Top-line Results Remain Strong, with
Double-Digit Growth Reported in three Business Segments in
Q1
Company also Reaffirms EPS Guidance for
2022
BURLINGTON, Mass. and FRISCO, Texas, April 28, 2022 /PRNewswire/ --
Keurig Dr Pepper Inc. (NASDAQ: KDP) today reported financial
results for the first quarter ended March
31, 2022 and raised its guidance for net sales growth in
2022 to the high-single-digit range, from the previous
mid-single-digit range. The Company also reaffirmed its guidance
for Adjusted EPS for the year.
|
Reported GAAP
Basis
|
Adjusted
Basis1
|
|
|
|
Q1
|
Q1
|
Net Sales
% vs Prior
Year
% vs 2020
|
$3.08 bn
6.1%
17.8%
|
$3.08 bn
6.1%
17.5%
|
Diluted EPS
% vs Prior Year
% vs 2020
|
$0.41
78.3%
272.7%
|
$0.33
0.0%
13.8%
|
Commenting on the announcement, Chairman and CEO Bob Gamgort stated, "We delivered another
quarter of strong revenue growth, reflecting the power of our brand
portfolio and the quality of our execution at retail. Margins were
impacted by accelerating inflation, which outpaced the timing of
pricing actions, and the previously discussed coffee supply chain
disruption. We made significant progress during the quarter on
increasing coffee production and rebuilding inventories, and we
implemented additional pricing actions across most categories.
Consequently, we now expect to deliver net sales growth in the
high-single-digit range and continue to expect to deliver Adjusted
EPS growth in the mid-single-digit range for the year."
First Quarter Consolidated Results
Net sales for the
first quarter of 2022 increased 6.1% to $3.08 billion, compared to $2.90 billion in the year- ago period, reflecting
exceptionally strong growth in Packaged Beverages, Beverage
Concentrates and Latin America Beverages, partially offset by an
expected decline in Coffee Systems. Driving the consolidated net
sales growth was favorable net price realization of 6.3%, slightly
offset by lower volume/mix of 0.2%. On a two-year basis, constant
currency net sales advanced 17.5% versus 2020.
KDP in-market performance in the Liquid Refreshment Beverages
(LRB) category remained strong in the quarter, with retail dollar
consumption2 advancing 9.9% and market share growth
registered in over 87% of the Company's cold beverage portfolio,
largely reflecting strength in CSDs3, coconut water and
seltzers, teas, apple juice and fruit drinks. This performance was
driven by Dr Pepper, Sunkist, Canada Dry, A&W and Squirt CSDs,
Vita Coco, Polar seltzers, Snapple,
and Mott's. On a two-year basis, KDP grew retail dollar consumption
by 21% and gained market share in 78% of its cold beverage
portfolio.
In coffee, retail dollar consumption of single-serve pods
manufactured by KDP in IRi tracked channels increased 3.6%, while
Coffee Systems net sales declined 4.3%, as production was
prioritized to rebuilding inventory following supply chain
disruption in late Q4 and early Q1. During the quarter, the Company
sequentially improved manufacturing output through a focused supply
chain recovery program. KDP manufactured share remained strong at
82.5%. Performance in away-from-home pods continued to improve
versus year-ago, but remained below pre-COVID levels, as return to
offices has lagged recovery in other sectors. On a two-year basis,
retail consumption of single-serve pods manufactured by KDP
increased 8.2% in IRi tracked channels.
GAAP operating income increased 51% to $966 million in the first quarter of 2022,
compared to $640 million in the
year-ago period. This performance reflected the strong net sales
growth and continued productivity, as well as a $38 million benefit from the Company's strategic
asset investment program, lower non-cash stock compensation expense
and legal fees. Partially offsetting these positive drivers were
the impacts of accelerating, broad-based inflation and significant
supply chain disruption across manufacturing, logistics, material
inputs and labor availability, leading to higher than anticipated
costs to meet continued strong consumer demand. Also impacting the
comparison was the favorable year-over-year impact of items
affecting comparability, including a $299
million gain on the Company's successful resolution of the
litigation with BodyArmor in the quarter.
Adjusted operating income in the quarter declined 1.2% to
$732 million. On a percent of net
sales basis, Adjusted operating income was 23.8% in the quarter,
compared to 25.5% in the year-ago period. On a two-year basis,
first quarter Adjusted operating income advanced 6.7% versus
2020.
GAAP net income in the first quarter of 2022 increased 80% to
$585 million, or $0.41 per diluted share, compared to GAAP net
income of $325 million, or
$0.23 per diluted share, in the
year-ago period. This performance was driven by the growth in
operating income, partially offset by a higher effective tax rate.
Also benefitting the performance was the favorable year-over-year
impact of items affecting comparability, including the after-tax
gain on the Company's successful resolution of litigation with
BodyArmor and costs associated with the early extinguishment of
debt.
Adjusted net income advanced 0.8% to $474
million in the first quarter of 2022. Adjusted diluted EPS
was $0.33, essentially in line with
the year-ago period and, on a two-year basis, Adjusted diluted EPS
in the quarter grew 13.8% versus 2020.
Operating cash flow increased to $663
million in the quarter, and free cash flow totaled
$632 million, primarily reflecting
the growth in earnings and ongoing effective working capital
management. This continued strong free cash flow performance
enabled KDP to reduce financial obligations by $350 million in the first quarter of 2022 and end
the period with $592 million of
unrestricted cash on hand. As a result, the Company's management
leverage ratio declined 0.1x, ending the first quarter at 2.8x.
1 Adjusted financial metrics presented in this
release are non-GAAP and on a constant currency basis. See
reconciliations of GAAP results to Adjusted results on a constant
currency basis in the accompanying tables.
2 Retail consumption data based on Keurig Dr Pepper's
custom IRi category definitions for the 13-week period ending
3/27/2022.
