57th Street General Acquisition Corp. (the “Company”) (NASDAQ:
CRMB), owner of Crumbs Holdings LLC (“Crumbs”), a national
neighborhood bakery and the largest U.S.-based retailer of
cupcakes, today announced financial results for the second quarter
and year-to-date periods ended June 30, 2011. The Company also
raised its 2011 development outlook to 16-18 new store openings
from 14-16, reaffirmed its commitment to have 200 stores in
operation by year-end 2014 and provided a general financial
outlook.
Second Quarter Highlights as Compared to Year Ago Period
Include:
- Net sales increased 30.1% to $10.3
million; gross profit increased 27.5% to $5.9 million.
- Store operating weeks increased 40.0%
to 455 from 325.
- Comparable store sales decreased
6.0%.
- GAAP net loss before non-controlling
interest of ($0.5 million), net loss attributable to stockholders
of ($0.3 million) or ($0.05) per share, basic and diluted.
- Adjusted EBITDA, a non GAAP measure, of
$0.1 million compared to $0.8 million (*).
- One new store opened in New York
City.
Year-to-Date Highlights as Compared to Year Ago Period
Include:
- Net sales increased 33.1% to $20.0
million; gross profit increased 30.4% to $11.6 million.
- Store operating weeks increased 37.2%
to 892 from 650.
- Comparable store sales decreased
2.1%.
- GAAP net loss before non-controlling
interest of ($0.4 million), net loss attributable to stockholders
of ($0.3 million) or ($0.05) per share, basic and diluted.
- Adjusted EBITDA of $0.6 million
compared to $1.6 million (*).
- Two new stores opened, Newark Liberty
Airport and New York City.
* See financial tables for a reconciliation of adjusted EBITDA
(earnings before interest, taxes, depreciation and amortization), a
non-GAAP measure, to GAAP results.
Jason Bauer, Co-Founder of Crumbs and CEO and President of the
Company stated, “Second quarter growth in revenue and gross profit
was driven by a significant increase in store operating weeks
offset by softness in comparable store sales. The decline in
comparable store sales was largely a function of our small store
base and our intent to cannibalize several of our highest
performing locations. For that reason, we continue to believe that
total revenue growth, store operating week expansion, and
store-level returns are a more accurate measure of our progress.”
Bauer continued, “To that point, our unit-level economics and key
metrics continue to justify our rapid expansion and we’re pleased
to increase our development target for 2011 while reiterating our
goal of 200 stores in operation by the end of 2014. Our new-found
balance sheet strength is a true competitive advantage during this
multi-year expansion phase, allowing us to invest in numerous
initiatives that we believe will solidify our position as our
country’s favorite neighborhood bakery and largest retailer of
cupcakes.”
Second Quarter Financial Results
Net sales for the second quarter of 2011 increased 30.1% to
$10.3 million from $7.9 million in the same period last year. Store
operating weeks increased 40.0% to 455 from 325. Comparable store
sales for the 25 stores in the comparable store base (67% of total
stores) decreased 6.0% compared to the second quarter of 2010 due
in part to deliberate cannibalization of several of the highest
performing locations. Over the last 12 months, 13 more stores have
been added to create an aggregate of 25 stores in the comparable
store base.
Cost of sales increased 33.8% to $4.3 million from $3.2 million,
and as a percentage of net sales, increased 116 basis points to
42.1% compared to the second quarter of 2010. Gross profit
increased 27.5% to $5.9 million from $4.7 million compared to the
second quarter of 2010 due to higher net sales.
General and administrative expenses were $0.7 million, or 6.3%
of net sales, compared to $0.3 million in the same period last
year, or 3.9% of net sales as the Company incurred higher
professional fees and deal-related expenses related to the business
combination agreement which closed in May.
Adjusted EBITDA was $0.1 million compared to $0.8 million in the
same period last year. See financial tables for a reconciliation of
adjusted EBITDA (earnings before interest, taxes, depreciation and
amortization), a non-GAAP measure, to GAAP results.
