Vermont Business Magazine For the first quarter of fiscal 2016, Keurig Green Mountain (GMCR), the beverage company based in Waterbury, reported that net sales decreased 9% to $1,258.4 million as compared to net sales of $1,386.4 million in the first quarter of fiscal 2015. Gross profit for the first quarter of fiscal 2016 was $360.0 million, or 28.6% of net sales, as compared to $464.1 million, or 33.5% of net sales for the prior year period. For the first quarter of fiscal 2016, selling, operating, and general and administrative expenses decreased 20.0% to $198.5 million from $248.2 million for the prior year period. As a percentage of sales, SG&A expenses decreased to 15.8% in the first quarter of fiscal 2016 from 17.9% in the prior year period. The decrease in SG&A over the prior period was primarily attributable to decreases in compensation expenses, due to lower headcount, and decreases in variable marketing expenses. Keurig's operating margin declined to 12.8% in the first quarter of fiscal 2016 from 15.6% in the prior year period.
Keurig generated $334.3 million in cash from operating activities during the 13 weeks ended December26, 2015 as compared to $142.4 million during the thirteen weeks ended December27, 2014. It used cash from operating activities during the thirteen weeks ended December26, 2015, as well as $150 million drawn on its US Revolver, primarily to repurchase shares of its common stock for $235.0 million, fund capital expenditures of $57.9 million, and pay dividends of $44.0 million.
On December6, 2015, Keurig entered into an Agreement and Plan of Merger with JAB Holding Company S.à r.l (“JAB Holding” SEE STORY), which is the holding company of Jacobs Douwe Egberts, a global coffee and tea company. The acquisition price is $92 per share, or $13.9 billion. Keurig shareholders will vote on the acquisition February 24. The board unanimously approved the deal in December. It is expected to receive shareholder approval and the company expects the acquisition to close the first quarter of 2016.
Starbucks CEO Howard Schultz suggested during an earnings call January 28 that the long relationship Starbucks has had with Keurig could come to an end, according to national press reports. JAB is potentially a major competitor to Starbucks. Keurig has been contracted by Starbucks to manufacture its single serve pods as K-Cups.
KEURIG GREEN MOUNTAIN,INC.
Unaudited Consolidated Statements of Operations
(Dollars in thousands, except per share data)
|
|
|
Thirteenweeksended |
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||||
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|
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December26, |
|
December27, |
|
||
|
Net sales |
|
$ |
1,258,421 |
|
$ |
1,386,358 |
|
|
Cost of sales |
|
898,424 |
|
922,236 |
|
||
|
Gross profit |
|
359,997 |
|
464,122 |
|
||
|
|
|
|
|
|
|
||
|
Selling and operating expenses |
|
137,573 |
|
176,522 |
|
||
|
General and administrative expenses |
|
60,930 |
|
71,673 |
|
||
|
Restructuring expenses |
|
681 |
|
— |
|
||
|
Operating income |
|
160,813 |
|
215,927 |
|
||
|
|
|
|
|
|
|
||
|
Other (expense) income, net |
|
(223 |
) |
181 |
|
||
|
Gain on financial instruments, net |
|
1,395 |
|
3,345 |
|
||
|
Loss on foreign currency, net |
|
(809 |
) |
(9,071 |
) |
||
|
Interest expense |
|
(2,244 |
) |
(1,087 |
) |
||
|
Income before income taxes |
|
158,932 |
|
209,295 |
|
||
|
|
|
|
|
|
|
||
|
Income tax expense |
|
(54,435 |
) |
(74,616 |
) |
||
|
Net income |
|
$ |
104,497 |
|
$ |
134,679 |
|
|
|
|
|
|
|
|
||
|
Net income attributable to noncontrolling interests |
|
— |
|
100 |
|
||
|
|
|
|
|
|
|
||
|
Net income attributable to Keurig |
|
$ |
104,497 |
|
$ |
134,579 |
|
|
|
|
|
|
|
|
||
|
Net income attributable to Keurig per common share: |
|
|
|
|
|
||
|
Basic |
|
$ |
0.70 |
|
$ |
0.83 |
|
|
Diluted |
|
$ |
0.69 |
|
$ |
0.82 |
|
|
|
|
|
|
|
|
||
|
Cash dividends declared per common share |
|
$ |
0.325 |
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$ |
0.2875 |
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|
|
|
|
|
|
||
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Weighted-average common shares outstanding: |
|
|
|
|
|
||
|
Basic |
|
150,236,842 |
|
162,181,332 |
|
||
|
Diluted |
|
150,959,148 |
|
164,075,038 |
|
||
KEURIG GREEN MOUNTAIN,INC.
