Caribou Coffee Company, Inc. (NASDAQ:CBOU), the second largest
company-owned premium coffeehouse operator in the United States
based on the number of coffeehouses, today reported financial
results for the fourth quarter and fiscal year 2011 (periods ended
January 1, 2012) and confirmed fiscal year 2012 guidance.
HIGHLIGHTS FOR THE FOURTH QUARTER OF 2011 INCLUDE:
- Consolidated sales increased 18.8%
- Comparable coffeehouse store sales
increased 5.6%
- Commercial and Franchise sales
increased 68.6%
- Net income attributable to Caribou
Coffee Company, Inc. was $4.9 million, or $0.24 per diluted
share
- Non-GAAP pro forma net income
attributable to Caribou Coffee Company, Inc. was $2.8 million, or
$0.14 per diluted share, compared to pro forma net income of $2.6
million, or $0.13 per diluted share for the same period in 2010
(see non-GAAP reconciliation at the end of this release)
HIGHLIGHTS FOR FISCAL YEAR 2011:
- Consolidated sales increased 15.0%
- Comparable coffeehouse store sales
increased 4.7%
- Commercial and Franchise sales
increased 62.3%
- Net income attributable to Caribou
Coffee Company, Inc. was $35.2 million, or $1.69 per diluted
share
- Non-GAAP pro forma net income
attributable to Caribou Coffee Company, Inc. was $8.7 million, or
$0.42 per diluted share, compared to pro forma net income of $5.6
million, or $0.27 per diluted share for the same period in 2010
(see non-GAAP reconciliation at the end of this release)
Speaking on behalf of the Company, Michael Tattersfield, the
Company’s President and CEO commented, “Our fourth quarter marked
the conclusion of a fantastic year for Caribou Coffee, in which we
made progress strategically, financially and culturally. We are
pleased to have delivered another solid quarter, one that rounds
out a record year of financial performance for Caribou. Looking
ahead, we are optimistic about what we can achieve across each of
our business lines, but are particularly excited to be resuming
meaningful development of company-owned coffeehouses. As always, we
will continue to provide the meaningful experiences our
guest’s love, while enhancing returns for our shareholders."
FOURTH QUARTER 2011 RESULTS
Net sales for the quarter of $92.5 million increased $14.6
million, or 18.8%, from $77.9 million in the comparable quarter of
2010.
- Coffeehouse sales were $66.0 million in
the fourth quarter of 2011, an increase of 6.1% compared to $62.1
million in the fourth quarter of 2010. The Company’s food platform,
specifically the addition of breakfast and lunch sandwiches,
continued to drive comparable coffeehouse sales, which were a 5.6%
increase in the quarter.
- Commercial sales were $23.3 million in
the fourth quarter of 2011, an increase of 77.5% compared to $13.1
million in the fourth quarter of 2010, largely driven by sales
related to the Keurig single-serve platform, as well as new and
existing customers in the Company’s grocery channel and increased
penetration in foodservice channels.
- Franchise sales were $3.3 million in
the fourth quarter of 2011, an increase of 24.6% compared to $2.7
million in the fourth quarter of 2010. Growth in product sales and
royalties from 169 franchise locations, a net increase of 38
locations from the prior year, drove the increase in franchise
sales versus last year.
Cost of sales and related occupancy costs in the fourth quarter
of 2011 was $49.6 million, an increase of $13.1 million, or 36.0%,
compared to the fourth quarter of 2010 and were driven by the
Company’s consolidated sales growth. As a percentage of revenue,
cost of sales and related occupancy costs were 53.6% in the fourth
quarter of 2011 versus 46.8% in the fourth quarter of 2010. The
higher coffee commodity costs drove the increase as a percentage of
revenue compared to the prior year as well as a shift in the
overall mix change to the Company’s commercial and franchise
channels, which have higher cost of sales as a percentage of
sales.
Operating expenses in the fourth quarter of 2011 were $27.5
million, an increase of $1.5 million, or 5.7%, compared to 26.0
million in the fourth quarter of 2010. The increase in operating
expenses was driven by expenses tied to sales volume increases and
new company-owned coffeehouse openings. As a percentage of revenue,
operating costs were 29.7%, compared to 33.4% in the fourth quarter
of 2010. The decrease as a percentage of revenue is the result of
leverage gained on fixed costs within the Company’s business
channels as well as a shift in the overall sales mix to the
Company’s commercial channel, which has a lower operating expense
component than its retail coffeehouses.
