Keurig Green Mountain, Inc. (Keurig) (NASDAQ: GMCR), a leader in specialty coffee, coffee makers, teas and other beverages with its innovative brewing technology, today announced its business results for the 13 weeks and 52 weeks ended September 27, 2014.
“2014 was an exciting year that saw Keurig Green Mountain successfully execute against aggressive strategic goals and meet or exceed all of our financial targets,” said Brian Kelley, Keurig’s President and CEO. “The fourth quarter was a strong end to the year, with 17% Keurig beverage system revenue growth highlighted by strong portion pack growth across our brand portfolio.”
“Looking to fiscal year 2015, we remain focused on what we believe is a significant opportunity to grow and premiumize home beverages in both our hot and cold platforms. We’ll continue to invest and execute behind this opportunity, given the powerful brand connection we’ve built with consumers and our successful track record of introducing disruptive and innovative products,” continued Kelley. “Our strong balance sheet and healthy free cash flow generation are an advantage, enabling us to invest behind organic growth and return meaningful cash to shareholders in the form of both dividends and share repurchases.”
Fourth Quarter Fiscal 2014 Financial Review
Thirteen weeks | Thirteen weeks | |||||||||||||
($ in millions except earnings per | Sept 27, 2014 | Sept 28, 2013 | % | |||||||||||
| Net sales | $ | 1,195.6 | $ | 1,047.2 | 14 | % | ||||||||
| Operating income: | ||||||||||||||
| GAAP | $ | 228.8 | $ | 177.3 | 29 | % | ||||||||
| Non-GAAP | $ | 240.2 | $ | 190.6 | 26 | % | ||||||||
| Net income: | ||||||||||||||
| GAAP | $ | 141.1 | $ | 127.0 | 11 | % | ||||||||
| Non-GAAP | $ | 148.8 | $ | 136.0 | 9 | % | ||||||||
| Diluted income per share: | ||||||||||||||
| GAAP | $ | 0.86 | $ | 0.83 | 4 | % | ||||||||
| Non-GAAP | $ | 0.90 | $ | 0.89 | 1 | % | ||||||||
Note: Complete GAAP to Non-GAAP reconciliation tables provided with this release.
Net Sales by Product
Net sales of $1.2 billion represented 14% growth in the quarter over the prior year period driven by strong performance in our portion pack business. Net sales growth was positively impacted by approximately 4 percentage points in the quarter due to certain retailer customers ordering portion packs more aggressively ahead of our fiscal year end SAP implementation.
The 14% increase includes an unfavorable impact from foreign currency exchange rates of approximately half a percentage point. Total portion pack net sales increased 22% in the quarter while brewers and accessory net sales declined 5%. Total net sales growth was negatively impacted by a 17% decrease in other product net sales in the quarter.
Thirteen weeks | Thirteen weeks | ||||||||||||||||||
| ($ in millions) | Sept 27, 2014 | Sept 28, 2013 | $ Increase | % Increase | |||||||||||||||
| Portion packs | $ | 948.7 | $ | 777.9 | $ | 170.8 | 22 | % | |||||||||||
| Brewers and accessories | 181.6 | 190.4 | (8.8 | ) | (5 | )% | |||||||||||||
| Subtotal | 1,130.3 | 968.3 | 162.0 | 17 | % | ||||||||||||||
| Other products and royalties | 65.3 | 78.9 | (13.6 | ) | (17 | )% | |||||||||||||
| Total net sales | $ | 1,195.6 | $ | 1,047.2 | $ | 148.4 | 14 | % | |||||||||||
Portion Packs
- The 22% increase in portion pack-related net sales over the prior year period was due to a 28% increase in sales volume partially offset by an approximately 3 percentage point decrease due to net price realization and a roughly 3 percentage point decrease due to product mix.
Brewers and Accessories
- For the quarter, 2.4 million Keurig® system brewers were sold including 2.3 million sold by Keurig with 0.1 million reported sold by Keurig’s licensed brewer partners. This brewer shipment number does not account for consumer returns.
- The 5% decline in Keurig’s brewer and accessory net sales compared to the prior year period includes an estimated negative $22 million impact related to a higher provision for sales returns related to certain models of our Keurig 1.0 “MINI Plus” brewers. Excluding this impact, brewer and accessory sales grew 7%. On a reported basis, brewer sales volumes declined 8 percent and brewer price realization declined 11 percent, partially offset by a 10 percentage point increase due to positive brewer mix.
