Company Delivers Strong Net Sales Momentum,
with all Business Segments Posting Growth in the Quarter
BURLINGTON, Mass. and FRISCO, Texas, Oct. 27,
2022 /PRNewswire/ -- Keurig Dr Pepper Inc. (NASDAQ:
KDP) today reported strong results for the third quarter ended
September 30, 2022 and reaffirmed its
full-year guidance for constant currency net sales growth in the
low-double-digit range and Adjusted EPS growth in the
mid-single-digit range.
|
Reported GAAP Basis
|
Adjusted Basis1
|
|
|
|
|
|
Q3
|
YTD 2022
|
Q3
|
YTD 2022
|
Net Sales
% vs Prior Year
|
$3.62 bn
11.4%
|
$10.25 bn
10.4%
|
$3.62 bn
11.8%
|
$10.25 bn
10.6%
|
Diluted EPS
% vs Prior Year
|
$0.13
(64.9)%
|
$0.69
(24.2)%
|
$0.46
4.5%
|
$1.18
2.6%
|
|
|
|
|
|
|
|
Commenting on the announcement, CEO Ozan
Dokmecioglu stated, "The third quarter was another strong
one for KDP, as we again demonstrated the advantages of our
all-weather business model, which has proven adept at performing
well in an evolving macro environment to meet the needs of
consumers. While the macro landscape remains challenging, our
cold beverages portfolio continues to perform exceptionally well,
with strong in-market execution and increased marketing investment
driving consistent growth in LRB market share. At the same
time, our coffee business has steadily recovered from the
significant supply chain disruption earlier this year and is poised
to deliver strong sales and earnings growth in the fourth
quarter."
Third Quarter Consolidated Results
Net sales for the
third quarter of 2022 increased 11.4% to $3.62 billion, compared to $3.25 billion in the year-ago period and, on a
constant currency basis, net sales advanced 11.8%. All four
segments grew sales during the quarter. Driving the
consolidated net sales growth was favorable net price realization
of 12.1%, only slightly offset by lower volume/mix of 0.3%,
reflecting the strength of the portfolio and continued strong
in-market execution.
KDP in-market performance in the Liquid Refreshment Beverages
(LRB) category remained strong in the quarter, with retail dollar
consumption2 advancing 11.2% and total LRB dollar share
posting another quarter of growth, largely reflecting strength in
premium unflavored waters, seltzers, teas, apple juice and fruit
drinks, combined with continued solid performance in
CSDs3. This performance was driven by CORE
Hydration, Polar seltzers, Snapple, Mott's, Hawaiian Punch and Dr
Pepper, Crush, Canada Dry, A&W and Squirt CSDs.
In coffee, retail dollar consumption of single-serve pods
manufactured by KDP increased 4.0% in IRi tracked channels, led by
higher pricing in both KDP owned and licensed and partner brands,
with stronger growth registered in untracked channels. KDP
Manufactured share remained strong at 81.7% in the quarter.
GAAP operating income in the third quarter of 2022 decreased
50.4% to $394 million, compared to
$795 million in the year-ago period,
primarily reflecting a $311 million
non-cash impairment charge in the current quarter on the Bai
brand. Also impacting results in the quarter was higher gross
profit, partially offset by continued broad-based inflationary
pressures and increased marketing investment.
Adjusted operating income increased 2.0% in the quarter to
$947 million, fueled by 8.6% growth
in Adjusted gross profit, partially offset by continued broad-based
inflationary pressures in transportation, warehousing and retail
labor, as well as increased marketing investment. On a
percent of net sales basis, Adjusted operating income was
26.1%.
GAAP net income in the third quarter of 2022 decreased 66.0% to
$180 million, or $0.13 per diluted share, compared to $530 million, or $0.37 per diluted share, in the year-ago period.
This performance primarily reflected the unfavorable
year-over-year impact of items affecting comparability.
Adjusted net income in the quarter advanced 4.3% to $656 million, driven by the growth in Adjusted
operating income and reduced interest expense. Adjusted
diluted EPS in the quarter increased 4.5% to $0.46, compared to $0.44 in the year-ago period.
Operating cash flow in the third quarter of 2022 declined
slightly to $759 million, while free
cash flow increased slightly to $686
million.
On September 14, 2022, the Company
announced a 6.7% increase in its annualized dividend rate to
$0.80 per share, from $0.75 per share, effective with the Company's
regular dividend that was payable on its common stock on
October 14, 2022.
Third Quarter Segment Results
Coffee Systems
Net sales for the third quarter
of 2022 increased 4.7% to $1.21
billion, compared to $1.16
billion in the year-ago period and, on a constant currency
basis, net sales advanced 5.2%. The constant currency net
sales growth was driven by a 7.8% increase in net price
realization, partially offset by a 2.6% decrease in volume/mix.
The higher net price realization of 7.8% in the quarter was
primarily driven by pricing actions taken in late 2021 and the
second quarter of 2022, while the volume/mix decrease of 2.6% was
due to pod shipment growth of 3.5%, more than offset by a brewer
shipment decline of 15%. The brewer performance is consistent
with the Company's expectation of returning to its long-term target
of adding two million new households into the Keurig system in
2022, which now requires selling fewer brewers than the
COVID-driven, elevated level of three million new households having
been added in each of the prior two years.
GAAP operating income in the third quarter of 2022 decreased
19.2% to $295 million, compared to
$365 million in the year-ago period.
This performance largely reflected broad-based inflationary
pressure, primarily in green coffee costs, which reached the
highest level of the year for KDP due to timing of the Company's
hedges. Also impacting the results was the unfavorable
year-over-year impact of items affecting comparability.
Partially offsetting these factors were the benefits of the net
sales growth and productivity. Adjusted operating income
decreased 15.7% to $343 million and,
on a percent of net sales basis, totaled 28.4%.
Packaged Beverages
Net sales for the third
quarter of 2022 increased 13.5% to $1.76
billion, compared to $1.55
billion in the year-ago period and, on a constant currency
basis, net sales advanced 13.6%. This strong and balanced
performance was driven by higher net price realization of 13.6%,
with volume/mix even with year-ago, reflecting the strength of the
portfolio and continued strong in-market execution.
Broad-based strength across the portfolio was led by CSDs,
Snapple, Mott's, CORE Hydration, Hawaiian Punch, Evian and Polar
seltzers.
