Net Sales Growth Accelerates, with all
Business Segments posting Strong Results
Company Reaffirms Adjusted EPS Guidance for
the Year
BURLINGTON, Mass. and FRISCO, Texas, July 28,
2022 /PRNewswire/ -- Keurig Dr Pepper Inc. (NASDAQ:
KDP) today reported strong results for the second quarter ended
June 30, 2022 and raised its
full-year net sales guidance to low-double-digit growth, from the
previous high-single-digit range. The Company also reaffirmed its
guidance for full year Adjusted EPS growth in the mid-single-digit
range.
|
Reported GAAP Basis
|
Adjusted Basis1
|
|
|
|
|
|
Q2
|
YTD 2022
|
Q2
|
YTD 2022
|
Net Sales
% vs Prior Year
|
$3.55 bn
13.2%
|
$6.63 bn
9.8%
|
$3.55 bn
13.5%
|
$6.63 bn
9.9%
|
Diluted EPS
% vs Prior Year
|
$0.15
(51.6)%
|
$0.56
3.7%
|
$0.39
2.6%
|
$0.72
1.4%
|
|
|
|
|
|
|
|
Commenting on the announcement, Chairman and CEO Bob Gamgort stated, "Our strong results reflect
the flexibility and resilience of our business and the capability
of our team to execute with excellence. We successfully
recovered from supply chain disruptions in coffee and
non-carbonated beverages, implemented additional pricing to offset
inflation and continued to accelerate growth across our broad
portfolio, leading to another quarter of strong market share
performance. We remain confident that our "all-weather"
business model will enable us to deliver in the ongoing volatile
macro environment."
Incoming CEO Ozan Dokmecioglu
added, "I am pleased with the continued strength of our business
and remain confident in our ability to deliver our plans for the
second half of this year. I look forward to assuming the role
of CEO and partnering with our talented team to drive value
creation through the successful execution of our strategic
plan."
Second Quarter Consolidated Results
Net sales for the
second quarter of 2022 increased 13.2% to $3.55 billion, compared to $3.14 billion in the year-ago period and, on a
constant currency basis, net sales increased 13.5%. This
strong performance reflected balanced growth in all segments, with
both pricing and volumes up in the quarter. Driving the
consolidated net sales growth was favorable net price realization
of 10.4% and higher volume/mix of 3.1%, reflecting modest volume
elasticity impacts in the quarter.
KDP in-market performance in the Liquid Refreshment Beverages
(LRB) category remained exceptionally strong in the quarter, with
retail dollar consumption2 advancing 9.9% and market
share growing or holding across 92% of the Company's cold beverage
portfolio, largely reflecting strength in CSDs3, premium
unflavored water, coconut water, seltzers, teas, apple juice,
vegetable juice and fruit drinks. This performance was driven
by Dr Pepper, Sunkist, Canada Dry, A&W and Squirt CSDs, CORE
Hydration, Vita Coco, Polar
seltzers, Snapple, Hawaiian Punch and Mott's.
In coffee, retail dollar consumption of single-serve pods
manufactured by KDP increased 3.8% in IRi tracked channels, led by
higher pricing in both partner and KDP owned and licensed brands,
with stronger growth registered in untracked channels. Coffee
Systems net sales in the quarter advanced approximately 9%,
reflecting the early completion of the Company's coffee recovery
program, which enabled KDP to begin to restore inventory levels to
partners and customers. KDP manufactured share in the quarter
remained strong at 81.8%.
GAAP operating income in the second quarter of 2022 decreased
22.1% to $572 million, compared to
$734 million in the year-ago period,
primarily reflecting higher gross profit, driven by the strong and
balanced net sales growth and productivity, more than offset by the
unfavorable year-over-year impact of items affecting comparability
and broad-based inflationary pressures and supply chain disruption.
Adjusted operating income declined slightly in the quarter to
$832 million, or 23.4% as a percent
of net sales, reflecting Adjusted gross profit growth of 10%,
offset by inflationary pressures in transportation, warehousing and
retail labor, each of which increased on a rate basis in the
quarter.
GAAP net income in the second quarter of 2022 decreased 51.3% to
$218 million, or $0.15 per diluted share, compared to $448 million, or $0.31 per diluted share, in the year-ago period.
This performance reflected the decline in GAAP operating
income and the unfavorable year-over-year impact of items affecting
comparability, which more than offset the benefits of a lower
effective tax rate and reduced interest expense.
Adjusted net income in the quarter advanced 3.3% to $554 million, driven by the benefits of the lower
effective tax rate and reduced interest expense, partially offset
by the slight decline in Adjusted operating income. Adjusted
diluted EPS in the quarter increased 2.6% to $0.39, compared to $0.38 in the year-ago period.
Operating cash flow in the second quarter of 2022 totaled
$676 million and free cash flow
totaled $599 million, primarily
reflecting the increase in operating cash flow and slightly lower
capital expenditures.
During the quarter, the Company repurchased approximately 2.5
million KDP shares for a total cost of $87.6
million, at an average price per share of $34.51. The company has $3.9 billion remaining under its share repurchase
authorization expiring on December 31,
2025.
|
|
|
|
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 6/26/2022.
|
3 CSDs refer
to "Carbonated Soft Drinks".
|
Second Quarter Segment Results
Coffee Systems
Net sales for the second quarter
of 2022 increased 8.5% to $1.20
billion, compared to $1.10
billion in the year-ago period and, on a constant currency
basis, net sales increased 9.1%. The constant currency net
sales growth was driven by a 5.8% increase in net price realization
and a 3.3% increase in volume/mix, reflecting the benefits of
modest elasticities and the early completion of the Company's
coffee recovery program, which enabled KDP to begin to rebuild
retailer and partner inventories and restore customer service
levels.
The higher net price realization of 5.8% in the quarter was
driven by pod and brewer pricing actions taken late in 2021 and
during the second quarter of 2022. The volume/mix increase of
3.3% reflected pod volume growth of 4.7%, partially offset by a
brewer volume decline of 4.2%, reflecting comparison to the strong
29% brewer growth in the year-ago period.
GAAP operating income in the second quarter of 2022 decreased
11.3% to $315 million, compared to
$355 million in the year-ago period,
largely reflecting the lag in timing between higher net price
realization and broad-based inflation, continued elevated costs
associated with the coffee recovery program, a slight increase in
marketing investment and the unfavorable year-over-year impact of
items affecting comparability. Partially offsetting these
factors was the benefit of productivity. Adjusted operating
income decreased 8.4% to $369 million
and, on a percent of net sales basis, totaled 30.9%.
