CBRL Group, Inc. Reports Higher Third Quarter Net Income Per Diluted Share
LEBANON, Tenn., May 28, 2008 (BUSINESS WIRE) -- CBRL Group, Inc. (Nasdaq: CBRL):
-- Fully diluted income from continuing operations per share increased 4.5% to $0.46 for the third quarter fiscal 2008 from $0.44 in the prior-year comparable period.
-- Revenue for the third quarter grew 3.3% to $567 million compared with the prior year quarter.
-- Comparable store restaurant sales for the third quarter fiscal 2008 increased 0.2% from prior year for Cracker Barrel Old Country Store(R) ("Cracker Barrel") while comparable store retail sales were down 2.1%, both on a comparable weeks basis.
-- Operating income margin from continuing operations in the third quarter was 4.9% of total revenue compared with 5.5% in the year-ago quarter.
CBRL Group, Inc. ("CBRL" or the "Company") (Nasdaq: CBRL) today reported income from continuing operations of $0.46 per diluted share for the third quarter of fiscal 2008, which represents an increase of 4.5% over $0.44 per diluted share from continuing operations in the third quarter of fiscal 2007. Income from continuing operations was $10.5 million compared with $12.1 million in the third quarter of fiscal 2007, reflecting lower operating income and lower interest income.
Third-Quarter Fiscal 2008 Results
Revenue from continuing operations
Total revenue from continuing operations of $567 million during the third quarter represented an increase of 3.3% from the third quarter of fiscal 2007. Comparable store restaurant sales for the period increased 0.2%, including a 3.5% higher average check, while guest traffic declined 3.3%, both on a comparable weeks basis. Cracker Barrel's average menu price increase for the quarter was approximately 3.7% compared with last year. Comparable store retail sales were down 2.1% for the quarter on a comparable weeks basis. During the quarter, the Company opened six new Cracker Barrel Old Country Store units, bringing the new store openings to date for fiscal 2008 to 16, with a total of 17 planned in fiscal 2008.
Income from continuing operations
Operating income from continuing operations of $27.7 million was 4.9% of total revenue during the third quarter of fiscal 2008 compared with $30.1 million, or 5.5% of total revenue, in the third quarter of fiscal 2007. Operating income margin was favorably affected by higher sales and lower general and administrative expenses, which were offset by higher retail product and food costs. General and administrative expenses declined because of lower incentive compensation accruals in the third quarter.
Income from continuing operations was $10.5 million, or $0.46 per diluted share, for the third quarter of fiscal 2008, compared with $12.1 million, or $0.44 per diluted share for the comparable period of fiscal 2007. The decline in income from continuing operations reflected lower operating income and lower interest income on cash balances held (the prior year included substantial cash balances held following the disposition of Logan's Roadhouse, Inc.) offset by the benefit of a lower effective tax rate.
Commenting on the third-quarter results, CBRL Group, Inc. Chairman, President and Chief Executive Officer Michael A. Woodhouse said, "In a very challenging consumer environment, we are pleased that our strong value proposition continued to generate restaurant traffic that outperformed casual dining industry trends in the quarter. Our cost management initiatives are showing positive results and helping to mitigate higher costs for food and pressures on retail gross margins. While we will continue to address current cost issues, we remain focused on driving restaurant traffic and building retail sales."
Year-to-date Fiscal 2008 Results
Total revenue from continuing operations of $1.78 billion year-to-date for fiscal 2008 represented an increase of 3.7% over fiscal 2007. Comparable store restaurant sales increased 1.0% on a comparable weeks basis, including a 3.3% higher check, while guest traffic declined by 2.3%. Comparable store retail sales decreased 0.6% on a comparable weeks basis. In the first nine months of fiscal 2008, the Company opened 16 new Cracker Barrel Old Country Stores and closed two units.
