Caribou Coffee Company Plans for Continued Business Expansion, 2006 Operating Highlights and 2007 Guidance
January 08 2007 - 8:01AM
Business Wire
Caribou Coffee Company, Inc. (NASDAQ: CBOU): -- 4Q 2006 Preliminary
Comparable Coffeehouse Net Sales Increase 2 Percent -- Preliminary
2006 Total Net Sales Increase 18 Percent -- 60 Company-Owned and 20
Franchised Coffeehouses Opened in 2006 -- Brand License Agreement
with Coca-Cola North America -- New Franchise Agreements for Four
Major U.S. Airports -- New Brand License Agreement with Keurig
Incorporated Caribou Coffee Company, Inc. (NASDAQ: CBOU) the second
largest company-owned gourmet coffeehouse operator in terms of
coffeehouses, today announced its plans for continued business
expansion and presented a summary of 2006 operations. In
celebration of the first full year as a public company listed on
the NASDAQ exchange and to start 2007, Caribou Coffee Chairman and
CEO, Michael J. Coles, will open the NASDAQ market tomorrow morning
with the ringing of the opening bell for Tuesday, January 9th. 2006
Review The Company today announced that preliminary total net sales
for the thirteen weeks ended December 31, 2006, increased 18
percent over the same period in the prior year. For the fifty-two
week period ended December 31, 2006, preliminary total net sales
rose 18 percent over the same period in the prior year. Preliminary
comparable coffeehouse net sales increased 2 percent for the
thirteen weeks ended December 31, 2006, compared with the same
thirteen weeks in the prior year. For the fifty-two week period
ended December 31, 2006, preliminary comparable coffeehouse net
sales declined 1 percent as compared with the same fifty-two week
period in the prior year. Franchised stores are not included in the
comparable coffeehouse net sales calculations. Preliminary �Other
Sales�, which consist of product sales to commercial, franchise and
Internet customers, royalties from franchises and brand licenses
and franchise development fees increased 22 percent during the
thirteen weeks ended December 31, 2006, to $3.0 million from $2.5
million during the thirteen weeks ended January 1, 2006. This
increase was primarily driven by product sales to franchise and
commercial customers. For the fifty-two week period ended December
31, 2006, �Other Sales� were 58 percent higher than the same period
in the prior year. For the thirteen weeks ended December 31, 2006,
the company opened 25 company-owned coffeehouses and 8 franchised
coffeehouses. For the full year, Caribou Coffee opened 60
coffeehouses, while franchisees opened 20 coffeehouses.
Coffeehouses at year-end 2006 totaled 464, including 24 franchised
locations of which 17 were international locations. Select
Operating Data 13 Weeks 13 Weeks 52 Weeks 52 Weeks 12/31/2006� �
1/01/2006� � 12/31/2006� � 1/01/2006� � Comparable Coffeehouse
Sales (Company-Owned) 2% 2% -1% 6% � COFFEEHOUSE COUNT
Company-Owned: Coffeehouses Open at Beginning of Period 416� 344�
386� 304� Coffeehouses Opened during the Period 25� 44� 60� 86�
Coffeehouses Closed during the Period 1� 2� 6� 4� Coffeehouses Open
at End of Period: Total Company-Owned 440� 386� 440� 386� �
Franchised: Coffeehouses Open at Beginning of Period 16� 4� 9� 2�
Coffeehouses Opened during the Period 8� 5� 20� 7� Coffeehouses
Closed during the Period 0� 0� 5� 0� Coffeehouses Open at End of
Period: Total Franchised 24� 9� 24� 9� TOTAL COFFEEHOUSES AT PERIOD
END 464� 395� 464� 395� Business Initiatives A key part of the
continued business expansion is the aggressive development of a
national brand presence through brand licensing agreements with
Kemps, General Mills and, most recently, the Coca-Cola North
America (CCNA). During 2006, Caribou Coffee and Kemps launched four
flavors of Caribou Coffee ice cream (Caribou Blend, Java Chunk,
Caramel High Rise and Turtle Mocha). All four flavors were strong
performers for Kemps in the premium ice cream segment. In 2007, a
light version will be introduced - Java Chunk Light � as well as
two flavors of Caribou Coffee ice cream nuggets (a bite-sized,
chocolate-covered coffee ice cream treat). In 2006, Caribou Coffee
and General Mills launched two Caribou Coffee snack bars, Vanilla
Latte and Chocolate Mocha. Based upon the success of these first
two flavors, new Caramel High Rise and Mint Condition bars will
begin rolling out this month. Coca-Cola North America and Caribou
Coffee recently announced plans to launch a new line of premium
ready-to-drink iced coffees in the U.S. this summer � the sixth new
product initiative announced by CCNA in the fast-growing coffee,
tea and indulgent beverage segments. Michael J. Coles, Caribou
Coffee Chairman and CEO commented, �Our partnership with Coca-Cola
North America will extend our great premium coffee taste experience
into the ready-to-drink category and allow us to take advantage of
CCNA�s world-class distribution system.� Added J.A.M. �Sandy�
Douglas, president, Coca-Cola North America, �Volume in the
ready-to-drink coffee category has grown 17% in the last four
years, and revenues are up 24%. Caribou�s expertise, involvement
and focus in brewing the perfect coffee will allow us to create a
wonderful ready-to-drink coffee.� Caribou Coffee continues
aggressive development of new products for its retail stores and is
launching a new line of lattes today � the Northern Lite Lattes.
