01—Abstract
Summary
Summary of the 8-K filed October 24, 2024. Cited figures are marked; the original filing is the authoritative source.
Keurig Dr Pepper Inc. (NASDAQ: KDP) reported third-quarter 2024 results on October 24, 2024.
Net sales rose 2.3% to $3.9 billiona, or 3.1% on a constant currency basis, driven by volume/mix growth of 3.5%, partially offset by a 0.4% unfavorable net price realization. GAAP operating income increased 0.7% to $902 million, while Adjusted operating income increased 7.5% to $1,050 million, with an Adjusted operating margin of 27.0%. GAAP diluted EPS was $0.45, and Adjusted diluted EPS rose 6.3% to $0.51, helped by Adjusted operating income growth and a lower share count, partly offset by higher interest expense.
Operating cash flow for the quarter was $628 millionb and free cash flow was $503 million. By segment, U.S. Refreshment Beverages net sales grew 5.3% to $2.4 billion, U.S. Coffee net sales fell 3.6% to $1 billion, and International net sales rose 0.4% to $0.5 billion (up 6.5% on a constant currency basis). For the first nine months, net sales were $11.28 billion, up 3.1%, and Adjusted diluted EPS was $1.34, up 8.1%.
The company reaffirmed its fiscal 2024 outlook, calling for mid-single-digit constant currency net sales growth and high-single-digit Adjusted diluted EPS growth. It also announced in a separate release that it has entered into a definitive agreement to acquire GHOST Lifestyle LLC, which it describes as advancing its position in the energy drink space.
02—Key points
Key Highlights
- Q3 2024 net sales increased 2.3% to $3.9 billion (3.1% on a constant currency basis), led by volume/mix growth of 3.5%.
- GAAP diluted EPS of $0.45 rose from the prior year, and Adjusted diluted EPS increased 6.3% to $0.51.
- Adjusted operating income grew 7.5% to $1,050 million, with Adjusted operating margin of 27.0%.
- U.S. Refreshment Beverages net sales rose 5.3% to $2.4 billion, with Adjusted operating income up 6.8%.
- U.S. Coffee net sales declured 3.6% to $1 billion due to unfavorable net price realization of 6.3%, though brewer shipments increased 3.3% over the trailing twelve months.
- Operating cash flow was $628 million and free cash flow was $503 million in the quarter; the company repurchased $1,105 million of common stock in the first nine months.
- Fiscal 2024 guidance was reaffirmed for mid-single-digit constant currency net sales growth and high-single-digit Adjusted diluted EPS growth; the company also announced a definitive agreement to acquire GHOST.
03—Questions
Frequently Asked Questions
How did Keurig Dr Pepper perform in the third quarter of 2024?
Net sales increased 2.3% to $3.9 billion, or 3.1% on a constant currency basis. GAAP net income rose 18.9% to $616 million, and Adjusted net income increased 3.9% to $694 million. Adjusted diluted EPS was $0.51, up 6.3%.
What is the company's outlook for 2024?
KDP reaffirmed its 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.
Why did U.S. Coffee sales decline?
U.S. Coffee net sales decreased 3.6% to $1 billion. Volume/mix growth of 2.7% was more than offset by unfavorable net price realization of 6.3%. K-Cup Pod shipments decreased 0.4%, which the company attributed to a still muted at-home coffee category, although it cited owned and licensed market share gains.
What acquisition did the company announce?
KDP announced in a separate press release that it has entered into a definitive agreement to acquire GHOST Lifestyle LLC. The company says the deal advances its position in the attractive energy drink space and accelerates its portfolio evolution toward growth-accretive, consumer-preferred categories.
How strong is the company's cash generation and leverage?
Operating cash flow was $628 million and free cash flow was $503 million for the third quarter. For the first nine months, net cash provided by operating activities was $1,370 million and free cash flow was $973 million. The management leverage ratio was 3.2 as of September 30, 2024.
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