SPOT COFFEE FISCAL THIRD QUARTER 2012 RESULTS: 18% INCREASE IN GROSS PROFIT & 15% INCREASE IN SALES
Toronto, Ontario, November 19, 2012- SPOT COFFEE (CANADA) LTD. (TSX-V: SPP) ("SPoT" or the "Company") released its financial results for the Company’s fiscal third quarter ended September 30, 2012. Complete financial statements and Management’s Discussion and Analysis have been filed for public review at www.sedar.com
and are available on the Company’s website at www.spotcoffee.com
. All dollar values expressed in Canadian dollars unless otherwise stated. Fiscal Third Quarter 2012 Highlights
- Reported revenue increase of 15% to $1,712,954
- System-wide revenue increase of 15% to $1,927,767
- Gross profit increase of 18% to $1,154,993
- Café-level EBITDA of $229,762
- Same-store-sales of seasoned cafés increase of 9%
- Commercial accounts sales increase of 20.6%
- Gross margins improved to 67% from 65% last quarter
SPoT Benefited From the Following Key Factors Over the Past Quarter
- Growth in same-store sales
- Continued cost reductions and increased purchasing power
- Operational efficiencies
- Expansion of the corporate catering program
- Full quarter of operations with SPoT’s seventh cafe, SPoT Hertel (60% Partnership)
- Falling commodity prices (coffee, wheat and grains)
- Growth in commercial accounts segment
- Increased community awareness due to greater involvement
On September 20th 2012, the Company opened its eighth café, SPoT Coffee Transit Road, situated on the crossroads of the affluent communities of Clarence and Amherst, New York. The café operated for 11 days in the third quarter, accordingly its operational results did not significantly contribute to the overall results of the portfolio this quarter but are expected to begin in the fourth quarter of this year. The Company’s previously announced 9th, 10th and 11th corporate cafés are under construction and are expected to open as follows: 9th café to open November 26th 2012, 10th café to open late December 2012 and 11th café to open Q1 2013. SPoT has identified new corporate locations consistent with the Company’s geographic and demographic criteria and is continuing to strategically grow across New York State and Southern Ontario.
"We are extremely pleased with the performance of the overall portfolio of cafés, they continue to show terrific strength as seen in this quarter’s results. SPoT Transit Road, our eighth location, was successfully opened on September 20th and while the café’s operating results didn’t materially contribute to the overall performance this quarter, we expect the café to begin contributing in the coming quarters," said Mr. Anton Ayoub, President of SPoT Coffee, commenting on the third quarter results. "The optimization of corporate cafés, the enhanced catering program and the increase in the wholesale and retail distribution of our award-winning gourmet roasted coffee and proprietary coffee blends to date in 2012 have put the Company extremely close to generating free cash flow at the corporate level, with two new cafés opening in the fourth quarter we are excited to get closer to achieving corporate profitability. This quarter the Company began to address capital requirements for its recently announced 2013 growth plan to open 10 new corporate cafés which will allow us to sign leases for additional café locations that have already been identified."
Q3 Financial Highlights
- Reported revenue for the fiscal third quarter increased 15% to $1,712,954 from $1,493,281 when compared to the same quarter of 2011. For the quarter ended September 30, 2012, SPoT’s system-wide sales revenue (without elimination for any café operating partnerships) was $1,927,767, which represents an increase of 15% compared to the system-wide sales revenue of $1,676,175 for the same quarter of 2011. For SPoT cafés open for two years or longer, the same-store sales increased on average 9% for each café this quarter when compared to the same quarter of 2011 highlighting the continued performance strength of seasoned café portfolio.
- Gross profit (measured as revenue less cost of sales) increased 18% to $1,154,993 from $981,569 when compared to the same quarter of 2011. SPoT’s gross margin percentage (measured as gross profit over revenue) came in at 67% of revenue for the fiscal third quarter 2012.
- Costs of sales increased 9% to $557,961 as compared to $511,712 for the same quarter of 2011. The Company’s 9% increase this quarter is less than the 15% increase to sales for the same period reflecting an improvement due to increasing optimization of waste controls and decreasing commodity prices.
- The Company achieved positive Café-level EBITDA of $229,762 and $690,440, both representing 14% of total Café-level sales, respectively, for the three months and nine months ended September 30, 2012. The Company had negative Company-wide EBITDA of $33,133 and $219,276, respectively, for the three months and nine months ended September 30, 2012. The Company-wide EBITDA reflects centralized operating and head office costs, the employment of highly qualified senior management and operating personnel at the head office level consistent with SPoT’s overall development and future expansion. As SPoT continues to open new cafés, the Company expects to benefit from a larger revenue base and increasing economies of scale offsetting the Company’s current investment into centralized operating and head office costs.
- The Company reported consolidated net losses of $268,550 and $933,986, respectively, for the three and nine months ended September 30, 2012. The key drivers behind the net loss in 2012 include a $173,121 non-cash stock-based compensation expense, an 81% increase in depreciation which is also a non-cash expense, a 43% increase in salaries and wages, a 31% increase in office and general and a 30% increase in occupancy costs driven by the expansion of the Company’s operations. SPoT remained focused on operational execution and expense control during the third quarter of 2012 and expects the continued growth of the Company to offset investments made into centralized overhead costs.
SPoT is also announcing the grant of an aggregate of 960,000 options to acquire SPoT common shares at a price of $0.19 per common share to certain officers, directors and employees of the Company. These options will vest in twelve equal monthly instalments beginning from the date of their grant. The options expire on the earlier of their fifth anniversary date or the time the optionees cease to serve as officers, directors or employees of the Company.
About SPoT Coffee
SPoT Coffee trades on the TSX Venture Exchange under the symbol SPP. SPoT designs, builds and operates community oriented cafés that provide its customers with the highest quality service, signature made-to order meals and the world’s finest in-house roasted gourmet coffee. Each SPoT café is distinctively designed to meet the uniqueness of the local neighborhood, creating a warm and friendly gathering place for the community. SPoT’s commercial business focuses on retail stores, business accounts and third party resellers such as universities and hospitals.
Forward Looking Statements
Except for statements of historical fact relating to the Corporation, certain information contained herein constitutes forward-looking statements. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Except as required by applicable securities requirements, the Corporation undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change. The reader is cautioned not to place undue reliance on forward-looking statements.
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