Jamba Q3 Net Earnings Strengthen to $4.1 Million

Jamba, Inc. (NASDAQ:JMBA) reported unaudited financial results for the third fiscal quarter ended October 4, 2011. The Company’s results reflect growth driven by a fourth consecutive quarter of positive Company-owned comparable store sales and store-level margin improvements, expansion of international stores and extension of the Jamba-branded CPG products with a new partnership and added retail distribution.

“Our financial position is also strengthening with quarterly net income of $4.1 million, $26.2 million in total cash, and zero debt.”

Highlights for the 12 weeks ended October 4, 2011, compared to the 12 weeks ended October 5, 2010:

• Net income was $4.1 million, or $0.05 diluted earnings per share for the quarter, compared to a net loss of $(0.8) million, or $(0.02) diluted loss per share for the prior year period.
• Company-owned comparable store sales⁽¹⁾ increased 3.3% for the quarter as compared to the prior year period, reflecting the Company’s fourth consecutive quarter of positive Company-owned comparable stores sales growth.
• System-wide comparable store sales⁽¹⁾ increased 3.7% for the quarter as compared to the prior year period, and franchise-operated comparable store sales⁽¹⁾ increased 4.2% for the quarter, as compared to the prior year period.
• Total revenue for the third quarter decreased 13.6% to $57.1 million from $66.1 million for the prior year period primarily due to the reduction in the number of Company-owned stores as a result of the Company’s refranchising initiative. Non-GAAP adjusted total revenue⁽²⁾ was $56.5 million for the quarter compared to non-GAAP adjusted total revenue⁽²⁾ of $55.2 million for the prior year period.
• General and administrative expenses for the quarter decreased 8.5% to $7.4 million from $8.1 million as compared to the prior year period.
• 11 new franchise-operated stores and two new Company-owned stores were opened in the U.S. during the quarter. Two Company-owned stores and two franchise stores closed during the quarter.
• Jamba’s Korean master developer opened an additional four Jamba Juice stores in South Korea.

“We are making solid gains against our strategic initiatives. Our comparable store sales improved across the system with our Company-owned stores posting a fourth consecutive quarter of increases. Importantly, our Company-owned comparable store sales were positive across all four day-parts with product innovation driving sales in the breakfast and evening,” said James D. White, chairman, president, and CEO, Jamba Inc. “Our financial position is also strengthening with quarterly net income of $4.1 million, $26.2 million in total cash, and zero debt.”

“Franchise development was strong, which was especially notable in the international arena. Our partners in South Korea opened four additional units. Subsequent to the quarter close, our partners in Canada opened their first store in Toronto and our partners in the Philippines expect to open their first store shortly,” continued Mr. White.

“Jamba is also testing a new growth concept called JambaGo™. This express format, offers a limited menu of our brand’s most popular smoothies and allows Jamba to rapidly expand availability in venues such as K-12 schools, colleges, and other similar outlets. The extension of Jamba-branded CPG products continued with nationwide distribution across 28,000 retail outlets. The signing of a new partnership with Bare Fruit LLC to produce three varieties of bake-dried, all-natural 100% fruit chip snacks, will represent a new category of Jamba-branded products. We expect these newest products to begin distribution by the end of this year,” said Mr. White.

“For 2012, we are projecting Company-owned comparable store sales growth of 3-4%; non-GAAP adjusted operating profit margin of 19-22%; the opening of 40-50 new domestic store locations and 10-15 new international stores; G&A, excluding performance compensation, flat with fiscal year 2011; two new international markets; and CPG licensing revenue to be approximately $3 million,” concluded Mr. White.

Third Quarter Fiscal 2011 Results

Revenue

For the third quarter ended October 4, 2011, total revenues decreased 13.6% to $57.1 million from $66.1 million in the third quarter ended October 5, 2010. The decrease is primarily due to the reduction in the number of Company-owned stores as a result of the Company’s refranchising initiative. During the third quarter of 2011, Company-owned comparable store sales increased 3.3%, system-wide comparable store sales increased 3.7% and franchise-operated comparable store sales increased 4.2%, compared to the prior year period. Franchise and other revenue increased 37.3%, driven primarily by the increase in the number of franchise-operated stores. Jamba’s CPG licensed revenue increased to $0.3 million in the third quarter of 2011 from $0.1 million in the prior year period due primarily to the commercialization and sale of licensed Jamba consumer products at approximately 28,000 retail points of distribution.

