Core Viewpoint - Cracker Barrel Old Country Store, Inc. has announced the upsizing and pricing of its offering of $300 million aggregate principal amount of 1.75% convertible senior notes due 2030, increasing from a previously announced $275 million [1] Group 1: Offering Details - The notes will accrue interest at a rate of 1.75% per annum, payable semi-annually starting March 15, 2026, and maturing on September 15, 2030 [2] - The initial conversion rate is set at 13.8455 shares of common stock per $1,000 principal amount of notes, equating to an initial conversion price of approximately $72.23 per share, representing a premium of about 32.5% over the last reported sale of $54.51 per share on June 10, 2025 [2] - The aggregate principal amount of the notes may be increased by an additional $45 million if the initial purchasers exercise their option [1][5] Group 2: Use of Proceeds - Cracker Barrel estimates net proceeds from the offering to be approximately $290.1 million, or $333.9 million if the option for additional notes is fully exercised [5] - Approximately $145.9 million of the net proceeds will be used to repurchase $150 million of outstanding 0.625% convertible senior notes due 2026 [5] - Remaining proceeds will be allocated for general corporate purposes, including potential repayment of existing indebtedness [5] Group 3: Redemption and Repurchase Conditions - The notes are redeemable for cash at Cracker Barrel's option starting September 15, 2028, under certain conditions [3] - In the event of a "fundamental change," noteholders may require Cracker Barrel to repurchase their notes for cash [4] Group 4: Capped Call Transactions - Cracker Barrel has entered into capped call transactions intended to reduce potential dilution upon conversion of the notes, with an initial cap of approximately $87.22, representing a 60% premium over the last reported sale price [6] - If additional notes are sold, a portion of the net proceeds will be used for further capped call transactions [7] Group 5: Market Activity and Impact - The option counterparties may purchase shares of Cracker Barrel's common stock or enter into derivative transactions, which could influence the market price of the stock and notes [8][10]

Core Insights - Cracker Barrel reported positive same-store sales in Q3 FY 2025, indicating strong consumer demand and effective operational strategies [1] - The company has formed fresh strategic partnerships, which may enhance its market position and operational efficiency [1] - Menu upgrades have been implemented, likely aimed at attracting new customers and retaining existing ones [1]

Core Viewpoint - Cracker Barrel Old Country Store, Inc. plans to offer $275 million in convertible senior notes due 2030, with an option for initial purchasers to buy an additional $41.25 million, subject to market conditions [1][2]. Group 1: Offering Details - The notes will be senior, unsecured obligations, accruing interest payable semi-annually starting March 15, 2026, and maturing on September 15, 2030 [2]. - Noteholders can convert their notes under certain conditions, with conversions settled in cash and/or shares of common stock at the company's discretion [2]. - The notes are redeemable at the company's option starting September 15, 2028, if specific stock price conditions are met [2]. Group 2: Use of Proceeds - A portion of the net proceeds will be used for capped call transactions, with remaining funds allocated for general corporate purposes, including the repayment of existing debt [3]. Group 3: Capped Call Transactions - Cracker Barrel will enter into capped call transactions to mitigate potential dilution from note conversions, with additional transactions expected if the option to purchase more notes is exercised [4]. - The initial hedging activities related to these transactions may influence the market price of Cracker Barrel's common stock [5]. Group 4: Existing Debt Management - The company may unwind existing convertible note hedge and warrant transactions if it repurchases any of its 2026 convertible notes with proceeds from the new offering [6][7].

