UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): February 25, 2014

 

 

CRACKER BARREL OLD COUNTRY STORE, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Tennessee		001-25225		62-0812904
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

305 Hartmann Drive, Lebanon, Tennessee 37087

(Address of Principal Executive Offices) (Zip code)

(615) 444-5533

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02

Results of Operations and Financial Condition.

On February 25, 2014, Cracker Barrel Old Country Store, Inc. (the “Company”) issued a press release (the “Press Release”) announcing the Company’s fiscal 2014 second quarter results of operations and projected outlook for the remainder of fiscal 2014. A copy of the Press Release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

 

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits.

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

Date: February 25, 2014				CRACKER BARREL OLD COUNTRY STORE, INC.
				By:		/s/ Lawrence E. Hyatt
				Name:		Lawrence E. Hyatt
				Title:		Senior Vice President and Chief Financial Officer

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EXHIBIT INDEX

 

 

Exhibit No.		Description
99.1		Press Release issued by Cracker Barrel Old Country Store, Inc. dated February 25, 2014

Exhibit 99.1

 

 

 

Investor Contact:		Lawrence E. Hyatt (615) 235-4432
Media Contact:		Andy Merrill (212) 886-9304

CRACKER BARREL REPORTS RESULTS FOR SECOND QUARTER FISCAL 2014

AND REAFFIRMS EARNINGS GUIDANCE FOR FISCAL 2014

Adjusted EPS increased 9% over prior year quarter despite the impact of extreme winter weather

LEBANON, Tenn. – February 25, 2014 – Cracker Barrel Old Country Store, Inc. (“Cracker Barrel” or the “Company”) (Nasdaq: CBRL) today reported financial results for the second quarter of fiscal 2014 ended January 31, 2014.

Second-Quarter Fiscal 2014 Highlights

 

•

Compared to the prior-year second quarter, comparable store restaurant sales decreased 0.6% and comparable store retail sales decreased 3.0%. The Company estimates that the extreme winter weather during the quarter negatively impacted restaurant and retail sales by approximately 2.5%.

 

•

Ninth consecutive quarter of outperformance of the Knapp-TrackTM casual dining index

 

•

On a GAAP basis, operating income margin was 8.4% of total revenue, compared with 8.1% in the prior year quarter. Adjusted for proxy contest expenses, adjusted operating income margin was 8.5% of total revenue, compared with an adjusted operating income margin of 8.4% in the prior year quarter. (See non-GAAP reconciliation below.)

 

•

On a GAAP basis, earnings per diluted share were $1.55, or $1.56 when adjusted for proxy contest expenses, a 9% increase over adjusted earnings per diluted share of $1.43 in the prior year quarter.

Commenting on the second-quarter results, Cracker Barrel President and Chief Executive Officer Sandra B. Cochran said, “The unusually severe winter weather significantly impacted our store traffic and sales. Holiday travelers are an important part of our customer base during the second quarter, and we believe that the inclement weather reduced travel visits. I am pleased with the performance of our field teams, who helped preserve our operating margins by controlling costs during periods of unpredictable customer traffic. I am also pleased that we outperformed the traffic and sales of our peers in the Knapp-Track casual dining index during this time of continued economic uncertainty and severe weather.”

 

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Cracker Barrel Reports Second Quarter Results

Page 2

February 25, 2014

 

Second-Quarter Fiscal 2014 Results

Revenue

The Company reported total revenue of $698.5 million for the second quarter of fiscal 2014, representing a decrease of 0.6% over the second quarter of the prior year. Comparable store restaurant sales decreased 0.6%, including a 2.3% increase in average check. The average menu price increase for the quarter was approximately 1.8%. Comparable store retail sales decreased 3.0% for the quarter. The Company opened one store since the end of the second quarter, for a total of two new store openings year-to-date.

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

 

		November				December				January				Second Quarter
Comparable restaurant traffic			-0.4	%			-4.8	%			-3.7	%			-2.9	%
Average check			2.9	%			2.1	%			2.1	%			2.3	%
Comparable restaurant sales			2.5	%			-2.7	%			-1.6	%			-0.6	%
Comparable retail sales			-2.8	%			-2.8	%			-3.6	%			-3.0	%

The Company estimates that the extreme winter weather had a negative impact on comparable store traffic and restaurant and retail sales of approximately 2.5% for the quarter, with the greatest impact in December and January.

