Keurig Dr Pepper Inc. (KDP) on Q1 2021 Results - Earnings Call Transcript

Operator: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Keurig Dr Pepper's Earnings Call for the First Quarter of 2021. This conference call is being recorded, and there will be a question-and-answer session at the end of the call. I would now like to introduce Keurig Dr Pepper's Vice President of Investor Relations, Mr. Tyson Seely. Mr. Seely, please go ahead. Tyson Seely: Thank you, and hello, everyone. Thanks for joining us. Earlier this morning, we issued our press release for the first quarter of 2021. If you need a copy you can get on our website keurigdrpepper.com in the Investor section. Robert Gamgort: Thanks, Tyson. And good morning, everyone. I hope you and your families are well. As we enter spring cautious optimism as in the year, vaccine rates are approaching 50% of the US adult population and growing across North America. Higher levels of consumer mobility are evident in retail, restaurants and entertainment. And there is an increasing belief that the worst of the pandemic is behind us. If the last year has taught us anything, however, it is that our role is not to predict the future but rather to be nimble, responsive and prepare for whatever we may face in the future. This same mindset enabled Keurig Dr Pepper to deliver meaningful outperformance in 2020 and a strong start to 2021. While some companies have been devastated by the impacts of the crisis, others have experienced a windfall from it. We on the other hand have succeeded despite the pandemic, by driving the parts of our business that are performing well to overcome the declines we've experienced in areas structurally challenged by COVID. Ozan Dokmecioglu: Thanks, Bob. And good morning, everyone. Continuing on an adjusted basis, I will briefly review our performance for the first quarter, which was very strong, and our press release discusses in significant detail. I will then turn into our outlook for the full year 2021. Constant currency net sales increased nearly 11%, fueled by higher volume mix of 10.3% and favorable net price realization of 0.5% with all four of our business segments posting growth. Adjusted operating income in the first quarter totaled $741 million, an increase of 8.3% compared to $684 million in the year ago period, driven by the very strong net sales growth, continued productivity and merger synergies and lower marketing spending in relation to the pre-COVID spending levels in the year ago period. These drivers were partially offset by higher operating expenses associated with increased consumer demand, inflation in logistics and input costs and an unfavorable comparison to a $2 million gain in the prior year on the sale leaseback of four facilities. Robert Gamgort: Thanks, Ozan. Before moving to Q&A, I would like to provide a brief update on corporate governance. As you are aware, we transitioned from a controlled company to a widely-held one in 2020. Since that time, we've enhanced our board structure, increasing its independence and diversity, and establishing the role of lead independent director. I want to highlight - or announced it yesterday that we welcome Lubomira Rochet, as a new Director to our Board. Since November, we've added four new directors, each of whom brings a unique experiences and fresh perspective to the Board. Finally, many of you have asked questions about our post-2021 outlook. We plan to hold an Investor Day shortly after we report our Q2 earnings, during which we look forward to sharing insights on our long-term strategy and financial expectation. Details for the conference will be provided in the near future. I will now hand back to the operator. Operator: Your first question comes from the line of Bonnie Herzog with Goldman Sachs. Your lines open. Bonnie Herzog: All right, thank you. Good morning. Robert Gamgort: Hi, Bonnie. Bonnie Herzog: Hi. I wanted to ask you guys about you know, the brewer sales in the quarter, I was hoping just to get a little bit more color on, you know, the much better than expected sales that you guys reported and how impactful some of the innovation that you've put in the marketplace has been? And then in looking forward, how should we think about your brewer’s sale to the balance of the year, especially in the context of some of the tougher comps that you're going to be facing? And then separately, thinking about attach rates on a go forward basis, you know, especially given some of the brewer volume growth that you've seen. I guess to me, it seems like if you're attach rate hold, this really could be a meaningful driver behind pod volumes in the coming quarters and years. And if you could just touch on that or is that the right way to think about it? Thanks. Robert Gamgort: Yeah, okay. Sounds great. Let me start with attach first. During the pandemic, we saw an increase in attachment rate, especially in the early days. And that was very different than the long term trend we had experienced, we said the attachment rates were very stable. Our expectation that we communicated at that time at that time is that, as consumer mobility normalized, we would see attachment rates normalize back to their long-term levels. And that's exactly what we're seeing right now. So I think attachment rate, on hand have come down from their piece in Q2 a year ago, no