Skip to main content Skip to home page
image description
image description
Keurig Dr Pepper Reports Q2 2023 Results, Raises Full Year Net Sales Outlook and Reaffirms EPS Guidance

Strong Q2 Net Sales Growth Led by U.S. Refreshment Beverages and International

Full Year Net Sales Outlook Increased to 5% to 6%

BURLINGTON, Mass. and FRISCO, Texas , July 27, 2023 /PRNewswire/ -- Keurig Dr Pepper Inc. (NASDAQ: KDP) today reported results for the second quarter ended June 30, 2023, raised its full year constant currency net sales growth outlook to 5% to 6% and reaffirmed its guidance for Adjusted diluted EPS growth of 6% to 7%.

   

Reported GAAP Basis

 

Adjusted Basis1

   

Q2

 

YTD

 

Q2

 

YTD

Net Sales

 

$3.79 bn

 

$7.14 bn

 

$3.79 bn

 

$7.14 bn

% vs prior year

 

6.6 %

 

7.7 %

 

6.1 %

 

7.4 %

Diluted EPS

 

$0.36

 

$0.69

 

$0.42

 

$0.76

% vs prior year

 

140.0 %

 

23.2 %

 

7.7 %

 

5.6 %

 

Commenting on the announcement, Chairman and CEO Bob Gamgort stated, "Our second quarter results demonstrated the strength of KDP's brand portfolio and our high-quality retail execution. We saw continued momentum in the U.S. Refreshment Beverages and International segments, as well as encouraging intraquarter developments in U.S. Coffee, where we expect a sequential recovery in revenue and a meaningful inflection in margins in the back half. On a consolidated basis, we continue to drive healthy growth while reinvesting in our business and are increasingly confident in our full year outlook, which now reflects even stronger underlying EPS results."

Second Quarter Consolidated Results

Net sales for the second quarter of 2023 increased 6.6% to $3.79 billion, compared to $3.55 billion in the year-ago period. On a constant currency basis, net sales advanced 6.1%, reflecting net price realization of 8.2%, only slightly offset by lower volume/mix of 2.1%. The resilient volume/mix performance reflected the continued strength of the Company's brand portfolio and in-market execution, as well as continued modest elasticities across most categories.

KDP in-market performance in the U.S. Liquid Refreshment Beverages (LRB) category remained strong, with retail dollar consumption2 advancing 10.7% and market share gains in categories representing approximately 85% of the Company's cold beverage retail sales base. The performance was led by CSDs3, seltzers, coconut waters, energy, apple juice and fruit drinks and was driven by Dr Pepper and Squirt in CSDs, as well as Polar seltzers, Evian, Vita Coco, C4 Energy, Mott's and Hawaiian Punch.

U.S. retail dollar consumption2 of KDP Manufactured K-Cup® Pods decreased 2.3% in IRi tracked channels in the quarter, and KDP Manufactured dollar share was approximately 79%. Total at-home coffee category trends during the second quarter continued to be impacted by greater consumer mobility versus the prior year, though the Company observed sequential improvement in category consumption towards the end of the second quarter, which continued into the third quarter. The single serve segment continued to gain volume share of the at-home coffee category throughout the period.

GAAP operating income increased 34.4% to $769 million, compared to $572 million in the year-ago period, reflecting growth in gross profit, as the strong net sales growth and productivity more than offset continued input cost inflation. Also impacting the comparison was the favorable year-over-year impact of items affecting comparability.

Excluding items affecting comparability, Adjusted operating income increased 4.4% to $873 million, including a strong double-digit increase in marketing investment, reflecting the strong growth in net sales and Adjusted gross profit, which more than offset transportation, warehousing and labor inflation. On a percent of net sales basis, Adjusted operating income was 23.0%.

GAAP net income for the quarter increased 130.7% to $503 million, or $0.36 per diluted share, compared to $218 million, or $0.15 per diluted share, in the year-ago period. This performance reflected a favorable year-over-year impact of items affecting comparability and the increase in Adjusted operating income, partially offset by a higher GAAP effective tax rate. Excluding items affecting comparability, Adjusted net income for the quarter advanced 7.0% to $596 million, and Adjusted diluted EPS increased 7.7% to $0.42.

Free cash flow for the second quarter was $295 million, reflecting lower operating cash flow and higher capital expenditures versus prior year.

During the quarter, the Company repurchased approximately 7 million KDP shares at a weighted average price per share of $32.34, totaling approximately $226 million. The Company has approximately $3.2 billion remaining under its share repurchase authorization expiring on December 31, 2025. 

_________________________________________

1 Adjusted financial metrics presented in this release are non-GAAP and with growth rates presented on a constant currency basis. See reconciliations of GAAP results to Adjusted results on a constant currency basis in the accompanying tables.
2 Retail consumption data based on Keurig Dr Pepper's custom IRi category definitions for the 13-week period ending 7/2/2023.
3 CSDs refer to "Carbonated Soft Drinks".

Second Quarter Segment Results

U.S. Refreshment Beverages

Net sales for the second quarter increased 11.8% to $2.3 billion, compared to $2.1 billion in the year-ago period, reflecting net price realization of 12.0% and a slight decrease in volume/mix of 0.2%. This strong performance continued to reflect the strength of the portfolio, including incrementality from recent innovation, and exceptional in-market execution, as well as the contribution from our sales and distribution partnership with Nutrabolt for C4 Energy.

