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Keurig Dr Pepper Reports Q1 2024 Results and Reaffirms Fiscal 2024 Guidance

Tim Cofer Appointed CEO & Board Member Effective April 26; Bob Gamgort to Serve as Executive Chairman
Following Strong Q1, Company Continues to Expect On-Algorithm 2024 Net Sales and Adjusted EPS Growth 

BURLINGTON, Mass. and FRISCO, Texas, April 25, 2024 /PRNewswire/ -- Keurig Dr Pepper Inc. (NASDAQ: KDP) today reported results for the first quarter of 2024, reaffirmed its full year guidance, and announced the completion of its CEO succession process.

   

Reported GAAP Basis

 

Adjusted Basis1

   

Q1

   

Q1

Net Sales

 

$3.47 bn

   

$3.47 bn

% vs prior year

 

3.4 %

   

2.8 %

Diluted EPS

 

$0.33

   

$0.38

% vs prior year

 

— %

   

11.8 %

Commenting on this final step in the CEO transition, which began in Fall 2023, Chairman and CEO Bob Gamgort stated, "It has been a privilege to help establish Keurig Dr Pepper into the formidable company it is today, and I look forward to supporting its future growth as Executive Chairman. As KDP enters its next phase, Tim and his leadership team are activating an exciting, evolved strategy that I am confident will extend our track record of success and continue to differentiate KDP within the beverage industry."

Incoming CEO Tim Cofer added, "I am honored to lead the next chapter of value creation as CEO of Keurig Dr Pepper and excited to partner with Bob, our Board, and all 28,000 colleagues to unlock our full potential as a beverage industry leader. We have a unique and competitively advantaged business, with a significant growth opportunity that we intend to realize through our evolved strategy. I'm pleased with our strong first quarter results, which reflect consistent execution across the organization and demonstrate the health of our business. This performance underscores our confidence in our 2024 outlook, which is in-line with our long-term financial algorithm."

First Quarter Consolidated Results

Net sales for the first quarter increased 3.4% to $3.5 billion. On a constant currency basis, net sales advanced 2.8%, driven by net price realization of 3.1%, partly offset by lower volume/mix of 0.3%.

GAAP operating income increased 31.0% to $765 million. The growth was driven by strong operating momentum, aided by a favorable year-over-year impact of items affecting comparability.

Adjusted operating income increased 17.5% to $825 million and totaled 23.8% as a percent of net sales. Adjusted operating income growth was driven by 9.7% Adjusted gross profit growth, translating to 350 basis points of Adjusted gross margin expansion. Adjusted operating income growth reflected higher net price realization and net productivity, partly offset by higher SG&A costs, including increased marketing investment, and the impact of the modest volume/mix decline.

GAAP net income for the quarter decreased 2.8% to $454 million, or $0.33 per diluted share. This performance primarily reflected an unfavorable year-over-year impact of items affecting comparability, partly offset by strong operating momentum.

Adjusted net income for the quarter advanced 10.0% to $530 million, and Adjusted diluted EPS increased 11.8% to $0.38. The Adjusted diluted EPS growth was driven by the Adjusted operating income growth and a lower share count, partly offset by a higher non-GAAP tax rate and higher non-GAAP interest expense.

Operating cash flow for the first quarter was $85 million and free cash flow totaled $(73) million. Free cash flow reflected carryover impacts of the Company's strategic reduction in supplier financing during 2023, as well as front-loaded timing in capital expenditures in 2024.

First Quarter Segment Results

U.S. Refreshment Beverages

Net sales for the first quarter increased 4.3% to $2.1 billion, driven by net price realization of 5.6%, partly offset by a decline in volume/mix of 1.3%. This performance reflected higher pricing compared to prior year, continued manageable elasticities across most categories, and the contribution from the Company's recently commenced Electrolit partnership.

GAAP operating income increased 25.5% to $615 million. Adjusted operating income increased 22.4% to $622 million and totaled 29.7% as a percent of net sales, driven by higher net price realization, net productivity, and an earned C4 performance incentive during the first quarter, partly offset by lower volume/mix and higher SG&A costs, including increased marketing investment.

U.S. Coffee

Net sales for the first quarter decreased 2.1% to $0.9 billion, driven by a net price decline of 1.8% and a modest volume/mix decline of 0.3%.

K-Cup® Pod shipments declined 1.1%, strengthening on a sequential basis, reflecting improving market share trends across the Company's owned & licensed portfolio.

