Jamba Juice Results

Jamba, Inc. Reports Results for Fiscal 2017

Jamba

Jamba, Inc. (NASDAQ:JMBA) reported financial results for the fiscal year ended January 2, 2018 (“fiscal 2017”), provided an update of results for the fiscal quarter ended April 3, 2018 (“first quarter”) and announced its expected timeline to return to a standard reporting cadence.

Highlights for fiscal 2017 as compared to the 53 weeks ended January 3, 2017 (“fiscal 2016”):

  • Total Revenue declined $8.7 million to $70.9 million, primarily due to the Company’s continued transition to an asset light business model, the exit of non-core business units, and the return to a 52-week fiscal calendar.
  • On a comparable calendar basis, system-wide comparable store sales declined 0.4%.
  • Comparable store sales declined 0.3% at franchise-owned stores and declined 1.4% at company-owned stores.
  • Net Income (Loss) improved $19.7 million, to a loss of $2.7 million.
  • Non-GAAP Adjusted EBITDA increased 33.1% to $14.7 million.
  • Non-GAAP Adjusted EBITDA Margin increased to 20.7%, compared to 13.8% in fiscal 2016.
  • Opened 50 new stores, of which 40 were domestic and 10 international.

Highlights for the first quarter of 2018:

  • System-wide comparable store sales increased 2.3%.
  • Comparable store sales increased 2.4% at franchise-owned stores and increased 1.6% at company-owned stores.
  • Opened 5 new stores. Openings were limited in the first quarter primarily because the Company did not have an active Franchise Disclosure Document (“FDD”) with which to solicit prospective franchisees, due to the delayed financial reporting. The Company has implemented single store and drive thru initiatives that are expected to deliver sequential increases in new store opening counts.
  • Closed 25 stores, resulting from continued efforts to optimize and reshape the portfolio. Average unit volume for the 25 closed stores is below $300,000 and less than half of the average unit volume of the remaining store base.
  • Held $7.5 million in cash and had no outstanding principal balance on its line of credit, as of April 3, 2018. The reported balance is unaudited.

The Company anticipates the following timeline to return to a standard reporting cadence:

  • File Form 10-Q for the first quarter of fiscal 2018 on or before June 26, 2018.
  • Hold a combined 2016 and 2017 shareholder meeting on June 26, 2018.
  • Return to a standard reporting cadence with the filing of Form 10-Q for the fiscal quarter ended July 3, 2018 (“second quarter”) on or before the standard reporting timeline requirement of August 13, 2018.

CEO Comments

Dave Pace, President and Chief Executive Officer, stated: “Today’s filing of our 2017 10-K completes another important step on our path to return to a standard reporting cadence. We anticipate being back on track after the filing of our first quarter 10-Q and the completion of our annual shareholder meeting planned for late June.”

Pace continued: “Financial results for 2017 delivered on our previously communicated guidance and demonstrate the progress being made in our revitalization of the Jamba business. Notably, despite the anticipated decline in total revenues related to our pivot to an asset-light model, Adjusted EBITDA grew by over 33%. The concrete actions we have taken to reinvigorate our core system have continued to drive performance into early 2018. Comparable store sales in the first quarter increased 2.3% and beat the industry benchmark for the eighth consecutive quarter.”

Pace concluded: “Our efforts in 2018 will continue to be focused on enhancing the customer experience, driving transaction growth, increasing store level margins and rebuilding the momentum behind our new store pipeline. We have repositioned this iconic brand for sustainable growth and significant value-creation for our shareholders and continue to be optimistic about our performance in 2018 and beyond.”

Fiscal 2017 Financial Results

Results are in line with prior guidance expectations.

