Q3 Performance Led by Continued Net Sales
Momentum and Strong Gross Margin Expansion
BURLINGTON, Mass. and FRISCO, Texas, Oct. 26,
2023 /PRNewswire/ -- Keurig Dr Pepper Inc. (NASDAQ:
KDP) today reported results for the third quarter ended
September 30, 2023 and reaffirmed its
guidance for full year constant currency net sales growth of 5% to
6% and Adjusted diluted EPS growth of 6% to 7%.
|
|
Reported GAAP Basis
|
|
Adjusted Basis1
|
|
|
Q3
|
|
YTD
|
|
Q3
|
|
YTD
|
Net Sales
|
|
$3.81 bn
|
|
$10.95 bn
|
|
$3.81 bn
|
|
$10.95 bn
|
% vs prior year
|
|
5.1 %
|
|
6.8 %
|
|
4.1 %
|
|
6.2 %
|
Diluted EPS
|
|
$0.37
|
|
$1.05
|
|
$0.48
|
|
$1.24
|
% vs prior year
|
|
184.6 %
|
|
52.2 %
|
|
4.3 %
|
|
5.1 %
|
"In the third quarter, we maintained healthy revenue
momentum and delivered a significant gross margin inflection,
helping to fund reinvestment in our brands and capabilities," said
Chairman and CEO Bob Gamgort. "In
addition to continued strong results across our U.S. Refreshment
Beverages and International segments, we also began to rebuild our
margins in U.S. Coffee. We are reaffirming our full year outlook
and remain committed to delivering a strong Q4 with an improved
composition of earnings."
Gamgort continued, "KDP continues to pair strong execution and
financial delivery with building the foundation for the Company's
next phase of growth. Today we announced our expansion into sports
hydration through a new and exciting partnership with Grupo PiSA
for Electrolit. Over the past 12 months, we have established new
growth platforms in sports hydration, energy and RTD coffee by
partnering with compelling brands and leveraging our unique
distribution assets across both cold and hot beverages to attract
strong partnerships."
Third Quarter Consolidated Results
Net sales for the third quarter of 2023 increased 5.1% to
$3.81 billion, compared to
$3.62 billion in the year-ago period.
On a constant currency basis, net sales advanced 4.1%, driven by
net price realization of 5.5% that was only partially offset by
lower volume/mix of 1.4%. Revenue momentum reflected the continued
strength of the Company's brand portfolio and in-market execution,
as well as manageable elasticity across most categories.
GAAP operating income increased 127.4% to $896 million, compared to $394 million in the year-ago period. The
comparison primarily reflected the favorable year-over-year impact
of items affecting comparability, including a $311 million impairment in the prior year period,
as well as strong gross profit growth.
Adjusted1 operating income increased 3.1% to
$984 million and totaled 25.9% as a
percent of net sales. Adjusted operating income growth was driven
by 6.0% Adjusted gross profit growth, translating to 100 basis
points of Adjusted gross margin expansion, with gains from pricing
and productivity more than offsetting both the modest volume/mix
decline and continued input cost pressure. The growth in Adjusted
gross profit funded a double-digit increase in marketing investment
and more than offset inflation in transportation, warehousing and
other corporate costs.
GAAP net income for the quarter increased 187.8% to $518 million, or $0.37 per diluted share, compared to $180 million, or $0.13 per diluted share, in the year-ago period.
This performance primarily reflected a favorable year-over-year
impact of items affecting comparability, partially offset by a
higher GAAP tax rate.
Adjusted net income for the quarter advanced 1.8% to
$673 million, and Adjusted diluted
EPS increased 4.3% to $0.48.
The Adjusted net income and EPS growth was driven by the Adjusted
operating income growth, partly offset by higher interest
expense.
Operating cash flow for the third quarter was $580 million and free cash flow totaled
$459 million. As expected, free
cash flow strengthened from the first half of the year, reflecting
the combination of profit growth and moderating working capital
usage.
Third Quarter Segment Results
U.S. Refreshment Beverages
Net sales for the third quarter increased 5.9% to $2.27 billion, compared to $2.14 billion in the year-ago period, driven by
net price realization of 7.1% and a modest decline in volume/mix of
1.2%. This strong performance reflected resilient category trends,
continued market share gains and the contribution from KDP's sales
and distribution partnership with Nutrabolt for C4 Energy.