Packaged Beverages
Net sales for the second
quarter of 2022 increased 12.8% to $1.69
billion, compared to $1.50
billion in the year-ago period and, on a constant currency
basis, net sales increased 12.9%. This strong and balanced
net sales performance was driven by higher net price realization of
11.0% and increased volume/mix of 1.9%, reflecting modest volume
elasticities and continued strong in-market execution.
The strong net sales performance reflected broad-based strength
across the portfolio, led by CSDs, CORE Hydration, Snapple, Polar
seltzers, Vita Coco, Mott's and
Hawaiian Punch.
GAAP operating income in the second quarter of 2022 decreased
11.1% to $232 million, compared to
$261 million in the year-ago period,
primarily reflecting the lag in timing between higher net price
realization and broad-based inflation and higher marketing
investment, partially offset by productivity and the favorable
year-over-year impact of items affecting comparability.
Adjusted operating income decreased 14.5% to $247 million and, on a percent of net sales
basis, totaled 14.6%.
Beverage Concentrates
Net sales for the second
quarter of 2022 increased 22.7% to $460
million, compared to $375
million in the year-ago period and, on a constant currency
basis, increased 22.9%. This strong and balanced performance
was driven by higher net price realization of 19.2%, including
favorable timing related to trade accruals versus year-ago, and
favorable volume/mix of 3.7%, reflecting modest volume
elasticities.
Total shipment volume versus year-ago increased 3.5% in the
quarter, led by increases in Canada Dry and Dr Pepper. Bottler case
sales volume in the quarter were essentially even with the year-ago
period.
GAAP operating income in the second quarter of 2022 increased
27.1% to $324 million, compared to
$255 million in the year-ago period,
primarily reflecting the strong net sales performance and lower
marketing, partially offset by broad-based inflation and the
slightly unfavorable year-over-year impact of items affecting
comparability. Adjusted operating income increased 27.6% to
$327 million and, on a percent of net
sales basis, totaled 71.1%.
Latin America Beverages
Net sales for the
second quarter of 2022 increased 26.5% to $210 million, on both a reported and constant
currency basis, compared to net sales of $166 million in the year-ago period. This
strong and balanced performance was driven by higher net price
realization of 14.5% and increased volume/mix of 12.0%, reflecting
modest volume elasticities and strong in-market execution.
Leading the net sales growth were Peñafiel, Clamato, Squirt
and Mott's.
GAAP operating income in the second quarter of 2022 increased
38.9% to $50 million, compared to
$36 million in the year-ago period,
reflecting the strong growth in net sales, productivity and a
slightly favorable year-over-year impact of items affecting
comparability which, taken together, more than offset broad-based
inflationary pressures, particularly elevated logistics costs, and
increased marketing investment. Adjusted operating income
increased 35.1% to $50 million and,
on a percent of net sales basis, totaled 23.8%.
KDP Acquisition
During the quarter, KDP announced an
agreement to acquire the global rights to Atypique, a highly unique
non-alcohol, ready-to-drink cocktail brand in the emerging and
fast-growing non-alcohol cocktail segment in Canada. This new
platform complements KDP's strong and successful ready-to-drink
alcohol portfolio in Canada and
provides the Company with new growth opportunities in an exciting,
new category.
KDP 2022 Guidance
KDP raised its guidance for 2022
constant currency net sales growth to the low-double-digit range
and reaffirmed its guidance for Adjusted EPS growth in the
mid-single-digit range. The Company continues to expect
Adjusted EPS growth in the second half of the year to reach the
high-single-digit range, driven largely by the fourth quarter.
Investor Contacts:
Steve
Alexander
T: 972-673-6769 / steve.alexander@kdrp.com
Chethan Mallela
chethan.mallela@kdrp.com
Media Contact:
Katie
Gilroy
T: 781-418-3345 / katie.gilroy@kdrp.com
About Keurig Dr Pepper
Keurig Dr Pepper (KDP) is a
leading beverage company in North
America, with annual revenue 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)
|
|
|
Second
Quarter
|
|
First Six
Months
|
(in millions,
except per share data)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net
sales
|
$
3,554
|
|
$
3,140
|
|
$
6,632
|
|
$
6,042
|
Cost of
sales
|
1,778
|
|
1,370
|
|
3,206
|
|
2,672
|
Gross
profit
|
1,776
|
|
1,770
|
|
3,426
|
|
3,370
|
Selling, general and
administrative expenses
|
1,204
|
|
1,039
|
|
2,222
|
|
2,000
|
Gain on litigation
settlement
|
—
|
|
—
|
|
(299)
|
|
—
|
Other operating income,
net
|
—
|
|
(3)
|
|
(35)
|
|
(4)
|
Income from
operations
|
572
|
|
734
|
|
1,538
|
|
1,374
|
Interest
expense
|
175
|
|
125
|
|
363
|
|
265
|
Loss on early
extinguishment of debt
|
169
|
|
—
|
|
217
|
|
105
|
Gain on sale of equity
method investment
|
—
|
|
—
|
|
(50)
|
|
—
|
Impairment of
investments and note receivable
|
6
|
|
—
|
|
12
|
|
—
|
Other expense (income),
net
|
9
|
|
(4)
|
|
18
|
|
(7)
|
Income before
provision for income taxes
|
213
|
|
613
|
|
978
|
|
1,011
|
(Benefit) provision for
income taxes
|
(5)
|
|
165
|
|
175
|
|
238
|
Net income including
non-controlling interest
|
218
|
|
448
|
|
803
|
|
773
|
Less: Net loss
attributable to non-controlling interest
|
—
|
|
—
|
|
—
|
|
—
|
Net income
attributable to KDP
|
$
218
|
|
$
448
|
|
$
803
|
|
$
773
|
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
0.15
|
|
$
0.32
|
|
$
0.57
|
|
$
0.55
|
Diluted
|
0.15
|
|
0.31
|
|
0.56
|
|
0.54
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
1,417.5
|
|
1,417.4
|
|
1,417.8
|
|
1,413.4
|
Diluted