- Additionally, accessory net sales increased by $7 million, nearly doubling over the prior year period.
Other Products
- Sales of other products declined $14 million, or 17%, during the quarter from the prior year period primarily due to the continuing demand shift from traditional coffee package formats to portion packs.
- For the quarter, gross margin grew 160 basis points to 37.6% of net sales from 36.0% in the prior year period. The following table quantifies the changes in gross margin period to period:
Change from Q4 | |||||
| Shift in sales mix between Keurig® brewers and portion packs | +260 bps | ||||
| Favorable green coffee costs | +210 bps | ||||
| Brewer sales mix | -210 bps | ||||
Lower write-downs due to obsolescence expense of brewer | +170 bps | ||||
| Increased portion pack packaging material costs | -130 bps | ||||
| Net price realization associated with portion packs | -120 bps | ||||
| Net price realization associated with brewers | -100 bps | ||||
| Other items | +80 bps | ||||
- GAAP operating income grew by 29%, representing 19.1% of net sales for the quarter, up 220 basis points from 16.9% in the prior year period.
- Non-GAAP operating income grew by 26%, representing 20.1% of net sales in the quarter, up 190 basis points from 18.2% in the prior year.
- Both GAAP and non-GAAP operating income were impacted by an approximately $10 million charge, net of estimated insurance recovery, related to certain models of our Keurig 1.0 “MINI Plus” brewers referenced above.
- The Company’s effective income tax rate was 35.2% for the quarter as compared to 27.8% in the prior year period.
- Diluted weighted average shares outstanding for the fourth quarter were 164 million, up from 153 million in the prior year period as a result of 16.7 million shares issued as part of The Coca-Cola Company transaction which closed February 27, 2014 and the 1.4 million shares issued as part of the Luigi Lavazza S.p.A. transaction which closed April 7, 2014. The transaction-related dilution was offset, in part, by the Company’s share repurchases under its previously announced share repurchase authorizations including a $700 million accelerated share repurchase (ASR) agreement.
- GAAP diluted EPS increased 4% from the prior year period to $0.86; non-GAAP diluted EPS grew 1% from the prior year period to $0.90. Non-GAAP EPS excluding Coca-Cola and Lavazza dilution and foreign exchange grew 12% in the quarter.
Fiscal Year 2014 Financial Review
| ($ in millions except earnings per share) | Fiscal 2014 | Fiscal 2013 | % | |||||||||||
| Net sales | $ | 4,707.7 | $ | 4,358.1 | 8 | % | ||||||||
| Operating income: | ||||||||||||||
| GAAP | $ | 947.2 | $ | 765.2 | 24 | % | ||||||||
| Non-GAAP | $ | 993.4 | $ | 815.5 | 22 | % | ||||||||
| Net income: | ||||||||||||||
| GAAP | $ | 596.5 | $ | 483.2 | 23 | % | ||||||||
| Non-GAAP | $ | 627.9 | $ | 517.6 | 21 | % | ||||||||
| Diluted income per share: | ||||||||||||||
| GAAP | $ | 3.74 | $ | 3.16 | 18 | % | ||||||||
| Non-GAAP | $ | 3.93 | $ | 3.39 | 16 | % | ||||||||
Note: Complete GAAP to Non-GAAP reconciliation tables provided with this release.
Net Sales by Product
For the year, net sales of $4.7 billion grew 8% over the prior year driven by a combination of strong performance in the portion pack business and solid brewer volume growth. The 8% increase includes an unfavorable impact from foreign currency exchange rates of approximately one percentage point. The core Keurig® beverage system business grew 11% over the prior year period excluding approximately one percentage point impact of foreign exchange rates.
The primary driver of the 8% increase in net sales for fiscal year 2014 as compared to the prior year was a $417 million, or 13%, increase in total portion pack net sales. Brewer and accessories net sales declined 1%, over fiscal year 2013. Total net sales growth was also negatively impacted by an 18% decrease in other product net sales in the quarter.
| ($ in millions) | Fiscal 2014 | Fiscal 2013 | $ Increase | % Increase | |||||||||||||||
| Portion packs | $ | 3,604.5 | $ | 3,187.3 | $ | 417.2 | 13 | % | |||||||||||
| Brewers and accessories | 822.3 | 827.6 | (5.3 | ) | (1 | )% | |||||||||||||
| Subtotal | 4,426.8 | 4,014.9 | 411.9 | 10 | % | ||||||||||||||
| Other products and royalties | 280.9 | 343.2 | (62.3 | ) | (18 | )% | |||||||||||||
| Total net sales | $ | 4,707.7 | $ | 4,358.1 | $ | 349.6 | 8 | % | |||||||||||
Portion Packs
- For the year, approximately 9.8 billion Keurig Brewed® portion packs were sold.
