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8-K - FORM 8-K - Crumbs Bake Shop, Inc. | c21307e8vk.htm |
Exhibit 99.1
For Immediate Release
57TH STREET GENERAL ACQUISITION CORP., OWNER OF CRUMBS HOLDINGS
LLC, ANNOUNCES SECOND QUARTER & YEAR-TO-DATE 2011 FINANCIAL
RESULTS
LLC, ANNOUNCES SECOND QUARTER & YEAR-TO-DATE 2011 FINANCIAL
RESULTS
RAISES 2011 DEVELOPMENT OUTLOOK
REAFFIRMS 200 STORES IN OPERATION BY YEAR-END 2014
New York, New York, August 11, 2011 57th Street General Acquisition Corp. (the Company)
(NASDAQ: CRMB), owner of Crumbs Holdings LLC (Crumbs), a national neighborhood bakery and the
largest U.S.-based retailer of cupcakes, today announced financial results for the second quarter
and year-to-date periods ended June 30, 2011. The Company also raised its 2011 development outlook
to 16-18 new store openings from 14-16, reaffirmed its commitment to have 200 stores in operation
by year-end 2014 and provided a general financial outlook.
Second Quarter Highlights as Compared to Year Ago Period Include:
| Net sales increased 30.1% to $10.3 million; gross profit increased 27.5% to $5.9
million. |
| Store operating weeks increased 40.0% to 455 from 325. |
| Comparable store sales decreased 6.0%. |
| GAAP net loss before non-controlling interest of ($0.5 million), net loss attributable
to stockholders of ($0.3 million) or ($0.05) per share, basic and diluted. |
| Adjusted EBITDA, a non GAAP measure, of $0.1 million compared to $0.8 million (*). |
| One new store opened in New York City. |
Year-to-Date Highlights as Compared to Year Ago Period Include:
| Net sales increased 33.1% to $20.0 million; gross profit increased 30.4% to $11.6
million. |
| Store operating weeks increased 37.2% to 892 from 650. |
| Comparable store sales decreased 2.1%. |
| GAAP net loss before non-controlling interest of ($0.4 million), net loss attributable
to stockholders of ($0.3 million) or ($0.05) per share, basic and diluted. |
| Adjusted EBITDA of $0.6 million compared to $1.6 million (*). |
| Two new stores opened, Newark Liberty Airport and New York City. |
* | See financial tables for a reconciliation of adjusted EBITDA (earnings before interest,
taxes, depreciation and amortization), a non-GAAP measure, to GAAP results. |
Jason Bauer, Co-Founder of Crumbs and CEO and President of the Company stated, Second quarter
growth in revenue and gross profit was driven by a significant increase in store operating weeks
offset by softness in comparable store sales. The decline in comparable store sales was largely a
function of our small store base and our intent to cannibalize several of our highest performing
locations. For that reason, we continue to believe that total revenue growth, store operating week
expansion, and store-level returns are a more accurate measure of our progress. Bauer continued,
To that point, our unit-level economics and key metrics continue to justify our rapid expansion
and were pleased to increase our development target for 2011 while reiterating our goal of 200
stores in operation by the end of 2014. Our new-found balance sheet strength is a true competitive
advantage during this multi-year expansion phase, allowing us to invest in numerous initiatives
that we believe will solidify our position as our countrys favorite neighborhood bakery and
largest retailer of cupcakes.
Second Quarter Financial Results
Net sales for the second quarter of 2011 increased 30.1% to $10.3 million from $7.9 million in the
same period last year. Store operating weeks increased 40.0% to 455 from 325. Comparable store
sales for the 25 stores in the comparable store base (67% of total stores) decreased 6.0% compared
to the second quarter of 2010 due in part to deliberate cannibalization of several of the highest
performing locations. Over the last 12 months, 13 more stores have been added to create an
aggregate of 25 stores in the comparable store base.
Cost of sales increased 33.8% to $4.3 million from $3.2 million, and as a percentage of net sales,
increased 116 basis points to 42.1% compared to the second quarter of 2010. Gross profit increased
27.5% to $5.9 million from $4.7 million compared to the second quarter of 2010 due to higher net
sales.
General and administrative expenses were $0.7 million, or 6.3% of net sales, compared to $0.3
million in the same period last year, or 3.9% of net sales as the Company incurred higher
professional fees and deal-related expenses related to the business combination agreement which
closed in May.
Adjusted EBITDA was $0.1 million compared to $0.8 million in the same period last year. See
financial tables for a reconciliation of adjusted EBITDA (earnings before interest, taxes,
depreciation and amortization), a non-GAAP measure, to GAAP results.
