goldman sachs investor conference new york city june 5, 2007
TRANSCRIPT
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Goldman Sachs Investor Conference
New York CityJune 5, 2007
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Safe Harbor
We make forward-looking statements in this presentation which represent our expectations or beliefs about future events and
financial performance. Forward-looking statements are identifiable by words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “will,” “may” and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are
forward-looking statements. Forward-looking statements are subject to known and unknown risks and uncertainties,
including those described in the Company’s filings with the Securities and Exchange Commission. In addition, actual results could differ materially from those suggested by the
forward-looking statements, and therefore you should not place undue reliance on the forward-looking statements.
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Michael ColesChairman and Chief Executive Officer
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Caribou Coffee - Investment Highlights Gourmet coffee among the fastest growing segments in
the restaurant industry
Second largest company-owned gourmet coffeehouse operator
Significant growth opportunities
Coffeehouse openings
Non-coffeehouse sales
Store level comparable sales and margin opportunities
Experienced management team successfully implementing key strategic initiatives
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INDUSTRY OVERVIEW
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$8.4bn
$9.0bn
$9.6bn
$8.0bn
$8.4bn
$8.8bn
$9.2bn
$9.6bn
$10.0bn
$10.2bn
$10.6bn
$11.0bn
$11.4bn
$11.8bn
2002 2003 2004
$11.1bn
2005
Coffee Industry – Large and Growing Market $22 billion market in the U.S. Specialty Coffee Consumption Grew Over 48% in the U.S. from 2001 - 2006 Coffeehouses Account for 69% of Specialty Coffee Sales
Source: Specialty Coffee Association of America, National Coffee Association, International Coffee Association.
Specialty Coffee Experiencing Double-Digit Growth
2006
$12.3bn$12.0bn
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Coffeehouses are the Pub of the 21st Century
165
7,6616,504
5,517
4,5742,976
1,7551,004
425
9,595
3,175
8,245
9,624
10,826
11,88312,096
13,739
5,696
2,085
14,305
-3,000
2,000
7,000
12,000
17,000
22,000
1992 1994 1996 1998 2000 2002 2003 2004 2005 2006
Starbucks Other U.S. Specialty Coffeehouses
3,600
6,700
10,000
12,600
15,400
17,40018,600
21,400
Source: Specialty Coffee Association of America and SEC filings.(1) Reflects Starbucks locations in U.S. and Canada.
Among fastest growing segments in the restaurant industry
23,900
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Caribou Coffee“An Experience that Makes the Day Better”
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Growth Strategy Enhanced Growth Opportunities versus One Year Ago
Franchise U.S. and International
Commercial Brand Licensing
Focus on Growth at Existing Coffeehouses Drive comps via:
Product Marketing Initiatives Continued Focus on Operational Excellence
Balanced and Diversified Growth Strategy Improve Financial Performance
Optimize ROIC Minimize Capital Requirements Grow Revenue, EBITDA and Achieve Positive Net Income
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The Caribou Formula
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Product: Selection and PreparationSourcing
Only the highest grade of arabica coffee beans
Rainforest Alliance
Fair Trade
Blending
Roastmasters create custom blends
Craft roasting in small batches to optimize flavor profile
Valve technology ensures freshness
Brewing High standards
for in-store brewing
Strict freshness policy
Roasting and
Packaging
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Product: Selected Drink Offerings
Iced Latte
Pom-A-MangoSmoothie
Cold PressCaramelCooler
Latte Mocha Cappuccino
DepthCharge
TurtleMocha
MintCondition
Lite-WhiteBerry
CaramelHi-Rise
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Product: Selected 'Bou Gourmet Offerings 'Bou Gourmet rolled-out August 1, 2005 – proprietary recipes
High quality food that complements store image & premium quality
beverages
Exciting pipeline for 2007 First Quarter Launches Included:
New Muffins Low Fat Banana Nut Bread Upgraded Biscotti Cheese Bagels Enhanced lunch program in
in Chicago market
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Product: Promotional Offerings
2007 Promotional Offerings Northern Lite Lattes ‘Bou Gourmet Bagels National Geographic
Wild Adventure Northern Lite Coolers
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Environment – A Destination Place Mountain lodge environment: fireplaces, wood beams and earth tones
Comfortable for in-store relaxation or high-level meetings
Efficient for fast take-away, including drive-thru
Free wireless internet access and kids’ corner
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Service: "BAMA"
Be Excellent, Not Average
Act with Urgency
Make a Connection
Anticipate Needs
Meeting Customers Expectations
Meeting Customers Expectations
Exceeding Customers Expectations
Exceeding Customers Expectations
“An experience that makes the day better”“An experience that makes the day better”
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CARIBOU OPPORTUNITYCoffeehouse Growth
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Coffeehouse Franchise Opportunity Management Expertise
Michael Coles 21 years of franchising experience
Chris Rich-VP Global Store Licensing 13 years with TGIF Negotiated agreements covering 50 countries
Domestic Area Developers Well qualified
Financial resources Market expertise Proven successful operators
International Opportunities
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Coffeehouse Franchise Rationale
Management expertise
Infrastructure in place
Unique branded specialty coffee licensing opportunity
Accelerate coffeehouse growth in U.S.