- The 13% increase in portion pack-related net sales over the prior year period was driven by an increase of approximately 18 percentage points due to sales volume partially offset by an approximately 3 percentage point decrease due to net price realization and a roughly 2 percentage point decrease due to product mix and the impact of foreign currency exchange.
Brewers and Accessories
- For the year, 10.9 million Keurig® system brewers were sold including 10.4 million sold by Keurig with 0.5 million reported sold by Keurig’s licensed brewer partners. This brewer shipment number does not account for consumer returns.
- The 1% decrease in Keurig’s brewer and accessory net sales compared to the prior year period was driven by a 6 percentage point increase in brewer sales volume and a 3 percentage point increase due to brewer product mix. This was offset by a 10 percentage point decrease due to brewer net price realization and a roughly 1 percentage point decrease due to the impact of foreign currency exchange.
- Additionally, accessories net sales increased by $4.5 million, or 8 percentage points, over the prior year.
Other Products
- Sales of other products declined $62.3 million, or 18%, from the prior year period primarily due to the continuing demand shift from traditional coffee package formats to portion packs.
- For the year, gross profit increased 12% and gross margin improved 140 basis points to 38.6% from 37.2% in the prior year period. The following table quantifies the changes in gross margin period to period:
Change from Fiscal | |||||
| Favorable green coffee costs | +330 bps | ||||
| Net price realization associated with portion packs and brewers | -210 bps | ||||
| Logistics productivity | +120 bps | ||||
| Brewer and portion pack sales mix | -100 bps | ||||
| Increased portion pack packaging material costs | -90 bps | ||||
| Shift in sales mix between Keurig® brewers and portion packs | +90 bps | ||||
| Higher warranty expense | -50 bps | ||||
| Other items | +50 bps | ||||
- GAAP operating income grew by 24%, representing 20.1% of net sales for the year, up 250 basis points from 17.6% in the prior year period.
- Non-GAAP operating income grew by 22%, representing 21.1% of net sales in fiscal year 2014, up 240 basis points from 18.7% in the prior year.
- The Company’s effective income tax rate was 35.4% for the year as compared to 34.7% in the prior year.
- Diluted weighted average shares outstanding for the year were 160 million, up from 153 million in the prior year period as a result of 16.7 million shares issued as part of The Coca-Cola Company transaction which closed February 27, 2014 and the 1.4 million shares issued as part of the Luigi Lavazza S.p.A. transaction which closed April 7, 2014. The transaction-related dilution was offset, in part, by the Company’s share repurchases under its previously announced share repurchase authorizations including a $700 million accelerated share repurchase (ASR) agreement.
- GAAP diluted EPS increased 18% from the prior year period to $3.74; non-GAAP diluted EPS grew 16% from the prior year period to $3.93. Non-GAAP EPS excluding dilution from the recent equity transactions and foreign exchange grew 21%.
Balance Sheet & Cash Flow Highlights
“We delivered free cash flow of $382 million this year, above the top end of our $300 to $350 million estimated range and returned nearly $1.2 billion to shareholders,” said Frances G. Rathke, Keurig’s Chief Financial Officer. “Combined with a strong balance sheet, these cash flows allow us to continue our balanced, long-term approach to value creation.”
| Balance Sheet & Cash Flow Highlights ($ in millions) | September 27, 2014 | September 28, 2013 | % | |||||||||||
| Cash and cash equivalents, including restricted cash | $ | 761.6 | $ | 260.7 | 192 | % | ||||||||
| Accounts receivables, net | $ | 621.5 | $ | 468.0 | 33 | % | ||||||||
| Inventories | $ | 835.2 | $ | 676.1 | 24 | % | ||||||||
| Raw materials & supplies | $ | 169.9 | $ | 182.9 | (7 | )% | ||||||||
| Coffee | $ | 74.4 | $ | 100.2 | (26 | )% | ||||||||
| Packaging & other raw materials | $ | 95.5 | $ | 82.7 | 15 | % | ||||||||
| Finished goods | $ | 665.3 | $ | 493.2 | 35 | % | ||||||||
| Brewers & accessories | $ | 477.5 | $ | 323.2 | 48 | % | ||||||||
| Portion packs | $ | 164.9 | $ | 149.3 | 10 | % | ||||||||
| Other | $ | 22.9 | $ | 20.7 | 11 | % | ||||||||
| Debt outstanding and capital lease and financing obligations | $ | 278.5 | $ | 251.0 | 11 | % | ||||||||
| Cash provided by operating activities (1) | $ | 719.4 | $ | 836.0 | (14 | )% | ||||||||
| Free cash flow (1) | $ | 381.6 | $ | 603.2 | (37 | )% | ||||||||
(1) Free cash flow is calculated by subtracting capital expenditures for fixed assets from net cash provided by operating activities as reported in the unaudited statement of cash flows.
