Green Mountain Coffee, Inc. (NASDAQ: GMCR) yesterday announced record financial results for the Company’s fiscal fourth quarter and full year ended September 30, 2000.
Net sales were up 38.6% to $21,332,000 for the thirteen weeks ended September 30, 2000, compared to $15,388,000 for the twelve weeks ended September 25, 1999. Total coffee pounds sold for the quarter increased 29.3% year-over-year to 2,715,000 pounds. It is estimated that without the extra week in the recent 2000 fourth quarter, the year-over-year increases in sales dollars and coffee pounds sold would have been 28.0% and 19.3%, respectively. Green Mountain Coffee experienced its strongest growth in the office coffee service channel, due in large part to Keurig Premium Coffee System(TM) coffee sales. The 9.3 percentage point difference in growth between the year-over-year increase in net sales and the increase in coffee pounds sold primarily was due to the impact of sales of the single-cup Keurig line of coffees, whose sales price per coffee pound sold is greater than the Company’s traditional product line, and sales of non-coffee products such as the new Monte Verde(TM) line of powdered hot cappuccino and frozen granita products.
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For the fourth fiscal quarter, Green Mountain Coffee’s gross profit was 39.7% of sales compared to 41.5% of sales in the year ago period. The 1.8 percentage point gross margin decline was caused primarily by the impact of sales of the Keurig line of coffees, which operates under a slightly different business model with lower gross margins. These lower gross margins are offset by lower operating expenses. As a result of this business mix and the Company’s continued focus on achieving increased operating efficiencies, Green Mountain Coffee improved overall operating expenses by 1.3 percentage points, to 30.8% of sales in the quarter ended September 30, 2000, compared to 32.1% in the year-ago quarter. Consequently, operating margins declined by only 50 basis points to 8.9% of sales, compared to 9.4% of sales in the year-ago quarter.
The Company’s effective tax rate for continuing operations in the fourth quarter of fiscal 2000 was 15.7%. The unusually low tax rate in the current quarter was primarily caused by a reduction during the quarter of a deferred tax valuation allowance that had been previously recorded on a manufacturer’s investment tax credit from the State of Vermont. The reduction was based upon management’s best estimate of future taxable income and that portion which is expected to be allocable to Vermont on which the credits could be applied. As a result of all of the above-described factors, Green Mountain Coffee achieved a 72.4% increase in income from continuing operations to $1,436,000 for the thirteen weeks ended September 30, 2000 compared to $833,000 for the twelve weeks ended September 25, 1999. On a per share basis, earnings from continuing operations increased to $0.43 for the thirteen weeks ended September 30, 2000 compared to $0.23 for the twelve weeks ended September 25, 1999. If the Company had been taxed at a more typical rate of 40%, it would have reported per share earnings on income from continuing operations of $0.31 for the Company’s fourth fiscal quarter, up 34.8% from $0.23 for the prior year fourth fiscal quarter.
For Green Mountain Coffee’s fiscal year 2000, the 53 weeks ended September 30, 2000, net sales increased 29.5% to a record $84,001,000 compared to net sales of $64,881,000 for fiscal 1999, the 52 weeks ended September 25, 1999. The Company sold approximately 10,871,000 pounds of coffee in fiscal 2000, which represented a 20.7% increase over the prior year. It is estimated that without the extra week in fiscal 2000, the year-over-year increases in sales dollars and coffee pounds sold would have been 26.9% and 18.4%, respectively. Gross profit as a percentage of sales improved to 39.9% for the year, compared to 39.5% in the prior year. Overall operating expenses decreased by 0.9 percentage points to 31.9% of sales for the year ended September 30, 2000, compared to 32.8% in the year-ago quarter. Consequently, full year operating margins improved to 8.1%, compared to 6.7% in fiscal 1999.
The Company reported record income from continuing operations of $4,153,000, or $1.19 per share, for the year, up 84.8% from $2,247,000, or $0.64 per share, in fiscal 1999. Fiscal 2000 full year results also were impacted by the previously mentioned reduction in the deferred tax valuation allowance, which lowered the Company’s effective tax rate for continuing operations to 33.4% for the year. If the Company had been taxed at a more typical rate of 40%, it would have reported income from continuing operations of $1.07 per share for fiscal 2000, compared to $0.64 for fiscal 1999, representing earnings per share growth of 67.2%.
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By GlobalDataRobert P. Stiller, Chairman, President, and Chief Executive Officer of Green Mountain Coffee said, “It was a great year for Green Mountain Coffee. These are exciting times as we see our hard work and team effort translating into strong financial performance. This past year we focused on improving our business processes and overall execution, we roasted some incredible coffee, and we had fun too. At the same time, Green Mountain Coffee remains as committed as ever to improving the environment and making our local and global communities better. In fiscal 2000, we again contributed five percent of our pre-tax income – through a combination of time, product and cash contributions – to organizations and causes that also pursue these goals. Looking forward, as we introduce more and more consumers to Green Mountain Coffee Roasters® coffee, I am confident we are poised to achieve continued market and financial success.”
