Peet’s Coffee & Tea, Inc. Reports First Quarter 2010 Results

“Sales were a bit stronger than expected across all channels, particularly grocery where we grew 39%, and our key growth initiatives are on track.”

Peet’s Coffee & Tea, Inc. (NASDAQ:PEET) announced its first quarter results for the fiscal quarter ended April 4, 2010, which included 13 weeks.

  • Reports net revenue growth for the quarter of 13%
  • Reports non-GAAP diluted earnings per share of $0.26 and GAAP diluted earnings per share of $0.22
  • Confirms 2010 non-GAAP diluted earnings per share guidance of $1.27 to $1.30, excluding legal and related expenses the company incurs to comply with a subpoena it received from the Federal Trade Commission in connection with its anti-trust review of the proposed Green Mountain Coffee Roasters acquisition of Diedrich Coffee.

Financial Highlights
First Quarter %

2010

2009

Change
Net revenue, as reported $ 81,196 $ 72,104 13 %
Net income per diluted share, as reported $ 0.22 $ 0.23 -4 %

Non-GAAP diluted net income per share,

excluding unusual items

 $ 0.26 $ 0.23 13 %

For the 13 weeks ended April 4, 2010, net revenue increased 13% to $81.2 million from $72.1 million for the corresponding period of fiscal 2009.

Net income for the 13 weeks ended April 4, 2010, was $3.1 million which was equal to the net income for the corresponding 13-week period of fiscal 2009. Diluted earnings per share were $0.22 for the 13-week period of fiscal 2010 compared to $0.23 per share for the corresponding period of fiscal 2009. Net income for the quarter includes pre-tax expense of $0.8 million of legal and related expenses the company incurred to comply with a subpoena it received from the Federal Trade Commission in connection with its anti-trust review of the proposed Green Mountain Coffee Roasters acquisition of Diedrich Coffee. Excluding this unusual item, non-GAAP diluted earnings per share would have been $0.26.

“Overall, we’re off to a good start in the first quarter driven by strong grocery growth and improving retail sales trends,” said Patrick O’Dea, president and CEO of Peet's Coffee & Tea. “Sales were a bit stronger than expected across all channels, particularly grocery where we grew 39%, and our key growth initiatives are on track.”

Consolidated Financial and Operating Summary

Retail net revenue increased 4% to $50.1 million for the 13 weeks ended April 4, 2010, from $48.0 million for the corresponding period of fiscal 2009. The increase was primarily attributable to growth in existing stores. The company ended the quarter with 193 stores versus 190 stores at the end of the first quarter in 2009.

Specialty net revenue increased 29% to $31.1 million for the 13 weeks ended April 4, 2010 compared to $24.1 million for the corresponding period of fiscal 2009. Within specialty sales, the grocery business continues to grow the most rapidly, up 39% over last year; the foodservice and office business grew 27%; and home delivery sales were down 1%.

Cost of sales and related occupancy expenses were 46.2% of total net revenue, compared to 45.2% for the corresponding period last year. The increase resulted from a mix shift towards the specialty channels which have a higher cost of sales, and, secondarily, higher milk costs in retail.

Operating expenses as a percentage of net revenue decreased to 34.3% from 34.9% for the corresponding period last year due to a favorable mix shift to the specialty business and lower operating expenses in specialty driven by sales leverage of the direct-store-delivery selling system, partially offset by higher retail costs in maintenance and healthcare benefits.

In the quarter the company incurred $0.8 million in legal and related fees to comply with a subpoena the company received from the Federal Trade Commission in connection with its anti-trust review of the proposed Green Mountain Coffee Roasters acquisition of Diedrich Coffee.

General and administrative expenses as a percentage of net revenue decreased to 7.8% of net sales compared to 8.2% for the corresponding period last year. General and administrative expenses increased to $6.3 million, compared to $5.9 million for the corresponding period last year primarily due to higher payroll related costs and legal expenses.

