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Dr Pepper Snapple (DPS) Q1 Earnings Top, Sales Lag Estimates
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Plano, TX-based Dr Pepper Snapple Group Inc. recently reported first-quarter 2017 results, with earnings beating the Zacks Consensus Estimate and revenues missing the mark.
Earnings in Details
First-quarter adjusted earnings per share ("EPS") of $1.01 beat the Zacks Consensus Estimate of 96 cents by 5.2%. Earnings also increased 7.4% year over year.
Revenues & Margins
Dr Pepper Snapple’s net sales of $1.51 billion missed the Zacks Consensus Estimate of $1.56 billion by 3.2%. Net sales rose 1.5% year over year.
While sales were driven by 1% volume growth, unfavorable foreign currency translation and adverse segment mix hurt sales by 1%.
Segment Detail
Segment-wise, the company generated higher revenues at the Beverage Concentrates (up 2% year over year) and Packaged Beverages (2%) segments. Latin America Beverages segment revenues also increased 6% in the quarter on a 3% increase in sales volumes and favorable pricing.
Operating Highlights
Adjusted gross margin declined 70 basis points to 58.6%. Adjusted operating margin also deteriorated 70 basis points to 19.9%.
Volume Details
Dr Pepper Snapple’s sales volume is measured in two ways: 1) sales volume and 2) bottler case sales ("BCS") volume. Sales volume represents concentrates and finished beverages sold to bottlers, retailers and distributors. BCS includes the sale of finished packaged beverages by the company and its bottlers to retailers and independent distributors.
Sales volume increased 1% in the quarter, inclusive of the Bai acquisition.
In the quarter, BCS volumes were 1% compared to flat growth in the previous quarter. During the quarter, Carbonated Soft Drinks ("CSDs") volumes increased 1%, while non-carbonated beverages ("NCBs") volumes decreased 2%.
Geographically, volumes in the U.S. and Canada were flat. Meanwhile, volumes increased 3% in Mexico and the Caribbean, lower than the previous quarter level of 5%.
Dr Pepper Snapple Group, Inc Price, Consensus and EPS Surprise
Cash and cash equivalents were $73 million as of Mar 31, 2017, compared with $1,787 million at 2016-end. Long-term obligations were $4,467 million, down from $4,468 million at 2016-end.
In the quarter, net cash provided by operating activities totaled $97 million, down 50.8% year over year.
Free cash flow came in at $81 million in the quarter, down 52.4%.
The company returned $125 million to shareholders in the form of stock repurchases ($28 million) and dividends ($97 million).
2017 Outlook
Dr Pepper Snapple expects core earnings in the range of $4.56 to $4.66 per share. Currency headwinds are expected to hurt 2017 core EPS by 7 cents.
The company expects net sales growth of 4%. Currency is likely to have a negative impact of about 1% on sales. Bai acquisition is now expected to add approximately 2% to growth.
Organic volume is expected to witness just over 1% growth, while total volume growth will likely be around 2% (inclusive of the Bai acquisition on Jan 31).
Capital expenditure is projected at about 3% of net sales. The company plans to repurchase $450 million to $500 million of shares this year.
Mondelez International, Inc. (MDLZ - Free Report) is slated to report its quarterly numbers on May 2.
The Kraft Heinz Company (KHC - Free Report) is scheduled to report first-quarter 2017 results on May 3.
B&G Foods Inc. (BGS - Free Report) is expected to report its quarterly numbers on May 4.
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Dr Pepper Snapple (DPS) Q1 Earnings Top, Sales Lag Estimates
Plano, TX-based Dr Pepper Snapple Group Inc. recently reported first-quarter 2017 results, with earnings beating the Zacks Consensus Estimate and revenues missing the mark.
Earnings in Details
First-quarter adjusted earnings per share ("EPS") of $1.01 beat the Zacks Consensus Estimate of 96 cents by 5.2%. Earnings also increased 7.4% year over year.
Revenues & Margins
Dr Pepper Snapple’s net sales of $1.51 billion missed the Zacks Consensus Estimate of $1.56 billion by 3.2%. Net sales rose 1.5% year over year.
While sales were driven by 1% volume growth, unfavorable foreign currency translation and adverse segment mix hurt sales by 1%.
Segment Detail
Segment-wise, the company generated higher revenues at the Beverage Concentrates (up 2% year over year) and Packaged Beverages (2%) segments. Latin America Beverages segment revenues also increased 6% in the quarter on a 3% increase in sales volumes and favorable pricing.
Operating Highlights
Adjusted gross margin declined 70 basis points to 58.6%. Adjusted operating margin also deteriorated 70 basis points to 19.9%.
Volume Details
Dr Pepper Snapple’s sales volume is measured in two ways: 1) sales volume and 2) bottler case sales ("BCS") volume. Sales volume represents concentrates and finished beverages sold to bottlers, retailers and distributors. BCS includes the sale of finished packaged beverages by the company and its bottlers to retailers and independent distributors.
Sales volume increased 1% in the quarter, inclusive of the Bai acquisition.
In the quarter, BCS volumes were 1% compared to flat growth in the previous quarter. During the quarter, Carbonated Soft Drinks ("CSDs") volumes increased 1%, while non-carbonated beverages ("NCBs") volumes decreased 2%.
Geographically, volumes in the U.S. and Canada were flat. Meanwhile, volumes increased 3% in Mexico and the Caribbean, lower than the previous quarter level of 5%.
Dr Pepper Snapple Group, Inc Price, Consensus and EPS Surprise
Dr Pepper Snapple Group, Inc Price, Consensus and EPS Surprise | Dr Pepper Snapple Group, Inc Quote
Financials
Cash and cash equivalents were $73 million as of Mar 31, 2017, compared with $1,787 million at 2016-end. Long-term obligations were $4,467 million, down from $4,468 million at 2016-end.
In the quarter, net cash provided by operating activities totaled $97 million, down 50.8% year over year.
Free cash flow came in at $81 million in the quarter, down 52.4%.
The company returned $125 million to shareholders in the form of stock repurchases ($28 million) and dividends ($97 million).
2017 Outlook
Dr Pepper Snapple expects core earnings in the range of $4.56 to $4.66 per share. Currency headwinds are expected to hurt 2017 core EPS by 7 cents.
The company expects net sales growth of 4%. Currency is likely to have a negative impact of about 1% on sales. Bai acquisition is now expected to add approximately 2% to growth.
Organic volume is expected to witness just over 1% growth, while total volume growth will likely be around 2% (inclusive of the Bai acquisition on Jan 31).
Capital expenditure is projected at about 3% of net sales. The company plans to repurchase $450 million to $500 million of shares this year.
Zacks Rank
Dr Pepper Snapple currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases in Consumer Staples Sector
Mondelez International, Inc. (MDLZ - Free Report) is slated to report its quarterly numbers on May 2.
The Kraft Heinz Company (KHC - Free Report) is scheduled to report first-quarter 2017 results on May 3.
B&G Foods Inc. (BGS - Free Report) is expected to report its quarterly numbers on May 4.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more.
Click here for a peek at this private information >>