BURLINGTON, Mass and
PLANO, Texas, Feb. 25, 2021 /PRNewswire/ -- Keurig Dr Pepper
Inc. (NASDAQ: KDP) today reported financial results for the fourth
quarter and full year ended December 31,
2020 and provided guidance for 2021.
|
|
Reported GAAP
Basis
|
Adjusted
Basis1
|
|
|
|
|
|
Q4
|
FY
2020
|
Q4
|
FY
2020
|
|
Net
Sales
% vs Prior Year
% vs Prior
Year – Constant Currency
|
$3.12
bn
6.4%
6.6%
|
$11.62
bn
4.5%
5.0%
|
$3.12
bn
6.4%
6.6%
|
$11.62
bn
4.5%
5.0%
|
|
Diluted
EPS
% vs
Prior Year
|
$0.30
3.4%
|
$0.93
5.7%
|
$0.39
11.4%
|
$1.40
14.8%
|
Earlier today the Company announced a 25% increase in its
annualized dividend rate to $0.75 per
share, from the current $0.60 per
share, effective with the Company's regular quarterly dividend to
be announced in the second quarter of 2021, subject to official
declaration by the Board of Directors. This 25% increase will
result in growth of 12.5% in dividends paid in 2021 and another
11.1% increase in 2022, given the calendar timing of both the
increase and dividend payments.
Commenting on the announcements, Chairman and CEO Bob Gamgort stated, "KDP again delivered on its
annual financial commitments in 2020, capped by a strong fourth
quarter with exceptional growth in net sales that was driven by
market share gains across our portfolio and accelerated household
adoption of the Keurig system. During the year, we implemented
robust protocols to keep our employees safe, enhanced our portfolio
with innovative new products and strategic partnerships, invested
in our supply chain for growth, delivered our corporate
responsibility goals and supported our communities. While we expect
2021 to be another challenging and unpredictable year, we're
confident in our ability to deliver the final year of the merger
commitments communicated in 2018. We are also confident in
our ongoing strong free cash flow generation, which will enable us
to return incremental value to our shareholders, while continuing
to delever to our targeted level by year-end."
Full-year 2020 highlights:
- Successfully responded to the COVID-19 pandemic, keeping
employees safe, delivering for customers and providing for the
communities that KDP serves.
- Delivered strong net sales growth and double-digit Adjusted
diluted EPS growth.
- Grew market share2 in more than 90% of the Company's
cold beverage retail base.
- Added approximately three million new U.S. households using the
Keurig coffee system.
- Strengthened and expanded KDP's direct-store-delivery network
through multiple transactions, including a long-term agreement with
Polar Beverages.
- Reduced financial obligations by more than $1.1 billion, with $240
million of unrestricted cash on hand, and improved KDP's
management leverage ratio by 0.9x to 3.6x at year-end 2020.
- Meaningfully advanced KDP's sustainability agenda, achieving
key 2020 goals.
- Transferred KDP's stock exchange listing to Nasdaq and entered
the Nasdaq-100 Index, supporting KDP's evolution into a Modern
Beverage Company.
2020 Full Year Consolidated Results
Net sales for the
full year of 2020 increased 4.5% to $11.62
billion, compared to $11.12
billion in the year-ago period. On a constant currency
basis, net sales increased 5.0%, driven by higher volume/mix of
5.6%, partially offset by lower net price realization of
0.6%.
KDP in-market performance remained strong for the year, with
dollar market share advancing in more than 90% of KDP's cold
beverage retail base, including CSDs3, premium
unflavored still water, teas and fruit drinks, vegetable juice,
apple juice and apple sauce. This performance reflected the
strength of Dr Pepper, Canada Dry and A&W CSDs, CORE hydration
and evian premium water, Snapple tea and juice drinks, Clamato
vegetable juice and Motts apple juice and apple sauce. In
coffee, retail consumption of single-serve pods manufactured by KDP
grew nearly 10% in IRi tracked channels, with accelerated growth in
e-commerce, partially offset by significant declines in away from
home office and hospitality businesses. In U.S. tracked
channels, dollar market share of KDP manufactured pods remained
strong at 83%.
GAAP operating income increased 4.3% to $2.48 billion, compared to $2.38 billion in the year-ago period, driven by
the strong net sales growth, continued productivity and merger
synergies and lower discretionary expenses, primarily
marketing. Partially offsetting these factors were the
unfavorable year-over-year impact of items affecting comparability,
which included $128 million of
COVID-19 related costs and a $67
million non-cash impairment charge on the Bai brand.
Also unfavorably impacting the comparison were increased operating
expenses associated with higher consumer demand, inflation in
logistics and certain other COVID-19 related costs. Excluding items
affecting comparability, Adjusted operating income increased 10.4%
to $3.19 billion, compared to
$2.89 billion in the year-ago period,
and Adjusted operating margin increased 150 basis points to
27.5%. On a constant currency basis, Adjusted operating
income grew 10.8%.
Total COVID-19 related operating costs were $150 million in 2020, including the
aforementioned $128 million in costs
recognized as items affecting comparability. These costs
primarily reflected temporary compensation increases and incentives
for front-line employees, as well as incremental health and safety
measures across our employee base and enhanced sanitation expenses
for our facilities. The remainder of the costs, totaling
$22 million, were included in
Adjusted results and represented inventory write-downs and bad debt
expense in the first half of the year.
GAAP net income for the full year advanced 5.7% to $1.33 billion, or $0.93 per diluted share, compared to $1.25 billion, or $0.88 per diluted share in the year-ago period.
This performance was driven by the growth in operating income,
lower interest expense, reflecting continued deleveraging that was
partially offset by comparison to prior year gains on interest rate
swap contracts, and a lower effective tax rate, stemming from
favorable valuation adjustments and discrete tax items. These
drivers were partially offset by the unfavorable year-over-year
impact of items affecting comparability, including the COVID-19
related costs, the non-cash impairment charge on the Bai brand and
other non-cash impairment charges on equity investments incurred in
2020. Excluding items affecting comparability, Adjusted net income
for the year increased 15% to $1.99
billion, compared to $1.73
billion in the year-ago period, and Adjusted diluted EPS for
2020 increased 15% to $1.40, compared
to $1.22 in the year-ago period.
KDP generated exceptionally strong free cash flow of
$2.20 billion in 2020, reflecting
growth in operating income and ongoing effective working capital
management. The free cash flow performance enabled KDP to reduce
total financial obligations by $1.12
billion and the Company ended the year with $240 million of unrestricted cash on hand.
The Company's management leverage ratio declined to 3.6x at
the end of 2020, compared to 4.5x at the end of 2019, primarily
reflecting the reduction in bank debt and strong earnings
growth. Since the close of the merger in July 2018, KDP's management leverage ratio has
declined by 2.4x.
________________________________________
|
1 Adjusted financial metrics used in
this release are non-GAAP. See reconciliations of GAAP results to
Adjusted results in the accompanying
tables.
|
2 Market
share and retail consumption data based on Keurig Dr Pepper's
custom IRi category definitions for the 13- and 52-week periods
ending 12/27/2020.
|
3 CSDs
refer to "Carbonated Soft Drinks".
|
2020 Full Year Segment Results
Coffee Systems
Net sales in 2020 increased 4.7%
to $4.43 billion, compared to
$4.23 billion in the year-ago period,
reflecting higher volume/mix of 7.2%, partially offset by lower net
price realization of 2.4%. Also impacting the net sales
performance was unfavorable foreign currency translation of
0.1%. On a constant currency basis, net sales advanced
4.8%.
The volume/mix growth of 7.2% reflected strong pod volume growth
of 6.3% and exceptionally strong brewer volume growth of 21%. Pod
growth was driven by double-digit at-home consumption, partially
offset by a significant decline in the away-from-home business, as
work-from-home trends were elevated for most of the year. The
strong brewer growth was driven by continued innovation, marketing
investments to grow household penetration and a very successful
holiday season. For the full year, U.S. households regularly
using a Keurig brewer increased approximately 10% to 33 million
households.
Operating income increased 4.0% to $1.27
billion in 2020, compared to $1.22
billion in the year-ago period. This performance
reflected the growth in net sales, continued productivity and
merger synergies and lower discretionary spending, partially offset
by unfavorable margin mix related to the exceptionally strong
brewer growth and the unfavorable year-over-year impact of items
affecting comparability, including $25
million in costs related to COVID-19. Excluding items
affecting comparability, Adjusted operating income increased 7.9%
to $1.51 billion, compared to
$1.40 billion in the year-ago period,
and Adjusted operating margin increased 110 basis points to 34.2%.
On a constant currency basis, Adjusted operating income grew
8.0%.
