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Keurig Dr Pepper Reports Q2 2024 Results and Reaffirms Fiscal 2024 Guidance

Net Sales Led by Double-Digit Growth in International and Solid U.S. Refreshment Beverages Performance
Company Continues to Expect On-Algorithm Net Sales and Adjusted EPS Growth in 2024

BURLINGTON, Mass. and FRISCO, Texas, July 25, 2024 /PRNewswire/ — Keurig Dr Pepper Inc. (NASDAQ: KDP) today reported results for the second quarter of 2024 and reaffirmed its full year guidance.

   

Reported GAAP Basis

 

Adjusted Basis1

   

Q2

 

YTD

 

Q2

 

YTD

Net Sales

 

$3.92 bn

 

$7.39 bn

 

$3.92 bn

 

$7.39 bn

% vs prior year

 

3.5 %

 

3.5 %

 

3.4 %

 

3.1 %

Diluted EPS

 

$0.38

 

$0.70

 

$0.45

 

$0.84

% vs prior year

 

5.6 %

 

1.4 %

 

7.1 %

 

9.2 %

Commenting on the quarter, CEO Tim Cofer stated, "Our second quarter results were healthy, with accelerating net sales trends, significant margin expansion, and solid EPS growth. Strong execution drove our performance, as we continued to advance our long-term strategic agenda. Our consumer-centric innovation model is resonating in market, our portfolio expansion to higher growth categories is ongoing, and we are actively enhancing an already robust route-to-market — all underpinned by an unrelenting focus on cost efficiency and capital discipline. Now halfway through 2024, we are on track to achieve our unchanged full year outlook, while also seeding initiatives to fuel consistent growth over multiple years."

Second Quarter Consolidated Results

Net sales for the second quarter increased 3.5% to $3.9 billion. On a constant currency basis, net sales advanced 3.4%, driven by volume/mix growth of 1.8% and higher net price realization of 1.6%.

GAAP operating income increased 12.0% to $861 million. Adjusted operating income increased 11.0% to $970 million and totaled 24.7% as a percent of net sales. GAAP and Adjusted operating income growth primarily reflected the benefits of higher net price realization and net productivity.

GAAP net income increased 2.4% to $515 million, or $0.38 per diluted share. Adjusted net income increased 3.2% to $618 million, and Adjusted diluted EPS increased 7.1% to $0.45. GAAP and Adjusted diluted EPS growth was driven by the strong operating income growth and a lower share count, partly offset by higher interest expense and a higher tax rate.

Operating cash flow for the second quarter was $657 million and free cash flow totaled $543 million.

Second Quarter Segment Results

U.S. Refreshment Beverages

Net sales for the second quarter increased 3.3% to $2.4 billion, driven by net price realization of 2.9% and volume/mix growth of 0.4%. This volume/mix performance reflected increased scale from recent partnerships and in-market traction from launched innovation.

GAAP operating income increased 14.0% to $717 million. Adjusted operating income increased 11.9% to $723 million and totaled 30.0% as a percent of net sales. GAAP and Adjusted operating income growth was driven by higher net price realization and net productivity.

U.S. Coffee

Net sales for the second quarter decreased 2.1% to $1.0 billion, with volume/mix growth of 0.8% more than offset by a net price decline of 2.9%.

K-Cup® Pod shipments increased 0.2%, led by strong market share trends in the Company's owned & licensed portfolio.

Brewer shipments totaled 10.1 million for the twelve months ending June 30, 2024, increasing 1.4% year-over-year, reflecting continued Keurig market share momentum.

GAAP operating income decreased 8.8% to $228 million, primarily due to certain unfavorable year-over-year impact of items affecting comparability. Adjusted operating income increased 0.3% to $293 million and totaled 30.8% as a percent of net sales.  Adjusted operating income reflected the benefit of net productivity, offset by the continued impact of targeted value investments.

International

Net sales for the second quarter increased 15.5% to $0.6 billion. On a constant currency basis, net sales advanced 14.7%, driven by volume/mix growth of 10.4% and net price realization of 4.3%. This performance reflected broad-based strength across the portfolio.