|
1,428.6
|
|
1,428.1
|
|
1,429.2
|
|
1,426.9
|
KEURIG DR PEPPER
INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
|
|
|
June
30,
|
|
December
31,
|
(in millions,
except share and per share data)
|
2022
|
|
2021
|
Assets
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
552
|
|
$
567
|
Restricted cash and
cash equivalents
|
2
|
|
1
|
Trade accounts
receivable, net
|
1,326
|
|
1,148
|
Inventories
|
1,239
|
|
894
|
Prepaid expenses and
other current assets
|
652
|
|
447
|
Total current
assets
|
3,771
|
|
3,057
|
Property, plant and
equipment, net
|
2,446
|
|
2,494
|
Investments in
unconsolidated affiliates
|
78
|
|
30
|
Goodwill
|
20,163
|
|
20,182
|
Other intangible
assets, net
|
23,774
|
|
23,856
|
Other non-current
assets
|
1,159
|
|
937
|
Deferred tax
assets
|
37
|
|
42
|
Total
assets
|
$
51,428
|
|
$
50,598
|
Liabilities and
Stockholders' Equity
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
4,950
|
|
$
4,316
|
Accrued
expenses
|
1,106
|
|
1,110
|
Structured
payables
|
145
|
|
142
|
Short-term borrowings
and current portion of long-term obligations
|
—
|
|
304
|
Other current
liabilities
|
560
|
|
613
|
Total current
liabilities
|
6,761
|
|
6,485
|
Long-term
obligations
|
11,555
|
|
11,578
|
Deferred tax
liabilities
|
6,007
|
|
5,986
|
Other non-current
liabilities
|
1,714
|
|
1,577
|
Total
liabilities
|
26,037
|
|
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,
1,416,072,925 and 1,418,119,197 shares issued and outstanding as of
June
30, 2022 and December 31, 2021, respectively
|
14
|
|
14
|
Additional paid-in
capital
|
21,701
|
|
21,785
|
Retained
earnings
|
3,471
|
|
3,199
|
Accumulated other
comprehensive income (loss)
|
205
|
|
(26)
|
Total stockholders'
equity
|
25,391
|
|
24,972
|
Non-controlling
interest
|
—
|
|
—
|
Total
equity
|
25,391
|
|
24,972
|
Total liabilities
and stockholders' equity
|
$
51,428
|
|
$
50,598
|
KEURIG DR PEPPER
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
|
First Six
Months
|
(in
millions)
|
2022
|
|
2021
|
Operating
activities:
|
|
|
|
Net income attributable
to KDP
|
$
803
|
|
$
773
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation
expense
|
205
|
|
206
|
Amortization of
intangibles
|
67
|
|
67
|
Other amortization
expense
|
86
|
|
80
|
Provision for sales
returns
|
25
|
|
32
|
Deferred income
taxes
|
(52)
|
|
(12)
|
Employee stock-based
compensation expense
|
12
|
|
48
|
Loss on early
extinguishment of debt
|
217
|
|
105
|
Gain on sale of equity
method investment
|
(50)
|
|
—
|
Gain on disposal of
property, plant and equipment
|
(33)
|
|
(4)
|
Unrealized loss (gain)
on foreign currency
|
2
|
|
(15)
|
Unrealized loss (gain)
on derivatives
|
187
|
|
(72)
|
Settlements of
interest rate contracts
|
125
|
|
—
|
Equity in losses of
unconsolidated affiliates
|
5
|
|
1
|
Impairment on
investments and note receivable of unconsolidated
affiliates
|
12
|
|
—
|
Other, net
|
22
|
|
3
|
Changes in assets and
liabilities:
|
|
|
|
Trade accounts
receivable
|
(206)
|
|
(41)
|
Inventories
|
(346)
|
|
(131)
|
Income taxes
receivable and payables, net
|
(245)
|
|
(65)
|
Other current and
non-current assets
|
(340)
|
|
(131)
|
Accounts payable and
accrued expenses
|
680
|
|
293
|
Other current and
non-current liabilities
|
163
|
|
2
|
Net change in
operating assets and liabilities
|
(294)
|
|
(73)
|
Net cash provided by
operating activities
|
1,339
|
|
1,139
|
Investing
activities:
|
|
|
|
Proceeds from sale of
investment in unconsolidated affiliates
|
50
|
|
—
|
Purchases of property,
plant and equipment
|
(186)
|
|
(204)
|
Proceeds from sales of
property, plant and equipment
|
78
|
|
15
|
Purchases of
intangibles
|
(10)
|
|
(12)
|
Issuance of related
party note receivable
|
(18)
|
|
(2)
|
Investments in
unconsolidated affiliates
|
(48)
|
|
—
|
Other, net
|
3
|
|
3
|
Net cash used in
investing activities
|
(131)
|
|
(200)
|
Financing
activities:
|
|
|
|
Proceeds from issuance
of Notes
|
3,000
|
|
2,150
|
Repayments of
Notes
|
(3,365)
|
|
(3,595)
|
Proceeds from issuance
of commercial paper
|
500
|
|
2,776
|
Repayments of
commercial paper
|
(649)
|
|
(1,453)
|
Repayments of 2019 KDP
Term Loan
|
—
|
|
(425)
|
Proceeds from
structured payables
|
79
|
|
73
|
Repayments of
structured payables
|
(75)
|
|
(81)
|
Cash dividends
paid
|
(531)
|
|
(424)
|
Repurchases of common
stock
|
(88)
|
|
—
|
Proceeds from issuance
of common stock
|
—
|
|
140
|
Tax withholdings
related to net share settlements
|
(8)
|
|
(125)
|
Payments on finance
leases
|
(41)
|
|
(27)
|
Other, net
|
(43)
|
|
(37)
|
Net cash used in
financing activities
|
(1,221)
|
|
(1,028)
|
Cash, cash
equivalents, and restricted cash and cash
equivalents:
|
|
|
|
Net change from
operating, investing and financing activities
|
(13)
|
|
(89)
|
Effect of exchange rate
changes
|
(1)
|
|
4
|
Beginning
balance
|
568
|
|
255
|
Ending
balance
|
$
554
|
|
$
170
|
KEURIG DR PEPPER
INC.
RECONCILIATION OF
SEGMENT INFORMATION
(UNAUDITED)
|
|
|
Second
Quarter
|
|
First Six
Months
|
(in
millions)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net
Sales
|
|
|
|
|
|
|
|
Coffee
Systems
|
$
1,195
|
|
$
1,101
|
|
$
2,288
|
|
$
2,243
|
Packaged
Beverages
|
1,689
|
|
1,498
|
|
3,169
|
|
2,805
|
Beverage
Concentrates
|
460
|
|
375
|
|
819
|
|
703
|
Latin America
Beverages
|
210
|
|
166
|
|
356
|
|
291
|
Total net
sales
|
$
3,554
|
|
$
3,140
|
|
$
6,632
|
|
$
6,042
|
|
|
|
|
|
|
|
|
Income from
Operations
|
|
|
|
|
|
|
|
Coffee
Systems
|
$
315
|
|
$
355
|
|
$
583
|
|
$
723
|
Packaged
Beverages
|
232
|
|
261
|
|
718
|
|
440
|
Beverage
Concentrates
|
324
|
|
255
|
|
568
|
|
493
|
Latin America
Beverages
|
50
|
|
36
|
|
75
|
|
58
|
Unallocated corporate
costs
|
(349)
|
|
(173)
|
|
(406)
|
|
(340)
|
Total income from
operations
|
$
572
|
|
$
734
|
|
$
1,538
|
|
$
1,374
|
KEURIG DR PEPPER INC.
