CKE Restaurants reports fiscal Q2 net earnings of US$1.8M, compared with net loss of US$2.2M in year-ago period, as total revenue rises 3% to US$308.6M

Nevin Barich

CARPINTERIA, California , September 18, 2012 (press release) – CKE Restaurants, Inc. (“CKE Restaurants”) announced today its second fiscal quarter financial results for the twelve weeks ended August 13, 2012. The Company expects to file its Quarterly Report on Form 10-Q with the Securities and Exchange Commission (“SEC”) on Wednesday, September 19, 2012 after the close of the financial markets.

Company-Operated Same-Store Sales and Average Unit Volumes

Company-operated same-store sales increased 2.9% in the second quarter of fiscal 2013. Carl’s Jr. same-store sales increased 4.0% and Hardee’s same-store sales increased 1.6% during the quarter.

At the end of the second quarter, the fifty-two week average unit volume for company-operated restaurants was $1,277,000. The fifty-two week average unit volumes for Carl’s Jr. and Hardee’s were $1,438,000 and $1,132,000, respectively.

To date, company-operated same-store sales for the third quarter of fiscal 2013 are positive in the mid-single digits.

Second Quarter Results

The Company reported total revenue of $308.6 million for the fiscal 2013 second quarter, an increase of $8.9 million, or 3.0%, compared to the fiscal 2012 second quarter.

“We are encouraged by the strong momentum of our business and the positive same-store sales results at both brands during the second quarter. The Company has now had eight consecutive quarters of positive company-operated same-store sales. Hardee’s has now had nine consecutive quarters of positive same-store sales and Carl’s Jr. posted its sixth consecutive quarter of positive same-store sales,” said Andrew F. Puzder, Chief Executive Officer.

For the fiscal 2013 second quarter, company-operated restaurant-level adjusted EBITDA margin was 19.4%, a 230 basis point increase over the prior year second quarter, in part due to the increase in company-operated same-store sales. Food and packaging costs as a percentage of company-operated restaurants revenue decreased 90 basis points, primarily as a result of higher year over year restaurant pricing and changes in product mix. While beef prices were essentially flat compared to the prior year quarter, commodity costs were lower for pork, cheese and dairy products and higher for potato and chicken products. Occupancy and other expense, excluding depreciation and amortization, as a percentage of company-operated restaurants revenue decreased 90 basis points, primarily as a result of sales leverage, lower repairs and maintenance expense and utilities expense. Labor and benefits as a percentage of company-operated restaurants revenue decreased 50 basis points. Refer to the further discussion of company-operated restaurant-level adjusted EBITDA margin under the heading “Non-GAAP Measures” below.

Adjusted EBITDA for the second quarter of fiscal 2013 increased by $6.8 million, or 16.5%, over the prior year second quarter. Adjusted EBITDA was $47.6 million in the second quarter of fiscal 2013 compared to $40.9 million in the prior year second quarter. Adjusted EBITDA represents net income (loss) adjusted to exclude income taxes, interest income and expense, asset impairments, facility action charges, depreciation and amortization, management fees, 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.

As of August 13, 2012, cash and cash equivalents were $62.2 million and the Company had $69.4 million available under its credit facility with no borrowings outstanding. Additionally, the Company had $31.1 million of temporarily restricted cash and cash equivalents as of August 13, 2012, which was restricted as a result of a tender offer for $29.9 million principal amount of the Company’s 11.375% senior secured second lien notes due 2018 (the “Senior Secured Notes”). The tender offer expired on August 16, 2012 with no notes tendered, and the related cash and cash equivalents became unrestricted and available for general corporate purposes at that time.

During the second quarter of fiscal 2013, the Company entered into agreements with independent third parties under which the Company sold and leased back 19 restaurant properties. The Company generated proceeds of $27.6 million in connection with these transactions.

On July 16, 2012, the Company redeemed $60.0 million principal amount of its Senior Secured Notes at a price equal to 103% of the principal amount redeemed. Subsequent to the redemption and as of August 13, 2012, the principal amount of the Senior Secured Notes outstanding was $472.1 million.

Capital expenditures for the fiscal 2013 second quarter were $9.8 million, of which $4.0 million related to new store openings, dual-branding and remodeling projects. 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 second quarter fiscal 2013 conference call on Wednesday, September 19, 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 29873355.

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 29873355.

Company Overview

CKE Restaurants, Inc. is a privately held company headquartered in Carpinteria, Calif. As of the end of the second quarter of fiscal 2013, the Company, through its subsidiaries, had a total of 3,279 franchised or company-operated restaurants in 42 states and 26 foreign countries. For more information about CKE Restaurants, please visit www.ckr.com.

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