Green Mountain Coffee Roasters, Inc. Reports 28 Percent Sales Gain For Single-Serve Packs In Third Quarter

GAAP operating margin of 14.9 percent of net sales in the third quarter of fiscal year 2012 decreased from 16.6 percent in the prior year period as a result of the lower gross margin.

Non-GAAP operating margin, which excludes $3.0 million in expenses associated with the SEC inquiry and pending litigation in the quarter, as well as $11.5 million in amortization of identifiable intangibles related to the company’s acquisitions, was 16.6 percent of net sales in the third quarter of fiscal year 2012 compared to 18.4 percent in the prior year period.

The company’s effective income tax rate was 39.6 percent for the third quarter of fiscal year 2012 as compared to a 35.8 percent effective tax rate for the prior year period. The increase is attributable to the extension of the 2011 federal R&D credit in the third quarter of the prior year and lower stock option activity in the current quarter.

Diluted weighted average shares outstanding as of the end of the third quarter of fiscal year 2012 increased to 159.3 million from 153.3 million from the prior year period.

“We are pleased with the strength of our balance sheet including our low debt ratio,” said Frances G. Rathke, GMCR’s chief financial officer. “As part of our ongoing efforts to drive efficiencies in our single-serve pack inventory management and distribution, we have reduced our forward-weeks coverage on hand from our fiscal second quarter.”

“Our higher overall inventory dollar balance in the third quarter of fiscal 2012 compared to the same period in fiscal 2011 is largely driven by increases in Keurig^® brewer finished goods resulting from expected first quarter fiscal 2013 holiday demand,” continued Rathke. “In order to ensure brewer availability on retail shelves for the holiday season, all of our anticipated holiday brewer units must be on hand in North America by early October, leading to brewer and accessories inventory build beginning in our fiscal third quarter and continuing into our fiscal fourth quarter.”

In its guidance for its fourth quarter (which contains 14 weeks), the company refined estimates for its fiscal year 2012.

For the fourth quarter of fiscal year 2012, the company anticipates:

Total net sales in the range of $889.9 million to $925.5 million, or net growth of 25 percent to 30 percent, from $711.9 million in the fourth quarter of fiscal year 2011.

Fourth quarter 2012 non-GAAP earnings per diluted share in a range of $0.45 to $0.50 per diluted share, excluding any acquisition-related transaction expenses; legal and accounting expenses related to the SEC inquiry and the company’s pending litigation; amortization of identifiable intangibles related to the company’s acquisitions; and any impact from anticipated company share repurchases.

The company anticipates the fiscal 2012 fourth quarter tax rate to be similar to the 37.7 percent year to date tax rate. Last year’s fourth quarter tax rate was 23.7 percent primarily attributable to the release of valuation allowances related to a $17.7 million capital loss carryforward and a $5.4 million net operating loss carryforward in the fourth quarter of fiscal 2011.

For its fiscal year 2012, the company anticipates:

Total net sales in the range of $3.79 billion to $3.84 billion, or net growth of 43 percent to 45 percent, from $2.65 billion in fiscal year 2011.

Fiscal year 2012 non-GAAP earnings per diluted share in a range of $2.21 to $2.26 per diluted share, excluding approximately $0.20 per share due to the amortization of identifiable intangibles related to the company’s acquisitions; any acquisition-related transaction expenses; legal and accounting expenses related to the SEC inquiry and the company’s pending litigation; any gain from the sale of the Filterfresh business; and any impact from anticipated company share repurchases.

Capital expenditures in the range of $475 to $525 million, down from prior estimates of $525 to $575 million.

Slightly negative free cash flow for fiscal 2012.

The company provided its outlook for its fiscal year 2013:

Total net sales growth in the range of 15 percent to 20 percent over fiscal 2012.