Emerville, Calif., July 31 - Peet's Coffee & Tea, Inc. today announced its results for the quarter ended June 29, 2008, which included 13 weeks.
In this release, the Company reports:
-- Net revenue of $70.1 million, an increase of 17% versus last year;
-- Diluted earnings per share of $0.21, an increase of 62% versus last year; and
-- The Company added 300 additional grocery accounts in the quarter and Peet's is now available in 7,200 grocer stores, on track for a full year target of 8,000.
For the 13 weeks ended June 29, 2008, net revenue increased 16.6% to $70.1 million from $60.1 million for the corresponding period of fiscal2007.
Net income for the quarter was $3.0 million, or $0.21 per diluted share, compared to $1.8 million or $0.13 per diluted share last year.
"We're very pleased with our progress this quarter which was driven by strong, profitable growth in our grocery and other wholesale businesses, and improved operating efficiencies across the Company," said Patrick O'Dea, president and chief executive officer of Peet's Coffee & Tea, Inc.
"This enabled us to increase income from operations 87% and deliver 62% earnings per share growth despite the more challenging economic environment."
Financial and Operating Summary
Specialty net revenue increased 24% to $23.7 million, compared to $19.1 million for the corresponding quarter last year. Within the specialty business, grocery grew 27%, foodservice and office sales were up 42% and the home delivery business declined 2% compared to the same period last year.
Retail net revenue increased 13% to $46.3 million for the 13 weeks ended June 29, 2008 from $41.0 million for the corresponding period of fiscal 2007. The increase was primarily attributable to new retail stores opened in the last 12 months and modest growth in existing stores. The Company opened four new retail locations in the quarter.
Cost of sales and related occupancy costs decreased to 46.0% of net revenue compared to 47.2% for the corresponding quarter last year. The decrease versus last year is due to improvements in procurement, good cost management in the retail segment and roasting facility expense leverage, partially offset by higher commodity costs.
Operating expenses as a percent of net revenue decreased to 35.2% compared to 35.5% for the corresponding quarter last year. The decline was driven by lower operating costs in the retail and foodservice businesses, partially offset by higher costs associated with expanding the grocery business.
General and administrative expense was equal to last year at $5.4 million as headcount related costs were consistent with the corresponding quarter last year.
Depreciation and amortization expenses increased to $3.2 million, compared to $2.6 million for the corresponding quarter last year. The increase was primarily due to the opening of 27 new retail stores in the last 12 months.
Income from operations for the quarter increased 87% versus the corresponding quarter last year to $4.5 million. As a percent of net revenue, income from operations improved by 2.4 percentage points to 6.4% compared to 4.0% for the corresponding quarter last year.
The Company ended the quarter with cash and cash equivalents plus investments of $18.1 million. The cash position was reduced by the Company's purchase of $8.3 million of its common stock during the quarter.
Looking ahead, the Company confirmed its prior earnings guidance for the full year 2008 of $0.77 to $0.82 per diluted share.
PEET'S COFFEE & TEA, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except share amounts)
June 29, December 30,
2008 2007
ASSETS
Current assets
Cash and cash equivalents $7,099 $15,312
Short-term marketable securities 11,003 7,932
Accounts receivable, net 8,318 8,287
Inventories 27,367 24,483
Deferred income taxes - current 2,950 2,950
Prepaid expenses and other 6,291 4,285
Total current assets 63,028 63,249
Long-term marketable securities - 7,831
Property and equipment, net 108,435 99,231
Deferred income taxes - non current 3,363 3,353
Other assets, net 3,908 3,883
Total assets $178,734 $177,547
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and other accrued
liabilities $12,360 $10,104
Accrued compensation and benefits 9,065 8,909
Deferred revenue 4,673 5,856
Total current liabilities 26,098 24,869
Deferred lease credits and other
long-term liabilities 6,516 5,425
Total liabilities 32,614 30,294
Shareholders' equity
Common stock, no par value;
authorized 50,000,000 shares;
