PORTLAND, Ore. (AP) — Shares of Green Mountain Coffee Roasters Inc. soared 12 percent in after-hours trading Wednesday after it reported a 30 percent jump in third-quarter profit and plans to repurchase shares.
The company issued a weak forecast for sales and earnings in the current quarter and for the full fiscal year.
Green Mountain, based in Waterbury, Vt., was once a market darling as the pioneer of the single-serve coffee system in the U.S. Soaring sales of its Keurig coffee systems helped the company grow quickly, but it has struggled recently with increased competition, an SEC inquiry, the looming expiration of some key patents and analyst questions about its reporting methods and sustainability.
CEO Lawrence Blanford said Wednesday that the third-quarter results demonstrate the company's business strength, but he said its sales growth would moderate from the hyper-growth it had shown over the past few years.
The company expects to earn 45 to 50 cents per share on an adjusted basis for its fourth quarter on revenue of $889.9 million to $925.5 million. Analysts polled by FactSet had forecast earnings of 61 cents on revenue of $952.2 million for the quarter.
Green Mountain expects to earn $2.21 to $2.26 per share on an adjusted basis for the full year with revenue in the range of $3.79 billion to $3.84 billion. That also falls short of market expectations of $2.33 per share on revenue of $3.87 billion. The company also said it expects slightly negative cash flow for the 2012 fiscal year.
Looking at 2013, Green Mountain expects sales growth in the range of 15 to 20 percent over 2012. It forecast earnings of $2.55 to $2.65 per share on an adjusted basis for 2013. Analysts were expecting $2.90 per share.
The company's disappointing forecast came with strong third-quarter gains. It earned $73.3 million, or 36 cents per share, for the quarter that ended June 23. That's up 30 percent from $56.3 million, or 37 cents per share, in the same quarter last year. On an adjusted basis, it earned 52 cents per share versus 49 cents per share a year ago. Revenue rose 21 percent to $869.2 million with stronger sales of its brewers and coffee pods but weaker revenue from royalties and other product sales.
Analysts expected 49 cents per share on revenue of $873.3 million.
Green Mountain said it will repurchase up to $500 million of its shares over the next two years.
Shares rose $2.15, or 12 percent, to $20.06 in after-hours trading. Green Mountain's stock had closed the day down 35 cents at $17.91.
Green Mountain's stock has lost nearly 84 percent of its value since last fall.
The company also said Wednesday that it is adding Norman Wesley, former CEO and Chairman of Fortune Brands Inc., to its board of directors. Green Mountain said it will continue to evaluate its board composition as part of an overall review.