General and administrative expenses decreased $0.3 million, or
3.3%, to $7.5 million in the fourth quarter of 2011, from $7.8
million in the fourth quarter of 2010. As a percentage of total net
sales, general and administrative expenses decreased to 8.1% in the
fourth quarter of 2011, compared to 10.0% in the fourth quarter of
2010 as the Company leveraged fixed costs against higher sales.
The Company’s net income attributable to Caribou Coffee Company,
Inc. for the fourth quarter of 2011 was $4.9 million or $0.24 per
diluted share, compared to $4.3 million, or $0.21 per diluted
share, in the same period in 2010. The Company ended the quarter
with $44.5 million in cash and cash equivalents and no long term
debt.
The Company’s non-GAAP pro forma net income attributable to
Caribou Coffee Company, Inc. in the fourth quarter of 2011 was $2.9
million, or $0.14 per diluted share, compared to a pro forma net
income of $2.6 million, or $0.13 per diluted share for the same
period in 2010 (see non-GAAP reconciliation at the end of this
release).
FISCAL YEAR 2012 OUTLOOK
Looking ahead, Caribou Coffee confirmed the following fiscal
year 2012 guidance:
- Net sales growth of approximately 10%.
- Comparable coffeehouse sales growth of
2% to 4%.
- Commercial sales growth of
approximately 20%.
- New coffeehouse unit growth of 55 – 70,
of which approximately 20 will be Company-owned coffeehouse
openings.
- Capital expenditure investments of $13
million to $15 million.
- Diluted earnings per share of $0.48 to
$0.51.
CONFERENCE CALL
Caribou Coffee will host a conference call today, February 22,
2012, at 4:30 p.m. (Eastern Time) to discuss these results. Hosting
the call will be Mike Tattersfield, Chief Executive Officer, and
Tim Hennessy, Chief Financial Officer. The call will be webcast and
can be accessed from the Company's website at
www.cariboucoffee.com. The webcast link is in the Investor
Relations section.
Listeners may also access the call by dialing 888-515-2880 or
719-457-2631 for international callers. A replay of the call will
be available until Wednesday, February 29, 2012, by dialing
877-870-5176 or 858-384-5517 for international callers; the
password is 4192405. In addition, the webcast will be archived on
the Company’s website.
ABOUT THE COMPANY
Founded in 1992, Caribou Coffee Company is one of the leading
branded coffee companies in the United States, with a compelling
multi-channel approach to their customers. Based on the number of
coffeehouses, Caribou Coffee is the second largest company-operated
premium coffeehouse operator in the United States. As of January 1,
2012, the Company had 581 coffeehouses, including 169
franchised locations, in 20 states, the District of Columbia
and nine international markets. The Company’s coffeehouses aspire
to be the community place loved by guests who are provided an
extraordinary experience that makes their day better. Caribou
Coffee provide the highest quality handcrafted beverages, foods and
coffee lifestyle items with a unique blend of expertise, fun and
authentic human connection in a comfortable and welcoming
coffeehouse environment. In addition, Caribou Coffee’s unique
coffees are available within grocery stores, mass merchandisers,
club stores, office coffee and foodservice providers, hotels,
entertainment venues and e-commerce channels. Caribou Coffee is a
proud recipient of the Rainforest Alliance Corporate Green Globe
Award and is committed to operating practices that promote
sustainability and environmental protection. 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 contain
forward-looking statements concerning Caribou Coffee’s expected
financial performance (including, without limitation, statements
and information in the fiscal year 2012 Outlook and the quotation
from management), as well as Caribou Coffee’s strategic and
operational plans. Risks and uncertainties may cause actual results
to differ materially from the results predicted, and reported
results should not be considered as an indication of future
performance. The potential risks and uncertainties include, among
others, our ability to develop and maintain our brand; our ability
to maintain or expand our commercial business, including
maintaining our relationship with Keurig; our ability to locate
superior sites and increase the density of our coffeehouses;
Caribou Coffee’s ability to compete with new or existing
competitors; the implementation and results of Caribou Coffee’s
ongoing strategic and cost initiatives; the fluctuations in cost
and availability of our raw ingredients; the demand by customers
for Caribou Coffee’s premium products; acceptance by customers of
new products and services; dependence on third parties for
supplies, services, and distribution; dependence on key personnel;
failure to manage growth and diversification; risks related to
Caribou Coffee’s international franchise operations; Caribou
Coffee’s ability to protect its intellectual property and the value
of its brands; and general economic conditions and changes in
economic conditions. All information set forth in this press
release and its attachments is as of February 22, 2012. Caribou
Coffee does not intend, and undertakes no duty, to update this
information to reflect subsequent events or circumstances; however,
Caribou Coffee may update its business outlook or any portion
thereof at any time in its discretion. More information about
potential factors that could affect the Company’s business and
financial results is included under the captions “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in the Company’s Annual Report on Form 10-K
for the year ended January 2, 2011, which is on file with the SEC
and available on the SEC’s website at www.sec.gov. Additional
information will also be set forth in those sections in any future
filings we may make with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act.