Year to date, the Company reported income from continuing operations of $44.7 million, or $1.88 per diluted share, compared with income from continuing operations of $47.8 million, or $1.50 per diluted share, in fiscal 2007.
Year-to-date net cash flow provided by operating activities from continuing operations was $83.8 million, compared with $100.0 million in fiscal 2007, reflecting lower net income from continuing operations as well as the timing of accounts payable in the current year.
Fiscal May Sales
With three days remaining in the fiscal month of May, we expect to report flat to slightly positive comparable store restaurant sales. Comparable store retail sales are expected to be up 2% to 3%. Sales for the fiscal month of May, which ends May 30, 2008, will be reported on June 3, 2008.
Fiscal 2008 Outlook
The Company urges caution in considering its current trends and the outlook disclosed in this press release. The restaurant industry is highly competitive, and trends and guidance are subject to numerous factors, risks and influences, some of which are discussed in the cautionary language set forth below in this press release and others that are described in the Company's Annual Report on Form 10-K for the fiscal year ended August 3, 2007 and subsequent Quarterly Reports on Form 10-Q which can be found on the Securities and Exchange Commission's website, sec.gov, and the Company's website, cbrlgroup.com. The Company disclaims any obligations to update disclosed information on trends or targets.
The Company commented that its outlook for fiscal 2008 reflects many assumptions, the accuracy of which is not yet known. Based on current trends and estimates, the Company expects fiscal 2008 total revenue to increase approximately 2% over revenues from continuing operations in fiscal 2007 (which included a 53rd week equaling $46.3 million of sales). The revenue increase reflects the projected opening of 17 new Cracker Barrel units during the year, full-year comparable store restaurant sales projected to be up 1% to 1.5% on a comparable weeks basis, including approximately 3.6% of menu price increases, and full-year comparable store retail sales projected to be flat to up 0.5% compared to fiscal 2007 on a comparable weeks basis. The Company also expects fiscal 2008 operating income margin as a percent of revenues from continuing operations to be approximately 6.7% to 6.8% compared with 7.0% (excluding the effect of a 53rd week) in fiscal 2007. Commodity cost inflation for fiscal 2008 now is expected to be 5.5% to 6.0% with an estimated 80% of product needs contracted for the fourth quarter of fiscal 2008. Depreciation for the year is expected to be approximately $57 to $58 million. Net interest expense is estimated at $57 to $58 million and diluted shares outstanding are expected to average approximately 23.5 million. The Company expects its full year 2008 effective tax rate to be between 30.0% and 30.5%, including lower than previously-expected tax rates in the fourth quarter. Income from continuing operations per diluted share now is projected to be in the range of $3.02 to $3.12 per share. The Company expects full year fiscal 2008 capital expenditures of approximately $85 million.
In updating its guidance, the Company also noted that beginning in fiscal 2009, the Company will no longer report sales results monthly. Instead, quarterly sales results will be reported when the Company releases quarterly financial results.
Commenting on the outlook, Mr. Woodhouse said, "While our restaurant traffic and retail sales were not as strong as we had expected in the third quarter, we are pleased with the way our fourth quarter has started. We believe that our first ever national promotion, The Greatest Family Road Trip(TM) Game, will generate new excitement for Cracker Barrel during the summer travel season. We continue to represent a great dining value, and now we're providing more reasons to stop and see what's new. We continue to expect earnings per share to be substantially better than fiscal 2007, which included the 53rd week, as a result of our operating focus and the recapitalization initiatives that we began in fiscal 2006."
Fiscal 2008 Third-Quarter Conference Call
As previously announced, the live broadcast of CBRL Group's quarterly conference call will be available to the public on-line at investor.cbrlgroup.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 June 11, 2008.
Headquartered in Lebanon, Tennessee, CBRL Group, Inc. presently operates 576 Cracker Barrel Old Country Store restaurants and gift shops located in 41 states.
