Specialty coffee retailer Keurig Green Mountain Inc. (GMCR), delivered robust fourth-quarter fiscal 2014 adjusted earnings of 90 cents per share which comfortably beat the Zacks Consensus Estimate of 78 cents by 15.4% and the company's expectation of 68–75 cents.
Earnings also improved 1% from the year-ago quarter. Adjusted earnings excluded one time charges of 4 cents.
Profit increased due to solid top-line improvement and enhanced operational efficiencies.
Consolidated Revenues and Margins
Keurig Green Mountain's quarterly net sales rose 14% to $1.19 billion from $1.04 billion in the comparable prior-year quarter, backed by 22% growth in portion packs — K-cups and Vue packs sales. However, foreign exchange had a 17% negative impact on sales. Net sales also beat the Zacks Consensus Estimate of $1.16 billion by 2.6%
Approximately 84% of fourth-quarter fiscal 2014 net sales was contributed by Keurig Single Cup Brewers, portion packs and Keurig-related accessories, with the remainder coming from bagged coffee, fractional packs and the Canadian office coffee services business.
Net sales of Single Serve Packs increased 22% year over year to $948.7 million due to a 28 percentage point (pp) increase in volume, partially offset by mix and pricing headwinds. This quarter the company sold portion packs to brand owners at a lower price than the previous year.
Net sales of Brewers and Accessories slipped 5% year over year to $181.6 million due to sales returns of certain models of Keurig 1.0 “MINI Plus” brewers. Volume increased 13 pp and product mix improved 3 pp.
Net sales of Other products slipped 17% to $65.3 million due to a demand shift from traditional coffee package formats to single-serve packs.
Though cost of sales increased 11.3%during the quarter, gross profit went up 12% to $449.78 million backed by higher revenues. Gross margin inflated 160 basis points (bps) to 37.6%.
Adjusted operating income went up 26% to $228.78 million. Adjusted operating margin inflated 190 bps to 20.1% backed by favorable green coffee costs, top-line growth and cost control.
Fiscal Results
In fiscal 2014, Keurig Green Mountain reported adjusted earnings of $3.93 per share, which surpassed the Zacks Consensus Estimate of $3.81 by 3.1%. Earnings also increased 16% from the prior-year earnings of $3.39 per share.
Net sales increased 8% to $4.70 billion in fiscal 2014 on the back of sales growth in most of the business segments. Sales beat the Zacks Consensus Estimate of $4.67 billion by 0.7%.
Guidance for Fiscal 2015
Keurig Green Mountain provided the fiscal 2015 outlook. The company expects adjusted earnings per share to grow in the range of mid to high single-digits. Keurig Green Mountain aims to achieve high single to low double-digit growth in annual revenues for the year.
Guidance for First Quarter Fiscal 2015
Keurig Green Mountain expects adjusted earnings per share in a range of 83 to 88 cents for first-quarter fiscal 2015. The company expects sales to grow in the high single-digits. Effective tax rate is expected to be within 35–35.5%.
Keurig Green Mountain currently sports a Zacks Rank #2 (Buy).
Other Stocks to Consider
Other consumer staples stocks worth considering are PepsiCo Inc. (PEP), Con Agra Foods Inc. (CAG) and Dr Pepper Snapple (DPS). All carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment