Cracker Barrel Reports Second Quarter Fiscal 2020 Results An

|Feb 25|magazine35 min read

LEBANON, Tenn., Feb. 25, 2020 /PRNewswire/ -- Cracker Barrel Old Country Store, Inc. ("Cracker Barrel" or the "Company") (Nasdaq: CBRL) today reported its financial results for the second quarter ended January 31, 2020.

Second Quarter Fiscal 2020 Highlights

  • Comparable store restaurant sales growth of 3.8% and traffic of -0.2% outperformed the casual dining industry. Comparable store retail sales increased 1.3%.
  • Operating income was $79.1 million, a 3.2% increase compared to the prior year.
  • GAAP earnings per diluted share were $2.55, which includes an unfavorable impact to earnings per diluted share for the quarter of ($0.15) from the Company's equity method investment in its unconsolidated subsidiary Punch Bowl Social, compared to prior year second quarter earnings per diluted share of $2.52.

Commenting on the second quarter results, Cracker Barrel President and Chief Executive Officer Sandra B. Cochran said, "I am pleased that we continued to outperform the casual dining industry and that we delivered solid operating income growth. The holidays are an important time for Cracker Barrel, and I believe this quarter we further strengthened our reputation as a destination for both in-store and off-premise holiday dining occasions, as demonstrated by the success of our Country Fried Turkey menu promotion and the continued growth of our off-premise business. Our teams continued to make progress on key initiatives, and I believe we are well-positioned to build on our momentum in the back half of our fiscal year."

Second Quarter Fiscal 2020 Results
Revenue 
The Company reported total revenue of $846.1 million for the second quarter of fiscal 2020, representing an increase of 4.2% over the second quarter of the prior year. Cracker Barrel comparable store restaurant sales increased 3.8%, as a 4.0% increase in average check offset a 0.2% decrease in comparable store restaurant traffic. The average menu price increase for the quarter was approximately 2.2%. Comparable store retail sales increased 1.3% from the prior year quarter.

Operating Income
Operating income in the second quarter was $79.1 million, or 9.4% of total revenue, an increase from the prior year quarter of $76.7 million, or 9.5% of total revenue. As a percentage of total revenue, increases in other operating expenses and general and administrative expenses were partially offset by reductions in cost of goods sold and labor and related expenses.  

Earnings per Diluted Share
GAAP earnings per diluted share were $2.55, which includes an unfavorable impact to earnings per diluted share for the quarter of ($0.15) from the Company's equity method investment in its unconsolidated subsidiary Punch Bowl Social, compared to prior year second quarter earnings per diluted share of $2.52.

Share Repurchases
The Company repurchased $5.8 million in shares during the second quarter.

Fiscal 2020 Outlook
The Company updated the following components of its fiscal 2020 outlook:

  • GAAP earnings per diluted share between $8.55 and $8.65
    • This includes an expected loss from the Company's equity method investment in its unconsolidated subsidiary, Punch Bowl Social, resulting in an unfavorable GAAP earnings per diluted share impact of approximately ($0.80)
    • This also includes transactional and integration expenses related to the Company's acquisition of Maple Street Biscuit Company, which are expected to result in an unfavorable impact to GAAP earnings per diluted share of approximately ($0.15)
  • Cracker Barrel comparable store restaurant sales growth of 2.0% to 2.5%
  • Approximately flat comparable store retail sales growth
  • Commodity inflation, on a constant mix basis, of 1.5% to 2.0%
  • Depreciation expense of approximately $115 million
  • Sustainable cost savings of approximately $11 million
  • Capital expenditures of approximately $125 million
  • An effective tax rate of approximately 16.0%, which includes an expected tax benefit from the projected loss from the Company's equity method investment in Punch Bowl Social

The Company reminds investors that its outlook for fiscal 2020 reflects a number of assumptions, many of which are outside the Company's control. 

Fiscal 2020 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 today beginning at 11:00 a.m. (ET). The on-line replay will be available at 2:00 p.m. (ET) and continue through March 10, 2020.

About Cracker Barrel Old Country Store®
Cracker Barrel Old Country Store, Inc. (Nasdaq: 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 664 company-owned Cracker Barrel Old Country Store® locations in 45 states and own the fast-casual concept Maple Street Biscuit Company. 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 Q2 FY 2020 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; uncertain performance of acquired businesses, strategic investments and other initiatives that we may pursue now or in the future, including our integration of Maple Street Biscuit Company and our non-controlling ownership interest in Punch Bowl Social; 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 STATEMENT

(Unaudited)

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

 


Second Quarter Ended 


Six Months Ended






Percentage






Percentage

1/31/20


2/1/19


Change


1/31/20


2/1/19


Change

Total revenue

$846,143


$811,707


4%


$1,595,183


$1,545,250


3%

Cost of goods sold, (exclusive of

depreciation and rent)

272,207


265,179


3


492,021


487,472


1

Labor and other related expenses

284,777


276,774


3


548,091


534,933


2

Other store operating expenses

171,638


156,819


9


334,546


309,297


8

General and administrative
   expenses

38,386


36,224


6


78,017


75,159


4

Operating income

79,135


76,711


3


142,508


138,389


3

Interest expense

3,505


4,177


(16)


7,085


8,526


(17)

Pretax income

75,630


72,534


4


135,423


129,863


4

Provision for income taxes

10,878


11,779


(8)


21,468


21,901


(2)

Income (loss) from unconsolidated
subsidiary

(3,584)


0




(9,564)


0



Net income

$61,168


$60,755


1


$104,391


$107,962


(3)













Earnings per share – Basic:

$2.55


$2.53


1


$4.35


$4.49


(3)

Earnings per share – Diluted:

$2.55


$2.52


1


$4.34


$4.48


(3)













