Coffee Service

Keurig Dr Pepper boosts Q3 2023 results, surpasses expectations

Image: South Carolina Department of Commerce

October 26, 2023

Keurig Dr Pepper Inc. lifted its sales and earnings for Q3 2023 against the prior year period, according to an earnings report, surpassing analyst expectations.

Highlights include:

• Net sales increased 5.1% from $3.62 billion in Q3 2022 to $3.81 billion in the quarter ending Sept. 30, 2023. On a constant currency basis, net sales advanced 4.1%, driven by net price realization of 5.5% that was only partially offset by lower volume/mix of 1.4%.
• Net income rose from $180 million to $518 million in the comparative quarters while adjusted net income rose 1.8% to $673 million driven by the adjusted operating income growth, partly offset by higher interest expense.
• EPS rose from 13 cents to 37 cents on both a basic and diluted basis.
• Adjusted diluted EPS increased 4.3% to 48 cents.
• U.S. refreshment beverages sales rose 5.9% from $2.14 billion to $2.27 billion, driven by net price realization of 7.1% and a modest decline in volume/mix of 1.2%. This strong performance reflected resilient category trends, continued market share gains and the contribution from KDP's sales and distribution partnership with Nutrabolt for C4 Energy.
• U.S. coffee sales decreased 3.2% from $1.05 billion to $1.01 billion, driven by net price realization of 3.1% and a volume/mix decline of 6.3%. Pod revenue decreased 4.8%, driven by a shipment decline of 8.1%. As expected, pod volume growth lagged gradually improving single-serve category consumption, due to an unfavorable comparison to trade inventory builds in the year-ago period and the continued impact of exiting certain low-margin private label contracts.
• International sales increased 20.8% from $433 million to $523 million.

Shares traded today at $29.39 against a 52-week range of $27.66 to $39.73.

The $3.81 billion in quarterly revenue beat analyst expectations by $40 million while the non-GAAP EPS of 48 cents beat expectations by one cent, according to Seeking Alpha.

"In the third quarter, we maintained healthy revenue momentum and delivered a significant gross margin inflection, helping to fund reinvestment in our brands and capabilities," Bob Gamgort, chairman and CEO, said in the press release. "In addition to continued strong results across our U.S. refreshment beverages and international segments, we also began to rebuild our margins in U.S. coffee. We are reaffirming our full year outlook and remain committed to delivering a strong Q4 with an improved composition of earnings."