Brewer shipments totaled 10.0 million for the twelve months ending March 31, 2024, declining 1.9% year-over-year. In the quarter, brewer shipments grew strongly, reflecting Keurig market share momentum and timing benefits.

GAAP operating income increased 6.9% to $248 million, primarily reflecting a favorable year-over-year impact of items affecting comparability.

Adjusted operating income increased 1.4% to $289 million, primarily driven by net productivity, which more than offset the impacts of targeted price reductions and increased marketing investment. Adjusted operating income margin totaled 31.7% as a percent of net sales and expanded 110 basis points versus the prior year.

International

Net sales for the first quarter increased 11.8% to $0.5 billion. On a constant currency basis, net sales advanced 7.0%, driven by volume/mix growth of 4.8% and net price realization of 2.2%. This strong performance reflected continued momentum across markets.

GAAP operating income increased 40.0% to $112 million, aided by favorable year-over-year impacts from items affecting comparability and currency translation.

Adjusted operating income increased 25.0% to $109 million and totaled 23.5% as a percent of net sales, driven by net sales growth and net productivity, partially offset by increased marketing investment.

2024 Guidance

The 2024 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. 

KDP reaffirmed its fiscal 2024 guidance for constant currency net sales growth in a mid-single-digit range and Adjusted diluted EPS growth in a high-single-digit range.

________________________________________

1 Adjusted financial metrics presented in this release are non-GAAP, excluding items affecting comparability 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. 

 

Investor Contacts:

Investor Relations
T: 888-340-5287 / IR@kdrp.com 

Media Contact:

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

ABOUT KEURIG DR PEPPER

Keurig Dr Pepper (Nasdaq: KDP) is a leading beverage company in North America, with a portfolio of more than 125 owned, licensed and partner brands and powerful distribution capabilities to provide a beverage for every need, anytime, anywhere. With annual revenue of approximately $15 billion, we hold leadership positions in beverage categories including soft drinks, coffee, tea, water, juice and mixers, and have the #1 single serve coffee brewing system in the U.S. and Canada. Our innovative partnership model builds emerging growth platforms in categories such as premium coffee, energy, sports hydration and ready-to-drink coffee. Our brands include Keurig®, Dr Pepper®, Canada Dry®, Mott's®, A&W®, Snapple®, Peñafiel®, 7UP®, Green Mountain Coffee Roasters®, Clamato®, Core Hydration® and The Original Donut Shop®. Driven by a purpose to Drink Well. Do Good., our 28,000 employees aim to enhance the experience of every beverage occasion and to make a positive impact for people, communities and the planet. For more information, visit www.keurigdrpepper.com and follow us on LinkedIn.

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, which differ from results using U.S. Generally Accepted Accounting Principles (GAAP). These non-GAAP financial measures should be considered as supplements to and should not be considered replacements for, or superior to, the GAAP measures. These measures may differ from similarly titled non-GAAP financial measures presented by other companies, and other companies may not define the non-GAAP financial measure in the same way. Non-GAAP financial measures typically exclude certain charges, including one-time costs that are not expected to occur routinely in future periods, described by the Company as "items affecting comparability". Refer to page A-5 for the Company's description of items affecting comparability for each period presented. The Company uses non-GAAP financial measures to evaluate our operating and financial performance and to compare such performance to that of prior periods and to the performance of our competitors. Additionally, we use non-GAAP financial measures in making operational and financial decisions and in our budgeting and planning process. We believe that providing non-GAAP financial measures to investors helps investors evaluate our operating performance, profitability and business trends in a way that is consistent with how management evaluates such performance.

Adjusted gross profit. Adjusted gross profit is defined as Net sales less Cost of sales, as adjusted for items affecting comparability as described on page A-5. Management believes that Adjusted gross profit is useful for investors in evaluating the Company's operating results and understanding the Company's operating trends by adjusting certain items that can vary significantly depending on specific underlying transactions or events, thereby affecting comparability.

Adjusted operating income. Adjusted operating income is defined as Income from operations, as adjusted for items affecting comparability as described on page A-5. Management believes that Adjusted operating income is useful for investors in evaluating the Company's operating results and understanding the Company's operating trends by adjusting certain items that can vary significantly depending on specific underlying transactions or events, thereby affecting comparability.

Adjusted net income attributable to KDP. Adjusted net income attributable to KDP is defined as Net income attributable to KDP, as adjusted for items affecting comparability as described on page A-5. Management believes that Adjusted net income is useful for investors in evaluating the Company's operating results and understanding the Company's operating trends by adjusting certain items that can vary significantly depending on specific underlying transactions or events, thereby affecting comparability.

