Cracker Barrel Old Country Store, Inc.
Jun 1, 2016

Cracker Barrel Reports Results For Third Quarter Fiscal 2016, Raises Full-Year Earnings Guidance, Increases Quarterly Dividend And Declares Special Dividend

Positive Third Quarter Comparable Store Restaurant Sales and Retail Sales
Board Increases Quarterly Dividend to $1.15 per share and Declares Special Dividend of $3.25 per share

LEBANON, Tenn., June 1, 2016 /PRNewswire/ -- Cracker Barrel Old Country Store, Inc. ("Cracker Barrel" or the "Company") (Nasdaq: CBRL) today reported financial results for the third quarter of fiscal 2016 ended April 29, 2016.

Third Quarter Fiscal 2016 Highlights

  • Compared to the prior year third quarter, comparable store restaurant sales increased 2.3% and comparable store retail sales increased 2.2%.
  • Operating income was 9.6% of total revenue, compared to GAAP operating income of 8.1% in the prior year quarter, or 8.2% in the prior year quarter when adjusted to exclude the impact of a prior year litigation accrual. (See non-GAAP reconciliation below.)
  • On a GAAP basis, earnings per diluted share were $2.04. Excluding the impact of a reduction of the provisions for uncertain tax positions, adjusted earnings per diluted share were $1.82, a 22% increase over adjusted earnings per diluted share of $1.49 in the prior year.

Commenting on the third quarter results, Cracker Barrel President and Chief Executive Officer Sandra B. Cochran said, "During the third quarter, we had positive comparable store restaurant and retail sales growth, and continued to outperform the casual dining industry. With the reduction in commodity costs, and our management team's focus on cost savings initiatives, we increased our operating income by nearly twenty percent. We are encouraged by our May sales results, which we believe have been driven in part by customer enthusiasm around our summer menu offerings."

Third Quarter Fiscal 2016 Results

Revenue
The Company reported total revenue of $700.1 million for the third quarter of fiscal 2016, representing an increase of 2.4% over the third quarter of the prior year.  Comparable store restaurant sales increased 2.3%, as a 2.9% increase in average check was partially offset by a 0.6% reduction in traffic.  The average menu price increase for the quarter was approximately 2.8%.  Comparable store retail sales increased 2.2% for the quarter.

The Company believes the Easter holiday shift between March and April resulted in a positive impact on comparable store traffic in March and a negative impact on comparable store traffic in April. Comparable store restaurant traffic, average check and comparable store restaurant and retail sales for the fiscal months of February, March and April, and for the third quarter were as follows:

 


February

March

April

Third Quarter

Comparable restaurant traffic

0.2%

0.7%

-2.3%

-0.6%

Average check

2.9%

3.3%

2.5%

2.9%

Comparable restaurant sales

3.1%

4.0%

0.2%

2.3%

Comparable retail sales

6.1%

6.7%

-3.6%

2.2%

 

Operating Income 
Operating income for the third quarter was $67.0 million, or 9.6% of total revenue. GAAP operating income in the prior year quarter was 8.1% of total revenue, or 8.2% when adjusted to exclude the impact of a litigation accrual. As a percentage of total revenue, improvements in cost of goods sold, labor and related expenses, and general and administrative expenses were partially offset by an increase in other store operating expenses. 

Diluted Earnings per Share 
On a GAAP basis, earnings per diluted share were $2.04 versus $1.47 in the prior fiscal year. Adjusted to exclude the impact of a reduction of the provisions for uncertain tax positions, adjusted earnings per diluted share were $1.82, compared with adjusted earnings per diluted share of $1.49 in the prior year quarter.  

Quarterly Dividend Increase and Special Dividend 
The Company announced that its Board of Directors increased the quarterly dividend to $1.15 per share on the Company's common stock, which represents a 4.5% increase over the Company's previous quarterly dividend of $1.10. The quarterly dividend is payable on August 5, 2016 to shareholders of record on July 15, 2016.

The Board of Directors also declared a special dividend of $3.25 per share on the Company's common stock. The special dividend is payable on July 29, 2016 to shareholders of record on July 15, 2016.

Commenting on the quarterly and special dividend, Ms. Cochran said, "We believe the increase in our quarterly dividend and the decision to declare a special dividend reflects our Board's commitment to a balanced approach to capital allocation, and to an ongoing assessment of our financial results, capital investment and liquidity needs, and our ability to deliver total shareholder return."                                                                                                                     

Fiscal 2016 Outlook 
Based upon year-to-date financial performance, recent trends, and current estimates, the Company raised its full-year earnings guidance. For fiscal 2016, the Company now expects to report earnings per diluted share on a GAAP basis of between $7.75 and $7.85, and on an adjusted basis of between $7.45 and $7.55. The Company now expects to report increases in comparable store restaurant and retail sales in the range of 2.0% to 2.5%. The Company expects total revenue of between $2.90 billion and $2.95 billion, reflecting the expected opening of five new Cracker Barrel stores during the fiscal year.