Share Repurchases
During the fourth quarter, the Company repurchased a total of 440 thousand shares at a cost of $55 million. From the inception of its Board authorized share repurchases through the end of the Company’s fourth fiscal quarter of 2014, the Company has repurchased a total of 16.9 million shares at a total cost of $1,107 million and an average price of $65.51. This was achieved through a combination of the previously announced Accelerated Stock Repurchase agreement (ASR), open market purchases and 10(b)5-1 plans, including $490 million of ASR repurchases subject to final price adjustment.
Dividend Declaration
Reflecting its commitment to return capital to shareholders and its expectation for continued strong cash flow generation, the Company announced a 15 percent increase in its indicated annualized dividend to $1.15 per share from $1.00. The increase will take effect with the February 12, 2015 quarterly dividend payment of $0.2875 declared by the Board payable to shareholders of record as of the close of business on January 13, 2015.
Business Outlook and Other Forward-Looking Information
The Company provided its outlook for fiscal year 2015 and the first quarter:
Fiscal Year 2015
- Net sales growth in the high-single to low-double digits compared to fiscal year 2014
- An annual effective tax rate of approximately 34% to 35%
- Non-GAAP earnings per diluted share growth of mid-single digits to high-single digits. This outlook:
- Includes an approximate $0.27 dilutive impact from the Coca-Cola and Lavazza equity transactions
- Includes an estimated $0.04 headwind from foreign currency exchange
- Excludes any additional actions the Company may take to offset dilution during fiscal year 2015
- Excludes the amortization of identifiable intangibles related to the Company’s acquisitions and legal and accounting expenses related to the Company’s pending securities and stockholder derivative class action litigation and antitrust litigation
- Free cash flow in the range of $225 million to $325 million
- Capital investment in the range of $425 million to $475 million
First Quarter 2015
- Net sales growth in the high-single digits over the first quarter of fiscal year 2014
- An effective tax rate of approximately 35-35.5%
- Non-GAAP earnings per diluted share in a range of $0.83 to $0.88 which:
- Includes an approximate $0.06 dilutive impact of the Coca-Cola and Lavazza equity transactions
- Includes an estimated $0.02 headwind from foreign currency exchange
- Excludes any additional actions the Company may take to offset dilution during the quarter
- Excludes the amortization of identifiable intangibles related to the Company’s acquisitions and legal and accounting expenses related to the Company’s pending securities and stockholder derivative class action litigation and antitrust litigation
Conference Call and Webcast
Keurig Green Mountain will be
discussing these financial results with analysts and investors in a
conference call and live webcast available via the Internet at 5:00 p.m.
ET today, November 19, 2014. The call is accessible via live webcast
from the events section of the Investor Relations portion of the
Company’s website at http://investor.keuriggreenmountain.com/events.cfm.
The Company archives the latest conference call for a period of time. A
replay of the conference call also will be available by telephone at
(719) 457-0820, passcode 8372972 from 9:00 p.m. ET on November 19, 2014
through 9:00 p.m. ET on Monday, November 24, 2014.
Use of Non-GAAP Financial Measures
In addition to reporting
financial results in accordance with generally accepted accounting
principles (GAAP), the Company provides non-GAAP operating results that
exclude legal and accounting expenses related to the SEC inquiry, and
pending securities and stockholder derivative class action litigation;
and non-cash acquisition-related items such as amortization of
identifiable intangibles, each of which include adjustments to show the
tax impact of excluding these items. In fiscal 2015 the Company’s
non-GAAP operating results also exclude legal and accounting expenses
related to the pending antitrust litigation against the Company. In each
case these amounts are not in accordance with, or an alternative to,
GAAP. The Company’s management believes that these measures provide
investors with transparency by helping illustrate the underlying
financial and business trends relating to the Company’s results of
operations and financial condition and comparability between current and
prior periods. Management uses the measures to establish and monitor
budgets and operational goals and to evaluate the performance of the
Company. Please see the “GAAP to Non-GAAP Reconciliation” table that
accompanies this document for a full reconciliation of the Company’s
GAAP to non-GAAP results.
