Jamba (JMBA) Q2 2012 Earnings Call August 01, 2012 5:00 pm ET Executives Karen L. Luey - Chief Financial Officer, Principal Accounting Officer, Chief Administrative Officer, Executive Vice President and Secretary James D. White - Chairman, Chief Executive Officer and President Analysts Peter Mahon - Dougherty & Company LLC, Research Division Conrad Lyon - B. Riley & Co., LLC, Research Division Chris Krueger - Northland Capital Markets, Research Division Presentation Operator
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With that said, I'd like to turn it over to James.James D. White Thank you, Karen, welcome to our second quarter call. On our last earnings call, I said that increases in our same-store sales were continuing in the start of our second quarter. For the second quarter though, same-store sales gains position Jamba as a leader in our peer group, with year-to-date performance that led us to increase our guidance for 2012. So we have some good results to review today. I'll highlight some of the quarterly accomplishments and then expand on a few of them later. Our same-store sales now have been positive for 7 consecutive quarters for company-owned stores and 2 full years for our franchise stores. The increases in Q2 were 5.1% for company stores, 6.4% for franchise units. Systemwide, the increase was 5.7%. Both improved traffic and higher average check drove the increases in all day parts. The store profitability improved by 270 basis points to 24.3%. Our balance sheet remains strong with 0 debt and almost $29 million in cash. All strategic initiatives in our BLEND Plan 2.0 are in place and helping accelerate our growth. Product and menu innovation move forward significantly around our expanded Make It Light, line-up of lower calorie smoothies, the return of our better-for-you Fruit Refresher beverages made with whole fruit and coconut water, featuring a summertime watermelon flavor and our expanded offering of fresh juice blends. We have 130 locations served by JambaGo units at the end of the second quarter. We're now accelerating this initiative and plan 400 to 500 by year end. Our milestone partnership with the National Dairy Council resulted in a fruit and dairy beverage for K-12 schools that combines the benefits of fat-free milk with real fruit and a naturally sweetened great-tasting smoothie.
Our target for JambaGo now has moved up to 1,500 by the end of 2013. Our international units have reached 30 and our on track to reach our annual target of 10 to 15 locations. Our CPG platform is now strengthened with our acquisition of the intellectual property and planned relaunch of Jamba Energy and the opportunistic expansion of Talbott Teas. CPG revenue is on track to reach around $3 million this year. Our unrelenting focus on taking cost out of the system and managing our cost structure continue to yield excellent results.With that overview, I'll now ask Karen to take us through the financials. Karen L. Luey Thank you, James. The press release that was issued today has comparisons against prior-year GAAP results and prior-year pro forma results. The 10-Q, which will be filed on or around August 2, 2012, will only include comparisons against prior-year GAAP results. The pro forma results compare the 13-week quarter of 2012 to the comparable 13-week period in 2011. A supplemental schedule was provided in today's press release. I will focus most of my comments on the pro forma comparison. We continue to make progress on strengthening the financial health of our company especially in our core restaurant business and it is reflected in our second quarter results. Our quarter-over-quarter comparisons on both the GAAP and pro forma basis reflects significant improvement in comparable same-store sales, total revenue, 4-wall store margins, adjusted operating profit, and we continue to improve on our bottom-line results. Our restaurant business is strengthening and it's reflected in our improved of 4-wall store results which includes Company Store revenue less total Company Store expenses of cost of sales, labor, occupancy and other store operating expenses. Our store level profitability on a pro forma basis improved by $2.1 million to $15.1 million or 24.2% of Company Store revenue for the second quarter of 2012. That's compared to $13 million or 21.5% of Company Store revenue from the prior year. The 270 basis point improvement in 4-wall store margin is attributable to our company same-store sales increase of 5.1% and the continued disciplined focus on all expenses. Read the rest of this transcript for free on seekingalpha.com