Company Delivers Continued Strong Net Sales
Momentum, led by U.S. Refreshment Beverages
BURLINGTON, Mass. and FRISCO, Texas, April 27,
2023 /PRNewswire/ -- Keurig Dr Pepper Inc. (NASDAQ:
KDP) today reported results for the first quarter ended
March 31, 2023 and reaffirmed its
guidance for full year constant currency net sales growth of 5% and
Adjusted diluted EPS growth of 6% to 7%.
|
Reported GAAP
Basis
|
Adjusted
Basis1
|
|
|
|
Q1
|
Q1
|
Net Sales
% vs Prior Year
|
$3.35 bn
8.9%
|
$3.35 bn
8.9%
|
Diluted EPS
% vs Prior Year
|
$0.33
(19.5)%
|
$0.34
3.0%
|
|
|
|
|
Commenting on the announcement, Chairman and CEO Bob Gamgort stated, "Our overall performance in
the quarter demonstrated the resilience of KDP as we delivered on
our commitments in a dynamic macro environment. Our results were
led by strong revenue growth, supported by successful innovation,
increased marketing and modest brand elasticities. The U.S.
Refreshment Beverages and International segments exhibited standout
performance and, as expected, U.S. Coffee had a slower start to the
year. Though the at-home coffee category is still cycling through
mobility-related changes relative to last year, single serve
continues to gain volume share of the U.S. category. On a
consolidated basis and against the backdrop of persistent
inflation, we are driving healthy bottom-line growth while
reinvesting in our business, and we remain confident in our 2023
outlook."
First Quarter Consolidated Results
Net sales for the
first quarter of 2023 increased 8.9% to $3.35 billion, compared to $3.08 billion in the year-ago period and, on a
constant currency basis, net sales also advanced 8.9%.
Driving the consolidated net sales growth was favorable net
price realization of 9.9%, only slightly offset by lower volume/mix
of 1.0%, reflecting the strength of the Company's brand portfolio
and continued modest elasticities across most categories.
KDP in-market performance in the U.S. Liquid Refreshment
Beverages (LRB) category remained strong, with retail dollar
consumption2 advancing 13.6% and KDP growing market
share in categories representing approximately 88% of its cold
beverage retail sales base. The performance reflected
strength in CSDs3, seltzers, coconut waters, energy,
apple juice and fruit drinks and was driven by Dr Pepper, Canada
Dry, A&W, Sunkist, Squirt and Crush CSDs, as well as Polar
seltzers, Vita Coco, C4 Energy,
Mott's and Hawaiian Punch.
Total at-home coffee category trends continued to be impacted in
the quarter by greater consumer mobility versus the prior year,
with the single serve pod segment gaining volume share of the
category. U.S. retail dollar consumption2 of KDP
Manufactured pods decreased 0.5% in IRi tracked channels in the
quarter, while KDP Manufactured share remained healthy at
approximately 81%.
GAAP operating income for the quarter decreased 39.5% to
$584 million, compared to
$966 million in the year-ago period,
primarily reflecting the unfavorable year-over-year impact of items
affecting comparability, including the gain on the Body Armor
litigation settlement in 2022, as well as the comparison to
year-ago benefits related to the Company's strategic asset
investment program, a change in accounting for non-cash stock
compensation expense and a recovery of legal fees, which
collectively represented an $88
million unfavorable impact in the quarter. Also
impacting the comparison was growth in GAAP gross profit, as
continued broad-based inflation was more than offset by the strong
net sales performance and higher productivity.
Excluding items affecting comparability, Adjusted operating
income decreased 4.5% to $699
million, despite the strong growth in net sales and Adjusted
gross profit, primarily due to the comparison to year-ago benefits,
broad-based inflationary pressure, as well as increased marketing
investment. On a percent of net sales basis, Adjusted
operating income was 20.8%.
GAAP net income for the quarter decreased 20.2% to $467 million, or $0.33 per diluted share, compared to $585 million, or $0.41 per diluted share, in the year-ago
period. This performance reflected the unfavorable
year-over-year impact of items affecting comparability and the
decline in Adjusted operating income, partially offset by the
benefits of Nutrabolt equity method earnings, a lower effective tax
rate and lower diluted shares outstanding. Excluding
items affecting comparability, Adjusted net income for the quarter
advanced 0.6% to $479 million, and
Adjusted diluted EPS increased 3.0% to $0.34.
