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8-K - PEETS COFFEE & TEA INC | v230594_8k.htm |
Exhibit 99.1
Media Contact:
Nicole Arena
Double Forte
415.848.8103
narena@double-forte.com
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Investor Contact:
Seanna Allen
Peet’s Coffee & Tea, Inc.
510.594.2196
investorrelations@peets.com
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PEET’S COFFEE & TEA, INC. REPORTS SECOND QUARTER 2011 RESULTS
EMERYVILLE, Calif. – August 2, 2011 – Peet’s Coffee & Tea, Inc. (NASDAQ: PEET) today announced its second quarter results for the fiscal period ended July 3, 2011, which included 13 weeks.
In this release, the company:
·
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Reports net revenue growth of 12% for the quarter
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·
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Reports diluted earnings per share of $0.38, up 23% versus 2010 diluted earnings per share of $0.31
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·
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Raises guidance for 2011 full-year net revenue growth to the 10% to 12% range, up from 8% to 10%
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·
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Expects 2011 full-year diluted earnings per share to be toward the higher end of the previous guidance range of $1.43 to $1.50
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Financial Highlights
Second Quarter
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%
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Year to Date
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%
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||||||||||||||||||||
2011
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2010
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Change
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2011
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2010
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Change
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||||||||||||||||||
Net revenue, as reported
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$ | 90,616 | $ | 80,776 | 12 | % | $ | 179,088 | $ | 161,972 | 11 | % | |||||||||||
Net income per diluted share, as reported
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$ | 0.38 | $ | 0.31 | 23 | % | $ | 0.79 | $ | 0.53 | 49 | % | |||||||||||
Non-GAAP net income per diluted share,
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|||||||||||||||||||||||
excluding unusual items
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$ | 0.38 | $ | 0.31 | 23 | % | $ | 0.79 | $ | 0.57 | 39 | % |
For the 13 weeks ended July 3, 2011, net revenue increased 12% to $90.6 million from $80.8 million for the corresponding period of fiscal 2010.
Net income for the 13 weeks ended July 3, 2011, was $5.1 million compared to $4.3 million for the corresponding 13-week period of fiscal 2010. Diluted earnings per share was $0.38 for the 13-week period of fiscal 2011 compared to $0.31 per share for the corresponding period of fiscal 2010, an increase of 23%.
“Our business performance continued to be very strong in the second quarter,” said Patrick O’Dea, president and CEO of Peet’s Coffee & Tea. “Sales were healthy across all of our channels, particularly in our grocery business, which grew 30%. Looking ahead to the balance of the year, we expect our sales momentum to continue, especially as we enter the sizeable medium-roast coffee segment. With our raised sales outlook, we now expect to be at the higher end of our 2011 full-year diluted earnings per share guidance of $1.43 to $1.50.”
Consolidated Financial and Operating Summary
Retail net revenue increased 6% to $53.4 million for the 13 weeks ended July 3, 2011, from $50.6 million for the corresponding period of fiscal 2010.
Specialty net revenue increased 23% to $37.3 million for the 13 weeks ended July 3, 2011, from $30.2 million for the corresponding period of fiscal 2010. Within specialty, grocery net revenue grew 30% over last year; foodservice and office grew 19%; and home delivery grew 2%.
Cost of sales and related occupancy expenses were 49.2% of total net revenue, compared to 46.3% for the corresponding period last year. The increase resulted primarily from higher coffee costs and to a lesser extent higher milk costs and a mix shift towards the specialty business, which has a higher cost of sales. Price increases across the channels and lower shipping expenses partially offset the impact of these higher costs.
Operating expenses as a percentage of net revenue decreased to 31.1% from 33.3% for the corresponding period last year due to a favorable mix shift to the specialty business, the impact of price increases across all channels, leveraging of overhead costs, and lower payroll expenses in retail stores.
General and administrative expenses as a percentage of net revenue were 6.7%, compared to 7.0% for the corresponding period last year. General and administrative expenses increased to $6.0 million from $5.6 million for the corresponding period last year, primarily due to higher payroll-related costs and marketing expenses.
Depreciation and amortization expenses as a percentage of net revenue decreased to 4.3%, compared to 5.0% for the corresponding period last year. Depreciation and amortization expenses were $3.9 million, compared to $4.0 million in the corresponding period last year.
The company ended the second quarter of 2011 with cash and cash equivalents plus investments of $29 million, compared to $49 million at year end 2010.
