Q4 Performance Led by Continued Momentum in
U.S. Refreshment Beverages & International
After a
Strong 2023, Company Expects to Deliver On-Algorithm Net Sales and
Adjusted EPS Growth in 2024
BURLINGTON, Mass. and FRISCO, Texas, Feb. 22,
2024 /PRNewswire/ -- Keurig Dr Pepper Inc. (NASDAQ:
KDP) today reported results for the fourth quarter and full year
ended December 31, 2023. The Company
also provided guidance for 2024.
|
|
Reported GAAP Basis
|
|
Adjusted Basis1
|
|
|
Q4
|
|
FY 2023
|
|
Q4
|
|
FY 2023
|
Net Sales
|
|
$3.87 bn
|
|
$14.81 bn
|
|
$3.87 bn
|
|
$14.81 bn
|
% vs prior year
|
|
1.7 %
|
|
5.4 %
|
|
1.1 %
|
|
4.9 %
|
Diluted EPS
|
|
$0.49
|
|
$1.55
|
|
$0.55
|
|
$1.79
|
% vs prior year
|
|
53.1 %
|
|
53.5 %
|
|
10.0 %
|
|
6.0 %
|
Full-year 2023 highlights:
- Mid-single-digit net sales growth, led by U.S. Refreshment
Beverages and International segments.
- Adjusted diluted EPS growth of 6%, in line with guidance and
reflecting a significantly enhanced composition of earnings. EPS
growth accelerated in the second half of the year.
- In U.S. Refreshment Beverages, market share gains in categories
representing approximately 85% of the portfolio.
- In U.S. Coffee, Keurig brewing system expanded to approximately
40 million U.S. households. Adjusted segment margins strongly
inflected in the second half of the year.
- In International, double-digit net sales growth, increasing to
13% of the total company sales mix.
- Portfolio expansion into quickly growing ready-to-drink coffee
and sports hydration categories through strategic partnerships with
Chobani (La Colombe) and Grupo PiSA (Electrolit). Successful
execution during year one of the strategic partnership with
Nutrabolt (C4 Energy).
- Over $1.8 billion returned
to shareholders through dividends, including a 7.5% increase in
KDP's quarterly dividend, and the opportunistic repurchase of 22
million shares.
Commenting on the results, Chairman and CEO
Bob Gamgort stated, "2023 was a year
of significant progress for KDP. Broad-based market share gains
across our portfolio and entries into attractive white spaces
supported our revenue momentum. Gross margin expansion resumed, as
the relationship between inflation, pricing, and our redoubled
productivity efforts improved throughout the year and helped fund
investments in our brands and capabilities. We delivered on our
financial commitments while simultaneously enhancing the
composition of our earnings profile and strengthening our balance
sheet.
Gamgort continued, "We now enter 2024 with a
high-quality foundation from which to grow, as we target
performance in line with our long-term financial algorithm.
Moreover, we head into 2024 with confidence and strategic focus,
bolstered by our bold challenger culture and a refreshed, energized
executive leadership team."
2023 Full Year Consolidated Results
Net sales for the full year increased 5.4% to
$14.8 billion. On a constant currency
basis, net sales advanced 4.9%, driven by net price realization of
7.0%, partly offset by lower volume/mix of 2.1%. This performance
reflected the strength of the Company's brand portfolio and
in-market execution, as well as continued manageable elasticities
across most categories.
GAAP operating income increased 22.5% to
$3.2 billion. The comparison
primarily reflected the favorable year-over-year impact of items
affecting comparability, including lapping a $477 million impairment in the prior year
period.
Adjusted operating income increased 2.8% to
$3.7 billion and totaled 24.7% as a
percent of net sales. Adjusted operating income growth was driven
by 7.6% Adjusted gross profit growth, translating to 150 basis
points of Adjusted gross margin expansion. Adjusted operating
income growth reflected higher net price realization and
productivity, partly offset by the impact of inflationary
pressures, the volume/mix decline, and higher SG&A costs,
including increased marketing investment.
GAAP net income for the year increased 51.9% to
$2.2 billion, or $1.55 per diluted share. This performance
primarily reflected the increase in GAAP operating income and the
favorable year-over-year impact of non-operating items affecting
comparability.
Adjusted net income for the year advanced 4.4% to
$2.5 billion, and Adjusted diluted
EPS increased 6.0% to $1.79. The
Adjusted net income and EPS growth was driven by the Adjusted
operating income growth and a benefit from Nutrabolt equity method
earnings, partly offset by higher interest expense.
Operating cash flow for the full year was $1.3 billion and free cash flow totaled
$913 million. Operating and free cash
flow 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.
2023 Full Year Segment Results
U.S. Refreshment Beverages
Net sales for the full year increased 9.1% to
$8.8 billion, driven by net price
realization of 9.6%, partly offset by a modest decline in
volume/mix of 0.5%. This performance reflected resilient category
trends, continued market share gains, and the contribution from
KDP's sales and distribution partnership with Nutrabolt for C4
Energy.
KDP in-market performance in the U.S. Liquid
Refreshment Beverages (LRB) category was strong. Retail dollar
consumption2 advanced 8.7% and market share grew in
categories representing approximately 85% of the Company's cold
beverage retail sales base. The dollar share gains were led by Dr
Pepper, Polar, Evian, Vita Coco, C4
Energy, and Mott's apple juice.
GAAP operating income increased 26.6% to
$2.5 billion. The growth included a
favorable year-over-year impact of items affecting comparability,
including lapping a $477 million
impairment in the prior year period.
Adjusted operating income increased 13.9% to
$2.6 billion and totaled 29.0% as a
percent of net sales, driven by net sales growth and productivity,
partly offset by cost inflation and increased marketing
investment.
U.S. Coffee
Net sales for the full year decreased 5.4% to
$4.1 billion, driven by net price
realization of 2.5%, which was more than offset by a volume/mix
decline of 7.9%.
Pod revenue decreased 3.6%, driven by a pod
shipment decline of 5.1%. Across IRi tracked channels, U.S.
retail dollar consumption2 of KDP-Manufactured K-Cup®
Pods decreased 4.5%, with stronger performance registered in
untracked channels. KDP Manufactured dollar share in the year was
approximately 80%.
Brewer shipments totaled 9.7 million for the
twelve months ending December 31,
2023, declining 10.3% year-over-year amid a softer
discretionary demand environment and due to the impact of retailer
inventory shifts during the first half of the year. Compared
against pre-pandemic levels represented by the twelve months ending
December 31, 2019, brewer shipments
grew 13.0% and at a 3% CAGR. Over that same timeframe, Keurig
brewing system households increased by 10 million to approximately
40 million.
GAAP operating income decreased 4.7% to
$1.2 billion, including a favorable
year-over-year impact from items affecting comparability.
Adjusted operating income decreased 4.3% to
$1.3 billion and totaled 32.7% as a
percent of net sales. Adjusted operating income margin expanded
versus prior year, driven by higher net price realization and
productivity, partly offset by inflationary pressures and the
volume/mix decline.
International
Net sales for the full year increased 15.0% to
$1.9 billion. On a constant currency
basis, net sales advanced 10.5%, driven by net price realization of
5.5% and volume/mix growth of 5.0%. This strong performance
reflected continued momentum across markets.
GAAP operating income increased 27.3% to
$475 million, including a favorable
year-over-year impact of items affecting comparability.
Adjusted operating income increased 19.5% to
$497 million and totaled 25.9% as a
percent of net sales, driven by net sales growth and productivity,
partly offset by continued inflation.