Adjusted diluted EPS. Adjusted diluted EPS is defined as Diluted EPS, as adjusted for items affecting comparability as described on page A-5. Management believes that Adjusted diluted EPS is useful for investors in providing period-to-period comparisons of the results of our operations since it adjusts for certain items affecting overall comparability.

Adjusted gross margin. Adjusted gross margin is defined as Adjusted gross profit divided by Net sales. Management believes that Adjusted gross margin is useful for investors as supplemental measures to evaluate our operating performance and ability to manage ongoing costs.

Adjusted operating margin. Adjusted operating margin is defined as Adjusted Income from operations divided by Net sales. Management believes that Adjusted operating margin is useful for investors as supplemental measures to evaluate our operating performance and ability to manage ongoing costs.

Adjusted interest expense. Adjusted interest expense is defined as Interest expense, net, as adjusted for items affecting comparability as described on page A-5. Management believes that Adjusted interest expense is useful for investors in evaluating our performance and establishing expectations for the impacts of interest expenses.

Adjusted EBITDA. Adjusted EBITDA is defined as EBITDA, as adjusted for items affecting comparability as described on page A-5. EBITDA is defined as Net income attributable to KDP as adjusted for interest expense, net; provision for income taxes; depreciation expense; amortization of intangibles; and other amortization. Management believes that Adjusted EBITDA is useful for investors in evaluating the Company's operating results and understanding the Company's operating trends by adjusting certain items that can vary significantly depending on specific underlying transactions or events, thereby affecting comparability.

Management leverage ratio. Management leverage ratio is defined as KDP's total principal amounts of debt less cash and cash equivalents, divided by Adjusted EBITDA. Management believes that the Management leverage ratio is useful for investors in evaluating the Company's liquidity and assessing the Company's ability to meet its financial obligations.

Free cash flow. 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. Management uses this measure to evaluate the company's performance and make resource allocation decisions.

Financial measures presented on a constant currency basis. 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. Because our reporting currency is the U.S. Dollar, the value of financial measures presented in U.S. Dollar will be affected by changes in currency exchange rates. Therefore, we present certain financial measures on a constant currency basis for greater comparability.

 

KEURIG DR PEPPER INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

 
 

First Quarter

(in millions, except per share data)

2024

 

2023

Net sales

$         3,468

 

$         3,353

Cost of sales

1,528

 

1,609

Gross profit

1,940

 

1,744

Selling, general, and administrative expenses

1,176

 

1,165

Other operating income, net

(1)

 

(5)

Income from operations

765

 

584

Interest expense, net

178

 

23

Other income, net

(7)

 

(20)

Income before provision for income taxes

594

 

581

Provision for income taxes

140

 

114

Net income

$            454

 

$            467

       

Earnings per common share:

     

Basic

$           0.33

 

$           0.33

Diluted

0.33

 

0.33

Weighted average common shares outstanding:                              

     

Basic

1,380.7

 

1,406.2

Diluted

1,387.7

 

1,417.0

 

KEURIG DR PEPPER INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 
 

March 31,

 

December 31,

(in millions, except share and per share data)

2024

 

2023

Assets

Current assets:

     

Cash and cash equivalents

$                317

 

$                267

Trade accounts receivable, net

1,311

 

1,368

Inventories

1,204

 

1,142

Prepaid expenses and other current assets

735

 

598

Total current assets

3,567

 

3,375

Property, plant and equipment, net

2,695

 

2,699

Investments in unconsolidated affiliates

1,438

 

1,387

Goodwill

20,163

 

20,202

Other intangible assets, net

23,251

 

23,287

Other non-current assets

1,128

 

1,149

Deferred tax assets

44

 

31

Total assets

$           52,286

 

$           52,130

Liabilities and Stockholders' Equity

Current liabilities:

     

Accounts payable

3,187

 

3,597

Accrued expenses

1,169

 

1,242

Structured payables

111

 

117

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

1,908

 

3,246

Other current liabilities

629

 

714

Total current liabilities

7,004

 

8,916

Long-term obligations

12,929

 

9,945

Deferred tax liabilities

5,784

 

5,760

Other non-current liabilities

1,916

 

1,833

Total liabilities

27,633

 

26,454

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,
1,355,571,438 and 1,390,446,043 shares issued and outstanding as of March
31, 2024 and December 31, 2023, respectively

14

 

14

Additional paid-in capital

19,661

 

20,788

Retained earnings

4,721

 

