Crumbs Bake Shop, Inc. Reports Third Quarter 2013 Financial Results

     Crumbs Bake Shop, Inc. Reports Third Quarter 2013 Financial Results

Company Updates 2013 Financial Outlook

PR Newswire

NEW YORK, Nov. 14, 2013

NEW YORK, Nov. 14, 2013 /PRNewswire/ --Crumbs Bake Shop, Inc. ("Crumbs")
(NASDAQ: CRMB), the largest cupcake specialty store chain in the U.S., today
reported financial results for the third quarter ended September 30, 2013.

Highlights of the Third Quarter 2013 Compared to the Third Quarter 2012:

  oNet sales increased 15.4% to $11.4 million from $9.9 million.
  oComp store sales decreased 17.2%.
  oStore operating weeks increased 44.3% to 977 from 677.
  oGross profit increased 11.4% to $6.1 million from $5.5 million.
  oNet loss attributable to stockholders was $(5.7) million or $(0.49) per
    share compared to $(1.1) million or $(0.20) per share.
  oAdjusted EBITDA^1, a non GAAP measure, was $(3.1) million compared to
    $(1.2) million.

1.See financial tables for a reconciliation of adjusted EBITDA (earnings
    before interest, taxes, depreciation and amortization), a non-GAAP
    measure, to GAAP results.

Third Quarter 2013 Financial Results
Net sales increased 15.4% to $11.4 million in the third quarter of 2013 as
compared to $9.9 million in the third quarter of 2012. The increase was
primarily attributable to $3.1 million in sales from the 30 stores not in the
same store sales base offset by a $1.6 million decrease in sales from the 49
stores in the same store sales base. During the quarter we saw sequential
improvement on a monthly basis. Comp store sales were down 19.6% in July,
19.1% in August and 12.6% in September. Total store operating weeks increased
44.3% to 977 from 677 in the third quarter last year.

Cost of sales was $5.4 million compared to $4.4 million in the third quarter
of 2012 and increased 270 basis points to 46.8% as a percentage of net sales.
Gross profit increased 11.4% to $6.1 million from $5.5 million in the third
quarter of last year. The increases were attributable to a variety of factors,
including operating our coffee business under the "We Proudly Serve" Starbucks
program, increased handling costs associated with our e-commerce operation and
increased customer sales discounts from promotional products. Management has
instituted programs that it believes will reduce the cost of sales for coffee.

Staff expenses were $4.3 million compared to $3.3 million in the third quarter
of 2012 and increased 400 basis points to 37.6% as a percentage of net sales.
Increases in staff expenses were primarily attributable to 26 new stores
opened during the last twelve months, including approximately 290 new store
positions.

Occupancy expenses were $3.6 million compared to $2.5 million in the third
quarter of last year and increased 580 basis points to 31.2% as a percentage
of net sales. The increases in occupancy expenses were primarily related to
lease expenses of $1.82 million associated with the opening of 26 stores since
September 30, 2012 and cost of closing stores.

General and administrative expenses were $0.9 million compared to $0.8 million
in the third quarter of 2012 and increased 50 basis points to 8.3% as a
percentage of net sales.

Income tax expense was $2.39 million as a result of full valuation allowance
placed on the deferred tax asset, net of payable to related parties pursuant
to tax receivable agreement.

Adjusted EBITDA was $(3.1) million compared to $(1.2) million in the third
quarter of last year. See financial tables for a reconciliation of adjusted
EBITDA (earnings before interest, taxes, depreciation and amortization), a
non-GAAP measure, to GAAP results.

Net loss attributable to stockholders was $(5.7) million, or $(0.49) per basic
and diluted share, compared to a net loss of $(1.1) million, or $(0.20) per
basic and diluted share, in the third quarter of last year. The weighted
average number of common shares outstanding was 11.6 million in the third
quarter of 2013 and 5.5 million in the third quarter of 2012.