Unaudited Consolidated Balance Sheets
(Dollars in thousands, except per share data)
|
|
|
December26, |
|
September26, |
|
||
|
Assets |
|
|
|
|
|
||
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Current assets: |
|
|
|
|
|
||
|
Cash and cash equivalents |
|
$ |
214,909 |
|
$ |
59,334 |
|
|
Restricted cash and cash equivalents |
|
25,561 |
|
30,460 |
|
||
|
Receivables, less uncollectible accounts and return allowances of $53,247 and $35,459 at December26, 2015 and September26, 2015, respectively |
|
572,185 |
|
517,936 |
|
||
|
Inventories |
|
517,745 |
|
691,980 |
|
||
|
Income taxes receivable |
|
8,869 |
|
51,786 |
|
||
|
Other current assets |
|
102,265 |
|
95,526 |
|
||
|
Deferred income taxes, net |
|
70,390 |
|
70,181 |
|
||
|
Total current assets |
|
1,511,924 |
|
1,517,203 |
|
||
|
|
|
|
|
|
|
||
|
Fixed assets, net |
|
1,264,509 |
|
1,293,563 |
|
||
|
Intangibles, net |
|
401,235 |
|
423,887 |
|
||
|
Goodwill |
|
734,991 |
|
747,406 |
|
||
|
Deferred income taxes, net |
|
831 |
|
854 |
|
||
|
Long-term restricted cash |
|
266 |
|
278 |
|
||
|
Other long-term assets |
|
17,697 |
|
18,386 |
|
||
|
|
|
|
|
|
|
||
|
Total assets |
|
$ |
3,931,453 |
|
$ |
4,001,577 |
|
|
|
|
|
|
|
|
||
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
||
|
Current liabilities: |
|
|
|
|
|
||
|
Current portion of long-term debt |
|
$ |
270 |
|
$ |
279 |
|
|
Current portion of capital lease and financing obligations |
|
3,010 |
|
3,271 |
|
||
|
Accounts payable |
|
266,912 |
|
298,609 |
|
||
|
Accrued expenses |
|
231,584 |
|
226,519 |
|
||
|
Income tax payable |
|
413 |
|
1,085 |
|
||
|
Dividend payable |
|
48,486 |
|
44,048 |
|
||
|
Deferred income taxes, net |
|
332 |
|
264 |
|
||
|
Other current liabilities |
|
28,463 |
|
28,049 |
|
||
|
Total current liabilities |
|
579,470 |
|
602,124 |
|
||
|
|
|
|
|
|
|
||
|
Long-term debt, less current portion |
|
480,740 |
|
330,766 |
|
||
|
Capital lease and financing obligations, less current portion |
|
116,505 |
|
117,187 |
|
||
|
Deferred income taxes, net |
|
192,133 |
|
195,063 |
|
||
|
Other long-term liabilities |
|
42,944 |
|
42,525 |
|
||
|
|
|
|
|
|
|
||
|
Commitments and contingencies |
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
Redeemable noncontrolling interests |
|
— |
|
4,554 |
|
||
|
|
|
|
|
|
|
||
|
Stockholders’ equity: |
|
|
|
|
|
||
|
Preferred stock, $0.10 par value: Authorized - 1,000,000 shares; No shares issued or outstanding |
|
— |
|
— |
|
||
|
Common stock, $0.10 par value: Authorized - 500,000,000 shares; Issued and outstanding - 149,187,975 and 153,209,256 shares at December26, 2015 and September25, 2015, respectively |
|
14,919 |
|
15,321 |
|
||
|
Additional paid-in capital |
|
660,077 |
|
879,060 |
|
||
|
Retained earnings |
|
2,070,319 |
|
2,014,279 |
|
||
|
Accumulated other comprehensive loss |
|
(225,654 |
) |
(199,302 |
) |
||
|
Total stockholders’ equity |
|
2,519,661 |
|
2,709,358 |
|
||
|
|
|
|
|
|
|
||
|
Total liabilities and stockholders’ equity |
|
$ |
3,931,453 |
|
$ |
4,001,577 |
|
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Source: Keurig 2.1.2016