GAAP operating income increased a very strong 19.1% to $629 million, compared to $528 million in the year-ago period, reflecting the net sales growth, productivity and a modest year-over-year benefit from items affecting comparability. These drivers were partially offset by continued broad-based input cost inflation and a significant increase in marketing investment. Excluding items affecting comparability, Adjusted operating income increased 18.1% to $646 million and, on a percent of net sales basis, totaled 27.7%.

U.S. Coffee

Net sales for the second quarter decreased 5.7% to $970 million, compared to $1,029 million in the year-ago period, reflecting net price realization of 1.6% and a volume/mix decline of 7.3%. 

At-home coffee consumption in the quarter continued to be impacted by year-over-year changes in mobility, with sequential improvement in category volume trends observable each month of the quarter. Pod revenue declined 4.6%, driven by a shipment decline of 7.7% that primarily reflected mobility-driven category softness, the exit of some lower-margin private label contracts and an unfavorable comparison in the prior year during which the Company rebuilt trade inventory levels following supply chain constraints. On a trailing twelve-month basis versus the pre-pandemic Q2 2019 period, at-home pod shipments grew 16.9%, representing a mid-single digit compound annual growth rate (CAGR).

Brewer shipments totaled 9.9 million for the twelve months ending June 30, 2023, representing an 11.0% decline year-over-year. Compared against pre-pandemic levels represented by the twelve months ending June 30, 2019, brewer shipments grew 17.8%, representing a mid-single digit CAGR. Brewer shipments in the second quarter continued to be impacted by trade inventory adjustments, which the Company believes are now mostly complete, and slower discretionary spending for small appliances.

GAAP operating income decreased 15.3% to $250 million, compared to $295 million in the year-ago period, reflecting broad-based inflationary pressures, the decline in volume/mix and a significant increase in marketing investment. Partially offsetting these drivers were the benefits of productivity, higher net price realization and a modest year-over-year benefit of items affecting comparability. Excluding these items, Adjusted operating income decreased 14.6% to $292 million and, on a percent of net sales basis, totaled 30.1%.

International

Net sales for the second quarter increased 10.9% to $489 million, compared to $441 million in the year-ago period and, on a constant currency basis, net sales advanced 7.0%. This strong performance was driven by higher net price realization of 6.1% and volume/mix growth of 0.9%, and reflected broad-based momentum in both Mexico and Canada.

GAAP operating income increased a strong 14.3% to $112 million, compared to $98 million in the year-ago period, largely reflecting the benefits of the higher net sales, increased productivity and the year-over-year benefit of items affecting comparability, partially offset by inflationary pressures and a significant increase in marketing investment. Excluding items affecting comparability, Adjusted operating income increased 7.7% to $116 million and, on a percent of net sales basis, totaled 23.7%.

2023 Guidance

The 2023 guidance provided below is presented on a constant currency, non-GAAP basis. The Company does not provide reconciliations of such forward-looking non-GAAP measures to GAAP measures, due to the inability to predict the amount and timing of impacts outside of the Company's control on certain items, such as non-cash gains or losses resulting from mark-to-market adjustments of derivative instruments, among others, which could be material.

On a constant currency basis, KDP now expects net sales growth of 5% to 6% for 2023. The company's outlook for Adjusted diluted EPS growth of 6% to 7% in 2023 remains unchanged.

Investor Contacts:

Jane Gelfand
T: 888-340-5287 / jane.gelfand@kdrp.com 

Chethan Mallela
T: 888-340-5287 / chethan.mallela@kdrp.com 

Media Contact:

Katie Gilroy
T: 781-418-3345 / katie.gilroy@kdrp.com

ABOUT KEURIG DR PEPPER

Keurig Dr Pepper (KDP) is a leading beverage company in North America, with annual revenue of more than $14 billion and approximately 28,000 employees. KDP holds leadership positions in liquid refreshment beverages, including soft drinks, specialty coffee and tea, water, juice and juice drinks and mixers, and markets the #1 single serve coffee brewing system in the U.S. and Canada. The Company's portfolio of more than 125 owned, licensed and partner brands is designed to satisfy virtually any consumer need, any time, and includes Keurig®, Dr Pepper®, Canada Dry®, Clamato®, CORE®, Green Mountain Coffee Roasters®, Mott's®, Snapple®, and The Original Donut Shop®. Through its powerful sales and distribution network, KDP can deliver its portfolio of hot and cold beverages to nearly every point of purchase for consumers. The Company's Drink Well. Do Good. corporate responsibility platform is focused on the greatest opportunities for impact in the environment, its supply chain, the health and well-being of consumers and with its people and communities. For more information, visit www.keurigdrpepper.com

FORWARD LOOKING STATEMENTS

Certain statements contained herein are "forward-looking statements" within the meaning of applicable securities laws and regulations. These forward-looking statements can generally be identified by the use of words such as "outlook," "guidance," "anticipate," "expect," "believe," "could," "estimate," "feel," "forecast," "intend," "may," "plan," "potential," "project," "should," "target," "will," "would," and similar words. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. These statements are based on the current expectations of our management, are not predictions of actual performance, and actual results may differ materially.

Forward-looking statements are subject to a number of risks and uncertainties, including the factors disclosed in our Annual Report on Form 10-K and subsequent filings with the SEC. We are under no obligation to update, modify or withdraw any forward-looking statements, except as required by applicable law.

