Exhibit 99.1
Keurig Green Mountain Reports Fiscal Second Quarter 2015 Results
- Non-GAAP EPS1 of $1.03 and GAAP EPS of $0.97
- Net sales growth of 2%; 3% excluding foreign currency
- Updated fiscal year 2015 outlook includes revenue growth of flat to low-single digits, non-GAAP EPS decline of mid-single-digits and free cash flow of $120-$170 million
- Repurchased $837 million of common shares in the quarter
- Board of Directors declared $0.2875 quarterly dividend
WATERBURY, Vt.--(BUSINESS WIRE)--May 6, 2015--Keurig Green Mountain, Inc. (NASDAQ: GMCR), a leader in specialty coffee, coffee makers, teas and other beverages with its innovative brewing technology, today announced its business results for the 13 weeks ended March 28, 2015.
“We are pleased to report that our earnings per share in the second quarter were in line with our guidance. Our top-line growth, however, was below our expectations primarily due to the slower than expected transition to the Keurig 2.0 system. We are taking actions to reduce brewer inventories, enhance our 2.0 brewer packaging to better communicate our extensive brand variety and step up innovation on our owned brands,” said President and CEO, Brian Kelley.
“Although we are lowering our guidance to reflect the impact of near-term challenges related to this complex product transition, we remain highly confident in our long term strategy for the Keurig hot system and continue to believe there is a significant runway of opportunity. Combined with the upcoming launch of our Keurig KOLD system, we expect the Keurig brand to further expand and globalize while continuing to transform the premium home beverage experience for consumers," continued Kelley.
Second Quarter Fiscal 2015 Financial Review
| ($ in millions except per share data) | | | | Thirteen weeks ended | | | | | | | Twenty-six weeks ended | | | |
| | | | March 28, 2015 | | | March 29, 2014 | | | %
Change | | | | | March 28, 2015 | | | March 29, 2014 | | | %
Change | |
| Net sales | | | | $ | 1,127.1 | | | $ | 1,103.1 | | | 2 | % | | | | $ | 2,513.5 | | | $ | 2,489.7 | | | 1 | % |
| Operating income: | | | | | | | | | | | | | | | | | | | | |
| GAAP | | | | $ | 244.0 | | | $ | 260.5 | | | (6 | )% | | | | $ | 459.9 | | | $ | 487.1 | | | (6 | )% |
| Non-GAAP | | | | $ | 258.0 | | | $ | 271.8 | | | (5 | )% | | | | $ | 487.7 | | | $ | 510.0 | | | (4 | )% |
| Net income attributable to Keurig: | | | | | | | | | | | | | | | | | | | | |
| GAAP | | | | $ | 155.5 | | | $ | 162.1 | | | (4 | )% | | | | $ | 290.1 | | | $ | 300.3 | | | (3 | )% |
| Non-GAAP | | | | $ | 166.0 | | | $ | 169.8 | | | (2 | )% | | | | $ | 309.9 | | | $ | 315.9 | | | (2 | )% |
| Diluted income per share (EPS): | | | | | | | | | | | | | | | | | | | | |
| GAAP | | | | $ | 0.97 | | | $ | 1.03 | | | (6 | )% | | | | $ | 1.79 | | | $ | 1.94 | | | (8 | )% |
| Non-GAAP | | | | $ | 1.03 | | | $ | 1.08 | | | (5 | )% | | | | $ | 1.91 | | | $ | 2.04 | | | (6 | )% |
| Cash dividends declared per common share | | | | $ | 0.2875 | | | $ | 0.25 | | | 15 | % | | | | $ | 0.5750 | | | $ | 0.50 | | | 15 | % |
Note: See complete GAAP to Non-GAAP Reconciliation tables attached to this release.
Net Sales by Product
Net sales of $1.1 billion increased 2% versus the prior year period primarily driven by growth in sales of pods (previously referred to as portion packs) partially offset by lower brewer and accessory sales. Foreign currency exchange rates negatively impacted sales by approximately 1 percentage point. Excluding the impact of foreign currency exchange rates, total net sales grew 3% and total Keurig beverage system sales grew 4% compared to the prior year period.
Net sales for the domestic segment increased 3% in the quarter while sales in the Canada segment declined 5% on a reported basis and grew 6% excluding the impact of foreign currency exchange rates.
