News

Einstein Noah Q2 revenues up slightly

August 4, 2011

Colorado-baed Einstein Noah Restaurant Group Inc., parent company of Einstein Bros. Bagels, Noah's New York Bagels and Manhattan Bagel brands, today reported financial results for the second quarter ended June 28.

Highlights for Q2 2011, compared to Q2 2010, include:

• Total revenues increased to $103.7 million from $103.5 million.
• Systemwide comparable store sales were +0.2 percent, a sequential increase of 100 basis points from the first quarter of 2011.
• Adjusted EBITDA of $9.7 million compared to $11.7 million.
• Net income available to common stockholders of $3.1 million, or $0.18 per diluted share, compared to $3.6 million, or $0.21 per diluted share.
• Free cash flow of $5.5 million compared to $4.7 million.

"We are pleased that our comparable sales trends improved sequentially in the second quarter, and continued to gain momentum thus far in the third quarter. Inflation remained high in the quarter, causing increased pressure on cost of goods sold and operating expenses, which will be alleviated going forward by a June price increase," said Jeff O'Neill, CEO and president of Einstein Noah.

O'Neill added that the top-line strategy for the balance of the year is centered on three key elements, including a line-up of unique, new premium sandwiches; a national rollout of the enhanced coffee platform; and the continuation of the chain's successful lower calorie bagel thin sandwiches.

"By successfully executing on our sales growth and cost saving efforts, we believe we are building a stronger foundation for our business going forward," he said.

Second quarter 2011 financial results

For the second quarter ended June 28, systemwide comparable store sales increased 0.2 percent, reflecting strong growth in check driven by moderate pricing, favorable mix shift and strength in catering sales offset by lower comparable transactions as the company rolled over its Free Bagel Friday promotion last year. Total revenues increased to $103.7 million from $103.5 million.

Total costs at company-owned restaurants increased 2.3 percent as a percentage of company-owned restaurant sales resulting in a gross margin of 16.2 percent. The decrease of the company's gross margin from 18.5 percent was primarily due to higher commodity costs.

Overall, gross profit was $18.3 million, or 17.7 percent of total revenues, in the second quarter of 2011 compared to $20.7 million, or 20 percent of total revenues, in the second quarter of 2010.

Adjusted EBITDA was $9.7 million in the second quarter of 2011 compared to $11.7 million in the second quarter of 2010. Income before income taxes decreased $0.5 million to $5.2 million from $5.7 million.

Restaurant openings during the second quarter of 2011 included seven Einstein Bros. restaurants, which consisted of two company-owned restaurant, one franchise restaurant, and four license restaurants.

The company reiterated its outlook for 2011, with plans to open between 75 and 90 total restaurants, including 10 to 14 new company-owned restaurants, 20 to 26 new franchise restaurants, and 45 to 50 license restaurants.

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