Fourth Quarter Consolidated Results
Net sales for the fourth quarter increased 1.7%
to $3.9 billion. On a constant
currency basis, net sales advanced 1.1%, driven by net price
realization of 4.8%, partly offset by lower volume/mix of 3.7%.
GAAP operating income increased 40.1% to
$943 million. The comparison
primarily reflected the favorable year-over-year impact of items
affecting comparability, including lapping a $166 million impairment in the prior year
period.
Adjusted operating income increased 6.5% to
$1.1 billion and totaled 28.5% as a
percent of net sales. Adjusted operating income growth was driven
by 9.7% Adjusted gross profit growth, translating to 450 basis
points of Adjusted gross margin expansion. Adjusted operating
income growth reflected higher net price realization, productivity,
and earned performance incentives related to C4 Energy, partly
offset by the impact of the volume/mix decline and higher SG&A
costs, including increased marketing investment.
GAAP net income for the quarter increased 53.0%
to $693 million, or $0.49 per diluted share. This performance
primarily reflected the increase in GAAP operating income and the
favorable year-over-year impact of non-operating items affecting
comparability, partly offset by a higher year-over-year GAAP tax
rate.
Adjusted net income for the quarter advanced 7.1%
to $770 million, and Adjusted diluted
EPS increased 10.0% to $0.55.
The Adjusted net income growth was driven by the Adjusted operating
income growth and a benefit from Nutrabolt equity method earnings,
partly offset by a higher year-over-year tax rate. Adjusted diluted
EPS growth also reflected lower diluted shares outstanding.
Operating cash flow for the fourth quarter was
$297 million and free cash flow
totaled $143 million. Operating and
free cash flow included a $463
million use of cash from accounts payable and accrued
expenses, primarily related to the Company's decision to
strategically reduce its supplier financing program.
Fourth Quarter Segment Results
U.S. Refreshment Beverages
Net sales for the fourth quarter increased 6.8%
to $2.2 billion, driven by net price
realization of 7.5%, partly offset by a modest decline in
volume/mix of 0.7%. This performance reflected manageable
elasticities, continued market share gains, and the contribution
from KDP's sales and distribution partnership with Nutrabolt for C4
Energy.
KDP in-market performance in the U.S. Liquid
Refreshment Beverages (LRB) category remained healthy. Retail
dollar consumption3 advanced 3.9% and market share grew
in categories representing approximately 85% of the Company's cold
beverage retail sales base. The dollar share gains were led by Dr
Pepper, Polar, Evian, Vita Coco, C4
Energy, and Hawaiian Punch.
GAAP operating income increased 69.0% to
$688 million. The growth primarily
reflected the favorable year-over-year impact of items affecting
comparability, including lapping the $166
million impairment in the prior year period.
Adjusted operating income increased 20.2% to
$713 million and totaled 32.2% as a
percent of net sales, driven by net sales growth, productivity, and
earned performance incentives related to C4 Energy, partly offset
by continued cost inflation and increased marketing investment.
U.S. Coffee
Net sales for the fourth quarter decreased 9.9%
to $1.2 billion, driven by net price
realization of 0.8%, which was more than offset by a volume/mix
decline of 10.7%.
Pod revenue decreased 6.9%, driven by a shipment
decline of 2.7% and unfavorable mix. Across IRi tracked channels,
U.S. retail dollar consumption3 of KDP-Manufactured
K-Cup® Pods decreased 8.6%, with stronger performance registered in
untracked channels. KDP Manufactured dollar share in the quarter
was approximately 80%.
GAAP operating income decreased 2.5% to
$383 million, despite a favorable
year-over-year impact of items affecting comparability.
Adjusted operating income decreased 2.8% to
$423 million, primarily due to the
decline in volume/mix, and totaled 36.5% as a percent of net sales.
Adjusted operating income margin expanded 260 basis points versus
the prior year, reflecting a favorable relationship between higher
net price realization, productivity, and input costs.
International
Net sales for the fourth quarter increased 11.5%
to $495 million. On a constant
currency basis, net sales advanced 6.5%, driven by net price
realization of 3.6% and volume/mix growth of 2.9%. This strong
performance reflected continued momentum across markets.
GAAP operating income increased 26.3% to
$144 million, despite an unfavorable
year-over-year impact of items affecting comparability.
Adjusted operating income increased 19.8% to
$152 million and totaled 30.7% as a
percent of net sales, driven by the net sales growth and
productivity, partly offset by continued inflation.
2024 Guidance
The 2024 guidance provided below is presented
on a constant currency, non-GAAP basis. The Company does not
provide reconciliations of such forward-looking non-GAAP measures
to GAAP measures, due to the inability to predict the amount and
timing of impacts outside of the Company's control on certain
items, such as non-cash gains or losses resulting from
mark-to-market adjustments of derivative instruments, among others,
which could be material.
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.
________________________________________
|
1 Adjusted
financial metrics presented in this release are non-GAAP, excluding
items affecting comparability and with growth rates presented on a
constant currency basis. See reconciliations of GAAP results to
Adjusted results on a constant currency basis in the accompanying
tables.
|
2 Retail
consumption data based on Keurig Dr Pepper's custom IRi (Circana)
category definitions for the 52-week period ending
12/31/2023.
|
3 Retail
consumption data based on Keurig Dr Pepper's custom IRi (Circana)
category definitions for the 13-week period ending
12/31/2023.
|
Investor Contacts:
Jane Gelfand
T: 888-340-5287 / jane.gelfand@kdrp.com
Chethan
Mallela
T: 888-340-5287 / chethan.mallela@kdrp.com
Media Contact:
Katie Gilroy
T: 781-418-3345 / katie.gilroy@kdrp.com
ABOUT KEURIG DR PEPPER
Keurig Dr Pepper (KDP) is a leading beverage
company in North America, with
annual revenue of more than $14
billion and approximately 28,000 employees. KDP holds
leadership positions in liquid refreshment beverages, including
soft drinks, specialty coffee and tea, water, juice and juice
drinks and mixers, and markets the #1 single serve coffee brewing
system in the U.S. and Canada. The
Company's portfolio of more than 125 owned, licensed and partner
brands is designed to satisfy virtually any consumer need, any
time, and includes Keurig®, Dr Pepper®, Canada Dry®, Clamato®,
CORE®, Green Mountain Coffee Roasters®, Mott's®, Snapple®, and The
Original Donut Shop®. Through its powerful sales and distribution
network, KDP can deliver its portfolio of hot and cold beverages to
nearly every point of purchase for consumers. The Company's Drink
Well. Do Good. corporate responsibility platform is focused on the
greatest opportunities for impact in the environment, its supply
chain, the health and well-being of consumers and with its people
and communities. For more information, visit
www.keurigdrpepper.com.
FORWARD LOOKING STATEMENTS
Certain statements contained herein are
"forward-looking statements" within the meaning of applicable
securities laws and regulations. These forward-looking statements
can generally be identified by the use of words such as "outlook,"
"guidance," "anticipate," "expect," "believe," "could," "estimate,"
"feel," "forecast," "intend," "may," "plan," "potential,"
"project," "should," "target," "will," "would," and similar words.
Forward-looking statements by their nature address matters that
are, to different degrees, uncertain. These statements are based on
the current expectations of our management, are not predictions of
actual performance, and actual results may differ materially.
Forward-looking statements are subject to a
number of risks and uncertainties, including the factors disclosed
in our Annual Report on Form 10-K and subsequent filings with the
SEC. We are under no obligation to update, modify or withdraw any
forward-looking statements, except as required by applicable
law.