GAAP net loss attributable to the controlling and non-controlling interests was ($0.5 million),
compared to $0.5 million in the same period last year. Net loss attributable to stockholders was
($0.3 million), or ($0.05) per share, basic and diluted.
New Store Development
During the second quarter of 2011, the Company opened one store in New York City in midtown
Manhattan. As of June 30, 2011, there were a total of 35 stores opened across six states and the
District of Columbia.
Outlook
The Company raised its 2011 development outlook and now anticipates opening 16-18 stores compared
to its original expectation of 14-16 new locations. All 2011 store openings are anticipated to be
in existing markets. The Company also reaffirmed its commitment to have 200 stores opened by
year-end 2014.
For 2011, the Company updated its financial outlook to the following:
| Net sales are expected to be $40.0 $45.0 million. |
| Adjusted EBITDA is expected to be $0.85 million $1.35 million (*). |
For 2012, the Companys preliminary outlook includes the following:
| Net sales are expected to be $80.0 $85.0 million. |
| Adjusted EBITDA is expected to be $7.5 $8.5 million (*). |
* | See financial tables for a reconciliation of the Companys adjusted EBITDA (earnings
before interest, taxes, depreciation and amortization) guidance, a non-GAAP measure, to the
Companys outlook on a GAAP basis. |
Conference Call
The Company will host a conference call to discuss second quarter 2011 financial results today at
5:00 PM Eastern Time. Hosting the call will be Jason Bauer, Co-Founder of Crumbs and CEO and
President of the Company, and John D. (Chuck) Ireland, Chief Financial Officer. The conference
call can be accessed live over the phone by dialing 877-857-6177 or 719-325-4901 for international
callers. A replay will be available beginning one hour after the call and can be accessed by
dialing 877-870-5176 or 858-384-5517 for international callers. The password is 4679497. The replay
will be available until August 31, 2011.
The call will be webcast live from the Companys Web site at crumbs.com under the Investor
Relations section. An archived webcast will be available beginning approximately one hour after
the end of the call.
About the Company and Crumbs Holdings LLC
The Company was formed in Delaware in October 2009 and acquired its interest in its subsidiary,
Crumbs Holdings LLC, in May 2011. The first Crumbs Bake Shop opened its doors in March 2003 on the
Upper West Side of Manhattan by co-founders Mia & Jason Bauer. The design of Crumbs Bake Shops is
inspired by old-time neighborhood bakeries, creating a warm and friendly environment with
wall-to-wall treats. Recently ranked the largest retailer of cupcakes nationwide and one of Inc.
Magazines 10 Breakout Companies of 2010, Crumbs currently has 35 locations, including 25 locations
in the New York Metro area, six locations on the West Coast, two locations in Washington, D.C., one
location in Virginia and one location in Chicago, Illinois. The specialty of the house is cupcakes;
however, the menu also includes an irresistible blend of comfort-oriented classics and elegant
baked goods. There are more than 60 varieties of cupcakes baked fresh daily with a new cupcake of
the week debuting each Monday.
Forward Looking Statements
Some of the statements in this press release may constitute forward-looking statements. Words such
as anticipate, expect, project, intend, plan, believe, target, aim, will and
words and terms of similar substance and any financial projections used in connection with any
discussion of future plans, strategies, objectives, actions, or events identify forward-looking
statements. Such statements include, among others, those concerning our expected financial
performance and strategic and operational plans, as well as all assumptions, expectations,
predictions, intentions or beliefs about future events. These statements are based on the beliefs
of our management as well as assumptions made by and information currently available to us and
reflect our current view concerning future events. As such, they are subject to risks and
uncertainties that could cause our results to differ materially from those expressed or implied by
such forward-looking statements. Such risks and uncertainties include, among many others: the risk
that the businesses of Crumbs will not be integrated successfully; the risk that the anticipated
benefits of the business transaction with Crumbs may not be fully realized or may take longer to
realize than expected; the ability to achieve and manage the growth of the Crumbs brand, expansion
into new and existing markets and operations; the risk that any projections, including earnings,
revenues, expenses, synergies, margins or any other financial items are not realized, risks arising
from disruptions in supply chain; risks relating to competition for real estate and ability to
negotiate and renew leases; risks arising from geographic concentration and regional factors
impacting local economies; the risk of disruption from the business transaction making it more
difficult to maintain relationships with customers, employees, suppliers and lessors; a reduction
in industry profit margin; changing interpretations of generally accepted accounting principles;
continued compliance with government regulations; changing legislation and regulatory environments;
a lower return on investment; the general volatility of the market prices of our securities and
general economic conditions; our ability to successfully implement new strategies; operating
hazards; and the loss of key personnel. These risks, as well as other risks associated the recently
consummated merger, are more fully discussed in the Schedule TO (and any amendments and exhibits
thereto) in connection with the recently completed tender offer, our Registration Statement on Form
S-3 and our periodic reports (and any amendments thereto) filed with the SEC and available at the
SECs website at www.sec.gov Forward-looking statements included herein speak only as of the date
hereof. If any of these risks or uncertainties materialize or if any assumptions prove incorrect,
results could differ materially from those expressed by such forward-looking statements. Neither
the Company nor Crumbs undertakes any obligation to update its forward-looking statements to
reflect events or circumstances after the date hereof.