surprise there. But the reverse side of it is, our attachment rates holding up versus their long-term trend, even as we add new households, absolutely. And I think - it's as simple as when we're able to convert a home from brewing coffee by the pots to brewing it by the cup, it settles in at a consumption race. And unless there's some substantial change in their behavior, stays very solid over time, which is ultimately good news. As we talked about a number of times, so it's worth, but it is worth repeating. Household penetration growth is what drives our pod growth over the long-term. And brewer sales over a longer period of time has some correlation. But especially in the short term, there's not causality. So you can't automatically look at trump brewer sales and say, that's going to mean that we've got a even higher rate of household penetration. And let me give you a little more depth on that, because it's such a critical point. In 2020, as you know, we added 3 million new households to the Keurig system. And that was about a million households above our normal run rate of 2 million. And there were a lot of questions about is this a pull-forward from the future? When we look at 2021? We said absolutely not. And that's exactly what's playing out right now. To get those 3 million households, we sold 11 million brewers. So that tells you that we had a record year, not only in terms of new household, but a record year in seeing existing households, which are now 33 million strong in the US, replace or upgrade their brewers. And while replacements and upgrades don't lead to household penetration growth, they're really important because they represent a strong recommitment to the Keurig system. So let's talk about 2021. When we talk about - when we put our initial thoughts about 2021, we said that we believe that we'll return to our long-term trend of adding 2 million new households per year, and we weren't concerned about any pull-forward. We had a really strong quarter in brewer sales in Q1, and by the way, 40% of that 60% growth was driven by consumption. So there's some shipment timing in there. But it's really consumer sales driving the majority of that, as happy as we are with that it is far too early in the year for us to conclude that that translates to household penetration growth above 2 million. Why is that? Because we've got a ton of innovation in the market right now. And you're also seeing two rounds of government stimulus in the past few months, that have people feeling very liquid. And so a number of people are using it to still invest in their homes, and they're upgrading their brewers. And we've given them innovation to do so. So as we sit here today, we're still talking about 2 million new households, which is a tremendous growth. And as we always do, we'll update our household penetration growth at the end of the year. And the start that we see on brewers to give us confidence, if nothing else to give us confidence that the 2 million number is very doable. Operator: Your next question comes from the line of Bryan Spillane with Bank of America. Your lines open. Bryan Spillane: Hey. Good morning, everyone. Robert Gamgort: Morning. Bryan Spillane: Just two quick ones for me. First one just Ozan on the inflation outlook for the year and relative to the comments on hedging. Just wanted to clarify, is your inflation outlook, you know, is it hedged. So meaning is there a potential for more? I don't know volatility, I guess in the COGS inflation over the balance of the year, or are we you know, is the outlook pretty well locked in? Ozan Dokmecioglu: Sure. Good morning, Bryan. And like you have heard, likes of many of our peer group of companies, we have increased our outlook for inflation over the past month. And when you looked at the major reasons of the inflation, you would see that primarily around the packaging likes of aluminium, glass, as well as polypropylene, the material that we use in the K-Cup pods, that includes corn inputs that translates for us as the high fructose syrup. \And then, in the past one month, we were expecting already an inflationary environment in the transportation and the overall logistics, but we have seen an uptick in those. And we also service our increased volume using at times off the spot rate, which makes it a little bit higher inflationary environment. And right now, we believe that we have included a healthy amount of inflation expectations, in our view to go period. And some of the input costs, especially transportation, which is translates for us as freight, as well as polypropylene are not really hedge above in terms of there not regulated market, so we can perform some of the hedging activities that we have then. And - but nevertheless, Bryan, we feel very good with our expectations and how much inflation we have increased in our outlook and build for the rest of the year. And for the commodities and the other input costs, there are other measurable items, as we always use widely hedging techniques to protect and bring price stability and then forecast transparency for the year to go, they are all intact. But please make no mistake, that hedging or forward purchasing provides high certainty for a period of time. And in a persistent inflation is just postponing, is not really mitigating the inflation as such. But in short, we feel