The Company also announced that its Board of Directors has established an Employee Stock Ownership Plan, retroactively effective for this past year, so that all employees can accumulate ownership in Green Mountain Coffee and share in the Company’s growth and prosperity. The Board has authorized the Company to purchase $200,000 of its stock to make its first contribution to the plan. Stiller spoke enthusiastically about the new plan, saying, “According to the National Center for Employee Ownership, studies consistently show that when broad employee ownership is combined with a highly participative management style, companies perform much better than they otherwise would be expected to do. We agree with the Center’s position that as employees are asked to take more responsibility, it simply makes sense for them to be rewarded accordingly. From our perspective, we believe this kind of motivation and general sense of fairness is in the best interest of all of the Company’s stakeholders, including stockholders.”
Green Mountain Coffee, Inc. is a leader in the specialty coffee industry and has been recognized by Forbes Magazine as one of the “Best 200 Small Companies in America.” The Company roasts high-quality arabica coffees and offers over 60 varieties including single-origin, estate, certified organic, Fair Trade, proprietary blends, and flavored coffees that it sells under the Green Mountain Coffee Roasters® brand.
The majority of Green Mountain Coffee’s revenue is derived from its wholesale operation that serves supermarkets, convenience stores, offices, and other locations where fine coffees are sold. Green Mountain Coffee also operates a direct mail operation and e-commerce website (http://www.GreenMountainCoffee.com) with secure on-line ordering for customers from its Waterbury, Vermont headquarters. The Company seeks to make the world a better place for present and future generations by operating in an environmentally and socially conscientious manner.
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. Owing to the uncertainties inherent in forward-looking statements, actual results could differ materially from those set forth in forward-looking statements. 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 green coffee, competition and other business conditions in the coffee industry and more generally in the food and beverage industry, the impact of the loss of one or more major customers, the Company’s level of success in continuing to attract new customers, economic conditions, variances from budgeted sales mix and growth rate, customer acceptance of the Company’s new products, the impact of a tighter job market, weather and special or unusual events, as well as other risk factors as described more fully in the Company’s filings with the Securities and Exchange Commission.
- Tables follow -
GREEN MOUNTAIN COFFEE, INC.
Consolidated Statement of Operations
(Dollars in thousands except per share data)
Thirteen Twelve Fifty-three Fifty-two
weeks ended weeks ended weeks ended weeks ended
09/30/00 09/25/99 09/30/00 09/25/99
Net sales:
Wholesale $ 20,449 $ 14,700 $ 79,855 $ 61,418
Direct
883 688 4,146 3,463
Net sales 21,332 15,388 84,001 64,881
Cost of
sales 12,870 9,008 50,465 39,261
Gross profit 8,462 6,380 33,536 25,620
Selling and
operating
expenses 5,144 3,813 20,747 16,381
General and
administrative
expenses 1,428 995 5,887 4,661
Loss on
abandonment
of fixed
assets -- 129 135 229
Operating
income 1,890 1,443 6,767 4,349
Other income 8 4 48 10
Interest
expense (194) (97) (583) (736)
Income from
continuing
operations
before income
taxes 1,704 1,350 6,232 3,623
Income tax
expense (268) (517) (2,079) (1,376)
Income from
continuing
operations 1,436 833 4,153 2,247
Discontinued
operations:
Income on
disposal of
retail stores
operations,
net of income
tax expense 60 -- 60 186
Net income $ 1,496 $ 833 $ 4,213 $ 2,433
Basic income
per share:
Weighted
average
shares
outstanding 3,083,711 3,517,102 3,293,422 3,503,412
Income from
continuing
operations $ 0.47 $ 0.24 $ 1.26 $ 0.64
Income from
discontinued
operations 0.02 -- 0.02 0.05
Net income $ 0.49 $ 0.24 $ 1.28 $ 0.69
Diluted income
per share:
Weighted
average shares
outstanding 3,351,483 3,570,279 3,489,622 3,547,155
Income from
continuing
operations $ 0.43 $ 0.23 $ 1.19 $ 0.64
Income from
discontinued
operations 0.02 -- 0.02 0.05
Net income $ 0.45 $ 0.23 $ 1.21 $ 0.69
GREEN MOUNTAIN COFFEE, INC.
