Good morning and welcome to the Cracker Barrel Fiscal 2017 third quarter earnings conference call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jessica Hazel, Senior Manager of Investor Relations. Please go ahead.

Thank you, Laura. Good morning and welcome to Cracker Barrel’s third quarter fiscal 2017 conference call and webcast. This morning, we issued a press release announcing our third quarter results and our outlook for the 2017 fiscal year. On the call with me this morning are Cracker Barrel’s President and CEO, Sandy Cochran; Senior Vice President and CFO, Jill Golder; Senior Vice President of Marketing, Don Hoffman, and Vice President and Principal Accounting Officer, Jeff Wilson. Sandy will begin with a review of the business and Jill will review the financials and outlook. We will then open up the call for questions for Sandy, Jill, Don and Jeff. On this call, we will refer to non-GAAP financial measures for the prior fiscal year, adjusted to exclude the prior year impact of the reduction of provisions for uncertain tax positions. Excluding these tax effects from financial results provides information that may be more indicative of the company’s ongoing operating performance while improving comparability to prior periods. This information is not intended to be considered in isolation or as a substitute for financial information prepared in accordance with GAAP. Reconciliations of the non-GAAP information to the GAAP financials are provided on the last page of this morning’s press release, which is posted in the investors section of our website, crackerbarrel.com. In addition, statements may be made by management of their beliefs and expectations regarding the company’s future operating results or expected future events. These are known as forward-looking statements which involve risks and uncertainties that in many cases are beyond management’s control and may cause actual results to differ materially from expectations. We caution our listeners and readers in considering forward-looking statements and information. Many of the factors that could affect results are summarized in the cautionary description of risks and uncertainties found at the end of the press release and are described in detail in our reports that we file with or furnish to the SEC. I’ll now turn the call over to Cracker Barrel’s President and CEO, Sandy Cochran. Sandy?

Thanks, Jessica. Good morning, everyone. Thanks for joining us today. For the third quarter, we posted improvements in our operating income and profit margins and delivered third quarter earnings above our previously stated expectations and consensus estimates. We believe our earnings feat was the result of our focus on an execution of our cost reduction initiatives as well as our field leadership team’s ability to manage our expense lines through a challenged traffic period. Our top line results performed below our internal expectations as we had hoped our marketing programs and additional advertising spend would have driven more incremental traffic and sales. But the macro environment with the consumer and with promotional activity continues to be challenging for us for the restaurant and retail industries as a whole. Driven by our solid year-to-date performance we're raising our earnings guidance for the fiscal year. We anticipate a continuation of the current macro environment. However we're optimistic about our ability to grow fourth quarter earnings. In this morning’s release, we announced an increase in our regular quarterly dividend to $1.20 per share. Over the last six years we've increased our dividend eight times or nearly 450%. Also, this morning we announced a special dividend of $3.50 per share. This is the third special dividend declaration in as many years. The increase in our regular dividend and declaration of special dividend reflects our commitment to a balanced approach to capital allocation and to returning capital to our shareholders after we've appropriately reinvested in our business. These decisions reflect our board's ongoing evaluation of our financial performance, capital investment and liquidity needs and on our ability to deliver total shareholder return. Jill will review the financial results for the quarter as well as our updated full year expectation, but before she does, I'd like…

Good morning everyone and thank you, Sandy. I would like to begin by discussing our financial performance for the third quarter of fiscal 2017 and then our outlook for the 2017 fiscal year. In this morning's release, we reported third quarter net income of $46.9 million or $1.95 per diluted share, representing a 7% increase over prior year adjusted earnings per diluted share of $1.82 when adjusting for the prior year impact of the reduction of provisions for uncertain tax positions. For the quarter, we reported total revenue of $700.4 million compared to prior year revenue of $700.1 million. Our restaurant revenue increased 0.8% to $575.1 million. This was partially offset by a 3.4% decrease in retail revenue to $125.3 million. Comparable store restaurant sales in the quarter decreased 0.4% as average check increased 1.7% and traffic decreased 2.1%. The increase in average check reflected menu price increases of approximately 1.6% and a favorable menu mix impact of 0.1%. In today's press release, we shared a change in how we are calculating traffic growth. Historically we relied upon the servers to enter the number of guests at each table into the POS system and derived a traffic count for To-Go. The data was then scrubbed using an algorithm to correct for potential inaccuracies from human error. Beginning in the third quarter, we are calculating traffic based upon entrée count. We believe this measurement approach more accurately reflects underlying business growth both in store and To Go treating each of these dining occasions the same. We have provided comparable restaurant traffic measured as change in entrees sold for fiscal 2017 by quarter on the supplemental information page of this morning's press release. Comparable store retail sales decreased 4.7% primarily driven by our negative store traffic in addition to fewer guests making…

[Operator Instructions] Our first question will come from Jake Bartlett of SunTrust.