GAAP operating income in the third quarter of 2022 decreased
96.6% to $10 million, compared to
$291 million in the year-ago period,
primarily reflecting the unfavorable year-over-year impact of items
affecting comparability, including the aforementioned $311 million non-cash impairment charge on the
Bai brand. Also impacting the performance was the strong net
sales growth and productivity that more than offset broad-based
inflation and significantly higher marketing investment in the
period. Adjusted operating income increased 7.9% to
$340 million and, on a percent of net
sales basis, totaled 19.4%.
Beverage Concentrates
Net sales for the third
quarter of 2022 increased 17.1% to $459
million, compared to $392
million in the year-ago period and, on a constant currency
basis, advanced 17.3%. This strong and balanced net sales
performance was driven by higher net price realization of 16.6% and
favorable volume/mix of 0.7%, reflecting the ongoing strength of
the portfolio.
Total shipment volume was essentially even with the year-ago
period, reflecting increases in Dr Pepper and Crush, largely offset
by declines in Schweppes and A&W. Bottler case sales
volume in the quarter declined 1.0% versus the year-ago period.
GAAP operating income in the third quarter of 2022 increased
20.9% to $347 million, compared to
$287 million in the year-ago period,
primarily reflecting the strong net sales performance and lower
marketing, partially offset by broad-based inflation.
Adjusted operating income increased 21.0% to $350 million and, on a percent of net sales
basis, totaled 76.3%.
Latin America Beverages
Net sales for the third
quarter of 2022 increased 26.9% to $198
million, compared to net sales of $156 million in the year-ago period and, on a
constant currency basis, advanced 28.8%. This strong and
balanced performance was driven by higher net price realization of
17.3% and increased volume/mix of 11.5%, reflecting the strength of
the portfolio and continued strong in-market execution.
Leading the net sales growth were Peñafiel, Clamato, Mott's
and Squirt.
GAAP operating income in the third quarter of 2022 increased
5.4% to $39 million, compared to
$37 million in the year-ago period,
reflecting the strong net sales growth and productivity, partially
offset by broad-based inflationary pressures, significantly higher
marketing investment and the unfavorable year-over-year impact of
items affecting comparability. Adjusted operating income
increased 13.5% to $41 million and,
on a percent of net sales basis, totaled 20.7%.
During the quarter, KDP announced a strategic partnership with
Red Bull, the iconic global energy
brand, to sell and distribute Red
Bull in Mexico. The partnership leverages KDP's
powerful distribution network in Mexico to expand availability of Red Bull in the country. This agreement
furthers KDP's commitment to win-win partnerships and is expected
to strengthen the company's energy category position, improve its
go-to-market scale and drive efficiencies over time.
KDP 2022 Guidance
KDP reaffirmed its 2022 guidance for
constant currency net sales growth in the low-double-digit range
and Adjusted EPS growth in the mid-single-digit range.
Investor Contacts:
Steve
Alexander
T: 972-673-6769 / steve.alexander@kdrp.com
Chethan Mallela
T: 646-620-8761 / 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.
1 Adjusted financial metrics presented in this
release are non-GAAP and with growth rates presented on a constant
currency basis. See reconciliations of GAAP results to Adjusted
results on a constant currency basis in the accompanying
tables.
2 Retail consumption data based on Keurig Dr Pepper's
custom IRi category definitions for the 13-week period ending
9/25/2022.
3 CSDs refer to "Carbonated Soft Drinks".
KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
(UNAUDITED)
|
|
|
Third
Quarter
|
|
First Nine
Months
|
(in millions,
except per share data)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net
sales
|
$
3,622
|
|
$
3,250
|
|
$
10,254
|
|
$
9,292
|
Cost of
sales
|
1,721
|
|
1,415
|
|
4,927
|
|
4,087
|
Gross
profit
|
1,901
|
|
1,835
|
|
5,327
|
|
5,205
|
Selling, general and
administrative expenses
|
1,196
|
|
1,040
|
|
3,418
|
|
3,040
|
Impairment of
intangible assets
|
311
|
|
—
|
|
311
|
|
—
|
Gain on litigation
settlement
|
—
|
|
—
|
|
(299)
|
|
—
|
Other operating income,
net
|
—
|
|
—
|
|
(35)
|
|
(4)
|
Income from
operations
|
394
|
|
795
|
|
1,932
|
|
2,169
|
Interest
expense
|
207
|
|
116
|
|
570
|
|
381
|
Loss on early
extinguishment of debt
|
—
|
|
—
|
|
217
|
|
105
|
Gain on sale of equity
method investment
|
—
|
|
—
|
|
(50)
|
|
—
|
Impairment of
investments and note receivable
|
—
|
|
—
|
|
12
|
|
—
|
Other expense (income),
net
|
4
|
|
1
|
|
22
|
|
(6)
|
Income before
provision for income taxes
|
183
|
|
678
|
|
1,161
|
|
1,689
|
Provision for income
taxes
|
4
|
|
149
|
|
179
|
|
387
|
Net income including
non-controlling interest
|
179
|
|
529
|
|
982
|
|
1,302
|
Less: Net loss
attributable to non-controlling interest
|
(1)
|
|
(1)
|
|
(1)
|
|
(1)
|
Net income
attributable to KDP
|
$
180
|
|
$
530
|
|
$
983
|
|
$
1,303
|
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
0.13
|
|
$
0.37
|
|
$
0.69
|
|
$
0.92
|
Diluted
|
0.13
|
|
0.37
|
|
0.69
|
|
0.91
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
1,416.1
|
|
1,417.6
|
|
1,417.3
|
|
1,414.9
|
Diluted
|
1,427.2
|
|
1,428.5
|
|
1,428.8
|
|
1,427.5
|
KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(UNAUDITED)
|
|
|
September
30,
|
|
December
31,
|
(in millions,
except share and per share data)
|
2022
|
|
2021
|
Assets
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
925
|
|
$
567
|
Restricted cash and
cash equivalents
|
3
|
|
1
|
Trade accounts
receivable, net
|
1,472
|
|
1,148
|
Inventories