NON-GAAP FINANCIAL MEASURES
This release includes certain non-GAAP financial
measures, which differ from results using U.S. Generally Accepted
Accounting Principles (GAAP). These non-GAAP financial
measures should be considered as supplements to and should not be
considered replacements for, or superior to, the GAAP
measures. These measures may differ from similarly titled
non-GAAP financial measures presented by other companies, and other
companies may not define the non-GAAP financial measure in the same
way. Non-GAAP financial measures typically exclude certain charges,
including one-time costs that are not expected to occur routinely
in future periods, described by the Company as "items affecting
comparability". Refer to page A-5 for the Company's description of
items affecting comparability for each period presented. The
Company uses non-GAAP financial measures to evaluate our operating
and financial performance and to compare such performance to that
of prior periods and to the performance of our competitors.
Additionally, we use non-GAAP financial measures in making
operational and financial decisions and in our budgeting and
planning process. We believe that providing non-GAAP financial
measures to investors helps investors evaluate our operating
performance, profitability and business trends in a way that is
consistent with how management evaluates such performance.
Adjusted gross profit. Adjusted gross
profit is defined as Net sales less Cost of sales, as adjusted for
items affecting comparability as described on page A-5. Management
believes that Adjusted gross profit is useful for investors in
evaluating the Company's operating results and understanding the
Company's operating trends by adjusting certain items that can vary
significantly depending on specific underlying transactions or
events, thereby affecting comparability.
Adjusted operating income. Adjusted
operating income is defined as Income from operations, as adjusted
for items affecting comparability as described on page A-5.
Management believes that Adjusted operating income is useful for
investors in evaluating the Company's operating results and
understanding the Company's operating trends by adjusting certain
items that can vary significantly depending on specific underlying
transactions or events, thereby affecting comparability.
Adjusted net income attributable to KDP.
Adjusted net income attributable to KDP is defined as Net income
attributable to KDP, as adjusted for items affecting comparability
as described on page A-5. Management believes that Adjusted net
income is useful for investors in evaluating the Company's
operating results and understanding the Company's operating trends
by adjusting certain items that can vary significantly depending on
specific underlying transactions or events, thereby affecting
comparability.
Adjusted diluted EPS. Adjusted diluted EPS
is defined as Diluted EPS, as adjusted for items affecting
comparability as described on page A-5. Management believes that
Adjusted diluted EPS is useful for investors in providing
period-to-period comparisons of the results of our operations since
it adjusts for certain items affecting overall comparability.
Adjusted gross margin. Adjusted gross
margin is defined as Adjusted gross profit divided by Net sales.
Management believes that Adjusted gross margin is useful for
investors as supplemental measures to evaluate our operating
performance and ability to manage ongoing costs.
Adjusted operating margin. Adjusted
operating margin is defined as Adjusted Income from operations
divided by Net sales. Management believes that Adjusted operating
margin is useful for investors as supplemental measures to evaluate
our operating performance and ability to manage ongoing costs.
Adjusted interest expense. Adjusted
interest expense is defined as Interest expense, net, as adjusted
for items affecting comparability as described on page A-5.
Management believes that Adjusted interest expense is useful for
investors in evaluating our performance and establishing
expectations for the impacts of interest expenses.
Adjusted EBITDA. Adjusted EBITDA is
defined as EBITDA, as adjusted for items affecting comparability as
described on page A-5. EBITDA is defined as Net income attributable
to KDP as adjusted for interest expense, net; provision for income
taxes; depreciation expense; amortization of intangibles; and other
amortization. Management believes that Adjusted EBITDA is useful
for investors in evaluating the Company's operating results and
understanding the Company's operating trends by adjusting certain
items that can vary significantly depending on specific underlying
transactions or events, thereby affecting comparability.
Management leverage ratio. Management
leverage ratio is defined as KDP's total principal amounts of debt
less cash and cash equivalents, divided by Adjusted EBITDA.
Management believes that the Management leverage ratio is useful
for investors in evaluating the Company's liquidity and assessing
the Company's ability to meet its financial obligations.
Free cash flow. Free cash flow is defined
as net cash provided by operating activities adjusted for purchases
of property, plant and equipment, proceeds from sales of property,
plant and equipment, and certain items excluded for comparison to
prior year periods. Management uses this measure to evaluate the
company's performance and make resource allocation decisions.
Financial measures presented on a constant
currency basis. Defined as certain financial statement captions
and metrics adjusted for certain items affecting comparability,
calculated on a constant currency basis by converting our current
period local currency financial results using the prior period
foreign currency exchange rates. Because our reporting currency is
the U.S. Dollar, the value of financial measures presented in U.S.
Dollar will be affected by changes in currency exchange rates.
Therefore, we present certain financial measures on a constant
currency basis for greater comparability.
KEURIG DR PEPPER INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
|
|
|
Fourth
Quarter
|
|
Year Ended December
31,
|
(in millions,
except per share data)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net
sales
|
$
3,867
|
|
$
3,803
|
|
$
14,814
|
|
$
14,057
|
Cost of
sales
|
1,683
|
|
1,807
|
|
6,734
|
|
6,734
|
Gross
profit
|
2,184
|
|
1,996
|
|
8,080
|
|
7,323
|
Selling, general, and
administrative expenses
|
1,258
|
|
1,227
|
|
4,912
|
|
4,645
|
Impairment of
intangible assets
|
—
|
|
166
|
|
2
|
|
477
|
Gain on litigation
settlement
|
—
|
|
—
|
|
—
|
|
(299)
|
Other operating income,
net
|
(17)
|
|
(70)
|
|
(26)
|
|
(105)
|
Income from
operations
|
943
|
|
673
|
|
3,192
|
|
2,605
|
Interest expense,
net
|
64
|
|
123
|
|
496
|
|
693
|
Loss on early
extinguishment of debt
|
—
|
|
—
|
|
—
|
|
217
|
Gain on sale of equity
method investment
|
—
|
|
—
|
|
—
|
|
(50)
|
Impairment of
investments and note receivable
|
—
|
|
—
|
|
—
|
