Peet's Coffee & Tea, Inc (PEET)

[MiamiGent]

PEET Peet’s Coffee & Tea, Inc. Reports Fourth Quarter and 2011 Year-End Results
PROVIDED BY Business Wire - 4:00 PM 02/14/2012

EMERYVILLE, Calif.--(BUSINESS WIRE)-- Peet’s Coffee & Tea, Inc. today announced its fourth quarter and full-year results for the period ended January 1, 2012.

In this release, the Company:

Reports diluted earnings per share of $0.42 for the fourth quarter and $1.33 for fiscal 2011
Reports non-GAAP diluted earnings per share of $1.49 for fiscal 2011, up 12% compared to fiscal 2010 non-GAAP diluted earnings per share
Reports net revenue growth of 11% for both the fourth quarter and the year
Confirms fiscal 2012 diluted earnings per share guidance of $1.70 to $1.80
Financial Highlights

PEET'S COFFEE & TEA, INC. (PEET)

Financial Highlights
(Unaudited, in thousands, except per share data)


Fourth Quarter % Fiscal Year %
2011
2010
Change
2011
2010
Change


Net revenue, as reported $ 101,623 $ 91,628 11 % $ 371,919 $ 333,808 11 %

Net income per diluted share, as reported $ 0.42 $ 0.48 -13 % $ 1.33 $ 1.28 4 %

Non-GAAP net income per diluted share $ 0.42 $ 0.48 -13 % $ 1.49 $ 1.33 12 %
___________

See “Non-GAAP Financial Information” at the end of this document, including the related reconciliation, for further detail.


For the 13 weeks and 52 weeks ended January 1, 2012, net revenue increased 11% versus the corresponding periods of fiscal 2010.

Diluted earnings per share was $1.33 for fiscal 2011, compared to $1.28 for fiscal 2010. Excluding the litigation- and transaction-related items outlined below, non-GAAP diluted earnings per share increased 12% to $1.49 for fiscal 2011, compared to $1.33 for fiscal 2010.

“Despite record high coffee costs since becoming a public company, we finished fiscal 2011 with diluted earnings per share toward the higher end of our stated range, consistent with previous guidance,” said Patrick O’Dea, president and CEO of Peet’s Coffee & Tea. “Our sales growth continues to be strong, led by our grocery business, which grew 29% in the quarter and 30% for the year. Our performance in 2011 is a testament to our brand’s premium-quality, premium-priced position in the market and the strength of our team. With pricing in place, visibility to our 2012 coffee costs, and already established growth strategies underway, we are well positioned to achieve our goals for this year. I believe this, in combination with the many new growth opportunities in our pipeline, bodes well for our long-term growth prospects.”

Non-GAAP Information

Net income and diluted earnings per share for fiscal 2011 include $3.3 million ($0.16 per diluted share) of expenses associated with a class action lawsuit, including anticipated settlement and legal costs. These costs are reflected in the consolidated statements of income as Litigation-related expenses.

Net income and diluted earnings per share for fiscal 2010 include $1.0 million ($0.05 per diluted share) of legal and related expenses incurred by the Company for its response to the subpoena it received from the Federal Trade Commission (FTC) in connection with the FTC’s anti-trust review of the acquisition of Diedrich Coffee by Green Mountain Coffee Roasters. These costs are reflected in the consolidated statements of income as Transaction-related expenses.

Fourth Quarter Consolidated Financial and Operating Summary

Retail net revenue increased 3% to $56.5 million for the 13 weeks ended January 1, 2012, from $54.7 million for the corresponding period last year. The increase was driven by a 6% rise in sales of beverages and pastries. The Company opened two stores in the quarter, ending the year with 196 stores versus 192 stores at the end of fiscal 2010.

Specialty net revenue increased 22% to $45.1 million for the 13 weeks ended January 1, 2012, compared to $36.9 million for the corresponding period last year. Within specialty, grocery sales were up 29% over last year, foodservice and office sales grew 20%, and home delivery sales were flat.

Cost of sales and related occupancy expenses increased as a percent of total net revenue to 52.7% for the quarter, compared to 45.7% for the corresponding period last year. The increase resulted primarily from higher coffee costs and, to a lesser extent, higher milk costs and a mix shift towards the specialty business, which has a higher cost of sales. Price increases across the channels and lower shipping expenses partially offset the impact of these higher costs.

Operating expenses decreased as a percentage of net revenue to 28.2%, compared to 30.9% for the corresponding period last year. The decrease was due to a favorable mix shift towards the specialty business, the impact of price increases across all channels, leveraging of overhead expenses, and cost efficiencies in both our retail stores and our direct store delivery system.

General and administrative expenses decreased as a percentage of net revenue to 6.7%, compared to 8.0% for the corresponding period last year. General and administrative expenses decreased to $6.8 million from $7.3 million for the corresponding period last year, primarily due to lower payroll costs and outside services.

Depreciation and amortization expenses decreased as a percentage of net revenue to 3.9%, compared to 4.3% for the corresponding period last year. Depreciation and amortization expenses were $3.9 million for the quarter, consistent with the corresponding period last year.

Cash and cash equivalents plus short-term and long-term marketable securities were $35 million at the end of fiscal 2011, compared to $49 million at the end of fiscal 2010.