Free cash flow for the first quarter was $16 million, reflecting lower operating cash flow
and higher capital expenditures.
During the quarter, the Company repurchased approximately 6.6
million KDP shares at a weighted average price per share of
$34.96, totaling approximately
$231 million. The Company has
approximately $3.4 billion remaining
under its share repurchase authorization expiring on December 31, 2025.
___________________
|
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 4/2/2023.
|
3
|
CSDs refer to
"Carbonated Soft Drinks"
|
First Quarter Segment Results
U.S. Refreshment Beverages
Net sales for the
first quarter increased 12.7% to $2.01
billion, compared to $1.78
billion in the year-ago period, reflecting favorable net
price realization of 12.5% and a 0.2% increase in volume/mix.
Driving this exceptional performance was strong traction from
recent innovation, most notably Dr Pepper Strawberries & Cream,
and effective in-market execution, as well as the contribution from
our recently announced sales and distribution partnership for C4
Energy.
GAAP operating income decreased 30.4% to $490 million, compared to $704 million in the year-ago period, largely
reflecting the unfavorable year-over-year impact of items affecting
comparability, including the gain on the Body Armor litigation
settlement in 2022. Also impacting the performance was continued
broad-based inflationary pressure and a net $32 million year-over-year headwind from the
Company's strategic asset investment program, partially offset by
the strong net sales growth and productivity. Excluding items
affecting comparability, Adjusted operating income increased 11.6%
to $508 million and, on a percent of
net sales basis, totaled 25.3%.
U.S. Coffee
Net sales for the first quarter
decreased 1.3% to $931 million,
compared to $943 million in the
year-ago period. This performance reflected higher net price
realization of 5.3%, more than offset by a 6.6% decline in
volume/mix.
At-home coffee consumption in the quarter continued to normalize
post the pandemic. Pod revenue grew 2.9%, including a
shipment decline of 1.9% due primarily to greater mobility versus
the prior year. On a trailing twelve-month basis versus the
pre-pandemic Q1 2019 period, at-home pod shipments grew 22.8%,
representing a mid-single digit compound annual growth rate
(CAGR).
Brewer shipments totaled 10.2 million for the twelve months
ending March 31, 2023, representing a
9.8% decline year-over-year. Compared against pre-pandemic
levels represented by the twelve months ending March 31, 2019, brewer shipments grew 25.6%,
representing a mid-single digit CAGR.
GAAP operating income decreased 9.0% to $232 million, compared to $255 million in the year-ago period, largely
reflecting the decline in volume/mix, broad-based inflationary
pressure and an unfavorable year-over-year impact of items
affecting comparability, partially offset by higher net price
realization and productivity. Excluding items affecting
comparability, Adjusted operating income decreased 5.3% to
$285 million and, on a percent of net
sales basis, totaled 30.6%.
International
Net sales for the first quarter
increased 17.2% to $415 million,
compared to $354 million in the
year-ago period and, on a constant currency basis, net sales
advanced 16.7%. This strong and balanced performance was
driven by higher net price realization of 9.0% and volume/mix
growth of 7.7%, and reflected strength in Peñafiel and growth in
K-Cup® Pods in Canada.
GAAP operating income increased a strong 25.0% to $80 million, compared to $64 million in the year-ago period, largely
reflecting the benefits of the double-digit increase in net sales
and productivity, as well as items affecting comparability,
partially offset by broad-based inflationary pressure.
Excluding items affecting comparability, Adjusted operating
income increased 18.3% to $84 million
and, on a percent of net sales basis, totaled 20.2%.
2023 Guidance
The 2023 guidance provided below is
presented on a constant currency, non-GAAP basis. The Company
does not provide reconciliations of such forward-looking non-GAAP
measures to GAAP measures, due to the inability to predict the
amount and timing of impacts outside of the Company's control on
certain items, such as non-cash gains or losses resulting from
mark-to-market adjustments of derivative instruments, among
others.
On a constant currency basis, KDP continues to expect net sales
growth of 5% and Adjusted diluted EPS growth of 6% to 7% in 2023,
with foreign currency translation expected to be an approximate one
half of one percentage point headwind to both metrics.
Investor Contacts:
Jane
Gelfand
T: 888-340-5287 / jane.gelfand@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 of more than $14 billion and approximately 28,000 employees.