|
12
|
Other income,
net
|
(20)
|
|
(8)
|
|
(61)
|
|
14
|
Income before
provision for income taxes
|
899
|
|
558
|
|
2,757
|
|
1,719
|
Provision for income
taxes
|
206
|
|
105
|
|
576
|
|
284
|
Net income including
non-controlling interest
|
693
|
|
453
|
|
2,181
|
|
1,435
|
Less: Net loss
attributable to non-controlling interest
|
—
|
|
—
|
|
—
|
|
(1)
|
Net income
attributable to KDP
|
$
693
|
|
$
453
|
|
$
2,181
|
|
$
1,436
|
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
0.50
|
|
$
0.32
|
|
$
1.56
|
|
$
1.01
|
Diluted
|
0.49
|
|
0.32
|
|
1.55
|
|
1.01
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
1,393.6
|
|
1,415.5
|
|
1,399.3
|
|
1,416.8
|
Diluted
|
1,401.3
|
|
1,427.5
|
|
1,408.4
|
|
1,428.5
|
KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(UNAUDITED)
|
|
|
December
31,
|
|
December
31,
|
(in millions,
except share and per share data)
|
2023
|
|
2022
|
Assets
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
267
|
|
$
535
|
Trade accounts
receivable, net
|
1,368
|
|
1,484
|
Inventories
|
1,142
|
|
1,314
|
Prepaid expenses and
other current assets
|
598
|
|
471
|
Total current
assets
|
3,375
|
|
3,804
|
Property, plant and
equipment, net
|
2,699
|
|
2,491
|
Investments in
unconsolidated affiliates
|
1,387
|
|
1,000
|
Goodwill
|
20,202
|
|
20,072
|
Other intangible
assets, net
|
23,287
|
|
23,183
|
Other non-current
assets
|
1,149
|
|
1,252
|
Deferred tax
assets
|
31
|
|
35
|
Total
assets
|
$
52,130
|
|
$
51,837
|
Liabilities and
Stockholders' Equity
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
3,597
|
|
5,206
|
Accrued
expenses
|
1,242
|
|
1,153
|
Structured
payables
|
117
|
|
137
|
Short-term borrowings
and current portion of long-term obligations
|
3,246
|
|
895
|
Other current
liabilities
|
714
|
|
685
|
Total current
liabilities
|
8,916
|
|
8,076
|
Long-term
obligations
|
9,945
|
|
11,072
|
Deferred tax
liabilities
|
5,760
|
|
5,739
|
Other non-current
liabilities
|
1,833
|
|
1,825
|
Total
liabilities
|
26,454
|
|
26,712
|
Commitments and
contingencies
|
|
|
|
Stockholders'
equity:
|
|
|
|
Preferred stock, $0.01
par value, 15,000,000 shares authorized, no shares
issued
|
—
|
|
—
|
Common stock, $0.01
par value, 2,000,000,000 shares authorized,
1,390,446,043
and 1,408,394,293
shares issued and outstanding as of December 31, 2023
and
2022,
respectively
|
14
|
|
14
|
Additional paid-in
capital
|
20,788
|
|
21,444
|
Retained
earnings
|
4,559
|
|
3,539
|
Accumulated other
comprehensive income
|
315
|
|
129
|
Total stockholders'
equity
|
25,676
|
|
25,126
|
Non-controlling
interest
|
—
|
|
(1)
|
Total
equity
|
25,676
|
|
25,125
|
Total liabilities
and stockholders' equity
|
$
52,130
|
|
$
51,837
|
KEURIG DR PEPPER INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
|
Year Ended December
31,
|
(in
millions)
|
2023
|
|
2022
|
Operating
activities:
|
|
|
|
Net income attributable
to KDP
|
$
2,181
|
|
$
1,436
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation
expense
|
402
|
|
399
|
Amortization of
intangibles
|
137
|
|
138
|
Other amortization
expense
|
181
|
|
172
|
Provision for sales
returns
|
61
|
|
61
|
Deferred income
taxes
|
(4)
|
|
(289)
|
Employee stock-based
compensation expense
|
116
|
|
52
|
Loss on early
extinguishment of debt
|
—
|
|
217
|
Gain on sale of equity
method investment
|
—
|
|
(50)
|
Gain on disposal of
property, plant, and equipment
|
(1)
|
|
(80)
|
Unrealized (gain) loss
on foreign currency
|
(13)
|
|
26
|
Unrealized loss on
derivatives
|
31
|
|
383
|
Settlements of
interest rate contracts
|
54
|
|
125
|
Equity in (earnings)
loss of unconsolidated affiliates
|
(33)
|
|
5
|
Earned
equity
|
(44)
|
|
—
|
Impairment of
intangible assets
|
2
|
|
477
|
Impairment of
investments and note receivable of unconsolidated
affiliate
|
—
|
|
12
|
Other, net
|
6
|
|
28
|
Changes in assets and
liabilities:
|
|
|
|
Trade accounts
receivable
|
70
|
|
(398)
|
Inventories
|
182
|
|
(426)
|
Income taxes
receivable and payables, net
|
(199)
|
|
(105)
|
Other current and
non-current assets
|
(192)
|
|
(456)
|
Accounts payable and
accrued expenses
|
(1,618)
|
|
903
|
Other current and
non-current liabilities
|
10
|
|
207
|
Net change in
operating assets and liabilities
|
(1,747)
|
|
(275)
|
Net cash provided by
operating activities
|
1,329
|
|
2,837
|
Investing
activities:
|
|
|
|
Proceeds from sale of
investment in unconsolidated affiliates
|
—
|
|
50
|
Purchases of property,
plant, and equipment
|
(425)
|
|
(353)
|
Proceeds from sales of
property, plant, and equipment
|
9
|
|
168
|
Purchases of
intangibles
|
(56)
|
|
(26)
|
Issuance of related
party note receivable
|
—
|
|
(18)
|
Investments in
unconsolidated affiliates
|
(316)
|
|
(962)
|
Other, net
|
4
|
|
6
|
Net cash used in
investing activities
|
(784)
|
|
(1,135)
|
Financing
activities:
|
|
|
|
Proceeds from issuance
of Notes
|
—
|
|
3,000
|
Repayments of
Notes
|
(500)
|
|
(3,365)
|
Net proceeds from
issuance of commercial paper
|
1,697
|
|
250
|
Proceeds from
structured payables
|
130
|
|
155
|
Repayments of
structured payables
|
(148)
|
|
(158)
|
Cash dividends
paid
|
(1,142)
|
|
(1,080)
|
Repurchases of common
stock
|
(706)
|
|
(379)
|
Tax withholdings
related to net share settlements
|
(62)
|
|
(15)
|
Payments on finance
leases
|
(95)
|
|
(90)
|
Other, net
|
(6)
|
|
(46)
|
Net cash used in
financing activities
|
(832)
|
|
(1,728)
|
Cash and cash
equivalents:
|
|
|
|
Net change from
operating, investing and financing activities
|
(287)
|
|
(26)
|
Effect of exchange rate
changes
|
19
|
|
(7)
|
Beginning
balance
|
535
|
|
568
|
Ending
balance
|
$
267
|
|
$
535
|
KEURIG DR PEPPER INC.
RECONCILIATION OF SEGMENT
INFORMATION
(UNAUDITED)
|
|
|
Fourth
Quarter
|
|
Year Ended December
31,
|
(in
millions)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net
Sales
|
|
|
|
|
|
|
|
U.S. Refreshment
Beverages
|
$
2,214
|
|
$
2,074
|
|
$
8,821
|
|
$
8,083
|
U.S. Coffee
|
1,158
|
|
1,285
|
|
4,071
|
|
4,302
|
International
|
495
|
|
444
|
|
1,922
|
|
1,672
|
Total net
sales
|
$
3,867
|
|
$
3,803
|
|
$
14,814
|
|
$
14,057
|
|
|
|
|
|
|
|
|
Income from
Operations
|
|
|
|
|
|
|
|
U.S. Refreshment
Beverages
|
$
688
|
|
$
407
|
|
$
2,483
|
|
$
1,961
|
U.S. Coffee
|
383
|
|
393
|
|
1,158
|
|
1,215
|
International
|
144
|
|
114
|
|
475
|
|
373
|
Unallocated corporate
costs
|
(272)
|
|
(241)
|
|
(924)
|
|
(944)
|
Total income from
operations
|
$
943
|
|
$
673
|
|
$
3,192
|
|
$
2,605
|
KEURIG DR PEPPER INC.
RECONCILIATION
OF CERTAIN NON-GAAP INFORMATION
(UNAUDITED)
The Company reports its financial results in accordance with
U.S. GAAP. However, management believes that certain non-GAAP
financial measures that reflect the way management evaluates the
business may provide investors with additional information
regarding the Company's results, trends and ongoing performance on
a comparable basis.
Specifically, investors should consider the following with
respect to our financial results:
Adjusted: Defined as certain financial statement captions
and metrics adjusted for certain items affecting comparability.
