Peet’s Coffee & Tea, Inc. (NASDAQ:PEET) today announced its
third quarter 2010 results for the period ended October 3, 2010,
which included 13 weeks.
In this release, the company:
- Reports third quarter diluted earnings
per share of $0.28, an increase of 47% versus the corresponding
period last year
- Reports third quarter net revenue of
$80.2 million, an increase of 9% versus the corresponding period
last year
- Raises guidance for full-year diluted
earnings per share by $0.03
- Gives guidance for 2011 diluted
earnings per share of $1.53 to $1.60.
For the 13 weeks ended October 3, 2010, net revenue increased 9%
to $80.2 million from $73.9 million for the corresponding period
last year.
Net income for the quarter increased 52% to $3.8 million, or
$0.28 per diluted share, compared to $2.5 million, or $0.19 per
diluted share, for the corresponding period last year.
“We made excellent progress this quarter,” said Patrick O’Dea,
CEO and president of Peet’s Coffee & Tea. “We drove strong
growth in our grocery business and achieved major operating
improvement in our stores. It’s a real testament to the strength of
our people and to the loyalty of our customers. We’re excited as we
enter the holiday season and feel good about our growth plans for
2011.”
Financial and Operating Summary
Retail net revenue increased 4% to $49.8 million for the 13
weeks ended October 3, 2010, from $47.9 million for the
corresponding period last year. The increase was solely due to
growth in existing stores.
Specialty net revenue increased 17% to $30.4 million compared to
$26.0 million for the corresponding period last year. Within the
specialty business, grocery sales grew 24%, the foodservice and
office business was up 11%, and home delivery sales were flat
compared to the same period last year.
Cost of sales and related occupancy costs increased as a
percentage of net revenue to 47.5%, compared to 46.4% for the
corresponding period last year. The increase from last year was due
to higher commodity costs, specifically coffee and milk, and a
shift in mix towards grocery, with both Peet’s and Godiva brands,
which have lower gross margins than our retail business.
Operating expenses decreased as a percentage of net revenue to
33.1%, compared to 35.2% for the corresponding period last year.
The decrease was due primarily to a favorable mix shift to the
specialty channel, where operating expenses are lower, and to
effective cost management in the retail business.
General and administrative expenses were consistent with last
year at $5.7 million, as increases in payroll-related costs were
offset by lower marketing expenses.
Depreciation and amortization expense was consistent with last
year at $3.9 million as new capital expenditures were offset by
newly fully depreciated assets.
Fiscal 2010 Full Year Outlook
Looking ahead, Peet’s raised its earnings guidance for the year
based on current results:
- Diluted earnings per share are now
expected to be in the $1.25 to $1.28 range for the 52 weeks ending
January 2, 2011. This is a $0.03 increase from prior guidance of
$1.22 to $1.25. This estimate includes approximately $1.0 million
($0.05 per diluted share) of expenses related to the subpoena the
company received from the Federal Trade Commission (FTC) in
connection with the FTC’s anti-trust review of the acquisition of
Diedrich Coffee by Green Mountain Coffee Roasters. Excluding the
expenses related to the FTC subpoena, Peet’s raised its non-GAAP
diluted earnings per share guidance $0.03 per share to $1.30 to
$1.33 for fiscal 2010.
Fiscal 2011 Outlook
Looking ahead, Peet’s provided the following fiscal 2011
guidance:
- Total net revenue is expected to grow
8% to 10%.
- Diluted earnings per share are expected
to be in the range of $1.53 to $1.60.
Peet’s Coffee & Tea, Inc. Q3 2010 Conference Call
The company will host a conference call beginning at 2:00 p.m.
PT/5:00 p.m. ET on November 2, 2010, which can be accessed by
calling 1-866-748-8653. The call will be simultaneously webcast on
Peet’s website at www.peets.com.
A replay of the teleconference will be available from 5:00 p.m.
PT/8:00 p.m. ET on November 2, 2010, through 8:59 p.m. PT/11:59
p.m. ET on November 9, 2010, at 1-800-642-1687 or 1-706-645-9291,
using access code 16459848. It will also be archived at
http://investor.peets.com/medialist.cfm through November 2, 2011,
at 8:59 p.m. PT/11:59 ET.
ABOUT PEET’S COFFEE & TEA, INC.
