Keurig Green Mountain Profit Surges 33%, But Sales Miss Street

(RTTNews) - Keurig Green Mountain Inc. (GMCR) Wednesday reported a 33 percent surge in profit for the third quarter, as strong demand for its single-cup coffee packs continues to drive growth. Earnings for the quarter trumped Wall Street estimates, but revenues fell short of expectations.

Keurig Green Mountain, known for its Keurig coffee brewers, said sales from portion packs jumped 10 percent to $826.3 million, while sales for brewers and accessories dropped 4 percent to $128.0 million.

"Our solid year-over-year brewer shipment growth of 13 percent and our 15 percent unit growth in portion packs is indicative of the continued expansion of the Keurig system across the U.S. and Canada," said CEO Brian Kelley.

The company sold 1.7 million Keurig system brewers during the quarter. Green Mountain has been the dominant player in the single-serve coffee industry, but the company faces stiff competition from the likes of Starbucks Corp. (SBUX).

"We also are excited about the imminent launch of our new Keurig 2.0 hot platform, the addition of formerly unlicensed and new brands to the Keurig hot beverage system during the quarter and our progress on the new Keurig Cold beverage system," Kelley added.

Keurig Green Mountain's net sales for the third quarter grew 6 percent to $1.02 billion from $967.1 million a year ago. Thirteen analysts polled by Thomson Reuters had a consensus revenue estimate of $1.05 billion for the quarter.

Waterbury, Vermont-based Keurig Green Mountain's third-quarter profit rose to $155.2 million or $0.94 per share from $116.3 million or $0.76 per share last year.

Adjusted earnings improved to $163.2 million or $0.99 per share from $124.7 million or $0.82 per share last year. On average, 13 analysts estimated earnings of $0.88 per share for the third quarter. Analyst' estimates typically exclude special items.

Gross margin for the quarter improved to 43.5 percent from 42.1 percent last year.

Looking forward to the fourth quarter, the company expect adjusted earnings of $0.68 to $0.75 per share and net sales growth in the high single to low double digits year-over-year. Analysts currently expect earnings of $0.86 per share on revenue growth of 10.60 percent for the fourth quarter.

The company raised its full-year 2014 adjusted earnings outlook to a range of $3.71 to $3.78 per share from its prior outlook of $3.63 to $3.73 per share, and maintained full-year sales growth guidance of high single digits. Analysts currently expect earnings of $3.78 per share on revenue growth of 7.80 percent for 2014.

GMCR closed Wednesday's trading at $118.13, up $0.39 or 0.33%, on the Nasdaq. The stock, however, dropped $3.38 or 2.86%, in after-hours trade.