very good with our expectations for the rest of the year. And we believe we de-risked our P&L as much as we could. Operator: Your next question comes from the line of Lauren Lieberman with Barclays. Your line is open. Lauren Lieberman: Great, thanks. Good morning. I want to talk a little bit about marketing plans for this year, as you mentioned in the prepared remarks industry - the cold drinks industry, everyone reduced spending significantly in 2020. And then you guys had tremendous results regardless. So I just want to talk about how your marketing plans for ‘21 possibly have changed with inflation being so much worse, you know, than initially anticipated. I'm sure marketing is up year-over-year, but just how much, anything that you can offer, how that may have shifted. And then also the mix of that spend, you know, again, given the very strong returns on the relatively low level of spend in 2020. How is that informing your thought process on what actually needs to be spent to support this business? Thanks. Robert Gamgort: Sure. Good morning, Lauren. Thanks for the question. Marketing plans, well, let me talk about marketing spending first. As you point out, everybody in industry dropped their spending in 2020. It was a combination of covering mix issues. But also in the early days of the pandemic, the marketing wasn't very efficient. As we got through the years, as you also point out, not only did we restore some of the spend, but we also learned to be incredibly efficient with that spend, nothing like being under pressure to innovate on how we're able to reach consumers in a more efficient way. And a lot of that learning carries over into 2021, where we build in that expected efficiency, plus we have plans to invest more in marketing. To be really - directly to your question, we have not changed our commitment to the increase in marketing that we have planned in 2021, despite the fact that we're seeing higher inflation, so we haven't touched marketing to offset inflation at all, in 2021. Our expectation is increased marketing spend, restore as much of that as we possibly can, although we won't get all the way back to where we were in 2019, for sure, that will take a couple of years to get there. We are also looking for opportunities to invest more in our marketing spend. So as we talked about a number of times, that we think 13% to 15% growth in an environment like we're in right now, especially when you look at a two year stack of 30% EPS at the midpoint is fantastic return. And anything above that, we would then use opportunistically to invest back in the business to continue to drive long-term growth, getting the balance right between delivering best-in-class EPS, plus best-in-class growth and market share expansion is what we're doing here. And we will reinvest any opportunity that we get. We spend an increasingly - increasingly we're spending more and more on digital, that's not a surprise, everyone's doing that. We have much more science behind our marketing. And our team continues to build their expertise in doing so and that leads to more efficiency. So absolute spending investment is no longer as it relevant, as it once was because we're dialing up the productivity and efficiency of that spend every year and so we're able to squeeze more out of every dollar in terms of the consumer impacting, as you point out, you know, even though our marketing was down in 2020, we gained share on 90% of our core portfolio, and we added 3 million new households security. So clearly, we knew what we were doing on that spending. And then my last point is, what are we going to spend the money on this year, we've got an incredible lineup of innovation, on the LRB side, well, first on CSD, zero sugar is our big news. You're already seeing advertising right now on Dr Pepper zero sugar. We're running NASCAR for the first time this weekend, in many, many years with Dr Pepper behind zero sugar and Bubba Wallace. We're introducing Bai Boost, which will support with advertising. And then on the Keurig side, we've got a number of innovations, Green Mountain Brew Over Ice. We're continuing the One Step Lattes and cappuccinos on Donut Shop, both of whom have done really well. And then, of course, substantial spending beyond the Keurig business to drive household penetration. So not only do we restore the spending, do we know how to spend it, but we're really focused that spending on innovation, which we know drives really efficient marketing. So thanks for that question. Operator: Your next question comes from the line of Andrea Teixeira with JPMorgan. Your line is open. Andrea Teixeira: Thank you. Good morning. So I wanted to go back to the comments about Q2 coming in below the guide for EPS, despite obviously being the easiest comp for you. I understand the transportation cost pressures and reinvestment. But can you talk about the top line outlook? And if it's coming above the - what do you have the now that you raised? Thank you. Robert Gamgort: Yeah. Ozan, will likely talk about the EPS side, the earning side of it and the pluses or minuses? Andrea, thanks for the question. We did something that we usually don't, which gave guidance on a quarter because of the volatility. So we're certainly doing in the earning side, but we do not plan to give guidance for quarter-by-quarter on the revenue side. But