Printer Friendly

Einstein Noah Restaurant Group Reports Growth in Revenue, Comparable Store Sales and Net Income.

Selected Highlights for the Quarter:

- Revenue growth of 4.3 percent.

- 15th consecutive quarter of comparable store sales growth.

- 26.6 percent growth in Income from Operations.

- Net income of $6.9 million and diluted EPS of $0.42.

- Generated $11.4 million of cash flow from operations.

- Unrestricted cash balance increased $4.5 million to $18.4 million.

- Opened three new company-owned locations and eight new licensed locations.

- Signed three new development agreements for a total of nine potential franchise restaurants.

LAKEWOOD, Colo., Aug. 6 /PRNewswire-FirstCall/ -- Einstein Noah Restaurant Group today posted strong results for the second quarter ended July 1, 2008. The Company posted a 26.6 percent increase in Income from Operations compared with the second quarter of 2007.

The net income of $6.9 million, which was significantly stronger than the net loss of $250,000 in the same period a year ago, accelerated due to operational efficiencies, a significant reduction in interest expense and the second quarter 2007 write off of debt issuance costs.

Also factoring into the profitable quarter was the Company's 15th consecutive quarter of positive comparable store sales growth, at 1 percent. Comparable store sales in the quarter were adversely affected by a reduction in the hours of operation at certain restaurants of approximately 0.6 percent. Additionally, many of our restaurants are located in California, Nevada, Arizona and Florida, states which are experiencing the lion's share of the housing downturn. These markets reduced the Company's comparable store sales by an additional 1 percent in the quarter.

"In light of the challenging economic environment, we aggressively pursued operational improvement in our restaurants, helping us increase profits during the quarter," said Rick Dutkiewicz, chief financial officer of Einstein Noah. "While our decision to reduce hours affected comparable store sales, the store-level margin improvement outweighed the impact of lower sales. Essentially, we carefully analyzed our restaurants to optimize their store hours based on profitability after 3 p.m. On a prospective basis, we have optimized store hours further and believe this will additionally reduce comparable store sales by approximately 0.6 percent. Our focus has been and will continue to be aimed at controlling the economics inside the four walls of the restaurant. In addition, we have reduced our general and administrative expenses where possible to ensure strong income from operations."

Comparable store sales growth continued to be stronger for our upgraded restaurants, which posted a 3 percent increase. Some of those restaurants are in states affected by the housing downturn.

Manufacturing and commissary operations also improved their margin performance by increasing gross profit 37.7 percent to $416,000 in the second quarter from $302,000 in the same period a year ago. Revenues for the channel also increased 34.5 percent to $7.6 million from $5.7 million.

The Company also benefited from a reduction in general and administrative expenses of 12.1 percent from $10.9 million in the same quarter in 2007 to $9.5 million this quarter, in part due to additional costs relating to the refinancing and charges for stock-based compensation in 2007.

In addition to the margin growth, the Company increased its number of locations. During the second quarter of 2007, eight license locations opened for business, and three company-owned restaurants opened. Included in the license expansion effort was the signing of a strategic license development agreement with Aramark to open restaurants in locations where it provides dining solutions.

The openings were coupled with the signing of two Einstein Bros. Bagels development agreements, as the Company opened its franchise opportunities to more regions of the country. Both agreements call for restaurants to open in Texas. In addition, the Company entered into a development agreement to franchise a new Manhattan Bagel location in Charlotte, N.C.

"Einstein Noah continues to drive toward growth as it aggressively pursues margin improvement in its company-owned locations," said Paul Murphy, chief executive officer and president of Einstein Noah. "Despite the current economic challenges, we are committed to strengthening the brand on all three fronts -- franchising, licensing and company-owned locations. The margin improvement we experienced in the second quarter demonstrates the effectiveness of our strategy. As we begin to set the stage for 2009, we have taken a modest position on locking in some of our commodities costs for next year. We have an agreement in process to secure our turkey supply into the fourth quarter of 2009 at about the same 2008 cost. And we have locked in 50 percent of our cheese costs for 2009 below the cost of cheese in 2008."

