Green Mountain Coffee sees net income rise 24%

by Staff
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WATERBURY, VT. — Net income at Green Mountain Coffee Roasters, Inc. in the first quarter rose 24% to $2,980,000, equal to 40c per share on the common stock, compared with net income of $2,406,000, or 34c, in the same period last year.

Net income in the first quarter ended Jan. 14 was positively impacted by the recognition of a non-cash stock compensation charge of $417,000, or approximately 3c per share, as a result of the adoption of FAS123 related to stock compensation. The company’s net income also includes recognition of a first quarter gain in fiscal 2006 of $2,000 as a result of its equity investment in Keurig, Inc.

Net sales for the quarter also rose, gaining 27% to total $63,867,000.

Sales growth was greatest in the office coffee service channel, contributing approximately a third of net sales. The high growth in this channel was due to strong sales of single-serve K-Cup products, driven by increased penetration of the Keurig B100 brewers in small offices, the introduction of "Extra Bold" K-Cups and by the continued success of tea in K-Cups. Pounds shipped to office coffee distributors increased 47% in the quarter.

Pounds shipped to food service companies rose 44%, representing 37% of coffee pound growth for the quarter. The increase over the prior year is a result of the Nov. 1 roll-out to more than 650 McDonald’s restaurants in New England and New York where the company is selling two Newman’s Own Organics Fair Trade Certified coffee products.

The consumer direct channel saw sales grow 45% in the quarter with an increase of 30% in pounds shipped directly to the consumer. The majority of this growth was related to the sales of Keurig Single-Cup Brewers for the home and the associated K-Cup products.

The supermarket channel coffee pounds shipped increased 7% in the first quarter with strong growth from both existing customers like Price Chopper and Demoulas and from new customer acquisitions such as Target.

In the convenience store channel, coffee pounds shipped increased 8%.

In the quarter the company saw an increase of 68% in sales of certified Fair Trade and organic coffees and an increase of 33% in company wide K-cup shipments.

The company anticipates its fully diluted earnings per share for fiscal year 2006 will be in the range of $1.20 to $1.40 per share. It is also predicting net sales growth of 22% to 28% and coffee pounds growth of 14% to 20%.

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