NON-GAAP FINANCIAL MEASURES

This release includes certain non-GAAP financial measures including Adjusted gross profit, Adjusted operating income, Adjusted net income, Adjusted diluted EPS, free cash flow and financial measures presented on a constant currency basis, which differ from results using U.S. Generally Accepted Accounting Principles (GAAP). These non-GAAP financial measures should be considered as supplements to the GAAP reported measures, should not be considered replacements for, or superior to, the GAAP measures and may not be comparable to similarly named measures used by other companies. Non-GAAP financial measures typically exclude certain charges, including one-time costs that are not expected to occur routinely in future periods. The Company uses non-GAAP financial measures internally to focus management on performance excluding these special charges to gauge our business operating performance. Management believes this information is helpful to investors because it increases transparency and assists investors in understanding the underlying performance of the Company and in the analysis of ongoing operating trends. Additionally, management believes that non-GAAP financial measures are frequently used by analysts and investors in their evaluation of companies, and their continued inclusion provides consistency in financial reporting and enables analysts and investors to perform meaningful comparisons of past, present and future operating results. The most directly comparable GAAP financial measures and reconciliations to non-GAAP financial measures are set forth in the appendix to this release and included in the Company's filings with the SEC.

To the extent that the Company provides guidance, it does so only on a non-GAAP basis and does not provide reconciliations of such forward-looking non-GAAP measures to GAAP due to the inability to predict the amount and timing of impacts outside of the Company's control on certain items, such as non-cash gains or losses resulting from mark-to-market adjustments of derivative instruments, among others, which could be material. 

 

KEURIG DR PEPPER INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

 
 

Second Quarter

 

First Six Months

(in millions, except per share data)

2023

 

2022

 

2023

 

2022

Net sales

$        3,789

 

$        3,554

 

$        7,142

 

$        6,632

Cost of sales

1,748

 

1,778

 

3,357

 

3,206

Gross profit

2,041

 

1,776

 

3,785

 

3,426

Selling, general and administrative expenses

1,272

 

1,204

 

2,437

 

2,222

Gain on litigation settlement

 

 

 

(299)

Other operating income, net

 

 

(5)

 

(35)

Income from operations

769

 

572

 

1,353

 

1,538

Interest expense

172

 

175

 

195

 

363

Loss on early extinguishment of debt

 

169

 

 

217

Gain on sale of equity method investment

 

 

 

(50)

Impairment of investments and note receivable

 

6

 

 

12

Other (income) expense, net

(16)

 

9

 

(36)

 

18

Income before provision for income taxes

613

 

213

 

1,194

 

978

Provision (benefit) for income taxes

110

 

(5)

 

224

 

175

Net income including non-controlling interest

503

 

218

 

970

 

803

Less: Net loss attributable to non-controlling interest

 

 

 

Net income attributable to KDP

$           503

 

$           218

 

$           970

 

$           803

               

Earnings per common share:

             

Basic

$          0.36

 

$          0.15

 

$          0.69

 

$          0.57

Diluted

0.36

 

0.15

 

0.69

 

0.56

Weighted average common shares outstanding:

             

Basic

1,400.3

 

1,417.5

 

1,403.2

 

1,417.8

Diluted

1,409.1

 

1,428.6

 

1,413.1

 

1,429.2

 

KEURIG DR PEPPER INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 
 

June 30,

 

December 31,

(in millions, except share and per share data)

2023

 

2022

Assets

Current assets:

     

Cash and cash equivalents

$                278

 

$                535

Trade accounts receivable, net

1,311

 

1,484

Inventories

1,384

 

1,314

Prepaid expenses and other current assets

597

 

471

Total current assets

3,570

 

3,804

Property, plant and equipment, net

2,489

 

2,491

Investments in unconsolidated affiliates

1,019

 

1,000

Goodwill

20,194

 

20,072

Other intangible assets, net

23,344

 

23,183

Other non-current assets

1,153

 

1,252

Deferred tax assets

32

 

35

Total assets

$           51,801

 

$           51,837

Liabilities and Stockholders' Equity

Current liabilities:

     

Accounts payable

4,601

 

5,206

Accrued expenses

1,030

 

1,153

Structured payables

126

 

137

Short-term borrowings and current portion of long-term obligations

2,635

 

895

Other current liabilities

664

 

685

Total current liabilities

9,056

 

8,076

Long-term obligations

9,934

 

11,072

Deferred tax liabilities

5,736

 

5,739

Other non-current liabilities

1,808

 

1,825

Total liabilities

26,534

 

26,712

Commitments and contingencies

     

Stockholders' equity:

     

Preferred stock, $0.01 par value, 15,000,000 shares authorized, no shares issued

 

Common stock, $0.01 par value, 2,000,000,000 shares authorized, 1,396,909,564 and 1,408,394,293 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

14

 

14

Additional paid-in capital

21,009

 

21,444

Retained earnings

3,948

 

3,539

Accumulated other comprehensive income

297

 

129

Total stockholders' equity

25,268

 

25,126

Non-controlling interest

(1)

 

(1)

Total equity

25,267

 

25,125

Total liabilities and stockholders' equity

$           51,801

 

$           51,837

 

KEURIG DR PEPPER INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 
 

First Six Months

(in millions)

2023

 

2022

Operating activities:

     

Net income attributable to KDP

$                  970

 

$                  803

Adjustments to reconcile net income to net cash provided by operating activities:

     

Depreciation expense

201

 

205

Amortization of intangibles

69

 

67

Other amortization expense

91

 

86

Provision for sales returns

26

 

25

Deferred income taxes

(26)

 

(52)

Employee stock-based compensation expense

57

 

12

Loss on early extinguishment of debt

 

217

Gain on sale of equity method investment

 

(50)

Gain on disposal of property, plant and equipment

(2)

 

(33)

Unrealized (gain) loss on foreign currency

(13)

 

2

Unrealized (gain) loss on derivatives

(31)

 

187

Settlements of interest rate contracts

 

