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:
- Reports net revenue growth of 12% for
the quarter
- Reports diluted earnings per share of
$0.38, up 23% versus 2010 diluted earnings per share of $0.31
- Raises guidance for 2011 full-year net
revenue growth to the 10% to 12% range, up from 8% to 10%
- 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
Financial Highlights
Second Quarter % Year to
Date %
2011
2010
Change
2011
2010
Change
Net revenue, as reported $ 90,616 $ 80,776 12 % $ 179,088 $
161,972 11 % Net income per diluted share, as reported $
0.38 $ 0.31 23 % $ 0.79 $ 0.53 49 % Non-GAAP net income per
diluted share, excluding unusual items $ 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:
- Raises guidance for 2011 full-year net
revenue growth to the 10% to 12% range, up from 8% to 10%
- 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
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.CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited,
in thousands, except share amounts)
July 3,2011
January 2,2011
ASSETS Current assets Cash and cash equivalents $
19,435 $ 44,629 Short-term marketable securities 9,149 4,183
Accounts receivable, net 15,049 14,852 Inventories 47,480 33,534
Deferred income taxes - current 4,379 4,420 Prepaid expenses and
other
8,945 7,798 Total
current assets 104,437 109,416 Long-term marketable
securities 211 - Property, plant and equipment, net 92,894 97,279
Other assets, net
1,333
2,137 Total assets
$
198,875 $ 208,832
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities
Accounts payable and other accrued liabilities $ 9,772 $ 9,138
Accrued compensation and benefits 9,055 11,555 Deferred revenue
5,984 7,102 Total current
liabilities 24,811 27,795 Deferred income taxes - non
current 72 46 Deferred lease credits 6,873 7,023 Other long-term
liabilities
1,239 1,468
Total liabilities 32,995 36,332 Shareholders' equity Common
stock, no par value; authorized 50,000,000 shares; issued and
outstanding: 12,913,000 and 13,063,000 shares 64,748 81,995
Accumulated other comprehensive income 5 2 Retained earnings
101,127 90,503 Total
shareholders' equity
165,880
172,500 Total liabilities and shareholders'
equity
$ 198,875 $
208,832
PEET’S COFFEE & TEA,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
INCOME(Unaudited, in thousands, except per share
amounts)
Thirteen weeks ended
Twenty-six weeks ended
July 3,2011
July 4,2010
July 3,2011
July 4,2010
Retail stores $ 53,351 $ 50,560 $ 105,440 $ 100,631
Specialty sales
37,265
30,216 73,648
61,341 Net revenue 90,616 80,776 179,088 161,972
Cost of sales and related occupancy expenses 44,558 37,377
85,778 74,916 Operating expenses 28,146 26,937 56,030 54,774
Transaction related expenses - 146 - 970 General and administrative
expenses 6,049 5,622 12,858 11,924 Depreciation and amortization
expenses
3,881 4,020
7,800 7,897 Total costs and
expenses from operations
82,634
74,102 162,466
150,481 Income from operations 7,982 6,674
16,622 11,491 Interest income, net
7
5 18 4
Income before income taxes 7,989 6,679 16,640 11,495
Income tax provision
2,878
2,424 6,016
4,189 Net income
$
5,111 $ 4,255 $
10,624 $ 7,306 Net
income per share: Basic $ 0.40 $ 0.32 $ 0.82 $ 0.55 Diluted $ 0.38
$ 0.31 $ 0.79 $ 0.53 Shares used in calculation of net
income per share: Basic 12,892 13,248 13,000 13,218 Diluted 13,309
13,885 13,414 13,847
PEET’S COFFEE & TEA,
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(Unaudited, in thousands)
Twenty-six weeks ended
July 3,2011