About Keurig Green Mountain, Inc.
As a leader in
specialty coffee, coffee makers, teas and other beverages, Keurig Green
Mountain (Keurig) (NASDAQ: GMCR), is recognized for its award-winning
beverages, innovative brewing technology, and socially responsible
business practices. The Company has inspired consumer passion for its
products by revolutionizing beverage preparation at home and in the
workplace. Keurig supports local and global communities by investing in
sustainably-grown coffee and by its active involvement in a variety of
social and environmental projects. By helping consumers drink for
themselves, we believe we can brew a better world. For more information
visit: www.KeurigGreenMountain.com.
To purchase Keurig® products visit: www.Keurig.com or www.Keurig.ca.
Keurig routinely posts information that may be of importance to
investors in the Investor Relations section of its website, www.KeurigGreenMountain.com,
including news releases and its complete financial statements, as filed
with the SEC. The Company encourages investors to consult this section
of its website regularly for important information and news.
Additionally, by subscribing to the Company's automatic
e-mail news release delivery, individuals can receive news directly
from Keurig as it is released.
Forward-Looking Statements
Certain information in this
filing constitutes "forward-looking statements." Forward-looking
statements can be identified by the fact that they do not relate
strictly to historical or current facts. They often include words such
as "believes," "expects," "anticipates," "estimates," "intends,"
"plans," "seeks" or words of similar meaning, or future or conditional
verbs, such as "will," "should," "could," "may," "aims," "intends," or
"projects." However, the absence of these words or similar expressions
does not mean that a statement is not forward-looking. These statements
may relate to: the expected impact of raw material costs and our pricing
actions on our results of operations and gross margins, expected trends
in net sales and earnings performance and other financial measures, the
expected productivity and working capital improvements, the success of
introducing and producing new product offerings, the impact of foreign
exchange fluctuations, the adequacy of internally generated funds and
existing sources of liquidity, such as the availability of bank
financing, the expected results of operations of businesses acquired by
us, our ability to issue debt or additional equity securities, our
expectations regarding purchasing shares of our common stock under the
existing authorizations, projections of payment of dividends, the impact
of pending shareholder litigation, and the impact of antitrust
litigation pending against the Company in the United States and Canada.
A forward-looking statement is neither a prediction nor a guarantee of
future events or circumstances, and those future events or circumstances
may not occur. Management believes that these forward-looking statements
are reasonable as and when made. However, caution should be taken not to
place undue reliance on any such forward-looking statements because such
statements speak only as of the date when made. We expressly disclaim
any obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise. In
addition, forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
our Company's historical experience and our present expectations or
projections. These risks and uncertainties include, but are not limited
to, those described in Part I, "Item 1A. Risk Factors" and Part II,
"Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our Form 10-K filed with the Securities and
Exchange Commission for the fiscal year ended September 27, 2014, and
elsewhere in those reports and those described from time to time in our
future reports filed with the Securities and Exchange Commission.