CBRL-F
Except for specific historical information, many 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 CBRL Group, Inc. and its subsidiaries to differ materially from those expressed or implied by this discussion. All forward-looking information is provided by the Company 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. Factors which could materially affect actual results include, but are not limited to: the effects of actual or perceived negative economic conditions including uncertain consumer confidence, higher costs for energy, consumer debt payments, or weather on sales and customer travel, discretionary income or personal expenditure activity of our customers; the ability of the Company to identify, acquire and sell successful new lines of retail merchandise and new menu items at our restaurants; commodity price increases including weather effects on supply and the effects of demand for corn for ethanol production on the costs of animal feed and resulting protein prices; the ability of the Company to sustain or the effects of plans intended to improve operational or marketing execution and performance; workers compensation, group health and utility price changes; 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 the Company's brands and products; the ability of and cost to the Company to recruit, train, and retain qualified hourly and management employees in an escalating wage environment; the effects of increased competition at Company locations on sales and on labor recruiting, cost, and retention; the availability and cost of suitable sites for restaurant development and our ability to identify those sites; consumer behavior based on negative publicity or concerns over nutritional or safety aspects of the Company's products or restaurant food in general, including concerns about E. coli bacteria, "mad cow" disease, and bird flu, as well as the possible effects of such events on the price or availability of ingredients used in our restaurants; the effects of incurring substantial indebtedness and associated restrictions on the Company's financial and operating flexibility and ability to execute or pursue its operating plans and objectives; changes in interest rates or capital market conditions affecting the Company's financing costs or ability to obtain financing; the effects of business trends on the outlook for individual restaurant locations and the effect on the carrying value of those locations; the ability of the Company to retain key personnel; 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 the Company's restaurant or retail supply chain; changes in foreign exchange rates affecting the Company's future retail inventory purchases; implementation of new or changes in interpretation of existing accounting principles generally accepted in the United States of America ("GAAP"); effectiveness of internal controls over financial reporting and disclosure; and other factors described from time to time in the Company's filings with the Securities and Exchange Commission, press releases, and other communications.
CBRL GROUP, INC.
CONDENSED CONSOLIDATED INCOME STATEMENT
(Unaudited)
(In thousands, except share amounts)
Third Quarter Ended
--------------------------------------
Percentage
5/2/08 4/27/07 Change
------------ ------------ ----------
Total revenue $ 567,138 $ 549,050 3%
Cost of goods sold 180,588 167,928 8
------------ ------------
Gross profit 386,550 381,122 1
Labor & other related
expenses 226,851 219,012 4
Other store operating
expenses 103,157 100,511 3
Impairment and store closing
charges -- -- --
------------ ------------
Store operating income 56,542 61,599 (8)
General and administrative
expenses 28,800 31,536 (9)
------------ ------------
Operating income 27,742 30,063 (8)
Interest expense 14,215 13,801 3
Interest income -- 2,199 (100)
------------ ------------
Pretax income 13,527 18,461 (27)
Provision for income taxes 3,048 6,350 (52)
------------ ------------
Income from continuing
operations 10,479 12,111 (13)
(Loss) income from