Non-GAAP Information
The Company is providing Adjusted EBITDA information, which is defined as net income of the
combined company, including net income attributable to any non-controlling interest, determined in
accordance with all applicable and effective GAAP pronouncements up to June 30, 2011, before
interest income or expense, income taxes and any gains or losses resulting from the change in
estimate relating to the Tax Receivable Agreement, depreciation, amortization, deferred rent
expense, losses or gains resulting from adjustments to the fair value of the contingent
consideration, stock-based compensation expense, extraordinary or non-recurring expenses and all
other extraordinary non-cash items for the applicable period as a compliment to U.S. generally
accepted accounting principles (GAAP) results. Adjusted EBITDA measures are commonly used by
management and investors as a measure of leverage capacity, debt service ability and liquidity.
Adjusted EBITDA is not considered a measure of financial performance under GAAP, and the items
excluded from Adjusted EBITDA are significant components in understanding and assessing our
financial performance. Adjusted EBITDA should not be considered in isolation or as an alternative
to, or superior to, such GAAP measures as net income, cash flows provided by or used in operating,
investing or financing activities or other financial statement data presented in our consolidated
financial statements as an indicator of financial performance or liquidity. Reconciliations of
non-GAAP financial measures are provided
in the accompanying tables. Since Adjusted EBITDA is not a measure determined in accordance with
GAAP and is susceptible to varying calculations, Adjusted EBITDA, as presented, may not be
comparable to other similarly titled measures of other companies.
57TH STREET GENERAL ACQUISITION CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share data)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net sales |
$ | 10,294 | $ | 7,915 | $ | 20,013 | $ | 15,040 | ||||||||
Cost of sales |
4,334 | 3,240 | 8,394 | 6,130 | ||||||||||||
Gross profit |
5,960 | 4,675 | 11,619 | 8,910 | ||||||||||||
Operating expenses |
||||||||||||||||
Selling expenses |
400 | 346 | 794 | 603 | ||||||||||||
Staff expenses |
3,258 | 2,029 | 6,108 | 3,961 | ||||||||||||
Occupancy expenses |
1,800 | 1,264 | 3,422 | 2,371 | ||||||||||||
General and administrative |
651 | 307 | 1,046 | 596 | ||||||||||||
Depreciation and amortization |
345 | 200 | 675 | 401 | ||||||||||||
6,454 | 4,146 | 12,045 | 7,932 | |||||||||||||
Income from operations |
(494 | ) | 529 | (426 | ) | 978 | ||||||||||
Other income (expense) |
||||||||||||||||
Interest and other income |
||||||||||||||||
Abandoned lease projects |
(14 | ) | (13 | ) | (8 | ) | ||||||||||
(14 | ) | | (13 | ) | (8 | ) | ||||||||||
Net income (loss) attributable to the
controlling and non-controlling interests |
(508 | ) | 529 | (439 | ) | 970 | ||||||||||
Less: Net (income) loss attributable to
non-controlling interest |
211 | 182 | ||||||||||||||
Net income (loss) attributable to stockholders |
$ | (297 | ) | $ | 529 | $ | (257 | ) | $ | 970 | ||||||
Net income (loss) per common share, basic
and diluted |
$ | (0.05 | ) | $ | 0.19 | $ | (0.05 | ) | $ | 0.57 | ||||||
Weighted average number of common
shares outstanding, basic and diluted |
5,599 | 2,771 | * | 5,141 | 1,711 | * | ||||||||||
* | The weighted average number of common shares outstanding is that of 57th Street General
Acquisition Corp. |
57TH STREET GENERAL ACQUISITION CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Unaudited) | (Audited) | |||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash |
$ | 11,514 | $ | 655 | ||||
Trade receivables |
323 | 248 | ||||||
Inventories |
394 | 241 | ||||||
Prepaid rent |
528 | 387 | ||||||
Deferred financing costs |
215 | |||||||
Other current assets |
408 | 81 | ||||||
Total current assets |
13,167 | 1,827 | ||||||
Property and equipment, net |
9,397 | 8,785 | ||||||
Other Assets |
||||||||
Deferred tax asset |
4,774 | |||||||
Restricted cash |
605 | 30 | ||||||
Intangible assets, net |
403 | 429 | ||||||
Deposits |
281 | 277 | ||||||
Other |
69 | 36 | ||||||
Total other assets |
6,132 | 772 | ||||||
$ | 28,696 | $ | 11,384 | |||||
LIABILITIES, MEMBERS EQUITY AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities |
||||||||
Accounts payable and accrued expenses |
$ | 1,695 | $ | 2,615 | ||||
Payroll liabilities |
200 | 141 | ||||||
Sales tax payable |
69 | 48 | ||||||
Gift cards and certificates outstanding |
124 | 120 | ||||||
Total current liabilities |
2,088 | 2,924 | ||||||
Long-term liabilities |
||||||||
Deferred rent |
2,211 | 1,863 | ||||||
Payable to related parties pursuant to tax receivable agreement |
2,387 | |||||||
Total liabilities |
6,686 | 4,787 | ||||||
Members equity |
6,596 | |||||||
Stockholders equity |
||||||||
Preferred stock, $.0001 par value; 1,000 shares authorized;
390 shares issued and outstanding at June 30, 2011 |
||||||||
Common stock, $.0001 par value; 100,000 shares authorized;
7,100 shares issued, 5,506 outstanding at June 30, 2011 |
||||||||
Additional paid-in capital |
30,297 | |||||||
Accumulated deficit |
(851 | ) | ||||||
Treasury stock, at cost |
(15,914 | ) | ||||||
Total equity |
13,532 | |||||||
Non-controlling interest |
8,478 | | ||||||
$ | 28,696 | $ | 11,383 | |||||
57TH STREET GENERAL ACQUISITION CORP. AND SUBSIDIARIES
ADJUSTED EBITDA AS DEFINED BY AMENDMENT NO. 3 TO THE
BUSINESS COMBINATION AGREEMENT DATED APRIL 7, 2011
(UNAUDITED AND IN THOUSANDS)
ADJUSTED EBITDA AS DEFINED BY AMENDMENT NO. 3 TO THE
BUSINESS COMBINATION AGREEMENT DATED APRIL 7, 2011
(UNAUDITED AND IN THOUSANDS)
For the three months | For the six months | |||||||||||||||
ended June 30 | ended June 30 | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income (loss) attributed to the controlling
and non-controlling interest |
$ | (508 | ) | $ | 529 | $ | (439 | ) | $ | 970 | ||||||
Depreciation |
311 | 171 | 608 | 343 | ||||||||||||
Amortization |
34 | 29 | 67 | 58 | ||||||||||||
Abandoned Lease Costs |
14 | 0 | 13 | 8 | ||||||||||||
Deferred Rent Expense |
126 | 120 | 258 | 210 | ||||||||||||
Non-recurring expenses |
98 | 0 | 98 | 0 | ||||||||||||
Adjusted EBITDA |
$ | 75 | $ | 849 | $ | 605 | $ | 1,589 | ||||||||
57TH STREET GENERAL ACQUISITION CORP. AND SUBSIDIARIES
ADJUSTED EBITDA GUIDANCE AS DEFINED BY AMENDMENT NO. 3 TO THE
BUSINESS COMBINATION AGREEMENT DATED APRIL 7, 2011
(UNAUDITED AND IN THOUSANDS)
ADJUSTED EBITDA GUIDANCE AS DEFINED BY AMENDMENT NO. 3 TO THE
BUSINESS COMBINATION AGREEMENT DATED APRIL 7, 2011
(UNAUDITED AND IN THOUSANDS)
2011 | 2012 | |||||||
Net income |
$ | (1,420 | ) | $ | 3,662 | |||
Depreciation |
1,365 | 2,545 | ||||||
Accelerated Depreciation of Abandoned Leasehold Improvements |
15 | 0 | ||||||
Amortization |
125 | 149 | ||||||
Deferred Rent Expense |
917 | 1,894 | ||||||
Non-recurring expenses |
98 | 0 | ||||||
Adjusted EBITDA for range midpoint |
$ | 1,100 | $ | 8,250 | ||||
Investor Relations Contact:
Tom Ryan/Raphael Gross of ICR
IR@crumbs.com / 646-545-4702
Tom Ryan/Raphael Gross of ICR
IR@crumbs.com / 646-545-4702
Media Relations Contact:
Bo Park of ICR
bo.park@icrinc.com / 646-277-1222
Bo Park of ICR
bo.park@icrinc.com / 646-277-1222