|
1,438
|
|
894
|
Prepaid expenses and
other current assets
|
487
|
|
447
|
Total current
assets
|
4,325
|
|
3,057
|
Property, plant and
equipment, net
|
2,483
|
|
2,494
|
Investments in
unconsolidated affiliates
|
76
|
|
30
|
Goodwill
|
20,024
|
|
20,182
|
Other intangible
assets, net
|
23,299
|
|
23,856
|
Other non-current
assets
|
1,196
|
|
937
|
Deferred tax
assets
|
37
|
|
42
|
Total
assets
|
$
51,440
|
|
$
50,598
|
Liabilities and
Stockholders' Equity
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
5,284
|
|
$
4,316
|
Accrued
expenses
|
1,129
|
|
1,110
|
Structured
payables
|
145
|
|
142
|
Short-term borrowings
and current portion of long-term obligations
|
—
|
|
304
|
Other current
liabilities
|
675
|
|
613
|
Total current
liabilities
|
7,233
|
|
6,485
|
Long-term
obligations
|
11,561
|
|
11,578
|
Deferred tax
liabilities
|
5,745
|
|
5,986
|
Other non-current
liabilities
|
1,800
|
|
1,577
|
Total
liabilities
|
26,339
|
|
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,
1,416,251,307 and 1,418,119,197 shares issued and outstanding as
of
September 30, 2022 and December 31, 2021, respectively
|
14
|
|
14
|
Additional paid-in
capital
|
21,730
|
|
21,785
|
Retained
earnings
|
3,367
|
|
3,199
|
Accumulated other
comprehensive loss
|
(9)
|
|
(26)
|
Total stockholders'
equity
|
25,102
|
|
24,972
|
Non-controlling
interest
|
(1)
|
|
—
|
Total
equity
|
25,101
|
|
24,972
|
Total liabilities
and stockholders' equity
|
$
51,440
|
|
$
50,598
|
KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
|
First Nine
Months
|
(in
millions)
|
2022
|
|
2021
|
Operating
activities:
|
|
|
|
Net income attributable
to KDP
|
$
983
|
|
$
1,303
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation
expense
|
301
|
|
304
|
Amortization of
intangibles
|
100
|
|
101
|
Other amortization
expense
|
129
|
|
118
|
Provision for sales
returns
|
38
|
|
48
|
Deferred income
taxes
|
(281)
|
|
(21)
|
Employee stock-based
compensation expense
|
43
|
|
68
|
Loss on early
extinguishment of debt
|
217
|
|
105
|
Gain on sale of equity
method investment
|
(50)
|
|
—
|
Gain on disposal of
property, plant and equipment
|
(38)
|
|
(5)
|
Unrealized loss on
foreign currency
|
22
|
|
1
|
Unrealized loss (gain)
on derivatives
|
387
|
|
(94)
|
Settlements of
interest rate contracts
|
125
|
|
—
|
Equity in losses of
unconsolidated affiliates
|
6
|
|
2
|
Impairment of
intangible assets
|
311
|
|
—
|
Impairment on
investments and note receivable of unconsolidated
affiliates
|
12
|
|
—
|
Other, net
|
22
|
|
10
|
Changes in assets and
liabilities:
|
|
|
|
Trade accounts
receivable
|
(372)
|
|
(126)
|
Inventories
|
(552)
|
|
(210)
|
Income taxes
receivable and payables, net
|
(106)
|
|
(11)
|
Other current and
non-current assets
|
(380)
|
|
(181)
|
Accounts payable and
accrued expenses
|
1,014
|
|
536
|
Other current and
non-current liabilities
|
167
|
|
(15)
|
Net change in
operating assets and liabilities
|
(229)
|
|
(7)
|
Net cash provided by
operating activities
|
2,098
|
|
1,933
|
Investing
activities:
|
|
|
|
Proceeds from sale of
investment in unconsolidated affiliates
|
50
|
|
—
|
Purchases of property,
plant and equipment
|
(260)
|
|
(325)
|
Proceeds from sales of
property, plant and equipment
|
79
|
|
18
|
Purchases of
intangibles
|
(19)
|
|
(31)
|
Issuance of related
party note receivable
|
(18)
|
|
(17)
|
Investments in
unconsolidated affiliates
|
(48)
|
|
—
|
Other, net
|
3
|
|
5
|
Net cash used in
investing activities
|
(213)
|
|
(350)
|
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
|
|
4,756
|
Repayments of
commercial paper
|
(649)
|
|
(3,758)
|
Repayments of 2019 KDP
Term Loan
|
—
|
|
(425)
|
Proceeds from
structured payables
|
114
|
|
112
|
Repayments of
structured payables
|
(111)
|
|
(123)
|
Cash dividends
paid
|
(796)
|
|
(687)
|
Repurchases of common
stock
|
(88)
|
|
—
|
Proceeds from issuance
of common stock
|
—
|
|
140
|
Tax withholdings
related to net share settlements
|
(10)
|
|
(125)
|
Payments on finance
leases
|
(65)
|
|
(40)
|
Other, net
|
(45)
|
|
(35)
|
Net cash used in
financing activities
|
(1,515)
|
|
(1,630)
|
Cash, cash
equivalents, and restricted cash and cash
equivalents:
|
|
|
|
Net change from
operating, investing and financing activities
|
370
|
|
(47)
|
Effect of exchange rate
changes
|
(10)
|
|
(5)
|
Beginning
balance
|
568
|
|
255
|
Ending
balance
|
$
928
|
|
$
203
|
KEURIG DR PEPPER INC.
RECONCILIATION OF SEGMENT
INFORMATION
(UNAUDITED)
|
|
|
Third
Quarter
|
|
First Nine
Months
|
(in
millions)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net
Sales
|
|
|
|
|
|
|
|
Coffee
Systems
|
$
1,209
|
|
$
1,155
|
|
$
3,497
|
|
$
3,398
|
Packaged
Beverages
|
1,756
|
|
1,547
|
|
4,925
|
|
4,352
|
Beverage
Concentrates
|
459
|
|
392
|
|
1,278
|
|
1,095
|
Latin America
Beverages
|
198
|
|
156
|
|
554
|
|
447
|
Total net
sales
|
$
3,622
|
|
$
3,250
|
|
$
10,254
|
|
$
9,292
|
|
|
|
|
|
|
|
|
Income from
Operations
|
|
|
|
|
|
|
|
Coffee
Systems
|
$
295
|
|
$
365
|
|
$
878
|
|
$
1,088
|
Packaged
Beverages
|
10
|
|
291
|
|
728
|
|
731
|
Beverage
Concentrates
|
347
|
|
287
|
|
915
|
|
780
|
Latin America
Beverages
|
39
|
|
37
|
|
114
|
|
95
|
Unallocated corporate
costs
|
(297)
|
|
(185)
|
|
(703)
|
|
(525)
|
Total income from
operations
|
$
394
|
|
$
795
|
|
$
1,932
|
|
$
2,169
|
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 third quarter and first nine months 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 as a result of the settlement of the
associated holdback liability; (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; (ix) transaction costs for significant
business combinations (completed or abandoned) excluding the DPS
Merger; (x) foundational projects, which are transformative and
non-recurring in nature; and (xi) impairment recognized on the Bai
brand.