KDP in-market performance in the U.S. Liquid Refreshment
Beverages (LRB) category remained healthy. Retail dollar
consumption2 advanced 7.0% and market share grew in
categories representing approximately 82% of the Company's cold
beverage retail sales base. The dollar share gains were led by Dr
Pepper and Squirt in CSDs3, Polar in unsweetened
sparkling water, Vita Coco, C4
Energy and Mott's apple juice.
GAAP operating income increased 109.9% to $676 million, compared to $322 million in the year-ago period. The growth
primarily reflected the favorable year-over-year impact of items
affecting comparability, including the aforementioned $311 million impairment in the prior year
period.
Adjusted operating income increased 6.1% to $695 million and totaled 30.6% as a percent of
net sales, driven by net sales gains and productivity, which more
than offset continued broad-based input cost inflation and a
significant increase in marketing investment.
U.S. Coffee
Net sales for the third quarter decreased 3.2% to $1.01 billion, compared to $1.05 billion in the year-ago period, driven by
net price realization of 3.1% and a volume/mix decline of 6.3%.
Pod revenue decreased 4.8%, driven by a shipment decline of
8.1%. As expected, pod volume growth lagged gradually improving
single serve category consumption, due to an unfavorable comparison
to trade inventory builds in the year-ago period and the continued
impact of exiting certain low-margin private label contracts.
Across IRi tracked channels, U.S. retail dollar consumption of
KDP-Manufactured K-Cup® Pods decreased 7.0%, with significantly
stronger performance registered in untracked channels. KDP
Manufactured dollar share in the quarter was approximately 79%.
Brewer shipments totaled 10.2 million for the twelve months
ending September 30, 2023, declining
4.5% year-over-year. In the quarter, brewer shipments grew
year-over-year as KDP prepared for the upcoming holiday season,
which is a key period for brewer demand.
GAAP operating income increased 7.7% to $293 million, compared to $272 million in the year-ago period, including a
modest year-over-year benefit of items affecting comparability.
Adjusted operating income increased 5.7% to $333 million and totaled 32.9% as a percent of
net sales. Adjusted operating income margin inflected strongly
versus prior year, driven by higher net price realization and
productivity, which more than offset the impacts of the volume/mix
decline and inflation.
International
Net sales for the third quarter increased 20.8% to $523 million, compared to $433 million in the year-ago period. On a
constant currency basis, net sales advanced 12.9%, driven by
volume/mix growth of 9.0% and net price realization of 3.9%. This
very strong performance reflected continued momentum in both
Mexico and Canada.
GAAP operating income increased 43.3% to $139 million, compared to $97 million in the year-ago period, including a
modest year-over-year benefit of items affecting comparability.
Adjusted operating income increased 31.7% to $145 million and totaled 28.0% as a percent of
net sales, driven by the net sales momentum and productivity gains,
which more than offset continued inflation.
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, which could be
material.
KDP reaffirmed its 2023 guidance for constant currency net sales
growth of 5% to 6% and Adjusted diluted EPS growth of 6% to 7%.
_________________________________________
|
1 Adjusted
financial metrics presented in this release are non-GAAP, excluding
items affecting comparability 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 10/1/2023.
|
3 CSDs refer
to "Carbonated Soft Drinks".
|
Investor Contacts:
Jane Gelfand
T: 888-340-5287 / jane.gelfand@kdrp.com
Chethan Mallela
T: 888-340-5287 / 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, which could be material.
KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
|
|
Third
Quarter
|
|
First Nine
Months
|
(in millions,
except per share data)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net
sales
|
$
3,805
|
|
$
3,622
|
|
$
10,947
|
|
$ 10,254
|
Cost of
sales
|
1,694
|
|
1,721
|
|
5,051
|
|
4,927
|
Gross
profit
|
2,111
|
|
1,901
|
|
5,896
|
|
5,327
|
Selling, general and
administrative expenses
|
1,217
|
|
1,196
|
|
3,654
|
|
3,418
|
Impairment of
intangible assets
|
2
|
|
311
|
|
2
|
|
311
|
Gain on litigation
settlement
|
—
|
|
—
|
|
—
|
|
(299)
|
Other operating income,
net
|
(4)
|
|
—
|
|
(9)
|
|
(35)
|
Income from
operations
|
896
|
|
394
|
|
2,249
|
|
1,932
|
Interest
expense
|
237
|
|
207
|
|
432
|
|
570
|
Loss on early
extinguishment of debt
|
—
|
|
—
|
|
—
|
|
217
|
Gain on sale of equity
method investment
|
—
|
|
—
|
|
—
|
|
(50)
|
Impairment of
investments and note receivable
|
—
|
|
—
|
|
—
|
|
12
|
Other (income) expense,
net
|
(5)
|
|
4
|
|
(41)
|
|
22
|
Income before
provision for income taxes
|
664
|
|
183
|
|
1,858
|
|
1,161
|
Provision for income
taxes
|
146
|
|
4
|
|
370
|
|
179
|
Net income including
non-controlling interest
|
518
|
|
179
|
|
1,488
|
|
982
|
Less: Net loss
attributable to non-controlling interest
|
—
|
|
(1)
|
|
—
|
|
(1)
|
Net income
attributable to KDP
|
$
518
|
|
$
180
|
|
$
1,488
|
|
$
983
|
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
0.37
|
|
$
0.13
|
|
$
1.06
|
|
$
0.69
|
Diluted
|
0.37
|
|
0.13
|
|
1.05
|
|
0.69
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
1,397.4
|
|
1,416.1
|
|
1,401.3
|
|
1,417.3
|
Diluted
|
1,406.2
|
|
1,427.2
|
|
1,410.8
|
|
1,428.8
|
KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(UNAUDITED)
|
|
September
30,
|
|
December
31,
|
(in millions,
except share and per share data)
|
2023
|
|
2022
|
Assets
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
260
|
|
$
535
|
Trade accounts
receivable, net
|
1,279
|
|
1,484
|
Inventories
|
1,348
|
|
1,314
|
Prepaid expenses and
other current assets
|
519
|
|
471
|
Total current
assets
|
3,406
|
|
3,804
|
Property, plant and
equipment, net
|
2,527
|
|
2,491
|
Investments in
unconsolidated affiliates
|
1,336
|
|
1,000
|
Goodwill
|
20,122
|
|
20,072
|
Other intangible
assets, net
|
23,223
|
|
23,183
|
Other non-current
assets
|
1,117
|
|
1,252
|
Deferred tax
assets
|
32
|
|
35
|
Total
assets
|
$
51,763
|
|
$
51,837
|
Liabilities and
Stockholders' Equity
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
4,090
|
|
5,206
|
Accrued
expenses
|
1,123
|
|
1,153
|
Structured
payables
|
122
|
|
137
|
Short-term borrowings
and current portion of long-term obligations
|
2,798
|
|
895
|
Other current
liabilities
|
681
|
|
685
|
Total current
liabilities
|
8,814
|
|
8,076
|
Long-term
obligations
|
9,940
|
|
11,072
|
Deferred tax
liabilities
|
5,714
|
|
5,739
|
Other non-current
liabilities
|
1,931
|
|
1,825
|
Total
liabilities
|
26,399
|
|
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,
1,398,322,033 and
1,408,394,293 shares issued and outstanding as of
September 30,
2023 and December 31, 2022, respectively
|
14
|
|
14
|
Additional paid-in
capital
|
21,014
|
|
21,444
|
Retained
earnings
|
4,165
|
|
3,539
|
Accumulated other
comprehensive income
|
171
|
|
129
|
Total stockholders'
equity
|
25,364
|
|
25,126
|
Non-controlling
interest
|
—
|
|
(1)
|
Total
equity
|
25,364
|
|
25,125
|
Total liabilities
and stockholders' equity
|
$
51,763
|
|
$
51,837
|
KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
First Nine
Months
|
(in
millions)
|
2023
|
|
2022
|
Operating
activities:
|
|
|
|
Net income attributable
to KDP
|
$
1,488
|
|
$
983
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation
expense
|
299
|
|
301
|
Amortization of
intangibles
|
103
|
|
100
|
Other amortization
expense
|
136
|
|
129
|
Provision for sales
returns
|
42
|
|
38
|
Deferred income
taxes
|
(22)
|
|
(281)
|
Employee stock-based
compensation expense
|
86
|
|
43
|
Loss on early
extinguishment of debt
|
—
|
|
217
|
Gain on sale of equity
method investment
|
—
|
|
(50)
|
Gain on disposal of
property, plant and equipment
|
(3)
|
|
(38)
|
Unrealized (gain) loss
on foreign currency
|
(4)
|
|
22
|
