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 2010 (periods ended January 2, 2011) and confirmed fiscal 2011 guidance. The Company’s fiscal year 2010 and fourth quarter included 52 weeks and 13 weeks, respectively, while the fiscal year 2009 and fourth quarter included 53 weeks and 14 weeks, respectively.
HIGHLIGHTS FOR THE FOURTH QUARTER 2010:
- Net sales increased 1.9% compared to the fourth quarter of 2009. On a comparative 13-week basis, net sales increased 9.2% compared to the prior year quarter.
- Comparable coffeehouse store sales increased 3.5% compared to the fourth quarter of 2009.
- Commercial sales increased 36.8% compared to the fourth quarter of 2009. On a comparative 13-week basis, commercial sales increased 47.0% compared to the prior year quarter.
- Net income was $4.3 million, or $0.21 in earnings per diluted share, compared to $3.0 million, or $0.15 in earnings per diluted share, in the fourth quarter of 2009. The additional week in the fourth quarter of 2009 accounted for $0.5 million in net income and $0.02 in earnings per diluted share.
HIGHLIGHTS FOR FISCAL YEAR 2010:
- Net sales increased 8.2% to $284.0 million compared to $262.5 million in fiscal year 2009. On a comparative 52-week basis, net sales increased 10.3% compared to 2009.
- Comparable coffeehouse store sales increased 4.5% compared to the prior year.
- Commercial sales increased 52.3% compared to fiscal year 2009. On a comparative 52-week basis, commercial sales increased 56.1% compared to the prior year.
- Net income was $9.4 million, or $0.46 in earnings per diluted share, compared to $5.1 million, or $0.26 in earnings per diluted share in the fiscal year 2009. The company incurred $0.5 million or $0.02 in earnings per diluted share, in non-recurring costs related to a follow-on offering of shares held by the Company’s largest shareholder. The additional week in the fiscal year 2009 accounted for $0.5 million in net income and $0.02 in earnings per diluted share.
Speaking on behalf of the Company, Michael Tattersfield, the Company’s President and CEO commented, “Our fourth quarter marked the conclusion of a very successful year at Caribou Coffee. We have never been in a stronger position, both strategically and financially, than we are today. We have diversified and strengthened our brand and business model by becoming a true multi-channel branded coffee company. We are poised to grow within each of our business channels and we will continue to provide the meaningful experiences our guest’s love, while enhancing returns for our shareholders.”
FOURTH QUARTER 2010 RESULTS
Net sales increased $1.4 million, or 1.9%, to $77.9 million for the quarter ended January 2, 2011 from $76.5 million for the quarter ended January 3, 2010. When calculated on a comparative 13-week basis, consolidated sales increased 9.2% compared to the fourth quarter of 2009.
- Coffeehouse sales were $62.1 million in the fourth quarter of 2010. When calculated on a comparative 13-week basis, coffeehouse sales increased 3.1% compared to the fourth quarter of 2009. Comparable coffeehouse sales in the fourth quarter of 2010 increased 3.5% compared to the prior year quarter.
- Commercial sales were $13.1 million in the fourth quarter of 2010 compared to $9.6 million in the fourth quarter of 2009, an increase of 36.8% from higher sales to existing and new customers. When calculated on a comparative 13-week basis, commercial sales increased 47.0% compared to the fourth quarter of 2009.
- Franchise sales were $2.7 million in the fourth quarter of 2010 compared to $2.3 million in the fourth quarter of 2009. When calculated on a comparative 13-week basis, franchise sales increased 24.2% compared to the fourth quarter of 2009.
Cost of sales and related occupancy costs in the fourth quarter of 2010 was $36.4 million. As a percentage of sales, cost of sales and related occupancy costs was 46.8% in the fourth quarter of 2010 compared to 45.1% in the fourth quarter of 2009. This increase was due to an overall mix change with a higher percentage of sales coming from the commercial segment, as well as food sales becoming a larger portion of retail coffeehouse sales.
Operating expenses in the fourth quarter of 2010 were $26.0 million. As a percentage of sales, operating costs were 33.4%, compared to 36.9% in the fourth quarter of 2009. This decrease was the result of leveraging of higher sales and lower marketing spending in the current year quarter.
General and administrative expenses were $7.8 million in the fourth quarter of 2010. As a percentage of sales, general and administrative expenses increased slightly to 10.0% in the fourth quarter of 2010, compared to 9.7% in the fourth quarter of 2009, as the Company added some key positions in fiscal year 2010, primarily related to new store development, marketing and product management.
EBITDA was $8.1 million in the fourth quarter of 2010, compared to EBITDA of $6.8 million in the fourth quarter of 2009, an improvement of 18.7%. The year-over-year EBITDA increase was 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 $0.3 million, or 9.4%, to $3.0 million in the fourth quarter of 2010, from $3.3 million in the same period in the prior year. Depreciation and amortization was lower in the quarter due to a lower depreciable asset base.
The net income attributable to Caribou Coffee Company in the fourth quarter of 2010 was $4.3 million or $0.21 per diluted share compared to a net income of $3.0 million or $0.15 per share in the same period in 2009. The additional week in the period accounted for approximately $0.02 per share in 2009. The Company ended the quarter with $23.1 million in cash and cash equivalents and no long term debt.
FISCAL 2011 OUTLOOK
Looking ahead, Caribou Coffee confirmed the following fiscal 2011 guidance:
- Net sales growth of 7% to 9%.
- Diluted earnings per share is expected to be $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).
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 2, 2011, the Company had 541 coffeehouses, including 131 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.