01—Abstract
Summary
Summary of the 8-K filed February 22, 2024. Cited figures are marked; the original filing is the authoritative source.
Keurig Dr Pepper Inc. (Nasdaq: KDP) reported fourth-quarter and full-year 2023 results in a press release furnished under Item 2.02 of this Form 8-K, dated February 22, 2024, and provided 2024 guidance.
For full-year 2023, GAAP net sales rose 5.4% to $14.8 billiona, and constant currency net sales advanced 4.9%, driven by net price realization of 7.0%, partly offset by a volume/mix decline of 2.1%. GAAP diluted EPS was $1.55, up 53.5%, while Adjusted diluted EPS grew 6.0% to $1.79. Adjusted operating income rose 2.8% to $3.7 billion, with Adjusted operating margin at 24.7% of net sales.
Segment performance was mixed. U.S. Refreshment Beverages net sales increased 9.1% to $8.8 billionb, with Adjusted operating income up 13.9%. U.S. Coffee net sales fell 5.4% to $4.1 billion, with brewer shipments declining 10.3% year-over-year to 9.7 million, while Adjusted operating income decreased 4.3%.
International net sales grew 15.0% to $1.9 billionc, with constant currency net sales up 10.5%. Full-year operating cash flow was $1.3 billion and free cash flow was $913 million, which included a $1.6 billion use of cash from accounts payable and accrued expenses tied to the company's decision to strategically reduce its supplier financing program. The company returned over $1.8 billion to shareholders through dividends and repurchased 22 million shares.
For 2024, KDP expects constant currency net sales growth in a mid-single-digit range and Adjusted diluted EPS growth in a high-single-digit range. Foreign currency translation is expected to be a roughly half-percentage-point headwind to both net sales and EPS growth. The Management leverage ratio at December 31, 2023 was 3.1.
02—Key points
Key Highlights
- Full-year 2023 net sales rose 5.4% to $14.8 billion; constant currency net sales advanced 4.9%.
- GAAP diluted EPS was $1.55, while Adjusted diluted EPS grew 6.0% to $1.79.
- U.S. Refreshment Beverages net sales increased 9.1% to $8.8 billion, with market share gains in categories representing approximately 85% of the portfolio.
- U.S. Coffee net sales declined 5.4% to $4.1 billion amid a 7.9% volume/mix decline; brewer shipments fell 10.3% to 9.7 million.
- International net sales increased 15.0% to $1.9 billion, with constant currency growth of 10.5%.
- Operating cash flow was $1.3 billion and free cash flow was $913 million, including a $1.6 billion use of cash from reducing the supplier financing program.
- 2024 guidance calls for mid-single-digit constant currency net sales growth and high-single-digit Adjusted diluted EPS growth.
03—Questions
Frequently Asked Questions
How did KDP perform in 2023 on a reported versus adjusted basis?
GAAP net income attributable to KDP rose 51.9% to $2.2 billion, or $1.55 per diluted share, reflecting higher GAAP operating income and favorable non-operating items affecting comparability. On an Adjusted basis, net income advanced 4.4% to $2.5 billion and Adjusted diluted EPS increased 6.0% to $1.79. Adjusted operating income grew 2.8% to $3.7 billion.
What drove the decline in U.S. Coffee results?
U.S. Coffee net sales decreased 5.4% to $4.1 billion, driven by a volume/mix decline of 7.9% that more than offset net price realization of 2.5%. Brewer shipments totaled 9.7 million, down 10.3% year-over-year, amid softer discretionary demand and retailer inventory shifts in the first half of the year. Adjusted operating income decreased 4.3%.
Why did operating and free cash flow decline in 2023?
Operating cash flow was $1.3 billion and free cash flow totaled $913 million. Both included a $1.6 billion use of cash from accounts payable and accrued expenses, primarily related to the company's decision to strategically reduce its supplier financing program.
What is KDP's outlook for 2024?
KDP expects constant currency net sales growth in a mid-single-digit range and Adjusted diluted EPS growth in a high-single-digit range in 2024. Foreign currency translation is expected to approximate a half of one percentage point headwind to both net sales and EPS growth.
How much did KDP return to shareholders in 2023?
The company returned over $1.8 billion to shareholders through dividends, including a 7.5% increase in its quarterly dividend, and opportunistically repurchased 22 million shares.
04—Continue