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Cracker Barrel Reports Fourth Quarter And Full Year Fiscal 2017 Results And Provides Guidance For Fiscal 2018

Fourth Quarter Comparable Store Traffic and Restaurant Sales Outperformed the Casual Dining Industry – Fourth Quarter Earnings per Diluted Share Increased 5.2% to $2.23

Cracker Barrel Old Country Store, Inc. (Nasdaq:  CBRL) today reported its financial results for the fourth quarter and for the fiscal year ended July 28, 2017. The Company also provided guidance for its 2018 fiscal year and first quarter:

Fourth Quarter Fiscal 2017 Highlights

Full Year Fiscal 2017 Highlights

Commenting on the full fiscal year results, Cracker Barrel President and Chief Executive Officer Sandra B. Cochran said, “We ended fiscal 2017 with solid operating income margin and earnings growth. Since fiscal 2014, when we laid out our three-year strategic plan, we have grown earnings per share by nearly fifty percent, well above our target growth. As we enter the new fiscal year, we anticipate the environment to remain challenged, yet are confident in our plans to invest in the long-term growth of the Company.” 

Fourth Quarter Fiscal 2017 Results 

Revenue 
The Company reported total revenue of $743.2 million for the fourth quarter of fiscal 2017, representing a decrease of 0.3% over the fourth quarter of the prior year. Comparable store restaurant sales decreased 0.8%, including a 1.7% decrease in store traffic partially offset by a 0.9% increase in average check. The average menu price increase for the quarter was approximately 1.4%. Comparable store retail sales decreased 4.4% for the quarter. The Company opened two new Cracker Barrel stores during the quarter bringing the combined Cracker Barrel and Holler & Dash store count to 649 locations at fiscal year-end. 

Comparable store restaurant traffic, average check and comparable store restaurant sales and retail sales for the fiscal months of May, June and July and the fourth quarter were as follows: 

 

May

June

July

Fourth Quarter

Comparable restaurant traffic

-2.9%

-1.3%

-1.2%

-1.7%

Average check

0.3%

1.2%

1.3%

0.9%

Comparable restaurant sales

-2.6%

-0.1%

0.1%

-0.8%

Comparable retail sales

-3.7%

-2.8%

-6.2%

-4.4%

Operating Income
Operating income in the fourth quarter was $83.2 million, or 11.2% of total revenue. Operating income in the prior year quarter was 10.4% of total revenue. As a percentage of total revenue, favorability in cost of goods sold and labor and related expenses were partially offset by an increase in store operating expenses. 

Fiscal 2017 Results 
The Company reported total revenue of $2.93 billion for the fiscal year, representing an increase of 0.5% over the prior year. Comparable store restaurant sales increased 0.2%, including a 1.6% increase in average check partially offset by a 1.4% decrease in store traffic. Comparable store retail sales were down 3.7% for the fiscal year. 

Operating income for fiscal 2017 was $313.2 million, or 10.7% of total revenue, compared to $280.5 million, or 9.6% of total revenue, in the prior year quarter. 

Earnings per diluted share were $8.37, a 6.5% increase over GAAP EPS of $7.86 in the prior year quarter. Adjusted for the impact of the retroactive reinstatement of the Work Opportunity Tax Credit (“WOTC”) and a reduction of the provisions for uncertain tax positions, earnings per diluted share increased 10.9% from adjusted EPS of $7.55 in the prior year quarter. (For a reconciliation of GAAP to non-GAAP financial measures, please see the tables accompanying this release.)

Fiscal 2018 Outlook
For fiscal 2018, the Company expects total revenue of approximately $3.1 billion reflecting the expected opening of eight or nine new Cracker Barrel stores and three or four new Holler & Dash stores, as well as projected increases in comparable store restaurant sales in the range of 2.5% to 3.5%, and comparable store retail sales in the range of 0.0% to 1.0%. The Company projects food commodity inflation of approximately 1.5% for the year. The Company projects operating income margin to be relatively flat to the prior year as a percent of total revenue. The Company expects depreciation expense between $95 million and $100 million; net interest expense in the range of $16 million to $17 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 expects to report earnings per diluted share for fiscal 2018 of between $8.85 and $9.00. 

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. 