Unrealized loss on
derivatives
|
44
|
|
387
|
Settlements of
interest rate contracts
|
54
|
|
125
|
Equity in (earnings)
loss of unconsolidated affiliates
|
(24)
|
|
6
|
Impairment of
intangible assets
|
2
|
|
311
|
Impairment on
investments and note receivable of unconsolidated
affiliates
|
—
|
|
12
|
Other, net
|
(5)
|
|
22
|
Changes in assets and
liabilities:
|
|
|
|
Trade accounts
receivable
|
170
|
|
(372)
|
Inventories
|
(31)
|
|
(552)
|
Income taxes
receivable and payables, net
|
(39)
|
|
(106)
|
Other current and
non-current assets
|
(159)
|
|
(380)
|
Accounts payable and
accrued expenses
|
(1,155)
|
|
1,014
|
Other current and
non-current liabilities
|
50
|
|
167
|
Net change in
operating assets and liabilities
|
(1,164)
|
|
(229)
|
Net cash provided by
operating activities
|
1,032
|
|
2,098
|
Investing
activities:
|
|
|
|
Proceeds from sale of
investment in unconsolidated affiliates
|
—
|
|
50
|
Purchases of property,
plant and equipment
|
(271)
|
|
(260)
|
Proceeds from sales of
property, plant and equipment
|
9
|
|
79
|
Purchases of
intangibles
|
(55)
|
|
(19)
|
Issuance of related
party note receivable
|
—
|
|
(18)
|
Investments in
unconsolidated affiliates
|
(308)
|
|
(48)
|
Other, net
|
2
|
|
3
|
Net cash (used in)
provided by investing activities
|
(623)
|
|
(213)
|
Financing
activities:
|
|
|
|
Proceeds from issuance
of Notes
|
—
|
|
3,000
|
Repayments of
Notes
|
—
|
|
(3,365)
|
Net issuance
(repayment) of commercial paper
|
750
|
|
(149)
|
Proceeds from
structured payables
|
91
|
|
114
|
Repayments of
structured payables
|
(105)
|
|
(111)
|
Cash dividends
paid
|
(842)
|
|
(796)
|
Repurchases of common
stock
|
(457)
|
|
(88)
|
Tax withholdings
related to net share settlements
|
(57)
|
|
(10)
|
Payments on finance
leases
|
(74)
|
|
(65)
|
Other, net
|
(3)
|
|
(45)
|
Net cash used in
financing activities
|
(697)
|
|
(1,515)
|
Cash, cash
equivalents, and restricted cash and cash
equivalents:
|
|
|
|
Net change from
operating, investing and financing activities
|
(288)
|
|
370
|
Effect of exchange rate
changes
|
13
|
|
(10)
|
Beginning
balance
|
535
|
|
568
|
Ending
balance
|
$
260
|
|
$
928
|
KEURIG DR PEPPER INC.
RECONCILIATION OF SEGMENT
INFORMATION
(UNAUDITED)
|
|
Third
Quarter
|
|
First Nine
Months
|
(in
millions)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net
Sales
|
|
|
|
|
|
|
|
U.S. Refreshment
Beverages
|
$
2,270
|
|
$
2,144
|
|
$
6,607
|
|
$
6,009
|
U.S. Coffee
|
1,012
|
|
1,045
|
|
2,913
|
|
3,017
|
International
|
523
|
|
433
|
|
1,427
|
|
1,228
|
Total net
sales
|
$
3,805
|
|
$
3,622
|
|
$
10,947
|
|
$
10,254
|
|
|
|
|
|
|
|
|
Income from
Operations
|
|
|
|
|
|
|
|
U.S. Refreshment
Beverages
|
$
676
|
|
$
322
|
|
$
1,795
|
|
$
1,554
|
U.S. Coffee
|
293
|
|
272
|
|
775
|
|
822
|
International
|
139
|
|
97
|
|
331
|
|
259
|
Unallocated corporate
costs
|
(212)
|
|
(297)
|
|
(652)
|
|
(703)
|
Total income from
operations
|
$
896
|
|
$
394
|
|
$
2,249
|
|
$
1,932
|
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) transaction
costs for significant business combinations (completed or
abandoned); (vii) non-cash changes in deferred tax liabilities
related to goodwill and other intangible assets as a result of tax
rate or apportionment changes; (viii) impairments recognized on
certain intangible assets; and (ix) other certain items that are
excluded for comparison purposes to prior year periods.
For the third quarter and first nine months of 2023, the other
certain items excluded for comparison purposes include (i)
productivity expenses, (ii) restructuring expenses associated with
the 2023 CEO Succession and Associated Realignment, and (iii) costs
related to significant non-routine legal matters, specifically the
antitrust litigation. Additionally, during the first nine months of
2023, the non-cash changes in deferred tax liabilities related to
goodwill and other intangible assets included an immaterial
non-cash true-up of the valuation of foreign deferred tax
liabilities related to a prior period.
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, 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; (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.