Thanks for taking the question. I am looking at your quarterly dividend growth for the last two years kind of 4.3% and 4.5%, what should we read from that, given that the prior operating income growth of 7% to 8%, is this kind of an indicator that that might have slowed or how would you have us think about that?

Good morning Jake. This is Jill. As a reminder, we've increased our dividend eight times over the last six years and so as Sandy mentioned that represents nearly a 450% growth rate. Our overall dividend yield is among the highest in our peer set as well as our payout ratio which is also the top of the group. And our dividend per share has far outpaced our earnings per share growth since 2011. So we remain confident in our declared dividend amounts.

And in looking at the same-store sales out-performance versus casual dining peers, still positive but didn’t narrow meaningfully, I think you mentioned some discounting from competitors, but how would you describe why that narrowed in this quarter, was it about getting from your promotional schedule, or more about the competition? Should we expect that to reaccelerate? What should re-accelerate that, that could out-perform versus the industry?

Well, Jake, you touched on several of the points that I would have made which is that we did continue to see a highly competitive, even an increasingly competitive market among really all – both the QSR group which we do compete with at the breakfast day-part and the casual dining, particularly the bar and grill does. And so that was a backdrop that we were operating in. We emphasized our value offerings in the quarter and in the fourth quarter plan to do even more to reinforce that. And so I'm hopeful that our gap to nap will improve.

And lastly, sorry for the noise, I am on the train. Other current [indiscernible] have been increasing their commodity inflation for 2017. If you care to provide any sort of insight for fiscal 2018 it would be appreciated. But if not, just the question would be, how would you respond to that? I know you're sensitive about your pricing, you couldn’t take it down but would you start to switch that around, if you did start to see more meaningful food cost deflation?

Yeah, hi Jake. We have not provided fiscal 2018 guidance on commodities and I will note that our commodity deflation favorability continues to moderate. So we would anticipate at some point the commodity market to return to a level of inflation.

And the next question will come from Gregory Francfort of Bank of America.

Hey guys, thanks for taking the question. This is actually John Michael on for Greg. Just a couple of quick ones. Wondering how you're thinking about leverage going forward and maybe what your current target is. And I was wondering if you could talk about acquisitions, and how you’re thinking about that from that perspective? Thank you.

I guess from the leverage standpoint, I mean right now we're generating the cash that we need in order to invest in the business and then appropriately returning cash back to our shareholders and I think that's something that we'll talk more about when we provide guidance in September. And I'll turn it over to Sandy to discuss any acquisitions or anything in that area.

I think in general there's been a lot of recent activity in the sector with acquisitions and the team would evaluate any opportunity that we were aware of, we would consider it, we would discuss it with the board. But we don't currently have a strategy that specifically has us targeting to make an acquisition in the near term.

And then Jill actually may have just answered but follow up, but I was wondering if you’re planning to give the 2018 earnings guidance in September at Investor Day, something like September.

Yeah, that's right on our September earnings call we will provide full 2018 guidance.

And the next question comes from Michael Gallo of C.L. King.

Good morning. Question, a follow up; my question is just on the potential to roll out wait list, I was wondering whether you've tested this – have you seen any impact on potential retail sales from perhaps people coming in closer to what to when they sit down? And then I have a follow-up.

We have had this in test for a number of months and have been pleased with the impact that it's had on both the guest experience and our ability to maximize business on the busy mornings in particular the weekends. What we found is that – Michael, is that our retail purchases tend to happen at the end of the visit so that what having this more efficient system for our guests allows them to come in and eat and give them time at the end of the visit to shop in the store. So we are not seeing a negative impact at this point on our retail purchases related to the online wait list.

And then just a question on the -- you actually I think increased the commodity deflation target for the year which is again different from what we've seen from others. So I was wondering what sort of drive out a relative to your expectations of three months ago?

Sure, our commodity deflation guidance we did increase the decelerations from down 4% to down 4.4%. The primary driver was in the dairy category from our blot cheese and butter and then just as a reminder we've locked into 99% of our commodities and that's been built into our guidance.

The next question will come from John Zolidis of Buckingham.

