01—Abstract
Summary
Summary of the 10-Q filed August 10, 2026. Cited figures are marked; the original filing is the authoritative source.
Keurig Dr Pepper Inc. (KDP) reported results for the quarter ended June 30, 2026, in which the acquisition of JDE Peet's, completed April 1, 2026, contributed to results beginning in the second quarter.
Net sales for the second quarter were $7,309 milliona, up from $4,163 million a year earlier, an increase of 75.6%. Income from operations fell 30.1% to $628 million, as SG&A rose to $2,397 million, including transaction and integration costs and a $314 million inventory step-up charge in cost of sales. Net income attributable to KDP was $142 million, compared with $547 million, and diluted EPS was $0.04 versus $0.40.
Interest expense, net rose to $336 millionb from $180 million, reflecting acquisition-related debt. The acquisition was financed through a $3.6 billion delayed draw term loan, approximately $6 billion of senior unsecured notes, a $4 billion JV Investment in the Pod Manufacturing JV (in which KDP retains a 51% interest), and $4.5 billion of Convertible Preferred Stock. Total assets rose to $87,619 million from $55,459 million at December 31, 2025, and short-term borrowings and current portion of long-term obligations increased to $8,394 million.
Cash flow from operations for the first six months was $1,176 millionc, compared with $640 million, while investing outflows were $16,899 million, largely for acquisitions. Moody's and S&P downgraded KDP's ratings following the transaction but kept them investment grade, with outlooks listed as stable. The filing also describes the planned Separation of the beverage and coffee businesses, which is expected in early 2027, subject to conditions.
It discloses a legal matter in which the antitrust plaintiffs collectively claim more than $1.5 billiond in damages, with no accrual recorded. It also notes that KDP has not recorded receivables for pending tariff refund claims.
02—Key points
Key Highlights
- Second-quarter net sales rose 75.6% to $7,309 million, driven by the JDE Peet's Acquisition, which contributed $2,802 million in the JDE Peet's segment.
- Income from operations declined 30.1% to $628 million, reflecting higher SG&A ($2,397 million) and a $314 million inventory step-up charge tied to the acquisition.
- Net income attributable to KDP was $142 million for the second quarter, versus $547 million a year earlier, and includes $68 million attributable to non-controlling interests, primarily the Pod Manufacturing JV.
- Diluted EPS was $0.04 for the second quarter versus $0.40 a year earlier; the filing notes the two-class method now applies because of the Convertible Preferred Stock.
- Interest expense, net increased to $336 million from $180 million, and the effective tax rate rose to 31.1% from 23.8%, driven by a non-cash revaluation of state deferred tax liabilities.
- Total assets were $87,619 million at June 30, 2026, up from $55,459 million, with goodwill of $29,760 million and intangible assets of $38,113 million.
- The Separation of the beverage and coffee businesses is expected in early 2027, and the filing lists Moody's and S&P ratings of Baa3 and BBB- with stable outlooks.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2026, Keurig Dr Pepper kept $0.02.
- Revenue$7.31B100.0%
- Cost of revenue−$4.24B58.1%
- Gross profit$3.07B41.9%
- Operating costs−$2.44B33.4%
- Operating income$628.0M8.6%
- Interest, other & tax−$486.0M6.6%
- Net income$142.0M1.9%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed August 10, 2026Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $7.31B$4.16B | +75.6% |
| Cost of Revenue | $4.24B$1.91B | +122.4% |
| Gross Profit | $3.07B$2.25B | +36.0% |
| SG&A Expenses | $2.40B$1.36B | +76.8% |
| Operating Income | $628.00M$898.00M | −30.1% |
| Net Income | $142.00M$547.00M | −74.0% |
| EPS (Basic) | $0.04$0.40 | −90.0% |
| EPS (Diluted) | $0.04$0.40 | −90.0% |
| Shares Outstanding (Basic) | 1.36B1.36B | +0.2% |
| Shares Outstanding (Diluted) | 1.36B1.36B | +0.1% |
05—Questions
Frequently Asked Questions
How did the JDE Peet's Acquisition change KDP's financial profile?
KDP acquired JDE Peet's on April 1, 2026, for total consideration of $17,930 million, recorded preliminary goodwill of $9,660 million, and added $14,760 million of intangible assets. Results began contributing in the second quarter, with the JDE Peet's segment reporting $2,802 million of net sales and a loss from operations of $62 million, which includes the $314 million inventory step-up. Total debt and borrowings rose substantially, with notes outstanding of $24,817 million at June 30, 2026, compared with $13,931 million at December 31, 2025.
Why did earnings fall sharply in the second quarter despite higher sales?
Income from operations decreased to $628 million from $898 million. Gross profit rose to $3,066 million, but SG&A increased to $2,397 million, driven by JDE Peet's SG&A and transaction and integration costs, and other operating expense was $41 million. Interest expense of $336 million and a higher effective tax rate of 31.1% also reduced net income to $210 million, of which $142 million was attributable to KDP.
How was the JDE Peet's Acquisition funded?
The filing lists a $3.6 billion delayed draw term loan, approximately $6 billion of senior unsecured notes, a $4 billion JV Investment in the Pod Manufacturing JV in exchange for a 49% interest, and $4.5 billion of Convertible Preferred Stock with a $37.25 initial conversion price. Cash flows show $4,395 million in net proceeds from the convertible preferred stock and $3,899 million from the sale of non-controlling interest.
What are the main legal and contingent items disclosed?
Keurig is defending the Multidistrict Antitrust Litigation over single-serve coffee, in which the remaining plaintiffs collectively claim more than $1.5 billion in damages. The company disputes the merits and has not accrued a loss contingency. KDP has also begun filing claims for tariffs previously paid following a February 2026 Supreme Court decision, but has not recorded receivables for pending claims under the gain contingencies model.
What is the status of the planned Separation?
KDP announced on August 25, 2025, its intention to separate its beverage and coffee portfolios into two independent, publicly traded companies through a tax-free spin-off of the coffee business. The filing states the Separation is expected in early 2027, subject to market conditions, customary conditions, and final Board approval, and that it cannot be assured to occur on that timeline or at all.
06—Continue