RECONCILIATION
OF CERTAIN NON-GAAP INFORMATION
(UNAUDITED)
The company reports its financial results in accordance with
U.S. GAAP. However, management believes that certain non-GAAP
financial measures that reflect the way management evaluates the
business may provide investors with additional information
regarding the company's results, trends and ongoing performance on
a comparable basis.
Specifically, investors should consider the following with
respect to our financial results:
Adjusted: Defined as certain financial statement captions
and metrics adjusted for certain items affecting comparability.
Items affecting comparability: Defined as certain items
that are excluded for comparison to prior year periods, adjusted
for the tax impact as applicable. Tax impact is determined based
upon an approximate rate for each item. For each period, management
adjusts for (i) the unrealized mark-to-market impact of derivative
instruments not designated as hedges in accordance with U.S. GAAP
that do not have an offsetting risk reflected within the financial
results, as well as the unrealized mark-to-market impact of our
Vita Coco investment; (ii) the
amortization associated with definite-lived intangible assets;
(iii) the amortization of the deferred financing costs associated
with the DPS Merger; (iv) the amortization of the fair value
adjustment of the senior unsecured notes obtained as a result of
the DPS Merger; (v) stock compensation expense and the associated
windfall tax benefit attributable to the matching awards made to
employees who made an initial investment in KDP; (vi) non-cash
changes in deferred tax liabilities related to goodwill and other
intangible assets as a result of tax rate or apportionment changes;
and (vii) other certain items that are excluded for comparison
purposes to prior year periods.
For the second quarter 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; (viii) losses
recognized with respect to our equity method investment in
Bedford as a result of funding our
share of their wind-down costs and (ix) foundational projects,
which are transformative and non-recurring in nature.
For the second 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 second quarter and first six months 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
income, net
|
|
Income from
operations
|
|
Operating
margin
|
For the Second
Quarter of 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$
1,778
|
|
$
1,776
|
|
50.0 %
|
|
$
1,204
|
|
$
—
|
|
$
—
|
|
$
572
|
|
16.1 %
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
(138)
|
|
138
|
|
|
|
—
|
|
—
|
|
—
|
|
138
|
|
|
Amortization of
intangibles
|
—
|
|
—
|
|
|
|
(33)
|
|
—
|
|
—
|
|
33
|
|
|
Stock
compensation
|
—
|
|
—
|
|
|
|
(5)
|
|
—
|
|
—
|
|
5
|
|
|
Restructuring and
integration costs
|
—
|
|
—
|
|
|
|
(23)
|
|
—
|
|
1
|
|
22
|
|
|
Productivity
|
(28)
|
|
28
|
|
|
|
(24)
|
|
—
|
|
—
|
|
52
|
|
|
Non-routine legal
matters
|
—
|
|
—
|
|
|
|
(3)
|
|
—
|
|
—
|
|
3
|
|
|
COVID-19
|
(3)
|
|
3
|
|
|
|
(1)
|
|
—
|
|
—
|
|
4
|
|
|
Transaction
costs
|
—
|
|
—
|
|
|
|
(1)
|
|
—
|
|
—
|
|
1
|
|
|
Foundational
projects
|
—
|
|
—
|
|
|
|
(2)
|
|
—
|
|
—
|
|
2
|
|
|
Adjusted
|
$
1,609
|
|
$
1,945
|
|
54.7 %
|
|
$
1,112
|
|
$
—
|
|
$
1
|
|
$
832
|
|
23.4 %
|
Impact of foreign
currency
|
|
|
|
|
— %
|
|
|
|
|
|
|
|
|
|
— %
|
Constant currency
adjusted
|
|
|
|
|
54.7 %
|
|
|
|
|
|
|
|
|
|
23.4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Second
Quarter of 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$
1,370
|
|
$
1,770
|
|
56.4 %
|
|
$
1,039
|
|
$
—
|
|
$
(3)
|
|
$
734
|
|
23.4 %
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
17
|
|
(17)
|
|
|
|
21
|
|
—
|
|
—
|
|
(38)
|
|
|
Amortization of
intangibles
|
—
|
|
—
|
|
|
|
(34)
|
|
—
|
|
—
|
|
34
|
|
|
Stock
compensation
|
—
|
|
—
|
|
|
|
(5)
|
|
—
|
|
—
|
|
5
|
|
|
Restructuring and
integration costs
|
—
|
|
—
|
|
|
|
(49)
|
|
—
|
|
—
|
|
49
|
|
|
Productivity
|
(14)
|
|
14
|
|
|
|
(24)
|
|
—
|
|
—
|
|
38
|
|
|
Non-routine legal
matters
|
—
|
|
—
|
|
|
|
(6)
|
|
—
|
|
—
|
|
6
|
|
|
COVID-19
|
(7)
|
|
7
|
|
|
|
(4)
|
|
—
|
|
—
|
|
11
|
|
|
Adjusted
|
$
1,366
|
|
$
1,774
|
|
56.5 %
|
|
$
938
|
|
$
—
|
|
$
(3)
|
|
$
839
|
|
26.7 %
|
KEURIG DR PEPPER
INC.
