Cracker Barrel Results

Cracker Barrel Reports Results For First Quarter Fiscal 2018

Company reports first quarter positive comparable store restaurant sales and updates fiscal year guidance - Board declares quarterly dividend of $1.20 per share

Cracker Barrel

Cracker Barrel Old Country Store, Inc.  (Nasdaq:  CBRL) today reported its financial results for the first quarter of fiscal 2018 ended October 27, 2017.

First Quarter Fiscal 2018 Highlights

  • Earnings per diluted share were $1.92 compared to diluted EPS of $2.01 in the prior year quarter. The Company estimates that hurricanes Harvey and Irma reduced first quarter diluted EPS by approximately $0.07 and will reduce second quarter diluted EPS by approximately $0.03.
  • Operating income margin was 10.0% of revenue, compared with prior year operating income margin of 10.7% of revenue.
  • Comparable restaurant sales of 0.2% and traffic of -1.8% outperformed the Casual Dining Industry, despite the negative impacts from hurricanes Harvey and Irma. (See comparable sales and traffic table for hurricane impact estimates.)
  • The Company's Board of Directors declared a quarterly dividend of $1.20 per share on the Company's common stock, payable on February 5, 2018 to shareholders of record on January 12, 2018.

Commenting on the first quarter and fiscal year outlook, Cracker Barrel President and Chief Executive Officer Sandra B. Cochran said, "We delivered positive comparable store restaurant sales in the first quarter, outperformed our casual dining peers, and exceeded our earnings expectations, despite the challenges presented by the impact of hurricanes Harvey and Irma on many of the communities in which we, our customers and our employees live and work. In addition, our field and leadership teams made significant progress on the introduction of several key business initiatives, including the system-wide rollout of our off-premise platform. While being more cautious in our industry outlook and in our expectations for continued wage and commodity pressure, we remain well-positioned to deliver top-line performance and earnings growth as a result of our fiscal 2018 initiatives." 

First Quarter Fiscal 2018 Results 

Revenue 

The Company reported total revenue of $710.4 million for the first quarter of fiscal 2018, representing an increase of 0.1% over the first quarter of the prior year. Comparable store restaurant sales increased 0.2%, including a 2.0% increase in average check partially offset by a 1.8% decrease in store traffic. The average menu price increase for the quarter was approximately 2.2%. Comparable store retail sales decreased 3.6% from the prior year quarter. The Company opened two new Holler & Dash Biscuit House locations during the quarter, bringing the store count to 651 combined Cracker Barrel Old Country Store and Holler & Dash Biscuit House locations at quarter-end. 

Comparable store restaurant traffic, average check and comparable store restaurant sales and retail sales for the fiscal months of August, September and October and the first quarter were as follows: 

 

 

August

 

September

 

October

First Quarter(1)

Comparable restaurant traffic

-1.3%

-2.4%

-1.7%

-1.8%

Average check

1.9%

2.1%

1.9%

2.0%

Comparable restaurant sales

0.6%

-0.3%

0.2%

0.2%

Comparable retail sales

-1.4%

-3.1%

-5.6%

-3.6%

 

(1)

The Company estimates that effects of hurricanes Harvey and Irma reduced fiscal first quarter

traffic and restaurant sales by approximately 0.3% and retail sales by approximately 0.6%.

Operating Income

Operating income in the first quarter was $70.8 million, or 10.0% of total revenue. Operating income in the prior year quarter was 10.7% of total revenue. As a percentage of total revenue, increases in other store operating expenses and general and administrative expenses were partially offset by decreases in cost of goods sold and labor and related expenses. 

Diluted Earnings per Share

Earnings per diluted share were $1.92, compared to diluted EPS of $2.01 in the prior year first quarter. The Company estimates that hurricanes Harvey and Irma reduced first quarter diluted EPS by approximately $0.07.

Fiscal 2018 Outlook

For fiscal 2018, the Company now expects to report earnings per diluted share of between $8.75 and $8.90 reflecting the approximately $0.10 negative impact from hurricanes Harvey and Irma. The Company expects total revenue of approximately $3.1 billion, reflecting the expected opening of eight or nine new Cracker Barrel stores and three new Holler & Dash stores, as well as projected increases in comparable store restaurant sales in the range of 2.0% to 3.0% and comparable store retail sales to be approximately flat. The Company now projects food commodity inflation in the range of 2.0% to 2.5% for the year. The Company now projects operating income margin to be approximately 10.5% of total revenue. The Company expects depreciation expense between $95 million and $100 million; net interest expense in the range of $15 million to $16 million; and capital expenditures of approximately $150 million to $160 million. The Company anticipates an effective tax rate for fiscal 2018 of between 31% and 32%. 

The Company's 2018 fiscal year is a 53-week year. The Company estimates the impact of the 53rd week, which is included in its guidance, to contribute earnings per diluted share of approximately $0.30. 

The Company expects to report earnings per diluted share for the second quarter of 2018 of between $2.15 and $2.25. The Company reminds investors that its outlook for fiscal 2018 reflects a number of assumptions, many of which are outside the Company's control. 