GAAP net loss attributable to the controlling and
non-controlling interests was ($0.5 million), compared to $0.5
million in the same period last year. Net loss attributable to
stockholders was ($0.3 million), or ($0.05) per share, basic and
diluted.
New Store Development
During the second quarter of 2011, the Company opened one store
in New York City in midtown Manhattan. As of June 30, 2011, there
were a total of 35 stores opened across six states and the District
of Columbia.
Outlook
The Company raised its 2011 development outlook and now
anticipates opening 16-18 stores compared to its original
expectation of 14-16 new locations. All 2011 store openings are
anticipated to be in existing markets. The Company also reaffirmed
its commitment to have 200 stores opened by year-end 2014.
For 2011, the Company updated its financial outlook to the
following:
- Net sales are expected to be $40.0 -
$45.0 million.
- Adjusted EBITDA is expected to be $0.85
million - $1.35 million (*).
For 2012, the Company’s preliminary outlook includes the
following:
- Net sales are expected to be $80.0 -
$85.0 million.
- Adjusted EBITDA is expected to be $7.5
- $8.5 million (*).
* See financial tables for a reconciliation of the Company’s
adjusted EBITDA (earnings before interest, taxes, depreciation and
amortization) guidance, a non-GAAP measure, to the Company’s
outlook on a GAAP basis.
Conference Call
The Company will host a conference call to discuss second
quarter 2011 financial results today at 5:00 PM Eastern Time.
Hosting the call will be Jason Bauer, Co-Founder of Crumbs and CEO
and President of the Company, and John D. (“Chuck”) Ireland, Chief
Financial Officer. The conference call can be accessed live over
the phone by dialing 877-857-6177 or 719-325-4901 for international
callers. A replay will be available beginning one hour after the
call and can be accessed by dialing 877-870-5176 or 858-384-5517
for international callers. The password is 4679497. The replay will
be available until August 31, 2011.
The call will be webcast live from the Company’s Web site at
crumbs.com under the Investor Relations section. An archived
webcast will be available beginning approximately one hour after
the end of the call.
About the Company and Crumbs Holdings LLC
The Company was formed in Delaware in October 2009 and acquired
its interest in its subsidiary, Crumbs Holdings LLC, in May 2011.
The first Crumbs Bake Shop opened its doors in March 2003 on the
Upper West Side of Manhattan by co-founders Mia & Jason Bauer.
The design of Crumbs Bake Shops is inspired by old-time
neighborhood bakeries, creating a warm and friendly environment
with wall-to-wall treats. Recently ranked the largest retailer of
cupcakes nationwide and one of Inc. Magazine’s 10 Breakout
Companies of 2010, Crumbs currently has 35 locations, including 25
locations in the New York Metro area, six locations on the West
Coast, two locations in Washington, D.C., one location in Virginia
and one location in Chicago, Illinois. The specialty of the house
is cupcakes; however, the menu also includes an irresistible blend
of comfort-oriented classics and elegant baked goods. There are
more than 60 varieties of cupcakes baked fresh daily with a new
cupcake of the week debuting each Monday.
Forward Looking Statements
Some of the statements in this press release may constitute
forward-looking statements. Words such as “anticipate,” “expect,”
“project,” “intend,” “plan,” “believe,” “target,” “aim,” “will” and
words and terms of similar substance and any financial projections
used in connection with any discussion of future plans, strategies,
objectives, actions, or events identify forward-looking statements.
Such statements include, among others, those concerning our
expected financial performance and strategic and operational plans,
as well as all assumptions, expectations, predictions, intentions
or beliefs about future events. These statements are based on the
beliefs of our management as well as assumptions made by and
information currently available to us and reflect our current view
concerning future events. As such, they are subject to risks and
uncertainties that could cause our results to differ materially
from those expressed or implied by such forward-looking statements.