3 CSDs refer to "Carbonated Soft Drinks".
First Quarter Segment
Results
Coffee Systems
Net sales for the first quarter
of 2022 totaled $1.09 billion,
compared to $1.14 billion in the
year-ago period, a decline of 4.3%, primarily reflecting the impact
of supply chain challenges. Net price realization increased by
3.2%, which was offset by lower volume/mix of 7.5%. On a two-year
basis, constant currency net sales advanced 11.8% versus 2020.
The higher net price realization in the quarter was driven by
pricing actions taken late 2021 and in the first quarter of 2022,
combined with sequentially lower customer fines incurred due to
improving, but still somewhat challenged service levels.
The volume/mix decrease of 7.5% in the quarter reflected lower
pod and brewer shipment volume, both of which declined 5.2% versus
the year-ago period. The pod performance reflected the
prioritization of production to rebuild inventory and resulted in
first quarter shipments that trailed consumption. Also impacting
the pod performance was comparison to the very strong pod shipment
volume growth of 13.7% in the year-ago period. The brewer
performance largely reflected comparison to the exceptionally
strong brewer shipment growth of 61% in the year-ago period.
GAAP operating income declined 27% to $268 million in the first quarter of 2022,
compared to $368 million in the
year-ago period, largely reflecting the net sales decline and the
impacts of the accelerating, broad-based inflationary pressures and
supply chain challenges, including incremental costs associated
with rebuilding inventory. Partially offsetting these drivers were
continued productivity and lower marketing expense, as the Company
reduced demand generating marketing investment due to its focus on
increasing manufacturing output and rebuilding inventory levels.
Also impacting the comparison was the slightly favorable
year-over-year impact of items affecting comparability.
Adjusted operating income declined 24% to $319 million in the quarter and, on a percent of
net sales basis, was 29.2%, compared to 36.9% in the year-ago
period. This performance largely reflected the broad-based
inflationary environment and increased costs to rebuild
inventory.
Packaged Beverages
Net sales for the first
quarter of 2022 increased an exceptionally strong 13.2% to
$1.48 billion, compared to
$1.31 billion in the year-ago period,
reflecting higher net price realization of 8.3% and higher
volume/mix of 4.9%, due to continued strong in-market execution and
market share expansion across the portfolio. On a two-year basis,
constant currency net sales increased 21.4% versus 2020.
Leading the net sales performance were Canada Dry, Dr Pepper,
7UP, A&W, Sunkist and Squirt CSDs, Mott's, and Snapple, as well
as growth in CORE Hydration, Polar seltzers, Hawaiian Punch and
Vita Coco.
GAAP operating income increased 172% in the first quarter of
2022 to $486 million, compared to
$179 million in the year-ago period,
reflecting the strong net sales growth, the aforementioned
$38 million benefit from the
Company's strategic asset investment program, continued
productivity and the favorable year-over-year impact of items
affecting comparability, including the gain that benefitted the
segment on the successful resolution of litigation with BodyArmor.
Partially offsetting these favorable drivers were the unfavorable
impacts of broad-based inflation across the business and supply
chain challenges that drove higher than anticipated costs to meet
continued strong consumer demand.
Adjusted operating income increased 16.9% to $235 million and, on a percent of net sales
basis, Adjusted operating income in the first quarter of 2022 was
15.9% in the quarter, compared to 15.4% in the year-ago period.
Beverage Concentrates
Net sales for the first
quarter of 2022 increased 9.5% to $359
million, compared to $328
million in the year-ago period reflecting higher net price
realization of 7.6% and favorable volume/mix of 1.9%. The
volume/mix performance primarily reflected higher fountain
foodservice shipments, driven by increased consumer mobility in the
restaurant and hospitality channels. On a two-year basis, constant
currency net sales advanced 16.7% versus 2020.
Total shipment volume versus year-ago increased 1.9% in the
quarter, as increases in Dr Pepper and Sunkist were partially
offset by declines in Crush. Bottler case sales volume increased
2.2% in the quarter compared to the year-ago period.
GAAP operating income in the first quarter of 2022 increased
2.5% to $244 million, compared to
$238 million in the year-ago period,
reflecting the benefit of the higher net sales, partially offset by
the impacts of the broad-based inflationary environment, a
significant increase in marketing investment and the unfavorable
year-over-year impact of items affecting comparability.
Adjusted operating income increased 3.3% to $247 million in the quarter and, on a percent of
net sales basis, adjusted operating income was 68.8%, compared to
72.9%, reflecting the significant increase in marketing investment
and the broad-based inflationary environment.
Latin America Beverages
Net sales for the first
quarter of 2022 increased 16.8% to $146
million, compared to net sales of $125 million in the year-ago period and, on a
constant currency basis, net sales increased 17.6%. This
performance was driven by higher net price realization of 9.6% and
increased volume/mix of 8.0%. Leading the strong net sales growth
in the quarter were Peñafiel, Clamato, Mott's and Squirt. On a
two-year basis, constant currency net sales increased 26.5% versus
2020.
GAAP operating income in the first quarter of 2022 increased
13.6% to $25 million, compared to
$22 million in the year-ago period,
reflecting the strong growth in net sales, continued productivity
and the slightly favorable year-over-year impact of items affecting
comparability. These drivers were partially offset by the
broad-based inflationary environment and higher marketing
investment.
Adjusted operating income increased 13.0% to $26 million in the quarter. On a percent of net
sales basis, Adjusted operating income was 17.7%, compared to 18.4%
in the year-ago period, reflecting broad-based inflation and higher
marketing investment.
KDP 2022 Guidance
KDP raised its guidance for constant
currency net sales growth in 2022 to the high-single-digit range
and reaffirmed its guidance for Adjusted diluted EPS growth in 2022
in the mid-single-digit range. The Company continues to expect EPS
performance versus 2021 to strengthen throughout the year, with
Adjusted diluted EPS growth reaching the high-single-digit range in
the second half of 2022, in line with the Company's long-term
algorithm.
