CKE: Reports Fourth Quarter and Fiscal Year 2012 Results

Carpinteria / CA. (cke) CKE Restaurants Inc. announced its financial results for the fourth quarter and fiscal year ended January 30, 2012. The fourth quarter and fiscal year included twelve and 52 weeks, respectively, as compared to 13 and 53 weeks in the fourth quarter and fiscal year ended January 31, 2011. The fiscal year ended January 31, 2011 is comprised of the Successor twenty-nine weeks ended January 31, 2011 and the Predecessor twenty-four weeks ended July 12, 2010.

Company-Operated Same-Store Sales and Average Unit Volumes

Blended same-store sales increased 3,6 percent in the fourth quarter of fiscal 2012. Hardee´s same-store sales increased 6,1 percent and Carl´s Jr. same-store sales increased 1,7 percent. Fiscal 2012 blended same-store sales increased 3,5 percent. Hardee´s same-store sales increased 5,2 percent and Carl´s Jr. same-store sales increased 1,9 percent. At the end of fiscal 2012, the blended fifty-two week average unit volume for Carl´s Jr. and Hardee´s was 1’257’000 USD. The fifty-two week average unit volumes for Carl´s Jr. and Hardee´s were 1’411’000 USD and 1’117’000 USD, respectively. To date, the Company´s blended same-store sales for the first quarter of fiscal 2013 are positive in the low single digits.

Fourth Quarter Results

Total revenue, excluding the estimated impact of the additional week in the prior year quarter, increased by 12,1 million USD or 4,4 percent. The Company reported total revenue of 287,4 million USD for the fiscal 2012 fourth quarter, a decrease of 9,9 million USD or 3,3 percent, compared to the fiscal 2011 fourth quarter. The decrease was attributable to the impact of an additional week in the prior year quarter, which was partially offset by increases in same-store sales and system-wide restaurant count. The Company estimates the additional week in the fiscal 2011 fourth quarter added approximately 22 million USD to revenue.

«Both brands continued to generate positive same-store sales results during the fourth quarter. Hardee´s has now had seven consecutive quarters of positive same-store sales. Carl´s Jr. also performed well, posting its fourth consecutive quarter of positive same-store sales», said Andrew F. Puzder, Chief Executive Officer.

For the fiscal 2012 fourth quarter, company-operated restaurant-level adjusted Ebitda margin, excluding a 2,0 million USD out-of-period insurance reserve adjustment relating to periods prior to fiscal 2010, was 16,9 percent, a 30 basis point decrease compared to the prior year quarter. Food and packaging costs increased 110 basis points, primarily as a result of higher commodity costs for beef, pork and potatoes. Labor and benefits, excluding the Insurance Reserve Adjustment, increased ten basis points. These increases were partially offset by a 90 basis point decrease in occupancy and other expense, excluding depreciation and amortization.

Fourth quarter Adjusted Ebitda, excluding the estimated impact of the additional week in the prior year quarter, increased by 0,6 million USD over the prior year fourth quarter. Adjusted Ebitda was 35,7 million USD in the fourth quarter of fiscal 2012 compared to 37,1 million USD in the same quarter of the prior year. The Company estimates the additional week in the fiscal 2011 fourth quarter added approximately two million USD to Adjusted Ebitda. Adjusted Ebitda represents income (loss) before income taxes, interest income and expense, asset impairments, facility action charges, depreciation and amortization, management fees, pro-forma cost savings as a result of becoming privately held, the effects of acquisition accounting adjustments and certain non-cash and unusual items.

Fiscal 2012 Results

Total revenue, excluding both the Carl´s Jr. distribution center revenue and the estimated impact of the additional week, increased by 58,0 million USD or 4,7 percent. The Company reported total revenue of 1’280,3 million USD for fiscal 2012, a decrease of 50,9 million USD or 3,8 percent compared to fiscal 2011. The decrease was primarily attributable to the sale of the Carl´s Jr. distribution business on July 02, 2010 and the impact of a fifty-third week in fiscal 2011. The Company estimates the additional week in fiscal 2011 added approximately 22 million USD to revenue.

Company-operated restaurant-level adjusted Ebitda for fiscal 2012, excluding the Insurance Reserve Adjustment, was 190,7 million USD compared to 191,2 million USD in the prior year. The decrease was primarily due to the additional week in the prior year and a 110 basis point increase in food and packaging costs, partially offset by a 40 basis point decrease in labor and benefits.

Adjusted Ebitda, excluding the estimated impact of the additional week in the prior year, increased by 3,0 million USD over the prior year. Adjusted Ebitda for fiscal 2012 was 165,9 million USD, as compared to 164,9 million USD for fiscal 2011.

As of January 30, 2012, cash and cash equivalents were 64,6 million USD and the Company had 69,1 million USD available under its credit facility with no borrowings outstanding.

During fiscal 2012, the Company entered into agreements with independent third parties under which the Company sold and leased back 47 restaurant properties. The Company generated proceeds of 67,5 million USD in connection with these transactions. During the fourth quarter of fiscal 2012, the Company entered into 18 of these transactions, generating proceeds of 24,3 million USD.

In accordance with the indenture governing the Company´s outstanding 11,375 percent Senior Secured Second Lien Notes due 2018, the Company is required to make an offer to repurchase its Notes with a portion of the net proceeds received from sale-leaseback transactions. Pursuant to these requirements, on December 01, 2011, the Company commenced a tender offer to purchase up to 27,9 million USD of the principal amount of the Notes (Tender Offer) at a redemption price of 103 percent. The Tender Offer expired on December 29, 2011 with no Notes tendered.

During fiscal 2012, the Company extinguished through redemptions and an open market purchase a total of 67,9 million USD of the principal amount of the Notes. Subsequent to the redemptions and purchase of the Notes and as of January 30, 2012, the principal amount of the Notes outstanding was 532,1 million USD.

Capital expenditures for fiscal 2012 were 52,4 million USD, of which 25,4 million USD related to new store openings, dual-branding and remodelling projects. Capital expenditures for fiscal 2011 were 63,1 million USD. For fiscal 2013, the Company expects capital expenditures to be between 60,0 million USD and 70,0 million USD.

As of January 30, 2012, the Company´s system-wide restaurant portfolio consisted of:

. Carl´s Jr. Hardee´s Other Total
Company-operated 423 469 0 892
Domestic franchised 693 1’226 9 1’928
International franchised 197 226 0 423
Total 1’313 1’921 9 3’243