Così, Inc. Reports Fiscal 2015 Fourth Quarter and Year-End Results
March 24 2016 - 4:01PM
Cosi, Inc. (NASDAQ:COSI), today reported 2015 fourth quarter and
year-end results for the period ended December 28, 2015. For the
2015 fourth quarter the Company reported a net loss of ($3.6)
million, or ($0.08) per diluted share, compared to ($4.5) million,
or ($0.18) per diluted share, in the 2014 fourth quarter. For
fiscal 2015, the Company reported a net loss of ($15.7) million, or
($0.36) per diluted share, compared to ($16.7) million, or ($0.82)
per diluted share, in fiscal year 2014.
2015 Fourth Quarter Financial Metrics and Highlights:
- Total revenues for the 2015 fourth quarter of $24.0 million
increased $4.5 million, or 23.1%, when compared to the 2014 fourth
quarter.
- Company-owned net restaurant sales for the 2015 fourth quarter
of $23.6 million increased $4.9 million, or 26.5%, when compared to
the 2014 fourth quarter. This increase was the result of
incremental net sales of $4.4 million from the 13 Hearthstone
restaurants added to the Company-owned portfolio in the 2015 second
quarter, $0.1 million from the comparable restaurant base, and $1.0
million from the non-comparable restaurant base, offset by net
sales decreases from closed restaurants of $0.6 million.
- System-wide comparable net restaurant sales, as measured for
restaurants in operation for more than 15 consecutive months as
Company-owned or franchised restaurants, recorded an aggregate
increase of 0.7% when compared to the 2014 fourth quarter. The
Hearthstone restaurants recorded an aggregate increase in
comparable restaurant sales of 3.8% when compared to the 2014
fourth quarter. Although the Hearthstone restaurants do not meet
the reported comparable restaurant criteria, the Company began
disclosing their comparable net restaurant sales in October 2015.
The breakdown in estimated comparable net restaurant sales for
Company-owned, franchised restaurants, and Hearthstone restaurants
is as follows:
|
2015 Fourth Quarter
Comparable Net Restaurant Sales |
Reported Company-owned
results |
|
0.4 |
% |
Reported Franchised
results |
|
1.4 |
% |
Reported System-wide
results |
|
0.7 |
% |
Disclosed Hearthstone
results |
|
3.8 |
% |
|
|
|
|
- Franchise fees and royalty revenues for the 2015 fourth quarter
of $0.5 million decreased $0.4 million, or 45.3%, when compared to
the 2014 fourth quarter. This variance was mostly the result of the
Hearthstone merger in the 2015 second quarter.
Fiscal 2015 Financial Metrics and Highlights:
- Total revenues for the fiscal year 2015 of $89.9 million
increased $12.1 million, or 15.6%, when compared to fiscal year
2014.
- Company-owned net restaurant sales for fiscal year 2015 of
$87.9 million increased $13.0 million, or 17.3%, when compared to
fiscal year 2014. This increase was the result of incremental net
sales of $13.4 million from the 13 Hearthstone restaurants added to
the Company-owned portfolio in the 2015 second quarter, $1.0
million from the comparable restaurant base, and $3.5 million from
the non-comparable restaurant base, offset by net sales decreases
from closed restaurants of $5.0 million.
- System-wide comparable net restaurant sales for fiscal year
2015, as measured for restaurants in operation for more than 15
consecutive months as Company-owned or franchised, recorded an
aggregate increase of 0.3% compared to fiscal year 2014. The
Hearthstone restaurants do not meet the reported comparable
restaurant criteria. However, the Company began disclosing their
comparable net restaurant sales results separately in October 2015.
As a result their comparable net restaurant sales are not disclosed
for the 52 week period ended December 28, 2015. The breakdown in
estimated comparable net restaurant sales for Company-owned and
franchised restaurants is as follows:
|
Fiscal 2015
Comparable Net Restaurants Sales |
Reported Company-owned
results |
|
1.6 |
% |
Reported Franchised
results |
|
-1.9 |
% |
Reported System-wide
results |
|
0.3 |
% |
|
|
|
|
- Franchise fees and royalty revenues for fiscal 2015 of $2.0
million decreased ($0.8) million, or (1.4%) of total revenues, when
compared to fiscal 2014.
- Company-owned restaurant cash flow for fiscal 2015 of ($0.6)
million improved by $2.5 million, or 2% of sales, when compared to
fiscal 2014.