KDP holds leadership positions in liquid refreshment beverages,
including 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®, Canada Dry®, Clamato®, CORE®, Green Mountain Coffee
Roasters®, Mott's®, Snapple®, 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's Drink Well. Do Good.
corporate responsibility platform is focused on the greatest
opportunities for impact in the environment, its supply chain, the
health and well-being of consumers and with its people and
communities. 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 gross
profit, Adjusted operating income, Adjusted net income, Adjusted
diluted EPS, free cash flow and financial measures presented on a
constant currency basis, which differ from results using U.S.
Generally Accepted Accounting Principles (GAAP). These non-GAAP
financial measures should be considered as supplements to the GAAP
reported measures, should not be considered replacements for, or
superior to, the GAAP measures and may not be comparable to
similarly named measures used by other companies. Non-GAAP
financial measures typically exclude certain charges, including
one-time costs that are not expected to occur routinely in future
periods. The Company uses non-GAAP financial measures internally to
focus management on performance excluding these special charges to
gauge our business operating performance. Management believes this
information is helpful to investors because it increases
transparency and assists investors in understanding the underlying
performance of the Company and in the analysis of ongoing operating
trends. Additionally, management believes that non-GAAP financial
measures are frequently used by analysts and investors in their
evaluation of companies, and their continued inclusion provides
consistency in financial reporting and enables analysts and
investors to perform meaningful comparisons of past, present and
future operating results. The most directly comparable GAAP
financial measures and reconciliations to non-GAAP financial
measures are set forth in the appendix to this release and included
in the Company's filings with the SEC.
To the extent that the Company provides guidance, it does so
only on a non-GAAP basis and does not provide reconciliations of
such forward-looking non-GAAP measures to GAAP due to the inability
to predict the amount and timing of impacts outside of the
Company's control on certain items, such as non-cash gains or
losses resulting from mark-to-market adjustments of derivative
instruments, among others.
KEURIG DR PEPPER INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
(UNAUDITED)
|
|
|
First
Quarter
|
(in millions,
except per share data)
|
2023
|
|
2022
|
Net
sales
|
$
3,353
|
|
$
3,078
|
Cost of
sales
|
1,609
|
|
1,428
|
Gross
profit
|
1,744
|
|
1,650
|
Selling, general and
administrative expenses
|
1,165
|
|
1,018
|
Gain on litigation
settlement
|
—
|
|
(299)
|
Other operating income,
net
|
(5)
|
|
(35)
|
Income from
operations
|
584
|
|
966
|
Interest
expense
|
23
|
|
188
|
Loss on early
extinguishment of debt
|
—
|
|
48
|
Gain on sale of equity
method investment
|
—
|
|
(50)
|
Impairment of
investments and note receivable
|
—
|
|
6
|
Other (income) expense,
net
|
(20)
|
|
9
|
Income before
provision for income taxes
|
581
|
|
765
|
Provision for income
taxes
|
114
|
|
180
|
Net income including
non-controlling interest
|
467
|
|
585
|
Less: Net loss
attributable to non-controlling interest
|
—
|
|
—
|
Net income
attributable to KDP
|
$
467
|
|
$
585
|
|
|
|
|
Earnings per common
share:
|
|
|
|
Basic
|
$
0.33
|
|
$
0.41
|
Diluted
|
0.33
|
|
0.41
|
Weighted average
common shares outstanding:
|
|
|
|
Basic
|
1,406.2
|
|
1,418.2
|
Diluted
|
1,417.0
|
|
1,429.7
|
KEURIG DR PEPPER INC.