Weighted average shares:












    Basic

23,950,811


24,040,374


(0)


23,994,583


24,031,480


(0)

    Diluted

24,005,817


24,093,725


(0)


24,054,870


24,083,723


(0)













Ratio Analysis












Total revenue:












    Restaurant

78.4%


77.8%




79.6%


79.1%



    Retail

21.6


22.2




20.4


20.9



            Total revenue

100.0


100.0




100.0


100.0



Cost of goods sold, (exclusive of

depreciation and rent)

32.2


32.7




30.8


31.5



Labor and other related expenses

33.6


34.1




34.4


34.7



Other store operating expenses

20.3


19.3




21.0


20.0



General and administrative expenses

4.5


4.4




4.9


4.8



Operating income

9.4


9.5




8.9


9.0



Interest expense

0.5


0.6




0.4


0.6



Pretax income

8.9


8.9




8.5


8.4



Provision for income taxes

1.3


1.4




1.4


1.4



Income (loss) from unconsolidated subsidiary

(0.4)


0.0




(0.6)


0.0



Net income

7.2%


7.5%




6.5%


7.0%



 


CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited and in thousands, except share amounts)


1/31/20


2/1/19


Assets





   Cash and cash equivalents

$72,840


$169,564


   Accounts receivable

20,778


16,977


   Inventory

157,352


151,402


   Prepaid expenses and other current assets

35,100


21,200


   Property and equipment, net

1,176,747


1,162,186


   Operating lease right-of-use assets, net

465,685


0


   Investment in unconsolidated subsidiary

79,536


0


   Other assets

122,514


66,474


   Goodwill

6,364


0


           Total assets

$2,136,916


$1,587,803







Liabilities and Shareholders' Equity





   Accounts payable

$123,318


$117,885


   Other current liabilities

321,566


262,245


   Long-term debt

460,000


400,000


   Long-term operating lease liabilities

460,840


0


   Other long-term obligations

85,927


127,719


   Deferred income taxes

55,335


51,336


   Shareholders' equity, net

629,930


628,618


          Total liabilities and shareholders' equity

$2,136,916


$1,587,803







Common shares issued and outstanding

23,943,248


24,041,374


 

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

(Unaudited and in thousands)


Six Months Ended


1/31/20


2/1/19

Cash flows from operating activities:




             Net income

$104,391


$107,962

             Net loss from unconsolidated subsidiary

9,564


0

             Depreciation and amortization

58,277


51,056

             Loss on disposition of property and equipment

4,005


5,760

             Impairment

664


0

             Share-based compensation, net of excess tax benefit

3,920


4,133

             Noncash lease expense

30,845


0

             (Increase) decrease in inventories

(2,167)


4,851

             (Decrease) in accounts payable

(10,779)


(4,447)

             Net changes in other assets and liabilities

(14,716)


21,548

                           Net cash provided by operating activities

184,004


190,863

Cash flows from investing activities:




             Purchase of property and equipment, net of insurance recoveries

(58,289)


(69,829)

             Proceeds from sale of property and equipment

1,565


91

             Notes receivable from unconsolidated subsidiary

(33,000)


0

             Acquisition of business, net of cash acquired

(32,971)


0

                           Net cash (used in) investing activities

(122,695)


(69,738)

Cash flows from financing activities:




              Net proceeds from long-term debt

60,000


0

              (Taxes withheld) from issuance of share-based compensation awards

(1,994)


(2,057)

              Purchases and retirement of common stock

(20,000)


0

              Deferred financing costs

0


(3,022)

              Dividends on common stock

(63,359)


(61,138)

                           Net cash (used in) financing activities

(25,353)


(66,217)





Net increase  in cash and cash equivalents

35,956


54,908

Cash and cash equivalents, beginning of period

36,884


114,656

Cash and cash equivalents, end of period

$72,840


$169,564






 

CRACKER BARREL OLD COUNTRY STORE, INC.

Supplemental Information

(Unaudited)


Second Quarter Ended


Six Months Ended


1/31/20


2/1/19


1/31/20


2/1/19

Company-owned units in operation:








     Open at beginning of period

695


663


667


660

     Maple Street units acquired during period

-


-


28


-

     Opened during period

1


2


1


5

     Closed during period

(1)


(1)


(1)


(1)

     Total company-owned units at end of period

695


664


695


664









Total revenue: (In thousands)








      Restaurant

$663,043


$631,175


$1,270,122


$1,222,153

      Retail

183,100


180,532


325,061


323,097

      Total revenue

$846,143


$811,707


$1,595,183


$1,545,250









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








      Restaurant

$172,676


$165,861


$322,133


$315,049

      Retail

99,531


99,318


169,888


172,423

      Total cost of goods sold

$272,207


$265,179


$492,021


$487,472









  Average unit volume*: (In thousands)








      Restaurant

$985.3


$950.4


$1,893.7


$1,843.9

      Retail

274.6


$271.8


487.4


487.5

      Total

$1,259.9


$1,222.2


$2,381.1


$2,331.4

Operating weeks:

8,668


8,634


17,339


17,233


Note*: Average unit volumes include sales of all stores except Maple Street Biscuit Company.











Q2 2020 vs. Q2 2019


6 mo. 2020 vs. 6 mo. 2019

     Comparable Cracker Barrel store sales period to period increase:





     Restaurant


3.8%


3.0%

     Retail


1.3%


0.4%






     Number of Cracker Barrel locations in comparable store base:


651


647

 

Investor Contact:

Adam Hanan 


(615) 443-9887



Media Contact:

Janella Escobar


(615) 235-4618

 

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/cracker-barrel-reports-second-quarter-fiscal-2020-results-and-updates-guidance-301010189.html

SOURCE Cracker Barrel Old Country Store, Inc.