-- Comparable store sales growth at company-owned restaurants of 5.2% in
the second quarter. Eleventh consecutive quarter of positive comparable
store sale growth.
-- Restaurant gross profit increased 7.6%to $18.9 million in the second
quarter
-- Average unit volume for company-owned stores increased to $884,000 for
trailing 12 months
-- Second quarter operating income increased 113% to $6.7 million.
-- Opened 1 new company-owned restaurant and 6 new licensed locations in
the quarter
-- Successful completion of public offering and amended credit facility
enabled substantial reduction in indebtedness and projected cash interest
expense savings of approximately $11.7 million annually.
LAKEWOOD, CO -- Einstein Noah Restaurant Group, Inc. (
EINSTEIN NOAH RESTAURANT GROUP, INC.
CONSOLIDATED BALANCE SHEETS
AS OF JANUARY 2, 2007 AND JULY 3, 2007
(in thousands, except share information)
(unaudited)
January 2, July 3,
2007 2007
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 5,477 $ 7,110
Restricted cash 2,403 1,715
Franchise and other receivables, net of
allowance of $505 and $432, respectively 6,393 6,010
Inventories 4,948 4,966
Prepaid expenses and other current assets 4,529 4,780
Assets held for sale 1,144 -
----------- -----------
Total current assets 24,894 24,581
Restricted cash long-term 284 278
Property, plant and equipment, net 33,889 38,733
Trademarks and other intangibles, net 63,806 63,806
Goodwill 4,875 4,875
Debt issuance costs and other assets, net 5,406 3,853
----------- -----------
Total assets $ 133,154 $ 136,126
=========== ===========
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable $ 3,347 $ 4,834
Accrued expenses 25,855 21,067
Short term debt and current portion of
long-term debt 3,605 1,180
Current portion of obligations under capital
leases 76 77
----------- -----------
Total current liabilities 32,883 27,158
Senior notes and other long-term debt, net of
discount 166,556 89,380
Obligations under capital leases 124 84
Other liabilities 8,822 8,591
Mandatorily redeemable, Series Z Preferred
Stock, $.001 par value, $1,000 per share
liquidation value; 57,000 shares
authorized; 57,000 shares issued and
outstanding 57,000 57,000
----------- -----------
Total liabilities 265,385 182,213
----------- -----------
Commitments and contingencies (see Note 10)
Stockholders’ deficit:
Series A junior participating preferred stock,
700,000 shares authorized; no shares issued
and outstanding
Common stock, $.001 par value; 25,000,000 shares
authorized; 10,596,419 and 15,739,355 shares
issued and outstanding 11 16
Additional paid-in capital 176,797 262,055
Accumulated deficit (309,039) (308,158)
----------- -----------
Total stockholders’ deficit (132,231) (46,087)
----------- -----------
Total liabilities and stockholders’
deficit $ 133,154 $ 136,126
=========== ===========
EINSTEIN NOAH RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SECOND QUARTER AND YEAR TO DATE PERIODS ENDED
JULY 4, 2006 AND JULY 3, 2007
(in thousands, except earnings per share and related share information)
(unaudited)
Second quarter ended: Year to date ended:
---------------------- ----------------------
July 4, July 3, July 4, July 3,
2006 2007 2006 2007
---------- ---------- ---------- -----------
Revenues:
Company-owned restaurant
sales $ 91,507 $ 94,141 $ 182,087 $ 183,256
Manufacturing and
commissary revenues 5,196 5,682 10,469 11,500
Franchise and license
related revenues 1,253 1,232 2,476 2,554
---------- ---------- ---------- -----------
Total revenues 97,956 101,055 195,032 197,310
Cost of sales:
Company-owned restaurant
costs 73,964 75,257 147,490 146,589
Manufacturing and
commissary costs 5,502 5,380 10,507 10,802
---------- ---------- ---------- -----------
Total cost of sales 79,466 80,637 157,997 157,391
---------- ---------- ---------- -----------
Gross profit 18,490 20,418 37,035 39,919
Operating expenses:
General and
administrative expenses 9,727 10,855 20,288 21,587
Depreciation and
amortization 5,594 2,623 11,598 5,042
Loss (gain) on sale,
disposal or abandonment
of assets, net (8) 31 13 405
Impairment charges and
other related costs 7 166 83 185
---------- ---------- ---------- -----------
Income from operations 3,170 6,743 5,053 12,700
Other expense:
Interest expense, net 4,712 4,144 9,921 8,933
Write-off of debt
discount upon redemption
of senior notes - 528 - 528
Prepayment penalty upon
redemption of senior
notes - 240 4,800 240
Write-off of debt
issuance costs upon
redemption of
senior notes - 2,071 3,956 2,071
Other - - 10 -
---------- ---------- ---------- -----------
