UPDATE 2-Green Mountain Q4 beats Street, Q1 EPS view disappoints
* Q4 EPS $0.34 vs est $0.33
* Q4 sales rises 65 pct to $222.2 million, beats est
* Q1 EPS outlook $0.11-$0.15 lags est $0.19
* Shares fall 12 pct after the bell (Adds analyst comments, background)
By Mihir Dalal
BANGALORE, Nov 11 (Reuters) - Green Mountain Coffee Roasters Inc (GMCR.O) posted higher-than-expected quarterly results, on strong sales of its Keurig single-cup brewers and their attendant K-cup refills, but shares fell 12 percent as its first-quarter earnings outlook fell short of expectations.
The company expects first-quarter earnings of 11 cents to 15 cents a share on sales growth of 61 to 66 percent. Analysts on average were expecting earnings of 19 cents a share, according to Thomson Reuters I/B/E/S.
"There is some confusion (among investors) over the first-quarter guidance. We would not be sellers on this guidance," said Janney Montgomery Scott analyst Mitchell Pinheiro.
The earnings outlook seems to be below consensus on lower-than-expected operating margins, said Pinheiro.
The company expects first-quarter operating margin in the range of 3.8 to 4.3 percent, compared 11.4 percent in the fourth quarter.
"However, the counter-intuitive argument is that the lower margins imply that the company is expecting to sell a boatload of Keurig brewers."
Green Mountain sells Keurig brewers at breakeven prices to consumers, but it makes a profit on sales of the higher-margin K-cup refills. Increased brewer sales hit operating margins initially but are likely to drive future profit as customers buy the higher-margin K-cups.
"So if you are focused on the first-quarter margin number, you do not understand the company's model," Pinheiro said.
Green Mountain, which also sells to hotels and offices, raised its fiscal 2010 outlook to earnings per share of $1.75 to $1.85 on sales growth of 50 to 55 percent.
It earlier expected earnings per share of $1.70 to $1.80 on net sales growth of 45 to 50 percent.
For the fourth quarter ended Sept. 26, net income rose to $14.4 million, or 34 cents a share, from $7.1 million, or 18 cents a share, a year ago. Continued...
