Keurig Green Mountain Q2 Profit Rises, Stock Up - Update

(RTTNews) - Keurig Green Mountain Inc. (GMCR), Wednesday reported a 22 percent jump in profit for the second quarter, on a double-digit growth in sales with strong demand for its single cup brewers and coffee packs. Earnings and revenues for the quarter trounced Wall Street estimates, sending Keurig Green Mountain shares up six percent in extended trading hours.

Green Mountain, known for its Keurig coffee brewers, said sales from portion packs grew 13 percent to $898.2 million, while sales for brewers and accessories grew 9 percent to $137.6 million. The company generated about 94 percent of its revenues from sales of Keurig single cup brewers, portion packs, and Keurig-related accessories.

Green Mountain's net sales for the second quarter grew 10 percent to $1.10 billion from $1.00 billion last year. Twelve analysts polled by Thomson Reuters had a consensus revenue estimate of $1.05 billion for the quarter.

Waterbury, Vermont-based Green Mountain's second-quarter profit rose to $162.1 million or $1.03 per share from $132.4 million or $0.87 per share last year.

Adjusted earnings for the quarter rose to $1.08 per share from $0.93 per share a year ago. On average, 12 analysts expected earnings of $0.94 per share for the quarter. Analysts' estimates typically exclude special items.

"Double digit sales and earnings growth on the heels of a strong holiday season demonstrates the continued opportunity to grow our Keurig system in North America in a very competitive environment," said CEO Brian Kelley. "During the quarter, we drove strong brewer and portion pack net sales and accelerated our installed base."

The company sold 1.8 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).

Moving ahead, the company expects third-quarter adjusted earnings of $0.83 to $0.88 per share and net sales growth in the high single digits. Analysts currently estimate earnings of $0.88 per share and revenue growth of 8.70 percent.

For the full year 2014, the company now expects adjusted earnings of $3.63 to $3.73 per share, compared to prior outlook of $3.75 to $3.85 per share. The company continues to expect net sales growth in the high single digits. Analysts currently estimate earnings of $3.72 per share on revenue growth of 6.70 percent.

Keurig also approved a new share buyback authorization of up to $1 billion over the next two years, which will take effect upon completion of the current program that has $288 million remaining.

In a separate development, the company said it has entered into a multi-year agreement with J.M. Smucker Co. (SJM ) for the expansion of their successful partnership for the manufacturing, marketing, distribution and sale of the Smucker family of coffee brands, including Folgers, Cafe Bustelo and Millstone into Keurig portion packs.

In February, Coca-Cola Co. (KO) had acquired a 10 percent stake in Green Mountain for $1.25 billion as part of a 10-year deal for the production and sale of Coca-Cola branded single-serve, pod-based cold beverages.

GMCR closed Wednesday's trading at $92.21, down $3.06 or 3.21%, on the Nasdaq. The stock, however gained $5.88 or 6.38%, in after-hours trade.