Investor Contacts:
Steve
Alexander
T: 972-673-6769 / steve.alexander@kdrp.com
Media Contact:
Katie
Gilroy
T: 781-418-3345 / katie.gilroy@kdrp.com
About Keurig Dr Pepper
Keurig Dr Pepper (KDP) is a leading beverage company in
North America, with annual revenue
approaching $13 billion and
approximately 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.
Forward-looking statements by their nature address matters that
are, to different degrees, uncertain. These statements are based on
the current expectations of our management, are not predictions of
actual performance, and actual results may differ materially.
Forward-looking statements are subject to a number of risks and
uncertainties, including the factors disclosed in our Annual Report
on Form 10-K and subsequent filings with the SEC. We are under no
obligation to update, modify or withdraw any forward-looking
statements, except as required by applicable law.
NON-GAAP FINANCIAL
MEASURES
This release includes certain non-GAAP financial measures
including Adjusted operating income, Adjusted net income, Adjusted
diluted EPS, free cash flow and financial measures presented on a
constant currency basis, which differ from results using U.S.
Generally Accepted Accounting Principles (GAAP). These non-GAAP
financial measures should be considered as supplements to the GAAP
reported measures, should not be considered replacements for, or
superior to, the GAAP measures and may not be comparable to
similarly named measures used by other companies. Non-GAAP
financial measures typically exclude certain charges, including
one-time costs that are not expected to occur routinely in future
periods. The Company uses non-GAAP financial measures internally to
focus management on performance excluding these special charges to
gauge our business operating performance. Management believes this
information is helpful to investors because it increases
transparency and assists investors in understanding the underlying
performance of the Company and in the analysis of ongoing operating
trends. Additionally, management believes that non-GAAP financial
measures are frequently used by analysts and investors in their
evaluation of companies, and their continued inclusion provides
consistency in financial reporting and enables analysts and
investors to perform meaningful comparisons of past, present and
future operating results. The most directly comparable GAAP
financial measures and reconciliations to non-GAAP financial
measures are set forth in the appendix to this release and included
in the Company's filings with the SEC.
To the extent that the Company provides guidance, it does so
only on a non-GAAP basis and does not provide reconciliations of
such forward-looking non-GAAP measures to GAAP due to the inability
to predict the amount and timing of impacts outside of the
Company's control on certain items, such as non-cash gains or
losses resulting from mark-to-market adjustments of derivative
instruments, among others.
KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
|
|
|
|
First
Quarter
|
(in millions,
except per share data)
|
|
2022
|
|
2021
|
Net
sales
|
|
$
3,078
|
|
$
2,902
|
Cost of
sales
|
|
1,428
|
|
1,302
|
Gross profit
|
|
1,650
|
|
1,600
|
Selling, general and
administrative expenses
|
|
1,018
|
|
961
|
Gain on litigation
settlement
|
|
(299)
|
|
—
|
Other operating income,
net
|
|
(35)
|
|
(1)
|
Income from operations
|
|
966
|
|
640
|
Interest
expense
|
|
188
|
|
140
|
Loss on early
extinguishment of debt
|
|
48
|
|
105
|
Gain on sale of equity
method investment
|
|
(50)
|
|
—
|
Impairment of
investments and note receivable
|
|
6
|
|
—
|
Other expense (income),
net
|
|
9
|
|
(3)
|
Income before provision for income taxes
|
|
765
|
|
398
|
Provision for income
taxes
|
|
180
|
|
73
|
Net income including non-controlling interest
|
|
585
|
|
325
|
Less: Net loss attributable to non-controlling
interest
|
|
—
|
|
—
|
Net income attributable to KDP
|
|
$
585
|
|
$
325
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
Basic
|
|
$
0.41
|
|
$
0.23
|
Diluted
|
|
0.41
|
|
0.23
|
Weighted average
common shares outstanding:
|
|
|
|
|
Basic
|
|
1,418.2
|
|
1,409.2
|
Diluted
|
|
1,429.7
|
|
1,425.6
|
KEURIG DR
PEPPER INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
|
|
|
March 31,
|
|
December 31,
|
(in millions, except share and per share
data)
|
2022
|
|
2021
|
Assets
|
Current
assets:
|
|
|
|
Cash and cash equivalents
|
$
592
|
|
$
567
|
Restricted cash and cash equivalents
|
2
|
|
1
|
Trade accounts receivable, net
|
1,214
|
|
1,148
|
Inventories
|
1,045
|
|
894
|
Prepaid expenses and other current assets
|
637
|
|
447
|
Total current
assets
|
3,490
|
|
3,057
|
Property, plant and
equipment, net
|
2,436
|
|
2,494
|
Investments in
unconsolidated affiliates
|
29
|
|
30
|
Goodwill
|
20,243
|
|
20,182
|
Other intangible
assets, net
|
23,889
|
|
23,856
|
Other non-current
assets
|
1,119
|
|
937
|
Deferred tax
assets
|
38
|
|
42
|
Total
assets
|
$
51,244
|
|
$
50,598
|
Liabilities and Stockholders'
Equity
|
Current
liabilities:
|
|
|
|
Accounts payable
|
$
4,510
|
|
$
4,316
|
Accrued expenses
|
1,028
|
|
1,110
|
Structured payables
|
143
|
|
142
|
Short-term borrowings and current portion of long-term
