During the first quarter of fiscal year 2014 the Company repurchased a total of 1.7 million shares at a cost of $122.5 million.
Dividend Declaration
GMCR’s Board of Directors has declared a quarterly cash dividend of $0.25 per share of the Company’s common stock. The quarterly cash dividend will be paid on May 2, 2014, to shareholders of record as of the close of business on April 4, 2014.
Business Outlook and Other Forward-Looking Information
“We expect sales growth will accelerate as we move through our fiscal year 2014 based on a number of factors including a higher installed base of Keurig brewers as well as the ongoing conversion and on-shelf availability of packs converted from unlicensed to licensed participants in the Keurig system,” said Kelley.
“We continue to expect net sales growth in the high single digits for fiscal year 2014 with some variability quarter-to-quarter as we work with our customers to manage the transition to our next generation Keurig 2.0 brewers and packs.”
Strategic Relationship with The Coca-Cola Company Announced
Separately today, the Company announced that it has signed a 10-year agreement with The Coca-Cola Company to collaborate on the development and introduction of The Coca-Cola Company’s global brand portfolio for use in GMCR’s forthcoming Keurig Cold™ at-home beverage system.
Under the global strategic agreement, GMCR and The Coca-Cola Company will cooperate to bring the Keurig Cold™ beverage system to consumers around the world. In an effort to ensure long-term interests are aligned, the Companies also entered into a Common Stock Purchase Agreement whereby The Coca-Cola Company will purchase a 10% minority equity position in GMCR.
The Company reaffirmed its outlook on its underlying business for its fiscal year 2014, and revised its outlook to reflect the anticipated impact of The Coca-Cola Company’s equity purchase. It expects:
- Net sales growth in the high single digits over fiscal year 2013 with stronger sales growth in the second half of the year as a number of currently unlicensed packs are transitioned to licensed partners.
- An annual effective tax rate of 37.0%.
- Non-GAAP earnings per diluted share of $3.75 to $3.85 which:
- Excludes the approximately 5% dilutive impact of The Coca-Cola Company’s purchase of shares and absent any actions the Company may take to offset dilution
- Includes an $0.11 headwind from foreign currency exchange
- Excludes the amortization of identifiable intangibles related to the Company’s acquisitions and legal and accounting expenses related to the SEC inquiry and the Company’s pending securities and stockholder derivative class action litigation
- On a currency-neutral basis and excluding the dilutive impact from The Coca-Cola Company’s purchase of shares and absent any actions the Company may take to offset dilution, underlying earnings growth is projected to increase 14% to 17% over the prior year period.
- Free cash flow in the range of $200 million to $300 million.
- Capital investment in the range of $400 million to $450 million primarily to fund new system introductions.
The Company also provided its outlook for its second quarter of fiscal year 2014:
- Net sales growth of low-to-mid single digits over the second quarter of fiscal year 2013 due to year-over-year pack sales comparisons; the impact of unlicensed packs; and, the currency headwind in Canada.
- Non-GAAP earnings per diluted share in a range of $0.93 to $0.98 which:
- Excludes the approximately 4% dilutive impact of The Coca-Cola Company’s purchase of shares and absent any actions the Company may take to offset dilution
- Includes $0.05 headwind from foreign currency exchange
- Excludes the amortization of identifiable intangibles related to the Company’s acquisitions and legal and accounting expenses related to the SEC inquiry and the Company’s pending securities and stockholder derivative class action litigation
- On a currency-neutral basis and excluding the dilutive impact from The Coca-Cola Company’s purchase of shares, and absent any actions the Company may take to offset dilution, underlying earnings growth is projected to increase 5% to 11% over the prior year period.
Use of Non-GAAP Financial Measures
In addition to reporting financial results in accordance with generally accepted accounting principles (GAAP), the Company provides non-GAAP operating results that exclude legal and accounting expenses related to the SEC inquiry and pending securities and stockholder derivative class action litigation; and non-cash acquisition-related items such as amortization of identifiable intangibles, each of which include adjustments to show the tax impact of excluding these items.
