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    1. Coffee Service

    Caribou Coffee Co., Inc. Reports 16.1 Percent Sales Gain In Third Quarter

    Nov. 10, 2011
    Caribou Coffee Co., Inc., the second largest company-owned premium coffeehouse operator in the U.S. based on the number of coffeehouses, today reported financial results for the third quarter of 2011 (13 weeks ended Oct. 2, 2011).
    Caribou Coffee Logo Detail 10449593

    Caribou Coffee Co., Inc., the second largest company-owned premium coffeehouse operator in the U.S. based on the number of coffeehouses, today reported financial results for the third quarter of 2011 (13 weeks ended Oct. 2, 2011). The company also provided a preliminary view on 2012.

    • Consolidated sales increased 16.1 percent;
    • Comparable coffeehouse store sales increased 4.1 percent;
    • Commercial and franchise sales increased 67.9 percent;
    • Net income attributable to Caribou Coffee Co., Inc. was $1.8 million, or $0.09 per diluted share

    Non-GAAP pro forma net income attributable to Caribou Coffee Co., Inc. was $1.6 million, or $0.07 per diluted share, compared to pro forma net income of $1.0 million, or $0.05 per diluted share for the same period in 2010 (see non-GAAP reconciliation at the end of this release)

    Speaking on behalf of the company, Michael Tattersfield, the president and chief executive officer commented in a prepared statement, “We are extremely pleased with our third quarter performance, not only from a financial standpoint, but through the strategic execution that drives those results and builds our brand. Our multi-channel business model is the catalyst of our success and is driving synergistic benefits across our company. We’re also excited that we have activated another growth lever and opened three company owned stores in the quarter, our first openings in over three years.”

    Net sales for the quarter of $81.4 million increased $11.2 million, or 16.1 percent, from $70.2 million in the comparable quarter of 2010.

    Coffeehouse sales were $58.7 million in the third quarter of 2011, an increase of 3.7 percent compared to $56.6 million in the third quarter of 2010. Growth was driven by a 4.1 percent increase in comparable coffeehouse sales in the third quarter of 2011, primarily due to the successful expansion of the company’s food platform through the launch of breakfast sandwiches and grilled cheese lunch sandwiches.

    Commercial sales were $19.8 million in the third quarter of 2011, an increase of 75.5 percent compared to $11.3 million in the third quarter of 2010. Growth was driven by sales from new and existing customers in the company’s grocery channel, sales in to the Keurig single-serve platform and increased penetration in foodservice channels.

    Franchise sales were $3.0 million in the third quarter of 2011, an increase of 30.3 percent compared to $2.3 million in the third quarter of 2010. Growth in product sales and royalties from 150 franchise locations, a net increase of 24 locations from the prior year, drove the increase in franchise sales versus last year.

    Cost of sales and related occupancy costs in the third quarter of 2011 were $41.9 million, an increase of $9.2 million, or 28.3 percent, compared to the third quarter of 2010, and were driven by the company’s consolidated sales growth. As a percentage of revenue, cost of sales and related occupancy costs were 51.5 percent in the third quarter of 2011 versus 46.6 percent in the third quarter of 2010. The increase as a percentage of sales was due to higher coffee commodity costs versus the prior year as well as a shift in the overall mix to the company’s commercial and franchise channels, which have higher cost of sales as a percentage of sales.

    Operating expenses in the third quarter of 2011 were $26.3 million, an increase of $1.2 million, or 4.6 percent, compared to $25.1 million in the third quarter of 2010. The increase in operating expenses was driven by new company-owned store openings as well as higher maintenance on existing stores. As a percentage of revenue, operating costs were 32.3 percent, compared to 35.8 percent in the same period of the prior year. The decrease as a percentage of sales is the result of leverage gained on fixed costs within the company’s business channels as well as a shift in the overall sales mix to the company’s commercial channel, which has a lower operating expense component than its retail coffeehouses.

    General and administrative expenses increased $0.4 million, or 4.6 percent, to $7.8 million in the third quarter of 2011, from $7.4 million in the third quarter of 2010. As a percentage of total net sales, general and administrative expenses decreased to 9.5 percent in the third quarter of 2011 from 10.6 percent in the third quarter of 2010, as the company leveraged fixed costs against higher sales.

    Depreciation and amortization decreased $0.4 million to $2.7 million during the third quarter of 2011 due to a lower depreciable asset base.

    The company’s net income attributable to Caribou Coffee Co., Inc. for the third quarter of 2011 was $1.8, million or $0.09 per diluted share, compared to $1.6 million, or $0.08 per diluted share, in the same period in 2010.

    EBITDA was $5.8 million in the third quarter of 2011, compared to EBITDA of $5.3 million in the third quarter of 2010, an improvement of 9.7 percent (EBITDA is a non-GAAP measure.)

    The company’s non-GAAP pro forma net income attributable to Caribou Coffee Co., Inc. in the third quarter of 2011 was $1.6 million, or $0.07 per diluted share, compared to a pro forma net income of $1.0 million, or $0.05 per diluted share for the same period in 2010

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