Green Mountain Coffee Roasters Reports Fiscal 2007 First Quarter Results.The success of the Keurig single-cup brewing brewing: see beer. system and K-Cups drive strong sales growth WATERBURY, Vt. -- Green Mountain Coffee Roasters Green Mountain Coffee Roasters is a publicly-traded brand of coffee based at Waterbury in the U.S. state of Vermont. The brand specializes in organic, fair-trade, and specialty gourmet coffees. Keurig is wholly owned subsidiary of Green Mountain Coffee Roasters, Inc. , Inc., (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : GMCR GMCR Green Mountain Coffee Roasters, Inc GMCR Grants Management Common Rule ) today announced its fiscal first quarter results for the thirteen weeks ended December 30, 2006. The Company changed its quarterly calendar in fiscal 2007 to report four thirteen-week quarters ending on the last Saturday in September (which is the same year-end as in prior years). The prior quarterly calendar was 16 weeks for the first quarter, twelve weeks for the second, third and fourth quarters except in the years with the additional 53rd week. A reconciliation of all GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). to non-GAAP financial measures is provided in the Company's financial tables accompanying this press release. A reconciliation of the fiscal first quarter 2006 consolidated statement of operations See Income statement. as reported for the sixteen weeks ended January 14, 2006 and the as adjusted, and thus comparable, fiscal first quarter 2006 presented on a thirteen weeks basis which would have ended on December 24, 2005 is provided in the Company's financial tables accompanying this press release and will be provided as a footnote Text that appears at the bottom of a page that adds explanation. It is often used to give credit to the source of information. When accumulated and printed at the end of a document, they are called "endnotes." in the Company's fiscal first quarter 2007 SEC filing. The as adjusted thirteen-week fiscal first quarter of 2006 data is used for comparative purposes in the following quarterly analyses. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the first quarter of fiscal 2007 totaled $83.3 million as compared to $63.9 million reported in the prior sixteen-week period. Excluding the extra three weeks in the fiscal first quarter of 2006, net sales for the first quarter of fiscal 2007 increased 56.8% over the as adjusted net sales for the prior period. Included in Green Mountain Coffee's net sales of the fiscal first quarter of 2007 is approximately $22.1 million of Keurig, Inc.'s (Keurig) net sales, after elimination of inter-company sales. The Company acquired Keurig in June 2006. Net income for the fiscal first quarter of 2007 was $2.4 million or $0.30 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to the reported sixteen week fiscal first quarter of 2006 net income of $3.0 million or $0.38 per diluted share. Excluding the extra three weeks in the fiscal first quarter of 2006 net income was $2.9 million, or $0.37 per diluted share. Excluding the impact of the non-cash items described below, non-GAAP net income grew approximately 19.4% in the fiscal first quarter totaling $3.7 million, or $0.46 per share, compared to non-GAAP net income of $3.1 million or $0.39 per share, for the comparable year ago period. The non-cash items were: 1.) Pre-tax non-cash stock-based compensation charges of $744,000 or approximately $0.06 per diluted share in the fiscal first quarter of 2007 as compared to $339,000 or approximately $0.02 per diluted share in the adjusted thirteen-week first quarter of fiscal 2006; 2.) As part of the purchase price accounting for the acquisition of Keurig, the fiscal first quarter 2007 results include pre-tax non-cash amortization expense related to the identifiable intangibles and pre-tax non-cash inventory step-up adjustments of approximately $1.3 million or $0.10 per diluted share; and 3.) The Company's net income in the fiscal first quarter of 2006 includes recognition of after-tax non-cash income of $2,000 or $0.00 per share as a result of its equity investment in Keurig, Inc. Robert P. Stiller, Chairman, President and Chief Executive Officer said, "I am very pleased with our first quarter financial results and achievements. Looking ahead, we are focused on continuing to deliver strong sales growth and further improve our operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: . The three key growth drivers for the Company are our proprietary Keurig single-cup brewing and K-Cup([R]) system; our Fair Trade Certified See certification. ([TM]) and organic coffees, including Newman's Own([R]) Organics; and our multi-channel geographic expansion strategy." Stiller added, "We are an innovative company with a passion for great coffee, outstanding customer service, and making a positive difference in the world. Thanks to an incredible team at Green Mountain Coffee and Keurig, we are on a path of sustainable growth and financial strength and I am gratified grat·i·fy tr.v. grat·i·fied, grat·i·fy·ing, grat·i·fies 1. To please or satisfy: His achievement gratified his father. See Synonyms at please. 2. and excited by our success in pursuing all three passions." Fiscal 2007 First Quarter Ended December 30, 2006 Financial Review Green Mountain Coffee Roasters Stand-Alone Highlights: * Net sales for the first quarter of fiscal 2007 were $61.3 million as compared to $63.9 million reported in the prior sixteen-week period. Excluding the extra three weeks in the fiscal first quarter of 2006, net sales for the first quarter of fiscal 2007 increased 15.3% over the as adjusted net sales of $53.1 million during the prior period. Dollar sales growth was strongest in the consumer direct, office coffee service (OCS OCS - Object Compatibility Standard ), and food service channels. Green Mountain K-Cup([R]) shipments of coffee and tea increased 34% over the prior year comparable quarter. * The consumer direct channel grew 60% in coffee pounds shipped. The majority of this growth was related to the sales of K-Cups([R]) to consumers for use with Keurig([R]) Single-Cup Brewers This is a list of member brewers of the Brewers Association. Numbered