Packaged Beverages
Net sales in 2020 increased
8.5% to $5.36 billion, compared to
$4.95 billion in the year-ago period,
reflecting favorable volume/mix of 8.2% and higher net price
realization of 0.3%. This strong performance reflected market share
growth across the portfolio, with particular strength in CSDs,
premium unflavored water, juice, apple sauce and mixers, partially
offset by softness in enhanced flavored water due to a slowdown in
the convenience and gas channels for most of the year.
Brands driving the strong net sales performance were Dr Pepper,
A&W, Canada Dry, 7UP, Squirt and Sunkist CSDs, Core Hydration
and evian premium water, Motts juices, Snapple teas and juice
drinks, A Shoc energy, Clamato, Real Lemon and mixers, partially
offset by a decline in Bai.
Operating income increased 8.6% to $0.82
billion in 2020, compared to $0.76
billion in the year-ago period, reflecting the strong growth
in net sales, lower discretionary expenses, and continued
productivity and merger synergies. These growth drivers were
partially offset by higher operating costs to meet strong consumer
demand, inflation in logistics and the unfavorable year-over-year
impact of items affecting comparability, including $101 million in costs related to COVID-19 and a
$67 million non-cash impairment
charge on the Bai brand. Excluding these and other items
affecting comparability, Adjusted operating income increased 30% to
$1.02 billion, compared to
$0.78 billion in the prior year, and
Adjusted operating margin increased 320 basis points to 19.0%. On a
constant currency basis, Adjusted operating income grew 31%.
Beverage Concentrates
Net sales in 2020
decreased 6.3% to $1.33 billion,
compared to $1.41 billion in the
year-ago period, reflecting unfavorable volume/mix of 5.8%, lower
net price realization of 0.4% and unfavorable foreign currency
translation of 0.1%. This performance primarily reflected the
negative impact of COVID-19 on the fountain foodservice business,
which primarily serves the restaurant and hospitality channels, due
to significantly reduced consumer mobility. On a constant
currency basis, net sales decreased 6.2%.
Total shipment volume declined 5.1% versus year-ago due to the
aforementioned COVID-19 impact on the fountain foodservice
business. Declines in Dr Pepper and Crush were partially
offset by increased shipment volume in Squirt. Bottler cases
sales volume in 2020 decreased 2.4% versus the prior year.
Operating income in 2020 decreased 2.4% to $932 million, compared to $955 million in the year-ago period, reflecting
the lower net sales and the unfavorable year-over-year impact of
items affecting comparability, partially offset by lower
discretionary expenses. Excluding items affecting
comparability, Adjusted operating income decreased 2.0% to
$938 million, compared to
$957 million in the year-ago period
and Adjusted operating margin increased 310 basis points to
70.8%.
Latin America Beverages
Net sales in 2020
decreased 5.9% to $497 million,
compared to $528 million in the
year-ago period, primarily reflecting the impact of unfavorable
foreign currency translation. On a constant currency basis,
net sales increased 3.8%, reflecting higher net price realization
of 5.8%, partially offset by lower volume/mix of 2.0% due primarily
to the impact of COVID-19 in Mexico.
Operating income in 2020 increased 24% to $105 million, compared to $85 million in the year-ago period, reflecting
the growth in constant currency net sales, continued productivity
and lower discretionary spending, partially offset by the
unfavorable impacts of foreign currency transaction expense,
inflation in logistics and the unfavorable year-over-year impact of
items affecting comparability. Excluding items affecting
comparability, Adjusted operating income increased 32% to
$108 million, compared to
$82 million in the prior year, and
Adjusted operating margin increased 620 basis points to 21.7%. On a
constant currency basis, Adjusted operating income grew 42.7%
versus 2019.
Fourth Quarter Consolidated Results
Net sales in the
fourth quarter of 2020 grew at an accelerated rate of 6.4% to
$3.12 billion, compared to
$2.93 billion in the year-ago
period. On a constant currency basis, net sales advanced
6.6%, reflecting higher volume/mix of 6.3% and favorable net price
realization of 0.3%.
KDP in-market performance remained strong in the quarter, with
dollar market share continuing to advance in more than 90% of KDP's
cold beverage retail base. This performance reflected
particular strength in CSDs, premium unflavored water, teas and
fruit drinks, vegetable juice, apple juice and apple sauce.
In coffee, retail consumption of single-serve pods
manufactured by KDP grew more than 7% in IRi tracked channels, with
accelerated growth in e-commerce, partially offset by significant
declines in away from home office and hospitality businesses. In
the U.S. tracked channels, dollar market share of KDP manufactured
pods remained strong at 83%.
GAAP operating income decreased 1.8% to $700 million in the fourth quarter of 2020,
compared to $713 million in the
year-ago period, reflecting the benefits of the strong growth in
net sales, lower discretionary expenses, primarily marketing,
continued productivity and merger synergies. More than
offsetting these factors were the unfavorable comparison to a
$30 million gain in the prior year on
the sale-leaseback of three manufacturing facilities, higher
operating expenses associated with increased consumer demand,
inflation in logistics and the unfavorable year-over-year impact of
items affecting comparability, including COVID-19 related costs and
a $67 million non-cash impairment
charge on the Bai brand. Excluding items affecting
comparability, Adjusted operating income in the quarter increased
5.5% to $858 million, compared to
Adjusted operating income of $813
million in the year-ago period, and Adjusted operating
margin declined 20 basis points to 27.5%. On a constant
currency basis, Adjusted operating income grew 5.7%.
The COVID-19 related operating costs incurred in the fourth
quarter totaled $11 million, all of
which were recognized as items affecting comparability, and
consisted of temporary compensation increases and incentives for
frontline employees, as well as incremental safety and sanitation
expenses.
GAAP net income in the fourth quarter of 2020 increased 5.4% to
$428 million, or $0.30 per diluted share, compared to GAAP net
income of $406 million, or
$0.29 per diluted share in the
year-ago period. This performance reflected the strong growth
in net sales, higher operating income driven by lower discretionary
expenses, productivity and merger synergies, as well as lower
interest expense and a lower effective tax rate resulting from
favorable valuation adjustments and discrete tax items. These
drivers were partially offset by the unfavorable year-over-year
impact of items affecting comparability, including the
aforementioned $67 million non-cash
impairment charge on the Bai brand and $11
million of COVID-19 related operating costs. Excluding
items affecting comparability, Adjusted net income advanced nearly
13% to $554 million in the fourth
quarter of 2020, compared to $491
million in the year-ago period. Adjusted diluted EPS
increased 11.4% to $0.39, compared to
$0.35 in the year-ago period.
Free cash flow generation remained strong at $685 million in the fourth quarter of 2020,
enabling the Company to reduce bank debt by $410 million.
Fourth Quarter Segment Results
Coffee Systems
Net sales for the fourth quarter
of 2020 increased 9.1% to $1.32
billion, compared to $1.21
billion in the year-ago period, reflecting higher volume/mix
of 10.2%, partially offset by lower net price realization of
1.3%. Also impacting the net sales performance was favorable
foreign currency translation of 0.2%. On a constant currency
basis, net sales increased 8.9%.
The volume/mix increase of 10.2% in the quarter reflected strong
pod volume growth of 7.4% and exceptionally strong brewer growth of
nearly 28%. Pod growth was driven by strong at-home consumption,
partially offset by continued softness in the away-from-home
business, as return to offices and hospitality remain depressed
although improved since the second quarter. The strong brewer
volume was driven by innovation and increased shipments to
retailers during a very successful holiday season.
Operating income increased 17% to $386
million in the fourth quarter of 2020, compared to
$329 million in the year-ago period,
reflecting the strong growth in net sales, continued productivity
and merger synergies and lower discretionary expenses. Partially
offsetting these positive drivers were unfavorable margin mix
related to the exceptionally strong brewer growth, inflation in
logistics and the unfavorable year-over-year impact of items
affecting comparability, including $4
million in costs related to COVID-19. Excluding these
and other items affecting comparability, Adjusted operating income
increased 17% to $431 million,
compared to $370 million in the
year-ago period, and Adjusted operating margin increased 210 basis
points to 32.7%.
Packaged Beverages
Net sales for the fourth
quarter of 2020 increased 7.9% to $1.31
billion, compared to $1.21
billion in the year-ago period, reflecting favorable
volume/mix of 6.1% due to continued, strong market share expansion
across the portfolio and higher net price realization of
1.8%.
Leading the net sales performance were Dr Pepper, A&W,
Canada Dry, 7UP, Sunkist and Squirt CSDs, Snapple and Motts juices,
CORE hydration and evian premium water and Clamato, partially
offset by a decline in Bai.
