Panera Bread: FY 2012 diluted EPS up 27% over 2011

St. Louis / MO. (pbc) Panera Bread Company reported net income of 52 million USD or 1,75 USD per diluted share, for the thirteen weeks ended December 25, 2012. The fourth quarter fiscal 2012 results compare to net income of 39 million USD or 1,31 USD per diluted share, for the fourth quarter ended December 27, 2011 and represent a 34 percent year-over-year increase in diluted earnings per share. The fourth quarter fiscal 2011 results include a one-time pre-tax charge of five million USD. Excluding this charge, fourth quarter fiscal 2012 diluted earnings per share increased 23 percent year-over-year.

For the fifty-two weeks ended December 25, 2012, net income was 173 million USD or 5,89 USD per diluted share. The full year fiscal 2012 results compare to net income of 136 million USD or 4,55 USD per diluted share, for the fifty-two weeks ended December 27, 2011 and represent a 29 percent year-over-year increase in diluted earnings per share. The full year fiscal 2011 results include a one-time pretax charge of five million USD. Excluding this charge, full year fiscal 2012 diluted earnings per share increased 27 percent year-over-year.

Fourth Quarter Fiscal 2012 Results and Business Review

Comparable Net Bakery-Cafe Sales Growth: In the fourth quarter fiscal 2012, Company-owned comparable net bakery-cafe sales increased 5,1 percent, franchise-operated comparable net bakery-cafe sales increased 4,7 percent and system-wide comparable net bakery-cafe sales increased 4,9 percent compared to the comparable period in fiscal 2011. Two year Company-owned comparable net bakery-cafe sales increased 11,0 percent, two year franchise-operated comparable net bakery-cafe sales increased 7,9 percent and two year system-wide comparable net bakery-cafe sales increased 9,3 percent.

The Company-owned comparable net bakery-cafe sales increase of 5,1 percent in the fourth quarter fiscal 2012 was comprised of a year-over-year transaction decline of 0,3 percent and average check growth of 5,4 percent. The Company estimates the impact of Hurricane Sandy resulted in a transaction loss of approximately 0,3 percent in the fourth quarter fiscal 2012. Average check growth was comprised of retail price increases of approximately 2,5 percent and positive mix impact of approximately 2,9 percent.

Operating Margin: In the fourth quarter fiscal 2012, the Company generated operating margin improvement of approximately 200 basis points compared to the fourth quarter fiscal 2011. This increase was driven primarily by higher bakery-cafe margins and lower general and administrative expenses. General and administrative expenses were lower primarily due to a five million USD one-time pre-tax charge in the fourth quarter fiscal 2011. Excluding this one-time charge, the Company generated year-over-year operating margin improvement of approximately 100 basis points in the fourth quarter fiscal 2012.

New Bakery-Cafe Development and AWS: During the fourth quarter fiscal 2012, the Company opened 18 new bakery-cafes and its franchisees opened 14 new bakery-cafes. For the full year fiscal 2012, the Company and its franchisees opened 123 new bakery-cafes (59 Company-owned and 64 franchise-operated). As a result, there were 1’652 bakery-cafes open system-wide as of December 25, 2012.

Average weekly sales («AWS») for Company-owned new bakery-cafes for full year fiscal 2012 was a record 47’029 USD compared to 41’637 USD in full year fiscal 2011. AWS for franchise-operated new bakery-cafes for full year fiscal 2012 was a record 46’781 USD compared to 41’438 USD in full year fiscal 2011.

Use of Capital: During the fourth quarter fiscal 2012, the Company repurchased 124’100 shares at an average share price of 161,00 USD. The share repurchase had a nominal impact on the Company´s fourth quarter fiscal 2012 earnings per diluted share. The Company has approximately 580 million USD available under its existing 600 million USD repurchase authorization as of the date of this release. Bill Moreton, President and Co-CEO, commented, «We are pleased to report our fifth consecutive year of 20 percent plus EPS growth driven in large part by our 6,5 percent comparable store sales increase. Our philosophy of continued investment in the quality of our food, marketing and operations is driving this success».

Full Year 2013 Targets

Diluted EPS Target: The Company is maintaining its targeted full year fiscal 2013 diluted earnings per share growth rate of 17 percent to 19 percent even after higher than previously targeted fiscal 2012 diluted earnings per share. The diluted earnings per share growth target includes the favourable impact of the 53rd week in fiscal 2013 but does not assume additional share repurchases. The full year fiscal 2013 diluted earnings per share growth target is based on the following key assumptions:

Comparable Net Bakery-Cafe Sales Growth: The Company is maintaining its target for Company-owned comparable bakery-cafe sales growth for fiscal 2013 of 4,5 percent to 5,5 percent.

Operating Margin: The Company´s fiscal 2013 EPS growth target assumes its operating margin will be flat to up 50 basis points when compared to fiscal 2012. This target reflects incremental investments to provide greater access for customers, increased operational capabilities and improvement to the Company´s core enterprise systems.

New Bakery-Cafe Development and AWS: The Company´s fiscal 2013 new bakery-cafe target is now 115 to 125 system-wide bakery-cafe openings and the average weekly net sales performance target for new Company-owned bakery-cafes remains at 40’000 USD to 42’000 USD.

First Quarter Fiscal 2013 Outlook

Diluted EPS Target: The Company´s first quarter fiscal 2013 diluted earnings per share target assumes earnings per diluted share of 1,62 USD to 1,66 USD, which would represent an increase of 16 percent to 19 percent in the first quarter fiscal 2013 versus the comparable period in fiscal 2012. The first quarter fiscal 2013 diluted earnings per share target includes the following key assumptions:

Comparable Net Bakery-Cafe Sales Growth: The range for the Company´s first quarter fiscal 2013 Company-owned comparable bakery-cafe sales growth is targeted at 4,0 percent to 5,0 percent versus the comparable period in fiscal 2012. The Company announced today Company-owned comparable net bakery-cafe sales in the first 41 days of the first quarter fiscal 2013 were up approximately 3,9 percent. The comparable net bakery-cafe sales growth for the same period in fiscal 2012 was approximately 8,9 percent, which was aided by favourable weather in 2012. As a result, two year Company-owned comparable net bakery-cafe sales increased 12,8 percent in the first 41 days of the first quarter fiscal 2013.

Operating Margin Target: In the first quarter fiscal 2013, the Company is targeting operating margin improvement of 25 to 75 basis points, primarily due to favourable bakery-cafe margins.

CFO Hire: Roger Matthews will be joining the Company as Executive Vice President and Chief Financial Officer effective March 18, 2013. Pat Kelly, who has served as the Company´s Interim CFO since April 2012, will remain in place until the end of March to ensure a smooth transition.

Concluding Comment: Ron Shaich, Chairman and Co-CEO, commented, «We believe that our consistent financial performance is the outgrowth of our long-term strategy of driving competitive advantage through the quality, craftsmanship and innovation of our menu offerings; the comfort and warmth of our bakery-cafe environments; and the dedication and passion of our associates. We believe the continued investments we are making in all of these areas position Panera well for continued, long-term earnings growth in our targeted range of 15 to 20 percent».

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