Jamba CEO Discusses Q3 2010 Results – Earnings Call Transcript
Jamba Inc. (
)
Q3 2010 Earnings Call Transcript
November 9, 2010 5:00 pm ET
Executives
Karen Luey – SVP & CFO
James White – Chairman, President & CEO
Analysts
Tony Brenner – Roth Capital Partners
Greg McKinley – Dougherty & Co.
Conrad Lyon – B. Riley & Company
Scott Van Winkle – Canaccord Genuity
Presentation
Operator
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Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Jamba, Inc. third quarter 2010 earnings conference call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator instructions) This conference is being recorded today, Tuesday, November 9, 2010.
I would now like to turn the conference over to our host Karen Luey, Senior Vice President and Chief Financial Officer. Please go ahead.
Karen Luey
Thank you, operator. Good afternoon. With me on today’s call is James D. White, our Chairman, President and CEO. During today’s call, I will review our third quarter financial results. James will follow with an update on our 2010 progress against plan and a review of our 2011 guidance, and then we will take questions.
I would like to remind all listeners that this call is being broadcast and recorded live over the Internet, at jambajuice.com. The webcast is available on our Web site and the replay will be available via telephone until November 30, 2010.
This conference call will include forward-looking statements within the meanings of the securities law. These forward-looking statements will include discussions about the company’s strategic priorities and certain statements of our expectations and plans. These forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements that are contained in the company’s filings with the SEC, including the Risk Factors section in our most recent Form 10-Q. The company does not assume any obligation to publicly release any revisions to forward-looking statements discussed during the call.
With that said, I would like to turn it over to James.
James White
Thank you, Karen, and welcome. I’m pleased to say that since our last conference call, Jamba has made significant progress on several key annual priorities in our 2010 BLEND plan. In some cases, we’ve completed them well ahead of schedule.
We signed definitive agreement that signaled a successful completion of our refranchising initiative. Our largest transaction for 41 Midwestern stores was announced just a few weeks ago and we recently announced an agreement for the sale of 15 stores in the Denver market.
We renewed our relationship with Nestlé USA to develop an exciting line of all-natural fruit-based beverages in the fast-growing energy drinks segment. We announced three other license agreements for branded Jamba consumer products, bringing our total to nine, and we are very pleased on our progress for plans in our second international market, Canada.
We put in place several initiatives to drive against our number one priority, improve comparable store sales. We’ll build on the sequential improvement we have experienced in five of the last six quarters. We continue to focus on reducing our expenses as we remain committed to improving our financial discipline and cost management, and the list goes on.
All-in-all, our substantial achievement put us in a good position for a solid finish to a year of transformation. We’re moving into the transition phase of our turnaround and poised for profitable growth in the future.
While we continue to face the challenges of a slowly recovering economy, particularly in our California Heartland, we feel very good about both our comprehensive initiatives to drive near-term growth and our long-term fundamentals, our business model and our growth drivers, our culture of discipline and continuous improvement and the vision that is guiding us to become a healthy active lifestyle brand.
With that brief overview, I’ll now ask Karen to take us through the financials, and then I will return to provide details about our strategic initiatives and accomplishments.
Karen Luey
Thank you, James. For the quarter, we reported a net loss of $0.8 million compared to net income of $2.8 million in Q3 of the prior year. It is important to note that the current quarter net loss includes non-cash charges of $1.4 million related to the refranchise of certain markets and $1.4 million related to lease termination cost on the early closure of seven store locations. Our net income adjusted for these charges would have been $2 million or 3% of total revenue.
As this completion nears, we should note that our refranchise initiative has taken significant risk out of our business model and has increased cash on the balance sheet. It has also allowed us to reinvest in the business and accelerate the pace of our transition to become a leading healthy active lifestyle brand.
During the quarter, we refranchised 46 store locations for net cash proceeds of $3.9 million. Since the inception of the program through the end of the third quarter, total proceeds from refranchising have totaled $19 million, of which $17 million was cash.
Subsequent to the end of the third quarter, we announced the signing of the last two purchase agreements which will signal the completion of the program. We anticipate that these deals will close by the end of the fiscal year.
This move to a more franchise organization impacts our business model in multiple places. The 116 locations we have refranchised from the inception of the program to the end of the third quarter have had an impact on comparisons to prior year.
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