Total pod net sales increased 7% in the quarter while brewers and accessories net sales declined 23%. Other product net sales declined 5% compared to the prior year period.
| | | | | | | | | | |
| Net Sales by Product | | | | Net sales (in millions) | | | | | | |
| | | | Thirteen weeks ended | | | | | | |
| | | | March 28, 2015 | | | March 29, 2014 | | | $ Increase
(Decrease) | | | % Increase
(Decrease) |
| Pods | | | | $ | 956.6 | | | $ | 898.2 | | | $ | 58.4 | | | | 7 | % |
| Brewers and accessories | | | | | 106.4 | | | | 137.6 | | | | (31.2 | ) | | | (23 | )% |
| Subtotal | | | | | 1,063.0 | | | | 1,035.8 | | | | 27.2 | | | | 3 | % |
| Other products | | | | | 64.1 | | | | 67.3 | | | | (3.2 | ) | | | (5 | )% |
| Total net sales | | | | $ | 1,127.1 | | | $ | 1,103.1 | | | $ | 24.0 | | | | 2 | % |
| | | | | | | | | | | | | | | | | | |
Pods
- The 7% increase in the quarter in pod net sales compared to the prior year period was due to a 14% increase in equivalent servings2 volume and a 1 percentage point increase due to net price realization. This was partially offset by a 7 percentage point decrease due to product mix and a roughly 1 percentage point negative impact from foreign currency exchange rates.
Brewers and Accessories
- For the quarter, 1.4 million Keurig® system brewers were sold including 1.3 million sold by Keurig and 0.1 million reported sold by Keurig’s licensed brewer partners. This brewer shipment number does not account for consumer returns.
- The 23% decline in Keurig’s brewer and accessory net sales compared to the prior year period was primarily due to a 22% decline in brewer sales volume, driven by high inventory levels at retail which negatively impacted shipments in the quarter and a difficult year ago comparison. Brewer net price realization declined by 1 percentage point and foreign currency exchange rates negatively impacted brewer net sales by roughly 1 percentage point. This was partially offset by 2 percentage points of positive brewer mix.
- Additionally, accessory net sales declined 31% compared to the prior year period.
Other Products
- Sales of other products declined 5% during the quarter from the prior year period primarily due to the continuing demand shift from traditional coffee package formats to pods.
- For the quarter, gross margin declined 80 basis points versus prior year to 40.7% of net sales. The table below quantifies the changes in gross margin period to period. Obsolescence of finished goods includes a $10 million charge related to the Rivo® brewer in the second quarter which negatively impacted gross margin by 90 bps.
| | | | |
| | | | Change from
Q2 2014 to
Q2 2015 |
| Shift in sales mix between pods, brewers and accessories and other products | | | | +260 bps |
| Higher obsolescence expense of finished goods | | | | -220 bps |
| Unfavorable green coffee costs | | | | -180 bps |
| Decrease in pod packaging material costs | | | | +100 bps |
| Logistics productivity | | | | +100 bps |
| Mix associated with pods | | | | -80 bps |
| Mix associated with brewers | | | | -60 bps |
| | | | |
- GAAP SG&A increased 9%, representing 19.1% of net sales for the quarter as compared to 17.9% in the prior year period. Non-GAAP SG&A increased 8% representing 17.8% of sales for the quarter as compared to 16.8% in the prior period. The increase in SG&A over the prior year period was driven by higher expenses associated with information technology and supporting our call centers and higher research and development expenses which include significant investments in the forthcoming Keurig® KOLD™ system.
- GAAP operating income declined 6%, representing 21.6% of net sales for the quarter, compared to 23.6% in the prior year period.
- Non-GAAP operating income declined 5%, representing 22.9% of net sales in the quarter, compared to 24.6% in the prior year period.
- The Company’s effective income tax rate was 34.8% for the quarter as compared to 35.8% in the prior year period.
- Diluted weighted average shares outstanding for the second quarter were 160.6 million, up 2% from 157.5 million in the prior year period as a result of 16.7 million shares and 1.4 million shares issued in connection with the Coca-Cola and Lavazza Equity Transactions3, respectively. Such transaction-related dilution was offset, in part, by the Company’s share repurchases under its previously announced share repurchase authorizations including a $700 million accelerated share repurchase (ASR) program, open market purchases and 10(b)5-1 plans and the previously announced repurchase of 5.2 million shares from Luigi Lavazza S.p.A. on March 3, 2015.
- GAAP diluted EPS declined 6% from the prior year period to $0.97.
- Non-GAAP diluted EPS declined 5% from the prior year period to $1.03. Non-GAAP EPS was negatively impacted by $0.08 per share dilution from the Coca-Cola and Lavazza Equity Transactions net of the ASR program repurchases and March 2015 Lavazza repurchase, both as discussed below, and $0.05 per share negative impact from foreign currency exchange. This compares to last year’s second quarter non-GAAP EPS negative impact of $0.04 per share dilution from the Coca-Cola and Lavazza Equity Transactions net of the ASR program repurchases. When excluding the impact of dilution and foreign currency, non-GAAP diluted EPS increased approximately 4% versus the prior year period.
