Crumbs Bake Shop, Inc. Third Quarter 2012 Net Sales Increased 11.5%

2012-11-14
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  • Net loss attributable to stockholders was $(1.3) million, or $(0.23) per diluted share, compared to a net loss of $(0.9) million, or $(0.17) per diluted share.

    Crumbs Bake Shop, Inc. (NASDAQ: CRMB), the largest cupcake specialty store chain in the U.S., reported financial results for the quarter ended September 30, 2012. In addition, the Company provided a business update in the aftermath of Hurricane Sandy as well as an update to its outlook for 2012, while reiterating its outlook for 2013.

    “Having successfully completed raising additional capital, with net proceeds of about $9.3 million, Crumbs now has the requisite financial resources to move forward with its aggressive mall based expansion strategy in 2013 and beyond.”

    Third Quarter 2012 Highlights as Compared to Third Quarter 2011 Highlights:

    • Net sales increased 11.5% to $9.9 million; gross profit increased 6.7% to $5.5 million.
    • Store operating weeks increased 44.7% to 677 from 468.
    • Net loss attributable to stockholders was $(1.3) million, or $(0.23) per diluted share, compared to a net loss of $(0.9) million, or $(0.17) per diluted share.
    • Net loss attributable to the controlling and non-controlling interests was $(2.1) million compared to a net loss of $(1.6) million.
    • Adjusted EBITDA1, a non GAAP measure, was $(1.2) million compared to $(0.7) million.
         

    1.

     

    See financial tables for a reconciliation of adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), a non-GAAP measure, to GAAP results.

     

    Julian R. Geiger, President and Chief Executive Officer, said, “Our results for the third quarter were soft, but similar to our expectations. I believe that we are continuing to make progress in implementing each of our six strategic initiatives, which should have a positive impact on our sales and profitability.”

    Geiger continued, “Having successfully completed raising additional capital, with net proceeds of about $9.3 million, Crumbs now has the requisite financial resources to move forward with its aggressive mall based expansion strategy in 2013 and beyond.”

    Third Quarter 2012 Financial Results

    Net sales increased 11.5% to $9.9 million from $8.9 million for the same period last year. Store operating weeks increased 44.7% to 677 from 468 for the third quarter of 2011.

    Cost of sales was $4.5 million compared to $3.8 million and increased 240 basis points to 44.9% as a percentage of net sales. Gross profit increased 6.7% to $5.5 million from $5.1 million for the third quarter of 2011.

    Staff expenses were $3.3 million compared to $3.1 million for the same period last year.

    Occupancy expenses were $2.5 million compared to $1.8 million for the third quarter of 2011.

    General and administrative expenses were $0.8 million, or 7.8% of net sales, compared to $0.7 million, or 7.4% of net sales, for the same period last year.

    Adjusted EBITDA was $(1.2) million compared to $(0.7) million for the third quarter of 2011. See financial tables for a reconciliation of adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), a non-GAAP measure, to GAAP results.

    Net loss attributable to stockholders was $(1.3) million, or $(0.23) per diluted share, compared to a net loss of $(0.9) million, or $(0.17) per diluted share for the same period last year. Net loss attributable to the controlling and non-controlling interests was $(2.1) million compared to a net loss of $(1.6) million for the third quarter of 2011.

    New Store Development & Equity Financing

    During the third quarter, Crumbs opened two mall-based stores: the Burlington Mall in Burlington, MA; and the Roosevelt Field Mall in Garden City, NY, as well as one store in Manhattan. In the fourth quarter, Crumbs plans to open one store in downtown Philadelphia, one mall-based store in New Jersey and five mall-based kiosks in, or adjacent to, current trading areas.

    Based on a variety of circumstances which Crumbs feels are unique to this year, we will experience some delays in new store openings during the fourth quarter.

    On October 11, 2012, Crumbs executed a Securities Purchase Agreement with accredited investors pursuant to which it sold 4,456,968 shares of its common stock at a price of $2.21 per share, which resulted in gross proceeds of $9.8 million. After paying its expenses related to the transaction, Crumbs intends to use the net proceeds of $9.3 million to fund new store growth and to bolster general working capital in order to strengthen its financial condition.

    In 2013, Crumbs intends to open as many as 25 in-line mall-based stores and mall-based kiosks within its current geographic footprint. Crumbs is also selectively looking to terminate some existing leases for underperforming street-level stores as part of its ongoing efforts to strengthen its overall portfolio.

