Exhibit 99.1
Contact: Frances G. Rathke, CFO
Tel: (802) 882-2300
Green Mountain Coffee Roasters, Inc.
Reports Strong Growth for
Fiscal 2009 Fourth Quarter and Full Year
– Keurig® Single-Cup Brewing System Drives Robust Sales and Earnings Growth–
– Fourth Quarter Net Sales up 65% and Net Income up 103% over Prior Year–
– Fiscal 2009 Net Sales up 61% and EPS up 95% over Prior Year–
– Company Raises Estimates for Fiscal Year 2010 EPS Growth–
WATERBURY, VT (November 11, 2009) – Green Mountain Coffee Roasters, Inc., (NASDAQ: GMCR) today announced its results for the quarter and year ended September 26, 2009, reporting outstanding top and bottom line growth for both periods.
Net sales for the fourth quarter of fiscal 2009 were up 65% to $222.2 million as compared to $134.8 million reported in the fourth quarter of fiscal 2008.
Net income for the fourth quarter of fiscal 2009 increased 103% to $14.4 million or $0.34 per diluted share, from $7.1 million or $0.18 per diluted share in the fourth quarter of fiscal 2008.
For the fiscal year ended September 26, 2009, the Company recorded net sales of $803.0 million, up 61% from $500.3 million for the year ended September 27, 2008. Net income for fiscal 2009 increased 151% to $55.9 million, or $1.39 per diluted share, as compared to net income of $22.3 million, or $0.58 per diluted share for the prior year. Excluding the impact of the $17.0 million or $0.26 per diluted share Kraft patent litigation settlement recorded in the first quarter of fiscal 2009, non-GAAP fully diluted EPS totaled $1.13 per share for fiscal 2009, up 95% from $0.58 per diluted share for fiscal 2008.
During fiscal 2009’s fourth quarter, 463 million K-Cup® portion packs were shipped system-wide by all Keurig licensed roasters, up 70% over the year-ago quarter. For fiscal 2009, 1.6 billion K-Cup® portion packs were shipped system-wide by all Keurig licensed roasters, up 63% over the prior year. Supporting continued growth in K-Cup demand, there were 713,000 Keurig brewers shipped during the fourth quarter of fiscal 2009 compared to 314,000 shipped during the fourth quarter of fiscal 2008, and 2,341,000 Keurig brewers shipped during fiscal 2009 compared to 983,000 shipped in fiscal 2008.
Lawrence J. Blanford, GMCR’s President and CEO, said, “We are pleased with our very strong performance this past quarter and year, which continues an extended period of outstanding results. Our three-year compound annual growth rate for net sales is 53% and EPS is 68%. Today we are also raising our expectations for EPS for fiscal 2010 from prior estimates of $1.70 to $1.80 per share to a range of $1.75 to $1.85 per diluted share.”
Blanford continued, “GMCR is executing on its plans and running on all cylinders as the innovative and proprietary Keurig Single-Cup Brewing System continues to transform how consumers in North America prepare and enjoy their beverages. The resulting demand for K-Cups is fueling our growth. This past quarter, Keurig realized the highest ever quarterly year-over-year
increase in K-Cup shipments since becoming part of GMCR in the third fiscal quarter of 2006. Our three-year compound annual growth rate for total system-wide K-Cup growth is 54%. As the Keurig brewer reaches more and more people, we are working to enhance its consumer appeal with some broader roast and taste profiles. Our Celestial Seasonings® Perfect Iced Teas were introduced in July, followed by two more products in the Café Escapes line and the exciting Donut House collection of K-Cups during this past quarter.”
Blanford concluded, “Speaking on behalf of the Board of Directors as well as the management team, what makes us particularly proud at GMCR is that we have achieved this financial success while staying true to our values as a socially and environmentally responsible company. Our culture has empowered us to effectively deal with the challenges of our tremendous growth because employees feel proud and motivated to be part of this effort. Collectively, our goal is to build stockholder value by providing consumers with an extraordinary coffee experience while helping to make a positive difference in the world. Looking forward, we are very excited about our prospects.”