RECONCILIATION OF
CERTAIN NON-GAAP INFORMATION
(UNAUDITED)
|
|
|
Interest
expense
|
|
Loss on early
extinguishment of debt
|
|
Impairment of
investments and note receivable
|
|
Other expense
(income), net
|
|
Income before
provision for income taxes
|
|
(Benefit) provision
for income taxes
|
|
Effective tax
rate
|
|
Net income
attributable to KDP
|
|
Diluted earnings per
share
|
For the Second
Quarter of 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$
175
|
|
$
169
|
|
$
6
|
|
$
9
|
|
$
213
|
|
$
(5)
|
|
(2.3) %
|
|
$
218
|
|
$
0.15
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
(63)
|
|
—
|
|
—
|
|
1
|
|
200
|
|
49
|
|
|
|
151
|
|
0.11
|
Amortization of
intangibles
|
—
|
|
—
|
|
—
|
|
—
|
|
33
|
|
8
|
|
|
|
25
|
|
0.02
|
Amortization of
deferred financing costs
|
(1)
|
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
|
|
1
|
|
—
|
Amortization of fair
value debt adjustment
|
(4)
|
|
—
|
|
—
|
|
—
|
|
4
|
|
1
|
|
|
|
3
|
|
—
|
Stock
compensation
|
—
|
|
—
|
|
—
|
|
—
|
|
5
|
|
(2)
|
|
|
|
7
|
|
—
|
Restructuring and
integration costs
|
—
|
|
—
|
|
—
|
|
—
|
|
22
|
|
5
|
|
|
|
17
|
|
0.01
|
Productivity
|
—
|
|
—
|
|
—
|
|
—
|
|
52
|
|
10
|
|
|
|
42
|
|
0.03
|
Impairment of
investment
|
—
|
|
—
|
|
(6)
|
|
—
|
|
6
|
|
—
|
|
|
|
6
|
|
—
|
Loss on early
extinguishment of debt
|
—
|
|
(169)
|
|
—
|
|
—
|
|
169
|
|
43
|
|
|
|
126
|
|
0.09
|
Non-routine legal
matters
|
—
|
|
—
|
|
—
|
|
—
|
|
3
|
|
1
|
|
|
|
2
|
|
—
|
COVID-19
|
—
|
|
—
|
|
—
|
|
—
|
|
4
|
|
1
|
|
|
|
3
|
|
—
|
Transaction
costs
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
|
|
1
|
|
—
|
Foundational
projects
|
—
|
|
—
|
|
—
|
|
—
|
|
2
|
|
—
|
|
|
|
2
|
|
—
|
Change in deferred tax
liabilities related to goodwill
and other intangible assets
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
50
|
|
|
|
(50)
|
|
(0.03)
|
Adjusted
|
$
107
|
|
$
—
|
|
$
—
|
|
$
10
|
|
$
715
|
|
$
161
|
|
22.5 %
|
|
$
554
|
|
$
0.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Second
Quarter of 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$
125
|
|
$
—
|
|
$
—
|
|
$
(4)
|
|
$
613
|
|
$
165
|
|
26.9 %
|
|
$
448
|
|
$
0.31
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
(1)
|
|
—
|
|
—
|
|
—
|
|
(37)
|
|
(9)
|
|
|
|
(28)
|
|
(0.02)
|
Amortization of
intangibles
|
—
|
|
—
|
|
—
|
|
—
|
|
34
|
|
9
|
|
|
|
25
|
|
0.02
|
Amortization of
deferred financing costs
|
(1)
|
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
|
|
1
|
|
—
|
Amortization of fair
value of debt adjustment
|
(4)
|
|
—
|
|
—
|
|
—
|
|
4
|
|
—
|
|
|
|
4
|
|
—
|
Stock
compensation
|
—
|
|
—
|
|
—
|
|
—
|
|
5
|
|
2
|
|
|
|
3
|
|
—
|
Restructuring and
integration costs
|
—
|
|
—
|
|
—
|
|
—
|
|
49
|
|
11
|
|
|
|
38
|
|
0.03
|
Productivity
|
—
|
|
—
|
|
—
|
|
—
|
|
38
|
|
10
|
|
|
|
28
|
|
0.02
|
Non-routine legal
matters
|
—
|
|
—
|
|
—
|
|
—
|
|
6
|
|
1
|
|
|
|
5
|
|
—
|
COVID-19
|
—
|
|
—
|
|
—
|
|
—
|
|
11
|
|
3
|
|
|
|
8
|
|
0.01
|
Change in deferred tax
liabilities related to goodwill and other intangible
assets
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(6)
|
|
|
|
6
|
|
—
|
Adjusted
|
$
119
|
|
$
—
|
|
$
—
|
|
$
(4)
|
|
$
724
|
|
$
186
|
|
25.7 %
|
|
$
538
|
|
$
0.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change -
adjusted
|
(10.1) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.0 %
|
|
2.6 %
|
Impact of foreign
currency
|
— %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.3 %
|
|
— %
|
Change - constant
currency adjusted
|
(10.1) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.3 %
|
|
2.6 %
|
KEURIG DR PEPPER
INC.
RECONCILIATION OF
CERTAIN NON-GAAP INFORMATION
(UNAUDITED)
|
|
|
Cost of
sales
|
|
Gross
profit
|
|
Gross
margin
|
|
Selling, general and
administrative expenses
|
|
Gain on litigation
settlement
|
|
Other operating
income, net
|
|
Income from
operations
|
|
Operating
margin
|
For the First Six
Months of 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$
3,206
|
|
$
3,426
|
|
51.7 %
|
|
$
2,222
|
|
$
(299)
|
|
$
(35)
|
|
$
1,538
|
|
23.2 %
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
(79)
|
|
79
|
|
|
|
26
|
|
—
|
|
—
|
|
53
|
|
|
Amortization of
intangibles
|
—
|
|
—
|
|
|
|
(67)
|
|
—
|
|
—
|
|
67
|
|
|
Stock
compensation
|
—
|
|
—
|
|
|
|
2
|
|
—
|
|
—
|
|
(2)
|
|
|
Restructuring and
integration costs
|
—
|
|
—
|
|
|
|
(56)
|
|
—
|
|
(2)
|
|
58
|
|
|
Productivity
|
(56)
|
|
56
|
|
|
|
(46)
|
|
—
|
|
—
|
|
102
|
|
|
Non-routine legal
matters
|
—
|
|
—
|
|
|
|
(7)
|
|
—
|
|
—
|
|
7
|
|
|
COVID-19
|
(7)
|
|
7
|
|
|
|
(2)
|
|
—
|
|
—
|
|
9
|
|
|
Gain on
litigation
|
—
|
|
—
|
|
|
|
—
|
|
271
|
|
—
|
|
(271)
|
|
|
Transaction
costs
|
—
|
|
—
|
|
|
|
(1)
|
|
—
|
|
—
|
|
1
|
|
|
Foundational
projects
|
—
|
|
—
|
|
|
|
(2)
|
|
—
|
|
—
|
|
2
|
|
|
Adjusted
|
$
3,064
|
|
$
3,568
|
|
53.8 %
|
|
$
2,069
|
|
$
(28)
|
|
$
(37)
|
|
$
1,564
|
|
23.6 %
|
Impact of foreign
currency
|
|
|
|
|
(1.1) %
|
|
|
|
|
|
|
|
|
|
0.2 %
|
Constant currency
adjusted
|
|
|
|
|
52.7 %
|
|
|
|
|
|
|
|
|
|
23.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the First Six
Months of 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$
2,672
|
|
$
3,370
|
|
55.8 %
|
|
$
2,000
|
|
$
—
|
|
$
(4)
|
|
$
1,374
|
|
22.7 %
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
26
|
|
(26)
|
|
|
|
50
|
|
—
|
|
—
|
|
(76)
|
|
|
Amortization of
intangibles
|
—
|
|
—
|
|
|
|
(67)
|