issued and outstanding: 13,610,000
and 13,932,000 shares 98,322 104,616
Accumulated other comprehensive
income 86 52
Retained earnings 47,712 42,585
Total shareholders' equity 146,120 147,253
Total liabilities and shareholders'
equity $178,734 $177,547
PEET'S COFFEE & TEA, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except per share amounts)
Thirteen weeks Twenty-six weeks
ended ended
June 29, July 1, June 29, July 1,
2008 2007 2008 2007
Retail stores $46,309 $40,963 $90,918 $79,986
Specialty sales 23,746 19,140 46,272 37,630
Net revenue 70,055 60,103 137,190 117,616
Cost of sales and related
occupancy expenses 32,240 28,374 64,229 55,564
Operating expenses 24,689 21,366 48,218 41,179
General and administrative
expenses 5,434 5,357 10,996 11,300
Depreciation and amortization
expenses 3,176 2,586 6,246 5,316
Total costs and expenses from
operations 65,539 57,683 129,689 113,359
Income from operations 4,516 2,420 7,501 4,257
Interest income 202 463 506 888
Income before income taxes 4,718 2,883 8,007 5,145
Income tax provision 1,682 1,081 2,880 1,927
Net income $3,036 $1,802 $5,127 $3,218
Net income per share:
Basic $0.22 $0.13 $0.37 $0.24
Diluted $0.21 $0.13 $0.36 $0.23
Shares used in calculation of net
income per share:
Basic 13,916 13,663 13,936 13,589
Diluted 14,197 14,077 14,217 14,003
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 thirteen
weeks ended
June 29, 2008
Net revenue $46,309 100.0% $23,746 100.0% $70,055 100.0%
Cost of sales
and occupancy 20,706 44.7% 11,534 48.6% 32,240 46.0%
Operating
expenses 19,825 42.8% 4,864 20.5% 24,689 35.2%
Depreciation
and amortization 2,509 5.4% 317 1.3% $350 3,176 4.5%
Segment operating
income 3,269 7.1% 7,031 29.6% (5,784) 4,516 6.4%
For the thirteen
weeks ended
July 1, 2007
Net revenue $40,963 100.0% $19,140 100.0% $60,103 100.0%
Cost of sales
and occupancy 19,060 46.5% 9,314 48.7% 28,374 47.2%
Operating expenses 17,987 43.9% 3,379 17.7% 21,366 35.5%
Depreciation and
amortization 2,002 4.9% 344 1.8% $240 2,586 4.3%
Segment operating
income 1,914 4.7% 6,103 31.9% (5,597) 2,420 4.0%
For twenty-six
weeks ended
June 29, 2008
Net revenue $90,918 100.0% $46,272 100.0% $137,190 100.0%
Cost of sales
and occupancy 41,062 45.2% 23,167 50.1% 64,229 46.8%
Operating expenses 38,851 42.7% 9,367 20.2% 48,218 35.1%
Depreciation and
amortization 4,887 5.4% 657 1.4% $702 6,246 4.6%
Segment operating
income 6,118 6.7% 13,081 28.3% (11,698) 7,501 5.5%
For the twenty-six
weeks ended
July 1, 2007
Net revenue $79,986 100.0% $37,630 100.0% $117,616 100.0%
Cost of sales and
occupancy 37,174 46.5% 18,390 48.9% 55,564 47.2%
Operating
expenses 34,408 43.0% 6,771 18.0% 41,179 35.0%
Depreciation and
amortization 4,143 5.2% 671 1.8% $502 5,316 4.5%
Segment operating
income 4,261 5.3% 11,798 31.4% (11,802) 4,257 3.6%
Presentation and reconciliation of Non-GAAP Financial Measures
The following table reconciles non-GAAP net income per share and net income, excluding the after tax costs associated with the Company's stock option review and restatement, to GAAP net income per share and net income. The Company is presenting these non-GAAP financial measures to illustrate the effect on net income and net income per share if the Company had not incurred the costs of the review of its stock option granting practices. The Company uses such non-GAAP financial measures to analyze and compare the performance of its core business. Non-GAAP financial information is not prepared under a comprehensive set of accounting rules and should be considered supplemental to, and not a substitute for or superior to, financial measures calculated in accordance with GAAP.
Peet's Coffee & Tea, Inc.
Reconciliation of Net Income excluding Investigation Fees
Thirteen weeks Twenty-six weeks
ended ended
June 29, July 1, June 29, July 1,
2008 2007 2008 2007
(unaudited, in (unaudited, in
thousands, thousands,
except per share except per share
amounts) amounts)
Net income, as reported $3,036 $1,802 $5,127 $3,218
Stock option review professional fees - 64 16 1,040
Income tax benefit - (24) (6) (389)
Net income, excluding fees $3,036 $1,842 $5,137 $3,869
After tax impact of review
professional fees $- $40 $10 $651
Diluted net income per share:
Net income, as reported $0.21 $0.13 $0.36 $0.23
Stock option review professional fees - - - 0.07
Income tax benefit - - - (0.03)
Diluted net income, excluding fees* $0.21 $0.13 $0.36 $0.27
After tax impact of review
professional fees* $- $- $- $0.05
* per share data may not sum due to rounding