Operating Income

GAAP operating income in the second quarter was $58.7 million, or 8.4% of total revenue. Adjusted for proxy contest expenses, adjusted operating income was $59.1 million, or 8.5% of total revenue, compared with adjusted operating income of $58.9 million, or 8.4% of total revenue, in the prior year quarter. Reductions in 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 in the second quarter of fiscal 2014 were $1.55, compared with $1.47 in the prior year quarter. Adjusted for proxy contest expenses, adjusted earnings per diluted share were $1.56, compared with adjusted earnings per diluted share of $1.43 in the prior year quarter.

 

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Cracker Barrel Reports Second Quarter Results

Page 3

February 25, 2014

 

Fiscal 2014 Outlook

Based upon year-to-date financial performance, the Company re-affirmed its previous earnings guidance and expects to report earnings per diluted share of between $5.60 and $5.80. The Company noted that it expects its full year earnings to be close to the midpoint of this range. For fiscal 2014, the Company now expects total revenue of approximately $2.7 billion and an operating income margin of approximately 8.0%. The revenue projection for fiscal 2014 reflects the expected opening of seven new Cracker Barrel stores, projected increases in comparable store restaurant sales of between 1.0% to 2.0%, and approximately flat comparable store retail sales. The Company’s projections are based upon expected food commodity inflation of approximately 2% for the year; depreciation expense between $68 million and $70 million; net interest expense between $16 million and $18 million; and an effective tax rate of between 31% and 32%. The Company expects capital expenditures during fiscal 2014 to be between $90 million and $100 million.

The Company expects to report earnings per diluted share for the third quarter of 2014 of between $1.20 and $1.30. The Company notes that its guidance assumes normal weather patterns for the balance of the third quarter and does not include expenses related to the proxy contest at its annual shareholders meeting held in November 2013 or expenses associated with the special shareholders meeting scheduled for April 23, 2014. The Company reminds investors that its outlook for fiscal 2014 reflects a number of assumptions, many of which are outside the Company’s control.

Fiscal 2014 Second-Quarter Conference Call

As previously announced, the live broadcast of Cracker Barrel’s quarterly conference call will be available to the public on-line at investor.crackerbarrel.com on February 25, 2014, beginning at 11:00 a.m. (Eastern Time). An on-line replay will be available at 2:00 p.m. (Eastern Time) and continue through March 11, 2014.

About Cracker Barrel

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 626 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.

 

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Cracker Barrel Reports Second Quarter Results

Page 4

February 25, 2014

 

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 Q2 FY14 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, and 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 successfully implement or sustain 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; our ability to successfully implement 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

 

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Cracker Barrel Reports Second Quarter Results

Page 5

February 25, 2014

 

the outlook for individual restaurant locations and the effect on the carrying value of those locations; 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; 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.

 

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Cracker Barrel Reports Second Quarter Results

Page 6

February 25, 2014

 

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
		1/31/14				2/1/13				Percentage Change				1/31/14				2/1/13				Percentage Change
Total revenue		$	698,491			$	702,671				(1	)%		$	1,347,632			$	1,330,122				1	%
Cost of goods sold			243,015				244,187				(1	)			448,944				442,045				2
Gross profit			455,476				458,484				(1	)			898,688				888,077				1
Labor and other related expenses			238,742				244,871				(3	)			475,489				477,610				0
Other store operating expenses			128,100				122,586				5				253,441				238,451				6
Store operating income			88,634				91,027				(3	)			169,758				172,016				(1	)
General and administrative expenses			29,928				33,830				(12	)			66,815				69,511				(4	)
Operating income			58,706				57,197				3				102,943				102,505				0
Interest expense			4,471				10,293				(57	)			8,878				21,005				(58	)
Pretax income			54,235				46,904				16				94,065				81,500				15
Provision for income taxes			17,180				11,736				46				29,850				23,140				29
Net income		$	37,055			$	35,168				5			$	64,215			$	58,360				10
Earnings per share – Basic:		$	1.56			$	1.48				5			$	2.70			$	2.47				9
Earnings per share – Diluted:		$	1.55			$	1.47				5			$	2.68			$	2.45				9
Weighted average shares:
Basic			23,812,777				23,711,235				0				23,815,107				23,644,405				1
Diluted			23,907,611				23,945,236				0				23,947,850				23,866,431				0
Ratio Analysis
Total revenue:
Restaurant			75.6	%			75.2	%							77.9	%			77.6	%
Retail			24.4				24.8								22.1				22.4
Total revenue			100.0				100.0								100.0				100.0
Cost of goods sold			34.8				34.8								33.3				33.2
Gross profit			65.2				65.2								66.7				66.8
Labor and other related expenses			34.2				34.8								35.3				35.9
Other store operating expenses			18.3				17.4								18.8				18.0
Store operating income			12.7				13.0								12.6				12.9
General and administrative expenses			4.3				4.9								5.0				5.2
Operating income			8.4				8.1								7.6				7.7
Interest expense			0.6				1.4								0.6				1.6
Pretax income			7.8				6.7								7.0				6.1
Provision for income taxes			2.5				1.7								2.2				1.7
Net income			5.3	%			5.0	%							4.8	%			4.4	%

