Jamba, Inc. Announces Third Quarter 2015 Financial Results

Strong System-Wide Comparable Store Sales Growth of +5.6%

Three Refranchising Deals Closed

Operational Improvements Lower COGS

$45 million Share Repurchase Program Continues

Reaffirms Full-Year Guidance

EMERYVILLE, Calif.–(BUSINESS WIRE)–Jamba, Inc. (NASDAQ:JMBA) today reported unaudited financial results for
the third fiscal quarter ended September 29, 2015. Highlights include
strong sales gains across the country with a system-wide increase in
comparable store sales of 5.6%. Additionally, Jamba completed three
refranchising deals during the quarter for 111 store locations and one
additional refranchising deal subsequent to the end of the quarter,
which have continued Jamba’s transformation to an asset-light model. As
of today, 91% of Jamba locations are operated by our franchisee partners.

Company-owned comparable store sales increased 6.6% driven by a
sequential improvement in average ticket due to reduction of promotional
discounting. “Our quarterly results showed strong progress on all our
priorities. With the completion of four more refranchising deals, we
have virtually finalized our transformation to an asset-light model.
Strong sales momentum resumed across the country with very solid gains
in our core California market plus double digit increases in our less
developed Chicago and New York markets.” said James D. White, chairman,
president and CEO of Jamba, Inc.

“Our sales growth was matched by our operational improvements with gains
in our speed of service, lower COGS, and full implementation of our
made-to-order juice and energy bowl optimization initiatives. Our new
product initiative was highlighted with the extension of our organic,
GMO-free line of cold pressed, ready-to-drink premium juices to 527
stores system-wide and the introduction of our limited time Almond Milk
Smoothies.”

“During the quarter, I also announced my plan to retire from Jamba, but
I will remain with Jamba until the Board and its executive recruiter
secure a new CEO. With Jamba successfully transformed to our new asset-
light model, it’s the right time for the Board to transfer leadership,”
Mr. White said.

Third Quarter Financial Highlights

  • Company-owned comparable store sales increased 6.6% for the quarter.
    System-wide comparable sales(1) increased 5.6% and
    Franchise comparable store sales(1) increased 5.3% for the
    quarter. Net income attributable to Jamba, Inc. was $13.1 million for
    the 13-week period ended September 29, 2015 compared to a net loss of
    $1.7 million for the 13-week period ended September 30, 2014.
  • Total revenue for the quarter decreased 39.1% to $35.5 million from
    $58.3 million for the prior year, primarily due to the reduction in
    the number of Company stores as part of our refranchising initiative,
    partially offset by the 5.6% increase in System-wide comparable store
    sales and net new global Franchise locations. The number of
    Company-owned stores at the end of the third quarter of 2015 was 94,
    compared to 272 at the end of the third quarter of 2014.
  • Income from operations was $13.3 million and operating margin was
    37.5% for the quarter.
  • General and administrative expenses for the 13-week period ended
    September 29, 2015 decreased 5.1% to $9.0 million compared with $9.5
    million for the prior year period. Non-GAAP Adjusted General and
    administrative expenses,(2) for the 13-week period
    decreased 11.7% to $7.3 million.
  • Shares repurchased during 13-week period ended September 29, 2015 were
    1,174,882, utilizing $16.3 million under the current $45 million Stock
    Repurchase Program. Cumulatively, from inception through the end of
    the third quarter, 2,726,280 shares were repurchased for $38.1 million
    under this program.
  • Jamba closed three refranchising transactions during the 13-week
    period ended September 29, 2015 for proceeds of approximately $36.1
    million and one refranchise deal closed subsequent to the end of the
    quarter for $3.3 million.
  • Franchisees opened 23 new Jamba Juice stores globally. At September
    29, 2015, there were 884 stores globally consisting of 94 Company
    Stores, 720 Franchise Stores and 70 International Stores.
  • Non-GAAP Adjusted Net Income(2) adjusted for costs
    associated with the shift to the asset-light business model and the
    gain associated with refranchising was $1.6 million for the third
    quarter, or $0.10 diluted earnings per share compared to Non-GAAP
    Adjusted Net Income(2) of $0.5 million, or $0.03 diluted
    earnings per share for the prior year period.
  • Generated Non-GAAP adjusted EBITDA of $4.0 million(3).