Core Insights - Cracker Barrel Old Country Store, Inc. (CBRL) reported third-quarter fiscal 2025 results with earnings exceeding estimates but revenues falling short, indicating mixed performance [1][3][9] Financial Performance - Adjusted earnings per share (EPS) for the third quarter were 58 cents, surpassing the Zacks Consensus Estimate of 17 cents, but reflecting a 34.1% decline year over year [3][9] - Quarterly revenues reached $821.1 million, missing the consensus mark of $827 million, but showing a year-over-year increase of 0.5% [3][9] Comparable Store Sales - Comparable-store restaurant sales increased by 1% compared to the same quarter in fiscal 2024, while comparable-store retail sales decreased by 3.8% year over year [4] - Menu pricing increased by 4.9% year over year, although the predicted growth for comparable-store restaurant sales was 1.8% [4] Operating Highlights - Cost of goods sold (excluding depreciation and rent) was $247.3 million, up 1% year over year, representing 30.1% of total revenues, which is a 10 basis point increase from the previous year [5] - General and administrative expenses totaled $46 million, down 16% year over year, significantly lower than the predicted $53.9 million [5] Net Income - Adjusted net income for the fiscal third quarter was $13.1 million, down from $19.6 million in the prior-year quarter, but above the prediction of $5 million [6] Balance Sheet - As of May 2, 2025, cash and cash equivalents were $9.8 million, down from $11.9 million a year earlier [7] - Inventory at the end of the fiscal third quarter was $168.9 million, a decrease of 3.8% year over year [7] - Long-term debt increased to $489.4 million from $472.2 million a year earlier [7] Dividend Declaration - CBRL declared a cash dividend of 25 cents per share, scheduled for payment on August 13, 2025, to shareholders on record as of July 18 [7] 2025 Guidance - For fiscal 2025, the company expects revenues between $3.45 billion and $3.5 billion, with adjusted EBITDA anticipated to be between $215 million and $225 million, an increase from previous projections [10] - Commodity inflation is expected to be in the mid-2% range, while hourly wage inflation is also anticipated to be in the mid-2% range, down from earlier estimates [10] Capital Expenditures - Capital expenditures are projected to be in the range of $160 million to $170 million [11]

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Financial Data and Key Metrics Changes - For Q3, total revenue was $821.1 million, up 0.5% from the prior year quarter [21] - Restaurant revenue increased by 1.2% to $679.3 million, while retail revenue decreased by 2.7% to $141.8 million [22] - Comparable store restaurant sales grew by 1%, while comparable store retail sales decreased by 3.8% [22] - Adjusted EBITDA was $48.1 million, or 5.9% of total revenue, compared to $47.9 million, or 5.9% of total revenue in the prior year [28] Business Line Data and Key Metrics Changes - Restaurant cost of goods sold was 26.2% of restaurant sales, up from 25.9% in the prior year, primarily due to menu mix and commodity inflation [23] - Retail cost of goods sold was 48.9% of retail sales, down from 49% in the prior year, driven by higher vendor allowances [24] - Labor and related expenses were 37.1% of revenue, down from 37.8% in the prior year, due to improved productivity [25] Market Data and Key Metrics Changes - Off-premise sales accounted for 19.1% of restaurant sales, compared to 18.9% in the prior year [22] - Pricing for the quarter was approximately 4.9%, consisting of 1.5% carry forward pricing from fiscal 2024 and 3.4% new pricing from fiscal 2025 [22] Company Strategy and Development Direction - The company is focused on brand refinement and enhancing guest engagement through various initiatives, including partnerships and promotions [11][12] - The transformation plan is aimed at driving relevancy, delivering food and experiences guests love, and growing profitability [19] - The company is leveraging AI technology to improve efficiency and effectiveness across various operations [15][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the macroeconomic environment but expressed confidence in executing the business and transforming for the future [18] - The company raised its guidance for total revenue and adjusted EBITDA for fiscal 2025, reflecting positive trends and strong start to Q4 [30][31] Other Important Information - The company is actively working to mitigate tariff impacts, with approximately one-third of retail products sourced from China [17] - The board declared a quarterly