CARIBOU COFFEE COMPANY, INC. AND
AFFILIATES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
Thirteen Weeks
Ended
Fifty-Two Weeks
Ended
January 1,
2012
January 2,
2011
January 1,
2012
January 2,
2011
(In thousands, except for per share amounts)
(Unaudited)
Coffeehouse sales $ 65,955 $ 62,134 $ 242,293 $ 232,108 Commercial
and franchise sales
26,565
15,755 84,211
51,889 Total net sales 92,520 77,889 326,504
283,997 Cost of sales and related occupancy costs 49,567 36,443
162,667 131,094 Operating expenses 27,481 26,010 105,993 101,169
Depreciation and amortization 3,052 3,013 11,425 12,284 General and
administrative expenses
7,523
7,780 31,226
29,343 Operating income 4,897 4,643 15,193
10,107 Other income (expense): Interest income 1 3 16 22 Interest
expense
(99 )
(174 ) (283
) (408 ) Income
before provision for income taxes 4,799 4,472 14,926 9,721
(Benefit) provision for income taxes
(192
) 30
(20,676 ) (76
) Net income 4,991 4,442 35,602 9,797 Less: Net income
attributable to noncontrolling interest
51
108 379
397 Net income attributable to
Caribou Coffee Company, Inc.
$ 4,940
$ 4,334 $
35,223 $ 9,400
Basic net income attributable to Caribou Coffee Company, Inc.
common shareholders per share
$ 0.24
$ 0.22 $
1.75 $ 0.48
Diluted net income attributable to Caribou Coffee Company, Inc.
common shareholders per share
$ 0.24
$ 0.21 $
1.69 $ 0.46
Basic weighted average number of shares outstanding
20,289 19,685
20,129 19,639
Diluted weighted average number of shares outstanding
20,982 20,834
20,803 20,641
CARIBOU COFFEE COMPANY, INC. AND
AFFILIATES
CONDENSED CONSOLIDATED BALANCE
SHEETS
January 1,
2012
January 2,
2011
In thousands, except per share amounts
(Unaudited)
ASSETS Current assets: Cash and cash equivalents $ 44,495 $
23,092 Accounts receivable, net 14,646 8,096 Other receivables, net
1,743 1,227 Inventories 22,965 25,931 Deferred tax assets - current
5,071 — Prepaid expenses and other current assets
1,514 1,122 Total
current assets 90,434 59,468 Property and equipment, net of
accumulated depreciation and amortization 36,965 41,075 Restricted
cash — 837 Deferred tax assets – non-current 15,642 — Other assets
323 345 Total
assets
$ 143,364 $
101,725 LIABILITIES AND SHAREHOLDERS’
EQUITY Current liabilities: Accounts payable $ 10,480 $ 8,080
Accrued compensation 6,272 5,954 Accrued expenses 8,502 6,916
Deferred revenue
8,591
8,726 Total current liabilities 33,845 29,676
Asset retirement liability 1,248 1,196 Deferred rent
liability 5,132 6,296 Deferred revenue
1,883
2,091 Total long term liabilities
8,263 9,583 Equity: Caribou Coffee Company, Inc.