Fiscal 2011 Full-Year Outlook
The company has updated its full-year guidance as follows:
·
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Raises guidance for 2011 full-year net revenue growth to the 10% to 12% range, up from 8% to 10%
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·
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Expects 2011 full-year diluted earnings per share to be toward the higher end of the previous guidance range of $1.43 to $1.50
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Peet’s Coffee & Tea, Inc. Q2 2011 Conference Call
Peet’s will discuss its second quarter 2011 earnings via conference call today, August 2, 2011. The teleconference call will begin at 2:00 p.m. PT/5:00 p.m. ET and 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 August 2, 2011, through 8:59 p.m. PT/11:59 p.m. ET on August 9, 2011, at 1-800-642-1687 or 1-706-645-9291, using access code 82103413. It will also be archived at http://investor.peets.com/events.cfm through August 2, 2012, at 8:59 p.m. PT/11:59 p.m. ET.
About Peet’s Coffee & Tea, Inc.
Peet’s Coffee & Tea, Inc. (NASDAQ: 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 2011 net revenue growth and 2011 forecasted 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, 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; 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; complaints or claims by current, former or prospective employees or government agencies or other litigation; 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 2, 2011. 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.
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(Unaudited, in thousands, except share amounts)
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July 3,
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January 2,
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2011
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2011
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ASSETS
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Current assets
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Cash and cash equivalents
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$ | 19,435 | $ | 44,629 | ||||
Short-term marketable securities
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9,149 | 4,183 | ||||||
Accounts receivable, net
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15,049 | 14,852 | ||||||
Inventories
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47,480 | 33,534 | ||||||
Deferred income taxes - current
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4,379 | 4,420 | ||||||
Prepaid expenses and other
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8,945 | 7,798 | ||||||
Total current assets
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104,437 | 109,416 | ||||||
Long-term marketable securities
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211 | - | ||||||
Property, plant and equipment, net
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92,894 | 97,279 | ||||||
Other assets, net
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1,333 | 2,137 | ||||||
Total assets
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$ | 198,875 | $ | 208,832 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities
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Accounts payable and other accrued liabilities
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$ | 9,772 | $ | 9,138 | ||||
Accrued compensation and benefits
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9,055 | 11,555 | ||||||
Deferred revenue
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5,984 | 7,102 | ||||||
Total current liabilities
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24,811 | 27,795 | ||||||
Deferred income taxes - non current
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72 | 46 | ||||||
Deferred lease credits
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6,873 | 7,023 | ||||||
Other long-term liabilities
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1,239 | 1,468 | ||||||
Total liabilities
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32,995 | 36,332 | ||||||
Shareholders' equity
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Common stock, no par value; authorized 50,000,000 shares;
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issued and outstanding: 12,913,000 and 13,063,000 shares
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64,748 | 81,995 | ||||||
Accumulated other comprehensive income
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5 | 2 | ||||||
Retained earnings
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101,127 | 90,503 | ||||||
Total shareholders' equity
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165,880 | 172,500 | ||||||
Total liabilities and shareholders' equity
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$ | 198,875 | $ | 208,832 |
PEET’S COFFEE & TEA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
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(Unaudited, in thousands, except per share amounts)
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Thirteen weeks ended
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Twenty-six weeks ended
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July 3,
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July 4,
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July 3,
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July 4,
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2011
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2010
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2011
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2010
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Retail stores
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$ | 53,351 | $ | 50,560 | $ | 105,440 | $ | 100,631 | ||||||||
Specialty sales
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37,265 | 30,216 | 73,648 | 61,341 | ||||||||||||
Net revenue
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90,616 | 80,776 | 179,088 | 161,972 | ||||||||||||
Cost of sales and related occupancy expenses
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44,558 | 37,377 | 85,778 | 74,916 | ||||||||||||
Operating expenses
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28,146 | 26,937 | 56,030 | 54,774 | ||||||||||||
Transaction related expenses