Balance Sheet & Cash Flow Highlights
| | | | | | | | | | |
| Balance Sheet & Cash Flow Highlights ($ in millions) | | | | March 28, 2015 | | | March 29, 2014 | | | % Change | |
| Cash and cash equivalents, including restricted cash | | | | $ | 127.0 | | | $ | 1,112.6 | | | (89 | )% |
| Accounts receivables, net | | | | $ | 524.3 | | | $ | 430.5 | | | 22 | % |
| Inventories | | | | $ | 724.7 | | | $ | 451.1 | | | 61 | % |
| Raw material inventories | | | | $ | 211.6 | | | $ | 146.3 | | | 45 | % |
| Finished goods | | | | $ | 513.1 | | | $ | 304.8 | | | 68 | % |
| Brewers & accessories | | | | $ | 343.4 | | | $ | 145.3 | | | 136 | % |
| Pods | | | | $ | 156.8 | | | $ | 135.3 | | | 16 | % |
| Other | | | | $ | 12.9 | | | $ | 24.2 | | | (47 | )% |
| Debt outstanding and capital lease and financing obligations | | | | $ | 534.1 | | | $ | 269.1 | | | 98 | % |
| Twenty-six weeks net cash provided by operating activities | | | | $ | 368.0 | | | $ | 593.6 | | | (38 | )% |
| Twenty-six weeks free cash flow (1) | | | | $ | 133.1 | | | $ | 474.6 | | | (72 | )% |
(1) Free cash flow is calculated by subtracting capital expenditures for fixed assets from net cash provided by operating activities as reported in the unaudited statement of cash flows.
Share Repurchases
During the second quarter of fiscal 2015, the Company repurchased a total of 7.0 million shares at a cost of $837 million. From the inception of its Board authorized share repurchase program through the end of the second quarter, the Company repurchased a total of 25.9 million shares at an average price of $86.17 for a total cost of $2.2 billion. This was achieved through a combination of the ASR program, open market purchases and 10(b)5-1 plans, and the previously announced repurchase of 5.2 million shares from Luigi Lavazza S.p.A.
Dividend Declaration
Keurig's Board has declared a regular quarterly cash dividend of $0.2875 per share of the Company's common stock. The quarterly cash dividend will be paid on July 30, 2015 to shareholders of record as of the close of business on June 30, 2015.
Business Outlook and Other Forward-Looking Information
The Company updated its outlook for fiscal year 2015 and provided its outlook for the third quarter:
Fiscal Year 2015
- Net sales growth flat to up low-single digits compared to fiscal year 2014
- An annual effective tax rate of approximately 34.5% to 35%
- Non-GAAP EPS decline in the mid-single digits. This outlook:
- Includes an estimated $0.14 headwind from foreign currency exchange
- Excludes the amortization of identifiable intangibles related to the Company’s acquisitions and legal and accounting expenses related to the Company’s pending securities and stockholder derivative class action litigation and antitrust litigation
- Free cash flow in the range of $120 million to $170 million
- Capital investment in the range of $425 million to $475 million
Third Quarter 2015
- Net sales growth flat to up low-single digits compared to the third quarter of fiscal year 2014
- An effective tax rate of approximately 32% to 32.5%
- Non-GAAP EPS in a range of $0.75 to $0.80 which:
- Includes an estimated $0.02 headwind from foreign currency exchange
- Excludes the amortization of identifiable intangibles related to the Company’s acquisitions and legal and accounting expenses related to the Company’s pending securities and stockholder derivative class action litigation and antitrust litigation
1 Certain items in this press release are designated as “Non-GAAP” and represent non-GAAP financial measures that exclude certain items. Please see the attached “GAAP to Non-GAAP Reconciliation” to find disclosure and reconciliation of non-GAAP financial measures, as well as a discussion in this release as to why the Company is presenting such non-GAAP measures.
2 Equivalent servings translates our multiple pod sizes, including K-Cup®, Vue® K-Carafe® and Bolt® pods, into a common serving.
3 The Company issued 16.7 million shares as part of the transaction with The Coca-Cola Company, which closed February 27, 2014 and another 1.4 million shares as part of the transaction with Luigi Lavazza S.p.A, which closed April 7, 2014 (collectively the Coca-Cola and Lavazza Equity Transactions).