4,559

Accumulated other comprehensive income

257

 

315

Total stockholders' equity

24,653

 

25,676

Total liabilities and stockholders' equity

$           52,286

 

$           52,130

 

KEURIG DR PEPPER INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 
 

First Quarter

(in millions)

2024

 

2023

Operating activities:

     

Net income

$                  454

 

$                  467

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

     

Depreciation expense

101

 

107

Amortization of intangibles

33

 

34

Other amortization expense

36

 

45

Provision for sales returns

14

 

10

Deferred income taxes

21

 

Employee stock-based compensation expense

28

 

29

Loss (gain) on disposal of property, plant, and equipment

1

 

(5)

Unrealized loss (gain) on foreign currency

8

 

(2)

Unrealized loss (gain) on derivatives

10

 

(95)

Equity in earnings of unconsolidated affiliates

(7)

 

(9)

Earned equity

(45)

 

(2)

Other, net

3

 

(2)

Changes in assets and liabilities:

     

Trade accounts receivable

42

 

28

Inventories

(65)

 

(74)

Income taxes receivable and payables, net

(10)

 

60

Other current and non-current assets

(136)

 

(151)

Accounts payable and accrued expenses

(398)

 

(391)

Other current and non-current liabilities

(5)

 

22

Net change in operating assets and liabilities

(572)

 

(506)

Net cash provided by operating activities

85

 

71

Investing activities:

     

Purchases of property, plant, and equipment

(158)

 

(62)

Proceeds from sales of property, plant, and equipment

 

7

Purchases of intangibles

(31)

 

(51)

Investments in unconsolidated affiliates

(6)

 

Other, net

2

 

1

Net cash used in investing activities

(193)

 

(105)

Financing activities:

     

Proceeds from issuance of Notes

3,000

 

Repayments of Notes

(1,150)

 

Net proceeds from issuance of commercial paper

(188)

 

265

Proceeds from structured payables

23

 

34

Repayments of structured payables

(30)

 

(32)

Cash dividends paid

(299)

 

(281)

Repurchases of common stock

(1,105)

 

(231)

Tax withholdings related to net share settlements

(41)

 

(31)

Payments on finance leases

(31)

 

(24)

Other, net

(21)

 

(3)

Net cash provided by (used in) financing activities

158

 

(303)

Cash and cash equivalents:

     

Net change from operating, investing and financing activities

50

 

(337)

Effect of exchange rate changes

 

6

Beginning balance

267

 

535

Ending balance

$                  317

 

$                  204

 

KEURIG DR PEPPER INC.

RECONCILIATION OF SEGMENT INFORMATION

(UNAUDITED)

 
 

First Quarter

(in millions)

2024

 

2023

Net Sales

     

U.S. Refreshment Beverages                    

$            2,093

 

$            2,007

U.S. Coffee

911

 

931

International

464

 

415

Total net sales

$            3,468

 

$            3,353

       

Income from Operations

     

U.S. Refreshment Beverages

$               615

 

$               490

U.S. Coffee

248

 

232

International

112

 

80

Unallocated corporate costs

(210)

 

(218)

Total income from operations

$               765

 

$               584

 

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) transaction costs for significant business combinations (completed or abandoned); and (vii) other certain items that are excluded for comparison purposes to prior year periods.

For the first quarter of 2024, the other certain items excluded for comparison purposes include (i) productivity expenses, (ii) restructuring expenses associated with the 2023 CEO Succession and Associated Realignment, (iii) costs related to significant non-routine legal matters, specifically the antitrust litigation, and (iv) restructuring expenses associated with the 2024 Network Optimization.

For the first quarter of 2023, the other certain items excluded for comparison purposes include productivity expenses.

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 first quarter of 2024 and 2023, 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)

 
 

Gross profit 

 

Gross
margin 

 

Income from
operations

 

Operating  
margin

For the First Quarter of 2024

             

Reported

$            1,940

 

55.9 %

 

$           765

 

22.1 %

Items Affecting Comparability:

             

Mark to market

(3)

     

(19)

   

Amortization of intangibles

     

33

   

Stock compensation

     

4

   

Restructuring - 2023 CEO Succession and Associated Realignment

     

2

   

Productivity

14

     

36

   

Non-routine legal matters

     

1

   

Transaction costs

     

1

   

Restructuring - 2024 Network Optimization

     

2

   

Adjusted

$            1,951

 

56.3 %

 

$           825

 

23.8 %

Impact of foreign currency

   

(0.1) %

     

— %

Constant currency adjusted

   

