November 20, 2013 / 10:12 PM / 4 years ago

UPDATE 2-Green Mountain sees strong revenue in second half of 2014

* Fourth-quarter earnings $0.89/share vs est. $0.75

* Forecasts first-qtr adj earnings $0.85-$0.90/share vs est. $0.96

* Announces new $1 bln share buyback program

* Shares rise 4 pct after market

By Maria Ajit Thomas

Nov 20 (Reuters) - K-cup coffee pods maker Green Mountain Coffee Roasters Inc said it expected stronger revenue in the second half of its fiscal 2014 as it converts unlicensed coffee pod makers to licensed partners.

The company, however, gave a cautious current-quarter forecast, citing a transition to a new brewing system and weakness in U.S. consumer spending.

Shares of Green Mountain, which also approved a share repurchase program of up to $1 billion, were up 4 percent in extended trading.

Sales of the company’s K-cups have risen steadily even though the expiry of some patents on its single-serve coffee pods last year allowed rivals TreeHouse Foods Inc and Caribou Coffee Co Inc and private-label firms to launch their own products.

Green Mountain has licensed K-cups to companies such as J.M. Smucker Co, Starbucks Corp, Tetley USA Inc and Associated British Foods Plc, which sell their coffee and tea in these pods.

Green Mountain also sells its coffee and the beverages of other brands in K-cups.

The company said on a post-earnings conference call that it would launch a new Keurig brewing system that would not brew unlicensed K-cups. This new system will replace the older ones over 2014 and early 2015.

K-cups from new licensed partners will hit the shelves during the second half of fiscal 2014 ending September, Chief Executive Brian Kelley said on the call.

Green Mountain sells its brewers virtually at cost to fuel adoption of its system. A majority of the company’s profits comes from K-cups.

Green Mountain said it expected net sales growth of low-to-mid single digits in the first quarter due to competition from unlicensed coffee pods and the impact of a weaker Canadian dollar.

The company forecast adjusted earnings of 85-90 cents per share. Analysts on average were expecting 96 cents per share, according to Thomson Reuters I/B/E/S.

Strong sales of K-cups and lower green coffee costs helped the company report better-than-expected results for the fourth quarter.

Net income rose to $127 million, or 83 cents per share, in the quarter ended Sept. 28 from $91.9 million, or 58 cents per share, a year earlier.

On an adjusted basis, Green Mountain earned 89 cents per share, beating the average analyst estimate of 75 cents.

Revenue rose 11 percent to $1.05 billion, above analysts’ estimates of $964.6 million. Sales of K-cups rose 11 percent.

The company’s shares were up at $64.30 in trading after the bell. The stock has risen 53 percent to Wednesday’s close of $61.43 on the Nasdaq.

Green Mountain shares are heavily shorted, with nearly 27 percent of its outstanding shares held in short positions.

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