Conference Call and Webcast
Keurig will be discussing these financial results with analysts and investors in a conference call and live webcast available via the Internet at 5:00 p.m. ET today, May 6, 2015. The call is accessible via live webcast from the events section of the Investor Relations portion of the Company’s website at http://investor.keuriggreenmountain.com/events.cfm. The Company archives the latest conference call for a period of time. A replay of the conference call also will be available by telephone at (719) 457-0820, passcode 5171920 from 9:00 p.m. ET on May 6, 2015 through 9:00 p.m. ET on Monday, May 11, 2015.
Use of Non-GAAP Financial Measures
In addition to reporting financial results in accordance with generally accepted accounting principles (GAAP), the Company provides non-GAAP operating results that exclude legal and accounting expenses related to the pending securities and stockholder derivative class action litigation, pending antitrust litigation against the Company, and the now concluded SEC inquiry; and non-cash acquisition-related items such as amortization of identifiable intangibles, each of which include adjustments to show the tax impact of excluding these items. In each case these amounts are not in accordance with, or an alternative to, GAAP. The Company’s management believes that these measures provide investors with transparency by helping illustrate the underlying financial and business trends relating to the Company’s results of operations and financial condition and comparability between current and prior periods. Management uses the measures to establish and monitor budgets and operational goals and to evaluate the performance of the Company. Please see the “GAAP to Non-GAAP Reconciliation” table that accompanies this document for a full reconciliation of the Company’s GAAP to non-GAAP results.
About Keurig Green Mountain, Inc.
As a leader in specialty coffee, coffee makers, teas and other beverages, Keurig Green Mountain (NASDAQ: GMCR), is recognized for its award-winning beverages, innovative brewing technology, and socially responsible business practices. The Company has inspired consumer passion for its products by revolutionizing beverage preparation at home and in the workplace. Keurig supports local and global communities by investing in sustainably-grown coffee and by its active involvement in a variety of social and environmental projects. By helping consumers drink for themselves, we believe we can brew a better world. For more information visit: www.KeurigGreenMountain.com. To purchase Keurig® products visit: www.Keurig.com or www.Keurig.ca. Keurig routinely posts information that may be of importance to investors in the Investor Relations section of its website, www.KeurigGreenMountain.com, including news releases and its complete financial statements, as filed with the SEC. The Company encourages investors to consult this section of its website regularly for important information and news. Additionally, by subscribing to the Company's automatic email news release delivery, individuals can receive news directly from Keurig as it is released.
Forward-Looking Statements
Certain information in this press release constitutes "forward-looking statements." Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as "believes," "expects," "anticipates," "estimates," "intends," "plans," "seeks" or words of similar meaning, or future or conditional verbs, such as "will," "should," "could," "may," "aims," "intends," or "projects." However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. These statements may relate to: the expected impact of raw material costs and our pricing actions on our results of operations and gross margins, expected trends in net sales and earnings performance and other financial measures, the expected productivity and working capital improvements, the success of introducing and producing new product offerings, the impact of foreign exchange fluctuations, the adequacy of internally generated funds and existing sources of liquidity, such as the availability of bank financing, the expected results of operations of businesses acquired by us, our ability to issue debt or additional equity securities, projections for future capital expenditures, our expectations regarding purchasing shares of our common stock under the existing authorizations, projections of payment of dividends, the impact of pending shareholder litigation, and the impact of antitrust litigation pending against the Company in the United States and Canada. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those described in Part I, "Item 1A. Risk Factors" and Part II "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our fiscal 2014 Annual Report filed on Form 10-K, elsewhere in that report and those described from time to time in our future reports filed with the Securities and Exchange Commission.
