company's common stock. This is the Company's third special dividend declaration. The special dividend is payable on July 28, 2017 to shareholders of record on July 14, 2017.

Fiscal 2017 Outlook

Based upon year-to-date financial performance and current estimates, the Company raised its full-year earnings guidance and now expects to report earnings per diluted share for the 2017 fiscal year between $8.25 and $8.35. The Company expects total revenue of approximately $2.95 billion, reflecting the expected opening throughout fiscal 2017 of six new Cracker Barrel stores and three new Holler & Dash Biscuit House restaurants. The Company now expects comparable store restaurant sales of between flat and 0.5% and comparable store retail sales of approximately -3.5%, reflecting the Company's more cautious expectations for the fourth quarter. The Company expects food commodity deflation of approximately 4.5% for the year. The Company now projects an operating income margin of approximately 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 fourth quarter of 2017 of between $2.10 and $2.20. 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 644 company-owned Cracker Barrel locations and four company-owned Holler & Dash Biscuit House locations across 44 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)

Third Quarter Ended

Nine Months Ended

Percentage

Percentage

4/28/17

4/29/16

Change

4/28/17

4/29/16

Change

Total revenue

$700,410

$700,136

0%

$2,183,063

$2,166,767

1%

Cost of goods sold (exclusive of 

    depreciation and rent)

205,882

212,382

(3)

673,911

700,287

(4)

Labor and other related expenses

250,819

249,324

1

759,193

745,581

2

Other store operating expenses

136,231

135,011

1

415,136

411,821

1

Store operating income

107,478

103,419

4

334,823

309,078

8

General and administrative 

    expenses

36,000

36,391

(1)

104,905

106,217

(1)

Operating income

71,478

67,028

7

229,918

202,861

13

Interest expense

3,389

3,436

(1)

10,703

10,549

1

Pretax income

68,089

63,592

7

219,215

192,312

14

Provision for income taxes

21,165

14,423

47

71,209

54,036

32

Net income

$46,924

$49,169

(5)

$148,006

$138,276

7

Earnings per share – Basic:

$1.95

$2.05

(5)

$6.16

$5.77

7

Earnings per share – Diluted:

$1.95

$2.04

(4)

$6.14

$5.75

7

Weighted average shares:

    Basic

24,042,573

23,941,188

0

24,028,175

23,945,184

0

    Diluted

24,121,203

24,073,778

0

24,111,753

24,064,624

0

Ratio Analysis

Total revenue:

    Restaurant

82.1%

81.5%

79.7%

79.1%

    Retail

17.9

18.5

20.3

20.9

            Total revenue

100.0

100.0

100.0

100.0

Cost of goods sold (exclusive of 

    depreciation and rent)

29.4

30.3

30.9

32.3

Labor and other related expenses

35.8

35.6

34.8

34.4

Other store operating expenses

19.5

19.3

19.0

19.0

Store operating income

15.3

14.8

15.3

14.3

General and administrative expenses

5.1

5.2

4.8

4.9

Operating income

10.2

9.6

10.5

9.4

Interest expense

0.5

0.5

0.5

0.5

Pretax income

9.7

9.1

10.0

8.9

Provision for income taxes

3.0

2.1

3.2

2.5

Net income

6.7%

7.0%

6.8%

6.4%

          

 

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited and in thousands, except share amounts)

4/28/17

4/29/16

Assets

   Cash and cash equivalents

$183,693

$176,692

   Property held for sale

200

0

   Accounts receivable

18,602

18,667

   Income tax receivable

1,344

10,033

   Inventory

155,532

145,882

   Prepaid expenses

15,902

15,874

   Deferred income taxes

2,867

5,636

   Property and equipment, net

1,093,354

1,060,513

   Other long-term assets

63,534

62,656

Total assets

$1,535,028

$1,495,953

Liabilities and Shareholders' Equity

   Accounts payable

$98,462

$88,011

   Other current liabilities

239,808

228,170

   Long-term debt

400,000

400,000

   Interest rate swap liability

6,523

17,559

   Other long-term obligations

128,230

128,007

   Deferred income taxes

60,045

53,773

   Shareholders' equity, net

601,960

580,433

Total liabilities and shareholders' equity

$1,535,028

$1,495,953

Common shares issued and outstanding

24,042,573

23,941,998

 

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

(Unaudited and in thousands)

Nine Months Ended

4/28/17

4/29/16

Cash flows from operating activities:

             Net income

$148,006

$138,276

             Depreciation and amortization

63,628

57,481

             Loss on disposition of property and equipment

3,760

3,812

             Share-based compensation, net of excess tax benefit

5,144

6,830

             (Increase) decrease in inventories

(3,224)

7,176

             (Decrease) in accounts payable

(34,031)

(45,106)

             Net changes in other assets and liabilities

19,789

(19,111)

                           Net cash provided by operating activities

203,072

149,358

Cash flows from investing activities:

             Purchase of property and equipment, net of insurance recoveries

(80,861)

(69,504)

             Proceeds from sale of property and equipment

413

639

                           Net cash (used in) investing activities

(80,448)

(68,865)

Cash flows from financing activities:

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

(6,031)

(5,281)

              Excess tax benefit from share-based compensation

1,203

2,063

              Purchases and retirement of common stock

0

(14,653)

              Dividends on common stock

(85,069)

(151,385)

                           Net cash (used in) financing activities

(89,897)

(169,256)

Net increase (decrease) in cash and cash equivalents

32,727

(88,763)

Cash and cash equivalents, beginning of period

150,966

265,455

Cash and cash equivalents, end of period

$183,693

$176,692

 

 

CRACKER BARREL OLD COUNTRY STORE, INC.

Supplemental Information

(Unaudited)

 

Third Quarter Ended

Nine Months Ended

4/28/17

4/29/16

4/28/17

4/29/16

Units in operation:

     Open at beginning of period

645

635

641

637

     Opened during period

2

1

6

1

     (Closed) during period

0

0

0

(2)

     Open at end of period

647

636

647

636

Total revenue: (In thousands)

      Restaurant

$575,098

$570,477

$1,739,888

$1,713,674

      Retail

125,312

129,659

443,175

453,093

      Total revenue

$700,410

$700,136

$2,183,063

$2,166,767

Cost of goods sold: (In thousands)

      Restaurant

$142,486

$149,484

$441,338

$469,050

      Retail

63,396

62,898

232,573

231,237

      Total cost of goods sold

$205,882

$212,382

$673,911

$700,287

  Average unit volume: (In thousands)

      Restaurant

$890.8

$898.4

$2,702.0

$2,696.4

      Retail

194.1

204.2

688.3

712.9

      Total

$1,084.9

$1,102.6

$3,390.3

$3,409.3

Operating weeks:

8,393

8,255

25,113

24,786

Q3 2017 vs. Q3 2016

9 mo. 2017 vs. 9 mo. 2016

Comparable store sales period to period increase (decrease):

Restaurant

(0.4%)

0.5%

Retail

(4.7%)

(3.4%)

Number of locations in comparable store base:

635

632

 

The following table reports quarterly comparable store restaurant traffic, average check and comparable store restaurant sales.

First Quarter

Second Quarter

Third Quarter

Comparable restaurant traffic

-1.0%

-1.2%

-2.1%

Average check

2.3%

1.8%

1.7%

Comparable restaurant sales

1.3%

0.6%

-0.4%

 

 

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 a prior year reduction of the provisions for uncertain tax positions and the prior year 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.

 

Third Quarter ended April 28, 2017

Third Quarter ended April 29, 2016

As Reported

Adjust

As Adjusted

As Reported

Adjust

As Adjusted

(1)

Store operating income

$107,478

$-

$107,478

$103,419

$-

$103,419

General and administrative expenses

36,000

-

36,000

36,391

-

36,391

Operating income

71,478

-

71,478

67,028

-

67,028

Interest Expense

3,389

-

3,389

3,436

-

3,436

Pretax income

68,089

-

68,089

63,592

-

63,592

Provision for income taxes

21,165

-

21,165

14,423

5,312

19,735

Net income

$46,924

$-

$46,924

$49,169

($5,312)

$43,857

Earnings per share - Basic

$1.95

$-

$1.95

$2.05

($0.22)

$1.83

Earnings per share - Diluted

$1.95

$-

$1.95

$2.04

($0.22)

$1.82

Nine Months ended April 28, 2017

Nine Months ended April 29, 2016

As Reported

Adjust

As Adjusted

As Reported

Adjust

As Adjusted

(1)(2)

Store operating income

$334,823

$-

$334,823

$309,078

$-

$309,078

General and administrative expenses

104,905

-

104,905

106,217

-

106,217

Operating income

229,918

-

229,918

202,861

-

202,861

Interest Expense

10,703

-

10,703

10,549

-

10,549

Pretax income

219,215

-

219,215

192,312

-

192,312

Provision for income taxes

71,209

-

71,209

54,036

7,604

61,640

Net income

$148,006

$-

$148,006

$138,276

($7,604)

$130,672

Earnings per share - Basic

$6.16

$-

$6.16

$5.77

($0.31)

$5.46

Earnings per share - Diluted

$6.14

$-

$6.14

$5.75

($0.32)

$5.43

 

(1)

Provision for taxes adjusted for the reduction of provisions for uncertain tax positions.                                                                               

(2)

Provision for taxes adjusted to exclude $2.3 million in 2016 for the prior year favorable effect of the retroactive reinstatement of the 

Work Opportunity Tax Credit.                                                                                                                                          



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