The Company now projects food commodity inflation to be flat for the fiscal year. The Company projects operating income margin of approximately 9.5% of total revenue for fiscal 2016. The Company expects depreciation expense between $77 million and $78 million; net interest expense of approximately $14 million; and capital expenditures of between $100 million and $110 million. The Company now expects an effective tax rate for fiscal 2016 of approximately 29% on a GAAP basis, or approximately 31% on an adjusted basis.

The Company expects to report earnings per diluted share for the fourth quarter of fiscal 2016 of between $2.05 and $2.15. The Company reminds investors that its outlook for fiscal 2016 reflects a number of assumptions, many of which are outside the Company's control.

Fiscal 2016 Third Quarter Conference Call 
As previously announced, the live broadcast of Cracker Barrel's quarterly conference call will be available to the public online at investor.crackerbarrel.com on June 1, 2016, beginning at 11:00 a.m. (Eastern Time).  An online replay will be available at 2:00 p.m. (Eastern Time) and continue through June 15, 2016.

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 636 company-owned locations in 42 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. For more information, visit: crackerbarrel.com.

CBRL-F

Except for specific historical information, certain of the matters discussed in this press release may express or imply projections of revenues or expenditures, statements of plans and objectives or future operations or statements of future economic performance. These, and similar statements are forward-looking statements concerning matters that involve risks, uncertainties and other factors which may cause the actual performance of Cracker Barrel Old Country Store, Inc. and its subsidiaries to differ materially from those expressed or implied by this discussion. All forward-looking information is subject to completion of our financial procedures for Q3 FY 2016 and is provided pursuant to the safe harbor established under the Private Securities Litigation Reform Act of 1995 and should be evaluated in the context of these factors. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "trends," "assumptions," "target," "guidance," "outlook," "opportunity," "future," "plans," "goals," "objectives," "expectations," "near-term," "long-term," "projection," "may," "will," "would," "could," "expect," "intend," "estimate," "anticipate," "believe," "potential," "regular," "should," "projects," "forecasts," or "continue" (or the negative or other derivatives of each of these terms) or similar terminology and include the expected effects of operational improvement initiatives, such as new menu items and retail offerings. Factors which could materially affect actual results include, but are not limited to: the effects of uncertain consumer confidence, higher costs for energy, general or regional economic weakness, weather on sales and customer travel, discretionary income or personal expenditure activity of our customers; our ability to identify, acquire and sell successful new lines of retail merchandise and new menu items at our restaurants; our ability to sustain or the effects of plans intended to improve operational or marketing execution and performance; changes in or implementation of additional governmental or regulatory rules, regulations and interpretations affecting tax, wage and hour matters, health and safety, pensions, insurance or other undeterminable areas; the effects of plans intended to promote or protect our brands and products; commodity price increases; the ability of and cost to us to recruit, train, and retain qualified hourly and management employees in an escalating wage environment; the effects of increased competition at our locations on sales and on labor recruiting, cost, and retention; workers' compensation, group health and utility price changes; consumer behavior based on negative publicity or concerns over nutritional or safety aspects of our food or products or those of the restaurant industry in general, including concerns about pandemics, as well as the possible effects of such events on the price or availability of ingredients used in our restaurants; the effects of our substantial indebtedness and associated restrictions on our financial and operating flexibility and ability to execute or pursue our operating plans and objectives; changes in interest rates or capital market conditions affecting our financing costs and ability to refinance all or portions of our indebtedness; the effects of business trends on the outlook for individual restaurant locations and the effect on the carrying value of those locations; our ability to retain key personnel; the availability and cost of suitable sites for restaurant development and our ability to identify those sites; changes in land, building materials and construction costs; the actual results of pending, future or threatened litigation or governmental investigations and the costs and effects of negative publicity associated with these activities; practical or psychological effects of natural disasters or terrorist acts or war and military or government responses; disruptions to our restaurant or retail supply chain; changes in foreign exchange rates affecting our future retail inventory purchases; implementation of new or changes in interpretation of existing accounting principles generally accepted in the United States of America ("GAAP"); and other factors described from time to time in our filings with the Securities and Exchange Commission, press releases, and other communications. Any forward-looking statement made by us herein, or elsewhere, speaks only as of the date on which made. We expressly disclaim any intent, obligation or undertaking to update or revise any forward-looking statements made herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