56.2 %

     

23.8 %

               

For the First Quarter of 2023

             

Reported

$            1,744

 

52.0 %

 

$           584

 

17.4 %

Items Affecting Comparability:

             

Mark to market

(14)

     

(2)

   

Amortization of intangibles

     

34

   

Stock compensation

     

5

   

Productivity

38

     

78

   

Adjusted

$            1,768

 

52.7 %

 

$           699

 

20.8 %

Refer to pages A-8 and A-9 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, net

 

Income before
provision for
income taxes

 

Provision for
income taxes

 

Effective tax  
rate

 

Net
income

 

Diluted
earnings per
share

For the First Quarter of 2024

                     

Reported

$             178

 

$                      594

 

$                 140

 

23.6 %

 

$        454

 

$            0.33

Items Affecting Comparability:

                     

Mark to market

(35)

 

18

 

2

     

16

 

0.01

Amortization of intangibles

 

33

 

9

     

24

 

0.02

Amortization of fair value debt adjustment

(4)

 

4

 

1

     

3

 

Stock compensation

 

4

 

1

     

3

 

Restructuring - 2023 CEO Succession and Associated Realignment

 

2

 

1

     

1

 

Productivity

 

36

 

10

     

26

 

0.02

Non-routine legal matters

 

1

 

     

1

 

Transaction costs

 

1

 

     

1

 

Restructuring - 2024 Network Optimization

 

2

 

1

     

1

 

Adjusted

$             139

 

$                      695

 

$                 165

 

23.7 %

 

$        530

 

$            0.38

Impact of foreign currency

           

— %

       

Constant currency adjusted

           

23.7 %

       
                       

For the First Quarter of 2023

                     

Reported

$               23

 

$                      581

 

$                 114

 

19.6 %

 

$        467

 

$            0.33

Items Affecting Comparability:

                     

Mark to market

93

 

(104)

 

(29)

     

(75)

 

(0.05)

Amortization of intangibles

 

34

 

10

     

24

 

0.02

Amortization of fair value of debt adjustment

(4)

 

4

 

1

     

3

 

Stock compensation

 

5

 

2

     

3

 

Productivity

 

78

 

21

     

57

 

0.04

Adjusted

$             112

 

$                      598

 

$                 119

 

19.9 %

 

$        479

 

$            0.34

                       

Change - adjusted

24.1 %

             

10.6 %

 

11.8 %

Impact of foreign currency

— %

             

(0.6) %

 

— %

Change - Constant currency adjusted

24.1 %

             

10.0 %

 

11.8 %

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)

 
 

U.S.
Refreshment
Beverages

 

U.S. Coffee

 

International

 

Unallocated
corporate costs 

 

Total

For the First Quarter of 2024

                 

Reported - Income from Operations

$                    615

 

$                   248

 

$                   112

 

$                  (210)

 

$                   765

Items Affecting Comparability:

                 

Mark to market

 

 

(6)

 

(13)

 

(19)

Amortization of intangibles

5

 

25

 

3

 

 

33

Stock compensation

 

 

 

4

 

4

Restructuring - 2023 CEO Succession and Associated Realignment

 

 

 

2

 

2

Productivity

2

 

14

 

 

20

 

36

Non-routine legal matters

 

 

 

1

 

1

Transaction costs

 

 

 

1

 

1

Restructuring - 2024 Network Optimization

 

2

 

 

 

2

Adjusted - Income from Operations

$                    622

 

$                   289

 

$                   109

 

$                  (195)

 

$                   825

                   

Change - adjusted

22.4 %

 

1.4 %

 

29.8 %

 

9.6 %

 

18.0 %

Impact of foreign currency

— %

 

— %

 

(4.8) %

 

— %

 

(0.5) %

Change - constant currency adjusted

22.4 %

 

1.4 %

 

25.0 %

 

9.6 %

 

17.5 %

                   

For the First Quarter of 2023

                 

Reported - Income from Operations

$                    490

 

$                   232

 

$                      80

 

$                  (218)

 

$                   584

Items Affecting Comparability:

                 

Mark to market

 

 

 

(2)

 

(2)

Amortization of intangibles

4

 

26

 

4

 

 

34

Stock compensation

 

 

 

5

 

5

Productivity

14

 

27

 

 

37

 

78

Adjusted - Income from Operations

$                    508

 

$                   285

 

$                      84

 

$                  (178)

 

$                   699

 

KEURIG DR PEPPER INC.