Fiscal 2012 Outlook

Looking ahead, Peet’s confirmed the following fiscal 2012 guidance:

Total net revenue growth of around 10%
Diluted earnings per share in the range of $1.70 to $1.80
Peet’s Coffee & Tea, Inc. Q4 and 2011 Year-End Conference Call

Peet’s will discuss its fourth quarter and fiscal year 2011 results via conference call today, February 14, 2012. The teleconference call will begin at 2:00 p.m. PT/5:00 p.m. ET and can be accessed by calling 866-748-8653. The call will be simultaneously webcast on the Investor Relations portion of Peet’s website, under Media Events: http://investor.peets.com/events.cfm.

A replay of the teleconference will be available from 5:00 p.m. PT/8:00 p.m. ET on February 14, 2012, until 8:59 p.m. PT/11:59 p.m. ET on February 21, 2012, at 404-537-3406 or 855-859-2056, using access code 43013095. The replay will also be archived at http://investor.peets.com/events.cfm through February 14, 2013, at 8:59 p.m. PT/11:59 p.m. ET.

The Company has posted on its website at http://investor.peets.com/events.cfm a detailed reconciliation of non-GAAP net income and non-GAAP net income per diluted share as well as non-GAAP operating income and margin on a total company and segment basis.

About Peet’s Coffee & Tea, Inc.

Peet’s Coffee & Tea, Inc. is the premier specialty coffee and tea company in the United States. The company was founded in 1966 in Berkeley, Calif. by Alfred Peet. Peet was an early tea authority who later became widely recognized as the grandfather of specialty coffee in the United States. Today, Peet’s Coffee & Tea offers superior quality coffees and teas in multiple forms, by sourcing the best quality coffee beans and tea leaves in the world, adhering to strict high quality and taste standards, and controlling product quality through its unique direct store delivery selling and merchandising system. Peet’s is committed to strategically growing its business through many channels while maintaining the extraordinary quality of its coffees and teas. For more information about Peet’s Coffee & Tea, Inc., visit www.peets.com.

CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION

This press release and the related conference call contain statements that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “anticipates,” “expects,” “intends,” “plans,” “targets,” “projects,” “guidance” and similar expressions are intended to identify such forward-looking statements, which include statements relating to 2012 forecasted net revenue, 2012 forecasted diluted earnings per share, the Company’s ability to achieve its 2012 goals, opportunities for new growth, and long-term prospects. Forward-looking statements are based on management’s current beliefs, as well as current assumptions made by and information currently available to management, including financial and operational information, coffee and other commodity price expectations, the Company’s stock price volatility, and current competitive conditions.

These forward-looking statements are not guarantees of future performance and are subject to inherent risks and uncertainties, including risks and uncertainties beyond the Company’s control or difficult to predict. Therefore, actual results and outcomes may differ materially from what is expressed or forecasted in such forward-looking statements. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company undertakes no obligation, other than as required by law, to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: general economic conditions, including the recent recession and its ongoing negative impact on consumer spending; other factors impacting demand for specialty coffee, including consumers’ tastes and preferences; volatility of coffee and other commodity costs; the availability and cost of high-quality Arabica coffee beans; current and potential future claims and litigation involving the Company and the Company’s ability to manage its expenses related to such claims and litigation; the Company’s ability to implement its business strategy, attract and retain customers, obtain and expand its market presence in new geographic regions, and develop and maintain its brand; competition; and disruption of its roasting and distribution facility operations as well as other risk factors, as described more fully in the Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended January 2, 2011. These factors may not be exhaustive and other unpredictable or unknown factors could also have material adverse effects on forward-looking statements. Additionally, the Company operates in a continually changing business environment, and new risks and uncertainties emerge from time to time.

All forward-looking statements in this press release and the related conference call are qualified by these cautionary statements.

PEET’S COFFEE & TEA, INC.

CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except share amounts)


January 1,
2012
January 2,
2011


ASSETS

Current assets
Cash and cash equivalents $ 30,755 $ 44,629
Short-term marketable securities 3,800 4,183
Accounts receivable, net 20,522 14,852
Inventories 54,265 33,534
Deferred income taxes - current 5,041 4,420
Prepaid expenses and other 9,368 7,798
Total current assets 123,751 109,416

Long-term marketable securities 888 -
Property, plant and equipment, net 89,304 97,279
Other assets, net 1,328 2,137

Total assets $ 215,271 $ 208,832

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
Accounts payable and other accrued liabilities $ 11,547 $ 9,138
Accrued compensation and benefits 10,283 11,555
Deferred revenue 7,382 7,102
Total current liabilities 29,212 27,795

Deferred income taxes - non current 367 46
Deferred lease credits 6,668 7,023
Other long-term liabilities 1,068 1,468
Total liabilities 37,315 36,332

Shareholders' equity
Common stock, no par value; authorized 50,000,000 shares;
issued and outstanding: 13,136,000 and 13,063,000 shares 69,664 81,995
Accumulated other comprehensive income 2 2
Retained earnings 108,290 90,503

Total shareholders' equity 177,956 172,500

Total liabilities and shareholders' equity $ 215,271 $ 208,832

PEET’S COFFEE & TEA, INC.

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except per share amounts)


Thirteen weeks ended
Fifty-two weeks ended

January 1,
2012
January 2,
2011
January 1,
2012
January 2,
2011


Retail stores $ 56,547 $ 54,694 $ 214,270 $ 205,116
Specialty sales 45,076 36,934 157,649 128,692
Net revenue 101,623 91,628 371,919 333,808