obligations
|
—
|
|
304
|
Other current liabilities
|
767
|
|
613
|
Total current
liabilities
|
6,448
|
|
6,485
|
Long-term
obligations
|
11,584
|
|
11,578
|
Deferred tax
liabilities
|
6,054
|
|
5,986
|
Other non-current
liabilities
|
1,647
|
|
1,577
|
Total
liabilities
|
25,733
|
|
25,626
|
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,
1,418,462,239 and 1,418,119,197 shares issued
and outstanding as of March 31,
2022 and December 31, 2021,
respectively
|
14
|
|
14
|
Additional paid-in capital
|
21,764
|
|
21,785
|
Retained earnings
|
3,518
|
|
3,199
|
Accumulated other comprehensive income (loss)
|
215
|
|
(26)
|
Total stockholders' equity
|
25,511
|
|
24,972
|
Non-controlling interest
|
—
|
|
—
|
Total equity
|
25,511
|
|
24,972
|
Total liabilities and
stockholders' equity
|
$
51,244
|
|
$
50,598
|
KEURIG DR
PEPPER INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
|
First Quarter
|
(in millions)
|
2022
|
|
2021
|
Operating activities:
|
|
|
|
Net income attributable
to KDP
|
$
585
|
|
$
325
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation expense
|
106
|
|
102
|
Amortization of intangibles
|
34
|
|
33
|
Other amortization expense
|
42
|
|
40
|
Provision for sales returns
|
12
|
|
19
|
Deferred income taxes
|
8
|
|
11
|
Employee stock-based compensation (benefit)
expense
|
(15)
|
|
25
|
Loss on early extinguishment of debt
|
48
|
|
105
|
Gain on sale of equity method investment
|
(50)
|
|
—
|
Gain on disposal of property, plant and equipment
|
(38)
|
|
(1)
|
Unrealized gain on foreign currency
|
(11)
|
|
(10)
|
Unrealized gain on derivatives
|
—
|
|
(41)
|
Equity in losses of unconsolidated affiliates
|
3
|
|
—
|
Impairment on investments and note receivable of
unconsolidated affiliates
|
6
|
|
—
|
Other, net
|
13
|
|
15
|
Changes in assets and liabilities:
|
|
|
|
Trade accounts
receivable
|
(73)
|
|
(37)
|
Inventories
|
(147)
|
|
(77)
|
Income taxes receivable and
payables, net
|
135
|
|
25
|
Other current and non-current
assets
|
(284)
|
|
(295)
|
Accounts payable and accrued
expenses
|
151
|
|
121
|
Other current and non-current
liabilities
|
138
|
|
186
|
Net change in operating assets
and liabilities
|
(80)
|
|
(77)
|
Net cash provided by
operating activities
|
663
|
|
546
|
Investing activities:
|
|
|
|
Proceeds from sale of
investment in unconsolidated affiliates
|
50
|
|
—
|
Purchases of property,
plant and equipment
|
(109)
|
|
(95)
|
Proceeds from sales of
property, plant and equipment
|
78
|
|
7
|
Purchases of
intangibles
|
(10)
|
|
(12)
|
Issuance of related
party note receivable
|
(6)
|
|
—
|
Investments in
unconsolidated affiliates
|
(3)
|
|
—
|
Other, net
|
3
|
|
1
|
Net cash provided by
(used in) investing activities
|
3
|
|
(99)
|
Financing activities:
|
|
|
|
Proceeds from issuance
of Notes
|
—
|
|
2,150
|
Repayments of
Notes
|
(201)
|
|
(1,845)
|
Proceeds from issuance
of commercial paper
|
—
|
|
120
|
Repayments of
commercial paper
|
(149)
|
|
(120)
|
Repayments of 2019 KDP
Term Loan
|
—
|
|
(425)
|
Proceeds from
structured payables
|
38
|
|
35
|
Repayments of
structured payables
|
(37)
|
|
(41)
|
Cash dividends
paid
|
(265)
|
|
(192)
|
Proceeds from issuance
of common stock
|
—
|
|
140
|
Tax withholdings
related to net share settlements
|
(5)
|
|
(125)
|
Payments on finance
leases
|
(20)
|
|
(15)
|
Other, net
|
(5)
|
|
(37)
|
Net cash used in
financing activities
|
(644)
|
|
(355)
|
Cash, cash equivalents, and restricted cash and cash
equivalents:
|
|
|
|
Net change from
operating, investing and financing activities
|
22
|
|
92
|
Effect of exchange rate
changes
|
4
|
|
2
|
Beginning
balance
|
568
|
|
255
|
Ending
balance
|
$
594
|
|
$
349
|
KEURIG DR
PEPPER INC.
RECONCILIATION OF
SEGMENT INFORMATION
(UNAUDITED)
|
|
|
|
First Quarter
|
(in millions)
|
|
2022
|
|
2021
|
Net Sales
|
|
|
|
|
Coffee Systems
|
|
$
1,093
|
|
$
1,142
|
Packaged Beverages
|
|
1,480
|
|
1,307
|
Beverage Concentrates
|
|
359
|
|
328
|
Latin America Beverages
|
|
146
|
|
125
|
Total net sales
|
|
$
3,078
|
|
$
2,902
|
|
|
|
|
|
Income from Operations
|
|
|
|
|
Coffee Systems
|
|
$
268
|
|
$
368
|
Packaged Beverages
|
|
486
|
|
179
|
Beverage Concentrates
|
|
244
|
|
238
|
Latin America Beverages
|
|
25
|
|
22
|
Unallocated corporate costs
|
|
(57)
|
|
(167)
|
Total income from operations
|
|
$
966
|
|
$
640
|
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
and do not have an offsetting risk reflected within the financial
results, as well as the unrealized mark-to-market impact of our
Vita Coco investment; (ii) the
amortization associated with definite-lived intangible assets;
(iii) the amortization of the deferred financing costs associated
with the DPS Merger; (iv) the amortization of the fair value
adjustment of the senior unsecured notes obtained as a result of
the DPS Merger; (v) stock compensation expense and the associated
windfall tax benefit attributable to the matching awards made to
employees who made an initial investment in KDP; (vi) non-cash
changes in deferred tax liabilities related to goodwill and other
intangible assets as a result of tax rate or apportionment changes;
and (vii) other certain items that are excluded for comparison
purposes to prior year periods.