For the third quarter and first nine months 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 third quarter and first nine 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
|
|
Impairment
of intangible
assets
|
|
Income
from
operations
|
|
Operating
margin
|
For the Third
Quarter of 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$
1,721
|
|
$
1,901
|
|
52.5 %
|
|
$
1,196
|
|
$
311
|
|
$
394
|
|
10.9 %
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
(51)
|
|
51
|
|
|
|
(55)
|
|
—
|
|
106
|
|
|
Amortization of
intangibles
|
—
|
|
—
|
|
|
|
(33)
|
|
—
|
|
33
|
|
|
Stock
compensation
|
—
|
|
—
|
|
|
|
(5)
|
|
—
|
|
5
|
|
|
Restructuring and
integration costs
|
—
|
|
—
|
|
|
|
(33)
|
|
—
|
|
33
|
|
|
Productivity
|
(30)
|
|
30
|
|
|
|
(27)
|
|
—
|
|
57
|
|
|
Impairment of
intangible assets
|
—
|
|
—
|
|
|
|
—
|
|
(311)
|
|
311
|
|
|
Non-routine legal
matters
|
—
|
|
—
|
|
|
|
(2)
|
|
—
|
|
2
|
|
|
COVID-19
|
(3)
|
|
3
|
|
|
|
(2)
|
|
—
|
|
5
|
|
|
Foundational
projects
|
—
|
|
—
|
|
|
|
(1)
|
|
—
|
|
1
|
|
|
Adjusted
|
$
1,637
|
|
$
1,985
|
|
54.8 %
|
|
$
1,038
|
|
$
—
|
|
$
947
|
|
26.1 %
|
Impact of foreign
currency
|
|
|
|
|
(0.1) %
|
|
|
|
|
|
|
|
— %
|
Constant currency
adjusted
|
|
|
|
|
54.7 %
|
|
|
|
|
|
|
|
26.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Third
Quarter of 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$
1,415
|
|
$
1,835
|
|
56.5 %
|
|
$
1,040
|
|
$
—
|
|
$
795
|
|
24.5 %
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
27
|
|
(27)
|
|
|
|
(18)
|
|
—
|
|
(9)
|
|
|
Amortization of
intangibles
|
—
|
|
—
|
|
|
|
(34)
|
|
—
|
|
34
|
|
|
Stock
compensation
|
—
|
|
—
|
|
|
|
(3)
|
|
—
|
|
3
|
|
|
Restructuring and
integration costs
|
—
|
|
—
|
|
|
|
(53)
|
|
—
|
|
53
|
|
|
Productivity
|
(21)
|
|
21
|
|
|
|
(23)
|
|
—
|
|
44
|
|
|
Non-routine legal
matters
|
—
|
|
—
|
|
|
|
(7)
|
|
—
|
|
7
|
|
|
COVID-19
|
(3)
|
|
3
|
|
|
|
(1)
|
|
—
|
|
4
|
|
|
Transaction
costs
|
—
|
|
—
|
|
|
|
(1)
|
|
—
|
|
1
|
|
|
Malware
incident
|
—
|
|
—
|
|
|
|
1
|
|
—
|
|
(1)
|
|
|
Adjusted
|
$
1,418
|
|
$
1,832
|
|
56.4 %
|
|
$
901
|
|
$
—
|
|
$
931
|
|
28.6 %
|
KEURIG DR PEPPER INC.
RECONCILIATION OF CERTAIN NON-GAAP
INFORMATION
(UNAUDITED)
|
|
|
Interest
expense
|
|
Other expense
(income), 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 Third
Quarter of 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$ 207
|
|
$
4
|
|
$
183
|
|
$
4
|
|
2.2 %
|
|
$
180
|
|
$
0.13
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
(113)
|
|
2
|
|
217
|
|
54
|
|
|
|
163
|
|
0.11
|
Amortization of
intangibles
|
—
|
|
—
|
|
33
|
|
8
|
|
|
|
25
|
|
0.02
|
Amortization of fair
value debt adjustment
|
(5)
|
|
—
|
|
5
|
|
1
|
|
|
|
4
|
|
—
|
Stock
compensation
|
—
|
|
—
|
|
5
|
|
2
|
|
|
|
3
|
|
—
|
Restructuring and
integration costs
|
—
|
|
—
|
|
33
|
|
8
|
|
|
|
25
|
|
0.02
|
Productivity
|
—
|
|
—
|
|
57
|
|
10
|
|
|
|
47
|
|
0.03
|
Impairment of
intangible assets
|
—
|
|
—
|
|
311
|
|
77
|
|
|
|
234
|
|
0.16
|
Non-routine legal
matters
|
—
|
|
—
|
|
2
|
|
—
|
|
|
|
2
|
|
—
|
COVID-19
|
—
|
|
—
|
|
5
|
|
1
|
|
|
|
4
|
|
—
|
Foundational
projects
|
—
|
|
—
|
|
1
|
|
1
|
|
|
|
—
|
|
—
|
Change in deferred tax
liabilities related to goodwill and other intangible
assets
|
—
|
|
—
|
|
—
|
|
31
|
|
|
|
(31)
|
|
(0.02)
|
Adjusted
|
$
89
|
|
$
6
|
|
$
852
|
|
$
197
|
|
23.1 %
|
|
$
656
|
|
$
0.46
|
Impact of foreign
currency
|
|
|
|
|
|
|
|
|
— %
|
|
|
|
|
Constant currency
adjusted
|
|
|
|
|
|
|
|
|
23.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Third
Quarter of 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$ 116
|
|
$
1
|
|
$
678
|
|
$
149
|
|
22.0 %
|
|
$
530
|
|
$
0.37
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
—
|
|
—
|
|
(9)
|
|
(3)
|
|
|
|
(6)
|
|
—
|
Amortization of
intangibles
|
—
|
|
—
|
|
34
|
|
9
|
|
|
|
25
|
|
0.02
|
Amortization of
deferred financing costs
|
(2)
|
|
—
|
|
2
|
|
2
|
|
|
|
—
|
|
—
|
Amortization of fair
value of debt adjustment
|
(4)
|
|
—
|
|
4
|
|
1
|
|
|
|
3
|
|
—
|
Stock
compensation
|
—
|
|
—
|
|
3
|
|
—
|
|
|
|
3
|
|
—
|
Restructuring and
integration costs
|
—
|
|
—
|
|
53
|
|
13
|
|
|
|
40
|
|
0.03
|
Productivity
|
—
|
|
—
|
|
44
|
|