Ozan, do you want to talk about the earnings visibility that we have and why we decided to give some extra color on Q2? Ozan Dokmecioglu: Absolutely. Good morning. So when we look to our overall expectation and the construct of the quarter two, we still see a very healthy quarter, as you have said a good top line increase expectation. And when we look to the inflationary pressures that are coming along, we expect a healthy amount of inflation to realize in our quarter two P&L. And we should not also forget that when you comp versus the last year in quarter two, we have seen some declines, especially in the transportation and the logistics area, for example, which was purely driven by the demand and supply, which was coming from the marketplace as part of the pandemic environment. So we are going to lap lows periods that on a like for like basis is up taking the overall freight costs, as well as logistics expectation for us. But the good news is we have a good handle on those things, and we have built in our forecast and the plans and not only for quarter two, but beyond, including the second half of the year. At the same time, last year, in quarter two, as part of the overall industry giving there wasn't much return in a pandemic environment, we reduced more, so from our marketing spending, especially behind the advertisement and promotion. And as Bob was articulating a couple of minutes ago, we started to reinstate some of the advertisement and promotion investments behind our brands and also support a slate of the innovation that we have and putting in the marketplace. Therefore this is also technically creating a negative comparison, increase in the advertisement and promotion versus last year. But it's all good expand that goes behind our branch and investment and of our business. And as we always do, we are very careful in terms of delivering on our productivities, merger synergies, as well as other cost controls that we have been doing very successfully since the actual emergent date, but we took it to the different levels starting with the pandemic environment. Therefore, when we put all the puts and takes, we do we still expect a very healthy growth in terms of the either the top line, mid part, as well as the bottom line of our P&L. Operator: Your next question comes from the line of Chris Carey with Wells Fargo Securities. Your line is open. Chris Carey: Hi, good morning. So I know we're still not in a you know completely normal operating environment with COVID. You know, but I guess with the strength that you're seeing in coffee, what looks like a pretty rational environment in the North American beverage environment, especially on the pricing front and you're still gaining share. I wonder if you have some, you know incremental thoughts as we get into this year, just about the steady state organic sales growth of this portfolio because it continues to show an ability to grow better than a low single digit top line algorithm, which to category exposure might suggest that the packaged beverage unit specifically has been coming in significantly better. And I just wonder if there's more opportunity here, then what again, that that low single digit category growth rate might imply? So thanks for any thoughts around that. Robert Gamgort: Sure. Good morning. Thanks for your question. The - this environment is anything but steady state, as we sit here right now. And as we said upfront, it appears to be returning to more of a business as new normal, whatever that's going to be when it settles basis. But way too early in this year, for us to even think about steady state. We have our entire organization remaining on their toes. We're looking for changes in the environment, none of us went into this year expecting the level of inflation that we're seeing right now, for example, and we don't know if it's temporary, or if it's sustained. So I don't know what steady state looks like. And when we get towards the end of the year, we'll probably have a better view on that. I mean, your question is, what's the longer term growth outlook for this portfolio and whatever that environment is? I won't steal any thunder from our Investor Day, which we'll be doing right after our Q2 earnings, because that will be the topic. What does the KDP outlook look like both from a strategy and a financial algorithm post-2021. At that point in time, we'll have more data on what the marketplace looks like. And that'll be a very robust part of that conversation. Operator: Your next question comes from the line of Steve Powers with Deutsche Bank. Your lines open. Steve Powers: Hey, thanks. And good morning, everybody. Two questions, if I could, I guess, maybe Ozan for you just to round the 2Q key versus balance of the year question. I think, you know, I appreciate the color you gave to Andrea’s question. But if you could just hit maybe for us a little bit more specificity on what you expect to get better in the back half versus 2Q, whether it's the cost environment, or the cost savings momentum, pricing benefits, or otherwise. Just looking for a bit more clarity on where the back half acceleration has to be sourced from relative to what you said about 2Q? And then Bob, what I really wanted to ask about was just the relative strength of packaged beverages on the top line, not just this quarter. But what we've