|
CONDENSED CONSOLIDATED BALANCE
SHEETS
|
(UNAUDITED)
|
|
|
March
31,
|
|
December
31,
|
(in millions,
except share and per share data)
|
2023
|
|
2022
|
Assets
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
204
|
|
$
535
|
Trade accounts
receivable, net
|
1,451
|
|
1,484
|
Inventories
|
1,391
|
|
1,314
|
Prepaid expenses and
other current assets
|
540
|
|
471
|
Total current
assets
|
3,586
|
|
3,804
|
Property, plant and
equipment, net
|
2,480
|
|
2,491
|
Investments in
unconsolidated affiliates
|
1,009
|
|
1,000
|
Goodwill
|
20,117
|
|
20,072
|
Other intangible
assets, net
|
23,273
|
|
23,183
|
Other non-current
assets
|
1,160
|
|
1,252
|
Deferred tax
assets
|
35
|
|
35
|
Total
assets
|
$
51,660
|
|
$
51,837
|
Liabilities and
Stockholders' Equity
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
4,947
|
|
5,206
|
Accrued
expenses
|
1,046
|
|
1,153
|
Structured
payables
|
137
|
|
137
|
Short-term borrowings
and current portion of long-term obligations
|
2,310
|
|
895
|
Other current
liabilities
|
687
|
|
685
|
Total current
liabilities
|
9,127
|
|
8,076
|
Long-term
obligations
|
9,929
|
|
11,072
|
Deferred tax
liabilities
|
5,739
|
|
5,739
|
Other non-current
liabilities
|
1,763
|
|
1,825
|
Total
liabilities
|
26,558
|
|
26,712
|
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,
1,403,720,858 and 1,408,394,293 shares issued and outstanding as of
March
31, 2023 and December 31, 2022, respectively
|
14
|
|
14
|
Additional paid-in
capital
|
21,210
|
|
21,444
|
Retained
earnings
|
3,724
|
|
3,539
|
Accumulated other
comprehensive income
|
155
|
|
129
|
Total stockholders'
equity
|
25,103
|
|
25,126
|
Non-controlling
interest
|
(1)
|
|
(1)
|
Total
equity
|
25,102
|
|
25,125
|
Total liabilities
and stockholders' equity
|
$
51,660
|
|
$
51,837
|
KEURIG DR PEPPER INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(UNAUDITED)
|
|
|
First
Quarter
|
(in
millions)
|
2023
|
|
2022
|
Operating
activities:
|
|
|
|
Net income attributable
to KDP
|
$
467
|
|
$
585
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation
expense
|
107
|
|
106
|
Amortization of
intangibles
|
34
|
|
34
|
Other amortization
expense
|
45
|
|
42
|
Provision for sales
returns
|
10
|
|
12
|
Deferred income
taxes
|
—
|
|
8
|
Employee stock-based
compensation expense
|
29
|
|
(15)
|
Loss on early
extinguishment of debt
|
—
|
|
48
|
Gain on sale of equity
method investment
|
—
|
|
(50)
|
Gain on disposal of
property, plant and equipment
|
(5)
|
|
(38)
|
Unrealized gain on
foreign currency
|
(2)
|
|
(11)
|
Unrealized gain on
derivatives
|
(95)
|
|
—
|
Equity in (earnings)
loss of unconsolidated affiliates
|
(9)
|
|
3
|
Impairment on
investments and note receivable of unconsolidated
affiliates
|
—
|
|
6
|
Other, net
|
(4)
|
|
13
|
Changes in assets and
liabilities:
|
|
|
|
Trade accounts
receivable
|
28
|
|
(73)
|
Inventories
|
(74)
|
|
(147)
|
Income taxes
receivable and payables, net
|
60
|
|
135
|
Other current and
non-current assets
|
(151)
|
|
(284)
|
Accounts payable and
accrued expenses
|
(391)
|
|
151
|
Other current and
non-current liabilities
|
22
|
|
138
|
Net change in
operating assets and liabilities
|
(506)
|
|
(80)
|
Net cash provided by
operating activities
|
71
|
|
663
|
Investing
activities:
|
|
|
|
Proceeds from sale of
investment in unconsolidated affiliates
|
—
|
|
50
|
Purchases of property,
plant and equipment
|
(62)
|
|
(109)
|
Proceeds from sales of
property, plant and equipment
|
7
|
|
78
|
Purchases of
intangibles
|
(51)
|
|
(10)
|
Issuance of related
party note receivable
|
—
|
|
(6)
|
Investments in
unconsolidated affiliates
|
—
|
|
(3)
|
Other, net
|
1
|
|
3
|
Net cash (used in)
provided by investing activities
|
(105)
|
|
3
|
Financing
activities:
|
|
|
|
Repayments of
Notes
|
—
|
|
(201)
|
Proceeds from issuance
of commercial paper
|
3,523
|
|
—
|
Repayments of
commercial paper
|
(3,258)
|
|
(149)
|
Proceeds from
structured payables
|
34
|
|
38
|
Repayments of
structured payables
|
(32)
|
|
(37)
|
Cash dividends
paid
|
(281)
|
|
(265)
|
Repurchases of common
stock
|
(231)
|
|
—
|
Tax withholdings
related to net share settlements
|
(31)
|
|
(5)
|
Payments on finance
leases
|
(24)
|
|
(20)
|
Other, net
|
(3)
|
|
(5)
|
Net cash used in
financing activities
|
(303)
|
|
(644)
|
Cash, cash
equivalents, and restricted cash and cash
equivalents:
|
|
|
|
Net change from
operating, investing and financing activities
|
(337)
|
|
22
|
Effect of exchange rate
changes
|
6
|
|
4
|
Beginning
balance
|
535
|
|
568
|
Ending
balance
|
$
204
|
|
$
594
|
KEURIG DR PEPPER INC.