Depreciation and amortization expenses as a percentage of net revenue decreased to 4.8% of net sales compared to 5.0% for the corresponding period last year. Depreciation and amortization expenses increased to $3.9 million, compared to $3.6 million for the corresponding period last year primarily due to depreciation from our new Enterprise Resource Planning (ERP) system.

The company ended the first quarter of 2010 with cash and cash equivalents plus investments of $55.8 million, compared to $47.9 million at year end 2009.


PEET’S COFFEE & TEA, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
April 4, January 3,

2010

2010

ASSETS
Current assets
Cash and cash equivalents $ 55,824 $ 47,934
Accounts receivable, net 12,539 15,209
Inventories 24,239 25,936
Deferred income taxes - current 3,592 3,592
Prepaid expenses and other 6,481 5,863
Total current assets 102,675 98,534
Property, plant and equipment, net 101,623 103,494
Other assets, net 2,176 2,775
Total assets $ 206,474 $ 204,803
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and other accrued liabilities $ 11,840 $ 13,669
Accrued compensation and benefits 6,601 10,832
Deferred revenue 5,513 6,845
Total current liabilities 23,954 31,346
Deferred income taxes - non current 316 321
Deferred lease credits 7,070 7,059
Other long-term liabilities 1,135 1,021
Total liabilities 32,475 39,747
Shareholders' equity

Common stock, no par value; authorized 50,000,000 shares;

issued and outstanding:13,309,000 and 13,104,000 shares

 97,946 92,054
Retained earnings 76,053 73,002
Total shareholders' equity 173,999 165,056
Total liabilities and shareholders' equity $ 206,474 $ 204,803
PEET’S COFFEE & TEA, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Thirteen weeks ended
April 4, March 29,

2010

2009
Retail stores $ 50,071 $ 47,982
Specialty sales 31,125 24,122
Net revenue 81,196 72,104
Cost of sales and related occupancy expenses 37,539 32,568
Operating expenses 27,837 25,171
Transaction related expenses 824 -
General and administrative expenses 6,302 5,938
Depreciation and amortization expenses 3,877 3,607
Total costs and expenses from operations 76,379 67,284
Income from operations 4,817 4,820
Interest (expense) income, net (1 ) 78
Income before income taxes 4,816 4,898
Income tax provision 1,765 1,845
Net income $ 3,051 $ 3,053
Net income per share:
Basic $ 0.23 $ 0.23
Diluted $ 0.22 $ 0.23
Shares used in calculation of net income per share:
Basic 13,188 13,039
Diluted 13,809 13,241
PEET’S COFFEE & TEA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Thirteen weeks ended
April 4, March 29,

2010

2009
Cash flows from operating activities:
Net income $ 3,051 $ 3,053

Adjustments to reconcile net income to net cash provided by

operating activities:
Depreciation and amortization 4,422 4,141
Amortization of interest purchased - 27
Stock-based compensation 742 643
Excess tax benefit from exercise of stock options (1,113 ) (28 )
Tax benefit from exercise of stock options 946 17
Loss on disposition of assets and asset impairment 31 7
Deferred income taxes (5 ) (9 )
Changes in other assets and liabilities:
Accounts receivable, net 2,670 1,809
Inventories 1,697 3,552
Prepaid expenses and other current assets (618 ) 1,694
Other assets 29 177
Accounts payable, accrued liabilities and deferred revenue (7,354 ) (3,235 )
Deferred lease credits and other long-term liabilities 125 453
Net cash provided by operating activities 4,623 12,301
Cash flows from investing activities:
Purchases of property, plant and equipment (2,623 ) (3,787 )
Proceeds from sales of property, plant and equipment 13 -
Changes in restricted investments 560 884
Proceeds from sales and maturities of marketable securities - 3,972
Net cash (used in) provided by investing activities (2,050 ) 1,069
Cash flows from financing activities:
Net proceeds from issuance of common stock 4,732 450
Purchase of common stock (528 ) (6,564 )
Excess tax benefit from exercise of stock options 1,113 28
Net cash provided by (used in) financing activities 5,317 (6,086 )
Increase in cash and cash equivalents 7,890 7,284
Cash and cash equivalents, beginning of year 47,934 4,719
Cash and cash equivalents, end of year $ 55,824 $ 12,003
Non-cash investing activities:
Capital expenditures incurred, but not yet paid $ 118 $ 1,548
Other cash flow information:
Cash paid for income taxes 91 21
SEGMENT REPORTING
(Dollars in thousands)