- General & administrative expenses for fiscal 2015 of $12.0
million decreased $0.5 million, or 2.6% of total revenues, when
compared to fiscal 2014 as a result of savings related to the
relocation of the corporate support center from Chicago, Illinois,
to a smaller location in Boston, Massachusetts, combined with
overhead savings in the second half of fiscal 2015, offset by costs
associated with leadership turnover and non-recurring costs
associated with the merger of Hearthstone Associates in the first
half of 2015, as well as the non-cash expenses related to
stock-compensation and bad-debt reserves.
- The Company recorded asset impairments of $1.3 million in
fiscal 2015, or 1.5% of total revenues, as a result of exiting
and/or considering exiting unprofitable Company-owned
restaurants.
- The Company reported a cash and cash equivalents balance of
$5.2 million as of December 28, 2015.
Fiscal 2015 Restaurant Counts:
- There were 79 Company-owned, and 31 franchised restaurants,
operating in 15 states, the District of Columbia, Costa Rica, and
the United Arab Emirates in fiscal 2015, versus 64 and 47
respectively in fiscal 2014. The change in restaurant counts is
described below:
|
|
|
|
|
|
|
|
|
Company- |
|
|
|
|
|
|
|
owned |
|
Franchised |
|
|
Total |
|
Fiscal 2014 Year-End
Count |
|
64 |
|
|
47 |
|
|
111 |
|
Opened during Fiscal
2015 |
|
|
|
|
5 |
|
|
5 |
|
Closed during Fiscal
2015 |
|
(2 |
) |
|
(4 |
) |
|
(6 |
) |
Converted to
Company-Owned |
|
17 |
|
|
(17 |
) |
|
0 |
|
Fiscal 2015 Year-End
Count |
|
79 |
|
|
31 |
|
|
110 |
|
|
|
|
|
|
|
|
|
|
|
Future Outlook:The Company previously reported that it expects
to deliver positive adjusted EBITDA in mid-2016 and lay the
foundation required to grow in 2017. RJ Dourney, the Company's
President & CEO, stated "We set out to reduce cash burn in the
fourth quarter and not only were we able to accomplish that, but we
also continue to see further reductions in 2016.”
“We stabilized sales in the fourth quarter and expect to meet
our conservative sales estimates for 2016. We also reached an
inflection point in the fourth quarter and are moving the legacy
portfolio of restaurants towards profitability, a trend that we
continue to see in 2016,” Dourney went on to say.
Dourney then addressed the Company’s objective in 2016, stating,
“We are building a stable foundation in 2016 in order to grow the
franchise system in 2017. I am excited about the recent
developments in our existing franchised territories, and encouraged
by the conversations we are having with a number of potential new
partners.”
|
Cosi,
Inc. |
Consolidated Balance
Sheets |
(dollars in thousands,
except per share amounts) |
|
|
|
|
|
|
|
|
|
December 28, |
|
December 29, |
|
|
|
2015 |
|
2014 |
Assets |
|
|
|
Current
assets: |
|
|
|
|
Cash and
cash equivalents |
$ |
5,152 |
|
|
$ |
21,053 |
|
|
Credit card
receivable |
|
343 |
|
|
|
507 |
|
|
Accounts
receivable, net of allowances of $223 and $118, respectively |
|
899 |
|
|
|
581 |
|
|
Inventories |
|
1,051 |
|
|
|
825 |
|
|
Prepaid
expenses and other current assets |
|
1,335 |
|
|
|
1,279 |
|
|
Total current
assets |
|
8,780 |
|
|
|
24,245 |
|
|
|
|
|
|
|
Furniture
and fixtures, equipment and leasehold improvements, net |
|
11,892 |
|
|
|
7,308 |
|
Notes
receivable, net of allowances of $1,001 and $450, respectively |
|
- |
|
|
|
551 |
|
Intangible
assets, net |
|
2,642 |
|
|
|
- |
|
Goodwill |
|
11,632 |
|
|
|
- |
|
Restricted
cash |
|
5,002 |
|
|
|
- |
|
Other
assets |
|
1,313 |
|
|
|
1,327 |
|
|
Total
assets |
$ |
41,261 |
|
|
$ |
33,431 |
|
|
|
|
|
|
|
Liabilities
and Stockholders' Equity |
|
|
|
Current
liabilities: |
|
|
|
|
Accounts
payable |
$ |
1,564 |
|
|
$ |
1,519 |
|
|
Accrued
expenses |
|
6,920 |
|
|
|
9,336 |
|
|
Deferred
franchise revenue |
|
- |
|
|
|
18 |
|
|
Current
portion of other long-term liabilities |
|
105 |
|
|
|
177 |
|
|
Current
portion of long-term debt |
|
473 |
|
|
|
- |
|
|
Total current
liabilities |
|
9,062 |
|
|
|
11,050 |
|
|
|
|
|
|
|
|
Deferred
franchise revenue |
|
1,726 |
