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Green Mountain Plummets 41% On Weak Outlook, But Q2 Profit Rises

5/2/2012 10:45 PM ET

Shares of Green Mountain Coffee Roasters, Inc. (GMCR: Quote) plummeted 41 percent in extended trading on Wednesday after the specialty coffee company provided guidance for the third quarter, well below Street view, and slashed it forecast for the full-year 2012.

The company also reported a profit for the second quarter that increased from last year as Keurig single cup brewing system continued to drive growth. Adjusted earnings per share matched analysts' expectations, but quarterly revenues missed their estimates.

"Over the past several years we achieved a strong net sales growth rate driven by consumers' rapid acceptance of our innovative Keurig Single Cup Brewing system. Additionally, during this timeframe we made a number of strategic acquisitions that strengthened our long-term position and contributed to our growth rate," President and CEO Lawrence Blanford said in a statement.

The Waterbury, Vermont-based company reported net income of $93.03 million or $0.58 per share for the second quarter, higher than $65.37 million or $0.44 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter increased to $101.68 million or $0.64 per share from $71.53 million or $0.48 per share in the year-ago quarter.

On average, 11 analysts polled by Thomson Reuters expected earnings of $0.64 per share for the second quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter increased 37 percent to $885.05 million from $647.66 million in the same quarter last year, but missed twelve Wall Street analysts' consensus estimate of $971.65 million.

The company attributed the sale growth to more consumers adopting the ease and convenience of Keurig's "Choose. Brew. Brew. Enjoy." approach to beverages. The company sold 1.4 million Keurig Single Cup Brewers during the second quarter.

Net sales from K-Cup portion packs surged 59 percent from last year to $655.0 million, and sales for brewers and accessories grew 21 percent to $140.2 million from a year ago. Meanwhile, other products sales declined 25 percent to $89.9 million from last year.

However, gross margin for the quarter contracted 210 basis points to 35.4 percent from last year as higher green coffee and other input costs more than offset price increases on K-Cup portion packs.

Looking ahead to the third quarter, Green Mountain forecasts adjusted earnings in a range of $0.48 to $0.53 per share, on anticipated net sales between $861 million and $897 million. Analysts expect the company to report earnings of $0.72 per share on quarterly revenues of $1.05 billion.

For fiscal 2012, the company slashed its adjusted earnings guidance to a range of $2.40 to $2.50 per share from the prior outlook of $2.55 to $2.65 per share. The company also now expects revenues between $3.8 billion and $4.0 billion, and growth of 45 to 50 percent, down from the earlier outlook of 60 to 65 percent growth.

Street is currently looking for full-year 2012 earnings of $2.67 per share, on annual revenues of $4.27 billion.

GMCR closed Wednesday's regular trading session at $49.52, down $0.22 or 0.44% on a volume of 21.51 million shares. The stock plummeted a further $20.12 or 40.63% in after-hours trading.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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