SPoT Coffee (Canada) Ltd.
TSX VENTURE : SPP

SPoT Coffee (Canada) Ltd.

May 16, 2012 16:26 ET

SPoT Coffee First Quarter 2012 Results: 40% Sales Increase and 28% Gross Profit Increase

TORONTO, ONTARIO--(Marketwire - May 16, 2012) - SPOT COFFEE (CANADA) LTD. (TSX VENTURE:SPP) ("SPoT" or the "Company") released its financial results for the Company's first quarter ended March 31, 2012. Complete interim financial statements and Management's Discussion and Analysis have been filed for public review at www.sedar.com and are available on the Company's website at www.spotcoffee.com. All dollar values expressed in Canadian dollars unless otherwise stated.

Q1 2012 Highlights

  • Reported revenue for the quarter increased 40% to $1,612,363 from $1,152,535 when compared to the same quarter of 2011. SPoT's system-wide sales revenue (without elimination for any café operating partnerships) was approximately $1.85 million for this quarter and represents a 49% increase over the same quarter of 2011 which was $1.25 million. This quarter SPoT operated seven cafés as opposed to five cafés during the same quarter of 2011. The Company is currently developing two more cafés that are opening during this third quarter and a third café opening during the fourth quarter of 2012. SPoT is currently in the process of evaluating other locations to accelerate the number of new cafés that the Company intends to open during this year.

  • For SPoT cafés open for two years or longer, the same-store sales increased on average 10.7% for each café this quarter when compared to the same quarter of 2011 highlighting the continued performance strength of the seasoned café portfolio.

  • Gross profit for the first quarter of 2012 (measured as revenue less cost of sales) increased 28% to $1,079,425 from $845,734 when compared to the same quarter of 2011. SPoT's gross margin percentage (measured as gross profit over revenue) was 67% of revenue for the first quarter of 2012.

  • Cost of sales was $532,938 for the first quarter of 2012 and represents 33% of revenue. Cost of sales for this quarter increased from $306,801 when compared to the same quarter of 2011 and is driven by the overall increase of the Company's sales.

  • SPoT uses Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") as a measurement of the Company's internal operating performance and a closer indication of cash earnings. For the first quarter of 2012, SPoT's EBITDA was a negative $53,562 as the free cash flow generation of the underlying café portfolio continues to offset centralised operating and head office costs, including the investment into highly qualified senior management and operating personnel consistent with the overall development and expansion of the SPoT brand. As SPoT continues to open new cafés during this year, the Company believes it will benefit from increasing economies of scale and operating leverage as a result of current investments into centralised infrastructure and operating costs.

  • The Company's consolidated net loss for the first quarter of 2012 increased to $392,823 from a loss of $121,815 for the same quarter of 2011. The increase to the Company's consolidated net loss for this quarter is in line with the overall expansion of SPoT's operations and include an increase driven by salaries, new café costs and increases to certain centralized corporate overhead costs, including non-cash expenses reflecting depreciation and stock option issuance to key management, directors and employees of the Company, as SPoT continues to invest into its expansion platform.

Commenting on the sales increase, SPoT Coffee President, Anton Ayoub stated, "While a portion of our strong sales growth this quarter comes from operating two new cafés, we are particularly proud about the 10.7% increase in average same-store sales. This shows we are building a strong brand with an increasingly loyal customer following. We are confident that we can translate this success into more Spot cafés in new and expanding geographic markets."

About SPoT

SPoT (www.spotcoffee.com) designs, builds and operates community-oriented cafés that provide its customers from every lifestyle and culture with the highest quality service, signature light meals and in-house roasted gourmet coffee. The current SPoT management team and directors have been successfully operating company-owned cafés since 2004.

Each SPoT café is a popular and friendly gathering place for its community where specialty coffee, upscale beverages, fresh baked goods, signature sandwiches, soups, salads and gourmet pizza, cakes, pastries and home baked goods are offered and enjoyed by its patrons in a warm, friendly and home-like environment.

The Company currently operates seven cafés that range in size from 2,000 to in excess of 4,000 sq. ft. with three more cafés currently under development. SPoT is currently evaluating several locations as part of its North American expansion.

Unlike other conventional gourmet coffee houses and quick service restaurants that are built on uniformity of product and style, each SPoT café maintains several unique and key features, including:

  • Dedication to create a friendly environment that nourishes and intensifies a sense of gathering and of community;
  • In-house roasting and blending SPoT's own award-winning premium Arabica coffee;
  • Unwavering commitment to offer the customers of the Company the highest quality products and services;
  • Innovative and varying café designs that consider both the culture and flavor of the specific communities of each café;
  • Choice of corner locations for each SPoT café at the center of their neighborhoods;
  • Ability to offer intimate and warm ambiances in each café to suit the social and private moods of SPoT's patrons; and
  • Trained and dynamic service staff that are proud to call themselves "SPoTters" who enjoy serving their customers and make them feel at home.

Forward Looking Statements

Except for statements of historical fact relating to the Corporation, certain information contained herein constitutes forward-looking statements. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Except as required by applicable securities requirements, the Corporation undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change. The reader is cautioned not to place undue reliance on forward-looking statements.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of the release.

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