Green Mountain Coffee Roasters Inc. (GMCR) Wednesday posted a 42 percent jump in second-quarter profit, on robust sales of Keurig single cup brewers and packs. Earnings for the quarter easily trumped Wall Street estimates, while sales fell shy of expectations.
The maker of specialty coffee and related products raised its adjusted earnings outlook for fiscal year 2013, and trimmed its sales guidance.
Green Mountain also announced a five-year extension of its tie-up with Starbucks Corp. (SBUX) for the manufacture and sale of Starbucks- and Tazo-branded single serve packs for use in its Keurig single serve brewers. Financial terms of the deal were not disclosed.
Shares of Green Mountain touched a new high for the year, surging 15 percent in after-hours trade on the Nasdaq.
Green Mountain said net sales from single-serve packs in the quarter grew 21 percent from last year. However, sales for brewers and accessories fell 10 percent. Sales of Keurig single cup brewers, single serve packs, and accessories comprised 92 percent of revenues.
Single serve pack volumes were up 26 percent, while shipment of Keurig system brewers fell 9 percent to 1.36 million.
The Waterbury, Vermon-based company posted total sales of $1 billion, up 14 percent from $885 million in the prior year. On average, 13 analysts polled by Thomson Reuters estimated revenues of $1.02 billion for the quarter.
Gross margin for the quarter grew 590 basis points from last year, partly on favorable green coffee costs. Operating income expanded to 21 percent from about 17 percent.
Net income for the quarter was $132 million or $0.87 per share, compared with $93 million or $0.58 per share last year.
Excluding items, adjusted earnings for the quarter were $141 million or $0.93 per share. Analysts had consensus earnings estimate of $0.73 per share for the quarter. Analysts' estimates typically exclude special items.
For the third quarter, Green Mountain expect adjusted earnings of $0.71 to $0.78 per share, with sales growth of 11 to 15 percent. Analysts currently expect earnings of $0.65 per share on revenues of $1.02 billion for the quarter.
For fiscal year 2013, Green Mountain now estimates adjusted earnings of $3.05 to $3.15 per share, up from prior range of $2.72 to $2.82 per share. Sales growth is now forecast in the range of 11 to 14 percent, down from prior range of 15 to 20 percent.
Analysts currently expect earnings of $2.84 per share on revenues of $4.47 billion for the year.
Adjusted earnings outlook for the year includes the impact of shares repurchased prior to March 2013 as part of its previously announced share repurchase program.
Meanwhile, elaborating on its extended strategic tie-up, Green Mountain said Starbucks will add brands and varietals to the Starbucks K-Cup and Vue pack portfolio of offerings for Keurig single cup brewers. New brands will include Seattle's Best Coffee, Torrefazione Italia coffee, Teavana Teas, and Starbucks Cocoa.
The companies initially struck a partnership in March 2011 and has shipped over 850 million Starbucks coffee K-Cup packs.
Green Mountain's stock closed Wednesday at $59.48, up 1.57%, on a volume of about 6 million shares on the Nasdaq. In after hours, the stock gained $9.11 or 15.32% at $ 68.59. In the past year, the stock has traded in a range of $17.11 - $59.62.
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