GAAP operating income increased 33.9% to $150 million. Adjusted operating income increased 30.2% to $152 million and totaled 26.9% as a percent of net sales. GAAP and Adjusted operating income growth was driven by the strong net sales growth and net productivity, partially offset by a meaningful increase in 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," "enable," "expect," "believe," "could," "estimate," "feel," "forecast," "intend," "may," "on track," "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)

 
 

Second Quarter

 

First Six Months

(in millions, except per share data)

2024

 

2023

 

2024

 

2023

Net sales

$         3,922

 

$         3,789

 

$         7,390

 

$         7,142

Cost of sales

1,750

 

1,748

 

3,278

 

3,357

Gross profit

2,172

 

2,041

 

4,112

 

3,785

Selling, general, and administrative expenses

1,295

 

1,272

 

2,471

 

2,437

Other operating expense (income), net

16

 

 

15

 

(5)

Income from operations

861

 

769

 

1,626

 

1,353

Interest expense, net

204

 

172

 

382

 

195

Other income, net

(15)

 

(16)

 

(22)

 

(36)

Income before provision for income taxes

672

 

613

 

1,266

 

1,194

Provision for income taxes

157

 

110

 

297

 

224

Net income

$            515

 

$            503

 

$            969

 

$            970

               

Earnings per common share:

             

Basic

$           0.38

 

$           0.36

 

$           0.71

 

$           0.69

Diluted

0.38

 

0.36

 

0.70

 

0.69

Weighted average common shares outstanding:

             

Basic

1,355.6

 

1,400.3

 

1,368.2

 

1,403.2

Diluted

1,361.2

 

1,409.1

 

1,374.4

 

1,413.1

 

KEURIG DR PEPPER INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 
 

June 30,

 

December 31,

(in millions, except share and per share data)

2024

 

2023

Assets

Current assets:

     

Cash and cash equivalents

$                438

 

$                267

Trade accounts receivable, net

1,390

 

1,368

Inventories

1,252

 

1,142

Prepaid expenses and other current assets

739

 

598

Total current assets

3,819

 

3,375

Property, plant and equipment, net

2,680

 

2,699

Investments in unconsolidated affiliates

1,468

 

1,387

Goodwill

20,081

 

20,202

Other intangible assets, net

23,108

 

23,287

Other non-current assets

1,144

 

1,149

Deferred tax assets

44

 

31

Total assets

$           52,344

 

$           52,130

Liabilities and Stockholders' Equity

Current liabilities:

     

Accounts payable

3,099

 

3,597

Accrued expenses

1,302

 

1,242

Structured payables

91

 

117

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

2,399

 

3,246

Other current liabilities

618

 

714

Total current liabilities

7,509

 

8,916

Long-term obligations

12,406

 

9,945

Deferred tax liabilities

5,746

 

5,760

Other non-current liabilities

1,965

 

1,833

Total liabilities

27,626

 

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,

1,355,763,506 and 1,390,446,043 shares issued and outstanding as of June

30, 2024 and December 31, 2023, respectively

14

 

14

Additional paid-in capital

19,683

 

20,788

Retained earnings

4,944

 

4,559

Accumulated other comprehensive income

77

 

315

Total stockholders' equity

24,718

 

25,676

Total liabilities and stockholders' equity

$           52,344

 

$           52,130

 

KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

 
 

First Six Months

(in millions)

2024

 

2023

Operating activities:

     

Net income

$                  969

 

$                  970

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

     

Depreciation expense

207

 

201

Amortization of intangibles

67

 

69

Other amortization expense

101

 

91

Provision for sales returns

29

 

26

Deferred income taxes

17

 

(26)

Employee stock-based compensation expense

52

 

57

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

18

 

(2)

Unrealized loss (gain) on foreign currency

16

 

(13)

Unrealized loss (gain) on derivatives

36

 

(31)

Equity in earnings of unconsolidated affiliates

(17)

 

(14)

Earned equity

(45)

 

(2)

Other, net

5

 

(7)

Changes in assets and liabilities:

     

Trade accounts receivable

(67)

 

162

Inventories

(119)

 

(61)

Income taxes receivable and payables, net

(34)

 

(70)

Other current and non-current assets

(180)

 

(147)

Accounts payable and accrued expenses

(314)

 

(762)

Other current and non-current liabilities

1

 

11

Net change in operating assets and liabilities

(713)

 

(867)

Net cash provided by operating activities

742

 

452

Investing activities:

     

Purchases of property, plant, and equipment

(273)

 

(149)