125

Equity in (earnings) loss of unconsolidated affiliates

(14)

 

5

Impairment on investments and note receivable of unconsolidated affiliates

 

12

Other, net

(9)

 

22

Changes in assets and liabilities:

     

Trade accounts receivable

162

 

(206)

Inventories

(61)

 

(346)

Income taxes receivable and payables, net

(70)

 

(245)

Other current and non-current assets

(147)

 

(340)

Accounts payable and accrued expenses

(762)

 

680

Other current and non-current liabilities

11

 

163

Net change in operating assets and liabilities

(867)

 

(294)

Net cash provided by operating activities

452

 

1,339

Investing activities:

     

Proceeds from sale of investment in unconsolidated affiliates

 

50

Purchases of property, plant and equipment

(149)

 

(186)

Proceeds from sales of property, plant and equipment

8

 

78

Purchases of intangibles

(55)

 

(10)

Issuance of related party note receivable

 

(18)

Investments in unconsolidated affiliates

(8)

 

(48)

Other, net

1

 

3

Net cash (used in) provided by investing activities

(203)

 

(131)

Financing activities:

     

Proceeds from issuance of Notes

 

3,000

Repayments of Notes

 

(3,365)

Proceeds from issuance of commercial paper

18,187

 

500

Repayments of commercial paper

(17,598)

 

(649)

Proceeds from structured payables

61

 

79

Repayments of structured payables

(72)

 

(75)

Cash dividends paid

(563)

 

(531)

Repurchases of common stock

(457)

 

(88)

Tax withholdings related to net share settlements

(32)

 

(8)

Payments on finance leases

(49)

 

(41)

Other, net

 

(43)

Net cash used in financing activities

(523)

 

(1,221)

Cash, cash equivalents, and restricted cash and cash equivalents:

     

Net change from operating, investing and financing activities

(274)

 

(13)

Effect of exchange rate changes

17

 

(1)

Beginning balance

535

 

568

Ending balance

$                  278

 

$                  554

 

KEURIG DR PEPPER INC.

RECONCILIATION OF SEGMENT INFORMATION

(UNAUDITED)

 
 

Second Quarter

 

First Six Months

(in millions)

2023

 

2022

 

2023

 

2022

Net Sales

             

U.S. Refreshment Beverages

$            2,330

 

$            2,084

 

$            4,337

 

$            3,865

U.S. Coffee

970

 

1,029

 

1,901

 

1,972

International

489

 

441

 

904

 

795

Total net sales

$            3,789

 

$            3,554

 

$            7,142

 

$            6,632

               

Income from Operations

             

U.S. Refreshment Beverages

$              629

 

$              528

 

$            1,119

 

$            1,232

U.S. Coffee

250

 

295

 

482

 

550

International

112

 

98

 

192

 

162

Unallocated corporate costs

(222)

 

(349)

 

(440)

 

(406)

Total income from operations

$              769

 

$              572

 

$            1,353

 

$            1,538

 

KEURIG DR PEPPER INC.
RECONCILIATION OF CERTAIN NON-GAAP INFORMATION
(UNAUDITED)

The company reports its financial results in accordance with U.S. GAAP. However, management believes that certain non-GAAP financial measures that reflect the way management evaluates the business may provide investors with additional information regarding the company's results, trends and ongoing performance on a comparable basis.

Specifically, investors should consider the following with respect to our financial results:

Adjusted: Defined as certain financial statement captions and metrics adjusted for certain items affecting comparability.

Items affecting comparability: Defined as certain items that are excluded for comparison to prior year periods, adjusted for the tax impact as applicable. Tax impact is determined based upon an approximate rate for each item. For each period, management adjusts for (i) the unrealized mark-to-market impact of derivative instruments not designated as hedges in accordance with U.S. GAAP that do not have an offsetting risk reflected within the financial results, as well as the unrealized mark-to-market impact of our Vita Coco investment; (ii) the amortization associated with definite-lived intangible assets; (iii) the amortization of the deferred financing costs associated with the DPS Merger; (iv) the amortization of the fair value adjustment of the senior unsecured notes obtained as a result of the DPS Merger; (v) stock compensation expense and the associated windfall tax benefit attributable to the matching awards made to employees who made an initial investment in KDP; (vi) non-cash changes in deferred tax liabilities related to goodwill and other intangible assets as a result of tax rate or apportionment changes; and (vii) other certain items that are excluded for comparison purposes to prior year periods.

For the second quarter and first six months of 2023, the other certain items excluded for comparison purposes include (i) productivity expenses and (ii) costs related to significant non-routine legal matters, specifically the antitrust litigation. Additionally, the non-cash changes in deferred tax liabilities related to goodwill and other intangible assets included an immaterial correction of an error during the second quarter of 2023 related to the valuation of the foreign deferred tax liabilities related to goodwill and other intangible assets.

For the second quarter and first six months of 2022, the other certain items excluded for comparison purposes include (i) restructuring and integration expenses related to significant business combinations; (ii) productivity expenses; (iii) costs related to significant non-routine legal matters, specifically the antitrust litigation; (iv) the loss on early extinguishment of debt related to the redemption of debt; (v) incremental costs to our operations related to risks associated with the COVID-19 pandemic, which were incurred to either maintain the health and safety of our front-line employees or temporarily increase compensation to such employees to ensure essential operations continue during the pandemic; (vi) the gain on the sale of our investment in BodyArmor as a result of the settlement of the associated holdback liability; (vii) the gain on the settlement of our prior litigation with BodyArmor, excluding recoveries of previously incurred litigation expenses which were included in our adjusted results; (viii) losses recognized with respect to our equity method investment in Bedford as a result of funding our share of their wind-down costs; (ix) transaction costs for significant business combinations (completed or abandoned); and (x) foundational projects, which are transformative and non-recurring in nature.