seen over the past several, there's been tailwind in that business, but you've, I think, pretty consistently exceeded expectations. And I'm curious, if there are things you can, you know, you know, hammer home for us in terms of where you attribute or what you attribute outperformance to. Part of that, I think, is that your market shares are stronger in future consumption channels where consumers have been biased to shop this past year. To the extent that's true, I guess maybe you could talk about that. But I'm also curious if you feel you see opportunities to leverage the strength you've had in those channels into future gains and immediate consumption channels when traffic builds as we go forward? Thank you. Robert Gamgort: Ozan, do you want to start with the first one? Ozan Dokmecioglu: Yes. Yes, Bob. Good morning, Steve. Thanks for the question. So in order to bring a little bit more color, let me try to break up a little bit more. And then - and we go from there. So as I said, we do believe that we have a good planning stance, not only for Q2, but for the remainder of the year. So - but let's make sure that we all agree on one thing is still we are not 100% out of the woods in terms of the pandemic environment. We still don't know exactly how all these things going to play out and how the macroeconomic situation going to react, and most importantly, how the mobility is going to be impacted. As we said in numerous number of times, we did not get any windfall from the pandemic environment. This was a ruthless prioritization in terms of managing the mix, along with the innovation and the categories that we operate. Therefore, we also said that we have seen some pressure in our - for example, in the coffee side, away from home business, that primarily serves the offices, as well as the hospitality sector. On the cold beverage side, the most negatively impacted part of our business was the fountain foodservice, as we discussed, again in numerous number of occasions. The good news with those, starting quarter two onwards, we are going to lap those negative numbers that we have seen in 2020. And with the increasing of the mobility, we do expect those two parts of our business to start to perform better than 2020. And albeit, we already started to see month in month out since January onwards. So we don't know and we don't have a real crystal ball in terms of how the mobility is going to be impacted and what would be the puts and takes on our business. Having said that, we also have a good understanding and some expectations in terms of how our top nine we look like in relation to the crisis stability that we believe now we have in our overall cost of goods sold portfolio, that goes back to the inflationary comments, and I have just made, which a good chunk of our portfolio that is hedgeable and we are taking all the necessary measures to assure up the rest of the year. And for the other input costs, like soft polypropylene and trade that there are not regulated markets that we can hedge, that we believe we put the incremental inflationary environment that would be applicable for our business for the rest of the year. And as we also discussed, we have several levels actually in case the inflammation goes further to put into the service, likes of productivities, cost controls, pricing whenever it is appropriate, as well as our increased volume profile to support the bottom line. Therefore, we are very fortunate in terms of having several resources in order to fight back even further inflation that may happen, given that we don't know exactly what we don't know at this point in time. And therefore, when we step back and look at it, we will also continue to ramp up our remainder productivity problems, as well as merger synergies more in the second half of this year. So when we add up all these puts and takes, we believe that we have quite a bit of healthy profit and loss profile to deliver our EPS commitment of 13% to 15%, with the associated top line. Therefore, the good news is that we have built in all these, again, puts and takes into the remainder of 2021 and came up with the full year profile that we have been talking. Bob? A - Robert Gamgort Yeah. Let me - I'm going to add one thing to that, Steve, before I get to your second question. To bring together your question and Andrea's question, you know, sometimes we get into the details, which are important, we lose the big picture. So let me just step back before I move on and say the big picture on it. The second quarter, we said is going to be below our 13% to 15% annual guidance, but still double digit. So we're talking very strong performance in second quarter. The biggest driver of that fact, in Q2, if you want to look at why is Q2 below the balance of the year is this reinvestment in marketing in 2021 compared to a quarter a year ago, we're marketing across our business and the entire industry was - had a dramatic pullback, I view that as a position of strength, not as a cost. But obviously it shows up on the earning side for one quarter. So all of that detail is really important. But let's not lose the big picture of what I just said. I think this is actually a very, very strong position. With regard to our results of our packaged beverage business, it's two things, its brand strength and its outstanding execution of retail with