How did Keurig Dr Pepper perform in the second quarter of 2024?

Net sales rose 3.5% to $3.92 billion, GAAP operating income rose 12.0% to $861 million, and GAAP diluted EPS was $0.38. Adjusted diluted EPS increased 7.1% to $0.45, driven by strong operating income growth and a lower share count, partly offset by higher interest expense and a higher tax rate.

Which segment drove growth, and which lagged?

International net sales grew 15.5% to $0.6 billion, with 14.7% constant currency growth from volume/mix of 10.4%. U.S. Coffee net sales decreased 2.1% to $1.0 billion, with a net price decline of 2.9% offsetting volume/mix growth of 0.8%. U.S. Refreshment Beverages net sales rose 3.3% to $2.4 billion.

What do the non-GAAP adjustments exclude?

Adjusted results exclude items affecting comparability, which in 2024 include productivity expenses, restructuring expenses related to the 2023 CEO Succession and Associated Realignment and the 2024 Network Optimization, non-routine legal matters tied to antitrust litigation, mark-to-market impacts on derivatives, and amortization of intangibles.

KDP 8-K: Earnings & Results

Q: How did the balance sheet and capital allocation change in the first half of 2024?

Long-term obligations increased to $12.41 billion from $9.95 billion at year-end 2023. The company issued $3.00 billion of notes, repaid $1.15 billion of notes, and repurchased $1.11 billion of common stock, while cash rose to $438 million. The management leverage ratio was 3.2 at June 30, 2024.

01—Abstract

Summary

Summary of the 8-K filed July 25, 2024. Cited figures are marked; the original filing is the authoritative source.

Keurig Dr Pepper Inc. (Nasdaq: KDP) reported second-quarter 2024 results on July 25, 2024, as stated in Item 2.02 of this Form 8-K, which furnishes a press release as Exhibit 99.1 titled "Keurig Dr Pepper Reports Q2 2024 Results" and reaffirms its full-year 2024 guidance.

Q2 net sales rose 3.5% to $3.92 billion^a on a reported basis (3.4% constant currency), driven by volume/mix growth of 1.8% and net price realization of 1.6%. GAAP operating income increased 12.0% to $861 million, and GAAP diluted EPS was $0.38, up 5.6% versus the prior year; Adjusted diluted EPS rose 7.1% to $0.45. Operating cash flow for the quarter was $657 million and free cash flow was $543 million.

By segment, U.S. Refreshment Beverages net sales rose 3.3% to $2.4 billion^b with adjusted operating margin of 30.0%. U.S. Coffee net sales fell 2.1% to $1.0 billion, with adjusted operating income up 0.3% to $293 million, while International net sales grew 15.5% to $0.6 billion (14.7% constant currency) and adjusted operating income rose 30.2% to $152 million. The company reaffirmed fiscal 2024 guidance for constant currency net sales growth in a mid-single-digit range and Adjusted diluted EPS growth in a high-single-digit range.

The balance sheet at June 30, 2024 shows cash of $438 million^c, total assets of $52.34 billion, and total stockholders' equity of $24.72 billion. Long-term obligations increased to $12.41 billion from $9.95 billion at year-end 2023.

For the first six months, the company issued $3.00 billion^d of notes, repaid $1.15 billion of notes, and repurchased $1.11 billion of common stock. The filing reports a management leverage ratio of 3.2 at June 30, 2024.

02—Key points

Key Highlights

Q2 2024 net sales of $3.92 billion, up 3.5% reported and 3.4% constant currency, driven by volume/mix of 1.8% and net price realization of 1.6%.
GAAP diluted EPS of $0.38 (up 5.6%); Adjusted diluted EPS of $0.45 (up 7.1%).
GAAP operating income rose 12.0% to $861 million; Adjusted operating income rose 11.0% to $970 million, a 24.7% margin.
International net sales grew 15.5% to $0.6 billion, with adjusted operating income up 30.2%; U.S. Coffee net sales declined 2.1% to $1.0 billion.
Full-year 2024 guidance reaffirmed: mid-single-digit constant currency net sales growth and high-single-digit Adjusted diluted EPS growth.
Q2 operating cash flow of $657 million and free cash flow of $543 million.
Long-term obligations rose to $12.41 billion from $9.95 billion at December 31, 2023, following $3.00 billion of notes issued in the first six months, while $1.11 billion of common stock was repurchased.

03—Questions

Frequently Asked Questions

How did Keurig Dr Pepper perform in the second quarter of 2024?
Net sales rose 3.5% to $3.92 billion, GAAP operating income rose 12.0% to $861 million, and GAAP diluted EPS was $0.38. Adjusted diluted EPS increased 7.1% to $0.45, driven by strong operating income growth and a lower share count, partly offset by higher interest expense and a higher tax rate.
Did the company change its 2024 outlook?
No. The company reaffirmed its fiscal 2024 guidance, expecting constant currency net sales growth in a mid-single-digit range and Adjusted diluted EPS growth in a high-single-digit range.
Which segment drove growth, and which lagged?
International net sales grew 15.5% to $0.6 billion, with 14.7% constant currency growth from volume/mix of 10.4%. U.S. Coffee net sales decreased 2.1% to $1.0 billion, with a net price decline of 2.9% offsetting volume/mix growth of 0.8%. U.S. Refreshment Beverages net sales rose 3.3% to $2.4 billion.
How did the balance sheet and capital allocation change in the first half of 2024?
Long-term obligations increased to $12.41 billion from $9.95 billion at year-end 2023. The company issued $3.00 billion of notes, repaid $1.15 billion of notes, and repurchased $1.11 billion of common stock, while cash rose to $438 million. The management leverage ratio was 3.2 at June 30, 2024.
What do the non-GAAP adjustments exclude?
Adjusted results exclude items affecting comparability, which in 2024 include productivity expenses, restructuring expenses related to the 2023 CEO Succession and Associated Realignment and the 2024 Network Optimization, non-routine legal matters tied to antitrust litigation, mark-to-market impacts on derivatives, and amortization of intangibles.

04—Continue

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