GREEN MOUNTAIN COFFEE ROASTERS

GREEN MOUNTAIN COFFEE ROASTERS - GREEN MOUNTAIN COFFEE...

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GREEN MOUNTAIN COFFEE ROASTERS: Green Mountain Coffee Roasters is a company that produces single serve coffee brewing systems that are available in numerous areas in America. It began as a simple little café in Vermont in 1981. After demand for their coffee grew in local restaurants, GMCR realized the potential to spread to a larger area. In fact, they became such a success that they have established themselves as one of the largest specialty coffee company in America. Green Mountain Coffee Trades found an immense amount of success in the coffee business, so much so, that they went public in 1993. Since then, they have continuously shown an upward trend in their business. In 2006 they acquired Keurig – these machines are now available everywhere for single serve coffee brewing for domestic consumers. “The Company has delivered double-digit net sales growth for the last 27 consecutive quarters. And, since the acquisition of Keurig, Incorporated in 2006, the Company has seen accelerated net sales growth of over 39% for the most recent 12 consecutive quarters.” Then, in 2009 they acquired another company, Tully’s Coffee, which currently has the highest sales of whole bean coffee in grocery stores in the US. Not done expanding yet, they made a deal with Starbucks in March of 2010. This deal entailed that Starbucks would sell Keurig machines and their coffee pods in their stores; seeing how large Starbucks is, this was a huge deal for GMCR. The company which started off in a café NOW employs a grand total of 1400+ employees. In looking at the financial statements of the company, we can see that there is indeed an upward trend in the company. Every year, there has been a positive incline in the free cash flow of GMCR. Save for the FCF between 2006 & 2007, the FCF has been moving steadily up. Even though it has been in the negative for the past few years, the company is improving since the number is getting closer and closer to the positive side; and in 2010, the FCF did reach the positive side of the number line (according to my calculations of subtracting Cash Flow from Investing Activities & Capital Expenditures from Cash Flow from operations). In the year 2010m Green Mountain Coffee Roasters’ free cash flow figure was calculated to be $8,177,000 – a big jump from the previous years, where they were in the red. Using the calculated growth rate (taken by using the previous 5 years’ FCF calculations, it came out to be ~3.5%), and the WACC
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This note was uploaded on 06/25/2011 for the course FIN 515 taught by Professor Unknown during the Spring '10 term at Keller Graduate School of Management.

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GREEN MOUNTAIN COFFEE ROASTERS - GREEN MOUNTAIN COFFEE...

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