Increase domestic market share
Leverage internal resources, including training
Allocate capital more efficiently
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New Coffeehouse Franchise Agreements
United States 2007 Franchise Agreements
Hartsfield- Jackson Atlanta Airport (first opened December 2006)
Dulles International Airport – Washington, D.C. Denver International Airport Total of 7 locations by year-end 2007
International South Korea – Announced December 2006
Three coffeehouses opened Q1 2007 Agreement allows for 50 coffeehouses over next 10 years
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Limited Footprint Provides Growth Opportunity
(196)
(61)
(30)
(37))
(20)
(21)
(13)
1992
1994
1995
1996
2001
2004
2005
2006
Market Expansion
(5)(4)(6)
MarketsMinnesotaIllinoisOhioMichiganNorth CarolinaGeorgiaMarylandWisconsinVirginiaWashington, D.C.PennsylvaniaIowaNorth DakotaSouth DakotaNebraskaColoradoIndianaKansasMissouri
(16)
Washington D.C. (10)(7)
(6)
(12)(1)
*Excludes 25 international franchise coffeehouses. As of April 01, 2007
(2)
(2) (1)
442 company-owned coffeehouses and 8 franchised coffeehouses in 18 states and the District of Columbia*
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Significant Growth in Coffeehouses-5
050
150
250
350
450
550
2000 2001 2002 2003 2004 2005 2006 2007E
Co. Owned Franchise
152185
203
251
306
395
464
514*
* Assumes mid-point of guidance issued January 8, 2007
Stores Open at Year End
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Comparable Coffeehouse Sales Trends
2007E = 0% to +5% Guidance issued January 8, 2007
2005200420032002 2006
1Q 072007E
(5.0%)
(3.0%)
(1.0%)
1.0%
3.0%
5.0%
7.0%
9.0%
11.0%
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CARIBOU OPPORTUNITYNon-Coffeehouse
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Compelling Commercial Business Opportunity
Grocery Stores & Mass MerchandisersOffice Coffee & Food
Service Providers
Sports, Entertainment & Health/Fitness
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Strategic Partners – Product Licensing
Launched March 2006
Launched July 2006
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Strategic Partners – Product Licensing
Launched April 2007
Launch Second Half 2007
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Experienced Management Team
Executive Position Years of Experience Years at Caribou
Michael Coles CEO 40+ 4
Roz Mallet President & COO 30 < 1
George Mileusnic CFO 29 6
Amy O’Neil SVP, Store Operations 13 13
Henry Stein VP, Business Development &
Commercial Sales
25 3
Kathy Hollenhorst VP, Marketing 20 2
Chris Rich VP, Franchising 20 < 2
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George MileusnicChief Financial Officer
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Financial Opportunity
Comparable coffeehouse sales
New coffeehouse openings
Increase in non-coffeehouse sales
Leverage fixed costs
Improved financial performance
Balance sheet supports growth
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Annual Revenue Trends
$101$108
$124
$198
$160
$236
$0.0
$50.0
$100.0
$150.0
$200.0
$250.0
2001 2002 2003 2004 2005 2006
($ i
n m
illi
on
s)
CAGR:+10.7% +24.1%
2001 - 2003 2003 – 2006
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Historical Results Impacted by Infrastructure Growth
(2) Includes one time non recurring expenses excluded from adjusted EBITDA(3)Company owned and franchised coffeehouses opened at end of period.