About Cracker Barrel Old Country Store, Inc.

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 647 company-owned Cracker Barrel Old Country Store®locations in 44 states and own the fast-casual Holler and Dash® restaurants. 

 

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED INCOME STATEMENTS

(Unaudited)

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

  First Quarter Ended   

 

Percentage

10/27/17

10/28/16

Change

Total revenue

$710,368

$709,971

0%

Cost of goods sold (exclusive of 

     depreciation and rent)

210,749

213,109

(1)

Labor and other related expenses

248,068

249,104

(0)

Other store operating expenses

143,820

137,926

4

Store operating income

107,731

109,832

(2)

General and administrative expenses

36,893

34,088

8

Operating income

70,838

75,744

(6)

Interest expense

3,618

3,676

(2)

Pretax income

67,220

72,068

(7)

Provision for income taxes

20,840

23,713

(12)

Net income

$46,380

$48,355

(4)

Earnings per share – Basic:

$1.93

$2.01

(4)

Earnings per share – Diluted:

$1.92

$2.01

(4)

Weighted average shares:

    Basic

24,035,202

24,001,708

0

    Diluted

24,105,187

24,099,013

0

Ratio Analysis

Total revenue:

    Restaurant

81.4%

80.8%

    Retail

18.6

19.2

            Total revenue

100.0

100.0

Cost of goods sold (exclusive of 

     depreciation and rent)

29.7

30.0

Labor and other related expenses

34.9

35.1

Other store operating expenses

20.2

19.4

Store operating income

15.2

15.5

General and administrative 

expenses

5.2

4.8

Operating income

10.0

10.7

Interest expense

0.5

0.5

Pretax income

9.5

10.2

Provision for income taxes

3.0

3.4

Net income

6.5%

6.8%

 

 

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited and in thousands, except share amounts)

10/27/17

10/28/16

Assets

   Cash and cash equivalents

$120,193

$125,108

   Accounts receivable

18,078

18,862

   Inventory

191,481

187,221

   Prepaid expenses

19,479

18,006

   Deferred income taxes

0

2,275

   Property and equipment, net

1,105,781

1,084,721

   Other long-term assets

66,920

62,886

Total assets

$1,521,932

$1,499,079

Liabilities and Shareholders' Equity

   Accounts payable

$130,127

$119,014

   Other current liabilities

245,659

234,494

   Long-term debt

400,000

400,000

   Interest rate swap liability

4,077

16,082

   Other long-term obligations

131,250

125,878

   Deferred income taxes

63,117

56,506

   Shareholders' equity, net

547,702

547,105

Total liabilities and shareholders' equity

$1,521,932

$1,499,079

Common shares issued and outstanding

23,994,793

24,032,367

 

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

(Unaudited and in thousands)

Three Months Ended

10/27/17

10/28/16

Cash flows from operating activities:

             Net income

$46,380

$48,355

             Depreciation and amortization

21,631

20,534

             Loss on disposition of property and equipment

1,204

1,107

             Share-based compensation, net of excess tax benefit

2,035

363

             (Increase) in inventories

(35,114)

(34,913)

             Increase (Decrease) in accounts payable

11,732

(13,479)

             Net changes in other assets and liabilities

(9,591)

12,971

                           Net cash provided by operating activities

38,277

34,938

Cash flows from investing activities:

             Purchase of property and equipment, net of insurance recoveries

(30,527)

(26,336)

             Proceeds from sale of property and equipment

110

265

                           Net cash (used in) investing activities

(30,417)

(26,071)

Cash flows from financing activities:

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

(3,383)

(6,138)

              Excess tax benefit from share-based compensation

0

1,062

              Purchases and retirement of common stock

(14,772)

0

              Dividends on common stock

(30,513)

(29,649)

                           Net cash (used in) financing activities

(48,668)

(34,725)

Net (decrease) in cash and cash equivalents

(40,808)

(25,858)

Cash and cash equivalents, beginning of period

161,001

150,966

Cash and cash equivalents, end of period

$120,193

$125,108

 

 

CRACKER BARREL OLD COUNTRY STORE, INC.

Supplemental Information

(Unaudited)

First Quarter Ended

10/27/17

10/28/16

Units in operation:

     Open at beginning of period

649

641

     Opened during period

2

2

     Open at end of period

651

643

Total revenue: (In thousands)

      Restaurant

$578,237

$573,677

      Retail

132,131

136,294

      Total revenue

$710,368

$709,971

Cost of goods sold (exclusive of 

   depreciation and rent): (In thousands)

      Restaurant

$143,850

$145,536

      Retail

66,899

67,573

      Total cost of goods sold

$210,749

$213,109

  Average unit volume: (In thousands)

      Restaurant

$889.5

$893.7

      Retail

203.2

212.3

      Total

$1,092.7

$1,106.0

Operating weeks:

8,451

8,345

Q1 2018 vs. Q1 2017

Comparable store sales period to period increase (decrease):

Restaurant

0.2%

Retail

(3.6%)

Number of locations in comparable store base:

635



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