G&A Optimization Continues

  • Jamba expects $30 million of Non-GAAP Adjusted G&A expense(2)
    in 2015 down from $33.7 million of G&A in 2014.
  • Jamba expects to further reduce G&A expense to $25-$26 million in
    2016, which is expected to be 4% of system-wide sales for the core
    store operations.
  • Jamba’s long-term goal is G&A of 3% or less of system-wide sales for
    the core store operations.

Refranchising Continues

  • During the third quarter, three refranchising transactions closed
    totaling 110 company-owned stores and one unopened company owned store.
  • Jamba closed one additional refranchising transaction for 16
    company-owned stores during the fourth quarter of this fiscal year.
  • On a global basis, the company expects to have approximately 865875
    franchise-owned and operated stores and 50-60 company-owned stores by
    end of fiscal 2015.
  • Jamba continues to project total proceeds of approximately $60 million
    from refranchising transactions.

Capital Allocation Update

  • The Company’s board of directors authorized a $25 million share
    repurchase program in October 2014, with increases to $40 million in
    May 2015 and to $45 million in August 2015.
  • During the quarter, the Company repurchased 1,174,882 shares of common
    stock on the open market at an average price of $13.87 per share.
  • Cumulatively through the end of the third quarter, 2,726,280 shares
    have been repurchased under this plan for a total cost of $38.1
    million, reducing share count by approximately 15.2% since inception
    of plan.
  • There is $6.9 million of capacity left under the current repurchase
    authorization.

Third Quarter Fiscal 2015 Results

Revenue

For the 13 weeks ended September 29, 2015, total revenue decreased 39.1%
to $35.5 million from $58.3 million in the prior year period. The
decrease is primarily due to the reduction in the number of
company-owned stores pursuant to the company’s refranchising strategy,
partially offset by increases in system-wide comparable store sales of
5.6%(1). The increase in company-owned comparable store sales(1)
of 6.6% consists of an increase in average check of 740 basis points
offset by a decrease in transaction count of 80 basis points. Jamba
continues to reduce the amount of promotional activity compared to the
prior year which resulted in almost all of the traffic decrease.
Franchise and other revenue increased 48.4% to $7.3 million from $4.9
million in the prior year period, primarily due to increased royalties
resulting from the increase in franchise operated stores and the
increase in franchise-operated comparable store sales(1) of
5.3% during the 13-week period ended September 29, 2015. Other revenue,
which includes JambaGO® and CPG, was $1.8 million and $1.4 million in
the 13-week periods ended September 29, 2015 and September 30, 2014,
respectively. The increase revenue was primarily due to new JambaGO®
customers from the K-12 and university channels along with higher
royalty revenue from the Company’s international business.

Income from Operations and Operating Margin

Jamba’s operating margin was 37.5% for the third quarter of 2015
compared to (3.1)% for the quarter ended September 30, 2014. Income from
Operations was $13.3 million for the third quarter of 2015 compared to a
loss from operations of $1.8 million in 2014. Included in the results
are gains on disposal of assets of $16.1 million. On a non-GAAP basis,
Adjusted Income from Operations(2) which excludes costs
associated with the shift to the asset-light business model and the gain
associated with refranchising was approximately $1.8 million or 5.1% of
revenue, compared to $0.7 million, or 1.1% of revenue, from the prior
year. During the quarter, cost optimization initiatives were implemented
to reduce supply chain costs, which improved cost of sales by 250 basis
points as compared to the beginning of 2015.

Retail Growth

As of September 29, 2015, there were 884 Jamba® stores system-wide in
the United States, of which 790 are franchise-operated stores, and 94
are Company-owned. Franchise-operated stores include 42 express formats.
During the quarter, Jamba opened 17 new domestic franchise-operated
stores and six international store locations. No new Company-owned
stores opened during the quarter. During the quarter, eight stores were
closed globally. As of September 29, 2015 there were 70 international
store locations, all of which are franchise-operated. Growth continues
at JambaGO® with units in operation exceeding 2,000.