11
|
|
|
|
33
|
|
0.02
|
Loss on early
extinguishment of debt
|
—
|
|
—
|
|
—
|
|
(1)
|
|
|
|
1
|
|
—
|
Non-routine legal
matters
|
—
|
|
—
|
|
7
|
|
2
|
|
|
|
5
|
|
—
|
COVID-19
|
—
|
|
—
|
|
4
|
|
1
|
|
|
|
3
|
|
—
|
Transaction
costs
|
—
|
|
—
|
|
1
|
|
—
|
|
|
|
1
|
|
—
|
Malware
incident
|
—
|
|
—
|
|
(1)
|
|
(1)
|
|
|
|
—
|
|
—
|
Change in deferred tax
liabilities related to goodwill and other intangible
assets
|
—
|
|
—
|
|
—
|
|
7
|
|
|
|
(7)
|
|
—
|
Adjusted
|
$ 110
|
|
$
1
|
|
$
820
|
|
$
190
|
|
23.2 %
|
|
$
631
|
|
$
0.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change -
adjusted
|
(19.1) %
|
|
|
|
|
|
|
|
|
|
4.0 %
|
|
4.5 %
|
Impact of foreign
currency
|
— %
|
|
|
|
|
|
|
|
|
|
0.3 %
|
|
— %
|
Change - constant
currency adjusted
|
(19.1) %
|
|
|
|
|
|
|
|
|
|
4.3 %
|
|
4.5 %
|
|
|
Diluted earnings per
common share may not foot due to rounding.
|
KEURIG DR PEPPER INC.
RECONCILIATION OF CERTAIN NON-GAAP
INFORMATION
(UNAUDITED)
|
|
|
Cost of
sales
|
|
Gross
profit
|
|
Gross
margin
|
|
Selling, general
and administrative
expenses
|
|
Impairment
of intangible
assets
|
|
Gain on
litigation
settlement
|
|
Other operating
income, net
|
|
Income from
operations
|
|
Operating
margin
|
For the First Nine
Months of 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$
4,927
|
|
$
5,327
|
|
52.0 %
|
|
$
3,418
|
|
$
311
|
|
$
(299)
|
|
$
(35)
|
|
$
1,932
|
|
18.8 %
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
(130)
|
|
130
|
|
|
|
(29)
|
|
—
|
|
—
|
|
—
|
|
159
|
|
|
Amortization of
intangibles
|
—
|
|
—
|
|
|
|
(100)
|
|
—
|
|
—
|
|
—
|
|
100
|
|
|
Stock
compensation
|
—
|
|
—
|
|
|
|
(3)
|
|
—
|
|
—
|
|
—
|
|
3
|
|
|
Restructuring and
integration costs
|
—
|
|
—
|
|
|
|
(89)
|
|
—
|
|
—
|
|
(2)
|
|
91
|
|
|
Productivity
|
(86)
|
|
86
|
|
|
|
(73)
|
|
—
|
|
—
|
|
—
|
|
159
|
|
|
Impairment of
intangible assets
|
—
|
|
—
|
|
|
|
—
|
|
(311)
|
|
—
|
|
—
|
|
311
|
|
|
Non-routine legal
matters
|
—
|
|
—
|
|
|
|
(9)
|
|
—
|
|
—
|
|
—
|
|
9
|
|
|
COVID-19
|
(10)
|
|
10
|
|
|
|
(4)
|
|
—
|
|
—
|
|
—
|
|
14
|
|
|
Gain on
litigation
|
—
|
|
—
|
|
|
|
—
|
|
—
|
|
271
|
|
—
|
|
(271)
|
|
|
Transaction
costs
|
—
|
|
—
|
|
|
|
(1)
|
|
—
|
|
—
|
|
—
|
|
1
|
|
|
Foundational
projects
|
—
|
|
—
|
|
|
|
(3)
|
|
—
|
|
—
|
|
—
|
|
3
|
|
|
Adjusted
|
$
4,701
|
|
$
5,553
|
|
54.2 %
|
|
$
3,107
|
|
$
—
|
|
$
(28)
|
|
$
(37)
|
|
$
2,511
|
|
24.5 %
|
Impact of foreign
currency
|
|
|
|
|
(0.1) %
|
|
|
|
|
|
|
|
|
|
|
|
— %
|
Constant currency
adjusted
|
|
|
|
|
54.1 %
|
|
|
|
|
|
|
|
|
|
|
|
24.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the First Nine
Months of 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$
4,087
|
|
$
5,205
|
|
56.0 %
|
|
$
3,040
|
|
$
—
|
|
$
—
|
|
$
(4)
|
|
$
2,169
|
|
23.3 %
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
53
|
|
(53)
|
|
|
|
32
|
|
—
|
|
—
|
|
—
|
|
(85)
|
|
|
Amortization of
intangibles
|
—
|
|
—
|
|
|
|
(101)
|
|
—
|
|
—
|
|
—
|
|
101
|
|
|
Stock
compensation
|
—
|
|
—
|
|
|
|
(14)
|
|
—
|
|
—
|
|
—
|
|
14
|
|
|
Restructuring and
integration costs
|
—
|
|
—
|
|
|
|
(145)
|
|
—
|
|
—
|
|
—
|
|
145
|
|
|
Productivity
|
(43)
|
|
43
|
|
|
|
(72)
|
|
—
|
|
—
|
|
—
|
|
115
|
|
|
Non-routine legal
matters
|
—
|
|
—
|
|
|
|
(23)
|
|
—
|
|
—
|
|
—
|
|
23
|
|
|
COVID-19
|
(22)
|
|
22
|
|
|
|
(9)
|
|
—
|
|
—
|
|
—
|
|
31
|
|
|
Transaction
costs
|
—
|
|
—
|
|
|
|
(1)
|
|
—
|
|
—
|
|
—
|
|
1
|
|
|
Malware
incident
|
—
|
|
—
|
|
|
|
3
|
|
—
|
|
—
|
|
—
|
|
(3)
|
|
|
Adjusted
|
$
4,075
|
|
$
5,217
|
|
56.1 %
|
|
$
2,710
|
|
$
—
|
|
$
—
|
|
$
(4)
|
|
$
2,511
|
|
27.0 %
|
|
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
|
|
Provision for
income taxes
|
|
Effective
tax rate
|
|
Net income
attributable
to KDP
|
|
Diluted
earnings
per share
|
For the First Nine
Months of 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$ 570
|
|
$
217
|
|
$
(50)
|
|
$
12
|
|
$
22
|
|
$
1,161
|
|
$
179
|
|
15.4 %
|
|
$
983
|
|
$
0.69
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
(247)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
406
|
|
101
|
|
|
|
305
|
|
0.21
|
Amortization of
intangibles
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
100
|
|
25
|
|
|
|
