Green Mountain Profit Tops Street, Coca-Cola Takes 10% Stake; Stock Up

(RTTNews) - Green Mountain Coffee Roasters Inc. (GMCR) Wednesday reported a higher first-quarter profit, on a four percent growth in sales as demand grew for its single-serve coffee packs. Quarterly earnings topped Wall Street estimates, but sales fell short of expectations.

In another development, Coca-Cola Co. (KO) acquired a 10 percent stake in Green Mountain as part of a 10-year deal to collaborate on the development of a Keurig Cold at-home beverage system, which is expected to be available in Green Mountain's fiscal 2015. Coke agreed to acquire about 16.7 million shares of Green Mountain for about $1.25 billion.

Green Mountain will be Coca-Cola's exclusive partner for the production and sale of Coca-Cola branded single-serve, pod-based cold beverages. The companies will also explore future opportunities to collaborate on the Keurig platform.

Investors welcomed the announcement, sending Green Mountain shares soaring to a new high for the year - climbing 35.79 percent to $109.83 in after-hours trade on the Nasdaq.

Waterbury, Vermont-based Green Mountain posted fourth-quarter net income of $138 million or $0.91 per share, compared with $107.6 million or $0.70 per share last year.

Excluding items, adjusted earnings for the quarter were $146 million or $0.96 per share, compared with $116 million or $0.76 per share a year ago.

On average, 15 analysts polled by Thomson Reuters expected earnings of $0.90 per share for the quarter. Analysts' estimates typically exclude special items.

Sales for the first quarter climbed to $1.39 billion from $1.34 billion in the prior year. Fourteen analysts had a consensus revenue estimate of $1.41 billion for the quarter.

The company experienced its best holiday season ever, said CEO Brian Kelley. "We achieved record brewer volume, revenue and retail sell-through despite a challenging holiday season for many retailers."

For the quarter, 5.1 million Keurig system brewers were sold.

Green Mountain has been the dominant player in the single-serve coffee industry, but the company faces stiff competition from the likes of Starbucks Corp. (SBUX).

For the second quarter, the company expects adjusted earnings of $0.93 to $0.98 per share and sales growth in the low-to-mid singly digits. Analysts currently expect earnings of $1.02 per share on sales growth of 8.1 percent for the quarter.

For fiscal year 2014, the company continues to project adjusted earnings of $3.75 to $3.85 per share and sales growth in the high single digits. Analysts currently expect earnings of $3.82 per share on sales growth of 8.4 percent for the year.

The company declared a quarterly cash dividend of $0.25 per share.

Green Mountain stock closed Wednesday at $80.88, up $0.74 or 0.92%, on a volume of 8.5 million shares. In after hours, the stock gained $28.95 or 35.79% at $109.83. In the past year, the stock has traded in the range of $42.25 - $89.66.