|
RECONCILIATION OF SEGMENT
INFORMATION
|
(UNAUDITED)
|
|
|
First
Quarter
|
(in
millions)
|
2023
|
|
2022
|
Net
Sales
|
|
|
|
U.S. Refreshment
Beverages
|
$
2,007
|
|
$
1,781
|
U.S. Coffee
|
931
|
|
943
|
International
|
415
|
|
354
|
Total net
sales
|
$
3,353
|
|
$
3,078
|
|
|
|
|
Income from
Operations
|
|
|
|
U.S. Refreshment
Beverages
|
$
490
|
|
$
704
|
U.S. Coffee
|
232
|
|
255
|
International
|
80
|
|
64
|
Unallocated corporate
costs
|
(218)
|
|
(57)
|
Total income from
operations
|
$
584
|
|
$
966
|
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 first quarter of 2023, the other certain items excluded
for comparison purposes include productivity expenses.
For the first quarter of 2022, the other certain items excluded
for comparison purposes include (i) restructuring and integration
expenses related to significant business combinations; (ii)
productivity expenses; (iii) costs related to significant
non-routine legal matters, specifically the antitrust litigation;
(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, which were 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; (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; and (viii) losses recognized with
respect to our equity method investment in Bedford as a result of funding our share of
their wind-down costs.
Constant currency adjusted: Defined as certain financial
statement captions and metrics adjusted for certain items affecting
comparability, calculated on a constant currency basis by
converting our current period local currency financial results
using the prior period foreign currency exchange rates.
For the first quarter ended March 31,
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 First
Quarter of 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$
1,609
|
|
$
1,744
|
|
52.0 %
|
|
$
1,165
|
|
$
—
|
|
$
(5)
|
|
$
584
|
|
17.4 %
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
14
|
|
(14)
|
|
|
|
(12)
|
|
—
|
|
—
|
|
(2)
|
|
|
Amortization of
intangibles
|
—
|
|
—
|
|
|
|
(34)
|
|
—
|
|
—
|
|
34
|
|
|
Stock
compensation
|
—
|
|
—
|
|
|
|
(5)
|
|
—
|
|
—
|
|
5
|
|
|
Productivity
|
(38)
|
|
38
|
|
|
|
(40)
|
|
—
|
|
—
|
|
78
|
|
|
Adjusted
|
$
1,585
|
|
$
1,768
|
|
52.7 %
|
|
$
1,074
|
|
$
—
|
|
$
(5)
|
|
$
699
|
|
20.8 %
|
Impact of foreign
currency
|
|
|
|
|
— %
|
|
|
|
|
|
|
|
|
|
0.1 %
|
Constant currency
adjusted
|
|
|
|
|
52.7 %
|
|
|
|
|
|
|
|
|
|
20.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the First
Quarter of 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$
1,428
|
|
$
1,650
|
|
53.6 %
|
|
$
1,018
|
|
$
(299)
|
|
$
(35)
|
|
$
966
|
|
31.4 %
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
59
|
|
(59)
|
|
|
|
26
|
|
—
|
|
—
|
|
(85)
|
|
|
Amortization of
intangibles
|
—
|
|
—
|
|
|
|
(34)
|
|
—
|
|
—
|
|
34
|
|
|
Stock
compensation
|
—
|
|
—
|
|
|
|
7
|
|
—
|
|
—
|
|
(7)
|
|
|
Restructuring and
integration costs
|
—
|
|
—
|
|
|
|
(33)
|
|
—
|
|
(3)
|
|
36
|
|
|
Productivity
|
(28)
|
|
28
|
|
|
|
(22)
|
|
—
|
|
—
|
|
50
|
|
|
Non-routine legal
matters
|
—
|
|
—
|
|
|
|
(4)
|
|
—
|
|
—
|
|
4
|
|
|
COVID-19
|
(4)
|
|
4
|
|
|
|
(1)
|
|
—
|
|
—
|
|
5
|
|
|
Gain on
litigation
|
—
|
|
—
|
|
|
|
—
|
|
271
|
|
—
|
|
(271)
|
|
|
Adjusted
|
$
1,455
|
|
$
1,623
|
|
52.7 %
|
|
$
957
|
|
$
(28)
|
|
$
(38)
|
|
$
732
|
|
23.8 %
|
|
Refer to page
A-8 for reconciliations of reported net sales to
constant currency net sales and adjusted income from operations to
constant currency adjusted income from operations.