discontinued operations (35) 214 (116)
------------ ------------
Net income $ 10,444 $ 12,325 (15)
============ ============
Earnings per share - Basic:
Income from continuing
operations $ 0.47 $ 0.48 (2)
(Loss) income from
discontinued operations $ -- $ 0.01 (100)
------------ ------------
Net income per share $ 0.47 $ 0.49 (4)
============ ============
Earnings per share -
Diluted:
Income from continuing
operations $ 0.46 $ 0.44 5
(Loss) income from
discontinued operations $ -- $ 0.01 (100)
------------ ------------
Net income per share $ 0.46 $ 0.45 2
============ ============
Weighted average shares:
Basic 22,140,557 24,984,268 (11)
Diluted 22,812,380 30,183,152 (24)
Ratio Analysis
----------------------------
Total revenue:
Restaurant 81.2% 81.0%
Retail 18.8 19.0
------------ ------------
Total revenue 100.0 100.0
Cost of goods sold 31.8 30.6
------------ ------------
Gross profit 68.2 69.4
Labor & other related
expenses 40.0 39.9
Other store operating
expenses 18.2 18.3
Impairment and store closing
charges -- --
------------ ------------
Store operating income 10.0 11.2
General and administrative
expenses 5.1 5.7
------------ ------------
Operating income 4.9 5.5
Interest expense 2.5 2.5
Interest income -- 0.4
------------ ------------
Pretax income 2.4 3.4
Provision for income taxes 0.6 1.2
------------ ------------
Income from continuing
operations 1.8 2.2
(Loss) income from
discontinued operations -- --
------------ ------------
Net income 1.8% 2.2%
============ ============
Nine Months Ended
--------------------------------------
Percentage
5/2/08 4/27/07 Change
------------ ------------ ----------
Total revenue $ 1,782,756 $ 1,719,447 4%
Cost of goods sold 584,551 551,136 6
------------ ------------
Gross profit 1,198,205 1,168,311 3
Labor & other related
expenses 681,652 650,780 5
Other store operating
expenses 314,850 304,165 4
Impairment and store closing
charges 877 -- --
------------ ------------
Store operating income 200,826 213,366 (6)
General and administrative
expenses 91,641 102,818 (11)
------------ ------------
Operating income 109,185 110,548 (1)
Interest expense 43,578 43,587 --
Interest income 185 6,654 (97)
------------ ------------
Pretax income 65,792 73,615 (11)
Provision for income taxes 21,096 25,841 (18)
------------ ------------
Income from continuing
operations 44,696 47,774 (6)
(Loss) income from
discontinued operations (146) 86,490 (100)
------------ ------------
Net income $ 44,550 $ 134,264 (67)
============ ============
Earnings per share - Basic:
Income from continuing
operations $ 1.94 $ 1.65 18
(Loss) income from
discontinued operations $ -- $ 2.98 (100)
------------ ------------
Net income per share $ 1.94 $ 4.63 (58)
============ ============
Earnings per share -
Diluted:
Income from continuing
operations $ 1.88 $ 1.50 25
(Loss) income from
discontinued operations $ -- $ 2.54 (100)
------------ ------------
Net income per share $ 1.88 $ 4.04 (53)
============ ============
Weighted average shares:
Basic 22,993,121 28,996,618 (21)
Diluted 23,671,903 34,070,700 (31)
Ratio Analysis
----------------------------
Total revenue:
Restaurant 77.9% 77.6%
Retail 22.1 22.4
------------ ------------
Total revenue 100.0 100.0
Cost of goods sold 32.8 32.1
------------ ------------
Gross profit 67.2 67.9
Labor & other related
expenses 38.2 37.8
Other store operating
expenses 17.7 17.7
Impairment and store closing
charges -- --
------------ ------------
Store operating income 11.3 12.4
General and administrative
expenses 5.2 6.0
------------ ------------
Operating income 6.1 6.4
Interest expense 2.4 2.5
Interest income -- 0.4
------------ ------------
Pretax income 3.7 4.3
Provision for income taxes 1.2 1.5
------------ ------------
Income from continuing
operations 2.5 2.8
(Loss) income from
discontinued operations -- 5.0
------------ ------------
Net income 2.5% 7.8%
============ ============
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited and in thousands, except share amounts)
5/2/08 8/3/07
----------- -----------
Assets
Cash and cash equivalents $ 11,901 $ 14,248