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 2023 and 2022,
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 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$
1,694
|
|
$
2,111
|
|
55.5 %
|
|
$
1,217
|
|
$
2
|
|
$
896
|
|
23.5 %
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
13
|
|
(13)
|
|
|
|
21
|
|
—
|
|
(34)
|
|
|
Amortization of
intangibles
|
—
|
|
—
|
|
|
|
(34)
|
|
—
|
|
34
|
|
|
Stock
compensation
|
—
|
|
—
|
|
|
|
(4)
|
|
—
|
|
4
|
|
|
Restructuring - 2023
CEO Succession and Associated Realignment
|
—
|
|
—
|
|
|
|
(27)
|
|
—
|
|
27
|
|
|
Productivity
|
(25)
|
|
25
|
|
|
|
(27)
|
|
—
|
|
52
|
|
|
Impairment of
intangible assets
|
—
|
|
—
|
|
|
|
—
|
|
(2)
|
|
2
|
|
|
Non-routine legal
matters
|
—
|
|
—
|
|
|
|
(2)
|
|
—
|
|
2
|
|
|
Transaction
costs
|
—
|
|
—
|
|
|
|
(1)
|
|
—
|
|
1
|
|
|
Adjusted
|
$
1,682
|
|
$
2,123
|
|
55.8 %
|
|
$
1,143
|
|
$
—
|
|
$
984
|
|
25.9 %
|
Impact of foreign
currency
|
|
|
|
|
— %
|
|
|
|
|
|
|
|
— %
|
Constant currency
adjusted
|
|
|
|
|
55.8 %
|
|
|
|
|
|
|
|
25.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 - DPS Merger
|
—
|
|
—
|
|
|
|
(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 %
|
|
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
|
|
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 Third
Quarter of 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$ 237
|
|
$
(5)
|
|
$
664
|
|
$
146
|
|
22.0 %
|
|
$
518
|
|
$
0.37
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
(114)
|
|
(2)
|
|
82
|
|
20
|
|
|
|
62
|
|
0.04
|
Amortization of
intangibles
|
—
|
|
—
|
|
34
|
|
9
|
|
|
|
25
|
|
0.02
|
Amortization of fair
value debt adjustment
|
(5)
|
|
—
|
|
5
|
|
1
|
|
|
|
4
|
|
—
|
Stock
compensation
|
—
|
|
—
|
|
4
|
|
3
|
|
|
|
1
|
|
—
|
Restructuring - 2023
CEO Succession and Associated Realignment
|
—
|
|
—
|
|
27
|
|
6
|
|
|
|
21
|
|
0.01
|
Productivity
|
—
|
|
—
|
|
52
|
|
12
|
|
|
|
40
|
|
0.03
|
Impairment of
intangible assets
|
—
|
|
—
|
|
2
|
|
—
|
|
|
|
2
|
|
—
|
Non-routine legal
matters
|
—
|
|
—
|
|
2
|
|
—
|
|
|
|
2
|
|
—
|
Transaction
costs
|
—
|
|
—
|
|
1
|
|
—
|
|
|
|
1
|
|
—
|
Change in deferred tax
liabilities related to goodwill and other intangible
assets
|
—
|
|
—
|
|
—
|
|
3
|
|
|
|
(3)
|
|
—
|
Adjusted
|
$ 118
|
|
$
(7)
|
|
$
873
|
|
$
200
|
|
22.9 %
|
|
$
673
|
|
$
0.48
|
Impact of foreign
currency
|
|
|
|
|
|
|
|
|
(0.2) %
|
|
|
|
|
Constant currency
adjusted
|
|
|
|
|
|
|
|
|
22.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 of debt adjustment
|
(5)
|
|
—
|
|
5
|
|
1
|
|
|
|
4
|
|
—
|
Stock
compensation
|
—
|
|
—
|
|
5
|
|
2
|
|
|
|
3
|
|
—
|
Restructuring and
integration costs - DPS Merger
|
—
|
|
—
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change -
adjusted
|
32.6 %
|
|
|
|
|
|
|
|
|
|
2.6 %
|
|
4.3 %
|
Impact of foreign
currency
|
— %
|
|
|
|
|
|
|
|
|
|
(0.8) %
|
|
— %
|
Change - constant
currency adjusted
|
32.6 %
|
|
|
|
|
|
|
|
|
|
1.8 %
|
|
4.3 %
|
|
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 2023
|
|
|
|
|
|
Income from
operations
|
|
|
|
|
|
U.S. Refreshment
Beverages
|
$
676
|
|
$
19
|
|
$
695
|
U.S. Coffee
|
293
|
|
40
|
|
333
|
International
|
139
|
|
6
|
|
145
|
Unallocated corporate
costs
|
(212)
|
|
23
|
|
(189)
|
Total income from
operations
|
$
896
|
|
$
88
|
|
$
984
|
|
|
|
|
|
|
For the third
