Green Mountain Keeps Climbing

Green Mountain Coffee Roasters (GMCR - Analyst Report) reported third quarter earnings of $0.36 per share, in-line with the Zacks Consensus Estimate. Earnings were up 112% year-over-year.

Net sales increased by a strong 61% year-over-year to $190.5 million, driven by strong gains from the Keurig business, which shipped approximately 439 million Keurig brewers, a 187% increase compared to the prior-year quarter. GMCR has reported 27 consecutive quarters of double-digit sales growth and 12 consecutive quarters of overall top-line growth of above 39%.

Organic sales of Green Mountain Roasters increased 39% driven by strong shipments (40%) of Green Mountain K-Cup coffee, tea and hot cocoa. In addition, the newly acquired Tully’s business also contributed positively to the top-line with a 5.5% increase in sales. Furthermore, the introduction of Café Escapes and the continued expansion of the distribution network and sales channels, targeting the at-home consumer also generated strong results.

In the third quarter, management announced two new licensing initiatives. GMCR licensed Con-Air Corporation to launch a Cuisinart branded Keurig brewed coffee maker during the first half of 2010. Secondly, the company also licensed Jardan to launch a brewer under its Mr. Coffee brand to be rolled out during the second half of 2010. Both these product lines will be co-branded with Keurig and are designed to work with the 200 varieties of gourmet coffee, tea and hot cocoa packaged in Keurig's patented K-Cup portion pack.

During the quarter, GMCR also launched a line of Celestial Seasonings Perfect Iced Tea K-Cup portion packs. Management believes that these products will provide new demand for K-Cup portion packs by adding cold beverages.

Management raised guidance for 2009 and provided an outlook for fiscal 2010. Total consolidated net sales growth is expected to be in the range of 58% to 61% for fiscal 2009. Total K-Cup portion packs shipped system-wide are expected to increase in the range of 60% to 65%. Earnings are now expected in the range of $1.10 to $1.14 per share. Previous expectation was $0.98 to $1.02 per share.

For fiscal 2010, total consolidated net sales growth is expected in the range of 45% to 50%.Total K-Cup portion packs shipped system-wide are expected to increase in the range of 65% to 70%. Earnings are expected in the range of $1.70 to $1.80 per share, including the non-cash amortization expenses related to the identifiable intangibles of $5.3 million or approximately $0.08 per share.