Green Mountain Coffee Roasters Earnings Call Highlights: Next Generation Revenue Growth
Scott Van Winkle – Canaccord Genuity asked: Congrats on the great brewer shipment number this quarter and a good quarter overall. I think when you look through the numbers and through this last quarter, I guess the only thing negative people are going to question this time is the second quarter guidance at least relative to Street expectations.
Can you give us a little more indication of what kind of contribution Filterfresh had made in these winter quarters? On that other income line, can you give us an indication of what that might look like? Are you assuming any negative impact from the warm winter weather we’re seeing this year?
Frances Rathke – CFO responded: In terms of the Filterfresh, last year it contributed approximately $91 million in revenue.That was over the three quarters we owned them last year, so it’s pretty ratable business quarter-by-quarter.
We don’t disclose specifically their earnings, but it’s in line with our OCS business and I think relative to the guidance for the second quarter as we said we’re anniversarying the Van Houtte acquisition; this lowers our growth rate on the top line.
In addition, we noted the decrease from the growth rate we experienced this past quarter that was so strong coming down a bit in the second quarter guidance because of the fact that we’re anniversarying the first price increase we took last year. Then we just discussed Filterfresh.
We believe we had outstanding poor shipment growth rate this past holiday quarter as well as extremely strong portion pack sales. That’s the downward shift going from 102 percent actual growth rate in first quarter down to our guidance for next quarter of 45 to 50.
Next Generation Revenue Growth
Mitch Pinheiro – Janney Montgomery Scott asked: The question is in guidance. How do we think about the next-gen within your 60 percent to 65 percent revenue growth rate? How do we parse that out, both next-gen and potentially Lavazza, particularly in terms of launch?
Frances Rathke – CFO responded: In terms of the launch, we are excited to start the launch this quarter. We anticipate as relatively compared to the rest of our business in terms of brewers and K-Cup packs, a small number for this year.
We do have start-up costs this quarter, both getting the packaging line for the new portion packs going as well as marketing and communicating this new significant product launch. With the combination of the under-absorbed overhead for the new start of the manufacturing capacity as well as the product launch, this will be a drag in terms of the new Brewer system, or drag on earnings in fiscal ’12, starting this quarter. That’s factored in our estimates as well.
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