Specialty coffee company Green Mountain Coffee (GMC) has reported net sales of US$22.98m for its Q3 ended 6 July, up 7.2% from US$21.44m year on year.
Total coffee pounds shipped during the Q3 increased 5.8% to 3,105,000 compared to 2,935,000 pounds for the Q3 2001.
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GMC delivered its strongest growth for the quarter in the supermarket channel, where coffee pounds shipped increased 18.7% due primarily to year-over-year expansion of sales to two customers. Following two fiscal quarters of year-over-year declines in sales of Keurig K-Cups, there was slight improvement in the Q3 with a 1.1% increase in sales. The convenience store channel grew 1.5%. Usually a steady growth contributor, comparisons were impacted by high prior year Q3 shipments related to the initial inventory build by McLane Co, the distributor for Exxon Mobil Corporation convenience stores.
GMC’s gross profit margin declined 0.9 percentage points to 42.5% of sales, compared to 43.4% of sales in the year-ago period. This reduction was due primarily to a increase in distribution costs due to increased sales in the supermarket channel, and an increase in green coffee costs related to the higher costs to procure Fair Trade and other high quality estate grown coffees.
Operating expenses as a percentage of sales decreased 1 percentage point to 31.7%, from 32.7% in the prior year quarter, due primarily to reductions in marketing, consulting and variable compensation expenses. Year on year, operating margins improved to 10.8% of sales, compared to 10.7% in the year-ago period, and GMC achieved a 7.4% year on year increase in net income. Earnings per share (EPS) were US$0.2 for the Q3 2002 compared to US$0.18 for the Q3 2001.
Year to date
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By GlobalDataFor the 40-weeks ended 6 July 2002, GMC saw a 9.3% increase in coffee pounds shipped compared to the same period last year. Sales were up 4.3% to US$78.36m, compared to US$75.09m year on year. Net income increased 14.6% to US$5m, or US$0.69 per share, from US$4.37m, or US$0.61 per share, in the 2001 period.
Robert P. Stiller, chairman, president, and CEO, said: “Combining the strength of our infrastructure and business model with GMC’s reputation for social responsibility, our many trademarked coffee blends, and the growing recognition and appeal of the GMC Roasters’ brand, we believe we have a winning formula. While our sales growth has been clearly impacted by the economic environment, we also have benefited from our multi-channel strategy. We remain as committed as ever to profitably growing this business.”
Stiller also said, “During the Q3 we continued to make changes to enhance our brand positioning strategy and even better support our reseller partners. We introduced new, more attractive, packaging and separated our coffee selections into three distinct product lines that include Signature Coffees, Exotic Origin Coffees, and Fair Trade and Organic Coffees. We added two new coffees to our Keurig line and we fully integrated coffees formerly marketed under the Frontier Organic Coffee brand. This has now created the broadest selection of double-certified Fair Trade and organic specialty coffee lines available in the US, all under the GMC Roasters brand.”
CFO William G. Hogan added: “We continue to work to control operating expenses in this slower growth environment. EBITDA grew 6.2% to US$3.38m from US$3.18m in the Q3 2001 and EBITDA for the first three quarters is up 10.4%.”
Consolidated Statement of Operations
(Dollars in thousands except per share data) Unaudited
Twelve Twelve Forty Forty
weeks weeks weeks weeks
ended ended ended ended
7/6/02 7/7/01 7/6/02 7/7/01
Net sales $ 22,989 $ 21,447 $ 78,359 $ 75,093
Cost of sales 13,221 12,135 44,350 43,843
Gross profit 9,768 9,312 34,009 31,250
Selling and operating
expenses 5,438 5,299 19,598 18,176
General and administrative
expenses 1,852 1,710 5,788 5,318
Operating income 2,478 2,303 8,623 7,756
Other (expense) income (47) 21 (54) 36
Interest expense (92) (96) (187) (440)
Income before income taxes 2,339 2,228 8,382 7,352
Income tax expense (877) (886) (3,348) (2,977)
Income before equity in net
earnings of Keurig, Inc. 1,462 1,342 5,034 4,375
Equity in net earnings of
Keurig, Inc. (21) – (21) –
Net income $ 1,441 $ 1,342 $ 5,013 $ 4,375
Basic income per share:
Weighted average shares
outstanding 6,700,782 6,469,931 6,666,043 6,352,628
Net income $ 0.22 $0.21 $0.75 $0.69
Diluted income per share:
Weighted average shares
outstanding 7,303,450 7,268,547 7,283,448 7,163,293
Net income $0.20 $0.18 $0.69 $0.61