    Business Update in the Aftermath of Hurricane Sandy

    During and after Hurricane Sandy, Crumbs experienced over approximately 230 fully or partially lost operating days across its 45 stores throughout New England, the Northeast, and the Mid-Atlantic regions. With the exception of its Westport, Connecticut store, there was no significant damage to any of its facilities and all locations have since resumed normal operations as of November 11, 2012. The Westport facility experienced some physical damage due to flooding in that area and has not been able to resume operations.

    Outlook

    As discussed in its Current Report on Form 8-K filed with the Securities and Exchange Commission on October 11, 2012, Crumbs projected total revenues of approximately $46.5 million and adjusted EBITDA of approximately $(1.9) million for 2012. For the fourth quarter, Crumbs now anticipates total revenues to be approximately $2.0 million less than previously estimated, bringing total revenues closer to $44.5 million for 2012. This revision reflects the known and lingering effects of Hurricane Sandy, some delayed store openings and current business trends.

    For 2013, Crumbs is reiterating its expectations as filed on the aforementioned Form 8-K of total revenues of approximately $73.0 million and adjusted EBITDA of approximately $3.2 million. See financial tables for a reconciliation of projected adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), a non-GAAP measure, to projected GAAP results.

    About Crumbs Bake Shop, Inc.

    The first Crumbs bake shop opened in March 2003 on the Upper West Side of Manhattan. Crumbs is well known for its innovative and oversized gourmet cupcakes. Crumbs currently has 57 locations, including 35 locations in the New York Metro area, six locations on the West Coast, five locations in Washington, D.C., two locations in Virginia, six locations in Chicago, Illinois and three locations in Boston, Massachusetts.

    Non-GAAP Information

    This press release includes certain numerical measures that are or may be considered “non-GAP financial measures” under the SEC’s Regulation G. “GAAP” refers to generally accepted accounting principles in the United States. The reconciliations of such measures to the most comparable GAAP figures, in accordance with Regulation G, are included herein. Crumbs presents its results in the way it believes will be most meaningful and useful, as well as most transparent, to the investing public, including use of Adjusted EBITDA as a financial measure, which also facilitates comparisons to our historical performance.

    The Company is providing Adjusted EBITDA information, which is defined as net income of the combined company, including net income attributable to any non-controlling interest, determined in accordance with all applicable and effective GAAP pronouncements up to December 31, 2010, before interest income or expense, income taxes and any gains or losses resulting from the change in estimate relating to our tax receivable agreement, depreciation, amortization, deferred rent expense, losses or gains resulting from adjustments to the fair value of the contingent consideration, stock-based compensation expense, extraordinary or non-recurring expenses and all other extraordinary non-cash items for the applicable period as a compliment to GAAP results. Adjusted EBITDA measures are commonly used by management and investors as a measure of leverage capacity, debt service ability and liquidity. Adjusted EBITDA is not considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA are significant components in understanding and assessing our financial performance. Adjusted EBITDA should not be considered in isolation or as an alternative to, or superior to, such GAAP measures as net income, cash flows provided by or used in operating, investing or financing activities or other financial statement data presented in our consolidated financial statements as an indicator of financial performance or liquidity. Reconciliations of non-GAAP financial measures are provided in the accompanying tables. Since Adjusted EBITDA is not a measure determined in accordance with GAAP and is susceptible to varying calculations, Adjusted EBITDA, as presented, may not be comparable to other similarly titled measures of other companies.

               
    CRUMBS BAKE SHOP, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (in thousands, except per share data)
         
     
    Three Months Ended September 30, Nine Months Ended September 30,
    2012 2011 2012 2011
     
     
    Net sales $ 9,895 $ 8,876 $ 32,253 $ 28,889
     
    Cost of sales   4,445     3,768     13,982     12,194  
     
    Gross profit   5,450     5,108     18,271     16,695  
     
    Operating expenses
    Selling expenses 296 315 983 1,133
    Staff expenses 3,325 3,101 10,070 9,221
    Occupancy expenses 2,515 1,795 7,307 5,069
    General and administrative 772 659 2,402 1,670
    New store expenses 142 419 323 533
    Depreciation and amortization   476     362     1,391     1,037  
     
