Coffee Service

Keurig Dr Pepper lifts Q2 2023 results, raises FY guidance

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July 27, 2023

Keurig Dr Pepper Inc. lifted its sales and earnings for Q2 2023 and raised its full year sales growth outlook and reaffirmed its EPS growth guidance, according to a press release. Highlights include:

• Net sales increased 6.6% from $3.55 billion in Q2 2022 to $3.79 billion for the quarter ending June 30, 2023. On a constant currency basis, net sales advanced 6.1%, reflecting net price realization of 8.2%, only slightly offset by lower volume/mix of 2.1%.
• Net income rose from $218 million to $503 million in the comparative quarters.
• EPS on both a basic and diluted basis rose from 15 cents to 36 cents.
• KDP in-market performance in the U.S. liquid refreshment beverages category remained strong, with retail dollar consumption advancing 10.7% and market share gains in categories representing approximately 85% of the company's cold beverage retail sales base. The performance was led by CSDs, seltzers, coconut waters, energy, apple juice and fruit drinks and was driven by Dr Pepper and Squirt in CSDs, as well as Polar seltzers, Evian, Vita Coco, C4 Energy, Mott's and Hawaiian Punch.
• U.S. retail dollar consumption of KDP manufactured K-Cup pods decreased 2.3% in IRi tracked channels in the quarter, and KDP manufactured dollar share was approximately 79%.
• Total at-home coffee category trends during the second quarter continued to be impacted by greater consumer mobility versus the prior year, though the company observed sequential improvement in category consumption towards the end of the second quarter, which continued into the third quarter. The single serve segment continued to gain volume share of the at-home coffee category throughout the period.
• U.S. refreshment beverage sales for the second quarter increased 11.8% to $2.3 billion, compared to $2.1 billion in the year-ago period, reflecting net price realization of 12% and a slight decrease in volume/mix of 0.2%.
• U.S. coffee sales for the second quarter decreased 5.7% to $970 million, compared to $1.03 billion in the year-ago period, reflecting net price realization of 1.6% and a volume/mix decline of 7.3%.
• International sales for the second quarter increased 10.9% to $489 million, compared to $441 million in the year-ago period and, on a constant currency basis, net sales advanced 7%.

Shares traded today at $34.01 against a 52-week range of $30.47 to $41.31.

The $3.79 billion in quarterly revenue topped analyst estimates of $3.69 billion, according to Refinitiv data, Reuters reported.

"Our second quarter results demonstrated the strength of KDP's brand portfolio and our high-quality retail execution," Bob Gamgort, chairman and CEO, said in the press release. "We saw continued momentum in the U.S. refreshment beverages and international segments, as well as encouraging intraquarter developments in U.S. coffee, where we expect a sequential recovery in revenue and a meaningful inflection in margins in the back half."

On a constant currency basis, KDP now expects net sales growth of 5% to 6% for 2023. The company's outlook for adjusted diluted EPS growth of 6% to 7% in 2023 remains unchanged.