dividend of $0.25 per share payable on August 13, 2025 [29] Q&A Session Summary Question: What does a strong start to Q4 mean in the context of the 1% restaurant same-store sales number reported in Q3? - Management noted improving trends from Q3 into Q4, particularly pleased with the Campfire promotion resonating with guests [33][34] Question: Can you provide more detail on managing expenses in Q3? - Management indicated that they adjusted discretionary expenses and G&A to align with the challenges faced in Q3 [35][36] Question: How do you view G&A as a percent of sales for the upcoming year? - Management stated that fiscal 2025 is an investment year, and G&A will return to historical levels as the transformation plan progresses [38] Question: Can you share average check size and mix benefits for Q3? - The average check was up 6.6% for the quarter, with 4.9% from pricing and 1.7% from mix [40][41] Question: What is the anticipated impact of tariffs on Q4? - Management expects a $5 million net tariff impact on Q4 EBITDA, with ongoing efforts to mitigate this through vendor negotiations and alternate sourcing [30][51] Question: Can you elaborate on the back of house optimization initiative? - The initiative aims to improve food quality and ease of operations, with expectations for benefits to flow through in Q4 and into fiscal 2026 [61][65] Question: What have you learned from the remodeling initiatives? - Management indicated that they will provide more insights in September regarding the impact of remodels and future plans [70]

Financial Data and Key Metrics Changes - For Q3 2025, total revenue was $821.1 million, up 0.5% from the prior year quarter [20] - Restaurant revenue increased by 1.2% to $679.3 million, while retail revenue decreased by 2.7% to $141.8 million [21] - Adjusted EBITDA was $48.1 million, maintaining 5.9% of total revenue, compared to $47.9 million in the prior year [26] Business Line Data and Key Metrics Changes - Comparable store restaurant sales grew by 1%, while comparable store retail sales decreased by 3.8% [21] - Off-premise sales accounted for 19.1% of restaurant sales, compared to 18.9% in the prior year [21] - Labor and related expenses were 37.1% of revenue, down from 37.8% in the prior year, primarily due to improved productivity [24] Market Data and Key Metrics Changes - Pricing for the quarter was approximately 4.9%, consisting of 1.5% carry forward pricing from fiscal 2024 and 3.4% new pricing from fiscal 2025 [21] - Commodity inflation was approximately 2.9%, driven mainly by higher beef, egg, and pork prices [22] Company Strategy and Development Direction - The company is focused on brand refinement and enhancing guest engagement through partnerships, such as with Speedway Motorsports for the Cracker Barrel 400 NASCAR race [10][11] - The transformation plan aims to improve operational efficiency and profitability, with initiatives like back of house optimization and menu innovation [8][9] - The company is leveraging AI for traffic forecasting and guest relations to improve efficiency [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the macroeconomic environment but expressed confidence in the ongoing transformation and positive trends in guest engagement [17][18] - The company raised its guidance for total revenue and adjusted EBITDA for fiscal 2025, reflecting strong performance and positive momentum [29][30] Other Important Information - The company is actively managing tariff impacts, with approximately one-third of retail products sourced from China, and is implementing strategies to mitigate these effects [15][16] - The board declared a quarterly dividend of $0.25 per share, payable on August 13, 2025 [28] Q&A Session Summary Question: What does a strong start to Q4 mean in the context of the 1% restaurant same-store sales in Q3? - Management noted improvements in trends from Q3 into Q4, particularly pleased with the Campfire promotion's resonance with guests [32][33] Question: Can you provide more detail on managing expenses in Q3? - Management indicated that they adjusted discretionary expenses and expect G&A levels in Q4 to align more closely with Q1 and Q2 [34][35] Question: How do you view G&A as a percent of sales moving forward? - Management stated that G&A will return to historical levels as the transformation plan progresses, with more details to be provided in September [37] Question: What was the average check size and mix benefit in Q3? - The average check was up 6.6%, with 4.9% from pricing and 1.7% from mix, indicating a successful pricing strategy [39][40] Question: How is the $5 million tariff impact factored into your guidance? - Management explained that improvements in labor and menu mix are helping offset the tariff impact, with ongoing adjustments being made [46][48] Question: What are the expected benefits from the back of house optimization initiative? - Management anticipates more benefits in Q4 and into 2026, with a focus on improving food quality and operational efficiency [60][64] Question: Can you discuss the remodeling initiative and what has been learned? - Management indicated that they will provide more insights in September regarding the remodeling efforts and their impact on the business [66][68]

