Selected Highlights:
* Revenue grows to $98 million in Q2, $195 million YTD
* Comparable store sales up 3.6% in quarter, 4.9% YTD
* 7th consecutive quarter of positive comparable store sales
* Operating income up 123% to $3.2 million in Q2, 64% to $5.1 million YTD
* $4.1 million in cash flow from operations in Q2
GOLDEN, Colo., Aug. 9 /PRNewswire-FirstCall/ -- New World Restaurant
Group, Inc. (OTC: NWRG) today announced improved financial results for its
second quarter and six-month period ended July 4, 2006.
SECOND QUARTER RESULTS
New World reported second quarter revenue of $98.0 million, up
sequentially and year over year from $97.1 million in the first quarter and
$97.1 million in the same quarter last year. The increase in year over year
revenue was attributable to a 3.6% improvement in comparable store sales for
the period. The Company has recorded seven consecutive quarters of positive
comparable store sales.
The Company generated $18.5 million in gross profit for the second quarter
versus $19.2 million in the same quarter last year. Restaurant gross profit
grew by 1.1% in the second quarter, reflecting improved margins at
company-owned restaurants, where New World benefits from food cost modeling
and incremental sales growth. This margin improvement was offset by negative
margins from our manufacturing and commissary operations. These operations
were impacted by increases in raw materials and freight costs and start-up
costs associated with new products and customers.
Total operating expenses declined by 13.6% in the second quarter to $15.3
million versus $17.7 million in the second quarter of 2005. This decline was
attributable to three factors: One, a 21% reduction in depreciation and
amortization expense related to a portion of the Company's asset base becoming
fully depreciated during the second quarter; two, a reduction in
impairment-related charges, which fell to $7,000 in the second quarter from
$1.2 million in the same quarter last year; and, three, the Company recorded
an $8,000 net gain in the sale, disposal or abandonment of assets category in
the second quarter versus a $161,000 loss in that category in the same quarter
a year ago. Those three reductions were partially offset by a 4.5% increase
in general and administrative expense -- to $9.7 million from $9.3 million --
due to a $200,000 increase in stock-based compensation expense and a $200,000
increase in travel and store management development expense. On a sequential
basis, general and administrative expense declined 7.9% to $9.7 million from
$10.6 million in the first quarter.
Income from operations increased 123.1% to $3.2 million in the second
quarter from $1.4 million in the same quarter last year. The Company
generated $4.1 million in cash from operations in the second quarter as
compared with $14.4 million in same quarter in the prior year. The decrease
is due to the timing of our quarterly interest payments under the new credit
facility as compared with semi-annual interest payments under the previous
credit facility.
Interest expense in the second quarter declined by $1.1 million, to $4.7
million from $5.8 million in the second quarter last year. This improvement
reflected the successful first quarter debt refinancing in which the Company's
interest rate on all debt was reduced from 13.9% to a weighted-average
effective rate of 10.2%.
Net loss in the second quarter, which included $5.8 million in non-cash
depreciation, amortization and stock-based compensation charges, was
significantly reduced to $1.5 million, or $0.15 per basic and diluted share,
versus a net loss of $4.3 million, or $0.43 per basic and diluted share, in
the same quarter a year ago.
Cash balances at July 4, 2006, improved to $4.7 million in cash and $2.4
million in restricted cash versus $1.6 million in cash and $2.6 million in
restricted cash at fiscal year end on January 3, 2006. The Company invested
$5.4 million in cash year-to-date for new property and equipment, including
new stores and store equipment, remodeling of existing stores, manufacturing
operations and general corporate purposes. In addition, the Company made a
$475,000 principal reduction on its first lien note during the second quarter.
"We are pleased with our strong financial results and our seventh
consecutive quarter of comparable store sales growth," said Paul Murphy,
president and CEO. "Our consistency in this area is attributable to higher
average check size resulting from a combination of modest price increases and
improved sales activities by our restaurant sales associates. We are now
turning our attention to initiatives designed to increase restaurant traffic
and transaction counts. We are focusing on introducing new menu items,
product bundling and increasing local store marketing efforts. As always, we
will emphasize our core strengths in bagels, the breakfast daypart, and
continuous improvement in all areas of restaurant operations.