Retail

Specialty

Unallocated

Total
Percent Percent Percent
of Net of Net of Net

Amount

Revenue

Amount

Revenue

Amount

Revenue
For the thirteen weeks ended April 4, 2010
Net revenue $ 50,071 100.0 % $ 31,125 100.0 % $ 81,196 100.0 %
Cost of sales and occupancy 21,654 43.2 % 15,885 51.0 % 37,539 46.2 %
Operating expenses 21,130 42.2 % 6,707 21.5 % 27,837 34.3 %
Depreciation and amortization 2,749 5.5 % 432 1.4 % $ 696 3,877 4.8 %
Segment operating income 4,538 9.1 % 8,101 26.0 % (7,822 ) 4,817 5.9 %
For the thirteen weeks ended March 29, 2009
Net revenue $ 47,982 100.0 % $ 24,122 100.0 % $ 72,104 100.0 %
Cost of sales and occupancy 20,525 42.8 % 12,043 49.9 % 32,568 45.2 %
Operating expenses 19,756 41.2 % 5,415 22.4 % 25,171 34.9 %
Depreciation and amortization 2,762 5.8 % 427 1.8 % $ 418 3,607 5.0 %
Segment operating income 4,939 10.3 % 6,237 25.9 % (6,356 ) 4,820 6.7 %

NON-GAAP FINANCIAL INFORMATION

The following reconciliation and non-GAAP financial information are provided to assist the reader with understanding the financial impact of the previously discussed unusual items and the extra week during the year. Management believes this information is relevant because the nature and magnitude of the charges do not reflect our on-going operating performance.

Reconciliation of Non-GAAP Financial Information to Net Income

(Unaudited, in thousands, except per share data)
Thirteen Thirteen
weeks ended weeks ended
April 4, March 29,

2010

2009

Net Income
Net income, as reported $ 3,051 $ 3,053
Transaction related expenses, net of tax 522
Non-GAAP net income $ 3,573 $ 3,053

Diluted Net Income Per Share
Net income per diluted share, as reported $ 0.22 $ 0.23
Transaction related expenses 0.04
Non-GAAP diluted net income per share $ 0.26 $ 0.23
Non-GAAP Financial Information
(Unaudited, in thousands, except per share data)
Quarter ended April 4, 2010
Transaction
As related Non-GAAP

Reported

expenses

Adjusted
Retail stores $ 50,071 $ 50,071
Specialty sales 31,125 31,125
Net revenue 81,196 81,196

Cost of sales and related

 37,539 37,539

occupancy expenses
Operating expenses 27,837 27,837
Transaction related expenses 824 $ (824 ) -
General and administrative 6,302 6,302
Depreciation and amortization 3,877 3,877

Total costs and expenses

 76,379 (824 ) 75,555
Income from operations 4,817 824 5,641
Interest expense, net (1 ) (1 )
Income before income taxes 4,816 824 5,640
Income tax provision 1,765 302 2,067
Net income $ 3,051 $ 522 $ 3,573
Net income per diluted share $ 0.22 $ 0.04 $ 0.26


Source: Restaurant News Resource / Nevistas

More News:


My Trip

My Password Reset

To reset your password, please enter your email address below. An email containing further instructions will be immediately sent to the email address associated with your account.

OR

Register as Traveler

OR

Register as Local
Register as Tour Guide

OR

Close
Yes No
CONFIRM CHANGE TIME
Yes No

To top