Income (loss) before
income taxes (1,542) (240) (13,634) 928
Provision for income taxes - 10 - 47
---------- ---------- ---------- -----------
Net income (loss) $ (1,542) $ (250) $ (13,634) $ 881
========== ========== ========== ===========
Net income (loss) per
common share - Basic $ (0.15) $ (0.02) $ (1.35) $ 0.08
========== ========== ========== ===========
Net income (loss) per
common share - Diluted $ (0.15) $ (0.02) $ (1.35) $ 0.07
========== ========== ========== ===========
Weighted average number of
common shares outstanding:
Basic 10,171,236 11,775,597 10,118,154 11,190,612
========== ========== ========== ===========
Diluted 10,171,236 11,775,597 10,118,154 11,874,874
========== ========== ========== ===========
EINSTEIN NOAH RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR TO DATE PERIODS ENDED JULY 4, 2006 AND JULY 3, 2007
(in thousands)
(unaudited)
July 4, July 3,
2006 2007
----------- -----------
OPERATING ACTIVITIES:
Net income (loss) $ (13,634) $ 881
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 11,598 5,042
Stock based compensation expense 408 1,250
Loss, net of gains, on disposal of assets 13 405
Impairment charges and other related costs 83 185
Provision for losses on accounts receivable,
net 132 25
Amortization of debt issuance and debt
discount costs 419 392
Write-off of debt issuance costs 3,956 2,071
Write-off of debt discount - 528
Paid-in-kind interest 643 904
Changes in operating assets and liabilities:
Franchise and other receivables 433 358
Accounts payable and accrued expenses 332 (1,225)
Other assets and liabilities (105) (2,500)
----------- -----------
Net cash provided by operating activities 4,278 8,316
INVESTING ACTIVITIES:
Purchase of property and equipment (5,400) (12,404)
Proceeds from the sale of equipment 153 1,164
----------- -----------
Net cash used in investing activities (5,247) (11,240)
FINANCING ACTIVITIES:
Proceeds from secondary common stock offering - 90,000
Costs incurred with offering of our common stock - (6,417)
Proceeds from line of credit 24 -
Repayments of line of credit (24) -
Payments under capital lease obligations (20) (39)
Repayment of notes payable (160,000) -
Borrowings under First Lien 80,000 11,900
Repayments under First Lien (475) (475)
Borrowing under Second Lien 65,000 -
Repayments under Second Lien - (65,000)
Borrowings under Subordinated Note 24,375 -
Repayments under Subordinated Note - (25,000)
Debt issuance costs (4,916) (842)
Proceeds upon stock option and warrant exercises 187 430
----------- -----------
Net cash provided by financing activities 4,151 4,557
Net increase in cash and cash equivalents 3,182 1,633
Cash and cash equivalents, beginning of period 1,556 5,477
----------- -----------
Cash and cash equivalents, end of period $ 4,738 $ 7,110
=========== ===========
Use of Non-GAAP Financial Information
In addition to the results reported in accordance with U.S. generally
accepted accounting principles ("GAAP") included in this release, the
Company has provided certain non-GAAP financial information, which is
Adjusted EBITDA (as described in more detail in the next section).
Management believes that the presentation of this non-GAAP financial
information provides useful information to investors because this
information may allow investors to better evaluate ongoing business
performance and certain components of the Company's results. This
information should be considered in addition to the results presented in
accordance with GAAP, and should not be considered a substitute for the
GAAP results. The Company has reconciled the non-GAAP financial information
included in this release to the nearest GAAP measure in context. See the
"Calculation of Adjusted EBITDA" table below.
Adjusted EBITDA
Adjusted EBITDA is defined as recurring earnings before interest, taxes,
depreciation and amortization and represents operating profit plus other
charges set forth in the attached Calculation of Adjusted EBITDA. Adjusted
EBITDA is not adjusted for all non-cash expenses or for working capital,
capital expenditures or other investment requirements and, accordingly, is
not necessarily indicative of amounts that may be available for
discretionary uses. Thus, Adjusted EBITDA should not be considered in
isolation or as a substitute for net earnings or cash provided by operating
activities, each prepared in accordance with GAAP, when measuring Einstein
Noah Restaurant Group, Inc.'s profitability or liquidity as more fully
discussed in the Company's financial statements and filings with the
Securities and Exchange Commission.