KGM-G, KGM-US, KGM-CA
| KEURIG GREEN MOUNTAIN, INC. Unaudited Consolidated Balance Sheets (Dollars in thousands, except per share data) | ||||||||||||
| September 27, 2014 | September 28, 2013 | |||||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 761,214 | $ | 260,092 | ||||||||
| Restricted cash and cash equivalents | 378 | 560 | ||||||||||
| Short-term investment | 100,000 | — | ||||||||||
Receivables, less uncollectible accounts and return allowances of
$66,120 | 621,451 | 467,976 | ||||||||||
| Inventories | 835,167 | 676,089 | ||||||||||
| Income taxes receivable | — | 11,747 | ||||||||||
| Other current assets | 69,272 | 46,891 | ||||||||||
| Deferred income taxes, net | 58,038 | 58,137 | ||||||||||
| Total current assets | 2,445,520 | 1,521,492 | ||||||||||
| Fixed assets, net | 1,171,425 | 985,563 | ||||||||||
| Intangibles, net | 365,444 | 435,216 | ||||||||||
| Goodwill | 755,895 | 788,184 | ||||||||||
| Deferred income taxes, net | 131 | 149 | ||||||||||
| Other long-term assets | 58,892 | 30,944 | ||||||||||
| Total assets | $ | 4,797,307 | $ | 3,761,548 | ||||||||
| Liabilities and Stockholders' Equity | ||||||||||||
| Current liabilities: | ||||||||||||
| Current portion of long-term debt | 19,077 | 12,929 | ||||||||||
| Current portion of capital lease and financing obligations | 2,226 | 1,760 | ||||||||||
| Accounts payable | 411,107 | 312,170 | ||||||||||
| Accrued expenses | 305,677 | 242,427 | ||||||||||
| Income tax payable | 53,586 | — | ||||||||||
| Dividend payable | 40,580 | — | ||||||||||
| Deferred income taxes, net | 340 | 233 | ||||||||||
| Other current liabilities | 10,395 | 27,544 | ||||||||||
| Total current liabilities | 842,988 | 597,063 | ||||||||||
| Long-term debt, less current portion | 140,937 | 160,221 | ||||||||||
| Capital lease and financing obligations, less current portion | 116,240 | 76,061 | ||||||||||
| Deferred income taxes, net | 202,936 | 252,867 | ||||||||||
| Other long-term liabilities | 23,085 | 28,721 | ||||||||||
| Commitments and contingencies | ||||||||||||
| Redeemable noncontrolling interests | 12,440 | 11,045 | ||||||||||
| Stockholders' equity: | ||||||||||||
Preferred stock, $0.10 par value: Authorized - 1,000,000 shares;
No shares | — | — | ||||||||||
Common stock, $0.10 par value: Authorized - 500,000,000 shares;
Issued and | 16,232 | 15,026 | ||||||||||
| Additional paid-in capital | 1,808,881 | 1,387,322 | ||||||||||
| Retained earnings | 1,687,619 | 1,252,407 | ||||||||||
| Accumulated other comprehensive (loss) income | (54,051 | ) | (19,185 | ) | ||||||||
| Total stockholders' equity | 3,458,681 | 2,635,570 | ||||||||||
| Total liabilities and stockholders’ equity | $ | 4,797,307 | $ | 3,761,548 | ||||||||
| KEURIG GREEN MOUNTAIN, INC. Unaudited Consolidated Statements of Operations (Dollars in thousands except per share data) | ||||||||||||||||||||||
Thirteen | Thirteen | |||||||||||||||||||||
| Sept 27, 2014 | Sept 28, 2013 | Fiscal 2014 | Fiscal 2013 | |||||||||||||||||||
| Net sales | $ | 1,195,567 | $ | 1,047,177 | $ | 4,707,680 | $ | 4,358,100 | ||||||||||||||
| Cost of sales | 745,778 | 669,718 | 2,891,820 | 2,738,714 | ||||||||||||||||||
| Gross profit | 449,789 | 377,459 | 1,815,860 | 1,619,386 | ||||||||||||||||||
| Selling and operating expenses | 140,498 | 127,062 | 561,573 | 560,430 | ||||||||||||||||||
| General and administrative expenses | 80,509 | 73,059 | 307,046 | 293,729 | ||||||||||||||||||
| Operating income | 228,782 | 177,338 | 947,241 | 765,227 | ||||||||||||||||||
| Other (expense) income, net | (1,673 | ) | 308 | 262 | 960 | |||||||||||||||||
| Gain (loss) on financial instruments, net | 3,689 | (3,481 | ) | 8,307 | 5,513 | |||||||||||||||||
| (Loss) gain on foreign currency, net | (9,323 | ) | 6,536 | (19,746 | ) | (12,649 | ) | |||||||||||||||
| Interest expense | (3,635 | ) | (4,696 | ) | (11,691 | ) | (18,177 | ) | ||||||||||||||
| Income before income taxes | 217,840 | 176,005 | 924,373 | 740,874 | ||||||||||||||||||