|
|
|
1,724 |
|
|
Other
long-term liabilities, net of current portion |
|
1,625 |
|
|
|
1,663 |
|
|
Long-term
debt, net |
|
10,669 |
|
|
|
6,623 |
|
|
Deferred
income tax |
|
327 |
|
|
|
- |
|
|
Total
liabilities |
|
23,409 |
|
|
|
21,060 |
|
|
|
|
|
|
|
|
Commitments
and Contingencies |
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
Common
stock - $.01 par value; 100,000,000 shares authorized, |
|
|
|
|
|
47,972,150 and 38,410,196 shares issued, respectively |
|
479 |
|
|
|
383 |
|
|
Additional
paid-in capital |
|
344,296 |
|
|
|
323,256 |
|
|
Treasury
stock, 59,886 shares at cost |
|
(1,198 |
) |
|
|
(1,198 |
) |
|
Accumulated
deficit |
|
(325,725 |
) |
|
|
(310,070 |
) |
|
Total
stockholders' equity |
|
17,852 |
|
|
|
12,371 |
|
|
Total
liabilities and stockholders' equity |
$ |
41,261 |
|
|
$ |
33,431 |
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated
financial statements. |
Cosi, Inc |
|
Consolidated Statements of Operations and
Comprehensive Loss |
|
(dollars in thousands, except per share
data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 28, |
|
December 29, |
|
|
|
|
|
|
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
Restaurant
net sales |
$ |
87,867 |
|
|
$ |
74,905 |
|
|
|
|
|
|
Franchise
fees and royalties |
|
2,023 |
|
|
|
2,853 |
|
|
|
|
|
|
|
Total revenues |
|
89,890 |
|
|
|
77,758 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
Cost of
food and beverage |
|
23,489 |
|
|
|
20,078 |
|
|
|
|
|
|
Restaurant
labor and related benefits |
|
33,168 |
|
|
|
29,046 |
|
|
|
|
|
|
Occupancy
and other restaurant operating expenses |
|
31,815 |
|
|
|
27,720 |
|
|
|
|
|
|
|
|
|
88,472 |
|
|
|
76,844 |
|
|
|
|
|
|
General and
administrative expenses |
|
11,972 |
|
|
|
12,359 |
|
|
|
|
|
|
Depreciation and amortization |
|
3,200 |
|
|
|
2,394 |
|
|
|
|
|
|
Restaurant
pre-opening expenses |
|
6 |
|
|
|
15 |
|
|
|
|
|
|
Provision
for losses on asset impairments |
|
|
|
|
|
|
|
|
|
and disposals |
|
1,344 |
|
|
|
346 |
|
|
|
|
|
|
Closed
store costs |
|
126 |
|
|
|
172 |
|
|
|
|
|
|
Lease
termination costs |
|
286 |
|
|
|
1,468 |
|
|
|
|
|
|
Gain on
sale of fixed assets |
|
- |
|
|
|
(50 |
) |
|
|
|
|
|
|
Total costs and expenses |
|
105,406 |
|
|
|
93,548 |
|
|
|
|
|
|
|
Operating loss |
|
(15,516 |
) |
|
|
(15,790 |
) |
|
|
|
Other
income (expense): |
|
|
|
|
|
|
|
Interest
expense |
|
(1,029 |
) |
|
|
(471 |
) |
|
|
|
|
Debt
issuance and debt discount amortization |
|
(658 |
) |
|
|
(446 |
) |
|
|
|
|
Other
income |
|
40 |
|
|
|
82 |
|
|
|
|
|
|
|
Total other expense |
|
(1,647 |
) |
|
|
(835 |
) |
|
|
|
|
|
|
Net loss before income taxes |
|
(17,163 |
) |
|
|
(16,625 |
) |
|
|
|
|
Benefit
from income tax |
|
1,508 |
|
|
|
- |
|
|
|
|
|
|
|
Net loss and comprehensive
loss |
$ |
(15,655 |
) |
|
$ |
(16,625 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share
Data: |
|
|
|
|
|
|
|
Loss per
share, basic and diluted |
$ |
(0.36 |
) |
|
$ |
(0.82 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding |
|
44,094,340 |
|
|
|
20,271,585 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated
financial statements. |
|
|
|
Cosi, Inc. |
Consolidated Statements of Cash
Flows |
(in thousands) |
|
|
|
|
December 28, |
|
December 29, |
|
|
|
|
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
|
|
Cash flows
from operating activities: |
|
|
|
|
|
|
Net
loss |
$ |
(15,655 |
) |
|
$ |
(16,625 |
) |
|
|
|
Adjustments
to reconcile net loss to net cash used in |
|
|
|
|
|
|
|
operating
activities |
|
|
|
|
|
|
|
Depreciation and
amortization |
|
3,200 |
|
|
|
2,394 |
|
|
|
|
|
Amortization of debt
issuance and debt discount costs |
|
658 |
|
|
|
446 |
|
|
|
|
|
Gain on sale of
assets |
|
- |
|
|
|
(50 |
) |
|
|
|
|
Asset impairments and
disposals |
|
1,344 |
|
|
|
374 |
|
|
|
|
|
Deferred income
tax |
|
(1,508 |
) |
|
|
- |
|
|
|
|
|
Provision for bad
debts |
|
167 |
|
|
|
226 |
|
|
|
|
|
Provision for
uncollectible notes receivable |
|
551 |
|
|
|
- |
|
|
|
|
|
Provision for lease
termination reserve |
|
286 |
|
|
|
(249 |
) |
|
|
|
|