Assets held for sale 2,550 4,676
Other current assets 186,891 181,357
Property and equipment, net 1,034,785 1,018,982
Long-lived assets 45,090 45,767
----------- -----------
Total assets $ 1,281,217 $ 1,265,030
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities $ 237,308 $ 274,669
Long-term debt 787,535 756,306
Other long-term obligations 184,359 129,932
Shareholders' equity 72,015 104,123
----------- -----------
Total liabilities and shareholders'
equity $ 1,281,217 $ 1,265,030
=========== ===========
Common shares outstanding 22,147,968 23,674,175
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
(Unaudited and in thousands)
Nine Months Ended
------------------------
5/2/08 4/27/07
----------- -----------
Cash flows from continuing operations:
Cash flows from operating activities:
Net income $ 44,550 $ 134,264
Loss (income) from discontinued
operations, net of tax 146 (86,490)
Depreciation and amortization 42,666 42,407
Loss on disposition of property and
equipment 101 587
Impairment 532 --
Accretion on zero-coupon notes -- 4,410
Share-based compensation, net of excess
tax benefit 6,585 5,351
Net changes in other assets and
liabilities (10,743) (517)
----------- -----------
Net cash provided by operating
activities 83,837 100,012
----------- -----------
Cash flows from investing activities:
Purchase of property and equipment, net
of insurance recoveries (60,699) (66,604)
Proceeds from sale of property and
equipment 4,878 5,330
----------- -----------
Net cash used in investing
activities (55,821) (61,274)
----------- -----------
Cash flows from financing activities:
Net proceeds (payments) for credit
facilities and other long-term
obligations 31,739 (80,692)
Proceeds from exercise of stock options 2,218 33,013
Excess tax benefit from share-based
compensation 41 4,754
Purchase and retirement of common stock (52,380) (341,581)
Dividends on common stock (11,756) (12,118)
----------- -----------
Net cash used in financing
activities (30,138) (396,624)
----------- -----------
Cash flows from discontinued operations:
Net cash used in operating activities
of discontinued operations (225) (33,463)
Net cash provided by investing
activities of discontinued operations -- 453,394
----------- -----------
Net cash (used in) provided by
discontinued operations (225) 419,931
----------- -----------
Net (decrease) increase in cash and cash
equivalents (2,347) 62,045
Cash and cash equivalents, beginning of
period 14,248 87,830
----------- -----------
Cash and cash equivalents, end of period $ 11,901 $ 149,875
=========== ===========
CBRL GROUP, INC.
Supplemental Information
(Unaudited)
Third Quarter Ended Nine Months Ended
--------------------- ------------------------
5/2/08 4/27/07 5/2/08 4/27/07
---------- --------- ------------ ----------
Units in operation:
Open at
beginning of
period 570 552 562 543
Opened during
period 6 5 16 14
Closed during
period -- -- (2) --
---------- --------- ------------ ----------
Open at end of
period 576 557 576 557
Total revenue: (In
thousands)
Restaurant $460,406 $ 444,923 $1,388,264 $1,335,032
Retail 106,732 104,127 394,492 384,415
---------- --------- ------------ ----------
Total revenue $567,138 $ 549,050 $1,782,756 $1,719,447
========== ========= ============ ==========
Operating weeks: 7,445 7,216 22,166 21,452
Average unit
volume: (In
thousands)
Restaurant $ 803.9 $ 801.5 $ 2,442.6 $ 2,427.1
Retail 186.4 187.6 694.1 698.9
---------- --------- ------------ ----------
Total $ 990.3 $ 989.1 $ 3,136.7 $ 3,126.0
========== ========= ============ ==========
Q3 2008 vs. Q3 2007 9 mo. 2008 vs. 9 mo.
2007
--------------------- ------------------------
Comparable store
sales period
increase
(decrease):
Restaurant 0.2% 1.0%
Retail (2.1)% (0.6)%
Number of locations
in comparable
store base 541 531
SOURCE: CBRL Group, Inc.
CBRL Group, Inc. Investor Contact: Diana S. Wynne, 615-443-9837 Senior Vice President, Corporate Affairs or Media Contact: Julie K. Davis, 615-443-9266 Director Corporate Communications
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