* The 15% increase in the OCS channel continues to demonstrate the appeal and success of the Keurig single-cup brewing system. * The food service channel increased 16% in coffee pounds shipped with the majority of this increase driven by continued strong sales to existing customers, including McDonald's restaurants There are more than 30,000 McDonald's restaurants in 119 countries. Restaurants The first McDonald's was not a restaurant at all, but it was a sit-in stand. The company's early franchises were built to a standard pattern that did not offer seating; this was in part to prevent in New England New England, name applied to the region comprising six states of the NE United States—Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. The region is thought to have been so named by Capt. and Albany, New York For other uses, see Albany. Albany is the capital of the State of New York and the county seat of Albany County. Albany lies 136 miles (219 km) north of New York City, and slightly to the south of the juncture of the Mohawk and Hudson Rivers. . * In the convenience store channel, coffee pounds shipped decreased 7%. This decrease primarily relates to fluctuations in quarterly inventory replenishment replenishment the addition of an appropriate quantity of properly prepared solution containing the correct concentration of chemicals to the developer solutions used in radiography. to McLane Company McLane Company, Inc. is the nation's largest wholesale-distributor of consumer packaged goods to the convenience store trade and other retail channels. It is also a major foodservice distributor to the quickservice restaurant industry. , the distributor to Exxon Mobil Corporation Exxon Mobil Corporation U.S.-based oil and gas company formed in 1999 through the merger of Exxon Corp. and Mobil Corp. It has investments and operations in petroleum and natural gas, coal, nuclear fuels, chemicals, and ores. convenience stores The following is a list of convenience stores organized by geographical location. Stores are grouped by the lowest heading that contains all locales in which the brands have significant presence. . * The supermarket channel coffee pounds shipped decreased 4% with increased coffee pounds from new customer acquisitions not fully offsetting certain declines in some other supermarket customers due to increased competition in the specialty coffee category in this channel. * The Company experienced a 17% gain in shipments of certified Fair Trade and organic coffees, including co-branded Newman's Own([R]) Organics coffees. Certified Fair Trade and organic coffees represented 29% of total Company volume. * Gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. was 35.0% of sales as compared to the previously reported prior sixteen-week period of 34.9%. Excluding the extra three weeks in the first quarter of 2006, the as adjusted gross profit margin was 35.7% with the first quarter 2007 decline in margin due primarily to variations in sales mix sales mix See product mix. . * Selling, general and administrative (S,G&A) expenses were 25.6% of sales as compared to the previously reported prior sixteen-week period of 26.9%. Excluding the extra three weeks in the first quarter of 2006, the as adjusted S,G&A margin was 26.3%. This improvement in S,G&A margin was the result of leveraging selling and organizational resources on a higher sales base. * The Company's operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the first quarter of fiscal 2007 was $5.7 million as compared to $5.2 million reported in the prior sixteen-week period. Excluding the extra three weeks in the fiscal first quarter of 2006, operating income for the first quarter of fiscal 2007 increased 14.3% over the as adjusted operating income of $5.0 million during the prior period. The Company's stand-alone operating margin was 9.3% for the first quarter of 2007 as compared to 9.4% in the comparable last year period. Excluding the $470,000 stock compensation charge in the first quarter of 2007 and the comparable $339,000 stock compensation charge in the comparable first quarter of 2006, the Company's stand-alone operating margin was 10.1% as compared to 10.0% in the as adjusted prior year period. Keurig, a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , Stand-Alone Highlights: * Net sales of Keurig included in the Company's first quarter of fiscal 2007 prior to elimination of inter-company sales were $29.7 million, an increase of 44% over the prior year period when Keurig was not consolidated into the Company's financial results. The increase in sales was primarily due to higher brewer and K-Cup sales and royalty income from the sales of K-Cups. As part of the consolidation, $7.6 million of inter-company sales and $7.3 million of cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold were eliminated. Further detail on shipments of Keurig brewers and K-Cups is provided in the chart accompanying this press release. * Net income before income taxes was $1.4 million after inter-company eliminations and before the impact of the purchase price items described below. For the fiscal first quarter of 2007, the net impact of Keurig was to decrease the consolidated income before tax of the Company by approximately $1.7 million. Keurig Purchase Price Accounting Highlights included in the Company's financial results for the fiscal first quarter of 2007: * Green Mountain Coffee financed the cash portion of the purchase price of Keurig through a new five-year $125 million syndicated revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility led by Bank of America
