Cracker Barrel(CBRL) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's unaudited financial statements, management's discussion, market risk, and controls Item 1. Financial Statements (Unaudited) This section presents the company's unaudited condensed consolidated financial statements for the quarter Condensed Consolidated Statements of Income This statement details the company's revenues, costs, and net income for the specified quarterly periods Condensed Consolidated Statements of Income (Unaudited, in thousands, except per share data) | Metric | Quarter Ended Oct 27, 2023 | Quarter Ended Oct 28, 2022 | | :--- | :--- | :--- | | Total revenue | $823,839 | $839,519 | | Cost of goods sold | $255,559 | $281,540 | | Operating income | $11,413 | $23,619 | | Income before income taxes | $6,475 | $20,087 | | Net income | $5,456 | $17,129 | | Diluted EPS | $0.25 | $0.77 | Condensed Consolidated Balance Sheets This statement provides a snapshot of the company's assets, liabilities, and equity at specific balance sheet dates Condensed Consolidated Balance Sheets (Unaudited, in thousands) | Metric | October 27, 2023 | July 28, 2023 | | :--- | :--- | :--- | | Total current assets | $287,689 | $282,287 | | Property and equipment – net | $968,441 | $971,945 | | Total assets | $2,219,631 | $2,218,094 | | Total current liabilities | $461,898 | $488,966 | | Long-term debt | $475,340 | $414,904 | | Total liabilities | $1,759,379 | $1,734,269 | | Total shareholders' equity | $460,252 | $483,825 | Condensed Consolidated Statements of Cash Flows This statement summarizes the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Unaudited, in thousands) | Metric | Three Months Ended Oct 27, 2023 | Three Months Ended Oct 28, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($15,797) | ($600) | | Net cash used in investing activities | ($24,598) | ($21,460) | | Net cash provided by financing activities | $29,162 | $15,660 | | Net decrease in cash and cash equivalents | ($11,233) | ($6,400) | | Cash and cash equivalents, end of period | $13,914 | $38,705 | Notes to Condensed Consolidated Financial Statements These notes provide additional details and explanations for the figures presented in the financial statements - The company's debt includes a $700 million revolving credit facility, with $180 million outstanding as of October 27, 2023, and $300 million in 0.625% Convertible Senior Notes due in 2026[60][64] Revenue by Source (in thousands) | Revenue Source | Quarter Ended Oct 27, 2023 | Quarter Ended Oct 28, 2022 | | :--- | :--- | :--- | | Restaurant | $660,793 | $662,234 | | Retail | $163,046 | $177,285 | | Total revenue | $823,839 | $839,519 | - The company launched its 'Cracker Barrel Rewards' loyalty program in the first quarter of fiscal 2024. As of October 27, 2023, deferred revenue related to the program was $419 thousand[96][76] - Total future minimum lease payments under operating leases amount to $1.137 billion, with a present value of $754.3 million as of October 27, 2023[103] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes financial performance, liquidity, capital resources, and critical accounting estimates Results of Operations This section details the company's revenue, cost of goods sold, and expense trends for the reporting period Comparable Store Sales Increase (Decrease) vs. Prior Year | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Restaurant | (0.5%) | 7.1% | | Retail | (8.1%) | 4.3% | | Restaurant and retail | (2.1%) | 6.5% | | Average check increase | 6.6% | 8.9% | | Comparable restaurant guest traffic decrease | (7.1%) | (1.8%) | - The decrease in guest traffic reflects lower consumer demand due to macroeconomic factors such as inflation, higher interest rates, and lower savings rates[115] - Cost of goods sold as a percentage of total revenue decreased from 33.5% to 31.0%, primarily due to 2.3% commodity deflation in the restaurant segment[113][116] - Labor and related expenses increased to 37.0% of total revenue from 34.8% in the prior year, driven by higher staffing levels and investments to improve the guest experience[117][118] - Other store operating expenses rose to 24.7% of revenue from 23.4%, mainly due to higher advertising spending for the new loyalty program and a shift in holiday marketing timing[121][123] - General and administrative expenses increased to 5.9% of revenue from 5.5%, primarily due to severance costs from corporate restructuring[151][125] Liquidity and Capital Resources This section discusses the company's cash flow, debt, and capital expenditure plans - Primary liquidity sources are cash from operations and a $700 million revolving credit facility. As of October 27, 2023, the company had $487.5 million in borrowing availability[153][154] - Net cash used in operating activities was $15.8 million for the first three months of 2024, compared to $0.6 million in the prior year, mainly due to lower net income and higher bonus payments[129] - Capital expenditures for fiscal 2024 are estimated to be between $120 million and $135 million[181] - The company paid a regular quarterly dividend of $1.30 per share during the first three months of 2024. No shares were repurchased during this period[158][183] Critical Accounting Estimates This section outlines key accounting policies requiring significant management judgment and estimation - Management identifies four critical accounting estimates that involve significant judgments and uncertainties: Impairment of Long-Lived Assets, Insurance Reserves, Retail Inventory Valuation, and Lease Accounting[190][163] - The company self-insures a significant portion of its workers' compensation and general liability programs, with reserves based on annual actuarial studies[193] - Retail inventory is valued using the retail inventory method (RIM), which requires estimates for markons, markdowns, and shrinkage[167][204] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes in market risks, primarily from interest rate fluctuations on variable-rate debt - The company is exposed to interest rate risk on its outstanding borrowings under the revolving credit facility, which bear interest based on rates like SOFR or a base rate[3] - A one-percentage point change in interest rates would impact pre-tax annualized earnings by approximately $1.8 million based on the $180 million of outstanding borrowings[3] - There have been no material changes in the company's market risks since July 28, 2023[206] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective, with no material changes to internal control - Based on an evaluation as of the end of the period, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[207] - There were no changes during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[199] PART II. OTHER INFORMATION This section covers additional disclosures including risk factors, other information, and a list of exhibits Item 1A. Risk Factors No material changes to risk factors previously disclosed in the company's 2023 Form 10-K have been reported - There have been no material changes in the risk factors previously disclosed in the company's 2023 Form 10-K[173] Item 5. Other Information No director or officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" during the quarter[208] Item 6. Exhibits This section provides an index of exhibits, including corporate governance documents and CEO/CFO certifications - The report includes an index of exhibits, such as the company's charter and bylaws, a separation agreement, and CEO/CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[209]