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Cracker Barrel Reports First Quarter Fiscal 2019 Results and Declares Quarterly Dividend

Company reports positive comparable store restaurant and retail sales

Board declares quarterly dividend of $1.25 per share

LEBANON, Tenn., Nov. 27, 2018 /PRNewswire/ -- Cracker Barrel Old Country Store, Inc. ("Cracker Barrel" or the "Company") (Nasdaq: CBRL) today reported its financial results for the first quarter ended November 2, 2018.

First Quarter Fiscal 2019 Highlights

  • Earnings per diluted share were $1.96, a 2.1% increase compared to $1.92 in the prior year first quarter.
  • Compared to the prior year, comparable restaurant sales increased 1.4% and comparable retail sales increased 4.3%.
  • The Company's Board of Directors declared a quarterly dividend of $1.25 per share on the Company's common stock, payable on February 5, 2019 to shareholders of record on January 18, 2019.

Commenting on the first quarter results, Cracker Barrel President and Chief Executive Officer Sandra B. Cochran said, "Our teams made progress on improving traffic through a heightened focus on the guest experience, our menu, our everyday value, and the continued expansion of our off-premise business. We delivered positive comparable store sales in both restaurant and retail, and we improved upon our fourth quarter sales trend. I am encouraged by our start to the fiscal year, and we must continue to work hard to drive further traffic improvement."

First Quarter Fiscal 2019 Results
Revenue 
The Company reported total revenue of $733.5 million for the first quarter of fiscal 2019, representing an increase of 3.3% over the first quarter of the prior year. Cracker Barrel comparable store restaurant sales increased 1.4%, as a 3.0% increase in average check offset a 1.6% decrease in comparable store restaurant traffic. The average menu price increase for the quarter was approximately 2.0%. Comparable store retail sales increased 4.3% from the prior year quarter.

Cracker Barrel comparable store restaurant traffic, average check, and comparable store restaurant sales and retail sales for the first quarter were as follows:


First Quarter

Comparable restaurant traffic

-1.6%

Average check

3.0%

Comparable restaurant sales

1.4%

Comparable retail sales

4.3%

Operating Income
Operating income in the first quarter was $61.7 million, or 8.4% of total revenue, a decrease from the prior year quarter of $70.8 million, or 10.0% of total revenue. The decrease as a percent of revenue was due to higher cost of goods sold, labor and related expenses, other operating expenses, and general and administrative expenses.

Earnings per Diluted Share
Earnings per diluted share were $1.96, a 2.1% increase over the prior year first quarter.  

Quarterly Dividend Declared
The Company's Board of Directors declared a quarterly dividend to common shareholders of $1.25 per share, payable on February 5, 2019 to shareholders of record on January 18, 2019.

Fiscal 2019 Outlook
For fiscal 2019, the Company continues to expect total revenue of approximately $3.04 billion, reflecting the expected opening of eight new Cracker Barrel stores as well as projected increases in comparable store restaurant sales growth in the range of flat to 1%. The Company now expects comparable store retail sales growth in the range of 1% to 2%. The Company continues to project food commodity inflation of approximately 2% for the year. The Company now projects operating income margin in the range of 9.0% to 9.3% as a percent of total revenue. The Company continues to expect depreciation expense of between $110 million and $115 million; net interest expense of approximately $17 million; and capital expenditures of approximately $160 million to $170 million. The Company presently anticipates an effective tax rate for fiscal 2019 of approximately 17%. The Company continues to project earnings per diluted share for fiscal 2019 of between $8.95 and $9.10 compared to GAAP earnings per diluted share of $10.29 and adjusted earnings per diluted share of $8.87, which reflects the $1.06 impact of the one-time non-cash revaluation of the net deferred tax liability and the $0.36 impact of the 53rd week in fiscal 2018. (For a reconciliation of GAAP to non-GAAP financial measures, please see the table accompanying this release.)

The Company reminds investors that its outlook for fiscal 2019 reflects a number of assumptions, many of which are outside the Company's control.

Fiscal 2019 First 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 today beginning at 11:00 a.m. (ET). The on-line replay will be available at 2:00 p.m. (ET) and continue through December 13, 2018.

About Cracker Barrel Old Country Store®
Cracker Barrel Old Country Store, Inc. (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 658 company-owned Cracker Barrel Old Country Store® locations in 45 states and own the fast-casual Holler and Dash® restaurants. For more information about the company, 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 Q1 FY 2019 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, and weather on sales and customer travel, discretionary income or personal expenditure activity of our customers; information technology-related incidents, including data privacy and information security breaches, whether as a result of infrastructure failures, employee or vendor errors, or actions of third parties; 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 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; our ability to enter successfully into new geographic markets that may be less familiar to us; 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 STATEMENTS

(Unaudited)

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





First Quarter Ended







Percentage



11/2/18


10/27/17


Change


Total revenue

$733,543


$710,368


3%


Cost of goods sold, exclusive of depreciation and rent

222,293


210,749


5


Labor and other related expenses

258,159


248,068


4


Other store operating expenses

152,478


143,820


6


Store operating income

100,613


107,731


(7)


General and administrative expenses

38,935


36,893


6


Operating income

61,678


70,838


(13)


Interest expense

4,349


3,618


20


Pretax income

57,329


67,220


(15)


Provision for income taxes

10,122


20,840


(51)


Net income

$47,207


$46,380


2









Earnings per share – Basic:

$1.97


$1.93


2


Earnings per share – Diluted:

$1.96


$1.92


2









Weighted average shares:







    Basic

24,022,586


24,035,202


(0)


    Diluted

24,073,722


24,105,187


(0)









Ratio Analysis







Total revenue:







    Restaurant

80.6%


81.4%




    Retail

19.4


18.6




            Total revenue

100.0


100.0




Cost of goods sold, exclusive of depreciation and rent

30.3


29.7




Labor and other related expenses

35.2


34.9




Other store operating expenses

20.8


20.2




Store operating income

13.7


15.2




General and administrative expenses

5.3


5.2




Operating income

8.4


10.0




Interest expense

0.6


0.5




Pretax income

7.8


9.5




Provision for income taxes

1.4


3.0




Net income

6.4%


6.5%
















  


CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited and in thousands, except share amounts)



11/2/18


10/27/17


Assets





   Cash and cash equivalents

$101,631


$120,193


   Accounts receivable

21,545


18,078


   Inventory

181,569


191,481


   Prepaid expenses and other current assets

20,989


19,479


   Property and equipment, net

1,157,979


1,105,781


   Other long-term assets

75,884


66,920


Total assets

$1,559,597


$1,521,932







Liabilities and Shareholders' Equity





   Accounts payable

$131,156


$130,127


   Other current liabilities

245,148


245,659


   Long-term debt

400,000


400,000


   Other long-term obligations

130,756


135,327


   Deferred income taxes

52,359


63,117


   Shareholders' equity, net

600,178


547,702


Total liabilities and shareholders' equity

$1,559,597


$1,521,932












Common shares issued and outstanding

24,034,375


23,994,793








 


CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

(Unaudited and in thousands)


Three Months Ended


11/2/18


10/27/17

Cash flows from operating activities:




             Net income

$47,207


$46,380

             Depreciation and amortization

24,838


21,631

             Loss on disposition of property and equipment

3,056


1,204

             Share-based compensation, net of excess tax benefit

2,089


2,035

             (Increase) in inventories

(25,316)


(35,114)

             Increase in accounts payable

8,824


11,732

             Net changes in other assets and liabilities

(1,071)


(9,591)

                           Net cash provided by operating activities

59,627


38,277

Cash flows from investing activities:




             Purchase of property and equipment, net of insurance recoveries

(36,746)


(30,527)

             Proceeds from sale of property and equipment

80


110

                           Net cash (used in) investing activities

(36,666)


(30,417)

Cash flows from financing activities:




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

(2,016)


(3,383)

              Purchases and retirement of common stock

0


(14,772)

              Deferred Financing Costs

(3,022)


0

              Dividends on common stock

(30,948)


(30,513)

                           Net cash (used in) financing activities

(35,986)


(48,668)





Net (decrease) in cash and cash equivalents

(13,025)


(40,808)

Cash and cash equivalents, beginning of period

114,656


161,001

Cash and cash equivalents, end of period

$101,631


$120,193






 


CRACKER BARREL OLD COUNTRY STORE, INC.

Supplemental Information

(Unaudited)






First Quarter Ended





11/2/18


10/27/17








Units in operation:







     Open at beginning of period




660


649

     Opened during period




3


2

     Open at end of period




663


651








Total revenue: (In thousands)







      Restaurant




$590,978


$578,237

      Retail




142,565


132,131

      Total revenue




$733,543


$710,368








Cost of goods sold (exclusive of depreciation and rent): (In thousands)







      Restaurant




$149,188


$143,850

      Retail




73,105


66,899

      Total cost of goods sold




$222,293


$210,749








  Average unit volume: (In thousands)







      Restaurant




$893.5


$889.5

      Retail




215.5


203.2

      Total




$1,109.0


$1,092.7








Operating weeks:




8,599


8,451






























Q1 2019 vs. Q1 2018

Comparable store sales period to period increase:












     Restaurant









1.4%

     Retail









4.3%

Number of locations in comparable store base:









641

 

CRACKER BARREL OLD COUNTRY STORE, INC.
Reconciliation of GAAP basis operating results to adjusted non-GAAP operating results
(Unaudited)


In the accompanying press release the Company makes reference to its full year 2018 adjusted earnings per share which excluded the impact of the 53rd week and the one-time non-cash revaluation of a net deferred tax liability.   The Tax Cuts and Jobs Act of 2017, which became effective on January 1, 2018 and prior to the end of our fiscal 2018 second quarter, lowered the federal corporate income tax rate to 21%.  During the second quarter of fiscal 2018, the Company recorded a provisional tax benefit for re-measurement of deferred tax liabilities due to this rate change of approximately $25 million.   The Company believed that excluding this item from its financial results reflected the  expected cash impact of tax reform for fiscal 2018, and as such provided investors with an enhanced understanding of the Company's financial results.  This information is not intended to be considered in isolation or as a substitute for income or earnings per share information prepared in accordance with GAAP.




Twelve months ended August 3, 2018


As Reported

Adjust

53rd week

As Adjusted



(1)



Total Revenue

$      3,030,445

$                   -

(58,353)

$      2,972,092






Store operating income

437,348

-

(13,309)

424,039

General and administrative expenses

143,756

-

(2,071)

141,685

Operating income

293,592

-

(11,238)

282,354

Interest Expense

15,169

-

(323)

14,846

Pretax income

278,423

-

(10,915)

267,508

Provision for income taxes

30,803

25,596

(2,383)

54,016

Net income

$     247,620

$    (25,596)

$    (8,532)

$     213,492






Earnings per share - Basic

$10.31

(1.06)

(0.36)

$8.89

Earnings per share - Diluted

$10.29

(1.06)

(0.36)

$8.87











(1) One-time Non-Cash Revaluation of Net Deferred Tax Liability



 

Investor Contact:

Adam Hanan


(615) 443-9887



Media Contact:

Janella Escobar


(615) 235-4618

 

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