Fiscal 2009 Fourth Quarter Financial Review
Net Sales
| | • | | For the Keurig business unit, net sales for the fourth quarter of fiscal 2009, after the elimination of inter-company sales, were $122.9 million, up 95% from net sales of $63.2 million in the fourth quarter of fiscal 2008. About half of the increase in Keurig’s net sales this past quarter was due to the 121% increase in K-Cup sales primarily to retailers as well as to consumers from Keurig.com. Dollar net sales of At Home Single-Cup brewers and accessories contributed over 40% of the increase in total Keurig business unit net sales this quarter. In addition, royalty income from the sale of K-Cups® from third party licensed roasters increased approximately $2.9 million over last year’s fourth fiscal quarter and totaled $9.9 million. |
| | • | | For the Specialty Coffee business unit (previously called the Green Mountain Coffee segment), net sales for the fourth quarter of fiscal 2009 grew 39% to $99.3 million, after the elimination of inter-company sales, as compared to $71.7 million reported in the fourth quarter of fiscal 2008. Dollar net sales growth was strongest in channels that benefit from sales of K-Cup portion packs including retail reseller, supermarket, consumer direct and office coffee channels. Coffee, tea and hot cocoa pounds shipped increased 47% this quarter over the prior period and totaled 12.1 million pounds. Fair Trade coffees represented 30% percent of coffee pounds shipped. |
Costs, Margins and Income
| | • | | Cost of sales increased to 68.3% of total net sales compared to 65.6% for the corresponding quarter last year. The increase over last year is primarily due to the significant increase in sales of Keurig At Home Single-Cup brewers, which are sold at approximately cost, as part of the Company’s strategy to drive demand for our K-Cup portion packs by increasing the installed base of Keurig brewers. |
| | • | | Selling, general and administrative expenses (SG&A) improved as a percentage of net sales by 450 basis points to 20.3% from 24.8% in the prior year quarter. This improvement was primarily the result of leveraging selling and organizational resources on a higher sales base. |
| | • | | As a result of this SG&A leverage, the Company increased its operating income by 96% to $25.3 million in the fourth quarter of fiscal 2009, as compared to $13.0 million reported in the fourth quarter of fiscal 2008. Operating margins significantly improved as a percentage of net sales to 11.4% from 9.6% in the prior year period. |
| | • | | Interest expense was $1.2 million and $1.3 million in the fourth quarter of fiscal 2009 and fiscal 2008, respectively. |
| | • | | Income before taxes for the fourth quarter of fiscal 2009 increased 104% to $23.8 million as compared to $11.7 million reported in the fourth quarter of fiscal 2008. |
| | • | | The Company’s tax rate was 39.6% as compared to 39.2% in the prior year quarter. |
| | • | | Net income for the fourth quarter of fiscal 2009 was $14.4 million or 6.5% of net sales as compared to $7.1 million or 5.3% in the corresponding quarter last year. |
Balance Sheet Highlights
| | • | | Accounts receivable increased 67% year-over-year to $91.6 million at September 26, 2009, from $54.8 million at September 27, 2008, as a result of continuing strong sales during the fourth quarter of fiscal 2009. |
| | • | | Inventories increased 61% year-over-year to $137.3 million at September 26, 2009, from $85.3 million at September 27, 2008, reflecting the Company’s effort to ensure both efficiencies and sufficient inventories of brewers and K-Cups for the holiday season of fiscal 2010 to meet anticipated strong consumer demand. |
| | • | | Long-term debt decreased to $73.0 million at September 26, 2009, from $123.5 million at September 27, 2008 as a portion of the proceeds received from the public offering of 5,750,000 shares of the Company’s common stock on August 12, 2009 were used to pay down debt. Cash flow from operations in the fourth quarter funded this quarter’s increase in inventories and other working capital needs. |
