Caribou Coffee's Q4 net income up 14% year-over-year to US$4.9M, driven by 77.5% increase in commercial sales, 24.6% growth in franchise sales; net sales up 18.8% to US$14.6M
MINNEAPOLIS
,
February 23, 2012
(press release)
– 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.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations”
HIGHLIGHTS FOR THE FOURTH QUARTER OF 2011 INCLUDE:
HIGHLIGHTS FOR FISCAL YEAR 2011:
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.
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:
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.
CARIBOU COFFEE COMPANY, INC. AND AFFILIATES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Thirteen Weeks Ended
Fifty-Two Weeks Ended
2012
2011
2012
2011
(Unaudited)
CARIBOU COFFEE COMPANY, INC. AND AFFILIATES
CONDENSED CONSOLIDATED BALANCE SHEETS
2012
2011
(Unaudited)
Coffeehouse Openings and Closings
NON-GAAP FINANCIAL INFORMATION
(Unaudited, in thousands, except per share data)
Thirteen Weeks Ended
Fifty-Two Weeks Ended
EBITDA RECONCILIATION
The following is a reconciliation of the Company’s net income to EBITDA.
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:
Management uses EBITDA:
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.
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)
January 1,
January 2,
January 1,
January 2,
(In thousands, except for per share amounts)
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
January 1,
January 2,
In thousands, except per share amounts
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
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.
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.
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
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
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.
FISCAL YEAR 2012 GUIDANCE
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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