Bank of America (NYSE: BAC TYO: 8648 ) is the largest commercial bank in the United States in terms of deposits, and the largest company of its kind in the world. . The interest expense associated with the acquisition increased the Company's total interest expense by approximately $1.8 million for the quarter. * In the first quarter of fiscal 2007, the pre-tax non-cash amortization expense related to the identifiable intangibles and inventory step-up adjustment was approximately $1.3 million. * As part of the purchase price, Green Mountain Coffee assumed the currently outstanding unvested options of the Keurig employees at June 15, 2006 and issued an inducement Inducement Electra incited brother, Orestes, to kill their mother and her lover. [Gk. Myth.: Zimmerman, 92; Gk. Lit.: Electra, Orestes] Hezekiah exhorts Judah to stand fast against Assyrians. [O.T. grant. The aggregate expense associated with these stock options is estimated at a total of $4.7 million which will be recognized over the next four years with a greater percentage of the expense in the first two years. For the first quarter of fiscal 2007, stock option expense associated with the Keurig options was $273,000. Business Outlook and Other Forward-Looking Information Company Estimates for Fiscal Year 2007: * Total consolidated net sales growth of 35% to 45% including a range of 17% to 20% for Green Mountain Coffee without giving effect to Keurig sales as a result of the acquisition primarily due to anticipated strong double-digit sales in the office coffee channel and significant growth in the consumer direct channel. Fiscal 2007 will be 52 weeks as compared to 53 weeks in fiscal 2006. * An operating margin in the range of 9.0% to 9.5% including consolidated non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of approximately $3.6 million for stock option compensation and $5.3 million for non-cash amortization expense related to the purchase price accounting allocation to certain intangibles and the inventory step-up adjustment. * Interest expense of $6.5 to $7.5 million. * A tax rate of 42.0% as compared to 41.4% in fiscal 2006. * Fully diluted GAAP earnings per share in the range of $1.51 to $1.57 per share, including the non-cash stock compensation expenses and amortization expenses related to the identifiable intangibles, which are estimated to reduce EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. by approximately $0.60 per share ($0.25 per share for stock compensation expense and $0.36 per share for amortization expense). This compares to fully diluted fiscal 2006 GAAP EPS of $1.07. For comparison purposes, excluding the impact of these non-cash expenses Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) , non-GAAP EPS is estimated to be in the range of $2.11 to $2.17 in fiscal 2007 as compared to non-GAAP EPS of $1.45 per share in fiscal 2006. Company Estimates for the Second Quarter Fiscal 2007 to end on March 31, 2007: * Please note that the prior year's fiscal calendar had twelve weeks in the second quarter whereas there will be thirteen weeks for the second quarter of fiscal 2007. * Consolidated net sales in the range of $75 million to $79 million with Green Mountain Coffee's stand-alone net sales for the second thirteen weeks of fiscal 2007 in the range of $56 million to $59 million. * An operating margin in the range of 8.0% to 8.5% including a non-cash charge of approximately $900,000 or $0.06 per share for stock option compensation and non-cash amortization expenses for identifiable intangibles of approximately $1.2 million or $0.08 per share. * Fully diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of in the range of $0.29 to $0.34 per share, including the non-cash stock compensation expenses and amortization expenses related to the identifiable intangibles, which are estimated to reduce EPS by approximately $0.14 per share. Company Estimates Relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc Balance Sheet and Cash Flow: * Capital expenditures for fiscal 2007 in the range of $18 to $20 million. * Depreciation and amortization expenses in the range of $15.3 to $16.3 million including the $5.3 million for amortization of identifiable intangibles. Use of Non-GAAP Financial Measures In addition to reporting financial results in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP), the Company provides non-GAAP operating results that exclude certain charges or credits and information regarding non-cash related items such as stock-based compensation, inventory step-up adjustments and amortization of identifiable intangibles related to the Keurig acquisition completed on June 15, 2006 and non-cash gains or losses from the Company's equity investment in Keurig prior to the acquisition. In addition, as a result of the Company's change in its calendar quarters in fiscal 2007, the Company is providing quarter-to-quarter comparisons on an as adjusted basis for comparative purposes. 