Constant currency adjusted: Defined as certain financial statement captions and metrics adjusted for certain items affecting comparability, calculated on a constant currency basis by converting our current period local currency financial results using the prior period foreign currency exchange rates.

For the second quarter and first six months of 2023 and 2022, the supplemental financial data set forth below includes reconciliations of adjusted and constant currency adjusted financial measures to the applicable financial measure presented in the unaudited condensed consolidated financial statements for the same period.

 

KEURIG DR PEPPER INC.

RECONCILIATION OF CERTAIN NON-GAAP INFORMATION

(UNAUDITED)

 
 

Cost of
sales

 

Gross profit

 

Gross
margin

 

Selling, general and
administrative
expenses

 

Other
operating
income, net

 

Income
from
operations

 

Operating
margin

For the Second Quarter of 2023

                         

Reported

$         1,748

 

$         2,041

 

53.9 %

 

$                      1,272

 

$                  —

 

$            769

 

20.3 %

Items Affecting Comparability:

                         

Mark to market

(9)

 

9

     

5

 

 

4

   

Amortization of intangibles

 

     

(35)

 

 

35

   

Stock compensation

 

     

(4)

 

 

4

   

Productivity

(26)

 

26

     

(32)

 

 

58

   

Non-routine legal matters

 

     

(3)

 

 

3

   

Adjusted

$         1,713

 

$         2,076

 

54.8 %

 

$                      1,203

 

$                  —

 

$            873

 

23.0 %

Impact of foreign currency

       

(0.1) %

             

— %

Constant currency adjusted

       

54.7 %

             

23.0 %

                           

For the Second Quarter of 2022

                         

Reported

$         1,778

 

$         1,776

 

50.0 %

 

$                      1,204

 

$                  —

 

$            572

 

16.1 %

Items Affecting Comparability:

                         

Mark to market

(138)

 

138

     

 

 

138

   

Amortization of intangibles

 

     

(33)

 

 

33

   

Stock compensation

 

     

(5)

 

 

5

   

Restructuring and integration costs

 

     

(23)

 

1

 

22

   

Productivity

(28)

 

28

     

(24)

 

 

52

   

Non-routine legal matters

 

     

(3)

 

 

3

   

COVID-19

(3)

 

3

     

(1)

 

 

4

   

Transaction costs

 

     

(1)

 

 

1

   

Foundational projects

 

     

(2)

 

 

2

   

Adjusted

$         1,609

 

$         1,945

 

54.7 %

 

$                      1,112

 

$                    1

 

$            832

 

23.4 %

 

Refer to page A-8 for reconciliations of reported net sales to constant currency net sales and adjusted income from operations to constant currency adjusted income from operations.

 

KEURIG DR PEPPER INC.

RECONCILIATION OF CERTAIN NON-GAAP INFORMATION

(UNAUDITED)

 
 

Interest
expense

 

Loss on early
extinguishment
of debt

 

Impairment of
investments and
note receivable

 

Other
(income)
expense, net

 

Income before
provision for
income taxes

 

Provision
(benefit) for
income taxes

 

Effective
tax rate

 

Net income
attributable to
KDP

 

Diluted
earnings per
share

For the Second Quarter of 2023

                                 

Reported

$       172

 

$                   —

 

$                     —

 

$              (16)

 

$                    613

 

$               110

 

17.9 %

 

$             503

 

$           0.36

Items Affecting Comparability:

                                 

Mark to market

(53)

 

 

 

9

 

48

 

15

     

33

 

0.02

Amortization of intangibles

 

 

 

 

35

 

6

     

29

 

0.02

Amortization of deferred financing costs

(1)

 

 

 

 

1

 

     

1

 

Amortization of fair value debt adjustment

(5)

 

 

 

 

5

 

1

     

4

 

Stock compensation

 

 

 

 

4

 

1

     

3

 

Productivity

 

 

 

 

58

 

12

     

46

 

0.03

Non-routine legal matters

 

 

 

 

3

 

1

     

2

 

Change in deferred tax liabilities related to
goodwill and other intangible assets

 

 

 

 

 

25

     

(25)

 

(0.02)

Adjusted

$       113

 

$                   —

 

$                     —

 

$                (7)

 

$                    767

 

$               171

 

22.3 %

 

$             596

 

$           0.42

Impact of foreign currency

                       

(0.2) %

       

Constant currency adjusted

                       

22.1 %

       
                                   

For the Second Quarter of 2022

                                 

Reported

$       175

 

$                 169

 

$                       6

 

$                  9

 

$                    213

 

$                 (5)

 

(2.3) %

 

$             218

 

$           0.15

Items Affecting Comparability:

                                 

Mark to market

(63)

 

 

 

1

 

200

 

49

     

151

 

0.11

Amortization of intangibles

 

 

 

 

33

 

8

     

25

 

0.02

Amortization of deferred financing costs

(1)

 

 

 

 

1

 

     

1

 

Amortization of fair value of debt adjustment

(4)

 

 

 

 

4

 

1

     

3

 

Stock compensation

 

 

 

 

5

 

(2)

     

7

 

Restructuring and integration costs

 

 

 

 

22

 

5

     

17

 

0.01

Productivity

 

 

 

 

52

 

10

     

42

 

0.03

Impairment of investment

 

 

(6)

 

 

6

 

     

6

 

Loss on early extinguishment of debt

 

(169)

 

 

 

169

 

43

     