CONFERENCE CALL

The Company will conduct a conference call and Webcast today at 3 p.m. Mountain Time (5 p.m. Eastern Time).

The call-in numbers for the conference call are 1-800-762-8908 for domestic toll free and 1-480-248-5085 for international. No conference ID is necessary to join the call. A telephone replay will be available through September 6, 2008, and may be accessed by calling 1-800-406-7325 for domestic toll free or 1-303-590-3030 for international. The conference access code is 3902939.

To access a live Webcast of the call, please visit Einstein Noah's Web site at http://www.einsteinnoah.com/. A replay of the Webcast will be available on the Web site for at least four weeks.

About Einstein Noah Restaurant Group

Einstein Noah Restaurant Group is a leading company in the quick casual restaurant industry that operates locations primarily under the Einstein Bros.(R) Bagels and Noah's New York Bagels(R) brands and primarily franchises locations under the Manhattan Bagel(R) brand. The company's retail system consists of more than 600 restaurants, including more than 100 license locations, in 35 states plus the District of Columbia. It also operates a dough production facility. The company's stock is traded under the symbol BAGL. Visit http://www.einsteinnoah.com/ for additional information.

Certain statements in this press release constitute forward-looking statements or statements which may be deemed or construed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words "forecast," "estimate," "project," "plan to," "is designed to," "expectations," "prospects," "intend," "indications," "expect," "should," "would," "believe," "target", "trend", "contemplate," "set the foundation for" and similar expressions and all statements which are not historical facts are intended to identify forward-looking statements. These forward-looking statements involve and are subject to known and unknown risks, uncertainties and other factors which could cause the Company's actual results, performance (financial or operating), or achievements to differ from the future results, performance (financial or operating), or achievements expressed or implied by such forward-looking statements. These factors include but are not limited to (i) the results for period over period revenue, gross profit, operating income, net income, depreciation and amortization, comparable store sales and margin performance are not necessarily indicative of future results and are subject to shifting consumer preferences, economic conditions, weather, and competition, among other factors; (ii) the results for the 2008 second quarter are not necessarily indicative of future results, which are subject to a variety of factors, including consumer preferences and the economy and increasing utility and other costs, and other seasonal effects; (iii) the ability to develop and open new company-owned, licensed and franchised restaurants and continue our development program for company-owned restaurants and opportunities for franchised and licensed locations are dependent upon the availability of capital, the availability of desirable locations, reaching favorable lease terms, as well as the availability of contractors and materials, and ability to obtain necessary permits and licenses; (iv) our ability to grow is dependent on many factors including our ability to attract and train personnel, the availability of products, our ability to develop new menu items and to produce those items in the restaurants, and the availability of capital and consumer acceptance; (v) our ability to improve our margins, to manage costs and to control the economics inside the four walls of the restaurant is subject to a variety of factors mentioned herein including the cost of labor and raw materials and the results of our field organization; (vi) our ability to strengthen the brand through franchising, licensing and company-owned locations is subject to a variety of factors in this paragraph and the ability to execute our strategy and deliver exceptional food and service, the ability to continue expanding operations and improving the Company's revenue and profitability, and other performance factors. These and other risks are more fully discussed in the Company's SEC filings.
 Contacts:
 Peter Jakel
 Communications Manager
 303-568-8113
 pjakel@einsteinnoah.com

 Rick Dutkiewicz
 Chief Financial Officer
 303-568-8004
 rdutkiewicz@einsteinnoah.com



 EINSTEIN NOAH RESTAURANT GROUP, INC.
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except earnings per share and related share information)
 (unaudited)

 13 weeks ended
 13 weeks ended Increase/ (percent of
 (dollars in thousands) (Decrease) total revenue)
 ---------------------- -------- --------------
 July 3, July 1, 2008 July 3, July 1,
 2007 2008 vs. 2007 2007 2008
 ---------- --------- -------- ------ ------
 Revenues:
 Company-owned
 restaurant sales $94,141 $96,321 2.3% 93.2% 91.4%
 Manufacturing and
 commissary revenues 5,682 7,640 34.5% 5.6% 7.2%
 Franchise and license
 related revenues 1,232 1,453 17.9% 1.2% 1.4%
 ---------- --------- -------- ------ ------
 Total revenues 101,055 105,414 4.3% 100.0% 100.0%

