CKE Restaurants, Inc. Reports Second Quarter Net Income of $12.3 Million, or $0.23 Per Diluted Share
	Second quarter net income was $12.3 million, or $0.23 per diluted share. Income from continuing operations in the prior year quarter was $11.7 million, or $0.18 per diluted share.
CKE Restaurants, Inc. (NYSE:CKR) announced today second quarter results and the filing of its Report on Form 10-Q with the Securities and Exchange Commission ("SEC") for the twelve weeks ended Aug. 11, 2008. Second Quarter Highlights -- Second quarter net income was $12.3 million, or $0.23 per diluted share. Income from continuing operations in the prior year quarter was $11.7 million, or $0.18 per diluted share. The 27.8 percent increase in diluted earnings per share is in part attributable to the Company's share repurchase program which was the primary driver of the 11.0 million share reduction in weighted-average diluted shares outstanding versus the prior year quarter. -- Blended company-operated same-store sales for the second quarter of fiscal 2009 increased 3.6 percent. Same-store sales increased 3.8 percent and 3.3 percent at Carl's Jr.(R) and Hardee's(R) company-operated restaurants, respectively. -- Blended average unit volume for the trailing-13 periods was $1,207,000 at company-operated restaurants. Average unit volumes for the trailing-13 periods increased to $1,527,000 and $973,000 at company-operated Carl's Jr. and Hardee's restaurants, respectively. -- Consolidated restaurant operating costs decreased 80 basis points to 80.7 percent of company-operated restaurants revenue. Reduced payroll and employee benefits costs more than offset higher food and packaging costs and higher depreciation expense related to our remodel program at both brands. -- Restaurant operating costs at Carl's Jr. company-operated restaurants decreased 30 basis points, compared to the prior year quarter, to 79.3 percent of company-operated restaurants revenue. A reduction in payroll and employee benefits expense more than offset higher food and packaging costs. -- Restaurant operating costs at Hardee's company-operated restaurants decreased 90 basis points, compared to the prior year quarter, to 82.4 percent of company-operated restaurants revenue. Lower payroll and employee benefits expense more than offset an increase in occupancy and other expense. Food and packaging costs were 30 basis points lower than the prior year quarter. -- Consolidated revenue for the current year quarter was $352.5 million, a 2.9 percent decrease from the prior year quarter. Company-operated restaurants revenue for the current year quarter was $267.1 million, a 7.2 percent decrease from the prior year quarter, reflecting the refranchising of 155 Hardee's restaurants partially offset by the opening of 20 new company- operated restaurants over the trailing-13 periods and positive same-store sales over the prior year quarter. -- For the twenty-eight weeks ended Aug. 11, 2008, the Company generated earnings before interest, income taxes, depreciation and amortization, facility action charges and share-based compensation expense ("Adjusted EBITDA") of $95.6 million, versus $92.7 million in the comparable prior year period. For the trailing-13 periods ended Aug. 11, 2008, the Company generated Adjusted EBITDA of $167.9 million. -- Fully diluted shares outstanding for the twelve and twenty-eight weeks ended Aug. 11, 2008, were 54.4 million and 54.3 million, respectively. Story continues below ↓ Advertisement Executive Commentary Andrew F. Puzder, president and chief executive officer, said: "Net income for the second quarter of fiscal 2009 was $12.3 million, or $0.23 per diluted share. Income from continuing operations in the prior year quarter was $11.7 million, or $0.18 per diluted share. The 27.8 percent increase in diluted earnings per share is in part attributable to a 16.8 percent decrease in diluted shares outstanding primarily as a result of our share repurchase activity in the prior fiscal year." "Blended same-store sales increased 3.6 percent during the second quarter on top of a 2.4 percent increase in the prior year quarter. Both brands featured the Prime Rib Burger during the second quarter. The Six Dollar Burger(TM) and Thickburger(R) varieties of the burger include a charbroiled, 100 percent Black Angus beef patty topped with thinly-sliced prime rib, melted Swiss cheese, grilled onions and a horseradish sauce all on a Ciabatta roll. We believe this burger is a great example of our innovative, premium quality product strategy that carries a value message to our guests that extends beyond