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Last Update: 09-May-13 07:48 ET
Green Mountain Coffee shares soar 16% following beat on earnings
Green Mtn Coffee (GMCR $69.80 +0.32) reported second quarter earnings of $0.93 per share, $0.21 better than the Capital IQ consensus of $0.72, while revenues rose 13.5% year/year to $1 billion versus the $1.02 billion consensus. The 21% increase in single serve pack net sales over the prior year period was driven by a 26% increase in sales volume offset by a 5% decrease due to single serve pack product mix. For the quarter, 1.36 million Keurig system brewers were sold, a 9% decrease in shipments over the prior year period. GMCR's licensed brewer partners reported 131,500 brewers sold during the period. In the second quarter of fiscal year 2013, gross margin improved 590 basis points to 41.3% from 35.4% in the prior year period. The higher gross margin versus the prior year period was due to favorable green coffee costs, lower obsolescence expense of finished goods and raw materials, lower labor and overhead manufacturing costs, a favorable product mix shift and a decrease in warranty expense for Keurig Single Cup Brewers. The Company's effective income tax rate was 35.6% for the second quarter of fiscal 2013 as compared to 36.0% for the prior year period. GMCR expects its fiscal 2013 annual effective tax rate to be approximately 37%. Free cash flow generation YTD totaled $456 million; continue to expect to invest in brewer inventory in the back half of the year to meet anticipated holiday demand.
The company revised FY13 free cash flow estimate to a range of $300 million to $400 million from a prior range of $100 million to $150 million. The company issued guidance for Q3, sees EPS of $0.71-0.78 versus the $0.65 Capital IQ consensus. Net sales growth in the range of 11% to 15% over the third quarter of fiscal year 2012, Capital IQ consensus 18%. The company issued guidance for FY13, sees EPS of $3.05-3.15 versus the $2.82 Capital IQ consensus. Net sales growth in the range of 14% to 17% over fiscal year 2012, compared to prior guidance of 15-20%. On a comparable basis, the Company's expected fiscal 2013 revenue growth rate is being driven by a 20% increase in the Company's core single serve business, offset by a 5% decline in its traditional coffee business, comprised of bagged coffee, fractional packs and office coffee services. Capital investment in the range of $275 million to $325 million versus $401 million in fiscal year 2012. The Company continues to be comfortable with its longer-term outlook of annual net sales growth of 15% to 20%.
The company revised FY13 free cash flow estimate to a range of $300 million to $400 million from a prior range of $100 million to $150 million. The company issued guidance for Q3, sees EPS of $0.71-0.78 versus the $0.65 Capital IQ consensus. Net sales growth in the range of 11% to 15% over the third quarter of fiscal year 2012, Capital IQ consensus 18%. The company issued guidance for FY13, sees EPS of $3.05-3.15 versus the $2.82 Capital IQ consensus. Net sales growth in the range of 14% to 17% over fiscal year 2012, compared to prior guidance of 15-20%. On a comparable basis, the Company's expected fiscal 2013 revenue growth rate is being driven by a 20% increase in the Company's core single serve business, offset by a 5% decline in its traditional coffee business, comprised of bagged coffee, fractional packs and office coffee services. Capital investment in the range of $275 million to $325 million versus $401 million in fiscal year 2012. The Company continues to be comfortable with its longer-term outlook of annual net sales growth of 15% to 20%.