 

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

 4/29/2016

   5/1/2015  


 Change  


 4/29/2016

   5/1/2015  


 Change  

Total revenue

$700,136

$683,705


2%


$2,166,767

$2,123,099


2%

Cost of goods sold, exclusive of depreciation

      and rent

212,382

216,142


(2)


700,287

700,592


(0)

Labor and other related expenses

249,324

246,805


1


745,581

740,806


1

Other store operating expenses

135,011

126,711


7


411,821

390,609


5

Store operating income

103,419

94,047


10


309,078

291,092


6

General and administrative expenses

36,391

38,570


(6)


106,217

108,952


(3)

Operating income

67,028

55,477


21


202,861

182,140


11

Interest expense

3,436

4,030


(15)


10,549

13,138


(20)

Pretax income

63,592

51,447


24


192,312

169,002


14

Provision for income taxes

14,423

16,130


(11)


54,036

52,498


3

Net income

$49,169

$35,317


39


$138,276

$116,504


19











Earnings per share - Basic:

$2.05

$1.48


39


$5.77

$4.87


18

Earnings per share - Diluted:

$2.04

$1.47


39


$5.75

$4.85


19











Weighted average shares:










    Basic

23,941,188

23,937,844


0


23,945,184

23,904,945


0

    Diluted

24,073,778

24,066,061


0


24,064,624

24,033,296


0











Ratio Analysis










Total revenue:










    Restaurant

81.5%

81.5%




79.1%

79.2%



    Retail

18.5

18.5




20.9

20.8



            Total revenue

100.0

100.0




100.0

100.0



Cost of goods sold, exclusive of depreciation

      and rent

30.3

31.6




32.3

33.0



Labor and other related expenses

35.6

36.1




34.4

34.9



Other store operating expenses

19.3

18.5




19.0

18.4



Store operating income

14.8

13.8




14.3

13.7



General and administrative expenses

5.2

5.7




4.9

5.1



Operating income

9.6

8.1




9.4

8.6



Interest expense

0.5

0.6




0.5

0.6



Pretax income

9.1

7.5




8.9

8.0



Provision for income taxes

2.1

2.3




2.5

2.5



Net income

7.0%

5.2%




6.4%

5.5%



 

 

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited and in thousands, except share amounts)



 4/29/2016


   5/1/2015  

Assets




   Cash and cash equivalents

$176,692


$202,054

   Accounts receivable

18,667


25,858

   Income tax receivable

10,033


8,269

   Inventory

145,882


136,405

   Prepaid expenses

15,874


13,826

   Deferred income taxes

5,636


4,964

   Property and equipment, net

1,060,513


1,042,898

   Other long-term assets

62,656


66,793

           Total assets

$1,495,953


$1,501,067





Liabilities and Shareholders' Equity




   Accounts payable

$88,011


$89,327

   Other current liabilities

228,170


226,602

   Long-term debt

400,000


400,000

   Interest rate swap liability

17,559


9,633

   Other long-term obligations

128,007


130,083

   Deferred income taxes

53,773


61,350

   Shareholders' equity, net

580,433


584,072

          Total liabilities and shareholders' equity

$1,495,953


$1,501,067





Common shares issued and outstanding

23,941,998


23,949,084

 

 

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

(Unaudited and in thousands)



    Nine Months Ended


 4/29/2016


   5/1/2015  

Cash flows from operating activities:




             Net income

$138,276


$116,504

             Depreciation and amortization

57,481


53,928

             Loss on disposition of property and equipment

3,812


5,413

             Share-based compensation, net of excess tax benefit

6,830


7,571

             Decrease in inventories

7,176


29,021

             (Decrease) in accounts payable

(45,106)


(9,150)

             Net changes in other assets and liabilities

(19,111)


13,393

                           Net cash provided by operating activities

149,358


216,680

Cash flows from investing activities:




             Purchase of property and equipment, net of insurance recoveries

(69,504)


(60,055)

             Proceeds from sale of property and equipment

639


1,563

                           Net cash used in investing activities

(68,865)


(58,492)

Cash flows from financing activities:




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

(5,281)


(3,432)

              Excess tax benefit from share-based compensation

2,063


3,224

              Purchases and retirement of common stock

(14,653)


0

              Deferred financing costs

0


(3,537)

              Dividends on common stock

(151,385)


(71,750)

                             Net cash used in financing activities

(169,256)


(75,495)





Net (decrease) increase in cash and cash equivalents

(88,763)


82,693

Cash and cash equivalents, beginning of period

265,455


119,361

Cash and cash equivalents, end of period

$176,692


$202,054

 

 


CRACKER BARREL OLD COUNTRY STORE, INC.