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 (1) The quality of being able to see through a material. The terms transparency and translucency are often used synonymously; however, transparent would technically mean "seeing through clear glass," while translucent would mean "seeing through frosted glass." See alpha blending. by helping to 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. In this press release, the Company presents its results for the first quarter of fiscal 2007 and the comparable prior period on a GAAP and Non-GAAP basis with line item reconciliation. Green Mountain Coffee Roasters 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 10:30 AM ET and will be available via live webcast on the Company's website at www.GreenMountainCoffee.com and other major portals. The Company archives the latest conference call on the Investor Services 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, confirmation code 4595271 from 1:30 PM ET on February 1st through midnight on Monday, February 5, 2007. Green Mountain Coffee Roasters, Inc. (NASDAQ: GMCR) is recognized as a leader in the specialty coffee industry for its award-winning coffees and successful business practices. The Company sells over 100 high quality selections, including Fair Trade Certified[TM] and organic coffees under the Green Mountain Coffee Roasters[R] and Newman's Own[R] Organics brands. While the majority of the Company's revenue is derived from its wholesale, direct mail, and e-commerce operations (www.GreenMountainCoffee.com), it also owns Keurig, Incorporated, a pioneer and leading manufacturer of gourmet single-cup brewing systems. Keurig markets premium single-cup (K-Cup) coffee brewing systems for the office and the home while the Company licenses, manufactures and sells Green Mountain coffee and tea K-Cups([R]) for offices, homes and other venues. Green Mountain Coffee Roasters was recently ranked No. 1 on the Business Ethics business ethics, the study and evaluation of decision making by businesses according to moral concepts and judgments. Ethical questions range from practical, narrowly defined issues, such as a company's obligation to be honest with its customers, to broader social list of "100 Best Corporate Citizens," and has been recognized repeatedly by Forbes, Fortune Small Business, and the Society of Human Resource Management as an innovative, high-growth, socially responsible company. Certain statements contained herein are not based on historical fact and are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the applicable securities laws and regulations. Owing to owing to prep. Because of; on account of: I couldn't attend, owing to illness. owing to prep → debido a, por causa de the uncertainties inherent in forward-looking statements, actual results could differ materially. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, fluctuations in availability and cost of high-quality green coffee, the unknown impact of any price increases on net sales, competition, business conditions in the coffee industry and food industry in general, Keurig Inc.'s ability to continue to grow and build profits in the office and at home markets, the impact of the loss of one or more major customers for Green Mountain Coffee or reduction in the volume of purchases by one or more major customers, delays in the timing of adding new locations with existing customers, Green Mountain Coffee's level of success in continuing to attract new customers, the Company's success in efficiently expanding operations and capacity to meet growth, variances from sales mix and growth rate, weather and special or unusual events, as well as other risks as described more fully in the Company's filings with the Securities and Exchange Commission. 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. GREEN MOUNTAIN COFFEE ROASTERS, INC. Unaudited Consolidated Statements of Operations (Dollars in thousands except per share data) [TABLE OMITTED] GREEN MOUNTAIN COFFEE ROASTERS, INC. Consolidated Balance Sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. (Dollars in thousands) [TABLE OMITTED] [TABLE OMITTED] GREEN MOUNTAIN COFFEE ROASTERS, INC. Consolidated Statements of Operations- Non-GAAP basis (in thousands except per share amounts) [TABLE OMITTED] [TABLE OMITTED] GREEN MOUNTAIN COFFEE ROASTERS, INC. Total Coffee Pounds Shipped by Stand-Alone Green Mountain Coffee (Unaudited Pounds in Thousands) [TABLE OMITTED] Note: Certain prior year customer channel classifications were reclassified to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" current year classifications. Note: The pounds shipped number in the Consumer Direct channel, includes shipments made to Keurig, Inc. for sales to the retail channel. [TABLE OMITTED] Data Related to Keurig, Inc., a wholly-owned subsidiary, and Green Mountain Coffee Roasters (Unaudited data and in thousands) [TABLE OMITTED] (1) Total Keurig brewers shipped means brewers shipped by Keurig to customers in the US/Canada. Cumulative brewers shipped life to date to customers in the US/Canada as of 12/30/06 is 594 thousand units. (2) Total K-Cups shipped (system-wide) means K-Cup shipments by all Keurig licensed roasters to customers in the US/Canada. These shipments form the basis upon which royalties are calculated by licensees for payments to Keurig. (3) Total K-Cups shipped by GMCR are under the brands Green Mountain Coffee, Newman's Own Organics coffee and Celestial Seasonings Celestial Seasonings is a tea company based in Boulder, Colorado, United States that specializes in herbal tea but also sells green and black tea (as well as white and oolong blends). They account for over $100,000,000 in Herbal Tea Blends Sales in the United States annually. tea. |
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