|
—
|
|
—
|
|
67
|
|
|
Stock
compensation
|
—
|
|
—
|
|
|
|
(11)
|
|
—
|
|
—
|
|
11
|
|
|
Restructuring and
integration costs
|
—
|
|
—
|
|
|
|
(92)
|
|
—
|
|
—
|
|
92
|
|
|
Productivity
|
(22)
|
|
22
|
|
|
|
(49)
|
|
—
|
|
—
|
|
71
|
|
|
Non-routine legal
matters
|
—
|
|
—
|
|
|
|
(16)
|
|
—
|
|
—
|
|
16
|
|
|
COVID-19
|
(19)
|
|
19
|
|
|
|
(8)
|
|
—
|
|
—
|
|
27
|
|
|
Malware
incident
|
—
|
|
—
|
|
|
|
2
|
|
—
|
|
—
|
|
(2)
|
|
|
Adjusted
|
$
2,657
|
|
$
3,385
|
|
56.0 %
|
|
$
1,809
|
|
$
—
|
|
$
(4)
|
|
$
1,580
|
|
26.2 %
|
Refer to page
A-12 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 expense
(income), net
|
|
Income before
provision for income taxes
|
|
(Benefit) provision
for income taxes
|
|
Effective tax
rate
|
|
Net income
attributable to KDP
|
|
Diluted earnings per
share
|
For the First Six
Months of 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$ 363
|
|
$
217
|
|
$
(50)
|
|
$
12
|
|
$
18
|
|
$
978
|
|
$
175
|
|
17.9 %
|
|
$
803
|
|
$
0.56
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
(134)
|
|
—
|
|
—
|
|
—
|
|
(2)
|
|
189
|
|
47
|
|
|
|
142
|
|
0.10
|
Amortization of
intangibles
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
67
|
|
17
|
|
|
|
50
|
|
0.04
|
Amortization of
deferred financing costs
|
(2)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2
|
|
—
|
|
|
|
2
|
|
—
|
Amortization of fair
value debt adjustment
|
(9)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
9
|
|
2
|
|
|
|
7
|
|
—
|
Stock
compensation
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(2)
|
|
(3)
|
|
|
|
1
|
|
—
|
Restructuring and
integration costs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
58
|
|
14
|
|
|
|
44
|
|
0.03
|
Productivity
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
102
|
|
22
|
|
|
|
80
|
|
0.06
|
Impairment of
investment
|
—
|
|
—
|
|
—
|
|
(12)
|
|
|
|
12
|
|
—
|
|
|
|
12
|
|
—
|
Loss on early
extinguishment of debt
|
—
|
|
(217)
|
|
—
|
|
—
|
|
—
|
|
217
|
|
54
|
|
|
|
163
|
|
0.12
|
Non-routine legal
matters
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
7
|
|
2
|
|
|
|
5
|
|
—
|
COVID-19
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
9
|
|
2
|
|
|
|
7
|
|
—
|
Gain on
litigation
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(271)
|
|
(68)
|
|
|
|
(203)
|
|
(0.14)
|
Gain on sale of
equity-method investment
|
—
|
|
—
|
|
50
|
|
—
|
|
—
|
|
(50)
|
|
(12)
|
|
|
|
(38)
|
|
(0.03)
|
Transaction
costs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
|
|
1
|
|
—
|
Foundational
projects
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2
|
|
—
|
|
|
|
2
|
|
—
|
Change in deferred tax
liabilities related
to goodwill and other intangible assets
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
50
|
|
|
|
(50)
|
|
(0.03)
|
Adjusted
|
$ 218
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
16
|
|
$
1,330
|
|
$
302
|
|
22.7 %
|
|
$ 1,028
|
|
$
0.72
|
Impact of foreign
currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— %
|
|
|
|
|
Constant currency
adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 expense
(income), net
|
|
Income before
provision for income taxes
|
|
(Benefit) provision
for income taxes
|
|
Effective tax
rate
|
|
Net income
attributable to KDP
|
|
Diluted earnings per
share
|
For the First Six
Months of 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$ 265
|
|
$
105
|
|
$
—
|
|
$
—
|
|
$
(7)
|
|
$
1,011
|
|
$
238
|
|
23.5 %
|
|
$
773
|
|
$
0.54
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
7
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(83)
|
|
(20)
|
|
|
|
(63)
|
|
(0.04)
|
Amortization of
intangibles
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
67
|
|
17
|
|
|
|
50
|
|
0.04
|
Amortization of
deferred financing costs
|
(4)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
4
|
|
—
|
|
|
|
4
|
|
—
|
Amortization of fair
value of debt adjustment
|
(10)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
10
|
|
2
|
|
|
|
8
|
|
—
|
Stock
compensation
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
11
|
|
14
|
|
|
|
(3)
|
|
—
|
Restructuring and
integration costs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
92
|
|
22
|
|
|
|
70
|
|
0.05
|
Productivity
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
71
|
|
18
|
|
|
|
53
|
|
0.04
|
Loss on early
extinguishment of debt
|
—
|
|
(105)
|
|
—
|
|
—
|
|
—
|
|
105
|
|
25
|
|
|
|
80
|
|
0.06
|
Non-routine legal
matters
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
16
|
|
3
|
|
|
|
13
|
|
0.01
|
COVID-19
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
27
|
|
7
|
|
|
|
20
|
|
0.01
|
Malware
incident
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(2)
|
|
—
|
|
|
|
(2)
|
|
—
|
Change in deferred tax
liabilities related to
goodwill and other intangible assets
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(6)
|
|
|
|
6
|
|
—
|
Adjusted
|
$ 258
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
(7)
|
|
$
1,329
|
|
$
320
|
|
24.1 %
|
|
$ 1,009
|
|
$
0.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change -
adjusted
|
(15.5) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.9 %
|
|
1.4 %
|
Impact of foreign
currency
|
— %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.3 %
|
|
— %
|
Change - Constant
currency adjusted
|
(15.5) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.2 %
|
|
1.4 %
|
KEURIG DR PEPPER
INC.