      7,526     6,651     22,476     18,663  
     
    Loss from operations   (2,076 )   (1,543 )   (4,205 )   (1,968 )
     
    Other income (expense)
    Interest and other income 2 - 19 -
    Loss on disposal of assets - - (14 ) -
    Abandoned projects   (67 )   (6 )   (111 )   (19 )
     
      (65 )   (6 )   (106 )   (19 )
     
    Loss before income tax benefit (expense) (2,141 ) (1,549 ) (4,311 ) (1,987 )
     
    Income tax benefit (expense) 7 (11 ) 7 (11 )
     
    Net loss attributable to the controlling and
    non-controlling interests (2,134 ) (1,560 ) (4,304 ) (1,998 )
     
    Less: Net loss attributable to
    non-controlling interest   859     647     1,742     828  
     
    Net loss attributable to stockholders $ (1,275 ) $ (913 ) $ (2,562 ) $ (1,170 )
     
     
    Net loss per common share, basic and diluted $ (0.23 ) $ (0.17 ) $ (0.47 )   $ (0.21 )
     
    Weighted average number of common
    shares outstanding, basic and diluted   5,506     5,506     5,506     5,568  
     
           
    CRUMBS BAKE SHOP, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (in thousands, except per share data)
     
     
    September 30, December 31,
    2012 2011
     
    ASSETS
     
    Current assets
    Cash $ 156 $ 5,941
    Trade receivables 360 406
    Inventories 612 503
    Prepaid rent 571 621
    Deferred financing costs 11 -
    Other current assets   376     197  
    Total current assets   2,086     7,668  
     
    Property and equipment, net   13,617     12,399  
     
    Other Assets
    Deferred tax asset 4,815 4,808
    Restricted certificates of deposit 673 673
    Intangible assets, net 384 397
    Deposits 283 318
    Other   340     105  
    Total other assets   6,495     6,301  
     
    $ 22,198   $ 26,368  
     
    LIABILITIES AND STOCKHOLDERS' EQUITY
     
    Current liabilities
    Accounts payable and accrued expenses $ 1,810 $ 2,432
    Payroll liabilities 59 250
    Sales tax payable 119 69
    Gift cards and certificates outstanding   169     180  
    Total current liabilities 2,157 2,931
     
    Long-term liabilities
    Deferred rent 3,657 3,031
    Payable to related parties pursuant to tax receivable agreement   2,386     2,386  
    Total liabilities   8,200     8,348  
     
    Commitments and contingencies
     
    Stockholders' equity
    Preferred stock, $.0001 par value; 1,000 shares authorized;
    390 shares issued and outstanding at September 30, 2012
    and December 31, 2012 - -
    Common stock, $.0001 par value; 100,000 shares authorized;
    7,381 shares issued, 5,786 outstanding at September 30, 2012 and
    7,100 shares issued, 5,506 outstanding at December 31, 2011 1 1
    Additional paid-in capital 30,546 30,264
    Accumulated deficit (6,815 ) (4,253 )
    Treasury stock, at cost   (15,914 )   (15,914 )
     
    Total Crumbs Bake Shop, Inc. stockholders' equity 7,818 10,098
     
    Non-controlling interest   6,180     7,922  
    Total stockholders' equity   13,998     18,020  
     
    $ 22,198   $ 26,368  
     
                   
    CRUMBS BAKE SHOP, INC. AND SUBSIDIARIES
    RECONCILIATION OF ADJUSTED EBITDA TO NEAREST COMPARABLE GAAP MEASURE
    (in thousands)
     
    Three Months Ended September 30, Nine Months Ended September 30,
    2012 2011 2012 2011
     
    Net income (loss) attributed to the controlling
    and non-controlling interest $ (2,134 ) $ (1,560 ) $ (4,304 ) $ (1,998 )
     
    Depreciation 439 328 1,283 936
    Amortization 37 34 108 101
    Interest income - - (2 ) -
    Income tax expense (benefit) (7 ) 11 (7 ) 11
    Loss on disposal of fixed assets - - 14 -
    Abandoned project costs 67 6 111 20
    Deferred rent expense 231 413 624 671
    Stock based compensation 119 - 282 -
    Non-recurring expenses   -     51     8     149  
     
    Adjusted EBITDA $ (1,248 ) $ (717 ) $ (1,883 ) $ (110 )


    Logos, product and company names mentioned are the property of their respective owners.

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