For the first quarter of 2022, the other certain items excluded
for comparison purposes include (i) restructuring and integration
expenses related to significant business combinations; (ii)
productivity expenses; (iii) costs related to significant
non-routine legal matters; (iv) the loss on early extinguishment of
debt related to the redemption of debt; (v) incremental costs to
our operations related to risks associated with the COVID-19
pandemic; (vi) the gain on the sale of our investment in BodyArmor;
(vii) the gain on the settlement of our prior litigation with
BodyArmor, excluding recoveries of previously incurred litigation
expenses which were included in our adjusted results and (viii)
losses recognized with respect to our equity method investment in
Bedford as a result of funding our
share of their wind-down costs.
For the first quarter of 2021, the other certain items excluded
for comparison purposes include (i) restructuring and integration
expenses related to significant business combinations; (ii)
productivity expenses; (iii) costs related to significant
non-routine legal matters; (iv) the loss on early extinguishment of
debt related to the redemption of debt; (v) incremental costs to
our operations related to risks associated with the COVID-19
pandemic; and (vi) gains from insurance recoveries related to the
February 2019 organized malware
attack on our business operation networks in the Coffee Systems
segment.
Costs related to significant non-routine legal matters relate to
the antitrust litigation. 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.
Constant currency adjusted: Defined as certain financial
statement captions and metrics adjusted for certain items affecting
comparability, calculated on a constant currency basis by
converting our current period local currency financial results
using the prior period foreign currency exchange rates.
For the first quarter of 2022 and 2021, the supplemental
financial data set forth below includes reconciliations of adjusted
and constant currency adjusted financial measures to the applicable
financial measure presented in the unaudited condensed consolidated
financial statements for the same period.
KEURIG DR
PEPPER INC.
RECONCILIATION OF
CERTAIN NON-GAAP INFORMATION
(UNAUDITED)
|
|
|
Cost of sales
|
|
Gross profit
|
|
Gross
margin
|
|
Selling, general
and administrative
expenses
|
|
Gain on
litigation
settlement
|
|
Other operating
(expense)
income, net
|
|
Income from
operations
|
|
Operating
margin
|
For the First Quarter of 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$
1,428
|
|
$
1,650
|
|
53.6 %
|
|
$
1,018
|
|
$
(299)
|
|
$
(35)
|
|
$
966
|
|
31.4 %
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to market
|
59
|
|
(59)
|
|
|
|
26
|
|
—
|
|
—
|
|
(85)
|
|
|
Amortization of intangibles
|
—
|
|
—
|
|
|
|
(34)
|
|
—
|
|
—
|
|
34
|
|
|
Stock compensation
|
—
|
|
—
|
|
|
|
7
|
|
—
|
|
—
|
|
(7)
|
|
|
Restructuring and integration costs
|
—
|
|
—
|
|
|
|
(33)
|
|
—
|
|
(3)
|
|
36
|
|
|
Productivity
|
(28)
|
|
28
|
|
|
|
(22)
|
|
—
|
|
—
|
|
50
|
|
|
Non-routine legal matters
|
—
|
|
—
|
|
|
|
(4)
|
|
—
|
|
—
|
|
4
|
|
|
COVID-19
|
(4)
|
|
4
|
|
|
|
(1)
|
|
—
|
|
—
|
|
5
|
|
|
Gain on litigation
|
—
|
|
—
|
|
|
|
—
|
|
271
|
|
—
|
|
(271)
|
|
|
Adjusted
|
$
1,455
|
|
$
1,623
|
|
52.7 %
|
|
$
957
|
|
$
(28)
|
|
$
(38)
|
|
$
732
|
|
23.8 %
|
Impact of foreign
currency
|
|
|
|
|
— %
|
|
|
|
|
|
|
|
|
|
— %
|
Constant currency
adjusted
|
|
|
|
|
52.7 %
|
|
|
|
|
|
|
|
|
|
23.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the First Quarter of 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$
1,302
|
|
$
1,600
|
|
55.1 %
|
|
$
961
|
|
$
—
|
|
$
(1)
|
|
$
640
|
|
22.1 %
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to market
|
9
|
|
(9)
|
|
|
|
29
|
|
—
|
|
—
|
|
(38)
|
|
|
Amortization of intangibles
|
—
|
|
—
|
|
|
|
(33)
|
|
—
|
|
—
|
|
33
|
|
|
Stock compensation
|
—
|
|
—
|
|
|
|
(6)
|
|
—
|
|
—
|
|
6
|
|
|
Restructuring and integration costs
|
—
|
|
—
|
|
|
|
(43)
|
|
—
|
|
—
|
|
43
|
|
|
Productivity
|
(8)
|
|
8
|
|
|
|
(25)
|
|
—
|
|
—
|
|
33
|
|
|
Non-routine legal matters
|
—
|
|
—
|
|
|
|
(10)
|
|
—
|
|
—
|
|
10
|
|
|
COVID-19
|
(12)
|
|
12
|
|
|
|
(4)
|
|
—
|
|
—
|
|
16
|
|
|
Malware incident
|
—
|
|
—
|
|
|
|
2
|
|
—
|
|
—
|
|
(2)
|
|
|
Adjusted
|
$
1,291
|
|
$
1,611
|
|
55.5 %
|
|
$
871
|
|
$
—
|
|
$
(1)
|
|
$
741
|
|
25.5 %
|
|
Refer to page
A-8 for reconciliations of reported net sales to
constant currency net sales and adjusted income from operations to
constant currency adjusted income from operations.
|
KEURIG DR
PEPPER INC.