"In addition," Murphy added, "we have plans to expand our system,
particularly with the Einstein Bros. and Noah's New York Bagels brands. With
the recent opening of our Noah's store in Mercer Island, WA, we have opened
two new stores year-to-date, and have five additional stores in development of
which we anticipate three to four being open by year-end. That number is
expected to triple in 2007. Also, we are currently staffing up our franchise
and catering operations in support of our future growth objectives."
Rick Dutkiewicz, chief financial officer, added, "As expected, our second
quarter financial performance showed continued improvement in revenue,
operating income and bottom line results. The debt refinancing we completed
in February, which lowered our effective interest rate on all debt by more
than 3 percentage points, resulted in a $1.1 million savings in interest
expense during the second quarter and $1.8 million in interest savings year to
date. Lower interest expense, combined with continued careful management of
our operating expense base, resulted in $4.3 million in cash generated from
operations during the quarter. Our improved cash position strengthens our
balance sheet and provides us with capital to support our growth initiatives."
SIX-MONTH RESULTS
Revenue through six months was $195.0 million, up from $190.4 million in
the same period last year. This increase was attributable to 4.9% growth in
comparable store sales as compared with the first half of 2005.
The Company generated $37.0 million in gross profit through the first six
months, up from $36.3 million in the same period a year ago. Restaurant gross
profit grew by 5.6% in the first half, partially offset by negative margins in
the Company's manufacturing operations.
Total operating expenses declined by 3.7% in the first half to $32.0
million from $33.2 million in the same period last year. Although general and
administrative expense increased by 12.7% to $20.3 million, the Company
achieved reductions in the remainder of its expense categories. Impairment
charges and related costs were reduced to $83,000 from $1.3 million, and loss
on sale, disposal or abandonment of assets decreased to $13,000 from $165,000.
The most significant expense reduction occurred in the category of
depreciation and amortization, which declined 15.9% to $11.6 million from
$13.8 million. The Company said that, as of July 4, 2006, all of its
amortizing assets became fully amortized and a substantial portion of its
other assets became fully depreciated. As a result, the Company expects its
annual depreciation and amortization expense to decline to a range of $12
million to $15 million.
Income from operations increased 63.8% to $5.1 million in the first half
from $3.1 million in the same period last year. The Company generated $4.3
million in cash in the first six months of 2006 as compared with $8.1 million
during the same period in 2005. The decrease is due to the timing of
quarterly interest payments under the new credit facility as compared to
semi-annual interest payments under the previous credit facility.
Interest expense in the first half declined by 15.1%, or $1.8 million, to
$9.9 million from $11.7 million in the same period last year, reflecting the
benefits of a significantly lower effective interest rate on all of the
Company's debt. Total other expense increased during the first half -- to
$18.7 million from $11.6 million primarily related to $8.8 million in costs
associated with the first quarter redemption and prepayment of the Company's
$160.0 million in notes.
Net loss in the first half was $13.6 million or $1.35 per basic and
diluted share versus a net loss of $8.5 million or $0.86 per basic and diluted
share in the same period a year ago. The year-to-date net loss includes $8.8
million in costs associated with the redemption and prepayment of the $160.0
million note.
CONFERENCE CALL
Management will conduct a conference call to discuss first quarter results
on August 10, 2006, at 9:00 a.m. Mountain Time (11:00 a.m. EDT). The call-in
numbers for the conference call are 1-877-381-6509 for domestic toll free and
706-679-7388 for international. The conference ID number is 4045568. A
telephone replay will be available through August 24, 2006, and may be
accessed by calling 1-800-642-1687 for domestic toll free or 706-645-9291 for
international. The conference ID number is 4045568. To access a live web
cast of the call, please visit New World's website at
www.newworldrestaurantgroup.com. A replay of the webcast will be available on
the website through September 10, 2006.
About New World Restaurant Group, Inc.
New World is a leading company in the quick casual restaurant industry
that operates locations primarily under the Einstein Bros. and Noah's New York
Bagels brands and primarily franchises locations under the Manhattan Bagel
brand. As of July 4, 2006, the Company's retail system consisted of 613
locations, including 427 company-owned locations, as well as 113 franchised
and 73 licensed locations in 34 states, and the District of Columbia. The
Company also operates a dough production facility. The Company's stock is
traded under the symbol NWRG.PK. Visit www.newworldrestaurantgroup.com for
additional information.
Certain statements in this press release constitute forward-looking
statements or statements which may be deemed or construed to be forward-
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. The words "forecast," "estimate," "project," "plan to,"
"is designed to," "expectations," "intend," "indications," "expect," "should,"
"would," "believe," "trend" and similar expressions and all statements which
are not historical facts are intended to identify forward-looking statements.
These forward-looking statements involve and are subject to known and unknown
risks, uncertainties and other factors which could cause the Company's actual
results, performance (financial or operating), or achievements to differ from
the future results, performance (financial or operating), or achievements
expressed or implied by such forward-looking statements. These factors include
but are not limited to (i) the results for period over period revenue, gross
profit, operating income, EBITDA, adjusted EBITDA, net loss, comparable store
sales, average check and transactions are not necessarily indicative of future
results and are subject to shifting consumer preferences, economic conditions,
weather, and competition, among other factors; (ii) the results for the second
quarter and first half of 2006 are not necessarily indicative of future
results which are subject to increasing utility and other costs, and other
seasonal effects; (iii) the Company's expectation that the debt refinancing
will lower the cash interest rate by more than 3 percentage points is
dependent upon LIBOR rate remaining stable; (iv) the Company's plans to
increase traffic and transaction counts are dependent upon the success of its
store marketing programs and other factors; (v) the Company's plans to open
new restaurants and/or expand its franchise program are dependent upon
availability of desirable properties, ability to negotiate favorable lease
terms, ability to attract and train qualified franchisees and personnel,
availability of growth capital, and ability to build new locations and manage
the risks associated with permitting, construction and potential construction
delays. These and other risks are more fully discussed in the Company's SEC
filings.
NEW WORLD RESTAURANT GROUP, INC.
CONSOLIDATED BALANCE SHEETS
AS OF JULY 4, 2006 AND JANUARY 3, 2006
(in thousands, except share information)
(unaudited)
July 4, January 3,
2006 2006
ASSET
Current assets:
Cash and cash equivalents $4,738 $1,556
Restricted cash 2,404 2,554
Franchise and other receivables, net
of allowance of $595 and $480, respectively 4,941 5,506
Inventories 4,742 5,072
Prepaid expenses and other current assets 4,988 4,506
Total current assets 21,813 19,194
Restricted cash long-term 579 595
Property, plant and equipment, net 30,964 33,359
Trademarks and other intangibles, net 63,806 67,717
Goodwill 4,875 4,875
Debt issuance costs and other assets, net 5,761 5,184
Total assets $127,798 $130,924
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $5,275 $5,848
Accrued expenses 25,694 24,789
Short term debt and current portion
of long-term debt 2,655 280
Current portion of obligations under
capital leases 59 19
Total current liabilities 33,683 30,936
Senior notes and other long-term
debt, net of discount 167,752 160,560
Obligations under capital leases 110 29
Other liabilities 8,503 8,610
Mandatorily redeemable, Series Z
Preferred Stock, $.001 par value, $1,000 per
share liquidation value; 2,000,000 shares
authorized; 57,000 shares issued
and outstanding 57,000 57,000
Total liabilities 267,048 257,135
Commitments and contingencies
Stockholders' deficit:
Common stock, $.001 par value; 25,000,000
shares authorized; 10,593,085 and 10,065,072
shares issued and outstanding 11 10
Additional paid-in capital 176,544 176,018
Unamortized stock compensation -- (68)
Accumulated deficit (315,805) (302,171)
Total stockholders' deficit (139,250) (126,211)
Total liabilities and stockholders' deficit $127,798 $130,924