| | • | | Cash and short-term cash investments were $292.0 million at September 26, 2009, up from $1.0 million at September 27, 2008, due to the proceeds from the offering of common stock. |
Business Outlook and Other Forward-Looking Information
Revised Certain Company Estimates for Fiscal Year 2010:
| | • | | Total consolidated net sales growth of 50% to 55%, up from prior estimates of 45% to 50%. |
| | • | | Total K-Cup portion packs shipped system-wide by all Keurig licensed roasters to increase in the range of 68% to 73%, up from prior estimates of 65% to 70%. |
| | • | | An operating margin in the range of 11.2% to 11.7%, including $6 million or $0.08 per diluted share for non-cash amortization expenses related to the identifiable intangibles of the Company’s acquisitions, up from fiscal 2009’s operating margin of 9.8% excluding the impact of the $17 million Kraft patent litigation settlement. |
| | • | | Interest expense of $4.0 million to $5.0 million |
| | • | | A tax rate of 39.2% as compared to 38.2% in fiscal 2009. |
| | • | | Fully diluted GAAP earnings per share in the range of $1.75 to $1.85 per share, including the non-cash amortization expenses related to the identifiable intangibles mentioned above of $6 million or approximately $0.08 per share, up from prior estimates of $1.70 to $1.80 per share. |
First Issue of Company Estimates Relating to Balance Sheet and Cash Flow for Fiscal Year 2010:
| | • | | Capital expenditures for fiscal 2010 in the range of $90 to $110 million. |
| | • | | Depreciation and amortization expenses in the range of $38 to $42 million including $6 million for amortization of identifiable intangibles. |
First Issue of Company Estimates for First Quarter Fiscal Year 2010:
| | • | | Total consolidated net sales growth of 61% to 66%. |
| | • | | An operating margin in the range of 3.8% to 4.3%. The Company anticipates selling and marketing expenses as a percentage of net sales during the first quarter of fiscal 2009 to be about the same as a year ago excluding the impact of the $17 million or $0.26 per diluted share Kraft patent litigation settlement. Operating margins are expected to be similar to year ago due to the planned increase in net sales of At Home Single-Serve Keurig brewers with no contribution to gross margins. |
| | • | | Fully diluted GAAP earnings per share in the range of $0.11 to $0.15 per share. This compares to the prior year fully diluted GAAP earnings per share of $0.37 per share and non-GAAP fully diluted earnings per share of $0.10 per share excluding the impact of the $17 million or $0.26 per diluted share Kraft patent litigation settlement |
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 certain charges or credits and non-cash related items such as amortization of identifiable intangibles related to the Keurig acquisition completed on June 15, 2006, the acquisition of Tully’s wholesale business and brands completed on March 27, 2009, and one-time operating income related to the settlement of the Company’s Kraft litigation. These amounts are not in accordance with, or an alternative to, GAAP. The Company’s management believes that these measures provide investors with greater 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.
Green Mountain Coffee Roasters, Inc. will be discussing these financial results and future prospects with analysts and investors in a conference call available via the Internet. The call will take place today at 5:00 PM ET and will be available, with accompanying slides, via live webcast on the Company’s website atwww.GMCR.com. The Company archives the latest conference call on the Investor Relations section of its website for a period of time. A replay of the conference call also will be available by telephone at 719-457-0820, Passcode 4246067 from 9:00 PM ET on November 11th through 9:00 PM ET on Monday, November 16, 2009.
GMCR routinely posts information that may be of importance to investors in the Investor Services section of its website, 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’sautomatic email news release delivery, individuals can receive news directly from GMCR as it is released.
About Green Mountain Coffee Roasters, Inc.