KGM-G
| |
| KEURIG GREEN MOUNTAIN, INC. |
| Unaudited Consolidated Balance Sheets |
| (Dollars in thousands, except per share data) |
| |
| | | | March 28,
2015 | | | | September 27,
2014 |
| Assets | | | | | | | | |
| Current assets: | | | | | | | | |
| Cash and cash equivalents | | | | $ | 97,553 | | | | | $ | 761,214 | |
| Restricted cash and cash equivalents | | | | | 29,474 | | | | | | 378 | |
| Short-term investment | | | | | — | | | | | | 100,000 | |
| Receivables, less uncollectible accounts and return allowances of $48,581 and $66,120 at March 28, 2015 and September 27, 2014, respectively | | | | | 524,327 | | | | | | 621,451 | |
| Inventories | | | | | 724,727 | | | | | | 835,167 | |
| Income taxes receivable | | | | | 15,548 | | | | | | — | |
| Other current assets | | | | | 73,533 | | | | | | 69,272 | |
| Deferred income taxes, net | | | | | 60,888 | | | | | | 58,038 | |
| Total current assets | | | | | 1,526,050 | | | | | | 2,445,520 | |
| | | | | | | | |
| Fixed assets, net | | | | | 1,287,640 | | | | | | 1,171,425 | |
| Intangibles, net | | | | | 457,719 | | | | | | 365,444 | |
| Goodwill | | | | | 764,352 | | | | | | 755,895 | |
| Deferred income taxes, net | | | | | 206 | | | | | | 131 | |
| Other long-term assets | | | | | 18,718 | | | | | | 58,892 | |
| | | | | | | | |
| Total assets | | | | $ | 4,054,685 | | | | | $ | 4,797,307 | |
| | | | | | | | |
| Liabilities and Stockholders’ Equity | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Current portion of long-term debt | | | | $ | 22,159 | | | | | $ | 19,077 | |
| Current portion of capital lease and financing obligations | | | | | 2,900 | | | | | | 2,226 | |
| Accounts payable | | | | | 279,463 | | | | | | 411,107 | |
| Accrued expenses | | | | | 236,328 | | | | | | 305,677 | |
| Income tax payable | | | | | — | | | | | | 53,586 | |
| Dividend payable | | | | | 44,258 | | | | | | 40,580 | |
| Deferred income taxes, net | | | | | 350 | | | | | | 340 | |
| Other current liabilities | | | | | 10,430 | | | | | | 10,395 | |
| Total current liabilities | | | | | 595,888 | | | | | | 842,988 | |
| | | | | | | | |
| Long-term debt, less current portion | | | | | 393,293 | | | | | | 140,937 | |
| Capital lease and financing obligations, less current portion | | | | | 115,711 | | | | | | 116,240 | |
| Deferred income taxes, net | | | | | 200,004 | | | | | | 202,936 | |
| Other long-term liabilities | | | | | 52,123 | | | | | | 23,085 | |
| | | | | | | | |
| Commitments and contingencies | | | | | | | | |
| | | | | | | | |
| Redeemable noncontrolling interests | | | | | 4,349 | | | | | | 12,440 | |
| | | | | | | | |
| Stockholders’ equity: | | | | | | | | |
| Preferred stock, $0.10 par value: Authorized - 1,000,000 shares; No shares issued or outstanding | | | | | — | | | | | | — | |
| Common stock, $0.10 par value: Authorized - 500,000,000 shares; Issued and outstanding - 153,941,018 and 162,318,246 shares at March 28, 2015 and September 27, 2014, respectively | | | | | 15,394 | | | | | | 16,232 | |
| Additional paid-in capital | | | | | 948,801 | | | | | | 1,808,881 | |
| Retained earnings | | | | | 1,894,731 | | | | | | 1,687,619 | |
| Accumulated other comprehensive loss | | | | | (165,609 | ) | | | | | (54,051 | ) |
| Total stockholders’ equity | | | | | 2,693,317 | | | | | | 3,458,681 | |
| | | | | | | | |
| Total liabilities and stockholders’ equity | | | | $ | 4,054,685 | | | | | $ | 4,797,307 | |
| | | | | | | | |
| |
| KEURIG GREEN MOUNTAIN, INC. |
| Unaudited Consolidated Statements of Operations |
| (Dollars in thousands except per share data) |
| |
| | | | Thirteen weeks ended | | | | Twenty-six weeks ended |
| | | | March 28,
2015 | | | | March 29,
2014 | | | | March 28,
2015 | | | | March 29,
2014 |
| Net sales | | | | $ | 1,127,184 | | | | | $ | 1,103,072 | | | | | $ | 2,513,542 | | | | | $ | 2,489,742 | |
| Cost of sales | | | | | 668,376 | | | | | | 645,640 | | | | | | 1,590,612 | | | | | | 1,568,263 | |
| Gross profit | | | | | 458,808 | | | | | | 457,432 | | | | | | 922,930 | | | | | | 921,479 | |
| | | | | | | | | | | | | | | | |
| Selling and operating expenses | | | | | 136,340 | | | | | | 125,005 | | | | | | 312,862 | | | | | | 293,220 | |
| General and administrative expenses | | | | | 78,491 | | | | | | 71,941 | | | | | | 150,164 | | | | | | 141,147 | |
| Operating income | | | | | 243,977 | | | | | | 260,486 | | | | | | 459,904 | | | | | | 487,112 | |
