Crumbs Bake Shop, Inc. Fourth Quarter 2013 Net Sales Increased 5.4%

 

 

Net sales increased 5.4% to $11.4 million from $10.8 million for the same period last year. Store operating weeks increased 32.4% to 973 from 735 for the fourth quarter of 2013 as compared to fourth quarter of 2012.

Crumbs Bake Shop, Inc. ("Crumbs") (NASDAQ: CRMB), the largest cupcake specialty store chain in the U.S., today reported financial results for the year ended December 31, 2013.

Fourth Quarter 2013 Highlights as Compared to Fourth Quarter 2012 Highlights:

  • Net sales increased 5.4% to $11.4 million.
  • Store operating weeks increased 32.4% to 973 from 735.
  • Gross profit increased 5.3% to $6.0 million.
  • GAAP net loss attributable to controlling and non-controlling interests was $(5.8) million compared to a net loss attributable to controlling and non-controlling interests of $(6.4) million.
  • Adjusted EBITDA1, a non GAAP measure, was $(2.7) million compared to $(1.8) 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.

Edward M. Slezak, Chief Executive Officer, said "We have known for quite some time now that we needed to evolve our business model.  During the fourth quarter we took the necessary steps to put ourselves in position to do just that.  Our focus for 2014 will be on executing our initiatives and strategies of licensing our brand for complimentary product categories, positioning ourselves to move toward a franchise store model, and continuing to close under-performing stores.  We believe these actions will put our business on a trajectory toward increased growth and vitality in the future."

Fourth Quarter 2013 Financial Results

Net sales increased 5.4% to $11.4 million from $10.8 million for the same period last year.  Store operating weeks increased 32.4% to 973 from 735 for the fourth quarter of 2013 as compared to fourth quarter of 2012.

Cost of sales was $5.3 million compared to $5.1 million for the same period last year and remained relatively flat at 47.1% as a percentage of net sales.  Gross profit increased 5.3% to $6.0 million from $5.7 million for the fourth quarter of 2012.

Staff expenses were $4.1 million compared to $5.4 million for the same period last year. 

Occupancy expenses were $3.0 million compared to $2.7 million for the fourth quarter of 2012.

General and administrative expenses were $1.0 million, or 9.1% of net sales, compared to $0.9 million, or 8.6% of net sales, for the same period last year.

Adjusted EBITDA was $(2.7) million compared to $(1.8) million for the fourth quarter of 2012.  See financial tables for a reconciliation of adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), a non-GAAP measure, to GAAP results.

The GAAP net loss attributable to the controlling and non-controlling interests was $(5.8) million compared to a net loss of $(6.4) million for the fourth quarter of 2012. 

Store Closings

While Crumbs opened one store in the fourth quarter of 2013, it closed 9 underperforming stores in that same period.  Year to date for 2014, Crumbs has closed an additional 6 underperforming stores.   The Company hopes to complete the process of closing under-performing stores before the end of third quarter of 2014.

About Crumbs Bake Shop, Inc.

The first Crumbs bake shop opened in March 2003 on the Upper West Side of Manhattan and is well known for its innovative and oversized gourmet cupcakes. The Company currently has 65 locations in 12 states and the District of Columbia.

CRUMBS BAKE SHOP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

Three Months Ended

December 31,

Years Ended

December 31,

2013

2012

2013

2012

Net sales

$

11,352

$

10,776

$

47,203

$

43,029

Cost of sales

5,349

5,076

21,707

19,059

Gross profit

6,003

5,700

25,496

23,970

Operating expenses

Selling expenses

615

395

2,302

1,377

Staff expenses

4,183

5,447

16,368

15,517

Occupancy expenses

3,041

2,720

12,739

10,026

General and administrative

1,029

930

3,995

3,332

New store expenses

3

129

431

452

Depreciation and amortization

731

524

2,637

1,916

Loss on disposal of property and equipment

959

4

1,098

18

Loss on impairment of assets

1,322

1,869

1,322

1,869

11,883

12,018

40,892

34,507

Loss from operations

(5,880)

