Peet's Coffee & Tea Sees 8% Revenue Increase in Latest Quarter
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Source: Peet's Coffee & Tea, Inc.
29/10/2009
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Emeryville, Calif., Oct 27, 2009- Peet's Coffee & Tea, Inc. today announced its third quarter 2009 results for the period ended September 27, 2009, which included 13 weeks.
In this release, the company:
-- Reports third quarter diluted earnings per share of $0.19, an increase
of 27% versus last year
-- Reports net revenue of $73.9 million, an increase of 8% versus last year
-- Raises guidance for diluted earnings per share expectations for the full
year to $1.04 to $1.06, up from the previous range of $0.97 to $1.00
-- Gives guidance for 2010 of diluted earnings per share of $1.24 to $1.30.
For the 13 weeks ended September 27, 2009, net revenue increased 8% to $73.9 million from $68.5 million for the corresponding period last year.
Net income for the quarter was $2.5 million, or $0.19 per diluted share, compared to $2.0 million, or $0.15 per diluted share, for the corresponding period last year.
"I'm very pleased with our performance," said Patrick O'Dea, CEO and president of Peet's Coffee & Tea. "We are leveraging the significant past investments we've made in our people, direct store delivery (DSD) selling system, the new roasting facility and our store base to produce strong earnings growth. While continuing to grow the Peet's brand, we will add new growth initiatives, such as the current national launch of Godiva flavored coffees, that are consistent with our overall vision to be the leading premium specialty coffee company in all key consumer segments. This strategy should enable us to deliver strong profit growth into the future."
Financial and Operating Summary
Retail net revenue increased 4% to $47.9 million for the 13 weeks ended September 27, 2009 from $45.9 million for the corresponding period last year. The increase was attributed to new retail stores opened in the last 12 months. The company opened three new retail locations in the quarter for a total of seven year to date. The company expects to open one additional store this year.
Specialty net revenue increased 15% to $26.0 million compared to $22.6 million for the corresponding period last year. Within the specialty business, grocery sales grew 24%, foodservice and office was up 13%, and home delivery sales were down 8% compared to the same period last year.
Cost of sales and related occupancy costs decreased as a percentage of net revenue to 46.4%, compared to 47.1% for the corresponding period last year. The decrease from last year was due to lower shipping costs, lower milk costs, effective cost controls in retail stores, and higher prices in retail, partially offset by higher coffee costs.
Operating expenses decreased as a percentage of net revenue to 35.3%, compared to 36.1% for the corresponding period last year. The decrease was primarily due to effective cost management in the retail business and the leveraging of both retail and grocery overhead costs.
General and administrative expenses increased to $5.8 million compared to $5.2 million for the same period last year driven primarily by higher payroll-related costs and higher professional service fees.
Depreciation and amortization expenses increased to $4.0 million compared to $3.2 million for the corresponding period last year. The increase was primarily due to the opening of 14 new retail stores in the last 12 months and the implementation of an enterprise resource planning (ERP) system during the quarter.
Fiscal 2009 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 $1.04 to $1.06
range for the 53 weeks ending January 3, 2010. This is an increase from
prior guidance of $0.97 to $1.00
-- Fiscal 2009 net revenue growth is expected to be between 8% and 9% for
the 53 weeks ending January 3, 2010.
Fiscal 2010 Outlook
Looking ahead, Peet's provided the following fiscal 2010 guidance:
-- Total net revenue is expected to grow 8% to 12% on a comparable 52 week
basis
-- Diluted earnings per share are expected to be in the $1.24 to $1.30
range which would translate to 20% to 25% growth on a comparable 52 week
basis.