Proceeds from sales of property, plant, and equipment

1

 

8

Purchases of intangibles

(49)

 

(55)

Investments in unconsolidated affiliates

(7)

 

(8)

Other, net

(1)

 

1

Net cash used in investing activities

(329)

 

(203)

Financing activities:

     

Proceeds from issuance of Notes

3,000

 

Repayments of Notes

(1,150)

 

Net (repayment) issuance of commercial paper

(226)

 

589

Proceeds from structured payables

31

 

61

Repayments of structured payables

(60)

 

(72)

Cash dividends paid

(591)

 

(563)

Repurchases of common stock

(1,105)

 

(457)

Tax withholdings related to net share settlements

(43)

 

(32)

Payments on finance leases

(56)

 

(49)

Other, net

(22)

 

Net cash used in financing activities

(222)

 

(523)

Cash and cash equivalents:

     

Net change from operating, investing and financing activities

191

 

(274)

Effect of exchange rate changes

(20)

 

17

Beginning balance

267

 

535

Ending balance

$                  438

 

$                  278

 

KEURIG DR PEPPER INC.
RECONCILIATION OF SEGMENT INFORMATION
(UNAUDITED)

 
 

Second Quarter

 

First Six Months

(in millions)

2024

 

2023

 

2024

 

2023

Net Sales

             

U.S. Refreshment Beverages

$            2,407

 

$            2,330

 

$            4,500

 

$            4,337

U.S. Coffee

950

 

970

 

1,861

 

1,901

International

565

 

489

 

1,029

 

904

Total net sales

$            3,922

 

$            3,789

 

$            7,390

 

$            7,142

               

Income from Operations

             

U.S. Refreshment Beverages

$              717

 

$              629

 

$            1,332

 

$            1,119

U.S. Coffee

228

 

250

 

476

 

482

International

150

 

112

 

262

 

192

Unallocated corporate costs

(234)

 

(222)

 

(444)

 

(440)

Total income from operations

$              861

 

$              769

 

$            1,626

 

$            1,353

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); (vii) non-cash changes in deferred tax liabiltiies related to goodwill and other intangible assets as a result of tax rate or apportionment changes; and (viii) other certain items that are excluded for comparison purposes to prior year periods.

For the second quarter and first six months 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 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 during the second quarter of 2023 included an immaterial non-cash true-up of the valuation of foreign deferred tax liabilities related to a prior period.

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 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 Second Quarter of 2024

             

Reported

$            2,172

 

55.4 %

 

$           861

 

22.0 %

Items Affecting Comparability:

             

Mark to market

6

     

(5)

   

Amortization of intangibles

     

34

   

Stock compensation

     

3

   

Restructuring – 2023 CEO Succession and Associated Realignment

     

11

   

Productivity

20

     

45

   

Non-routine legal matters

     

1

   

Transaction costs

     

1

   

Restructuring – 2024 Network Optimization

2

     

19

   

Adjusted

$            2,200

 

56.1 %

 

$           970

 

24.7 %

Impact of foreign currency

   

— %

     

— %

Constant currency adjusted

   

56.1 %

     

24.7 %

               

For the Second Quarter of 2023

             

Reported

$            2,041

 

53.9 %

 

$           769

 

20.3 %

Items Affecting Comparability:

             

Mark to market

9

     

4

   

Amortization of intangibles

     

35

   

Stock compensation

     

4

   

Productivity

26

     

58

   

Non-routine legal matters

     

3

   

Adjusted

$            2,076

 

54.8 %

 

$           873

 

23.0 %

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 Second Quarter of 2024

                     

Reported

$     204

 

$             672

 

$             157

 

23.4 %

 

$           515

 

$         0.38

Items Affecting Comparability:

                     

Mark to market

(32)

 

22

 

4

     

18

 

0.01

Amortization of intangibles

 

34

 

8

     

26

 

0.02

Amortization of deferred financing costs

(1)

 

1

 

     

1

 

Amortization of fair value debt adjustment

(3)

 

3

 

     

3

 

Stock compensation

 

3

 

1

     

2

 

Restructuring – 2023 CEO Succession and Associated Realignment

 

11

 

2

     

9

 

0.01

Productivity

 

45

 

10

     

35

 

0.03

Non-routine legal matters

 

1

 

1

     

 

Transaction costs

 

1

 

1

     

 

