MINNEAPOLIS -(BUSINESS WIRE) - Nov. 8, 2012 - 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 third quarter of 2012 (thirteen weeks ended September 30, 2012). The Company also provided a preliminary view of fiscal 2013.
Net income attributable to Caribou Coffee Company, Inc. was $1.7 million, or $0.08 per diluted share compared to $1.8 million, or $0.09 per diluted share, in the third quarter of 2011. Non-GAAP pro forma net income attributable to Caribou Coffee Company, Inc. in the third quarter of 2011 was $1.6 million, or $0.07 per diluted share. (see non-GAAP reconciliation at the end of this release).
Speaking on behalf of the Company, Michael Tattersfield, the Company’s President and Chief Executive Officer commented, “Our third quarter performance was in-line with our expectations. We leveraged on-going product innovation and an unyielding focus on customer service to grow comparable coffeehouse sales of 3.5% in the quarter. We also opened 20 new coffeehouses in the quarter, six of which were company owned. We continue to focus on our multi-channel premium coffee business model to build the Caribou brand, and are confident in our ability to drive future growth across all of our lines of business.”
Tattersfield continued, “Subsequent to our fiscal third quarter, Hurricane Sandy caused damage to a portion of our green coffee inventory that is being stored in a third-party warehouse in New Jersey. We are currently assessing the extent of the damage, including the reclamation and usability potential of the product, as well as possible avenues for recovery. While this situation is rather unfortunate, we estimate our maximum liability will not exceed $5 million, and thankfully, our coffeehouse operations were not materially impacted by the storm.”
Net sales for the quarter of $77.2 million decreased $4.2 million, or 5.2%, from $81.4 million in the comparable quarter of 2011.
Cost of sales and related occupancy costs in the third quarter of 2012 were $37.2 million, a decrease of $4.7 million, or 11.3%, compared to the third quarter of 2011, and were driven by lower sales of blended coffee in the Keurig® single-serve platform. As a percentage of revenue, cost of sales and related occupancy costs were 48.2% in the third quarter of 2012 versus 51.5% in the same period of the prior year. The favorability in cost of sales was driven by lower sales of green coffee related to Caribou Coffee K-cups, which have significantly lower margins.
Operating expenses in the third quarter of 2012 were $26.6 million, an increase of $0.3 million, or 1.0%, compared to $26.3 million in the third quarter of 2011. The increase in operating expenses was driven by higher fees for debit card transactions due to recent legislation changes, partially offset by lower labor costs. As a percentage of revenue, operating costs were 34.4%, compared to 32.3% in the same period of the prior year. The increase as a percentage of sales was the result of deleveraging on lower green coffee sales and royalties related to Caribou Coffee K-cups which have lower operating expenses associated with those sales.
General and administrative expenses increased $0.4 million, or 5.1%, to $8.2 million in the third quarter of 2012, from $7.8 million in the third quarter of 2011. As a percentage of total net sales, general and administrative expenses increased to 10.6% in the third quarter of 2012 from 9.5% in the third quarter of 2011. The increase was due to deleveraging on lower green coffee sales and royalties related to Caribou Coffee K-cups.
Depreciation and amortization decreased $0.1 million to $2.5 million during the third quarter of 2012 due to a lower depreciable asset base.
Tax expense was $0.9 million in the third quarter of 2012 compared to a tax expense of $0.8 million in the third quarter of 2011.
The Company’s net income attributable to Caribou Coffee Company, Inc. in the third quarter of 2012 was $1.7 million, or $0.08 per diluted share, compared to $1.8 million, or $0.09 per diluted share, in the same period in 2011.
The Company has updated its guidance for the full year 2012 based upon the following assumptions:
The Company is also providing a preliminary view for the full year 2013 based upon the following assumptions:
The Company will host a conference call on November 8, 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.
Listeners may access the call by dialing 888-505-4375 or 719-325-2454 for international callers. A replay of the call will be available until Thursday, November 15, 2012, by dialing 877-870-5176 or 858-384-5517 for international callers; the password is 6466229.
The conference call will also be webcast and can be accessed from the Investor Relations section of the Caribou Coffee website at www.cariboucoffee.com.
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 September 30, 2012, the Company had 610 coffeehouses, including 202 franchised locations, in 22 states, the District of Columbia and ten 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. For more information, visit the Caribou Coffee web site at www.cariboucoffee.com.
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, 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 November 9, 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 1, 2012, 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.
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NON-GAAP FINANCIAL INFORMATION
(Unaudited, in thousands, except per share data)
The following reconciliations and non-GAAP financial information are provided to assist the reader with understanding the financial impact of the 2011 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 thirteen week period and thirty-nine week period results to the Company’s 2011 results.
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EBITDA is equal to net income excluding: (a) interest expense; (b) interest income; (c) depreciation and amortization; and (d) income taxes.
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.
Source: Caribou Coffee Company, Inc.
Caribou Coffee Company, Inc.
Investor Relations
Raphael Gross
203-682-8253
ir@cariboucoffee.com
Caribou Coffee provides high quality, handcrafted beverages and food options to fuel life's adventures.