 Cost of sales:
 Company-owned
 restaurant costs
 Cost of goods sold 27,876 28,933 3.8% 27.6% 27.4%
 Labor costs 28,566 28,201 (1.3%) 28.3% 26.8%
 Other operating costs 8,728 9,300 6.6% 8.6% 8.8%
 Rent and related, and
 marketing costs 10,087 10,214 1.3% 10.0% 9.7%
 ---------- --------- -------- ------ ------
 Total company-owned
 restaurant costs 75,257 76,648 1.8% 74.5% 72.7%

 Manufacturing and
 commissary costs 5,380 7,224 34.3% 5.3% 6.9%
 ---------- --------- -------- ------ ------
 Total cost of sales 80,637 83,872 4.0% 79.8% 79.6%

 Gross profit:
 Company-owned
 restaurant 18,884 19,673 4.2% 18.7% 18.7%
 Manufacturing and
 commissary 302 416 37.7% 0.3% 0.4%
 Franchise and license 1,232 1,453 17.9% 1.2% 1.4%
 ---------- --------- -------- ------ ------
 Total gross profit 20,418 21,542 5.5% 20.2% 20.5%

 Gross profit percentages:
 Company-owned
 restaurant 20.1% 20.4% 1.5% * *
 Manufacturing and
 commissary 5.3% 5.4% 1.9% * *
 Franchise and license 100.0% 100.0% 0.0% * *

 Operating expenses:
 General and
 administrative
 expenses 10,855 9,540 (12.1%) 10.7% 9.1%
 Depreciation and
 amortization 2,623 3,345 27.5% 2.6% 3.2%
 Loss on sale, disposal
 or abandonment of
 assets, net 31 63 103.2% 0.0% 0.1%
 Impairment charges and
 other related costs 166 54 (67.5%) 0.2% 0.1%
 ---------- --------- -------- ------ ------
 Income from operations 6,743 8,540 26.6% 6.7% 8.1%
 Other expense:
 Interest expense, net 4,144 1,328 (68.0%) 4.1% 1.3%
 Write-off of debt
 discount upon
 redemption of senior
 notes 528 - (100.0%) 0.5% 0.0%
 Prepayment penalty upon
 redemption of
 senior notes 240 - (100.0%) 0.2% 0.0%
 Write off of debt
 issuance costs upon
 redemption of senior
 notes 2,071 - (100.0%) 2.0% 0.0%
 ---------- --------- -------- ------ ------
 Income (loss) before
 income taxes (240) 7,212 ** (0.2%) 6.8%
 Provision for income
 taxes 10 298 2880.0% 0.0% 0.3%
 ---------- --------- -------- ------ ------
 Net income (loss) $(250) $6,914 ** (0.2%) 6.6%
 ========== ========= ======== ====== ======

 Net income per common
 share - Basic $(0.02) $0.43 * * *
 Net income per common
 share - Diluted $(0.02) $0.42 * * *

 Weighted average number
 of common shares
 outstanding:
 Basic 11,775,597 15,925,876 35.2% * *
 Diluted 11,775,597 16,398,822 39.3% * *

 * not applicable
 ** not meaningful



 EINSTEIN NOAH RESTAURANT GROUP, INC.
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except earnings per share and related share information)
 (unaudited)

 26 weeks ended
 26 weeks ended Increase/ (percent of
 (dollars in thousands) (Decrease) total revenue)
 ---------------------- -------- --------------
 July 3, July 1, 2008 July 3, July 1,
 2007 2008 vs. 2007 2007 2008
 ---------- --------- -------- ------ ------
 Revenues:
 Company-owned
 restaurant sales $183,256 $189,931 3.6% 92.9% 91.0%
 Manufacturing and
 commissary revenues 11,500 15,728 36.8% 5.8% 7.6%
 Franchise and license
 related revenues 2,554 3,019 18.2% 1.3% 1.4%
 ---------- --------- -------- ------ ------
 Total revenues 197,310 208,678 5.8% 100.0% 100.0%

