Jamba, Inc. Announces Second Quarter 2014 Financial Results

Comparable Store Sales Increase as Fresh-Squeezed Juice Rolls Out

Juices Now Offered by More Than 500 Jamba Stores

Net income flat at $6.4 million; non-GAAP net income $7.7 million, an increase of 21.3%; G&A Decreases

Tech Innovations Score Breakthroughs with Consumers

EMERYVILLE, Calif. - (BUSINESS WIRE) - Aug. 4, 2014 - Jamba, Inc. (NASDAQ:JMBA) today reported unaudited financial results for the second fiscal quarter ended July 1, 2014. Jamba® recorded quarterly comparable store sales(1) increases for company-owned and franchise-operated stores, driven by the expansion of Jamba’s fresh-squeezed juice and whole food blending platform.

Juice and whole food blending was introduced to 376 stores during the quarter as a result of the accelerated national rollout, bringing the new platform to a total of 508 Jamba units by quarter end. The juice platform, which was available for only one month during the quarter in most units, is on target to add 300-400 basis points to sales based upon store sales to date. Beyond juice, Jamba continued its global growth with 19 units opened in domestic and international markets, putting the Company on track to reach its annual target of 60-80 new units. The Company also made progress on its refranchising efforts / transition to an asset-light model and decreased the number of company operated stores to 258 at quarter end. This transition helped contribute to our reduction in general and administration (G&A) expense by 6.4% year-over-year to $9.6 million.

Highlights for the 13 weeks ended July 1, 2014, compared to the 13 weeks ended July 2, 2013:

  • Company-owned comparable store sales(1) increased 2.5% for the quarter compared to the prior year period.
  • System-wide comparable store sales(1) increased 2.2% and franchise-operated comparable store sales(1) rose 2.0% for the quarter compared to the prior year period.
  • Net income was $6.4 million, or $0.36 diluted earnings per share for the quarter, flat compared to the prior year period. On a non-GAAP basis excluding one-time costs relating to the Company’s juice launch, adjusted net income(2) was$7.7 million, or $0.44 diluted earnings per share for the quarter, an increase of 22.2%.
  • Total revenue decreased 5.4% to $64.2 million compared to total revenue of $67.8 million for the prior year period, primarily caused by a decrease in the number of company-owned stores due to the Company’s refranchising initiatives.
  • Income from operations was $6.6 million, flat with the prior year period. Operating margin improved by 60 basis points to 10.3% for the second quarter of 2014. On a non-GAAP basis excluding one-time costs relating to the Company’s juice launch, adjusted income from operations(2) was $8.0 million, an increase of $1.4 million.
  • General and administration expense decreased 6.4% to $9.6 million compared with $10.2 million for the prior year period. On a non-GAAP basis excluding one-time costs relating to the Company’s juice launch, adjusted general and administration expense(2) was $9.3 million, a decrease of $1.0 million.
  • Global development continued with franchisees opening 19 Jamba Juice stores -- 13 domestically, including one Smoothie Station, and six in International markets. At quarter end, there were 857 stores globally; 258 company stores, 551 domestic franchise stores and 48 international franchise stores.
  • 376 stores launched fresh-squeezed juice in the quarter – 120 Company-owned stores and 256 franchise-operated units.
  • By mid-July, the Jamba Insider Rewards™ loyalty program enlisted more than one million members in less than five months, outpacing the rate of other industry leaders. At the same time, the ISIS® mobile wallet was used for one million transactions to redeem free Jamba® smoothies and juices.

"Our second-quarter marked a significant milestone for Jamba as we continue to successfully execute on our U.S. growth strategy and drive shareholder value. Our fresh-squeezed juice and whole food blending platform is now in more than 500 stores across the U.S. While we’re in the very early days of this national rollout, we are very pleased with the marketplace excitement, consumer acceptance and incremental sales generated by this initiative," said James D. White, chairman, president and CEO of Jamba, Inc.

"The full impact of juice is not captured in our second quarter results, but in our core California market, which served as a pilot for juice, same store sales increased 3.6%, and while we are only one month into the third quarter, the initial results are positive and indicate that we are off to a strong start, up 6-7% on a same store sales basis. By year-end, we believe we will have established Jamba as the clear national leader in fresh-squeezed juice. In addition, two recent technological innovations – a smart-phone enabled customer loyalty program and a mobile payment system – achieved significant breakthroughs with high levels of consumer engagement and use," Mr. White said.

