Gross Margin Increases 12 Percentage Points Versus Year Ago
Company At 9,345 Total Dispensers; $35 Million Run Rate
Conference Call Wednesday, November 12 At 11 a.m.
Eastern Standard Time
SAN DIEGO, Nov. 11, 2008 (GLOBE NEWSWIRE) -- Javo(r) Beverage Company, Inc. (OTCBB:JAVO), a leading provider of premium dispensable coffee and tea-based beverages to the food service industry, announced today its unaudited financial results for the third quarter of 2008.
Financial highlights for the third quarter ending September 30, 2008 include the following:
* Revenues increased 45% to $5.6 million from $3.9 million in
the third quarter 2007.
* Gross profit margin expanded to 40.3%, an increase of 1,230
basis points from the year ago period.
* The Company's total base of beverage dispensers reached 9,345,
an increase of 519 from the prior quarter in line with
forecast.
* Dispensed products revenue reached $4.3 million, up 51% over
third quarter 2007.
* Selling, general and administrative expenses totaled $4.7
million, an increase of 63% versus the year ago period, due
primarily to larger non-cash expenses and higher variable
marketing expenses related to the Company's national account
programs.
* The Company had a net loss of $2.6 million compared to a loss
of $127 thousand in the prior year quarter. The difference of
$2.6 million was attributable to a reduction in non-cash
derivative income of $2.0 million and additional non-cash
expense increases for depreciation, amortization and stock
compensation.
Financial highlights for the first nine months ending September 30, 2008 include the following:
* Revenues increased 65% to $16.2 million from $9.8 million in
the third quarter 2007.
* Gross profit margin expanded to 43.1%, an increase of 920
basis points from the year ago period.
* The Company's total base of beverage dispensers reached 9,345,
an increase of 5,040 since the beginning of the year.
* Dispensed products revenue reached $12.8 million, up 105%
over the first nine months of 2007.
* Selling, general and administrative expenses totaled $11.6
million, an increase of 48%, primarily due non-cash items,
expenses associated with fielding the Company's national
sales force and higher variable marketing expenses for
national programs.
* The Company had a net loss of $6.7 million compared to a
loss of $5.4 million in the prior year quarter. The difference
of $1.3 million was entirely accounted for by the reduced
non-cash derivative income for the period versus year ago.
Cody C. Ashwell, chairman and CEO of Javo Beverage Company, said, "Javo's third quarter results and year-to-date performance demonstrate the superiority of Javo's product proposition compared to its competitors and the strength of our business model, especially in this difficult economic environment. The Company stayed on target with respect to our 2008 business plan, so far adding 5,040 new recurring revenue dispensing locations and leaving us within reach of our year-end target of 10,000 dispenser placements."
Ashwell continued, "Our dispensed specialty beverage platform gives the 2.5 million traditional foodservice locations across the country the ability to deliver coffee shop-style beverages in a convenient, high quality platform at a time when consumers are looking for value oriented alternatives for many of their daily purchases. When a foodservice location installs and maintains a Javo hot coffee or specialty beverage dispenser in their restaurant, hospital, hotel, convenience store or casino it creates a predictable monthly revenue stream for Javo who supplies the beverage concentrates for that equipment. Reaching the 10,000 dispenser milestone means that we enter 2009, without any additional growth, with an annual revenue run rate in excess of $ 35 million, above our annual operating breakeven with current overhead."
Ashwell added, "Our operations group, which recently managed the integration of coffee roasting and certain key processing and packaging operations at our brewing facility in Vista, achieved a gross margin of 40.3% for the quarter, 12 full percentage points above year ago. This investment in our manufacturing operations eliminated several third party manufacturing operations, reduced inter-plant freight and improved the overall efficiency of our beverage production operations. The margin performance was lower versus the prior quarter was due to an expected shift in product mix to packaged and bulk coffee products."
Ashwell said, "Selling, general and administrative expenses, which have been scaled to support a fully national customer base and selling force, were $4.7 million, compared to $ 2.9 million in the same quarter in 2007. The $1.8 million increase was due, primarily, to increases in non-cash expenses for depreciation and amortization of $476 thousand and stock compensation issuance of $378 thousand. Selling costs for the third quarter were higher by $ 896 thousand versus year ago with $ 619 thousand attributable to planned variable marketing allowances tied to our growing national account business. The remainder of the increase was tied to the expansion of our sales force to better capitalize on customer opportunities in key geographic areas. Our general and administrative costs have stabilized and excluding non-cash items, were nearly identical with year ago."
Ashwell concluded, "We recorded a $2.7 million net loss for the third quarter versus a loss of $ 128 thousand in the same quarter of 2007. The difference of $ 2.6 million was attributable to a reduction in non-cash income from derivatives due to liability accounting for warrants of $2.0 million and additional non-cash expense increases for depreciation, amortization and issuance of stock for compensation of $ 852 thousand."
Gary Lillian, president of Javo Beverage Company, said, "Javo's sales team continued to execute at a high level during challenging economic times, adding 519 on-demand beverage dispensing locations, bringing our total to 9,345.
