Green Mountain Coffee Roasters Inc GMCR.O forecast quarterly and full year earnings well ahead of analysts expectations, helped by an expanded lineup of single-serve coffee makers and drinks, sending its shares up 22 percent in after-hours trade.
Green Mountain, which makes the Keurig brewing system and the K-Cups that go with it, is the leader in the small-but-growing U.S. market for single-serve coffee, though its shares have been targeted by short-sellers and at Tuesday's close were down 74 percent since September last year.
Marc Riddick, an analyst with The Williams Capital Group, said Green Mountain's ability to beat estimates on sales, earnings and outlook was "exceptional".
The performance might not change the minds of short-sellers who have been active since influential investor David Einhorn cast doubts on Green Mountain's sales figures, growth projects and accounting practices, he said.
"I do think it allows some long-only investors the opportunity to take a fresh look at the name," Riddick said. "A strong quarter, a good move in this stock and a new CEO coming onboard is a fairly powerful combination."
Green Mountain Chief Executive Lawrence Blanford is retiring next month, to be replaced by Brian Kelley, an executive from Coca-Cola Co (KO.N).
Analysts have welcomed Kelley's product and supply chain expertise after Green Mountain had difficulty forecasting demand for its coffee and had to deal with a U.S. securities probe into its accounting, and the demotion of founder Robert Stiller after ill-timed stock sales due to margin calls.
With an additional selling week in the quarter to boost results, Green Mountain said net income was $91.9 million, or 58 cents per share, in its fiscal fourth quarter ended on September 29, up from $75.4 million, or 47 cents per share, a year earlier.
Excluding items, earnings were 64 cents per share. On that basis, analysts on average were expecting 48 cents, according to Thomson Reuters I/B/E/S.
Net sales jumped 33 percent to $946.7 million, topping analysts' average estimate of $902.7 million.
Green Mountain raised its forecast for the new fiscal year to $2.64 to $2.74 per share, up from $2.55 to $2.65 per share previously. It expects annual net sales to grow 15 percent to 20 percent.
For the current first quarter Green Mountain forecast earnings of 62 cents to 67 cents per share and net sales growth of 14 percent to 18 percent. The slightly lower sales growth forecast was due to an unusually strong quarter last year.
The first quarter includes the key holiday shopping period, when gifts of coffee makers can turn many people into ongoing Keurig customers. Analysts on average expected earnings of 59 cents for the quarter and $2.51 for the year, according to estimates.
The September expiration of certain of Green Mountain's K-Cup patents opened the door for lower-cost rivals that stand to pressure prices overall and margins for Green Mountain, which makes most of its profit from the cups rather than the brewers.
But Blanford said, on his last conference call with analysts, that he had not seen any "marketplace dynamics that have caused us to think differently about our outlook for single-serve packs."
In an effort to address speculation over whether licensed partners, which include Starbucks (SBUX.O) and Dunkin Brands (DNKN.O), would continue as such given the expirations, Blanford said all partners were still committed to multi-year agreements.
Green Mountain, which started as a small Vermont coffee company, is also expanding beyond its core offerings, introducing fruity "wellness" drinks with nutrients. It is also working to move consumers to its new higher-end Vue system, whose patents are still in effect, and unveiled a single-cup espresso machine with Italy's Luigi Lavazza.
"As we look to the future, we remain committed to bringing fresh ideas to light; pushing forward disruptive technologies; and capturing true innovation," said Blanford.
Green Mountain shares jumped 22 percent to $35.36 after hours, from their Nasdaq close on Tuesday at $28.95.
(Reporting By Martinne Geller in New York; Editing by David Gregorio and Leslie Gevirtz)