(1) See the Company’s 2005 10-K at www.cariboucoffee.com for a reconciliation of fiscal year 2003 through 2005 net loss to Adjusted EBITDA. See the Company’s 10-K filed April 2, 2007 for a reconciliation of the fiscal 2006 net loss to adjusted EBTIDA. See Company’s 10-Q filed on May 14, 2007 for a reconciliation of the fiscal 1Q 2007 and 1Q 2006 net loss to adjusted EBITDA.
($ millions)2002 2003 2004 2005
General & Administrative Expense ($10.3) ($12.3) ($15.5) ($22.7)
Adjusted EBITDA $11.8 $11.6 $14.4 $15.9
Depreciation & Amortization / Other (2)
($8.1) ($11.8) ($15.3) ($19.4)
Net Income / (Loss)
$3.1
($0.9)
($2.1)
($4.9)
Cap Ex $12.2 $20.7 $32.4 $43.2
Total Coffeehouses (3) 203 251 306 395
(1)
2006
($25.9)
$15.0
($23.6)
($9.1)
$34.3
464
2006
($6.1)
$3.8
($5.3)
($1.6)
$7.0
402
2007
($6.6)
$3.5
($6.6)
($3.3)
$3.0
475
First Quarter
$3.7 ($0.2) ($0.9) ($3.5) ($8.6) ($1.5) ($3.1)EBIT
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Unit Level Economics *
* Historical average range /future expectations
Average Investment ($ in 000s)
Capital Expenditures (Net of Tenant Improvements Allowances)
$365 - $415
Initial Inventory $10
Total $375 - $425
Comparable Coffeehouse Sales Range
Year 1 (Months 13th -24th) Mid Teens
Year 2 (Months 25th – 36th) Mid Single Digits
Mature Store Performance –
(New stores open at ~ 80% of a mature store level)
Sales $500 – $700
Store-Level Cash Flow Margin 17% – 20%
Year 3 Contribution $85 – $140
Year 3 Cash-on-Cash ROI ~30%
Average Store Payback 4 – 5 Years
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Balance Sheet to Support Growth
Cash – approximately $9.7 million
Credit Facility – $60 million available
(As of April 1, 2007)
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Caribou Coffee - Investment Highlights Gourmet coffee among the fastest growing segments in
the restaurant industry
Second largest company-owned gourmet coffeehouse operator
Significant growth opportunities
Coffeehouse openings
Non-coffeehouse sales
Store level comparable sales and margin opportunities
Experienced management team successfully implementing key strategic initiatives
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Appendix
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EBITDA ReconciliationThe table below reconciles net income (loss) to EBITDA and Adjusted EBITDA for the periods presented.
(In thousands)
December 31,January 1,January 2,December 28,
2006200620052003Statement of Operations Data:Net income (loss) $ (9,059) $ (4,905) $ (2,074) $ (937)Interest expense 695 1,603 963 511 Interest income (554) (266) (6) (9)Depreciation and amortization(1) 23,645 18,284 14,791 11,768 Provision for income taxes 313 80 219 228 EBITDA 15,040 14,796 13,893 11,561 Consolidation of corporate and operating locations — — 500 Derivative income — (623) — Amendment of employment agreement — 1,738 — Adjusted EBITDA 15,040 15,911 14,393 11,561
(1) Includes depreciation and amortization associated with our headquarters and roast facility that are categorized as general and administrative expenses and cost of sales and related occupancy costs on our statement of operations.
Fiscal Year Ended
December 29,
2002
$ 3,113 496 (29)
8,050 156
11,786
11,786
— — —
April 1, April 1,
2007 2006
$ (3,251) $ (1,572) 130 148 (33) (187) 6,583 5,281 20 147 3,449 3,817
— — — — — —
3,449 3,817
Three months Ended