Store Portfolio
In the first three quarters of the year we have opened a total of 21
mall-based stores, including 11 in line stores and 10 kiosks. During the
third quarter of 2013, Crumbs opened 1 mall-based store and 2 kiosks in, or
adjacent to, current trading areas. During the third quarter we experienced a
slowing of sales, resulting in lower than projected annual sales for most of
our mall stores.

The Company has also expressed its intention to close certain street-level
stores in California, Connecticut, Illinois, Metropolitan New York City, and
Washington D.C that management believes will be unable to reach acceptable
levels of financial performance. So far this year, Crumbs has closed 5 of
those stores located in Connecticut, California, Illinois and Metropolitan New
York City, and expects to close at least two additional stores in Manhattan by
the end of the year.

October 2013
During October, in total the Company experienced flat comp store sales. In
the first 27 days of the month the comp store trend was approximately negative
11%, continuing the sequential improvement experienced during the third
quarter, while the remainder of the month the Company was operating against
significant store closures from the effects of super storm Sandy in October
2012.

2013 Outlook
Based upon actual results through the first three quarters of 2013, along with
our revised outlook for the balance of the year, Crumbs is lowering its annual
expectations of net sales to approximately $48 million from $53 million and
adjusted EBITDA to approximately $(8.8) million from $(4.9) million. The
Company's revised sales projection reflects continued weakness at street-level
stores as well as lower sales projections for mall stores as indicated above.
Any additional store closures would also further impact both sales and
adjusted EBITDA. Management has initiated several strategies to improve the
profitability of its stores. The Company is also negotiating and entering into
various licensing agreements that will provide additional revenue. In
addition, decreases in corporate level expenses have been initiated with
additional reductions planned. Although these changes should reduce the amount
of expenses in the fourth quarter of 2013 and fiscal year 2014, additional
cash will be needed to fund operations through December 31, 2013. The Company
is exploring a variety of strategic options which include equity and/or debt
instruments to fund its future operating cash flow or enter into a strategic
arrangement with a third party. 

See financial tables for a reconciliation of projected adjusted EBITDA
(earnings before interest, taxes, depreciation and amortization), a non-GAAP
measure, to projected GAAP results.

Earnings Call
The Company will not be conducting an earnings call for the third quarter of
2013.

About Crumbs Bake Shop, Inc.
The first Crumbs bake shop opened in March 2003 on the Upper West Side of
Manhattan and is well known for its innovative and oversized gourmet cupcakes.
The Company currently has 78 locations in 12 states and the District of
Columbia.

Forward Looking Statements
Some of the statements in this press release constitute forward-looking
statements within the meaning of the federal securities laws. Words such as
"anticipate," "expect," "project," "intend," "plan," "believe," "target,"
"aim," "will" and words and terms of similar substance and any financial
projections used in connection with any discussion of future plans,
strategies, objectives, actions, or events identify forward-looking
statements. Such statements include, among others, those concerning our
expected financial performance and strategic and operational plans, as well as
all assumptions, expectations, predictions, intentions or beliefs about future
events. These statements are based on the beliefs of our management as well as
assumptions made by and information currently available to us and reflect our
current views concerning future events. As such, they are subject to risks and
uncertainties that could cause our results to differ materially from those
expressed or implied by such forward-looking statements. Such risks and
uncertainties include, among many others: the risk that any projections,
including earnings, revenues, expenses, synergies, margins or any other
financial items that form the basis for management's plans and assumptions are
not realized; the risk of disruption from being a public company, making it
more difficult to maintain relationships with customers, employees or
suppliers; a reduction in industry profit margin; the inability to continue
the development of the Crumbs brand; the timing of and ability to achieve
profitability of new stores; the inability to manage or fund rapid growth;
requirements or changes affecting the business in which Crumbs Bake Shop, Inc.
and Crumbs Holdings LLC and its wholly-owned subsidiaries are engaged; our
ability to successfully implement new strategies; operating hazards; and
competition and the loss of key personnel; changing interpretations of
generally accepted accounting principles; continued compliance with government
regulations; changing legislation and regulatory environments; the ability to
meet the NASDAQ Stock Market's continued listing standards; a lower return on
investment; and the general volatility of the market prices of our securities
and general economic conditions. These and other risks are discussed in
detail in the periodic reports that Crumbs Bake Shop, Inc. files with the
Securities and Exchange Commission (the "SEC"), including in the "Risk
Factors" section of its Quarterly Report on Form 10-Q and its Annual Report on
Form 10-K for the year ended December 31, 2012, and investors are urged to
review those periodic reports and its other filings with the SEC, which are
accessible on the SEC's website at www.sec.gov, before making an investment
decision. Crumbs Bake Shop, Inc.'s forward-looking statements may also be
subject to other risks and uncertainties, including those that it may discuss
elsewhere in this news release or in its filings with the SEC. We assume no
obligation to update these forward-looking statements except as required by
law.

Non-GAAP Information
This press release includes certain numerical measures that are or may be
considered "non-GAP financial measures" under the SEC's Regulation G. "GAAP"
refers to generally accepted accounting principles in the United States. The
reconciliations of such measures to the most comparable GAAP figures, in
accordance with Regulation G, are included herein. Crumbs presents its results
in the way it believes will be most meaningful and useful, as well as most
transparent, to the investing public, including use of Adjusted EBITDA as a
financial measure, which also facilitates comparisons to our historical
performance.

The Company is providing Adjusted EBITDA information, which is defined as net
income of the combined company, including net income attributable to any
non-controlling interest, determined in accordance with all applicable and
effective GAAP pronouncements up to December 31, 2010, before interest income
or expense, income taxes and any gains or losses resulting from the change in
estimate relating to our tax receivable agreement, depreciation, amortization,
deferred rent expense, losses or gains resulting from adjustments to the fair
value of the contingent consideration, stock-based compensation expense,
extraordinary or non-recurring expenses and all other extraordinary non-cash
items for the applicable period as a compliment to GAAP results. Adjusted
EBITDA measures are commonly used by management and investors as a measure of
leverage capacity, debt service ability and liquidity. Adjusted EBITDA is not
considered a measure of financial performance under GAAP, and the items
excluded from Adjusted EBITDA are significant components in understanding and
assessing our financial performance. Adjusted EBITDA should not be considered
in isolation or as an alternative to, or superior to, such GAAP measures as
net income, cash flows provided by or used in operating, investing or
financing activities or other financial statement data presented in our
consolidated financial statements as an indicator of financial performance or
liquidity. Reconciliations of non-GAAP financial measures are provided in the
accompanying tables. Since Adjusted EBITDA is not a measure determined in
accordance with GAAP and is susceptible to varying calculations, Adjusted
EBITDA, as presented, may not be comparable to other similarly titled measures
of other companies.



CRUMBS BAKE SHOP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
                          Three Months Ended September  Nine Months Ended
                          30,                           September 30,
                              2013            2012        2013        2012
Net sales                 $   11,421       $  9,895     $ 35,851    $ 32,253
Cost of sales                 5,350           4,445       16,358      13,983
Gross profit                  6,071           5,450       19,493      18,270
Operating expenses
 Selling expenses            573             296         1,686       982
 Staff expenses              4,294           3,325       12,186      10,070
 Occupancy expenses          3,560           2,515       9,752       7,307
 General and                 944             772         2,966       2,402
administrative
 New store expenses          37              142         427         323
 Depreciation and            715             476         1,906       1,391
amortization
 Loss on disposal of         -               -           85          14
property and equipment
                              10,123          7,526       29,008      22,489
Loss from operations          (4,052)         (2,076)     (9,515)     (4,219)
Other income (expense)
 Interest expense            (165)           -           (241)       -
 Interest and other          27              2           35          19
income
 Abandoned projects          (113)           (67)        (128)       (111)
 Change in fair market
value of warranty             (109)           273         (218)       382
liability
                              (360)           208         (552)       290
Loss before income tax        (4,412)         (1,868)     (10,067)    (3,929)
benefit (expense)
Income tax benefit            (2,387)         7           (2,387)     7
(expense)
Net loss attributable to
the controlling and
non-controlling              (6,799)         (1,861)     (12,454)    (3,922)
interests
Less: Net loss
attributable to
non-controlling interest     1,106           749         2,035       1,588
Net loss attributable to  $   (5,693)      $  (1,112)   $ (10,419)  $ (2,334)
stockholders
Net loss per common       $   (0.49)       $  (0.20)    $ (0.90)    $ (0.42)
share, basic and diluted
Weighted average number
of common
shares outstanding,          11,631          5,506       11,590      5,506
basic and diluted