quarter of 2022
|
|
|
|
|
|
Income from
operations
|
|
|
|
|
|
U.S. Refreshment
Beverages
|
$
322
|
|
$
333
|
|
$
655
|
U.S. Coffee
|
272
|
|
43
|
|
315
|
International
|
97
|
|
7
|
|
104
|
Unallocated corporate
costs
|
(297)
|
|
170
|
|
(127)
|
Total income from
operations
|
$
394
|
|
$
553
|
|
$
947
|
|
|
|
Reported
|
|
Impact of
Foreign
Currency
|
|
Constant
Currency
|
For the third
quarter of 2023
|
|
|
|
|
|
|
Net
sales
|
|
|
|
|
|
|
U.S. Refreshment
Beverages
|
|
5.9 %
|
|
— %
|
|
5.9 %
|
U.S. Coffee
|
|
(3.2)
|
|
—
|
|
(3.2)
|
International
|
|
20.8
|
|
(7.9)
|
|
12.9
|
Total net
sales
|
|
5.1
|
|
(1.0)
|
|
4.1
|
|
|
|
Adjusted
|
|
Impact of
Foreign
Currency
|
|
Constant
Currency
Adjusted
|
For the third
quarter of 2023
|
|
|
|
|
|
|
Income from
operations
|
|
|
|
|
|
|
U.S. Refreshment
Beverages
|
|
6.1 %
|
|
— %
|
|
6.1 %
|
U.S. Coffee
|
|
5.7
|
|
—
|
|
5.7
|
International
|
|
39.4
|
|
(7.7)
|
|
31.7
|
Total income from
operations
|
|
3.9
|
|
(0.8)
|
|
3.1
|
|
|
|
Reported
|
|
Items
Affecting
Comparability
|
|
Adjusted
|
|
Impact
of
Foreign
Currency
|
|
Constant
Currency
Adjusted
|
For the third
quarter of 2023
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
|
|
|
|
|
|
|
|
|
U.S. Refreshment
Beverages
|
|
29.8 %
|
|
0.8 %
|
|
30.6 %
|
|
— %
|
|
30.6 %
|
U.S. Coffee
|
|
29.0
|
|
3.9
|
|
32.9
|
|
—
|
|
32.9
|
International
|
|
26.6
|
|
1.1
|
|
27.7
|
|
0.3
|
|
28.0
|
Total operating
margin
|
|
23.5
|
|
2.4
|
|
25.9
|
|
—
|
|
25.9
|
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 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$
5,051
|
|
$
5,896
|
|
53.9 %
|
|
$
3,654
|
|
$
2
|
|
$
—
|
|
$
(9)
|
|
$
2,249
|
|
20.5 %
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
18
|
|
(18)
|
|
|
|
14
|
|
—
|
|
—
|
|
—
|
|
(32)
|
|
|
Amortization of
intangibles
|
—
|
|
—
|
|
|
|
(103)
|
|
—
|
|
—
|
|
—
|
|
103
|
|
|
Stock
compensation
|
—
|
|
—
|
|
|
|
(13)
|
|
—
|
|
—
|
|
—
|
|
13
|
|
|
Restructuring - 2023
CEO Succession and Associated Realignment
|
—
|
|
—
|
|
|
|
(27)
|
|
—
|
|
—
|
|
—
|
|
27
|
|
|
Productivity
|
(89)
|
|
89
|
|
|
|
(99)
|
|
—
|
|
—
|
|
—
|
|
188
|
|
|
Impairment of
intangible assets
|
—
|
|
—
|
|
|
|
—
|
|
(2)
|
|
—
|
|
—
|
|
2
|
|
|
Non-routine legal
matters
|
—
|
|
—
|
|
|
|
(5)
|
|
—
|
|
—
|
|
—
|
|
5
|
|
|
Transaction
costs
|
—
|
|
—
|
|
|
|
(1)
|
|
—
|
|
—
|
|
—
|
|
1
|
|
|
Adjusted
|
$
4,980
|
|
$
5,967
|
|
54.5 %
|
|
$
3,420
|
|
$
—
|
|
$
—
|
|
$
(9)
|
|
$
2,556
|
|
23.3 %
|
Impact of foreign
currency
|
|
|
|
|
— %
|
|
|
|
|
|
|
|
|
|
|
|
0.1 %
|
Constant currency
adjusted
|
|
|
|
|
54.5 %
|
|
|
|
|
|
|
|
|
|
|
|
23.4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 - DPS Merger
|
—
|
|
—
|
|
|
|
(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 %
|
|
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
(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 Nine
Months of 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$ 432
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
(41)
|
|
$
1,858
|
|
$
370
|
|
19.9 %
|
|
$ 1,488
|
|
$
1.05
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
(74)
|
|
—
|
|
—
|
|
—
|
|
16
|
|
26
|
|
6
|
|
|
|
20
|
|
0.01
|
Amortization of
intangibles
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
103
|
|
25
|
|
|
|
78
|
|
0.06
|
Amortization of
deferred financing costs
|
