(By Salman - iStockAnalyst Writer)
Green Mountain Coffee Roasters Inc. (
NasdaqGS: GMCR) operates in specialty coffee industry in the United States and internationally. The company roasts 100% Arabica coffees and offers over 100 different coffee selections, including certified organic, Fair Trade Certified, estate, signature blends and flavored coffees. Keurig is wholly owned subsidiary of Green Mountain Coffee Roasters Inc. and sells many of their coffee varieties as K-Cups.
Recession has forced people to spend more time at home. A growing number of Americans now prefer to brew coffee at home because it's cheaper than drinking coffee out in public. Home consumption opportunities are on the rise, and a company like Green Mountain Coffee roasters stands to benefit from it.
The company has continued to defy the worst economic downturn in decades. Late in April Green Mountain announced second-quarter earnings jumped 113% to 50 cents a share compared to 23 cents a share in the prior year quarter. Revenue surged 60% to $193 million. Analysts on average were looking for earnings of 36 cents a share. The results also beat company's own earnings estimate in the range of 33 cents a share to 37 cents a share.
Very few companies have been able to match Green Mountain's performance. During the quarter, the company's operating margin improved to 11.7% from 9.6%. The operating margin improvement was driven by the lower percent for SG&A. Operating income increased 95% to $22.6 million. The company's dollar share was up 7.5 point from 6.8% in the year ago quarter to 14.3% in the second quarter while unit share more than doubled, rising from 2.3% in the prior year quarter to 5.8%.
On a segmental basis, Keurig's business unit net sales were up 97% to $120 million and the specialty coffee business unit net sales were up 40% to $113 million.
The company is quite serious about expanding geographically and by forging new relationships. Recently, Green Mountain completed the $40.3 million acquisition of the Tully's coffee brand and wholesale business. The acquisition is seen as a big boost for the company as Tully's is a complimentary west coast brand known for its dark roasted coffees with packaged products already distributed in over 5,000 supermarket locations.
The addition of Wal-Mart has now brought total retail locations to 16,800. The company intends to increase its number of retail locations to over 20,000 and grocery store locations to over 15,000 over the next couple of years.