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PEET'S COFFEE & TEA, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except share amounts)
September 27, December 28,
2009 2008
---- ----
ASSETS
Current assets
Cash and cash equivalents $16,966 $4,719
Short-term marketable securities 4,232 8,600
Accounts receivable, net 10,682 11,924
Inventories 30,564 26,124
Deferred income taxes - current 2,907 2,922
Prepaid expenses and other 8,029 7,193
----- -----
Total current assets 73,380 61,482
Property, plant and equipment, net 106,900 107,914
Deferred income taxes - non current 3,146 3,059
Other assets, net 2,764 3,897
----- -----
Total assets $186,190 $176,352
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and other accrued
liabilities $8,811 $9,858
Accrued compensation and benefits 9,568 8,852
Deferred revenue 4,759 6,350
----- -----
Total current liabilities 23,138 25,060
Deferred lease credits 7,264 6,645
Other long-term liabilities 950 740
--- ---
Total liabilities 31,352 32,445
Shareholders' equity
Common stock, no par value; authorized
50,000,000 shares;
issued and outstanding: 12,983,000 and
13,174,000 shares 88,320 90,123
Accumulated other comprehensive income 3,838 34
Retained earnings 62,680 53,750
------ ------
Total shareholders' equity 154,838 143,907
------- -------
Total liabilities and shareholders'
equity $186,190 $176,352
======== ========
PEET'S COFFEE & TEA, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except per share amounts)
Thirteen weeks ended Thirty-nine weeks ended
September 27, September 28, September 27, September 28,
2009 2008 2009 2008
---- ---- ---- ----
Retail stores $47,863 $45,911 $144,686 $136,829
Specialty sales 26,042 22,575 74,889 68,847
------ ------ ------ ------
Net revenue 73,905 68,486 219,575 205,676
Cost of sales
and related
occupancy
expenses 34,291 32,249 99,812 96,478
Operating
expenses 26,052 24,715 76,804 72,934
General and
administrative
expenses 5,770 5,237 17,782 16,233
Depreciation and
amortization
expenses 3,962 3,150 11,200 9,395
----- ----- ------ -----
Total costs and
expenses from
operations 70,075 65,351 205,598 195,040
------ ------ ------- -------
Income from
operations 3,830 3,135 13,977 10,636
Interest
(expense)
income, net (15) 130 111 636
--- --- --- ---
Income before
income taxes 3,815 3,265 14,088 11,272
Income tax
provision 1,346 1,247 5,158 4,127
----- ----- ----- -----
Net income $2,469 $2,018 $8,930 $7,145
====== ====== ====== ======
Net income per share:
Basic $0.19 $0.15 $0.69 $0.52
Diluted $0.19 $0.15 $0.67 $0.51
Shares used in
calculation of net
income per share:
Basic 12,976 13,603 12,977 13,825
Diluted 13,343 13,899 13,267 14,111
PEET'S COFFEE & TEA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Thirty-nine weeks ended
September 27, September 28,
------------- ------------
2009 2008
---- ----
Cash flows from operating activities:
Net income $8,930 $7,145
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 12,790 11,025
Amortization of interest purchased 36 157
Stock-based compensation 2,277 1,962
Excess tax benefit from exercise of stock
options (275) (384)
Tax benefit from exercise of stock
options 119 246
Loss on disposition of assets and asset
impairment 184 216
Deferred income taxes (72) 366
Changes in other assets and liabilities:
Accounts receivable, net 1,242 (1,355)
Inventories (4,440) (5,215)
Prepaid expenses and other current
assets (836) (5,521)
Other assets 185 (81)
Accounts payable, accrued liabilities and
deferred revenue (1,904) 872
Deferred lease credits and other long-term
liabilities 829 1,605
--- -----
Net cash provided by operating
activities 19,065 11,038
------ ------
Cash flows from investing activities:
Purchases of property, plant and
equipment (11,908) (20,430)
Proceeds from sales of property, plant and
equipment - 67
Changes in restricted investments 878 -
Proceeds from sales and maturities of
marketable securities 8,507 5,597
Purchases of marketable securities (371) (917)
---- ----
Net cash used in investing
activities (2,894) (15,683)
------ -------
Cash flows from financing activities:
Net proceeds from issuance of common stock 2,365 2,855
Purchase of common stock (6,564) (10,017)
Excess tax benefit from exercise of stock
options 275 384
--- ---
Net cash used in financing
activities (3,924) (6,778)
------ ------
Increase (decrease) in cash and cash
equivalents 12,247 (11,423)
Cash and cash equivalents, beginning of
period 4,719 15,312
----- ------
Cash and cash equivalents, end of period $16,966 $3,889
======= ======
Non-cash investing activities:
Capital expenditures incurred, but not yet
paid $716 $1,135
Other cash flow information:
Cash paid for income taxes 5,023 7,670
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
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% 5,564 21.4% 26,052 35.3%
Depreciation and
amortization 2,907 6.1% 463 1.8% $592 3,962 5.4%
Segment
operating
income 3,289 6.9% 6,903 26.5% (6,362) 3,830 5.2%
For the
thirteen
weeks ended
September 28,
2008
Net
revenue $45,911 100.0% $22,575 00.0% $68,486 100.0%
Cost of sales
and occupancy 21,130 46.0% 11,119 49.3% 32,249 47.1%
Operating
expenses 19,940 43.4% 4,775 21.2% 24,715 36.1%
Depreciation and
amortization 2,357 5.1% 372 1.6% $421 3,150 4.6%
Segment
operating
income 2,484 5.4% 6,309 27.9% (5,658) 3,135 4.6%
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% 16,387 21.9% 76,804 35.0%
Depreciation and
amortization 8,449 5.8% 1,325 1.8% $1,426 11,200 5.1%
Segment
operating
income 12,890 8.9% 20,295 27.1% (19,208) 13,977 6.4%
For the
thirty-nine
weeks ended
September 28,
2008
Net
revenue $136,829 100.0% $68,847 100.0% $205,676 100.0%
Cost of sales
and occupancy 62,191 45.5% 34,287 49.8% 96,478 46.9%
Operating
expenses 58,791 43.0% 14,143 20.5% 72,934 35.5%
Depreciation and
amortization 7,244 5.3% 1,029 1.5% $1,122 9,395 4.6%
Segment
operating
income 8,603 6.3% 19,388 28.2% (17,355) 10,636 5.2%
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