As a leader in the specialty coffee industry, Green Mountain Coffee Roasters, Inc. (NASDAQ: GMCR) is recognized for its award-winning coffees, innovative brewing technology, and socially responsible business practices. GMCR’s operations are managed through two business units. The Specialty Coffee business unit produces coffee, tea and hot cocoa from its family of brands, including Green Mountain Coffee®, Tully’s Coffee®,, and Newman’s Own® Organics coffee. The Keurig business unit is a pioneer and leading manufacturer of gourmet single-cup brewing systems. K-Cup® portion packs for Keurig® Single-Cup Brewers are produced by a variety of licensed brands, including Green Mountain Coffee, and Tully’s. GMCR supports local and global communities by offsetting 100% of its direct greenhouse gas emissions, investing in Fair Trade Certified™ coffee, and donating at least five percent of its pre-tax profits to social and environmental projects. Visitwww.GreenMountainCoffee.com andwww.Keurig.com for more information.
Forward-Looking Statements
Certain statements contained herein are not based on historical fact and are “forward-looking statements” within the meaning of the applicable securities laws and regulations. Generally, these statements can be identified by the use of words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “feel,” “forecast,” “intend,” “may,” “plan,” “potential,” “project,” “should,” “would,” and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Owing to the uncertainties inherent in forward-looking statements, actual results could differ materially from those stated here. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the impact on sales and profitability of consumer sentiment in this difficult economic
environment, the Company’s success in efficiently expanding operations and capacity to meet growth, the Company’s success in efficiently and effectively integrating Tully’s wholesale operations and capacity into its Specialty Coffee business unit, the Company’s success in introducing new product offerings, the ability of lenders to honor their commitments under the Company’s credit facility, competition and other business conditions in the coffee industry and food industry in general, fluctuations in availability and cost of high-quality green coffee, any other increases in costs including fuel, Keurig’s ability to continue to grow and build profits with its roaster partners in the At Home and Away from Home businesses, the impact of the loss of major customers for the Company or reduction in the volume of purchases by major customers, delays in the timing of adding new locations with existing customers, the Company’s level of success in continuing to attract new customers, sales mix variances, weather and special or unusual events, as well as other risks described more fully in the Company’s filings with the SEC. Forward-looking statements reflect management’s analysis as of the date of this press release. The Company does not undertake to revise these statements to reflect subsequent developments, other than in its regular, quarterly earnings releases.
– Tables Follow –
GREEN MOUNTAIN COFFEE ROASTERS, INC.
Unaudited Consolidated Statements of Operations
(Dollars in thousands except per share data)
| | | | | | | | | | | | | | | | |
| | | Thirteen
weeks ended
9/26/09 | | | Thirteen
weeks ended
9/27/08 | | | Fifty- two
weeks ended
9/26/09 | | | Fifty-two
weeks ended
9/27/08 | |
Net sales | | $ | 222,205 | | | $ | 134,835 | | | $ | 803,045 | | | $ | 500,277 | |
Cost of sales | | | 151,853 | | | | 88,426 | | | | 553,281 | | | | 323,372 | |
| | | | | | | | | | | | | | | | |
Gross profit | | | 70,352 | | | | 46,409 | | | | 249,764 | | | | 176,905 | |
| | | | |
Selling and operating expenses | | | 31,077 | | | | 22,687 | | | | 123,948 | | | | 92,182 | |
General and administrative expenses | | | 13,938 | | | | 9,755 | | | | 47,103 | | | | 39,032 | |
Patent litigation (settlement) expense | | | — | | | | 1,011 | | | | (17,000 | ) | | | 3,279 | |
| | | | | | | | | | | | | | | | |
| | | | |
Operating income | | | 25,337 | | | | 12,956 | | | | 95,713 | | | | 42,412 | |
| | | | |
Other income (expense) | | | (338 | ) | | | (7 | ) | | | (662 | ) | | | (235 | ) |
Interest expense | | | (1,199 | ) | | | (1,290 | ) | | | (4,693 | ) | | | (5,705 | ) |
| | | | | | | | | | | | | | | | |
Income before income taxes | | | 23,800 | | | | 11,659 | | | | 90,358 | | | | 36,472 | |
| | | | |
Income tax expense | | | (9,425 | ) | | | (4,571 | ) | | | (34,476 | ) | | | (14,173 | ) |
| | | | | | | | | | | | | | | | |
Net income | | $ | 14,375 | | | $ | 7,088 | | | $ | 55,882 | | | $ | 22,299 | |
| | | | | | | | | | | | | | | | |
| | | | |
Basic income per share: | | | | | | | | | | | | | | | | |
Weighted average shares outstanding | | | 40,581,045 | | | | 36,346,410 | | | | 37,993,196 | | | | 35,924,697 | |
Net income | | $ | 0.35 | | | $ | 0.20 | | | $ | 1.47 | | | $ | 0.62 | |
Diluted income per share: | | | | | | | | | | | | | | | | |
Weighted average shares outstanding | | | 42,800,588 | | | | 38,557,712 | | | | 40,123,553 | | | | 38,347,170 | |
Net income | | $ | 0.34 | | | $ | 0.18 | | | $ | 1.39 | | | $ | 0.58 | |
- More -
GREEN MOUNTAIN COFFEE ROASTERS, INC.