Operating income in the fourth quarter of 2020 decreased 27% to
$165 million, compared to
$226 million in the year-ago period,
reflecting the unfavorable comparison to a $30 million year-ago gain on the sale-leaseback
of three manufacturing facilities, higher operating costs to meet
the continued strong consumer demand, inflation in logistics costs,
and the unfavorable year-over-year impact of items affecting
comparability, which included the $67
million non-cash impairment charge on the Bai brand and
$6 million in costs related to
COVID-19. Partially offsetting these drivers were the strong growth
in net sales, continued productivity and merger synergies and lower
discretionary expenses. Excluding items affecting
comparability, Adjusted operating income increased 5.6% to
$245 million, compared to
$232 million in the year-ago period,
and Adjusted operating margin declined 50 basis points to
18.7%.
Beverage Concentrates
Net sales for the fourth
quarter of 2020 decreased 5.8% to $358
million, compared to $380
million in the year-ago period, reflecting unfavorable
volume/mix of 4.5% and lower net price realization of 1.3%.
This performance continued to be pressured by COVID-19 as
consumer mobility in the restaurant and hospitality channels
remained depressed.
Total shipment volume versus year-ago declined 3.4% in the
quarter, due to the aforementioned COVID-19 impact on the fountain
foodservice business. Declines in Dr Pepper and Crush were
partially offset by increased shipment volume in Squirt.
Bottler case sales volume decreased 2.1% in the quarter compared to
the year-ago period.
Operating income in the fourth quarter of 2020 decreased 4.5% to
$253 million, compared to
$265 million in the year-ago period,
reflecting the impact of the lower net sales, partially offset by
lower discretionary expenses and a slight year-over-year benefit
from items affecting comparability. Excluding items affecting
comparability, Adjusted operating income decreased 4.5% to
$254 million, compared to
$266 million in the year-ago period,
and Adjusted operating margin increased 90 basis points to
70.9%.
Latin America Beverages
Net sales for the
fourth quarter of 2020 increased 2.3% to $136 million, compared to net sales of
$133 million in the year-ago period,
driven by volume/mix growth of 2.3% and higher net price
realization of 6.0%, significantly offset by unfavorable foreign
currency translation of 6.0%. On a constant currency basis, net
sales increased a strong 8.3%.
Operating income in the fourth quarter of 2020 increased 39% to
$32 million, compared to $23 million in the year-ago period, reflecting
the strong growth in constant currency net sales, continued
productivity and lower discretionary expenses, partially offset by
the unfavorable impact of foreign currency transaction expense and
inflation in logistics. Excluding items affecting
comparability, Adjusted operating income increased 32% to
$33 million, compared to $25 million in the year-ago period, and Adjusted
operating margin increased 550 basis points to 24.3%. On a
constant currency basis, Adjusted operating income grew 36% versus
the prior year.
KDP Adjusted Guidance for 2021
KDP expects to deliver
another year of strong net sales growth in 2021, positioning the
Company to exceed its three-year merger target of 2-3% average
annual growth. Adjusted diluted EPS is again expected to grow
by double-digits, enabling KDP to meet its three-year merger target
of 15-17% average annual growth.
Specifically, constant currency net sales growth is expected in
the range of 3-4% in 2021, driven by investments in innovation and
marketing, the benefits of recent partnerships and ongoing strong
in-market execution. Adjusted diluted EPS growth is expected
in the range of 13% to 15%, reflecting the benefits of the strong
top-line performance and continued merger synergies and
productivity, as well as reduced interest expense and improvement
in the Company's effective tax rate.
Supporting this guidance are the following detailed
expectations:
- Merger synergies of approximately $200
million, for a three-year total of approximately
$600 million, in line with the
Company's merger target.
- Adjusted interest expense in the range of $505 million to $515
million.
- Adjusted effective tax rate in the range of 23.5% to
24.0%.
- Diluted weighted average shares outstanding of approximately
1,430 million.
- Management leverage ratio at or below 3.0x at year end
2021.
Investor Contacts:
Tyson
Seely
Keurig Dr Pepper
T: 781-418-3352 / tyson.seely@kdrp.com
Steve Alexander
Keurig Dr Pepper
T: 972-673-6769 / steve.alexander@kdrp.com
Media Contact:
Katie
Gilroy
Keurig Dr Pepper
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 in excess of $11 billion and nearly 27,000 employees. KDP
holds leadership positions in 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®, Green Mountain Coffee Roasters®, Canada Dry®, Snapple®,
Bai®, Mott's®, CORE® 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 is committed to sourcing,
producing and distributing its beverages responsibly through its
Drink Well. Do Good. corporate responsibility platform, including
efforts around circular packaging, efficient natural resource use
and supply chain sustainability. 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, phrases or expressions and variations
or negatives of these words, although not all forward-looking
statements contain these identifying words. Forward-looking
statements by their nature address matters that are, to different
degrees, uncertain, such as statements regarding the estimated or
anticipated future results of the combined company following the
combination of Keurig Green Mountain, Inc. ("KGM") and Dr Pepper
Snapple Group, Inc. ("DPS" and such combination, the
"transaction"), the anticipated benefits of the transaction,
including estimated synergies and cost savings, the long-term
merger targets, and other statements that are not historical facts.
These statements are based on the current expectations of our
management and are not predictions of actual performance.
These forward-looking statements are subject to a number of
risks and uncertainties regarding the company's business and the
transaction and actual results may differ materially. These risks
and uncertainties include, but are not limited to: (i) the impact
the significant additional debt incurred in connection with the
transaction may have on our ability to operate our business, (ii)
risks relating to the integration of the KGM and DPS operations,
products and employees into the combined company and assumption of
certain potential liabilities of KGM and the possibility that the
anticipated synergies and other benefits of the transaction,
including cost savings, will not be realized or will not be
realized within the expected timeframe, (iii) the impact of the
global COVID-19 pandemic, and (iv) risks relating to the businesses
and the industries in which our combined company operates. These
risks and uncertainties, as well as other risks and uncertainties,
are more fully discussed in the Company's filings with the SEC,
including our Annual Report on Form 10-K and subsequent filings.
While the lists of risk factors presented here and in our public
filings are considered representative, no such list should be
considered to be a complete statement of all potential risks and
uncertainties. Any forward-looking statement made herein speaks
only as of the date of this document. We are under no obligation
to, and expressly disclaim any obligation to, update or alter any
forward-looking statements, whether as a result of new information,
subsequent events or otherwise, except as required by applicable
laws or regulations.
NON-GAAP FINANCIAL MEASURES
This release includes
certain non-GAAP financial measures including Adjusted operating
income, Adjusted net income, Adjusted diluted EPS and Free Cash
Flow, 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 related to the
transaction and integration activities, which 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
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.
KEURIG DR PEPPER
INC.
|
CONSOLIDATED
STATEMENTS OF INCOME
|
For the Three
Months and Years Ended December 31, 2020 and
2019
|
(Unaudited, in
millions, except per share data)
|
|
|
For the Three
Months Ended
December 31,
|
|
For the Year
Ended
December 31,
|
|
(in millions,
except per share data)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Net
sales
|
$
|
3,121
|
|
|
$
|
2,934
|
|
|
$
|
11,618
|
|
|
$
|
11,120
|
|
Cost of
sales
|
1,353
|
|
|
1,241
|
|
|
5,132
|
|
|
4,778
|
|
Gross
profit
|
1,768
|
|
|
1,693
|
|
|
6,486
|
|
|
6,342
|
|
Selling, general and
administrative expenses
|
1,000
|
|
|
1,011
|
|
|
3,978
|
|
|
3,962
|
|
Impairment of
intangible assets
|
67
|
|
|
—
|
|
|
67
|
|
|
—
|
|
Other operating
(income) expense, net
|
1
|
|
|
(31)
|
|
|
(39)
|
|
|
2
|
|
Income from
operations
|
700
|
|
|
713
|
|
|
2,480
|
|
|
2,378
|
|
Interest
expense
|
146
|
|
|
157
|
|
|
604
|
|
|
654
|
|
Loss on early
extinguishment of debt
|
—
|
|
|
2
|
|
|
4
|
|
|
11
|
|
Impairment of
investments and note receivable
|
—
|
|
|
—
|
|
|
102
|
|
|
—
|
|
Other expense,
net
|
(4)
|
|
|
4
|
|
|
17
|
|
|
19
|
|
Income before
provision for income taxes
|
558
|
|
|
550
|
|
|
1,753
|
|
|
1,694
|
|
Provision for income
taxes
|
130
|
|
|
144
|
|
|
428
|
|
|
440
|
|
Net
income
|
$
|
428
|
|
|
$
|
406
|
|
|
$
|
1,325
|
|
|
$
|
1,254
|
|
Less: Net income
attributable to non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net income
attributable to KDP
|
$
|
428
|
|
|
$
|
406
|
|
|
$
|
1,325
|
|
|
$
|
1,254
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.30
|
|
|
$
|
0.29
|
|
|
$
|
0.94
|
|
|
$
|
0.89
|
|
Diluted
|
0.30
|
|
|
0.29
|
|
|
0.93
|
|
|
0.88
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
1,407.3
|
|
|
1,406.9
|
|
|
1,407.2
|
|
|
1,406.7
|
|
Diluted
|
1,423.8
|
|
|
1,419.9
|
|
|
1,422.1
|
|
|
1,419.1
|
|
KEURIG DR PEPPER
INC.
