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Green Mountain Q2 Profit Climbs 42%, Revenue Hits $1B

Posted On: 5/10/2013

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TAGS: office coffee service, vending business, Green Mountain Coffee Roasters, GMCR second-quarter, Keurig single-cup, K-Cup sales, Starbucks Corp., Brian Kelley, single-serving coffee packs, Starbucks K-Cups, OCS supplies, coffee trends

Stocks soar as Starbucks expands K-Cup deal

WATERBURY, VT -- Green Mountain Coffee Roasters second-quarter net income rose 42% to $132.4 million, or 87¢ a share, from $93 million, or 58¢, last year. Total revenue rose 14% to $1 billion in the quarter.

Shares climbed 18% to $70 on May 9, the highest price in more than a year, after the Waterbury, VT, roaster and maker of the Keurig single-cup brewing platform raised its profit forecast on higher K-Cup sales. Green Mountain also announced an expanded partnership with Starbucks Corp., an hour before reporting its earnings.

Sales of Keurig K-Cups during the second quarter increased 21% over the comparable prior-year period. Green Mountain president and chief executive Brian Kelley, who replaced Larry Blanford in December, credited growth in the sales of single-serving packs and to more Keurig brewers in more households.

"By the end of this fiscal year we will have 16 to 17 million brewers active in U.S. homes, implying an installed base growth rate of 25% to 30% over last year," Kelley said. "We expect similar growth next year.

Keurig brewers and accessory sales fell 9.6% to $126.8 million as the company continues to face increased competition from rival single-cup systems like Starbucks' Verismo.

Through their extended five-year agreement, Starbucks ultimately will triple the number of its products offered in both K-Cup and Vue single-serving packs. New brands Starbucks will offer include Seattle's Best Coffee, Torrefazione Italia coffee, Teavana Teas and Starbucks Cocoa.

Starbucks first reached an agreement with Green Mountain to sell Starbucks K-Cups in March 2011. Starbucks has reportedly shipped more than 850 million of the single-cup packs since then.