Metrics       Prior Guidance

Issued March 15, 2018

      Actual
Total Revenue

Approximately $71 million

$70.9 million
Annual system-wide comparable sales

-0.4%

-0.4%
New store openings

50 new store openings; 11 openings, net of closures

50 new store openings; 11 openings, net of closures
Non-GAAP Adjusted G&A expense

Approximately $18 million; exiting 2017 with a run rate of no more than $20 million

$18.1 million
Non-GAAP Adjusted EBITDA

At least $14.5 million

$14.7 million

 

First Quarter of Fiscal 2018

  • Comparable store sales: The increase of 2.3% in the first quarter of 2018 was the result of favorability from overlapping severe weather in the first quarter of 2017, tempered by cooler weather across much of the country in March, 2018.
  • New Store Openings: New store openings in the first quarter were limited because the Company did not have an active Franchise Disclosure Document (“FDD”) to solicit prospective franchisees through much of 2017, due to the delayed financial reporting. As a result, new store openings in 2018 will be led by existing franchisees. The Company launched its single store franchise recruiting efforts in the first quarter, following the filing of the 2016 Form 10-K and issuance of an active FDD, and has received significant interest from prospective franchisees. The Company expects the positive response to the single store franchise option coupled with existing franchisee development agreements and drive thru initiatives, will deliver sequential increases in new store opening counts.
  • Store Closures: Counts were elevated in the first quarter as the Company continues to work with franchisees to optimize and reshape the portfolio. The optimization effort will continue in order to enhance the financial health of the franchisee network and the long-term benefit of the Jamba system. The Company expects closure rates will decline in the remainder of 2018 from the elevated first quarter levels.
  • Marketing: The Company successfully introduced coffee smoothies and all day breakfast sandwiches that will remain on the menu. Additionally, the Company successfully tested a revised marketing approach during the fourth quarter of 2017 and first quarter of 2018, to optimize media weight, medium, and content. The Company intends to deploy this marketing approach in the remainder of 2018, supporting a pipeline of consumer researched and tested products.

Liquidity

The Company held cash of $7.5 million as of April 3, 2018 and $10.0 million as of January 2, 2018. Reported amounts include restricted cash of $0.3 million in both periods.

The Company used $1.8 million of cash in the first quarter of 2018 to pay audit and related expenses. This amount is in addition to the $5.7 million of cash used during fiscal 2017, the Company previously reported. The Company anticipates the usage of cash for incremental audit and related expenses will be substantially complete in the second quarter of 2018 and will be at a reduced level in the second quarter as compared to the first quarter of 2018.

The Company had not drawn against its line of credit, and had no outstanding principal balance as of April 3, 2018.

Reported balances are unaudited.

Guidance Policy

The Company provides annual guidance as it relates to certain financial metrics and will only provide updates if there is a material change versus the original guidance. Consistent with prior practice, management will not discuss intra-period sales or other key operating results not yet reported as the limited data may not accurately reflect the final results of the period or quarter referenced.

Inducement Grants

In connection with the Company’s 2017 hiring of Claudia Schaefer, the Company’s Senior Vice President, Chief Marketing Officer, and as required by Ms. Schaefer’s 2017 employment offer letter, the Company was to issue to Ms. Schaefer (i) a non-qualified stock option to purchase to up 35,000 shares of the Company’s common stock at a per share price of the closing price of the Company’s common stock on the date of grant, vesting annually over four years and (ii) (a) 10,000 restricted stock units, vesting annually over three years, and (b) 35,000 performance-based restricted stock units of which 17,500, 10,000 and 7,500 would vest upon achievement of stock price targets of $19.50, $24.00 and $28.50 prior to July 2019, respectively, in each case subject to Ms. Schaefer’s continued employment with Jamba and/or its affiliates. Upon a change of control during the three year period after the grant date whereby the Company’s stockholders receive per-share consideration equaling or exceeding any of the price targets listed above, the performance-based units would vest in the amounts listed above for each price target (as adjusted for any stock splits, dividends, or similar transactions). With the Company’s 2017 10-K filing earlier today, the Company was able to file the Form S-8 for the inducement grants described above in order to issue such grants, to be effective May 14, 2018.

Additionally, in connection with the Company’s hiring of other non-executive officer employees in 2017 and as required by their respective 2017 employment offer letters, the Company was to issue to such employees (i) nonqualified stock options to purchase an aggregate of up to 7,500 shares of the Company's common stock at an exercise price per share equal to the closing price of the Company’s common stock on the date of such grant, annually over four years so long as each employee remains an employee of Jamba Juice Company and/or its affiliates and (ii) 15,000 restricted stock units, vesting annually over three years so long as each employee remains an employee of Jamba Juice Company and/or its affiliates. With the Company’s 2017 10-K filing earlier today, the Company was able to file the Form S-8 for the inducement grants described above in order to issue such grants, to be effective May 14, 2018.

The grants were made as an inducement that was a material component of each person’s compensation and subsequent acceptance of employment with the Company and was granted as an employment inducement award pursuant to NASDAQ Listing Rule 5635(c)(4) approved by the Compensation and Executive Development Committee of the Company’s board of directors.

About Jamba, Inc.

Jamba, Inc. (NASDAQ:JMBA) through its wholly-owned subsidiary, Jamba Juice Company, is a global healthy lifestyle brand that inspires and simplifies healthful living through freshly blended whole fruit and vegetable smoothies, bowls, juices, cold-pressed shots, boosts, snacks, and meal replacements. Jamba’s blends are made with premium ingredients free of artificial flavors and preservatives so guests can feel their best and blend the most into life.

Jamba Juice® has more than 800 franchised and company-owned locations worldwide, as of April 3, 2018.

 
JAMBA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except par value data)
 

     

   

Fiscal Year Ended

January 2, 2018

January 3, 2017
Revenue:

Company stores

$44,673

$51,282
Franchise and other revenue

26,253

28,341
Total revenue

70,926

79,623
Costs and operating expenses:

Cost of sales

10,231

12,601
Labor

15,653

17,872
Occupancy

6,487

7,659
Store operating

8,228

9,285
Depreciation and amortization

3,549

5,749
General and administrative

28,260

37,958
Loss (gain) on disposal of assets

688

790
Store pre-opening

711

1,224
Impairment of long-lived assets

-

3,410
Store lease termination and closure

297

4,160
Other operating, net

15

1,083
Total costs and operating expenses

74,119

101,791
Income (loss) from operations

(3,193)

(22,168)
Other income (expenses):

Interest income

105

250
Interest expense

(325)

(439)
Total other income (expenses), net

(220)

(189)
Income (loss) before income taxes

(3,413)

(22,357)
Income tax (expense) benefit

671

(79)
Net income (loss)

$(2,742)

$(22,436)

Weighted-average shares used in the computation of income (loss) per share:

Basic

15,513,028

15,229,102
Diluted

15,513,028

15,229,102
Income (loss) per share:

Basic

$(0.18)

$(1.47)
Diluted

$(0.18)

$(1.47)

 
 
JAMBA, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)

     

   

Fiscal Year Ended

January 2, 2018

January 3, 2017
ASSETS

Current assets:

Cash and cash equivalents

$10,030

$7,133
Receivables, net of allowances of $904 and $1,808

10,098

11,778
Inventories

465

534
Prepaid and refundable taxes

127

243
Prepaid rent

776

1,053
Assets held for sale

-

206
Prepaid expenses and other current assets

4,194

2,757
Total current assets

25,690

23,704
Property, fixtures and equipment, net

10,928

12,512
Goodwill

1,181

1,183
Trademarks and other intangible assets, net

1,211

1,327
Deferred tax asset

791

-
Notes receivable and other long-term assets

847

2,894
Total assets

$40,648

$41,620
LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY

Current liabilities:

Accounts payable

$3,279

$2,749
Accrued compensation and benefits

1,900

3,580
Workers’ compensation and health insurance reserves

222

675
Accrued gift card liability

27,469

24,131
Accrued expenses

6,791

7,658
Other current liabilities

8,052

7,664
Total current liabilities

47,713

46,457
Deferred rent and other long-term liabilities

7,509

8,940
Total liabilities

55,222

55,397
Stockholders’ (deficit) equity:

Common stock, $.001 par value, 30,000,000 shares authorized;

18,447,023 and 15,588,206 shares issued and outstanding,

respectively, at January 2, 2018, and 18,268,885 and 15,410,068

shares issued and outstanding, respectively, at January 3, 2017

18

18
Additional paid-in capital

409,518

407,273
Treasury shares, at cost, 2,858,817

(40,009)

(40,009)
Accumulated deficit

(384,101)

(381,059)
Total shareholders' (deficit) equity

(14,574)

(13,777)
Total liabilities and stockholders’ (deficit) equity

$40,648

$41,620

 
 
JAMBA, INC.
(Unaudited)
REVENUE

     

   

Fiscal Year Ended

January 2, 2018

January 3, 2017
Revenue (in thousands):

Company stores

$44,673

$51,282
Franchise revenue

24,760

23,992
Other revenue

1,493

4,349
Total revenue

$70,926

$79,623

 
 
JAMBA, INC.
(Unaudited)
RECONCILIATION OF NON-GAAP DOMESTIC SYSTEMWIDE SALES

     

   

Fiscal Year Ended

January 2, 2018

January 3, 2017
Total Revenue (in thousands)

$70,926

$79,623
Franchise and Other Revenue

(26,253)

(28,341)
Domestic franchise sales

453,015

441,316
Non-GAAP domestic system-wide sales

$497,688

$492,598

 
 
JAMBA, INC.
(Unaudited)
RECONCILIATION OF GENERAL AND ADMINISTRATIVE TO NON-GAAP ADJUSTED GENERAL AND ADMINISTRATIVE

     

   

Fiscal Year Ended

January 2, 2018

January 3, 2017
General and Administrative (in thousands)

$28,260

$37,958
Corporate relocation expenses

(1,765)

(7,427)
Audit related expenses

(4,705)

(122)
Other non-recurring expenses

(3,642)

(7,707)
Non-GAAP Adjusted General and Administrative

$18,148

$22,702

 
 
JAMBA, INC.
(Unaudited)
RECONCILIATION OF NET LOSS TO NON-GAAP ADJUSTED EBITDA

     

   

Fiscal Year Ended

January 2, 2018

January 3, 2017
Net Loss (in thousands):

$(2,742)

$(22,436)
Other non-recurring expenses

13,078

24,865
Depreciation and amortization

3,549

5,749
Interest income

(105)

(250)
Interest expense

325

439
Income taxes

(671)

79
Stock based compensation

1,240

2,579
Non-GAAP Adjusted EBITDA

$14,674

$11,025

 
 
JAMBA, INC.
(Unaudited)

     

   

COMPARABLE STORE SALES

 

Fiscal Calendar Basis

52-Weeks Ended

January 2, 2018 vs

January 3, 2017 vs
Increase/(Decrease)

December 27, 2016 (b)

December 29, 2015

 
Percentage Change in Comparable store sales

Company stores

(1.3)%

0.8%
Franchise stores

(0.4)%

(0.3)%
System-wide

(0.5)%

(0.2)%

 

 

Comparable Calendar Basis (a)

52-Weeks Ended

January 2, 2018 vs

January 3, 2017 vs
Increase/(Decrease)

January 3, 2017

December 29, 2015

 
Percentage Change in Comparable store sales

Company stores

(1.4)%

0.8%
Franchise stores

(0.3)%

(0.3)%
System-wide

(0.4)%

(0.2)%

 

 
Percentage Change in Comparable calendar Company store sales

Traffic

(4.7)%

(2.4)%
Average check

3.3%

3.2%
Total Comparable Company store sales

(1.4)%

0.8%

(a) Due to a 53 week fiscal 2016, year-over-year fiscal comparisons are offset by one week. Using comparable calendar periods balances the one week shift and provides a clearer year over year comparison. 2016 fiscal and calendar comparisons are the same.