RECONCILIATION OF
CERTAIN NON-GAAP INFORMATION
(UNAUDITED)
|
|
(in
millions)
|
|
Reported
|
|
Items Affecting
Comparability
|
|
Adjusted
|
For the second
quarter of 2022:
|
|
|
|
|
|
|
Income from
operations
|
|
|
|
|
|
|
Coffee
Systems
|
|
$
315
|
|
$
54
|
|
$
369
|
Packaged
Beverages
|
|
232
|
|
15
|
|
247
|
Beverage
Concentrates
|
|
324
|
|
3
|
|
327
|
Latin America
Beverages
|
|
50
|
|
—
|
|
50
|
Unallocated corporate
costs
|
|
(349)
|
|
188
|
|
(161)
|
Total income from
operations
|
|
$
572
|
|
$
260
|
|
$
832
|
|
|
|
|
|
|
|
For the second
quarter of 2021:
|
|
|
|
|
|
|
Income from
operations
|
|
|
|
|
|
|
Coffee
Systems
|
|
$
355
|
|
$
49
|
|
$
404
|
Packaged
Beverages
|
|
261
|
|
28
|
|
289
|
Beverage
Concentrates
|
|
255
|
|
2
|
|
257
|
Latin America
Beverages
|
|
36
|
|
1
|
|
37
|
Unallocated corporate
costs
|
|
(173)
|
|
25
|
|
(148)
|
Total income from
operations
|
|
$
734
|
|
$
105
|
|
$
839
|
|
|
Reported
|
|
Impact of Foreign
Currency
|
|
Constant
Currency
|
For the second
quarter of 2022:
|
|
|
|
|
|
|
Net
sales
|
|
|
|
|
|
|
Coffee
Systems
|
|
8.5 %
|
|
0.6 %
|
|
9.1 %
|
Packaged
Beverages
|
|
12.8 %
|
|
0.1
|
|
12.9
|
Beverage
Concentrates
|
|
22.7 %
|
|
0.2
|
|
22.9
|
Latin America
Beverages
|
|
26.5 %
|
|
—
|
|
26.5
|
Total net
sales
|
|
13.2 %
|
|
0.3
|
|
13.5
|
|
|
Adjusted
|
|
Impact of Foreign
Currency
|
|
Constant Currency
Adjusted
|
For the second
quarter of 2022:
|
|
|
|
|
|
|
Income from
operations
|
|
|
|
|
|
|
Coffee
Systems
|
|
(8.7) %
|
|
0.3 %
|
|
(8.4) %
|
Packaged
Beverages
|
|
(14.5) %
|
|
—
|
|
(14.5)
|
Beverage
Concentrates
|
|
27.2 %
|
|
0.4
|
|
27.6
|
Latin America
Beverages
|
|
35.1 %
|
|
—
|
|
35.1
|
Total income from
operations
|
|
(0.8) %
|
|
0.2
|
|
(0.6)
|
|
|
Reported
|
|
Items Affecting
Comparability
|
|
Adjusted
|
|
Impact of Foreign
Currency
|
|
Constant Currency
Adjusted
|
For the second
quarter of 2022:
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
|
|
|
|
|
|
|
|
|
Coffee
Systems
|
|
26.4 %
|
|
4.5 %
|
|
30.9 %
|
|
(0.1) %
|
|
30.8 %
|
Packaged
Beverages
|
|
13.7
|
|
0.9
|
|
14.6
|
|
—
|
|
14.6
|
Beverage
Concentrates
|
|
70.4
|
|
0.7
|
|
71.1
|
|
—
|
|
71.1
|
Latin America
Beverages
|
|
23.8
|
|
—
|
|
23.8
|
|
—
|
|
23.8
|
Total operating
margin
|
|
16.1
|
|
7.3
|
|
23.4
|
|
—
|
|
23.4
|
KEURIG DR PEPPER
INC.
RECONCILIATION OF
CERTAIN FINANCIAL MEASURES BY SEGMENT TO CONSTANT CURRENCY ADJUSTED
FINANCIAL MEASURES BY SEGMENT
(UNAUDITED)
|
|
(in
millions)
|
|
Reported
|
|
Items Affecting
Comparability
|
|
Adjusted
|
For the first six
months of 2022:
|
|
|
|
|
|
|
Income from
operations
|
|
|
|
|
|
|
Coffee
Systems
|
|
$
583
|
|
$
105
|
|
$
688
|
Packaged
Beverages
|
|
718
|
|
(236)
|
|
482
|
Beverage
Concentrates
|
|
568
|
|
6
|
|
574
|
Latin America
Beverages
|
|
75
|
|
1
|
|
76
|
Unallocated corporate
costs
|
|
(406)
|
|
150
|
|
(256)
|
Total income from
operations
|
|
$
1,538
|
|
$
26
|
|
$
1,564
|
|
|
|
|
|
|
|
For the first six
months of 2021:
|
|
|
|
|
|
|
Income from
operations
|
|
|
|
|
|
|
Coffee
Systems
|
|
$
723
|
|
$
102
|
|
$
825
|
Packaged
Beverages
|
|
440
|
|
50
|
|
490
|
Beverage
Concentrates
|
|
493
|
|
3
|
|
496
|
Latin America
Beverages
|
|
58
|
|
2
|
|
60
|
Unallocated corporate
costs
|
|
(340)
|
|
49
|
|
(291)
|
Total income from
operations
|
|
$
1,374
|
|
$
206
|
|
$
1,580
|
|
|
Reported
|
|
Impact of
Foreign
Currency
|
|
Constant
Currency
|
For the first six
months of 2022:
|
|
|
|
|
|
|
Net
sales
|
|
|
|
|
|
|
Coffee
Systems
|
|
2.0 %
|
|
0.3 %
|
|
2.3 %
|
Packaged
Beverages
|
|
13.0
|
|
—
|
|
13.0
|
Beverage
Concentrates
|
|
16.5
|
|
0.1
|
|
16.6
|
Latin America
Beverages
|
|
22.3
|
|
0.4
|
|
22.7
|
Total net
sales
|
|
9.8
|
|
0.1
|
|
9.9
|
|
|
Adjusted
|
|
Impact of
Foreign
Currency
|
|
Constant
Currency
Adjusted
|
For the first six
months of 2022:
|
|
|
|
|
|
|
Income from
operations
|
|
|
|
|
|
|
Coffee
Systems
|
|
(16.6) %
|
|
0.1 %
|
|
(16.5) %
|
Packaged
Beverages
|
|
(1.6)
|
|
—
|
|
(1.6)
|
Beverage
Concentrates
|
|
15.7
|
|
0.2
|
|
15.9
|
Latin America
Beverages
|
|
26.7
|
|
—
|
|
26.7
|
Total income from
operations
|
|
(1.0)
|
|
0.1
|
|
(0.9)
|
|
|
Reported
|
|
Items Affecting
Comparability
|
|
Adjusted
|
|
Impact of Foreign
Currency
|
|
Constant Currency
Adjusted
|
For the first six
months of 2022:
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
|
|
|
|
|
|
|
|
|
Coffee
Systems
|
|
25.5 %
|
|
4.6 %
|
|
30.1 %
|
|
(0.1) %
|
|
30.0 %
|
Packaged
Beverages
|
|
22.7
|
|
(7.5)
|
|
15.2
|
|
—
|
|
15.2
|
Beverage
Concentrates
|
|
69.4
|
|
0.7
|
|
70.1
|
|
—
|
|
70.1
|
Latin America
Beverages
|
|
21.1
|
|
0.2
|
|
21.3
|
|
—
|
|
21.3
|
Total operating
margin
|
|
23.2
|
|
0.4
|
|
23.6
|
|
—
|
|
23.6
|
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
|
$
2,176
|
Interest
expense
|
598
|
Provision for income
taxes
|
590
|
Other expense
(income), net
|
23
|
Depreciation
expense
|
409
|
Other
amortization
|
170
|
Amortization of
intangibles
|
134
|
EBITDA
|
$
4,100
|
Items affecting
comparability:
|
|
Gain on sale of
equity-method investment
|
$
(574)
|
Gain on litigation
settlement
|
(271)
|
Loss on early
extinguishment of debt
|
217
|
Impairment of
investments and note receivable
|
29
|
Restructuring and
integration expenses
|
165
|
Productivity
|
167
|
Non-routine legal
matters
|
21
|
Stock
compensation
|
5
|
COVID-19
|
19
|
Transaction
costs
|
3
|
Foundational
projects
|
2
|
Mark to
market
|
72
|
Adjusted
EBITDA
|
$
3,955
|
|
|
|
June
30,
|
|
2022
|
Principal amounts of
senior unsecured notes
|
$
11,743
|
Less: Cash and cash
equivalents
|
552
|
Total principal
amounts less cash and cash equivalents
|
$
11,191
|
|
|
June 30, 2022
Management Leverage Ratio
|
2.8
|
KEURIG DR PEPPER
INC.