Second Quarter Fiscal 2014 Results

Revenue

For the 13 weeks ended July 1, 2014, total revenue decreased 5.4% to $64.2 million from $67.8 million in the prior year period. The decrease is primarily caused by the reduction in the number of Company-owned stores due to the Company’s refranchising strategy, partially offset by the 2.5% increase in Company-owned comparable store sales(1). The number of Company-owned stores at the end of the 13 week periods ended July 1, 2014 and July 2, 2013 was 258 and 295, respectively. The increase in Company-owned comparable store sales(1) of 2.5% was driven primarily by an increase in average check of 410 basis points, partially offset by a decrease in transaction count of 160 basis points. During the 13 week period ended July 1, 2014, franchise-operated comparable store sales(1) increased 2.0%. Franchise and other revenue increased 24.6% to $5.6 million from $4.5 million in the prior year period. JambaGO® and CPG revenue was $1.5 million for the 13 week period ended July 1, 2014 and $1.1 million for the prior year period.

Income from Operations and Operating Margin

The Company’s operating margin improved by 60 basis points to 10.3% for the second quarter of 2014 compared to 9.8% for the quarter ended July 2, 2013. On a non-GAAP basis excluding one-time costs relating to the Company’s juice launch, adjusted income from operations(2) was $8.0 million, an increase of $1.4 million. The $1.4 million improvement primarily reflected reduced cost of goods sold and labor cost resulting from sampling and promotional activities and reduced general and administration expenses.

Retail Growth

During the quarter, 376 stores launched fresh-squeezed juice – 120 Company-owned stores and 256 franchise-operated. As of July 1, 2014, 508 Jamba Juice® stores offered the fresh-squeezed juice platform.

At quarter end, system-wide, Jamba® had 809 stores in the United States, of which 551 are franchise-operated stores, and 258 are Company-owned. Franchise-operated stores include 34 Jamba Smoothie Stations™, the limited menu express format.

During the quarter, Jamba opened 13 new domestic franchise-operated stores, of which five are non-traditional and eight traditional, and six international franchise-operated stores, two of which are in the Philippines, two in Canada, one in Mexico and one in South Korea. No new Company-owned stores opened during the quarter; 16 stores were closed globally. Over 1,800 JambaGO® units were in operation.

Liquidity

On July 1, 2014, the Company held $32.4 million in cash and cash equivalents, flat compared to cash and cash equivalents at December 31, 2013. As of July 1, 2014 the Company did not have any restricted cash.

Outlook for 2014

The Company continues to expect to achieve the following results for fiscal 2014:

  • Positive Company-owned comparable store sales(1) of 2.0% - 4.0% ;
  • Store-level margin of 18.0% - 19.0%;
  • Operating margin of 2.0% - 3.0%;
  • 60 - 80 new U.S. and international store locations;
  • Up to 1,000 new JambaGO® installations.

Webcast and Conference Call Information

A conference call to review the second quarter 2014 results will be held today, August 4, 2014 at 5:00 p.m. ET. The conference call can be accessed live over the phone by dialing (877) 407-3982 or for international callers by dialing (201) 493-6780. A replay will be available at 8:00 p.m. ET and can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international callers; the pin number is 13586372. The replay will be available until August 25, 2014. The call can be accessed from the Company’s website at www.jambajuice.com under the Corporate Investor Relations section or directly at http://ir.jambajuice.com.

About Jamba, Inc.

Jamba, Inc., (the "Company") owns and franchises Jamba Juice® stores through its wholly-owned subsidiary, Jamba Juice Company. Jamba Juice Company is a leading restaurant retailer of better-for-you, specialty beverage and food offerings, which include great tasting, whole fruit smoothies, fresh-squeezed juices and juice blends, hot teas and a variety of food items including, hot oatmeal, breakfast wraps, sandwiches, Artisan Flatbreads™ , baked goods and snacks. As of July 1, 2014, there were 857 store locations globally. There were 258 Company-owned and operated stores and 551 franchise-operated stores in the United States, and 48 franchise-operated international stores. Jamba Juice Company expanded the Jamba® brand by direct selling of consumer packaged goods ("CPG") and licensing its trademarks. CPG products for at-home enjoyment are also available online, through select retailers across the nation and in Jamba® outlets in the United States.

Fans of Jamba Juice® can find out more about Jamba Juice's locations as well as specific offerings and promotions by visiting the Jamba Juice website at www.JambaJuice.com or by contacting Jamba’s Guest Services team at 1-866-4R-FRUIT (473-7848).