Stock-based
compensation expense |
|
1,207 |
|
|
|
509 |
|
|
|
|
|
Interest expense paid
in kind |
|
- |
|
|
|
470 |
|
|
|
|
|
Changes in operating
assets and liabilities, net of effect of acquisitions |
|
|
|
|
|
|
|
|
|
Credit cards receivable |
|
163 |
|
|
|
(100 |
) |
|
|
|
|
Accounts receivable |
|
(137 |
) |
|
|
(213 |
) |
|
|
|
|
Inventories |
|
(84 |
) |
|
|
(46 |
) |
|
|
|
|
Prepaid expenses and other
current assets |
|
170 |
|
|
|
69 |
|
|
|
|
|
Other assets |
|
33 |
|
|
|
101 |
|
|
|
|
|
Accounts payable and accrued
expenses |
|
(4,302 |
) |
|
|
(888 |
) |
|
|
|
|
Deferred franchise
revenue |
|
(10 |
) |
|
|
206 |
|
|
|
|
|
Other liabilities |
|
(402 |
) |
|
|
(671 |
) |
|
|
|
|
Net cash used in operating
activities |
|
(14,319 |
) |
|
|
(14,047 |
) |
|
|
|
|
|
|
|
|
|
|
Cash flows
from investing activities: |
|
|
|
|
|
|
Capital
expenditures |
|
(4,769 |
) |
|
|
(1,880 |
) |
|
|
|
Proceeds
from sale of assets |
|
- |
|
|
|
72 |
|
|
|
|
Cash paid
for purchases of stores |
|
(250 |
) |
|
|
- |
|
|
|
|
|
Net cash used in investing
activities |
|
(5,019 |
) |
|
|
(1,808 |
) |
|
|
|
|
|
|
|
|
|
|
Cash flows
from financing activities: |
|
|
|
|
|
|
Net
proceeds from issuance of private placement |
|
15,264 |
|
|
|
- |
|
|
|
|
Restricted
cash |
|
(5,002 |
) |
|
|
- |
|
|
|
|
Principal
payments on long-term debt |
|
(6,825 |
) |
|
|
- |
|
|
|
|
Proceeds
from issuance of long-term debt |
|
- |
|
|
|
7,500 |
|
|
|
|
Proceeds
from issuance of common stock |
|
- |
|
|
|
24,473 |
|
|
|
|
Proceeds
from the issuance of warrants |
|
- |
|
|
|
11 |
|
|
|
|
Issuance of
long-term debt and stock warrants |
|
- |
|
|
|
(690 |
) |
|
|
|
|
Net cash provided by
financing activities |
|
3,437 |
|
|
|
31,294 |
|
|
|
|
|
|
|
|
|
|
|
Net
(decrease)/ increase in cash and cash equivalents |
|
(15,901 |
) |
|
|
15,439 |
|
|
|
Cash and
cash equivalents, beginning of year |
|
21,053 |
|
|
|
5,614 |
|
|
|
Cash and
cash equivalents, end of year |
$ |
5,152 |
|
|
$ |
21,053 |
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
Cash paid
for: |
|
|
|
|
|
|
Corporate
franchise and income taxes |
$ |
376 |
|
|
$ |
376 |
|
|
|
|
Interest |
$ |
970 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
Non-cash
Financing activities: |
|
|
|
|
|
|
Issuance of
common stock for acquisition (Note 1) |
$ |
4,665 |
|
|
$ |
- |
|
|
|
|
Issuance of
stock warrants |
$ |
- |
|
|
$ |
1,571 |
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated
financial statements. |
|
|
|
|
|
|
Teleconference and Webcast InformationAs
previously announced, the Company expects to host an investor
teleconference and webcast at 5:00 p.m. Eastern Time on March 24,
2016, to discuss the Company's results for the 2015 fiscal year end
results. The webcast will be broadcast live and available for
replay for a limited time thereafter at:
AudioDial-In Number: 877 516
3513Secondary (International) Dial-In Number: 281 973
6108Participant Code: 63339310Note: Participants
should dial in a few minutes prior to the start time
WebcastWebsite
link: http://ir.getcosi.com Note: Live,
then archived for one year
ReplayDial-In Number: 855 859
2056Secondary Dial-In Number: 404 537 3406Participant
Code: 63339310Note: Available from March 24,
2016 (at 8:00 p.m. ET) until March 31, 2016 (11:59 PM
ET)
About Così, Inc.Così (http://www.getcosi.com)
is an international fast casual restaurant company. At the
heart of every Cosi® restaurant is an open-flame stone-hearth oven
where the Così® signature flatbread is made from scratch throughout
the day. The flatbread is made from a generations-old recipe
and is part of many Così® favorites. Così® was founded on the idea
that good-for-you food should be delicious. Menu items are
made using fresh ingredients and distinctive sauces and spreads to
create edgy flavors. The menu features made-to-order
sandwiches, hand-tossed salads, bowls, breakfast wraps, melts, all
natural soups, signature Squagels®, artisan flatbread pizzas,
S`mores, snacks and desserts. Guests can also enjoy
handcrafted beverages and a variety of coffee-based and specialty