75
|
|
0.05
|
Amortization of
deferred financing costs
|
(2)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2
|
|
—
|
|
|
|
2
|
|
—
|
Amortization of fair
value debt adjustment
|
(14)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
14
|
|
3
|
|
|
|
11
|
|
0.01
|
Stock
compensation
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3
|
|
(1)
|
|
|
|
4
|
|
—
|
Restructuring and
integration costs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
91
|
|
22
|
|
|
|
69
|
|
0.05
|
Productivity
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
159
|
|
32
|
|
|
|
127
|
|
0.09
|
Impairment of
intangible assets
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
311
|
|
77
|
|
|
|
234
|
|
0.16
|
Impairment of
investment
|
—
|
|
—
|
|
—
|
|
(12)
|
|
|
|
12
|
|
—
|
|
|
|
12
|
|
0.01
|
Loss on early
extinguishment of debt
|
—
|
|
(217)
|
|
—
|
|
—
|
|
—
|
|
217
|
|
54
|
|
|
|
163
|
|
0.11
|
Non-routine legal
matters
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
9
|
|
2
|
|
|
|
7
|
|
—
|
COVID-19
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
14
|
|
3
|
|
|
|
11
|
|
0.01
|
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
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3
|
|
1
|
|
|
|
2
|
|
—
|
Change in deferred tax
liabilities related to
goodwill and other intangible assets
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
81
|
|
|
|
(81)
|
|
(0.06)
|
Adjusted
|
$ 307
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
22
|
|
$
2,182
|
|
$
499
|
|
22.9 %
|
|
$ 1,684
|
|
$
1.18
|
Impact of foreign
currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— %
|
|
|
|
|
Constant currency
adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
common share may not foot due to rounding.
|
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
|
|
Provision for
income taxes
|
|
Effective
tax rate
|
|
Net income
attributable
to KDP
|
|
Diluted
earnings
per share
|
For the First Nine
Months of 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$ 381
|
|
$
105
|
|
$
—
|
|
$
—
|
|
$
(6)
|
|
$
1,689
|
|
$
387
|
|
22.9 %
|
|
$ 1,303
|
|
$
0.91
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
7
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(92)
|
|
(23)
|
|
|
|
(69)
|
|
(0.05)
|
Amortization of
intangibles
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
101
|
|
26
|
|
|
|
75
|
|
0.05
|
Amortization of
deferred financing costs
|
(6)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
6
|
|
2
|
|
|
|
4
|
|
—
|
Amortization of fair
value of debt adjustment
|
(14)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
14
|
|
3
|
|
|
|
11
|
|
0.01
|
Stock
compensation
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
14
|
|
14
|
|
|
|
—
|
|
—
|
Restructuring and
integration costs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
145
|
|
35
|
|
|
|
110
|
|
0.08
|
Productivity
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
115
|
|
29
|
|
|
|
86
|
|
0.06
|
Loss on early
extinguishment of debt
|
—
|
|
(105)
|
|
—
|
|
—
|
|
—
|
|
105
|
|
24
|
|
|
|
81
|
|
0.06
|
Non-routine legal
matters
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
23
|
|
5
|
|
|
|
18
|
|
0.01
|
COVID-19
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
31
|
|
8
|
|
|
|
23
|
|
0.02
|
Transaction
costs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
|
|
1
|
|
—
|
Malware
incident
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(3)
|
|
(1)
|
|
|
|
(2)
|
|
—
|
Change in deferred tax
liabilities related to
goodwill and other intangible assets
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
|
|
(1)
|
|
—
|
Adjusted
|
$ 368
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
(6)
|
|
$
2,149
|
|
$
510
|
|
23.7 %
|
|
$ 1,640
|
|
$
1.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change -
adjusted
|
(16.6) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.7 %
|
|
2.6 %
|
Impact of foreign
currency
|
— %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.3 %
|
|
— %
|
Change - Constant
currency adjusted
|
(16.6) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.0 %
|
|
2.6 %
|
|
Diluted earnings per
common share may not foot due to rounding.
|
KEURIG DR PEPPER INC.