For the first quarter of fiscal 2018, the Company expects to report earnings per diluted share of between $1.85 and $1.95. 

The fiscal 2018 and first quarter estimates do not include any financial implications of Hurricane Harvey and Hurricane Irma. Given the recency of these events and the ongoing nature of relief efforts, the Company is still determining the extent of the financial impact. The Company reminds investors that its outlook for fiscal 2018 reflects a number of assumptions, many of which are outside the Company’s control. 

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED INCOME STATEMENT

(Unaudited)

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

 

   Fourth Quarter Ended   

Twelve Months Ended

7/28/17

7/29/16

Percentage

Change

7/28/17

7/29/16

Percentage

Change

Total revenue

$743,226

$745,584

0%

$2,926,289

$2,912,351

0%

Cost of goods sold (exclusive of 
   depreciation and rent)

217,382

227,889

(5)

891,293

928,176

(4)

Labor and other related expenses

257,931

260,607

(1)

1,017,124

1,006,188

1

Other store operating expenses

148,164

142,713

4

563,300

554,534

2

Store operating income

119,749

114,375

5

454,572

423,453

7

General and administrative 
   expenses

36,509

36,765

(1)

141,414

142,982

(1)

Operating income

83,240

77,610

7

313,158

280,471

12

Interest expense

3,568

3,503

2

14,271

14,052

2

Pretax income

79,672

74,107

8

298,887

266,419

12

Provision for income taxes

25,779

23,084

12

96,988

77,120

26

Net income

$53,893

$51,023

6

$201,899

$189,299

7

Earnings per share – Basic:

$2.24

$2.13

5

$8.40

$7.91

6

Earnings per share – Diluted:

$2.23

$2.12

5

$8.37

$7.86

6

Weighted average shares:

    Basic

24,042,717

23,944,611

0

24,031,810

23,945,041

0

    Diluted

24,137,895

24,102,214

0

24,118,288

24,074,273

0

Ratio Analysis

Total revenue:

    Restaurant

82.3%

81.8%

80.3%

79.8%

    Retail

17.7

18.2

19.7

20.2

            Total revenue

100.0

100.0

100.0

100.0

Cost of goods sold (exclusive of 
   depreciation and rent)

29.2

30.6

30.5

31.9

Labor and other related expenses

34.7

35.0

34.8

34.6

Other store operating expenses

20.0

19.1

19.2

19.0

Store operating income

16.1

15.3

15.5

14.5

General and administrative 
   expenses

4.9

4.9

4.8

4.9

Operating income

11.2

10.4

10.7

9.6

Interest expense

0.5

0.5

0.5

0.5

Pretax income

10.7

9.9

10.2

9.1

Provision for income taxes

3.4

3.1

3.3

2.6

Net income

7.3%

6.8%

6.9%

6.5%

          

 

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited and in thousands, except share amounts)

 

7/28/17

7/29/16

Assets

   Cash and cash equivalents

$161,001

$150,966

   Accounts receivable

18,116

19,389

   Income tax receivable

4,265

16,184

   Inventory

156,367

152,308

   Prepaid expenses and other current assets

16,047

14,573

   Deferred income taxes

3,061

2,320

   Property and equipment, net

1,098,097

1,080,189

   Other long-term assets

64,988

61,735

Total assets

$1,521,942

$1,497,664

Liabilities and Shareholders’ Equity

   Accounts payable

$118,395

$132,493

   Other current liabilities

257,433

236,324

   Long-term debt

400,000

400,000

   Interest rate swap liability

6,833

22,070

   Other long-term obligations

129,353

126,608

   Deferred income taxes

65,421

53,726

   Shareholders’ equity, net

544,507

526,443

Total liabilities and shareholders’ equity

$1,521,942

$1,497,664

Common shares issued and outstanding

24,055,682

23,956,134

 

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

(Unaudited and in thousands)

 

Twelve Months Ended

7/28/17

7/29/16

Cash flows from operating activities:

             Net income

$201,899

$189,299

             Depreciation and amortization

86,319

78,223

             Loss on disposition of property and equipment

5,585

7,146

             Share-based compensation, net of excess tax benefit

5,822

10,576

             (Increase) decrease in inventories

(4,059)