Liquidity

On September 30, 2015, the Company held $25.2 million in cash and cash
equivalents as compared to $17.8 million cash and cash equivalents at
December 30, 2014. As of September 29, 2015 and September 30, 2014, the
Company did not have any restricted cash. During the quarter, the
Company repurchased 1,174,882 shares of common stock on the open market
at an average price of $13.87 per share.

 
Summary Guidance Table
 

The Company expects to achieve the following results:

 
          Outlook
Component         2015         2016         Long-Term
System-wide Same Store Sales         2%-4%         2%-4%         2%-4%
Global Openings         80-90         100-125         100-125
System-wide Sales         $525-550M         $600-625M         10-12% growth

Avg. Unit Volume

(traditional/domestic)

        $645K         $665K         $700-$750K
Company Adjusted G&A         $30M         $25-26M        

3% or less of

system-wide sales for

core store business

Non-GAAP Adjusted EBITDA*         $10-12M         $15-20M         30-40% margins
Capital Expenditures         $8-10M         $4-6M         $3-5M
Effective Tax Rate         2%-3%         2%-3%         2%-3%
Non-GAAP Adjusted Free Cash Flow*         -$2M to $2M         $9-16M         90-110% of Net Income

* Excludes the impact of non-cash stock based compensation

 

A conference call to review the third quarter 2015 results will be held
today, November 9, 2015 at 5:00 p.m. ET. The conference call can be
accessed live over the phone by dialing (877) 407-3982 or for
international callers by dialing (201) 493-6780. A replay will be
available at 8:00 p.m. ET and can be accessed by dialing (877) 870-5176
or (858) 384-5517 for international callers; the pin number is 13621531.
The replay will be available until November 30, 2015. The call can be
accessed from the Company’s website at www.jambajuice.com under
the Corporate Investor Relations section or directly at http://ir.jambajuice.com.

About Jamba, Inc.

Jamba, Inc., owns and franchises Jamba Juice® stores through its
wholly-owned subsidiary, Jamba Juice Company. Jamba Juice Company is a
leading restaurant retailer of better-for-you, specialty beverage and
food offerings, which include great tasting, whole fruit smoothies,
fresh-squeezed juices and juice blends, hot teas and a variety of food
items including, hot oatmeal, breakfast wraps, sandwiches, Artisan
Flatbreads™, Energy Bowls™, baked goods and snacks. As of September 29,
2015, there were 884 store locations globally. There were 94
Company-owned and operated stores and 720 franchise-operated stores in
the United States, and 70 franchise-operated international stores. Jamba
Juice Company expanded the Jamba® brand by direct selling of consumer
packaged goods (“CPG”) and licensing its trademarks. CPG products for
at-home enjoyment are also available online, through select retailers
across the nation and in Jamba® outlets in the United States.

Fans of Jamba Juice® can find out more about Jamba Juice’s locations as
well as specific offerings and promotions by visiting the Jamba Juice
website at www.jambajuice.com or
by contacting Jamba’s Guest Services team at 1-866-4R-FRUIT (473-7848).

Forward-Looking Statements

This press release (including information incorporated or deemed
incorporated by reference herein) contains “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements are those involving future events and
future results that are based on current expectations, estimates,
forecasts, and projections as well as the current beliefs and
assumptions of the Company’s management. Words such as “outlook”,
“believes”, “expects”, “appears”, “may”, “will”, “should”,
“anticipates”, or the negative thereof or comparable terminology, are
intended to identify such forward-looking statements. Any statement that
is not a historical fact, including the statements made under the
caption “Summary Guidance Table” and any other estimates, projections,
future trends and the outcome of events that have not yet occurred, is a
forward-looking statement. Forward-looking statements are only
predictions and are subject to risks, uncertainties and assumptions that
are difficult to predict. Therefore actual results may differ materially
and adversely from those expressed in any forward-looking statements.
Factors that might cause or contribute to such differences include, but
are not limited to factors discussed under the section entitled “Risk
Factors” in the Company’s reports filed with the SEC. Many of such
factors relate to events and circumstances that are beyond the Company’s
control. You should not place undue reliance on forward-looking
statements. The Company does not assume any obligation to update the
information contained in this press release.