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

(UNAUDITED)

 
   

Reported  

 

Impact of Foreign
Currency

 

Constant Currency 

For the first quarter of 2024:

           

Net sales

           

U.S. Refreshment Beverages

 

4.3 %

 

— %

 

4.3 %

U.S. Coffee

 

(2.1)

 

 

(2.1)

International

 

11.8

 

(4.8)

 

7.0

Total net sales

 

3.4

 

(0.6)

 

2.8

 

   

Reported  

 

Items
Affecting
Comparability 

 

Adjusted  

 

Impact of
Foreign
Currency 

 

Constant
Currency
Adjusted 

For the first quarter of 2024:

                   

Operating margin

                   

U.S. Refreshment Beverages

 

29.4 %

 

0.3 %

 

29.7 %

 

— %

 

29.7 %

U.S. Coffee

 

27.2

 

4.5

 

31.7

 

 

31.7

International

 

24.1

 

(0.6)

 

23.5

 

0.1

 

23.6

Total operating margin

 

22.1

 

1.7

 

23.8

 

 

23.8

 

   

Reported  

 

Items
Affecting
Comparability 

 

Adjusted  

For the first quarter of 2023:

           

Operating margin

           

U.S. Refreshment Beverages          

 

24.4 %

 

0.9 %

 

25.3 %

U.S. Coffee

 

24.9

 

5.7

 

30.6

International

 

19.3

 

0.9

 

20.2

Total operating margin

 

17.4

 

3.4

 

20.8

 

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

$                  2,168

Interest expense, net

651

Provision for income taxes

602

Depreciation expense

396

Other amortization

172

Amortization of intangibles

136

EBITDA

$                  4,125

Items affecting comparability:

 

Impairment of intangible assets

$                         2

Restructuring - 2023 CEO Succession and Associated Realignment

37

Productivity

188

Restructuring - 2024 Network Optimization

2

Non-routine legal matters

6

Stock compensation

16

Transaction costs

3

Mark to market

(14)

Adjusted EBITDA

$                  4,365

   
 

March 31,

 

2024

Principal amounts of:

 

Commercial paper notes

$                  1,908

Senior unsecured notes

13,093

Total principal amounts

15,001

Less: Cash and cash equivalents

317

Total principal amounts less cash and cash equivalents

$                14,684

   

March 31, 2024 Management Leverage Ratio

3.4

 

KEURIG DR PEPPER INC.

RECONCILIATION OF ADJUSTED EBITDA - LAST TWELVE MONTHS

(UNAUDITED)

 

(in millions)

SECOND
QUARTER OF
2023

 

THIRD
QUARTER OF
2023

 

FOURTH
QUARTER OF
2023

 

FIRST
QUARTER OF
2024

 

LAST TWELVE
MONTHS

Net income

$                 503

 

$                 518

 

$                 693

 

$                 454

 

$             2,168

Interest expense, net

172

 

237

 

64

 

178

 

651

Provision for income taxes

110

 

146

 

206

 

140

 

602

Depreciation expense

94

 

98

 

103

 

101

 

396

Other amortization

46

 

45

 

45

 

36

 

172

Amortization of intangibles

35

 

34

 

34

 

33

 

136

EBITDA

$                 960

 

$             1,078

 

$             1,145

 

$                 942

 

$             4,125

Items affecting comparability:

                 

Impairment of intangible assets

 

$                     2

 

$                   —

 

$                   —

 

$                     2

Restructuring - 2023 CEO Succession
and Associated Realignment

 

27

 

8

 

2

 

37

Productivity

51

 

41

 

66

 

30

 

188

Restructuring - 2024 Network
Optimization

 

 

 

2

 

2

Nonroutine legal matters

3

 

2

 

 

1

 

6

Stock compensation

4

 

4

 

4

 

4

 

16

Transaction costs

 

1

 

1

 

1

 

3

Mark to market

(5)

 

(32)

 

40

 

(17)

 

(14)

Adjusted EBITDA

$             1,013

 

$             1,123

 

$             1,264

 

$                 965

 

$             4,365

 

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 quarter of 2024 and 2023, there were no certain items excluded for comparison to prior year periods.

   

First Quarter

(in millions)

 

2024

 

2023

Net cash provided by operating activities

 

$                 85

 

$                 71

Purchases of property, plant and equipment

 

(158)

 

(62)

Proceeds from sales of property, plant and equipment

 

 

7

Free Cash Flow

 

$               (73)

 

$                 16

 

(PRNewsfoto/Keurig Dr Pepper)

 

 

SOURCE Keurig Dr Pepper Inc.

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