Non-GAAP Adjusted Operating Profit⁽³⁾ and Non-GAAP Adjusted Operating Profit Margin⁽³⁾, Non-GAAP Adjusted Operating Profit (excluding refranchising)⁽⁴⁾ and Non-GAAP Adjusted Operating Margin (excluding refranchising)⁽⁴⁾

Jamba’s non-GAAP adjusted operating profit margin⁽³⁾ increased by 670 basis points to 26.9% for the third quarter of 2011 on a year-over-year basis and on a dollar basis increased $2.0 million from the third quarter of 2010 reflecting the impact of our cost savings initiatives. Non-GAAP adjusted operating profit (excluding refranchising)⁽⁴⁾ reflected an increase of $3.2 million and on a non-GAAP adjusted operating profit margin (excluding refranchising)⁽⁴⁾ rate reflected a 520 basis point improvement to 26.2% in the third quarter of 2011 as compared to the prior year period. Quarterly comparisons excluding the effects of the refranchising initiative from non-GAAP adjusted operating profit will be provided until the end of the first quarter of fiscal 2012, which represents the last refranchising year-over-year comparable quarter. As a result of Jamba’s positive Company-owned comparable store sales increase, the Company is improving the leverage of its fixed costs.

Number of Stores

Jamba has 752 stores in the United States, of which 442 are franchise-operated stores and 310 are Company-owned. During the quarter, two new Company-owned stores and 11 new domestic franchise-operated stores were opened, of which two were traditional venues and nine were non-traditional venues. Two Company-owned and two franchise-operated stores were closed during the period. Internationally, the Company’s Korean master developer opened four new Jamba Juice locations in South Korea during the third quarter, resulting in 10 Jamba Juice international locations at the end of the quarter.

Non-GAAP Adjusted Total Revenue⁽²⁾

Non-GAAP adjusted total revenue⁽²⁾ which is total revenue adjusted for the effect of refranchising, improved by $1.3 million to $56.5 million for the third quarter compared to the prior year period.

Non-GAAP Adjusted Net Income⁽⁵⁾

Non-GAAP adjusted net income⁽⁵⁾ improved to $4.5 million from $1.7 million for the third quarter compared to the prior year period.

Outlook for 2011

The Company continues to expect to achieve the following results for fiscal 2011:

• Deliver positive Company-owned comparable store sales⁽¹⁾ of 2-4%.
• Achieve adjusted operating profit^{margin(3) of 18-20%;}
• Open up to 80 units globally, including 50-70 traditional, non-traditional, and JambaGo™locations in the U.S.;
• Maintain general and administrative expenses, in dollars (excluding litigation charges and other one-time expenses), consistent with 2010 levels.

Outlook for 2012

• Deliver positive Company-owned comparable store sales⁽¹⁾ of 3-4%;
• Achieve adjusted operating profit^{margin(3) of 19-22%;}
• Develop 40-50 new stores in U.S. locations, plus 10-15 new stores at international locations, all excluding JambaGo™ units;
• Maintain general and administrative expenses flat, in dollars, with fiscal 2011, excluding performance compensation;
• Deliver CPG licensing revenue of approximately $3 million.

Liquidity

On October 4, 2011, the Company held $24.8 million in cash and cash equivalents as compared to $29.0 million cash and cash equivalents at December 28, 2010. On October 4, 2011, the Company held $1.4 million in restricted cash compared to a balance of $1.8 million on December 28, 2010.

About Jamba, Inc.

Jamba, Inc. is a holding company which owns and franchises, on a global basis, Jamba Juice stores through its wholly-owned subsidiary, Jamba Juice Company. Jamba Juice Company is a leading restaurant retailer of better-for-you beverage and food offerings, which include great tasting fruit smoothies, fresh juices and teas, hot oatmeal made with organic steel cut oats, fruit and veggie smoothies, Whirl’ns™ Frozen Yogurt, breakfast wraps, salads, sandwiches, California Flatbreads™, and a variety of baked goods and snacks. As of October 4, 2011, there were 752 locations in the United States consisting of 310 Company-owned and operated stores and 442 franchise-operated stores. In addition, at October 4, 2011 there were 10 international stores.

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