126

 

0.09

Non-routine legal matters

 

 

 

 

3

 

1

     

2

 

COVID-19

 

 

 

 

4

 

1

     

3

 

Transaction costs

 

 

 

 

1

 

     

1

 

Foundational projects

 

 

 

 

2

 

     

2

 

Change in deferred tax liabilities related to
goodwill and other intangible assets

 

 

 

 

 

50

     

(50)

 

(0.03)

Adjusted

$       107

 

$                   —

 

$                     —

 

$                10

 

$                    715

 

$               161

 

22.5 %

 

$             554

 

$           0.39

                                   

Change - adjusted

5.6 %

                         

7.6 %

 

7.7 %

Impact of foreign currency

— %

                         

(0.6) %

 

— %

Change - constant currency adjusted

5.6 %

                         

7.0 %

 

7.7 %

 

Diluted earnings per common share may not foot due to rounding.

 

KEURIG DR PEPPER INC. 

RECONCILIATION OF CERTAIN NON-GAAP INFORMATION 

(UNAUDITED) 

 

(in millions)

Reported

 

Items Affecting
Comparability

 

Adjusted

For the second quarter of 2023

         

Income from operations

         

U.S. Refreshment Beverages

$                            629

 

$                              17

 

$                            646

U.S. Coffee

250

 

42

 

292

International

112

 

4

 

116

Unallocated corporate costs

(222)

 

41

 

(181)

Total income from operations

$                            769

 

$                            104

 

$                            873

           

For the second quarter of 2022

         

Income from operations

         

U.S. Refreshment Beverages

$                            528

 

$                              19

 

$                            547

U.S. Coffee

295

 

47

 

342

International

98

 

6

 

104

Unallocated corporate costs

(349)

 

188

 

(161)

Total income from operations

$                            572

 

$                            260

 

$                            832

 

   

Reported

 

Impact of Foreign
Currency

 

Constant Currency

For the second quarter of 2023

           

Net sales

           

U.S. Refreshment Beverages

 

11.8 %

 

— %

 

11.8 %

U.S. Coffee

 

(5.7)

 

 

(5.7)

International

 

10.9

 

(3.9)

 

7.0

Total net sales

 

6.6

 

(0.5)

 

6.1

 

   

Adjusted

 

Impact of Foreign
Currency

 

Constant Currency
Adjusted

For the second quarter of 2023

           

Income from operations

           

U.S. Refreshment Beverages

 

18.1 %

 

— %

 

18.1 %

U.S. Coffee

 

(14.6)

 

 

(14.6)

International

 

11.5

 

(3.8)

 

7.7

Total income from operations

 

4.9

 

(0.5)

 

4.4

 

   

Reported

 

Items Affecting
Comparability

 

Adjusted

 

Impact of
Foreign
Currency

 

Constant
Currency
Adjusted

For the second quarter of 2023

                   

Operating margin

                   

U.S. Refreshment Beverages

 

27.0 %

 

0.7 %

 

27.7 %

 

— %

 

27.7 %

U.S. Coffee

 

25.8

 

4.3

 

30.1

 

 

30.1

International

 

22.9

 

0.8

 

23.7

 

 

23.7

Total operating margin

 

20.3

 

2.7

 

23.0

 

 

23.0

 

KEURIG DR PEPPER INC.

RECONCILIATION OF CERTAIN NON-GAAP INFORMATION

(UNAUDITED)

 
 

Cost of sales

 

Gross profit

 

Gross
margin

 

Selling, general
and administrative
expenses

 

Gain on
 litigation
settlement

 

Other operating
income, net

 

Income from
operations

 

Operating
margin

For the First Six Months of 2023

                             

Reported

$            3,357

 

$            3,785

 

53.0 %

 

$                    2,437

 

$                —

 

$                     (5)

 

$         1,353

 

18.9 %

Items Affecting Comparability:

                             

Mark to market

5

 

(5)

     

(7)

 

 

 

2

   

Amortization of intangibles

 

     

(69)

 

 

 

69

   

Stock compensation

 

     

(9)

 

 

 

9

   

Productivity

(64)

 

64

     

(72)

 

 

 

136

   

Non-routine legal matters

 

     

(3)

 

 

 

3

   

Adjusted

$            3,298

 

$            3,844

 

53.8 %

 

$                    2,277

 

$                —

 

$                     (5)

 

$         1,572

 

22.0 %

Impact of foreign currency

       

— %

                 

— %

Constant currency adjusted

       

53.8 %

                 

22.0 %

                               

For the First Six Months of 2022

                             

Reported

$            3,206

 

$            3,426

 

51.7 %

 

$                    2,222

 

$             (299)

 

$                   (35)

 

$         1,538

 

23.2 %

Items Affecting Comparability:

                             

Mark to market

(79)

 

79

     

26

 

 

 

53

   

Amortization of intangibles

 

     

(67)

 

 

 

67

   

Stock compensation

 

     

2

 

 

 

(2)

   

Restructuring and integration costs

 

     

(56)

 

 

(2)

 

58

   

Productivity

(56)

 

56

     

(46)

 

 

 

102

   

Non-routine legal matters

 

     

(7)

 

 

 

7

   

COVID-19

(7)

 

7

     

(2)

 

 

 

9

   

Gain on litigation

 

     

 

271

 

 

(271)

   

Transaction costs

 

     

(1)

 

 

 

1

   

Foundational projects

 

     

(2)

 

 

 

2

   

Adjusted

$            3,064

 

$            3,568

 

53.8 %

 

$                    2,069

 

$              (28)

 

$                   (37)

 

$         1,564

 

23.6 %

 

Refer to page A-11 for reconciliations of reported net sales to constant currency net sales and adjusted income from operations to constant currency adjusted income from operations.