Peet's Coffee & Tea, Inc., (PEET), is the premier specialty
coffee and tea company in the United States. The company was
founded in 1966 in Berkeley, Calif. by Alfred Peet. Peet was an
early tea authority who later became widely recognized as the
grandfather of specialty coffee in the U.S. Today, Peet’s Coffee
& Tea offers superior quality coffees and teas in multiple
forms, by sourcing the best quality coffee beans and tea leaves in
the world, adhering to strict high quality and taste standards, and
controlling product quality through its unique direct store
delivery selling and merchandising system. Peet’s is committed to
strategically growing its business through many channels while
maintaining the extraordinary quality of its coffees and teas. For
more information about Peet's Coffee & Tea, Inc., visit
www.peets.com.
This press release contains statements that are not based on
historical fact and are “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements include statements relating to
2010 earnings per diluted share and 2011 forecasted net revenue and
earnings per diluted share. Forward-looking statements are based on
management’s beliefs, as well as assumptions made by and
information currently available to management, including financial
and operational information, the company’s stock price volatility,
commodity price expectations, and current competitive
conditions. As a result, these statements are subject to
various risks and uncertainties. The company’s actual results
could differ materially from those set forth in forward-looking
statements depending on a variety of factors including, but not
limited to, general economic conditions, including the recent
recession and its ongoing negative impact on consumer spending;
volatility of commodity costs; the outcome of the current wage and
hour litigation involving the company and potential future claims
and litigation involving the company, and the company’s ability to
manage its expenses related to such claims and litigation; the
company’s ability to implement its business strategy, attract and
retain customers, and obtain and expand its market presence in new
geographic regions; the availability and cost of high-quality
Arabica coffee beans; consumers’ tastes and preferences; and
competition in its market as well as other risk factors as
described more fully in the company’s filings with the Securities
and Exchange Commission, including its Annual Report on Form 10-K
for the year ended January 3, 2010. These factors may not be
exhaustive. The company operates in a continually changing business
environment, and new risks emerge from time to time. Any
forward-looking statements speak only as of the date of this press
release.
PEET’S COFFEE & TEA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in
thousands, except share amounts) October 3,
January 3,
2010
2010
ASSETS Current assets Cash and cash equivalents $
28,551 $ 47,934 Accounts receivable, net 13,668 15,209 Inventories
40,360 25,936 Deferred income taxes - current 3,550 3,592 Prepaid
expenses and other
8,195
5,863 Total current assets 94,324 98,534
Property, plant and equipment, net 98,819 103,494 Other assets, net
2,164 2,775 Total
assets
$ 195,307 $
204,803 LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities Accounts payable and other accrued
liabilities $ 12,184 $ 13,669 Accrued compensation and benefits
7,964 10,832 Deferred revenue
5,434
6,845 Total current liabilities 25,582 31,346
Deferred income taxes - non current 279 321 Deferred lease credits
7,097 7,059 Other long-term liabilities
1,372
1,021 Total liabilities 34,330 39,747
Shareholders' equity Common stock, no par value; authorized
50,000,000 shares; issued and outstanding:12,773,000 and 13,104,000
shares 76,906 92,054 Retained earnings
84,071
73,002 Total shareholders' equity
160,977 165,056 Total
liabilities and shareholders' equity
$
195,307 $ 204,803
PEET’S COFFEE & TEA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited,
in thousands, except per share amounts) Thirteen
weeks ended Thirty-nine weeks ended October 3,
September 27, October 3, September 27,
2010
2009
2010
2009
Retail stores $ 49,791 $ 47,863 $ 150,422 $ 144,686
Specialty sales
30,417
26,042 91,758
74,889 Net revenue 80,208 73,905 242,180 219,575
Cost of sales and related occupancy expenses 38,138 34,291