|
CONSOLIDATED
BALANCE SHEETS
|
As of
December 31, 2020 and 2019
|
(Unaudited, in
millions, except shares and per share data)
|
|
|
December
31,
|
(in millions,
except share and per share data)
|
2020
|
|
2019
|
Assets
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
240
|
|
|
$
|
75
|
|
Restricted cash and
restricted cash equivalents
|
15
|
|
|
26
|
|
Trade accounts
receivable, net
|
1,048
|
|
|
1,115
|
|
Inventories
|
762
|
|
|
654
|
|
Prepaid expenses and
other current assets
|
323
|
|
|
403
|
|
Total current
assets
|
2,388
|
|
|
2,273
|
|
Property, plant and
equipment, net
|
2,212
|
|
|
2,028
|
|
Investments in
unconsolidated affiliates
|
88
|
|
|
151
|
|
Goodwill
|
20,184
|
|
|
20,172
|
|
Other intangible
assets, net
|
23,968
|
|
|
24,117
|
|
Other non-current
assets
|
894
|
|
|
748
|
|
Deferred tax
assets
|
45
|
|
|
29
|
|
Total
assets
|
$
|
49,779
|
|
|
$
|
49,518
|
|
Liabilities and
Stockholders' Equity
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
3,740
|
|
|
$
|
3,176
|
|
Accrued
expenses
|
1,040
|
|
|
939
|
|
Structured
payables
|
153
|
|
|
321
|
|
Short-term borrowings
and current portion of long-term obligations
|
2,345
|
|
|
1,593
|
|
Other current
liabilities
|
416
|
|
|
445
|
|
Total current
liabilities
|
7,694
|
|
|
6,474
|
|
Long-term
obligations
|
11,143
|
|
|
12,827
|
|
Deferred tax
liabilities
|
5,993
|
|
|
6,030
|
|
Other non-current
liabilities
|
1,119
|
|
|
930
|
|
Total
liabilities
|
25,949
|
|
|
26,261
|
|
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, 1,407,260,676 and
1,406,852,305 shares issued and outstanding as of December 31, 2020
and 2019,
respectively
|
14
|
|
|
14
|
|
Additional paid-in
capital
|
21,677
|
|
|
21,557
|
|
Retained
earnings
|
2,061
|
|
|
1,582
|
|
Accumulated other
comprehensive (income) loss
|
77
|
|
|
104
|
|
Total
stockholders' equity
|
23,829
|
|
|
23,257
|
|
Non-controlling
interest
|
1
|
|
|
—
|
|
Total
equity
|
23,830
|
|
|
23,257
|
|
Total liabilities
and stockholders' equity
|
$
|
49,779
|
|
|
$
|
49,518
|
|
KEURIG DR PEPPER
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
For
The Years Ended December 31, 2020 and
2019
|
(Unaudited, in
millions)
|
|
|
For the Year Ended
December 31,
|
(in
millions)
|
2020
|
|
2019
|
Operating
activities:
|
|
|
|
Net income
|
$
|
1,325
|
|
|
$
|
1,254
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation
expense
|
362
|
|
|
358
|
|
Amortization of
intangibles
|
133
|
|
|
126
|
|
Other amortization
expense
|
158
|
|
|
174
|
|
Provision for sales
returns
|
54
|
|
|
43
|
|
Deferred income
taxes
|
(51)
|
|
|
(23)
|
|
Employee stock-based
compensation expense
|
85
|
|
|
64
|
|
Loss on early
extinguishment of debt
|
4
|
|
|
11
|
|
(Gain) loss on
disposal of property, plant and equipment
|
(36)
|
|
|
(14)
|
|
Unrealized (gain) loss
on foreign currency
|
(1)
|
|
|
(24)
|
|
Unrealized loss on
derivatives
|
8
|
|
|
36
|
|
Equity in losses of
unconsolidated affiliates
|
20
|
|
|
51
|
|
Impairment of
intangible assets
|
67
|
|
|
—
|
|
Impairment on
investments and note receivable of unconsolidated
affiliates
|
102
|
|
|
—
|
|
Other, net
|
60
|
|
|
52
|
|
Changes in assets and
liabilities:
|
|
|
|
Trade accounts
receivable
|
(5)
|
|
|
(7)
|
|
Inventories
|
(107)
|
|
|
(24)
|
|
Income taxes
receivable and payables, net
|
(91)
|
|
|
36
|
|
Other current and non
current assets
|
(435)
|
|
|
(324)
|
|
Accounts payable and
accrued expenses
|
624
|
|
|
583
|
|
Other current and non
current liabilities
|
180
|
|
|
102
|
|
Net change in
operating assets and liabilities
|
166
|
|
|
366
|
|
Net cash provided by
operating activities
|
2,456
|
|
|
2,474
|
|
Investing
activities:
|
|
|
|
Acquisitions of
businesses
|
—
|
|
|
(8)
|
|
Issuance of related
party note receivable
|
(6)
|
|
|
(32)
|
|
Investments in
unconsolidated affiliates
|
(5)
|
|
|
(16)
|
|
Purchases of
property, plant and equipment
|
(461)
|
|
|
(330)
|
|
Proceeds from sales
of property, plant and equipment
|
203
|
|
|
247
|
|
Purchases of
intangibles
|
(56)
|
|
|
(35)
|
|
Other, net
|
9
|
|
|
24
|
|
Net cash used in
investing activities
|
(316)
|
|
|
(150)
|
|
Financing
activities:
|
|
|
|
Proceeds from
controlling shareholder stock transactions
|
29
|
|
|
—
|
|
Proceeds from
unsecured credit facility
|
1,850
|
|
|
—
|
|
Proceeds from senior
unsecured notes
|
1,500
|
|
|
—
|
|
Proceeds from term
loan
|
—
|
|
|
2,000
|
|
Net (repayment)
issuance of commercial paper notes
|
(1,246)
|
|
|
167
|
|
Proceeds from
structured payables
|
171
|
|
|
330
|
|
Payments on
structured payables
|
(341)
|
|
|
(531)
|
|
Payments on senior
unsecured notes
|
(250)
|
|
|
(250)
|
|
Payment on unsecured
credit facility
|
(1,850)
|
|
|
—
|
|
Payments on term
loan
|
(955)
|
|
|
(3,203)
|
|
Payments on finance
leases
|
(52)
|
|
|
(38)
|
|
Cash dividends
paid
|
(846)
|
|
|
(844)
|
|
Other, net
|
—
|
|
|
5
|
|
Net cash used in
financing activities
|
(1,990)
|
|
|
(2,364)
|
|
Cash, cash
equivalents, restricted cash and restricted cash equivalents — net
change from:
|
|
|
|
Operating, investing
and financing activities
|
150
|
|
|
(40)
|
|
Effect of exchange
rate changes on cash, cash equivalents, restricted cash and
restricted cash equivalents
|
(6)
|
|
|
12
|
|
Cash, cash
equivalents, restricted cash and restricted cash equivalents at
beginning of period
|
111
|
|
|
139
|
|
Cash, cash
equivalents, restricted cash and restricted cash equivalents at end
of period
|
$
|
255
|
|
|
$
|
111
|
|
KEURIG DR PEPPER
INC.
|
RECONCILIATION OF
SEGMENT INFORMATION
|
(Unaudited)
|
|
|
For the Three
Months Ended
December 31,
|
|
For the Year
Ended
December 31,
|
(in
millions)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net
Sales
|
|
|
|
|
|
|
|
Coffee
Systems
|
$
|
1,320
|
|
|
$
|
1,210
|
|
|
$
|
4,433
|
|
|
$
|
4,233
|
|
Packaged
Beverages
|
1,307
|
|
|
1,211
|
|
|
5,363
|
|
|
4,945
|
|
Beverage
Concentrates
|
358
|
|
|
380
|
|
|
1,325
|
|
|
1,414
|
|
Latin America
Beverages
|
136
|
|
|
133
|
|
|
497
|
|
|
528
|
|
Total net
sales
|
$
|
3,121
|
|
|
$
|
2,934
|
|
|
$
|
11,618
|
|
|
$
|
11,120
|
|
|
|
|
|
|
|
|
|
Income from
Operations
|
|
|
|
|
|
|
|
Coffee
Systems
|
$
|
386
|
|
|
$
|
329
|
|
|
$
|
1,268
|
|
|
$
|
1,219
|
|
Packaged
Beverages
|
165
|
|
|
226
|
|
|
822
|
|
|
757
|
|
Beverage
Concentrates
|
253
|
|
|
265
|
|
|
932
|
|
|
955
|
|
Latin America
Beverages
|
32
|
|
|
23
|
|
|
105
|
|
|
85
|
|
Unallocated corporate
costs
|
(136)
|
|
|
(130)
|
|
|
(647)
|
|
|
(638)
|
|
Total income from
operations
|
$
|
700
|
|
|
$
|
713
|
|
|
$
|
2,480
|
|
|
$
|
2,378
|
|
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.
