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Einstein Noah Restaurant Group Reports Fourth Quarter And Fiscal 2011 Financial Results

Stocks in this article: BAGL

The Company uses company-owned comparable store sales, franchise and license sales and the resulting system-wide sales information internally in connection with restaurant development decisions, planning, and budgeting analyses. The Company believes comparable store sales information is useful in assessing consumer acceptance of our brands; facilitates an understanding of our financial performance and the overall direction and trends of sales and operating income; helps the Company appreciate the effectiveness of its advertising and marketing initiatives; and provides information that is relevant for comparison within the industry.

Comparable store sales percentages are non-GAAP financial measures, which should not be considered in isolation or as a substitute for other measures of performance prepared in accordance with GAAP, and may not be equivalent to comparable store sales as defined or used by other companies. The Company does not record franchise or license restaurant sales as revenues. However, royalty revenues are calculated based on a percentage of franchise and license restaurant sales, as reported by the franchisees or licensees.

 
EINSTEIN NOAH RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except earnings per share and related share information)
 
 
  Fiscal quarter ended   Increase/
(in thousands) (Decrease)
December 28,   January 3, 2011
2010 2012 vs. 2010
 
Revenues:
Company-owned restaurant sales $ 95,441 $ 103,000 7.9 %
Manufacturing and commissary revenues 7,700 9,002 16.9 %
Franchise and license related revenues   2,924     3,139 7.4 %
Total revenues 106,065 115,141 8.6 %
 
Cost of sales (exclusive of depreciation and amortization shown separately below):
Company-owned restaurant costs
Cost of goods sold 27,446 30,048 9.5 %
Labor costs 26,586 29,080 9.4 %
Rent and related expenses 9,959 10,117 1.6 %
Other operating costs 9,171 9,631 5.0 %
Marketing costs   2,258     2,043 (9.5 %)
Total company-owned restaurant costs 75,420 80,919 7.3 %
 
Manufacturing and commissary costs   6,417     7,988 24.5 %
Total cost of sales 81,837 88,907 8.6 %
 
Gross margin:
Company-owned restaurant 20,021 22,081 10.3 %
Manufacturing and commissary 1,283 1,014 (21.0 %)
Franchise and license   2,924     3,139 7.4 %
Total gross margin 24,228 26,234 8.3 %
 
Operating expenses:
General and administrative expenses 10,235 9,470 (7.5 %)
Depreciation and amortization 4,525 5,276 16.6 %
Restructuring expenses 477 765 60.4 %
Other operating expenses, net   89     381 328.1 %
Income from operations 8,902 10,342 16.2 %
 
Interest expense, net 740 852 15.1 %
Write-off of debt issuance costs upon redemption of term loan   966     - (100.0 %)
Income before income taxes 7,196 9,490 31.9 %
Provision for income taxes   3,842     3,370 (12.3 %)
Net income $ 3,354   $ 6,120 82.5 %
 
Net income $ 3,354 $ 6,120 82.5 %
Less: Additional redemption on temporary equity (22 ) - (100.0 %)
Add: Beneficial conversion feature on temporary equity (169 ) - (100.0 %)
Add: Accretion of premium on Series Z preferred stock   435     - (100.0 %)
Net income available to common stockholders $ 3,598   $ 6,120 70.1 %
 
Net income available to common stockholder per share – Basic $ 0.22 $ 0.36 63.6 %
Net income available to common stockholders per share – Diluted $ 0.21 $ 0.36 71.4 %
Cash dividend declared per common share $ 0.125 $ 0.125 0.0 %
 
Weighted average number of common shares outstanding:
Basic 16,600,719 16,809,502 1.3 %
Diluted 16,853,782 17,022,819 1.0 %
 
 
EINSTEIN NOAH RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
PERCENTAGE RELATIONSHIP TO TOTAL REVENUES
(unaudited)
   
 
Fiscal quarter ended
December 28, January 3,
2010 2012
 
Revenues:
Company-owned restaurant sales 90.0% 89.5%
Manufacturing and commissary revenues 7.3% 7.8%
Franchise and license related revenues 2.7% 2.7%
Total revenues 100.0% 100.0%
 