RECONCILIATION OF
ADJUSTED EBITDA - LAST TWELVE MONTHS
(UNAUDITED)
|
|
|
(in
millions)
|
THIRD QUARTER OF
2021
|
|
FOURTH QUARTER OF
2021
|
|
FIRST SIX MONTHS OF
2022
|
|
LAST TWELVE
MONTHS
|
Net income
attributable to KDP
|
$
530
|
|
$
843
|
|
$
803
|
|
$
2,176
|
Interest
expense
|
116
|
|
119
|
|
363
|
|
598
|
Provision for income
taxes
|
149
|
|
266
|
|
175
|
|
590
|
Other (income)
expense, net
|
1
|
|
4
|
|
18
|
|
23
|
Depreciation
expense
|
98
|
|
106
|
|
205
|
|
409
|
Other
amortization
|
38
|
|
46
|
|
86
|
|
170
|
Amortization of
intangibles
|
34
|
|
33
|
|
67
|
|
134
|
EBITDA
|
$
966
|
|
$
1,417
|
|
$
1,717
|
|
$
4,100
|
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
|
—
|
|
—
|
|
217
|
|
217
|
Impairment on
investments and note receivable
|
—
|
|
17
|
|
12
|
|
29
|
Restructuring and
integration expenses
|
53
|
|
57
|
|
55
|
|
165
|
Productivity
|
40
|
|
40
|
|
87
|
|
167
|
Nonroutine legal
matters
|
7
|
|
7
|
|
7
|
|
21
|
Stock
compensation
|
3
|
|
4
|
|
(2)
|
|
5
|
COVID-19
|
4
|
|
6
|
|
9
|
|
19
|
Transaction
costs
|
1
|
|
1
|
|
1
|
|
3
|
Foundational
projects
|
—
|
|
—
|
|
2
|
|
2
|
Malware
incident
|
(1)
|
|
1
|
|
—
|
|
—
|
Mark to
market
|
(9)
|
|
28
|
|
53
|
|
72
|
Adjusted
EBITDA
|
$
1,064
|
|
$
1,054
|
|
$
1,837
|
|
$
3,955
|
KEURIG DR PEPPER INC.
RECONCILIATION
OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH
FLOW
(UNAUDITED)
Free cash flow is defined as net cash provided by operating
activities adjusted for purchases of property, plant and equipment,
proceeds from sales of property, plant and equipment, and certain
items excluded for comparison to prior year periods. For the first
six months of 2022 and 2021, there were no certain items excluded
for comparison to prior year periods.
|
|
First Six
Months
|
(in
millions)
|
|
2022
|
|
2021
|
Net cash provided by
operating activities
|
|
$
1,339
|
|
$
1,139
|
Purchases of property,
plant and equipment
|
|
(186)
|
|
(204)
|
Proceeds from sales of
property, plant and equipment
|
|
78
|
|
15
|
Free Cash
Flow
|
|
$
1,231
|
|
$
950
|
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)
|
|
Allowances for
Expected Credit Losses(4)
|
|
Total
|
For the second
quarter of 2022
|
|
|
|
|
|
|
|
Coffee
Systems
|
$
—
|
|
$
1
|
|
$
—
|
|
$
1
|
Packaged
Beverages
|
1
|
|
1
|
|
—
|
|
2
|
Beverage
Concentrates
|
—
|
|
—
|
|
—
|
|
—
|
Latin America
Beverages
|
—
|
|
1
|
|
—
|
|
1
|
Total
|
$
1
|
|
$
3
|
|
$
—
|
|
$
4
|
|
|
|
|
|
|
|
|
For the second
quarter of 2021
|
|
|
|
|
|
|
|
Coffee
Systems
|
$
1
|
|
$
4
|
|
$
(2)
|
|
$
3
|
Packaged
Beverages
|
3
|
|
3
|
|
(8)
|
|
(2)
|
Beverage
Concentrates
|
—
|
|
—
|
|
(3)
|
|
(3)
|
Latin America
Beverages
|
—
|
|
—
|
|
—
|
|
—
|
Total
|
$
4
|
|
$
7
|
|
$
(13)
|
|
$
(2)
|
|
|
|
|
|
|
|
|
For the first six
months of 2022:
|
|
|
|
|
|
|
|
Coffee
Systems
|
$
1
|
|
$
3
|
|
$
—
|
|
$
4
|
Packaged
Beverages
|
2
|
|
2
|
|
—
|
|
4
|
Beverage
Concentrates
|
—
|
|
—
|
|
—
|
|
—
|
Latin America
Beverages
|
—
|
|
1
|
|
—
|
|
1
|
Total
|
$
3
|
|
$
6
|
|
$
—
|
|
$
9
|
|
|
|
|
|
|
|
|
For the first six
months of 2021:
|
|
|
|
|
|
|
|
Coffee
Systems
|
$
2
|
|
$
13
|
|
$
(2)
|
|
$
13
|
Packaged
Beverages
|
6
|
|
5
|
|
(8)
|
|
3
|
Beverage
Concentrates
|
—
|
|
—
|
|
(3)
|
|
(3)
|
Latin America
Beverages
|
—
|
|
1
|
|
—
|
|
1
|
Total
|
$
8
|
|
$
19
|
|
$
(13)
|
|
$
14
|
|
|
|
|
|
|
|
|
(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.
|
(4)
|
Reflects reversal of
allowances initially recorded in 2020 specifically related to the
COVID-19 pandemic, driven by improving economic conditions during
2021.
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/keurig-dr-pepper-reports-strong-q2-2022-results-and-raises-full-year-net-sales-guidance-301594929.html
SOURCE Keurig Dr Pepper Inc.