Coffee Service

Keurig Dr Pepper boosts Q1 2023 sales on higher pricing, earnings slide

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April 28, 2023

Keurig Dr Pepper Inc. lifted its Q1 2023 sales boosted by higher pricing while earnings took a hit, according to a press release. Highlights include:

• Net sales increased 8.9% from $3.08 billion in Q1 2022 to $3.35 billion in Q1 2023, and on a constant currency basis, net sales advanced 8.9%. Driving the consolidated net sales growth was favorable net price realization of 9.9%, only slightly offset by lower volume/mix of 1%, reflecting the strength of the company's brand portfolio and continued modest elasticities across most categories.
• Net income fell from $585 million to $467 million in the comparative quarters.
• EPS fell 19.5% from 41 cents to 33 cents on a both a basic and diluted basis.
• Adjusted diluted EPS rose to 34 cents.
• KDP in-market performance in the U.S. liquid refreshment beverages category remained strong, with retail dollar consumption advancing 13.6% and KDP growing market share in categories representing approximately 88% of its cold beverage retail sales base. The performance reflected strength in CSDs3, seltzers, coconut waters, energy, apple juice and fruit drinks and was driven by Dr Pepper, Canada Dry, A&W, Sunkist, Squirt and Crush CSDs, as well as Polar seltzers, Vita Coco, C4 Energy, Mott's and Hawaiian Punch.
• U.S. refreshment net sales increased 12.7% from $1.8 billion to $2.01 billion, reflecting favorable net price realization of 12.5% and a 0.2% increase in volume/mix. Driving this performance was strong traction from recent innovation, most notably Dr Pepper Strawberries & Cream, and effective in-market execution, as well as the contribution from the recently announced sales and distribution partnership for C4 Energy.
• U.S. coffee net sales for the first quarter decreased 1.3% from $943 million to $931 million. This performance reflected higher net price realization of 5.3%, more than offset by a 6.6% decline in volume/mix.
• International net sales increased 17.2% from $354 million to $415 million, and on a constant currency basis, net sales advanced 16.7%. This performance was driven by higher net price realization of 9% and volume/mix growth of 7.7%, and reflected strength in Peñafiel and growth in K-Cup pods in Canada.

Shares traded today at $32.58 against a 52-week range of $32.43-$41.31.

The $3.35 billion in quarterly revenue beat analyst expectations by $60 million while the non-GAAP EPS of 34 cents beat expectations by one cent, according to Seeking Alpha.

"Our results were led by strong revenue growth, supported by successful innovation, increased marketing and modest brand elasticities," Bob Gamgort, chairman and CEO, said in the press release. "The U.S. refreshment beverages and international segments exhibited standout performance and, as expected, U.S. coffee had a slower start to the year. Though the at-home coffee category is still cycling through mobility-related changes relative to last year, single-serve continues to gain volume share of the U.S. category.

"On a consolidated basis and against the backdrop of persistent inflation, we are driving healthy bottom-line growth while reinvesting in our business, and we remain confident in our 2023 outlook."