Green Mountain Q1 Net Sales Surge 77%, Ups FY10 Outlook

Green Mountain Coffee Roasters (GMCR) has reported net sales of $349.4m for the first quarter of 2010, an increase of 77% compared to $197m for the same quarter previous year. Net income for the quarter was $12.4m or $0.29 per diluted share compared to $14.3m or $0.39 per diluted share for the previous year quarter.

Excluding the favorable impact of the patent settlement in 2009, the first quarter of fiscal 2010 GAAP and non-GAAP fully diluted earnings per share of $0.27 represents a 163% increase over non-GAAP fully diluted earnings per share of $0.10 per share in fiscal 2009.

The two primary drivers of the 77%, or $152.4m, increase in the company’s net sales for the first quarter of fiscal 2010 were the 101%, or $86.0m, increase in total K-Cup net sales and the 86.5%, or $56.7m, increase in Keurig brewer and accessories sales. Approximately 87% of consolidated sales this past quarter were from the Keurig Brewing System and its recurring K-Cup portion pack revenue.

For the Keurig business unit, net sales for the first quarter of fiscal 2010, after the elimination of inter-company sales, were $217.8m, up 106% from net sales of $105.6m in the first quarter of fiscal 2009.

The Keurig segment net sales increase over the prior year quarter was due to strong At Home brewer and accessories sales plus a 158% increase in K-Cup sales to retailers and to consumers from Keurig.com. Additionally, royalty income from the sale of K-Cups from third party licensed roasters increased $2m over the prior year quarter and totaled $11m.

For the Specialty Coffee business unit (SCBU) net sales for the first fiscal 2010 grew 44% to $131.6m, after the elimination of inter-company sales compared to $91.3m reported in the first quarter of fiscal 2009.

Net sales related to the Timothy’s brand, which are included in the company’s results for the first time, represented approximately 8 percentage points of the 44% increase in SCBU’s net sales, and 4 percentage points of the 77% increase in GMCR’s total company sales. Fair Trade Certified coffees represented approximately 30% percent of coffee pounds shipped this quarter.

Lawrence Blanford, president and CEO of GMCR said: “Building on our excellent fiscal 2009 performance, it is exciting to be off to an outstanding start for fiscal 2010. The Keurig Single-Cup Brewing System and our growing family of brands and K-Cup portion pack products are changing the way consumers in North America prepare and enjoy their coffee and other beverages.

“Due to our strong first quarter financial results, we are raising our expectations for fiscal 2010 EPS from prior estimates of $1.85 to $1.95 per fully diluted share to a range of $1.95 to $2.05 per fully diluted share excluding any one-time acquisition-related transaction expenses for the pending Diedrich acquisition above the amount incurred in the first quarter of fiscal 2010.”

For fiscal 2010, the company anticipates total consolidated net sales growth of 57% to 62%, up from prior estimates of 55% to 60%; and earnings per share in the range of $1.95 to $2.05 per share, up from prior estimates of $1.85 to $1.95 per share.