Cost of sales (exclusive of depreciation and amortization shown separately below):
Company-owned restaurant costs (1)
Cost of goods sold 28.8% 29.2%
Labor costs 27.9% 28.2%
Rent and related expenses 10.3% 9.8%
Other operating costs 9.6% 9.4%
Marketing costs 2.4% 2.0%
Total company-owned restaurant costs 79.0% 78.6%
 
Manufacturing and commissary costs (2) 83.3% 88.7%
Total cost of sales 77.2% 77.2%
 
Gross margin:
Company-owned restaurant (1) 21.0% 21.4%
Manufacturing and commissary (2) 16.7% 11.3%
Franchise and license 100.0% 100.0%
Total gross margin 22.8% 22.8%
 
Operating expenses:
General and administrative expenses 9.6% 8.2%
Depreciation and amortization 4.3% 4.6%
Restructuring expenses 0.4% 0.7%

Other operating expenses, net

0.1% 0.3%
Income from operations 8.4% 9.0%
 
Interest expense, net 0.7% 0.8%
Write-off of debt issuance costs upon redemption of term loan 0.9% 0.0%
Income before income taxes 6.8% 8.2%
 

Provision for income taxes

3.6% 2.9%
Net income 3.2% 5.3%
 
 
(1) As a percentage of company-owned restaurant sales
(2) As a percentage of manufacturing and commissary revenues
 
 
EINSTEIN NOAH RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except earnings per share and related share information)
 
 
  Fiscal year ended   Increase/
(in thousands) (Decrease)
December 28,   January 3, 2011
2010 2012 vs. 2010
 
Revenues:
Company-owned restaurant sales $ 372,191 $ 378,723 1.8 %
Manufacturing and commissary revenues 30,405 34,542 13.6 %
Franchise and license related revenues   9,115     10,330   13.3 %
Total revenues 411,711 423,595 2.9 %
 
Cost of sales (exclusive of depreciation and amortization shown separately below):
Company-owned restaurant costs
Cost of goods sold 106,035 112,018 5.6 %
Labor costs 109,005 110,595 1.5 %
Rent and related expenses 39,731 40,322 1.5 %
Other operating costs 37,732 39,116 3.7 %
Marketing costs   9,854     9,836   (0.2 %)
Total company-owned restaurant costs 302,357 311,887 3.2 %
 
Manufacturing and commissary costs   25,566     30,441   19.1 %
Total cost of sales 327,923 342,328 4.4 %
 
Gross margin:
Company-owned restaurant 69,834 66,836 (4.3 %)
Manufacturing and commissary 4,839 4,101 (15.3 %)
Franchise and license   9,115     10,330   13.3 %
Total gross margin 83,788 81,267 (3.0 %)
 
Operating expenses:
General and administrative expenses 38,502 36,786 (4.5 %)
Depreciation and amortization 17,769 19,259 8.4 %
Restructuring expenses 477 1,099 130.4 %
Other operating income, net   (531 )   (395 ) (25.6 %)
Income from operations 27,571 24,518 (11.1 %)
 
Interest expense, net 5,135 3,357 (34.6 %)
Adjustment for Series Z modification 929 - (100.0 %)
Write-off of debt issuance costs upon redemption of term loan   966     -   (100.0 %)
Income before income taxes 20,541 21,161 3.0 %
Provision for income taxes   9,918     7,958   (19.8 %)
Net income $ 10,623   $ 13,203   24.3 %
 
Net income $ 10,623 $ 13,203 24.3 %
Less: Additional redemption on temporary equity (387 ) - (100.0 %)
Add: Accretion of premium on Series Z preferred stock   1,072     -   (100.0 %)
Net income available to common stockholders $ 11,308   $ 13,203   16.8 %
 
Net income available to common stockholder per share – Basic $ 0.68 $ 0.79 16.2 %
Net income available to common stockholders per share – Diluted $ 0.67 $ 0.78 16.4 %

Cash dividends declared per common share

$ 0.125 $ 0.375 200.0 %
 
Weighted average number of common shares outstanding:
Basic 16,532,420 16,629,098 0.6 %
Diluted 16,804,726 16,880,321 0.4 %
 
 
EINSTEIN NOAH RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
PERCENTAGE RELATIONSHIP TO TOTAL REVENUES
(unaudited)
   
