Diedrich Coffee, a leading fine coffee roaster and wholesaler, reported impressive revenue and profit figures for the first quarter 2010 (ended September 16, 2009). Total quarterly revenue increased 52% over the same quarter last year, going from $10.4 million to $15.8 million. The jump was led by a 66%, $5.8 million, increase in the sale of Keurig K-Cups, the popular one-serving coffee pods that users can pop in a coffee maker and discard. Diedrich Coffee is one of only four roasters under license to produce K-Cups for Keurig Incorporated’s top-selling single-cup brewing system.
First quarter gross margins were also up, increasing from 21% in the same quarter last year to 26% this year. Price increases helped, but other factors include a higher machine utilization, lower temporary help and overtime costs, reduction of scrap and waste due to better inventory controls, lower outbound freight costs, plus the ability to leverage fixed manufacturing costs over higher production volumes.
All of this helped the bottom line, with net income for the first quarter totaling $571,000 ($.07 per diluted share), as opposed to a net loss of $1.8 million in the same quarter last year.
The announcement of improved results came just one day after Diedrich stated that it has entered into a definitive agreement with Peet’s Coffee & Tea, Inc., where Peet’s will acquire Diedrich in a cash/stock transaction valued at $213 million ($26 per share).
Diedrich Coffee specializes in sourcing, roasting and selling high quality coffees. The company markets its three leading brands of specialty coffees, Diedrich Coffee, Coffee People, and Gloria Jean’s Coffees, through office coffee service distributors, restaurants and specialty retailers, and via the company’s web stores.
Peet’s Coffee & Tea (NASDAQ: PEET), based in Emeryville, California, near San Francisco, is a long-established specialty coffee and tea retailer, founded in 1966. It operates 200 store locations, mostly in California, but its products are sold at many grocery stores across the U.S.