 

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Cracker Barrel Reports Second Quarter Results

Page 7

February 25, 2014

 

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited and in thousands, except share amounts)

 

		1/31/14				2/1/13
Assets
Cash and cash equivalents		$	91,353			$	186,148
Property held for sale			0				882
Accounts receivable			18,206				13,338
Income tax receivable			4,100				0
Inventory			148,073				139,567
Prepaid expenses			13,881				19,229
Deferred income taxes			4,316				9,206
Property and equipment, net			1,029,447				1,017,930
Other long-term assets			60,764				59,301
Total assets		$	1,370,140			$	1,445,601
Liabilities and Shareholders’ Equity
Accounts payable		$	82,202			$	85,109
Other current liabilities			215,170				220,585
Long-term debt			387,500				512,500
Interest rate swap liability			9,761				14,911
Other long-term obligations			121,228				116,660
Deferred income taxes			57,098				61,543
Shareholders’ equity, net			497,181				434,293
Total liabilities and shareholders’ equity		$	1,370,140			$	1,445,601
Common shares issued and outstanding			23,820,077				23,728,808

 

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Cracker Barrel Reports Second Quarter Results

Page 8

February 25, 2014

 

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

(Unaudited and in thousands)

 

		Six Months Ended
		1/31/14				2/1/13
Cash flows from operating activities:
Net income		$	64,215			$	58,360
Depreciation and amortization			33,301				32,357
Loss on disposition of property and equipment			2,089				1,465
Share-based compensation, net of excess tax benefit			3,642				4,120
(Decrease) increase in inventories			(1,386	)			3,700
(Decrease) in accounts payable			(28,435	)			(16,162	)
Net changes in other assets and liabilities			(10,521	)			(2,860	)
Net cash provided by operating activities			62,905				80,980
Cash flows from investing activities:
Purchase of property and equipment, net of insurance recoveries			(38,468	)			(29,329	)
Proceeds from sale of property and equipment			1,268				333
Net cash used in investing activities			(37,200	)			(28,996	)
Cash flows from financing activities:
Net payments for credit facilities and other long-term obligations			(1	)			(58	)
(Taxes withheld) and proceeds from exercise of share-based compensation awards, net			(8,446	)			2,622
Excess tax benefit from share-based compensation			604				1,289
Purchases and retirement of common stock			(12,473	)			0
Dividends on common stock			(35,754	)			(21,651	)
Net cash used in financing activities			(56,070	)			(17,798	)
Net (decrease) increase in cash and cash equivalents			(30,365	)			34,186
Cash and cash equivalents, beginning of period			121,718				151,962
Cash and cash equivalents, end of period		$	91,353			$	186,148

 

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Cracker Barrel Reports Second Quarter Results

Page 9

February 25, 2014

 

CRACKER BARREL OLD COUNTRY STORE, INC.