For the years ended December 31,
2020 and 2019, we define our Adjusted non-GAAP financial
measures as certain financial statement captions and metrics
adjusted for certain items affecting comparability. The items
affecting comparability are defined below.
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
and do not have an offsetting risk reflected within the financial
results; (ii) the amortization associated with definite-lived
intangible assets; (iii) the amortization of the deferred financing
costs associated with the DPS Merger and Keurig Acquisition; (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 attributable to the matching awards made to
employees who made an initial investment in the Keurig Green
Mountain, Inc. Executive Ownership Plan, the Keurig Dr Pepper
Omnibus Incentive Plan of 2009 or the Keurig Dr Pepper Inc. Omnibus
Incentive Plan of 2019; and (vi) other certain items that are
excluded for comparison purposes to prior year periods.
For year ended December 31, 2020,
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 nonroutine legal matters; (iv) the loss on
early extinguishment of debt related to the redemption of debt; (v)
incremental temporary costs to our operations related to risks
associated with the COVID-19 pandemic; (vi) impairment recognized
on equity method investments with Bedford Systems, LLC and
LifeFuels Inc; and (vii) impairment recognized on the Bai
brand.
Incremental costs to our operations related to risks associated
with the COVID-19 pandemic include incremental expenses 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. We believe
removing these costs reflects how management views our business
results on a consistent basis.
For year ended December 31, 2019,
the other certain items excluded for comparison purposes include
(i) restructuring and integration expenses related to significant
business combinations; (ii) productivity expenses; (iii)
transaction costs for significant business combinations (completed
or abandoned) excluding the DPS Merger; (iv) costs related to
significant nonroutine legal matters; (v) the impact of the step-up
of acquired inventory not associated with the DPS Merger (vi)
the loss on early extinguishment of debt related to the redemption
of debt and (vii) the loss related to the February 2019 organized malware attack on our
business operation networks in the Coffee Systems segment.
For the years ended December 31,
2020 and 2019, the supplemental financial data set forth
below includes reconciliations of Adjusted income from operations,
Adjusted net income and Adjusted diluted EPS to the applicable
financial measure presented in the unaudited condensed consolidated
financial statement for the same period.
Reconciliations for these items are provided in the tables
below.
KEURIG DR PEPPER
INC.
|
RECONCILIATION OF
CERTAIN REPORTED ITEMS TO CERTAIN NON-GAAP ADJUSTED
ITEMS
|
For the Three
Months Ended December 31, 2020
|
(Unaudited, in
millions, except per share data)
|
|
|
Cost of
sales
|
|
Gross
profit
|
|
Gross
margin
|
|
Selling, general
and administrative expenses
|
|
Impairment of
intangible assets
|
|
Income from
operations
|
|
Operating
margin
|
Reported
|
$
|
1,353
|
|
|
$
|
1,768
|
|
|
56.6
|
%
|
|
$
|
1,000
|
|
|
$
|
67
|
|
|
$
|
700
|
|
|
22.4
|
%
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
31
|
|
|
(31)
|
|
|
|
|
23
|
|
|
—
|
|
|
(54)
|
|
|
|
Amortization of
intangibles
|
—
|
|
|
—
|
|
|
|
|
(33)
|
|
|
—
|
|
|
33
|
|
|
|
Stock
compensation
|
—
|
|
|
—
|
|
|
|
|
(6)
|
|
|
—
|
|
|
6
|
|
|
|
Restructuring and
integration costs
|
—
|
|
|
—
|
|
|
|
|
(56)
|
|
|
—
|
|
|
56
|
|
|
|
Productivity
|
(1)
|
|
|
1
|
|
|
|
|
(24)
|
|
|
—
|
|
|
25
|
|
|
|
Impairment of
intangible assets
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
(67)
|
|
|
67
|
|
|
|
Nonroutine legal
matters
|
—
|
|
|
—
|
|
|
|
|
(14)
|
|
|
—
|
|
|
14
|
|
|
|
COVID-19
|
(6)
|
|
|
6
|
|
|
|
|
(5)
|
|
|
—
|
|
|
11
|
|
|
|
Adjusted
GAAP
|
$
|
1,377
|
|
|
$
|
1,744
|
|
|
55.9
|
%
|
|
$
|
885
|
|
|
$
|
—
|
|
|
$
|
858
|
|
|
27.5
|
%
|
|
Interest
expense
|
|
Income before
provision for income taxes
|
|
Provision for
income taxes
|
|
Effective tax
rate
|
|
Net income
attributable to KDP
|
|
Weighted Average
Diluted shares
|
|
Diluted earnings
per share
|
Reported
|
$
|
146
|
|
|
$
|
558
|
|
|
$
|
130
|
|
|
23.3
|
%
|
|
$
|
428
|
|
|
1,423.8
|
|
$
|
0.30
|
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
1
|
|
|
(55)
|
|
|
(14)
|
|
|
|
|
(41)
|
|
|
|
|
(0.03)
|
|
Amortization of
intangibles
|
—
|
|
|
33
|
|
|
8
|
|
|
|
|
25
|
|
|
|
|
0.02
|
|
Amortization of
deferred financing costs
|
(3)
|
|
|
3
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
—
|
|
Amortization of fair
value debt adjustment
|
(6)
|
|
|
6
|
|
|
2
|
|
|
|
|
4
|
|
|
|
|
—
|
|
Stock
compensation
|
—
|
|
|
6
|
|
|
1
|
|
|
|
|
5
|
|
|
|
|
—
|
|
Restructuring and
integration costs
|
—
|
|
|
56
|
|
|
15
|
|
|
|
|
41
|
|
|
|
|
0.03
|
|
Productivity
|
—
|
|
|
25
|
|
|
6
|
|
|
|
|
19
|
|
|
|
|
0.01
|
|
Impairment of
intangible assets
|
—
|
|
|
67
|
|
|
15
|
|
|
|
|
52
|
|
|
|
|
0.04
|
|
Nonroutine legal
matters
|
—
|
|
|
14
|
|
|
4
|
|
|
|
|
10
|
|
|
|
|
0.01
|
|
COVID-19
|
—
|
|
|
11
|
|
|
2
|
|
|
|
|
9
|
|
|
|
|
0.01
|
|
Adjusted
GAAP
|
$
|
138
|
|
|
$
|
724
|
|
|
$
|
170
|
|
|
23.5
|
%
|
|
$
|
554
|
|
|
1,423.8
|
|
$
|
0.39
|
|
|
Diluted
earnings per common share may not foot due to
rounding.
|
KEURIG DR PEPPER
INC.
