Cracker Barrel Old Country Store Inc. (CBRL) reported its financial results for the fourth quarter and fiscal year 2010.
 
Net income from continuing operations increased to $27.4 million or $1.14 per share from $22.8 million or $0.99 in the comparable quarter of 2009. The company’s results also surpassed the Zacks Consensus Estimate of $1.12. The upside was primarily due to higher operating income, lower interest expense and lower taxes. 
 
For fiscal year 2010, earnings per share were $3.62 compared with $2.89 in 2009.
 
Revenue
 
Considering the top line, total revenue from continuing operation was $612.5 million, up 2.8% year over year. On a comparable basis, restaurant sales in the fourth quarter were up 2.0% and retail sales were up 2.6%.
 
For fiscal year 2010, revenues increased 1.6% year over year to $2.4 billion. Comparable store restaurant sales increased 0.8% while retail sales decreased 0.9%.
 
Margins
 
Gross margins in the quarter improved to 70.0% compared with 69% in the year-ago quarter. General and administrative expenses increased 17% over the year to $37.4 million and 6.1% of total revenue.
 
Higher store operating income offset by higher general and administrative expenses pushed up the operating income in the fourth quarter to $45.5 million from $41.1 million in the fourth quarter of 2009. Operating margin improved from 7.0% to 7.4% in the quarter. For the fiscal year, operating margin was 6.8% versus 6.0% in 2009.
 
Balance Sheet
 
At the end of the fiscal year, Cracker Barrel had cash and cash equivalents of approximately $47.7 million compared with $11.6 million in 2009. The company repaid its debt to some extent in the year, leading to a 10% decline to $573.7 million in 2010.
 
Cash Flow
 
Net cash flow from operating activities soared 29.2% to $212.1 million. Capital spending increased to $69.9 million from $67.8 million in 2009. The company repurchased roughly 1.35 million shares in the fiscal 2010 for approximately $62.5 million.
 
Outlook
 
For fiscal year 2011, Cracker Barrel expects total revenue growth to range approximately between 3.0% to 4.5% year over year. The guidance is premised on the opening of eleven new units during the year, comparable store restaurant sales would increase within the range of 1.5%-3.0% and comparable store retail sales would go up between 2.0%-4.0%.
 
Depreciation is expected to be roughly $64-$66 million, operating margin within the 7.1%-7.3% range, net interest expense within $48-$49 million, effective tax rate within 27.0%-28.0% and diluted shares outstanding approximately 23.5-24 million.
 
Earnings per share are expected to be approximately $3.95 to $4.10 and capital expenditures to be between $110 and $120 million. The company will continue its share repurchase activity in 2011 and repay $25 million of its long-term debt.

Cracker Barrel Old Country Store Inc. was founded in 1969 in Lebanon, Tenn. and operates as many as 595 company-owned locations in 41 states. We currently maintain a Neutral recommendation on the stock, as supported by a Zacks # 3 (Hold) Rank.

 

 
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