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- | 146 | - | 970 | ||||||||||||
General and administrative expenses
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6,049 | 5,622 | 12,858 | 11,924 | ||||||||||||
Depreciation and amortization expenses
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3,881 | 4,020 | 7,800 | 7,897 | ||||||||||||
Total costs and expenses from operations
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82,634 | 74,102 | 162,466 | 150,481 | ||||||||||||
Income from operations
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7,982 | 6,674 | 16,622 | 11,491 | ||||||||||||
Interest income, net
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7 | 5 | 18 | 4 | ||||||||||||
Income before income taxes
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7,989 | 6,679 | 16,640 | 11,495 | ||||||||||||
Income tax provision
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2,878 | 2,424 | 6,016 | 4,189 | ||||||||||||
Net income
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$ | 5,111 | $ | 4,255 | $ | 10,624 | $ | 7,306 | ||||||||
Net income per share:
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||||||||||||||||
Basic
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$ | 0.40 | $ | 0.32 | $ | 0.82 | $ | 0.55 | ||||||||
Diluted
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$ | 0.38 | $ | 0.31 | $ | 0.79 | $ | 0.53 | ||||||||
Shares used in calculation of net income per share:
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||||||||||||||||
Basic
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12,892 | 13,248 | 13,000 | 13,218 | ||||||||||||
Diluted
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13,309 | 13,885 | 13,414 | 13,847 |
PEET’S COFFEE & TEA, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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(Unaudited, in thousands)
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Twenty-six weeks ended
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July 3,
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July 4,
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2011
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2010
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Cash flows from operating activities:
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Net income
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$ | 10,624 | $ | 7,306 | ||||
Adjustments to reconcile net income to net cash provided by
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||||||||
operating activities:
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Depreciation and amortization
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8,956 | 8,981 | ||||||
Amortization of interest purchased
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197 | - | ||||||
Stock-based compensation
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2,035 | 1,623 | ||||||
Excess tax benefit from exercise of stock options
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(5,763 | ) | (1,481 | ) | ||||
Tax benefit from exercise of stock options
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5,224 | 1,228 | ||||||
Loss on disposition of assets and asset impairment
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325 | 63 | ||||||
Deferred income taxes
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67 | (6 | ) | |||||
Changes in other assets and liabilities:
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Accounts receivable, net
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(197 | ) | 2,993 | |||||
Inventories
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(13,946 | ) | (11,456 | ) | ||||
Prepaid expenses and other current assets
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(1,147 | ) | 278 | |||||
Other assets
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(2 | ) | 31 | |||||
Accounts payable, accrued liabilities and deferred revenue
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(3,021 | ) | (4,893 | ) | ||||
Deferred lease credits and other long-term liabilities
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(379 | ) | 260 | |||||
Net cash provided by operating activities
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2,973 | 4,927 | ||||||
Cash flows from investing activities:
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||||||||
Purchases of property, plant and equipment
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(4,851 | ) | (5,455 | ) | ||||
Proceeds from sales of property, plant and equipment
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- | 17 | ||||||
Changes in restricted investments
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798 | 559 | ||||||
Proceeds from sales and maturities of marketable securities
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3,013 | - | ||||||
Purchases of marketable securities
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(8,384 | ) | - | |||||
Net cash used in investing activities
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(9,424 | ) | (4,879 | ) | ||||
Cash flows from financing activities:
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||||||||
Net proceeds from issuance of common stock
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15,023 | 8,122 | ||||||
Purchase of common stock
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(39,529 | ) | (14,730 | ) | ||||
Excess tax benefit from exercise of stock options
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5,763 | 1,481 | ||||||
Net cash used in financing activities
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(18,743 | ) | (5,127 | ) | ||||
Decrease in cash and cash equivalents
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(25,194 | ) | (5,079 | ) | ||||
Cash and cash equivalents, beginning of period
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44,629 | 47,934 | ||||||
Cash and cash equivalents, end of period
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$ | 19,435 | $ | 42,855 | ||||
Non-cash investing activities:
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||||||||
Capital expenditures incurred, but not yet paid
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$ | 449 | $ | 330 | ||||
Other cash flow information:
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Cash paid for income taxes
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2,896 | 2,721 |
PEET’S COFFEE & TEA, INC.
