Einstein Noah: profit rises 2008 in all, but declines in Q4

Lakewood / CO. (enr) Einstein Noah Restaurant Group reported financial results for the fourth quarter and full year ended December 30, 2008. Selected highlights for the fourth quarter 2008 compared to the fourth quarter 2007:

• Total revenue of 103,9 million USD versus 105,2 million USD
• System-wide comparable store sales decreased a modest 1,0 percent
• Gross profit of 21,5 million USD in each of these quarters
• Net income and diluted EPS of 5,8 million USD and 0,36 USD, respectively, versus net income and diluted EPS of 6,8 million USD and 0,41 USD. Fourth quarter 2008 results included 1,3 million USD in senior management transition costs, or approximately 0,08 USD per diluted share.
• Generated 9,4 million USD of cash flow from operations in 2008 compared to 5,6 million USD in 2007.

Selected highlights for 2008 compared to 2007:

• Total revenue growth of 2,6 percent to 413,5 million USD from 402,9 million USD
• System-wide comparable store sales increased 1,4 percent
• Gross profit of 81,8 million USD versus 80,9 million USD
• Net income and diluted EPS of 21,1 million USD and 1,29 USD, respectively, versus net income and diluted EPS of 12,6 million USD and 0,88 USD. 2008 results included 3,2 million USD in charges for senior management transition costs and California wage and hour settlements, or approximately 0,20 USD per diluted share.
• Generated 43,1 million USD of cash flow from operations in 52-week period, resulting in an unrestricted cash balance of 24,2 million USD on December 30, 2008, compared to the 52 weeks ended January 01, 2008 where we generated 24,9 million USD in cash flow and had an unrestricted cash balance of 9,4 million USD.

Full Year 2008 Financial Results

For the full year ended December 30, 2008, system-wide comparable store sales, which include Company-owned, franchised, and licensed locations, increased 1,4 percent. Total revenues increased 2,6 percent to 413,5 million USD from 402,9 million USD last year. Company-owned restaurant sales grew 1,0 percent to 376,7 million USD from 373,0 million USD, with virtually flat comparable store sales, despite management deliberately reducing the hours of operation beginning in the second quarter of 2008. Company-owned restaurant gross profit was 73,5 million USD compared to 75.8 million USD in 2007.

Franchise and license related revenues increased 12,6 percent to 6,4 million USD in 2008, compared to 5,7 million USD last year. Einstein Noah benefitted from a net increase of 27 franchise and license locations, in addition to a strong comparable store sales increase of 8,6 percent. To date, the company signed seven development agreements for additional Einstein Bros. Bagels franchises which should ultimately result in a total of 49 additional franchise openings. Manufacturing and commissary revenues increased 25,5 percent to 30,4 million USD, compared to 24,2 million USD last year. Manufacturing and commissary gross profit was 1,8 million USD, compared to a 0,6 million USD loss in 2007.

Net income was 21,1 million USD for 2008, or 1,29 USD per diluted share, compared to net income of 12,6 million USD, or 0,88 USD per diluted share, in 2007 and reflects one full year´s benefit of our recapitalization, which occurred in June 2007. The 2008 results included a 1,9 million USD charge related to two California wage and hour settlements, along with 1,3 million USD of senior management transition costs, which in aggregate was approximately 0,20 USD per diluted share.

About: Einstein Noah Restaurant Group is a leading company in the quick casual restaurant industry in the United States that operates locations primarily under the Einstein Bros.(R) Bagels and Noah´s New York Bagels(R) brands and primarily franchises locations under the Manhattan Bagel(R) brand. The company´s retail system consists of more than 600 restaurants, including more than 100 license locations, in 36 states plus the District of Columbia. It also operates a dough production facility.