beverages.
Così® employees create a welcoming environment where guests are
invited to relax and enjoy great food. In many cases, Così®
is the cornerstone of the communities that they are in and take
pride in supporting community organizations and local charities.
There are currently 76 Company-owned and 31 franchise restaurants
operating in fifteen states, the District of Columbia, Costa Rica
and the United Arab Emirates.
"Così," "(Sun & Moon Design)" and related marks are
registered trademarks of Così, Inc. in the U.S.A. and certain other
countries. Copyright © 2016 Così, Inc. All rights reserved.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995. This press release contains statements that
constitute forward- looking statements under the federal securities
laws. Forward-looking statements are statements about future events
and expectations and not statements of historical fact. The words
"believe," "may," "will," "should," "anticipate," "estimate,"
"expect," "intend," "objective," "seek," "plan," "strive," or
similar words, or negatives of these words, identify forward-
looking statements. We qualify any forward-looking statements
entirely by these cautionary factors. Forward-looking statements
are based on management's beliefs, assumptions and expectations of
our future economic performance, taking into account the
information currently available to management. Forward-looking
statements involve risks and uncertainties that may cause our
actual results, performance or financial condition to differ
materially from the expectations of future results, performance or
financial condition we express or imply in any forward-looking
statements. Factors that could contribute to these differences
include, but are not limited to: the results being reported in this
release are unaudited and subject to change; the cost of our
principal food products and supply and delivery shortages and
interruptions; labor shortages or increased labor costs; changes in
demographic trends and consumer tastes and preferences, including
changes resulting from concerns over nutritional or safety aspects
of beef, poultry, produce, or other foods or the effects of
food-borne illnesses, such as E. coli, "mad cow disease" and avian
influenza or "bird flu"; competition in our markets, both in our
business and in locating suitable restaurant sites; our operation
and execution in new and existing markets; expansion into new
markets including foreign markets; our ability to attract and
retain qualified franchisees and our franchisees' ability to open
restaurants on a timely basis; our ability to locate suitable
restaurant sites in new and existing markets and negotiate
acceptable lease terms; the rate of our internal growth and our
ability to generate increased revenue from our existing
restaurants; our ability to generate positive cash flow from
existing and new restaurants; fluctuations in our quarterly results
due to seasonality; increased government regulation and our ability
to secure required government approvals and permits; our ability to
create customer awareness of our restaurants in new markets; the
reliability of our customer and market studies; cost effective and
timely planning, design and build out of restaurants; our ability
to recruit, train and retain qualified corporate and restaurant
personnel and management; market saturation due to new restaurant
openings; inadequate protection of our intellectual property; our
ability to obtain additional capital and financing; adverse weather
conditions which impact customer traffic at our restaurants; and
adverse economic conditions. Further information regarding factors
that could affect our results and the statements made herein are
included in our filings with the Securities and Exchange
Commission.
Additional information is available on Così's
website athttp://www.getcosi.com in the investor relations
section.
CONTACT:
Miguel Rossy-Donovan
Chief Financial Officer
(857) 415-5020
InvestorRelations@getcosi.com