CKE Restaurants reports fiscal Q4 earnings of US$88,000, compared with loss of US$5M in year-ago period; total revenue falls 3.3% to US$287.4M

CARPINTERIA, California , April 10, 2012 (press release) – CKE Restaurants, Inc. (“CKE”) announced today its financial results for the fourth quarter and fiscal year ended January 30, 2012. The Company expects to file its Annual Report on Form 10-K for fiscal 2012 with the Securities and Exchange Commission (“SEC”) on Wednesday, April 11, 2012 after the close of the financial markets.

The fourth quarter and fiscal year ended January 30, 2012, included 12 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. Refer to the further discussion of Presentation of Operating Results under the heading “Non-GAAP Measures” below.

Company-Operated Same-Store Sales and Average Unit Volumes

Blended same-store sales increased 3.6% in the fourth quarter of fiscal 2012. Hardee’s® same-store sales increased 6.1% and Carl’s Jr.® same-store sales increased 1.7%.

Fiscal 2012 blended same-store sales increased 3.5%. Hardee’s same-store sales increased 5.2% and Carl’s Jr. same-store sales increased 1.9%.

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. The fifty-two week average unit volumes for Carl’s Jr. and Hardee’s were $1,411,000 and $1,117,000, 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, or 4.4%. The Company reported total revenue of $287.4 million for the fiscal 2012 fourth quarter, a decrease of $9.9 million, or 3.3%, 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 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 out-of-period insurance reserve adjustment relating to periods prior to fiscal 2010 (“Insurance Reserve Adjustment”), was 16.9%, 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 10 basis points. These increases were partially offset by a 90 basis point decrease in occupancy and other expense, excluding depreciation and amortization. Refer to the further discussion of company-operated restaurant-level adjusted EBITDA margin under the heading “Non-GAAP Measures” below and to the Company’s Annual Report on Form 10-K for fiscal 2012 for a more detailed description of the Insurance Reserve Adjustment.

Fourth quarter Adjusted EBITDA, excluding the estimated impact of the additional week in the prior year quarter, increased by $0.6 million over the prior year fourth quarter. Adjusted EBITDA was $35.7 million in the fourth quarter of fiscal 2012 compared to $37.1 million in the same quarter of the prior year. The Company estimates the additional week in the fiscal 2011 fourth quarter added approximately $2 million 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. Refer to the further discussion of Adjusted EBITDA under the heading “Non-GAAP Measures” below, which includes a reconciliation of net income (loss) to Adjusted EBITDA.

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, or 4.7%. The Company reported total revenue of $1,280.3 million for fiscal 2012, a decrease of $50.9 million, or 3.8%, compared to fiscal 2011. The decrease was primarily attributable to the sale of the Carl’s Jr. distribution business on July 2, 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 to revenue.

Company-operated restaurant-level adjusted EBITDA for fiscal 2012, excluding the Insurance Reserve Adjustment, was $190.7 million compared to $191.2 million 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 over the prior year. Adjusted EBITDA for fiscal 2012 was $165.9 million, as compared to $164.9 million for fiscal 2011. Refer to the further discussion of Adjusted EBITDA under the heading “Non-GAAP Measures” below, which includes a reconciliation of net income (loss) to Adjusted EBITDA.

As of January 30, 2012, cash and cash equivalents were $64.6 million and the Company had $69.1 million 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 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.

In accordance with the indenture governing the Company’s outstanding 11.375% Senior Secured Second Lien Notes due 2018 (the “Notes”), 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 1, 2011, the Company commenced a tender offer to purchase up to $27.9 million of the principal amount of the Notes (“Tender Offer”) at a redemption price of 103%. 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 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.

Capital expenditures for fiscal 2012 were $52.4 million, of which $25.4 million related to new store openings, dual-branding and remodeling projects. Capital expenditures for fiscal 2011 were $63.1 million. For fiscal 2013, the Company expects capital expenditures to be between $60.0 million and $70.0 million.

Conference Call Information

The Company will host its fourth quarter and fiscal 2012 conference call on Wednesday, April 11, 2012 at 8:00 a.m. (PDT). The dial in information is as follows: 973-500-2164 U.S. and international. The conference ID is 61483330.

A replay will be made available approximately two hours after the conclusion of the live event. The replay will be available for 7 days and can be accessed by calling 404-537-3406. The conference ID is 61483330.

Company Overview

CKE Restaurants, Inc. is a privately held company headquartered in Carpinteria, Calif. As of the end of fiscal 2012, the Company, through its subsidiaries, had a total of 3,243 franchised or company-operated restaurants in 42 states and in 25 countries. For more information about CKE, please visit www.ckr.com.


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