Supplemental Information

(Unaudited)



Third Quarter Ended


 Nine Months Ended


 4/29/2016

   5/1/2015


 4/29/2016

 5/1/2015







Units in operation:






     Open at beginning of period

635

634


637

631

     Opened (closed) during period

0

0


(2)

3

     Open at end of period

635

634


635

634







Total revenue: (In thousands)






      Restaurant

$570,477

$557,098


$1,713,674

$1,681,363

      Retail

129,659

126,607


453,093

441,736

      Total revenue

$700,136

$683,705


$2,166,767

$2,123,099







Cost of goods sold: (In thousands)





      Restaurant

$149,484

$153,351


$469,050

$470,511

      Retail

62,898

62,791


231,237

230,081

      Total cost of goods sold

$212,382

$216,142


$700,287

$700,592






  Average unit volume: (In thousands)

      Restaurant

$898.4

$878.7


$2,696.4

$2,654.1

      Retail

204.2

199.7


712.9

697.3

      Total

$1,102.6

$1,078.4


$3,409.3

$3,351.4













Operating weeks:

8,255

8,242


24,786

24,706



Q3 2016 vs. Q3 2015


9 mo. 2016 vs. 9 mo. 2015





Comparable store sales period to period increase:



       Restaurant

2.3%


1.8%

       Retail

2.2%


2.5%





Number of locations in comparable store base

629


623

 

 

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 general and administrative expenses, operating income, provision for taxes and net income per share before the impact of a reduction of the provisions for uncertain tax positions, the retroactive reinstatement of the Work Opportunity Tax Credit and the prior year Fair Labor Standards Act litigation. The Company believes that excluding these items and their 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 29, 2016


Third Quarter ended May 1, 2015


As Reported 

Adjust 

As Adjusted


As Reported 

Adjust

As Adjusted



(1)




(3)










Store operating income

$       103,419

$               -

$       103,419


$      94,047

$              -

$              94,047

General and administrative expenses

36,391

-

36,391


38,570

(769)

37,801

Operating income

67,028

-

67,028


55,477

769

56,246

Interest Expense

3,436

-

3,436


4,030

-

4,030

Pretax income

63,592

-

63,592


51,447

769

52,216

Provision for income taxes

14,423

5,312

19,735


16,130

239

16,369

Net income

$        49,169

$         (5,312)

$         43,857


$      35,317

$            530

$              35,847









Earning per share - Basic

$            2.05

$          (0.22)

$            1.83


$         1.48

$           0.02

$                 1.50

Earning per share - Diluted

$            2.04

$          (0.22)

$            1.82


$         1.47

$           0.02

$                 1.49


















Nine Months ended April 29, 2016


Nine Months ended May 1, 2015


As Reported 

Adjust

As Adjusted


As Reported 

Adjust

As Adjusted



(1), (2)




(2), (3)










Store operating income

$       309,078

$               -

$       309,078


$    291,092

$              -

$            291,092

General and administrative expenses

106,217

-

106,217


108,952

(2,919)

106,033

Operating income

202,861

-

202,861


182,140

2,919

185,059

Interest Expense

10,549

-

10,549


13,138

-

13,138

Pretax income

192,312

-

192,312


169,002

2,919

171,921

Provision for income taxes

54,036

7,604

61,640


52,498

3,226

55,724

Net income

$       138,276

$         (7,604)

$       130,672


$    116,504

$           (307)

$            116,197









Earning per share - Basic

$            5.77

$          (0.31)

$            5.46


$         4.87

$          (0.01)

$                 4.86

Earning per share - Diluted

$            5.75

$          (0.32)

$            5.43


$         4.85

$          (0.01)

$                 4.84









(1) Provision for income taxes adjusted for reversal of certain provisions for uncertain tax positions.

(2) Provision for income taxes adjusted to exclude $2.3 million in both 2016 and 2015 for the prior year favorable effect of the retroactive reinstatement of the Work Opportunity Tax Credit.

(3) Accrued liability and tax effects related to the settlement of the Fair Labor Standards Act litigation.  

 

 

Investor Contact: 

 Lawrence E. Hyatt


(615) 235-4432                                          



Media Contact: 

 Janella Escobar


(615) 235-4618      

 

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