| | | | | | | | | | | | | | | | |
| Other income, net | | | | | 169 | | | | | | 1,253 | | | | | | 350 | | | | | | 1,682 | |
| Gain on financial instruments, net | | | | | 3,579 | | | | | | 2,900 | | | | | | 6,924 | | | | | | 7,461 | |
| Loss on foreign currency, net | | | | | (8,813 | ) | | | | | (8,722 | ) | | | | | (17,884 | ) | | | | | (19,272 | ) |
| Interest expense | | | | | (281 | ) | | | | | (2,995 | ) | | | | | (1,368 | ) | | | | | (5,615 | ) |
| Income before income taxes | | | | | 238,631 | | | | | | 252,922 | | | | | | 447,926 | | | | | | 471,368 | |
| | | | | | | | | | | | | | | | |
| Income tax expense | | | | | (83,050 | ) | | | | | (90,609 | ) | | | | | (157,666 | ) | | | | | (170,580 | ) |
| Net income | | | | | 155,581 | | | | | | 162,313 | | | | | $ | 290,260 | | | | | $ | 300,788 | |
| | | | | | | | | | | | | | | | |
| Net income attributable to noncontrolling interests | | | | | 102 | | | | | | 229 | | | | | | 202 | | | | | | 477 | |
| | | | | | | | | | | | | | | | |
| Net income attributable to Keurig | | | | $ | 155,479 | | | | | $ | 162,084 | | | | | $ | 290,058 | | | | | $ | 300,311 | |
| | | | | | | | | | | | | | | | |
| Net income attributable to Keurig per common share: | | | | | | | | | | | | | | | | |
| Basic | | | | $ | 0.98 | | | | | $ | 1.05 | | | | | $ | 1.81 | | | | | $ | 1.98 | |
| Diluted | | | | $ | 0.97 | | | | | $ | 1.03 | | | | | $ | 1.79 | | | | | $ | 1.94 | |
| | | | | | | | | | | | | | | | |
| Cash dividends declared per common share | | | | $ | 0.2875 | | | | | $ | 0.25 | | | | | $ | 0.5750 | | | | | $ | 0.50 | |
| | | | | | | | | | | | | | | | |
| Weighted-average common shares outstanding: | | | | | | | | | | | | | | | | |
| Basic | | | | | 158,969,696 | | | | | | 153,945,441 | | | | | | 160,575,947 | | | | | | 151,552,422 | |
| Diluted | | | | | 160,633,437 | | | | | | 157,463,096 | | | | | | 162,362,574 | | | | | | 154,525,749 | |
| |
| |
| KEURIG GREEN MOUNTAIN, INC. |
| Unaudited Consolidated Statements of Cash Flows |
| (Dollars in thousands) |
| |
| | | | Twenty-six
weeks ended | | | | Twenty-six
weeks ended |
| | | | | | |
| | | | March 28, 2015 | | | | March 29, 2014 |
| Cash flows from operating activities: | | | | | | | | |
| Net income | | | | $ | 290,260 | | | | | $ | 300,788 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
| Depreciation and amortization of fixed assets | | | | | 101,721 | | | | | | 104,222 | |
| Amortization of intangibles | | | | | 23,168 | | | | | | 21,942 | |
| Amortization of deferred financing fees | | | | | 2,826 | | | | | | 2,826 | |
| Unrealized loss on foreign currency, net | | | | | 11,439 | | | | | | 18,089 | |
| Loss (gain) on disposal of fixed assets | | | | | 469 | | | | | | (842 | ) |
| Provision for doubtful accounts | | | | | 4,473 | | | | | | 1,575 | |
| Provision for sales returns | | | | | 63,301 | | | | | | 51,747 | |
| Gain on derivatives, net | | | | | (9,543 | ) | | | | | (9,954 | ) |
| Excess tax benefits from equity-based compensation plans | | | | | (20,489 | ) | | | | | (46,170 | ) |
| Deferred income taxes | | | | | (141 | ) | | | | | (80 | ) |
| Deferred compensation and stock compensation | | | | | 21,890 | | | | | | 15,882 | |
| Other | | | | | 2,148 | | | | | | (196 | ) |
| Changes in assets and liabilities, net of acquisition: | | | | | | | | |
| Receivables | | | | | 23,387 | | | | | | (20,697 | ) |
| Inventories | | | | | 99,460 | | | | | | 219,417 | |
| Income tax receivable/payable, net | | | | | (49,177 | ) | | | | | 27,408 | |
| Other current assets | | | | | (4,131 | ) | | | | | 3,051 | |
| Other long-term assets, net | | | | | 887 | | | | | | (498 | ) |
| Accounts payable and accrued expenses | | | | | (197,573 | ) | | | | | (83,137 | ) |
| Other current liabilities | | | | | 4,252 | | | | | | (9,133 | ) |
| Other long-term liabilities | | | | | (662 | ) | | | | | (2,620 | ) |
| Net cash provided by operating activities | | | | | 367,965 | | | | | | 593,620 | |
| | | | | | | | |
| Cash flows from investing activities: | | | | | | | | |
| Change in restricted cash | | | | | (272 | ) | | | | | 128 | |
| Maturity of short-term investment | | | | | 100,000 | | | | | | — | |
| Acquisition, net of cash acquired | | | | | (180,698 | ) | | | | | — | |
| Capital expenditures for fixed assets | | | | | (234,842 | ) | | | | | (118,978 | ) |
| Purchase of long-term investment | | | | | — | | | | | | (10,000 | ) |
