Cracker Barrel Old Country Store, Inc.

You may press star and then one on your touchtone telephones. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Adam Hannon, Director of Investor Relations. Sir, please go ahead.

Thank you. Good morning and welcome to Cracker Barrel's third quarter fiscal 2025 conference call and webcast. This morning, we issued a press release announcing our third quarter results. In this press release and on this call, we will refer to non-GAAP financial measures such as adjusted EBITDA for the third quarter ended May 2, 2025. Please refer to the footnotes in our press release for further details about these metrics. The company believes these measures provide investors with an enhanced understanding of the company's financial performance. This information is not intended to be considered in isolation or as a substitute for net income or earnings per share information prepared in accordance with GAAP. The last pages of the press release include reconciliations from the non-GAAP information to the GAAP financials. On the call with me this morning are Cracker Barrel's President and CEO, Julie Massino, and Senior Vice President and CFO, Craig Pimels. Julie and Craig will provide a review of the business, financials, and outlook. We will then open up the call for questions. On this call, 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. Finally, the information shared on this call is valid as of today's date, and the company undertakes no obligation to update it except as may be required under applicable law. I'll now turn the call over to Cracker Barrel's President and CEO, Julie Messina. Julie?

Good morning, and thank you for joining us. We were pleased with our third quarter performance, which included positive comparable store restaurant sales for the fourth consecutive quarter and adjusted EBITDA that exceeded our expectations. These results further underscore that our transformation plan is working. I'll do a quick recap of some Q3 highlights and then speak to the exciting ways our plan is coming together in Q4, as these initiatives exemplify how we're evolving the brand by leaning into what makes Cracker Barrel great and doing so in a refined way that appeals to both existing and new guests alike. We're excited about our progress and our teams are energized. Looking back at Q3, the quarter started soft. So we took actions to support the top line and tightly manage our expenses without limiting our ability to deliver our important fourth quarter initiative. I'm proud of how the team responded to these challenges. Their agility, discipline, and strong ability to manage the business help deliver a solid quarter. From a culinary perspective, our spring promotion featured two shrimp dishes, a bold Louisiana-style shrimp skillet and a comforting shrimp and grit skillet. We also expanded our pancake platform by introducing innovative new flavors and options across various price points as part of our broader barbell strategy. From an operational perspective, we remain focused on strong execution and the metrics that matter. For example, compared to the prior year quarter, hourly turnover improved by approximately 14 percentage points and our internal net sentiment scores increased 2.3%. During the quarter, we implemented phase one of our back of house optimization initiative to the full system. As a reminder, This phase is focused on process simplification to improve quality and profitability while also making jobs easier and more enjoyable. We've been pleased with the results and employee feedback has also been very positive as team members find the new processes easier to execute. Let's talk about Q4. There's a lot going on that we're excited about. Our Q4 work demonstrates the complementary nature of our strategic pillars and provides compelling examples of how we're bringing our strategy to life. A big focus in recent months has been our brand refinement work, which will continue to gather steam in Q4 before officially launching in August. Brand refinement means evolving our brand across all touchpoints and creating deeper, more meaningful engagement with our guests. In addition to the updated look and feel that we've been incorporating into our advertising, we are showing up authentically in places where our existing and new guests are. An example of this is our partnership with Speedway Motorsports and the success of the Cracker Barrel 400, the NASCAR race we sponsored this past Sunday just down the road from our home office. There's strong overlap with Cracker Barrel guests and NASCAR fans, and our brands have much in common. Both are highly experiential and put country hospitality and people at the heart of everything we do. The Cracker Barrel 400 is more than a race. It marks the launch of a key partnership, and throughout the summer, NASCAR fans can expect activations at Speedway Motorsports destinations across the country. The Cracker Barrel 400 was a big moment in and of itself, but it is also a piece of our overall strategy and integrated marketing campaign to promote the much anticipated return of Campfire Meals. We heard loud and clear from both guests and employees that they deeply missed these unique and delicious foil-wrapped meals that are packed with hearty protein, seasoned vegetables, and a rich broth. We brought them back for the first time since 2018 and made them even better. We've elevated the flavors, improved the quality, and made them easier for the kitchen to execute. In addition to the returning favorites of beef and chicken, we've added a new shrimp and andouille sausage offering starting at the great value price point of $10.99. To support Campfire, we've invested in advertising, and our integrated marketing campaign also reflects our ongoing brand refinements, including a refreshed look and feel that showcases the quality and appeal of our delicious food. We're also evolving how we show up in social media and are working with creators to tap into conversations as part of our efforts to connect authentically with our guests. Cracker Barrel Rewards is another way we're deepening our engagement with guests and driving frequency. To jumpstart the campfire menu promotion and reward our loyalty members, we gave them early access to our new decadent s'mores brownie skillet, and will continue to give early access to provide value to our members. We recently achieved our fiscal 25-year target of acquiring 8 million members, and over one-third of tracked sales are now associated with loyalty members. Cracker Barrel Rewards continues to deliver incremental sales and traffic, And looking ahead, we're focused on enhancing our personalization capabilities to further drive incrementality. As a part of this, we've been testing advanced personalization for Cracker Barrel rewards using an AI-driven learning model. We are encouraged by the results, as it's driven a mid-single-digit lift in average revenue per member compared to control. We're also using AI in other ways as part of our broader efforts to improve efficiency and effectiveness by leveraging technology. Our traffic forecasting utilizes machine learning, which has improved accuracy at the store level and enhanced our ability to manage labor. Our entry filter for guest relations, or kind of how we triage inbound, is powered by AI, which speeds up time to resolution and more quickly puts guests in touch with a live representative. And finally, we're using machine learning to bolster our cybersecurity. These are just a few examples, and we continue to evaluate opportunities to incorporate AI-based technology into our toolkit to positively impact the business. Before turning it over to Craig, I'd like to comment on the tariff situation. For context, approximately one-third of our retail products are sourced directly from vendors in China. In addition to this direct exposure, we also have indirect exposure related to product that we purchase through domestic vendors that is also sourced from China. Our approach to mitigate the tariff impacts includes, first, aggressively negotiating with vendors, second, alternate sourcing, and third, pricing. As we have mentioned, we have been in the process of updating our retail strategy, and we are also accelerating initiatives from this, such as rationalizing SKUs, reducing the number of seasonal themes, adjusting our seasonal promotional strategy. All of these will also help mitigate the impact of tariffs. The situation remains dynamic, and we intend to provide more specifics in September when we report Q4 earnings and share our fiscal year 26 guidance, at which time we expect to have a higher degree of certainty on the net impacts related to tariffs and the timing of our mitigation efforts. I want to wrap up my prepared remarks with a few key points. First, we acknowledge that there's a lot going on in the macroeconomic environment, but our teams are keenly focused on executing the business today while transforming for the future. We're leaning into what guests love about Cracker Barrel, and we're evolving to drive our business forward. Our Q4 initiatives are a great example of this, and there's much more to come. Third, guests are choosing us, and we've delivered four consecutive quarters of positive comparable store restaurant sales growth. Because of this momentum, we were able again to raise our guidance, and Q4 is off to a strong start. Finally, as a reminder, All of this work is anchored on our three business imperatives of driving relevancy, which is market share, delivering food and experiences guests love, and growing profitability. We remain confident in our plan and our ability to execute, and achieving these imperatives will drive significant long-term value creation. I'll now turn it over to Craig to review our financials and provide our outlook.