Green Mountain Coffee Roasters is well into an encouraging recovery after a tumultuous 2012, which saw leadership upheaval and much-discussed patent expirations.
The Waterbury firm’s latest financial results for September to December 2012, show 16 percent revenue growth compared to the same period last year, driven by increasing single-serve packet sales. Some 4.95 million Keurig brewers were also sold during those months, up 18 percent from last year.
The results are the first released under new President and CEO Brian Kelley, who moved to the firm from Coca-Cola in December.
“Our first quarter performance was very strong, driven by the Keurig brewing system, its steady and strong consumer acceptance over what is now many years, and the value inherent in our open-brand portfolio,” said Kelley in a conference call to investors late Wednesday afternoon.
Kelley took time to dispel what he saw as recent myths about the company, including the fear that the expiration of a key patent last year would direly affect the company and revenues.
“The impact of our K-cup pack patent expiration last year appears largely exaggerated, and not nearly as dire as some feared,” said Kelley. “In fact, it turns out that it wasn’t really the patent that was protecting the strength of the Keurig system. The patent just gave us a head start, which is exactly what patents are intended to do.”
He argued that the production system for Keurig brewers, GMCR’s partnership with other brands, and existing customer loyalty meant that the firm’s market share in household brewers would remain buoyant in coming years.
GMCR figures show that based on industry data, the Keurig brewer accounted for almost a third of all coffeemaker sales in the last quarter of 2012.
Kelley also alluded to a gradual plan to “sharpen” the firm’s business strategy, saying that details from an internal review would surface in the next three to six months.
Analyst Marc Riddick from Williams Capital, who follows the firm, said earnings and other results were reasonably positive and close to what he’d expected for the holiday season. He added that Kelley’s leadership and vision so far were “solid,” especially his plans to improve branding and efficiency.
“It’s a continuation of seeing the company resonate with consumers in general,” said Riddick, who said the firm would continue to grow its base of customers. “We have new leadership, and we’ll learn a lot more about that strategic direction in the next three to six months. In the meantime, the company continues to do very well.”
During the conference call, there was also brief mention of the company’s “growing pains” in the last five years, which have included controversial critiques from noted hedge fund manager David Einhorn, of Greenlight Capital, the removal of the board chair last year, and stockholder lawsuits.
In the firm’s proxy statement for shareholders before its annual meeting in early March, it says that the board formed a special investigative committee in May 2012 to review allegations by stockholders in “certain stockholder demand letters.”
While company spokesperson Katie Gilroy confirmed that the committee did meet and work on the topic, she couldn’t discuss any details of what came of the its work, or what it found, since those details stay confidential.
Betsy Bishop, president of Vermont’s Chamber of Commerce, lauded Green Mountain Coffee as a “very good employer,” adding, “What we know about them in Vermont is that they’re doing well, that they’re hiring, that they’re producing more.
“So from a Vermont perspective, we see those signs of growth, so we’re encouraged by that.”
Although Bishop declined to weigh in on the firm’s performance or prospects, she pointed to “new innovations” from the company, signalling an upbeat outlook.
The firm’s proxy statement shows that no company executives received bonuses last year because of the firm’s poor performance. Executives could have earned bonuses ranging from $234,000 to $950,000.
Founded in 1981 as a small cafe in Waitsfield, Green Mountain Coffee went public in 1993, and acquired Keurig brewing systems in 2006. While based in Waterbury, the company now employs about 5,800 people, with facilities in six states and Canada.
