Keurig Green Mountain, Inc.
Feb 1, 2012
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Green Mountain Coffee Roasters, Inc. Reports Fiscal Year 2012 First Quarter Results

Strong Keurig® Single Cup Brewer and Beverage Holiday Sales Drive 102% Net Sales Growth

WATERBURY, Vt.--(BUSINESS WIRE)-- Green Mountain Coffee Roasters, Inc., (GMCR) (NASDAQ: GMCR), a leader in specialty coffee and coffee makers, today announced its fiscal year 2012 first quarter results for the thirteen weeks ended December 24, 2011.

Performance Highlights

First Quarter Fiscal Year 2012

"North American consumers continue to embrace the convenience, choice and consistent experience provided by the Keurig® Single Cup Brewing system and, as evidenced by our strong holiday sales, are encouraging friends and family to do the same," said Lawrence J. Blanford, GMCR's president and CEO. "We believe our sales in the period were, in part, the result of our efforts to ensure strong in-stock positions on store shelves as well as due to growing awareness of the Keurig® brand which was aided by our nationwide advertising and strong in-store merchandising."

With increasing consumer adoption, the Keurig® Single Cup Brewing system, supported by GMCR's growing family of owned and non-owned beverage brands in K-Cup® packs, is changing the way North America brews its coffee and other beverages.

"The value of single-serve, at-home brewing seems to be resonating with consumers," added Blanford. "According to NPD Group, in calendar 2011, sales of single-serve coffee makers accounted for 50% of the total dollars consumers spent overall in the coffee maker category. The Keurig® Single Cup Brewing system has set the bar for consumers' single-cup experience, and drove an estimated 35% unit share of all coffee makers during the October through December 2011 period according to NPD."

First Quarter Fiscal Year 2012 Financial Review

Net Sales (in millions)

    Thirteen weeks ended        
December 24,
2011
    December 25,
2010

$ Increase
(Decrease)

% Increase
(Decrease)

K-Cup® Packs $ 715.7 $ 332.9 $ 382.8 115 %
Brewers and Accessories 330.4 188.0 142.4 76 %
Other Products and Royalties   112.1   53.2   58.9 111 %
Total Net Sales $ 1,158.2 $ 574.1 $ 584.1 102 %
 

Balance Sheet Highlights

Business Outlook and Other Forward-Looking Information

Company Estimates for Fiscal Year 2012*

"Our brewer sales in the first quarter of fiscal year 2012 were above our expectations, with approximately 4.2 million brewers sold by the combination of GMCR and our licensed partners. That total is more than half of the 6.5 million brewers sold in all of our fiscal year 2011," said Blanford. "As these brewers come into use, we expect them to have a positive impact on future portion pack demand. Given the challenge of estimating sales in such a dynamic environment, in the coming months we will be working to ensure we apply appropriate rigor and analyses to confirm and refine our modeling assumptions and estimates of forward demand. In the meantime however, we are reaffirming our prior revenue and earnings estimates for fiscal year 2012."The Company reaffirmed its prior estimates for its fiscal year 2012, including:

* Referenced brewer shipments do not account for returns.

Company Estimates for Second Quarter Fiscal Year 2012

The Company is providing initial estimates for the second quarter of fiscal year 2012:

Of note when comparing growth rates for fiscal years 2011 and 2012: second quarter fiscal year 2011 results reflect the impact of the acquisition of Van Houtte completed during first quarter of fiscal 2011; a price increase on K-Cup® packs announced in the first quarter of fiscal year 2011 and completed in the second quarter of fiscal year 2011 across all channels was a meaningful contributor to the second quarter fiscal year 2011's growth; and, year-over-year comparisons will need to consider GMCR's sale of its Filterfresh business in October 2011 which contributed approximately $91 million in revenue during fiscal year 2011.

The Company's estimates for its second quarter fiscal year 2012 reflect lower portion pack and brewer growth rates compared to its first quarter fiscal year 2012 following the extraordinary growth driven by holiday purchases during first quarter fiscal year 2012 and the established seasonality of the business.

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 such as transaction expenses related to the Company's acquisitions including the foreign exchange impact of hedging the risk associated with the Canadian dollar purchase price of the Van Houtte acquisition; any gain from sale of the Fitlerfresh U.S.-based coffee services business; legal and accounting expenses related to the SEC inquiry and pending litigation; non-cash related items such as amortization of identifiable intangibles and losses incurred on the extinguishment of debt; and the effect of net operating and capital loss carryforwards, each of which include adjustments to show the tax impact of excluding these items. 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 of Unaudited Consolidated Statements of Operations" tables that accompany this document for a full reconciliation the Company's GAAP to non-GAAP results.

