Green Mountain Coffee Roasters, Inc. announced its fiscal 2011 second quarter results for the thirteen weeks ended March 26, 2011.
Net sales for the second quarter of fiscal 2011 increased 101 percent to $647.7 million as compared to $322.0 million for the second quarter of fiscal 2010. Under Generally Accepted Accounting Principles (GAAP), net income for the second quarter of fiscal 2011 totaled $65.4 million, or $0.44 per diluted share, representing an increase of 172 percent as compared to GAAP net income of $24.1 million, or $0.17 per diluted share, for the second quarter of fiscal 2010.
The company's non-GAAP net income for the second quarter of fiscal 2011 increased 147 percent to $71.5 million, from non-GAAP net income of $28.9 million in the second quarter of fiscal 2010. Second quarter fiscal 2011 non-GAAP net income excludes pre-tax items of: $1.9 million in Van Houtte transaction-related expenses, $11.7 million in amortization of identifiable intangibles related to the company's acquisitions, $0.4 million in legal and accounting expenses related to the SEC inquiry and pending litigation, and a $3.0 million tax benefit related to the reversal of certain non-deductible acquisition-related expenses incurred in prior quarters which are now deemed deductible in accordance with recently enacted tax regulations. Second quarter fiscal 2010 non-GAAP net income excludes pre-tax items of: $4.8 million in transaction-related expenses for the Diedrich acquisition and $3.1 million in amortization of identifiable intangibles related to the company's prior acquisitions.
On the same basis of presentation, GMCR's non-GAAP earnings per diluted share increased 131 percent to $0.48 in the second quarter of fiscal 2011 from $0.21 in the second quarter of fiscal 2010.
"We believe healthy post-holiday in-store brewer inventory levels and positive word of mouth from enthusiastic Keurig owners combined to help drive a very strong fiscal second quarter for GMCR," said Lawrence J. Blanford, GMCR's president and CEO in a prepared statement.
"We believe we are in the early stages of potential Keurig system adoption in North America and continue to work to scale our operations, processes and workforce to meet both the current and expected demands of the business," said Blanford. "The addition of leading, nationally recognized brands like Dunkin' Donuts, Starbucks and Swiss Miss to the Keurig Single-Cup Brewing system expands customer choice within the system, fuels new excitement by current Keurig owners and users, raises system awareness, and has the potential to attract new consumers to the system."
Approximately 82 percent of consolidated net sales in the second quarter were from the Keurig brewing system and its recurring K-Cup® portion pack sales, including Keurig-related accessory sales.
Net sales from K-Cup® portion packs totaled $411.8 million in the quarter, up 94 percent, or $199.1 million, over the same period in 2010.
In response to rising green coffee costs and increases in other input costs, in September 2010 the company announced a price increase on all K-Cup® portion packs beginning on Oct. 11, 2010. The price increase was fully implemented across all channels as of February 2011. In the second quarter of fiscal 2011, the price increase improved net sales by approximately 10.3 percent over what net sales would have been if calculated based on the pricing for K-Cup® portion packs in effect during the prior year period.
Net sales from Keurig brewers and accessories totaled $116.2 million in the quarter, up 86 percent, or $53.8 million, from the prior year period.
Supporting continued growth in K-Cup® demand, GMCR sold 1.2 million Keurig brewers during the second quarter of fiscal 2011. This brewer shipment number does not account for consumer returns to retailers. We estimate that GMCR brewer shipments represented approximately 91 percent of total brewers shipped with Keurig technology in the period.