RECONCILIATION OF
CERTAIN NON-GAAP INFORMATION
(UNAUDITED)
|
|
|
Interest
expense
|
|
Loss on early
extinguishment
of debt
|
|
Gain on sale
of equity-
method
investment
|
|
Impairment of
investments
and note
receivable
|
|
Other
(income)
expense,
net
|
|
Income
before
provision for
income taxes
|
|
Provision
for
income
taxes
|
|
Effective
tax rate
|
|
Net
income
attributable
to KDP
|
|
Diluted
earnings
per
share
|
For the First
Quarter of 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$ 188
|
|
$
48
|
|
$
(50)
|
|
$
6
|
|
$
9
|
|
$
765
|
|
$
180
|
|
23.5
%
|
|
$
585
|
|
$
0.41
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to market
|
(71)
|
|
—
|
|
—
|
|
—
|
|
(3)
|
|
(11)
|
|
(2)
|
|
|
|
(9)
|
|
(0.01)
|
Amortization of intangibles
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
34
|
|
9
|
|
|
|
25
|
|
0.02
|
Amortization of deferred financing costs
|
(1)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
|
|
1
|
|
—
|
Amortization of fair value debt adjustment
|
(5)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
5
|
|
1
|
|
|
|
4
|
|
—
|
Stock compensation
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(7)
|
|
(1)
|
|
|
|
(6)
|
|
—
|
Restructuring and integration costs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
36
|
|
9
|
|
|
|
27
|
|
0.02
|
Productivity
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
50
|
|
12
|
|
|
|
38
|
|
0.03
|
Impairment of investment
|
—
|
|
—
|
|
—
|
|
(6)
|
|
|
|
6
|
|
—
|
|
|
|
6
|
|
—
|
Loss on early extinguishment of debt
|
—
|
|
(48)
|
|
—
|
|
—
|
|
—
|
|
48
|
|
11
|
|
|
|
37
|
|
0.03
|
Non-routine legal matters
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
4
|
|
1
|
|
|
|
3
|
|
—
|
COVID-19
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
5
|
|
1
|
|
|
|
4
|
|
—
|
Gain on litigation
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(271)
|
|
(68)
|
|
|
|
(203)
|
|
(0.14)
|
Gain on sale of equity-method investment
|
—
|
|
—
|
|
50
|
|
—
|
|
—
|
|
(50)
|
|
(12)
|
|
|
|
(38)
|
|
(0.03)
|
Adjusted
|
$ 111
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
6
|
|
$
615
|
|
$
141
|
|
22.9 %
|
|
$
474
|
|
$
0.33
|
Impact of foreign
currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— %
|
|
|
|
|
Constant currency
adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the First
Quarter of 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$ 140
|
|
$
105
|
|
$
—
|
|
$
—
|
|
$
(3)
|
|
$
398
|
|
$
73
|
|
18.3 %
|
|
$
325
|
|
$
0.23
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to market
|
8
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(46)
|
|
(11)
|
|
|
|
(35)
|
|
(0.02)
|
Amortization of intangibles
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
33
|
|
8
|
|
|
|
25
|
|
0.02
|
Amortization of deferred financing costs
|
(3)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3
|
|
—
|
|
|
|
3
|
|
—
|
Amortization of fair value of debt adjustment
|
(6)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
6
|
|
2
|
|
|
|
4
|
|
—
|
Stock compensation
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
6
|
|
12
|
|
|
|
(6)
|
|
—
|
Restructuring and integration costs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
43
|
|
11
|
|
|
|
32
|
|
0.02
|
Productivity
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
33
|
|
8
|
|
|
|
25
|
|
0.02
|
Loss on early extinguishment of debt
|
—
|
|
(105)
|
|
—
|
|
—
|
|
—
|
|
105
|
|
25
|
|
|
|
80
|
|
0.06
|
Non-routine legal matters
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
10
|
|
2
|
|
|
|
8
|
|
0.01
|
COVID-19
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
16
|
|
4
|
|
|
|
12
|
|
0.01
|
Malware incident
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(2)
|
|
—
|
|
|
|
(2)
|
|
—
|
Adjusted
|
$ 139
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
(3)
|
|
$
605
|
|
$
134
|
|
22.1 %
|
|
$
471
|
|
$
0.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change -
adjusted
|
(20.1) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.6 %
|
|
— %
|
Impact of foreign
currency
|
— %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.2 %
|
|
— %
|
Change - Constant
currency adjusted
|
(20.1) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.8 %
|
|
— %
|
KEURIG DR
PEPPER INC.
RECONCILIATION OF
CERTAIN FINANCIAL MEASURES BY SEGMENT TO CONSTANT CURRENCY
ADJUSTED FINANCIAL MEASURES BY SEGMENT
(UNAUDITED)
|
|
(in millions)
|
Reported
|
|
Items Affecting
Comparability
|
|
Adjusted
|
For the first quarter of 2022:
|
|
|
|
|
|
Income from operations
|
|
|
|
|
|
Coffee Systems
|
$
268
|
|
$
51
|
|
$
319
|
Packaged Beverages
|
486
|
|
(251)
|
|
235
|
Beverage Concentrates
|
244