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SEGMENT REPORTING
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(Unaudited, in thousands)
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Retail
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Specialty
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Unallocated
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Total
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Percent
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Percent
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Percent
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||||||||||||||||||||||||||
of Net
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of Net
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of Net
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||||||||||||||||||||||||||
Amount
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Revenue
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Amount
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Revenue
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Amount
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Revenue
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For the thirteen weeks ended July 3, 2011
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Net revenue
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$ | 53,351 | 100.0 | % | $ | 37,265 | 100.0 | % | $ | 90,616 | 100.0 | % | ||||||||||||||||
Cost of sales and occupancy
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23,692 | 44.4 | % | 20,866 | 56.0 | % | 44,558 | 49.2 | % | |||||||||||||||||||
Operating expenses
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20,387 | 38.2 | % | 7,759 | 20.8 | % | 28,146 | 31.1 | % | |||||||||||||||||||
Depreciation and amortization
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2,731 | 5.1 | % | 433 | 1.2 | % | $ | 717 | 3,881 | 4.3 | % | |||||||||||||||||
Segment operating income
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6,541 | 12.3 | % | 8,207 | 22.0 | % | (6,766 | ) | 7,982 | 8.8 | % | |||||||||||||||||
For the thirteen weeks ended July 4, 2010
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||||||||||||||||||||||||||||
Net revenue
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$ | 50,560 | 100.0 | % | $ | 30,216 | 100.0 | % | $ | 80,776 | 100.0 | % | ||||||||||||||||
Cost of sales and occupancy
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21,964 | 43.4 | % | 15,413 | 51.0 | % | 37,377 | 46.3 | % | |||||||||||||||||||
Operating expenses
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20,350 | 40.2 | % | 6,587 | 21.8 | % | 26,937 | 33.3 | % | |||||||||||||||||||
Depreciation and amortization
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2,867 | 5.7 | % | 457 | 1.5 | % | $ | 696 | 4,020 | 5.0 | % | |||||||||||||||||
Segment operating income
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5,379 | 10.6 | % | 7,759 | 25.7 | % | (6,464 | ) | 6,674 | 8.3 | % | |||||||||||||||||
For the twenty-six weeks ended July 3, 2011
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Net revenue
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$ | 105,440 | 100.0 | % | $ | 73,648 | 100.0 | % | $ | 179,088 | 100.0 | % | ||||||||||||||||
Cost of sales and occupancy
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45,936 | 43.6 | % | 39,842 | 54.1 | % | 85,778 | 47.9 | % | |||||||||||||||||||
Operating expenses
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40,866 | 38.8 | % | 15,164 | 20.6 | % | 56,030 | 31.3 | % | |||||||||||||||||||
Depreciation and amortization
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5,468 | 5.2 | % | 877 | 1.2 | % | $ | 1,455 | 7,800 | 4.4 | % | |||||||||||||||||
Segment operating income
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13,170 | 12.5 | % | 17,765 | 24.1 | % | (14,313 | ) | 16,622 | 9.3 | % | |||||||||||||||||
For the twenty-six weeks ended July 4, 2010
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||||||||||||||||||||||||||||
Net revenue
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$ | 100,631 | 100.0 | % | $ | 61,341 | 100.0 | % | $ | 161,972 | 100.0 | % | ||||||||||||||||
Cost of sales and occupancy
|
43,618 | 43.3 | % | 31,298 | 51.0 | % | 74,916 | 46.3 | % | |||||||||||||||||||
Operating expenses
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41,480 | 41.2 | % | 13,294 | 21.7 | % | 54,774 | 33.8 | % | |||||||||||||||||||
Depreciation and amortization
|
5,616 | 5.6 | % | 889 | 1.4 | % | $ | 1,392 | 7,897 | 4.9 | % | |||||||||||||||||
Segment operating income
|
9,917 | 9.9 | % | 15,860 | 25.9 | % | (14,286 | ) | 11,491 | 7.1 | % |
NON-GAAP FINANCIAL INFORMATION
The following reconciliation and non-GAAP financial information are provided to assist the reader with understanding the financial impact of a prior-year unusual item. Management believes this information is relevant because the nature and magnitude of the charges do not reflect our on-going operating performance.
PEET'S COFFEE & TEA, INC.
Reconciliation of Non-GAAP Financial Information to Net Income
|
(Unaudited, in thousands, except per share data)
|
Thirteen
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Thirteen
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Twenty-Six
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Twenty-Six
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weeks ended
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weeks ended
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weeks ended
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weeks ended
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July 3,
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July 4,
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July 3,
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July 4,
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2011
|
2010
|
2011
|
2010
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|||||||||||||
Net Income
|
||||||||||||||||
Net income, as reported
|
$ | 5,111 | $ | 4,255 | $ | 10,624 | $ | 7,306 | ||||||||
Transaction expense, net of tax
|
- | 93 | - | 617 | ||||||||||||
Non-GAAP net income
|
$ | 5,111 | $ | 4,348 | $ | 10,624 | $ | 7,923 | ||||||||
Net Income Per Diluted Share *
|
||||||||||||||||
Net income per diluted share, as reported
|
$ | 0.38 | $ | 0.31 | $ | 0.79 | $ | 0.53 | ||||||||
Transaction expense, net of tax
|
- | 0.01 | - | 0.04 | ||||||||||||
Non-GAAP net income per diluted share
|
$ | 0.38 | $ | 0.31 | $ | 0.79 | $ | 0.57 |
* per share data may not sum due to rounding