 Cost of sales:
 Company-owned
 restaurant costs
 Cost of goods sold 54,149 56,918 5.1% 27.4% 27.3%
 Labor costs 55,173 57,151 3.6% 28.0% 27.4%
 Other operating costs 17,499 18,178 3.9% 8.9% 8.7%
 Rent and related, and
 marketing costs 19,768 20,226 2.3% 10.0% 9.7%
 ---------- --------- -------- ------ ------
 Total company-owned
 restaurant costs 146,589 152,473 4.0% 74.3% 73.1%

 Manufacturing and
 commissary costs 10,802 15,084 39.6% 5.5% 7.2%
 ---------- --------- -------- ------ ------
 Total cost of sales 157,391 167,557 6.5% 79.8% 80.3%

 Gross profit:
 Company-owned
 restaurant 36,667 37,458 2.2% 18.6% 18.0%
 Manufacturing and
 commissary 698 644 (7.7%) 0.4% 0.3%
 Franchise and license 2,554 3,019 18.2% 1.3% 1.4%
 ---------- --------- -------- ------ ------
 Total gross profit 39,919 41,121 3.0% 20.2% 19.7%

 Gross profit percentages:
 Company-owned
 restaurant 20.0% 19.7% (1.5%) * *
 Manufacturing and
 commissary 6.1% 4.1% (32.8%) * *
 Franchise and license 100.0% 100.0% 0.0% * *

 Operating expenses:
 General and
 administrative
 expenses 21,587 20,283 (6.0%) 10.9% 9.7%
 Depreciation and
 amortization 5,042 6,549 29.9% 2.6% 3.1%
 Loss on sale, disposal
 or abandonment of
 assets, net 405 132 (67.4%) 0.2% 0.1%
 Impairment charges and
 other related costs 185 54 (70.8%) 0.1% 0.0%
 ---------- --------- -------- ------ ------
 Income from operations 12,700 14,103 11.0% 6.4% 6.8%
 Other expense:
 Interest expense, net 8,933 2,907 (67.5%) 4.5% 1.4%
 Write-off of debt
 discount upon
 redemption of senior
 notes 528 - (100.0%) 0.3% 0.0%
 Prepayment penalty upon
 redemption of
 senior notes 240 - (100.0%) 0.1% 0.0%
 Write-off of debt
 issuance costs upon
 redemption of senior
 notes 2,071 - (100.0%) 1.0% 0.0%
 ---------- --------- -------- ------ ------
 Income (loss) before
 income taxes 928 11,196 1106.5% 0.5% 5.4%
 Provision for income
 taxes 47 440 836.2% 0.0% 0.0%
 ---------- --------- -------- ------ ------
 Net income $881 $10,756 1120.9% 0.4% 5.2%
 ========== ========= ======== ====== ======

 Net income per common
 share - Basic $0.08 $0.68 750.0% * *
 Net income per common
 share - Diluted $0.07 $0.65 828.6% * *

 Weighted average number
 of common shares
 outstanding:
 Basic 11,190,612 15,908,377 42.2% * *
 Diluted 11,874,874 16,431,921 38.4% * *

 * not applicable



 EINSTEIN NOAH RESTAURANT GROUP, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 (Unaudited)

 26 weeks ended
 ------------------------
 July 3, July 1,
 2007 2008
 ------- -------
 OPERATING ACTIVITIES:
 Net income $881 $10,756
 Adjustments to reconcile net income to net
 cash provided by operating activities:
 Depreciation and amortization 5,042 6,549
 Stock based compensation expense 1,250 810
 Loss, net of gains, on disposal of assets 405 132
 Impairment charges and other related costs 185 54
 Provision for losses on accounts receivable 25 81
 Amortization of debt issuance and debt
 discount costs 392 241
 Write-off of debt issuance costs 2,071 -
 Write-off of debt discount 528 -
 Paid-in-kind interest 904 -
 Changes in operating assets and liabilities:
 Restricted cash 694 327
 Franchise and other receivables 358 1,228
 Accounts payable and accrued expenses (1,225) 2,027
 Other assets and liabilities (3,194) 522
 ------- -------
 Net cash provided by operating activities 8,316 22,727