CRUMBS BAKE SHOP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
                                                  September 30,  December 31,
                                                  2013           2012
ASSETS
Current assets
 Cash                                           $   1,667      $   6,270
 Trade receivables                                   453            259
 Inventories                                         416            559
 Prepaid rent                                        777            600
 Other current assets                                624            410
Total current assets                                  3,937          8,098
Property and equipment, net                           17,610         13,209
Other Assets
 Deferred tax asset                                  -              4,773
 Restricted certificates of deposit                  673            673
 Intangible assets, net                              293            367
 Capitalized lease costs                             851            440
 Deposits                                            268            289
 Debt issuance costs                                 884            0
 Other                                               10             38
Total other assets                                    2,979          6,580
                                                  $   24,526     $   27,887
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
 Accounts payable and accrued expenses           $   2,256      $   2,080
 Payroll liabilities                                 119            357
 Sales tax payable                                   209            110
 Gift cards and certificates outstanding             223            234
Total current liabilities                             2,807          2,781
Long-term liabilities
 Deferred rent                                       4,609          3,791
 Payable to related parties pursuant to tax          -              2,387
receivable agreement
 Warranty liability                                  600            382
 Convertible notes payable                           10,000         -
Total liabilities                                     18,016         9,341
Commitments and contingencies
Stockholders' equity
 Preferred stock, $.0001 par value; 1,000
shares authorized;
390 shares issued and outstanding at September
30, 2012
and December 31, 2012                               -              -
 Common stock, $.0001 par value; 100,000 shares
authorized;
7,381 shares issued, 5,786 outstanding at
September 30, 2012 and
7,100 shares issued, 5,506 outstanding at           1              1
December 31, 2011
 Additional paid-in capital                          39,535         39,117
 Accumulated deficit                                 (20,194)       (9,776)
 Treasury stock, at cost                             (15,914)       (15,914)
 Total Crumbs Bake Shop, Inc. stockholders'     3,428          13,428
equity
 Non-controlling interest                            3,082          5,118
Total stockholders' equity                        6,510          18,546
                                                  $   24,526     $   27,887







CRUMBS BAKE SHOP, INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA TO NEAREST COMPARABLE GAAP MEASURE
(in thousands)
                                    Three Months Ended    Nine Months Ended
                                    September 30,         September 30,
                                    2013       2012       2013        2012
Net income (loss) attributed to
the controlling
   and non-controlling interest   $ (6,799)  $ (1,862)  $ (12,454)  $ (3,922)
   Depreciation and amortization    715        476        1,906       1,391
   Interest expense                 165        -          240         -
   Interest income                  -          -          (4)         (2)
   Income tax expense (benefit)     2,387      (7)        2,387       (7)
   Loss on disposal of fixed        -          -          85          14
   assets
   Abandoned projects               113        67         128         111
   Deferred rent expense            185        231        537         624
   Stock based compensation         94         120        416         282
   Change in fair value of          109        (273)      218         (382)
   warrant liability
   Non-recurring expenses           (20)       -          (20)        8
Adjusted EBITDA                   $ (3,051)  $ (1,248)  $ (6,561)   $ (1,883)

SOURCE Crumbs Bake Shop

Website: http://www.crumbs.com
Contact: Investor Relations Contact: IR@crumbs.com / 646-478-9917
 
Press spacebar to pause and continue. Press esc to stop.