Such risks and uncertainties include, among many others: the risk
that the businesses of Crumbs will not be integrated successfully;
the risk that the anticipated benefits of the business transaction
with Crumbs may not be fully realized or may take longer to realize
than expected; the ability to achieve and manage the growth of the
Crumbs brand, expansion into new and existing markets and
operations; the risk that any projections, including earnings,
revenues, expenses, synergies, margins or any other financial items
are not realized, risks arising from disruptions in supply chain;
risks relating to competition for real estate and ability to
negotiate and renew leases; risks arising from geographic
concentration and regional factors impacting local economies; the
risk of disruption from the business transaction making it more
difficult to maintain relationships with customers, employees,
suppliers and lessors; a reduction in industry profit margin;
changing interpretations of generally accepted accounting
principles; continued compliance with government regulations;
changing legislation and regulatory environments; a lower return on
investment; the general volatility of the market prices of our
securities and general economic conditions; our ability to
successfully implement new strategies; operating hazards; and the
loss of key personnel. These risks, as well as other risks
associated the recently consummated merger, are more fully
discussed in the Schedule TO (and any amendments and exhibits
thereto) in connection with the recently completed tender offer,
our Registration Statement on Form S-3 and our periodic reports
(and any amendments thereto) filed with the SEC and available at
the SEC’s website at www.sec.gov Forward-looking statements
included herein speak only as of the date hereof. If any of these
risks or uncertainties materialize or if any assumptions prove
incorrect, results could differ materially from those expressed by
such forward-looking statements. Neither the Company nor Crumbs
undertakes any obligation to update its forward-looking statements
to reflect events or circumstances after the date hereof.
Non-GAAP Information
The Company is providing Adjusted EBITDA information, which is
defined as net income of the combined company, including net income
attributable to any non-controlling interest, determined in
accordance with all applicable and effective GAAP pronouncements up
to June 30, 2011, before interest income or expense, income taxes
and any gains or losses resulting from the change in estimate
relating to the Tax Receivable Agreement, depreciation,
amortization, deferred rent expense, losses or gains resulting from
adjustments to the fair value of the contingent consideration,
stock-based compensation expense, extraordinary or non-recurring
expenses and all other extraordinary non-cash items for the
applicable period as a compliment to U.S. generally accepted
accounting principles (GAAP) results. Adjusted EBITDA measures are
commonly used by management and investors as a measure of leverage
capacity, debt service ability and liquidity. Adjusted EBITDA is
not considered a measure of financial performance under GAAP, and
the items excluded from Adjusted EBITDA are significant components
in understanding and assessing our financial performance. Adjusted
EBITDA should not be considered in isolation or as an alternative
to, or superior to, such GAAP measures as net income, cash flows
provided by or used in operating, investing or financing activities
or other financial statement data presented in our consolidated
financial statements as an indicator of financial performance or
liquidity. Reconciliations of non-GAAP financial measures are
provided in the accompanying tables. Since Adjusted EBITDA is not a
measure determined in accordance with GAAP and is susceptible to
varying calculations, Adjusted EBITDA, as presented, may not be
comparable to other similarly titled measures of other
companies.