(b) Fiscal year ended January 3, 2017 and contained a 53rd week; comparable store sales are calculated based on a 52-week year.

 
JAMBA, INC.
(Unaudited)

     

   

NEW STORE OPENINGS, NET OF CLOSURES

Fiscal Year Ended

January 2, 2018

January 3, 2017 (a)
Openings

Traditional

25

26
Non-traditional

11

18
Drive thru

4

2
International

10

19
Total

50

65

 
Closures

Traditional

(14)

(14)
Non-traditional

(16)

(16)
Drive thru

International

(9)

(24)
Total

(39)

(54)

 
Openings, Net of Closures

Traditional

11

12
Non-traditional

(5)

2
Drive thru

4

2
International

1

(5)
Total

11

11

(a) As communicated on March 20, 2017, the Company now excludes Express format stores from store counts. Store counts exclude Express in both 2016 and 2017 for comparability.

 
 
KEY OPERATING METRICS FOR THE FISCAL YEAR ENDED JANUARY 2, 2018

     

   

Fiscal Year Ended

January 2, 2018

January 3, 2017

Number of system-wide stores open at end of period

873

862
New store openings

50

65

Domestic system-wide comparable store sales change (a)

(0.4)%

(0.2)%

Domestic system-wide sales (in thousands)

497,688

492,598
Blended royalty rate

5.0%

5.1%
Net Income (in thousands)

(2,742)

(22,436)
Adjusted EBITDA (in thousands)

14,674

11,025

Adjusted EBITDA margin percent

20.7%

13.8%

(a) Due to a 53 week fiscal 2016, 2017 year-over-year fiscal comparisons are offset by one week. Comparable calendar basis is presented above.

 
JAMBA, INC.
(Unaudited)

     

   

COMPARABLE STORE SALES

 

13-Weeks Ended

April 3, 2018 vs

April 4, 2017 vs
Increase/(Decrease)

April 4, 2017

April 5, 2016 (a)

 
Percentage Change in Comparable store sales

Company stores

1.6%

(7.3)%
Franchise stores

2.4%

(5.6)%
System-wide

2.3%

(5.8)%

 

 
Percentage Change in Comparable Company store sales

Traffic

1.6%

(9.9)%
Average check

(0.0)%

2.6%
Total Comparable Company store sales

1.6%

(7.3)%

(a) Due to a 53 week fiscal 2016, year-over-year fiscal comparisons in 2017 are offset by one week. Comparable calendar basis is presented above.

 
 
JAMBA, INC.
(Unaudited)

     

   

   

   

STORE COUNT

NUMBER OF STORES

COMPANY

FRANCHISE

TOTAL

Domestic

International

For the Quarter Ended April 3, 2018

At January 2, 2018

53

749

71

873
Opened

2

3

5
Acquired

Closed

(2)

(17)

(6)

(25)
Refranchised

At April 3, 2018

51

734

68

853

 

 
For the Quarter Ended April 4, 2017

At January 3, 2017

66

726

70

862
Opened

13

2

15
Acquired

Closed

(5)

(4)

(9)
Refranchised

At April 4, 2017

66

734

68

868

 
 
JAMBA, INC.
(Unaudited)

     

   

NEW STORE OPENINGS, NET OF CLOSURES

13-Weeks Ended

April 3, 2018

April 4, 2017
Openings

Traditional

2

11
Non-traditional

1
Drive thru

1
International

3

2
Total

5

15

 
Closures

Traditional

(12)

(2)
Non-traditional

(6)

(3)
Drive thru

(1)

International

(6)

(4)
Total

(25)

(9)

 
Openings, Net of Closures

Traditional

(10)

9
Non-traditional

(6)

(2)
Drive thru

(1)

1
International

(3)

(2)
Total

(20)

6

 



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