| Income tax expense | (76,590 | ) | (48,864 | ) | (326,959 | ) | (256,771 | ) | ||||||||||||||
| Net income | $ | 141,250 | $ | 127,141 | $ | 597,414 | $ | 484,103 | ||||||||||||||
Net income attributable to noncontrolling | 194 | 185 | 896 | 871 | ||||||||||||||||||
| Net income attributable to Keurig | $ | 141,056 | $ | 126,956 | $ | 596,518 | $ | 483,232 | ||||||||||||||
Net income attributable to Keurig per | ||||||||||||||||||||||
| Basic | $ | 0.87 | $ | 0.84 | $ | 3.80 | $ | 3.23 | ||||||||||||||
| Diluted | $ | 0.86 | $ | 0.83 | $ | 3.74 | $ | 3.16 | ||||||||||||||
| Cash dividends declared per common share | $ | 0.25 | $ | — | $ | 1.00 | $ | — | ||||||||||||||
Weighted-average common shares | ||||||||||||||||||||||
| Basic | 162,540,994 | 150,633,106 | 157,085,574 | 149,638,636 | ||||||||||||||||||
| Diluted | 164,446,353 | 153,280,550 | 159,568,342 | 152,801,493 | ||||||||||||||||||
| KEURIG GREEN MOUNTAIN, INC. Unaudited Consolidated Statements of Cash Flows (Dollars in thousands) | ||||||||||||
| Fiscal 2014 | Fiscal 2013 | |||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income | $ | 597,414 | $ | 484,103 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization of fixed assets | 214,607 | 183,814 | ||||||||||
| Amortization of intangibles | 43,032 | 45,379 | ||||||||||
| Amortization of deferred financing fees | 5,651 | 7,125 | ||||||||||
| Unrealized loss (gain) on foreign currency, net | 15,196 | 9,159 | ||||||||||
| (Gain) loss on disposal of fixed assets | (602 | ) | (85 | ) | ||||||||
| Provision for doubtful accounts | 1,782 | 689 | ||||||||||
| Provision for sales returns | 114,057 | 79,747 | ||||||||||
| (Gain) loss on derivatives, net | (1,582 | ) | (4,507 | ) | ||||||||
| Excess tax benefits from equity-based compensation plans | (55,444 | ) | (54,699 | ) | ||||||||
| Deferred income taxes | (52,708 | ) | (17,701 | ) | ||||||||
| Deferred compensation and stock compensation | 30,882 | 26,315 | ||||||||||
| Other | 4,826 | 844 | ||||||||||
| Changes in assets and liabilities: | ||||||||||||
| Receivables | (274,884 | ) | (187,221 | ) | ||||||||
| Inventories | (166,473 | ) | 87,677 | |||||||||
| Income tax payable/receivable, net | 120,553 | 46,290 | ||||||||||
| Other current assets | (838 | ) | (12,668 | ) | ||||||||
| Other long-term assets, net | 3,162 | 3,915 | ||||||||||
| Accounts payable and accrued expenses | 133,818 | 133,532 | ||||||||||
| Other current liabilities | (7,521 | ) | 3,100 | |||||||||
| Other long-term liabilities | (5,495 | ) | 1,161 | |||||||||
| Net cash provided by operating activities | 719,433 | 835,969 | ||||||||||
| Cash flows from investing activities: | ||||||||||||
| Change in restricted cash | 182 | 3,005 | ||||||||||
| Purchase of short-term investment | (100,000 | ) | — | |||||||||
| Purchase of long-term investment | (35,905 | ) | — | |||||||||
| Capital expenditures for fixed assets | (337,860 | ) | (232,780 | ) | ||||||||
| Other investing activities | 1,164 | 4,208 | ||||||||||
| Net cash used in investing activities | (472,419 | ) | (225,567 | ) | ||||||||
| Cash flows from financing activities: | ||||||||||||
| Net change in revolving line of credit | — | (226,210 | ) | |||||||||
| Proceeds from issuance of common stock under compensation plans | 40,681 | 29,777 | ||||||||||
| Proceeds from issuance of common stock for private placement | 1,348,414 | — | ||||||||||
| Repurchase of common stock | (1,052,430 | ) | (188,278 | ) | ||||||||
| Excess tax benefits from equity-based compensation plans | 55,444 | 54,699 | ||||||||||
| Payments on capital lease and financing obligations | (1,931 | ) | (8,288 | ) | ||||||||
| Proceeds from borrowings of long-term debt | 403 | — | ||||||||||
| Repayment of long-term debt | (13,361 | ) | (71,620 | ) | ||||||||
| Dividends paid | (118,358 | ) | — | |||||||||
| Purchase of noncontrolling interest | (4,752 | ) | — | |||||||||
| Other financing activities | (1,124 | ) | (1,406 | ) | ||||||||
