Cracker Barrel Reports Results for Second Quarter Fiscal 2014 and Reaffirms Earnings Guidance for Fiscal 2014

  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  Business Wire  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-Track^TM 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.”  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:                                                                 Second                               November   December   January   Quarter Comparable restaurant          -0.4%      -4.8%      -3.7%     -2.9% traffic 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.  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 in42 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 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 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.                                                                      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                     1/31/14         2/1/13                         1/31/14         2/1/13                                                                  Change                                               Change Total revenue      $ 698,491          $ 702,671          (1)%           $ 1,347,632        $ 1,330,122        1% Cost of goods       243,015           244,187          (1)             448,944           442,045          2 sold Gross profit         455,476            458,484          (1)              898,688            888,077          1 Labor and other related        238,742            244,871          (3)              475,489            477,610          0 expenses Other store operating           128,100           122,586          5               253,441           238,451          6 expenses Store operating            88,634             91,027           (3)              169,758            172,016          (1) income General and administrative      29,928            33,830           (12)            66,815            69,511           (4) expenses Operating            58,706             57,197           3                102,943            102,505          0 income Interest            4,471             10,293           (57)            8,878             21,005           (58) expense Pretax income        54,235             46,904           16               94,065             81,500           15 Provision for       17,180            11,736           46              29,850            23,140           29 income taxes Net income         $ 37,055           $ 35,168           5              $ 64,215           $ 58,360           10                                                                                                                Earnings per       $ 1.56             $ 1.48             5              $ 2.70             $ 2.47             9 share – Basic: Earnings per share –            $ 1.55             $ 1.47             5              $ 2.68             $ 2.45             9 Diluted:                                                                                                                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       34.8              34.8                             33.3              33.2 sold Gross profit         65.2               65.2                              66.7               66.8 Labor and other related        34.2               34.8                              35.3               35.9 expenses Other store operating           18.3              17.4                             18.8              18.0 expenses Store operating            12.7               13.0                              12.6               12.9 income General and administrative      4.3               4.9                              5.0               5.2 expenses Operating            8.4                8.1                               7.6                7.7 income Interest            0.6               1.4                              0.6               1.6 expense Pretax income        7.8                6.7                               7.0                6.1 Provision for       2.5               1.7                              2.2               1.7 income taxes Net income          5.3        %      5.0        %                     4.8        %      4.4        %                                                                                                                                                                             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                                                                                                                      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          3,642           4,120 benefit (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           (38,468 )       (29,329 ) insurance recoveries 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         (1      )       (58     ) long-term obligations (Taxes withheld) and proceeds from exercise of       (8,446  )       2,622 share-based compensation awards, net Excess tax benefit from share-based                  604             1,289 compensation 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             (30,365 )       34,186 equivalents Cash and cash equivalents, beginning of period      121,718       151,962  Cash and cash equivalents, end of period           $ 91,353       $ 186,148                                                                                                                                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        625           620           624             616 of period Opened during           0            1            1              5 period Open at end of           625           621           625             621 period                                                                     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          $ 243,015     $ 244,187     $ 448,944       $ 442,045 goods sold                                                                     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 613                     609 store base                                                                                                                                                                    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       As Adjusted     As Reported   Adjust       As Adjusted                                    (1)                                            (1) (2)                                                                                   (3)                                                                                                   Store operating            88,634          -              88,634          91,027          -              91,027 income General and administrative       29,928          (376   )       29,552          33,830          (1,726 )       32,104 expenses Impairment and store               -           -          -             -           -          -        dispositions, net Operating            58,706          376            59,082          57,197          1,726          58,923 income Interest            4,471       -          4,471         10,293      -          10,293   Expense Pretax income        54,235          376            54,611          46,904          1,726          48,630 Provision for       17,180      119        17,299        11,736      2,637      14,373   income taxes Net income         $ 37,055     $ 257         $ 37,312       $ 35,168     $ (911   )   $ 34,257                                                                                                     Earning per        $ 1.56          $ 0.01         $ 1.57          $ 1.48          $ (0.04  )     $ 1.44 share - Basic Earning per share -            $ 1.55          $ 0.01         $ 1.56          $ 1.47          $ (0.04  )     $ 1.43 Diluted 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         As Adjusted     As Reported     Adjust         As Adjusted                                    (1)                                            (1) (2)                                                                                   (3)                                                                                                   Store operating            169,758         -              169,758         172,016         -              172,016 income General and administrative      66,815      (3,200 )    63,615        69,511      (5,634 )    63,877   expenses Operating            102,943         3,200          106,143         102,505         5,634          108,139 income Interest            8,878       -          8,878         21,005      -          21,005   Expense Pretax income        94,065          3,200          97,265          81,500          5,634          87,134 Provision for       29,850      1,015      30,865        23,140      3,847      26,987   income taxes Net income         $ 64,215     $ 2,185     $ 66,400       $ 58,360     $ 1,787     $ 60,147                                                                                                     Earning per        $ 2.70          $ 0.09         $ 2.79          $ 2.47          $ 0.07         $ 2.54 share - Basic Earning per share -            $ 2.68          $ 0.09         $ 2.77          $ 2.45          $ 0.07         $ 2.52 Diluted 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.       Provision for taxes adjusted to exclude the $2.1 million prior year (3)   favorable effect of the retroactive reinstatement of the work       opportunity tax credit.  Contact:  Cracker Barrel Old Country Store, Inc Investors: Lawrence E. Hyatt, 615-235-4432 or Media: Andy Merrill, 212-886-9304  
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