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Keurig Dr Pepper (KDP) Q2 Earnings Top Estimates, Sales View Up
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Keurig Dr Pepper Inc. (KDP - Free Report) has reported second-quarter 2023 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. Also, both metrics improved year over year. Results have gained from continued brand strength and significant pricing.
Shares of KDP have declined 0.5% in the past three months against the industry’s 3.4% rise.
Image Source: Zacks Investment Research
Q2 in Detail
Adjusted earnings of 42 cents per share grew 7.7% year over year and came above the Zacks Consensus Estimate of 40 cents per share.
Net sales of $3,789 million beat the Zacks Consensus Estimate of $3,700 million. Also, the reported figure jumped 6.6% from the year-ago quarter on a reported basis and increased 6.1% a constant-currency (cc) basis. Net price realization grew 8.2%, with a lower volume/mix of 2.1%.
In the reported quarter, Keurig Dr Pepper’s in-market performance in the Liquid Refreshment Beverages category remained sturdy, with retail dollar consumption growing 10.7% and market share expanding roughly 85% of KDP's cold beverage portfolio. This mainly reflected strength in CSDs, seltzers, energy, apple juice, coconut waters and fruit drinks. Also, strength in Dr Pepper and Squirt in CSDs as well as Polar seltzers, Vita Coco, C4 Energy, Evian, Mott's and Hawaiian Punch aided the results.
The overall at-home coffee category trends have been impacted by higher consumer mobility year over year, with the single serve pod segment expanding volume share of the category. U.S. retail dollar consumption of manufactured pods dipped 2.3% in IRi tracked channels during the reported quarter, while KDP Manufactured share was healthy at about 79%.
Adjusted gross profit rose 6.7% year over year to $2,076 million. The adjusted gross margin advanced 10 basis points year over year to 54.8% on reported basis, while the metric remained flat on cc basis. We had expected an adjusted gross margin of 54.5% for the quarter under discussion.
Adjusted operating income rose 4.4% to $873 million in the quarter. Meanwhile, the adjusted operating margin contracted 40 basis points to 23%.
Keurig Dr Pepper, Inc Price, Consensus and EPS Surprise
Sales in the U.S. Coffee segment declined 5.7% year over year to $970 million, reflecting improved net price realization of 1.6% and lower volume/mix of 7.3%. At-home coffee consumption continued to be impacted by mobility changes on a year-over-year basis. Further, pod revenues fell 4.6%, including a shipment drop of 7.7% mainly owing to the mobility-driven category softness and exit of certain lower-margin private label contracts.
On a trailing 12-month basis compared with the pre-pandemic second-quarter 2019 period, at-home pod shipments increased 16.9%, reflecting a mid-single digit compound annual growth rate. Brewer shipments totaled 9.9 million in the 12 months ending Jun 30, 2023, representing an 11% decline year over year.
Sales in the U.S. Refreshment Beverages segment totaled $2,330 million, up 11.8% year over year, reflecting higher net price realization of 12% and a 0.2% decline in volume/mix. The results were driven by recent innovations and effective in-market execution along with the contribution from its sales and distribution partnership for C4 Energy. In the quarter, we had expected sales of $2,180.3 million from the segment.
Sales in the International segment rose 10.9% year over year to $489 million, gaining from a favorable net price realization of 6.1% and a volume/mix rise of 0.9%. At cc, the segment’s net sales increased 7%. Also, solid momentum in Mexico and Canada aided results. Our estimate for sales from this segment was $442.3 million in the quarter.
Financials
As of Jun 30, 2023, Keurig Dr Pepper’s cash and cash equivalents were $278 million. KDP also had long-term obligations of $9,934 million and a total stockholders’ equity of $25,268 million (excluding non-controlling interest).
Net cash provided by operating activities totaled $452 million in the first six months of 2023. The company generated a free cash flow of $311 million in the said period.
Outlook
Keurig Dr Pepper updated its 2023 view. The company currently expects sales growth of 5-6%, which is higher than 5% projected earlier. For adjusted earnings, it continues to expect an increase of 6-7%.
Zacks Rank & Stocks to Consider
Keurig Dr Pepper currently carries a Zacks Rank #4 (Sell).
Celsius currently carries a Zacks Rank #2 (Buy). CELH has an earnings surprise of 81.8% in the last reported quarter. The Zacks Consensus Estimate for its current financial year’s sales and EPS indicates growth of 69.6% and 154.4%, respectively, from the year-ago period’s reported levels.
Coty has a Zacks Rank #2 at present. The Zacks Consensus Estimate for COTY’s current financial year’s sales and EPS suggests growth of 4.2% and 92.9%, respectively, from the year-ago reported figures. COTY has a trailing four-quarter earnings surprise of 145%, on average.
Church & Dwight currently carries a Zacks Rank #2. The Zacks Consensus Estimate for CHD’s current financial-year sales and earnings per share suggests growth of 7.4% and 4.7, respectively, from the corresponding year-ago reported figures. CHD has a trailing four-quarter earnings surprise of 9.8%, on average.
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Keurig Dr Pepper (KDP) Q2 Earnings Top Estimates, Sales View Up
Keurig Dr Pepper Inc. (KDP - Free Report) has reported second-quarter 2023 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. Also, both metrics improved year over year. Results have gained from continued brand strength and significant pricing.