Non-GAAP Financial Measures

The Company provides certain supplemental non-GAAP financial measures to
its investors as a complement to the most comparable GAAP measures. The
Company believes that providing these non-GAAP measures to its
investors, in addition to corresponding GAAP income statement measures,
provides investors the benefit of viewing the Company’s performance
using the same financial metrics that the management team uses in making
many key decisions and understanding how the Company’s core business
operations may perform and may look in the future. The non-GAAP
financial measures are discussed further in Footnotes below.

Non-GAAP financial measures are not in accordance with, or an
alternative for, generally accepted accounting principles in the United
States of America. Non-GAAP measures should not be considered in
isolation from or as a substitute for financial information presented in
accordance with generally accepted accounting principles, and may be
different from non-GAAP measures used by other companies.

Footnotes

(1) Comparable store sales are calculated using sales of
Jamba Juice® stores open more than one full year. Company-owned
comparable store sales percentages are based on sales from Company-owned
stores included in our store base. Franchise-operated comparable store
sales percentages are based on sales from franchised stores, as reported
by franchisees, which are included in our store base. System-wide sales
percentages are based on sales by both Company-owned and
franchise-operated stores, as reported by our franchisees, which are
included in our store base. Company-owned stores that were sold in
refranchising transactions are included in the Company-owned store base
for each accounting period of the fiscal year to the extent the sale is
consummated at least three days prior to the end of such accounting
period, but only for the days such stores have been Company-owned.
Thereafter, such stores are excluded from the store base until such
stores have been franchise-operated for at least one full fiscal period,
at which point such stores are included in the franchise-operated store
base and compared to sales in the comparable period of the prior year.
Comparable store sales exclude closed locations. Company-owned
comparable store sales percentages as used herein, may not be equivalent
to Company-owned comparable store sales as defined or used by other
companies. Franchise-operated comparable store sales percentages and
system-wide sales percentages as used herein are non-GAAP financial
measures and should not be considered in isolation or as substitute for
other measures of performance prepared in accordance with generally
accepted accounting principles in the United States. Management reviews
the increase or decrease in Company-owned comparable store sales,
franchise-operated comparable store sales and system-wide sales compared
with the same period in the prior year to assess business trends and
make certain business decisions. The Company believes the data is useful
in assessing the overall performance of the Jamba® brand and,
ultimately, the performance of the Company, the Company-owned stores,
and franchise-operated stores.

(2) Non-GAAP Adjusted Net Income attributable to Jamba,
Inc. is calculated as net income attributable to Jamba, Inc. as
determined in accordance with GAAP excluding the cost items as
specifically identified in the non-GAAP reconciliation schedules set
forth below associated with the Company’s legal and other transition
costs related to the Company’s move to outsource specified services to
Capgemini, costs associated with the move to an asset-light business
model and the gain associated with refranchising. Non-GAAP Adjusted
General and Administration Expense is calculated as general and
administration expense in accordance with GAAP excluding $3.0 million of
the portion of such transitional costs in general and administration
expenses. The Company believes that net income attributable to Jamba,
Inc. and general and administration expense adjusted to exclude the
costs of such items is a helpful indicator of the Company’s operating
performance in that it shows the net gain/loss without the impact of
what the Company believes to be upfront transitional costs. Management
does not believe such costs are reflective of the Company’s ongoing
performance and accordingly excludes those items from non-GAAP adjusted
net income/loss attributable to Jamba, Inc. and general and
administration expense. Adjusted Income from Operations is calculated as
income from operations as determined in accordance with GAAP excluding
costs associated with the shift to the asset-light business model and
the gain associated with refranchising.

(3) The Company used the non-GAAP financial measure of
Adjusted EBITDA and Adjusted Free Cash Flow in its statements made in
this release and believes that these are useful in measuring the
operating performance of the company. Adjusted EBITDA is equal to net
income, adjusted for: (a) the Company’s legal and transition costs
related to the Company’s move to outsource specified services to
Capgemini and the move to an asset-light business model; (b) gain from
disposal of assets relating to refranchising; (c) depreciation and
amortization; (d) interest income; (e) interest expense; (f) income
taxes; and (g) stock based compensation expense. Adjusted Free Cash Flow
is equal to net cash provided by operating activities, adjusted for: (a)
the Company’s legal and transition costs related to the Company’s move
to outsource specified services to Capgemini and the move to an
asset-light business model; and (b) capital expenditures.