Hi, this is Christine on for John. Thanks for taking my question. We saw results in the retail business that were more difficult than the restaurant side. So our question is, is there something going on in the retail business that is distinct from what's happening in the dining room, and piggybacking off of that what do you think can be done to try to prove result in retail going forward thanks.

So Christine, as much as we believe that the discounting in the restaurant business is significant. I'd characterize the environment as even more in the retail competitive and against that backdrop industry right now (White package] I'm sure anybody out there is aware of what's going on with particularly mall based retailers in the number of store closures and chain bankruptcies and so on. So I would characterize the environment as even more highly competitive and it was against that backdrop that we had to operate during the quarter. In terms of what we did and what we are doing is we're looking across every element of our business. So first, we are and our buyers are doing an excellent job of evaluating that we are in fact offering great value that we are merchandising in a way that allows the guests to find the value, and that we are signing the merchandise in a way that highlights that So for example, in some cases we might have had a spinner of jewelry that we decided to put all at one price point a very attractive price point and to sign it that way so that the guests could very clearly see that they were able to find great bargains in our store. I think the team has been aggressively looking at their inventory levels and where they could trimming them, I think we're talking a lot to our vendors about how they can support our promotional activities and what they can do to help us through this. And I think they're doing a good job of looking in our assortment to understand to what degree we just didn't have the right product for either the trend or the time with the current guests but you never want to thing that you aren’t doing anything to contribute to the medal. But I think Laura and her team are very focused on the things that we can do to operate effectively in this environment over the next what probably will be the next few quarters as the overall retail industry continues to shake out.

But the next question is from Brittany Whitman of Longbow Research.

Morning guys, thanks for taking my question quickly. And wanted to know if there was any impact on either your traffic and/or sales from the timing shifts of the Easter holiday?

Good morning Britney. From the Easter holiday I mean there was timing within the quarter, Easter shifted from March and April but overall for the quarter it's all within that quarter.

And then quickly if I may; I know you said you're getting ready to ramp up your store expansion in California with your first store in fiscal 2018? Wanted to see if you have any other expectations or you could get give any more color for your store builds in 2018 if we should expect to see that ramp up?

At this point we're not giving any guidance on our 2018 unit growth.

Any guidance on 2018 commodity costs given the recent movements that you guys have been seeing.

No, as I said earlier I mean we've seen in the industry being the significant commodity the fallacious over the last number of quarters we would expect at some point to see an inflationary environment return.

The next question comes from Steve Anderson of Maxim Group.

Wanted to ask about the labor cost, IAC [ph] you’re still seeing a little bit deleverage but I know it's like – the amount of de-leverage actually had improved 60 somewhat, as anything is our 60 basis quarter was less than this year but I wanted to was – he was got anything excuse 's going to read that toto, -- where was any Annie incremental [ph] improvement from the $15 million cost savings at during this particular quarter.

Hi Good morning Steve. Yeah. There's really two primary impacts on the labor lines, we continue to see wage inflation and that’s been more at the upper end of our 2.5% and 3.5% guidance range. We've been able to offset some of that with our focus on our cost savings. We talked about on the last call the fact that we initiated one of our cost saving impacts. But with the cross training initiatives during low peak hours for the cashier and retail associates, yes that cost saving initiative benefits the overall labor line. And then just as we think about the 2017 savings target, our guidance is $18 million to $20 million and at this point we would expect to be at the upper end of that guidance.

[Operator Instructions] And our next question comes from Bob Derrington of Telsey Advisory Group.

Hey good morning everyone. This is Ben Fox on for Bob Derrington and I'm just curious as you look at the retail business and you look kind of how the product mix was last year and how would envision that being this year with all the new summer items rolling out if you could just kind of comment on the direction it's headed, that would be great? Thank you.

Ben, I'm not sure I understood the question. As we head into the summer season as I mentioned in the scripted remarks, I think we're excited about our assortment. Apparel and accessories continues to be both one of our largest categories and it has been one of the ones that we've had to do some of the most discounting. But I am excited about what we have on the floor right now. Food is always an important category for us in the summer; it's a great pickup item for families traveling and for summer road trips and so on. So I don't think I'm not anticipating a significant category shift this summer versus last summer. End of Q&A

And this concludes our question and answer session. I would like to turn the conference back over to Sandy Cochran for any closing remarks.

Thank you all for joining us today. As we head into the final quarter of the year our management teams and over 70,000 employees remain focused on providing the great guest experience that differentiates the brand. I remain confident that we have the right strategy in the right leadership in place to move the brand forward and create shareholder value. We appreciate your interest and your support. Thank you.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.