All seven varieties of Northern Lite Lattes will be featured from
January 8th through March 4th at all Caribou Coffee locations.
Northern Lite Lattes are made of skim milk and sugar-free syrups in
vanilla, carmel, turtle, raspberry, hazelnut, chocolate raspberry
and Kahlua� flavors. These hot latte drinks offer customers a new
guilt-free drink that is decadent, yet still as low as 80 calories
per drink. Commercial sales have also grown significantly during
the past year. The Company continued the expansion of sales of
Caribou Coffee in grocery stores by adding additional products to
existing customers, and expanded the number of grocery stores where
Caribou Coffee is sold to approximately 2,000. During the fourth
quarter, Caribou also expanded the number of Hy-Vee and Meijer
stores carrying its products. In terms of additional products to
existing customers, a pre-packaged Caribou Coffee product was added
to the Safeway Denver Colorado division and Fair Trade coffee is
being sold at additional Costco stores. Sam�s Clubs in the Midwest
added Caribou Natural Decaffeinated Coffee to its line-up. The
office coffee business also saw growth with the addition of Aramark
in Denver, CO; Toledo, OH and Richmond, VA and another office
coffee distributor, Gold Cup, in several southeast markets. Caribou
Coffee also continues to expand its global presence through
franchise expansion both domestically and internationally. Caribou
Coffee recently announced its first entry into the Asian market
with plans to develop a minimum of 25 Caribou Coffee stores in
South Korea over the next five years through a franchise agreement.
The first three Caribou Coffee locations are expected to open in
Seoul during the first quarter of 2007. The agreement allows for up
to 50 stores over the next 10 years. With the completion of the
UFOC (Uniform Franchise Offering Circular) in late 2006, Caribou
Coffee is aggressively pursuing multi-unit developers for many key
U.S. markets and is in discussions with a number of potential area
developers. Caribou Coffee today announced that it has signed
franchise agreements to open coffeehouses in four U.S. airports.
The four franchise agreements include the Hartsfield-Jackson
Atlanta International, Dulles International, Reagan National and
Denver International airports. These agreements call for the
opening of a total of eight coffeehouses by the end of 2007, the
first of which opened in December at the Atlanta airport. With the
signing of these four agreements, Caribou Coffee will have a
presence at seven major U.S. airports. Michael J. Coles commented,
�As we continue to broaden and deepen our geographic presence in
the U.S., having coffeehouses in airports is a key strategy. Not
only will we be deepening our penetration in existing markets, but
also exposing the Caribou Coffee brand to the millions of
passengers passing through some of the busiest airports in the
U.S.� Caribou Coffee�s business expansion is already underway as
the company enters 2007. The Company today announced that it has
entered into a brand license agreement with Keurig, Incorporated,
the leader in gourmet single cup brewing. Caribou Coffee will now
be packaged in Keurig K-Cups offering coffee lovers eight Caribou
Coffee varieties to choose from both at home and in the office. �We
are proud to welcome Caribou to the Keurig family,� stated Nick
Lazaris, President of Keurig. �Caribou is an exceptionally strong
brand with a loyal following among gourmet coffee lovers. Our
office and home Keurig users will be delighted with Caribou in
K-Cups.� "Caribou is pleased to make available our coffeehouse
quality coffees in Keurig�s K-Cups." Caribou Coffee�s Michael J.