Net cash provided by (used in) financing activities | 252,986 | (411,326 | ) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 1,122 | 2,727 | ||||||||||
| Net increase in cash and cash equivalents | 501,122 | 201,803 | ||||||||||
| Cash and cash equivalents at beginning of period | 260,092 | 58,289 | ||||||||||
| Cash and cash equivalents at end of period | $ | 761,214 | $ | 260,092 | ||||||||
| Supplemental disclosures of cash flow information: | ||||||||||||
| Cash paid for interest | $ | 12,043 | $ | 9,129 | ||||||||
| Cash paid for income taxes | $ | 270,367 | $ | 223,580 | ||||||||
| Dividends declared not paid at the end of each period | $ | 40,580 | $ | — | ||||||||
Fixed asset purchases included in accounts payable and not | $ | 64,202 | $ | 30,541 | ||||||||
| Noncash investing and financing activities: | ||||||||||||
Fixed assets acquired under capital lease and financing | $ | 40,125 | $ | 27,791 | ||||||||
Settlement of acquisition-related liabilities through release of | $ | — | $ | 9,227 | ||||||||
KEURIG GREEN MOUNTAIN, INC. | ||||||||||
Thirteen weeks | Thirteen weeks | |||||||||
| Operating income | $ | 228,782 | $ | 177,338 | ||||||
| Expenses related to SEC inquiry (1) | 1,031 | 2,111 | ||||||||
| Amortization of identifiable intangibles (2) | 10,405 | 11,145 | ||||||||
| Non-GAAP operating income | $ | 240,218 | $ | 190,594 | ||||||
Thirteen weeks | Thirteen weeks | |||||||||
| Net income attributable to Keurig | $ | 141,056 | $ | 126,956 | ||||||
| After tax: | ||||||||||
| Expenses related to SEC inquiry (1) | 676 | 1,435 | ||||||||
| Amortization of identifiable intangibles (2) | 7,078 | 7,605 | ||||||||
| Non-GAAP net income attributable to Keurig | $ | 148,810 | $ | 135,996 | ||||||
Thirteen weeks | Thirteen weeks | |||||||||
| Diluted income per share | $ | 0.86 | $ | 0.83 | ||||||
| After tax: | ||||||||||
| Expenses related to SEC inquiry (1) | — | 0.01 | ||||||||
| Amortization of identifiable intangibles (2) | 0.04 | 0.05 | ||||||||
| Non-GAAP net income per share | $ | 0.90 | $ | 0.89 | ||||||
* Does not sum due to rounding | ||||||||||
(1) Represents legal and accounting expenses related to the SEC inquiry and pending securities and stockholder derivative class action litigation classified as general and administrative expense.
(2) Represents the amortization of intangibles related to the Company’s acquisitions classified as general and administrative expense.
KEURIG GREEN MOUNTAIN, INC. | ||||||||||
| Fiscal 2014 | Fiscal 2013 | |||||||||
| Operating income | $ | 947,241 | $ | 765,227 | ||||||
| Expenses related to SEC inquiry (1) | 3,130 | 4,910 | ||||||||
| Amortization of identifiable intangibles (2) | 43,032 | 45,379 | ||||||||
| Non-GAAP operating income | $ | 993,403 | $ | 815,516 | ||||||
| Fiscal 2014 | Fiscal 2013 | |||||||||
| Net income attributable to GMCR | $ | 596,518 | $ | 483,232 | ||||||
| After tax: | ||||||||||
| Expenses related to SEC inquiry (1) | 2,023 | 3,208 | ||||||||
| Amortization of identifiable intangibles (2) | 29,324 | 31,128 | ||||||||
| Non-GAAP net income attributable to Keurig | $ | 627,865 | $ | 517,568 | ||||||
| Fiscal 2014 | Fiscal 2013 | |||||||||
| Diluted income per share | $ | 3.74 | $ | 3.16 | ||||||
| After tax: | ||||||||||
| Expenses related to SEC inquiry (1) | 0.01 | 0.02 | ||||||||
| Amortization of identifiable intangibles (2) | 0.18 | 0.20 | ||||||||
| Non-GAAP net income per share | $ | 3.93 | $ 3.39* | |||||||
* Does not sum due to rounding. | ||||||||||
(1) Represents legal and accounting expenses related to the SEC inquiry and pending securities and stockholder derivative class action litigation classified as general and administrative expense.
(2) Represents the amortization of intangibles related to the Company’s acquisitions classified as general and administrative expense.
Contacts:
Suzanne DuLong, 781-418-8075
Investor.Services@keurig.com
or
Katie
Gilroy, 781-418-3345
Investor.Services@keurig.com