(1)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
|
|
1
|
|
—
|
Amortization of fair
value debt adjustment
|
(14)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
14
|
|
3
|
|
|
|
11
|
|
0.01
|
Stock
compensation
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
13
|
|
6
|
|
|
|
7
|
|
—
|
Restructuring - 2023
CEO Succession and Associated Realignment
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
27
|
|
6
|
|
|
|
21
|
|
0.01
|
Productivity
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
188
|
|
45
|
|
|
|
143
|
|
0.10
|
Impairment of
intangible assets
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2
|
|
—
|
|
|
|
2
|
|
—
|
Non-routine legal
matters
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
5
|
|
1
|
|
|
|
4
|
|
—
|
Transaction
costs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
|
|
1
|
|
—
|
Change in deferred tax
liabilities related to goodwill and other intangible
assets
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
28
|
|
|
|
(28)
|
|
(0.02)
|
Adjusted
|
$ 343
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
(25)
|
|
$
2,238
|
|
$
490
|
|
21.9 %
|
|
$ 1,748
|
|
$
1.24
|
Impact of foreign
currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.1) %
|
|
|
|
|
Constant currency
adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.8 %
|
|
|
|
|
|
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
(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 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 of debt adjustment
|
(14)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
14
|
|
3
|
|
|
|
11
|
|
0.01
|
Stock
compensation
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3
|
|
(1)
|
|
|
|
4
|
|
—
|
Restructuring and
integration costs - DPS Merger
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change -
adjusted
|
11.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.8 %
|
|
5.1 %
|
Impact of foreign
currency
|
— %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.6) %
|
|
(0.9) %
|
Change - Constant
currency adjusted
|
11.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2 %
|
|
4.2 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 nine
months of 2023:
|
|
|
|
|
|
Income from
operations
|
|
|
|
|
|
U.S. Refreshment
Beverages
|
$
1,795
|
|
$
54
|
|
$
1,849
|
U.S. Coffee
|
775
|
|
135
|
|
910
|
International
|
331
|
|
14
|
|
345
|
Unallocated corporate
costs
|
(652)
|
|
104
|
|
(548)
|
Total income from
operations
|
$
2,249
|
|
$
307
|
|
$
2,556
|
|
|
|
|
|
|
For the first nine
months of 2022:
|
|
|
|
|
|
Income from
operations
|
|
|
|
|
|
U.S. Refreshment
Beverages
|
$
1,554
|
|
$
103
|
|
$
1,657
|
U.S. Coffee
|
822
|
|
136
|
|
958
|
International
|
259
|
|
20
|
|
279
|
Unallocated corporate
costs
|
(703)
|
|
320
|
|
(383)
|
Total income from
operations
|
$
1,932
|
|
$
579
|
|
$
2,511
|
|
|
|
Reported
|
|
Impact of
Foreign
Currency
|
|
Constant
Currency
|
For the first nine
months of 2023:
|
|
|
|
|
|
|
Net
sales
|
|
|
|
|
|
|
U.S. Refreshment
Beverages
|
|
10.0 %
|
|
— %
|
|
10.0 %
|
U.S. Coffee
|
|
(3.4)
|
|
—
|
|
(3.4)
|
International
|
|
16.2
|
|
(4.3)
|
|
11.9
|
Total net
sales
|
|
6.8
|
|
(0.6)
|
|
6.2
|
|
|
|
|
|
|
|
|
|
Adjusted
|
|
Impact of
Foreign
Currency
|
|
Constant
Currency
Adjusted
|
For the first nine
months of 2023:
|
|
|
|
|
|
|
Income from
operations