Coles added. �We�ve partnered with Keurig because their technology
ensures our coffees will deliver a gourmet coffee experience at
home or in the office that Caribou customers love in our
coffeehouses.� Introducing 2007 Annual Financial Guidance For the
current year, Caribou Coffee expects comparable coffeehouse net
sales to be in the range of 0 to 5 percent. �Other Sales�, which
consist of product sales to commercial, franchise and Internet
customers, royalties from franchise and brand licenses and
franchise development fees are projected to increase between 40 to
50 percent. Total coffeehouse openings in 2007 are estimated to be
50 to 70 of which 25 to 30 are expected to be company-owned and 25
to 40 are expected to be franchised coffeehouses. EBITDA for the
full year is estimated to be in the range of $14 million to $17
million after $3 to $5 million of expenses related to store
closings. (An EBITDA reconciliation to net income can be found at
the end of this release.) Michael J. Coles commented, �2006 was a
pivotal year for Caribou Coffee. We have positioned ourselves for
expansion across multiple business channels. With all of these
initiatives in place, I am optimistic about our ability to drive
profitable growth in the future.� About Caribou Coffee Caribou
Coffee Company Inc. (NASDAQ: CBOU), founded in 1992 and
headquartered in Minneapolis, Minnesota, is the second largest,
company-owned, gourmet coffeehouse operator in the United States
based on the number of coffeehouses. Caribou Coffee had 464
coffeehouses, including 24 franchised locations. Caribou Coffee's
coffeehouses are located in 18 states and the District of Columbia,
as well as in several venues outside the United States. Caribou
Coffee offers its customers high-quality, gourmet coffee and
espresso-based beverages, as well as specialty teas, baked goods,
whole bean coffee, branded merchandise and related products.
Caribou Coffee also sells products to club stores, grocery stores,
mass merchandisers, office coffee providers, airlines, hotels,
sports and entertainment venues, college campuses and other
commercial customers. In addition, Caribou Coffee licenses third
parties to use the Caribou Coffee brand on quality food and
merchandise items. Caribou Coffee focuses on creating a unique
experience for customers through a combination of high-quality
products, a comfortable and welcoming coffeehouse environment and a
unique style of service. For more information, visit the Caribou
Coffee web site at www.cariboucoffee.com. Forward Looking
Statements Certain statements in this release, and other written or
oral statements made by or on behalf of Caribou Coffee are
"forward-looking statements" within the meaning of the federal
securities laws. Statements regarding future events and
developments and our future performance, as well as management's
current expectations, beliefs, plans, estimates or projections
relating to the future, are forward-looking statements within the
meaning of these laws. These forward-looking statements are subject
to a number of risks and uncertainties. Among the important factors
that could cause actual results to differ materially from those
indicated by such forward-looking statements are: fluctuations in
quarterly and annual results, incurrence of net losses, adverse
effects of management focusing on implementation of a growth
strategy, failure to develop and maintain the Caribou Coffee brand
and other factors disclosed in the Company's filings with the
Securities and Exchange Commission. The Company undertakes no
obligation to update any forward-looking statements in order to
reflect events or circumstances that may arise after the date of
this release. EBITDA RECONCILIATION � The following is a
reconciliation of the Company�s net loss to EBITDA and Adjusted
EBITDA. � Range of Guidance ($ in millions) � Net loss ($14.1) to
($11.1) Interest expense 0.8� to 0.6� Depreciation and
amortization(1) 27.1� to 27.7� Income taxes 0.2� to 0.4� EBITDA/
adjusted EBITDA $14.0� to $17.0� � (1) Includes depreciation and
amortization associated with the headquarters and roasting facility
that is categorized as general and administrative expenses and cost
of sales and related occupancy costs on the statement of
operations. Caribou Coffee uses EBITDA and Adjusted EBITDA: � As
measurements of operating performance because they assist
management in comparing operating performance on a consistent basis
as they remove the impact of items not directly resulting from the
coffeehouse operations; � For planning purposes, including the
preparation of its internal annual operating budget; � To establish
targets for certain management compensation matters; and � To
evaluate the Company�s capacity to incur and service debt, fund
capital expenditures and expand its business. EBITDA and Adjusted
EBITDA as calculated by the Company are not necessarily comparable
to similarly titled measures used by other companies. In addition,
EBITDA and Adjusted EBITDA: (a) do not represent net income or cash
flows from operating activities as defined by GAAP; (b) are not
necessarily indicative of cash available to fund cash flow needs;
and (c) should not be considered as alternatives to net income,
operating income, cash flows from operating activities or other
financial information as determined under GAAP. The Company
prepares Adjusted EBITDA by adjusting EBITDA to eliminate the
impact of a number of items that it does not consider indicative of
its core operating performance. You are encouraged to evaluate each
adjustment and the reasons the Company considers them appropriate
for supplemental analysis. As an analytical tool, Adjusted EBITDA
is subject to all of the limitations applicable to EBITDA. In
addition, in evaluating Adjusted EBITDA, you should be aware that
in the future the Company may incur expenses similar to the
adjustments in this presentation. Caribou Coffee�s presentation of
Adjusted EBITDA should not be construed as an implication that its
future results will be unaffected by unusual or non-recurring
items.
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