RECONCILIATION OF CERTAIN NON-GAAP
INFORMATION
(UNAUDITED)
|
|
|
(in
millions)
|
|
Reported
|
|
Items Affecting
Comparability
|
|
Adjusted
|
For the third
quarter of 2022:
|
|
|
|
|
|
|
Income from
operations
|
|
|
|
|
|
|
Coffee
Systems
|
|
$
295
|
|
$
48
|
|
$
343
|
Packaged
Beverages
|
|
10
|
|
330
|
|
340
|
Beverage
Concentrates
|
|
347
|
|
3
|
|
350
|
Latin America
Beverages
|
|
39
|
|
2
|
|
41
|
Unallocated corporate
costs
|
|
(297)
|
|
170
|
|
(127)
|
Total income from
operations
|
|
$
394
|
|
$
553
|
|
$
947
|
|
|
|
|
|
|
|
For the third
quarter of 2021:
|
|
|
|
|
|
|
Income from
operations
|
|
|
|
|
|
|
Coffee
Systems
|
|
$
365
|
|
$
43
|
|
$
408
|
Packaged
Beverages
|
|
291
|
|
24
|
|
315
|
Beverage
Concentrates
|
|
287
|
|
3
|
|
290
|
Latin America
Beverages
|
|
37
|
|
—
|
|
37
|
Unallocated corporate
costs
|
|
(185)
|
|
66
|
|
(119)
|
Total income from
operations
|
|
$
795
|
|
$
136
|
|
$
931
|
|
|
|
|
|
|
|
|
|
Reported
|
|
Impact of
Foreign
Currency
|
|
Constant
Currency
|
For the third
quarter of 2022:
|
|
|
|
|
|
|
Net
sales
|
|
|
|
|
|
|
Coffee
Systems
|
|
4.7 %
|
|
0.5 %
|
|
5.2 %
|
Packaged
Beverages
|
|
13.5 %
|
|
0.1
|
|
13.6
|
Beverage
Concentrates
|
|
17.1 %
|
|
0.2
|
|
17.3
|
Latin America
Beverages
|
|
26.9 %
|
|
1.9
|
|
28.8
|
Total net
sales
|
|
11.4 %
|
|
0.4
|
|
11.8
|
|
|
|
Adjusted
|
|
Impact of Foreign
Currency
|
|
Constant Currency
Adjusted
|
For the third quarter of 2022:
|
|
|
|
|
|
|
Income from operations
|
|
|
|
|
|
|
Coffee
Systems
|
|
(15.9) %
|
|
0.2 %
|
|
(15.7) %
|
Packaged
Beverages
|
|
7.9
|
|
—
|
|
7.9
|
Beverage
Concentrates
|
|
20.7
|
|
0.3
|
|
21.0
|
Latin America
Beverages
|
|
10.8
|
|
2.7
|
|
13.5
|
Total income from operations
|
|
1.7
|
|
0.3
|
|
2.0
|
|
|
Reported
|
|
Items Affecting
Comparability
|
|
Adjusted
|
|
Impact of
Foreign
Currency
|
|
Constant
Currency
Adjusted
|
For the third
quarter of 2022:
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
|
|
|
|
|
|
|
|
|
Coffee
Systems
|
|
24.4 %
|
|
4.0 %
|
|
28.4 %
|
|
(0.1) %
|
|
28.3 %
|
Packaged
Beverages
|
|
0.6
|
|
18.8
|
|
19.4
|
|
—
|
|
19.4
|
Beverage
Concentrates
|
|
75.6
|
|
0.7
|
|
76.3
|
|
—
|
|
76.3
|
Latin America
Beverages
|
|
19.7
|
|
1.0
|
|
20.7
|
|
0.2
|
|
20.9
|
Total operating
margin
|
|
10.9
|
|
15.2
|
|
26.1
|
|
—
|
|
26.1
|
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 nine
months of 2022:
|
|
|
|
|
|
|
Income from
operations
|
|
|
|
|
|
|
Coffee
Systems
|
|
$
878
|
|
$
153
|
|
$
1,031
|
Packaged
Beverages
|
|
728
|
|
94
|
|
822
|
Beverage
Concentrates
|
|
915
|
|
9
|
|
924
|
Latin America
Beverages
|
|
114
|
|
3
|
|
117
|
Unallocated corporate
costs
|
|
(703)
|
|
320
|
|
(383)
|
Total income from
operations
|
|
$
1,932
|
|
$
579
|
|
$
2,511
|
|
|
|
|
|
|
|
For the first nine
months of 2021:
|
|
|
|
|
|
|
Income from
operations
|
|
|
|
|
|
|
Coffee
Systems
|
|
$
1,088
|
|
$
145
|
|
$
1,233
|
Packaged
Beverages
|
|
731
|
|
74
|
|
805
|
Beverage
Concentrates
|
|
780
|
|
6
|
|
786
|
Latin America
Beverages
|
|
95
|
|
2
|
|
97
|
Unallocated corporate
costs
|
|
(525)
|
|
115
|
|
(410)
|
Total income from
operations
|
|
$
2,169
|
|
$
342
|
|
$
2,511
|
|
|
|
Reported
|
|
Impact of
Foreign
Currency
|
|
Constant
Currency
|
For the first nine
months of 2022:
|
|
|
|
|
|
|
Net
sales
|
|
|
|
|
|
|
Coffee
Systems
|
|
2.9 %
|
|
0.4 %
|
|
3.3 %
|
Packaged
Beverages
|
|
13.2
|
|
—
|
|
13.2
|
Beverage
Concentrates
|
|
16.7
|
|
0.2
|
|
16.9
|
Latin America
Beverages
|
|
23.9
|
|
0.9
|
|
24.8
|
Total net
sales
|
|
10.4
|
|
0.2
|
|
10.6
|
|
|
|
Adjusted
|
|
Impact of
Foreign
Currency
|
|
Constant
Currency
Adjusted
|
For the first nine
months of 2022:
|
|
|
|
|
|
|
Income from
operations
|
|
|
|
|
|
|
Coffee
Systems
|
|
(16.4) %
|
|
0.2 %
|
|
(16.2) %
|
Packaged
Beverages
|
|
2.1
|
|
—
|
|
2.1
|
Beverage
Concentrates
|
|
17.6
|
|
0.2
|
|
17.8
|
Latin America
Beverages
|
|
20.6
|
|
1.0
|
|
21.6
|
Total income from
operations
|
|
—
|
|
0.2
|
|
0.2
|
|
|
Reported
|
|
Items Affecting
Comparability
|
|
Adjusted
|
|
Impact of
Foreign
Currency
|
|
Constant
Currency
Adjusted
|
For the first nine months of
2022:
|
|
|
|
|
|
|
|
|
|
|
Operating margin
|
|
|
|
|
|
|
|
|
|
|
Coffee
Systems
|
|
25.1 %
|
|
4.4 %
|
|
29.5 %
|
|
(0.1) %
|
|
29.4 %
|
Packaged
Beverages
|
|
14.8
|
|
1.9
|
|
16.7
|
|
—
|
|
16.7
|
Beverage
Concentrates
|
|
71.6
|
|
0.7
|
|
72.3
|
|
—
|
|
72.3
|
Latin America
Beverages
|
|
20.6
|
|
0.5
|
|
21.1
|
|
—
|
|
21.1
|
Total operating margin
|
|
18.8
|
|
5.7
|
|
24.5
|
|
—
|
|
24.5
|
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
|
$
1,826
|
Interest
expense
|
689
|
Provision for income
taxes
|
445
|
Other expense
(income), net
|
26
|
Depreciation
expense
|
407
|
Other
amortization
|
175
|
Amortization of
intangibles
|
133
|
EBITDA
|
$
3,701
|
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
intangible assets
|
311
|
Impairment of
investments and note receivable
|
29
|
Restructuring and
integration expenses
|
145
|
Productivity
|
177
|
Non-routine legal
matters
|
16
|
Stock
compensation
|
7
|
COVID-19
|
20
|
Transaction
costs
|
2
|
Malware
incident
|
1
|
Foundational
projects
|
3
|
Mark to
market
|
187
|
Adjusted
EBITDA
|
$
3,971
|
|
|
|
September
30,
|
|
2022
|
Principal amounts of
senior unsecured notes
|
$
11,743
|
Less: Cash and cash
equivalents
|
925
|
Total principal
amounts less cash and cash equivalents
|
$
10,818
|
|
|
September 30, 2022
Management Leverage Ratio
|
2.7
|
KEURIG DR PEPPER INC.