(6,318)

(15,396)

(10,537)

Other income (expense)

Interest expense

(163)

-

(403)

-

Interest and other income

2

3

37

22

Abandoned projects

(7)

-

(136)

(111)

Change in fair value of warrant liability

273

(109)

55

273

105

(106)

(447)

184

Loss before income tax benefit

(5,775)

(6,424)

(15,843)

(10,353)

Income tax benefit (expense)

-

-

(2,386)

7

Net loss attributable to the 

controlling and non-controlling interests

(5,775)

(6,424)

(18,229)

(10,346)

Less: Net loss attributable to 

non-controlling interest

933

1,063

2,968

2,651

Net loss attributable to stockholders

$

(4,842)

$

(5,361)

$

(15,261)

$

(7,695)

Net loss per common share, basic and diluted

$

(0.42)

$

(0.49)

$

(1.32)

$

(1.12)

Weighted average number of common

shares outstanding, basic and diluted

11,631

10,908

11,600

6,864

 

 

 

CRUMBS BAKE SHOP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

December 31, 

December 31, 

2013

2012

ASSETS

Current assets

Cash 

$

893

$

6,270

Trade receivables

321

259

Inventories

418

559

Prepaid rent

-

600

Other current assets

424

410

Total current assets

2,056

8,098

Property and equipment, net

14,598

13,128

Other assets

Deferred tax asset

-

4,774

Restricted certificates of deposit

673

673

Intangible assets, net

846

448

Capitalized lease costs

754

-

Deposits

239

289

Debt issuance costs

838

477

Total other assets

3,350

6,661

$

20,004

$

27,887

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable and accrued expenses

$

3,785

$

2,080

Payroll liabilities

365

357

Sales tax payable

182

110

Deferred licensing royalties

17

Gift cards and certificates outstanding

258

234

Total current liabilities

4,607

2,781

Long-term liabilities

Deferred rent

4,066

3,791

Payable to related parties pursuant to tax receivable agreement

-

2,387

Warrant liability

327

382

Convertible notes payable

10,000

-

Total liabilities

19,000

9,341

Commitments and contingencies

Stockholders' equity

Preferred stock, $.0001 par value; 1,000 shares authorized; 

234 shares issued and outstanding at December 31, 2012 and

390 shares issued and outstanding at December 31, 2011

-

-

Common stock, $.0001 par value; 100,000 shares authorized;

13,392 shares issued, 11,798 outstanding at December 31, 2012 and

7,100 shares issued, 5,506 outstanding at December 31, 2011

1

1

Additional paid-in capital

39,805

39,117

Accumulated deficit

(25,037)

(9,776)

Treasury stock, at cost

(15,914)

(15,914)

 

   Total Crumbs Bake Shop, Inc. stockholders' equity

(1,145)

13,428

Non-controlling interest

2,149

5,118

Total stockholders' equity

1,004

18,546

$

20,004

$

27,887

 

 

 

CRUMBS BAKE SHOP, INC. AND SUBSIDIARIES

RECONCILIATION OF ADJUSTED EBITDA TO NEAREST COMPARABLE GAAP MEASURE

(in thousands)

Three Months Ended December 31,

Years Ended December 31,

2013

2012

2013

2012

Net income (loss) attributed to the controlling

 

  and non-controlling interest

$

(5,775)

$

(6,424)

$

(18,229)

$

(10,346)

Non-recurring expenses

-

-

(20)

-

Stock-based compensation

107

1,974

523

2,256

Deferred rent

97

134

713

758

Depreciation and amortization

731

524

2,637

1,916

Loss on disposal of property and equipment

959

4

1,098

18

Loss on impairment of assets

1,322

1,869

1,322

1,869

Interest expense

163

-

403

-

Interest income

(1)

-

(5)

(3)

Abandoned projects

7

-

136

111

Change in fair value of warrant liability

(273)

109

(55)

(273)

Income tax benefit

-

-

2,386

(7)

Adjusted EBITDA

$

(2,663)

$

(1,810)

$

(9,091)

$

(3,701)



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