Items affecting comparability: Defined as certain items
that are excluded for comparison to prior year periods, adjusted
for the tax impact as applicable. Tax impact is determined based
upon an approximate rate for each item. For each period, management
adjusts for (i) the unrealized mark-to-market impact of derivative
instruments not designated as hedges in accordance with U.S. GAAP
that do not have an offsetting risk reflected within the financial
results, as well as the unrealized mark-to-market impact of our
Vita Coco investment; (ii) the
amortization associated with definite-lived intangible assets;
(iii) the amortization of the deferred financing costs associated
with the DPS Merger; (iv) the amortization of the fair value
adjustment of the senior unsecured notes obtained as a result of
the DPS Merger; (v) stock compensation expense and the associated
windfall tax benefit attributable to the matching awards made to
employees who made an initial investment in KDP; (vi) transaction
costs for significant business combinations (completed or
abandoned); (vii) non-cash changes in deferred tax liabilities
related to goodwill and other intangible assets as a result of tax
rate or apportionment changes; (viii) impairments recognized on
certain intangible assets; and (ix) other certain items that are
excluded for comparison purposes to prior year periods.
For the fourth quarter and full year ended December 31, 2023, the other certain items
excluded for comparison purposes include (i) productivity expenses,
(ii) restructuring expenses associated with the 2023 CEO Succession
and Associated Realignment, and (iii) costs related to significant
non-routine legal matters, specifically the antitrust litigation.
Additionally, during the year ended December
31, 2023, the non-cash changes in deferred tax liabilities
related to goodwill and other intangible assets included an
immaterial non-cash true-up of the valuation of foreign deferred
tax liabilities related to a prior period.
For the fourth quarter and full year ended December 31, 2022, the other certain items
excluded for comparison purposes include (i) restructuring and
integration expenses related to significant business combinations;
(ii) productivity expenses; (iii) costs related to significant
non-routine legal matters, specifically the antitrust litigation;
(iv) the loss on early extinguishment of debt related to the
redemption of debt; (v) incremental costs to our operations related
to risks associated with the COVID-19 pandemic, which were incurred
to either maintain the health and safety of our front-line
employees or temporarily increase compensation to such employees to
ensure essential operations continue during the pandemic; (vi) the
gain on the sale of our investment in BodyArmor as a result of the
settlement of the associated holdback liability; (vii) the gain on
the settlement of our prior litigation with BodyArmor, excluding
recoveries of previously incurred litigation expenses which were
included in our adjusted results; (viii) losses recognized with
respect to our equity method investment in Bedford as a result of funding our share of
their wind-down costs; (ix) transaction costs for significant
business combinations (completed or abandoned); (x) foundational
projects, which are transformative and non-recurring in nature; and
(xi) impairments recognized on certain intangible brand assets.
Constant currency adjusted: Defined as certain financial
statement captions and metrics adjusted for certain items affecting
comparability, calculated on a constant currency basis by
converting our current period local currency financial results
using the prior period foreign currency exchange rates.
For the years ended December 31,
2023 and 2022, the supplemental financial data set forth
below includes reconciliations of adjusted and constant currency
adjusted financial measures to the applicable financial measure
presented in the unaudited condensed consolidated financial
statements for the same period.
KEURIG DR PEPPER INC.
RECONCILIATION OF CERTAIN NON-GAAP
INFORMATION
(UNAUDITED)
|
|
|
Gross
profit
|
|
Gross
margin
|
|
Income from
operations
|
|
Operating
margin
|
For the Fourth
Quarter of 2023
|
|
|
|
|
|
|
|
Reported
|
$
2,184
|
|
56.5 %
|
|
$
943
|
|
24.4 %
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
Mark to
market
|
13
|
|
|
|
40
|
|
|
Amortization of
intangibles
|
—
|
|
|
|
34
|
|
|
Stock
compensation
|
—
|
|
|
|
4
|
|
|
Restructuring - 2023
CEO Succession and Associated Realignment
|
—
|
|
|
|
8
|
|
|
Productivity
|
26
|
|
|
|
71
|
|
|
Transaction
costs
|
—
|
|
|
|
1
|
|
|
Adjusted
|
$
2,223
|
|
57.5 %
|
|
$
1,101
|
|
28.5 %
|
Impact of foreign
currency
|
|
|
— %
|
|
|
|
— %
|
Constant currency
adjusted
|
|
|
57.5 %
|
|
|
|
28.5 %
|
|
|
|
|
|
|
|
|
For the Fourth
Quarter of 2022
|
|
|
|
|
|
|
|
Reported
|
$
1,996
|
|
52.5 %
|
|
$
673
|
|
17.7 %
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
Mark to
market
|
(10)
|
|
|
|
(9)
|
|
|
Amortization of
intangibles
|
—
|
|
|
|
38
|
|
|
Stock
compensation
|
—
|
|
|
|
2
|
|
|
Restructuring and
integration costs - DPS Merger
|
—
|
|
|
|
81
|
|
|
Productivity
|
30
|
|
|
|
71
|
|
|
Impairment of
intangible assets
|
—
|
|
|
|
166
|
|
|
Non-routine legal
matters
|
—
|
|
|
|
4
|
|
|
COVID-19
|
(1)
|
|
|
|
—
|
|
|
Foundational
projects
|
—
|
|
|
|
1
|
|
|
Adjusted
|
$
2,015
|
|
53.0 %
|
|
$
1,027
|
|
27.0 %
|
|
Refer to pages A-8
and A-9 for reconciliations of reported net sales to constant
currency net sales and adjusted income from operations to constant
currency adjusted income from operations.
|
KEURIG DR PEPPER INC.
RECONCILIATION OF CERTAIN NON-GAAP
INFORMATION
(UNAUDITED)
|
|
|
Interest
expense,
net
|
|
Income
before
provision for
income taxes
|
|
Provision
for income
taxes
|
|
Effective
tax rate
|
|
Net income
attributable
to KDP
|
|
Diluted
earnings
per share
|
For the Fourth
Quarter of 2023
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$ 64
|
|
$
899
|
|
$
206
|
|
22.9 %
|
|
$
693
|
|
$
0.49
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
60
|
|
(20)
|
|
(4)
|
|
|
|
(16)
|
|
(0.01)
|
Amortization of
intangibles
|
—
|
|
34
|
|
9
|
|
|
|
25
|
|
0.02
|
Amortization of fair
value debt adjustment
|
(5)
|
|
5
|
|
2
|
|
|
|
3
|
|
—
|
Stock
compensation
|
—
|
|
4
|
|
—
|
|
|
|
4
|
|
—
|
Restructuring - 2023
CEO Succession and Associated Realignment
|
—
|
|
8
|
|
3
|
|
|
|
5
|
|
—
|
Productivity
|
—
|
|
71
|
|
18
|
|
|
|
53
|
|
0.04
|
Transaction
costs
|
—
|
|
1
|
|
—
|
|
|
|
1
|
|
—
|
Change in deferred tax
liabilities related to goodwill and other intangible
assets
|
—
|
|
—
|
|
(2)
|
|
|
|
2
|
|
—
|
Adjusted
|
$ 119
|
|
$
1,002
|
|
$
232
|
|
23.2 %
|
|
$
770
|
|
$
0.55
|
Impact of foreign
currency
|
|
|
|
|
|
|
(0.1) %
|
|
|
|
|
Constant currency
adjusted
|
|
|
|
|
|
|
23.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fourth
Quarter of 2022
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$ 123
|
|
$
558
|
|
$
105
|
|
18.8 %
|
|
$
453
|
|
$
0.32
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
(2)
|
|
(11)
|
|
(8)
|
|
|
|
(3)
|
|
—
|
Amortization of
intangibles
|
—
|
|
38
|
|
10
|
|
|
|
28
|
|
0.02
|
Amortization of fair
value of debt adjustment
|
(5)
|
|
5
|
|
1
|
|
|
|
4
|
|
—
|
Stock
compensation
|
—
|
|
2
|
|
—
|
|
|
|
2
|
|
—
|
Restructuring and
integration costs - DPS Merger
|
—
|
|
81
|
|
19
|
|
|
|
62
|
|
0.04
|
Productivity
|
—
|
|
71
|
|
24
|
|
|
|
47
|
|
0.03
|
Impairment of
intangible assets
|
—
|
|
166
|
|
49
|
|
|
|
117
|
|
0.08
|
Impairment of
investment
|
—
|
|
—
|
|
3
|
|
|
|
(3)
|
|
—
|
Loss on early
extinguishment of debt
|
—
|
|
—
|
|
(3)
|
|
|
|
3
|
|
—
|
Non-routine legal
matters
|
—
|
|
4
|
|
1
|
|
|
|
3
|
|
—
|
COVID-19
|
—
|
|
—
|
|
1
|
|
|
|
(1)
|
|
—
|
Foundational
projects
|
—
|
|
1
|
|
—
|
|
|
|
1
|
|
—
|
Change in deferred tax
liabilities related to goodwill and other intangible
assets
|
—
|
|
—
|
|
(1)
|
|
|
|
1
|
|
—
|
Adjusted
|
$ 116
|
|
$
915
|
|
$
201
|
|
22.0 %
|
|
$
714
|
|
$
0.50
|
|
|
|
|
|
|
|
|
|
|
|
|
Change -
adjusted
|
2.6 %
|
|
|
|
|
|
|
|
7.8 %
|
|
10.0 %
|
Impact of foreign
currency
|
— %
|
|
|
|
|
|
|
|
(0.7) %
|
|
— %
|
Change - constant
currency adjusted
|
2.6 %
|
|
|
|
|
|
|
|
7.1 %
|
|
10.0 %
|
|
Diluted earnings per
common share may not foot due to rounding.