|
RECONCILIATION OF
CERTAIN REPORTED ITEMS TO CERTAIN NON-GAAP ADJUSTED
ITEMS
|
For the Three
Months Ended December 31, 2019
|
(Unaudited, in
millions, except per share data)
|
|
|
Cost of
sales
|
|
Gross
profit
|
|
Gross
margin
|
|
Selling, general
and administrative expenses
|
|
Other operating
expense (income), net
|
|
Income from
operations
|
|
Operating
margin
|
Reported
|
$
|
1,241
|
|
|
$
|
1,693
|
|
|
57.7
|
%
|
|
$
|
1,011
|
|
|
$
|
(31)
|
|
|
$
|
713
|
|
|
24.3
|
%
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
41
|
|
|
(41)
|
|
|
|
|
5
|
|
|
—
|
|
|
(46)
|
|
|
|
Amortization of
intangibles
|
—
|
|
|
—
|
|
|
|
|
(32)
|
|
|
—
|
|
|
32
|
|
|
|
Stock
compensation
|
—
|
|
|
—
|
|
|
|
|
(6)
|
|
|
—
|
|
|
6
|
|
|
|
Restructuring and
integration costs
|
—
|
|
|
—
|
|
|
|
|
(65)
|
|
|
(1)
|
|
|
66
|
|
|
|
Productivity
|
(1)
|
|
|
1
|
|
|
|
|
(19)
|
|
|
—
|
|
|
20
|
|
|
|
Transaction
costs
|
—
|
|
|
—
|
|
|
|
|
(1)
|
|
|
—
|
|
|
1
|
|
|
|
Nonroutine legal
matters
|
—
|
|
|
—
|
|
|
|
|
(21)
|
|
|
—
|
|
|
21
|
|
|
|
Adjusted
GAAP
|
$
|
1,281
|
|
|
$
|
1,653
|
|
|
56.3
|
%
|
|
$
|
872
|
|
|
$
|
(32)
|
|
|
$
|
813
|
|
|
27.7
|
%
|
|
Interest
expense
|
|
Income before
provision for income taxes
|
|
Provision for
income taxes
|
|
Effective tax
rate
|
|
Net income
attributable to KDP
|
|
Weighted Average
Diluted shares
|
|
Diluted earnings
per share
|
Reported
|
$
|
157
|
|
|
$
|
550
|
|
|
$
|
144
|
|
|
26.2
|
%
|
|
$
|
406
|
|
|
1,419.9
|
|
$
|
0.29
|
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
(3)
|
|
|
(43)
|
|
|
(12)
|
|
|
|
|
(31)
|
|
|
|
|
(0.02)
|
|
Amortization of
intangibles
|
—
|
|
|
32
|
|
|
8
|
|
|
|
|
24
|
|
|
|
|
0.02
|
|
Amortization of
deferred financing costs
|
(3)
|
|
|
3
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
—
|
|
Amortization of fair
value debt adjustment
|
(6)
|
|
|
6
|
|
|
1
|
|
|
|
|
5
|
|
|
|
|
—
|
|
Stock
compensation
|
—
|
|
|
6
|
|
|
2
|
|
|
|
|
4
|
|
|
|
|
—
|
|
Restructuring and
integration costs
|
1
|
|
|
65
|
|
|
16
|
|
|
|
|
49
|
|
|
|
|
0.04
|
|
Productivity
|
—
|
|
|
20
|
|
|
7
|
|
|
|
|
13
|
|
|
|
|
0.01
|
|
Transaction
costs
|
—
|
|
|
1
|
|
|
1
|
|
|
|
|
—
|
|
|
|
|
—
|
|
Loss on early
extinguishment of debt
|
—
|
|
|
2
|
|
|
—
|
|
|
|
|
2
|
|
|
|
|
—
|
|
Nonroutine legal
matters
|
—
|
|
|
21
|
|
|
4
|
|
|
|
|
17
|
|
|
|
|
—
|
|
Adjusted
GAAP
|
$
|
146
|
|
|
$
|
663
|
|
|
$
|
172
|
|
|
25.9
|
%
|
|
$
|
491
|
|
|
1,419.9
|
|
$
|
0.35
|
|
|
Numbers may not
foot due to rounding.
|
KEURIG DR PEPPER
INC.
|
RECONCILIATION OF
CERTAIN REPORTED ITEMS TO CERTAIN NON-GAAP ADJUSTED
ITEMS
|
For the Year Ended
December 31, 2020
|
(Unaudited, in
millions, except per share data)
|
|
|
Cost of
sales
|
|
Gross
profit
|
|
Gross
margin
|
|
Selling, general
and administrative expenses
|
|
Impairment of
intangible assets
|
|
Income from
operations
|
|
Operating
margin
|
Reported
|
$
|
5,132
|
|
|
$
|
6,486
|
|
|
55.8
|
%
|
|
$
|
3,978
|
|
|
$
|
67
|
|
|
$
|
2,480
|
|
|
21.3
|
%
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
33
|
|
|
(33)
|
|
|
|
|
(5)
|
|
|
—
|
|
|
(28)
|
|
|
|
Amortization of
intangibles
|
—
|
|
|
—
|
|
|
|
|
(133)
|
|
|
—
|
|
|
133
|
|
|
|
Stock
compensation
|
—
|
|
|
—
|
|
|
|
|
(27)
|
|
|
—
|
|
|
27
|
|
|
|
Restructuring and
integration costs
|
—
|
|
|
—
|
|
|
|
|
(199)
|
|
|
—
|
|
|
199
|
|
|
|
Productivity
|
(29)
|
|
|
29
|
|
|
|
|
(99)
|
|
|
—
|
|
|
128
|
|
|
|
Impairment of
intangibles assets
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
(67)
|
|
|
67
|
|
|
|
Nonroutine legal
matters
|
—
|
|
|
—
|
|
|
|
|
(57)
|
|
|
—
|
|
|
57
|
|
|
|
COVID-19
|
(44)
|
|
|
44
|
|
|
|
|
(84)
|
|
|
—
|
|
|
128
|
|
|
|
Adjusted
GAAP
|
$
|
5,092
|
|
|
$
|
6,526
|
|
|
56.2
|
%
|
|
$
|
3,374
|
|
|
$
|
—
|
|
|
$
|
3,191
|
|
|
27.5
|
%
|
|
Interest
expense
|
|
Loss on early
extinguishment of debt
|
|
Impairment on
investments and note receivable
|
|
Income before
provision for income taxes
|
|
Provision for
income taxes
|
|
Effective tax
rate
|
|
Net income
attributable to KDP
|
|
Weighted Average
Diluted shares
|
|
Diluted earnings
per share
|
Reported
|
$
|
604
|
|
|
$
|
4
|
|
|
$
|
102
|
|
|
$
|
1,753
|
|
|
$
|
428
|
|
|
24.4
|
%
|
|
$
|
1,325
|
|
|
1,422.1
|
|
$
|
0.93
|
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
(27)
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
|
(1)
|
|
|
|
|
—
|
|
|
|
|
—
|
|
Amortization of
intangibles
|
—
|
|
|
—
|
|
|
—
|
|
|
133
|
|
|
35
|
|
|
|
|
98
|
|
|
|
|
0.07
|
|
Amortization of
deferred financing costs
|
(11)
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
3
|
|
|
|
|
8
|
|
|
|
|
0.01
|
|
Amortization of fair
value debt adjustment
|
(24)
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
6
|
|
|
|
|
18
|
|
|
|
|
0.01
|
|
Stock
compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|
5
|
|
|
|
|
22
|
|
|
|
|
0.02
|
|
Restructuring and
integration costs
|
—
|
|
|
—
|
|
|
—
|
|
|
199
|
|
|
49
|
|
|
|
|
150
|
|
|
|
|
0.11
|
|
Productivity
|
—
|
|
|
—
|
|
|
—
|
|
|
128
|
|
|
33
|
|
|
|
|
95
|
|
|
|
|
0.07
|
|
Impairment of
intangibles assets
|
—
|
|
|
—
|
|
|
—
|
|
|
67
|
|
|
15
|
|
|
|
|
52
|
|
|
|
|
0.04
|
|
Loss on early
extinguishment of debt
|
—
|
|
|
(4)
|
|
|
—
|
|
|
4
|
|
|
1
|
|
|
|
|
3
|
|
|
|
|
—
|
|
Impairment on
investment
|
—
|
|
|
—
|
|
|
(102)
|
|
|
102
|
|
|
25
|
|
|
|
|
77
|
|
|
|
|
0.05
|
|
Nonroutine legal
matters
|
—
|
|
|
—
|
|
|
—
|
|
|
57
|
|
|
14
|
|
|
|
|
43
|
|
|
|
|
0.03
|
|
COVID-19
|
—
|
|
|
—
|
|
|
—
|
|
|
128
|
|
|
31
|
|
|
|
|
97
|
|
|
|
|
0.07
|
|
Adjusted
GAAP
|
$
|
542
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,632
|
|
|
$
|
644
|
|
|
24.5
|
%
|
|
$
|
1,988
|
|
|
1,422.1
|
|
$
|
1.40
|
|
|
Diluted
earnings per common share may not foot due to
rounding.
|
KEURIG DR PEPPER
INC.