Shares of KDP have declined 0.5% in the past three months against the industry’s 3.4% rise.
Image Source: Zacks Investment Research
Q2 in Detail
Adjusted earnings of 42 cents per share grew 7.7% year over year and came above the Zacks Consensus Estimate of 40 cents per share.
Net sales of $3,789 million beat the Zacks Consensus Estimate of $3,700 million. Also, the reported figure jumped 6.6% from the year-ago quarter on a reported basis and increased 6.1% a constant-currency (cc) basis. Net price realization grew 8.2%, with a lower volume/mix of 2.1%.
In the reported quarter, Keurig Dr Pepper’s in-market performance in the Liquid Refreshment Beverages category remained sturdy, with retail dollar consumption growing 10.7% and market share expanding roughly 85% of KDP's cold beverage portfolio. This mainly reflected strength in CSDs, seltzers, energy, apple juice, coconut waters and fruit drinks. Also, strength in Dr Pepper and Squirt in CSDs as well as Polar seltzers, Vita Coco, C4 Energy, Evian, Mott's and Hawaiian Punch aided the results.
The overall at-home coffee category trends have been impacted by higher consumer mobility year over year, with the single serve pod segment expanding volume share of the category. U.S. retail dollar consumption of manufactured pods dipped 2.3% in IRi tracked channels during the reported quarter, while KDP Manufactured share was healthy at about 79%.
Adjusted gross profit rose 6.7% year over year to $2,076 million. The adjusted gross margin advanced 10 basis points year over year to 54.8% on reported basis, while the metric remained flat on cc basis. We had expected an adjusted gross margin of 54.5% for the quarter under discussion.
Adjusted operating income rose 4.4% to $873 million in the quarter. Meanwhile, the adjusted operating margin contracted 40 basis points to 23%.
Keurig Dr Pepper, Inc Price, Consensus and EPS Surprise
Keurig Dr Pepper, Inc price-consensus-eps-surprise-chart | Keurig Dr Pepper, Inc Quote
Segmental Details
Sales in the U.S. Coffee segment declined 5.7% year over year to $970 million, reflecting improved net price realization of 1.6% and lower volume/mix of 7.3%. At-home coffee consumption continued to be impacted by mobility changes on a year-over-year basis. Further, pod revenues fell 4.6%, including a shipment drop of 7.7% mainly owing to the mobility-driven category softness and exit of certain lower-margin private label contracts.
On a trailing 12-month basis compared with the pre-pandemic second-quarter 2019 period, at-home pod shipments increased 16.9%, reflecting a mid-single digit compound annual growth rate. Brewer shipments totaled 9.9 million in the 12 months ending Jun 30, 2023, representing an 11% decline year over year.
Sales in the U.S. Refreshment Beverages segment totaled $2,330 million, up 11.8% year over year, reflecting higher net price realization of 12% and a 0.2% decline in volume/mix. The results were driven by recent innovations and effective in-market execution along with the contribution from its sales and distribution partnership for C4 Energy. In the quarter, we had expected sales of $2,180.3 million from the segment.
Sales in the International segment rose 10.9% year over year to $489 million, gaining from a favorable net price realization of 6.1% and a volume/mix rise of 0.9%. At cc, the segment’s net sales increased 7%. Also, solid momentum in Mexico and Canada aided results. Our estimate for sales from this segment was $442.3 million in the quarter.
Financials
As of Jun 30, 2023, Keurig Dr Pepper’s cash and cash equivalents were $278 million. KDP also had long-term obligations of $9,934 million and a total stockholders’ equity of $25,268 million (excluding non-controlling interest).
Net cash provided by operating activities totaled $452 million in the first six months of 2023. The company generated a free cash flow of $311 million in the said period.
Outlook
Keurig Dr Pepper updated its 2023 view. The company currently expects sales growth of 5-6%, which is higher than 5% projected earlier. For adjusted earnings, it continues to expect an increase of 6-7%.
Zacks Rank & Stocks to Consider
Keurig Dr Pepper currently carries a Zacks Rank #4 (Sell).
Some better-ranked companies are Celsius Holdings, Inc. (CELH - Free Report) , Coty (COTY - Free Report) and Church & Dwight Co. (CHD - Free Report) .
Celsius currently carries a Zacks Rank #2 (Buy). CELH has an earnings surprise of 81.8% in the last reported quarter. The Zacks Consensus Estimate for its current financial year’s sales and EPS indicates growth of 69.6% and 154.4%, respectively, from the year-ago period’s reported levels.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Coty has a Zacks Rank #2 at present. The Zacks Consensus Estimate for COTY’s current financial year’s sales and EPS suggests growth of 4.2% and 92.9%, respectively, from the year-ago reported figures. COTY has a trailing four-quarter earnings surprise of 145%, on average.
Church & Dwight currently carries a Zacks Rank #2. The Zacks Consensus Estimate for CHD’s current financial-year sales and earnings per share suggests growth of 7.4% and 4.7, respectively, from the corresponding year-ago reported figures. CHD has a trailing four-quarter earnings surprise of 9.8%, on average.