| Other investing activities | | | | | (517 | ) | | | | | 1,207 | |
| Net cash used in investing activities | | | | | (316,329 | ) | | | | | (127,643 | ) |
| | | | | | | | |
| Cash flows from financing activities: | | | | | | | | |
| Net change in revolving line of credit | | | | | 265,000 | | | | | | — | |
| Proceeds from sale of common stock | | | | | — | | | | | | 1,243,028 | |
| Proceeds from issuance of common stock under compensation plans | | | | | 15,055 | | | | | | 26,441 | |
| Repurchase of common stock | | | | | (918,356 | ) | | | | | (880,816 | ) |
| Excess tax benefits from equity-based compensation plans | | | | | 20,489 | | | | | | 46,170 | |
| Payments on capital lease and financing obligations | | | | | (1,545 | ) | | | | | (954 | ) |
| Repayment of long-term debt | | | | | (9,381 | ) | | | | | (6,517 | ) |
| Dividends paid | | | | | (87,191 | ) | | | | | (37,220 | ) |
| Other financing activities | | | | | (266 | ) | | | | | (180 | ) |
| Net cash used in financing activities | | | | | (716,195 | ) | | | | | 389,952 | |
| | | | | | | | |
| Effect of exchange rate changes on cash and cash equivalents | | | | | 898 | | | | | | (3,866 | ) |
| | | | | | | | |
| Net (decrease) increase in cash and cash equivalents | | | | | (663,661 | ) | | | | | 852,063 | |
| Cash and cash equivalents at beginning of period | | | | | 761,214 | | | | | | 260,092 | |
| Cash and cash equivalents at end of period | | | | $ | 97,553 | | | | | $ | 1,112,155 | |
| | | | | | | | |
| Supplemental disclosures of cash flow information: | | | | | | | | |
| Fixed asset purchases included in accounts payable and not disbursed at the end of each period | | | | $ | 58,991 | | | | | $ | 43,431 | |
| Dividends declared not paid at the end of each period | | | | $ | 44,258 | | | | | $ | 40,483 | |
| Noncash investing and financing activities: | | | | | | | | |
| Fixed assets acquired under capital lease and financing obligations | | | | $ | 375 | | | | | $ | 25,930 | |
| | | | | | | | |
| |
| KEURIG GREEN MOUNTAIN, INC. |
| GAAP to Non-GAAP Reconciliation |
| (Dollars in thousands, except per share data) |
| |
| | | | Thirteen weeks ended |
| | | | March 28, 2015 | | | | March 29, 2014 |
| Selling and operating expenses | | | | $ | 136,340 | | | | | $ | 125,005 | |
| General and administrative expenses | | | | | 78,491 | | | | | | 71,941 | |
| Total SG&A | | | | $ | 214,831 | | | | | $ | 196,946 | |
| Expenses related to SEC inquiry (1) | | | | | (48 | ) | | | | | (546 | ) |
| Amortization of identifiable intangibles (2) | | | | | (13,058 | ) | | | | | (10,789 | ) |
| Expenses related to antitrust litigation (3) | | | | | (931 | ) | | | | | — | |
| Non-GAAP SG&A | | | | $ | 200,794 | | | | | $ | 185,611 | |
| | | | | | | | |
| | | | Thirteen weeks ended |
| | | | March 28, 2015 | | | | March 29, 2014 |
| Operating income | | | | $ | 243,977 | | | | | $ | 260,486 | |
| Expenses related to SEC inquiry (1) | | | | | 48 | | | | | | 546 | |
| Amortization of identifiable intangibles (2) | | | | | 13,058 | | | | | | 10,789 | |
| Expenses related to antitrust litigation (3) | | | | | 931 | | | | | | — | |
| Non-GAAP operating income | | | | $ | 258,014 | | | | | $ | 271,821 | |
| | | | | | | | |
| | | | Thirteen weeks ended |
| | | | March 28, 2015 | | | | March 29, 2014 |
| Net income attributable to Keurig | | | | $ | 155,479 | | | | | $ | 162,084 | |
| After tax: | | | | | | | | |
| Expenses related to SEC inquiry (1) | | | | | 31 | | | | | | 348 | |
| Amortization of identifiable intangibles (2) | | | | | 9,884 | | | | | | 7,334 | |
| Expenses related to antitrust litigation (3) | | | | | 607 | | | | | | — | |
| Non-GAAP net income attributable to Keurig | | | | $ | 166,001 | | | | | $ | 169,766 | |
| | | | | | | | |
| | | | Thirteen weeks ended |
| | | | March 28, 2015 | | | | March 29, 2014 |
| Diluted income per share (EPS) | | | | $ | 0.97 | | | | | $ | 1.03 | |
| After tax: | | | | | | | | |
| Expenses related to SEC inquiry (1) | | | | | 0.00 | | | | | | 0.00 | |
| Amortization of identifiable intangibles (2) | | | | | 0.06 | | | | | | 0.05 | |
| Expenses related to antitrust litigation (3) | | | | | 0.00 | | | | | | — | |
| Non-GAAP EPS | | | | $ | 1.03 | | | | | $ | 1.08 | |
| | | | | | | | | |
(1) Represents legal and accounting expenses related to the SEC inquiry and pending securities and stockholder derivative class action litigation classified as general and administrative expense.