 INVESTING ACTIVITIES:
 Purchase of property and equipment (12,404) (12,475)
 Proceeds from the sale of equipment 1,164 4
 Acquisition of restaurant assets - (7)
 ------- -------
 Net cash used in investing activities (11,240) (12,478)

 FINANCING ACTIVITIES:
 Proceeds from secondary common stock offering 90,000 -
 Costs incurred with offering of our common stock (6,417) -
 Payments under capital lease obligations (39) (39)
 Borrowings under First Lien Term Loan 11,900 -
 Repayments under First Lien Term Loan (475) (1,450)
 Repayments under Second Lien Term Loan (65,000) -
 Repayments under Subordinated Note (25,000) -
 Debt issuance costs (842) -
 Proceeds upon stock option exercises 430 220
 ------- -------
 Net cash provided by (used in) financing
 activities 4,557 (1,269)

 Net increase in cash and cash equivalents 1,633 8,980
 Cash and cash equivalents, beginning of period 5,477 9,436
 ------- -------
 Cash and cash equivalents, end of period $7,110 $18,416
 ======= =======




 EINSTEIN NOAH RESTAURANT GROUP, INC.
 CONSOLIDATED BALANCE SHEETS
 (in thousands, except share information)
 (Unaudited)

 January 1, July 1,
 2008 2008
 -------- --------
 ASSETS
 Current assets:
 Cash and cash equivalents $9,436 $18,416
 Restricted cash 1,203 876
 Franchise and other receivables, net of
 allowance of $606 and $278, respectively 7,807 6,498
 Inventories 5,313 4,917
 Prepaid expenses and other current assets 5,281 5,036
 -------- --------
 Total current assets 29,040 35,743

 Property, plant and equipment, net 47,714 52,532
 Trademarks and other intangibles, net 63,831 63,831
 Goodwill 4,981 4,981
 Debt issuance costs and other assets, net 2,996 2,881
 -------- --------
 Total assets $148,562 $159,968
 ======== ========

 LIABILITIES AND STOCKHOLDERS' DEFICIT
 Current liabilities:
 Accounts payable $5,072 $5,472
 Accrued expenses and other current
 liabilities 19,279 19,795
 Short term debt and current portion of
 long-term debt 955 1,180
 Current portion of obligations under
 capital leases 80 79
 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
 -------- --------
 Total current liabilities 25,386 83,526

 Senior notes and other long-term debt 88,875 87,200
 Long-term obligations under capital leases 67 29
 Other liabilities 10,841 11,034
 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 -
 -------- --------
 Total liabilities 182,169 181,789
 -------- --------
 Commitments and contingencies

 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; 15,878,811 and 15,932,856
 shares issued and outstanding 16 16
 Additional paid-in capital 262,830 263,860
 Accumulated deficit (296,453) (285,697)
 -------- --------
 Total stockholders' deficit (33,607) (21,821)
 -------- --------
 Total liabilities and stockholders'
 deficit $148,562 $159,968
 ======== ========



CONTACT: Peter Jakel, Communications Manager, +1-303-568-8113, pjakel@einsteinnoah.com, or Rick Dutkiewicz, Chief Financial Officer, +1-303-568-8004, rdutkiewicz@einsteinnoah.com, both of Einstein Noah Restaurant Group

Web site: http://www.einsteinnoah.com/
COPYRIGHT 2008 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2008 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Aug 6, 2008
Words:3091
Previous Article:China Bio-Immunity Corporation Completes Share Exchange and Reverse Merger.
Next Article:Blackboard Inc. Reports Second Quarter 2008 Results.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters