Caribou Coffee Company, Inc., the second largest company-owned premium coffeehouse operator in the United States based on the number of coffeehouses, today reported financial results for the first quarter of 2011 (thirteen weeks ended April 3, 2011) and re-confirmed fiscal 2011 guidance.
HIGHLIGHTS FOR THE FIRST QUARTER OF 2011 INCLUDE:
- Consolidated sales increased 7.8%
- Comparable coffeehouse store sales increased 4.3%
- Commercial and Franchise sales increased 28.0%
- Net income attributable to Caribou Coffee Company, Inc. was $24.1 million, or $1.17 per diluted share which includes a $21.3 million tax benefit related to the reversal of a tax valuation allowance
- Non-GAAP pro forma net income attributable to Caribou Coffee Company, Inc. was $1.6 million, or $0.08 per diluted share, compared to pro forma net income of $0.5 million, or $0.03 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 financial performance during the recent quarter underscores our successful execution against our strategy of becoming a true multi-channel coffee company. We continue to see success across our three lines of business, each of which contributed significantly to our 8% growth in consolidated sales and earnings per share performance. As always, we are committed to enhancing returns for our shareholders while building the community place loved by our guests.”
FIRST QUARTER 2011 RESULTS
Net sales for the quarter of $72.3 million increased $5.2 million, or 7.8%, from $67.1 million in the comparable quarter of 2010.
- Coffeehouse sales were $57.6 million in the first quarter of 2011, an increase of 3.6% compared to $55.6 million in the first quarter of 2010. This growth was driven by a 4.3% increase in comparable coffeehouse sales in the first quarter of 2011, primarily due to the successful expansion of the Company’s food platform through the launch of breakfast sandwiches.
- Commercial sales were $11.7 million in the first quarter of 2011, an increase of 29.7% compared to $9.0 million in the first quarter of 2010. Sales growth in the commercial channel was achieved through sales growth from existing and new customers in the Company’s grocery channel, sales related to the Keurig single-serve platform and increasing penetration in foodservice channels.
- Franchise sales were $3.0 million in the first quarter of 2011, an increase of 21.9% as compared with $2.5 million in the first quarter of 2010. Increased product sales and royalties from 135 franchise locations, a net increase of 12 locations on a year over year basis, drove the increase in franchise sales versus the prior year.
Cost of sales and related occupancy costs in the first quarter of 2011 were $33.2 million, an increase of $1.8 million or 5.9% compared to the first quarter of 2010, driven by the Company’s consolidated sales growth. As a percentage of revenue, cost of sales and related occupancy costs were 46.0% in the first quarter of 2011 versus 46.8% in the first quarter of 2010. This decrease as a percentage of sales was due to pricing action taken in the quarter, as well as leveraging the Company’s higher sales volume over fixed occupancy costs.
Operating expenses in the first quarter of 2011 rose $0.4 million or 1.8% to $25.4 million compared to $25.0 million in the same period of the prior year. The increase in operating expenses was related to variable costs related to increased sales in the quarter such as labor in the Company’s retail coffeehouse channel. As a percentage of revenue, operating costs were 35.2%, down from 37.2% in the same period of the prior year, as the Company gained leverage on fixed costs within their business channels and benefitted from a shift in their overall sales mix to their commercial channel, which has a lower operating expense component than their retail coffeehouses.
General and administrative expenses increased $1.3 million, or 19.9%, to $7.8 million in the first quarter of 2011, from $6.5 million in the first quarter of 2010. As a percentage of total net sales, general and administrative expenses increased to 10.8% in the first quarter of 2011 from 9.7% in the first quarter of 2010. This increase was due to resources added in the latter half of 2010 to support key initiatives, including marketing, product management and real estate.
EBITDA was $6.2 million in the first quarter of 2011, compared to EBITDA of $4.6 million in the first quarter of 2010, an improvement of 35.0%. EBITDA increased primarily due to improved performance within the retail coffeehouses and continued growth in the commercial and franchise segments. (EBITDA is a non-GAAP measure. See EBITDA reconciliation at the end of this release).
Depreciation and amortization decreased $0.2 million to $2.9 million during the first quarter of 2011. Depreciation and amortization was lower in the quarter due to a lower depreciable asset base.
In the first quarter of 2011, the Company recorded a tax benefit of $21.3 million compared to a tax benefit of $0.2 million in first quarter of 2010. The tax benefit in 2011 related to the reversal of a portion of the Company’s valuation allowance against accumulated net operating losses and other deferred tax assets and the corresponding recognition of those deferred tax assets on the Company’s balance sheet.
The Company’s net income attributable to Caribou Coffee Company, Inc. for the first quarter of 2011 was $24.1 million or $1.17 per diluted share compared to $1.0 million or $0.05 per diluted share for the same period in 2010.
The Company’s non-GAAP pro forma net income attributable to Caribou Coffee Company, Inc. in the first quarter of 2011 was $1.6 million, or $0.08 per diluted share, compared to a pro forma net income of $0.5 million, or $0.03 per diluted share for the same period in 2010 (see non-GAAP reconciliation at the end of this release).
FISCAL 2011 OUTLOOK
Caribou Coffee also re-confirmed the following fiscal 2011 guidance:
- Net sales growth of 7% to 9%
- Diluted earnings per share of $0.58 to $0.62 on a pre-tax basis (pre-tax EPS is a non-GAAP measure. See EPS reconciliation at the end of this release).
- Diluted earnings per share of $0.35 to $0.37 on a pro forma taxed basis (pro forma EPS is a non-GAAP measure.)
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 April 3, 2011, the Company had 544 coffeehouses, including 135 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 provides 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.