Fiscal year ended
December 28, January 3,
2010 2012
 
Revenues:
Company-owned restaurant sales 90.4% 89.4%
Manufacturing and commissary revenues 7.4% 8.2%
Franchise and license related revenues 2.2% 2.4%
Total revenues 100.0% 100.0%
 
Cost of sales (exclusive of depreciation and amortization shown separately below):
Company-owned restaurant costs (1)
Cost of goods sold 28.5% 29.6%
Labor costs 29.3% 29.2%
Rent and related expenses 10.7% 10.7%
Other operating costs 10.1% 10.3%
Marketing costs 2.6% 2.6%
Total company-owned restaurant costs 81.2% 82.4%
 
Manufacturing and commissary costs (2) 84.1% 88.1%
Total cost of sales 79.6% 80.8%
 
Gross margin:
Company-owned restaurant (1) 18.8% 17.6%
Manufacturing and commissary (2) 15.9% 11.9%
Franchise and license 100.0% 100.0%
Total gross margin 20.4% 19.2%
 
Operating expenses:
General and administrative expenses 9.4% 8.7%
Depreciation and amortization 4.3% 4.5%
Restructuring expenses 0.1% 0.3%
Other operating income, net (0.1%) (0.1%)
Income from operations 6.7% 5.8%
 
Interest expense, net 1.3% 0.8%
Adjustment for Series Z modification 0.2% 0.0%
Write-off of debt issuance costs upon redemption of term loan 0.2% 0.0%
Income before income taxes 5.0% 5.0%
Provision for income taxes 2.4% 1.9%
Net income 2.6% 3.1%
 
 
(1) As a percentage of Company-owned restaurant sales
(2) As a percentage of manufacturing revenues
 
 
EINSTEIN NOAH RESTAURANT GROUP, INC.
SELECTED FINANCIAL INFORMATION
(in thousands)
   
 
 
 

Selected Consolidated Balance Sheet Information:

December 28, 2010 January 3, 2012
Cash and cash equivalents, end of period $ 11,768 $ 8,652
Property, plant and equipment, net 56,663 59,017
Total assets 205,067 204,732
Total debt 87,700 74,200
Total liabilities 127,681 116,919
 
 
 
Fiscal year ended

Selected Consolidated Cash Flow Information:

December 28, 2010 January 3, 2012
Net cash provided by operating activities $ 43,769 $ 39,110
Net cash used in investing activities (15,737 ) (23,685 )
Net cash used in financing activities (26,149 ) (18,541 )

Free cash flow (cash provided by operating activities less cash used in investing activities)

28,032 15,425
 
 

Reconciliation of GAAP to Non-GAAP Measures:

  Fiscal quarter ended
December 28,   January 3,
2010 2012
 
Net income $ 3,354 $ 6,120
Adjustments to net income:
Interest expense, net 740 852
Provision for income taxes 3,842 3,370
Depreciation and amortization 4,525 5,276
Write-off of debt issuance costs upon redemption of term loan 966 -
Restructuring expenses 477 765
Other operating expenses, net   89   381
 
Adjusted EBITDA $ 13,993 $ 16,764
 
 
EINSTEIN NOAH RESTAURANT GROUP, INC.
SELECTED FINANCIAL INFORMATION
(in thousands)
   

Reconciliation of GAAP to Non-GAAP Measures:

Fiscal year ended
December 28, January 3,
2010 2012
 
Net income $ 10,623 $ 13,203
Adjustments to net income:
Interest expense, net 5,135 3,357
Provision for income taxes 9,918 7,958
Depreciation and amortization 17,769 19,259
Adjustment for Series Z modification 929 -
Write-off of debt issuance costs upon redemption of term loan 966 -
Restructuring expenses 477 1,099
Other operating income, net   (531 )   (395 )
 
Adjusted EBITDA $ 45,286   $ 44,481  
 
       
Trailing 12 Months Activity
Company
Owned Franchised Licensed Total
Consolidated Total
Beginning balance December 28, 2010 431 92 210 733
Opened restaurants 9 6 40 55
Closed restaurants (1 ) (3 ) (11 ) (15 )
Refranchising, Net 1   (1 ) -   -  
Ending balance January 3, 2012 440   94   239   773  




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