Supplemental Information

(Unaudited)

 

		Second Quarter Ended								Six Months Ended
		1/31/14				2/1/13				1/31/14				2/1/13
Units in operation:
Open at beginning of period			625				620				624				616
Opened during period			0				1				1				5
Open at end of period			625				621				625				621
Total revenue: (In thousands)
Restaurant		$	528,391			$	528,155			$	1,050,338			$	1,032,469
Retail			170,100				174,516				297,294				297,653
Total revenue		$	698,491			$	702,671			$	1,347,632			$	1,330,122
Cost of goods sold: (In thousands)
Restaurant		$	148,382			$	146,338			$	290,978			$	281,521
Retail			94,633				97,849				157,966				160,524
Total cost of goods sold		$	243,015			$	244,187			$	448,944			$	442,045
Average unit volume: (In thousands)
Restaurant		$	845.4			$	850.5			$	1,681.5			$	1,665.7
Retail			272.2				281.0				475.9				480.2
Total		$	1,117.6			$	1,131.5			$	2,157.4			$	2,145.9
Operating weeks:			8,125				8,073				16,241				16,116

 

		Q2 2014 vs. Q2 2013				6 mo. 2014 vs. 6 mo. 2013
Comparable store sales period to period (decrease) increase:
Restaurant			-0.6	%			1.0	%
Retail			-3.0	%			-0.7	%
Number of locations in comparable store base			613				609

 

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Cracker Barrel Reports Second Quarter Results

Page 10

February 25, 2014

 

CRACKER BARREL OLD COUNTRY STORE, INC.

Reconciliation of GAAP basis operating

results to adjusted non-GAAP operating results

(Unaudited and in thousands)

The Company makes reference in this release to “adjusted store operating income,” “adjusted operating income,” “adjusted net income,” “adjusted earnings per diluted share,” and “adjusted general and administrative expenses,” excluding the impact of severance and proxy contest expenses and the retroactive restatement of the work opportunities tax credit. 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, net income, or earnings per share or expense information prepared in accordance with GAAP.

 

		Second Quarter ended January 31, 2014												Second Quarter ended February 1, 2013
		As Reported				Adjust (1)				As Adjusted				As Reported				Adjust (1)(2)(3)				As Adjusted
Store operating income			88,634				—				88,634				91,027				—				91,027
General and administrative expenses			29,928				(376	)			29,552				33,830				(1,726	)			32,104
Operating income			58,706				376				59,082				57,197				1,726				58,923
Interest Expense			4,471				—				4,471				10,293				—				10,293
Pretax income			54,235				376				54,611				46,904				1,726				48,630
Provision for income taxes			17,180				119				17,299				11,736				2,637				14,373
Net income		$	37,055			$	257			$	37,312			$	35,168			$	(911	)		$	34,257
Earning per share – Basic		$	1.56			$	0.01			$	1.57			$	1.48			$	(0.04	)		$	1.44
Earning per share – Diluted		$	1.55			$	0.01			$	1.56			$	1.47			$	(0.04	)		$	1.43
Tax rate			31.7	%							31.7	%			25.0	%							29.6	%
		Six months ended January 31, 2014												Six months ended February 1, 2013
		As Reported				Adjust (1)				As Adjusted				As Reported				Adjust (1)(2)(3)				As Adjusted
Store operating income			169,758				—				169,758				172,016				—				172,016
General and administrative expenses			66,815				(3,200	)			63,615				69,511				(5,634	)			63,877
Operating income			102,943				3,200				106,143				102,505				5,634				108,139
Interest Expense			8,878				—				8,878				21,005				—				21,005
Pretax income			94,065				3,200				97,265				81,500				5,634				87,134
Provision for income taxes			29,850				1,015				30,865				23,140				3,847				26,987
Net income		$	64,215			$	2,185			$	66,400			$	58,360			$	1,787			$	60,147
Earning per share – Basic		$	2.70			$	0.09			$	2.79			$	2.47			$	0.07			$	2.54
Earning per share – Diluted		$	2.68			$	0.09			$	2.77			$	2.45			$	0.07			$	2.52
Tax rate			31.7	%							31.7	%			28.4	%							31.0	%

 

(1)	Charges and tax effects of the proxy contest concluded at the Company’s annual meeting of shareholders.

(2)	Severance, other charges and tax effects related to organizational changes.

(3)	Provision for taxes adjusted to exclude the $2.1 million prior year favorable effect of the retroactive reinstatement of the work opportunity tax credit.

 

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