Forward-Looking Statements

This press release (including information incorporated or deemed incorporated by reference herein) contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those involving future events and future results that are based on current expectations, estimates, forecasts, and projections as well as the current beliefs and assumptions of the Company’s management. Words such as "outlook", "believes", "expects", "appears", "may", "will", "should", "anticipates", or the negative thereof or comparable terminology, are intended to identify such forward looking statements. Any statement that is not a historical fact, including the statements made under the caption "Outlook for 2014" and any other estimates, projections, future trends and the outcome of events that have not yet occurred, is a forward-looking statement. Forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore actual results may differ materially and adversely from those expressed in any forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to factors discussed under the section entitled "Risk Factors" in the Company’s reports filed with the SEC. Many of such factors relate to events and circumstances that are beyond the Company’s control. You should not place undue reliance on forward-looking statements. The Company does not assume any obligation to update the information contained in this press release.

Non-GAAP Financial Measures

The Company provides certain supplemental non-GAAP financial measures to its investors as a complement to the most comparable GAAP measures. The Company believes that providing these non-GAAP measures to its investors, in addition to corresponding GAAP income statement measures, provides investors the benefit of viewing the Company's performance using the same financial metrics that the management team uses in making many key decisions and understanding how the Company's core business operations may perform and may look in the future. The non-GAAP financial measures are discussed further in Footnotes below.

Non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States of America. Non-GAAP measures should not be considered in isolation from or as a substitute for financial information presented in accordance with generally accepted accounting principles, and may be different from non-GAAP measures used by other companies.

Footnotes

(1)Comparable store sales are calculated using sales of Jamba Juice® stores open more than one full year. Company-owned comparable store sales percentages are based on sales from Company-owned stores included in our store base. Franchise-operated comparable store sales percentages are based on sales from franchised stores, as reported by franchisees, which are included in our store base. System-wide sales percentages are based on sales by both Company-owned and franchise-operated stores, as reported by our franchisees, which are included in our store base. Company-owned stores that were sold in refranchising transactions are included in the Company-owned store base for each accounting period of the fiscal quarter to the extent the sale is consummated at least three days prior to the end of such accounting period, but only for the days such stores have been Company-owned. Thereafter, such stores are excluded from the store base until such stores have been franchise-operated for at least one full fiscal period, at which point such stores are included in the franchise-operated store base and compared to sales in the comparable period of the prior year. Comparable store sales exclude closed locations. Company-owned comparable store sales percentages as used herein, may not be equivalent to Company-owned comparable store sales as defined or used by other companies. Franchise-operated comparable store sales percentages and system-wide sales percentages as used herein are non-GAAP financial measures and should not be considered in isolation or as substitute for other measures of performance prepared in accordance with generally accepted accounting principles in the United States. Management reviews the increase or decrease in Company-owned comparable store sales, franchise-operated comparable store sales and system-wide sales compared with the same period in the prior year to assess business trends and make certain business decisions. The Company believes the data is useful in assessing the overall performance of the Jamba® brand and, ultimately, the performance of the Company, the Company-owned stores, and franchise-operated stores.

(2)Non-GAAP adjusted net income is calculated as net income as determined in accordance with GAAP excluding the cost items as specifically identified in the non-GAAP reconciliation schedules set forth below associated with the Company’s juice launch. The Company believes that net income adjusted to exclude the costs of the Company’s juice launch is a helpful indicator of the Company's operating performance in that it shows the net gain/loss without the impact of what the Company believes to be a one-time up front cost. Management does not believe such costs are reflective of the Company's ongoing performance and accordingly excludes those items from non-GAAP adjusted net income/loss.

 


 
         
JAMBA, INC.      
CONDENSED CONSOLIDATED BALANCE SHEETS      
(Unaudited)      
             
      July 1,     December 31,
(In thousands, except share and per share amounts)       2014         2013  
             
ASSETS            
Current assets:            
Cash and cash equivalents     $ 32,376       $ 32,386  
Receivables, net of allowances of $223 and $291       14,926         14,110  
Inventories       2,429         2,670  
Prepaid and refundable taxes       237         483  
Prepaid rent       2,954         307  
Prepaid expenses and other current assets       5,914         6,727  
Total current assets       58,836         56,683  
             
