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Caribou Coffee Company, Inc. (CBOU)
Q1 2010 Earnings Call
May 6, 2010 4:30 pm ET
Mike Tattersfield – President & CEO
Tim Hennessey – CFO
Idalia Rodriguez - IR
David Tarantino – Robert W. Baird
Colin Guheen – Cowen and Company
Mark Argento – Craig-Hallum Capital
Rick Fearon – Accretive Capital Partners
Ken Holtman – Unspecified Company
» Haverty Furniture Companies Inc. Q1 2010 Earnings Call Transcript
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Good afternoon everyone. Caribou’s Coffee first quarter 2010 earnings press release was distributed this afternoon after the market closed. If you do not have a copy one may be found on the website at www.cariboucoffee.com in the Investor Relations section.
Joining me today are Mike Tattersfield, President and Chief Executive Officer, and Tim Hennessey, Chief Financial Officer.
Part of our discussion today may include forward-looking statements. These statements are not guarantees of future performance and therefore undue reliance should not be put upon them. The company undertakes no obligation to update any forward-looking statements in order to reflect the events or circumstances that may arise after the date of this conference call.
We refer you to Caribou Coffee's recent filings with the SEC for a more detailed discussion of the risks that could impact future operating results and financial conditions. During this call, management will discuss financial terms such as EBITDA, which is a non-GAAP measure.
While this is a non-GAAP measure of financial performance, management believes it is a common and useful tool in evaluating the company's performance. A reconciliation to comparable GAAP measures can be found on the last page of today's press release as well as on the website in the Investor Relations section.
Following the presentation today, Mike and Tim will be able to answer your questions. With that I would like to turn the call over to Mike Tattersfield, CEO.
Thanks Idalia, good afternoon everyone and thank you for joining us this afternoon. I’ll lead off the call by updating you on the progress we are making on our strategic initiatives and then turn the call over to Tim who will walk you through the highlights of our financial performance for the quarter.
As many of you know our team has spent the last year and a half balancing the financial turnaround while building and executing on our long range strategic growth initiatives. During the latter half of 2009 we were able to devote a greater portion of our time, energy, and resources, on our longer-term growth strategy of building a multi channel branded coffee company, utilizing five key levers across our businesses.
Those levers are, drive retail coffeehouse average unit volume, unit growth in company-owned coffeehouses, lower consumer package goods coffee business, a stronger presence in the food service sector, and expanding unit growth in our franchise and license channel.
Our strategy is taking hold and we are seeing positive signs of traction across all three lines of business. Today we reported consolidated net sales growth of 11% for the quarter. Each of our business channels contributed significantly to the growth in our top line, which reinforces our optimism for our ability to transform into a multi channel branded coffee company.
Net income for the quarter was $1 million or $0.05 per diluted share, this is up from $300,000 or $0.02 per in the comparable quarter of last year. We believe this quarter’s performance is reflective of our commitment to deliver profitable growth each quarter while continuing to invest in the areas necessary to expand the Caribou brand through our multi channel growth strategy.
I’d like to take a few moments to walk you through some highlights from each of our business segments, within the coffeehouse segment increasing the average unit volume of our coffeehouse is the biggest opportunity and our top priority.
I am happy to report that we are having success. Comparable coffeehouse sales were up 5.2% in the quarter which beat our internal estimates. We are focused on growing average unit volume two ways, drive increasing levels of traffic into our coffeehouses and increase average check by increasing beverage, food, and bean merchandise sales to our guests.
To drive traffic, we have ramped up our marketing and product management initiatives to make sure Caribou Coffee is top of mind for our guests. We launched our new [Bou] marketing campaign in March which provided a fresh new look to our brand. New Bou is focused on our guests and our culture and through this initiative we are making sure that Caribou Coffee is the community place that our guests love.
We have changed the look and feel of our products, point of sale messaging, general merchandising, as well as our website, to provide a more youthful and playful look, more representative of our culture. These include new branding efforts highlighting our Bouisms, which are simple and fun little phrases that remind our guests of all the things in life to stay awake for.
Our focus on product management has demonstrated to our guests that Caribou is committed to providing premium product and outstanding value. We are differentiating our brand through the introduction of new premium products such as real chocolate based beverages, wholesome oatmeal, and distinctive teas.
At the core of these product introductions are the consistent things that premium quality, all natural and customizable offerings. We handcraft each of these offerings to our guests’ individual taste, and the feedback has been tremendous.