|
RECONCILIATION OF
CERTAIN REPORTED ITEMS TO CERTAIN NON-GAAP ADJUSTED
ITEMS
|
For the Year Ended
December 31, 2019
|
(Unaudited, in
millions, except per share data)
|
|
|
Cost of
sales
|
|
Gross
profit
|
|
Gross
margin
|
|
Selling, general
and administrative expenses
|
|
Other operating
expense (income), net
|
|
Income from
operations
|
|
Operating
margin
|
Reported
|
$
|
4,778
|
|
|
$
|
6,342
|
|
|
57.0
|
%
|
|
$
|
3,962
|
|
|
$
|
2
|
|
|
$
|
2,378
|
|
|
21.4
|
%
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
35
|
|
|
(35)
|
|
|
|
|
10
|
|
|
—
|
|
|
(45)
|
|
|
|
Amortization of
intangibles
|
—
|
|
|
—
|
|
|
|
|
(126)
|
|
|
—
|
|
|
126
|
|
|
|
Stock
compensation
|
—
|
|
|
—
|
|
|
|
|
(24)
|
|
|
—
|
|
|
24
|
|
|
|
Restructuring and
integration costs
|
(1)
|
|
|
1
|
|
|
|
|
(216)
|
|
|
(25)
|
|
|
242
|
|
|
|
Productivity
|
(15)
|
|
|
15
|
|
|
|
|
(60)
|
|
|
(22)
|
|
|
97
|
|
|
|
Transaction
costs
|
—
|
|
|
—
|
|
|
|
|
(9)
|
|
|
—
|
|
|
9
|
|
|
|
Nonroutine legal
matters
|
—
|
|
|
—
|
|
|
|
|
(48)
|
|
|
—
|
|
|
48
|
|
|
|
Inventory
step-up
|
(3)
|
|
|
3
|
|
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
|
Malware
incident
|
(2)
|
|
|
2
|
|
|
|
|
(6)
|
|
|
—
|
|
|
8
|
|
|
|
Adjusted
GAAP
|
$
|
4,792
|
|
|
$
|
6,328
|
|
|
56.9
|
%
|
|
$
|
3,483
|
|
|
$
|
(45)
|
|
|
$
|
2,890
|
|
|
26.0
|
%
|
|
Interest
expense
|
|
Loss on early
extinguishment of debt
|
|
Income before
provision for income taxes
|
|
Provision for
income taxes
|
|
Effective tax
rate
|
|
Net income
attributable to KDP
|
|
Weighted Average
Diluted shares
|
|
Diluted earnings
per share
|
Reported
|
$
|
654
|
|
|
$
|
11
|
|
|
$
|
1,694
|
|
|
$
|
440
|
|
|
26.0
|
%
|
|
$
|
1,254
|
|
|
1,419.1
|
|
$
|
0.88
|
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
(47)
|
|
|
—
|
|
|
2
|
|
|
(1)
|
|
|
|
|
3
|
|
|
|
|
—
|
|
Amortization of
intangibles
|
—
|
|
|
—
|
|
|
126
|
|
|
34
|
|
|
|
|
92
|
|
|
|
|
0.06
|
|
Amortization of
deferred financing costs
|
(13)
|
|
|
—
|
|
|
13
|
|
|
4
|
|
|
|
|
9
|
|
|
|
|
0.01
|
|
Amortization of fair
value debt adjustment
|
(26)
|
|
|
—
|
|
|
26
|
|
|
6
|
|
|
|
|
20
|
|
|
|
|
0.01
|
|
Stock
compensation
|
—
|
|
|
—
|
|
|
24
|
|
|
6
|
|
|
|
|
18
|
|
|
|
|
0.01
|
|
Restructuring and
integration costs
|
1
|
|
|
—
|
|
|
241
|
|
|
55
|
|
|
|
|
186
|
|
|
|
|
0.13
|
|
Productivity
|
—
|
|
|
—
|
|
|
97
|
|
|
24
|
|
|
|
|
73
|
|
|
|
|
0.05
|
|
Transaction
costs
|
(16)
|
|
|
—
|
|
|
25
|
|
|
7
|
|
|
|
|
18
|
|
|
|
|
0.01
|
|
Loss on early
extinguishment of debt
|
—
|
|
|
(11)
|
|
|
11
|
|
|
2
|
|
|
|
|
9
|
|
|
|
|
0.01
|
|
Nonroutine legal
matters
|
—
|
|
|
—
|
|
|
48
|
|
|
11
|
|
|
|
|
37
|
|
|
|
|
0.02
|
|
Inventory
step-up
|
—
|
|
|
—
|
|
|
3
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
—
|
|
Malware
incident
|
—
|
|
|
—
|
|
|
8
|
|
|
2
|
|
|
|
|
6
|
|
|
|
|
—
|
|
Adjusted
GAAP
|
$
|
553
|
|
|
$
|
—
|
|
|
$
|
2,318
|
|
|
$
|
591
|
|
|
25.5
|
%
|
|
$
|
1,727
|
|
|
1,419.1
|
|
$
|
1.22
|
|
|
Diluted
earnings per common share may not foot due to
rounding.
|
KEURIG DR PEPPER
INC.
|
RECONCILIATION OF
SEGMENT ITEMS TO CERTAIN NON-GAAP ADJUSTED SEGMENT
ITEMS
|
(Unaudited)
|
|
(in
millions)
|
Reported
|
|
Items
Affecting
Comparability
|
|
Adjusted
GAAP
|
For the Three
Months Ended December 31, 2020
|
|
|
|
|
|
Income from
Operations
|
|
|
|
|
|
Coffee
Systems
|
$
|
386
|
|
|
$
|
45
|
|
|
$
|
431
|
|
Packaged
Beverages
|
165
|
|
|
80
|
|
|
245
|
|
Beverage
Concentrates
|
253
|
|
|
1
|
|
|
254
|
|
Latin America
Beverages
|
32
|
|
|
1
|
|
|
33
|
|
Unallocated corporate
costs
|
(136)
|
|
|
31
|
|
|
(105)
|
|
Total income from
operations
|
$
|
700
|
|
|
$
|
158
|
|
|
$
|
858
|
|
|
|
|
|
|
|
For the Three
Months Ended December 31, 2019
|
|
|
|
|
|
Income from
Operations
|
|
|
|
|
|
Coffee
Systems
|
$
|
329
|
|
|
$
|
41
|
|
|
$
|
370
|
|
Packaged
Beverages
|
226
|
|
|
6
|
|
|
232
|
|
Beverage
Concentrates
|
265
|
|
|
1
|
|
|
266
|
|
Latin America
Beverages
|
23
|
|
|
2
|
|
|
25
|
|
Unallocated corporate
costs
|
(130)
|
|
|
50
|
|
|
(80)
|
|
Total income from
operations
|
$
|
713
|
|
|
$
|
100
|
|
|
$
|
813
|
|
|
Numbers may not
foot due to rounding.
|
KEURIG DR PEPPER
INC.
|
RECONCILIATION OF
SEGMENT ITEMS TO CERTAIN NON-GAAP ADJUSTED SEGMENT
ITEMS
|
(Unaudited)
|
|
(in
millions)
|
Reported
|
|
Items
Affecting
Comparability
|
|
Adjusted
GAAP
|
For the year ended
December 31, 2020
|
|
|
|
|
|
Income from
Operations
|
|
|
|
|
|
Coffee
Systems
|
$
|
1,268
|
|
|
$
|
246
|
|
|
$
|
1,514
|
|
Packaged
Beverages
|
822
|
|
|
199
|
|
|
1,021
|
|
Beverage
Concentrates
|
932
|
|
|
6
|
|
|
938
|
|
Latin America
Beverages
|
105
|
|
|
3
|
|
|
108
|
|
Unallocated corporate
costs
|
(647)
|
|
|
257
|
|
|
(390)
|
|
Total income from
operations
|
$
|
2,480
|
|
|
$
|
711
|
|
|
$
|
3,191
|
|
|
|
|
|
|
|
For the year ended
December 31, 2019
|
|
|
|
|
|
Income from
Operations
|
|
|
|
|
|
Coffee
Systems
|
$
|
1,219
|
|
|
$
|
184
|
|
|
$
|
1,403
|
|
Packaged
Beverages
|
757
|
|
|
26
|
|
|
783
|
|
Beverage
Concentrates
|
955
|
|
|
2
|
|
|
957
|
|
Latin America
Beverages
|
85
|
|
|
(3)
|
|
|
82
|
|
Unallocated corporate
costs
|
(638)
|
|
|
303
|
|
|
(335)
|
|
Total income from
operations
|
$
|
2,378
|
|
|
$
|
512
|
|
|
$
|
2,890
|
|
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
|
$
|
1,325
|
|
Interest
expense
|
604
|
|
Provision for income
taxes
|
428
|
|
Loss on early
extinguishment of debt
|
4
|
|
Impairment of
investments and note receivable
|
102
|
|
Impairment of
intangible assets
|
67
|
|
Other (income)
expense, net
|
17
|
|
Depreciation
expense
|
362
|
|
Other
amortization
|
158
|
|
Amortization of
intangibles
|
133
|
|
EBITDA
|
$
|
3,200
|
|
Items affecting
comparability:
|
|
Restructuring and
integration expenses
|
$
|
199
|
|
Productivity
|
108
|
|
Nonroutine legal
matters
|
57
|
|
Stock
compensation
|
27
|
|
Mark to
market
|
(28)
|
|
COVID-19
|
128
|
|
Adjusted
EBITDA
|
$
|
3,691
|
|
|
|
|
December
31,
|
|
2020
|
Principal amounts
of:
|
|
Commercial paper
notes
|
$
|
—
|
|
Term loan
|
425
|
|
KDP
Revolver
|
—
|
|
Senior unsecured
notes
|
13,225
|
|
Total principal
amounts
|
13,650
|
|
Less: Cash and cash
equivalents
|
240
|
|
Total principal
amounts less cash and cash equivalents
|
$
|
13,410
|
|
|
|
December 31, 2020
Management Leverage Ratio
|
3.6
|
|
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 years ended December 31,
2020 and 2019, there were no certain items excluded for comparison
to prior year periods.