|
|
3
|
|
247
|
Latin America Beverages
|
25
|
|
1
|
|
26
|
Unallocated corporate costs
|
(57)
|
|
(38)
|
|
(95)
|
Total income from operations
|
$
966
|
|
$
(234)
|
|
$
732
|
|
|
|
|
|
|
For the first quarter of 2021:
|
|
|
|
|
|
Income from operations
|
|
|
|
|
|
Coffee Systems
|
$
368
|
|
$
53
|
|
$
421
|
Packaged Beverages
|
179
|
|
22
|
|
201
|
Beverage Concentrates
|
238
|
|
1
|
|
239
|
Latin America Beverages
|
22
|
|
1
|
|
23
|
Unallocated corporate costs
|
(167)
|
|
24
|
|
(143)
|
Total income from operations
|
$
640
|
|
$
101
|
|
$
741
|
|
|
Reported
|
|
Impact of Foreign
Currency
|
|
Constant Currency
|
For the first quarter of 2022:
|
|
|
|
|
|
Net sales
|
|
|
|
|
|
Coffee Systems
|
(4.3) %
|
|
— %
|
|
(4.3) %
|
Packaged Beverages
|
13.2
|
|
—
|
|
13.2
|
Beverage Concentrates
|
9.5
|
|
—
|
|
9.5
|
Latin America Beverages
|
16.8
|
|
0.8
|
|
17.6
|
Total net sales
|
6.1
|
|
—
|
|
6.1
|
|
|
|
|
|
|
|
Adjusted
|
|
Impact of Foreign
Currency
|
|
Constant Currency
Adjusted
|
For the first quarter of 2022:
|
|
|
|
|
|
Income from operations
|
|
|
|
|
|
Coffee Systems
|
(24.2) %
|
|
— %
|
|
(24.2) %
|
Packaged Beverages
|
16.9
|
|
—
|
|
16.9
|
Beverage Concentrates
|
3.3
|
|
—
|
|
3.3
|
Latin America Beverages
|
13.0
|
|
—
|
|
13.0
|
Total income from operations
|
(1.2)
|
|
—
|
|
(1.2)
|
|
|
|
|
|
|
|
|
Reported
|
|
Items Affecting
Comparability
|
|
Adjusted
|
|
Impact of Foreign
Currency
|
|
Constant Currency
Adjusted
|
For the first quarter of 2022:
|
|
|
|
|
|
|
|
|
|
|
Operating margin
|
|
|
|
|
|
|
|
|
|
|
Coffee Systems
|
|
24.5 %
|
|
4.7 %
|
|
29.2 %
|
|
— %
|
|
29.2 %
|
Packaged Beverages
|
|
32.8
|
|
(16.9)
|
|
15.9
|
|
—
|
|
15.9
|
Beverage Concentrates
|
|
68.0
|
|
0.8
|
|
68.8
|
|
—
|
|
68.8
|
Latin America Beverages
|
|
17.1
|
|
0.7
|
|
17.8
|
|
(0.1)
|
|
17.7
|
Total operating margin
|
|
31.4
|
|
(7.6)
|
|
23.8
|
|
—
|
|
23.8
|
KEURIG DR
PEPPER INC.
RECONCILIATION OF
ADJUSTED EBITDA AND MANAGEMENT LEVERAGE
RATIO
(UNAUDITED)
|
|
|
(in millions, except for
ratio)
|
|
ADJUSTED EBITDA RECONCILIATION - LAST TWELVE
MONTHS
|
|
Net income attributable to KDP
|
$
2,406
|
Interest expense
|
548
|
Provision for income taxes
|
760
|
Other (income) expense, net
|
10
|
Depreciation expense
|
414
|
Other amortization
|
166
|
Amortization of intangibles
|
135
|
EBITDA
|
$
4,439
|
Items affecting comparability:
|
|
Gain on sale of equity-method investment
|
$
(574)
|
Gain on litigation settlement
|
(271)
|
Loss on early extinguishment of debt
|
48
|
Impairment of investments and note receivable
|
23
|
Restructuring and integration expenses
|
192
|
Productivity
|
155
|
Non-routine legal matters
|
24
|
Stock compensation
|
5
|
COVID-19
|
26
|
Transaction costs
|
2
|
Mark to market
|
(104)
|
Adjusted EBITDA
|
$
3,965
|
|
|
|
March 31,
|
|
2022
|
Principal amounts of
senior unsecured notes
|
$
11,750
|
Less: Cash and cash
equivalents
|
592
|
Total principal amounts less cash and cash
equivalents
|
$
11,158
|
|
|
March 31, 2022 Management Leverage
Ratio
|
2.8
|
KEURIG DR
PEPPER INC.
RECONCILIATION OF
ADJUSTED EBITDA - LAST TWELVE
MONTHS
(UNAUDITED)
|
|
|
(in millions)
|
SECOND
QUARTER OF
2021
|
|
THIRD
QUARTER OF
2021
|
|
FOURTH
QUARTER OF
2021
|
|
FIRST
QUARTER OF
2022
|
|
LAST
TWELVE MONTHS
|
Net income attributable to KDP
|
$
448
|
|
$
530
|
|
$
843
|
|
$
585
|
|
$
2,406
|
Interest expense
|
125
|
|
116
|
|
119
|
|
188
|
|
548
|
Provision for income taxes
|
165
|
|
149
|
|
266
|
|
180
|
|
760
|
Other (income) expense, net
|
(4)
|
|
1
|
|
4
|
|
9
|
|
10
|
Depreciation expense
|
104
|
|
98
|
|
106
|
|
106
|
|
414
|
Other amortization
|
40
|
|
38
|
|
46
|
|
42
|
|
166
|
Amortization of intangibles
|
34
|
|
34
|
|
33
|
|
34
|
|
135
|
EBITDA
|
$
912
|
|
$
966
|
|
$
1,417
|
|
$
1,144
|
|
$
4,439
|
Items affecting comparability:
|
|
|
|
|
|
|
|
|
|
Gain on sale of equity-method investment
|
$
—
|
|
$
—
|
|
$
(524)
|
|
$
(50)
|
|
$
(574)
|
Gain on litigation settlement
|
—
|
|
—
|
|
—
|
|
(271)
|
|
(271)
|
Loss on early extinguishment of debt
|
—
|
|
—
|
|
—
|
|
48
|
|
48
|
Impairment on investments and note receivable
|
—
|
|
—
|
|
17
|
|
6
|
|
23
|
Restructuring and integration expenses
|
49
|
|
53
|
|
57
|
|
33
|
|
192
|
Productivity
|
32
|
|
40
|
|
40
|
|
43
|
|
155
|
Nonroutine legal matters
|
6
|
|
7
|
|
7
|
|
4
|
|
24
|
Stock compensation
|
5
|
|
3
|
|
4
|
|
(7)
|
|
5
|
COVID-19
|
11
|
|
4
|
|
6
|
|
5
|
|
26
|
Transaction costs
|
—
|
|
1
|
|
1
|
|
—
|
|
2
|
Malware incident
|
—
|
|
(1)
|
|
1
|
|
—
|
|
—
|
Mark to market
|
(38)
|
|
(9)
|
|
28
|
|
(85)
|
|
(104)
|
Adjusted EBITDA
|
$
977
|
|
$
1,064
|
|
$
1,054
|
|
$
870
|
|
$
3,965
|
KEURIG DR PEPPER INC.