a price point." "On a consolidated basis, restaurant-level operating expenses decreased 80 basis points versus the prior year quarter. This improvement is the result of the combination of price increases taken to offset increased food and labor costs as well as other cost control initiatives implemented over the past year." "We continued our strategic refranchising program of Hardee's restaurants originally announced in April 2007 and expanded by an additional 40 restaurants in June 2008. Six restaurants were refranchised during the quarter and an additional 23 restaurants were refranchised subsequent to the end of the second quarter. To date, we have completed the refranchising of 224 Hardee's restaurants in the Midwest and Southeast." "During the first half of fiscal 2009, we and our franchisees opened 54 new units, including 23 internationally. We and our franchisees also completed 105 remodels as well as 19 Green Burrito and 19 Red Burrito dual-brand conversions." "With respect to our individual brands: Carl's Jr. "Same-store sales at company-operated Carl's Jr. restaurants increased 3.8 percent during the second quarter. On a two-year cumulative basis, same-store sales at Carl's Jr. were up 5.8 percent for the second quarter. Revenues at company-operated Carl's Jr. restaurants increased $8.2 million, or 5.9 percent, over the prior year quarter due to the same-store sales gains and the addition of 14 company-operated restaurants over the past year," continued Puzder. "In addition to the Prime Rib Burger, Carl's Jr. also debuted Natural Cut French Fries during the quarter. Carl's Jr. also promoted the Jalapeno Chicken Sandwich and Chili Cheese Fries and introduced the latest flavor of its Hand-Scooped Ice Cream Shakes and Malts(TM) -- Banana Cream Pie. Average unit volume at company-operated Carl's Jr. restaurants increased to $1,527,000 -- a $34,000 increase since the end of fiscal 2008, and an all-time high for the brand." "Restaurant operating costs at company-operated Carl's Jr. restaurants decreased by 30 basis points as compared with the prior year quarter, to 79.3 percent of company-operated restaurants revenue. Lower payroll and employee benefits costs in the quarter resulting from a decrease in workers' compensation claims expense more than offset higher food and packaging costs for commodities including beef, cheese and potatoes." Hardee's "Same-store sales at company-operated Hardee's restaurants increased 3.3 percent during the second quarter. On a two-year cumulative basis, Hardee's same-store sales were up 6.2 percent for the second quarter," added Puzder. "Revenue from company-operated Hardee's restaurants decreased $29.0 million, or 19.5 percent, from the prior year quarter due primarily to the refranchising of 155 Hardee's restaurants partially offset by the opening of six new company-operated restaurants over the trailing-13 periods and positive same-store sales over the prior year quarter. In addition to the Prime Rib Thickburger(R), Hardee's promoted the Red Burrito Taco Salad(TM) and debuted Strawberry Biscuits during the breakfast daypart. Hardee's company-operated restaurants average unit volume increased to $973,000, a $19,000 increase since the end of fiscal 2008 and the highest average unit volume for the brand as far back as we can check." "Hardee's restaurant operating costs at its company-operated restaurants decreased 90 basis points as compared with the prior year quarter, to 82.4 percent of company-operated restaurants revenue. Lower payroll and employee benefits costs more than offset an increase in occupancy and other expense resulting from higher depreciation expense related to our ongoing remodel program. Food and packaging costs were 30 basis points lower than the prior year quarter." "We will maintain our focus on the fundamentals of our business, including our premium product strategy, superior customer service, and effective, cutting-edge advertising. Further, we will continue to address rising restaurant operating costs and their potential impact on our business. Finally, we believe the remodeling and dual-branding of our existing restaurants, as well as our new restaurant growth, will permit us to attract new guests into our restaurants and drive same-store sales growth in the near- and long-term," Puzder concluded. As of the end of its fiscal 2009 second quarter, CKE Restaurants, Inc., through its subsidiaries, had a total of 3,100 franchised, licensed or company-operated restaurants in 42 states and in 14 countries, including 1,170 Carl's Jr. restaurants and 1,917 Hardee's restaurants.