Coffee Service

Keurig Dr Pepper boosts Q3 2022 sales, earnings slide

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October 28, 2022

Keurig Dr Pepper Inc. lifted its Q3 2022 revenue over the prior year period but suffered an earnings decline, according to an earnings report. While missing analysts' expectations, the company reaffirmed sales and earnings growth for fiscal 2022.

Highlights include:

• Net sales for the third quarter of 2022 increased 11.4%, from $3.25 billion in Q3 2021 to $3.62 billion in Q3 2022, and on a constant currency basis, net sales advanced 11.8%.
• Net income fell from $530 million to $180 million in the comparative quarters.
• Both basic and diluted earnings per common share fell from 37 cents to 13 cents.
• Adjusted diluted EPS increased 4.5% from 44 cents to 46 cents.
• All four business segments grew sales during the quarter. Driving the consolidated net sales growth was favorable net price realization of 12.1%, only slightly offset by lower volume/mix of 0.3%.
• KDP in-market performance in the liquid refreshment beverages category remained strong in the quarter, with retail dollar consumption advancing 11.2% and total LRB dollar share posting another quarter of growth, largely reflecting strength in premium unflavored waters, seltzers, teas, apple juice and fruit drinks, combined with continued solid performance in carbonated beverages. This performance was driven by Core Hydration, Polar seltzers, Snapple, Mott's, Hawaiian Punch, Dr Pepper, Crush, Canada Dry, A&W and Squirt.
• Coffee system net sales rose 4.7% from $1.16 billion to $1.21 billion, and on a constant currency basis, net sales advanced 5.2%. In coffee, retail dollar consumption of single-serve pods manufactured by KDP increased 4% in IRi tracked channels, led by higher pricing in KDP's owned, licensed and partner brands, with stronger growth registered in untracked channels.
• Packaged beverages net sales increased 13.5%, from $1.55 billion to $1.76 billion, and on a constant currency basis, net sales advanced 13.6%.
• Beverage concentrates net sales increased 17.1% from $392 million to $459 million, and on a constant currency basis, advanced 17.3%.
• Latin America net sales increased 26.9% from $156 million to $198 million, and on a constant currency basis, advanced 28.8%.

Shares traded at $39.35 today against a 52-week range of $33.35-$41.31.

The $3.62 billion in quarterly revenue missed analyst expectations by $10 million, while the non-GAAP EPS of 46 cents was in line with expectations, according to Seeking Alpha.

"The third quarter was another strong one for KDP, as we again demonstrated the advantages of our all-weather business model, which has proven adept at performing well in an evolving macro environment to meet the needs of consumers," CEO Ozan Dokmecioglu said in the press release. "While the macro landscape remains challenging, our cold beverages portfolio continues to perform exceptionally well, with strong in-market execution and increased marketing investment driving consistent growth in LRB market share.

"At the same time, our coffee business has steadily recovered from the significant supply chain disruption earlier this year and is poised to deliver strong sales and earnings growth in the fourth quarter."

The company reaffirmed its guidance for constant currency net sales growth in 2022 in the low double digits and adjusted EPS growth in the mid-single digits.