01—Abstract
Summary
Summary of the 10-Q filed April 23, 2026. Cited figures are marked; the original filing is the authoritative source.
Keurig Dr Pepper Inc. reported first-quarter 2026 net sales of $3,976 milliona, up from $3,635 million a year earlier, while net income fell to $270 million from $517 million and diluted EPS fell to $0.20 from $0.38.
Income from operations declined to $756 millionb from $801 million, as SG&A rose to $1,342 million, driven in part by costs tied to the JDE Peet's Acquisition and the planned Separation. Interest expense, net more than doubled to $281 million, and other expense was $118 million, mainly from realized and unrealized losses on FX forward contracts related to funding the acquisition. The quarter was dominated by financing for the JDE Peet's Acquisition.
The company issued approximately $6 billionc of senior unsecured notes (Maple Notes), drew $3.6 billion under a delayed draw term loan, completed a $4.5 billion convertible preferred stock investment, and sold a 49% interest in the Pod Manufacturing JV for $4 billion. Total cash, cash equivalents, and restricted cash rose to $18,716 million at March 31, 2026, including approximately $17.8 billion of restricted cash held for the acquisition. Total assets increased to $73,140 million from $55,459 million, and long-term obligations rose to $20,891 million from $13,036 million.
The company stated that it acquired 97.75%d of JDE Peet's outstanding ordinary shares, with aggregate consideration for tendered shares of approximately €15.11 billion, and intends to acquire the remainder. Moody's and S&P downgraded KDP's ratings following the transaction announcement but kept them investment grade. JDE Peet's will contribute to results beginning in the second quarter of 2026.
02—Key points
Key Highlights
- Net sales rose 9.4% to $3,976 million, with net price realization of 5.5% and volume/mix of 2.6%.
- Net income decreased 47.8% to $270 million, and diluted EPS fell to $0.20 from $0.38, driven by higher interest expense and other non-operating expense.
- Interest expense, net increased 89.9% to $281 million, largely from accelerated recognition of deferred financing costs upon termination of the Bridge Credit Agreement.
- Acquisition, integration, and financing costs related to JDE Peet's and the Separation totaled a pre-tax impact of approximately $298 million in the first quarter.
- Financing for JDE Peet's included about $6 billion of Maple Notes, a $3.6 billion delayed draw term loan, $4.5 billion of convertible preferred stock, and a $4 billion JV Investment for a 49% interest in the Pod Manufacturing JV.
- Total assets rose to $73,140 million and long-term obligations to $20,891 million at March 31, 2026, with approximately $17.8 billion of restricted cash held for the acquisition.
- Moody's and S&P downgraded KDP's credit ratings after the JDE Peet's announcement, but both remain investment grade with stable outlooks.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, Keurig Dr Pepper kept $0.07.
- Revenue$3.98B100.0%
- Cost of revenue−$1.88B47.2%
- Gross profit$2.10B52.8%
- Operating costs−$1.34B33.8%
- Operating income$756.0M19.0%
- Interest, other & tax−$486.0M12.2%
- Net income$270.0M6.8%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed April 23, 2026Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $3.98B$3.63B | +9.4% |
| Cost of Revenue | $1.88B$1.65B | +13.8% |
| Gross Profit | $2.10B$1.99B | +5.7% |
| SG&A Expenses | $1.34B$1.19B | +12.6% |
| Operating Income | $756.00M$801.00M | −5.6% |
| Net Income | $270.00M$517.00M | −47.8% |
| EPS (Basic) | $0.20$0.38 | −47.4% |
| EPS (Diluted) | $0.20$0.38 | −47.4% |
| Shares Outstanding (Basic) | 1.36B1.36B | +0.2% |
| Shares Outstanding (Diluted) | 1.36B1.36B | +0.1% |
05—Questions
Frequently Asked Questions
Why did net income decline despite higher net sales?
Net income fell 47.8% to $270 million, mainly because interest expense, net rose to $281 million from $148 million and other expense was $118 million, primarily from losses on FX forward contracts tied to funding the JDE Peet's Acquisition. Income from operations also declined 5.6% to $756 million as SG&A grew 12.6%, outpacing gross profit growth of 5.7%.
How is the JDE Peet's Acquisition being financed?
The company completed several transactions in the first quarter: senior unsecured Maple Notes of approximately $6 billion, a $3.6 billion delayed draw term loan, $4.5 billion of Convertible Preferred Stock issued to KKR and Apollo-affiliated investors, and a $4 billion JV Investment for a 49% interest in the Pod Manufacturing JV.
What is the status of the JDE Peet's Acquisition?
On April 1, 2026, KDP acquired 96.22% of JDE Peet's shares, and after the post-closing acceptance period it held 97.75% of the outstanding shares, with the company stating it intends to acquire all remaining shares. Aggregate consideration for tendered shares was approximately €15.11 billion. JDE Peet's will contribute to results beginning in the second quarter of 2026.
What do the credit rating changes mean for investors?
Moody's (Baa3, Stable) and S&P (BBB-, Stable) downgraded KDP's long-term and commercial paper ratings on March 10, 2026. The company notes the downgrades may increase borrowing costs and affect access to capital markets, though its ratings remain investment grade.
Will the company's capital structure change after the Separation?
The filing states that the intended Separation of the beverage and coffee portfolios into two independent public companies would release KDP from the Delayed Draw Term Loan Agreement, with Maple becoming the sole borrower. The Convertible Preferred Stock conversion price and terms may also be adjusted upon the Separation.
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