57TH STREET GENERAL ACQUISITION CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED)
(in thousands, except per share data) Three
Months Ended June 30, Six Months Ended June 30,
2011 2010
2011 2010
Net sales $ 10,294 $ 7,915 $ 20,013 $ 15,040
Cost
of sales 4,334 3,240
8,394 6,130
Gross profit
5,960 4,675 11,619
8,910
Operating expenses Selling
expenses 400 346 794 603 Staff expenses 3,258 2,029 6,108 3,961
Occupancy expenses 1,800 1,264 3,422 2,371 General and
administrative 651 307 1,046 596 Depreciation and amortization
345 200 675
401 6,454 4,146
12,045 7,932
Income from operations (494 ) 529
(426 ) 978
Other
income (expense) Interest and other income Abandoned lease
projects (14 ) (13 )
(8 ) (14 ) - (13 )
(8 )
Net income (loss) attributable to
the controlling and non-controlling interests (508 ) 529
(439 ) 970 Less: Net (income) loss attributable to
non-controlling interest 211
182
Net income (loss)
attributable to stockholders $ (297 ) $ 529 $
(257 ) $ 970
Net income (loss) per common share,
basic
and diluted $ (0.05 ) $ 0.19 $ (0.05 )
$ 0.57
Weighted average number of
common shares outstanding, basic and diluted
5,599 2,771 * 5,141
1,711 *
* The weighted average number of common shares outstanding is
that of 57th Street General Acquisition Corp.
57TH STREET GENERAL ACQUISITION CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except per share
data)
June 30, December 31, 2011 2010
(Unaudited)
(Audited) ASSETS
Current assets Cash $ 11,514 $ 655 Trade receivables 323 248
Inventories 394 241 Prepaid rent 528 387 Deferred financing costs
215 Other current assets 408
81 Total current assets 13,167
1,827
Property and equipment,
net 9,397 8,785
Other Assets Deferred tax asset 4,774 Restricted cash 605 30
Intangible assets, net 403 429 Deposits 281 277 Other 69
36 Total other assets
6,132 772 $ 28,696
$ 11,384
LIABILITIES,
MEMBERS' EQUITY AND STOCKHOLDERS' EQUITY Current
liabilities Accounts payable and accrued expenses $ 1,695 $
2,615 Payroll liabilities 200 141 Sales tax payable 69 48 Gift
cards and certificates outstanding 124
120 Total current liabilities 2,088 2,924
Long-term liabilities Deferred rent 2,211 1,863
Payable to related parties pursuant to tax receivable agreement
2,387 Total
liabilities 6,686 4,787
Members' equity
6,596
Stockholders' equity Preferred stock, $.0001
par value; 1,000 shares authorized; 390 shares issued and
outstanding at June 30, 2011 Common stock, $.0001 par value;
100,000 shares authorized; 7,100 shares issued, 5,506 outstanding
at June 30, 2011 Additional paid-in capital 30,297 Accumulated
deficit (851 ) Treasury stock, at cost (15,914 )
Total equity 13,532 Non-controlling interest
8,478 - $ 28,696
$ 11,383
57TH STREET
GENERAL ACQUISITION CORP. AND SUBSIDIARIES ADJUSTED EBITDA
AS DEFINED BY AMENDMENT NO. 3 TO THE BUSINESS COMBINATION
AGREEMENT DATED APRIL 7, 2011 (UNAUDITED AND IN THOUSANDS)
For the three months For the six
months ended June 30 ended June 30 2011
2010 2011 2010 Net income (loss)
attributed to the controlling and non-controlling
interest $ (508 ) $ 529 $ (439 ) $ 970
Depreciation 311 171 608 343 Amortization 34 29 67 58 Abandoned
Lease Costs 14 0 13 8 Deferred Rent Expense 126 120 258 210
Non-recurring expenses 98 0
98 0
Adjusted EBITDA $ 75
$ 849 $ 605
$ 1,589 57TH STREET
GENERAL ACQUISITION CORP. AND SUBSIDIARIES ADJUSTED EBITDA
GUIDANCE AS DEFINED BY AMENDMENT NO. 3 TO THE BUSINESS
COMBINATION AGREEMENT DATED APRIL 7, 2011 (UNAUDITED AND IN
THOUSANDS)
2011 2012 Net income $ (1,420 )
$ 3,662 Depreciation 1,365 2,545 Accelerated Depreciation of
Abandoned Leasehold Improvements 15 0 Amortization 125 149 Deferred
Rent Expense 917 1,894 Non-recurring expenses 98 0
Adjusted EBITDA for range midpoint $ 1,100 $ 8,250
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