 

KEURIG DR PEPPER INC.

RECONCILIATION OF CERTAIN NON-GAAP INFORMATION

(UNAUDITED)

 
 

Interest
expense

 

Loss on early
extinguishment
of debt

 

Gain on sale of
equity method
investment

 

Impairment of
investments and
note receivable

 

Other
(income)
expense, net

 

Income before
provision for
income taxes

 

Provision
(benefit) for
income taxes

 

Effective
tax rate

 

Net income
attributable
to KDP

 

Diluted
earnings
per share

For the First Six Months of 2023

                                     

Reported

$     195

 

$                   —

 

$                   —

 

$                     —

 

$             (36)

 

$            1,194

 

$              224

 

18.8 %

 

$        970

 

$    0.69

Items Affecting Comparability:

                                     

Mark to market

40

 

 

 

 

18

 

(56)

 

(14)

     

(42)

 

(0.03)

Amortization of intangibles

 

 

 

 

 

69

 

16

     

53

 

0.04

Amortization of deferred financing costs

(1)

 

 

 

 

 

1

 

     

1

 

Amortization of fair value debt adjustment

(9)

 

 

 

 

 

9

 

2

     

7

 

0.01

Stock compensation

 

 

 

 

 

9

 

3

     

6

 

Productivity

 

 

 

 

 

136

 

33

     

103

 

0.07

Non-routine legal matters

 

 

 

 

 

3

 

1

     

2

 

Change in deferred tax liabilities related to
goodwill and other intangible assets

 

 

 

 

 

 

25

     

(25)

 

(0.02)

Adjusted

$     225

 

$                   —

 

$                   —

 

$                     —

 

$             (18)

 

$            1,365

 

$              290

 

21.2 %

 

$     1,075

 

$    0.76

Impact of foreign currency

                           

0.1 %

       

Constant currency adjusted

                           

21.3 %

       
                                       

For the First Six Months of 2022

                                     

Reported

$     363

 

$                 217

 

$                 (50)

 

$                     12

 

$              18

 

$               978

 

$              175

 

17.9 %

 

$        803

 

$    0.56

Items Affecting Comparability:

                                     

Mark to market

(134)

 

 

 

 

(2)

 

189

 

47

     

142

 

0.10

Amortization of intangibles

 

 

 

 

 

67

 

17

     

50

 

0.04

Amortization of deferred financing costs

(2)

 

 

 

 

 

2

 

     

2

 

Amortization of fair value of debt adjustment

(9)

 

 

 

 

 

9

 

2

     

7

 

Stock compensation

 

 

 

 

 

(2)

 

(3)

     

1

 

Restructuring and integration costs

 

 

 

 

 

58

 

14

     

44

 

0.03

Productivity

 

 

 

 

 

102

 

22

     

80

 

0.06

Impairment of investment

 

 

 

(12)

 

 

12

 

     

12

 

Loss on early extinguishment of debt

 

(217)

 

 

 

 

217

 

54

     

163

 

0.12

Non-routine legal matters

 

 

 

 

 

7

 

2

     

5

 

COVID-19

 

 

 

 

 

9

 

2

     

7

 

Gain on litigation

 

 

 

 

 

(271)

 

(68)

     

(203)

 

(0.14)

Gain on sale of equity-method investment

 

 

50

 

 

 

(50)

 

(12)

     

(38)

 

(0.03)

Transaction costs

 

 

 

 

 

1

 

     

1

 

Foundational projects

 

 

 

 

 

2

 

     

2

 

Change in deferred tax liabilities related to
goodwill and other intangible assets

 

 

 

 

 

 

50

     

(50)

 

(0.03)

Adjusted

$     218

 

$                   —

 

$                   —

 

$                     —

 

$              16

 

$            1,330

 

$              302

 

22.7 %

 

$     1,028

 

$    0.72

                                       

Change - adjusted

3.2 %

                             

4.6 %

 

5.6 %

Impact of foreign currency

— %

                             

(0.5) %

 

— %

Change - Constant currency adjusted

3.2 %

                             

4.1 %

 

5.6 %

 

Diluted earnings per common share may not foot due to rounding.

 

KEURIG DR PEPPER INC. 

RECONCILIATION OF CERTAIN FINANCIAL MEASURES BY SEGMENT TO CONSTANT CURRENCY
ADJUSTED FINANCIAL MEASURES BY SEGMENT
 

(UNAUDITED) 

 

(in millions)

Reported

 

Items Affecting
Comparability

 

Adjusted

For the first six months of 2023:

         

Income from operations

         

U.S. Refreshment Beverages

$                         1,119

 

$                              35

 

$                         1,154

U.S. Coffee

482

 

95

 

577

International

192

 

8

 

200

Unallocated corporate costs

(440)

 

81

 

(359)

Total income from operations

$                         1,353

 

$                            219

 

$                         1,572

           

For the first six months of 2022:

         

Income from operations

         

U.S. Refreshment Beverages

$                         1,232

 

$                          (230)

 

$                         1,002

U.S. Coffee

550

 

93

 

643

International

162

 

13

 

175

Unallocated corporate costs

(406)

 

150

 

(256)

Total income from operations

$                         1,538

 

$                              26

 

$                         1,564

 

   

Reported

 

Impact of Foreign
Currency

 

Constant Currency

For the first six months of 2023:

           

Net sales

           

U.S. Refreshment Beverages

 

12.2 %

 

— %

 