Conference Call and Webcast

Green Mountain Coffee Roasters, Inc. 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, February 1, 2012. Management's prepared remarks on its quarterly results will be provided via a Current Report on Form 8-K and also posted under the events link in the Investor Relations section of the Company's website at www.GMCR.com. As a result, the conference call will include only brief remarks by management followed by a question and answer session. The call along with accompanying slides is accessible via live webcast from the events link in the Investor Relations portion of the Company's website at http://investor.gmcr.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 9427808 from 9:00 p.m. ET on February 1, 2012 through 9:00 p.m. ET on Sunday, February 5, 2012.

About Green Mountain Coffee Roasters, Inc.

As a leader in specialty coffee and coffee makers, Green Mountain Coffee Roasters, Inc. (GMCR) (NASDAQ: GMCR), is recognized for its award-winning coffees, innovative Keurig® Single Cup brewing technology, and socially responsible business practices. GMCR supports local and global communities by offsetting 100% of its direct greenhouse gas emissions, investing in sustainably-grown coffee, and donating at least five percent of its pre-tax profits to social and environmental projects.

GMCR routinely posts information that may be of importance to investors in the Investor Relations 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's automatic email news release delivery, individuals can receive news directly from GMCR as it is released.

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 difficulty in forecasting sales and production levels, the degree to which there are changes in 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 the Company's acquisitions, the ability to maximize or successfully assert our intellectual property rights, the Company's success in introducing and producing new product offerings, the Company's dependence on external capital, including 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, the Company's ability to continue to grow and build profits in the At Home and Away from Home businesses, the Company's ability to attract and retain senior management, the continued availability of a consistent supply of parts for our brewers, and the brewers themselves, the Company experiencing product liability, product recall and higher than anticipated rates of warranty expense or sales returns associated with a product quality or safety issue, the extent to which the data security of the Company's websites may be compromised, 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, the impact of the inquiry initiated by the SEC and any related litigation or additional governmental investigative or enforcement proceedings, as well as other risks described more fully in the Company's Annual Report on Form 10-K for fiscal year 2011 and other filings with the SEC. Forward-looking statements reflect management's analysis as of the date of this release. The Company does not undertake to revise these statements to reflect subsequent developments, other than in its regular, quarterly earnings releases.

GMCR-C

GREEN MOUNTAIN COFFEE ROASTERS, INC.
Unaudited Consolidated Statements of Operations
(Dollars in thousands except per share data)
   
Thirteen Thirteen
weeks ended weeks ended
December 24, December 25,
2011 2010
Net sales $ 1,158,216 $ 574,148
Cost of sales   821,612     430,548  
Gross profit 336,604 143,600
 
Selling and operating expenses 141,358 78,289
General and administrative expenses   49,408     42,031  
Operating income 145,838 23,280
 
Other income (expense), net 691 88
Loss on financial instruments, net (1,134 ) (6,342 )
Gain on foreign currency, net 2,686 1,579
Gain on sale of subsidiary 26,311 -
Interest expense   (6,463 )   (6,058 )
Income before income taxes 167,929 12,547
 
Income tax expense   (63,247 )   (10,098 )
Net Income $ 104,682 $ 2,449
 
Net income attributable to noncontrolling interests   268     37  
 
Net income attributable to GMCR $ 104,414   $ 2,412  
 
 
Basic income per share:
Basic weighted average shares outstanding 154,704,471 141,374,327
Net income per common share - basic $ 0.67 $ 0.02
 
Diluted income per share:
Diluted weighted average shares outstanding 159,367,829 147,036,072
Net income per common share - diluted $ 0.66 $ 0.02
 

GREEN MOUNTAIN COFFEE ROASTERS, INC.
Unaudited Consolidated Balance Sheets
(Dollars in thousands)
   
December 24, September 24,
2011 2011
Assets
Current assets:
Cash and cash equivalents $ 84,111 $ 12,989
Restricted cash and cash equivalents 9,087 27,523

Receivables, less uncollectible accounts and return allowances
 of $58,956 and $21,407 at December 24, 2011 and
 September 24, 2011, respectively

412,464 310,321
Inventories