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Green Mountain Net Income Climbs 118%; Keurig Makes Walmart Entry

Posted On: 5/6/2009

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Coffee, Office Coffee Service, Green Mountain Coffee Roasters Inc., Wal-Mart Inc., Keurig, K-Cup, Single-Cup Brewers, Robert Stiller, Vending, Vending Machine, Automatic Retailing, Foodservice, Refreshment Service, Coin-Operated

WATERBURY, VT -- Green Mountain Coffee Roasters Inc. reported that net income increased 118% to $13 million during its second quarter ended March 28 from $6 million a year earlier. Net sales totaled $193.4 million, up 60% over $120.9 million in the second quarter of 2008, marking the 11th consecutive quarter of overall top-line growth of at least 39%.

The company also announced that it has inked a deal with Wal-Mart Inc. to sell its Keurig single-cup coffee system and K-Cups in 3,000 stores. Walmarts will carry Keurig's Elite B40 and a variety of K-Cups from Green Mountain Coffee as well as Gloria Jean's, Timothy's, Tully's Coffee and Newman's Own Organics.

During fiscal 2009's second quarter, 432 million K-Cup portion packs were shipped systemwide by all Keurig licensed roasters, up 62% over the year-ago quarter. Supporting continued growth in K-Cup demand, during the second quarter of fiscal 2009, 479,000 Keurig brewers were shipped, up 148% over the same quarter in the prior year.

Keurig business unit net sales were $119.8 million, up 97% from net sales of $60.7 million in the second quarter of fiscal 2008. About half of the increase in Keurig's net sales this past quarter was due to the 129% increase in K-Cup sales to retailers and from Net sales of home brewers and accessories contributed approximately 30% of the increase in total Keurig business unit net sales this quarter.

In the specialty coffee division (previously called the Green Mountain Coffee segment), net sales for the second quarter of fiscal 2009 grew 40% to $113.3 million, as compared to $81 million reported in the second quarter of fiscal 2008. Dollar sales growth was strongest in channels that benefit from sales of K-Cup portion packs including the OCS, retail reseller, supermarket and consumer direct channels. Coffee, tea and hot cocoa pounds shipped increased 18.6%.

During the second quarter, Fair Trade Certified and organic coffees represented over 30% of total coffee pounds sold, up from about 26% in the prior-year quarter. The company increased prices in May 2008 by 8% to 12% on average across business channels and package types for coffee products sold by its specialty coffee business unit. Of the 40% increase in net sales in the just-finished quarter, approximately 10 percentage points was due to the price increase.

Based on the strength of its results in the first two quarters of the fiscal year, Green Mountain raised its full-year sales and earnings estimates to total consolidated net sales growth of 58% to 61%, up from prior estimates of 43% to 48%. Total K-Cup portion packs shipped systemwide by all Keurig licensed roasters are expected to increase in the range of 60% to 65%, up from prior estimates of 53% to 63%. For the third quarter, Green Mountain expects total consolidated net sales growth of 61% to 66%.

Separately, a filing from Green Mountain Coffee chairman Robert Stiller disclosed that he sold 200,000 shares of common stock on May 4 at $73.22 a share, with a total value of $14.6 million. The sale follows the roaster's run-up in stock value from the low $50s on April 30, following the release of the strong second quarter earnings report and announcement of the Wal-Mart deal. Stiller still holds almost 4 million shares after the sale.