RECONCILIATION
OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH
FLOW
(UNAUDITED)
Free cash flow is defined as net cash provided by operating
activities adjusted for purchases of property, plant and equipment,
proceeds from sales of property, plant and equipment, and certain
items excluded for comparison to prior year periods. For the first
quarter of 2022 and 2021, there were no certain items excluded for
comparison to prior year periods.
|
|
First Quarter
|
(in millions)
|
|
2022
|
|
2021
|
Net cash provided by operating
activities
|
|
$
663
|
|
$
546
|
Purchases of property, plant and equipment
|
|
(109)
|
|
(95)
|
Proceeds from sales of property, plant and
equipment
|
|
78
|
|
7
|
Free Cash Flow
|
|
$
632
|
|
$
458
|
KEURIG DR PEPPER INC.
RECONCILIATION
OF SIGNIFICANT COVID-19 RELATED
EXPENSES
(UNAUDITED)
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 are 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)
|
|
Total
|
For the first quarter of 2022:
|
|
|
|
|
|
Coffee Systems
|
$
1
|
|
$
2
|
|
$
3
|
Packaged Beverages
|
1
|
|
1
|
|
2
|
Beverage Concentrates
|
—
|
|
—
|
|
—
|
Latin America Beverages
|
—
|
|
—
|
|
—
|
Total
|
$
2
|
|
$
3
|
|
$
5
|
|
|
|
|
|
|
For the first quarter of 2021:
|
|
|
|
|
|
Coffee Systems
|
$
1
|
|
$
9
|
|
$
10
|
Packaged Beverages
|
3
|
|
2
|
|
5
|
Beverage Concentrates
|
—
|
|
—
|
|
—
|
Latin America Beverages
|
—
|
|
1
|
|
1
|
Total
|
$
4
|
|
$
12
|
|
$
16
|
|
|
|
|
|
|
|
|
(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 included
incremental benefits provided to frontline workers such as extended
sick leave, in order to maintain essential operations during the
COVID-19 pandemic.
|
(3)
|
Included costs
associated with personal protective equipment, temperature scans,
cleaning and other sanitization services. Impacts both cost of
sales and SG&A expenses.
|
RECONCILIATION OF CERTAIN ADJUSTED AND
CONSTANT CURRENCY ADJUSTED FINANCIAL RESULTS
FOR THE
FIRST QUARTER OF 2020
(Unaudited, in millions, except per
share data)
For the purposes of additional analysis, we have also included
certain non-GAAP financial measures for the first quarter of
2020.
For the first quarter of 2020, 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.
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; (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; and (vi) other certain items that are
excluded for comparison purposes to prior year periods.
For the first quarter of 2020, 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) not associated with
the DPS Merger; (iv) costs related to significant non-routine legal
matters; (v) the impact of the step-up of acquired inventory not
associated with the DPS Merger (vi) incremental costs to our
operations related to risks associated with the COVID-19 pandemic
and (vii) impairment recognized on equity method investment with
Bedford Systems, LLC.
|
|
Net
Sales
|
|
Income from
operations
|
|
Diluted earnings per
share(1)
|
Reported
|
|
$
2,613
|
|
$
466
|
|
$
0.11
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
Mark to market
|
|
—
|
|
58
|
|
0.04
|
Amortization of intangibles
|
|
—
|
|
33
|
|
0.02
|
Stock compensation
|
|
—
|
|
7
|
|
—
|
Restructuring and integration costs
|
|
—
|
|
52
|
|
0.03
|
Productivity
|
|
—
|
|
54
|
|
0.03
|
Impairment on investment
|
|
—
|
|
—
|
|
0.05
|
Nonroutine legal matters
|
|
—
|
|
9
|
|
—
|
COVID-19
|
|
—
|
|
5
|
|
—
|
Adjusted
|
|
$
2,613
|
|
$
684
|
|
$
0.29
|
|
|
(1)
|
Diluted earnings per
share may not foot due to rounding.
|
RECONCILIATION OF CERTAIN ADJUSTED AND
CONSTANT CURRENCY ADJUSTED FINANCIAL RESULTS
FOR THE
FIRST QUARTER OF 2020
(Unaudited, in millions, except per
share data)
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.
|
|
Growth
(%)
|
Net sales growth
compared to the first quarter of 2020
|
|
17.8 %
|
Impact of foreign
currency
|
|
(0.3)
|
Constant currency net
sales growth compared to the first quarter of 2020
|
|
17.5 %
|
|
|
|
Adjusted income from
operations growth compared to the first quarter of 2020
|
|
7.0 %
|
Impact of foreign
currency
|
|
(0.3) %
|
Constant currency
adjusted income from operations growth compared to the first
quarter of 2020
|
|
6.7 %
|
|
|
|
Adjusted diluted
earnings per share growth compared to the first quarter of
2020
|
|
13.8 %
|
Impact of foreign
currency
|
|
— %
|
Constant currency
adjusted diluted earnings per share growth compared to the first
quarter of 2020
|
|
13.8 %
|
|
|
|
Reported
|
|
Impact of
Foreign
Currency
|
|
Constant
Currency
|
For the first
quarter of 2022:
|
|
|
|
|
|
|
Net
sales
|
|
|
|
|
|
|
Coffee Systems
|
|
12.3 %
|
|
(0.5) %
|
|
11.8 %
|
Packaged Beverages
|
|
21.6
|
|
(0.2)
|
|
21.4
|
Beverage Concentrates
|
|
17.3
|
|
(0.6)
|
|
16.7
|
Latin America Beverages
|
|
24.8
|
|
1.7
|
|
26.5
|
Total net
sales
|
|
17.8
|
|
(0.3)
|
|
17.5
|
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SOURCE Keurig Dr Pepper Inc.