|
KEURIG DR PEPPER INC.
|
RECONCILIATION OF CERTAIN NON-GAAP
INFORMATION
|
(UNAUDITED)
|
|
|
Interest
expense
|
|
Loss on early
extinguishment
of debt
|
|
Gain on sale of
equity method
investment
|
|
Impairment of
investments and
note receivable
|
|
Other
(income)
expense, net
|
|
Income before
provision for
income taxes
|
|
Provision for
income taxes
|
|
Effective
tax rate
|
|
Net income
attributable
to KDP
|
|
Diluted
earnings
per share
|
For the First
Quarter of 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$ 23
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
(20)
|
|
$
581
|
|
$
114
|
|
19.6 %
|
|
$
467
|
|
$
0.33
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
93
|
|
—
|
|
—
|
|
—
|
|
9
|
|
(104)
|
|
(29)
|
|
|
|
(75)
|
|
(0.05)
|
Amortization of
intangibles
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
34
|
|
10
|
|
|
|
24
|
|
0.02
|
Amortization of fair
value debt adjustment
|
(4)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
4
|
|
1
|
|
|
|
3
|
|
—
|
Stock
compensation
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
5
|
|
2
|
|
|
|
3
|
|
—
|
Productivity
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
78
|
|
21
|
|
|
|
57
|
|
0.04
|
Adjusted
|
$ 112
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
(11)
|
|
$
598
|
|
$
119
|
|
19.9 %
|
|
$
479
|
|
$
0.34
|
Impact of foreign
currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.3 %
|
|
|
|
|
Constant currency
adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20.2 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the First
Quarter of 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$ 188
|
|
$
48
|
|
$
(50)
|
|
$
6
|
|
$
9
|
|
$
765
|
|
$
180
|
|
23.5 %
|
|
$
585
|
|
$
0.41
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
(71)
|
|
—
|
|
—
|
|
—
|
|
(3)
|
|
(11)
|
|
(2)
|
|
|
|
(9)
|
|
(0.01)
|
Amortization of
intangibles
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
34
|
|
9
|
|
|
|
25
|
|
0.02
|
Amortization of
deferred financing costs
|
(1)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
|
|
1
|
|
—
|
Amortization of fair
value of debt
adjustment
|
(5)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
5
|
|
1
|
|
|
|
4
|
|
—
|
Stock
compensation
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(7)
|
|
(1)
|
|
|
|
(6)
|
|
—
|
Restructuring and
integration costs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
36
|
|
9
|
|
|
|
27
|
|
0.02
|
Productivity
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
50
|
|
12
|
|
|
|
38
|
|
0.03
|
Impairment of
investment
|
—
|
|
—
|
|
—
|
|
(6)
|
|
—
|
|
6
|
|
—
|
|
|
|
6
|
|
—
|
Loss on early
extinguishment of debt
|
—
|
|
(48)
|
|
—
|
|
—
|
|
—
|
|
48
|
|
11
|
|
|
|
37
|
|
0.03
|
Non-routine legal
matters
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
4
|
|
1
|
|
|
|
3
|
|
—
|
COVID-19
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
5
|
|
1
|
|
|
|
4
|
|
—
|
Gain on
litigation
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(271)
|
|
(68)
|
|
|
|
(203)
|
|
(0.14)
|
Gain on sale of
equity-method investment
|
—
|
|
—
|
|
50
|
|
—
|
|
—
|
|
(50)
|
|
(12)
|
|
|
|
(38)
|
|
(0.03)
|
Adjusted
|
$ 111
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
6
|
|
$
615
|
|
$
141
|
|
22.9 %
|
|
$
474
|
|
$
0.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change -
adjusted
|
0.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.1 %
|
|
3.0 %
|
Impact of foreign
currency
|
— %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.5) %
|
|
— %
|
Change - Constant
currency adjusted
|
0.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.6 %
|
|
3.0 %
|
|
Diluted earnings per
common share may not foot due to rounding.