Restructuring – 2024 Network Optimization

 

19

 

4

     

15

 

0.01

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

 

 

6

     

(6)

 

Adjusted

$     168

 

$             812

 

$             194

 

23.9 %

 

$           618

 

$         0.45

Impact of foreign currency

           

0.2 %

       

Constant currency adjusted

           

24.1 %

       
                       

For the Second Quarter of 2023

                     

Reported

$     172

 

$             613

 

$             110

 

17.9 %

 

$           503

 

$         0.36

Items Affecting Comparability:

                     

Mark to market

(53)

 

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 of 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

 

$             767

 

$             171

 

22.3 %

 

$           596

 

$         0.42

                       

Change – adjusted

48.7 %

             

3.7 %

 

7.1 %

Impact of foreign currency

— %

             

(0.5) %

 

— %

Change – constant currency adjusted

48.7 %

             

3.2 %

 

7.1 %

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 Second Quarter of 2024

                 

Reported – Income from Operations

$                    717

 

$                   228

 

$                   150

 

$                  (234)

 

$                   861

Items Affecting Comparability:

                 

Mark to market

 

 

(1)

 

(4)

 

(5)

Amortization of intangibles

5

 

26

 

3

 

 

34

Stock compensation

 

 

 

3

 

3

Restructuring – 2023 CEO Succession and Associated Realignment

 

 

 

11

 

11

Productivity

1

 

20

 

 

24

 

45

Non-routine legal matters

 

 

 

1

 

1

Transaction costs

 

 

 

1

 

1

Restructuring – 2024 Network Optimization

 

19

 

 

 

19

Adjusted – Income from Operations

$                    723

 

$                   293

 

$                   152

 

$                  (198)

 

$                   970

                   

Change – adjusted

11.9 %

 

0.3 %

 

31.0 %

 

9.4 %

 

11.1 %

Impact of foreign currency

— %

 

— %

 

(0.8) %

 

— %

 

(0.1) %

Change – constant currency adjusted

11.9 %

 

0.3 %

 

30.2 %

 

9.4 %

 

11.0 %

                   

For the Second Quarter of 2023

                 

Reported – Income from Operations

$                    629

 

$                   250

 

$                   112

 

$                  (222)

 

$                   769

Items Affecting Comparability:

                 

Mark to market

 

 

 

4

 

4

Amortization of intangibles

6

 

25

 

4

 

 

35

Stock compensation

 

 

 

4

 

4

Productivity

11

 

17

 

 

30

 

58

Non-routine legal matters

 

 

 

3

 

3

Adjusted – Income from Operations

$                    646

 

$                   292

 

$                   116

 

$                  (181)

 

$                   873

 

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 second quarter of 2024

           

Net sales

           

U.S. Refreshment Beverages

 

3.3 %

 

— %

 

3.3 %

U.S. Coffee

 

(2.1)

 

 

(2.1)

International

 

15.5

 

(0.8)

 

14.7

Total net sales

 

3.5

 

(0.1)

 

3.4

 

   

Reported

 

Items Affecting
Comparability

 

Adjusted

 

Impact of
Foreign
Currency

 

Constant
Currency
Adjusted

For the second quarter of 2024

                   

Operating margin

                   

U.S. Refreshment Beverages

 

29.8 %

 

0.2 %

 

30.0 %

 

— %

 

30.0 %

U.S. Coffee

 

24.0

 

6.8

 

30.8

 

 

30.8

International

 

26.5

 

0.4

 

26.9

 

 

26.9

Total operating margin

 

22.0

 

2.7

 

24.7

 

 

24.7

 

   

Reported

 

Items Affecting
Comparability

 

Adjusted

For the second quarter of 2023

           

Operating margin

           

U.S. Refreshment Beverages

 

27.0 %

 

0.7 %

 

27.7 %

U.S. Coffee

 

25.8

 

4.3

 

30.1

International

 

22.9

 

0.8

 

23.7

Total operating margin

 

20.3

 

2.7

 

23.0

 

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

 
 

Gross profit

 

Gross
margin

 

Income from
operations

 

Operating
margin

For the First Six Months of 2024

             

Reported

$            4,112

 

55.6 %

 

$        1,626

 

22.0 %

Items Affecting Comparability:

             

Mark to market

3

     

(24)

   

Amortization of intangibles

     

67

   

Stock compensation

     