regard to the brand strength. We have you know talked about our share gain on Dr Pepper, Canada Dry for years, which continues to say and I won't build - drill down deeper into those because we talked about those all the time, but we're getting broader share strength across our portfolio. So I mentioned one today this deserves a little bit of a call out which is Sunkist, which has now moved to the number one fruit flavored CSD share position. We never talked about Sunkist, but we've had innovation, renovation and marketing behind that brand. And you see that it respond, and I could keep going throughout our CSD portfolio to talk about that. Beyond CSDs, we've had fantastic results on brands like CORE, Snapple, we're in the middle of a Snapple reinvention right now, which is a completely new look to it, new bottle 100%, post consumer recycled, et cetera, et cetera. So I won't go through this laundry list. But there is real brand strength and it's not accidental. It's driven by innovation, renovation and really strong marketing and that will continue. With regards to execution, it's more than just we're getting the blocking and tackling right. We have added really strong leadership to that side of the business. We've upgraded the data and technology that helps aid our decision making. We have real strength in things like - on areas like revenue growth management, which allows us to be very precise in our promotion program. And then finally, we've made 14 investments, some are substantial, like the Honickman partnerships. Some are very small, but we made 14 transactions in our route to market to take some independent businesses and move them over to our businesses in which our thesis is that when we can consolidate the supply and distribution, we're able to execute better market, and that's showing up and that's not going to slow down. So it's really the combination of those, your point about C store versus others is really not a major factor here. If you want to look at our relative C store performance, I can make it really simple for you. The single biggest reason why we are not as large as some of our competitors is because we don't have a meaningful position in energy or sports, but particularly energy. And energy is a big category in C stores. But it's nothing beyond that. Operator: Your next question comes from the line of Kevin Grundy with Jefferies. Your line is open. Kevin Grundy: Great. Thanks. Good morning, everyone. Thanks for taking the question. Bon, a question for you on Polar and the company's sparkling water strategy more broadly. So you spent a little bit of time, you mentioned distribution opportunity for the brand. It also seemed like it contributed to the strong package beverage result in the quarter building on Steve's question a moment ago. So a few questions, please. What is the ACV opportunity? I think you mentioned it's 55%. What is the ambition? Where do you think that can go? And where are those shelf space gains going to come from, as you as you expand? Have you been pleased with the existing velocity, as you've expanded here at existing retailers? And then Bob maybe just more broadly on the company's sparkling water strategy, just more broadly, given the attractiveness of it, and it continues to be one of high growth categories in the beverage space a lot there? Thank you. Robert Gamgort: Yeah. Okay. Yeah, thanks for question. We have - really if you look at our previous position as sparkling water with relatively limited, we had some regional positions in Canada Dry and Schweppes. And we actually think those brands are much more fit for the ginger ale and CSD business, they are in sparkling water. But it made some sense when we didn't have anything. The Polar is the brand that we're backing. We're happy with the velocity. We're really pleased with the ACV that we're at right now, which is 55%. And where does it go from here? It's going to deliver at the HCD level of all of our top brands. You know, that's almost universal distribution. So there's no reason why this is one of our big investment areas is not going to achieve that strength. With regard to how do we plan on playing within sparklings? We have some niche brands. The businesses that we can add around the edges here, Limitless was one which is caffeinated, that we're expanding beyond just caffeinated, that we will position against that. But I think very clearly Polar is the brand that we're backing. It's an important brand in a high growth segment, one that's been a gap in our portfolio, and like our position in premium water in total, where we've now become the number two player we’re being very intentional about making sure that we have a good position in sparkling water going forward. Operator: All right, thank you. That concludes the Q&A session of today's call. I'll hand the call back to Tyson. Tyson Seely: Thank you, Jerome. And thank you everyone for your participation today. The IR team is around as usual. I know it's a busy day for everyone. We didn't get to everyone in the queue, but the IR team is here for your questions throughout the day. Please reach out to us. Have a good day. Operator: Thank you, presenters. And thank you ladies and gentlemen. That concludes today's conference. Thank you all for joining. You may now disconnect.
KDP Ratings Summary
KDP Quant Ranking
Related Analysis