Consolidated Balance Sheet
(Dollars in thousands)
September 30, September 25,
2000 1999
Assets
Current assets:
Cash and cash equivalents $ 489 $ 415
Receivables, less allowances
of $320 at September 30, 2000
and $190 at September 25, 1999 8,454 6,223
Inventories 5,350 5,409
Other current assets 580 497
Loans to officers -- 250
Deferred income taxes, net 182 490
Total current assets 15,055 13,284
Fixed assets, net 11,274 10,183
Other long-term assets 348 250
Deferred income taxes, net 497 161
$ 27,174 $ 23,878
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of
long-term debt $ 135 $ 1,127
Accounts payable 6,125 4,551
Accrued payroll 1,381 1,005
Accrued expenses 614 357
Accrued losses and other
costs of discontinued
operations, net 119 192
Total current liabilities 8,374 7,232
Long-term debt 283 1,908
Long-term line of credit 8,500 3,056
Commitments and contingencies
Stockholders' equity:
Common stock, $0.10 par value:
Authorized - 10,000,000 shares;
Issued - 3,671,005 and
3,615,404 shares at
September 30, 2000 and
September 25, 1999,
respectively 367 362
Additional paid-in capital 13,901 13,409
Retained earnings
(accumulated deficit) 2,778 (1,435)
Treasury shares, at cost -
568,753 and 100,609 shares at
September 30, 2000 and September
25, 1999, respectively (7,029) (654)
Total stockholders' equity 10,017 11,682
$ 27,174 $ 23,878
GREEN MOUNTAIN COFFEE, INC.
Coffee Pounds Sold, by Sales Channel
(As a Percent of Total Coffee Pounds Sold)
Unaudited
Q4 13 wks Q4 12 wks Q4 Q4
Channel ended ended Y/Y lb. % Y/Y lb.
9/30/00 9/25/99 Increase Increase
Supermarkets 26.5% 29.4% 101,000 16.3%
Convenience Stores 26.4% 27.0% 149,000 26.2%
Other Retail 2.3% 2.5% 12,000 23.1%
Restaurants 10.9% 13.5% 11,000 3.9%
Office Coffee Service 24.1% 17.7% 282,000 75.8%
Distributors
Other Food Service 7.0% 7.0% 46,000 31.7%
Direct Mail, including 2.8% 2.9% 14,000 23.0%
Internet Sales
Totals 2,715,000 2,100,000 615,000 29.3%
53 wks 52 wks Full Year Full Year
Channel ended ended Y/Y lb. % Y/Y lb.
9/30/00 9/25/99 Increase Increase
Supermarkets 24.9% 28.0% 186,000 7.4%
Convenience Stores 26.8% 26.6% 520,000 21.7%
Other Retail 2.2% 2.6% 8,000 3.4%
Restaurants 11.2% 13.3% 20,000 1.7%
Office Coffee Service 23.8% 17.6% 1,003,000 63.4%
Distributors
Other Food Service 8.1% 8.7% 95,000 12.1%
Direct Mail, including 3.0% 3.2% 35,000 12.1%
Internet Sales
Totals 10,871,000 9,004,000 1,867,000 20.7%
Note: Certain prior year customer channel classifications were
reclassified to conform to current year classifications.
Wholesale Coffee Pounds Sold, by Geographic Region
(As a Percentage of Total Wholesale Coffee Pounds Sold)
Unaudited
Q4 13 wks Q4 12 wks Q4 Q4
Region ended ended Y/Y lb. %Y/Y lb.
9/30/00 9/25/99 Increase Increase
Northern New England 34.1% 38.5% 115,000 14.7%
Southern New England 24.3% 23.8% 155,000 31.9%
Mid-Atlantic (NY, NJ & PA) 22.5% 21.2% 162,000 37.4%
South Atlantic 7.0% 5.3% 77,000 71.3%
Midwest 2.7% 2.0% 30,000 73.2%
South Central & West 2.1% 1.4% 28,000 96.6%
Multi-Regional 6.2% 6.5% 30,000 22.6%
International 1.1% 1.3% 4,000 15.4%
Totals 2,640,000 2,039,000 601,000 29.5%
53 wks 52 wks Full Year Full Year
Region ended ended Y/Y lb. % Y/Y lb.
9/30/00 9/25/99 Increase Increase
Northern New England 33.2% 36.4% 338,000 10.7%
Southern New England 24.5% 24.2% 478,000 22.7%
Mid-Atlantic (NY, NJ & PA) 21.8% 20.8% 488,000 27.0%
South Atlantic 6.9% 5.3% 257,000 55.2%
Midwest 2.5% 1.9% 101,000 60.5%
South Central & West 2.1% 1.4% 102,000 81.6%
Multi-Regional 7.9% 9.2% 29,000 3.6%
International 1.1% 0.8% 39,000 54.2%
Totals 10,546,000 8,714,000 1,832,000 21.0%
Note: Excludes coffee pounds sold in the Direct Mail channel.