Unaudited Consolidated Balance Sheets
(Dollars in thousands)
| | | | | | | | |
| | | September 26,
2009 | | | September 27,
2008 | |
Assets | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 241,811 | | | $ | 804 | |
Restricted cash and cash equivalents | | | 280 | | | | 161 | |
Short-term investments | | | 50,000 | | | | — | |
Receivables, less allowances of $4,792 and $3,002 at September 26, 2009, and September 27, 2008, respectively | | | 91,559 | | | | 54,782 | |
Inventories | | | 137,294 | | | | 85,311 | |
Other current assets | | | 6,706 | | | | 4,886 | |
Deferred income taxes, net | | | 10,151 | | | | 6,146 | |
| | | | | | | | |
Total current assets | | | 537,801 | | | | 152,090 | |
| | |
Fixed assets, net | | | 135,981 | | | | 97,678 | |
Intangibles, net | | | 36,478 | | | | 29,396 | |
Goodwill | | | 99,600 | | | | 73,953 | |
Other long-term assets | | | 3,979 | | | | 4,531 | |
| | | | | | | | |
Total assets | | $ | 813,839 | | | $ | 357,648 | |
| | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | |
Current liabilities: | | | | | | | | |
Current portion of long-term debt | | $ | 5,030 | | | $ | 33 | |
Accounts payable | | | 76,961 | | | | 43,821 | |
Accrued compensation costs | | | 17,264 | | | | 11,669 | |
Accrued expenses | | | 18,570 | | | | 14,645 | |
Income tax payable | | | 2,971 | | | | 2,079 | |
Other short-term liabilities | | | 3,257 | | | | 673 | |
| | | | | | | | |
Total current liabilities | | | 124,053 | | | | 72,920 | |
| | |
Long-term debt | | | 73,013 | | | | 123,517 | |
| | | | | | | | |
Deferred income taxes, net | | | 26,599 | | | | 21,691 | |
| | | | | | | | |
| | |
Commitments and contingencies | | | | | | | | |
| | |
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—60,000,000 shares; Issued – 43,603,684 and 41,690,466 shares at September 26, 2009, and September 27, 2008, respectively | | | 4,360 | | | | 4,169 | |
Additional paid-in capital | | | 450,596 | | | | 61,987 | |
Retained earnings | | | 137,162 | | | | 81,280 | |
Accumulated other comprehensive loss | | | (1,870 | ) | | | (419 | ) |
ESOP unallocated shares, at cost – 12,687 and 27,194 shares at September 26, 2009, and September 27, 2008, respectively | | | (74 | ) | | | (161 | ) |
Treasury shares, at cost— 0 and 5,208,993 shares at September 26, 2009, and September 27, 2008, respectively | | | — | | | | (7,336 | ) |
| | | | | | | | |
Total stockholders’ equity | | | 590,174 | | | | 139,520 | |
| | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 813,839 | | | $ | 357,648 | |
| | | | | | | | |
- More -
GREEN MOUNTAIN COFFEE ROASTERS, INC.