|
KEURIG DR PEPPER INC.
RECONCILIATION OF CERTAIN FINANCIAL MEASURES BY
SEGMENT TO CONSTANT CURRENCY
ADJUSTED FINANCIAL MEASURES BY
SEGMENT
(UNAUDITED)
|
|
|
U.S.
Refreshment
Beverages
|
|
U.S.
Coffee
|
|
International
|
|
Unallocated
corporate costs
|
|
Total
|
For the Fourth
Quarter of 2023
|
|
|
|
|
|
|
|
|
|
Reported - Income from
Operations
|
$
688
|
|
$
383
|
|
$
144
|
|
$
(272)
|
|
$
943
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
—
|
|
—
|
|
6
|
|
34
|
|
40
|
Amortization of
intangibles
|
6
|
|
26
|
|
2
|
|
—
|
|
34
|
Stock
compensation
|
—
|
|
—
|
|
—
|
|
4
|
|
4
|
Restructuring - 2023
CEO Succession and Associated Realignment
|
—
|
|
—
|
|
—
|
|
8
|
|
8
|
Productivity
|
19
|
|
14
|
|
—
|
|
38
|
|
71
|
Transaction
costs
|
—
|
|
—
|
|
—
|
|
1
|
|
1
|
Adjusted - Income from
Operations
|
$
713
|
|
$
423
|
|
$
152
|
|
$
(187)
|
|
$
1,101
|
|
|
|
|
|
|
|
|
|
|
Change -
adjusted
|
20.2 %
|
|
(2.8) %
|
|
25.6 %
|
|
53.3 %
|
|
7.2 %
|
Impact of foreign
currency
|
— %
|
|
— %
|
|
(5.8) %
|
|
— %
|
|
(0.7) %
|
Change - constant
currency adjusted
|
20.2 %
|
|
(2.8) %
|
|
19.8 %
|
|
53.3 %
|
|
6.5 %
|
|
|
|
|
|
|
|
|
|
|
For the Fourth
Quarter of 2022
|
|
|
|
|
|
|
|
|
|
Reported - Income from
Operations
|
$
407
|
|
$
393
|
|
$
114
|
|
$
(241)
|
|
$
673
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
—
|
|
—
|
|
1
|
|
(10)
|
|
(9)
|
Amortization of
intangibles
|
6
|
|
27
|
|
5
|
|
—
|
|
38
|
Stock
compensation
|
—
|
|
—
|
|
—
|
|
2
|
|
2
|
Restructuring and
integration costs - DPS Merger
|
—
|
|
(1)
|
|
1
|
|
81
|
|
81
|
Productivity
|
13
|
|
17
|
|
—
|
|
41
|
|
71
|
Impairment of
intangible assets
|
166
|
|
—
|
|
—
|
|
—
|
|
166
|
Non-routine legal
matters
|
—
|
|
—
|
|
—
|
|
4
|
|
4
|
COVID-19
|
1
|
|
(1)
|
|
—
|
|
—
|
|
—
|
Foundational
projects
|
—
|
|
—
|
|
—
|
|
1
|
|
1
|
Adjusted - Income from
Operations
|
$
593
|
|
$
435
|
|
$
121
|
|
$
(122)
|
|
$
1,027
|
KEURIG DR PEPPER INC.
RECONCILIATION OF CERTAIN FINANCIAL MEASURES BY
SEGMENT TO CONSTANT CURRENCY
ADJUSTED FINANCIAL MEASURES BY
SEGMENT
(UNAUDITED)
|
|
|
|
Reported
|
|
Impact of
Foreign
Currency
|
|
Constant
Currency
|
For the fourth
quarter of 2023
|
|
|
|
|
|
|
Net
sales
|
|
|
|
|
|
|
U.S. Refreshment
Beverages
|
|
6.8 %
|
|
— %
|
|
6.8 %
|
U.S. Coffee
|
|
(9.9)
|
|
—
|
|
(9.9)
|
International
|
|
11.5
|
|
(5.0)
|
|
6.5
|
Total net
sales
|
|
1.7
|
|
(0.6)
|
|
1.1
|
|
|
Reported
|
|
Items Affecting
Comparability
|
|
Adjusted
|
|
Impact of
Foreign
Currency
|
|
Constant
Currency
Adjusted
|
For the fourth
quarter of 2023
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
|
|
|
|
|
|
|
|
|
U.S. Refreshment
Beverages
|
|
31.1 %
|
|
1.1 %
|
|
32.2 %
|
|
— %
|
|
32.2 %
|
U.S. Coffee
|
|
33.1
|
|
3.4
|
|
36.5
|
|
—
|
|
36.5
|
International
|
|
29.1
|
|
1.6
|
|
30.7
|
|
—
|
|
30.7
|
Total operating
margin
|
|
24.4
|
|
4.1
|
|
28.5
|
|
—
|
|
28.5
|
KEURIG DR PEPPER INC.