Keurig Dr Pepper Tops Q4 Estimates, Sees Strong Growth Ahead

Keurig Dr Pepper (NASDAQ:KDP) delivered fourth-quarter results that surpassed analyst expectations, driving a 4% gain in shares as investors responded to strong revenue growth and an upbeat 2025 outlook.

The beverage giant posted adjusted earnings per share of $0.58, slightly beating the $0.57 consensus estimate. Revenue climbed 5.2% year-over-year to $4.07 billion, exceeding the $4.02 billion forecast and reinforcing consistent financial performance in line with long-term growth targets.

The U.S. Refreshment Beverages segment led the quarter, with net sales jumping 10.3% to $2.4 billion, fueled by a 7.5% increase in volume/mix and a 2.8% rise in pricing. However, the U.S. Coffee segment struggled, with net sales declining 2.4% to $1.1 billion, despite a 1.1% uptick in K-Cup pod shipments.

Looking ahead, Keurig Dr Pepper remains optimistic about 2025, forecasting mid-single-digit net sales growth and high-single-digit adjusted EPS growth on a constant currency basis. The company expects its recent acquisition of GHOST to contribute to performance, further strengthening its market position in the beverage industry.

Keurig Dr Pepper Tops Q4 Estimates, Sees Strong Growth Ahead

Keurig Dr Pepper (NASDAQ:KDP) delivered fourth-quarter results that surpassed analyst expectations, driving a 4% gain in shares as investors responded to strong revenue growth and an upbeat 2025 outlook.

The beverage giant posted adjusted earnings per share of $0.58, slightly beating the $0.57 consensus estimate. Revenue climbed 5.2% year-over-year to $4.07 billion, exceeding the $4.02 billion forecast and reinforcing consistent financial performance in line with long-term growth targets.

The U.S. Refreshment Beverages segment led the quarter, with net sales jumping 10.3% to $2.4 billion, fueled by a 7.5% increase in volume/mix and a 2.8% rise in pricing. However, the U.S. Coffee segment struggled, with net sales declining 2.4% to $1.1 billion, despite a 1.1% uptick in K-Cup pod shipments.

Looking ahead, Keurig Dr Pepper remains optimistic about 2025, forecasting mid-single-digit net sales growth and high-single-digit adjusted EPS growth on a constant currency basis. The company expects its recent acquisition of GHOST to contribute to performance, further strengthening its market position in the beverage industry.

Keurig Dr Pepper Inc. (NASDAQ: KDP) Overview and Financial Insights

  • The consensus price target for KDP has decreased from $38.33 to $35.5, indicating a potential reassessment of the company's future growth prospects.
  • RBC Capital remains optimistic about KDP, setting a higher price target of $43, suggesting confidence in the company's strategic initiatives and market position.

Keurig Dr Pepper Inc. (NASDAQ:KDP) is a significant contender in the beverage industry, offering a diverse portfolio of products across segments like Coffee Systems, Packaged Beverages, Beverage Concentrates, and Latin America Beverages. With well-known brands such as Dr Pepper, Canada Dry, and Snapple, KDP competes with other consumer defensive companies like Kimberly-Clark.

The consensus price target for KDP's stock has seen a decline over the past year, dropping from $38.33 to $35.5. This shift may reflect changing market conditions or company performance. Despite this, RBC Capital has set a higher price target of $43, suggesting optimism about KDP's future, as highlighted by RBC Capital.

KDP's upcoming fourth-quarter earnings are expected to benefit from innovation and growth in its Refreshment Beverages segment. The company's strategic initiatives in expanding its product offerings are anticipated to positively impact its financial performance. Investors are watching closely to see if KDP will exceed expectations in its earnings report.

Piper Sandler analyst Michael Lavery has initiated coverage on KDP with a Neutral rating and a target price of $35. While KDP faces challenges in its coffee segment, there is potential for growth in the energy drink market. This could influence future stock performance and investor sentiment.

Keurig Dr Pepper Inc. (NASDAQ:KDP) Analyst Update and Earnings Forecast

  • Lauren Lieberman from Barclays sets a price target of $36 for NASDAQ:KDP, indicating a potential upside of 5.51%.
  • Q4 2024 earnings per share (EPS) forecasted at $0.57, with revenues expected to hit $4.03 billion, marking a 4.2% year-over-year increase.
  • Despite a positive revenue and EPS growth outlook, consensus EPS estimate has been revised downward by 1.8% over the past 30 days.

Keurig Dr Pepper Inc. (NASDAQ:KDP) is a leading beverage company known for its diverse portfolio of soft drinks, coffee, and other beverages. The company competes with major players like Coca-Cola and PepsiCo. On February 24, 2025, Lauren Lieberman from Barclays set a price target of $36 for KDP, suggesting a potential price increase of 5.51% from its current trading price of $34.12.

KDP is expected to report quarterly earnings of $0.57 per share for the quarter ending December 2024, a 3.6% increase from the previous year. Analysts forecast revenues of $4.03 billion, marking a 4.2% year-over-year growth. Despite this positive outlook, the consensus earnings per share (EPS) estimate has been revised downward by 1.8% over the past 30 days, reflecting a reassessment by analysts.