|
|
|
|
For the Year Ended
December 31,
|
(in
millions)
|
|
2020
|
|
2019
|
Net cash provided
by operating activities
|
|
$
|
2,456
|
|
|
$
|
2,474
|
|
Purchases of property,
plant and equipment
|
|
(461)
|
|
|
(330)
|
|
Proceeds from sales of
property, plant and equipment
|
|
203
|
|
|
247
|
|
Free Cash
Flow
|
|
$
|
2,198
|
|
|
$
|
2,391
|
|
RECONCILIATION OF
CERTAIN CURRENCY NEUTRAL ADJUSTED FINANCIAL RESULTS
|
(Unaudited)
|
|
Net sales, adjusted
income from operations and adjusted earnings per share, as adjusted
to currency neutral: These adjusted financial results are
calculated on a currency neutral basis by converting our
current-period local currency financial results using the
prior-period foreign currency exchange rates.
|
|
|
|
For the Three
Months Ended December 31, 2020
|
|
|
Coffee
|
|
Packaged
|
|
Beverage
|
|
Latin
America
|
|
|
Percent
change
|
|
Systems
|
|
Beverages
|
|
Concentrates
|
|
Beverages
|
|
Total
|
Net
sales
|
|
9.1
|
%
|
|
7.9
|
%
|
|
(5.8)
|
%
|
|
2.3
|
%
|
|
6.4
|
%
|
Impact of foreign
currency
|
|
(0.2)
|
%
|
|
—
|
%
|
|
—
|
%
|
|
6.0
|
%
|
|
0.2
|
%
|
Net sales, as
adjusted to currency neutral
|
|
8.9
|
%
|
|
7.9
|
%
|
|
(5.8)
|
%
|
|
8.3
|
%
|
|
6.6
|
%
|
|
|
|
For the Three
Months Ended December 31, 2020
|
|
|
Coffee
|
|
Packaged
|
|
Beverage
|
|
Latin
America
|
|
|
Percent
change
|
|
Systems
|
|
Beverages
|
|
Concentrates
|
|
Beverages
|
|
Total
|
Adjusted income
from operations
|
|
16.5
|
%
|
|
5.6
|
%
|
|
(4.5)
|
%
|
|
32.0
|
%
|
|
5.5
|
%
|
Impact of foreign
currency
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
4.0
|
%
|
|
0.2
|
%
|
Adjusted income
from operations, as adjusted to
currency neutral
|
|
16.5
|
%
|
|
5.6
|
%
|
|
(4.5)
|
%
|
|
36.0
|
%
|
|
5.7
|
%
|
|
|
|
For the Year Ended
December 31, 2020
|
|
|
Coffee
|
|
Packaged
|
|
Beverage
|
|
Latin
America
|
|
|
Percent
change
|
|
Systems
|
|
Beverages
|
|
Concentrates
|
|
Beverages
|
|
Total
|
Net
sales
|
|
4.7
|
%
|
|
8.5
|
%
|
|
(6.3)
|
%
|
|
(5.9)
|
%
|
|
4.5
|
%
|
Impact of foreign
currency
|
|
0.1
|
%
|
|
—
|
%
|
|
0.1
|
%
|
|
9.7
|
%
|
|
0.5
|
%
|
Net sales, as
adjusted to currency neutral
|
|
4.8
|
%
|
|
8.5
|
%
|
|
(6.2)
|
%
|
|
3.8
|
%
|
|
5.0
|
%
|
|
|
|
For the Year Ended
December 31, 2020
|
|
|
Coffee
|
|
Packaged
|
|
Beverage
|
|
Latin
America
|
|
|
Percent
change
|
|
Systems
|
|
Beverages
|
|
Concentrates
|
|
Beverages
|
|
Total
|
Adjusted income
from operations
|
|
7.9
|
%
|
|
30.4
|
%
|
|
(2.0)
|
%
|
|
31.7
|
%
|
|
10.4
|
%
|
Impact of foreign
currency
|
|
0.1
|
%
|
|
0.1
|
%
|
|
—
|
%
|
|
11.0
|
%
|
|
0.4
|
%
|
Adjusted income
from operations, as adjusted to
currency neutral
|
|
8.0
|
%
|
|
30.5
|
%
|
|
(2.0)
|
%
|
|
42.7
|
%
|
|
10.8
|
%
|
|
|
|
For the Three
Months
Ended December 31, 2020
|
|
For the Year
Ended
December 31, 2020
|
Adjusted diluted
earnings per share
|
|
$
|
0.39
|
|
|
$
|
1.40
|
|
Impact of foreign
currency
|
|
—
|
|
|
—
|
|
Adjusted diluted
earnings per share, as adjusted to currency neutral
|
|
$
|
0.39
|
|
|
$
|
1.40
|
|
The following table
sets forth our reconciliation of significant COVID-19-related
expenses. However, employee compensation expense and employee
protection costs, which impact our SG&A expenses and cost of
sales, are included as the COVID-19 item affecting comparability
and is excluded in our Adjusted financial measures. In addition,
reported amounts under U.S. GAAP also include additional costs, not
included as the COVID-19 item affecting comparability, as presented
in tables below.
|
|
|
|
|
|
|
|
|
|
|
|
|
Items Affecting
Comparability(1)
|
|
|
|
|
|
|
(in
millions)
|
Employee
Compensation
Expense(2)
|
|
Employee
Protection
Costs(3)
|
|
Allowances for
Expected Credit
Losses(4)
|
|
Inventory
Write-
Downs(5)
|
|
Total
|
For the Three
Months Ended
December 31, 2020
|
|
|
|
|
|
|
|
|
|
Coffee
Systems
|
$
|
1
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4
|
|
Packaged
Beverages
|
3
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
6
|
|
Beverage
Concentrates
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Latin America
Beverages
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
Unallocated corporate
costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
$
|
4
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended
December 31,
2020
|
|
|
|
|
|
|
|
|
|
Coffee
Systems
|
$
|
15
|
|
|
$
|
10
|
|
|
$
|
2
|
|
|
$
|
8
|
|
|
$
|
35
|
|
Packaged
Beverages
|
76
|
|
|
25
|
|
|
8
|
|
|
—
|
|
|
109
|
|
Beverage
Concentrates
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
Latin America
Beverages
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
Unallocated corporate
costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
$
|
91
|
|
|
$
|
37
|
|
|
$
|
14
|
|
|
$
|
8
|
|
|
$
|
150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Employee compensation
expense and employee protection costs are both included as the
COVID-19 items affecting comparability in the reconciliation of our
Adjusted Non-GAAP financial measures.
|
(2)
|
Primarily reflects
temporary incremental frontline incentive pay and the associated
taxes in order to maintain essential operations during the COVID-19
pandemic. Impacts both cost of sales and SG&A expenses. In
mid-September 2020, we discontinued the incremental frontline
incentive pay program.
|
(3)
|
Includes costs
associated with personal protective equipment, temperature scans,
cleaning and other sanitization services. Impacts both cost of
sales and SG&A expenses.
|
(4)
|
Allowances reflect
the expected impact of the economic uncertainty caused by COVID-19,
leveraging estimates of credit worthiness, default and recovery
rates for certain of our customers. Impacts SG&A
expenses.
|
(5)
|
Inventory write-downs
represent obsolescence charges, which impact cost of
sales.
|
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SOURCE Keurig Dr Pepper