RECONCILIATION OF CERTAIN NON-GAAP
INFORMATION
(UNAUDITED)
|
|
|
Gross
profit
|
|
Gross
margin
|
|
Income from
operations
|
|
Operating
margin
|
For the Year Ended
December 31, 2023
|
|
|
|
|
|
|
|
Reported
|
$
8,080
|
|
54.5 %
|
|
$
3,192
|
|
21.5 %
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
Mark to
market
|
(5)
|
|
|
|
8
|
|
|
Amortization of
intangibles
|
—
|
|
|
|
137
|
|
|
Stock
compensation
|
—
|
|
|
|
17
|
|
|
Restructuring - 2023
CEO Succession and Associated Realignment
|
—
|
|
|
|
35
|
|
|
Productivity
|
115
|
|
|
|
259
|
|
|
Impairment of
intangible assets
|
—
|
|
|
|
2
|
|
|
Non-routine legal
matters
|
—
|
|
|
|
5
|
|
|
Transaction
costs
|
—
|
|
|
|
2
|
|
|
Adjusted
|
$
8,190
|
|
55.3 %
|
|
$
3,657
|
|
24.7 %
|
Impact of foreign
currency
|
|
|
— %
|
|
|
|
— %
|
Constant currency
adjusted
|
|
|
55.3 %
|
|
|
|
24.7 %
|
|
|
|
|
|
|
|
|
For the Year Ended
December 31, 2022
|
|
|
|
|
|
|
|
Reported
|
$
7,323
|
|
52.1 %
|
|
$
2,605
|
|
18.5 %
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
Mark to
market
|
120
|
|
|
|
150
|
|
|
Amortization of
intangibles
|
—
|
|
|
|
138
|
|
|
Stock
compensation
|
—
|
|
|
|
5
|
|
|
Restructuring and
integration costs - DPS Merger
|
—
|
|
|
|
172
|
|
|
Productivity
|
116
|
|
|
|
230
|
|
|
Impairment of
intangible assets
|
—
|
|
|
|
477
|
|
|
Non-routine legal
matters
|
—
|
|
|
|
13
|
|
|
COVID-19
|
9
|
|
|
|
14
|
|
|
Gain on
litigation
|
—
|
|
|
|
(271)
|
|
|
Transaction
costs
|
—
|
|
|
|
1
|
|
|
Foundational
projects
|
—
|
|
|
|
4
|
|
|
Adjusted
|
$
7,568
|
|
53.8 %
|
|
$
3,538
|
|
25.2 %
|
|
Refer to pages A-13
and A-14 for reconciliations of reported net sales to constant
currency net sales and adjusted income from operations to constant
currency adjusted income from operations.
|
KEURIG DR PEPPER INC.
RECONCILIATION OF CERTAIN NON-GAAP
INFORMATION
(UNAUDITED)
|
|
|
Interest
expense,
net
|
|
Income before
provision for
income taxes
|
|
Provision
for income
taxes
|
|
Effective
tax rate
|
|
Net income
attributable
to KDP
|
|
Diluted
earnings
per share
|
For the Year Ended
December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$ 496
|
|
$
2,757
|
|
$
576
|
|
20.9 %
|
|
$ 2,181
|
|
$ 1.55
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
(14)
|
|
6
|
|
2
|
|
|
|
4
|
|
—
|
Amortization of
intangibles
|
—
|
|
137
|
|
34
|
|
|
|
103
|
|
0.07
|
Amortization of
deferred financing costs
|
(1)
|
|
1
|
|
—
|
|
|
|
1
|
|
—
|
Amortization of fair
value debt adjustment
|
(19)
|
|
19
|
|
5
|
|
|
|
14
|
|
0.01
|
Stock
compensation
|
—
|
|
17
|
|
6
|
|
|
|
11
|
|
0.01
|
Restructuring - 2023
CEO Succession and Associated Realignment
|
—
|
|
35
|
|
9
|
|
|
|
26
|
|
0.02
|
Productivity
|
—
|
|
259
|
|
63
|
|
|
|
196
|
|
0.14
|
Impairment of
intangible assets
|
—
|
|
2
|
|
—
|
|
|
|
2
|
|
—
|
Non-routine legal
matters
|
—
|
|
5
|
|
1
|
|
|
|
4
|
|
—
|
Transaction
costs
|
—
|
|
2
|
|
—
|
|
|
|
2
|
|
—
|
Change in deferred tax
liabilities related to goodwill and other intangible
assets
|
—
|
|
—
|
|
26
|
|
|
|
(26)
|
|
(0.02)
|
Adjusted
|
$ 462
|
|
$
3,240
|
|
$
722
|
|
22.3 %
|
|
$ 2,518
|
|
$ 1.79
|
Impact of foreign
currency
|
|
|
|
|
|
|
(0.1) %
|
|
|
|
|
Constant currency
adjusted
|
|
|
|
|
|
|
22.2 %
|
|
|
|
|
|
Diluted earnings per
common share may not foot due to rounding.
|
KEURIG DR PEPPER INC.
RECONCILIATION OF CERTAIN NON-GAAP
INFORMATION
(UNAUDITED)
|
|
|
Interest
expense,
net
|
|
Income before
provision for
income taxes
|
|
Provision
for income
taxes
|
|
Effective
tax rate
|
|
Net income
attributable
to KDP
|
|
Diluted
earnings
per share
|
For the Year Ended
December 31, 2022
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
$ 693
|
|
$
1,719
|
|
$
284
|
|
16.5 %
|
|
$ 1,436
|
|
$ 1.01
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
(249)
|
|
395
|
|
93
|
|
|
|
302
|
|
0.21
|
Amortization of
intangibles
|
—
|
|
138
|
|
35
|
|
|
|
103
|
|
0.07
|
Amortization of
deferred financing costs
|
(2)
|
|
2
|
|
—
|
|
|
|
2
|
|
—
|
Amortization of fair
value of debt adjustment
|
(19)
|
|
19
|
|
4
|
|
|
|
15
|
|
0.01
|
Stock
compensation
|
—
|
|
5
|
|
(1)
|
|
|
|
6
|
|
—
|
Restructuring and
integration costs - DPS Merger
|
—
|
|
172
|
|
41
|
|
|
|
131
|
|
0.09
|
Productivity
|
—
|
|
230
|
|
56
|
|
|
|
174
|
|
0.12
|
Impairment of
intangible assets
|
—
|
|
477
|
|
126
|
|
|
|
351
|
|
0.25
|
Impairment of
investment
|
—
|
|
12
|
|
3
|
|
|
|
9
|
|
0.01
|
Loss on early
extinguishment of debt
|
—
|
|
217
|
|
51
|
|
|
|
166
|
|
0.12
|
Non-routine legal
matters
|
—
|
|
13
|
|
3
|
|
|
|
10
|
|
0.01
|
COVID-19
|
—
|
|
14
|
|
4
|
|
|
|
10
|
|
0.01
|
Gain on
litigation
|
—
|
|
(271)
|
|
(68)
|
|
|
|
(203)
|
|
(0.14)
|
Gain on sale of
equity-method investment
|
—
|
|
(50)
|
|
(12)
|
|
|
|
(38)
|
|
(0.03)
|
Transaction
costs
|
—
|
|
1
|
|
—
|
|
|
|
1
|
|
—
|
Foundational
projects
|
—
|
|
4
|
|
1
|
|
|
|
3
|
|
—
|
Change in deferred tax
liabilities related to goodwill and other intangible
assets
|
—
|
|
—
|
|
80
|
|
|
|
(80)
|
|
(0.06)
|
Adjusted
|
$ 423
|
|
$
3,097
|
|
$
700
|
|
22.6 %
|
|
$ 2,398
|
|
$ 1.68
|
|
|
|
|
|
|
|
|
|
|
|
|
Change -
adjusted
|
9.2 %
|
|
|
|
|
|
|
|
5.0 %
|
|
6.5 %
|
Impact of foreign
currency
|
— %
|
|
|
|
|
|
|
|
(0.6) %
|
|
(0.5) %
|
Change - Constant
currency adjusted
|
9.2 %
|
|
|
|
|
|
|
|
4.4 %
|
|
6.0 %
|
|
Diluted earnings per
common share may not foot due to rounding.
|
KEURIG DR PEPPER INC.