The company is set to release its fourth-quarter 2024 earnings on February 25, before the market opens. Analysts expect a positive performance, with projected increases in both revenues and earnings per share. The Zacks Consensus Estimate for fourth-quarter revenues is $4.03 billion, a 4.2% rise from the same quarter last year. The consensus estimate for quarterly earnings has slightly decreased by a penny to 57 cents per share, still representing a 3.6% increase from the previous year.

KDP has a history of exceeding expectations, with an average earnings surprise of 3.4% over the past four quarters. The anticipated growth in earnings is likely driven by innovation, portfolio expansion, and growth in Refreshment Beverages. The stock is currently priced at $34.12, with a slight increase of 0.08, or 0.24%, today. It has fluctuated between a low of $33.86 and a high of $34.43 during the trading day.

Keurig Dr Pepper Inc. (NASDAQ: KDP) Overview and Financial Insights

  • The consensus price target for KDP has decreased from $38.33 to $35.5, indicating a potential reassessment of the company's future growth prospects.
  • RBC Capital remains optimistic about KDP, setting a higher price target of $43, suggesting confidence in the company's strategic initiatives and market position.

Keurig Dr Pepper Inc. (NASDAQ:KDP) is a significant contender in the beverage industry, offering a diverse portfolio of products across segments like Coffee Systems, Packaged Beverages, Beverage Concentrates, and Latin America Beverages. With well-known brands such as Dr Pepper, Canada Dry, and Snapple, KDP competes with other consumer defensive companies like Kimberly-Clark.

The consensus price target for KDP's stock has seen a decline over the past year, dropping from $38.33 to $35.5. This shift may reflect changing market conditions or company performance. Despite this, RBC Capital has set a higher price target of $43, suggesting optimism about KDP's future, as highlighted by RBC Capital.

KDP's upcoming fourth-quarter earnings are expected to benefit from innovation and growth in its Refreshment Beverages segment. The company's strategic initiatives in expanding its product offerings are anticipated to positively impact its financial performance. Investors are watching closely to see if KDP will exceed expectations in its earnings report.

Piper Sandler analyst Michael Lavery has initiated coverage on KDP with a Neutral rating and a target price of $35. While KDP faces challenges in its coffee segment, there is potential for growth in the energy drink market. This could influence future stock performance and investor sentiment.

Keurig Dr Pepper Inc. (NASDAQ:KDP) Analyst Update and Earnings Forecast

  • Lauren Lieberman from Barclays sets a price target of $36 for NASDAQ:KDP, indicating a potential upside of 5.51%.
  • Q4 2024 earnings per share (EPS) forecasted at $0.57, with revenues expected to hit $4.03 billion, marking a 4.2% year-over-year increase.
  • Despite a positive revenue and EPS growth outlook, consensus EPS estimate has been revised downward by 1.8% over the past 30 days.

Keurig Dr Pepper Inc. (NASDAQ:KDP) is a leading beverage company known for its diverse portfolio of soft drinks, coffee, and other beverages. The company competes with major players like Coca-Cola and PepsiCo. On February 24, 2025, Lauren Lieberman from Barclays set a price target of $36 for KDP, suggesting a potential price increase of 5.51% from its current trading price of $34.12.

KDP is expected to report quarterly earnings of $0.57 per share for the quarter ending December 2024, a 3.6% increase from the previous year. Analysts forecast revenues of $4.03 billion, marking a 4.2% year-over-year growth. Despite this positive outlook, the consensus earnings per share (EPS) estimate has been revised downward by 1.8% over the past 30 days, reflecting a reassessment by analysts.

The company is set to release its fourth-quarter 2024 earnings on February 25, before the market opens. Analysts expect a positive performance, with projected increases in both revenues and earnings per share. The Zacks Consensus Estimate for fourth-quarter revenues is $4.03 billion, a 4.2% rise from the same quarter last year. The consensus estimate for quarterly earnings has slightly decreased by a penny to 57 cents per share, still representing a 3.6% increase from the previous year.

KDP has a history of exceeding expectations, with an average earnings surprise of 3.4% over the past four quarters. The anticipated growth in earnings is likely driven by innovation, portfolio expansion, and growth in Refreshment Beverages. The stock is currently priced at $34.12, with a slight increase of 0.08, or 0.24%, today. It has fluctuated between a low of $33.86 and a high of $34.43 during the trading day.