7

   

Restructuring – 2023 CEO Succession and Associated Realignment

     

13

   

Productivity

34

     

81

   

Non-routine legal matters

     

2

   

Transaction costs

     

2

   

Restructuring – 2024 Network Optimization

2

     

21

   

Adjusted

$            4,151

 

56.2 %

 

$        1,795

 

24.3 %

Impact of foreign currency

   

— %

     

— %

Constant currency adjusted

   

56.2 %

     

24.3 %

               

For the First Six Months of 2023

             

Reported

$            3,785

 

53.0 %

 

$        1,353

 

18.9 %

Items Affecting Comparability:

             

Mark to market

(5)

     

2

   

Amortization of intangibles

     

69

   

Stock compensation

     

9

   

Productivity

64

     

136

   

Non-routine legal matters

     

3

   

Adjusted

$            3,844

 

53.8 %

 

$        1,572

 

22.0 %

Refer to pages A-12 and A-13 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 Six Months of 2024

                     

Reported

$             382

 

$                   1,266

 

$                 297

 

23.5 %

 

$        969

 

$            0.70

Items Affecting Comparability:

                     

Mark to market

(67)

 

40

 

6

     

34

 

0.02

Amortization of intangibles

 

67

 

17

     

50

 

0.04

Amortization of deferred financing costs

(1)

 

1

 

     

1

 

Amortization of fair value debt adjustment

(7)

 

7

 

1

     

6

 

Stock compensation

 

7

 

2

     

5

 

Restructuring – 2023 CEO Succession and Associated Realignment

 

13

 

3

     

10

 

0.01

Productivity

 

81

 

20

     

61

 

0.04

Non-routine legal matters

 

2

 

1

     

1

 

Transaction costs

 

2

 

1

     

1

 

Restructuring – 2024 Network Optimization

 

21

 

5

     

16

 

0.01

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

 

 

6

     

(6)

 

Adjusted

$             307

 

$                   1,507

 

$                 359

 

23.8 %

 

$     1,148

 

$            0.84

Impact of foreign currency

           

0.1 %

       

Constant currency adjusted

           

23.9 %

       
                       

For the First Six Months of 2023

                     

Reported

$             195

 

$                   1,194

 

$                 224

 

18.8 %

 

$        970

 

$            0.69

Items Affecting Comparability:

                     

Mark to market

40

 

(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 of 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

 

$                   1,365

 

$                 290

 

21.2 %

 

$     1,075

 

$            0.76

                       

Change – adjusted

36.4 %

             

6.8 %

 

10.5 %

Impact of foreign currency

— %

             

(0.6) %

 

(1.3) %

Change – Constant currency adjusted

36.4 %

             

6.2 %

 

9.2 %

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 Six Months of 2024

                 

Reported – Income from Operations

$                 1,332

 

$                   476

 

$                   262

 

$                  (444)

 

$                1,626

Items Affecting Comparability:

                 

Mark to market

 

 

(7)

 

(17)

 

(24)

Amortization of intangibles

10

 

51

 

6

 

 

67

Stock compensation

 

 

 

7

 

7

Restructuring – 2023 CEO Succession and Associated Realignment

 

 

 

13

 

13

Productivity

3

 

34

 

 

44

 

81

Non-routine legal matters

 

 

 

2

 

2

Transaction costs

 

 

 

2

 

2

Restructuring – 2024 Network Optimization

 

21

 

 

 

21

Adjusted – Income from Operations

$                 1,345

 

$                   582

 

$                   261

 

$                  (393)

 

$                1,795

                   

Change – adjusted

16.6 %

 

0.9 %

 

30.5 %

 

9.5 %

 

14.2 %

Impact of foreign currency

— %

 

— %

 

(2.5) %

 

— %

 

(0.3) %

Change – constant currency adjusted

16.6 %

 

0.9 %

 

28.0 %

 

9.5 %

 

13.9 %

                   

For the First Six Months of 2023

                 

Reported – Income from Operations

$                 1,119

 

$                   482

 

$                   192

 

$                  (440)

 

$                1,353

Items Affecting Comparability:

                 

Mark to market

 

 

 

2

 

2

Amortization of intangibles

10

 

51

 

8

 

 

69

Stock compensation

 

 

 

9

 

9

Productivity

25

 

44

 

 

67

 