Shareholders’ equity: Preferred stock, par value $.01, 20,000
shares authorized; no shares issued and outstanding — — Common
stock, par value $.01, 200,000 shares authorized; 20,848 and 20,141
shares issued and outstanding at January 1, 2012 and January 2,
2011, respectively 208 202 Additional paid-in capital 132,643
129,026 Accumulated comprehensive income — 12 Accumulated deficit
(31,718 )
(66,941 ) Total Caribou Coffee Company,
Inc. shareholders’ equity 101,133 62,299 Noncontrolling interest
123 167 Total
equity
101,256
62,466 Total liabilities and equity
$ 143,364 $
101,725
Coffeehouse Openings and
Closings
Thirteen Weeks
Ended Fifty-Two Weeks Ended January 1,
2012 January 2, 2011
January 1, 2012 January
2, 2011 (In thousands, except operating data)
Non-GAAP Metrics: EBITDA(1) $ 8,423 $ 8,056 $ 28,234 $
23,979
Operating Data: Percentage change in
comparable coffeehouse net sales(2) 5.6 % 3.5 % 4.7 % 4.5 %
Company-Owned: Coffeehouses open at beginning of period 409 410 410
413 Coffeehouses opened during the period 5 0 8 0 Coffeehouses
closed during the period
2
0 6
3 Coffeehouses open at end of period: Total
Company-Owned 412 410 412 410 Franchised: Coffeehouses open at
beginning of period 150 126 131 121 Coffeehouses opened during the
period 19 7 45 20 Coffeehouses closed during the period
0 2
7 10 Coffeehouses
open at end of period: Total Franchised
169
131 169
131 Total coffeehouses open at
end of period
581
541 581
541
(1)
See reconciliation and discussion of non-GAAP measures which
follow at the end of this section. (2) Percentage change in
comparable coffeehouse net sales compares the net sales of
coffeehouses during a fiscal period to the net sales from the same
coffeehouses for the equivalent period in the prior year. A
coffeehouse is included in this calculation beginning in its
thirteenth full fiscal month of operations. A closed coffeehouse is
included in the calculation for each full month that the
coffeehouse was open in both fiscal periods. Franchised
coffeehouses are not included in the comparable coffeehouse net
sales calculations.
NON-GAAP FINANCIAL INFORMATION
(Unaudited, in thousands, except per share
data)
The following reconciliation and non-GAAP financial
information are provided to assist the reader with understanding
the financial impact of the reversal of the valuation allowance
against accumulated net operating losses and other deferred tax
assets on the Company’s net income attributable to Caribou Coffee
Company, Inc. and earnings per share when comparing current 13 and
52 week period results to the Company’s fiscal year 2010 results.
Thirteen Weeks
Ended
January 1, 2012 January 2,
2011 January 1, 2012
January 2, 2011 (Thousands) Diluted
EPS Net income attributable to Caribou Coffee Company, Inc. as
reported $ 4,940 $ 4,334 $ 0.24 $ 0.21 (Benefit from) provision for
income taxes
(192 )
30 (0.01 )
0.00 Non-GAAP pro-forma pre-tax income attributable to
Caribou Coffee Company, Inc. 4,748 4,364 0.23 0.21 Pro forma
tax expense at 40% effective tax rate (2)
1,899
1,746 0.09
0.08 Non-GAAP pro forma net income attributable
to Caribou Coffee Company, Inc.
$ 2,849
$ 2,618 $
0.14 $ 0.13 Diluted
weighted average number of shares outstanding
20,982 20,834
20,982 20,834
Fifty-Two Weeks
Ended
January 1, 2012 January 2,
2011 January 1, 2012
January 2, 2011 (Thousands) Diluted
EPS Net income attributable to Caribou Coffee Company, Inc. as
reported $ 35,223 $ 9,400 $ 1.69 $ 0.46 Deferred tax asset
valuation allowance reversal (1) 20,529 - 0.98 0.00 Other
benefit from income taxes
147
76 0.01
0.01 Non-GAAP pro-forma pre-tax income attributable to
Caribou Coffee Company, Inc. 14,547 9,324 0.70 0.45 Pro
forma tax expense at 40% effective tax rate (2)
5,819 3,730
0.28 0.18 Non-GAAP pro
forma net income attributable to Caribou Coffee Company, Inc.