750

             Decrease in accounts payable

(14,098)

(624)

             Net changes in other assets and liabilities

39,299

(13,992)

                           Net cash provided by operating activities

320,767

271,378

Cash flows from investing activities:

             Purchase of property and equipment, net of insurance recoveries

(110,108)

(113,360)

             Proceeds from sale of property and equipment

503

845

                           Net cash used in investing activities

(109,605)

(112,515)

Cash flows from financing activities:

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

(6,896)

(5,779)

              Excess tax benefit from share-based compensation

2,636

2,626

              Purchases and retirement of common stock

0

(14,653)

              Dividends on common stock

(196,867)

(255,546)

                           Net cash used in financing activities

(201,127)

(273,352)

Net increase (decrease) in cash and cash equivalents

10,035

(114,489)

Cash and cash equivalents, beginning of period

150,966

265,455

Cash and cash equivalents, end of period

$161,001

$150,966

 

 

CRACKER BARREL OLD COUNTRY STORE, INC.

Supplemental Information

(Unaudited)

 

 

 

Fourth Quarter Ended

Twelve Months Ended

7/28/17

7/29/16

7/28/17

7/29/16

Units in operation:

     Open at beginning of period

647

636

641

637

     Opened during period

2

5

8

6

     (Closed) during period

0

0

0

(2)

     Open at end of period

649

641

649

641

Total revenue: (In thousands)

      Restaurant

$611,324

$609,525

$2,351,212

$2,323,199

      Retail

131,902

136,059

575,077

589,152

      Total revenue

$743,226

$745,584

$2,926,289

$2,912,351

Cost of goods sold: (In thousands)

      Restaurant

$153,848

$158,663

$595,186

$627,713

      Retail

63,534

69,226

296,107

300,463

      Total cost of goods sold

$217,382

$227,889

$891,293

$928,176

  Average unit volume: (In thousands)

      Restaurant

$943.5

$954.6

$3,645.7

$3,651.2

      Retail

203.6

213.1

891.7

925.9

      Total

$1,147.1

$1,167.7

$4,537.4

$4,577.1

Operating weeks:

8,423

8,301

33,536

33,087

 

Q4 2017 vs. Q4 2016

12 mo. 2017 vs. 12 mo. 2016

Comparable store sales period to period increase (decrease):

Restaurant                                           

(0.8%)

0.2%

Retail

(4.4%)

(3.7%)

Number of locations in comparable store base:

635

632

 

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.

Fourth Quarter Ended July 28, 2017

Fourth Quarter Ended July 29, 2016

As Reported

Adjust

As Adjusted

As Reported

Adjust

As Adjusted

Store operating income

$119,749

$-

$119,749

$114,375

$-

$114,375

General and administrative expenses

36,509

36,509

36,765

36,765

Operating income

83,240

83,240

77,610

77,610

Interest Expense

3,568

3,568

3,503

3,503

Pretax income

79,672

79,672

74,107

74,107

Provision for income taxes

25,779

25,779

23,084

23,084

Net income

$53,893

$-

$53,893

$51,023

$-

$51,023

Earnings per share – Basic

$2.24

$-

$2.24

$2.13

$-

$2.13

Earnings per share – Diluted

$2.23

$-

$2.23

$2.12

$-

$2.12

Twelve Months Ended July 28, 2017

Twelve Months Ended July 29, 2016

As Reported

Adjust

As Adjusted

As Reported

Adjust

As Adjusted

(1)(2)

Store operating income

$454,572

$-

$454,572

$423,453

$-

$423,453

General and administrative expenses

141,414

141,414

142,982

142,982

Operating income

313,158

313,158

280,471

280,471

Interest Expense

14,271

14,271

14,052

14,052

Pretax income

298,887

298,887

266,419

266,419

Provision for income taxes

96,988

96,988

77,120

7,604

84,724

Net income

$201,899

$-

$201,899

$189,299

($7,604)

$181,695

Earnings per share – Basic

$8.40

$-

$8.40

$7.91

($0.32)

$7.59

Earnings per share – Diluted

$8.37

$-

$8.37

$7.86

($0.31)

$7.55

(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.   

Posted by on September 13, 2017.

Categories: Restaurant Industry News

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