136

Non-routine legal matters

 

 

 

3

 

3

Adjusted – Income from Operations

$                 1,154

 

$                   577

 

$                   200

 

$                  (359)

 

$                1,572

 

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 six months of 2024:

           

Net sales

           

U.S. Refreshment Beverages

 

3.8 %

 

— %

 

3.8 %

U.S. Coffee

 

(2.1)

 

 

(2.1)

International

 

13.8

 

(2.6)

 

11.2

Total net sales

 

3.5

 

(0.4)

 

3.1

 

   

Reported

 

Items
Affecting
Comparability

 

Adjusted

 

Impact of
Foreign
Currency

 

Constant
Currency
Adjusted

For the first six months of 2024:

                   

Operating margin

                   

U.S. Refreshment Beverages

 

29.6 %

 

0.3 %

 

29.9 %

 

— %

 

29.9 %

U.S. Coffee

 

25.6

 

5.7

 

31.3

 

 

31.3

International

 

25.5

 

(0.1)

 

25.4

 

0.1

 

25.5

Total operating margin

 

22.0

 

2.3

 

24.3

 

 

24.3

 

   

Reported

 

Items Affecting 
Comparability

 

Adjusted

For the first six months of 2023:

           

Operating margin

           

U.S. Refreshment Beverages

 

25.8 %

 

0.8 %

 

26.6 %

U.S. Coffee

 

25.4

 

5.0

 

30.4

International

 

21.2

 

0.9

 

22.1

Total operating margin

 

18.9

 

3.1

 

22.0

 

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

$                 2,180

Interest expense, net

683

Provision for income taxes

649

Depreciation expense

408

Other amortization

191

Amortization of intangibles

135

EBITDA

$                 4,246

Items affecting comparability:

 

Impairment of intangible assets

$                        2

Restructuring – 2023 CEO Succession and Associated Realignment

48

Productivity

172

Restructuring – 2024 Network Optimization

21

Non-routine legal matters

4

Stock compensation

15

Transaction costs

4

Mark to market

(19)

Adjusted EBITDA

$                 4,493

   
 

June 30,

 

2024

Principal amounts of:

 

Commercial paper notes

$                 1,870

Senior unsecured notes

13,093

Total principal amounts

14,963

Less: Cash and cash equivalents

438

Total principal amounts less cash and cash equivalents

$               14,525

   

June 30, 2024 Management Leverage Ratio

3.2

 

KEURIG DR PEPPER INC.
RECONCILIATION OF ADJUSTED EBITDA – LAST TWELVE MONTHS
(UNAUDITED)

 

(in millions)

THIRD
QUARTER OF
2023

 

FOURTH
QUARTER OF
2023

 

FIRST SIX
MONTHS OF
2024

 

LAST TWELVE
MONTHS

Net income

$                 518

 

$                 693

 

$                 969

 

$             2,180

Interest expense, net

237

 

64

 

382

 

683

Provision for income taxes

146

 

206

 

297

 

649

Depreciation expense

98

 

103

 

207

 

408

Other amortization

45

 

45

 

101

 

191

Amortization of intangibles

34

 

34

 

67

 

135

EBITDA

$             1,078

 

$             1,145

 

$             2,023

 

$             4,246

Items affecting comparability:

             

Impairment of intangible assets

$                    2

 

$                  —

 

$                  —

 

$                    2

Restructuring – 2023 CEO Succession and Associated Realignment

27

 

8

 

13

 

48

Productivity

41

 

66

 

65

 

172

Restructuring – 2024 Network Optimization

 

 

21

 

21

Nonroutine legal matters

2

 

 

2

 

4

Stock compensation

4

 

4

 

7

 

15

Transaction costs

1

 

1

 

2

 

4

Mark to market

(32)

 

40

 

(27)

 

(19)

Adjusted EBITDA

$             1,123

 

$             1,264

 

$             2,106

 

$             4,493

 

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

 
   

First Six Months

(in millions)

 

2024

 

2023

Net cash provided by operating activities

 

$               742

 

$               452

Purchases of property, plant and equipment

 

(273)

 

(149)

Proceeds from sales of property, plant and equipment

 

1

 

8

Free Cash Flow

 

$               470

 

$               311

 

(PRNewsfoto/Keurig Dr Pepper)

 

 

SOURCE Keurig Dr Pepper Inc.

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