$ 8,728 $
5,594 $ 0.42
$ 0.27 Diluted weighted average number of
shares outstanding
20,803
20,641 20,803
20,641 (1)
Relates to the tax benefit from the reversal of an accounting
reserve against tax net operating loss carryforwards and other
deferred tax assets. (2) Pro forma effective tax rate for
illustrative purposes
EBITDA RECONCILIATION
The following is a reconciliation of the
Company’s net income to EBITDA.
Thirteen Weeks Ended Fifty-Two Weeks Ended
January 1, 2012 January 2,
2011 January 1, 2012
January 2, 2011 (In thousands) Net
Income attributable to Caribou Coffee Company, Inc. $ 4,940 $ 4,334
$ 35,223 $ 9,400 Interest expense 99 174 283 408 Interest income (1
) (3 ) (16 ) (22 ) Depreciation and amortization(1) 3,577 3,521
13,420 14,269 (Benefit from) provision for income taxes
(192 ) 30
(20,676 ) (76
) EBITDA $
8,423 $
8,056 $
28,234 $
23,979 (1) Includes
depreciation and amortization associated with the headquarters and
roasting facility that are categorized as general and
administrative expenses and cost of sales and related occupancy
costs on the statement of operations.
EBITDA is equal to net income excluding: (a) interest expense;
(b) interest income; (c) depreciation and amortization; and (d)
income taxes.
Management believes EBITDA is useful to investors in evaluating
the Company’s operating performance for the following reason:
- Coffeehouse leases are generally
short-term and Caribou must depreciate all of the cost associated
with those leases on a straight-line basis over the initial lease
term excluding renewal options (unless such renewal periods are
reasonably assured at the inception of the lease). The Company
opened a net 209 company-operated coffeehouses from the beginning
of fiscal year 2003 through the end of the fourth quarter of 2011.
As a result, management believes depreciation expense is
disproportionately large when compared to the sales from a
significant percentage of the coffeehouses that are in their
initial years of operations. Also, many of the assets being
depreciated have actual useful lives that exceed the initial lease
term excluding renewal options. Consequently, management believes
that adjusting for depreciation and amortization is useful for
evaluating the operating performance of the coffeehouses.
Management uses EBITDA:
- As a measurement of operating
performance because it assists management in comparing its
operating performance on a consistent basis as it removes the
impact of items not directly resulting from coffeehouse
operations;
- For planning purposes, including the
preparation of our internal annual operating budget; and
- To evaluate the Company’s capacity to
incur and service debt, fund capital expenditures and expand the
business.
EBITDA as calculated by Caribou Coffee is not necessarily
comparable to similarly titled measures used by other companies. In
addition, EBITDA: (a) does not represent net income or cash flows
from operating activities as defined by GAAP; (b) is not
necessarily indicative of cash available to fund cash flow needs;
and (c) should not be considered an alternative to net income,
operating income, cash flows from operating activities or Caribou
Coffee’s other financial information as determined under GAAP.
FISCAL YEAR 2012 GUIDANCE
The following reconciliation and non-GAAP financial information
are provided to assist the reader with understanding the financial
impact of taxes on our pro-forma earnings per share when adjusted
for pro-forma tax impacts when comparing 2011 performance with the
Company’s fiscal year 2012 guidance.
Year
ended
December
30,
2012
Year
ended
January 1,
2012
(non-GAAP)
Diluted EPS Net income attributable to Caribou Coffee
Company, Inc., $0.81 - $0.85 $1.69 Deferred tax asset valuation
allowance reversal, net of other tax expense (1)
$0.00
$0.99 Pre-tax income attributable to Caribou Coffee
Company, Inc., expected and non-GAAP, respectively $0.81 – $0.85
$0.70 Tax expense at 40% effective tax rate (2)
$0.33 –
$0.34 $0.28 Net income attributable to Caribou
Coffee Company, Inc, expected and pro forma, respectively.
$0.48 – $0.51 $0.42 (1)
Relates to the tax benefit from the reversal of an
accounting reserve against tax net operating loss carryforwards and
other deferred tax assets. (2) For fiscal year ended January 1,
2012 amount represents pro forma effective tax rate. For fiscal
year ended December 30, 2012, amount represents expected effective
tax rate.
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