Revenue Grows 55% Compared to 2007
Dispensed Beverage Locations Grow 134% to 10,084
Gross Profit Up to $8.2 Million
SAN DIEGO, March 17, 2009 (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 financial results for the year 2008.
Financial highlights for the year include:
* Revenues increased 55% to $19.5 million in 2008 from $12.6 million
in the prior year.
* Javo deployed more than 5,779 new beverage dispensers during the
year, bringing its total to 10,084, an increase of 134%.
* Dispenser-based product revenue grew by 96% to $ 15.7 million
compared to $ 8.0 million in 2007.
* Gross profit rose 103% to $8.2 million in 2008 from $4.1 million
in 2007.
* Net loss increased to $10.8 million, $0.07 per fully diluted
share, for 2008 from $7.4 million, $0.05 per fully diluted share,
in 2007. Excluding non-cash items, the loss was $5.1 million, a
$1.5 million improvement over 2007.
Financial highlights for the fourth quarter include:
* Revenues increased 19% to $3.2 million in fourth quarter of 2008
from $2.7 million in the prior year.
* Javo deployed more than 739 new beverage dispensers during the
final quarter of the year, bringing the total to 10,084.
* The Company's dispenser-based product revenue grew by 65% to
$2.9 million for the quarter compared to $1.8 million in the
prior year quarter.
* Gross profit rose 77.0% to $1.2 million in Q4 of 2008 from
$675 thousand in the final quarter of 2007.
* Net loss increased to $4.0 million, $0.02 per fully diluted share,
for the fourth quarter of 2008 from $2.1 million, $0.01 per fully
diluted share, in the final quarter of 2007.
2008 Business Review
The Company achieved gross revenue of $19.5 million, an increase of $6.9 million or 55% over 2007. This increase was primarily the result of an increase in beverage dispensing locations serving Javo's coffee and tea products to a year-end total of 10,084 from 4,305 in the prior year. Revenue from dispensed products was the primary growth driver during the year reaching $15.7 million, a 96% increase compared to 2007. Each Javo dispenser placed at a customer location is expected to generate from $2,500 to $6,000 in annual dispensed product revenue.
For the full year, gross profit increased to $8.2 million up from $4.1 million in 2007 or an increase of 103%. Gross profit margin for the year expanded by 1,000 basis points to 42.3% as the Company improved its operations during 2008 through the integration of several beverage manufacturing processes, including roasting, thermal processing and packaging.
In 2008, sales and marketing expenses increased in line with revenue to $7.2 million, a 55% increase over the prior year's expenses of $4.7 million. The increase was due primarily to the added cost of variable marketing allowances tied to the Company's growing national account business. Salaries, travel and entertainment expenses associated with doubling the size of its sales and service force to achieve nationwide coverage contributed approximately $1.0 million in added 2008 expenses. The Company anticipates that sales and marketing expenses will grow much more modestly in 2009 and will decline as a percent of revenue.
General and administrative expenses for 2008 increased 34% to $8.7 million compared to $6.5 million in the prior year. The year-over year change of $2.2 million was due to a $1.8 million increase in non-cash expenses for the issuance of non-executive stock compensation and depreciation; and increases in expenses for overhead, warehouse and quality control of $441,000.
Other income and expenses were $3.1 million in 2008 compared to $344,000 in the prior year. The increase was primarily due to a reduction in the recognition of non-cash derivative income of $2.8 million reported in connection with warrants issued to Javo's senior convertible debt and a decrease in interest income of $509,000. The 2008 interest expense of $5.9 million contains substantial non-cash items, including amortization of debt discount of $4.3 million and $1.2 million of accrued interest on the senior convertible debt which was paid with common shares.
The Company's net loss in 2008 was $10.8 million compared with $7.5 million in the previous year. The increase of $3.3 million includes a reduction in non-cash derivative income of $2.8 million and a decrease in interest income of $509,000. Excluding all non-cash items, the Company's net loss was $5.1 million, an improvement of $1.5 million over 2007.
The Company was able to achieve substantial growth in revenue during the year as it established or expanded dispensed specialty beverage programs with leading foodservice chains or networked purchasing organizations. These customers will produce positive sales momentum in 2009 as the Company records an entire year of sales to locations that were installed either mid-year or late in the year. Accomplishments with key customers in 2008 include:
* Javo built on its relationship with 7-Eleven, the worldwide
convenience retailing leader, by growing the number of locations
and geographic markets serving iced coffees and lattes. Javo
shipments of iced coffee to locations where the program has been
in place for more than one year were up strongly in 2008.
* Javo executed a chain-wide rollout of its iced coffee program to
Speedway SuperAmerica, a leading Mid-west retailer that operates
1,600 convenience locations. Consumer reaction to the new
beverages has been above expectation and the Company's revenue
will grow in 2009 as it records a full twelve months of dispensed
product revenue.
* The Company began an expansion its iced coffee program with BP
Products North America, who owns or partners with dealers at more
than 3,500 am pm(r) and BP(r) convenience stores. Javo also added
to its number of dispensing locations with other national and
regional convenience store chains such as: Exxon-Mobil (On the
Run(r) stores), Sunoco (A1 stores), Conoco and others. These
chain expansions are expected to be completed by the second
quarter of 2009 prior to the peak summer selling season.
* Javo added a record number of new locations serving Javo dispensed
coffee products under its Preferred Supplier program with contract
feeder Compass Group. Through company-owned members such as
Morrison Management, Eurest, Bon Appetit, Chartwells College and
University Dining, Restaurant Associates and Creative Host
Services, Compass Group provides food, vending and related
services at thousands of locations. Javo's national sales and
service organization is well positioned for similar success in
2009 within Compass' more than 10,000 contracted facilities.
* The Company completed its first year as a Prime Vendor to the U.S.
Department of Veterans Affairs, converting approximately half of
the more than 200 major VA facilities nationwide to Javo dispensed
coffee. These are among the most prized coffee customers in the
country and Javo's agreement with the Department will permit it to
execute more conversions in 2009.
* For Premier, Inc., the largest healthcare purchasing organization
in the U.S., Javo added hundreds of new foodservice coffee
locations in 2008.