RECONCILIATION OF ADJUSTED EBITDA - LAST TWELVE
MONTHS
(UNAUDITED)
|
|
(in
millions)
|
FOURTH
QUARTER OF
2021
|
|
FIRST NINE
MONTHS OF
2022
|
|
LAST TWELVE
MONTHS
|
Net income
attributable to KDP
|
$
843
|
|
$
983
|
|
$
1,826
|
Interest
expense
|
119
|
|
570
|
|
689
|
Provision for income
taxes
|
266
|
|
179
|
|
445
|
Other expense
(income), net
|
4
|
|
22
|
|
26
|
Depreciation
expense
|
106
|
|
301
|
|
407
|
Other
amortization
|
46
|
|
129
|
|
175
|
Amortization of
intangibles
|
33
|
|
100
|
|
133
|
EBITDA
|
$
1,417
|
|
$
2,284
|
|
$
3,701
|
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 of
intangible assets
|
—
|
|
311
|
|
311
|
Impairment on
investments and note receivable
|
17
|
|
12
|
|
29
|
Restructuring and
integration expenses
|
57
|
|
88
|
|
145
|
Productivity
|
40
|
|
137
|
|
177
|
Nonroutine legal
matters
|
7
|
|
9
|
|
16
|
Stock
compensation
|
4
|
|
3
|
|
7
|
COVID-19
|
6
|
|
14
|
|
20
|
Transaction
costs
|
1
|
|
1
|
|
2
|
Foundational
projects
|
—
|
|
3
|
|
3
|
Malware
incident
|
1
|
|
—
|
|
1
|
Mark to
market
|
28
|
|
159
|
|
187
|
Adjusted
EBITDA
|
$
1,054
|
|
$
2,917
|
|
$
3,971
|
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
nine months of 2022 and 2021, there were no certain items excluded
for comparison to prior year periods.
|
|
First Nine
Months
|
(in
millions)
|
|
2022
|
|
2021
|
Net cash provided by
operating activities
|
|
$
2,098
|
|
$
1,933
|
Purchases of property,
plant and equipment
|
|
(260)
|
|
(325)
|
Proceeds from sales of
property, plant and equipment
|
|
79
|
|
18
|
Free Cash
Flow
|
|
$
1,917
|
|
$
1,626
|
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 third
quarter of 2022
|
|
|
|
|
|
|
|
Coffee
Systems
|
$
—
|
|
$
3
|
|
$
—
|
|
$
3
|
Packaged
Beverages
|
1
|
|
1
|
|
—
|
|
2
|
Beverage
Concentrates
|
—
|
|
—
|
|
—
|
|
—
|
Latin America
Beverages
|
—
|
|
—
|
|
—
|
|
—
|
Total
|
$
1
|
|
$
4
|
|
$
—
|
|
$
5
|
|
|
|
|
|
|
|
|
For the third
quarter of 2021
|
|
|
|
|
|
|
|
Coffee
Systems
|
$
1
|
|
$
1
|
|
$
—
|
|
$
2
|
Packaged
Beverages
|
1
|
|
1
|
|
—
|
|
2
|
Beverage
Concentrates
|
—
|
|
—
|
|
—
|
|
—
|
Latin America
Beverages
|
—
|
|
—
|
|
—
|
|
—
|
Total
|
$
2
|
|
$
2
|
|
$
—
|
|
$
4
|
|
|
|
|
|
|
|
|
For the first nine
months of 2022:
|
|
|
|
|
|
|
|
Coffee
Systems
|
$
1
|
|
$
6
|
|
$
—
|
|
$
7
|
Packaged
Beverages
|
3
|
|
3
|
|
—
|
|
6
|
Beverage
Concentrates
|
—
|
|
—
|
|
—
|
|
—
|
Latin America
Beverages
|
—
|
|
1
|
|
—
|
|
1
|
Total
|
$
4
|
|
$
10
|
|
$
—
|
|
$
14
|
|
|
|
|
|
|
|
|
For the first nine
months of 2021:
|
|
|
|
|
|
|
|
Coffee
Systems
|
$
3
|
|
$
14
|
|
$
(2)
|
|
$
15
|
Packaged
Beverages
|
7
|
|
6
|
|
(8)
|
|
5
|
Beverage
Concentrates
|
—
|
|
—
|
|
(3)
|
|
(3)
|
Latin America
Beverages
|
—
|
|
1
|
|
—
|
|
1
|
Total
|
$
10
|
|
$
21
|
|
$
(13)
|
|
$
18
|
|
|
|
|
|
|
|
|
|
|
(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.
|
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SOURCE Keurig Dr Pepper Inc.