NEW WORLD RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SECOND QUARTER AND YEAR TO DATE PERIODS ENDED JULY 4, 2006 AND
JUNE 28, 2005
(in thousands, except earnings per share and related share information)
(unaudited)
Second quarter ended: Year to date ended:
July 4, June 28, July 4, June 28,
2006 2005 2006 2005
Revenues:
Restaurant sales $91,507 $91,116 $182,087 $177,975
Manufacturing revenues 4,960 4,641 9,981 9,635
Franchise and license
related revenues 1,489 1,356 2,964 2,798
Total revenues 97,956 97,113 195,032 190,408
Cost of sales:
Restaurant costs 73,964 73,770 147,490 145,200
Manufacturing costs 5,502 4,193 10,507 8,900
Total cost of sales 79,466 77,963 157,997 154,100
Gross profit 18,490 19,150 37,035 36,308
Operating expenses:
General and administrative
expenses 9,727 9,309 20,288 17,994
Depreciation and
amortization 5,594 7,077 11,598 13,785
Loss (gain) on sale, disposal
or abandonment of
assets, net (8) 161 13 165
Impairment charges and other
related costs 7 1,182 83 1,279
Income from operations 3,170 1,421 5,053 3,085
Other expense (income):
Interest expense, net 4,712 5,773 9,921 11,692
Prepayment penalty upon
redemption of $160 Million
Notes -- -- 4,800 --
Write-off of debt issuance
costs upon redemption of
$160 Million Notes -- -- 3,956 --
Other -- (69) 10 (126)
Loss before income taxes (1,542) (4,283) (13,634) (8,481)
Provision for income taxes -- -- -- --
Net loss $(1,542) $(4,283) $(13,634) $(8,481)
Net loss per common share -
Basic and Diluted $(0.15) $(0.43) $(1.35) $(0.86)
Weighted average number of
common shares outstanding:
Basic and Diluted 10,171,236 9,860,886 10,118,154 9,854,799
NEW WORLD RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR TO DATE PERIODS ENDED JULY 4, 2006 AND JUNE 28, 2005
(in thousands)
(unaudited)
July 4, June 28,
2006 2005
OPERATING ACTIVITIES:
Net loss $(13,634) $(8,481)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 11,598 13,785
Stock based compensation expense 408 34
Loss, net of gains, on disposal of assets 13 165
Impairment charges and other related costs 83 1,279
Integration and reorganization costs -- 5
Provision for (recovery of) losses on
accounts receivable, net 132 (138)
Amortization of debt issuance and debt
discount costs 419 924
Write-off of debt issuance costs 3,956 --
Accretion of paid-in-kind interest 643 --
Changes in operating assets and liabilities:
Restricted cash (166) (2,040)
Franchise and other receivables 433 1,572
Accounts payable and accrued expenses 332 (1,016)
Other assets and liabilities 61 1,976
Net cash provided by operating activities 4,278 8,065
INVESTING ACTIVITIES:
Purchase of property and equipment (5,400) (4,082)
Proceeds from the sale of equipment 153 92
Net cash used in investing activities (5,247) (3,990)
FINANCING ACTIVITIES:
Proceeds from line of credit 24 5,430
Repayments of line of credit (24) (5,445)
Repayment of other borrowings -- (10)
Payments under capital lease obligations (20) --
Repayment of notes payable (160,000) --
Borrowings under First Lien 80,000 --
Repayments under First Lien (475) --
Borrowing under Second Lien 65,000 --
Borrowings under Subordinated Note 24,375 --
Proceeds upon stock option and warrant exercises 187 21
Debt issuance costs (4,916) --
Net cash provided by (used in)
financing activities 4,151 (4)
Net increase in cash and cash equivalents 3,182 4,071
Cash and cash equivalents, beginning of period 1,556 9,752
Cash and cash equivalents, end of period $4,738 $13,823
SOURCE New World Restaurant Group, Inc.
-0- 08/09/2006
/CONTACT: Jay Pfeiffer of Pfeiffer High Investor Relations, Inc.,
+1-303-393-7044, jay@pfeifferhigh.com, for New World Restaurant Group, Inc.;
or Rick Dutkiewicz, Chief Financial Officer of New World Restaurant Group,
Inc., +1-303-568-8004, rdutkiewicz@nwrgi.com/
/Web site: http://www.newworldrestaurantgroup.com /
(NWRG)
CO: New World Restaurant Group, Inc.
ST: Colorado
IN: RST FOD REA OTC
SU: ERN CCA
BK-BF
-- LAW146 --
7062 08/09/2006 20:23 EDT http://www.prnewswire.com
