Cracker Barrel Old Country Store (CBRL), operator of full-service restaurants, has recorded 5.37 percent increase in profit for the quarter ended Jan. 31, 2014. The company earned $37.06 million, or 1.55 a share in the second-quarter, compared with $35.17 million, or 1.47 a share, a year ago. Analysts had predicted earnings of $1.56 a share for the second quarter.

Revenue during the second-quarter went down marginally 0.59 percent to $698.49 million from $702.67 million last year.

The company's comparable store restaurant sales decreased 0.6%, including a 2.3% increase in average check. The average menu price increase for the quarter was approximately 1.8%. Comparable store retail sales decreased 3.0% for the quarter, it said.

Gross margin contracted by 4 basis points over the previous year to 65.21 percent. Total expenses as a percentage of revenues decreased to 91.60 percent from 91.86 percent in the same period last year. That resulted in improvement of 26 basis points in operating margin to 8.40 percent.

The company disclosed operating income of $58.71 million, compared with operating income of $57.20 million in the last year period.

Commenting on the second-quarter results, Cracker Barrel President and Chief Executive Officer Sandra B. Cochran said, ''The unusually severe winter weather significantly impacted our store traffic and sales. Holiday travelers are an important part of our customer base during the second quarter, and we believe that the inclement weather reduced travel visits. I am pleased with the performance of our field teams, who helped preserve our operating margins by controlling costs during periods of unpredictable customer traffic.''

The company has re-affirmed its previous earnings guidance full year. It expects to report earnings per diluted share of between $5.60 and $5.80. The company noted that it expects its full year earnings to be close to the midpoint of this range.

For fiscal 2014, the company now expects total revenue of approximately $2.7 billion and an operating income margin of approximately 8 percent.

Cash flow

The company has generated cash of $62.90 million from operating activities during the first half of 2014, down 22.32 percent or $18.08 million when compared with the last year. The company has generated 4.67 cents of operating cash flow in every sales dollar for the first six months, down from 6.09 cents for the same period last year.

The company's net capital expenditure has gone up 28.29 percent during the six month period to $37.20 million.  

The company's free cash flow accounted for 40.86 percent of operating cash flow for the first six months from 64.19 percent in the last year period.

The company has witnessed cash outflow of $56.07 million for financing activities during the first half compared with cash outgo of $17.80 million in previous year period.

The company has spent net of $12.47 million on common stock repurchases during the six month period.

The company's cash dividend payment increased 65.14 percent or $14.10 million to $35.75 million for the six month period. Dividend payment accounted for 56.84 percent of operating cash flow for the first half of 2014 compared with 26.74 percent in the same period last year.

The company's cash balance stood at $91.35 million on Jan. 31, 2014, down 50.92 percent or $94.80 million from Feb. 1, 2013.

Working Capital

The company's working capital turned negative to $17.44 million as at Jan. 31, 2014, from $62.68 million on Feb. 1, 2013. As a result, current ratio moved below one to 0.94 on Jan. 31, 2014 from 1.21 on Feb. 1, 2013. A negative working capital is common for companies engaged in restaurant business.

The company's cash conversion cycle (CCC) increased to 30 days for second-quarter from 27 days for the last year. CCC is a liquidity metric which expresses the length of time (in days) that a company uses to sell inventory, collect receivables and pay its accounts payable. Decreasing or steady CCCs are good for business.

Days' inventory outstanding, average collection period and days' payables outstanding for the second quarter witnessed marginal fluctuation over previous year period.

Debt Position

The company's has witnessed a decrease in total debt. As at Jan. 31, 2014, the company's long-term debt stood at $387.50 million, down 224.40 percent or $125 million from Feb. 1, 2013.

Interest coverage ratio witnessed a sharp improvement during the second quarter, helped by decline in debt. It moved to 13.13 for the second quarter from 5.56 in the last year period.
 
Debt as a percentage of assets has also gone down to 28.28 percent on Jan. 31, 2014 from 35.45 percent on Feb. 1, 2013.