SPoT Coffee (Canada) Ltd.
TSX VENTURE : SPP

SPoT Coffee (Canada) Ltd.

November 22, 2011 15:04 ET

SPoT Coffee Third Quarter 2011 Results: Reports 22% Increase to Gross Profit and 13% Sales Increase

TORONTO, ONTARIO--(Marketwire - Nov. 22, 2011) - SPOT COFFEE (CANADA) LTD. (TSX VENTURE:SPP) ("SPoT" or the "Company") released its financial results for the Company's third quarter ended September 30, 2011. Complete 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.

Third Quarter 2011 Highlights

  • Gross profit (measured as revenue less cost of sales) increased 22% to $981,569 from $801,643 when compared to the same quarter of 2010. SPoT's gross margin percentage (measured as gross profit over revenue) increased to 66% of revenue for the third quarter of 2011 and represents an 8% increase in the Company's gross margin percentage over the same quarter of 2010 which was 61% of revenue.

  • Reported revenue increased 13% to approximately $1.5 million from approximately $1.3 million when compared to the same quarter of 2010. For the third quarter of 2011, SPoT's system-wide sales revenue (without elimination for any café operating partnerships) was $1.67 million. The Company operated six café s during this quarter.

  • Cost of sales decreased 2% to $511,712 as compared to $519,870 for the same quarter of 2010.

  • The Company's consolidated net loss was strongly reduced by 66% to $55,689 from a loss of $165,619 for the same quarter of 2010. SPoT uses Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITD A") as a measurement of the Company's operating performance and a closer indication of cash earnings. For the third quarter of 2011, SPoT's EBITDA was a positive $44,102 and this represents a significant increase of 176% or $102,049 over the same quarter of 2010 when the Company accounted for an EBITDA deficit of $57,947.
SPoT benefited from the following key factors this quarter:
  1. Strength of same store sales growth. SPoT continues to implement a number of key initiatives to increase same store sales including growing the Company's marketing and community relations programs which are focused on strengthening the overall SPoT brand as well as continuing to attract a new customer base.

  2. Menu optimization. SPoT continues to enhance its menu options to provide customers with attractive food options that continue to cater to the needs of each local café community. This quarter included the roll-out of the Company's new individual-sized pizza program ("SPoT My Pie") and more healthy food options.

  3. Growth through expansion. This quarter reflects the operation of one additional café over the same quarter of 2010, SPoT Delray Beach, which the Company owns through a partnership agreement.

  4. Cost reductions. SPoT continues to evaluate its vendor base and identify ways to optimize the Company's increasing purchasing power. Over the first three quarters of 2011, SPoT has significantly narrowed its vendor base and put in place agreements with existing vendors to maximize cost control on all purchases and further take advantage of SPoT's increasing economies of scale. This quarter SPoT has also implemented a more streamlined coffee purchasing and ordering system at each of the cafés resulting in less waste and greater product awareness among café managers and staff resulting in a lower cost of sales.

"SPoT's third quarter results continue to demonstrate the strength in our underlying operations and reflect the positive results of the Company's collective efforts to optimize our daily operating performance. We have built a strong, controlled, and systematic platform that now enables us to expand more aggressively into our targeted new locations," said Raymond Stapell, President and CEO of SPoT.

As previously reported, SPoT opened its seventh operating café on November 11th, SPoT Hertel, located in Western New York. While the benefit of SPoT Hertel will begin to be accounted for during this fourth quarter, preliminary performance of SPoT Hertel can be described as "highly favorable". The construction of café eight (SPoT Park Place) and café nine (SPoT Transit Road) is expected to commence during this January 2012.

Currently the Company is identifying new locations consistent with SPoT's location and demographic criteria. The Company reiterates that ample opportunities exist that may facilitate accelerated growth ahead of the Company's expansion schedule which currently targets at a minimum three to four new operating cafés for 2012.

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 two 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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