Property, fixtures and equipment, net       40,032         37,485  
Goodwill       1,233         1,233  
Trademarks and other intangible assets, net       1,535         1,317  
Other long-term assets       3,154         1,198  
Total assets     $ 104,790       $ 97,916  
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
Current liabilities:            
Accounts payable     $ 5,445       $ 5,086  
Accrued compensation and benefits       7,430         5,538  
Workers' compensation and health insurance reserves       1,511         1,046  
Accrued jambacard liability       33,215         37,121  
Other current liabilities       14,785         13,082  
Total current liabilities       62,386         61,873  
Deferred rent and other long-term liabilities       6,967         9,201  
Total liabilities       69,353         71,074  
             
Commitments and contingencies            
             
             
Stockholders' equity:            
Common stock, $.001 par value, 30,000,000 shares authorized; 17,209,127 and 17,154,655            
shares issued and outstanding at July 1, 2014 and December 31, 2013, respectively.       17         17  
Additional paid-in-capital       393,632         391,234  
Accumulated deficit       (358,317 )       (364,409 )
Total equity attributable to Jamba, Inc.       35,332         26,842  
Noncontrolling interest       105         -  
Total stockholders' equity       35,437         26,842  
Total liabilities and stockholders' equity     $ 104,790       $ 97,916  
                     

 

                         
JAMBA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
                           
                           
        13 Week     13 Week     26 Week     26 Week
        Period Ended     Period Ended     Period Ended     Period Ended
(In thousands except share and per share amounts)     July 1, 2014     July 2, 2013     July 1, 2014     July 2, 2013
                           
Revenue:                          
Company stores     $ 58,632       $ 63,365       $ 105,904       $ 115,134  
Franchise and other revenue       5,566         4,469         9,927         8,385  
Total revenue       64,198         67,834         115,831         123,519  
                           
Costs and operating expenses:                        
Cost of sales       13,587         14,858         25,169         27,262  
Labor       16,243         16,849         30,573         32,604  
Occupancy       6,899         7,319         13,866         14,695  
Store operating       8,495         9,040         15,897         17,808  
Depreciation and amortization       2,680         2,768         5,298         5,540  
General and administrative       9,582         10,237         17,932         19,390  
Other operating, net       106         120         709         878  
Total costs and operating expenses       57,592         61,191         109,444         118,177  
Income from operations       6,606         6,643         6,387         5,342  
                           
Other (expense) income, net:                        
                           
Interest income       18         -         34         -  
Interest expense       (48 )       (59 )       (94 )       (137 )
Total other expense, net       (30 )       (59 )       (60 )       (137 )
                           
Income before income taxes       6,576         6,584         6,327         5,205  
                           
Income tax expense       (223 )       (234 )       (218 )       (95 )
                           
Net income       6,353         6,350         6,109         5,110  
                           
Redeemable preferred stock dividends and deemed dividends             (104 )             (588 )
                           
Less: Net income attributable to noncontrolling interest       (17 )       -         (17 )       -  
Net income attributable to Jamba, Inc.     $ 6,336       $ 6,246       $ 6,092       $ 4,522  
                           
                           
Weighted-average shares used in computation of loss per share:                    
Basic       17,200,698         16,793,260         17,182,893         16,478,352  
Diluted       17,611,007         17,473,249         17,604,395         16,895,654  
                           
Earnings per share attributable to Jamba, Inc. common shareholders:                    
Basic     $ 0.37       $ 0.37       $ 0.36       $ 0.27  
Diluted     $ 0.36       $ 0.36       $ 0.35       $ 0.27  
                                         

 

                   
JAMBA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Adjusted for One-Time Costs Associated with Juice Launch
                     
        Reported     Juice Launch     As Adjusted
        13 Week     One-Time Costs     13 Week
        Period Ended           Period Ended
(In thousands except share and per share amounts)     July 1, 2014           July 1, 2014
                     
Revenue:                    
Company stores     $ 58,632       $ -       $ 58,632  
Franchise and other revenue       5,566         165         5,731  
Total revenue       64,198         165         64,363  
                     
Costs and operating expenses:                  
Cost of sales       13,587         (477 )       13,110  
Labor       16,243         (419 )       15,824  
Occupancy       6,899         -         6,899  
Store operating       8,495         (33 )       8,462  
Depreciation and amortization       2,680         -         2,680  
General and administrative       9,582         (303 )       9,279  
Other operating, net       106         -         106  
Total costs and operating expenses       57,592         (1,232 )       56,360  
Income from operations       6,606         1,397         8,003  
                     