|
|
|
|
|
|
|
U.S. Refreshment
Beverages
|
|
11.6 %
|
|
— %
|
|
11.6 %
|
U.S. Coffee
|
|
(5.0)
|
|
—
|
|
(5.0)
|
International
|
|
23.7
|
|
(4.3)
|
|
19.4
|
Total income from
operations
|
|
1.8
|
|
(0.5)
|
|
1.3
|
|
|
|
|
|
|
|
|
|
Reported
|
|
Items
Affecting
Comparability
|
|
Adjusted
|
|
Impact
of
Foreign
Currency
|
|
Constant
Currency
Adjusted
|
For the first nine
months of 2023:
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
|
|
|
|
|
|
|
|
|
U.S. Refreshment
Beverages
|
|
27.2 %
|
|
0.8 %
|
|
28.0 %
|
|
— %
|
|
28.0 %
|
U.S. Coffee
|
|
26.6
|
|
4.6
|
|
31.2
|
|
—
|
|
31.2
|
International
|
|
23.2
|
|
1.0
|
|
24.2
|
|
—
|
|
24.2
|
Total operating
margin
|
|
20.5
|
|
2.8
|
|
23.3
|
|
0.1
|
|
23.4
|
|
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
|
$
1,941
|
Interest
expense
|
555
|
Provision for income
taxes
|
475
|
Other (income)
expense, net
|
(49)
|
Depreciation
expense
|
397
|
Other
amortization
|
179
|
Amortization of
intangibles
|
141
|
EBITDA
|
$
3,639
|
Items affecting
comparability:
|
|
Impairment of
intangible assets
|
$
168
|
Restructuring and
integration expenses - DPS Merger
|
81
|
Restructuring - 2023
CEO Succession and Associated Realignment
|
27
|
Productivity
|
216
|
Non-routine legal
matters
|
9
|
Stock
compensation
|
15
|
Transaction
costs
|
1
|
Foundational
projects
|
1
|
Mark to
market
|
(41)
|
Adjusted
EBITDA
|
$
4,116
|
|
|
|
September
30,
|
|
2023
|
Principal amounts
of:
|
|
Commercial paper
notes
|
$
1,149
|
Senior unsecured
notes
|
11,743
|
Total principal
amounts
|
12,892
|
Less: Cash and cash
equivalents
|
260
|
Total principal
amounts less cash and cash equivalents
|
$
12,632
|
|
|
September 30, 2023
Management Leverage Ratio
|
3.1
|
|
|
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)
|
FOURTH
QUARTER
OF
2022
|
|
FIRST
NINE
MONTHS
OF
2023
|
|
LAST
TWELVE
MONTHS
|
Net income
attributable to KDP
|
$
453
|
|
$
1,488
|
|
$
1,941
|
Interest
expense
|
123
|
|
432
|
|
555
|
Provision for income
taxes
|
105
|
|
370
|
|
475
|
Other (income)
expense, net
|
(8)
|
|
(41)
|
|
(49)
|
Depreciation
expense
|
98
|
|
299
|
|
397
|
Other
amortization
|
43
|
|
136
|
|
179
|
Amortization of
intangibles
|
38
|
|
103
|
|
141
|
EBITDA
|
$
852
|
|
$
2,787
|
|
$
3,639
|
Items affecting
comparability:
|
|
|
|
|
|
Impairment of
intangible assets
|
$
166
|
|
$
2
|
|
$
168
|
Restructuring and
integration expenses - DPS Merger
|
81
|
|
—
|
|
81
|
Restructuring - 2023
CEO Succession and Associated Realignment
|
—
|
|
27
|
|
27
|
Productivity
|
64
|
|
152
|
|
216
|
Nonroutine legal
matters
|
4
|
|
5
|
|
9
|
Stock
compensation
|
2
|
|
13
|
|
15
|
Transaction
costs
|
—
|
|
1
|
|
1
|
Foundational
projects
|
1
|
|
—
|
|
1
|
Mark to
market
|
(9)
|
|
(32)
|
|
(41)
|
Adjusted
EBITDA
|
$
1,161
|
|
$
2,955
|
|
$
4,116
|
|
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
nine months of 2023 and 2022, there were no certain items excluded
for comparison to prior year periods.
|
|
First Nine
Months
|
(in
millions)
|
|
2023
|
|
2022
|
Net cash provided by
operating activities
|
|
$
1,032
|
|
$
2,098
|
Purchases of property,
plant and equipment
|
|
(271)
|
|
(260)
|
Proceeds from sales of
property, plant and equipment
|
|
9
|
|
79
|
Free Cash
Flow
|
|
$
770
|
|
$
1,917
|
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SOURCE Keurig Dr Pepper Inc.