 
JAMBA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except share and per share amounts)
 
          13-Week Period Ended       39-Week Period Ended
September 29, 2015     September 30, 2014 September 29, 2015     September 30, 2014
Revenue:
Company stores $ 28,213 $ 53,377 $ 124,301 $ 159,281
Franchise and other revenue   7,284     4,907     17,826     14,834  
 
Total revenue   35,497     58,284     142,127     174,115  
 
Costs and operating expenses:
Cost of sales 6,626 14,611 30,507 39,780
Labor 8,843 16,793 39,807 47,366
Occupancy 3,980 6,917 16,946 20,783
Store operating 5,901 9,400 21,994 25,297
Depreciation and amortization 1,143 2,617 4,360 7,915
General and administrative 9,003 9,487 26,393 27,419
Gain on disposal of assets (16,076 ) (555 ) (21,334 ) (1,601 )
Other operating, net   2,776     821     5,360     2,576  
 
Total costs and operating expenses   22,196     60,091     124,033     169,535  
 
Income (loss) from operations   13,301     (1,807 )   18,094     4,580  
 
Other income (expense), net:
 
Interest income 49 21 78 55
Interest expense   (53 )   (49 )   (162 )   (143 )
 
Total other expense, net   (4 )   (28 )   (84 )   (88 )
 
Income (loss) before income taxes 13,297 (1,835 ) 18,010 4,492
 
Income tax (expense) benefit   (194 )   156     (277 )   (62 )
 
Net income (loss) 13,103 (1,679 ) 17,733 4,430
Less: Net income attributable to noncontrolling interest       22     52     39  
 
Net income (loss) attributable to Jamba, Inc. $ 13,103   $ (1,701 ) $ 17,681   $ 4,391  
 
 

Weighted-average shares used in computation of

earnings per share:

 
Basic   15,808,680     17,291,287     16,084,411     17,219,043  
Diluted   16,214,943     17,291,287     16,558,680     17,663,050  
 
 

Earnings per share attributable to Jamba, Inc.

common stockholders

 
Basic $ 0.83   $ (0.10 ) $ 1.10   $ 0.26  
Diluted $ 0.81   $ (0.10 ) $ 1.07   $ 0.25  
 
 
JAMBA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Reconciliation of GAAP to Non-GAAP
(Unaudited)
Adjusted for Transitional Costs Associated with Shift to
Asset-Light Business Model
(in thousands, except share and per share amounts)
 
        Reported         As Adjusted     Reported         As Adjusted
13-Week Gains and 13-Week 13-Week Gains and 13-Week
Period Ended Transitional Period Ended Period Ended Transitional Period Ended
(In thousands except share and per share amounts) September 29, 2015 Costs September 29, 2015 September 30, 2014 Costs September 30, 2014
 
Revenue:
Company stores $ 28,213 $ $ 28,213 $ 53,377 $ 11 $ 53,388
Franchise and other revenue 7,284 7,284 4,907 450 5,357
           
Total revenue   35,497         35,497     58,284     461     58,745  
 
Costs and operating expenses:
Cost of sales 6,626 6,626 14,611 (138 ) 14,473
Labor 8,843 (783 ) 8,060 16,793 (109 ) 16,684
Occupancy 3,980 3,980 6,917 6,917
Store operating 5,901 0 5,901 9,400 (414 ) 8,986
Depreciation and amortization 1,143 1,143 2,617 2,617
General and administrative 9,003 (1,712 ) 7,291 9,487 (1,227 ) 8,260
Gain on disposal of assets (16,076 ) 15,892 (184 ) (555 ) (555 )
Other operating, net   2,776     (1,907 )   869     821     (118 )   703  
Total costs and operating expenses   22,196     11,490     33,686     60,091     (2,006 )   58,085  
 
Income (loss) from operations 13,301 (11,490 ) 1,811 (1,807 ) 2,467 660
 
Other income (expense), net:
 