Other income (expense), net:                  
                     
Interest income       18         -         18  
Interest expense       (48 )       -         (48 )
Total other expense, net       (30 )       -         (30 )
                     
Net income before income taxes       6,576         1,397         7,973  
                     
Income tax expense       (223 )       (47 )       (270 )
                     
Net income       6,353         1,350         7,703  
                     
Net income attributable to noncontrolling interest       (17 )       -         (17 )
                     
Net income attributable to Jamba, Inc.     $ 6,336       $ 1,350       $ 7,686  
                     
                     
Weighted-average shares used in computation of earnings per share:              
                     
Basic       17,200,698               17,200,698  
Diluted       17,611,007               17,611,007  
                     
Earnings per share attributable to Jamba, Inc. common shareholders:                  
Basic     $ 0.37             $ 0.45  
Diluted     $ 0.36             $ 0.44  
                   

 

                   
JAMBA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Adjusted for One-Time Costs Associated with Juice Launch
                     
        Reported     Juice Launch     As Adjusted
        26 Week     One-Time Costs     26 Week
        Period Ended           Period Ended
(In thousands except share and per share amounts)     July 1, 2014           July 1, 2014
                     
Revenue:                    
Company stores     $ 105,904       $ -       $ 105,904  
Franchise and other revenue       9,927         165         10,092  
Total revenue       115,831         165         115,996  
                     
Costs and operating expenses:                  
Cost of sales       25,169         (477 )       24,692  
Labor       30,573         (419 )       30,154  
Occupancy       13,866         -         13,866  
Store operating       15,897         (33 )       15,864  
Depreciation and amortization       5,298         -         5,298  
General and administrative       17,932         (303 )       17,629  
Other operating, net       709         -         709  
Total costs and operating expenses       109,444         (1,232 )       108,212  
                     
Income from operations       6,387         1,397         7,784  
                     
Other (expense) income, net:                  
                     
Interest income       34         -         34  
Interest expense       (94 )       -         (94 )
Total other expense, net       (60 )       -         (60 )
                     
Income before income taxes       6,327         1,397         7,724  
                     
Income tax expense       (218 )       (47 )       (265 )
                     
Net income       6,109         1,350         7,459  
                     
Net income attributable to noncontrolling interest       (17 )       -         (17 )
                     
Net income attributable to Jamba, Inc.     $ 6,092       $ 1,350       $ 7,442  
                     
                     
Weighted-average shares used in computation of earnings per share:            
Basic       17,182,893               17,182,893  
Diluted       17,604,395               17,604,395  
                     
Earnings per share attributable to Jamba, Inc. common shareholders:              
Basic     $ 0.36             $ 0.43  
Diluted     $ 0.35             $ 0.42  
                           

 

                           
JAMBA, INC.
(Unaudited)
                           
STORE COUNT                          
      NUMBER OF STORES
      COMPANY     FRANCHISE     TOTAL
            Domestic     International      
Quarter ended July 1, 2014                          
At December 31, 2013     268       535       48       851  
Opened     -       22       8       30  
Closed     (2 )     (14 )     (8 )     (24 )
Refranchised     (8 )     8      

-

      -  
At July 1, 2014     258       551       48       857  
                           
                           
Quarter ended July 2, 2013                          
At January 1, 2013     301       473       35       809  
Opened     2       17       9       28  
Closed     -       (6 )     (2 )     (8 )
Refranchised     (8 )     8       -       -  
At July 2, 2013     295       492       42       829  
                           

 

COMPARABLE STORE SALES                      
      13 Week     13 Week   26 Week     26 Week
      Period Ended     Period Ended   Period Ended     Period Ended
      July 1, 2014     July 2, 2013   July 1, 2014     July 2, 2013
                       
Percentage Change in Comparable store sales                      
Company stores     2.5 %     2.2 %   1.6 %     2.8 %
Franchise stores     2.0 %     1.2 %   1.2 %     0.2 %
System-wide     2.2 %     1.7 %   1.4 %     1.5 %
                       
                       
Percentage Change in Comparable Company store sales                      
Traffic effect     -1.6 %     1.6 %   -3.6 %     1.5 %
Average check effect     4.1 %     0.6 %   5.2 %     1.3 %
Total Comparable Company store sales     2.5 %     2.2 %   1.6 %     2.8 %

Source: Jamba, Inc.

Investor Contacts:

Dara Dierks
ICR
646-277-1212
investors@jambajuice.com

###

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