12.2 %

U.S. Coffee

 

(3.6)

 

 

(3.6)

International

 

13.7

 

(2.4)

 

11.3

Total net sales

 

7.7

 

(0.3)

 

7.4

 

   

Adjusted

 

Impact of Foreign
Currency

 

Constant Currency
Adjusted

For the first six months of 2023:

           

Income from operations

           

U.S. Refreshment Beverages

 

15.2 %

 

— %

 

15.2 %

U.S. Coffee

 

(10.3)

 

 

(10.3)

International

 

14.3

 

(2.3)

 

12.0

Total income from operations

 

0.5

 

(0.2)

 

0.3

 

   

Reported

 

Items 
Affecting 
Comparability

 

Adjusted

 

Impact of 
Foreign
Currency

 

Constant 
Currency
Adjusted

For the first six months of 2023:

                   

Operating margin

                   

U.S. Refreshment Beverages

 

25.8 %

 

0.8 %

 

26.6 %

 

— %

 

26.6 %

U.S. Coffee

 

25.4

 

5.0

 

30.4

 

 

30.4

International

 

21.2

 

0.9

 

22.1

 

 

22.1

Total operating margin

 

18.9

 

3.1

 

22.0

 

 

22.0

 

Diluted earnings per common share may not foot due to rounding.

 

KEURIG DR PEPPER INC. 

RECONCILIATION OF ADJUSTED EBITDA AND MANAGEMENT LEVERAGE RATIO 

(UNAUDITED) 

 

(in millions, except for ratio)

 

ADJUSTED EBITDA RECONCILIATION - LAST TWELVE MONTHS

 

Net income attributable to KDP

$                  1,603

Interest expense

525

Provision for income taxes

333

Other (income) expense, net

(40)

Depreciation expense

395

Other amortization

177

Amortization of intangibles

140

EBITDA

$                  3,133

Items affecting comparability:

 

Impairment of intangible assets

$                     477

Restructuring and integration expenses

114

Productivity

225

Non-routine legal matters

9

Stock compensation

16

COVID-19

5

Foundational projects

2

Mark to market

99

Adjusted EBITDA

$                  4,080

   
 

June 30,

 

2023

Principal amounts of:

 

Commercial paper notes

$                     988

Senior unsecured notes

11,743

Total principal amounts

12,731

Less: Cash and cash equivalents

278

Total principal amounts less cash and cash equivalents

$                12,453

   

June 30, 2023 Management Leverage Ratio

3.1

 

Diluted earnings per common share may not foot due to rounding.

 

KEURIG DR PEPPER INC. 

RECONCILIATION OF ADJUSTED EBITDA - LAST TWELVE MONTHS 

(UNAUDITED) 

 

(in millions)

THIRD
QUARTER OF
2022

 

FOURTH
QUARTER OF
2022

 

FIRST SIX
MONTHS OF
2023

 

LAST TWELVE
MONTHS

Net income attributable to KDP

$                 180

 

$                 453

 

$                 970

 

$             1,603

Interest expense

207

 

123

 

195

 

525

Provision for income taxes

4

 

105

 

224

 

333

Other (income) expense, net

4

 

(8)

 

(36)

 

(40)

Depreciation expense

96

 

98

 

201

 

395

Other amortization

43

 

43

 

91

 

177

Amortization of intangibles

33

 

38

 

69

 

140

EBITDA

$                 567

 

$                 852

 

$             1,714

 

$             3,133

Items affecting comparability:

             

Impairment of intangible assets

$                 311

 

$                 166

 

$                   —

 

$                 477

Restructuring and integration expenses

33

 

81

 

 

114

Productivity

50

 

64

 

111

 

225

Nonroutine legal matters

2

 

4

 

3

 

9

Stock compensation

5

 

2

 

9

 

16

COVID-19

5

 

 

 

5

Foundational projects

1

 

1

 

 

2

Mark to market

106

 

(9)

 

2

 

99

Adjusted EBITDA

$             1,080

 

$             1,161

 

$             1,839

 

$             4,080

 

Diluted earnings per common share may not foot due to rounding.

 

KEURIG DR PEPPER INC.
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(UNAUDITED)

Free cash flow is defined as net cash provided by operating activities adjusted for purchases of property, plant and equipment, proceeds from sales of property, plant and equipment, and certain items excluded for comparison to prior year periods. For the first six months of 2023 and 2022, there were no certain items excluded for comparison to prior year periods.

   

First Six Months

(in millions)

 

2023

 

2022

Net cash provided by operating activities

 

$                     452

 

$                 1,339

Purchases of property, plant and equipment

 

(149)

 

(186)

Proceeds from sales of property, plant and equipment

 

8

 

78

Free Cash Flow

 

$                     311

 

$                 1,231

 

Diluted earnings per common share may not foot due to rounding.

 

(PRNewsfoto/Keurig Dr Pepper)

 

 

SOURCE Keurig Dr Pepper Inc.

More News
Feb 22, 2024

Q4 Performance Led by Continued Momentum in U.S. Refreshment Beverages & International After a Strong 2023, Company Expects to Deliver On-Algorithm Net Sales and Adjusted EPS Growth in 2024...

Feb 6, 2024

Keurig Dr Pepper (NASDAQ: KDP) announced today that its Board of Directors has declared a regular quarterly cash dividend of $0.215 per share, payable in U.S. dollars, on the Company's common...

Feb 1, 2024

Keurig Dr Pepper (NASDAQ: KDP) today announced the expansion of its current partnership with iconic Italian coffee company, Lavazza Group, to include wider sales and distribution of Lavazza...

Release Archive
Back to top