Second quarter ended Year to date ended
July 4, July 3, July 4, July 3,
2006 2007 2006 2007
--------- --------- --------- ----------
Net income (loss) $ (1,542) $ (250) $ (13,634) $ 881
Adjustments
Legal costs associated
with amended First Lien
Term Loan - 191 - 191
Interest expense, net 4,712 4,144 9,921 8,933
Write-off of debt discount
upon redemption of senior
notes - 528 - 528
Prepayment penalty upon
redemption of senior
notes - 240 4,800 240
Write-off of debt issuance
costs upon redemption of
senior notes - 2,071 3,956 2,071
Depreciation and
amortization 5,594 2,623 11,598 5,042
Loss (gain) on sale,
disposal or abandonment
of assets, net (8) 31 13 405
Impairment charges and
other related costs 7 166 83 185
Provision for income taxes - 10 - 47
--------- --------- --------- ----------
Consolidated adjusted EBITDA $ 8,763 $ 9,754 $ 16,737 $ 18,523
========= ========= ========= ==========
The following table reconciles our net income and earnings per share as
reported under GAAP in the United States with those financial measures as
adjusted by the items detailed below and presented in the accompanying news
release and associated teleconference. These calculations are not prepared
in accordance with GAAP and should not be viewed as alternatives to GAAP.
We believe that the supplemental presentation of these calculations
provides meaningful non-GAAP financial measures to help investors
understand and compare business trends among different reporting periods on
a consistent basis. These calculations set forth the pro forma effects of
how our secondary public stock offering and our amendment of the First Lien
Term Loan facility would have affected our consolidated statements of
operations if the transactions had been consummated on the last day of the
period prior to the beginning of the quarters and the year to date periods
ended July 4, 2006 and July 3, 2007. As a result of these transactions, we
were able to pay off our higher interest rate debt.
Second quarter ended Year to date period ended
July 4, July 3, July 4, July 3,
2006 2007 2006 2007
---------- ---------- ---------- -----------
Net income (loss) $ (1,542) $ (250) $ (13,634) $ 881
Add
Legal costs associated
with amended First
Lien Term Loan - 191 - 191
Interest expense, net 4,712 4,144 9,921 8,933
Write-off of debt
discount upon
redemption of senior
notes - 528 - 528
Prepayment penalty
upon redemption of
senior notes - 240 4,800 240
Write-off of debt
issuance costs upon
redemption of senior
notes - 2,071 3,956 2,071
Interest Income 64 112 113 211
Less
Interest expense under
amended $90 Million
First Lien Term Loan
at 6.96% for 2006 and
7.39% for 2007 1,566 1,663 3,132 3,326
Other interest expense 76 15 156 32
Unused Line Fee of
$13.3 million at
0.50% 17 17 33 33
Amortization of debt
issuance costs 120 120 241 241
Letter of Credit Fee
of $6.7 million at
2.50% 42 42 84 84
---------- ---------- ---------- -----------
Pro forma pre-tax income $ 1,413 $ 5,180 $ 1,510 $ 9,339
========== ========== ========== ===========
Common shares outstanding
as of April 4, 2006,
April 3, 2007, January 3,
2006, and January 2, 2007 10,065,072 10,612,227 10,065,072 10,596,419
Shares issued in secondary
public offering 5,000,000 5,000,000 5,000,000 5,000,000
Common stock issued upon
stock option exercise 45,151 127,128 45,151 142,936
---------- ---------- ---------- -----------
Pro-forma weighted average
number of common shares
outstanding as of
July 4, 2006 and July 3,
2007 - Basic 15,110,223 15,739,355 15,110,223 15,739,355
Dilutive effect of stock
options 435,912 821,551 418,168 684,262
---------- ---------- ---------- -----------
Pro-forma weighted average
number of common shares
outstanding as of
July 4, 2006 and July 3,
2007 - Diluted 15,546,135 16,560,906 15,528,391 16,423,617
========== ========== ========== ===========
Pro-forma EPS - Basic $ 0.09 $ 0.33 $ 0.10 $ 0.59
========== ========== ========== ===========
Pro-forma EPS - Diluted $ 0.09 $ 0.31 $ 0.10 $ 0.57
========== ========== ========== ===========
Contact Information: Contacts: Jay Pfeiffer Pfeiffer High Investor Relations, Inc. 303-393-7044 Rick Dutkiewicz Chief Financial Officer 303-568-8004