NexCen Brands Inc., franchisor of Great American Cookies, MaggieMoo's, Marble Slab Creamery, Pretzelmaker and Pretzel Time, has improved on its net loss for the second quarter ended June 30, as reported in its unaudited financial results released Thursday. The company also announced it has filed its quarterly report on Form 10-Q for the quarterly period with the Securities and Exchange Commission.
Total revenues in the second quarter were down 1 percent to $11.8 million, compared to $11.9 million in the same period last year. The slight decrease in revenues is the result of a decline in royalty and factory revenues due to current economic conditions, partially offset by an increase in franchise fee revenues.
Year-to-date total revenues were up 7 percent to $23.7 million, compared to $22.2 million last year. The increase in revenues is primarily the result of full quarter revenues for Great American Cookies, acquired on Jan. 29, 2008.
Net loss for the quarter was $416,000, a significant improvement from a loss of $195.8 million in the same period last year. Year to date, the net loss was $1.3 million, improved from a loss of $201.2 million last year.
Second quarter highlights
The company was able to decrease its operating expenses during the quarter by $10.2 million, or 8.1 percent, down from $125.3 million. Operating income increased to $1.6 million, compared to an operating loss of $113.4 million in the same period last year.
The results for Q2 2008 included impairment charges related to intangible assets of $109.7 million, $1.9 million in professional fees related to special investigations, and $0.8 million in restructuring costs. Excluding these special items specific to the events of 2008, adjusted operating expenses for Q2 2009 decreased 21 percent, or $2.7 million, from adjusted operating expenses of $12.8 million for the second quarter of 2008.
The company had total cash of $8.0 million as of June 30, compared to total cash of $8.3 million at March 31 and $8.3 million at Dec. 31, 2008. The company's outstanding debt balance was $142.6 million at June 30, compared to $142.5 million at March 31 and $142.3 million at Dec. 31, 2008.
The company's total number of franchised locations, including the company's retail brands, was 1,770 stores at the end of the quarter vs. 1,881 stores at the same time last year. The net decrease of 111 stores, or 6 percent, reflects closures, initiated either by the franchisee or the company, of underperforming and non-compliant stores.
The company executed franchise agreements for 20 new franchise units across its franchise businesses in the second quarter of 2009, vs. franchise agreements for 24 new franchise units in the first quarter of 2009.
Strategic improvements for the year to date include completing key hires to bolster the management team and the opening of a new ‘Innovation Lab' with additional capabilities to produce new ice cream, cookies and pretzels products for each of its quick-service franchised brands.
"Despite our progress to date, we recognize that the continued difficult macroeconomic environment, including the lack of readily available financing for franchisees, has affected our business and our financial results, and may continue to do so," Kenneth J. Hall, NexCen Brands CEO, said. "As such, we will maintain a conservative approach to managing our expenses, while at the same time, strive to capitalize on innovation and expansion opportunities. We also understand that we must further bolster our financial condition and address our debt level. In short, we are encouraged by our financial performance through the first half of 2009, but not complacent."
Conference call replay
A replay of the company's conference call call will be available through Nov. 13 by dialing (866) 281-6782, access code: 154227. The broadcast will be available on the company's Web site through the 'Investor Relations' link and will be archived online until Dec. 31.