RECONCILIATION OF CERTAIN FINANCIAL MEASURES BY
SEGMENT TO CONSTANT CURRENCY
ADJUSTED FINANCIAL MEASURES BY
SEGMENT
(UNAUDITED)
|
|
|
U.S.
Refreshment
Beverages
|
|
U.S.
Coffee
|
|
International
|
|
Unallocated
corporate costs
|
|
Total
|
For the Year Ended
December 31, 2023
|
|
|
|
|
|
|
|
|
|
Reported - Income from
Operations
|
$
2,483
|
|
$
1,158
|
|
$
475
|
|
$
(924)
|
|
$
3,192
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
—
|
|
—
|
|
6
|
|
2
|
|
8
|
Amortization of
intangibles
|
20
|
|
101
|
|
16
|
|
—
|
|
137
|
Stock
compensation
|
—
|
|
—
|
|
—
|
|
17
|
|
17
|
Restructuring - 2023
CEO Succession and Associated Realignment
|
—
|
|
—
|
|
—
|
|
35
|
|
35
|
Productivity
|
57
|
|
74
|
|
—
|
|
128
|
|
259
|
Impairment of
intangible assets
|
2
|
|
—
|
|
—
|
|
—
|
|
2
|
Non-routine legal
matters
|
—
|
|
—
|
|
—
|
|
5
|
|
5
|
Transaction
costs
|
—
|
|
—
|
|
—
|
|
2
|
|
2
|
Adjusted - Income from
Operations
|
$
2,562
|
|
$
1,333
|
|
$
497
|
|
$
(735)
|
|
$
3,657
|
|
|
|
|
|
|
|
|
|
|
Change -
adjusted
|
13.9 %
|
|
(4.3) %
|
|
24.3 %
|
|
45.5 %
|
|
3.4 %
|
Impact of foreign
currency
|
— %
|
|
— %
|
|
(4.8) %
|
|
— %
|
|
(0.6) %
|
Change - constant
currency adjusted
|
13.9 %
|
|
(4.3) %
|
|
19.5 %
|
|
45.5 %
|
|
2.8 %
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended
December 31, 2022
|
|
|
|
|
|
|
|
|
|
Reported - Income from
Operations
|
$
1,961
|
|
$
1,215
|
|
$
373
|
|
$
(944)
|
|
$
2,605
|
Items Affecting
Comparability:
|
|
|
|
|
|
|
|
|
|
Mark to
market
|
—
|
|
—
|
|
9
|
|
141
|
|
150
|
Amortization of
intangibles
|
22
|
|
102
|
|
14
|
|
—
|
|
138
|
Stock
compensation
|
—
|
|
—
|
|
—
|
|
5
|
|
5
|
Restructuring and
integration costs - DPS Merger
|
2
|
|
—
|
|
2
|
|
168
|
|
172
|
Productivity
|
52
|
|
71
|
|
—
|
|
107
|
|
230
|
Impairment of
intangible assets
|
477
|
|
—
|
|
—
|
|
—
|
|
477
|
Non-routine legal
matters
|
—
|
|
—
|
|
—
|
|
13
|
|
13
|
COVID-19
|
7
|
|
5
|
|
2
|
|
—
|
|
14
|
Gain on
litigation
|
(271)
|
|
—
|
|
—
|
|
—
|
|
(271)
|
Transaction
costs
|
—
|
|
—
|
|
—
|
|
1
|
|
1
|
Foundational
projects
|
—
|
|
—
|
|
—
|
|
4
|
|
4
|
Adjusted - Income from
Operations
|
$
2,250
|
|
$
1,393
|
|
$
400
|
|
$
(505)
|
|
$
3,538
|
KEURIG DR PEPPER INC.
RECONCILIATION OF CERTAIN FINANCIAL MEASURES BY
SEGMENT TO CONSTANT CURRENCY
ADJUSTED FINANCIAL MEASURES BY SEGMENT
(UNAUDITED)
|
|
|
|
Reported
|
|
Impact of
Foreign
Currency
|
|
Constant
Currency
|
For the year ended
December 31, 2023
|
|
|
|
|
|
|
Net
sales
|
|
|
|
|
|
|
U.S. Refreshment
Beverages
|
|
9.1 %
|
|
— %
|
|
9.1 %
|
U.S. Coffee
|
|
(5.4)
|
|
—
|
|
(5.4)
|
International
|
|
15.0
|
|
(4.5)
|
|
10.5
|
Total net
sales
|
|
5.4
|
|
(0.5)
|
|
4.9
|
|
|
Reported
|
|
Items
Affecting
Comparability
|
|
Adjusted
|
|
Impact of
Foreign
Currency
|
|
Constant
Currency
Adjusted
|
For the year ended
December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
|
|
|
|
|
|
|
|
|
U.S. Refreshment
Beverages
|
|
28.1 %
|
|
0.9 %
|
|
29.0 %
|
|
— %
|
|
29.0 %
|
U.S. Coffee
|
|
28.4
|
|
4.3
|
|
32.7
|
|
—
|
|
32.7
|
International
|
|
24.7
|
|
1.2
|
|
25.9
|
|
—
|
|
25.9
|
Total operating
margin
|
|
21.5
|
|
3.2
|
|
24.7
|
|
—
|
|
24.7
|
KEURIG DR PEPPER INC.
RECONCILIATION OF ADJUSTED EBITDA AND MANAGEMENT
LEVERAGE RATIO
(UNAUDITED)
|
|
(in millions,
except for ratio)
|
|
ADJUSTED EBITDA
RECONCILIATION - LAST TWELVE MONTHS
|
|
Net income
attributable to KDP
|
$
2,181
|
Interest expense,
net
|
496
|
Provision for income
taxes
|
576
|
Depreciation
expense
|
402
|
Other
amortization
|
181
|
Amortization of
intangibles
|
137
|
EBITDA
|
$
3,973
|
Items affecting
comparability:
|
|
Impairment of
intangible assets
|
$
2
|
Restructuring - 2023
CEO Succession and Associated Realignment
|
35
|
Productivity
|
218
|
Non-routine legal
matters
|
5
|
Stock
compensation
|
17
|
Transaction
costs
|
2
|
Mark to
market
|
(8)
|
Adjusted
EBITDA
|
$
4,244
|
|
|
|
December
31,
|
|
2023
|
Principal amounts
of:
|
|
Commercial paper
notes
|
$
2,096
|
Senior unsecured
notes
|
11,243
|
Total principal
amounts
|
13,339
|
Less: Cash and cash
equivalents
|
267
|
Total principal
amounts less cash and cash equivalents
|
$
13,072
|
|
|
December 31, 2023
Management Leverage Ratio
|
3.1
|
KEURIG DR PEPPER INC.
RECONCILIATION
OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH
FLOW
(UNAUDITED)
Free cash flow is defined as net cash provided by operating
activities adjusted for purchases of property, plant and equipment,
proceeds from sales of property, plant and equipment, and certain
items excluded for comparison to prior year periods. For the years
ended December 31, 2023 and 2022,
there were no certain items excluded for comparison to prior year
periods.
|
|
Year Ended December
31,
|
(in
millions)
|
|
2023
|
|
2022
|
Net cash provided by
operating activities
|
|
$
1,329
|
|
$
2,837
|
Purchases of property,
plant and equipment
|
|
(425)
|
|
(353)
|
Proceeds from sales of
property, plant and equipment
|
|
9
|
|
168
|
Free Cash
Flow
|
|
$
913
|
|
$
2,652
|
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SOURCE Keurig Dr Pepper Inc.