Unaudited Consolidated Statements of Cash Flows
(Dollars in thousands)
| | | | | | | | |
| | | Fifty-two
weeks ended
September 26,
2009 | | | Fifty-two
weeks ended
September 27,
2008 | |
Cash flows from operating activities: | | | | | | | | |
Net income | | $ | 55,882 | | | $ | 22,299 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Depreciation and amortization | | | 17,987 | | | | 13,500 | |
Amortization of intangibles | | | 5,318 | | | | 4,812 | |
Loss on disposal of fixed assets | | | 679 | | | | 201 | |
Provision for doubtful accounts | | | 243 | | | | 1,159 | |
Loss on futures derivatives | | | 264 | | | | 6 | |
Deferred compensation and stock compensation | | | 6,819 | | | | 6,455 | |
Tax benefit from exercise of non-qualified options and disqualified dispositions of incentive stock options | | | (399 | ) | | | (386 | ) |
Excess tax benefits from equity-based compensation plans | | | (10,761 | ) | | | (6,168 | ) |
Deferred income taxes | | | 1,683 | | | | 549 | |
Contributions to the ESOP | | | 1,000 | | | | 200 | |
Tax expense from allocation of ESOP shares | | | (3 | ) | | | (61 | ) |
Changes in assets and liabilities: | | | | | | | | |
Receivables | | | (37,020 | ) | | | (16,568 | ) |
Inventories | | | (49,792 | ) | | | (46,402 | ) |
Income tax payable | | | 11,653 | | | | 6,804 | |
Other current assets | | | (1,850 | ) | | | (1,882 | ) |
Other long-term assets, net | | | 1,769 | | | | (660 | ) |
Accounts payable | | | 25,834 | | | | 8,667 | |
Accrued compensation costs | | | 5,595 | | | | 4,642 | |
Accrued expenses | | | 3,597 | | | | 4,779 | |
| | | | | | | | |
Net cash provided by operating activities | | | 38,498 | | | | 1,946 | |
| | |
Cash flows from investing activities: | | | | | | | | |
Acquisition of certain assets of Tully’s Coffee Corporation | | | (41,361 | ) | | | — | |
Purchases of short-term investments | | | (50,000 | ) | | | — | |
Capital expenditures for fixed assets | | | (48,298 | ) | | | (48,718 | ) |
Proceeds from disposal of fixed assets | | | 162 | | | | 407 | |
| | | | | | | | |
Net cash used for investing activities | | | (139,497 | ) | | | (48,311 | ) |
| | |
Cash flows from financing activities: | | | | | | | | |
Net change in revolving line of credit | | | (95,500 | ) | | | 33,500 | |
Proceeds from issuance of common stock | | | 378,046 | | | | 5,653 | |
Excess tax benefits from equity-based compensation plans | | | 10,761 | | | | 6,168 | |
Proceeds from borrowings of long-term debt | | | 50,000 | | | | — | |
Deferred financing fees | | | (1,084 | ) | | | (907 | ) |
Repayment of long-term debt | | | (217 | ) | | | (63 | ) |
| | | | | | | | |
Net cash provided by financing activities | | | 342,006 | | | | 44,351 | |
| | |
Net increase (decrease) in cash and cash equivalents | | | 241,007 | | | | (2,014 | ) |
Cash and cash equivalents at beginning of period | | | 804 | | | | 2,818 | |
| | | | | | | | |
Cash and cash equivalents at end of period | | $ | 241,811 | | | $ | 804 | |
| | | | | | | | |
| | |
Fixed asset purchases included in accounts payable and not disbursed at the end of each period: | | $ | 12,509 | | | $ | 5,203 | |
| | |
Noncash financing activity: | | | | | | | | |
Debt assumed in conjunction with acquisition of Tully’s | | $ | 210 | | | $ | — | |
