Green Mountain Earnings Conference Call Highlights: K-Cup Capacity and Starbucks
Green Mountain Coffee Roasters (NASDAQ:GMCR) reported its fiscal 2011 fourth quarter earnings and in its subsequent conference call, the company answered the following analysts’ questions we thought you’d like to know.
Present and future K-Cup capacity and platform
Mitch Pinheiro, Janney Capital Markets asked: Can you give us estimates of where K-Cup capacity is today and where the spending is on your current K-Cup platform? Where will this take you a year from now?
Larry Blanford – President and CEO: Mitch responded: We don’t report our specific capacity. We are confident that within the capacity estimates we have provided, that the capacity that has been put in place in fiscal ’11 and our fiscal ’12 plans, will support our demand projections for ’12.
It will get us ready for either holiday ’12 or the first quarter of fiscal ’13.
We still have a lot of initiatives that we’re working on that we expect to continue to increase demand in ’13. We’re in good shape. Scott McCreary and his team has done a nice job; he can quickly comment on how he’s using his engineering teams for efficiencies and a new launch.
R. Scott McCreary – President, SCBU responded: In addition to the new equipment that we are putting in, we have dedicated a team of engineers across all of our sites that focus on bringing the productivity of our current installed base. We will continue leveraging the investments that we’ve been making.
Starbucks and potential constraints
Pinheiro asked: You have capacity constraints. Is the K-Cup or lack thereof growth coming from any capacity constraints where you weren’t able to meet certain orders for them?
Larry Blanford – President and CEO: Mitch responded: No, that really wasn’t the case. The Starbucks (NASDAQ:SBUX) rollout is going very well and I am very proud of the organization hitting all of its marks in terms of being in a position to support Dunkin’ (NASDAQ:DNKN), Swiss Miss and Starbucks.
We wish we could roll out Starbucks faster, but there is a schedule of events and we’re on target with those. We’ll be rolling Starbucks out continually through additional channels over fiscal ’12.
Pinheiro asked: Did Starbucks ship this quarter?
Frances Rathke – CFO responded: Starbucks launched on November 1. There were very minimal sales to Starbucks in our fiscal fourth quarter. The majority of it was shipped to them in October.
We’re seeing nice improvements overall in the output from each of those lines. We recognize the holiday season is very important to our business. Most of the 2012 capacity is either already installed or just being installed right now.
The capital that we expect to continue to spend this year will prepare us for fall of 2013.
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