Revenue Performance - Total revenue for the third quarter of 2025 increased by 0.5% compared to the same period in the prior year[94]. - Total revenue for the first nine months of 2025 increased by 1.5% compared to the same period in the prior year[94]. - Total revenue for the third quarter of 2025 was $821,147, an increase from $817,135 in the same period of 2024, representing a growth of 0.2%[1]. Income and Expenses - Operating income for the quarter ended May 02, 2025, was 1.8% of total revenue, compared to a loss of 2.4% in the same quarter of the prior year[93]. - Net income for the quarter ended May 02, 2025, was 1.5%, compared to a loss of 1.1% in the same quarter of the prior year[93]. - Labor and other related expenses as a percentage of total revenue decreased from 37.8% in the prior year to 37.1% in the current quarter[93]. - Labor and related expenses as a percentage of total revenue decreased to 37.1% in the third quarter of 2025 from 37.8% in the same period of 2024[1][106]. - Other store operating expenses increased to 25.3% of total revenue in the third quarter of 2025, compared to 24.5% in the same period of 2024[1][111]. - General and administrative expenses decreased to 5.6% of total revenue in the third quarter of 2025, down from 6.7% in the prior year[1][115]. - Interest expense for the third quarter of 2025 was $4,984, a slight decrease from $5,187 in the same period of 2024[1][121]. - Impairment charges recorded in the third quarter of 2025 amounted to $718 due to the deterioration in operating performance in two locations[1][118]. Sales Metrics - Comparable store restaurant sales metrics are used to evaluate sales growth, excluding new store openings and sales related to Maple Street Biscuit Company[92]. - Comparable store restaurant sales increased by 1.0% in the third quarter of 2025, driven by an average check increase of 6.6%[1][7]. - Average store volumes for restaurants reached $1,006.0 in the third quarter of 2025, compared to $994.6 in the same period of 2024[1]. Capital Expenditures and Financing - Capital expenditures for the first nine months of 2025 were $113,214, up from $80,081 in the prior year, driven by maintenance and remodel initiatives[128]. - The company expects to increase capital expenditures to approximately $600,000 to $700,000 from 2025 to 2027, with $160,000 to $170,000 planned for 2025[129]. - The company entered into a five-year $800,000 credit facility on May 16, 2025, which includes a $550,000 revolving credit facility and a $250,000 delayed draw term loan[126]. - As of May 02, 2025, the company had $191,500 in outstanding borrowings under the 2022 Revolving Credit Facility and $474,496 in borrowing availability[131]. Cash Flow and Working Capital - Cash generated from operations for the first nine months of 2025 was $116,677, an increase from $99,456 in the same period of 2024, primarily due to timing of cash receipts and payments[127]. - Negative working capital was $146,208 as of May 02, 2025, an improvement from negative working capital of $175,993 at August 02, 2024[139]. Tax and Inflation Expectations - The effective tax rate for the quarter ended May 02, 2025, was (27.4)%, compared to 62.4% for the same period in 2024[122]. - The company anticipates an effective tax rate for 2025 to be approximately (11%) to (17%)[124]. - The company expects commodity inflation to remain in the mid 2% range for 2025[1][103]. Store Operations - The company operated 658 Cracker Barrel stores and 70 Maple Street Biscuit Company locations as of May 02, 2025[80]. - The company plans to complete 25-30 remodels and 25-30 store refreshes in 2025[89]. - The projected net impact of tariffs on retail margins is approximately $5,000 in the fourth quarter of 2025[87]. Interest Rate Sensitivity - The impact of a one-percentage point change in interest rates on the $191,500 of outstanding borrowings is approximately $1,936 on a pre-tax annualized basis[148].