Interest income 49 49 21 21
Interest expense (53 ) (53 ) (49 ) (49 )
           
Total other expense, net   (4 )       (4 )   (28 )       (28 )
 
Income (loss) before income taxes 13,297 (11,490 ) 1,807 (1,835 ) 2,467 632
 
Income tax (expense) benefit (194 ) (194 ) 156 (222 ) (66 )
           
Net income (loss) 13,103 (11,490 ) 1,613 (1,679 ) 2,245 566
Less: Net income attributable to noncontrolling interest 0 22 22
           
Net income (loss) attributable to Jamba, Inc. $ 13,103   $ (11,490 ) $ 1,613   $ (1,701 ) $ 2,245   $ 544  
 
Weighted-average shares used in computation of earnings per share:
Basic   15,808,680     15,808,680     17,291,287     17,291,287  
Diluted   16,214,943     16,214,943     17,291,287     17,291,287  
 

Earnings per share attributable to Jamba, Inc. common shareholders:

Basic $ 0.83   $ 0.10   $ (0.10 ) $ 0.03  
Diluted $ 0.81   $ 0.10   $ (0.10 ) $ 0.03  
 
 
JAMBA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Reconciliation of GAAP to Non-GAAP

 

(Unaudited)
Adjusted for Transitional Costs Associated with Shift to
Asset-Light Business Model
(in thousands, except share and per share amounts)
 
          Reported         As Adjusted     Reported         As Adjusted
39-Week Gains and 39-Week 39-Week Gains and 39-Week
Period Ended Transitional Period Ended Period Ended Transitional Period Ended
(In thousands except share and per share amounts) September 29, 2015 Costs September 29, 2015 September 30, 2014 Costs September 30, 2014
 
Revenue:
Company stores $ 124,301 $ $ 124,301 $ 159,281 $ 11 $ 159,292
Franchise and other revenue 17,826 17,826 14,834 615 15,449
           
Total revenue   142,127         142,127     174,115     626     174,741  
 
Costs and operating expenses:
Cost of sales 30,507 30,507 39,780 (615 ) 39,165
Labor 39,807 (783 ) 39,024 47,366 (528 ) 46,838
Occupancy 16,946 16,946 20,783 20,783
Store operating 21,994 (231 ) 21,763 25,297 (447 ) 24,850
Depreciation and amortization 4,360 4,360 7,915 7,915
General and administrative 26,393 (3,004 ) 23,389 27,419 (1,530 ) 25,889
Gain on disposal of assets (21,334 ) 21,288 (46 ) (1,601 ) (1,601 )
Other operating, net 5,360 (2,727 ) 2,633 2,576 (118 ) 2,458
           
Total costs and operating expenses   124,033     14,543     138,576     169,535     (3,238 )   166,297  
 
Income from operations 18,094 (14,543 ) 3,551 4,580 3,864 8,444
 
Other income (expense), net:
 
Interest income 78 78 55 55
Interest expense (162 ) (162 ) (143 ) (143 )
           
Total other expense, net   (84 )       (84 )   (88 )       (88 )
 
Income before income taxes 18,010 (14,543 ) 3,467 4,492 3,864 8,356
 
Income tax expense (277 ) (277 ) (62 ) (269.41 ) (331 )
           
Net income 17,733 (14,543 ) 3,190 4,430 3,595 8,025
Less: Net income attributable to noncontrolling interest   52         52     39         39  
Net income attributable to Jamba, Inc. $ 17,681   $ (14,543 ) $ 3,138   $ 4,391   $ 3,595   $ 7,986  
 
Weighted-average shares used in computation of earnings per share:
Basic   16,084,411     16,084,411     17,219,043     17,219,043  
Diluted   16,558,680     16,558,680     17,663,050     17,663,050  
 
Earnings per share attributable to Jamba, Inc. common shareholders:
Basic $ 1.10   $ 0.20   $ 0.26   $ 0.46  
Diluted $ 1.07   $ 0.19   $ 0.25   $ 0.45  
 
 

(1) Includes gain on disposal of assets relating to refranchising

(2) Includes transitional costs

 

Contacts

ICR
Dara Dierks, 646-277-1212
Investor Relations
investors@jambajuice.com

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