|
KEURIG DR PEPPER INC.
|
RECONCILIATION OF CERTAIN FINANCIAL MEASURES BY
SEGMENT TO CONSTANT CURRENCY
|
ADJUSTED FINANCIAL MEASURES BY
SEGMENT
|
(UNAUDITED)
|
|
(in
millions)
|
Reported
|
|
Items Affecting
Comparability
|
|
Adjusted
|
For the first
quarter of 2023:
|
|
|
|
|
|
Income from
operations
|
|
|
|
|
|
U.S. Refreshment
Beverages
|
$
490
|
|
$
18
|
|
$
508
|
U.S. Coffee
|
232
|
|
53
|
|
285
|
International
|
80
|
|
4
|
|
84
|
Unallocated corporate
costs
|
(218)
|
|
40
|
|
(178)
|
Total income from
operations
|
$
584
|
|
$
115
|
|
$
699
|
|
|
|
|
|
|
For the first
quarter of 2022:
|
|
|
|
|
|
Income from
operations
|
|
|
|
|
|
U.S. Refreshment
Beverages
|
$
704
|
|
$
(249)
|
|
$
455
|
U.S. Coffee
|
255
|
|
46
|
|
301
|
International
|
64
|
|
7
|
|
71
|
Unallocated corporate
costs
|
(57)
|
|
(38)
|
|
(95)
|
Total income from
operations
|
$
966
|
|
$
(234)
|
|
$
732
|
|
|
Reported
|
|
Impact of
Foreign
Currency
|
|
Constant
Currency
|
For the first
quarter of 2023:
|
|
|
|
|
|
Net
sales
|
|
|
|
|
|
U.S. Refreshment
Beverages
|
12.7 %
|
|
— %
|
|
12.7 %
|
U.S. Coffee
|
(1.3)
|
|
—
|
|
(1.3)
|
International
|
17.2
|
|
(0.5)
|
|
16.7
|
Total net
sales
|
8.9
|
|
—
|
|
8.9
|
|
|
Adjusted
|
|
Impact of
Foreign
Currency
|
|
Constant
Currency
Adjusted
|
For the first
quarter of 2023:
|
|
|
|
|
|
Income from
operations
|
|
|
|
|
|
U.S. Refreshment
Beverages
|
11.6 %
|
|
— %
|
|
11.6 %
|
U.S. Coffee
|
(5.3)
|
|
—
|
|
(5.3)
|
International
|
18.3
|
|
—
|
|
18.3
|
Total income from
operations
|
(4.5)
|
|
—
|
|
(4.5)
|
|
|
Reported
|
|
Items
Affecting
Comparability
|
|
Adjusted
|
|
Impact of
Foreign
Currency
|
|
Constant
Currency
Adjusted
|
For the first
quarter of 2023:
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
|
|
|
|
|
|
|
|
|
U.S. Refreshment
Beverages
|
|
24.4 %
|
|
0.9 %
|
|
25.3 %
|
|
— %
|
|
25.3 %
|
U.S. Coffee
|
|
24.9
|
|
5.7
|
|
30.6
|
|
—
|
|
30.6
|
International
|
|
19.3
|
|
0.9
|
|
20.2
|
|
0.1
|
|
20.3
|
Total operating
margin
|
|
17.4
|
|
3.4
|
|
20.8
|
|
0.1
|
|
20.9
|
|
Diluted earnings per
common share may not foot due to rounding.
|
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
|
$
1,318
|
Interest
expense
|
528
|
Provision for income
taxes
|
218
|
Other (income)
expense, net
|
(15)
|
Depreciation
expense
|
400
|
Other
amortization
|
175
|
Amortization of
intangibles
|
138
|
EBITDA
|
$
2,762
|
Items affecting
comparability:
|
|
Loss on early
extinguishment of debt
|
$
169
|
Impairment of
intangible assets
|
477
|
Impairment of
investments and note receivable
|
6
|
Restructuring and
integration expenses
|
136
|
Productivity
|
218
|
Non-routine legal
matters
|
9
|
Stock
compensation
|
17
|
COVID-19
|
9
|
Transaction
costs
|
1
|
Foundational
projects
|
4
|
Mark to
market
|
233
|
Adjusted
EBITDA
|
$
4,041
|
|
|
|
March
31,
|
|
2023
|
Principal amounts
of:
|
|
Commercial paper
notes
|
$
664
|
Senior unsecured
notes
|
11,743
|
Total principal
amounts
|
12,407
|
Less: Cash and cash
equivalents
|
204
|
Total principal
amounts less cash and cash equivalents
|
$
12,203
|
|
|
March 31, 2023
Management Leverage Ratio
|
3.0
|
|
Diluted earnings per
common share may not foot due to rounding.