Group 1 - Cracker Barrel Old Country Store reported quarterly earnings of $0.58 per share, exceeding the Zacks Consensus Estimate of $0.17 per share, but down from $0.88 per share a year ago, representing an earnings surprise of 241.18% [1] - The company posted revenues of $821.15 million for the quarter ended April 2025, missing the Zacks Consensus Estimate by 0.66%, compared to $817.14 million in the same quarter last year [2] - Cracker Barrel shares have increased approximately 9.3% since the beginning of the year, outperforming the S&P 500's gain of 1.5% [3] Group 2 - The current consensus EPS estimate for the upcoming quarter is $0.69 on revenues of $854.23 million, and for the current fiscal year, it is $2.70 on revenues of $3.48 billion [7] - The Zacks Industry Rank indicates that the Retail - Restaurants sector is currently in the bottom 29% of over 250 Zacks industries, suggesting potential challenges for stock performance [8] Group 3 - The estimate revisions trend for Cracker Barrel is mixed, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market in the near future [6] - Darden Restaurants, a competitor in the same industry, is expected to report quarterly earnings of $2.92 per share, reflecting a year-over-year change of +10.2%, with revenues anticipated to be $3.25 billion, up 10% from the previous year [9][10]

Financial Performance - Total revenue for Q3 fiscal 2025 was $821.1 million, a 0.5% increase compared to Q3 fiscal 2024[4] - GAAP net income for Q3 was $12.6 million, or 1.5% of total revenue, compared to a net loss of $9.2 million in the prior year[7] - Adjusted EBITDA for Q3 was $48.1 million, a 0.4% increase from $47.9 million in the prior year, representing 5.9% of total revenue[6] - GAAP earnings per diluted share were $0.56, compared to a loss of $0.41 per diluted share in the prior year[8] - Net income for the third quarter was $12.6 million, a significant increase of 237% from a net loss of $9.2 million in the prior year[16] - Earnings per share (diluted) for the third quarter was $0.56, compared to a loss of $0.41 per share in the same quarter last year, representing a 237% improvement[16] - Operating income for the third quarter was $14.9 million, a turnaround from an operating loss of $19.3 million in the prior year, reflecting a 177% increase[16] - Adjusted net income for the third quarter was $13,123,000, representing an adjusted net income margin of 1.6%[23] Revenue and Sales - Comparable store restaurant sales increased by 1.0%, with total menu pricing increases of 4.9%, while comparable store retail sales decreased by 3.8%[5] - Revenue for the third quarter ended May 2, 2025, was $821,147,000, a slight increase from $817,135,000 in the same period last year, representing a growth of 0.25%[23] Costs and Expenses - Total cost of goods sold for the third quarter was $242.8 million, up 1% from $240.8 million in the same quarter last year[21] - The company incurred $30,991,000 in depreciation and amortization expenses for the third quarter, up from $28,337,000 in the previous year[25] - Total impairment charges for the third quarter were $718,000, a decrease from $17,448,000 in the same quarter last year[25] Future Outlook - The company expects adjusted EBITDA for fiscal 2025 to be between $215 million and $225 million, an increase from the previous outlook of $210 million to $220 million[13] - The company expects continued revenue growth and improvement in profitability metrics in the upcoming quarters[23] - Commodity inflation is expected to be in the mid 2% range, while hourly wage inflation is also projected to be in the mid 2% range[13] - Capital expenditures are projected to be between $160 million and $170 million, unchanged from the previous outlook[13] Strategic Initiatives - The company plans to open 1 new Cracker Barrel store and 4 new Maple Street Biscuit Company units, both of which have already opened[13] - The company plans to continue its strategic transformation initiatives, which may include new product development and market expansion efforts[22] - The company has initiated a strategic transformation initiative, with expenses amounting to $7,263,000 for the nine months ended May 2, 2025[25] Assets and Cash Flow - Cash and cash equivalents at the end of the period were $9.8 million, down from $11.9 million at the end of the previous year[18] - Total assets decreased to $2.14 billion from $2.16 billion year-over-year[18] - The company reported a net cash provided by operating activities of $116.7 million for the nine months ended May 2, 2025, compared to $99.5 million in the prior year[20] Company Structure - The company-owned units for Cracker Barrel remained stable at 658, while Maple Street Biscuit Company increased to 70 from 63 units[21] - The weighted average shares outstanding for the third quarter were 22,459,281, compared to 22,201,964 in the prior year[25]