July 4,2010
Cash flows from operating activities: Net income $ 10,624 $
7,306 Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 8,956 8,981
Amortization of interest purchased 197 - Stock-based compensation
2,035 1,623 Excess tax benefit from exercise of stock options
(5,763 ) (1,481 ) Tax benefit from exercise of stock options 5,224
1,228 Loss on disposition of assets and asset impairment 325 63
Deferred income taxes 67 (6 ) Changes in other assets and
liabilities: Accounts receivable, net (197 ) 2,993 Inventories
(13,946 ) (11,456 ) Prepaid expenses and other current assets
(1,147 ) 278 Other assets (2 ) 31 Accounts payable, accrued
liabilities and deferred revenue (3,021 ) (4,893 ) Deferred lease
credits and other long-term liabilities
(379
) 260 Net cash provided by
operating activities
2,973
4,927 Cash flows from investing
activities: Purchases of property, plant and equipment (4,851 )
(5,455 ) Proceeds from sales of property, plant and equipment - 17
Changes in restricted investments 798 559 Proceeds from sales and
maturities of marketable securities 3,013 - Purchases of marketable
securities
(8,384 )
- Net cash used in investing activities
(9,424 ) (4,879
) Cash flows from financing activities: Net
proceeds from issuance of common stock 15,023 8,122 Purchase of
common stock (39,529 ) (14,730 ) Excess tax benefit from exercise
of stock options
5,763
1,481 Net cash used in financing activities
(18,743 )
(5,127 ) Decrease in cash and cash
equivalents (25,194 ) (5,079 ) Cash and cash equivalents, beginning
of period
44,629
47,934 Cash and cash equivalents, end of
period
$ 19,435 $
42,855 Non-cash investing activities:
Capital expenditures incurred, but not yet paid $ 449 $ 330 Other
cash flow information: Cash paid for income taxes 2,896 2,721
PEET’S COFFEE & TEA,
INC.SEGMENT REPORTING(Unaudited, in
thousands)
Retail
Specialty
Unallocated
Total
Amount
Percentof NetRevenue
Amount
Percentof NetRevenue
Amount
Percentof NetRevenue
For the thirteen weeks ended July 3, 2011 Net revenue
$ 53,351 100.0 % $ 37,265 100.0 % $ 90,616 100.0 % Cost of sales
and occupancy 23,692 44.4 % 20,866 56.0 % 44,558 49.2 % Operating
expenses 20,387 38.2 % 7,759 20.8 % 28,146 31.1 % Depreciation and
amortization 2,731 5.1 % 433 1.2 % $ 717 3,881 4.3 % Segment
operating income 6,541 12.3 % 8,207 22.0 % (6,766 ) 7,982 8.8 %
For the thirteen weeks ended July 4, 2010 Net revenue
$ 50,560 100.0 % $ 30,216 100.0 % $ 80,776 100.0 % Cost of sales
and occupancy 21,964 43.4 % 15,413 51.0 % 37,377 46.3 % Operating
expenses 20,350 40.2 % 6,587 21.8 % 26,937 33.3 % Depreciation and
amortization 2,867 5.7 % 457 1.5 % $ 696 4,020 5.0 % Segment
operating income 5,379 10.6 % 7,759 25.7 % (6,464 ) 6,674 8.3 %
For the twenty-six weeks ended July 3, 2011 Net
revenue $ 105,440 100.0 % $ 73,648 100.0 % $ 179,088 100.0 % Cost
of sales and occupancy 45,936 43.6 % 39,842 54.1 % 85,778 47.9 %
Operating expenses 40,866 38.8 % 15,164 20.6 % 56,030 31.3 %
Depreciation and amortization 5,468 5.2 % 877 1.2 % $ 1,455 7,800
4.4 % Segment operating income 13,170 12.5 % 17,765 24.1 % (14,313
) 16,622 9.3 %
For the twenty-six weeks ended July 4,
2010 Net revenue $ 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 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)
Thirteenweeks endedJuly
3,2011
Thirteenweeks endedJuly
4,2010
Twenty-Sixweeks endedJuly
3,2011
Twenty-Sixweeks endedJuly
4,2010
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
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