113,054 99,812 Operating expenses 26,526 26,003 81,301 76,676
Transaction related expenses
-
49 970 128 General and administrative expenses 5,745 5,770 17,669
17,782 Depreciation and amortization expenses
3,947 3,962
11,844 11,200 Total costs and
expenses from operations
74,356
70,075 224,838
205,598 Income from operations 5,852 3,830
17,342 13,977 Interest income, net
2
(15 ) 6
111 Income before income taxes 5,854 3,815
17,348 14,088 Income tax provision
2,091
1,346 6,279
5,158 Net income
$
3,763 $ 2,469
$ 11,069 $
8,930 Net income per share: Basic $ 0.29 $ 0.19
$ 0.85 $ 0.69 Diluted $ 0.28 $ 0.19 $ 0.81 $ 0.67 Shares
used in calculation of net income per share: Basic 12,847 12,976
13,094 12,977 Diluted 13,425 13,343 13,706 13,267
PEET’S
COFFEE & TEA, INC. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited, in thousands)
Thirty-nine weeks ended October 3,
September 27,
2010
2009
Cash flows from operating activities: Net income $ 11,069 $
8,930 Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 13,456 12,790
Amortization of interest purchased - 36 Stock-based compensation
2,457 2,277 Excess tax benefit from exercise of stock options
(1,579 ) (275 ) Tax benefit from exercise of stock options 1,311
119 Loss on disposition of assets and asset impairment 110 184
Deferred income taxes - (72 ) Changes in other assets and
liabilities: Accounts receivable, net 1,541 1,242 Inventories
(14,424 ) (4,440 ) Prepaid expenses and other current assets (2,332
) (836 ) Other assets 26 185 Accounts payable, accrued liabilities
and deferred revenue (6,249 ) (1,904 ) Deferred lease credits and
other long-term liabilities
389
829 Net cash provided by operating activities
5,775 19,065
Cash flows from investing activities: Purchases of property,
plant and equipment (8,396 ) (11,908 ) Proceeds from sales of
property, plant and equipment 17 - Changes in restricted
investments 558 878 Proceeds from sales and maturities of
marketable securities - 8,507 Purchases of marketable securities
- (371
) Net cash used in investing activities
(7,821 ) (2,894
) Cash flows from financing activities: Net
proceeds from issuance of common stock 9,315 2,365 Purchase of
common stock (28,231 ) (6,564 ) Excess tax benefit from exercise of
stock options
1,579
275 Net cash used in financing activities
(17,337 )
(3,924 ) (Decrease) increase in
cash and cash equivalents (19,383 ) 12,247 Cash and cash
equivalents, beginning of period
47,934
4,719 Cash and cash equivalents,
end of period
$ 28,551
$ 16,966 Non-cash investing
activities: Capital expenditures incurred, but not yet paid $ 641 $
716 Other cash flow information: Cash paid for income taxes 5,402
5,023
SEGMENT
REPORTING (Unaudited, 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 October 3, 2010 Net
revenue $ 49,791 100.0 % $ 30,417 100.0 % $ 80,208 100.0 % Cost of
sales and occupancy 22,082 44.3 % 16,056 52.8 % 38,138 47.5 %
Operating expenses 20,457 41.1 % 6,069 20.0 % 26,526 33.1 %
Depreciation and amortization 2,825 5.7 % 426 1.4 % $ 696 3,947 4.9
% Segment operating income 4,427 8.9 % 7,866 25.9 % (6,441 ) 5,852
7.3 %
For the thirteen weeks ended September 27, 2009
Net revenue $ 47,863 100.0 % $ 26,042 100.0 % $ 73,905 100.0 % Cost
of sales and occupancy 21,179 44.2 % 13,112 50.3 % 34,291 46.4 %
Operating expenses 20,488 42.8 % 5,515 21.2 % 26,003 35.2 %
Depreciation and amortization 2,907 6.1 % 463 1.8 % $ 592 3,962 5.4
% Segment operating income 3,289 6.9 % 6,952 26.7 % (6,411 ) 3,830
5.2 %
For the thirty-nine weeks ended October 3, 2010
Net revenue $ 150,422 100.0 % $ 91,758 100.0 % $ 242,180 100.0 %
Cost of sales and occupancy 65,700 43.7 % 47,354 51.6 % 113,054
46.7 % Operating expenses 61,938 41.2 % 19,363 21.1 % 81,301 33.6 %
Depreciation and amortization 8,441 5.6 % 1,315 1.4 % $ 2,088
11,844 4.9 % Segment operating income 14,343 9.5 % 23,726 25.9 %
(20,727 ) 17,342 7.2 %
For the thirty-nine weeks ended
September 27, 2009 Net revenue $ 144,686 100.0 % $ 74,889 100.0
% $ 219,575 100.0 % Cost of sales and occupancy 62,930 43.5 %
36,882 49.2 % 99,812 45.5 % Operating expenses 60,417 41.8 % 16,259
21.7 % 76,676 34.9 % Depreciation and amortization 8,449 5.8 %
1,325 1.8 % $ 1,426 11,200 5.1 % Segment operating income 12,890
8.9 % 20,423 27.3 % (19,336 ) 13,977 6.4 %
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