|
KEURIG DR PEPPER INC.
|
RECONCILIATION OF ADJUSTED EBITDA - LAST TWELVE
MONTHS
|
(UNAUDITED)
|
|
(in
millions)
|
SECOND
QUARTER OF
2022
|
|
THIRD
QUARTER OF
2022
|
|
FOURTH
QUARTER OF
2022
|
|
FIRST
QUARTER OF
2023
|
|
LAST TWELVE
MONTHS
|
Net income
attributable to KDP
|
$
218
|
|
$
180
|
|
$
453
|
|
$
467
|
|
$
1,318
|
Interest
expense
|
175
|
|
207
|
|
123
|
|
23
|
|
528
|
Provision for income
taxes
|
(5)
|
|
4
|
|
105
|
|
114
|
|
218
|
Other (income)
expense, net
|
9
|
|
4
|
|
(8)
|
|
(20)
|
|
(15)
|
Depreciation
expense
|
99
|
|
96
|
|
98
|
|
107
|
|
400
|
Other
amortization
|
44
|
|
43
|
|
43
|
|
45
|
|
175
|
Amortization of
intangibles
|
33
|
|
33
|
|
38
|
|
34
|
|
138
|
EBITDA
|
$
573
|
|
$
567
|
|
$
852
|
|
$
770
|
|
$
2,762
|
Items affecting
comparability:
|
|
|
|
|
|
|
|
|
|
Loss on early
extinguishment of debt
|
$
169
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
169
|
Impairment of
intangible assets
|
—
|
|
311
|
|
166
|
|
—
|
|
477
|
Impairment on
investments and note receivable
|
6
|
|
—
|
|
—
|
|
—
|
|
6
|
Restructuring and
integration expenses
|
22
|
|
33
|
|
81
|
|
—
|
|
136
|
Productivity
|
44
|
|
50
|
|
64
|
|
60
|
|
218
|
Nonroutine legal
matters
|
3
|
|
2
|
|
4
|
|
—
|
|
9
|
Stock
compensation
|
5
|
|
5
|
|
2
|
|
5
|
|
17
|
COVID-19
|
4
|
|
5
|
|
—
|
|
—
|
|
9
|
Transaction
costs
|
1
|
|
—
|
|
—
|
|
—
|
|
1
|
Foundational
projects
|
2
|
|
1
|
|
1
|
|
—
|
|
4
|
Mark to
market
|
138
|
|
106
|
|
(9)
|
|
(2)
|
|
233
|
Adjusted
EBITDA
|
$
967
|
|
$
1,080
|
|
$
1,161
|
|
$
833
|
|
$
4,041
|
|
Diluted earnings per
common share may not foot due to rounding.
|
KEURIG DR PEPPER INC.
RECONCILIATION
OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH
FLOW
(UNAUDITED)
Free cash flow is defined as net cash provided by operating
activities adjusted for purchases of property, plant and equipment,
proceeds from sales of property, plant and equipment, and certain
items excluded for comparison to prior year periods. For the first
quarter of 2023 and 2022, there were no certain items excluded for
comparison to prior year periods.
|
|
First
Quarter
|
(in
millions)
|
|
2023
|
|
2022
|
Net cash provided by
operating activities
|
|
$
71
|
|
$
663
|
Purchases of property,
plant and equipment
|
|
(62)
|
|
(109)
|
Proceeds from sales of
property, plant and equipment
|
|
7
|
|
78
|
Free Cash
Flow
|
|
$
16
|
|
$
632
|
|
Diluted earnings per
common share may not foot due to rounding.
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/keurig-dr-pepper-reports-q1-2023-results-and-reaffirms-guidance-for-2023-301808948.html
SOURCE Keurig Dr Pepper Inc.