(2) Represents the amortization of intangibles related to the Company’s acquisitions classified as general and administrative expense.
(3) Represents legal expenses related to antitrust litigation classified as general and administrative expense.
| | | | Twenty-six weeks ended |
| | | | March 28, 2015 | | | | March 29, 2014 |
| Selling and operating expenses | | | | $ | 312,862 | | | | | $ | 293,220 | |
| General and administrative expenses | | | | | 150,164 | | | | | | 141,147 | |
| Total SG&A | | | | $ | 463,026 | | | | | $ | 434,367 | |
| Expenses related to SEC inquiry (1) | | | | | (1,442 | ) | | | | | (918 | ) |
| Amortization of identifiable intangibles (2) | | | | | (23,168 | ) | | | | | (21,941 | ) |
| Expenses related to antitrust litigation (3) | | | | | (3,232 | ) | | | | | — | |
| Non-GAAP SG&A | | | | $ | 435,184 | | | | | $ | 411,508 | |
| | | | | | | | |
| | | | Twenty-six weeks ended |
| | | | March 28, 2015 | | | | March 29, 2014 |
| Operating income | | | | $ | 459,904 | | | | | $ | 487,112 | |
| Expenses related to SEC inquiry (1) | | | | | 1,442 | | | | | | 918 | |
| Amortization of identifiable intangibles (2) | | | | | 23,168 | | | | | | 21,941 | |
| Expenses related to antitrust litigation (3) | | | | | 3,232 | | | | | | — | |
| Non-GAAP operating income | | | | $ | 487,746 | | | | | $ | 509,971 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | Twenty-six weeks ended |
| | | | March 28, 2015 | | | | March 29, 2014 |
| Net income attributable to Keurig | | | | $ | 290,058 | | | | | $ | 300,311 | |
| After tax: | | | | | | | | |
| Expenses related to SEC inquiry (1) | | | | | 927 | | | | | | 584 | |
| Amortization of identifiable intangibles (2) | | | | | 16,792 | | | | | | 14,976 | |
| Expenses related to antitrust litigation (3) | | | | | 2,087 | | | | | | — | |
| Non-GAAP net income attributable to Keurig | | | | $ | 309,864 | | | | | $ | 315,871 | |
| | | | | | | | |
| | | | Twenty-six weeks ended |
| | | | March 28, 2015 | | | | March 29, 2014 |
| Diluted income per share (EPS) | | | | $ | 1.79 | | | | | $ | 1.94 | |
| After tax: | | | | | | | | |
| Expenses related to SEC inquiry (1) | | | | | 0.01 | | | | | | 0.00 | |
| Amortization of identifiable intangibles (2) | | | | | 0.10 | | | | | | 0.10 | |
| Expenses related to antitrust litigation (3) | | | | | 0.01 | | | | | | — | |
| Non-GAAP EPS | | | | $ | 1.91 | | | | | $ | 2.04 | |
| | | | | | | | | |
(1) Represents legal and accounting expenses related to the SEC inquiry and pending securities and stockholder derivative class action litigation classified as general and administrative expense.
(2) Represents the amortization of intangibles related to the Company’s acquisitions classified as general and administrative expense.
(3) Represents legal expenses related to antitrust litigation classified as general and administrative expense.
CONTACT:
Keurig Green Mountain, Inc.
For Media:
Suzanne DuLong, 781-418-8075
pr@keurig.com
or
For Investors:
Kristi Bonner, 646-762-8095
Investor.Services@keurig.com
